Altcoins Implode, Bitcoin Stands Strong: A Masterclass in Signal vs Noise

It all comes down to computers communicating. >> The information superighway can be a confusing mix of on-ramps and off-ramps. Bitcoin is worthless artificial gold. >> Is it still rat poison? >> Probably rat poison squared. >> We need to get into the world of Okay, this is actually foundational technology. What the internet of money does is it creates a single network which can do a microtransaction to a giga transaction. The internet is going to be one of the major forces for reducing the roll of gun. The one thing that's missing but that will soon be developed is a reliable ecash. Hi everyone, welcome back to another episode of Final Settlement. No shortage of uh volatility and updates since last week's discussion. Sure everybody saw the crazy uh volatility in the crypto and digital asset markets. Bitcoin relatively unscathed. Um so hope you enjoy this episode. A quick word. We have a very exciting announcement tomorrow coming out from Onamp from a product perspective as well as uh last week we teased a new updated pricing con uh structure that I think a lot of you will really appreciate. We deeply understand that we have some of if not the best custody solutions on the planet earth. But uh as far as some clients will go as far as calling it the Rolls-Royce of custody, but historically price have been an inhibitor. Some clients saying they're not necessarily ready to upgrade. Um, and we don't want that to be a u reason for people not to leverage on-ramp. So, if you want to reach out, those updates will become public in the coming weeks, but if you want a sneak peek, you can book a consultation or reach out to me directly, michael@onrampbitcoin.com, and would love to share more. All right, on to the show. >> Allighty, gentlemen. Welcome back to another episode of Final Settlement. Today is Monday, October 13th, 10:06 a.m. Eastern Standard Time. Gentlemen, how are we doing? big week. Lots uh lots has happened over the past past few days. Um if you've been holding Bitcoin uh unlevered in cold storage, you might not know anything happened uh over the past few days, but um if you were doing pretty much else anything else in the crypto space, uh you certainly were were wide awake on Friday afternoon. But uh we'll get into all of that. Uh maybe prior to that, uh the three of us were in Dallas last week for a few different events. Um there was text cap on Wednesday which was you know really a traditional finance capital markets focused uh conference. Um so there was you know a lot of people from New York Stock Exchange, NASDAQ who are um really pioneering a lot of things in Texas specifically getting uh wanting to get more companies uh directly listed in in this in the state on these various new exchanges as well as incorporating in the state. And so there was just a lot of momentum and excitement around Texas in general. And then the next two days, Thursday and Friday, was the North American Blockchain Summit um hosted by uh Texas Blockchain Council and Lee Bratcher um which was great as well. So uh Michael, did you have any thoughts on on the days leading up to to Friday, which we'll get to? >> Yeah, I um very wild week. Uh very wild round trip. not not wild week for us, just wild week in general coming back to the show because I feel like there's so many different segments and things we'll touch on from, you know, what's going on the capital market side to um the crazy stuff in crypto. But I think a few of the the notable things for me that I took some some things I wanted to share was um related to I guess first the uh the sentiment that something's broken is something really interesting. This is less from the event but more from meeting with family offices. I've done a lot of trips to Dallas and met with a lot of folks over the past 5 years being in the industry and this is the first time I've really experienced um you know the notion of the the you debasement trade and really just effectively explaining the the um numer or the denominator just being broken. Uh I think really people are prime for it and and I don't think it's anything actually to do with Bitcoin per se. I think Bitcoin took a small part of it. I think it's gold and really what's happening with it has really got people spooked. Um so that that was a big one. And then I think um the the politicians in Texas I think would be great for you guys to hear from some you know folks aren't from Texas is uh I thought it was very interesting and refreshing to hear some of the senators speak in a light to call out um the ills of the fiscal and monetary policy and how you want to ultimately insulate or help your state um bypass them. I think at the end of the day, the thing they all miss is you just want your citizens to hold as much Bitcoin as possible because again, if you're in a world full of debasement, if your uh constituents don't have any money to spend, then you kind of don't end up in a good place. Um, so I'll pause there and curious if you guys have any thoughts. >> Yeah. No, it was um it's a good point around generally speaking, you know, uh people in government that were, you know, featured at both of these conferences really recognizing, you know, something that we've talked about for a long time on this show. um just in terms of the realities uh of the fiat system, the realities of the debt situation, uh fiscal spending, um and really like the implications of that for the average citizen. So that you know their constituents is that things are getting more expensive and they have no way to protect themselves effectively from the debasement. And so this debasement trade is now very much in the zeitgeist as you referenced. Um, and you know, it's not I would say it's not something that's permeated everywhere, but it's it's interesting to see that, you know, it has gotten more steam in a place like Texas where um there's general recognition around property rights and freedoms and and so it is a natural extension to say, hey, let's embrace these, you know, outside money assets um as a way to protect, you know, not only our state but our our citizenry as well. And so overall very positive um you know optimistic outlook from a lot of the folks that were speaking at the conference um just in in the sense of being early to this still um and if you can make inroads in terms of setting up infrastructure and getting companies to uh move to Texas and incorporate in Texas um I think that's all very constructive for you know just being early to what is you know it's being called a trade but it's it's really just you know properly position positioning yourselves for what is a you know long-term structural shift in how wealth is preserved generally speaking. >> Yeah. And uh even in general too everybody who was you know working or related to the Texas government uh really stressed the fact that in their constitution they can't run a deficit. They just are trying to be uh fiscally conservative themselves. And then in addition to that, um, you know, Texas isn't quite the capital markets that New York is or, um, you know, still trying to like compete with California as well. And so they're just really trying to be the challenger to both of those. And as such, they're um they want a lot of innovation to come into the city and and or uh state in general. And so with that, I think that's always a good place to be because you have to be watching everything that's coming down the pipeline and trying to be as well positioned