NYC Bitcoin Investor Week Recap

Speaker 4 (00:02.414) trying to convince my girlfriend Elizabeth to be on the pod with me sometimes. Her and I just chatting about. Yeah, I mean, not really. Like a lot better than that. upon. point. Speaker 2 (00:15.406) I never watched it, but I just know that's first Look. Yeah, no, absolutely. I just think of the Block Fight clip. Rocketship. Hey, hey, just in case you're going to Too much. And we're live. Sorry, we've been live for 20 minutes. Speaker 2 (00:34.3) Well it funny, was very... Ysko. Okay. dinner with yesterday and it literally brought that up because it was just having an app station talking about our business and then I was like well what has you interested in art because they're investors in art is like after the block by situation and and he brought up well block by was just a product of a ponzi like got stuck with Sam and he was... Speaker 2 (00:57.13) and it's like well I would to be you know counter would be like if it wasn't Sam it was somebody else because they were lending unsecured and like there's all this fuck other degree that was it anything like and there was a Ponzi was also like I he started I forgot about this how like FTX was collateralizing a lot alone so they just took this token which you're not It's independent. If it's a pawns, you probably shouldn't collateralize. Clients assets with like a made up. Yeah, doesn't sound great. Speaker 2 (01:26.412) You're like I have ten billion dollars of ripple We're good. That's effectively what it is this whole thing. We're good. Air tokens out of Mickey Mouse token. Exactly. Speaker 4 (01:43.144) Mark seems like a super nice guy. He really is. was a good. conversation. He was super fascinated about what we were doing. That's awesome. Speaker 4 (01:52.6) So you were there, the Arch guys were there. Who's a big crowd? was like the tables overflowed and probably it was supposed to be 20. It probably ended up at like 23 25 Dennis Porter showed up We are rolling and you guys are to go. Wow. All right. Yeah. Welcome back to the last trade. This is our first ever in-person recording. So it's really nice to see a big Tim. Of course we got the long tie, long orange tie over there. Got Michael Tanguma and Brian Cabela. So gentlemen, it's nice to see you in person, Tim. You finally got the chance to meet Michael. you didn't think it was going to happen this week, but it did. Speaker 4 (02:08.277) And we're back. Speaker 4 (02:30.24) I thought it was AI Michael the whole time. Yeah, I'm glad we did this on Friday. because we have a whole week of ammunition to talk about. There's been some incidents across the board, good and bad, and we obviously have pretty suppressed price at this point, so there's a lot to talk about. to have a. Speaker 3 (02:45.772) Yeah, you wouldn't think that at three o'clock in the morning, someone be trying to break into your hotel room to steal your. right. Right. So. Jackson where are we? We're in New York. Why are we even together in the first place? Midtown. Beautiful Midtown. It's a good point. So we have Bitcoin Investor Week was this week, which I would say in terms of conferences that at least I've attended, very well done. The people that decided to show up were more serious, I think, both as individuals and as institutions. I tended to just be bouncing around the room, chatting to a lot of people and I think it's just a higher caliber of individual that made the intention to show up here. So I want to say kudos to Pomp's team. They did a great job. And also he's kind of an animal up on the stage in terms of just moderating all these discussions one after another. Really good. What do you guys think? I it's been great. I think he's done a great job to your point of curating a crowd that isn't just, you know, Bitcoin enthusiasts or what you would typically see at a Bitcoin conference. It's very much really bridging the gap between Bitcoin and traditional finance space. And so a lot of interested folks who are curious and trying to learn more. So, yeah, I think it's been it's been a great week. Speaker 2 (04:07.79) Yeah. Yeah, agreed. From the start of the week, we did something with Pomp and the Strive folks and on Tuesday there was a very buttoned up crowd full of probably So our third. wealth managers, asset managers. Interesting to see a group like that on the middle of a Tuesday show up and very lively. It went on for like a closer to a little over two hours. Going into Wednesday, there was, he had a session, but then there was mining and a component around like business treasury. And then going into Thursday, Friday, more of a panel session. But to your point, definitely an animal hustler, like, just working his ass off. Pretty impressive, actually. And Caroline, too, should get a shout out. She's done a lot of work behind the scenes to get it up, pull it all together. Stood out, obviously, like, because we're closest to it. The two, like, themes are the business treasury stuff and strive and the GameStop. I don't want to call it activist approach, but they did write a letter and they're trying to get them to put Bitcoin. Speaker 2 (04:53.717) the things that have Speaker 4 (05:06.734) That's what they're calling it. It is an activist program. This approach that's increasing. There's a lot of conversations and attempt gets excited. We can talk about that. And then the other one that I found fascinating was just this notion of like there are sophisticated participants in the crypto ecosystem here and they are talking about like the way you like by bit is a big topic security and then also like just ledger and kidnappings and all that and the solutions are like specifically on the by bit custodial problem is just like it's just assumed you just have to diversify. across all these different exchanges or custodians if you're gonna operate in this space. And I think it's kind of funny because it's just like, in my mind, I always just anchor back to FDIC and like a sign of broken market structure that you can't leave too much money in a single bank. Like that's not a good sign of a society of like a market. And it just happens to be in Bitcoin. You just have to like spread your shit around everywhere because you're not sure who's gonna rug you. And everyone assumes that's just how we're gonna operate. And we're only at 80,000. What happens when we're at 800,000? The risk just, doesn't 10x, it's almost like 100 to 1,000xs, and nobody really has solutions for that. Speaker 3 (06:17.61) Yeah, the market structure is totally broken. A lot of the conversations in this week, people noticed the on-ramp vest. So I think the branding, people noticed that this week, but a lot of people still don't fully understand what we do. So a lot of people would just come up and ask about the company. And the way I started a lot of the conversations was that just point to the numbers. There's $600 billion of losses in Bitcoin and crypto custody. so, Michael, that ties into your point where there's this broken market structure where if you're an individual or more so on the institutional side as corporates or institutional investors, they diversify various custodians because they don't want to have the chance of losing, having a permanent loss of capital if their total allocation of Bitcoin. And so what we've seen then is because of this broken market structure, it's either you park it with one institution or you manage it all yourself. There's been such a tremendous amount of losses. And a lot of the people that attended, of course, there are people that were representing institutions that noticed a lot of fun. I'll just quick side note. I noticed a lot of quantitative crypto funds. I don't know how many quant funds need to exist to underperform Bitcoin, but there was a lot of them at the conference. But anyways, you know, A lot of these individuals recognize that existing solutions are insufficient. So I thought that was a great place to anchor to because