How I actually think about this is I think the opportunity here is the space is two two and a half trillion today I think it's going to 100 trillion in line with other asset classes that's the biggest MEC trade of all time and the largest generation of wealth in all human history that's the trade how are you want to slice and dice that yeah how are you want to slice and dice that it's up to you what risk tolerance you have But that's the trade hey everyone we all know blockchain is changing the world but
who's actually driving it I'm excited to invite you to the sixth edition of Meridian a web 3 conference hosted by the Stellar development foundation in London from October 15th through 17th get early bird tickets at meridian. stellar.org with code blockworks pod special thanks to Stellar for sponsoring us now let's get into today's episode everyone knows there's a Massive shortage of top senior marketers in crypto and teams are constantly struggling to get their go to market done right that's why we're excited to have partnered up with Renault Partners the premier go to market advisory firm for
early stage crypto teams get in touch with their team by heading on over to re nud partners.com or giving the co-founder Jeff a follow on X check out the links in the description below hey everyone Jason here have you ever wanted To play casino games with your friends right from your couch I'm excited to tell you about my prize the first multiplayer online casino where you can play chat and win together when you make your first deposit of $10 or more you'll get $20 for free head on over to my prize.com SL invite ire to
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everyone welcome back to Empire we have Raul Paul and Dan tapiero Joining the Pod today Jens how are you good A bit bored but fine yeah end of August that's what we get but that's why Dan and I have been working on 10 that's the only thing we can do looking bronzed looking lovely yeah how did you get us to do this I just looked at my schedule I'm thinking you schedule the end of August something but you you did it your block Works pull the problem with uh having you invested us Dan is I
know all the people inside your company now so I Know how to get on your schedule that's the downside yeah all right so look I want I want to like nothing's happening it's end of August but I want to I think everyone's wondering like what happens the rest of the year how much do the elections impact this like what's really going on in crypto um Global liquidity Cycles but actually I wanted to start with a I've heard you guys on podcast together and every time it's like oh yeah we've known Each other for 30 years
yeah yeah we go way back but I don't actually know the real story of how you two know each other what do you mean the real story R was my salesman he was at Goldman Sachs and I was at can't remember exactly where or steinhardt no so fair was Asia yeah and it's very straightforward and back then braul you know there are very few really intelligent sales doesn't exist uh you Know Brokers and I was uh managing a portfolio and every day you know this the the uh the salespeople from the various firms would send
you a Bloomberg uh it was the equivalent of email like a Bloomberg comment and so Raul frankly put out the most interesting most intelligent and then I'm not kidding commentary it it was it was the the pre- Twitter where you had one page essentially eight sentences to write something interesting to Captivate the Um the client so that's like late 90s uh and then I you know I thought probably 907 Asian crisis Asian that out then you'd try to sell him the trade and Dan would say this is a smart guy and then you'd call him
up and say you want you want to execute this through us well and Dan was kind of up for 24 hours a day at that point because he was trading he was trading the Asian book and having to check in with everybody else but um I then moved Across to um GLG to run the global macro book so then we'd swap notes because we were both doing similar stuff and then we swapped notes ever since I started GMI back in 2004 and Dam was an early subscriber to that so we've just kind of there's very
few without blowing either of our trumpets there's very few pure macro guys and Dan and I speak the same language we understand there's times when we have completely different views But generally speaking we kind of understand the Frameworks of how we think about things we're very pure macro and we don't try and conflate it a lot all right maybe that's a good place to take us in then which is you know we on on Empire Santi and I are talking about crypto Cycles all day long and where are we in the cycle but what we
fail to talk about because we are not the macro nerds that you both are are um the global macro Sant Dan macro Sant that's Whatre we F to talk about like the global macro liquidity cycle so maybe if Raul you could just T us up with like what is the global macro liquidity cycle and like just where are we in this cycle right now yeah so very simply something I call the everything code is from 20 8 we had a global debt reset now as opposed to letting go of all the debts what they did
was cut interest rates to zero and said nobody needs to pay interest rates okay that was a huge Advantage to the system and everybody reset their debts for this three to five year sector so then the debt refi cycle when I have to refinance the interest payments and and the debts Drive the business cycle the business Cycle's always been the credit cycle so now it's become almost perfectly 4 years the only other time in history it was perfect like this was back in the 50s and 60s after World War II and the financial repression then
so there's Financial Repression going on but it goes in this four-year cycle the four-year cycle happens to be the crypto cycle the US election cycle it's all the same thing so it doesn't matter what you label it but there is a cycle that's going on and we're just coming into it now which is we've now got 10 trillion dollars of of um debt to refy you have to refy the interest payments usually what they do is they inject enough liquidity into the system to to pay for this because There's not enough GDP growth to pay
for it all and so we go on to the next cycle so that's really what drives all assets right now everything is basically correlated but out of that there's one asset that does a lot better because it's got the secular adoption curve which is crypto plus the macro Tailwind of debasement of currency and the cycle so that's where we are in the cycle now zoning into election year well this is when they start giving out money they Also have a lot of refi to do so it tends to be a very good back end of
the election year and then the following year tends to be very very strong too but this is a global thing as well every major Central Bank is refy their debts in the same cycle the Europeans the Japanese the Canadians the the the Brits and the Chinese now what you always look for in these refi is who's the weakest link because they're likely the Ones to do the most stimulus it's probably China this time around just came on the tapes just now um I think Felix actually just tweeted it out there was a Bloomberg story that
