Don’t Overtrade The Retail Cycle | Weekly Roundup

Transcript

I will say the place where you will go wrong that right now is overtrading and trying to chase different things. That is the only real guaranteed way. If you just sit back in something right now, you you probably will make money. You just might not make as much money as the person on Twitter who's tweeting about how much money they made. But the guaranteed way to lose money is to chase every single trend because you'll always be behind. This episode is brought to you by Geodet. the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. You'll hear more about them later in the episode. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is

forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the company's funds or projects discussed. All right, everyone. Welcome back to the roundup. We have no Santi. We do have Rob. Rob, what's up? How you doing? You know, it's really sad because I've been on this like a few times now, and it feels like getting the three of us together has been really tough. So, I'm I'm waiting for the three of us.

You're just trying to take our job. One, I mean, it's like you're coming after me for a few weeks. You're coming after Santi now. You know what? I could never replace either of you. I'm just glad to be here. So, thank you for having me. The feeling is mutual, Rob. Though, we did miss you at dinner last night. It's good good dinner. You know, there's just too much going on in the markets right now. Uh you can't you have to be working if you're going to make money right now. That is true. That is true. Um all right, before we get into the markets, I have a a a new update. So, we used to I used to read some of the YouTube comments, but now the YouTube comments are um like a cesspool of people showing random coins I've never heard of. So, I

I've actually stopped looking at them. But if you want us to, there were some really good roasts back in the day on YouTube comments of Santi and me. And unfortunately for you now, Rob, you you too probably will get pulled into these roasts. So I'm I'm going to read two of them from back in the day. One is uh regarding vampire attacks, Yano, you are so pale that the vampire reference seemed appropriate for you. Sorry, dude. Uh the next one is, "Is it just me or does every episode Yano's eyes get closer and closer together? Another year of the show and it'll be Santi and the Cyclops." So, if you want to roast us like these and you want me to read them, uh just leave us a fivestar review and include your roast in the review and then I can actually read them. So,

that's uh that's the new thing we're doing if you want to get your roast in. Rob, I really hope that like I get a few of these. Like that feels like um you know, just like I made it finally. So, maybe we can just roast Rob this week. That could be the that could be the theme. Um Rob, where are you making money? You're working. You said uh you have to just be working a lot to be making money. What's the how do you make money in these markets? Well, uh I mean we're we're not traders, we're VCs. Uh that said, like I think there there's a lot of excitement about what's going on in the public market right now. There's a lot of overlap between VC and traders these days though, I will say.

So, so that's not true of us. That's definitely true of I think a lot of people in crypto. I think the reality is is this like what our LPs want is us not to trade. Um and so it really depends on like how you define like the vehicle that you're you're trading out of or you're you're investing out of. Um but that said like deal flow is also really really picked up uh especially in like certain hot vehic uh or hot verticals things like you know stable coins continues to be really hot infrastructure a lot of prediction markets um a lot of people just excited about like general you know financial uh applications DeFi I think is picking back up and so you know we're we've got a lot going on and you know I think there's just a lot of tailwinds behind

the industry generally and so a lot of people are excited about about building new things. I saw you guys did one of the predict uh one of the prediction markets I looked at as well with um I saw a job post a careers page and the careers page said like Sam Alman and Dragonfly have backed this. Uh I do not know which one that is but we you I mean we're we're we're large investors of Poly Market I think as I've I've said on this podcast before continue to be very bullish there with with the uh the acquisition they did at that DCO uh earlier this week. Yeah. Um what what was that? So they spent 112 million to get licensed in the US.

Yeah, essentially. That's right. So um they are now a derivatives clearing or or if this goes through and when it goes through they will have a derivatives clearing organization um in the US. So they will actually be able to uh in a regulated manner serve US customers uh similar to to Kel. Yeah. Yeah. Um what do you think it's think of these markets in general? Um I can pull up uh let's look at some of the prices just week overweight. Like we had another week of basically just up only. I mean, you've got ETH is I mean, it wasn't as crazy as last week, but ETH is up 10 8.8%.

BNB is up eight. Salana is up eight. Dogecoin's up 13. Um, Cardano's up two. Everything's up. Suie's down five, Stellar's down six. Hyperl's down eight. Interesting. Let um Hyperliquid's down eight. Let's talk about that in a sec. But on on the other side of things too, you have uh actually Matt Lavine had a good piece on this. You like the meme stock mania is kind of back. Like Open Door ripped 300%. Um Crispy Cream ripped 70%. I saw Sydney Sweeney did an ad with Abbercrombie and it ripped like I don't know 100%. I think it was American Eagle. Yeah, American Eagle. Thank you. Yes, it was up like 28%. Yeah.

Yeah, exactly. GoPro is up 100%. Kohl's is up 50%. So like just like uh you know animal spirits are definitely back in the market. What do you what do you make of this? Yeah, it's very clear animal spirits are back to that point. Uh and and they're back in a in a way that retail hasn't been back for a long time. You know, if you look at um I mean, we'll start with the meme stocks, right? So, you know, like you mentioned, you know, gold was up 90% in one day, right? And it was they had 11 times their average volume in that day. It was halted multiple times. Like, and if you actually go and you look, it actually looks very much like 2021. It was, you know, a very much like Wall Street bets driven. There was a lot of short interest. People were

trying to, you know, were were posting on Reddit about trying to um, you know, cause a short squeeze. It just sounded, you know, a lot like the the GameStop uh, mania. And we've seen that across, you know, a bunch of these Kohl's, GoPro, Crispy Cream, Open Door. Um, you now you've seen it also in in crypto. I mean, for instance, it's not just like Bitcoin and ETH and Hyperlquid and the things that we think are good that have been running, but uh Tezos is up like 90% uh month over month. Uh yeah, Zor was well, Zora ripped earlier this week. You know, it's it's it's everything, right? People are, you know, excited about uh about investing again.