everyone, if you've been in the space long enough, you recognize it's kind of a, it's a challenge to manage the asset for the longterm. Like Michael, you've mentioned about playing hot potato with it, right? You don't really know where to go with your Bitcoin for the longterm. Yeah, I think the one Speaker 1 (07:52.034) aspect though that where there's a big gap with everyone here is makes complete sense that it is a gap because on one side of the quote-unquote sophisticated working in the market who are working generally for someone in Speaker 2 (08:03.072) You and you assume this is like what the market provides so you use it. Like that's what you do. And then if you're a custodian or exchange, like to do anything like what we're doing, you can't even fathom it because you have to think about, well, the fallacy that they believe like custody goes to zero. So how could you like aggregate enough partners enough to coordinate and work together and then have enough fees to go around it. So it's just like an impossible thing for them to think about. On the other side of it, and this sounds like, Super like maybe controversial or whatever but it's like everyone's really really short Bitcoin like if there's a reason why it's only 80,000 There's a very few people have material wealth meaning like something that's substantial to them including people here and If it's an individual they if they've got material wealth they end up in the point you described to taking custody and then they're very uncomfortable and then what we do makes complete sense and they're like tell me more And so Speaker 2 (08:57.838) And then the thing that you and I have seen and maybe you guys as well, like we talked to lot of family offices, a lot of people managing, increasingly like people reaching out to us. The problem with it is that they're managing other people's capital. So it's like a big leap, you have to have a strong pain point or you're gonna get fired which... probably both won't happen because it's such a small percentage of the family offices. Again, they're severely under allocated for what we know this market's going and also just like as it relates to other assets. So it's all in Coinbase. And like to get them to leave it off Coinbase, you have to not only have a step, you have to help them mitigate some disasters like point in their professional career. And that's all coming, we know it, but it's just still very early. And people just really have it with all this boils down to people don't feel the pain because they don't have enough Bitcoin. improvement. Speaker 4 (09:44.558) Yeah, that's definitely part of it. think Jackson that's it's always good to reference the losses because it is Just a stark reminder of like how different this asset is from a custodial perspective and how it's you know been the the largest pitfall of owning the asset over the first 16 years of its history is Securing it in a way where you don't get knocked out of the game the other way that I've spoken to folks this week you know because you have a two minute conversation with someone and you have to sort of, know, why does on-ramp exist effectively? The way I like to, you know, impart it on people is like, you need fault tolerance, you need redundancy, and multi-institution custody is the only way to get that real fault tolerance in a setup where you don't have to just spread it out and hope that, you know, hope and pray that your custodians don't get rugged. You spread it out in a way where... it's actually possible where something could go wrong with a single custodian and you're not knocked out of the game. You're not losing 20, 30 % of your assets. And that resonates with folks because, I mean, they've just never heard that that was even possible because even if they know what multisig is, and this goes back to the Bybit hack stuff, if we want to get into that, it's like, yeah, great. Putting aside for a second the differences between Ethereum-based multisig and Bitcoin multisig, but like... Yeah, it's great. They were using a form of multisig to secure their Ethereum, but you still have the single entity risk, right? And so if something goes wrong, whether through malfeasance, negligence, or whatever else, multisig doesn't really, you kind of defeat the purpose of multisig if the entity itself can be compromised. And that's why you need to spread out the keys across distinct entities. Yeah, that was the thing that like kind of blue pumps brain when we were chatting about before we did the preamble at this lunch was describing what we did. Speaker 1 (11:39.148) and was breaking down that as the price appreciates, the ROI increases at the individual level when it comes. Yeah, for the attackers, whether it's an individual and staking out your house and putting together how you manage your multi-sig or your individual custody all the way to the buy-bit situation. it's written, there's reports on this that Lazarus embeds themselves in organizations. And it's very similar with Coinbase. If they manage 700 billion today and it's 1.4 and then 2.1, and like as the value increases, it just makes sense to play the for attackers. to me. Speaker 1 (12:09.072) longer game to infiltrate. Tim, I'm curious how this ties into the business stuff because it just hit me like we talk about it and obviously sounds like talking in our book about, and we said this at this lunch, it's like it's all great, they have their business strategy, increased equity value, all the stuff everyone's excited about, but the second one treasuries lost their assets, all that shareholder value just gets wiped away. But what just hit me when Brian was talking was that that's gonna be like whenever that does happen, every other business has to use what we do or figure it out because they can't afford, right? Like there people who like, why would you just leave this at X exchange? So curious like how you think about that because I know you're in those circles and like, I don't think custody, we were talking about it last night and it's kind of interesting where like everyone gets, they talk about the strategy of getting exposure and then how are they gonna like pump it and market it, but they like bypass the execution of like the acquisition coupled with custody that never gets talked about. And I'm pretty confident, like some think about it, but they're just like, we're just gonna go Coinbase. So it reminds me of when I was interviewing Eric Semler and he said, of course, we're very happy with our custodians, but we're also very excited for additional institutions to enter. And of course, he meant traditional institutions. yeah, was sitting at the conference yesterday and an individual came up to me, introduced themselves and said, hey, I have a private company. We're going to flip it public. We're to put Bitcoin on the balance sheet. And I'm not just excited. for starting as a Bitcoin enthusiast, but now being more in the space and business and career-wise, in that instance, I was able to say, yeah, however I can help, let me know. He's saying, I'm talking to investment banks, I'm doing this, I'm doing that, trying to prepare. And I said, if I can introduce you to OnRamp. Speaker 4 (14:06.498) You know for custody to Acropolis for a Bitcoin treasury solution. Let me know how I can help you. He's like, maybe and I'm like, yeah I'm just throwing it out there so that if and when something happens like hey, I like like that's just a natural part of the conversation for me now, which just makes me feel like I can at least do my part to try to move everything forward in a responsible way. Yeah, I think part of that too is we haven't seen that many companies actually deploy the Bitcoin treasury strategy. And I think it's the same reason why we haven't seen a lot of investors actually allocate in a meaningful way to Bitcoin because You can't really wrap your arms around an asset class that you could lose permanently because you didn't actually secure it the right way. That doesn't exist in traditional finance. I think that's almost worse to make the allocation. So be right about Bitcoin over the long term, but then not actually be able to enjoy that wealth however you want it later down the line or, you know, increase the value of your company in the business case. But That's certainly something that I noticed. went to a breakfast yesterday morning, at Alliance Bernstein and their Hudson yards office. And so I just recognized I hadn't been in one of those rooms in a while. when I was at Stiefel, Brian, know, Brown brothers as well, there's always weekly or monthly strategy update calls from various groups. And so Bernstein had a breakfast that was obviously open to some external people as well. Hence me being there. But they were talking all about they're really talking about all these things that were incredibly bullish for Bitcoin. But Bitcoin wasn't spoken about once. But it was about tech and kind of the future of investing in all these things. And I just find it so fascinating because when I got there a little bit late, probably 15 minutes into the presentation because of the incident that happened at my hotel room, which we'll get into. But I got there a little bit late and immediately they're talking. They had that they had kind of their own branded slide of Speaker 3 (16:12.322) the projected federal debt, right, that you've seen used, I think, by the Congressional Budget Office. And so they were talking about federal debt. They had a cool chart. I want to get the full slide deck, but they had a chart that showed pre and post debt levels, GFC. So like at the state level, consumer level, I think debt's been pretty flat pre and post GFC. But the federal government debt has obviously gone parabolic since the Great Financial Crisis. So they're talking about all these macro themes and then they went into things specific to a lot of things around AI and talking about how the businesses that won in software over the past decade were not the businesses that built the infrastructure for the software, but the ones that were able to capture the value of the networks upon that infrastructure. So I was then thinking about, like Bitcoin really ties into all of this, right? Because it's building on the network effects of social medias and the internet, of course. But it's just remarkable to be in a room where you have successful people, sophisticated people. They knew their stuff about equities very well. They were very well researched, but they're not talking at all about Bitcoin, which I think is remarkable. So it just goes back to, think, A, there's confusion. B, you see CNBC, Wall Street Journal. You see the Bybit hack. like, well, I don't want to be I don't want to lose my assets that way. You don't want to be diving through a landfill. So there's all these structural issues that exist. And so that's why a lot of people haven't invested. I think it's just like, it's too daunting. It's too different. Yeah. And going back to Michael, what you're saying around like, you know, all these companies that have a good idea around we need exposure to Bitcoin, let's put it on our balance sheet. I think the reason they're not thinking about custody is because it's just a sort of a short termism thing. Like in their mind, it's probably still a trade to some extent. I don't think they're thinking about it as a 50 to 100 year plan. And if you do have that perspective, then yeah, you start to think about, well, Speaker 4 (18:17.24) How do I protect this into the future? How do I make sure to Jackson Point I don't get kicked out of the game? Because from a fiduciary perspective, whether it's a company running a Bitcoin treasury strategy or an investment advisor allocating the Bitcoin for their clients, that's what gets you fired is if you got the thesis right, but hey, the allocation is now zero because you picked the wrong custodian. So that's what gets people fired over the next decade. Yeah, what's interesting is like, you've been on a pod recently about counterparty risk and like the lack of conversation counterparty risk in like TradFi. And it ties to like Bitcoin just having accelerated, you know, whatever we call it business cycles where we just see whether it's the uptrend and then downtrend, the volatility or exchange hacks. Like the Bybit thing, while it's a big deal, it's the largest hack in the history of humanity, right? You brought this up, Jackson. Speaker 2 (19:11.502) kind of Asian Pacific exchange. It's not that big. It's also crazy, well not crazy, another takeaway for me from over the weekend was they actually did a pretty remarkable job of communicating what was going on in real time and then also having pretty, not a difficult time plugging the hole, which also just speaks to Well, that's a different conversation of how they actually plug the hole and is that part of this downtrip. But where it was going was that you can have a hack and it kind of gets glossed over in this space and we're on to the next thing. And where I'm going is that most people just do not assume they're going lose their money when they invest. So if they get passed to your point, that keeps a lot of people out. But the second that they're in, like when you talk to family office or corporate treasury, it's like whatever you would imagine can't happen. The best one that I think of is the dollar. So everyone here, we just assume the dollar will always exist. And we all know that you can go down a laundry list of currencies that have basically hyperinflated. But when we're here, it's like impossible. COVID was another kind of example of it. Like when you saw it happen, you're like, holy shit, I didn't think this could happen in the United States. Point being is that people just like inherently do not believe Speaker 1 (20:28.784) that an exchange or their custodian will collapse and they forget that 22 was just there and it's just like embedded in the psyche that like it couldn't happen to me. Like I can't get like somebody kidnapped my family for my Bitcoin or all these things even though we know there's like a list and lists of people that have documented it and some that haven't. And so it's just an interesting thing and I think it's a what I think it's because we're US based because in all these other markets like when we a lot of our European clients they ask for seven day periods between the two key signings. because of the exact kidnapping situation that they just unfortunately have to deal with. And so it's just a very much Western counterparty trust in the system. The problem is we generally have the best rule on you should trust people, but Bitcoin has that accelerated business cycle of counterparty risk because it's digital. You can take it, people go and rehypothecate, and the volatility shakes people out. And so it's a learning curve. To your point, people need better education. They need to be able to find you, ask you about... their business strategy and then you'd be like, hey, maybe you should actually look into custody because this isn't this thing that's just figured out that you should assume. And the word assume I was literally just thinking people must either be absent-minded meaning they've got lives I understand that and or they're they're assuming the best like when I order when I Engage with an insurance policy you just you know, it's a trusted institution And so I think if a couple additional things come into play you'll see people kind of have that light bulb moment. Because you don't see any of the larger named custodians, to my knowledge, any education on security or why people should trust that everything's fine. I mean, it's just like no information out there. At least not that they're promoting or marketing and trying to make that part of the conversation. Speaker 1 (22:22.171) The other aspect, and this is why we focus on education on like the asset, is simply because everyone's like speculating on it. Again, not everyone is overgeneralizing, but majority of people stepping in, like, it's a ticker in the same way, like something on Robinhood that's the latest meme stock or meme coin. Like, Bitcoin's like a form of a meme for individuals. So they're never really allocating more than maybe 1 % because to Jackson's point, they never know, like, if you leave it on exchange, it's known to be hacked or you put it on a ledger and it could end up in a landfill. So we're so still early that people don't look at this asset as just a way to preserve their wealth and, just DCA and then go about their lives. and it's gonna take still time to like that permeate. Because when that permeates then it just becomes natural. It's like, well, if I have three, five, 10%, I can't afford to like have this mess up. Yeah, I think it comes back to other people's money too. OPM. You don't really care about other people's money like you do your own, right? So if you're allocating on behalf of other people, you want to do the thing that doesn't get you fired. Everyone is self-interested, right? So you're going to do the thing that looks best for your career, doesn't get you fired, gets you the promotion. You don't really care. It's also like a herd mentality crowd thing type thing where it's like, and you saw this pretty explicitly with like the ETFs and it was like, you know, as soon as BlackRock put forth that they were going to use Coinbase for their custodian, everybody used Coinbase for their custodian. So it was just a pure like, okay, that worked, that got through the SEC. That's what we need to do. So let's do it. Let's not overthink it. Let's just get it through the door. Speaker 3 (23:57.496) course, but it's also like people treat their own finances differently than a company or a client's. I mean, if you're acting as a fiduciary, you should be of course doing the right thing by your clients. But even if you work at like a large company, right, and you go on a trip, you're probably going to spend the money of the company differently than you would spend your own. Like if you're just like you have unlimited budget, you work at like Google or you work at BNY, whatever, right? And you're on a business trip. That's why you stayed at that really nice hotel this week, right? So yeah, should we talk about that? Mine as well. briefly. Speaker 2 (24:29.794) mean, Jackson was, Jackson. I accidentally had a visitor in the middle of the night. Yeah, I mean, we don't have to get into the details, but I had a very poor hotel experience. I just anyone who's listening, do not stay at the New Yorker at Penn Station. I mean, if you come to New York, it's just generally not a good idea to stay in Midtown. But I stayed caddy corner to Penn Station in the New Yorker Hotel. Do not stay there. I woke up in the middle of the night, about two thirty in the morning to someone belligerently banging on my door. I looked, you you have the little people, you can see what's going on out there. like, at first I didn't think it was someone at my door. I just thought it was the wind blowing my door or something, but I got out of bed. I look and there's just large dude just banging on my door. He's clearly under the influence of something. Long story short, he, he did some inappropriate things. He, he pulled his pants down and relieved himself on my door. had to call the security of the hotel. and the police had to come. And so there was this entire incident that took place at the New Yorker Hotel this week. So it's why I'm a little bit fatigued. I also think that, you know. Speaker 4 (25:43.758) If you want the rest of their details book a consultation with Jackson Exactly, exactly. I think it actually came out that this guy was part of a larger ring that was following people at the conference and he pretended to be belligerent but he was actually trying to get Jackson's Bitcoin and so it was was when Jackson was telling the story was that he opened the door at 2 30. the thing that we found. Speaker 4 (26:05.742) I'll move to open the door. I was half asleep. gave him, listen, I gave him the benefit of the doubt. I cracked the door open. was like, man, this is not your room. He was incoherent though. So didn't understand that. So of course close the door. But yeah, more point of the story. Don't stay at that hotel. Also don't travel with your Bitcoin. That's right. You're kind of in a predicament. If you're doing self custody, probably don't want to bring it with you because you're not going to have the same security being at a hotel. And you're also not going to want to be carrying it around a city or wherever you are. But then it's also like, well, if you're leaving for a prolonged period of time, what do you do with the asset? So it's just like this chicken or egg thing. I don't know. lot you know this week ETF outflows the price 80k arch partnership the the buy bit one when you maybe just go into the buy bit I was thinking about to be nobody bit partnership we don't like not a bybit partnership. Speaker 2 (27:03.086) But I was thinking about Rumors get started. Speaker 1 (27:11.296) So we can't go into the mechanics of the bit, but at the end of the day, they were playing with these plastic devices. They were playing with these plastic devices. And if anybody has ever used, and it's funny because people have to, because it's the largest, I don't know if you know this, but so like roughly 60 to 70 % of all the Bitcoins held by individuals, but then they hold it, 70 to 80 % of market share is with Ledger. And on Jali upgrade because it's just like you park it there and it's really scary to upgrade to your little. Bye. Speaker 2 (27:18.21) This is like Ultima, they were playing- Speaker 4 (27:40.022) Everyone's scared to touch it. You just sit in, you just hope. And the old ledgers if you have your we got to get you on there amazing devices device Yes, it is a phenomenal thing to experience because the user experience experience horrible. It has two buttons You the first part is when you get a to put in the pin if you do it twice and fail the third time if you mess up with a ledger. Mickey Mouse Speaker 1 (28:05.14) it wipes the device completely. unless you back up the words, you're just like lost all your Bitcoin. And, but then this thing back in the day for like, so the screen is only, you know, call it like an inch and a half. And so a Bitcoin address, if you think about the length of it on a screen is probably like three inches. So you can't ever see the Speaker 1 (28:28.696) it gets a little more complex just in regular Bitcoin but you can at least like view the address. With this is I'm thinking about the buyBit hack and like just watching people manage billions of dollars in this like plastic we joke about though but it's just like well where I'm going. Speaker 2 (28:37.544) and plug this on these people are managing significant and they're just like click buttons and like And part of the hack with the Ethereum deal is that like, because it's a smart contract, because Bitcoin doesn't have native multisig, that you never can verify the address on the device, because that's just like a known thing. If you're going to manage your own keys, you got to be able to verify on the physical device where you're sending it. You don't want to trust an internet connected browser or your computer in general. So it shows a hash. It doesn't actually show the address. So the person's just clicking and they're just busy and they have like shit to do and probably liquidations or whatever happening. So they're just clicking. Addresses that aren't actually sending the 1.2 billion to the wallet and that's how this happened and I was just thinking about like, it's just wild. Speaker 1 (29:22.636) like setup that we're serious market 100k of all these things happening and that's how people are managing crazy Gene, I'll- Speaker 4 (29:32.782) I mean, I will say, for myself personally, yesterday was the first time I saw an executive at the conference with a security