Why Bitcoin is emerging as a macro asset, with Coinbase's head of research

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show where we're searching for clarity in an ocean of vibes and vibes alone. I'm your host, Jay Hamilton. It's Friday, May the 30th, and today we are joined by David Dwong, head of research at Coinbase. Today, we're going to talk about the current state of the crypto market in May or end of May 2025. We're going to talk about FTX. Second round of user dispersements begin today that could provide support to the crypto market in the week ahead which is already been looking quite good over May. We're also going to talk obviously Bitcoin had their conference Bitcoin 2025 in Vegas just happened with JD Vance and David Sachs and a lot of

big names. Senator Lumis making presentations and giving updates there. We'll talk about what you need to know from Bitcoin Vegas if you weren't there. Before we jump in and hear from David, if you guys just do me a quick favor, I hate asking this, but if you could give us a like or subscribe or a follow wherever you are listening, it really helps us helps the show, helps us get in front of more people and help them invest in crypto in a safe way so we can bring more people and onboard them without them getting wrecked. Today's episode is brought to you by Letin. Get cash without selling your Bitcoin. It's also brought to you by meanwhile ditch dollars insurance and Bitcoin. Without further ado, David, welcome to the Milk Road Show. My pleasure to be here. It's great to have you. Uh, okay, let's start

with uh with F FTX. You you wrote a uh you write a regular uh report on a market commentary of what you're noticing. And in your report, which you actually just published today, we'll link to the show notes for everybody who wants to go read it. uh you talked about FTX repayments are starting which would bring great support to the crypto market. Uh can you walk us through what's going on with the FTX repayments? Sure. So this is going to be the second round of repayments for the FTX estate and the first one was done in February where they paid about $7 billion but that was for the convenience class and that meant for the those were the smaller claimments for anything below or equal to $50,000. These ones incorporate some of that. Uh so there are five classes being

paid out here. Some of those are institutional, some of those are lenders. Uh some of those are those like smaller claimments as well and they constitute around $5 billion total. Most of that's going to be paid out in stable coins and cash. In the last round actually was paid out in a mix of crypto and cash. And I think that that probably didn't help uh things because the market structure around that definitely didn't lend to the benefit of uh crypto in February when crypto still kind of tanked even though we had that liquidity injection. And I think part of that had to do with like the headline risk around like what was going on with tariffs at the time. I mean we still haven't gotten through all those tariff headlines but still they were really hitting uh in late February. We also saw that there

just weren't really a lot of like you know cryptospecific catalysts that really kind of supported the markets. I think that things are different this time around. Probably demand could get a boost uh from this liquidity. It's going to be paid out over the next three business days starting today. But of course it's kind of starting on a bit of a sour note because like I said those tariff headlines haven't gone away and in fact if anything they're more confusing than ever. Okay. perfect leadin uh to my next question uh which is about the trade war and tariffs. Uh I was I was finally feeling like we could take a breath here for a minute with it felt like we were like okay everything's at least on pause until roughly like July. So I was like, "Okay, here we go.

We can all just take a breath." And we had great optimism in the markets because I think the markets also markets had sort of priced in the the tariff uncertainty and then also accepted that hey there's these pauses. So we kind of have smooth sailing until we get to the point of these these pauses ending and and then the federal court decides that Trump isn't allowed to do the tariffs and now we kind of go back into uncertainty. I don't even how do you unpack and uh think about the trade dynamics right now and the way they're impacting markets and the way an investor should try to process all this information. Yeah,

there are so many dimensions to this because I think the macro picture I mean first of all there's two things we have to think about simultaneously. Number one is what's going on with the tariffs and the trade war and number two is what is happening with uh the rest of the fiscal situation inside of the US. And I think that with the uh trade courts uh kind of announcement that subsequently has been I guess you know they were saying that like you cannot have those tariffs in place and now the appeals have gone through and they say that actually it's going to continue on and this back and forth. I don't think markets really ever believed it in full because you can kind of see it in the confidence of investors. They were you know kind of not really pricing in the idea that this this cord order was going

to hold anyway. Uh but then you also had uh Scott Besson actually saying that actually hold on relations with China are starting to kind of sour here. We saw the tweet coming from Trump. So you also have to keep in mind like there's the actual dynamics around whether or or not we're going to maintain like the the status of tariffs as they stand, but also like kind of keep like all the micro kind of dynamics of we have 150 to 200 kind of trade relationships that we're con concentrating on right now. what is the momentum as we kind of approach like July because you know if we have this uh you know pause from like back on May 9th uh for example or sorry April 9th then we don't really have a

lot of time to kind of get things done and as soon as momentum kind of stalls then we should be concerned that we're not going to fully get to conclusion to this uh saga. So, I think that that's going to be important. And then on the other side of things, we have to think about, well, what is Trump saying about tax cuts? What is he saying about this big beautiful bill? Um, how does that kind of also affect people's perceptions of how assets like Bitcoin in particular, store of value assets actually kind of like do inside of this environment? So, there's a ton to kind of consider when we're thinking about the macro environment.