But we're seeing people get a little bit over their skis. Like if you if you zoom out to like month over month, you know, it looks it looks great. But for instance, um there was something like like 30% of the OI or the open interest or the leverage in the market was washed out between Friday and last night and then we've we've actually rebounded like quite heavy again. So you're just seeing people get so excited about you know uh potentially investing that they're taking on tons and tons of leverage. I I think um XRP open interest so leverage on XRP perpetuals last week on in one day increased 26%. And this is you know the third or fourth biggest token in the market. Right.

Is this where you go to look? Are you going to coin glass to look at this or what where do you see this? Yeah, typically coin glass is my um my go-to for for open interest. Um it's you know a little bit tougher to to kind of parse some of the the information over extended period of time. Um but but yeah, it's the I think it's the best for open interest. Right. So tell me what you So when you see these metrics like what what what do you think about? Yeah. I mean so I think when you start to see a really rapid increase in open interest that's when you can see the froth coming right and you start seeing funding rates blow out and that means that there's like significant amount of leverage coming into the market. Uh, and especially I mean you go and look at

Hyperlid at parts of of Times last week which structurally the the way it works is that the the um funding rates are always higher on Hyperlid but at times last week the funding rates on XRP were like 90 to 100% annualized meaning that people were willing to pay 100% annualized to get leverage on XRP because they thought after it blew past the all-time high it was going to keep going right. It's like the froth is just incredible in the market right now. Um, and you know, a lot of that got washed out. So hopefully we've kind of, you know, we'll we'll um kind of bottom here or we'll we'll get a little bit um I guess like less volatility uh into the the coming weeks. We're we're also actually interestingly we're going into a um a part of the season that is

usually bad for markets. So starting around uh the early August, August is usually bad for markets. There's just not a lot of uh volatility. There's not a lot of volume. Um, and so it it'll be interesting to see if this can uh keep up. Yeah. I think what people forget is that if you're looking so we're looking at this uh the monthly chart of uh Bitcoin people forget that you know we ripped for like 7 months straight in 2020 from like what September October of 2020 straight through what like roughly May 2021 we had this nasty pullback in the summer from let's call it 6065 down to we wicked down to 28 and then that was like for a couple months in the summer actually most of the summer and

Then we ripped back higher to to 68 and then and then topped. So I'm curious. Yeah. If you and we had this like double top, right? I'm curious if you think this pattern could play out again. So obviously anything's possible, but like Yeah. How how do you think about if this is a likely scenario? Yeah. I mean, structurally, I think the market's very different now. I think I've said this I I've been saying this for for over a year, but now I think it's a lot of people are saying this, which is that the typical like four-ear cycle is over. the market has gotten more sophisticated. There's more institutional participants. We have an ETF now. Um, now we have all of these, you know, DATs that have, you know, structural buying pressure like on these tokens. And so, you probably shouldn't see this kind of four-year cycle play

out in the same way. Despite that, we've shockingly seen this year look a lot like 2021 in terms of price action. Um it's not clear to me though that we should be in a situation where like yeah we've we we kind of pump up and into the end of the year and then we pull back and and we kind of go into another four-year cycle. I do think in a world where the institutions are you know buying uh Bitcoin just for you know kind of portfolio diversification and because it's digital gold or they're buying Ethereum because they believe that this is going to be you know the infrastructure for a future you know digital financial market. Same thing with Salana and etc. I do think in that world the institutions are not going to you know uh they're not going to observe

a four-year market cycle. They are going to invest with different time frames in mind and it is going to be less volatile and potentially and it's going to be um I guess a you know probably not on the same time frame of what we are used to seeing. Yeah. Okay. So I know Dragonfly obviously is not trading these markets right? you guys are long-term venture investors, but in your PA, are you starting to trim when you see things like this? Even outside of crypto, by the way, like you look at what Zuck is doing with these billion-dollar aquifers. I mean, that's like memecoin mania, like meme stocks are back. The AI aquires, uh, the digital asset treasury companies, we should talk about that in

a bit. Like there's kind of all signs of a froth. Do you start trimming around now? So, I am personally a very bad trader. Uh you and me both, Rob. That's unfortunate for the listeners. You and me both. No, I it's just not my focus, right? Um and I'm a long-term believer in the space. So, like I'm just like I'm long-term long Ethereum. I'm long-term long Salana. Um I am long-term long XRP um and uh and Bitcoin. It's just, you know, kind of give me those like large caps um and and things that I think are doing really well. Hyperlid, Athena, etc. And like I just believe in these things. I think they'll do really well over time. And um I try not to like look at my PA every day.

Yeah. Um that said, like you're you're totally right, right? Like there's there's froth everywhere. Uh you know, when you look at the big beautiful bill uh that that got passed a few weeks ago, um you know, it's very clear that we're going to be in a again a structural devaluation uh of of the dollar. We're going to be continue to be in a a world where there's going to be liquidity injected into the market. And as we've seen time and time again, you know, crypto markets track liquidity uh in the market. People need something to put to uh somewhere to put that money to work. And my expectation is, you know, that plus the buying pressure from the DATs plus um there just being bullishness around rate cuts will probably lead us into, you know, continued upward price movement

over time. You know, on the short term, like who knows? But, you know, over the medium term, I expect uh that at least the music hasn't stopped uh playing yet. Yeah. Uh let's talk about digital asset treasury companies. So we had I mean just every every week you get more movement. This episode is brought to you by Geodet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics. Geodet shows that blockchain can be a truly transformative force by delivering real time centimeter level accuracy. Geodet enhances emergency response, boosts construction precision,

and enables advanced navigation for drones and surveyors far beyond the limits of standard GPS. To find out more, click the link in the show notes or follow them on X. Hey everyone, Jason here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy nononsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitweis's chief investment officer. He's been on the show before, and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one.

The Bitwise weekly CIO memo is really worth the five minutes of your time. Check it out at bitweisinvestments.com/cio memo/mpire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risks associated with crypto before investing. As always, investments in blockchain technology involve risk terms and conditions apply. I think the most notable thing was actually that we started uh the Athena one was pretty notable because I think if you're every crypto treasure uh every crypto protocol is looking at what Athena did to see if it worked or not.

