How BTC's Rally Could Kickstart Crypto's Flywheel | Roundup

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-hosts 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 thanks this episode is brought to you by velora valora is the easiest way to send swap collect and grow your crypto on the cello blockchain download the app and start exploring dapps like badali today at veloraapp.com forward slash Empire

alright everyone welcome back to another Roundup edition of bell crab you got Michael's one and two Vance piano Alice welcome you're the bear piano so I I forgot to say I think the uh the biggest news of the the week just dropped like about 30 minutes ago uh the Warriors are getting Chris Paul really yeah no for Jordan pool wow this is this is the part of the conversation where Mike Taps out I uh I did hear last week I actually listened to you guys did hear that you guys were having a debate about Mike versus my athleticism and uh I got better AI than you I'm just gonna say it I got better and I I'll just I'll just say it's not

even if that's Mike how closely you follow Sports novel for you like I got some photos of Vienna playing with ball at the charity tournament right where uh don't don't make don't make me out of those things actually that's a total block neither one of us played neither one of us a bunch of two sub 30 year olds with blown out backs yeah yeah I hate to see it you couldn't even step to the Wiffle ball playoffs actually I actually saved one home run but tumbled backwards and it was looking bad up there signed up for like three months of PT after catching that thing laughs oh my God yeah we're playing like these

like blue collar like 50 year old guys who just they look like they everyone I think we were the only one that didn't have like matching matching outfits for that for that thing yeah taking it too seriously anyway yeah um all right why don't we just launch right into the news of the week I think the the big headline is obviously the ETFs so this actually happened at the tail end of last week but BlackRock announced that they were filing for an ETF BlackRock is the largest asset manager in the world they've got nine trillion dollars in assets under management and their record for getting ETFs approved is 575 approved to one not approved so pretty good post BlackRock

there's just been a slew of uh other ETF issuers that have filed so we had bitwise reignite their their ETF application same with Invesco same with wisdom tree so pretty big week and prices have responded so bitcoin's sort of leading the charge it's been a very good week for Bitcoin and the rest of crypto so what do you guys I mean I know it's been talked about a little bit but what are your guys takes on this I think I think initial take is just like sentiment flips on a dime like people can't even remember how they felt two or three weeks ago and you have like CMS intern memes you have fractals to 180 200k for Bitcoin you know people are like expecting this

to get approved next week so it just shows like how fickle sentiment is and to me you know bear markets are when price doesn't go up on you know good news and this is like very much price going up on good news and it's kind of like a solution to a lot of the existential consideration the asset class in terms of like are we ever going to be led into like the kingdom of Trad five and I think you know November December January it was like probably not slash never um and now it looks like you know there's gonna be there's edx the Citadel exchange there's um the Soros fund coming out and saying crypto has a place Jerome Powell says crypto is not going anywhere you have the spot ETF which is like you know

looking like it gets considered um and it's not just Bitcoin like there's a gonna be a plurality of these things like if if Bitcoin gets considered and approved you know each is probably next after that and so yeah it's good to see um and all of a sudden like you know you look at the chart the previous all-time high of Bitcoin was like I think 69 000. and we're at we're at 30. once you kind of get to like 50 of the drawdown erased people start thinking you know all-time lie that's just how yeah people start thinking we're close I mean you could see it in this in the social sentiment they're these like different tools that track social sentiment six million people tweeted Bitcoin ETF

six million people tweeted Bitcoin ETF last week um and it's like it's always like the cold star problem because things like Bitcoin and eth are more likely to be successful the higher the price is which is the opposite of every other tech company you know if like if it was up 10x it's more likely to go down south at that point like something wrong the business fundamentals don't justify that but like things like digital gold or things that are reflexive like Heath if you can get the cold start solved and you get people talking the flywheel started um you know if people if if Bitcoin goes over 40K people are like thinking like next six to nine months like all-time high that kind of feels like where we're

gonna go at some point so my my 100 agree with all that um I think the other take here the additional take here is like let's think about this in the context of the timeline where you've got over the last few weeks over the last few months just terrible sentiment from Regulators as to wanting to blow this industry up you know drive it into the ground you know it's never going to be illegal in the United States then you've got the largest Partners uh of asset managers and largest asset managers in the space investor Wisdom Tree and BlackRock um and Fidelity Citadel Charles Schwab all coming out with positive sentiment positive news a desire to move in that

direction and I think that it kind of turns it around instead of you know when we were talking about this last summer we were all thinking okay one's going to be the the Jay Powell pit put I think now we're talking about the GG put when you've got all the stuff happening in parallel when you've got these massive asset managers coming through and saying hey we're actually going to step out and support this you you kind of assume that it has been de-risked from a regulatory perspective from a reputational perspective from a business perspective for these and and this is maybe you know one read of why these black rats of the world are putting out the ETF there may be other reads maybe this is just the straw man or maybe this is just a signal I don't necessarily buy into that