guard with them, with a bodyguard. I mean, I've heard stories of like the crypto ball, like in the VIP area, like every single note, like. person that had security with those. There's like three or four security guards for every person. It just makes it very uncomfortable and not a great vibe, right? So like, I guess that's where we're going if you want to just, you know, do that. Yeah. Speaker 3 (30:08.002) Yeah, next time I stay in midtown, I'm going to have a security guard. No, but I agree, Tim. I think it's actually remarkable that where we are, mean, right about 80 K right now. So it's it's a it's a hurting market, but. I'm Speaker 3 (30:23.554) To your point, I'm surprised we haven't seen more of that actually, because you would think like some of the more high profile people, both host of conferences, but also a lot of the speakers are very high profile as well. And to your point, some of them, I guess, have security with them, but others don't. And so I've been thinking about this for a while. Pretty much reminds me of the conversation we had earlier this week where we were speaking to someone who wanted to do self custody. Right. Michael, like, wanted to run their own multi-sig, wanted to do it in a non-KYC way. We talked through it. Michael is kind of like poking holes in it. But ultimately this guy works at a crypto company. So it's like all that doesn't matter. You work in the industry. It doesn't matter if you do all this non-KYC stuff. People know that you're earning potential and you're likely saving your money. in Bitcoin and crypto. it's like anyone who's I think works in the space or frequenting conferences. A lot of these people that I met this week, they go to conferences like several conferences a year. Yeah. There's a sad thing that we just like, for better or worse, we get the tail end of like the bad stuff that happens, right? Like we export inflation, the like misery or whatever we want to call it, like. happens. Speaker 1 (31:38.594) the disparity in wealth has increased. That's like unquestionable in the US as far as outside. And so this conversation Jackson's bringing up happened to be with somebody that was from the UK. And so he's describing how fundamentally his like experience changes when he goes to the UK versus here in New York simply from like keeping his phone out. He was referencing you just never take your phone out on the streets because they have spotters and it's very elaborate for a phone. And he's just breaking down like how in the US the The criminals are more higher end or whatever. True, it's just like, it's A, like where you're at, but B, that ultimately gets exported over time because... And I'm like, well, it's not really. Speaker 1 (32:21.664) more people here, the disparity increases. And where I'm going with this is that like, so it's known in Europe and other places, you just don't talk about this stuff. You don't do a lot of these things. We just assume you take for granted here. But we're in a bull market for crime, for all these things. And because it doesn't matter what administration or people. folks that come in or DAs that come at the end of the day, if there's an increasing disparity from people with money and not, that's where crime starts to break down. That's like how society, that's why you need a good form of money. So this doesn't end for a while. Like, Bitcoin's price appreciation helps and protects individuals, but while that's happening, people are gonna continue to have their money debased. And so all this stuff is just gonna be even more pronounced. And it's sad and scary because, like, I think about it personally. What you're describing, it's like the security guard for the individual is actually less, it's like the 2D version of security. It's the family that is probably more susceptible to having bad things happen because that's like, you know, child care, wife, you know, you're lucky enough, wife works from home or doesn't work and is out and doing things. And like, those are the easier targets because like, you know, that's the one you're just going to be like, take all my Bitcoin, I don't care. Like, I want my family back. actually probably. Speaker 2 (33:36.046) . So anyway, think this goes back to just a sign of broken market structure because you don't kidnap like Jeff Bezos or people that have large equity positions because like the amount of controls to roll out of that position take weeks to get it you're caught by them. It's like, get it from Coinbase or like tell me where your multi-sig setup is. And that's the reality of like needing controls and all the authentications that we work. We're just building a world for 250k Bitcoin. but crypto world goes. Speaker 2 (33:58.029) to. right And that's the other component which you alluded to is like I think there's some cognitive dissonance where people see the stories of the kidnappings the crime and it's it's kind of similar to the you know, the custody situation where they're just hoping and hoping and praying and that it doesn't happen to them and that's Just not the way the right way to look at it because to your point like this stuff is going to accelerate like if you think about Bitcoin adoption how many people across the globe even know what the hell Bitcoin is. Like the same goes for criminal networks. And so as more people around the world learn about Bitcoin, so will criminal networks. And so you would expect all of this stuff to accelerate over time. And I think there's a large cohort of people who just assume, one, it's not going to happen to them, or two, we're good and it's not going to accelerate. And dumping in the ETF isn't the play, Docs who said it, but I was talking to somebody very notable in this industry and they're like, yeah, I'm thinking about A, getting a security guard and B, just putting, like they were serious. It wasn't like a marketing deal. was like dumping all my Bitcoin in the ETF. And because of this exact deal, that would be our ambition, right? It's like, I'm just an honor client. You can't rob me in the same way I have my assets in an ETF. It's very hard to move this allocation. Speaker 3 (35:23.777) Yeah, I mean... What's more important that you own direct Bitcoin exposure or that you and your family can't be killed for your Bitcoin? Like it sounds hyperbolic, but for some people, if that's the decision they're weighing, they're just going to be like, well, all right, I'll just have financial product in my brokerage account because it saves me a lot of trouble that I otherwise might have to deal with. Yeah, that's just kind of messed up that we even have to talk about this. think hopefully at some point it'll be interesting to see how this all plays out because think there would just be more solutions that naturally will have to protect against this. But then also the bounty, of course, increases over time. For me, it's becoming more more clear that I already use on ramp for over 50 percent of my Bitcoin, but I want to be probably at 100 percent or like 95 percent because I just don't have to deal with any of the shit. I also don't want to own an ETF, though. But I like just thinking through this in real time. It's crazy that, you know, these are real things that we have to consider because You know, if I never went into Bitcoin, I stayed in traditional finance, well, I wouldn't actually have to think about any of these like personal security issues. You probably Speaker 1 (36:31.68) to Lana too but that's it. Can I put my Solana with on-ramp? We don't have the ledger safe or whatever. Maybe we can get the on-ramp swag store up because instead of hiring a bodyguard you can just wear the on-ramp vest and then you're good That's something that's something early. We talked to Peter McCormick. He talked about like you put it like Brinks or whatever. It's like this house is secured by. Speaker 2 (36:54.254) like on ramp on your. when it comes to By one rep. Yeah, it's just like a in your front yard that