as possible in order to uh have your citizens in the right kind of frame of reference for what's kind of coming. And that's I think why they're so open-minded to ideas like Bitcoin and uh and gold. Yeah, we don't have to spend too much time here or we can go into the the rest of the show, but I do think the one thing um that I want to call out a little biased, but I'm sure you guys appreciate it is it was very refreshing and fascinating to see a state, you know, that is I believe and they didn't let you forget eight largest uh in the world from a GDP perspective and I believe France, they're they're trailing France by a few months to get to seven. Um, but it was a real idea like breaking down from a pragmatic first principles stance on how to actually achieve being a uh to Liam's point a place for capital markets and businesses of all shapes and sizes to thrive and and really breaking down like the um there was a certain tax levy uh as a corporate income tax and just different things that they were doing to protect businesses. But the thing that I really took from it was um they were like, "Hey, we don't sit back once we do a good job and pat each other on the back." We're like, "Hey, that was a good deal." They're like, "We just want to keep pushing the ball forward." Like, "We're just going to keep moving, keep grinding." And that ties into something that's interesting enough that we've done um whether it's both on the early writer side when it comes to uh being Bitcoin denominated and even on on-ramp when it comes to pushing from the from the front with multi-institution because I was listening to uh Pomp briefly and Jordan Vistister this past week and and Pomp was referencing something about how he went and um and we need to get him on a pod on his is uh and talk about this because I know he'd appreciate it. He was referencing how he was talking to a a p like a um like a a group or cohort of publications, media folks, and referenced how um that in the future they need to start denominating returns in Bitcoin dollars and gold. And they all looked at him like he was insane. And um and then we're just and it just reminded me of like the debasement trade sound money renaissance we've been talking about but then really early writers being denominated in Bitcoin because at the end of the day um these concepts are pushing the puck forward but it's how we will thrive and and survive as a society but they're what looked at as taboo or crazy will eventually be looked at as a standard in the same way multi-institution. And so I just thought it's interesting a Texas based firm, you see what Texas is doing. There's just uh there's a level of like craziness in the world and that to like see through it or push forward, you just have to have a basis of um I don't know what it is, but but Texas has it and I hope we get to embody it because there's no question like they're leading from the front when it comes to what's happening in the US outside of like Florida. I'm not sure of any other state that's um had, you know, as much growth since like postco. >> Yeah. And the and the other thing I would say too, you know, just a broad takeaway from the few days we were there speaking with, you know, various uh people in the industry and then also sort of prospects and and clients. It's, you know, Texas in general, I would say, you know, it's very similar to how we've we've historically talked about like the Middle East, like there's a predisposition to understand hard assets, understand commodity uh driven markets, and also understand, you know, there was a lot of um panels and discussions on the Bitcoin mining side at at uh the NABS conference as well. And so there's this there's a I would say a natural inclination of you know these folks to understand Bitcoin as a hard asset as an outside money um understand the linkages between Bitcoin mining and the energy space the oil and gas space um so there's a lot of uh it's basically you know very primed area to understand a lot of this stuff and that being said I would say it's still generally early in that uh discussion just given like you know if I want to take the more cynical view on on some of the events like you know there's still a lot conflation in the sense that um you know there's a lot of panels and discussions around stable coins and the tokenization of real world assets um and really you know overall sort of um still bucketing you know Bitcoin and crypto and digital assets kind of in in the same uh innovation wave if you will um and people you know talking about DeFi as as uh you know the real innovation here and and Bitcoin's kind of boring like there there was some of that sentiment at the conference which you know isn't unexpected. You have a lot of people from the industry who are you know have their own incentives in mind that um are are driving them to those those uh outcomes or or um lines of thinking. So I I think that is worth noting just given um you know what we will talk about today around just the broader crypto space. I do think that there's still a certain amount of conflation um that's going on. Did you guys sense that as well or >> let's do it. we got let's let's let's talk about the [ __ ] and how it's it's uh >> all right so yeah um as as we alluded to uh Friday got a little crazy um and so there's a lot of different ways we can take this but I would say the long and short of it is um traditional markets closed around you know 400 p.m. Eastern and not soon after that uh Trump threw out a tweet or a truth social post um you know signaling that he would you know implement a 100% tariff on China beginning November 1st. Now we've seen a lot of this you know the sort of trade war back and forth tariffs on tariffs off. Um so you would think that it you know something like this we we'd already be a little bit primed to to not be as reactive to it. Um but given that traditional markets were closed um there's this natural inclination that you know crypto trades 24/7 so that is the only market to trade once those traditional markets closed and so there was a knock-on effect um basically a cascading liquidations. Now there is some other nuances to all of this in the sense that you know it it wasn't totally random in the sense that you know there was arguably sort of an attack here in some sense on the broader crypto space not specific to Bitcoin really um like I said at the jump you know if you were just holding Bitcoin in cold storage you know none of this really impacted you we're back over 114K which you know we were around the same levels like 10 or 12 days ago um whereas some altcoins Um, and and you know, it's always funny to me that people characterize like certain altcoins as blue chip. Um, you know, if they're in the top 25 or top 100 even in terms of market cap, but a lot of these things uh in a matter of minutes on Friday afternoon dropped, you know, anywhere from 70 to 85% um in market cap. Now they sort of bounce back, but this was a the broad takeaway to me is that it just shows the fragility of the broader digital asset crypto ecosystem that when something like this occurs where there's a broad deleveraging um and sort of a cascading liquidation that occurs, you know, a lot of the market makers just step away and these things really have no floor. And so that's what we saw happen um on multiple sort of venues across decentralized exchanges and centralized exchanges. I think the number being quoted that was observable on decentralized exchanges was something like 20 billion in