Um and I think there was a lot of consensus that like okay you could do this with Bitcoin, you could do this with ETH, maybe you could do this with Soul. Um but beyond that like does it work, does it not work? And so I think a lot of folks are paying attention to Athena. So again, I don't know how much you can share. I think you guys are one of the largest shareholders of Athena. So I'm not I, you know, I don't know how much you can share or not. You are the largest shareholder of Athena. Okay. So Athena launched $360 million treasury play where they're uh the headline was they're buying lock tokens. So I'll just read the news story. Uh Athena Foundation, the the nonprofit organization backing the stablecoin project Athena announced the founding of a new company called Stablecoin X to buy up the project's

native ENA tokens. Um uh let's see um of the $360 million raised, stable coin X sold 100 million in shares in exchange for locked ENA tokens with the remaining 260 denominated in cash. So sounds like 360 total, 200 was 260 was cash, 100 was uh contri uh locked ENA that got contributed. Over the next six weeks, the company will spend 260 million to buy buy up more locked Athena tokens from the Athena Foundation. The Athena Foundation will then use the proceeds from the sale of the lock tokens to buy spot Athena tokens. Okay.

Walk us through what's happening here. Yeah. So, I think high level uh and there's some things I I probably can't say, you know, it's a public company um or or it is it will be a public company which the the Spack uh is DSPAC has done. Um, but broadly like the point that they're trying to make here is they're trying to make this vehicle attractive not just to the pipe investors but also to people who might buy the this, you know, these shares over time by allowing this vehicle or this company to buy discounted tokens at, you know, some future cadence.

meaning that if you own uh a share of this, you can get exposure to an ENA token for less than $1 of ENA token for less than $1, right? Like that's the goal here, right? And what we started to see in a lot of these treasury companies is over is is when there was so much froth before people were willing to pay these big premiums or they were even the pipe investors were willing to say, "Okay, well, we'll come in at 1.1 or 1.2 two times the net asset value because, you know, you know, we're buying these assets plus, you know, the adviserss and and the asset managers need to get paid. But what we've started to see is a little bit of um what I think is uh the market's been a little tired of some of those uh those products and they're looking for vehicles where they there's

an expectation that maybe they can actually get discounted tokens so that they can actually get an uplift relative to the you know current spot market right and so I saw a couple vehicles over the weekend um there's one I know another one I know of happening right now where you can get exposure as a pipe investor at, you know, 7 or 0.8 times NAV and then you can maybe go ahead and do an at the market um offering, you know, right after you do the pipe that increases that per share price again. And so you have multiple people who are able to get exposure to that token uh at a less than, you know, $1 of that token at less than $1. And so that's where we're seeing the market go a little bit here.

And you know, that's part of what is happening here on the Athena piece. At the same time, they are going to go back and they're going to buy back uh you know, up to 8% of the circulating supply. Um, which is a really really significant amount. And so that's been the way they were they were thinking about it. And I think we've started to see those vehicles get a lot more traction and people be a lot more interested in those versus the ones that are typically like, you know, come in at some sort of premium. Okay, so let's look at the price of Athena. It is up. It's up from Yeah, it was kind of sitting around 25 30 cents for a while. This thing gets announced and it uh it actually hit yeah 55. It's sitting around Yeah, it's

sitting around 50 cents today. So, if you are the founder of another protocol, you're looking at this saying, okay, the price just doubled. So, what would you say to other people who are looking at this saying, should I go do this? It's like the different way to ask the question is, if this worked for Athena, is it going to work for everyone else? I mean, it's definitely not going to work for everyone else. like there there's no doubt about that. I think structurally there are types of protocols that it will work for if they're able to put in place some sort of you know discounted buying program where people can get exposure to these tokens at that discount because there's always going to be arbitrageors that you know want to have exposure to that.

There always going to be people who are willing to you know hedge out that risk and and take that you know discounted token. Um, I I expect the market will get, you know, or will continue to get tired. You know, for a little bit of context, I I um was emailing a banker, one of the best banks in the world, uh, last night, and they were telling me that they had five people reach out within 24 hours looking for a banker to be a placement agent on one of these, uh, one of these vehicles. Uh same similarly I was in so I was I did um a fireside chat with Anthony Scaramucci yesterday at this um uh conference out in in the Hamptons and I had stayed in the Hamptons for a couple days before

that and I was with some some friends in the industry and every person that I knew in the industry that was at this house that we were sharing all of them got multiple calls over the weekend for new digital asset treasuries meaning that people were trying to place like call it like another six new vehicles over the weekend last weekend. So, the froth in and the amount of people trying to rush into this is incredible. There's just not going to be enough to buy in demand for all of these. There needs to be some differentiation if you're going to do it. It needs to be their protocol that's differentiated like Athena was the first one and there needs to be um some sort of like you know I think foundation support especially when you go beyond those big um you know those big names we talked about and you need

to be able to give people you know exposure to the underlying and some yield that they can't get exposure to themselves. Yeah. Yeah. Who who should who is this right for and who is this wrong for? Like why would if you say it's not right for other people like why would this work for Athena but it wouldn't work for you know insert XYZ protocol I think it's it's not going to work for the long tale of assets that don't have like a fundamental story people can buy into right so I think Athena is one of the few call it applications that people fundamentally believe in like the revenue story right we've talked a lot about there being this kind of revenue story right now Hyperlid you know for instance they had a a vehicle that was

put together uh in a thing called son therapeutics a couple weeks ago and that stock price has been down only and the reason it's been down only isn't because people aren't excited about hyperlquid it's been down only because it was structured extremely poorly and they didn't actually do a good job of thinking about how do we incentivize people to want to own this thing right so I think it's it works for protocols that people structurally want to own because they believe in the thesis it works for some you know kind of the top most liquid tokens if they can structure these things in a way that makes it attractive to those investors that we just talked about.

But it's not going to work for, you know, this long tale of tokens that maybe don't have a big float that don't have a story that people can buy into. Like, how do I, you know, I've heard there's um there's a a vehicle coming out for, you know, a project that you and I know. It's got a big big VC backer behind it. Somebody I was shocked to hear was behind it. Um, but they haven't even had their first, you know, cliff unlock yet. I know who you're talking about. Yeah. Yeah. Yeah. It should not It should not happen. Yeah. Yeah. There there's no reason for that thing to happen whatsoever, right? When that comes out. And that it it makes absolutely no sense for anyone other than the VC who wants to contribute their own tokens to it, right?