I've been talking about for a while is the US and and China have agreed to kind of help each other so we know the Chinese need to STI They say well they they've said let me see if I can find the exact tweet look it said it was exactly what I've been writing about in GMI they said China central bank says a meeting in Shanghai produced an agreement with the US Treasury to appoint contact people to deal with any future Financial stress events yeah well the Chinese not really know what they're doing I mean that's
the the reality their currency still more or less pegged to the dollar and the Euro they kind of Outsource their monetary policy they I mean you know it's a big econ eony uh but yeah I don't think they Have you know the the best people at the central bank and the treasury there um so I'm not surprised that they're asking us for help the entire commercial real estate sector is frozen right and it's all dollar debts right so they they've got a dollar shortage and what they're basically saying here is the Fed will get dollars
to them I think this is one of the reasons what Japan has been doing in the Yen as well because the euro dollar market Market is driven through The Japanese Banks you know I'm not you know the whole R's explanation of the cycle is a little more scientific than uh than my own but it's it's pretty it's very similar um but you know Rd do you remember look it used to be for many many years that every time the FED tightened the dollar rallied a lot and then what happened was that that tight the the
tightness of monetary policy got transferred around the world and the weakest link would blow up oh what just Happened with China is the Fed blew up China right it's not such a bad thing that we can control what happens over there with our interest rates but the reality is the dollar went up a lot uh against the Yen okay a lot and it didn't go up quite as much uh against the dollar I'm sorry the dollar didn't go up quite as much against the R&B because there's a peg uh quasi dirty Peg going on there
so Japan and the rest of of Asia just devalued massively against China right so that hurt China also dollar uh dollars becoming more expensive uh pressured you know the leverage player out there and that's China the real estate sector is still ridiculously leopard so it's pretty much the same thing that we've always seen Ro I mean it was you know all these crises over the years um and it's largely because China does not have a a floating currency they're not big boys they try to be big boys they say they're big boys On the global
stage but they don't even manage their own currency it's kind of a joke a little bit that the peg is left over from before when they were Communists and they never really adjusted um so they don't have a free floating currency it's not quite like the Arabs who are completely pegged to the dollar you know Saudi and all the Middle Eastern currencies there's a complete Peg there but um it's kind of funny China is a 20 trillion dollar Economy and it doesn't have uh can't manage its own currency so as a result they don't have
their own monetary policy and so I mean I I think rates there probably are going back to zero R don't you think I mean I yeah I was looking at or something right yeah I mean I was looking at the 10year bond rate which is actually a big influence on the crypto price bizarrely and 10year yields in China at like 2.1% or something and they just look like They're going to approximately zero and we know this because this is the Japan Playbook right when you've got an aging population aging as fast as that you've actually
lost control of your growth engine so the natural rate of interest rates has to be much lower and it shows got debt crisis yeah and I think that took the edge off of the inflation bump here because China has been you know deflating or let's just say in trouble for over a year um yeah so I I think That helped Al sort of works in a feedback loop right the FED they tighten it forced to slow down there and then that slow down there helped take the edge uh off of the inflation and what we're
seeing now is the flip side of everything that Dan's saying so the flip side is people start cutting rates you start easing conditions bond yields start to fall everywhere the dollar starts to fall that in a beer market now that's right Just kicked off few weeks go that's right now it it means it eases Financial conditions for everybody that drives the business cycle as the business P Cycle picks up people have more earnings they invest stuff markets go up and you know that's that pattern has always gone on the business cycle there's more an extra
little C with China though they really you know talking about not knowing what to do I mean look Jack mod disappeared for two weeks what was it in 15 or 16 I Can't well when was it uh maybe it was a little later than that and they became openly hostile to capitalist Behavior so that doesn't help things you know I I have to say they really brought their own their own pain onto themselves I was in Hong Kong in January and I was meeting with investors and getting a lay of the land a little bit
and the only thing anyone could talk about there was that uh there were some Mainland Chinese commercial real estate bonds that were Trading at 80 cents on the dollar and supposedly they had the backing of the government the government woke up one day and decided that they were not backstopping those bonds the bonds went to zero overnight I forgot which entity this was and I was hearing there was one Hong Kong family lost a billion dollars in one day on that you know look it's it's they made the bet they like sitting with yield but
the reality is you Know investors hate uncertainty and uh when you have a government that controls things so much uh and does some wacky things you lose confidence and I don't know whether it's the end of the the The Exodus cycle but the last three four years all the big foreign money has been leaving China and I think they actually have a capital account deficit for the first time ever in the last few months R you'd have to check that you're closer to that all That old macro stuff than me now now but uh but
I I I think you know China puts itself on the global stage as a power and and it is but we forget that uh they're new uh to this game they're very new yeah so so so the Like This Global liquidity cycle that you guys keep mentioning and I I mean great great points on China who is is this a free market liquidity cycle is it a central bank setting the liquidity cycle is it the is it the is it election it's Combination between governments and central banks there is no these are not separated entities
anymore so one group needs to refy the debt and add new debt the other group has to make sure it's managed so the treasury and the FED yeah but individuals are involved in making decisions uh in terms of how they allocate assets as well I would say it's a dirtier uh a dirtier combination of the authorities but then the global investor r or investable Global Investable Capital uh does have a a reflexive effect when the markets get moving so I mean I I wouldn't there trillion dollars now in uh in in t- bills right I
think is the number in money markets and t- bills so I think it's a combination Jason I know you're trying to figure out because liquidity what is liquidity what how does the cycle work right um and it's this very funny Combination of people interpreting economic data in the future placing bets today on what the future will look like the Market's moving in a certain direction and then the markets moving in that direction actually starting to impact the underlying uh economy and I mean that's the reflexive Cy very it's very reflexive and self-fulfilling but then like