liquidations. Now that number is probably understating the total amount of of liquidations because we don't have full uh transparency into some of the the centralized venues. Um but that was um you know my sort of takeaway is just like this is something that we've known sort of as Bitcoiners is that um a lot of this you know sort of vaporware uh to be to be honest about it. Um has a lot of sort of spoof trading uh market makers are sort of keeping these things afloat. Um and when they step out there's really no floor. And so when these cascading liquidations occur, um, you know, you could see this this occur where, you know, some of these things are dropping 80 to 90% uh in in a matter of minutes. So, pretty wild stuff. Uh, but again, like the takeaway here should be like just just own Bitcoin in cold storage with no leverage and and none of this really impacted you. But curious your guys thoughts on all this. Yeah, I'm uh I 100% would agree with everything that you just mentioned. I think that the proliferation of um PERS and Hyperlid and all these different exchanges that are DeFi exchanges where um there are no shortage of people who are in the broader crypto space or now being interested in the crypto space in general and are telling me about how they have a friend of a friend or something like that who can get them something like 24% annualized returns by taking market neutral bets. and um you know not having any uh directional exposure to the crypto markets but that it implies or expects that these markets are always as liquid as um as like the the Bitcoin markets and there is somebody who is going to step in and there's a lot of um there's a lot of actual liquidity in there and as we saw especially over the weekend that's just not necessarily the case especially for a lot of these altcoins Um the reality is the fact that we're just going to be in a in a high volatility environment. Um going back to, you know, the actual announcement that caused this to happen. Um we are going to be uncertain about exactly what's going to happen with tariffs and where everything is going to fall. And so, um, as such, I think the the point really stands to to what you mentioned, Brian, earlier is just like it's it's very prudent to avoid leverage, especially if you um are have any short-term obligations that you need to make and just think about um you know, living your life and saving your craft. So, you don't need to speculate in the markets, especially on a very short-term type basis. >> Yeah. So there's a lot here. I think uh there's a lot here from crypto, there's a lot here from Trady. Um there's a lot here in general. One is what Brian maybe finished off with is maybe the key point to take away is um if you're in spot Bitcoin without a single counterparty, um whether it's yourself, right, or you know, an institution, you're in a good really good spot. even if it is yourself. Um, with an institution, that's a second quite that's a different situation because, you know, we don't even know where the rest of the bodies are going to be buried as far as like where holes exist. There was a lot of stuff that happened in 21 where people blew up and you didn't find out till 6 months later uh that they were insolvent, which is a thing for everyone to to be to realize. Um, but the notion of like Friday, I didn't know it was happening. I was traveling and you know if you run a like a book a lending book then you probably the volatility you're paying a little bit more closer attention but we don't run a a lending book and so the market's moving and um yeah I didn't really understand what was happening until later and I still didn't fully understand because the move wasn't as drastic as you've seen like historically in 21 when you saw something happen like that you were moving like 50% down in the Bitcoin markets or 30 to 50% this was only like at roughly 10%, you know, when it when it did the deleveraging to 105 or whatever, that was like that was more of market structure where things get wonky at the very end, but it popped right back to 112. Um, so a few things on the crypto side to Brian's point, all these assets are highly liquid. Um, so there's only a few market makers that are actually trading uh against each other and eventually when they step out because the market, you know, goes no bid and there's like who's left holding the bag, all the liquidity drives up and that's where you see these things completely go down. So that's one. what Liam said, those market neutral trades and uh or delta neutral trades and these per proliferation of per like these things have never existed and nobody actually knows the level of contagion and crossc collateralization and the [ __ ] that exists like actually nobody really knows like if you go listen cuz I I find this stuff fascinating and so you go listen to some of the best you know quote crypto trend five pods and they're all have a different take on what the hell happened and none of them can tell you anything they're just like well there's auto deleveraging and then like the liquidations and then the insurance fund and you know these delta nutri trades well they're getting stopped out when they are getting liquidated on the downside and then if they were uh long they're also getting stopped out because the auto deleveraging just stopped out their position so they just got like screwed on both sides um and yeah I mean I think that's like the core notion so so you take that right from crypto and it's all a Ponzi and I think a lot of Well, no. And maybe you can make some money. Maybe you can't because it doesn't matter if you had everything right. If the exchanges and the fragile infrastructure you're uh trading on blow up where you're just left holding the bag, even though if you were short or long. But the real my real takeaway here is that this is basically the same system but accelerated in the traditional finance world like in the sense of um the counterparty risk the amount of leverage it's just hyper scaled and hyper accelerated to just you know be at the whims of Trump tweeting that what we've been talking about and the thing I I think gets the least amount of appreciated and Brian and I were part of some very serious uh or interesting conversations with very wealthy people that have no Bitcoin and it's and we talk about Bitcoin being asymmetric and and what I used to think of it as asymmetric is like what you get the exposure to Bitcoin's upside and then you reduce your exposure to the dollar's downside. But what I'm really starting to believe is asymmetries, you reduce the counterparty risk to whatever other buckets of assets you hold because as we'll talk about later in the trad space, there is no shortage of like uh air pockets in a lot of different funds, banks, everywhere that you look because there's too much debt and not enough dollars. And that's the thing I don't think people appreciate is like there aren't many safe places to park very serious capital uh including like commercial residential in certain cities because we saw what happened in CO and so imagine you have a bunch of real estate exposure in a given market and something crazy happens well there goes 60% of your net worth like so anyway I know that was a lot but that's like what I think about when I say these deleveraging it's like this is just a proxy for the rest of the market. Yeah, that's a good point. And the other sort of high level takeaway for me was, you know, I saw some of this sentiment on X was like, you know, uh sort of in the after the early aftermath on on Friday evening was like, you know, today is a day where a lot of Bitcoin maximists were born in the sense that if you are a crypto trader and you know, you thought you were doing well, making some money, taking some leverage, taking some some bets on, you know, pretty far out on the risk curve whether you knew it or not. Um and something like this occurs where you know you thought you were in a a decent enough position in terms of the leverage um and you just get completely obliterated. Like there was countless sort of stories and accounts of you know people who had built up uh you know eight to you know eight figure balances trading crypto and it's all gone in a matter of minutes. Like that is a wakeup call for these people to say hey you know maybe these Bitcoiners are right. maybe, you know, just holding Bitcoin is is the thing here and the rest of this is is super speculative because these people, frankly, have been sold a story that just isn't true, right? Like, you know, whether, you know, any of these any of these given narratives around all these different tokens and and why they should have value um kind of goes up in smoke when you realize there's no actual bid for these things. Um, and then you juxtapose that against Bitcoin, which to your point, Michael, like wicked down to maybe 105 on on certain venues, um, and quickly came back up to like 112 and now we're back over 114. Like the that that shows you like there's actual there's actual demand for this. There's actual bids here sort of globally as opposed to just, you know, propped up markets with market makers who when they step out, these things just have zero zero floor. Um, so that was the other big takeaway to me like this should be an eye opening experience for a lot of folks. Now the the counter to that is like for the uninitiated this is another event that you know unless there's really good ar articulation of what occurred um people are just going to continue to lump this in as crypto like oh there was a flash crash in crypto and not be able to distinguish that you know Bitcoin was really you know unaffected by this in in you know in in a large part but um that that is my fear that like this is just another thing that you know the uninitiated is going to say hey you know all this stuff is all this stuff is speculative. >> It's not even I mean it's not even that that's like probably um a optimistic lens. This goes back to safe's take about SPF should have never went to jail because when you put SPF in jail well then the market just assumes that 2021's false was SPF versus this whole thing of crypto and the the the Ponzi that it exists. >> Similar here they're going to call out all these other things. they're going to forget um that it was crypto and that it was vaporware and that it there are liquid markets and they're highly fragile. I'm I'm not saying this is what happened or didn't happen, but I'm fairly certain that what happened Friday, we will see 100x the amount of deleveraging in the next 24 to 36 months. Like this was just a dry run. And um but the thing that I think what really bothers me is like it it's really just simple like there's no such thing as a free lunch. Like money doesn't grow on trees. So it's the same trade whether it's the DAT trade or whether you're farming you know the the um risk-free rate or you're hoping for your passive 10% you know returns. Like unless you understand where that yield or that return is coming from on a long enough time horizon, it's going to be looped into this whole like bubble here and then you're going to be exposed and that's why you park the money in the thing that's safe and then you just go back to like making more money. And it's really actually pretty straightforward, but the world has gotten that crazy that that's what the crypto casino is. It's a embodiment of the g the gambling that exists masked up like tradi which tradfi also is you know the casino. So you like blend them together. You add a little uh you know polyark and three bill in and next thing you know you're ready to to to repeat this back. >> Yeah. One other thing that we touched on but didn't really stress too much is um the fact that Bitcoin didn't dump nearly as much as these other assets just shows that there are a lot of limit orders or who of people who just want to acquire Bitcoin at a cheaper rate. Um I honestly just don't even think that the rest of the crypto market even thinks that long term that they want to acquire their assets at a cheaper rate anytime that the market dumps because they're just so focused on making a quick buck today. Um, and yeah, there there are definitely a bunch of traders in the uh Bitcoin market that are speculative, too. But anytime that this goes like any significant amount of risk off, there are a bunch of savers who are willing to step in and just acquire Bitcoin for the long term as well. Any uh any dip that happens, which um isn't necessarily the case with the rest of the digital assets market. >> Hey guys, hope you're enjoying this week's episode. Quick word from Onramp. As you're familiar, we have multi-institution custody, which protects clients uh from individuals all the way to institutions. We're onboarding some of the largest publicly traded companies holding Bitcoin as their treasury reserve asset. Um but we also have a bunch of features, you know, within that, whether it's traditional financial services like the ability to trade, set up inheritance, um get Bitcoin back loans, but we also have on-ramp guardian. has come up a bunch as deep fakes come to life uh become more prevalent. Physical attacks uh become more and more realistic. There is no shortage of tools and services that you can add on top of your multi-institution custody arrangement to make sure that you can um rest assured that your assets will be safe and secured. These come by the way of, you know, legal time locks from 7 days all the way to 365 days to velocity controls as well as other 38 factor authentication methods that you can use outside of the traditional kind of logic that exists online. If you want to learn more, I'd encourage you to sign up via self onboarding or book a consultation and the team will happily walk you through it. All right, on to the rest of the show. >> Yeah, that's well said. Um the only other just small note I wanted to reference on this was um there was some interesting uh takes and sort of uh takeaways around you know real the concept of real world assets and so there was um you know a version of of uh tokenized gold pack gold that basically deped um you know because the price of gold didn't really move that much on Friday. it was still around 4K, but this uh version of tokenized gold, you know, basically spiked down to around 3,200. Um, and so people got liquidated if you had, you know, even a marginal amount of leverage on on those assets. And so it just gets back to this whole concept of real world assets is is sort of flawed in my mind in the sense that um if you are entangling it with sort of whether it's smart contract risk or just um liquidity risk at at whatever venue is sort of issuing that uh tokenized version of the asset. Um there's just a whole host of layers of risk that you know are not really well articulated or very clear. Um and so just something to to note there because I saw that and then I saw someone respond to that being like oh on our platform it's actually better because that can't happen. We use external oracles for the price of the real world