little sign. Yeah Can we go to Jackson's loan and how is that happening that maybe ties into Arch and how are you thinking about leverage? Chronicles how Speaker 3 (37:12.952) think it's a good time to love her up. Yeah, so I need to get out of New York first. Is that your plan? Speaker 2 (37:20.526) Why do you help us understand why getting out of New York helps with your loan position? I need a clear head. you You just need to how much leverage to take. A good night's sleep. need a day without any alcohol. need to just, you know, sober up a bit tomorrow over the weekend. Think through this in a bit more detail. But I mean, the way I think about it is I would never, I would never want to put a client or recommend something to a client that I haven't used myself. So that's why, A, I'm considering. Speaker 3 (37:52.726) or I will be taking a loan for sure. I just haven't decided what size I'm going to take a loan because if I'm speaking to people about it, then I need to use it myself. That's just kind of how I operate. And then the second piece is think Bitcoin at 80 K is cheap. I mean, am I the only way I look at it? It's down from what? 109 is the all time high. So it's pretty considerable drawdown. And so I think if it's done responsive responsibly in terms of how we have it collateralized, with Arch and their product, how the custody is managed from a bankruptcy remote perspective, being able to view it on chain 24 seven, that all gives me confidence in terms of how the product is set up. But yeah, I mean, I would like to buy a little more coin. I looked at my Chase account, I told Brian, I looked at my Chase account last week. I have no, dollars to buy any more Bitcoin with. So there's only one way I could solve that problem. So, yeah, Jackson's alluding to this past week, we announced a partnership with Arch Lending. Really great guys, we spent a lot of time this week with Drew VanHumanshu, the co-founders. Super excited for that product, there's a lot more to come. At the end of the day, there's been a big void since 2022 with the collapse of all the lenders. And lending really isn't, kind of like think about it like going to the gym, it's not really like complex, it just takes work and being very like discerning and actually getting it done. In lending, it's not complex, but it takes work in being conservative, having low loan to values, having segway. wallets that are titled to the individual's name. Speaker 1 (39:24.29) the ability to on chain, all the things Jackson alluded to, the bankruptcy remote nature. And so they're doing things the right way. They have a lot of big plans when it comes to the capital market side, bringing in more liquidity. So we've had a lot of interest from our clients and it'll increase. have things coming about bringing it in the application, building on multi-institution custody. They offer lines of credit, which I think is really interesting, less from the leverage side and more of just like if you're very long Bitcoin, need dollar liquidity. is like a lifestyle loan where you can like actually run the numbers and if you have an asset that's appreciating at whatever percentage on an annual basis you can do that math of taking the loan out and then as the asset appreciates you can always take a larger position so you don't have to sell the Bitcoin but you also have a steady flow of liquidity so it's exciting times if you want to reach out to learn about it reach out we'll talk about it we won't talk about leverage we'll just share like how to conservatively keep your Bitcoin while it's getting some where Speaker 2 (40:23.182) Thank it be correct to say there's like a loan product and then separately a line of credit product? I think the line of credit So, but it is interesting because it's kind of like a. It's like Speaker 1 (40:36.654) like on top of the product. like let's say roughly 50 % loan to value. So for every dollar that you want to borrow, you're posting $2 in Bitcoin. And let's just say you took a $10,000 loan out, that means you put $20,000 in BTC. Well, let's say the price appreciates to 25,000 or 30 and you need some extra dollars, you can actually increase that amount of dollars you're taking from the existing position. Or if you want to top it off, and then you want to just have that like line, you're not having to read usually like loans, you have to go create another origination fee which is generally like one to one and a half percent it's a general like yeah it's a new process versus just like extending it which is super slick when you think about like as the price appreciates you come into an on-ramp dashboard you have your different you know wallets you have your long-term custody and whether it's you need to buy a diamond ring and assign every Speaker 1 (41:26.178) Because this is like true story, like I sold a Rolex because I wasn't going to sell my Bitcoin for my wife's diamond ring. Like, well, maybe you don't have to do that. If you need some liquidity, you just like press a couple of buttons, you get dollars wired to your bank account, and then you wait for your, you know, we work with a lot of TradFi folks to get their quarterly or end of year bonus. You get your bonus, you pay it off, you have your Bitcoin appreciated, didn't appreciate, you didn't have to spend those Sats. There's a lot of reasons where loans are an important part of the market structure. So it's an exciting part to add to our financial services. Yeah. So what about the price? House view, Brian Cabellas. House of you this is very normal So from the the top that you mentioned like 109 to where we sit today, I think it's like a 27 28 percent decline It's not even the worst dip of this cycle. So if you go back to August of 24 There was a 33 percent decline from like 74 down to 50k and if you just look back at the history of Bitcoin bull markets, there's several instances of bull market drawdowns that range anywhere from 20 to 60%. Average is probably around 30, 35 for a given bull market drawdown. And so this is to me like very normal, sort of what you would expect. And so I also think this particular drawdown, there's a lot of factors, right? There's a lot of sort of conversations at the macro level, you know, and really what I think is less understood is like, you know, there's some data you can look at, okay, like what coins are being sold, right? And so the vast majority of cell pressure right now is from people that have been holding Bitcoin from one to six months. So these are short-term holders who realistically Speaker 4 (43:20.12) probably are not the most sophisticated. Bitcoin holders don't really appreciate what they own and so are more likely to get shaken out by broader macro turbulence, conflating Bitcoin with other risk assets and thinking that if inflation is sticky, I don't want to own risk assets when in reality, the thing you want to own is Bitcoin if you think inflation is going to continue to rip. And so it's one, sort of less sophistication from more of these short-term players. I think it's also probably related to lot of hedge funds that are just, again, trading this as a macro risk on asset. And so all of that is to say I think this is super normal, expected, and to your point, probably a good place to buy, good entry. Yeah, good point on the trading. I spoke to a number of fund managers with quantitative strategies this week and they all probably underperform Bitcoin, but they're probably the ones trading right now. So, yeah, I guess it's nothing really to worry about. If anything, it's just an opportunity for people who want to add more to their position to do so. But with human psychology, it's always people are always chasing the price. when it's running the best meme that illustrates all of this is like the the huge line of people to buy at 100k and no one's in line to buy at 80k and it's just like you know if except Jackson except yeah yes and I'd be wound if you rewound six months or less than that it's like