Yeah, it's uh I mean it's just there's so much there's there's so much to unpack here and really there's also just so much headline risk right now that it feels like you really you kind of need to just tune into true social and follow what Trump is saying and be prepared for markets to swing because one thing that's very interesting that I think people forget is we we live in a world where markets didn't used to respond respond as quickly to news as they do now because we used to only get this news through Bloomberg terminals which only certain people had access to and which was kind of slow. It wasn't like

people were going to social media and hey post here and then boom markets respond. So it is it is so difficult. Let's let's I I want to talk about how this impacts Bitcoin and other crypto assets but but before we get there let's just stick with with macro for a second. uh when you look at the US economy the what we're hearing now is we went from this okay we're going to go into this phase of austerity and we're going to sounded like Trump and Bessant and I'm not sure that they ever really wanted this or was this just more of a play to try to get the y the long curve of the yields down which unfortunately has not worked but we they've clearly shifted to we're going to grow our way out of this we're going to spend we're

going to print more money it feels like everything heads towards inflation which should be that feels like another asset bubble is coming which would be bullish for risk assets like crypto. H how do you frame the state of the US economy? What you think the Treasury might do? Maybe we could even talk about what you think the Fed might do because they just seem to be bit of a ghost right now and not playing ball at all. Uh we know that by May 2026 that we'll have a new leader of the Fed as Jerome Powell will step down at that point. I mean, I don't think it's going to happen before then, even though Trump seemed to make a lot of noise thinking he might be able to do that. How do you how do you frame the US economy and what you think might happen

in the next year and and tie that into how that might impact the crypto markets? Yeah, I think fiscal dynamics, first of all, are much more important than what's going on the monetary side. And I don't think that this playbook by the way is is a you know a unique kind of separation from what they had like planned or what we thought was going to happen for the year. However, I think the timing is definitely kind of flipped. So originally we thought some of those tax cuts and uh those you know deregulatory kind of developments would actually be frontloaded and then tariffs would be in the back back half the year.

But then it made it very clear even prior to inauguration that that wasn't going to be the case. And I mean that's actually why we kind of went out with a view that we were going to see uh the dip in crypto markets probably in the first quarter, maybe second quarter. And we I actually thought that we would see the low in the first quarter of the year. Turned out that that was actually in early Q2 instead. But then that we would see uh alltime new all-time highs rather in the second half of the year. uh for Bitcoin specifically, of course, that's come way sooner uh than I expected, but we're not like through the woods yet. And I I think that we're kind of incrementally kind of moving in that direction in part because I think uh we're still expecting that like me like

in terms of like our macro picture, I'm expecting that things are going to materialize better in the second half of the year. And the kind of dirty secret that not a lot of people want to talk about is that deficit spending actually does support asset prices. And I think that that's what we're going to be getting. But of course, it comes at a huge cost because now with rates where they are uh now with uh how the bond curve itself is frontloaded in terms of actually you know this happened during the Biden administration, but like we ended up borrowing a lot more in the front end of the curve than the back end of the curve. I think that the interest expense is going to be a lot more painful now. And so this is why people are thinking about how they need to

reform capital market assumptions around store value assets like gold, like Bitcoin. And I think that that is going on at the moment. It's hard to say how much of that is feeding into the performance of assets like Bitcoin. Certainly like Bitcoin dominance has been kind of taking off and I don't necessarily think that it's going to stop anytime soon. By the way, I think that many people are kind of looking at alt season and whether there's a prospect for it. I think that maybe select alt uh might be okay in this kind of environment, but certainly I think it's much going to be much more dominated by Bitcoin because of institutions playing in the space. Now, you brought up the idea of like kind of how about the monetary policy aspect of this. I think the stuff is relevant. I

don't think it's gone away completely, but a lot of people kind of look at the futures curve on like, you know, from from Fed fund futures and they kind of say like, oh, like the Fed's pricing in like 75, 100 bips. And I'm like, no, because a lot of this stuff has changed given the dynamic of people actually trying to look for stores of value, looking for safe haven assets. Treasuries don't play that role quite as much as they did previously. But still, I would say that it's more realistic to kind of expect two like 25 basis point rate cuts coming from the Fed most likely in September and October than it would be to kind of expect that they're going to deliver 100 base points or more if the situation deteriorates uh at the moment. Yeah. And if if we look at uh I'm just trying to pull up Poly Market

real quick here. Uh if we look at Poly Market, the the expected rate cuts for this year, uh we've got let me just get this up here. Uh it's it's across the board. 26% zero rate cuts, 23% one, 24% two, 13% three, and then uh a few percent beyond three. So I think, you know, the market is pricing in a few rate cuts. Earlier in the year, we were thinking there would be way more rate cuts. Uh but inflation is low, so there isn't really a need for them to cut rates.