the FED is basing their decisions off data from ago well you see liquidity in the US is fed net liquidity Which is the treasury general account which is the treasury which is the reverse repo which is somewhere in between the treasury and the fed and there quantitative and the use of the balance sheet so they're all three joined at the hip and they manage that liquidity flow to manage this process and Dan's right because they know is once they start unleashing the spigots then the reflexive buildup happens and guess what it generates capital gains They
get capital gains tax it starts financing deficits it's kind of this cycle is is the clearest I've ever seen macro in my life because it's so cyclical now does that last forever probably not but right now it's it seems the most clear I've ever seen it you don't have to worry than I used to worry about well I think it's so clear because the rate was artificially put up uh delayed when they put it up they overdid it And now it's clear as day everything is slowing I was a little early on my call for
them to cut and a little early on the growth slowdown my my view on the inflation slowdown which really I mean inflation peaked you know 20 months ago uh dropped all last year all of this year and they still have the rate at 5% it's Madness it's and now we're going to feel it I mean now you're starting to feel it the companies some of them are missing you're not feeling it in crypto Land we don't have to get there yet but um uh because but in the traditional economy I think you start to see
that unemployment rate move to you know what do you think r five and a half here uh maybe or maybe just five but either way it's going to be sticky because of the AI changes and Technology this is not going to mean revert I think that the all-time low of employment is in as a percentage of the overall population you have a bigger structural View about about you know that's a much bigger structural view right the displacement of workers through AI yeah I mean this is look the simplest way I can put it is this
is the biggest deflationary nuclear bomb we've ever been given and people don't understand it yet they're still arguing about oh you know secular inflation the 70s again I'm like are you [ __ ] kidding me you don't understand what's about to happen well productivity also explodes Which is good yeah um but I think people find new forms of work I'm not that negative because I'm not negative on work per se yeah I I think it's like because we're we're retiring a load of people that are going to die we're replacing with more and more robots
and AI so you actually increase GDP growth how it gets distributed who the hell knows we'll figure that out when it happens but I don't think we're going to lose jobs yet I think you know the next 10 years is probably about having superpowers where we can do stuff with AI all let me let me ask you guys what is probably a really dumb question uh poly Market showing 50-50 odds for Republican and Democrats in in uh in in November does the presid does the US president impact the global liquidity cycle as you guys see
it or it's look one of them might accelerate it one of them might delay it by three or six months but at the end of The day like this stuff is almost pre-programmed they all have to finance the same deficits there's no way around it there's no way you can use your austerity to get out of this anymore it's way too big so no and we've seen it every political party since 2008 has done basically the same thing so I don't think it makes a difference Dan do you think it makes much of a difference
well I mean it can shift Capital flow the bulk of capital Global Capital pretty Much stays I mean moving uh on based on certain cues that we talked about whether it's data or policy but look I mean it's very clar if camela wins she's less uh capitalist uh Pro markets than a trump I mean look Trump for whatever you want to say the only president in my lifetime that actually knew where the S&P closed uh every day at 4M I'm a free markets guy you know everyone has their Priorities of what they care about in
politics for me free markets are at the top and he's not a free markets person so if you're an investor you know maybe you're a little worried uh more about the US and then maybe you shift Capital to Europe or maybe Asia or somewhere else I don't know uh um but the cycle uh as rul was describing it as I think you're talking about no that's at the moment now it's kicking in right there are Leads and lags you know you can be early by a year seeing it but no now it's really going to
kick in the dollar bare market watch the dollar the dollar is trades you know 7 trillion dollars a day people forget the Global Currency markets it really is sort of a reflection of how easier tight dollar liquidity is and so now the dollar will enter into a bare phase um and I think that's going to be positive for for all assets here it'll also take pressure off Of um the countries that were hurt by the FED um policy okay it does make sense I'm trying to think about yeah I'm trying to think about what the
next so like if I hear you guys correctly there's almost and I might be trying to put this in a box too much but like there's maybe four stages of this liquidity cycle we just started to get the dollar turning over like so so maybe as I hear we're like just ending the second stage halfway about Macro winter spring summer and fall this is macro summer the is falling rates are coming down we've got to refile all the debt I mean this is usually As Good As It Gets the ism starts picking up the business
cycle picks up it becomes reflective investment Capital comes in that's crypto well I don't know if the business cycle is picking up it can't pick up before it slows down like I think you know I I think liquidity goes into the markets First and uh I think that that's uh and then the then the economies pick up because the markets have picked up but I don't you know I know you you're showing some of those I and things I think they're going to be a little more delayed than you're showing in your could be well
be but the nasdaq's are alltime highs markets are alltime high markets I think keep going what do you think about this I saw this uh kind of go viral maybe yesterday chth Tweets tell me we're in a recession without telling me telling me we're in a recession and it was a Zero Hedge uh tweet saying on Wednesday the Bureau of Labor Statistics will downward revised jobs for the April 2023 March 2024 period by up to 1 million the same thing that happens every single year in I mean Jam is obviously a very smart successful guy
but he's not a macro guy I mean we we've had for 30 years every year they revise it one way or the other we're in A Slowdown they revise it down in both phases they revise it up I mean it's always that Market kind of knows it so it's a non-market event knows the growth has been sluggish and therefore liquidity has to rise so the market kind of knows this stuff markets are much smarter at this kind of stuff than people you know investing advice from jamat but maybe not the macro Global Market advice from
