Market Structure, Macro Volatility, and the Next Phase of Crypto | Michael Anderson & Vance Spencer

Transcript

Brian Armstrong and Coinbase came out and said, "We do not support this. We're pulling our support." That led kind of a a total freeze in terms of, you know, action and momentum and movement. And so that total freeze, at least initially, kind of freaked everybody out and said, "Wait, are we done? Is this over? Is it dead?" Um, and I think the answer ultimately is no. >> Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed.

>> Wow. All right. We're in it. >> Are we recording? >> Yes. Yes, we are. We're recording. And uh and our producer and editor and uh uh magnificent behind the scenes team is on an airplane. I know you're watching this, so sorry about all those things we said. >> The airplane Wi-Fi. Let's go. >> Um, all right. So, we got some stuff to talk about. Let's go through um >> the Verizon uh cellular coverage out outage didn't kill the the Wi-Fi.

>> Yep. So, basically, since last time, we're in two new foreign wars. Uh market structure is happening. Lighter has launched. Uh the AI trade has advanced a little bit. The Fed chair is almost arrested. And I think there may have been a rate cut, but that's that's what we want to cover today. >> I mean, the last time we checked in was before the end of the year, before the holidays. So, a lot of things have happened. Um >> right. Maybe not all of those, but certainly most of them.

>> Yeah. Um, let's talk about market structure though. >> I It's It's the timely news. We're recording this on Thursday, January 15th. It feels like everything has happened in the last 72 hours. You know, the it's it's all go. It's no go. It may be back. Who knows? Kind of like where things stand right now. But, but the run of events uh has been I think Senate Banking said that today would be the day that they vote on passing it through committee. The draft text that was put out by the the banking committee was floated I think at like midnight Eastern on Monday that sent basically everybody and and both sides into a frenzy. You had the opening of amendments which led

to basically uh the industry coming out and saying we need to get rid of this, we need to you know change that. Um and in particular Elizabeth Warren and and Senator Reid coming through and saying rip all this out. This doesn't work. Uh the the number of amendments that like you could see on the page from from Warren was like an entire page of amendments. Um which all of them put together negates the entire purpose of the bill. So it's those are all non-starters. But where things land landed, I think, are um I believe yesterday, uh yesterday afternoon, Brian Armstrong and Coinbase came out and said, "We do not support this. We're pulling our support." That led kind of a a total freeze in terms

of, you know, action and momentum and movement. Um I I think uh and so that total freeze, at least initially, it kind of freaked everybody out and said, "Wait, are we done? Is this over? Is it dead?" Um, and I think the answer ultimately is no. Um, the uh you've got David Saxs coming out tweeting, hey, this is like this is part of the process. You've got Chris Dixon coming out and saying, you know, we're supportive of, you know, rules of the road, like entrepreneurs need to know what these what these rules are. This is positive for the industry. Um, we're ready to work on this. I I think everybody kind of, you know, had the the immediate u well if I can't get what I want, then nobody gets anything

perspective. Um and and now I think Sander heads are finally prevailing and and there will be some sort of um amicable resolution, let's say, um is my read of the situation. The other thing that's going on in process is banking is one half of it. Senate A is the other half. Senate a has said I think it's the 27th or the 29th uh of January that they're going to put through their draft uh and have their own markup and vote. The idea was that oh and and so at the end of the day yesterday uh or actually maybe that was today Tim Scott officially pulled the vote. So the vote has been postponed in Senate banking. Um there is still a question as to what Senate AD does. Um maybe there's an an amicable path in and middle ground that

can be met basically in the next two weeks. Um, I I think there's a lot of politicking going on right now. There's a ton of horse trading going on right now. We have We should get into it and and talk about kind of like what that actually means and how that's working. Um, but I I do think that, you know, that that's kind of the lay of the land at least. Um, it'll be interesting to see how this whole uh episode of House of Cards plays out. >> Yep. Um the other thing is their stocks uh their stocks both went down by like 8% today and I think it was generally a bad day for the market but specifically or or not like a good day for crypto. I would say a bad day for the actual stock

market. Um but I think really what that's being labeled as is you know the failure of this act to get through at least on this pass uh has not materially changed the condition of their stock prices but it has impacted them. Um and so I don't think you know now especially given that feedback given the given the pause that market structure is dead I would say um poly market has I think at 56 60%. Probably I'm a little bit higher than that. Um, and if you really read the bill, which uh if you if you haven't, you know, you should and if you don't really want to put it into JAT GBT and see and just ask it kind of topical questions, but um this is landmark legislation for US capital markets. It's

probably the biggest change in terms of adding a new asset class since uh you know the how we test with securities and then fixed income becoming popular uh in the 80s and '90s. But um it's super exciting and I think the industry would thrive under this. Uh I think you know the chance that it doesn't happen is probably smaller than it does. But I think what that would be like is um you know the 10 to 20 really big incumbents using their balance sheets to you know uh kind of consolidate market share in the space and then going off and using that to bridge to trady through other regulated vehicles like ETFs uh things like an IPO for like a tether uh the DATs probably become more important um