There was even I've even heard a take recently that as a result of the current big beautiful bill which I don't think I just love saying that by the way that the naming of it is just incredible. Uh I don't know if that's going to go through as it is. We'll see if it goes through. It seems like it's meeting a bit of opposition right now. But if it did go through as it is, I've heard a take that that Powell could raise rates because he could he's in a position where he can because inflation is is low. It's not at the 2% right now, but it feels like we're never getting back to the 2%. Like I think we all need to accept that we haven't been at 2% in like six years or something like that.

That just feels like an old target that we need to move beyond. So, I I don't know like it it the the setup to me right now feels I mean you you said yourself you you you thought that we would be in this position where we would see all-time highs in in Bitcoin and we we hit that much earlier than we think. I still feel like we've got a bull run to happen towards the end of this year. Uh and and I will agree with you that I don't think we get an altcoin season like we have in the past. I think I actually hate the term altcoin. I say this on the show all the time. Um, we need to ditch that term. It's a completely trying to bucket like 40 million assets into into one term is

ridiculous. Um, but but I think we get I mean if any we actually just kind of had an altcoin season. Look at what just happened, right? Like we we had a and this is this is how altcoin seasons work. They rip. They rip fast. And you know, Bitcoin sold. They're up what 70% from their lows just four six weeks ago. So, you know, and no, but not everything rips, right? And that's I think the way altcoin season will go. Um, and know how do you play out the the rest of do you think we're still in a bull cycle and how do you play out the rest of this this bull cycle? You think it it goes through the rest of this year? Do you see it extending into next year leading up to the midterms? And that's really what Trump is focused on is trying to

boost markets at that point. How do you play it out? Yeah, great question because I think in any given year and some of these things, some of these themes kind of cross over from year to year. I think there's maybe one two big macro themes you need to play and if you get it right, then your portfolio is going to do well. At the moment, there's probably a little bit more than that because of tariffs and how much of that is imprinted on investors minds at the moment. But I think going back to kind of what you were saying about what the Fed's going to do, like how how is that going to manifest itself? I mean, first of all, I I would say that my concerns around inflation have been probably

pretty like low for a while now. like and I think that seeing inflation kind of uh remain at this these kinds of levels gives uh the central bank a lot of freedom to actually cut rates if they believe the economy is going to start to deteriorate. Um all said and done I think that they're going to have to deliver like those two 50 base point I'm sorry those those two 25 basis point cuts 50 pips total. Um, and a big part of it has to do with the fact that I think if they're looking at the the current situation with respect to the, you know, employment, respect to other things. It's not an entirely worrying situation, uh, by any means, but I think that they're they kind of need to put

insurance cuts in there just because of their concern. Now, the thing that I I think kind of makes it hard for a lot of people is because we have these tariffs because they drive inflation expectations temporarily and that's the bigger challenge because the Fed's job is not to respond to one-off developments. Like they they they they don't and they can't like you don't like kind of say, "Well, tariffs are going to be here. It's going to have like a one-off kind of shock on on prices. I'm going to cut rates like or hike rates rather." Well, no. they they don't do that because like there you don't you know like unless it is a persistent kind of development on inflation then doing that does nothing for inflation rates.

What might happen though is the concern around inflation expectations because those can be self-fulfilling and that's about psychology. It's about like in consumer behavior and that's really really hard to kind of get right because if we believe that like prices will keep going up because we're humans that these are human constructs. We're just like we we kind of make it happen and the Fed kind of feels a need to respond to those kinds of things. So I think that that is much much harder to predict. But ultimately I I think that's going to come and go. What I do think is going to continue from like a multi-year perspective is the structural development that we've been seeing in terms of AI actually improving like productivity. Those are things that have

been been present for the last year or so. Uh these are not short trends. These are like multi-year trends. Like the last productivity decline we had lasted 15 years and they went from like you know 200 like five up through 2020. and we've only been able to recover since the advent of AI really kind of being part of that. I think that conversation like that structural development in line with some of these fiscal uh changes that the Trump administration is making right now that's going to carry over I think definitely puts us in a strong position in the second half of the year.