he's a tech Guru right so all right So then the question becomes look you young guys are very funny you know because this is you know you're trying to figure out what drives all these things right and the funny thing is is that it really more or less has stayed not the same but it's very similar and when it changes it Rhymes um anyway I mean what I'm trying to figure out is how to run a business is what it comes down to like I I don't trade like you long right now yeah don't Make
it hard on yourself be stay long on your Bitcoin and your eth right um you know your business should be booming you have conferences and uh data and news right yeah hire too many people Jason that's not a good idea figure out how to use AI so that you don't have to bring on expenses right that's right I mean basically if you think about it as the business cycle picks up which it will earnings pick up therefore the events Business picks up which means sponsors spend more money on Advertising which means subscription stuff picks up
and before you know it the whole thing works so that's what lies ahead you've gone through all the tough times Well we all have what lies ahead should be good and as Dan said we all have to be much more careful about adding people because people can be replaced by efficient processes with AI well Jason you and I were talking about this the other day I Mean it's like okay the world is changing fast I was just gonna say even we are doing a lot about how to I mean our whole business is changing because
of it I mean I have a whole crack AI team that the whole firm will be restructured and what I'm hoping is that uh we actually are able to lay out what we figure out to some of our companies we can share some of the things that we're doing um but we also get to see what the other companies are doing so as You know you guys know we invested in 24 different businesses in the digital asset World um one of our companies l in Ln they are the only CI lender that survived 22 and
23 the old debacle those guys uh they faced a near-death experience uh q42 q123 they really leaned out they really got super lean and went hardcore into uh bringing AI to helping them run processes and so we've been um and remarkably they went from a company yeah In deep trouble to actually net profitable uh now and I think they'll probably I mean the revenues this year certainly will be I don't know 40 50 million I'm actually not sure what what the total will be but it's um uh incredible uh their profit margins just exploded and
they were able to do that as a result of the bare Market the bare Market forced them to do that and so we have a bunch of companies like that that um use the bare Market to really Streamline yeah and the crypto guys they're very smart guys they're the ones that are the early adopters for all new tech right yeah yeah yeah we saw the same thing it's like you I mean you you lean up in the bare market and you figure out how to make the business more efficient all right take me out of
the operators uh seat and maybe into the Institutional Investor seat like you know Dan you're obviously running this Big crypto portfolio but imagine you're back running a macro fund and you can allocate to bonds and US equities or International equities or or crypto or you know you did you see my tweet today LinkedIn I put something on LinkedIn because listen to this role I you're on on LinkedIn but I was reading on LinkedIn the City Bank Private Bank Global family office survey came out yesterday or whenever and one of the guys on LinkedIn post it
cannot believe It Global family offices it's apparently has surveyed in this in this piece there is 28% cash or 28% cash their 50% in fixed income and cash look at this allocation okay hedge funds are are are not interesting anymore as we know except if you're in that top 1% Commodities 7% and I wrote my goodness gold HD an all-time high Gold so hit an all-time high last week and they have point 7% in Commodities and of course zero in crypto so this is pretty incredible Jason you know uh I don't know how how much
of a reflection this is of a global reality but City Bank is a large institution and Global family offices manage a lot of capital so D think what's that like let's say you running the M the managing the money for for these family offices how what is the dream portfolio going Into this next stage of the cycle well it just depends on your risk tolerance I think for those type of people minimum Dan and I are the wrong people to ask also no but I make people ask me every day how they should have their
portfolio allocated I would have you have to have at least 10% in blockchain crypto web 3 digital assets and I always say you have a break break down you have some Bitcoin and ethereum which are the Core assets of the space and then I think you can have a venture fund and then you could have a growth fund which is what we are or a little later stage not a speculative but I think is really going to come into its own now as companies that we have start to go public and potentially start to tokenize
their Equity all sorts of good things are going to happen on that front but I think how you decide to break it up you know maybe you do a little Solana Because Solana is a trans transition asset I think it's transitioning away from a venture project uh to becoming a core asset not quite there yet and I don't know Raul maybe you want to make a pitch for sweet as a venture asset that's potentially moving into not quite no it's I it's like salana was last cycle you know there's a few of those I think
are should be on people's radoff screens because they're serious people with serious experience I don't make Same question to you then not before getting into salon and Su and all all that stuff like what is what is your portfolio allocation I know it depends all that mine's 100% crypto so I'm the wrong person to ask so you're 100% have been for five years years I and Dan is you know without very high without getting him into trouble he's reasonably High Dan how what is your personal portfolio yeah okay's that very high I can't you know
I Don't know I don't want to scare my wife away you know our 25th uh year wedding anniversaries in a few weeks we'll have you on afterwards I don't want to hear her she she shouldn't hear what our allocation is if I was that but if if I was that family office group you know yeah what would be the right allocation for this point in the cycle well as Dan said it's a reasonable chunk of crypto most family offices I see start at like 1% end up at 20% over A cycle so I think somewhere
10% plus works well you want to be heavily technology because technology is in a secular bull market you can probably own bonds finally for a bit make a bit of money there um yeah but whatever I would do in bonds so I'm still a big proponent of gold and I'm still very involved there and uh I think you know you get this move let's say in the tenure to three you know and you get the move in the short end to two something gold will Be up at you know 3,000 so I use gold as
a proxy makes sense for whatever you want your uh cash or fixed income allocation to be but you can see that's that's less and then I think you have to have a big chunk of NASDAQ um yeah it's so straightforward to do you know you can get your technology investment the NASDAQ has been producing 177% returns annually since 2011 I mean that's Huge uh while the S&P does 8% so I mean bitcoin's at 147% so it's a it's a whole different game but yeah I mean I would just be growth orientated all in on risk