And so I I think these things to to be successful and to make sense, they need to be mostly unlocked. They need to have a real fundamental story and people need to be excited about, you know, where they could go in the future. And the foundation needs to be involved in trying to structure these things in a way that is good for all investors, not just the PIPE investors or the VC investors, but also the retail investors. Yeah. Um yeah, interesting. Athena's, you know, so disclosure, I started buying a we added this to our financial disclosure. I started buying Athena like I don't know a month or two ago. um based ba on the only thesis the only thesis was that uh institutional capital wants to ape the st stablecoin narrative and the single way for them to do that is circle stock and circle so and that

was correct circle stock ripped but like I feel like there is there there needs to be other ways for them to buy the stable coin narrative and obviously like a vehicle like this is going to be good for Athena's price their market buying I don't know roughly I was trying to back into the math four five or six million dollars a day yeah it's around five I $5 million a day every day of Athena for I don't know I think I saw six weeks somewhere. though. Um, okay. Um, I'll take on the stable coin mania side. Yeah. There was um, you know, after Circle ripped, right, which just incredible what's happened in Circle. You, if you looked at like, you know, like there was um, an insurance company in a bank in Hong Kong that was in the like Hong Kong

stable coin sandbox um, that was doing literally nothing with stable coins other than like being part of the sandbox with the Hong Kong government. stock ripped 300% the week after like this stable coin thesis around like people wanting exposure to stable coins it's not also not a US- ccentric thing like this is a global phenomenon and so I think the the circle stock is is one way to get exposure but um you know you can't get circle stock everywhere in the world and you can't get circle stock for all types of investors so to your point I think like getting exposure to stable coins in that thesis is something that there's a lot of hunger for you know all parts of the world yeah let me read two tweets tweets. Um, this is Nick Carter and Chris Berniski, I think, slightly hinting at the fact

that these digital asset treasury companies are not going to end well. Um, this is Nick saying, "In the end, it's going to be very funny that people earnestly tried to get you to buy a dollar for 105 with the idea that other people would then willingly buy the dollar for 300 cents." And that uh this is Chris saying, "Still laughing that Tradfi is going to repeat the same cycles we made as an industry last cycle." What do you what do you um agree or disagree with these guys? Um it's not clear to me what like Chris is talking about and and listen we the GBTC trade was like clearly terrible for the industry. It was clearly like there was an expectation that if you bought into this clos fund that was

non-transferable and non-tradable at a some sort of premium that it would continue to trade at uh some sort of premium, right? Um and people then took leverage against that h so that when it traded and it came down to a discount like they had significant capital calls, right? or they they had margin calls and that was clearly dumb because it was nonliquid collateral, right? Like in this case it is liquid collateral and if you're only taking equity so I I think I I totally agree with uh any of these vehicles that have like debt on them and they have debt instruments that are coming due um and that could cause you know them to have to go and sell the

underlying there there's a much bigger issue with those vehicles. But if you're just diluting shareholders with like call it at the market offerings and you know convertible uh equity um I think these things could easily deflate. And so to Nick's point like yeah you could easily buy this thing at 105 cents and it settles at 90 cents because you know there's a tax obligation and so it should structurally trade at at something under a dollar. But it doesn't strike me that there's like any sort of, you know, quote unquote like widow widowmaker trade unless there's like a bunch of hidden leverage in the in the the industry where like people are using these as you know collateral to go and borrow against. But securities lending is a lot safer than uh you know lending against Bitcoin in an opaque way or lending against GBTC in an opaque way

where nobody understood what was happening. like the people you can go and see, you know, what people own and, you know, what their exposure is on in the equity books um and they can go work with their primes to do that and then there's like, you know, real risk management at these these primes that are are adding leverage on it. So, it's it's unclear to me that um that point of view makes a lot of sense. Um, but NIX like I think is completely fair to the point we made earlier like yeah, if you're buying this thing at 105 cents and you're hoping it trades at a premium, maybe it structurally should because like you're getting some 10, you know, 10% yield uh every year, so it should trade at 1.1. But if you're expecting if you're buying at a premium, you're expecting someone else to buy at

a premium, like that strikes me as, you know, potentially a very uh risk trade that um is is hard to to underrate over a long period of time. Yeah. Yeah. Uh, anything else on digital asset treasury companies that you're thinking about? No, except for, you know, what did you think of the one where the uh they're buying punks in one of these now? Uh, did you see that? Oh, yeah. Um, what's it called? They they bought they bought Lesser's Punk. Yeah, they bought Leser's Punk. Um, I'm blanking on what the name is, but that was a little bit crazy to me.

Yeah. I mean, that Oh, Game Games Square. Yeah, Games Square. So, Gamesquare paid just tweeted. They said, "Game Games Square has acquired the iconic cowboy cowboy ape number 5577, Crypto Punk from DeFi pioneer Rob Leer, and a $5 million strategic investment. We added 10 million of ETH to our treasury, bringing total Ethereum treasury holdings to over 52 million. Um, yeah, I mean, this is this is just this is silliness. I I think that's I don't know. I don't know how to I mean, what's the market cap of this company? Hold on. Let's look. Yeah.

Let's see. What is the market cap? $125 million market cap. So, you're spending, you know, Yeah. I mean, they raised 100 million bucks or they sorry, they raised 70 million bucks and they, you know, spent some of it on a on a on a punk and then bought some ETH. Yeah. Yeah. I mean, yeah, it's not the time. I mean, I can tell you like, you know, Blockwork sits on crypto and for the last two years, we've been like, we're not selling this crypto. We're not selling this cry. We're now we're now like aggressively trimming our crypto positions because you are.