um I think those are a little bit more contrived perspectives but if we think about this also in the timeline of what's happening in 2024 you know there is positive sentiment with what has what we know is coming in in probably Marsh of you know the happening of Bitcoin and the timeline for these ETFs potentially getting improved is 240 days which is I think in February or March of 2024 like there there is just sort of a new narrative obviously all of that coincides with one of the most negative sentiment periods of time I've seen in crypto in the last seven years and there was a massive amount of short interest happening while that negative sentiment was happening it was one of the most low volatility periods that

we've seen um and I I think a lot of the move up was definitely a short squeeze but then it was also driven by positive narrative what happens going forward who who knows but I do think we're going to see a lot more positive movements and it's really going to come down to a regulatory fight and you know is it going to be the market structure bill or the draft bill which is now like I think that was actually one of the biggest things that came out over the last couple of days there will be a vote on that on July 19 out of committee and that that is a huge step forward that'll be the first time that we have a regulatory bill that's Pro crypto at least supportive of crypto going out for a vote so it's it's all of these news stories coinciding in a

backdrop of the most negative sentiment period of time from a regulatory perspective so I I think that's my quick and dirty yeah can we just remember that just last week we were talking about whether or not this was a worse cycle in terms of sentiment than 2019 right that was that was one week ago that that was a legitimate question that was getting floated on Twitter now look where we all are yeah what do you think that BlackRock so this comes on the back of two interesting things right the SEC is currently in a lawsuit with grayscale over grayscale on ETF and also the SEC is currently suing coinbase BlackRock is filing a spot Bitcoin ETF using coinbase custody on the back end right so like what do you think that

BlackRock knows here that the rest of us don't know is it just that they know I mean yeah what do you think about uh I I think like there's two schools of thought one is is like this is a line manager on the ETF product Suite that just like threw this in and is like hoping to maybe get in front of other people you know get in position if grayscale wins um just like wants to be considered the other school of thought is like this is coming down from on high from Larry Fink you know directly and he's like Giga brain 60 chess trying to like do you know all sorts of things within the Democratic political machine he thinks

that coinbase is you know something that he'll use long term like I've seen all these conspiracy theories it's probably somewhere in the middle um I'm surprised I'm surprised none of the four of us showed up with the tinfoil hat on right like you got me I would have done that I just didn't you don't like the uh you don't like the take like this is the the entire past year was a giant Inside Job coordinated by by Wall Street parasites and government Regulators so they could catch up to the old Bitcoin I feel like that's like just table Stakes I don't even feel like that's a conspiracy theory um it's also like kind of too obvious maybe for me like like double agent conspiracy theory like conspiracy theory to The Conspiracy Theory I I don't know if if uh

there's really like any inside track here I think it's more of a forcing function of like this is gonna happen eventually and I think now it's gonna weigh on Market sentiment is like I don't think this is maybe this gets approved in the next 45 days that's what this guy Eric falchunis from Bloomberg yeah and he's like way more knowledgeable about egfs than I am I also think there's a like a a high likelihood the gear against or drags us out until till Friday yeah like between now and February what are we all thinking it's probably somewhere between the sentiment that we had before and the sentiment that we had now I I think also just to address the conspiracy theory stuff because many people are oh well right after the SEC enforcement action you know all of these

stratified things first of all we'll talk about the exchange as well but you know that ndx ER what is the name of that exchange edx that was announced a long time ago so all of this stuff has been in the work the way these institutions work isn't to you know do a snap decision here and hey let's roll that exchange out because you know Bitcoin is down that's just these things take a much longer period of time the other thing is I I just look I love a good conspiracy theory I'll wear that Noah t-shirt thing but I think the simplest Occam's razor explanation to this is just that we were we were morons for the last two years I mean it's much simpler explanation for me to think that the institutions saw that there was something here they wanted to get their piece of it they weren't gonna decide to

participate when we were being full stream morons this feels like a good opportune time I don't even think you have to be a conspiracy theorist to believe this this is just good business strategy from their standpoint all these guys love a bargain you know yeah yeah like how many of them been hurt just like by buying things that were zeitgeiste and you know like AI is like fully bright it's like I don't I don't know what we're gonna do with that but like if you do anything now you're probably gonna buy close tool or the actual top crypto is beaten down but it's not going anywhere Bitcoin even at these prices is like a 600 billion dollar asset 500 billion dollar asset like people think like the Bitcoin has failed as an experiment but it's like the biggest alternative store value that exists

this is going to be something that's important I think they recognize that I don't know if there's any like imminent approval coming but you know like I said like you know if you have a few wins on the on the legal slash litigation side which coinbase seems to have you have a tactical Narrative of like you know um try advice starting to get behind this this is kind of um like what happened in the last bear Market honestly and but like you know sub out some of that for like Michael Saylor starting to buy Bitcoin and telling everyone it's legitimate um Tesla Tesla you know all that stuff and one of the things that I find super interesting about prior Cycles is that if you ask somebody to remember or to recall to you what exactly happened and

when it happened they would have no idea what what actually happened it was just too much Euphoria too much craziness like they wouldn't be able to tell you the order in which the assets went up but like Bitcoin every cycle leads you know like I'm just looking at this chart right so so this is the BTC dominance chart let me just throw out a couple numbers to just to illustrate this so December 2020 you know crypto has bro or Bitcoin is broken through its all-time high it's at 34 000 by the end of December eth BTC is at 0.026 didn't didn't basically move Bitcoin

ripped first and then you have you know from March 2021 to about May you have that ratio effectively quadruple and so like you know you kind of need to get the simping for Bitcoin out of the way early um and it like it's a very digestible asset it's a very simple narrative it's very easy but it's kind of the gateway drug to all these different things you help all these different Assets in crypto and I think that's kind of what I'm framing this in my mind as is like okay this is probably the start you know if you see this big Bitcoin dominance move up this is probably the start I I would I would agree with that fence

and well I think it's you could even look at um yeah I think there's two there's two ways that I think about Bitcoin dominance which is there's sort of a secular Trend and then there's a more cyclical Trend that can be kind of useful to you the secular trend of Bitcoin dominance is downed you know over a period let me zoom out a little bit more if you go further back right and before 2017 it was you know about 95 dominance and it's you know if this was a stock chart right it looks like it kind of bounces here and now it's going to bounce again but it's going to make lower highs and I expect that to continue to be the case because a lot of the Innovation and value that's getting created in crypto isn't just concentrated in Bitcoin anymore I think that's a pretty healthy thing but

cyclically I think you can you you know Bitcoin dominance tends to bottom at the absolute Peak right of Mark Euphoria this is January of 2018 and then it's kind of the first thing to catch a bid as well on the other side so this might be the beginning of that process so I basically would just agree with you and then you know you can tell here Bitcoin dominance peaked in December of 10 2020 and then it was basically down only when everyone rotated into Ethan alts and those sorts of things yeah I I think it's a really healthy indicator that shows that money and interest are flooding into the space because I don't think you're gonna I agree with what band said like I don't think you can have a bull run um until until this Bitcoin dominance

starts to rise a little bit because at the end of the day like bitcoin's not really getting moved from retail buying right now it's getting moved from institutional buying I would assume um and I think this shows that like there's the first real spark of institutional interest back in crypto and you know probably a year and a half here so one of the questions we were discussing earlier today is what does an a spot ETF uh let's say BlackRock ends up winning it Blacklock gets to distribute it to all of his financial advisors who are selling it into the sales force of BlackRock like what does that actually do to bitcoin the marginal buyer you know there's some analysis that we've seen where it says if for every dollar that you put in it has a 15 to 20 x

dollar uh multiplier in terms of the market cap like where do you think do you think that there's enough net interest right now from ETF purchasers to to Really drive a new narrative not from ETF purchasers I I think I'm just scarred by that that specific Narrative of like you know the institutions are coming they're bought they're like putting Bitcoin on their private platform and they're in their private wealth management platform they're all gonna buy because now for the first time ever they have the ability to buy directly from the JPMorgan Private Bank Club I think that narrative it's probably why I'm gonna miss the next web3 social or probably because I'm so scarred by that narrative um I would push back on that I've you I've viewed those as different things they're sort of the you know corporate

blockchain not Bitcoin arguments but I've I've always thought it'd be super bullish if you could just buy Bitcoin directly from your you know Fidelity brokerage which you can't now you can do I think yeah I just think once that like an ETF would first of all it would give a a real seal of legitimacy you know a lot of the conversations about is this going to be legal is it not going to be legal so there's the actual flow sort of component in terms of how much demand is it going to drive but then there's the credibility argument I think they're both I think they're both powerful here's a here's a maybe it's I don't know what you guys think of this take but I I think that maybe the SEC thinks that they just can't win the grayscale case and they're gonna roll over on bitcoin

while still trying to kill the rest of like protocols and like the long tail of crypto assets so maybe they roll over on bitcoin but keep trying to attacks yeah give the industry a win yeah I mean like make them look reasonable I think maybe the SEC realizes that they went a little too far um and that seems to be the sentiment in DC is that uh that Gensler extended his hand too much so like maybe this is them pulling back a little bit but I don't I have no idea unfortunately I don't think crypto unfortunately for them I don't think crypto works that way right if you did this with stocks if you said that you know Tesla is the only legitimate EV automaker sanctioned by the government all the other EVS would

would tank um all the EV companies would take if you do that with crypto if you say that Bitcoin is legit we're going to give it a spot ETF what's everybody going to do if you're going to buy alts like that that it's a global game there's exchanges that are outside the reach of the US like that's just kind of how it works so um maybe they try that I'm not sure how effective it would be I I have there and therein lies the GG put yeah the the other thought this is where I really wish I had a tinfoil hat but the I find this argument from the Maxi is super frustrating because they're the the tagline kind of is that everything else is a security except for

Bitcoin but at the same time the Maxis believe that the US is this like top-down sort of scam you know about funneling money up to the top so you know if you had to if you had to pick one crypto which was the most directly against the interests of the United States government you'd have to pick Bitcoin right I mean it's the other ones aren't necessarily explicitly trying to be money and the other ones that the tagline isn't down with the US dollar I I right but but the the one thing that you could say though like you're you're confusing Securities regulations with like money and OCC regulations and cftc and commodity regulations like those aren't

all intertwined like the government cabal coming together to say like that's the thing that we need to go kill I think you can use individual perspectives as perspective on how to change things regulate things control things but I like the SEC isn't really going to win an argument and you know has already come out and said I don't think Gary gensor has actually said this yet but other members of the SEC have said that Bitcoin is not a security so like the cat's already out of the bag but no I don't think you can run that back I get that but that's why I wanted my my tinfoil add-on for this particular part because I just I I know that it's not like one big cabal and everyone's not you know on the phone you know being like let's kill Bitcoin but I do think

countries in general respond to national interests and you know if Bitcoin were to be successful as the explicit stated intention is that's not within U.S interests and I think it's a convoluted argument to say that it that it is so I I think the most interesting thing about the ETF is like does it drive additional flows and I think it will but it won't in the way that people imagine it I think The Narrative of it being approved by BlackRock and brought into the regulatory fold is a narrative that drives flows but like we've had Beto for you know two years at this point um you know this is not like a new phenomenon you can go buy gbtc in your 401K retirement account if you want like

there's a lot of ways to access this and the other stuff is that coinbase has been onboarding a lot of like the biggest hedge funds biggest asset managers in the on the world and like they are some of the primary um users of this stuff and like I get that there's an angle of like you know if you want to short it like you can't really do that on coinbase if you're like really like an upsized asset manager also like I've heard that these asset managers want to use it for leverage and do different things with it that are only kind of available within like the prototypical broker dealer custodian model so I think there's some but we've already had this for a long time so I don't think it's like turning on the floodgates

to the counter or the counter argument there would be you can go buy gbtc or Beto Beto has an expense ratio that's underperformed Bitcoin gbtc is at like a 30 to 33 discount and it requires you both of those require you to be or the gbtc requires you to be an accredited investor I mean the the most the largest asset holders in the US as a population right now are the Boomers the Baby Boomers and they're you know have no access effectively if you're in a retirement account to be able like 401ks you can't unless you're on Fidelity Fidelity digital assets allows you to buy Bitcoin and eth right now but if you have a 401k you can't get access to bitcoin frankly so like there is an

argument that there is a net new buyer I I agree though that I don't think that it's going to be as pronounced as the expectation of everybody with this potential application getting approved is it expecting I think that there will be net new but it's going to be more of the the benefit will be realized in the institutionalization of Bitcoin Less in the actual flows Alex Weiss also had a tweet where he marked all of the ETF approval and denial dates and uh you know it's pretty it's pretty clear like the market topped on the approval and the denials um and I think it's kind of interesting the

last cycle ended with the Beto uh ETF was approved I think December 10th 2020 yeah 2021 this cycle will start with it just like do you remember Vance you remember and I think it was March of 2017 uh when the Winklevoss twins had their application denied and that's what kicked off all of the excitement around eth and frankly Ico summer like the the the denials and the progles are major catalysts up and down this episode is brought to you by velora valora is the ultimate wallet for exploring the cello ecosystem easily

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badali download the app and start exploring today at valoraapp.com jumper [Music] let me ask you guys about uh about edx markets so edx is um this exchange that uh Citadel Fidelity virtue Charles Schwab Sequoia and interestingly enough uh Paradigm are are behind um so they announced it back in I think it was September of 2022 but it just went Live this past week so that's why it was in the news again uh the the only four tokens that are trading on it are I think it's Litecoin Bitcoin cash Bitcoin and E who's who's trading on this do you think and and would any crypto native funds like would you guys ever trade on this or there's no reason for you to

trade on it before before we talk about this I just want to say that if you knew that there was a Bitcoin ETF news coming uh and you bought Bitcoin you would still underperform Bitcoin cash so like that's the extent to which all this stuff is correlated and especially alts that are like a liquid and move a lot you know it's like it's not necessarily like a buy Bitcoin if Bitcoin ETF gets approved but on the on the edx stuff like we've heard this is Citadel is basically you know main play for crypto um you know they've stopped doing a lot of like the OTC stuff um but you know it's like run by a guy who was very prominent in the organization um it's clearly kind of like this

it's like a very kind of like uh over complicated version of what you could do with crypto but like they've separated the custodian from the clearing from the trading like it's great but like it doesn't make a ton of sense within the context of crypto just being a more efficient version of all of that I don't think we would ever trade there I mean we we have East we have Bitcoin Litecoin bch I don't know why we would do that but I expect this to take a lot of share away from uh you know place like coinbase frankly and binance like all of the color that we have from the people that we trade with and work with are that they largely if they're still in the US move to the CME and you can see that the CME volumes that ramps

over the first like six months like that really is becoming like a center of flow where it historically has not been um so yeah I think I think the next cycle broadly will kind of be like a regulatory cycle I have a question I might be misunderstanding this but I thought that edx was going to partner with brokerages you know you wouldn't go and trade at edx it's a it's an actual exchange yeah I maybe remember they funnel trades through through different brokerages I think I mean similar to you know you're not you're not going on the New York Stock Exchange and making right yeah right well it's also I I believe I I think I read this it's API only like there's no interface it's just in exchange to trade um and institutional only in that

respect yeah I think they're launching a Clearinghouse to settle trades but not not yet um but I think the key here is that like if you look at all the crypto exchanges today there's this kind of like they're a hodgepodge of like custody and settlement and like they have the exchange and like they are the broker as well kind of but like that model doesn't even really fully make sense if you apply it to crypto this is like we are going to take the traditional model of separating custody settlement in exchange and then apply it to crypto trading which which is it doesn't really exist out there would you say the comp here is more like NASDAQ New York Stock Exchange versus like this the monoliths that you would have with coinbase binance is that a fair assumption that is yeah

understanding yeah okay yep that's what I thought too so it's like people joke about like the cabal and crypto or like the car the cartel um you know there's like a room where everyone's Fates are decided and where like the market direction is chosen um I don't think that exists honestly in crypto I don't think it really exists in Trad five but like someone who is in the cabal would say that that would be something that I would think um well the traffic guys kind of travel in the same circles we've noticed over time and there's like you know like if you can just turn on crypto trading by going to the Citadel branded run licensed exchange versus like getting IC approval to get on the coinbase and do

all of that stuff like it's just gonna make it easier for them to pop on board and like you know I think that's what most of the Trad five people within crypto are talking about at this point it's like are you gonna go trade on CME are you gonna wait for edx to get up and running for real because it's just like it's another API within the same regulatory framework and Technology stack that you know this is this is the interesting part it's the same technology stack that sitsex Citadel Securities works with so you know if you're already trading on the largest market maker in the world you can trade on edx so I think that'd be just as an anecdotal uh piece of info one of our one of our investors um back in the day when we were talking

with them about you know defy and like you know using things on chain and trying to get all this their very traditional registered investment advisor and they were telling us it took them I I think like six months approval just be able to stand up a separate like air gap computer not doesn't have any of this offer running on it and that was like their D5 computer and it had to stay in the office they had to have monitoring on where The Ledger what like the controls that maybe just like unless you're in that position in that institution the controls that are associated with rias and financial advisors and you know all the stuff that comes with that are so strong that nobody's willing to even like go there if you have to be able to promote this idea like step outside the bounds and

try something new I think it's it's under it's underappreciated how hard that is yep it's just one thing that's sort of funny to me is that Litecoin and Bitcoin cash are included there that's that's just a funny selection of assets I mean it's no coincidence that those are the same poor assets that Gary gens learned that one speech said or not Securities except for Bitcoin cash well maybe you did say that one I I forget but I don't know because even yeah Jason I've gone into Bloomberg a couple times and if you like if you just open up a Bloomberg terminal look at the crypto products that they cover it's like Bitcoin and Ethan then it's like every Ico coin from 2017 it's like

Ripple Stellar Bitcoin cash Litecoin they're all up there I think lost within this also is like the fact that eth is in there like like eth is it's been said it's not security by the cftc it feels like it's in it's in like the the process of being blessed by the Trad fight community but like having it on these places is extremely bullish in my mind yeah I was gonna say that I don't think it I don't think in this era of the SEC we're going to be able to see them bless it as not a security it's gonna have to live in this in this phase of purgatory mostly because if they say that it's not a security what

that does is it gives trade-ins to the hidman documents and it basically gives a playbook for anybody else who says hey we just followed the Playbook of ethereum you've already said that ethereum isn't a security because become sufficiently decentralized and if you run that Playbook you can make it such that you believe that yours is sufficiently decentralized without all this is to get at without new legislation frankly what's at least been discussed in the draft Market structure Bill where you have definitions around all this stuff we're just going to continue to live in a world of purgatory yeah well I guess we'll have to see how the regular story stuff plays out over the next couple years well I would love to maybe talk a little bit about each

corrections I know you guys are excited on this can we just there's one other like institutional news thing that nobody really talked about this week which was actually sap um which like seemed boring but I I don't know if you guys read this blog post um so at sap Powers a lot of like Fortune 1000s they're kind of like the underlying infrastructure for how a lot of Fortune 500s and Fortune 1000s like collect payments and do their billing and accounting and all that stuff they put out a blog post today it's uh a couple days ago it says today cross-border payments are a hassle for small and mid-sized Enterprises with international business partners expensive up to 50 bucks a transaction slow up to seven days to transmit the money and non-transparent you never know the status of the transaction these

major challenges can get solved with digital money as a means of settlement and blockchain is the underlying technology and what they announced a couple days ago is that uh the t is that sap is now testing cross-border payments for all of their customers using usdc and I think this is a narrative that is completely dead like the payments narrative is complete dead but I actually had breakfast with someone yesterday who's they're working on they're working on the same thing but for consumers like they're they're all they're really good crypto founder been building for several years they are working entirely on this payments solution um and I think this could be a narrative that like stable coins in the real world economy um this could be a narrative that comes

back that like nobody's talking about um and I think like reading that sap blog post you can really quickly imagine a world where like millions of businesses I mean it already happens in crypto like USB where millions of businesses all around the world consider settle like this inner company trade instantaneously using usdc and other stable points and so like get a little Echo by the way but yeah I'm uh I don't know I'm pretty excited actually we're like this renewed interest in payments curious what you guys think Jay Powell yesterday in front of Congress said that we should consider stable coins to be a form of money and it was one of the one of the comments that he made yesterday which I thought was pretty profound I I think we're

going to start to see cross-border um frankly as we see um efficiencies gained on we've talked about this before but native minting of usdc I think provides a really strong use case for bringing usdc over onto a layer two onto an execution environment where it's just that much cheaper to transact I saw sending a token or sending eth on most of these l2s was getting close to that one cent uh cost basis and we assume a couple more uh iterations and a couple more improvements and and you're sending in unlimited amounts of value for less than a cent over a layer two um

if you have that with with Native minting you then have the security guarantees of usdc and and the cost reduction uh that make payments viable I think when you break down what payments really are uh it really comes down to just a cost per execution person-to-person payments and uh is going to be probably the hardest in-person payment so point of sale transactions is is sort of the next hardest you're used to having to pay a fee in those types of situations which is just assumed by the merchant across border payments that fee goes up in some cases to be you know percentages uh if not like 10 of the total value um and so you just start to take those things off and break down okay in the

payments ecosystem what's going to be the most viable right now cross-border then it comes down to it's not it's not really a cost structure there it's about availability so how do you get uscc or any of the local currencies to accept that as a form of cross-border payment um I I think it'll be still a long ways before you get point of sale transactions to support usdc mostly because people are just obsessed and kind of addicted to the points that they get from credit cards um but I I think payments is always going to be a viable option it really you know frankly just comes down to cost and that's that's kind of what drives adoption payments I'm not super bullish on it in the short to medium term I just think there's this

guy get a framework a little while ago that really resonated which was just if you have a product and you can make something like a service or product order a magnitude better but you have to add one step good luck your toast and as opposed to if you have a product that's just as good but you get to remove a step then that's you know a gigantic business right there and I just think even like if you magically transport into a world where everyone is already on blockchain Rails no one would ever use the system that we have in tradpy it sucks but because we don't have that what you're asking is tons of individual merchants in business businesses to understand how to use this stuff and retrain and do new systems so I just think it's

so just to be clear though Mike uh like there everybody thinks of payments as being like vemo transactions and using your Apple pay your credit card at a point of sale like orders of magnitude more value are transferred cross-border every single day and in business to business transactions um I didn't see the sap announcement but like we're talking tens to hundreds of more value is is in the payments realm in that area of the world um where like cross-border FX and you know reliability of actually receiving the money that you get if you send a a wire transfer and it has more than two stops so three or four different FX conversions there's like a 95 chance that your money actually shows up on the other end so like if you want to send

value to to Nigeria for instance it's going to go through Euros it's got to go through you know to the local currency and then to the bank account that you're trying to send it to um the reliability there is actually like still extremely small um so specifically what I'm referring to is cross-border and and potentially with FX involved what's like an example of a like a cross-border payment for that because you still need to to like if you're going between currencies you're still basically FX trading you're going like Euro to usdc to Dollar because right like no one in you know in like the real world I use usdc but it's for crypto stuff usually like if you want to do crypto things and buy crypto stuff then usdc is a more uh there's more utility as a dollar but in the real world you

know you can't pay for anything at the store with usdc so I I think that's the point I'm trying to get at is there's still that three op conversion uh view it you know currency to usdc to X and then you need a different set of infrastructure to manage those transactions so that's the direction that that's the friction that I see in the short temperature yeah yeah and you know the difference would be it's on a blockchain where you can check it versus like a correspondent bank where the money flows out and you're like I hope this comes back on the other side that is true it I mean and it does suck like we we had one small period of time where we had to as block Works make a bunch of international uh cross-border payments and I can tell you it was

horrendous absolutely horrendous it's literally goes out and five days later you hope it ends up and where it's supposed to go yeah yeah you think bridging your assets over to an L2 are bad yeah I need an international wire waiting 20 minutes versus mating four days yeah yeah baby steps though like this is cool like one of the reasons this thing the sap is cool is like I don't know remember when everyone was talking about private ledgers like saps using public ethereum for global trade with uscc like it probably takes 10 times longer than we realized but I don't know baby steps so I'm I'm there with Yano I'm bullish let's call them let's go baby all right should we talk inscriptions speaking of being bullish