that's what it should be what Dan has raised the point is fascinating because these big family offices are the complete opposite they super risk adverse and you're like and this is the reflexive thing that Dan talks about as well is these guys are all going to end The cycle over their ski tips long again oh yeah that's how it always works right they're just not there yet yeah they're gonna come hey everyone Jason here just wanted to take a a quick break to talk about something exciting in the world of blockchain the Stellar development foundation
is hosting their sixth annual Meridian conference this October 15th through 17th in London it's a 3-day event where the bright latest Minds in Web 3 come together to discuss everything from tokenization to defi if you're a developer Builder policy maker or business leader looking to make an impact in transforming Global Systems through blockchain this is your chance to join the conversation you'll get to network with the forward thinkers who are defining the future of this space head over to meridian. stellar.org and use the code blockworks pod for early bird pricing now let's get back to
Today's episode hey everyone we all know that there's a massive shortage of top senior marketers in crypto we've seen it over and over that teams are constantly struggling to get their go-to Market done right that's why we're excited to have partnered up with Rena Partners the premier goto Market advisory firm for early stage crypto teams they help top Founders tell their stories better and build great non-technical teams they advise Founders on all things marketing Including tight brand positioning Community build building social media and building A+ internal teams don't just take it from us they work
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and bitcoin's at 150 and you know eth Hits 10 and salana is hitting a thousand and everyone's going crazy and you know the the Arenas are getting called The coinbase Arena are you trying to sell or are you just holding through all of this um generally every time I've sold it's been a mistake and actually what you should do is look forward to the bare markets and add to Them really I mean you know I first bought Bitcoin at0 if I have just kept that position I'd have been much richer it's stupid right but you
you get absorbed by this cycle mentality Now by all means drisk a bit take some lifestyle chips off the table do something something but this trade is much bigger than a cycle and you think you're going to sell at the high and buy at the low got another thing coming you won't and you'll miss yeah but but I Have some Targets in mind I mean like I always even in 2019 I remember talking to Raul and you know I thought we were sort of eight nine 10,000 Bitcoin and I was thinking around 300 350 within
10 years that was sort of nice place to you know take some profit I you definitely don't reduce the whole thing but but what would you put what's that what would you the issue is I get to yeah is okay let's say Bitcoin's at 400,000 yeah you take money off what the hell do you do with it well you know what look having managed money for so long uh you ask that same question to yourself all the time because you have a great idea great bet it goes to where you think it's supposed to go
and you always think what am I going to do with it then but there are always New Opportunities if you're open to them so look this is the big one this is as I've Said many times sort of the biggest macro investment opportunity I've ever seen of all time it is and um and so but even so you know you have to risk manage a little bit um I I think we're going to have some companies that are going to be go going to have their IPO or be public I mean circle's already announced e
Toro's announced you have companies out there discussing it uh you know Kraken Jason I think you talked about with Ripley lot on one of yours so there are A bunch of other companies as well that uh probably you know so this a natural exit for some of uh my positions uh that way meaning I I will I'll have no choice but to sell when they go public and the funds uh would at that time need to return money to investors so um but I I think yeah it's hard to put like a 10 15y year
you know number on it I know Yan vanc he had some crazy number recently that he put out there for 2050 was it or 2040 2040 I think yeah That's I mean that's very impressive uh but I just think in terms of total dollars and value and you know gold is a 1520 trillion doll asset we know all the other values Bitcoin could easily be a 10 trillion uh dollar asset and I think today it's what one and a half two so easily you know easily could get to three to 500,000 which is sort of
where I thought like rationally it made sense could it do much more than that absolutely um but I like to have a road Map and I like to uh know where I'm going and in my experience when I've ignored uh a Target it's been a bad idea um generally speaking I mean yes Ro bought Bitcoin at 200 okay he sold it at 2,000 and then it went to 18,000 and he probably wanted to kill himself uh but he got a shot to come back at three four five six 7,000 and he got a shot to
come back in um but I don't worry about what I miss right I'm never worried about you know what I'm missing that's just not a Proper way how I actually think about this is I think the opportunity here is the space is two two and a half trillion today I think it's going to 100 trillion in line with other asset classes so that's a that's the biggest mea trade of all time and the largest generation of wealth in all human history that's the trade how are you want to slice and dice that yeah how are
you want to slice and dice sets up to you what risk tolerance You have but that's the trade um you know when I first did the first piece of work on bitcoin back in 2013 I said it was worth a million bucks yeah you know and I don't think that's wrong you know if bitcoin's at a million yeah the space is somewhere close to my target of 100 trillion or maybe it's 50 trillion doesn't matter it's just gigantic yeah you just have to stay with it and I think look it's it's a very it's uh
it's a dly space in the sense That you know there are a lot of young people in it and there's a lot of speculation and there's a lot of garbage and they're you know they're bad actors in the space Also and because Bad actors are drawn to you know crazy opportunity like this it's just it always is that way on the edge um and I think young people are susceptible to the emotional swings and they get blown up I mean I can remember being in my 20s and 30s and having you know being down $30
million In a week or whatever it was and being unhappy um uh but I had a lot of episodes like and so I it just it doesn't really affect me uh anymore and I say this I say civilians so people who didn't have to live through many many failures like I did and like Raul did you know emotionally personally you blow yourselves up and I I feel like that's why when the market does some consolidating like now all the young guys are you know in panic And why why aren't we rallying and this and that
oh my God it's oh I hate this space it's terrible and I'm thinking we're at 60,000 on I mean this recent Panic was crazy to me so stupid what we're 2500 on ethereum I mean I can remember clearly ethereum at a 100 people bought ethereum less than a dollar the amount of wealth that's been accumulated in the space yeah amongst people let's say 38 And younger is gigantic at these prices these prices are enormous salana was a dollar in January of 21 right I think it was like a dollar maybe three dollar whatever it's 150
I mean who we kidding what the old world is up a 100 times but Dan it's gone sideways for three months it's all over so I'm just saying the young guys especially on Twitter and this and that you know they're living at every moment and that's why this is Actually what am I doing I'm answering your question about these are the most difficult markets to trade that I've ever seen you have to make a decision you're either gonna be a ho hogler you're just gonna buy Hold Your Position and go away and if you really
want to trade it because you need the adrenaline and this and that uh you know you need a staff of 10 or 20 around the clock and all kinds of different people um very few People that I know uh you know our certainly our age 50 and over are that active his no I would say noo is still active I saw him a few weeks ago in his office and he was you know he was hitting it like we got one of these chats you know for his to bring it should be the three of
us his old his Viewpoint in I mean um you know I know as Dan does a lot of macro people have moved almost entirely into This space I don't know not a lot well there's a few there's a few but none of those people trade literally none of them except no except noo it's like you know the no he said he needs his hits he needs his hits but you know speaking to another guy who's very very famous in the space Oh not in the space but just as one of the greatest traders of all
time I mean he's like oh [ __ ] that I never trade this stuff I'm like but you're one of the best traders of all Time he goes this is far too difficult to trade because it's just much easier to hold on and you can make money and build a business so so that that person I don't know who you're referring to likes crypto as a just long only I'm holding Bitcoin he's taken the biggest I think of people who come into the space he's taking the biggest bet of all yeah I I know who
you're talking you know who you're talking I'm talking about he's taking the biggest bet of All across the whole spectrum of things he's not it's not just Allin Bitcoin like sailor you know who's just all in businesses he's doing what you and I have been doing does his last name rhyme with coward we can't say can't say any names um what Dan you talk to these guys all day long because you do fundraising and stuff like that what the um what is the pitch these days is is it uh you know bitcoin's a hedge against
chaos is it its better technology is it better Money is it a bet on Innovation like what what are you what are you pitching these days well I don't know what you mean really pitch to who about what I think or if you rais money or you talked to the B LPS yeah yeah but I mean so we're investing in these you know growth stage uh more developed companies in the space not venture capital and right now uh we raised a bit of money for one specific opportunity there's a bit of a unique situation in
the secondary market For companies that are you know again sort of at the growth stage not seed preed or even a there have been almost no rounds the last year in BC you know larger companies companies doing a few hundred million in Revenue there have been no rounds uh no equity rounds there were two or three smaller rounds recently but they're more Venture um so we raised a bit of capital to make investments into companies that we already own and companies we know at Ridiculous valuations I'm buying you know between 60 and 90% discounts from
not just previous rounds that were done but from where we think the value is today and there's a because of the FTX debacle believe this or not you know you had many traditional crossover uh private Equity Funds come into the space famous ones Silver Lake and Tomo Bravo and tiger was active codu toask they all came in they pushed valuations up they Invested a lot of money into these larger businesses at very high multiples 50 80 times revenue and what happened with FTX is that many of them were invested in FTX they lost quite a
lot of money there are other Investments like take for instance open SE which was at 13 billion 18 months ago or whatever it was um you know you can buy the secondary for a billion dollars uh you know many of these um equity in this much of the equity in the space is down Like that um even and but that's a business that's had problems there are companies that we have believe this or not where the revenue and profits are higher today than at the peak in 21 yet I can buy in the secondary because
there's distressed selling still at 50 to 80% discounts so you have an employee an ex-employee uh SE Suite you have Venture investors who invested in these companies five six eight years ago they just need any liquidity for their Investors and they will sell almost at any price so as far as I know we are the single largest buyer in the secondary for these companies um I've already put in between all four funds over $600 million to work in the secondary so it's a completely nonfunctioning Market um and I think it's that way largely because the
the larger group growth investors PE investors they're not they're not they've left and they're not interested Really in coming back they were duped uh by a bunch of guys and look a lot of companies raised like even a great company like fireblocks raised at 50 or 70 times Revenue right it's very hard to make a return when you're in you know as an investor when you invest at those multiples we tended not to to pay more than around 10 11 times and even that I thought was generous um so our Focus my pitch to people
who I'm speaking about for our funds is look this is a specific Opportunity that exists today um because there's a liquidity hole in the later stage and you know I bought a I'm buying a a company now that will do over a billion dollars in Revenue this year and I'm buying it at two and a half times Revenue this is a crypto business that will be up you know over a 100% this year so I mean that's crazy yeah uh you know so I'm happy to to just focus on that I'm not look I'm you
know e6z and Polygon and panta and polychain all those guys you know the Venture portion of our world right you know the the tges and the you know the preed tokens all that stuff has been very active right um but that's just not what we do um do you think you will do you think you will do that Dan one day no I I don't because I don't like having like being in an area where there's so much competition I mean do I really think I'm a better technology investor than Mark Andre I Mean I
don't see that so why would I even bother and I think that area is so crowded and all the young guys all they want to do is just trade these tokens um you know even even analyst young guys that I have they all just they want to make a 100x and we're trying to make a five to 10x over a 10year fund right we're not for me like that's enough and I think we're going to be able to do that um with a lot less risk than exists when you're I don't know if you're aware
J I've also got an asset management firm that's a crypto uh fund of hedge funds so called exponential age asset management xam and the other part of this cycle is there's no secondary liquidity in crypto markets it's bizarre so what you get is all these early stage people they dump the tokens and then there's a few Asian trading shops a few market makers and a bunch of retail but there's literally 10 billion ion dollars of professional capital in crypto Markets and down and I grew up in the hedge fund industry and that's a hedge fund
dream there under there's not enough capital in the space means lots of opportunities there's all these dislocations from new tokens coming out going down 80% because people get liquidity and these hedge funds can sort out through all the [ __ ] and say hey this is actually a good opportunity stuff like that and really that whole thing is getting us from the the idea of This is to get us from the two and a half trillion to the 100 trillion give it to the you know 12 of the best 14 of the best hedge funds
in the world let them do the allocation yeah we're not a hedge fund I think Ro strategy is a good one uh because it is so difficult and it does feel to me like the equivalent of the early 90s in the traditional Edge fund business um I just think that you know it's nice to be in spaces there's Very little competition we have virtually none and you have virtually none right it's nice yeah because we can I always say we can screw something up and no one's there to eat our lunch and uh there always
going to be difficulties uh but yeah also the Venture mentality is is very different than the the macro investment it's hard for you and I to do VC I just it just doesn't feel right I can't I I don't like having anything go to zero ever I'm Not uh I can't just sort of spray and say yeah that's a great idea uh here's 1% I mean I can't keep track of 99 invest I can't do it I just no I can't do it I like to have big bets and and focus on them I can't
do that oh I've written 78 Angel checks this month I'm like what the [ __ ] you can't even keep on top of the paperwork I know I know Dan do you what do what do you like more do you like what you do now the grow the grow style there's no Comparison now I mean the opportunity look when when I first started in the macro hedge fund business in the 90s um I mean it was unbelievable experience there weren't that many hedge funds and there were only maybe 10 really real macro hedge funds and
we were actually interestingly like we were making the news in a way you know with these devaluations and you know Governments didn't really know what they were doing and we sort of did and I mean that's an incredible position to being as a very young guy I mean working at Tiger for Julian in the early 90s and seeing the way that he sort of interpreted and analyzed the world and how he invested in it like I was 23 24 25 I mean you know there's a level of excitement there uh that's you know unbelievable um
but after that there's nothing that compares to this I I think Having a shorter term time frame like I I love what R's doing I I do think that hedge funds um can be you know it's very difficult to navigate um you know the liquid trading markets and at the same time control your volatility so a fund of funds is a nice way to do that I like look I have a 10-year view that's clear and we're moving towards it uh and to be long cash flowing businesses that are able to still make money through
bare phases I mean I have A one company in the portfolio I just saw the other day they actually made more they were making more money uh in 203 than they did in 22 which is which is pretty incredible and now they just have a record quarter and um so I like being able to being able to sit through an 80% correction in ethereum uh long a company that is gonna make more money during that period I mean that to me is the Holy Grail uh Okay maybe eth goes up you know 20 30X eventually
and I underperform but as a as an older guy I don't really care about underperforming I don't think we're going to be the number number one performing Fund in the space and I I don't care about that I care about having um the best sort of risk adjusted you know best asymmetry most greatest asymmetry in the investment because I know how easy it is to lose money to Blow up I mean I've lived through all of that so my funds are the way you know they're a reflection of how I feel most comfortable sitting long
without worrying about like a disaster or a blow up or having your business threaten or you know not every investment is going to work out but the portfolio that we have very powerful over time right so I prefer that um I prefer that it's a little bit of Delayed gratification in the old world you know you would get compensated uh at the end of every year which is nice this is is not so much that way but look there are always tradeoffs um you know there are always tradeoffs you don't have to stare at a
Bloomberg screen all day that's a big trade no but but yeah no that's that's true you get used to that there's probably a lot more dealing with people in this business though you Got the portfolio companies and you got the founders you got the whole team and yeah yeah that's true I mean we have 12 board seats I mean that's a whole don't I know it Dan don't I know it you speak with pain Jason you speak with pain no I no Dan Dan's been amazing um uh Ro give me your best prediction for like
we've been talking like big macro cycles and like you know 100e visions and stuff like give me your best Prediction no no for what happens the next 12 months in crypto like what what is the next 12 months in crypto give price predictions Because the Internet is a ugly place and you just get beaten over the head by it so there's there's no point um but listen my view oh definitely new highs oh yeah look the whole Space goes up a lot I think does maybe 10x from here and Bitcoin does 5x or 4X from
here that kind of stuff typical bull market and Then there'll be the main thing that I'm starting to think through is there is always another layer One race which is early stage when you don't have proven Network effects that bet is actually a good bet it's not one you go all in on but that bet was the salana BET of last cycle eth better the previous cycle so I'm starting to think through that because when I don't trade don't do anything I just sit with my portfolio so I'm thinking through that because I Reckon there's
a really good trade to come um and it's a lot of fun but it comes very quickly and it usually gets overvalued and then goes down 95% afterwards so I'm G to make it easier for you Jason this is easy uh everybody out there should just think think about this very simply we're essentially at the all-time high in Bitcoin okay essentially 60 70 to me is the same number and the interest rate is Five okay we went from zero to five and we're back at the all-time highs so as we move from five back to
two and a half just on that alone just on that one thing forget everything else you're over a 100,000 easy just on that one thing forget about all the millions of things going on in the space that we didn't talk about every you know new development um just that one thing I think that should give people a lot of confidence you know that if there's Another wipe out like we had the other day like you said uh they should be buying and holding uh but there is tremendous Innovation going on now yeah um the activity