Yeah. Yeah. We're starting to I mean we're not a hedge fund. We're a company that has operating expenses and I'm not in the business like Yeah. when I don't know ETH is at 2,000 or like soul is at like $20 like we're not we're not or Bitcoin's at you know 30k like we're not selling that. Like that's just objectively like a bad idea to sell it. But yeah, Bitcoin at 120 and soul at 200 and ETH nearing four like yeah you want to start we're going to lose a lot of upside. Sure, cuz like the most amount of money in a cycle is made at the very end, like the last 30 to 60 days, but like that's not the business of block work. So, yeah, we'll we'll start really aggressively trimming our crypto position this quarter.

How did you guys make that crypto? And then how do you actually manage your like treasury strategy? Um, we manage it very conservatively, I'd say, where yeah, like I just said, like I, you know, I am in a bunch of founder group chats and stuff like that and I think we're trimming earlier than most are, but our mentality is like in an industry as volatile as crypto, the sometimes all you need to do is survive. And to survive, you need cash. And I know everyone says four year cycle's dead and stuff like that, but I think Mike and I maybe we just have we're just too scarred by the last eight years, but like we we still believe we could go into like a a pretty nasty draw down at some point. Maybe it's 26, maybe it's 27, I don't know. But I' I' I'd rather

be overly safe than uh than too aggressive with the with the Treasury management. So that I think that's how we think about it. This episode is brought to you by Geonet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics. Geodet shows that blockchain can be a truly transformative force. By delivering real-time centimeter level accuracy, Geodet enhances emergency response, boosts construction precision, and enables advanced navigation for drones and surveyors far beyond the

limits of standard GPS. To find out more, click the link in the show notes or follow them on X. Hey everyone, Jason here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy, nononsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitwise's chief investment officer. He's been on the show before, and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one.

The Bitwise weekly CIO memo is really worth the 5 minutes of your time. Check it out at bitweisinvestments.com/ciome/mpire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risks associated with crypto before investing. As always, investments in blockchain technology involve risk terms and conditions apply. Let's talk about pump. So, let me pull up the price of pump. What is it? 03 03 even below that.

It's down to it's down it's sub3. All right. All right. Here's the chart. Sub3 billion dollar uh FTV. Um Santi and I were doing the roundup last week. Um Santi Santi asked me he said uh could this hit My god, I'm getting targeted for Aman Aman resorts. That's how you know it's a bull market. Gotta close that thing. Um um bull market, baby. Yeah. Yeah. Exactly. Uh three uh Santi said, "Would do you think it'll hit 10 billion or two billion first?" And I said, "Two billion." Um what do what's the dynamic that's happening here? Why is why is Pump basically I mean this chart is down only. What What's going on outside of the his uh tough interview with Thread Thread Guy, which I don't

know if you caught any of that, but yeah, that was tough. Uh that was not good. And so I said this two weeks ago, I think when I was on, you know, we talked about like what what we thought would be the outcome. And I think I mentioned to you that uh two things had happened that I'd heard about. One was is that they had upsized pretty significantly the amount that they were going to go that they sold to the liquid funds. And so originally they had they had told people or at least I had been told that they had told people they were going to raise $250 million from the liquid funds and then the rest was going to be you know to to retail. Um and then when they you know kind of released the tokconomics it looked like it was like more like $770 million to the liquid

funds. And so, you know, that alone had raised people's concern that there just wasn't liquid fund demand anymore. Everybody had gotten filled on the demand they had. And so, when it launched, there was an expectation that frankly everybody there there was no buyer left who had like real size, right? And I think we we've seen that play out pretty significantly. um a lot of because it was unlocked 100% uh at the you know at the outset we saw a lot of people dumping right away when uh you know on a 30 40 50% um gain we you know there was a lot of people had hedged between that period of time because there's pre-market pers on hyperlquid and and others um so a lot of people had like hedged that you know 30% gain and then got out of it really quickly people

were essentially trading around it they weren't you know functionally um you know really bullish about um being long. But I think the other thing that has happened here is the the protocol itself has been getting absolutely crushed in market share the last week. And so if you look at the um the 30-day metrics, pump has now less than 50% of the market share relative to to Bonk or Bontop fund. Um if you look at the 7-day metrics, the uh pump is now like 10% market share. like they have gotten absolutely crushed in terms of users.

They I I believe are now under um 10,000 tokens uh getting got launched recently um which is like the lowest they've had in a in a really really long time. This chart you're talking about. Yeah, this chart exactly I'm talking about. Yeah. And so if you look, you know, all the way to the right there, um on the on the last week, you know, bonk is is is by far and away the biggest, right? And you look at you know all those other weeks it's all pump right and so the the there is something happening here which is you know either people were only farming the airdrop before now that the they're not farming the airdrop they're more excited about bonk a better product maybe um or they think there's going to be you know some sort of um you know bonk airdrop as well

there's also I mean we talked about this a couple weeks ago but bonk is sharing more uh revenue with with the creators and so there's more you demand from or there's more incentive from the creators themselves. And so I think this tells part of the story as well, not just you know the dynamics of the um of of the the share and the ICO itself. Yeah. Um how low do you So this was the debate at dinner last night that I was actually sitting in your seat. You you missed a good one. Um uh some So the person to my right said they are aggressively with leverage longing pump.

Uh the person to my left said it's going to 500 million. Which bucket are you sitting in? Uh, I'm definitely not aggressively with leverage. Long punk. You know, it's funny. I've So, I've been tracking a little bit all the all the way down and like every time it has like a little dip, uh, the funding rates on Hyperlid just blow out. Like people are like clearly, you know, playing paying 50 60 70% um, annualized to go long with leverage on pump and they just keep getting liquidated all the way down. Dude, there's a lot I've never seen so much people so many people trying to catch a falling knife right now every time. Yeah. Yeah. Yeah.