So I think this this the potential for a rally will continue into the second half of the year and probably could even go into 2026 as well. You think AI is deflationary? Yes, as a first instance. So ultimately I think that like the concerns people have about AI taking people's jobs and like you know that actually contributing to like uh disinflation rather than inflation I think happens early but these are not things that I think are going to be sustained over the medium to long term. So like ultimately that I think that will correct itself and I wouldn't necessarily be worried about it. So maybe as a first instance, but

it's it's not something that I'd be like, "Oh, people's jobs are gone forever." No, it's just going to change like people's jobs like I I don't know what that those are necessarily going to be, but the people who curate those prompts for for AI, those inference those inferences, you know, like maybe like that that becomes a thing. But like ultimately like I don't know what those jobs are going to look like. Some of them are going to be like removed, but it's like anything else. Like, hey, like uh if you have self-driving cars, maybe those are fewer truck like drivers in the beginning, but maybe they'll need to like operate things on the back end, you know, like so these things shift and you can't really predict them. Yeah. Yeah.

It's a good take. Okay, let's let's shift to Bitcoin. So, we just had Bitcoin Vegas. Uh give us the the download on For those who weren't at Bitcoin, guys. I know you weren't there either, but you were quite tuned into it. Uh for those who missed it, what were the major announcements that came out of Bitcoin Vegas? Yeah. Uh so JD Vance uh gave the keynote speech and I think what was really interesting about this is, you know, it's no surprise that he talked up crypto and talked to Bitcoin, but saying that Bitcoin as a strategic asset for the relationship between the US and China, I think was a really big statement. Uh and I don't think a lot of people fully appreciate what that means because I mean what he's really kind of saying and this kind of goes into what uh cryptos are like David

Sax also kind of said in terms of you know whether like more and more countries are going to be following down the the US example because I think a lot of people when the executive order kind of came out uh and I don't remember the exact date now I think it was in in in January like right after the inauguration I think a lot of people were disappointed that the US wasn't accumulating more Bitcoin. And David Saxs actually also kind of stepped in here and said like, well, hold on here. Read the exact text because we're not saying that we're never going to accumulate Bitcoin. We just need to do it in a budget neutral way, which is we can't raise taxes for it. We don't want to like like increase the Treasury debt in order to buy Bitcoin. But if we can find a way to actually do it in a budget

neutral way, we will do it. And we there is still a path to accumulating Bitcoin, which I think was a really really big statement. And also then you also had um some countries like Pakistan kind of came out and said that they're going to have a new strategic Bitcoin reserve. Uh which is you know not a complete surprise because I used to work in emerging markets for example. I think this opens the door now for other emerging markets to kind of set up their own potential strategic Bitcoin reserves. So, I I very much think that this is part of the conversation and some countries out there, we know that they're sitting on a pile of Bitcoin.

Like, uh I think the US sits on 1980,000 Bitcoin, China sits on 190,000 Bitcoin, for example. But I think more and more we're probably going to see either a conversion or perhaps accumulation of Bitcoin coming from these sovereign entities. Selling your Bitcoin should be a last resort when you need cash. That's why there's Lein, the trusted platform for Bitcoin backed loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties. They've issued over 9 billion in loans and never lost a single Satoshi of client funds, even during the chaos of 2022. If you're a long-term hodler, this is the move. Get

liquidity without selling at milkroad.com/letin spelled ledn. Meanwhile is the world's first licensed and regulated life insurance company built for the bitcoin economy. They do everything in BTC. You pay in BTC. They pay claims to your family in BTC. You take out policy loans entirely in BTC when you need liquidity. Protect your family from life's uncertainty and a broken financial system. Build intergenerational Bitcoin wealth while the cost of living skyrockets in dollar terms. Plus, get all the tax and legal benefits of life insurance now in Bitcoin. Visit milkroad.com/meanwhile to join the wait list and get early access to the world's

first Bitcoin life insurance. How much do you think this is happening? the the the the tough thing to really figure out right now is is to label Bitcoin as to how it is trading. And it depends depending on who you ask, you get different answers, right? Some people are like, "Oh, it's it's it's just a tech stock. It correlates to the NASDAQ, which yeah, you can find evidence to show that." Others are, "Oh, no, it's decoupling. It's a store of value. It trades more like gold." You can also find evidence to support that.

where where are we in in Bitcoin's journey and where do you think it's going? Yeah, this is a great question. And you know the other thing that and this is probably a pet peeve and probably this is the right form for it, but like oftentimes people use those terms of store value and inflation hedge interchangeably as well. And they're they're totally different things. Uh I mean they're related. I I shouldn't say totally different things. They are in fact related, but generally when I'm thinking about store value, I'm thinking about an asset that keeps it value over the long term. Whereas when I'm thinking about inflation hedge, I think about how this asset responds to short-term shocks to inflation. So those two things aren't completely separated. Gold obviously like has done well kind of, you know,

meeting both expectations uh to some extent, but certainly like you can't always say that like a store of good store value is also a good inflation hedge and vice versa. Like it might be the opposite. Um but let me ask let me ask you this. Let me just double click on that quickly. uh bring treasur bring US treasuries into that where do US treasuries fit in that because there is clearly a move away from US treasuries right now and there's an opportunity for that move to move to bitcoin can you just pull that in there sure I mean and treasuries are interesting because you also have tips which are like inflation protected notes uh which are designed precisely to kind of you know work against inflation and so if you're