asset. So you know nothing happened. And then in the in sort of the the caveat to that he was like well the way we do that is by having it not actually be able to be traded outside of traditional hours. So it's like, well then isn't that sort of defeating the purpose of these things if like you can only trade the tokenized version when you know the actual markets are open. So I just thought it was all kind of funny to me like you know these concepts get you know when when you see something like this these a lot of these concepts that the crypto people talk about get called into question when we actually realize that they're all pretty fragile. Um where do you guys want to go from here? We had a ton of links maybe um I thought this was pretty interesting just uh prediction markets very invogue the Keli raise um I forget who who brought this link but uh Kelshi hits $5 billion valuation days after rival poly market gets two billion uh backing at an 8 billion valuation yeah I added this as part of the deals maybe we can speedrun we can talk about this one and then go through just a couple there was a bunch of announcements with um capital around capital formation Um, I think this ties in. I mean, there's interesting things happening with Poly Market from the election to uh I think there was somebody that placed a bid before this like Noble Pri Nobel um the uh the winner of that as well as there was another one that just happened Nobel Peace Prize and there was another event and I think there's an I haven't fully rationalized this there's an interesting case for like open markets um for people to be able to like not price discovery about information discovery. My my instincts tell me that the other side of it is is darker, which is you turn everything into a a market, everything into a gambling market and and it plays nicely into what we just talked about here. Um, which you just financialize everything under the sun. Um, but it's, you know, the part of the investment was from ICE, which is NYC's parent company, investing there. Um, so yeah, I I know you guys probably have additional thoughts, but I just think the overarching notion of like, you know, these markets there. Oh, the other thing was Poly Market's rumored to be announcing I think today it came out about a token now, which probably makes sense because if ICE is going to, you know, invest I think it was three I thought it was two three billion, not two, but either way, um, there's some probably warrants tied to tokens, uh, tied to that and that that makes a lot more sense from that valuation. Yeah, I mean to me I've heard people talk around prediction market like kind of what you were alluding to around you know information discovery if there's a market for everything that's kind of um broadly speaking a net positive for information discovery. I guess where it it gets conflated to me is like, you know, if you have markets on various things like uh a public company's quarterly earnings, whether you know they um are positive or negative, like if that's a bet, then like there is there is still quote unquote insider information because I've heard people make the argument that there's no insider information in predictor markets and it's just like this is how you this is how you value a market by just allowing people to bet on it. Um, but I I do think that that breaks down when the the market itself is on something that does actually have some insider information related to it. So, I think it's going to be interesting to see how all of this plays out, particularly from a regulatory perspective, like you know, if there's certain rules and stipulations around uh public company earnings, but then you have these more open markets on just betting either side of of what an announcement could be or an earnings release could be. I I just think that causes some issues in terms of like, well, there is there is still some insider information with some of these markets and so I'm not exactly sure how that that's all going to play out. Yeah, I mean it's a good point because that's like to theion of um like leaking false information or public information. So the first dimension is like what you referenced is if you're an officer, an executive and you leak something to somebody internal or they have an anonymous account uh and then they can go and speculate on it. And then the opposite is if you're leaking negative or like information that's not true and then they're speculating and you're making money on the other side. like you don't necessarily bring the most clear market and this TVD if that's even correct. Um like it's just brings an almost negative incentives. Um now the opposite is like well if there was somebody that knew about a assassination and then they bet that they wouldn't and then they could like throw it. there's all these like weird d like parallels you can go down but I don't necessarily see at the end of the day uh and I haven't fully formed this opinion but like where everyone is so positive on prediction markets or a net positive for the world I don't think that's right I just don't necessarily know I haven't thought deeply about all the reason >> I think it's a little bit nuance it's almost like the crypto casinos like they start off by allowing people to buy and hold Bitcoin and that's obviously net benefit because people can have uh save their money and a better store of wealth and then they offer the next best cryptocurrency as well um just because they think okay maybe this one has potential and it's innovative etc and then um you later on have you know 10,000 digital assets on your platform including uh only pushing email advertisements for shebaenu and fartcoin and that's essentially how I kind of see these going like there's the poly markets and cow sheets that have definite benefits for information sharing for um you know presidential elections and very important events. But then at the end of the day they're also going and trying to go out on the risk curve with everything sports gambling that is more of a negative sum game as well and that's just the incentive that they have because they need to make more capital and in order to return it to their investors. Um, so it's not necessarily, in my view, uh, all all great or all bad, but um, I think they're just going to get pushed out further and further on the risk curve. >> Yeah. >> Um, okay. Rattle off a few more uh, deals or headlines here. Um, I'm going to go to the uh, Square launches AI voice ordering and an integrated Bitcoin solution for merchants. I think this is um part of a uh you know announcements that's they've sort of been dripping out over the past few months in terms of basically turning on you know the ability for merchants uh using Square payment terminals to uh accept Bitcoin. It's something that you know they probably you know in hindsight could have done a little earlier. People have been asking for this for a long time but it seems like now they're actually following through on it. So um any thoughts on this one guys? Yeah, I mean I think um I thought it was interesting that they put the AI in the top part. This is a 10 Tech Crunch article, so it's it's unrelated and then the Bitcoin integration. >> I think probably, you know, Square's playing a different game, a very long game. And so I think it makes sense where they've you know slowly trickled out the type of integrations and really I think the biggest gap around payments has been what's commercially acceptable and and viable and it's really a time thing