Um I don't know how it goes to 500 though because like the balance sheet uh value the book value is is higher than that, right? You know, they raised uh Right. The book value is two. So, it's got to My thought is if it gets near two, I mean, you you you should long the hell out of this thing was my thought. But yeah, I I mean I think that's right. Right. like they're it's unclear to me if they're dividending out or what they're going to do, you know, from a team perspective, but yeah, I mean it it's it shouldn't trade to 500 if they have $2 billion worth of cash on hand. Interesting. Um okay, let's go back to the beginning. We were looking at um we're looking at the price the 7-day price of all these things and it's up up up until you get

to Hyperlquid which is um one of the worst performers on the week. It's down 8%. How much of this has to do with the fact that uh Coinbase announced that they are launching PERPS and people already knew they were launching PERPS but I think it I think it did launch um yeah it launched like three days ago. Yeah, per have arrived in the US. No monthly expirations trade with up to 10 times leverage fees as low as um uh two bips. Yeah, I I think the price action has basically zero to do with that. Uh, okay. Like, like Coinbase has had per internationally for a while. And, you know, these PERS in the US, uh, obviously, you know, they're not exactly a per. It's like a 5year uh, future, so it's a longdated future. Um, if you look

at the the volumes and the OI in the first few days, uh, this this week, like they're not particularly high. Like, uh, Hyperliquid is still significantly higher. And it's not clear to me that you know the US KYC user base is hyperlquid's core user right so I think you know in the US my guess is that a lot of people are using hyperlquid are people who are not KY not wanting to KYC necessarily and then there's a lot of like people outside the US who are using it. I I don't expect that the core user uh for hyperl will be the the core user for Coinbase. I I would also just I would make a point. You had that coin glass um uh page up earlier, right? If you look at the open interest relative

to the volume of on BTC uh perpetuals of Coinbase. So, scroll down here. They're uh I think they're number 20 or 19. Yeah, number 20 there. So, they're number they're number 20 in BTC open interest was like 295. So you know below a lot of others including significantly below hyperlquid and then their open interest to oi on the 24 if you go to that righth hand column is.1633 right if you went and looked at CME or Binance at the top you'll see that that um uh is much higher so CME is you know 1.66 66 Binance is 6 OKX is.5 all of these guys for people for people listening this is

open interest to uh open interest to 24-hour volume yeah open interest divided by volume which means um if if that metric is higher meaning that the open interest divided by the volume is higher there is uh more people who are actually like takers who are long this position right if that's lower it means there's a lot of volume but not necessarily people who want to hold the long risk over time, right? Or the not necessarily long could be short as well, but they want to take the leverage risk over time. What does that imply to me is that Coinbase is saying they're doing a lot of volume in this product, but it doesn't sound like they're doing actually volume from people from like takers. Sounds like what they're doing is like quantity.

Yeah. One of the market makers and they're probably incentivizing a lot of that volume. So, when I look at this, it strikes me that Coinbase has basically no demand for the product at at this moment on a relative basis. Wait, so let me translate that a little bit. So Coinbase has all these relationships with the institutional crowd and the market makers and stuff like that. And so they're saying, "Hey guys, we've got this PERS thing. Can you please come over? Maybe we'll give you a little incentives." Or maybe it's just like we've got a long-standing relationship. Please please please come over and uh make make markets on these. Um yeah, they're probably paying people for volume. They're they're probably that's probably negative units.

And so but then but then you've got a market where it's a bunch of make market makers, but there's no you're saying there's no users in retail on this thing. there's no retail users and there's no like sophisticated institutional like long oriented takers as well or the people who actually want to take these positions over time and and Coinbase has been since they launched per internationally you know a year ago or so they have been the worst on this metric and so it feels to me like that's just uh what's been happening this this entire who who will win this Rob is this like a hyperl keeps winning it is this um I showed off this app that I keep degenerately trading on called Loot Base um is this uh like someone like one of these apps Does it? Is it a Is it a

Robin Hood? Is like will Coinbase gain? What's who who wins that market? Yeah, it's hard to bet against people with a lot of distribution already. So, you know, I know too bad Santi's not here who can tell us how bullish she is Robin Hood still. Uh but you're you're you're How was the original Hood Hood launch? Uh but yeah, I mean it's hard it's hard to see how like you know if Robin Hood uh launches burps to to their users, they don't do a really awesome or they don't take a lot of the market share. Yeah, we've continued to see Robin Hood take market share from Coinbase, you know, over the last year. I I think there doesn't have to be one winner, right? Uh I think we'll continue to see um you know, the current exchanges that are doing well continue to do well. The

interesting thing is it was just uh I guess a year and a half ago. So it was like November of 2023 where CME open interest uh surpassed Binance open interest. And now if you go up and you look at the top on that Bitcoin um uh chart that you were just showing, CME open interest is um uh like multiples of uh or no not multiples. It's it's but it's pretty significantly above of Binance like 20 20ish% 25-ish percent higher than than Binance.

I mean to give if people haven't looked at this. So CME's open interest is 18 billion. Then you have Binance is 15 billion. So it's close but then it it really drops off. I mean buy bits eight. OKX is five. Gate is eight. I'm surprised Gate is that high honestly. I'm not sure it's that high. So yeah. Yeah. Yeah. Fair. Fair. But it really drops off. I mean, yeah, Coinbase is 300 million compared to Yeah. Even Hyperlid is is four billion. So, like, you know, significantly higher.

Where did you see that Hyperlid data? Uh, scroll down a little bit. You just passed it. Oh wow. Yeah. No, so I think Yeah, you were you were I see. Yeah. But but I think I think the point here is that like we've essentially seen the market kind of fragment, right? So like the sophisticated institutional uh traders and takers like they they're especially in the US like they're on CME right that's where they've been the CME has been the leading platform since um since call November of of 2023 beyond that it's been basically a Binance buybit maybe bit and now hyperlquid story right and you know these are you know the retail users many outside of

the US who have been using this uh type of product at these exchanges is for for years, right? They're not probably net new to this. They're, you know, people who probably started on BitMX back in the day. And I think they will continue to do well, frankly. Um, but I do think it's, you know, Coinbase is sort of trapped in a middle area because they want to sell to institutions. That's 80% of their volume, but they make all of their money from retail. And these retail guys are on, you know, these places that have, you know, just more. They offer more leverage. They offer more products. They're a little do you think the Darabit acquisition will help this? I mean, we've got Darabbit here, two 2.7 billion.

It probably will on the institutional side. I mean, Darabbit uh their futures product has been, you know, pretty mediocre, but they're they're by far and away the leader on the options side. And options is definitely more of a you know differentiated uh product for like sophisticated institutional users especially when you have per that you know is much better for for retail users anyways already. Mantle is pioneering the blockchain for banking a bold new category combining traditional finance with the power of web 3. With UR, the world's first onchain money app, users can manage fiat and crypto side by side using a Swiss

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All right, let's let's shift gears a little bit um to the other side of the market which is NFTTS. Um so we've got uh the kind of big news is that uh the punk the punk's floor was getting swept uh and punk punk started ripping. Punks went from oh yeah here's the chart of punk. So punks were down at uh trading at like 38 39 ETH about a month ago and now they're almost at 50 ETH. Um and that that price action is kind of the same for a lot of other NFTs. So, Lil Pudgies are up 23% week overweek. Pudgies are up 30%. Um, mutant apes are up 14%.

Uh, ringers are up 100%. Um, yeah, Node Monkeys up 11. Taproot wizards up 20 19%. Uh, Mi Bits are up 30%. Doodles are up 16%. Is this just like is there anything to make of this other than people are making a lot of money on chain and they're flipping into what people always flip into which is like flexing on chain? I don't think there's anything else to make of it, right? Like all of this stuff is linked. We talked about the the meme stocks. We're talking about you know people trading you know on alts on in crypto like now people buying NFTTS who at a time where um ETH is up like you know what is it? it's up like 150% off the bottoms right in April, right?

And so when you take all that into account and you know people take a little bit of profit, they try to rotate it into something else and especially they try to rotate it into things that haven't um you know yet had that you know similar you know pump uh that that you know something that they already had owned and so I think that's really all to make of it. Um but I curious if you have a different perspective because I think you're probably deeper on NFTs than I am. No, same exact rotation that happened a year ago. People made a bunch of money and they rotated into memecoins. Now people make a bunch of money and they're rotating rotating into NFTs. I think it's I like the way I see it is what's happening right now is like quote unquote the real cycle and what we

got in the beginning of or uh in 2024 was kind of a it like a jump start. It was kind of what I'd say DeFi summer was. So you had 2020 you had DeFi summer, then the market cooled down a bit and then 2021 you just had an allout ripper of a bull market. every everything was going up compared to 2020 where it was really just like I don't know Bitcoin and some other coins but mainly like DeFi. It was kind of a contained bull market. That's how I would say 2024 was. It was like a contained bull market and now it's a everything in the industry is going to go up. You the the dino coins are going to go up. Meme coins are going to go up.

NFTs are going to go up. The L1s are going to go up. The L2s are going up. Right? Arbitum was up like 80%. Right? So now it's just an rip your face off type of bull market where it's it's tough to really go wrong. I will say the place where you will go wrong that right now is overtrading and trying to chase different things. That is the only real guaranteed way. If you just sit back in something right now you you probably will make money. You just might not make as much money as the person on Twitter who's tweeting about how much money they made. But the guaranteed way to lose money is to chase every single trend. because you'll always be behind.

Yeah. Yeah. And and by the way, most of those guys on Twitter are larers, right? Like they're influencers. Like they're they're full of to be honest. Um and so like comparing yourselves to them is definitely not the way to to be like thoughtful about how you manage your own money. I think the I I completely agree with your point about like listen, we're just seeing more retail driven rotation in the way we used to see before relative to I think to your point about 24. I think we also just saw a lot of institutional capital, especially into Bitcoin, you know, ahead of of the election. Um, and I think it's it's worth it to keep in mind with the NFTs that like, yeah, all of these are up a decent amount by a a percentage basis, but I think like the total NFT market cap is up $6 billion in that in in the

last, you know, week or so, which is pretty dimminimous, honestly, on a relative basis. Yeah. Yeah. Yeah. Totally. Okay. Um, moving back into maybe more the institutional side of things, there was uh I actually thought the most interesting announcement of the week was uh this which is that PNC is gonna offer crypto through Coinbase. Um, and so what this does is uh crypto trade here. Actually, there's a better I won't pull up my own tweet. I will pull up uh the head of crypto as a service at Coinbase, this guy Brian Foster. Uh so Coinbase uh I'll read Brian's tweet. Uh Coinbase equals infrastructure. We're excited to partner with PNC via our crypto as a service platform, enabling PNC clients to trade crypto and use USDC. We're powering over 240 banks, brokers,

fintex, exchanges, and PSPs. And on a mission to help arm the financial institutions to build leading crypto products for their clients in every major geo around the world, spot trading, regulated futures, pers, trade finance subcustody non-custodial wallets, embedded payments, USDC based tokenization, and more. Um, I thought this was a really interesting announcement because not only does PNC get the ability to offer crypto trading to their customers, but now Coinbase gets more banking infrastructure, uh, which is just like furthers Coinbase's push to become to become a full-on bank. I've always said that like the main thing that Coinbase is missing as a product set is, uh, the just like the last mile of banking, like the ability to accept and send wires.

Yeah. just like a few other things like that. And so I think maybe the PNC partnership will help with the help them with that. And then I think it's just yeah important to take a step back and realize that two years ago PNC was debanking people who owned crypto and now they're offering crypto trading to their customers. Come a long way. So yeah, we've come a long way. I I think it's it's very clear like with the Genius Act uh that we're going to see pretty much every bank try to, you know, enter the space in some way, whether it's stable coins, whether it's crypto trading. you know, we had the um the Fiserve announcement, you know, a few months ago around, you know, offering crypto or offering stable coin access to their community banks. I I think it's very clear the direction of travel is is

really good. This this type of announcement though does remind me a lot of 2021. We got a lot of announcements like oh like you know FIS and Fiserve and you know these community banks and this bank I think there was US bank announcement back then there was a uh a Bank of America one a Wells Fargo one back then that was all around like trying to access or allow access to crypto for for their customers and these places are are that's just not what people want out of their checking account typically they want to be in some other you know platform where that serves their financial needs whether it's trading uh etc. And and they also these places are not digitally native