looking for a pure inflation hedge for like one country for example just the US that's your answer uh but you've historically had treasuries kind of being the safe payment asset in part because many many countries use the dollars intermediary in their balance payments. So if you're trading for example and you let let's say you're China and you're buying like soybeans from Brazil like in the past oftentimes they've kind of said well like I want that traded in dollars because I don't necessarily want to accept Brazilian realale or Brazil said like I don't necessarily want to deal with the volatility of having convert my like Brazilian recemen for example. So they've always kind of operated using the dollar as

intermediary. Now some of that has changed like Brazil like and China famously struck a bilateral deal where now they can actually have that. So they can actually don't need to have the dollar in that but still for the most part the dollar kind of sits as intermediary in almost 80% of transactions in the world. Now if you're sitting on dollars inside of your reserves uh because you need to have it for imports or other things um and you know you always think about it in terms of like do I have like six months worth of like dollars for imports? Well, I don't want to just keep the dollars around because the dollar doesn't pay me anything. I want to get like I want to have an opportunity for yield. So, I'd rather buy treasuries with it or other things. And so that's why we've seen

like treasuries actually uh have this kind of special place inside of global finance because we need it on a practical basis like day-to-day as well as for like institutional investors and other places who basically like also need to kind of trade using like the dollar and they also want to like have a yield bearing asset in their books uh rather than just kind of holding dollar outright because they know that like treasuries are liquid they can always convert out of that. So that's kind of why you've seen like treasuries. But there's also this other thing going on and this has been happening now for the last 15 years which is that if you're a foreign entity like a a pension fund for example or like large insurance company you've probably been attracted to US

assets because over the last 15 years US assets have done well. longer than that. But like, you know, you've also kind of said to yourself, do I really need to hedge this? Because if I'm like in in like a country where I'm a little bit concerned about how my currency is performing, the dollar is the hedge. Like historically speaking, like I want to keep myself in the dollars. Like I don't need to like kind of like convert that back into Mexican pesos or whatever because like if like the dollar does well, then I'm doing well. So like for a very long period of time, many of these entities haven't hedged or they've like only partially hedged a lot of of their position and they're invested in everything, right? They're invested in like private equity, they're invested in

like US stocks, they're invested in treasuries, bonds, other things. Um and increasingly because of what's been happening with tariffs and the uncertainty with respect to trade more and more a lot of those entities are saying I need to either protect myself by actually hedging my dollar position which means getting out of dollars i.e or outright selling dollars. And so what we've started to see in the recent months has been this indiscriminate selling dollar selling pressure. And this has also contributed a lot to what we've seen inside of crypto because more and more people are saying like, well, what do I do with these assets? And yes, some of that kind of gets converted back to like whatever the home currency is,

but some of that's actually sitting inside of crypto and sitting inside of Bitcoin, which by the way has matured as an asset, the crypto has matured as an asset class. So now they're actually a lot more comfortable with the idea that they can actually do so because the US is in on it. Like the regulatory environment is changing inside of the US, which means that the regulatory environment in many other countries is probably going to change. So you're seeing that globally like like Bitcoin's role as a potential super national asset i.e. an asset that sits outside of those so sovereign kind of boundaries actually has started to kind of pick up. So whether this is going to continue whether I was just going to ask that so does this trend of dethroning the dollar does it continue?

I think it will. I I do think that if it's not Bitcoin, we need something else. But Bitcoin's the best kind of alternative. What else? What else could it be? Like is there what's number two option? Is there a number two option in your mind? For the time being, probably not. I mean like I I still think that what we're seeing in terms of the rest of crypto space as far as what other layer one networks are doing and whether more and more transactions are going to fall on them and I think that's where stable coins kind of slot in very well because I think stable coins and what they represent for at least maintain the longevity of the dollar for the time being in terms of our exorbitant privilege I I think kind of handles that and wherever those stable coins sit and

they might sit on one network it might sit on many networks Um, but like if you know headlines like Stripe kind of trying to figure out like their their stable coin like like strategy right now or other places trying to figure out like banks kind of like coming together and kind of saying like maybe we all of us need to decide on on one stable coin that we use across all these banks like JP Morgan and and Morgan Stanley, HBC and whomever like I think that that uh could actually mean that wherever that sits could also kind of solidify like the value of of basically If it all sat on Ethereum or if it all sat on Salana and you needed to hold Ethereum in or Salana in order to process all those transactions, then