versus anything else. It's not really tooling. Um and so I think you know the notion of the debasement trade the understanding I think there was something that came out this today about 47% of Americans uh feel that you know groceries are more expensive this year than last year. small businesses feel it. And so to be able to give the tools and then offer, which is I think one of the big parts of this, is offering uh until 2027 um no uh interchange fees. So if somebody is paying a client or um a user of the merchant services with paying in Bitcoin, they don't have to pay any interchange, which is generally about 3% for Square. So I thought that was very interesting. And then obviously Square has the full kind of stack around um letting them you know convert into you know BTC or take the dollars and convert to Bitcoin. So I thought that was an interesting aspect of um you know starting to like get it more and more in the business understanding of like look this is something that you want to be prepared for looking at and then they obviously have Cash App. Um, so if there anybody's ever going to land the payments use case for Bitcoin, it's really was always going to be Square because of the cash app play and then also on the uh merchant services, but I think the reality is this is still far into the future because people just don't spend Bitcoin. There's not really a reason to spend Bitcoin. >> Yeah, that's what I >> Yeah, that's what I was going to sort of reiterate. you referenced earlier like there's a time there's a time element to this and and I think what you meant by that is like just you know the notion of people spending bitcoin the you know the sort of individual incentive is to hold bitcoin and spend dollars at current um and so in order to see material adoption and uptick in in these services you kind of need people being willing to spend their bitcoin so where my mind goes with all this it's something we've talked about in the past is like you know who will be the first merchants to recognize that you So maybe the way to go about this is you actually offer discounts in Bitcoin terms. Like if if a uh customer wants to pay in Bitcoin, they're actually getting a a discount in dollar terms at that uh specific point in time. That would be one thing that I would expect uh certain merchants to to adopt here. So, in addition to the the interchange fee thing that you referenced, there could be other ways to incentivize people paying in Bitcoin because I think what we're starting to see is the recognition from the merchant side that they want to, you know, uh, save in Bitcoin, store some of their um, their revenue or their earnings in Bitcoin just as a defensive mechanism. But you still do need the other side of that equation. Um, now you could do an auto conversion. If you want to accept dollars, you convert it to Bitcoin as a merchant. That works as well. But I think where it really turns into, you know, what people talk about around circular economies and and Bitcoin actually being used as payment broadly, you do need people to actually want to spend their Bitcoin. And so one way of doing that would be, you know, a dollar-based disc discount at the point of purchase. Um Liam, any thoughts on that? >> Yeah, I was just going to say Square is one of those few companies that actually deeply gets Bitcoin as well as has the distribution necessary in order to um turn it on for a large number of companies. Um, I was going to say, yeah, it's it's going to be um a little bit of a slower burn in order to have um consumers pay the merchants directly in Bitcoin, but uh just the auto conversion of some portion of revenue directly into Bitcoin is going to be a um impetus or uh you know for different payment processors in order to really focus on uh offering Bitcoin integration for um up and down the stack just because a lot of their companies are going to now have Bitcoin and have a more of a material portion over time. And and so um every company is going to recognize that, you know, even if they really want, um dollars or Bitcoin, they're going to want to accept both, but over time, they're just going to want to save most of their value in Bitcoin. It's just very early days, but we're going to see this force other payment processors in order to have at least a game plan around Bitcoin. Hey guys, I just wanted to give a quick uh update and just something that we don't talk about enough is the on-ramp onboarding process. Um, you have at any time the ability for an honor private wealth individual to walk you through, help you configure, deposit, withdraw, move assets over, but in reality, we know a lot of people are sophisticated that listen don't necessarily need the handholding. Um, our self onboarding experience is some one of the best in the industry. It takes what used to take me two to eight weeks in onboarding and collaborative custody, shipping devices, wallet configuration files and everything that's associated um about two to eight minutes in onboarding via our process. The wallet is set up, the keys are offline, sharted with qualified custodians and you have the ability to audit onchain. Those assets are secure with us. If you want to check it out, I encourage you to go to onrebitcoin.com and then go to sign up. All right. Hope you enjoy the rest of the podcast. Yeah, maybe to rattle off a few a few others, so we don't have to go through all of them. Uh, but they're interesting and we can go deeper on any of them. So, securityize um was rumored to go public uh via spa with Caner equity. I think that's interesting from the RWA perspective of what Brian was talking about. Like there's a huge opportunity now in the capital markets to recognize uh the trend of digital assets. Um the other two that were a little bit more interesting was um PayPal, which is one of the largest payment infrastructure uh providers in Japan, took a 40% stake in Binance. That's interesting because that's like, you know, Tradfi going into crypto. Um and then the other angle or this is kind of similar is Galaxy announced and they didn't say who it was, which is kind of funny, but uh it's in their press release and it's a publicly traded firm. So, I would imagine you can get these um you can get who it is from the the filings that come out shortly after, but ultimately if somebody took a $460 million strategic uh position from a leading asset management firm and I thought that was really interesting because we're going to see more and more of this specifically the pay and then whoever this asset management firm is of different lenses of traditional finance looking to integrate with digital assets. We see this all the day along when we talk with RAS. Uh and it it kind of makes sense even from the on-ramp perspective. If we find the right partner that has the right distribution or the right opportunity that's synergistic with what we're doing that can help with distribution and other things that come with you know RAS that how hold anywhere between 10 to hundreds of billions of dollars in client assets. Clients don't ape into Bitcoin. They go in at a very you know nominal either 0.1 to 5% positions. Well, that other 95% still needs to be managed. And so I thought that was really interesting on the Galaxy side. Um, but I'll pause there. Any any of those that stand out? >> Yeah, I um it was curious that they didn't name name the firm in the Galaxy release, but I'm sure we'll figure that out uh shortly. It it kind of relates to um another one in the sense is is what we've talked