yeah people would be loving to buy at 80k if they knew where the price was going so it's just like it's again market psychology And my Speaker 3 (44:59.702) It's funny because like this is it's not even a retail behavior. I just remember seeing this years on Wall Street to where everyone just wanted to chase performance. It's like, yeah, no, I just want to allocate my money to whatever the best hedge fund was last year. Like, right. It's just. And it's almost never the best performing fund that next year. Almost never. It's obviously like having all your net worth and business tied to it. And seeing the price run or like drop, but a little bit. like it's not fun. And it's also very like feel something again because it's just like. know. We start tickling night. They start going a little like what's going on here. I forgot what it feels like to really be started plotting the street when like 79 K and you're like a little worried you're like the last time that was like really that significant was the March 2020 like seeing that just dropped to 3k I swear I just sat there and I was like buying but it was like the cognitive distance of like clicking bad two phones because I was like got my wife's because I had maxed out on everything I had on this phone so I'm like and she was up for like managing like Speaker 1 (46:03.854) leverage this is why I always tell you about managing leverage. But mean is like, holy shit, could this go to zero? Because we went from 12 to three in less than 36 hours and you're watching it fall. So you're just, well I guess I've just put everything in. So we're just gonna. and still behind me usually. this thing down to zero but at the same point you're like it's so we're nowhere near that. Yeah. We will experience something like that though. Like we will in this next, as long as this isn't over and the price is coming and all these people looking their chops, they're gonna come in, all the leverage that's gonna come in, we're gonna see whether it's like 800 to... Speaker 2 (46:39.79) 200 or whatever it is. We're just gonna see why. in on like effort proportions because the dollar amount always goes great which we didn't talk about but I can't help but feel the 1.2 billion dollar largest hack of all history has something to do with a little bit of the price as well well it's not the same asset it just I feel like there has to be some connective Part of it could just be, again, back to more, less sophisticated short-term holder, they see this massive hack, the biggest in history, and maybe they're holding their Bitcoin on a different exchange and they say, screw this, I'm out, I'm selling the Bitcoin like this. Exactly, so that could be a factor as well. You don't know what's going on. How much is like chops? Chops? Chops, right? risk agent. Speaker 1 (47:19.032) Timber. Speaker 1 (47:23.418) Sailor looking as just like seeing 79k. I literally tweeted, sell your kidney but keep your Bitcoin. So I think he's still in. Yes, I heard. Speaker 1 (47:34.775) Yeah, there was a Magoo tweet about that last night. I'm wondering what the sailor was on. funny I mean, it definitely sends the right message to hodl your Bitcoin. Yeah. Yeah, one thing I thought was interesting at the conference was Pampa brought out some controversial takes, which I appreciated for some of the few talks that I heard bits and pieces of. He actually mentioned it at the lunch as well that we had on Tuesday with Shrive about he asked people, you know, raise your hand if you think that the budget will be balanced this year and like. 5 % of the people raise their hands and then he's like, well, I believe with over 50 % confidence that it'll happen this year. So then it went into a discussion of like, you know, is this bad for Bitcoin, blah, blah, blah. If the federal government's more responsible with their finances. And the thing, the way I think about this is that, um, at least for the foreseeable future, Bitcoin will always have some correlation to. Speaker 3 (48:37.794) the responsibility of the federal government to monetary conditions. But I do think that that's going to just become more more muted over time because it's kind of a very dollar centric or US centric view to think that if the government gets it all under control, which they want, there's a number of reasons why over the longterm won't happen, but it could happen in a given year potentially. I guess it wouldn't be a 0 % chance. But so it's a US centric view to say that, government, you know, balanced budget. that happens for a couple of years. Bitcoin, you know, there's no there's no reason to own it anymore because people outside of the U.S. don't own it only because of debasement. mean, there's a lot of other reasons why you'd want to own it just in terms of being able to send it anywhere in the world, not have it be confiscated, etc., etc. So I think ultimately what's happened is the first 15 years are more driven by liquidity. It's kind of this like post QE post GFC environment where just tons of dollars and other currencies floating around zero. interest rate policy, I think that'll come back. It inevitably has to just given the debt based system. But I do think with more institutional investors coming in, sovereign wealth funds, central banks, et cetera, you know, those that'll still be part of, guess, the reason to own Bitcoin, but it won't be the majority reason to. bothers me like the whole framing of it because it doesn't make any sense to me we didn't get a chance to I didn't bring it up at the lunch because there was a lot of people but like It doesn't matter if they balance the budget or not for Bitcoin's price for a number of reasons. One is you have whatever the total addressable market of value that exists and then have this little asset and there's value at a neutral store value that has a finite supply and it's still so relatively small. So as long as A, that still maintains independent of balancing the budget. But that's just one position. A bigger part of it is at the end of the day, and this is the thing that people just don't get, Speaker 1 (50:33.456) what gives the dollar value has nothing to do with guns or law. It all has to do with people have debt obligations, independent of federal debt. Like they have their own personal, if they're a business, if they're an independent, credit cards like they owe and they will never be able to repay that debt because of the amount that has been created, it will be destroyed. Commercial real estate is probably one of the best examples of this. So when that has to de-lever, There's too much debt and not enough dollars. You have to inject liquidity or everything falls apart. So unless we're to go into complete anarchy, they're going to have to continue to debase the currency to keep the system alive. And that's ultimately what drives Bitcoin's value. So independent of any like balancing a budget, like they're just have to increase the supply, however they do it, however they mention it. And that's what will ultimately drive Bitcoin's price appreciation because people protect themselves from it. It's really that simple. We get caught in lot of this like minutiae. But people of global macro, it's like at end of the day they have to make more dollars because if not, the whole system just collapses. I think what's probably most likely and I think James Lavish and Sam Callahan mentioned this when Pomp sort of posed this question to them. It's like, yeah, I guess theoretically it would be possible, but like it would be on a nominal basis, right? To your point, Michael, like it would be the currency would still be debasing at an excessive rate, even if you nominally balance the budget and you nominally have some GDP growth, like that will be a function of a debasing currency. And so I put it at a very sort Speaker 4 (52:06.544) of low probability that that even happens, but for all the good that Doge and Elon can do, you're not fixing the entitlements issue. You're not