on chain has really exploded and um and again we haven't really started when we start to see just straight up user applications we're starting to see gaming starting to happen I think that's going to be a big breakout but we've got so many of these Consumer apps the old movement of web two to web 3 or old internet to new internet that's going to come at scale and I think we're going to really start kicking it off this cycle there's a the biggest the biggest activation of permission list this year is uh is a gaming
60 by 80 gaming Lounge it's uh three it's a futur verse which is a one RT company actually and alium are showing off these games that they've been building for years and now now They're real they're live games they're actual games that you can go play yeah the other one that's just come out is Off the Grid yeah um which is huge future versus uh you guys connected with obviously yeah yeah we're uh we we Twisted we Twisted aon's arm enough to get him to fly out from oh it's 20 hour New Zealand yeah so
really well that's good to know yeah aon's making the track so so right now there's a lot of talk about this election I know I started Talking about it at the beginning but you know it feels like it's complet Doom and Gloom if the Democrats win and crypto's going to be pushed you know out of the US and all the founders are going to have move please IGN all this nonsense so that's that's that's it's a leading question Dan to get you to say that me come on yeah what are they gonna do oh come
on that's not real the point being is that's not real Also we've been in this space for so long and we've had china ban it three times India ban it twice the US be Pro it against the Europeans hate it and it's made no [ __ ] difference Gensler could become the president and it wouldn't matter it's finished like it's decentralized it's all over the world if the US wants to you know get in the way of innovation for four years somewhere else will pick it up look do you Remember in 2021 when we all
said oh my goodness if China you know bans Bitcoin and they kick out the miners because all the bitcoin's being mined in China it's over for the space it's over it's over the thing went down for like a few days yeah I mean every time Europe comes out and they're gonna put like it's all nonsense it's noise it's I cannot I can't believe how many times it's just powered through all of the Human stupidity out there and Gensler is the greatest representative of that human stupidity I mean seriously so good luck become treasury guy good
luck to you you know I I just I just look all the hand ringing that goes on I think it's part of the you know the emotion yeah the bull bull Market's job is to throw is to try and throw you off right I mean this a clear clean macro case for a secular bull market that continues so your job is just not to get thrown off By the fud I mean people find every reason not to do something when when all you have to do is buy it and then not do anything it's it's
like this is the digitization of money and value it's really straightforward I don't know that anyone is gonna stop that it's just like the internet it's the same thing that was for ideas and information people were afraid oh dissemination of ideas the whole world will come to an end the world didn't end NASDAQ went up you know 50x right it's the same thing so Gensler and whatever it's it's not gonna matter you know I I quite like like talking to you guys because I think there's this view of macro guys where um you know very
complicated people they're looking at how oil's moving here and Asia is doing this and and they're actually inherently pessimistic and when I they are all mid curvers well when I talk to you guys they're all mid curvs they just over analyze everything yeah but when I Talked to you many words oh my God Dan go Dan goes it went to 5% and Bitcoin still at 60k think of I mean there's a there's a nice simplification of what's Happening Here and I think if you spend too much time on on Twitter you get caught caught up
on you know a thir car Yen carry trades and how that takes the bitco it's like guys just stop this is all over again and the world is ending and tomorrow is more digital than today yeah or rates are going to come down I Mean they two really simple things equal you know answer yeah we're gonna lose Dan he's laughing at the people on Twitter too hard I mean because the Yen car trade I I've heard that phrase at least 10 I was actually thinking you I was reading these Twitter threads from guys I knew
had no idea what they're talking about I was I was actually thinking about you Dan being like a wonder what Dan's thinking reading these things yeah nonsense it was one of the One of the things that um saved us from investing in FTX was I heard uh the guy doing a podcast and he was talking about macro like this 30-year-old guy trying to talk about macro and like getting involved in these like things and I'm like this guy is this is bogus I didn't think he was necessarily as big a fraud as he turned out
to be but I thought he had fraudulent you know nonsense coming out of his mouth about macro uh people tend to want to read Into there is a lot of complexity but sometimes there isn't and people want to read into it like Chinese manipulating the gold you and I have been around for a long time and what you end up learning because we've both gone down that route as well is really you learn how to extrapolate all the noise and say what are the dominant factors that matter right and if not you get caught in
this trap of Everything feels like a dominant factor and then you're looking for the Linkages between the gold market and some Indonesian Central Bank who's gonna do some grain swap you know we've all been there dad we've all done that I know you know why Jason it's because we have lost money betting on that crap yeah all let me tell you something the only way to any sort of wisdom is through massive amounts of failure so I've already bet on the Yen carry trade thing whatever long short Saudi deeg we've done the Saudi D Peg
I mean There's all kinds of nonsense the Hong Kong dollar Peg that's the the greatest money suck uh I stopped that one thankfully uh in 97 or 98 but people still go on about that you know I'm just saying yeah you know you you know I'm drawn towards Simplicity because that's where I've made money that's right and this is business about making money that's what this is and it's interesting and you know it's part hobby but you know there There are other things that happen in life right I'm saying that I'm drawn to the things
that make me money and the process that makes me money because this is my business right not because I feel like it not because I'm drawn to how interesting understanding the Yen whatever it's all nonsense I'm drawn to the things that are going to make me money and those those things tend to be simply explained yeah it's true Jens good chat Uh this was the this was the optimism and the hopium at the end of the summer you know everyone's this is two old blos complaining about the new macro people it's quite fun hey everyone
big thanks for watching today's episode wanted to just quickly remind you about the Stellar development foundation's sixth annual Meridian conference this October 15th through 17th in London this is an incredible opportunity to network With the forward thinkers who are defining the future of this space head over to meridian. stellar.org and use the code blockworks pod for early bird pricing [Music]