tell me tell me your analyst 10-year thesis on inscriptions well I forgot first let's do a description of it here's my here's my here's my I'm sure you guys understand it better than I do um but basically all right so you have the evm the evm processes user transactions and stores a bunch of data there's like different types of data right there's persistent contract data um there which is like the storage right there's temporary contract data which is the memory and then there's the transaction data like transaction input data and this is called Data um if you look at store both storage and call data can be permanent but call data is just again my understanding is like it's a lot a lot cheaper to use um and the reason for this is because

smart contracts uh can't read the call data unless it's this is where my understanding breaks down but unless it's the input to one of its own functions um and I think that's kind of the basis for each scription so escriptions are basically just chunks of call data that store images or texts um and so if you look at here I can like sometimes I'm a it's helpful to see it like I'll pull up I just found this one on etherscan if you can see this here so like this is etherscan and you can scroll down and this input data doesn't look like anything but if you change it to this UTF view you can see there's just an image here so this is an

e description and voila it's like ordinals but with better branding because ordinals as you say it sounds like ordinals it is I think I think it's basically ordinals like you hear the word ordinals though and doesn't really mean anything I think The Branding on the descriptions is really nice it's an inscription on eighth see it on etherscan there you go I like it God bless these kids who are just using ethereum for things that really was not intended to be used for but cool anyways I like I don't know if this is like a 10-year thesis or like you need to go out I think there's like ether punks now right yeah they sold out instantly ethereum punks instant iconic I mean like

is it a bit silly do we already have nfts really need this you know yes yes potentially no um but I think also it's like we're just continuing to bootstrap culture around one yeah it's pretty I think uh I I think here's the thesis for youth scriptions is that there's a lot of stuff happening in the nft world where like people are realizing that maybe I'm gonna botch all of this um but like you know if you look at Foundation or open C or something like that you realize that like a lot of it a lot of nft value and information is actually like stored more at the like yeah I I've done it the details right but like on open C and not at the protocol level but

uh like ether scan is kind of the source of Truth for the whole for all for all of eth right it's kind of like it and it can be recreated you're just using this decentralized eat data um so inscriptions are like maybe more of a yeah heart heart data as opposed to something that's like stored at the app level does that make sense a hard date I mean also what a beautiful business ether scan is never raised outside funding I think they're based in Malay or something um probably like wildly profitable but it's just been the source of Truth for as long as I've been in crypto same with Michael like I I was trying to read a Bitcoin block Explorer to check out

where the US government was sending the Bitcoin I just was like man I cannot make heads or tails of this anymore this makes no sense at all yeah have you ever met met them have you ever met uh who is it Matthew you could imagine a coin market cap like exit for them in the next cycle coin gecko is a great they have a great story yeah Bobby shout out yeah what is the business model for the block explorers how do they monetize ads I think ads yeah yeah so if you go to it and you click exchange like right now you click exchange and it's sponsored by yeah dot IO or play you get like metawin or coins.game and this is all an

automated business so there's no they don't have a sales team at least is my understanding they make money doing the l2s block explorers too right like b b scan and opio oh really okay Arbor scan and they're not I don't know how I think there's like a two-year wait list for getting them to do your blockchain too I don't know how recurring that yeah that's not not recurring but a little Hefty Hefty price tag of have hardest accurate yeah very very expensive I think broadly it's like when are we you like or uh etherscriptions aside like when are we gonna get the nft people reactivated I feel like if all all the crypto folks they've just been destroyed Eminem sold his uh board ape today it's June 22nd 2023

looking uh looking like there's like some outstanding loans on some board Apes like right around the floor price right now on Bend out bad I know you need to get these people reactivated I don't know why that gonna be but like I remember it was like 2019 2020 there was really no activity on nfcs and then 2021 it was all of a sudden like punks are worth half a million dollars each like do we think that's gonna happen again I was with a fund manager yesterday um who has a lot of same similar perspectives as we do and uh one of the Theses that he had was it might be the right time to start buying punks we're also talking with another uh

manager in the space and and they're one of their like pretty strong Theses and I think they've already been deploying into it is is buying nfts like there's an element here where it gets so low and potentially attractive that it might become a good just investment category what buying nftc on your site yeah can you guys buy nfts in the fund yeah we can we haven't um at what price would punks have to go to to buy some pugs it depends on how you have to underwrite it and are you looking at it from like a individual asset class perspective and is there some like value or utility from that specific nft or are you looking at

this basically as like a levered eth play no value no utility Punk specifically I said punks because there's no util like there's no game that's being created around punks it's just a number go up and it's probably a leopardyth play I don't know if they're I I don't know if we could talk about what price we buy yeah we can't talk about any of that but I'm just looking at punks right now it's 49 49 yeah so the total market cap is 491 000 eth and eth is at 2000 call it so times 10 4.9 times 10 49 like this is like what 2 billion market cap something like that