fixing the $36 trillion. Luke Grumman. I wish, I gotta re-listen to this because he references, it's always good to bring, contextualize all this stuff and he referenced the Afghanistan war and from 2000 to 2020, was like, imagine if we all just went on some vendor in Vegas and the US, we as a society went on a, I think it's like two trillion dollar vendor where we have nothing to show for it. We even left the, the, the weapons. Yeah, the equipment, it's there. So we gave it to them. So somebody has to pay for that. that debt exists, all this stuff in a vacuum, like from all of the bad fiscal monetary policy, it has to come to roost. And if this exists by way of loans, all the way down to the micro example of somebody took out a loan, lost their job, because that's what's happening today, well, somebody has to pay that debt all the way to the largest macro, whether it's a sovereign, that that debt exists and is being defaulted on every minute. Just this. Speaker 1 (53:18.444) because it's just bad economic decisions and so you have to print more dollars or if you default you just again cost like a mass cascading and so like that's just a function of how this whole system is set up. It's why it's the whole bull case. for Bitcoin. Yeah, you could hear them cheering for the bull kids. Yeah, there's literally cheering right outside the door. Which, I don't know, it's probably we're running up on time, but this ties into the second part of that conversation at the lunch, which was inflation or deflation, it's like Bitcoin protect you, and it's like both, because inflation, obviously, your currency's debased, but deflation, very similarly, as a corporate or business or individual, you need to hold something to preserve your wealth, because Speaker 2 (53:49.333) it comes up all. Speaker 2 (53:54.414) Well, it protects you. Speaker 1 (54:07.918) the micro example of an individual losing his job that's kind of like deflation, like you just lost your income. But on a corporate level, if software and these other tools are increasing, well that's a form of deflation because now your margins completely collapse because now you can't charge for open AI. And so you need something to preserve your wealth. It goes both ways. Speaking of understanding or thinking we even understand Bitcoin, does anybody have a hot take on what Jeff Park is kind of popularized? I can't say that word. And I don't think a lot of people agree with this, especially the pundits on mainstream TV, that as the Bitcoin price increases, the volatility is going to increase. I think so. think the common theme, I see Brian like, Grimacee, is like, the is that people think, like, as a price appreciate, the volatility may be, historically. I think the common thing Speaker 1 (55:01.57) dampens a bit, but you're just increasing the liquidity pool amount of capital, the size of capital. There's still humans that manage all this. They don't just like long-term, see this now. So there are gonna dump positions. There's gonna be exchange hacks. They're not gonna know where to pinpoint the risk. And so they just like exit. Like there's a lot of things that'll just factor. So that only increases as adoption. There's more people involved. I think it depends on what time horizon you're talking about because I think in my mind for sort of called the next few cycles, I would expect volatility to continue its downward trend. But that being said, there's a point at which something flips and what I mean by that is effectively the dollar begins to hyperinflate. And so that would then, you you'd see much more volatility in Bitcoin's price, obviously, and it would probably break that historical downtrend. But it's very hard to say when that happens, whether it's five years from now or 50 years from now, it's very hard to say. One thing you just made me think of though, and this is something that we'll see, I hadn't thought about it, was like, Yeah, I didn't. Speaker 1 (56:13.644) So there's all this liquidity and it's unsophisticated. And so you get five, 10, whatever more corporates come in to buy Bitcoin and their stock performs and the price is running. There's all this capital that's going to want businesses to deploy a similar strategy, but they're going to want them to do more leverage, more leverage, they're to have less sound economics from a cashflow perspective. And inevitably, like there's people out there, you know, seeing target points to like find liquidation and all the things associated. So you have like on the other side of that risk comes back, deleveraging, and then now all these companies have to like, and there'll be other firms that do this. There'll be even individuals that take out credit card loans to buy Bitcoin. Yeah, more dollars come in for leverage, right? Because even in 22, there wasn't like that much liquidity to come in compared to what's coming with Canter, two billion facility. So point being is like on a short enough time horizon, you can imagine you see even more volatility. That's all you get. Speaker 1 (57:12.802) because the market's just not sophisticated. Speaker 3 (57:17.486) All right, mean, anything else we didn't touch, I know we got to wrap up here shortly, but was there anything else that stood out either from the conference or just conversations before we? One thing, had a conversation last night at our dinner and I think, you know, it's very easy to get caught up in pessimism of the moment, you know, and that really stems from, again, less sophisticated players who look at Bitcoin, quote unquote, crashing down to 80K. Not only is it a very normal sort of bull market correction, but the other thing I was talking with some folks about last night is like Say what you will about Trump and everything he's done since coming into into power the meme coin stuff This is by far in a way the most friendly administration any bit quarter Bitcoin or could have ever asked for if you rewind a couple years you know having this level of enthusiasm from cabinet members personal interest in the assets from cabinet members, it's a completely different paradigm than has existed in Bitcoin's entire history. And I think it's easy to lose sight of that when the price doesn't skyrocket immediately to 250k. It's like, okay, yes, but like all of these things that we've been wishing for and hoping for from... just letting Bitcoin businesses operate, letting people self-custody the asset if they want to, letting people run a node, mine Bitcoin. We're starting to see those protections be put in place. The basics? The basics. We're starting to see that stuff be protected at both the state and federal level. And there's general enthusiasm and optimism for reshoring a lot of the innovation in the space. And I think that's just incredibly positive. And it's important to keep that in mind when. Speaker 4 (59:15.587) You see people on Twitter saying it's over. it over. We'll find out next week on The Last Trade. Good to see you guys. A lot of fun hanging out this week. Yeah, guess being called action here would just be don't stay at the New Yorker Hotel or at the City ever. And yeah, get in touch if you want to discuss any of this. We didn't have the on-ramp terminal pulled up today since we were recording in person, but that's always a good one if you want to just pay attention to what's going on beyond the price. So yeah, I'll see you guys next week. You a conference to go to? What's that? A conference to go to? Today. Are you going to the conference? We gotta go. What do mean? Speaker 3 (59:55.476) yeah. He's done. See you go home. Backpacked, you know, I could get on a train right now if I have to. But yeah, Bitcoin Investor Week. Well, when is this dropping? Yeah. Speaker 4 (01:00:09.166) Hopefully today. Okay. Yeah. All right. I'll get it out. All right. So yeah, great one. Great to see everybody at the conference. All right. Yep. That was good stuff, boys. Let's get it. Dude, I forgot. I didn't take my stuff out of there.