and so there's a lot of just like kind of different stuff that uh comes out of this um but I'm still positive and I you know, if this does happen, David Saxs is definitely out a debt of gratitude and his tweet probably came at the exact right time for people to just uh relax a little bit and, you know, hopefully go forward with with a better thoughtout plan. >> I mean, I I think totally agree with all of that. Um I I think there are it's what will happen is some sort of um relenting on certain points to basically like get the the main points that they want. And I I do think that it's not just coincidental that the the proposal to cap interest rates on credit cards happens at the exact same time that it

seems like the banking industry is pushing to ensure that stable coin yields are not possible. And and so what what I'm meaning with this is you got Brian Moahan, the CEO of Bank of America who's who's coming on and and giving an opinion, you know, this week or yesterday saying that $6 trillion of assets of deposits will leave the US banking system if stable coins are allowed to pass back yield. Stable coins have been allowed to pass back yield basically since the start. They got codified in that got codified in Genius last summer and you still haven't seen deposits, you know, le leave the banking industry first and foremost. Second off, you've got JP Morgan hitting record not

net interest income last year in what they've announced. And anybody who h has interfaced with a banking provider or has a checking or savings account recently knows that you put money in the savings rate that you get is singledigit basis points. So what we're talking about isn't like oh well they're going to leave to go get three and a half% at Coinbase and and screw us. It's like it's been so low that nobody even cares about that in the first place. Um so I I think that that's just like um it is a narrative. It isn't reality.

uh and he's kind of like taking data points to to prove his point that aren't real. Um and the second point is on this credit card capping interest rate bill or or the proposal to do so. Many of Bank of America and JP Morgan, the two largest net interest margin uh acrewers uh from a banking perspective in the country have massive payment services uh payment businesses. And if you were to take Chase and say the 26 to 29% interest rate that you know Chase charges its customers is capped at 10%. There's a couple things that happen. The first one is revenue goes precipitously down. Um the second is customers will end up finding out that their credit cards are canceled because they are in a

risky band that requires Chase to price them above that 10% threshold. It isn't like a oh we can so we will. It's like you you are because your credit score is 550. So I I I think that there's a real issue with this that will hurt consumers, but I think the banking lobby knows that you can't find a fight a two-front war, especially in Congress right now. And so they're going to be forced to choose. Do you want to give on stable coin interest and have that be the the or or have that be the fight that you, you know, have the last stand on or or do you want to try and fight two wars if we bring this capped interest rate uh concept into play? Um, so I think it's pretty savvy if if the overall intention and it seems pretty timely to not be, you know, just a

coincidence. Um, but if that is the intention of basically pulling the banking industry back from stable coin yield and saying fine, we'll cap interest rates, then we'll see what it does. But, you know, I we said this earlier today in the office, but it is uh paradoxically this may be a bullish pause. >> Yep. Uh, it's also worth considering what consumers stand to benefit or gain from legislation like this. I tweeted this earlier, but you know, imagine a world where nobody can access Open AI or anthropic shares forever. Imagine that they don't go public at all. So, you have no equity exposure to anything. And then imagine a world where you can't earn yield. You have no fixed income or debt exposure to anything. Uh, that's

just like a really dystopian version of the world that I don't think anyone should root for. Um, so my hope is that this legislation does happen. Um, but there's probably good reason for at least, you know, taking a bit more time to to get it done. Um, but, you know, I I think people downplay the effect of legislation like this. Um, similar to how, you know, genius created so much market opportunity, excitement, and liquidity. I think that is the similar dynamic that plays out if this passes. Um but let us talk about um uh let's talk about Fed chair stuff

actually um and interest rates. So >> y >> Powell got uh you know I guess prosecutors looking into him. Uh Trump has now kind of backed off that threat to replace him. Um it seems like there's you know at least a couple locked interest rate cuts uh this year. JP Morgan came out with the expectation for a hike which I think is just kind of way off market. But I I think generally what we expect is that rates will get cut and there will become this thing called you know like a steepened yield curve where the rates are really low at the short end but at the long end they're still high. Um and so uh you know at the long end that would be kind of like where 4%

5% is today. Uh the other thing that Trump has directed the at least housing chair to do is use $200 billion to go off and buy mortgage back securities and I chatbed this earlier but the the pack the max pace during co for MBS security buybacks was $30 billion. So if you do the math between now and where the midterms are, you know, six months divided by $200 billion, that's like 30 35. Um, so maybe housing rates come down as well, but what's your take on on this entire environment?