around just the blending of Trafi and crypto. I think the other sort of uh news from last week was Morgan Stanley dropping restrictions um which allow wealth clients to own crypto funds. This is a pivot. You know, I think Morgan Stanley was historically um sort of skeptical or questioning crypto exposure for their clients and um now they're they're looking to open it up. And so I think this this merging um of these two worlds I think is you know still in the early days but more stuff like this is going to continue to come out. um whether it's you know uh on the Galaxy side TR five firms actually taking stakes in the cryptonnative incumbents or just you know uh something more like this where it's just opening access to whether it's the ETFs or or other products for their clients. Um this is just again you know early stages of this this transition or this evolution of these worlds colliding. Um and I thought this was this was a notable notable one just given Morgan Stanley who they are and how they've historically talked about the asset class. Um, this is a pretty pretty big departure. >> Yeah. Well, they also just made that relatively large investment into Zero Hash, too. And now, uh, I think this week is the first week that they're actually talking about, um, like recommending some sort of Bitcoin allocation to their clients. And so that's something that we've kind of been talking about for a long time that most um most legacy firms are not going to recommend any uh Bitcoin exposure to their clients unless they actually like have some sort of incentive to do so, right? If they can't make money on it, like uh they're just not going to push their clients what's perceived to be further out on the risk curve, especially if they even if they know it's better for them, they're just um they'd happily be wrong if they can't make fees off of it. Um, and so I think that's also why you're seeing more of these asset managers like whether it's Galaxy, PayP, and Binance Japan, etc. all kind of making stakes into um these companies, they are um they're trying to one learn about it as well as two get their clients best-in-class exposure to uh whatever they're um they're investing in. >> Yeah. And I think where this ties into the business opportunity kind of what we're building, what we're investing in, and then just in general where the market goes is it's it's super valuable to talk about in the sense that Morgan Stanley u manages roughly six trillion in assets and historically had just been for private clients uh or over I think it is a million and a half in net worth and now it's available to all of them. But it's that this is just a first order. The next order is like there's multiple reasons and it doesn't really matter why whether it's because they want to make money or it's because they're afraid that their clients will leave. Um because similar with Vanguard if they don't offer up digital assets well then their clients are just going to go down the street and take their capital with them. But then the angle is well where do they go next is the big um like se like line of um do they go down the per and and all the stuff we just talked about and expose themselves. I feel like uh Franklin Templeton's very close or already involved there when you look at just how much crypto Franklin has done versus somebody like Morgan Stanley and I've spoken with those folks. They're very conservative and they generally look at Bitcoin as a completely separate asset than everything else. Then you start to go, well, now I have to, if you go down the Bitcoin route and your clients are holding material positions, well, they're not really equipped again to build the right products and services for those individuals. And that's really where acquisitions, aqua hires end up coming into play because it's very hard to build that from within a business. Square is able to do it and they were able to get the right people because Jack is a leader that, you know, is understood that understands Bitcoin and people will work for him. But if you're just a trifi person and you're, you know, have no view of the space or even if you shill a view of the space, but it's not widely felt that you deeply understand or have the right um kind of like thought on where it's going, the the best talent will not go work for you. And that's really where a lot of these companies are going to get hit over the course of the next 12 to 24 months. And then especially as the deleveraging happens, as they're going to realize, oh, it was always Bitcoin. And then they're going to really be on acquisition sprees uh to find the right talent and businesses that will integrate best-in-class products and services. >> Yeah. And the other thought I had related specifically to the Morgan Stanley stuff is um well it's generally positive. I think we I think we can sort of um ascertain that it's very much you know this decision and this quasi pivot is being very much driven by underlying client demand. And the reason I think that is because they're still being very conservative in how they talk about it. So what I'm pulling up on screen here is actually from the report itself which talked about this and talked about the recommendation. Well, for one, they're saying cryptocurrency, right? So this is not Bitcoin specific. They're talking about crypto broadly here. And if you look at the sort of recommended allocations here, the the 4% that people are excited about is in the quote unquote opportunistic growth bucket, which you know, I I think that that falls sort of more in the the narrative domain of broader crypto, right? Like venture tech sort of exposure, opportunistic growth. Whereas you look at the other end of this spectrum, the quoteunquote wealth conservation bucket is 0% to to cryptocurrency when you know in reality if if this were more specific to Bitcoin, like Bitcoin to me falls in the wealth conservation bucket most most appropriately, right? This is not a trade. It's not opportunistic growth. It's not venture tech. Um it's fundamentally protecting yourself against a basement with which is another way of saying wealth conservation. Um, so I did find that notable that like while people are getting excited about this and and saying this is huge. Um, we do have to sort of peel back the the layers here in the sense that I think this is just being driven by client demand and they knew they had to put out something that said like, you know, we're going to quote unquote recommend crypto to our clients. Um, but when you dig into what's actually put here, it's it's um maybe a little less positive uh specific to Bitcoin or or or really just sh you know, showing their hand in terms of not really understanding what's going on here. Yeah, I think we don't we don't have to pull it up unless you want to, but I think this ties into the um the central banks and banks in Russia offer uh also just putting laxer controls around um crypto activity which I think is interesting because we've seen the opposite with India and I think it came out last week India was like going after 500 uh of the top like high net worth people around crypto and tax evasion. like there's an antagonistic view that certain sovereigns are taking versus you're naturally starting to see you know others like Russia let their banks um soft start to offer some of these services which they historically have I think they were the last ones maybe 6 months to a year ago took a similar stance with Morgan Stanley that they like were starting to lean towards it but it was only for a very select uh number of clients um with a certain you know net worth standards. >> Yeah. >> Yeah. I think um Russia is one that makes sense though. Uh it's still less than 1% of bank assets can be digital assets related, but uh obviously back in I think it was 2022 or 2023 when their treasuries were seized. And then just commodity rich nations in general are going to be the first to lean into Bitcoin. Uh just like we've seen with Texas, it's just going to be those types of countries that understand there's a limited amount if you have the resources and uh have a lot of energy. It's just a trade that can allow you to get more Bitcoin if you're uh mining there um and just use excess power which will obviously en enable more uh power generation for your grid and consumers too. So it's just uh it's yeah it's very different to see versus um you know some of those other countries like India which you know honestly I think that they're just going to be a little bit slower because I don't know if they have quite as much uh natural resources in that country compared to country like Russia. >> Yeah. As it as it relates to the sovereign sort of discussion. There was another um noteworthy uh announcement from last week. Luxembourg uh is the first Eurozone nation to invest in Bitcoin sort of at the sovereign level. So their sovereign wealth fund invested 1% of its holdings into Bitcoin ETF ETFs making the first level state level fund in the Euro zone to do so. Um and then uh somewhat similarly um the I think this is just worth noting uh you referenced this earlier um but a Bitcoiner the leader of the Venezuelan opposition Maria Karina Machado um she won the Nobel Peace Prize and is a Bitcoiner and you know has has proposed using Bitcoin as a national reserve asset for Venezuela. So um I think this is is very positive to see just in terms of again those sort of the sovereign level game theory playing out in real time of um you know adopting outside money adopting reserve assets that um can't be manipulated by either the US or anyone else um sort of managing fiat currencies. I think this is a very positive development. >> Yeah. Should we wrap with the capital market stuff related to um just the um I forgot first brands? Yeah, pull that up. Yeah. >> So, I haven't done a deep dive on this, Michael. I know you have. So, I'm gonna I'm just gonna I'm gonna hand this one to you, but what is First Brands and and what's going on here? >> Well, I haven't necessarily done a deep dive because it's like the similar the per stuff. It's just it's pretty wild. If you if you actually and this will give context. If you open up the other link, I think that was in there from Zero Hedge, it'll show their order chart, which if you see if you ever seen an or chart like this, you should generally run. Uh I think we've seen a few recently in the digital asset space and most notably um uh FTX but uh effectively first brain started as like a smaller automotive business and it ended up picking up a rollup strategy um where they own some of the large like the notable thing that I think is in one of their like either um some document was that if you have a car over 10 years old you basically have a part that came from first brands companies because it was anything that is postmanufacturer where you can buy at like half the cost, right? So that all sounds pretty good is like you have um you know wholesale distribution of auto parts. What ended up happening is um they were taking off balance sheet loans. So the market didn't understand the amount of leverage that they had and I think that their notable assets are 1 to 10 billion and they have uh estimated 10 to 50 billion in offbalance sheet loans for that 1 to 10. So like anywhere between a 10 to 5 to 10x uh leverage ratio and there's a bunch of money missing and they don't know where where it went and there's all this other stuff happening and the bigger problem and I think this is tying into they're starting some rumors of uh concern I don't know how it really are so don't take this take it with a grain of salt is Jeff being exposed but the core when you look at this it's obviously not apples to apples but it mirrors very similarly when you look at like what just we talked about the beginning of the show with the amount of leverage in the system of crypto and as it starts to get more and more complex it gets more and more obiscated where you don't know where the risk lies and then when the deleveraging happens you could be somewhere over as like in a Jeffre you know bond portfolio or whatever it is and have exposure there that's going to effectively net out to be potentially a zero um and so this is picking up steam I don't necessarily think this is like some kind of crazy systemic thing that's going to like you know be like I think evergreen was one of the ones that comes to mind from a couple years ago So, but I think um we will start to see more and more of this and part of what this article or what's referencing is just like uh was picked up the past few months is as we start to see or the past few weeks as we start to see more and more of u acute signs of recession and you know delinquencies you start to see on the edges these types of businesses that are prone to the consumer's lack of liquidity start to show up. Um because there's a lot of holes everywhere. Like we talked about the air pockets. It's like when do they start to show up is the point. Um so yeah. Yeah. This this reminds me of um the sort of what we you know you're exactly right. We're starting to see little signs here and there of really where where all the risk lies. Um and the other example that comes to mind was a month or so ago that um you know CLA offloading a bunch of their buy now pay later loans to an insurance company and it's just shifting around the risk shifting around the liabilities and and really obiscating where the credit risk lies. Um I think we're going to start to see more of this unfortunately where uh we we start to figure out similar to the crypto side it's like figuring out where the bodies are buried uh over the next several months I think is going to be um pretty interesting to watch play out. >> Yeah. with the only caveat is uh in the crypto space there is no bailouts versus uh if anything is systemically important you're going to get bailed out in nominal terms but not in real terms. >> Um anything else Mike? >> No. Um a few a few things just to call out if you made it this far. We had teased last week about um updated pricing on the on-ramp side and we had a lot of interest. Um, we're basically going to be moving to a flat pricing structure. If you want to book a consultation, you can reach out and we'll walk you through the pricing. It's really advantageous for clients that have wanted to work with us but a little hesitant on our um bit base pricing. And then um we have exciting news tomorrow related to the business side of Bitcoin adoption. So I'd encourage you guys to to take a look at that and reach out if you want to learn more because um we have a notable things being announced in the next couple weeks and would love to chat with anybody listening. Awesome. Well, sounds good. I think we can wrap there, boys. Tight hour. Uh, thanks for joining. See you guys next week. >> Thanks. >> Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that Onra Media is forformational and entertainment purposes only and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. 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