you could see one of those assets in the long term. Not I don't think that's a now thing, but in the long term, you could see one of those assets becoming an important store of value. Yes. Uh but it's it's a big if. It's a big if. Yeah. Yeah. High risk, not financial advice, right? Uh, and you have like I mean there there weird theories in in economics like Gresham's law and other things where like you know if an asset like continues trending way too high it it's hard to be used for regular day-to-day transactions for example which makes perfect sense right like you would want to to to hoard that instead of actually spending it if it's increasing in value but you know like I would say that you know we saw this happen with Ethereum back in like the

like the the boom cycle of 2020 2021 one when people were spending on DeFi summer and spending on NFTTS and other things because a lot of those things were dominated in ETH and so that really contributed to ETH's performance at the time. This cycle a lot of it happened to be memecoins and so Salana actually ended up uh being like uh the key there in the lynch pin and and which is why like Salana did very well in the cycle because a lot of those meme coins are denominated and sold. Um, so those things definitely matter. Uh, which is partly why when I think about like dynamics with with Bitcoin as a whole and like its relationship to the dollar, well, you know, like a lot of like a lot of crypto assets are denominated in USD.

And so when the dollar actually performs poorly or when there's the potential for like indiscriminate selling which could last for months if not years well the counterpoint to that is that well then that denom dollar denominated asset like Bitcoin should the theoretically perform better. Um so I I I think of it in those terms. Okay. Uh there was a a great aside that I did not expect to dive into. Uh this is turning into a great macro conversation. I love it. Uh let's let's go back to to to Bitcoin for a sec. So we talked about uh Bitcoin Vegas and ve very uh very positive sentiment coming from the US government. No surprise there. We all know their stance. But I think you are right that

uh it kind of got lost because we all started to focus so much on tariffs and tariffs stole all the headlines that the what is happening on the government side around Bitcoin kind of people have kind of forgot about it. We're not so focused on it, but there is real demand from from governments and I don't even think that's really even started yet. And then we have this whole corporate treasury strategy that is absolutely exploding right now and is really driving a lot of the inflows and the buying that's happening on Bitcoin. Talk to us about the the corporate treasury strategy and how how you frame that and and then that impact on Bitcoin and and

is that why you said earlier in the show that you think Bitcoin dominance continues? I mean that's part of the reason when I was thinking of institutional investors like I I partly thought think of corporates but I'm also thinking about many of the like investment advisors out there who are collecting on behalf of like retail participants who are getting into the space for the first time and you you're seeing that like if you're looking at 13F filings for ETFs uh for example you see that investment advisors continue to climb. So we've been going from like like mid to low single digits. Now we're around like uh yeah that's a that's a good chart if you can show it like I think like above 12% for example.

So I think that we are seeing that increase uh slowly. I mean like many of these firms have not done the due diligence. Many of them are now awake to the idea that they need to allow their clients and their investment advisors to actually recommend it to their clients. Um, of course, investmentizers don't necessarily want to recommend like some of these like crypto ETFs unless they get paid for it. So, until their bosses say it's fine, you can do it like they do it, but they can take reverse inquiry. So, just from reverse inquiries alone, you're seeing this kind of increase uh into double digit territory.

So, I think it is really important. But you asked about corporate treasuries and this is a tough thing to kind of get around, get my head around, excuse me, because I mean like every day now there's a new headline about someone uh starting either a Bitcoin strategy like now we have ETH and Soul as well. And you know like I I don't know if like you know initially it kind of started as pure kind of like Micro Strategy SL strategy copycats. Uh now there's they're starting to kind of deviate a little bit and and do their own thing.

Um but a lot of them are still kind of saying like hey we're going to issue convertible notes or we're going to issue stock and we're going to use that money and we're going to raise it and we're going to like uh use it to kind of kind of buy this thing. And the latest being from Trump Media I think was was a big headline when they put out that$2.5 billion dollar number. I mean these are these are not small kind of increments in terms of where corporates are. But it's interesting because I think if you're looking at just public companies right now uh we have about I think 71 72 different public companies who are uh running this Bitcoin strategy and outside of like if you take like separate micro strategy and you know I'm going to call it that because when you it gets confusing which is strategy I

call it strategy. Yeah. Yeah. Micro, but when you separate strategy, I mean like the rest like are are like almost like barely half of what Micro Strategy Strategy has at the moment. So I think Strategy has like 580,000 Bitcoin, for example, and the rest of them combined is like 175, you know. So, uh it's it's kind of insane how much um like like they they have or M like Micro Strategy has compared to the rest. Um, but increasingly I think they're they're looking at it as, you know, not just a pure speculative kind of way of of of putting on putting crypto on their balance sheet. I think some are starting to perceive whether there's actual cash management strategy, which is typically

what you should be looking at if you're a corporate treasurer, like I shouldn't just be thinking about speculating on things. I should be thinking about managing my my my balance sheet, managing my cash. I think more and more are thinking about it that way. If we pivot towards that direction, then I think that this theme actually has legs. Uh if we don't and it's just purely kind of thinking like, oh, like I I want to trade at a premium relative to the Bitcoin I hold. I don't know like I think that can kind of last but you can't not everyone can do that. So yeah. How many of those do we really need?