>> Not QE, but QE in so many different formats. >> Look, this uh this not quantitative easing. We're just going to ease the quantitative. I don't know. It's like >> housing market ever going to come back? It's pretty um back and we we've talked about that, but like what about the rest of the world? >> Well, yeah, there there's two elements of the housing market. There's the value of the house, then there's the cost of capital uh to buy the house. And and right now cost of capital is, you know, effectively never been higher. But also, the cost to buy the house has never been higher. And so, you've got this entire generation or potentially two at this point, they're just unable to buy homes.

And I I've had this comment like uh um I've listened to the podcast with a few of the podcasts with Nick Shirley over the holidays and um I one of the standout comments that he made is like you know our generation I think he's like 22 or 23 maybe a few years older than that um but he's like all my friends and and in San Francisco this sounds crazy but in the rest of the world and the rest of the country this is probably you know the the sentiment the feeling is he's like all my friends none of us can buy homes And it is kind of what everybody in the previous generations, whether it's, you know, Minnesota in the Midwest or or any of the, you know, southern states, uh, rust belt, wherever, you're going to find most people want to be able to buy a

home. They want to buy, you know, a $250 starter home and be able to deduct the the interest payments from their mortgage and um, have that be kind of like an economic engine that works for them as opposed to, you know, dumping rent payments every month. Um and so I I think you have um a total and this is what I think has given rise to memecoins to mimetic trading um probably some of the speculative nature of meme uh of uh crypto as well um it's sort of this um anxiety that the generation has that is unable that that they're unable to participate and it's kind of like this is their shot this is their chance and you've got on the front end impossible

you of thresholds to to even get a house to live in. On the back end, you've got AI chasing you and, you know, going to steal your jobs. Um, try being a 22 or 23 year old, you know, knowledge worker these days as an entry-level analyst at a bank or consulting firm or or even a tech company. It's like, well, writing code, building powerpoints, doing models, like that's like at least from, you know, the I would say quote unquote attractive most attractive jobs. um you know coming out of college a decade ago, those are going away and and so it's this it's this insane kind of questioning of uh purpose but also capability uh and and viability from an economic perspective. Um so I I think

the big hurdle um and you're starting to see this even in California with like Tom Styer coming out um as you know a potential run for governor. I guess he's running for governor. His entire platform at least all the ads that I see are all about affordability. The 2026 midterms are all going to be about affordability. Um, it's probably going to be a major subject of the 2028 election cycle as well. Affordability. What that comes down to is do you have a job where wages are increasing? Uh, and you have sturdy structural um, you know, you have low fears of losing your job either due to competition or outsourcing or technology. Um, and are you able to participate in the the economy? um or do you feel like your parents' generation

um was more advantaged than you are? Um and so being able to prove that I think you tactically it's hard to do um right now other than affecting housing and housing is going to be the biggest asset. It's going to be the those most uniform um you know level way of participating. It's usually the older generations that have large 401ks who have access to the public markets um you know or or exposure to the public markets. So I don't think you know equities markets are the best way to attract this as well. Um going after housing I think is the right move. Uh it's just a very very hard very large problem.

>> It's a very hard very large problem and most people's and I don't think this will hold true for the Nick Shirley generation nor will it for millennials like I think millennials and we're we're not elderly millennials. I found out about that term recently but we are probably middle of the band millennials. I think that is most millennials don't own houses. um but most people do and most people have most of their net worth tied up in it. So uh as rates go down things like refies or helocks you know and that creates liquidity in the economy. Um the other thing about housing which is interesting right now and like I think our hope is that we can start doing financing for you know things like housing uh at some point through crypto rails because uh the liquidity is so good there's government

guarantees um and there's actually decent interest rates. Uh Fanny and Freddy May are actually going uh public should be this year and that will be the first kind of of the mega IPOs to hit. Um apparently it's worth between like 400 and 600 billion which is a lot of money. They would raise 30 billion in an IPO but just like adding another of these IPOs to the list of this SpaceX. uh I don't think anthropic or open AAI go public this year but um I I think once you do have this like string of of IPOs like that is when a potential top for for an equity market starts to appear uh obviously doesn't matter if you're building something that has enduring value over you know multiple years but just that quantum of liquidity coming out of the market um would be

tough and I think some of it could flow into things like crypto and and worth doing like kind of like BMR update and and crypto update, but the ETF flows since the beginning of this week, uh, January 15th, have been really strong. Uh, Bitcoin had 850 million yesterday. I think ETH had almost 180 million. Um, Salana had inflows, too. So, it feels like there is kind of this uh this flow and and like the animating dynamics of this market are the DATs and the ETFs. And if they get rolling at the same time, um, it can be a very positive flywheel. And I'm uh I'm looking at, you know, BMR shareholders who are in the I think it's the Venetian in Las Vegas.

God, it's like lying around the around the casino to get into the BMR shareholder meeting. >> So like Tom Lee is kind of killing it. And he also made a 200 million investment in Mr. Beast that we were talking about. >> We we should we should talk about all of this. What before moving on to like crypto and BTC ETH in particular, I'm I'm curious your take on you know what happens with this Fed chair like closing the loop on JPAL. Oh yeah. >> Um how do we feel like but like what do you think the macroeconomic outlook is from a Fed perspective um going through the rest of the year? I know JP Morgan's got hikes. There's like one to two cuts.

Uh I think there was a tweet last night from from Trump saying both of Kevin's, you know, look pretty good. Uh I I'm where where are your odds in terms of what happens with the Fed chair and how that affects rates and midterms and all the all the all the things. Um I I think most people were surprised that the market didn't crash when the Fed Powell arrest thing came out. Uh I think you know especially older people have such respect for the Fed as an institution and I just don't think that's shared by anyone under the age of 40. Uh, so, um, I don't think there's much difference in terms of it's just going to be Max aggressive cuts, Kevin Hasset, Kevin Worsh, one of them. I could also see it

being Rick Reer from Black Rockck, which I think it would be kind of um, uniquely bullish for crypto because he's like part of the crypto. He's part of the firm where their number one product is the Bitcoin ETF. Um, so like Rick Reer is my dark horse. David Zervos. If you haven't looked up a picture of this guy, you should. He was my ultimate candidate, but he looks like a magician, so he probably's not gonna get the job. Um, uh, but I think it's just like I don't know, 100 bips of cuts. That's pretty bullish with, you know, housing with all this other stuff is bullish.

>> Yep. Agreed. Um, should we talk Tom Lee and ETH? cuz I think I think the uh the big one so uh there's the BitMine vote. I I think that that was supposed to go through by midnight tomorrow or last night. Uh the shareholder meeting today. Um the vote I I I think it's it's worth it to talk about kind of like what's going on behind the scenes here. And I don't know, we've tried to we tried to collect information um that, you know, leads us in a direction of kind of like what's going on. Um, so there's a vote to approve the uh compensation package for Tomley and there's a couple of elements

to it. There's an ETH percentage target which is 4% or 5% and then there's also a price target uh and there's also a market cap target. And so those are the elements that will kind of unlock value for Tomley. Um, so the expectation is and and the 4% is kind of that um that minimum uh or the first trunch uh of unlock for him and he's almost there. Um and and one thing that was actually picked up by uh way he he's got 3.8 or he's got maybe 3.9 million ETH and and I think it's like 4, you know, three or four is like the watermark for the first trunch.

>> Exactly. To date, Tom Le has been basically given kind of like this very generous but flat package of like here's these shares, but the one that he's up for right now is is hundreds of millions of dollars, maybe even more if he hits these thresholds. And the thresholds are 4% and then 5%. And so if he wants to hit 4%, he's probably got like a few hundred thousand more ETH to buy. Uh, and there's some speculation that this options position that he may or may not have on is is that exposure. And then the next target is like almost, you know, 1.7 million ETH away. Uh maybe maybe more. So 1.7 million ETH is uh what is that? Five billion bucks,

>> something like that, give or take. >> Maybe more. It's like six or seven billion. So that's that's to hit his next incentive target is he needs to buy six to seven billion more of ETH. Um, and I think kind of the the backdrop just to give everyone context is like if the ETFs are 200 million a day and then you know Tom Lee is moving at 100, 200, 300 million a day, you know, that's that's especially right now that's significant market impact with a bunch of people short the market and and maybe ETH specifically too. >> Yep. Agreed. Um, and so what one of the bloggers has picked up is um, basically this the giver.

>> The giver, right? That's right. Um, the giver has picked up this effect of whenever there's an announcement, they they disclose the number of ETH that they hold, purchases, cash raised, and cash balance. Um, and so there's been this $1 billion cash amount that's been basically stagnant. while there's also been additional cash raises as well as some ATM or as well as some ETH purchases. Um, and and so I I think you know the the rumor or or kind of the hypothesis that the giver has come up with is that Tomley is actually buying in the money call options. Um, and the in the money call options there is there's some expectation that the in the money call options because they're short data don't have to be disclosed in in the AK. Um, and he is potentially just

rolling them whenever he gets to that expiry. uh but that this gives him some ability to get that ETH exposure. Um and he's probably even over the 4% if these were to be exercised because there's a billion you know of of like ETH notional that could be exercised with these call options. um that you know hypothesis is also tied back to what happened in August when there was um frankly the same effect where they started buying call options to get the exposure they were able to exercise them this also coincided with kind of a an ETH squeeze um you know back then and and e that's when ETH hit 4850 or whatever the whatever the last high was

uh right around this time and and the expectation was a lot of this was being driven by what you didn't have back then uh or sorry what you had back then what you don't have now is you had a massive multi- I think 3 million ETH uh stake uh unstake happening and and now the opposite is true. There's zero in the unstaking queue and there's actually a lot in the staking queue. Um so you've got the the reverse effect which is that more ETH is being locked up as as opposed to being unlocked. It seems like the notional size of this this options call is actually about five times larger than what was happening back in August.

Um and you know coincidentally coincides with you know the the Bitmine shareholder vote happening you know last night today. Um and also I think you know this brilliant move by investing $200 million into into Beast Industries and and so I think there's a lot of stuff that you can kind of read within the tea leaves and you know Mr. Beast gives you distribution. But also the other angle to this too is like how else think about how many people would love how many of his, you know, most fervent followers would love to be able to get access to Beast Industries. Well, now you can because Bitmine the the company owns four or 5% of Mr.

Beast Industries in addition to all ETH. But that that's a great mechanism for getting more distribution for your shares, attention for you, but also making Mr. beast just you know a super huge believer in Ethereum. So I I would say that there's you know a really really strong bullish case going on right now and I don't know if this plays out in a matter of days, weeks or or maybe a month or two but it it is something that's happening in real time. Tom Le's put on a clinic on how to run a company for the 21st century and also he's just a a capital assassin. Like he will raise at MNAV and he will ditch playbooks and create new ones, use options. Um it's just an absolute clinic.

I think uh whenever it was in Q1 when everyone was very down on ETH, I don't even think anybody could have imagined a bull case like this where it's like, okay, Tom Lee is going to be the CEO of Ethereum and then he's going to get Mr. Beast on board as well. It's it's it's very very interesting and and he's got uh a cult following of this stock and that's something that I think we've noticed over the past year is like there's certain public equities like some of the Bitcoin miners that have turned HBC uh some space companies now it's kind of broadening into like robotics and defense like there there's things that have like cult stock status and I think Bitmine is certainly one of them now uh and and the volumes as well for you know Bit mine are picking

which is really what you want to see if he's about to kind of uh shift directions or kind of put on some turbo boosters. But what was the volume today? Yeah, I mean 46 million shares of volume at $31. That's like a billion and a half of volume in a day. That is uh I I would think that the real volumes from Ethan Bitcoin are probably pretty similar. >> Yep. Um, so kudos to him and it and it's and it seems like this stock may turn from uh the alchemy of 5% to we're investing in the future of the best creators on earth to this is Tom Lee's this is Tom this is your this is uh like

Delta 2 exposure to Tom Lee. Like if you like Tom Lee, he's going to build the future in the stock and and you can invest in it which I appreciate. I I think there's more room for innovation on on uh on public equities and and and corporations that that have someone strong like Tom at the top. So, uh we wish him the best and obviously we'd like you too. So, that's great. Um let's talk about AI stuff. Um so, one of the things that uh is starting to happen is people are leaving these other labs to go back to open AI. And I think AI is important for crypto because that is where all the

capex is that these stable coins will go off in finance. So at some way, shape or form, if your stable coin is passing back yield, it probably comes from AI at some level. Uh especially as these things get to, you know, trillions of dollars of scale. Uh but at the same time, kind of like the labs, which honestly remind me of the L1 blockchains. Uh it's like when when like you know Gav York split off from Ethereum and and then like Polka Dot happened and and you know Polka Dot didn't end well but certainly looked like a competitor for a little bit. Uh what do you make of these people uh fleeing? Is it is this like a rats fleeing the ship moment or is this uh just like normal consolidation within >> coming back to open AI? Yeah, like the

thinking machines, the three founders of thinking machines left, the other two founders of thinking machines to go back to OpenAI. People are are uh now saying that SSI is going to be the next one. >> Yeah, I I I think um it's interesting. I don't it's hard to know what the internal politics are but I think it's extremely difficult to frankly start a scaling um any type of company but even an AI company if you've got like a starting valuation of5 or 10 billion uh you're able to give huge equity incentives because on paper it's worth that but the problem is you you have to grow into that you have to you have to

like scale into that to be you know something that's potentially uh able to be realized. Um the other element that I think I think came through in some of the the texts um that uh I think Andre uh Carpathy uh had something like $4 billion uh of OpenAI stock um that there's another $10 billion of OpenAI RSUs that were allocated to employees. So, it's also it's not like, you know, OpenAI isn't willing to say, hey, like we can give you some serious dough. Uh, also this will be worth something potentially even more than what we're giving you when we go public in the next, you know, 18 to 24 months. So, I I think that there's like a real um kind

of opportunity cost from from going and joining these these companies or at least staying at them. Um but the other element that I think is important to call out too is um so just taking a step back in terms of uh you know the AI space right now um what has fundamentally changed in the last basically since five GPT 5 came out which I think was August or or July um is that open AI was in the lead and and then and at the start of the year everyone's like Google's never going to be able to do AI they are going to have to cannibalize their entire business model just to be able to do AI. Um, and you also kind of had anthropic which, you know, they they had this like kind

of almost ESG perspective to AI that I think kind of made um made them look inferior from a competitive standpoint, just like they weren't trying as hard as OpenAI is. And you also had all these rumors of like Sam Alman paying $100 million or or Mark Zuckerberg paying $100 million, Sam Alman countering, like there's this talent war going on. They're willing to play the game. Mark Zuckerberg's buying scale or or investing in scale for 15 billion dollars. Like there's a lot going on in the background. And so what I think has happened is OpenAI, you know, really didn't have a great launch of GPT5. I think it was it was going after a different market which is less compute

um and frankly just like smaller uh instance size than um what people were expecting which is just like a a massive leap in terms of capabilities. Then what you had happen is Gemini came out and Gemini started beating all of chat GBT 5 capabilities. All the benchmarks kind of started getting beat by Gemini. Google kind of started to slowly integrate Gemini into every single product. And I I listened to uh Yano and Chiao uh on the podcast and Chiao had a great line which is like I just did a quick search on uh earlier this year on like what are my top applications and it's basically like Google Suite, Google search and YouTube and like those are all of them by the same company and now it's Gemini

too and and so I I I think you know Google has really come back this year and I think their stocks up like 65% this year or was last year. um they they have really come back onto the scene as a real dominant player in AI. Anthropic also has come back on the scene in terms of what their capabilities are from an enterprise perspective. And so maybe Claude isn't going to be like the consumer application that has 850 million, you know, weekly active users. That's okay because they're going after a different game which is enterprise which they believe is where all the value is going to be. Um and I think the answer is probably it's both. you know, this market is gonna be so big, you're going to have, you know, possibly

trillion dollar outcomes on both sides of of the equation. Um, so OpenAI has been feeling it really over the last few months. Um, and you you also have that footand mouth podcast uh that Sam Alman and uh um uh Brad Brad Gersonner did. Um where Sam probably wishes he could take it back. >> I don't know if they've done an episode after that. I I do think that that was the last one. I also remember seeing a few months later, >> more news like this, please. >> The head of PR and comms at OpenAI uh was moving on.

>> You know, there there's there's definitely some stuff going on, but but I think they're trying to write the ship and and I think, you know, I think we talked about this on the pod last time. Um but Gavin Bader had a great line which is we have yet to see any models that have been trained by Blackwells. >> Um and OpenAI and XAI so Grock will will definitely be you know a benefactor here as well. Um but OpenAI because of their distribution will be kind of the largest showcase to what the possibilities are with that. um whenever you know I don't know if that's GPT6 or if that's a improvement on five however they're going to do it they're they're going to showcase that first and what has happened is chatbt 5.2 two uh the the the new reasoning model actually is now

caught back up to Gemini. And so there there are I'd say improvements that are being made. It's this horse race. It's the same thing that's been going on. Um but man, if you're a Thinking Machines or SSI, like you're watching this happen from the sidelines. Um you're you're you're probably you're probably feeling like you're too far behind to really get in the game. Um, and and you may be a smaller player which has a great outcome from a financial perspective, but I think ultimately all the people that we're talking about here are not caring about the financial outcome that it's going to be a large outcome for them either way. Um, what they're talking about is being at the place when it happens. And if they're not in the middle of it, um, you're going to feel

like you missed. And, um, that that I think is probably what a lot of these people are seeing. And there's probably a lot of, you know, pull as well as push. Um, you know, political infighting at these companies. Startups are tough, especially when you're talking about big personalities and big numbers. Um, so yeah, a little bit of a ramble, but that's those are my thoughts. >> And and I think the the first cluster of Blackwells gets live this quarter. Mhm. >> Um, and I think what you're going to see is these AI data center companies, a lot of them are ex Bitcoin miners, start to do um, better than people expect or frankly just deliver uh, on promises. Like a week or two ago, Core Wee was trading at

like 2 or 3x sales for 2026, which no matter what you think of them, is probably too cheap. Uh, and they will need more financing, and I think you'll see stable coins get involved, and that'll be a huge source of yield for stable coins going forward. Um, just back on a crypto note, I'm I've I just have had the bit mine in the uh the top left of my screen and you know the conference starts there's this like Pangu video of Tom Lee as a penguin driving a Lambo around like amazing hype video. It's like you know the future of finance, the future of the creator economy. Um there's people like you know there's like this massive stage he's on.

There's all these people that are like die hard in the front row. I I remember when one of our um foreign LPs uh you know gave us the Bitcoin bullcase based on Micro Strategy being a cult. Um and I thought that was really unique and I didn't fully kind of grasp the stock of cult grasp the idea of cult stocks at that point. But what and this isn't possible for everyone like I think it's really only possible for you know what are the commonalities of Sailor and Tom Lee. They've been around for like 20 years. They've they've uh you know there was a long period of time where Tom Lee uh was just getting like bullied on CNBC when he'd present things like tech bull

cases or Bitcoin. I remember >> Tom, you're bullish again. >> Look at you. You're back. And and uh I think um the mo the call where he got most disrespected probably I think unfairly was uh he called for $20,000 Bitcoin. Uh, and he was like two years off or maybe a year off. >> What? Put that on a timeline when, >> right? I think he called for it in 2017. >> I think it was 2017. Exactly. Yeah. Or or maybe 18. >> Um, >> and either way, he was two years off or a year and a half off. But Tom is the ultimate just like just add duration.

You have a problem, just add a little bit more time horizon. Um I think he is a believer in the power of this kind of like stock collectivism in terms of like these cult stocks but also just like technology. Um and you know, even even like this summer I thought Tesla was going to go to zero cuz one of my friends was very short Tesla and uh you know I think just like the car business is really hard and didn't fully believe the humanoid robots story and I and I still think that will be a while but he was very bullish and I think he's just has this ability to see through maybe like revenue gaps or like you know there the time and duration it

takes for technology matching that to an invest ing style that if you have a permanent capital concept like a company um it just fits really well and it doesn't need to be there's rules right there's like investment company rules which is uh this kind of long-winded way of saying you can't have more than of 40% of your NAV in securities if you're a company that's why all these treasury companies work the underlying assumption is that they all have commodities um but if you have something with price reflexivity like ETH that's a commodity with yield it's just like this core equity layer of a company that can allow you to go off and put $200 million into Mr. Beast, run your ATM and and if you combine it with the Tom Lee personality and and uh I think Tom Lee the commonality across his career is like

most people if they work at hedge funds or public equities for 20 years are just really jaded boomers. Um but Tom Lee is always very nice and even when they try to bait him on CNBC, he doesn't he doesn't go for it. He's just like a nice guy. So nice guys finishing first potentially. We'll see. But it's a great look especially for ETH. >> Yeah. And and I think for the industry too like you know Sailor Sailor has built you know strategy in this way that is this like Bitcoin behemoth you know he's like >> he's not even really going to do like any options because he doesn't want to generate like he he's like a purist just like the Bitcoin >> boomer. He's a boomer. Well, let's say let's say purist uh to be

>> to be nice. But um what you do have and I think that this is kind of like a representation of the the ideologies of Bitcoin versus Ethereum is you have more experimentation. you have more, you know, risk on at the edges, but as a risk-on perspective and and sort of like a novel distribution perspective that people like Tom Lee embody um and and are able to capitalize on and provide a mechanism for investing in which is Bitmine. Uh and you know, it's not like you're going to see Micro Strategy off and you know, put uh $200 million into a new hardware Bitcoin hardware company or something like that or or anything related. um you know as in the same way that I think the the

investment in Beast Industries is just a brilliant move. Um I I think that you've got um really sort of the the core hard money perspective of Bitcoin and that's what Sailor represents. But Tom Lee is the perfect representation of this, you know, technology platform, this this technology wave, this um philosophical wave uh of decentralized uh uh technology that Tom Lee is putting into Bitmine. >> And uh he's got the lighter founder, you know, coming and doing a talk. he's got uh I I think generally the thought process of Bitmindine at least according to this presentation is like

ETH is just the beginning and we're and we're going to buy a shitload more ETH >> right >> so everyone get ready but super cool to see it and and hats off to him um for going there. Uh, I think the last one is probably lighter versus hyperlquid. Um, I I think it touches on, you know, what we could probably call out as like valuations in general. Um, and I think that we we have talked about this, but there are the revenue meta is real and the revenue meta is basically, you know, building

businesses on chain. Uh, that that is um really kind of the direction that I I think most assets are going after 1010 last year. Um, you really have like a binary. Are are you building a business on chain or are you not? Do you have the potential um to be you know a distributed uh mechanism similar to hyperlquid that's got 98 99% of its revenue flowing back into a profit buyback um and that is the direction where most of these are going historically that's been exchanges so lighter came onto the scene um I I can't remember if they launched by the time we did our last pod but but they were right about at that launch date um >> at least the >> I'm in the the lighter token um and so

that you airdrop happened, that sale happened, like all all the things kind of happened over the holidays. Um, which was awesome to see. I think we're we're having more shots on goal. Um, and it trades, I think as of today at like 1.8 billion FTV. Um, and it's an interesting concept. I I think we're just going to continue to see these um businesses being built on chain. Those are the ones that can ascribe the the large multi-billion dollar valuations or or sustaining values. Um, and everything else is is going to be troubled uh, unless you have the ability to become an Ethereum, which is very very hard uh, as a platform with that much scale. Uh, or or you're displacing Bitcoin, which no one's been able to do in, you know,

almost 20 years. Um, so you kind of have three options. You're either Bitcoin, you're a smart contract platform with the same scale of Salana or Ethereum, or you're building a business on chain. If you're building a business on chain, you know, you're going to look and feel a lot like a growth stage tech company. Um, and that's great. And I think taking it all the way back, you know, things like market structure are going to be beneficial when that comes about. If not, or if there's a period of time in between now and then, I think the SEC innovation hub or or some kind of sandbox is going to be the path forward um where if you're doing the right things, if you're not trying to like abscond with false information or yeah, do anything nefarious like that, you're going to be fine. um you just got to

kind of like find the right regulatory path. Um so there will be a path forward for DeFi assets that have value acrruel and and yeah, it's just exciting to see, you know, more stuff more shots on goal. Yeah, more shots on goal. Um and there's nothing wrong with trading at low valuation. Like you you do have to grow into a normal valuation multiple at a certain point. Um but also at a certain point you do have to trade at fair value for people to actually believe any facet of your growth story and and the delta between those two if you are not able to access institutional flows is you have to buy back your own token >> right >> um and so it's like a very simple math exercise of like okay find the marginal

buyer uh and and that is something that you're just adding on top of a startup where life is already very hard and uncertain um but some can do it and some won't but it's just like the degree of difficulty is higher. Um I do think on the displacing BTC point um I think bit like not to go back to Bitmine but like they are repositioning ETH as probably on par with Bitcoin. Like if you have if if the two largest stats are roughly the same I would say Bitmine is higher quality and has more dynamism and like ETH and ETH is to Bitcoin what kind of Tom Lee is to Sailor at the moment or it's like Bitmine is to Micro Strategy.

It's like got a little bit more motion. It's a little bit more exciting. There's more pageantry. There's it's more interesting. There's more optionality. Uh may maybe the last thing to wrap up on is uh quantum and not in like the quantum stocks uh meaning I don't know how those are doing. I can't imagine that well since I last checked. Uh I do think uh the ZKVM push pushing for quantum resistance uh you know sooner rather than later like bit uh Nick Carter led an investment and I haven't done full diligence into what this actually is but uh you know he thinks by 2035 the risk of Bitcoin getting attacked by a quantum attack is like 70 to 80%. So, um, like it's worth just thinking through like if these

things are supposed to last forever, what are the technology ways that they'll have to survive? If if if ETH is fully quantum resistant and that looks like where the world is heading, um, it could be difficult for for BTC. >> Totally. I mean, look, I I would imagine I would think people in BTC land would come out if there is a solution to quantum or if there needs to be a quantum resistant version that will happen. Um I I think we we're still a ways away from that being viable. Um there's also so many other issues if quantum is real password you've ever written every single bank account you know you know all of your personal identifiable information just like

>> totally totally but like all of those places I'm not worried about responding >> for sure there's you know my bank is my bank like I call my my guy there's a CEO but like Bitcoin like you can't call Satoshi >> yeah but it's not like there's well you can't Valera can't necessarily do the same thing there's there's more interaction >> on X saying he will though. >> Yeah. Yeah. No, I get it. I what I what I'm saying it's not like there's nobody working on Bitcoin. It's like there are upgrades happening. It's like they will do it. I It's just a question of how and how long would it take once it becomes real. Um I I I think broadly though the point is interesting which is you know we talked about or I just said that there would be basically three different asset types. There's like Bitcoin,

there's basically ETH as a smart contract platform, and then there's basically D5 with businesses on chain or or all different businesses on chain. The the most likely, you're right in that the most likely outcome for anything displacing Bitcoin is probably ETH just based off of the momentum that it has and the monetary premium that it has relative to the business or activity or whatnot. And and I think if they're able if if Tom Lee and everybody else is able to kind of like rally around that like this could be uh the shot at doing so uh especially at a time when you know the the prognosis uh relative to size of ETF inflows and you know micro strategy buying may be relatively lower for the period of time relative to Bitine and

ETH and ETH ETFs and and the Bitine crew is a very mildly crew Like it's Tom Lee right now. He's he's walking through Mr. Beast Industries investment. He's got a massive picture of Mr. Beast up and Vitalic is coming on stage next. It's it's really a different uh crew. Um and he also just uh announced that he like he's doing these Tom Lee moonshots which which is equivalent to Google's other bets division. That's where like Whimo came out of that's where all these other things like that is kind of what he will be doing. Um, you know, like this is like what Mr. Beast Investment will be part of. Um, so it's super cool to see people pushing this stuff forward. Um, I

think, you know, probably watching this pod, you can tell we're pretty optimistic at the moment for all this stuff. Feel like market structure will be a great narrative to to kind of layer all the flows into. Um, still don't know who buys the longtail of altcoins, but we're not terribly interested in that at the fund level. And um, yeah, it feels like pretty good time for crypto all things considered. I'm excited. >> All right. Should we leave it there? We'll leave it there. >> Thank you. Appreciate it.