like they don't offer good product experiences. They don't offer good user experiences. The products are really thin. Typically it's usually you know just call it like buy and hold type products. And so it's never been clear to me that like these types of announcements are anything other than a good headline. Now it implies something good about where the industry is going but it's not clear to me that you'll see any real volume on this. I would tell you I was I was talking to somebody uh maybe it was a couple days ago who was saying hey listen like we we've been talking to Ferve about this community bank stablecoin product and I can tell you for a fact it is less than a million dollars of volume since they announced it a couple of months ago right and so like listen and I think that you that's what

you see a lot of uh in in these announcements they're meant for headlines but what is also happening is when you look at you know we're in earning season right now for Q2 every single corpor corporation is clearly feels the pressure that they need to talk about stable coins at least or they need to talk about crypto in some way because you're seeing it across all of these earnings calls. People are getting asked about it. It's clear that their boards are talking about it. They feel like they need a strategy because, you know, the US legislature is putting their weight behind this now and there was going to continue to be a um an excitement and acceptance of of crypto in this space. So, people want to be putting out these headlines. they want to have a strategy, but it's unclear to me that they actually mean much in the

near term. Yeah. Yeah. Yeah. The other one that was interesting was uh JP Morgan's eyeing Bitcoin back loans. So, like a month ago or a couple weeks ago, they said that they might uh or that they will let you borrow against your crypto ETF holdings. Um and now they're Yeah. Now they're eyeing Bitcoin back loans, which is interesting. So, yeah. I mean, that's great. So, I mean that why wouldn't their high net worth, you know, uh division do that? There's a lot of, you know, very rich Bitcoin people who um don't want to sell their Bitcoin. And, you know, it's it's no different than I mean, famously like Adam Newman took out billions of dollars worth of of loans to JP Morgan, you know, secured against his private stock.

You know, this is a more liquid collateral. So, like why wouldn't they do that? Yeah, exactly. You following Galaxy's stock? Yeah, it's whipping. It's actually funny how much they're they're leaning into this data center side of their business, though. It is. I think their data center business is now larger than their crypto business. Is that right? Or or will be soon. Yeah. I mean, they got so I don't want to say lucky, but like they got pretty lucky with some of their Bitcoin mining miners that they um that they uh that they lent to who then couldn't couldn't pay and then they seized and then they got the electricity contracts and then um I don't know. We have we have Novagrats coming on the pod soon. I'm going to get into all the details, but um yeah, just up 160% this year.

Um, anything else we missed? Market structure bill came out. I don't know if you read it. I didn't, so we can skip talking about it, but there's like an early early iteration of the market structure bill, I guess. Yeah. You know, and it passed the House, right, which is great. Um, in a bipartisan manner. I I think there's, you know, we'll see what happens in the Senate. There's definitely I think a lot of debate around like how good the current version of it is for the industry. Um it doesn't actually give that much clarity even though it's called the Clarity Act on like you know how or or a token might be classified as a security versus a commodity. It kind of tries to punt more of that specifically to the um the three-letter agencies themselves. Um but again it's a

good thing for the direction of travel. I I think uh but there's a lot of devil in the details in that one specifically. Same thing with Genius Act, but you know, I think Genius was a little bit more, you know, down the center and and much easier to um to understand and for people to get excited about. Yeah. Yeah, definitely. Anything else you're you're paying attention to that we we didn't cover? No, I I I mean, I think that's it, right? So, the the markets, the digital asset treasury companies, like that is what everybody is talking about. I don't know, you know, in your chats, the people you're talking to, that is it's all I mean, I'm getting I I think I get two calls or emails a day about these. It's crazy. Yeah. Yeah.

So, um, content of the week, you got a wreck. People liked your fiction recommendation. They did. They liked it. Yeah. I've got one. Um, I listen to there's a podcast called Lenny's podcast which is the biggest podcast for like product managers and product people and uh he did an episode with uh this guy Dan Skipper who's the CEO of a company called every uh it's called the AI native startup five products seven figures in revenue 100% AI written code and it's a good peak into uh the podcast called Lenny's podcast good peak into what a 100% AI native business looks like. So, I would I would

recommend that to to operators out there. Okay. I I've um this is kind of a a uh an one that's like straight down the the middle, but there was a um there was an OddLocks podcast last week about what um what AI was doing to the legal industry. Uh that I actually thought was like fascinating. uh and it I think it's a harbinger of what's happening to a lot of these service verticals and these these service industries and you know there's a there's a bit of I think maybe concern around like what the future of work looks like in AI. I've been a little bit on the other side that like my expectation is like this is net good

for everybody. It's GDP expanding like people will find other things to do with their time and we'll just all you know be better off. Um but I think people are worried about about how work uh gets done and so I'd listened to the one on the legal industry about um how people are adapting to that on all. I thought that was that was awesome. Yeah. Yeah. Long your positive long-term or short term? I I'm positive. Uh I mean I think short term people overstate what we can get done. People always overestimate what can get done in the short term and underestimate what can get done in the long term. It's always true. But I'm positive uh for both the short term and the long term.

Yeah. Yeah. Um Rob, thanks for coming on. Thanks for having me. Appreciate you. See you guys. Uh we have an episode with the one and only Charles Hoskinson on Monday. So, we're recording that uh later today. It is either going to be a hilariously good episode or a total flop of an episode, but you'll have to tune in on Monday to see. Are you guys gonna talk about Midnight? Are you gonna talk about Honestly, I don't think I'm gonna ask him one question about Cardano. I plan on asking him about his like why he spent 10 million on a Blackhawk. I think he's the largest owner of Buffaloos in the entire United States. I do want to ask him how he how he got Cardano in the hands of every Uber user, but no, I don't plan on asking him too any technical questions about Cardano.

All right. Well, I didn't know about the Buffaloos. I definitely want to know more about the Buffaloos. Yeah. Yeah. He's also trying to find like aliens in the ocean. So, like I said, could be a great episode, could be a flop. We'll see. All right, folks. Rob, thank you. See you guys on Monday. [Music]