Right. Right. you know, like how many I should better put how many of those does the market require for for investment? You know, obviously right now there's a lot of excitement about it and people are excited about strategy, but and and rightfully so. And some of these new ones like I I'm I believe that there's a place for more than just strategy to be the only one playing this playbook. and and we're seeing it on ETH with Sharplink and uh Soul Strategy with Salana like there's there's people doing it with other assets as well obviously at a much much smaller scale though uh so it feels like I don't know maybe we need 10 of these or something can last in the long term but I don't think there's a place for hundreds of these of

micro strategies do you well when I think about this I think about in terms of who is the forced buyer of these things like I'm an extrad FI guy. I was, you know, I worked at an investment bank for like, you know, 17 years before I moved into crypto. And when I think about this, I'm like, well, who has to buy these things? Like, why is it that these things like need to exist? Because there is still a contingent of buyer out there who basically cannot get access to crypto directly, i.e. they cannot buy Bitcoin spot or or ETH or soul or whatever. Um, and like they can't even do the ETFs. So they're looking for proxies in the space and Micro Strategy for example has run uh a brilliant strategy of of

accumulating Bitcoin that they can actually take advantage of and so there is a place uh for these equity proxies I think in our space and and there are buyers who will continue doing it but yeah I'm with you like they're not going to buy all 72 of these or 71 or 72 of these like they're going to buy one because they they need exposure but you and they're not going to they don't need diversification on that exposure. But as you said, uh the the other part there really is when you say when we talk about and everybody's talking about it, everybody is, you know, every media company and every podcast has got a Bitcoin Treasury Strategy podcast right now. Uh but when we say that you kind of

need to break it in two into the the the micro strategy playbook and then just a a corporation who has real revenues and has a real business in other ways just using Bitcoin as a part of their balance sheet that we are still very early in and that seems to be something that like do you think that all public companies will eventually have Bitcoin on their balance sheets? That's what I think is changing right now. I'm I and that's kind of what I was getting at with the idea of more corporate treasurers using Bitcoin as part of their cash management strategies. Like I think thus far we haven't really seen it over the last like uh let's say a runup into like 2025, but since the start of the year

you're starting to see like more and more corporates kind of pivoting towards that direction. And I think that has a lot to do with kind of the regulatory environment. the fact that previously they were I mean concerned about operation choke point 2.0 like whether like directly or or just in the back of their minds maybe they didn't know the term because that's a term we use inside the crypto space uh but certainly they they felt the pressure not to actually own any Bitcoin or crypto because of their concerns about running a foul of regulators. Now that that's not a problem anymore. I think they can actually think about having crypto on balance sheet in a real way uh that you know wouldn't be get push back uh from

you know their boards from regulators. Uh so I think that they are definitely adapting to the idea that Bitcoin and crypto in general uh hold a role in the new world order. Okay, let's shift to before we wrap here uh let's shift quickly to Ethereum and Salana. So we've talked a lot about Bitcoin. uh what's your outlook for Ethereum and Salana? Yeah, I mean they're they're they feel like so like such different things at this point uh that uh it's interesting because I think that you know both have definitely benefited from DeFi to some extent and I mean trading still seems to be a pre-minent use case I think on any platform and that's what really kind of

you know brought attention to Ethereum and that with the memecoin situation is definitely brought attention to to Salana of course that kind overlooked that there are a lot of developments happening on both chains in terms of like utility and what's happening on there on Ethereum. you're getting more real world assets, more stable coins kind of getting parked there because I speak to a lot of institutional investors for example like are the large institutions that are actually building out your like money market funds and putting them on chain and things like that and still they like you know are attracted to Ethereum because they understand and are comfortable with the security guarantees on Ethereum which isn't to say that they're not willing to diversify into other things. We saw the with Black Rockck moving Bidd on to like

Salana for example. Um, but Salana has historically kind of taken advantage of not just memecoins, but DPIN and other things that I think are on the frontier and probably very very unique to crypto because I think for me I want to see those things built out because I want crypto utility to actually say like well hold on deepen is a sector that you can only really do with crypto because you're incentivizing with those tokens to build out real world infrastructure and they're both kind of sides of the same coin of like it's all connected to the real world. It's all things that like we kind of want to see built out because this is the stuff that people will use. Uh so I think that they're both doing it. They're both doing it in different kind of ways and I think like like depending on how those trends kind