let me do that math yeah and I said remember when you and I said we were definitely gonna buy pumps when they went down Mike and I top of the market we're like if we ever get into a deep bear Market we're definitely buying punks here we are all right and do another Barrel so Punk says a one billion dollar market cap aggregate that's how I think about it but there's no there's no utility right there's no fees there's no anything like that so that's why they're valuable I mean do it looked like utility was trouncing that this is digital art for a little while but I don't know I kind of think it's it maybe isn't one size fits at all second you add utility people start trying to make an equation out of it where you'll

be the utility on one side is it greater than or less than the price I mean you've got to be a pure Revenue pure plan pre-revenue pure play the crazy part about Punk right that like number up chart no Excel no Excel no no Revenue the crazy part about punks is that like blur kind of like farmed the farmers in many ways where someone on March 17th sold 800 punks into blur bidding liquidity at once like I don't know it when the market changes that dramatically in terms of volume and liquidity

I at least want to wait to like re-underwrite things could you explain what you mean by Farm the farmers yeah so all of these farmers were paid in blur points to basically bid nfts um meanwhile the people who were selling nfts were actually like the the biggest net beneficiaries and like you have this like two-sided liquidity that has never happened before and so like who are the winners probably the sellers of nft but also like the protocol that like got this artificial bid liquidity and the losers were like the people who bought so like you know uh Big Brother Machi folks like that um just kind of got torn up and lost a bunch of Youth in the process the uh have you guys ever heard the the

d-gen Spartan line on Sushi swap no um so he he you know this was an Uncommon Core episode he did a while ago with haasu but I did actually see he he made the comparison between blend and Sushi which was basically one of the reasons why defy uh D5 coins topped around the same time the sushi swap is the incentives were so strong on sushi that they pulled so much liquidity to one place that if you held these kind of illiquid D5 coins you like your entire incentive there was to sell and kind of a similar comparison could be made to blur whereas you might think something is super bullish because you're pulling a bunch of liquidity to one venue but if

you're a long-term bag holder of these things there's an attractive price you're incentivizing everyone to dump at the same time so that right your your options to liquidate nfts at scale are like you get this Sotheby's like sponsored Grail type sale or you sell into blur I mean maybe it is like a decent time to buy nfts but like calling them Liberty feels very specious that implies like it has both the fundamentals of Youth and then like this other thing I don't I don't know maybe we're just too too right and left curve simultaneously to be part of this new generation of of d-gens but wouldn't that put us mid-curf yeah I mean I mean right in the middle we're close so far

yeah I mean I I really agree the only other argument is that uh depending on the tax situation nfts will probably take a more favorable regulatory perspective what do you guys think I know we're we're running short on time here but did you see that BMB is using the op stack to launch a layer two it seems like the there's a like uh like Zora was another nft Marketplace that announced that they were launching using op stack it feels like there's some traction that's at least just my sort of just looking at perception and more and more Protocols are using that do you guys is that your perception as well I gotta be honest I haven't really looked into the uh binance like the BNB using op stack but it seems like there's some

critical mass that's gaining there doesn't make sense to me to build an L2 on a centralized L1 with a permission validator set you can literally have any scalability you want just like l2s are just probably new opportunity to launch a token frankly and as we've talked about the lowest effort thing that has the highest market cap return will get launched a lot until that until there's so many of them that they're all worth nothing enter all of the unit swap clones from 2021 very well said RFP um aside from like you know the l2s on binance all that stuff or BNB the thing I would like to see in this bear Market I would like to see cze and Brian you know kind of bury the hatchet come together you know like you're

literally the dude last man standing I feel like there's been a lot of beef between those two I always do very different regulatory approaches and probably the viewpoints of the world as well but like we're gonna have this like Trad fi carving up of like coinbase's business I I feel like a little bit like it would be good to see them get on the same page you know more so than they have been historically good luck with that me too yeah we got to bring the tribes together even more even Bitcoin like we don't hold a lot of Bitcoin but like respect the pump as Ivan on Tech once said you know you gotta versus a pump you got to be there for the other folks there's not many of

us left as I've been on tech one said I used to watch those streams it was so bizarre watching him turn into like attack explainer to like a guy who pumps coins but like I that line that he said is just a classic and it's true one day we'll tell you about our influencer business that we created in the bottom of the bear Market but uh looking down for another time we don't know I'd love to just never talk about that again YouTube streamers big girls business yeah that was chaos anything else this week guys um no submarines for anybody same place

yeah Vance you need it really bad for those people at the people were like mocking the people in the submarine that made no sense to me like totally terrible terrible way to go for people that are trapped at the bottom of the ocean like yeah well it sounds it sounds like it wasn't really trapped it happened very fast but crazy story nonetheless no submarines for anybody all right it's a good way to end it foreign [Music]