of manifest. I think that's going to be like the the key for their their upward lift. But I think right now like Ethereum has been doing a lot of soul searching and that's not a play on words. It's, you know, but that they are to some extent because they're kind of looking at like soul and saying like everyone's gravitating towards that because memecoin craze is kind of how a lot of people were thinking about wealth creation for example and that matters because that's kind of one of the big draws to crypto as a whole. People want to make money off this kind of stuff. Uh but now Ethereum is kind of looking at it. They're saying like well you know we got to change change up our game. And this is why you see like uh you know researchers like Dankrad Feist actually saying like here's 9698 uh the CIP will

actually change gas fee limits for example we can get to like 2,000 transactions per second and maybe if you're in the Salana ecosystem or you're you're tribal about it you're going to be like well 2,000 transactions per second. Salana's aiming for a million transactions per second like what's what good is two 200? It's like well it's about the use case. like whatever use case kind of lands on it like maybe that's sufficient to kind of accommodate this because they have the block space for it. Like I think either chain like I don't think you need the additional block space for it like they they probably have enough to kind of accommodate the use cases that we are at least are able to look at right now. But I think more and more uh given what just happened with the Petra upgrade, people are now kind of saying like actually

Ethereum's making some important changes to its network. like the fact that Vitalic kind of came out and said, "Well, you know, maybe we shouldn't just be wedded to an EVM anymore. Maybe we should actually move over to like a risk 5 architecture. Uh actually that will allow smart contracts to be written in rust and other things besides solidity and we could just process it on chain like you know maybe that is the future and maybe we need to think about it." So I think increasingly like people are kind of saying like uh Fusaka is becoming a much more important upgrade because the thought that's going into Ethereum and maybe changing pivoting its strategy uh is actually really important and Salana is not going to be left behind. I think Salana is also well aware that all this stuff is going on

and you know you see that with some of the like their like uh cindes that they've been kind of suggesting and they're kind of changing like their ideas around staking and what they need to do. So, uh, you know, I think this long term is going to like probably be important for the fundamentals of these projects. Yeah. I think the the what I'm hearing from you and what I hear a lot right now is that uh it's if I can simplify it's too early to know which L1 chain is going to be the global supercomputer or the yellow chain or even if how much of the market they that one L1 chain will have. It's likely that there will one be one dominant chain decades from now, but

for right now, there is still so much opportunity for both to grow and to succeed. And they're both on great paths and they they both seem to be set up very well. Uh Salana has a lot of FUD because of the meme coins, but they also have incredible infrastructure that they've proven exists because of the memecoins. So there is and I wouldn't necessarily think that meme coins are dead by the way. I think people are calling meme coins way too early and I don't trade a lot of them myself to be honest with you. But I I I do think that probably meme coins are probably you know just kind of plateau around here.

Maybe there won't be another like kind of rise up. I mean we've seen the peak of beam coins but I don't think they're dead per se. Um and if that lasts like I I still think Salana is still going to be in a good position. Yeah, completely agree, David. Absolute pleasure to get you on the show today. Really appreciate your time. Appreciate you joining us. Everybody, uh, if you want a great regular download from David's mind into your inbox, make sure you check out his weekly report, which we will link to in the show notes. And, uh, obviously, shout out to everybody on the Coinbase team. Appreciate everything you guys are building and doing for the space. I appreciate it. Thanks so much for having me on. Thanks for listening in everybody. I have to remind you as

always that none of this was financial advice. This show is for educational andformational purposes only. I am not your financial adviser. David is not your financial adviser. If you want to seek a financial adviser to help you through investments, you should go do that. But most importantly, you should always do your own research and think first. Don't just listen to us. Listen to others as well and make your own financial decisions because investing is difficult and risky and you should know that. And if you want to stay on top of it all, you should make sure you subscribe to our show and to the Milk Road newsletter because it's going to help you make smart investment decisions. Thanks again for tuning in, y'all. Have a wicked awesome day. We'll see you back again tomorrow. Thanks for tuning in, y'all. Before I let you go, I

got to tell you, our friends over at Gemini are doing a super cool contest right now. They're giving away two Tesla Cyber Trucks. It's called the Cyber Beast Edition, and it is a custom Cybert truck wrapped in a custom Bitcoin design. It looks freaking awesome. Basically, all you got to do to get an entry in order to win these Cyber Trucks is use your Gemini credit card or trade on Gemini exchange. For every 50 bucks you spend on your credit card or you trade on the exchange, you get one entry. So, check it out. It goes until June 18th. It's open to US residents 18 and older. So, sorry to everyone else around the world, but if you're in the US and you want to get a chance to win a

sweet Tesla Cybert truck, check out the link in the show notes. Spend your money on your Gemini credit card or trade on their exchange and you could win a Cybert truck. And if you win, I hope you come pick me up and give me a ride. All right, thanks for listening y'all. See you again tomorrow. Have a wicked awesome day. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5-minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro.

You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends.