Between2Chains B2C023: Where Do We Go From Here (w/ Jeff Dorman )

Episode Summary

Jun 17 2021 . 35 MIN

B2C023: Where Do We Go From Here (w/ Jeff Dorman )

Jeff Dorman returns to Between2Chains to talk about the crazy market over the past few weeks and the current downcycle in digital assets. During the conversation, he touches on correlations, political and regulatory fears in the market, different types of buyers and the flow of their funds, the forces that shaped the bull market and whether they’re still in play, differentiation among assets, the challenge of exchanges, and more. If you’re wondering where we go from here, you’ll want to listen to his insights.

Show Notes

Jeff Dorman returns to Between2Chains to talk about the crazy market over the past few weeks and the current downcycle in digital assets. During the conversation, he touches on correlations, political and regulatory fears in the market, different types of buyers and the flow of their funds, the forces that shaped the bull market and whether they’re still in play, differentiation among assets, the challenge of exchanges, and more. If you’re wondering where we go from here, you’ll want to listen to his insights.

Content Notes:

Dorman discusses the following during the episode:

  1. What really drives correlations and how that dynamic comes into play in digital assets
  2. The phases of the crypto market cycle and the accelerated timeline during which it has all unfolded
  3. What he thinks is most interesting about the most recent correlation
  4. The trend shift in Bitcoin that he thinks is worth watching
  5.  The two types of marginal buyer and how each drives the asset class
  6. How to understand the market environment and institutional buyers
  7. The four things that have driven the rally over the last year and where those factors stand now
  8. Bitcoin and the ESG debate, the potential paths he sees Bitcoin taking, and how Bitcoin is different from other digital assets
  9. Regulation of the asset class and the opportunities it may enable
  10.   Institutional buying: the narrative versus the reality
  11.   The challenge of exchanges and how regulation may solve the current fragmentation
  12. What he’s excited about looking forward



Wed, 6/16 10:57AM • 35:23





Welcome to The Real vision Podcast Network. Before we get going, we want to remind you that Jeff Dorman is the co founder and chief investment officer of ARCA funds. And Peter Hans is ARCA fund Managing Director. The commentary and opinions expressed in this podcast are solely those of the podcast participants and do not necessarily reflect the opinions of ARCA funds or its affiliates and are subject to change for any reason without notice. Any discussion of investments or investment strategies within this podcast or for informational purposes only, and not to be construed as a recommendation to buy or sell any particular investment, security, digital asset or strategy. Investing in digital assets involves a high degree of risk and volatility, including the risk of the total loss of principal. And now enjoy the show with your host Peter Hans.



Jeff, How are you this morning?



 Great here, thanks for having me back.



Of course, always the best default guest there is. So I don't know what to say. Besides, it's been a crazy market the past few weeks. And obviously, one of the things in a market like this safe maybe the last 24 or 36 hours is correlations and kind of everything trending to one, you know, which is something that we saw really the opposite of in the previous kind of 12 to 18 months, what are your thoughts around that?



You know, correlation is often driven by the players more so than the assets, right? The assets are what gets all the attention, right? You know, bonds and equities should be somewhat negatively correlated, or you know, gold and the dollar should be somewhat negatively correlated, right. But in reality, we see changes in correlation all the time, sometimes just due to who is involved and not what is involved are probably the most egregious case of that recently would have been the rk goes hedge fund blow up where seemingly every stock that that family office owned, had very little correlation to each other. It was like Baidu and discovery, Tencent, Viacom, but when one hedge fund owned all of the stocks using leverage with a variety of different banks and prime brokerages, well, all of a sudden, when he became a fourth seller, all of those stocks had a correlation of one because they were going down because of who was selling not because of what the actual underlying companies or stocks were doing. And we see the same dynamic come into play in digital assets, which is, you know, in stable times, and in normal times, correlations between assets in the digital asset space have been going down, you know, pretty much every month that every year since inception. You know, there's there's no reason why the factors that affect Bitcoin, which is, you know, the dollar and interest rates should be the same that affect ethereum, which is technology and DeFi, which should not be anything close to the factors that affect a gaming token, or an NFT token. They all have different drivers. And they should have therefore different correlations and betas and different price drivers. But in a period of high stress, where everybody is very worried about a crack down of regulation coming out of China, or everyone is worried about inflation, or everybody is worried about, you know, US regulation, you name it, all of a sudden, you start to realize that there's high overlap amongst the digital assets between who owns them. And when every person or individual entity becomes a seller all at once the correlation picks up. And that's really what we see we see differentiated, uncorrelated returns on the way up, and very highly correlated, undifferentiated returns on the way down. And since the middle of May, we've had basically a pretty similar down cycle in digital assets that you would see in other markets, right? First, it starts with a couple opportunistic sellers. But the buyers are still there, then eventually the selling overwhelms the buyers and you start to get cascading liquidations with futures and other derivatives products. Then because the price goes down, it leads to retail fear and it you'll get overblown with the selling. And then eventually the momentum traders and the people shorting the market have all the power and they just keep pushing on a string until the buyers arrive. And that's basically the four cycles you see. And we saw all of that happen in a very short time period of two weeks, you know, in in traditional markets, sometimes that'll take a year to play out. It took two weeks in this case to play out before some of the buyers started to come back in. What I think is most interesting about the recent correlation is historically Bitcoin has been the safe haven in the digital asset market. When that happens, normally Bitcoin will fall less than the rest of the market and will ultimately rise less on the way back up right so Bitcoin shows a little bit of stability relative to other things. We actually saw the opposite in the last few weeks here where Bitcoin fell as much or more as other digital assets. But every time we bounced it bounced away less So for the first time really since I can remember, Bitcoin has pretty unfavorable upside downside capture compared to other digital assets, which is an interesting trend worth watching. Going forward.



Yeah, I guess with any market like this, and we covered this kind of Last time, we spoke about how abbreviated these kind of sell offs and really violent they are any kind of rebound is about the marginal buyer and kind of the snowball effect of who the marginal buyer is in traditional markets. It's, you know, largely exhausted, right? Well, I guess it had been up until, you know, kind of the Robin Hood phenomenon. And we got a much larger buyer universe than we've traditionally had in, say, equities, the marginal buyer in digital assets in you know, and I have my own thoughts on this. But is this in your mind? Is it? Is it just kind of the continued slow, almost one off adoption of traditional asset class investors understanding this asset class? Or is there something, you know, kind of more and larger to it.



There's really only two types of marginal buyer, right? There's people who are already invested in choose to allocate more to the asset class than they already have. And it's new buyers, right? So let's take the first group. To start with that, that's harder to figure out right, somebody who's already a believer in digital assets that already has an allocation to digital assets, it's hard to figure out when they decide to add more or add less, you know, that's, that's largely anecdotal. It's the new buyers that generally drive this asset class, because the percentage of people in the world who don't have exposure is much larger than those who do. And the big story for the last nine to 12 months, has been that institutional buyers are starting to enter the market. You know, institutional buyers take a long time, regardless of what market conditions are, you know, we've been doing this for, you know, 20 years, even in traditional equities and debt, you know, when institutional buyers are getting into a new area, it often takes 18 to 24 months of due diligence before they make an allocation. That's not really going to be accelerated or decelerated. based on market environment, right, they're not going to move faster, because all of a sudden, the market went lower. You know, if they had already allocated, they might allocate more because of price and opportunity. But it's unlikely to get them from zero to something just because of market volatility in the same way that they aren't moving faster, because price went up, they're not moving faster, because price went down. They're looking for, you know, a 10 to 20 year type of allocation. So I think one of the misnomers over the last 6 to 9 months is is a lot of people in the digital asset space, just use the word institutional for everything. You know, when we're used to in the debt equity world, institutional allocator means pension funds, endowments, sovereign wealth funds, right, your typical allocators of capital. In this space, anybody who's not a person is just gets called institutional, right? Whether it's a an OTC shop or a hedge fund or a corporate treasurer. So not all of those are sticky money. Traditionally, the pensions, the endowments, the sovereign wealth, those are usually stickier money, they're coming in for 10 to 20 years when they make an allocation. A hedge fund might come in for a month. Right? You know, it's great that, you know, refer is a good example. I refer, you know, got a lot of press, you know, 5 or 6 months ago, because they allocated a billion dollars to Bitcoin, well, just a few days ago, they said, Okay, we're out, we sold it, the price was too high. And you know, that's not institutional money in the way that we're normally thinking about it. Right? Those are traders for more or less, right, you know, you're scouting minor to the world, your Guggenheim, you know, your, your macro hedge funds, right? These are institutional funds, so to speak, but they are not sticky money. They're traitors. So as fast as they got in, when everything looked great in September, and as fast as they got out, when it looked overvalued, they might come back in again. So you're going to see a flow of funds. But the bigger story is, when we talk about institutional adoption, we're talking about sticky money that's making a longer term decision to allocate to that asset class. And to me, nothing has changed there. They're doing their work. They're doing their due diligence, they're having their calls with funds like ours, as well as others. And that money is coming at some point, regardless of price.



Yep. No, I agree. I think the first part of what you talked about in terms of existing investors allocating more, let me give me that's really just about leverage, right? It's like is leverage in the system or is leverage washed out in the system. So the incremental buyer is almost the same buyer just levered. And the incremental buyer, especially when we talk about institutional Yeah, I mean, grayscale and some of these other entities when they talk about you know, their their institutional ownership levels, like either doesn't know what the word means, or is choosing to ignore it. I guess from their standpoint, it doesn't really matter because once they sell they're in for life. But um, yeah, no, I think that's exactly right. And look, from my perspective, with my day job at ARCA institutional interest is considerably higher than it was a year ago, when, you know, there were no relatively run a relative basis concerns over environmental impact of Bitcoin or, you know, any of these other kind of issues that we have going on right now, politically or from a regulatory standpoint.



When I want to think I think that's really interesting, too, because if you if you go even further back in terms of like, what has driven the rally over the last, you know, call it 12 to 18 months of digital assets, you can really point to four things, you can point to low rates, low dollar, nowhere else to put your money. Well, that's still very much intact, right? As much as people are talking about inflation. And even this morning, as we're recording, we had the CPI data that came out, the reality is the 10 year is still at 150. And nobody really knows if this is transitory or not. So we still have low rates, we still have a declining dollar that's still very bullish for all risk assets. Until that goes away. equities, real estate, digital assets should still be very much in favor. The second was, you know, the big reason was, again, the institutional buying, right, which we already discussed, but you know, there were signs that that was slowing down, if you include the corporate treasurers like Tesla, and you know, other factors, you know, you could at least see that some of those marginal, quote unquote, institutional new entrants, were at least starting to pull back, you know, so and then the third was the ESG, you know, Elon musk type narrative, right? I mean, that was a complete 180 degrees from Bitcoin is great to Bitcoin is now terrible. And truthfully, that probably says more about society than it does about Bitcoin or proof of work mining or anything like that, you know, it's obviously a nuanced discussion on whether or not Bitcoin is too energy intensive or not. But I think the reality that it was driven by a celebrity like Elon Musk, you know, is more telling of anything, right, that when Elon said Bitcoin is good, it was therefore good. And now he says it's bad, and therefore it's bad. And I think the reality is, nothing has changed, right? proof of work, mining has always been a concern for some, just like any energy debate, which is if you believe that the energy is being used for something valuable, which most people who believe in Bitcoin do, then there's some level of energy expenditure, that would be worth it. And we just have to figure out what that is, for those who don't believe that Bitcoin is valuable than any number above zero in terms of energy consumption is too much, you know, you'll hear these debates about refrigeration or air conditioning, because people largely think that that is a worthwhile technology, and therefore, nobody really pinpoints how much energy should be used for refrigeration or air conditioning. So this debate is somewhat binary. Well, we'll get back to that a second. But so yeah, and then the fourth one is fundamentals right fundamentals have nothing to do with Bitcoin, or proof of work mining fundamentals have to do with your DeFi your gaming, your NFT's, all these other sectors of digital assets, which are still growing like a weed, and we're seeing huge revenue growth on these projects, we're seeing huge user growth. So you know, basically, three out of four of the narratives that have been bullish for digital assets are still very much in play. And the only one that is not is, you know, this idea of energy consumption and new corporate buying,



But I was gonna say, in terms of like, you know, the refrigeration and air conditioning, I mean, most things are not an absolute, right. Whereas, whereas Bitcoin energy consumption is somewhat of an absolute in that, you know, you're not using it for personal necessity or comfort, right? In the case of, say, air conditioning, and you can conserve, right, I could run my house at 60 degrees, or I could run my house in the summer at, you know, 70 or 72, or whatever it is, right? And, you know, I can, where I can get a nest and like, you know, have a smart home, right? With Bitcoin, it's, you're just gonna pump that thing all the time, because you want to mine as much as humanly possible, right? There's no, there's no effect personally on any one individual from doing that. Now, I'm not arguing for or against anything, I do generally think that. It's just very simple economics. And you're going to move towards the, you know, lowest cost provider of electricity. And, you know, right now, obviously, you know, things like coal are cheap. And then over time, you know, more renewable and sustainable forms of energy will be cheaper right now, they're very expensive. But, you know, there's really all sorts of arguments for it and against it. And I think your point is extremely valid, that, you know, if you believe in the utility of, you know, whether it's Bitcoin or anything, then it's going to warranted. I think what we're seeing right now, especially in the US with the narrative around this, and especially, you know, just in the past day, you see, people like Elizabeth Warren chiming in who has an agenda, right? I mean, all US politicians, this is what I think largely, I mean, I think the the quote unquote twitter sphere and digital assets largely doesn't understand a lot about the way finance and politics works. But like, Elizabeth Warren is not gonna do anything, she has no power to do anything. This is her agenda, right? She's a very left, pro regulation pro high taxing of the ultra wealthy and pro environment many of those things are, are fine in and of themselves. But bitcoins a narrative she can hold on to. And because of that, she's going to do it too, that she has something to hang on through when she runs for president or runs for re election, right? It doesn't mean anything. This is the way politics works, nothing gets done, no legislation actually gets done. There's zero risk of the US doing anything to curtail Bitcoin, you know, or any digital asset like this, just this not reality, but it is reality that you're going to hear a lot of chirping.



Yeah, and I think what's interesting is we started with kind of digital assets as a whole and that we're back on just Bitcoin, I think that's probably what's most interesting is most of the news flow recently has been very Bitcoin specific. And for a while, through all of April, in the first half of May, the negative price action was also very Bitcoin specific, it was only in the last week or two, where every other digital asset got wrapped up. And that's what we're talking about with correlations, when, you know, the person who owns it is more at risk than the assets themselves. And that's why we started to see the correlation really pick up over the last week or two. But you know, for Bitcoin, specifically, based on what you just said, it's, you know, Bitcoin has always been sort of a long tail option, right, it's either going to really work as a store of value and potential even a medium of exchange, in which case, it's probably worth, you know, at least 10x, what it's trading at today, in terms of just, you know, the size of the overall opportunity, or it's worth very little, because it never really gets adoption. and everything in between is sort of just a path function of, you know, a lot of different variables and news. So if you were really treating Bitcoin, like an option, the only thing that has changed in the last few months is potentially your time to expiry has been pushed up, right, it is might take longer to get to your end result because of some of the negative things that have happened. But you know, most of your opinion on Bitcoin, longer term should not have really been changed, either you believe in it, or you don't. And that's very different from the other digital assets, which, you know, have real KPIs and real metrics along the way that show, you know, real growth and real contraction and real revenues and real dividends and things like that. So, you know, I know our thesis forever has been that these assets are completely differentiated, and there's no commonality between them except for the underlying technology of blockchain. It's really starting to come to fruition here over the last few months of how different these real digital assets are. And it'll be interesting to see, you know, as we're talking about with institutional buyers and other new entrants coming into the market, how quickly they see that as well, that you're not making a blanket allocation to digital assets, or pockets of digital assets that you may or may not want to have exposure to.



You're listening to our show between two chains with your host, Peter Hans.



The ironic thing is, you know, we talked about it's kind of like two edged sword, right, there's the there's just look at the things we've talked about thus far, who's the marginal buyer, institutional buyers coming in? We've talked about, you know, obviously, correlations differentiation amongst the different assets within the asset class. And we've talked about political and kind of regulatory overhangs, fear risk, whatever you want to call it, all three of them are very intertwined, in that you if we want big institutional money to come into the space to actually be the marginal buyer. And that institutional base is also going to help to normalize correlations, so that you know, things like Bitcoin and Doge are separated from true businesses with real fundamentals that just happen to have a blockchain architecture or ledger, and regulatory risk and overhang. The bottom line is we're not going to get massive institutional participation without regulation first, because people need to know the rules, these large institutions need to know the rules, whether it's issuance custody, you know, risk, right. So they're all very intertwined. I mean, personally, look, I continue to be a large proponent that not only is regulation of the asset class necessary, but it's the biggest tailwind we have, because that is the green light towards large issuance from large, you know, global organizations, or at least us organizations, as well as, you know, kind of the marginal buyer with actual money. You know, I'm not talking about Michael Saylor, or Tony Pagliaro, or any of these other guys, right, the who's the marginal but don't roll your eyes.



Yeah, you know, for sure and and a lot of what you see in here every day about these individual entrance, you know, they make for a really good story but the majority of the wealth and the money that comes in doesn't create a story right? It comes in slowly. It comes in behind the scenes, it's so you know, it's always fun to talk about Hey, Michael sailor is in or Paul Tudor Jones is in or, you know, Rick reader at BlackRock isn't, but the reality is it's the trillions of dollars of wealth that these institutions manage on behalf of pensions and endowments and individuals that are really driving those allocation decisions. And you know, you can see it, right, I mean, he have to, you'd have to be really stubborn or pigheaded to not see that that's happening, right. There's a reason that every wall street bank is talking about digital assets. That's because their clients are demanding. It's the read through the reason every custodian is now trying to figure out how to custody digital assets, because their clients are demanding. So you know, the individual millionaire who has money at JP Morgan as a high net worth client of JP Morgan, that guy's not going to generate a headline, but when there's 50,000 of those people all demanding it, that creates a stir. And I think, you know, like we said at the beginning of this, you know, it's it's not as interesting of a story. But the institutional buying is real, it's different than the way institutional buying is being portrayed in the media. But it's real, and it's coming in, and it's not slowing down. You know, we see it every day, with the conversations we're having, and no other funds in the space are seeing the same thing. So you know, you again, if you look at just grayscale, for example, you know, they've had no inflows for three months, because the price of GBTC and the eath grayscale trusts are trading in the open market below net asset value, which means there's literally zero reason why anybody would put new money into a grayscale product right now at net asset value when you can buy it at a 15% discount on the open market. So the headline is, institutional flows are slowing because we're not seeing inflows at grayscale anymore. The reality is, intuitively, it makes zero sense why there would be any inflows to grayscale right now, because you'd be literally paying 15% too much if you did. But that doesn't mean flows aren't coming in to venture capital funds, and hedge funds and oil, other Bitcoin products that trade actually at net asset value. So you know, the stories that you hear are often just not really indicative of what's actually happening. And price aside, really, nothing has changed over the last two months, other than a continued grind towards further adoption, further acid inflows, further infrastructure and build out and, you know, ultimately, hopefully, some regulation here that gives the marginal buyer more comfort.



Yeah, and I think, too. And, you know, I don't know that I've ever actually talked about this, but you know, one of the dynamics in this asset class that is, is, you know, truly, I guess both creates some opportunities, but also makes it just very difficult to operate as the fact that, you know, the way exchanges operate, like, if you want to go buy Nexus mutual, like you really, you have to go to their website, right. I mean, I don't know if it trades on any exchanges. I know, rap access does, but like, or certain assets, like HXRO, there was news recently, that, you know, Alan Howard, and I think it was, you know, more lubega? Yeah, invested in HXRO, and if I was like, oh, wow, that's, that's interesting. How do I go by that? Like, I don't know, as a US citizen, I even can buy it, right. Whereas if I want to buy a certain stock, I mean, you know, maybe it trades on, you know, in Japan or France, but I can, I can go buy it. Right, you know, and I don't know, regulation changes that are makes it easier to have kind of like, exchanges that are more broad based, as opposed to, you know, randomly having Coinbase pick up an asset. And then, you know, in certain states, you can't even really access Coinbase. So, you know, I don't know, what you think changes that if anything?



Well, you're bringing up an interesting point, which is that we there's never been another asset class that is so dependent on the fragmentation of what is available, where meaning for every coin base, and, you know, binance that most people have heard of, you know, the majority people are still trading in traditional venues, right. I think Robin Hood has nine and a half million users who trade digital assets right now. Well, that's great, except Robin Hood literally only has seven digital assets available on their platform. It's Bitcoin ethereum, and then five that you'd probably never want to own. They're just legacy tokens that you know, we're we're around first, not necessarily the ones that have value. That's kind of crazy, right? PayPal and Venmo. You know, they offer for digital assets. You know, we just heard the other day that interactive brokers is going to start allowing digital asset trading you know, who knows what which ones they give access to? So you know, where is the predominant? You know, where can you get a full suite of digital assets that you buy so that if you do hear about a one off asset like indexes mutual or an HFRO, where do I go by that? And with the answer has been on these decentralized exchanges, and I'm looking at a chart right now, decentralized exchange of volume as a percentage of the overall market was 1%, back in 2020, and less than 1% in 2019. Right now, it makes up 8%. This is the ratio of decentralized trading to centralize trading. So that's where a lot of that is happening. If the decentralized venues don't have control over what assets are listed or not, they're being listed by that's the whole idea of liquidity provider. If you own HXRO. And you decide you want to be a market maker on a decentralized venue, you could just list it and all of a sudden, there's an HXRO, you know, US DC pool, or there's an HXRO, Bitcoin pool. So what's happening is, ultimately it comes down again, to education, the buyer base has to learn where to find these assets and not be just a victim or, you know, beholden to whatever exchange they happen to be on boarded to, there has to be a much easier way to go find the assets that you want to buy, right, you don't have that problem in the traditional debt equity world, if you want to buy a stock or a bond, it's probably available on every place that you would be on boarded. And that's not the case here. So that fragmentation is, is really interesting. And to your point about regulation that will go away, right? once there's clear rules, that fragmentation probably goes away, everybody's going to list the same things. Until that happens, either you just decide, hey, I'm a robin hood user, and therefore I'm only going to trade whatever Robin Hood is, or you go out there and say, No, I want to buy this specific asset, I'm going to go figure out where I can go buy that asset. And you know, a lot of people don't work that way. Right, the entire financial advisory industry is built upon, these are the rails you're allowed to use, and therefore you're only allowed to buy what these rails offer for you. You know, retail investors don't have those same restrictions. But you know, they do have workflows and brands that they're most used to and take some time to break away from. But the trend is clear by decentralized exchange trading, meaning uniswap sushi swap pancakes, well, these decentralized exchanges are growing very quickly as a percentage of overall trading. And it's because they offer the most assets.



Yeah, I think that's exactly right. And I don't know that there's like one of the arguments of politically about mass speculation. And it being kind of the Wild West is a little ridiculous, given everything we're seeing now with, you know, AMC and GameStop. And, you know, kind of this meme universe. I mean, now we're seeing it expand to, you know, everything from physical sports guards to NFT's. I mean, the fact that matter is, humans are always going to look for some sort of, quote, unquote, get rich, quick scheme. Right. And, you know, whether that's buying options in or levering yourself up to buy GameStop stock or, or buying Dogecoin or, you know, trading crypto on Robin Hood, you know, it's all pretty much the same thing, is it? Is it not?



Well, I think it's the same thing in terms of in terms of the the goal, as you mentioned, right? The goal is to make money. And that's incredibly clear, right? It's certainly interesting, I would say, to think about the media's portrayal of what happens, right. You know, last week is a good example. I think AMC was up what 90% in a week, despite the fact that they sold a bunch of stock to major capital. And then mudrick turned around and sold it back to the market. And then three days later, AMC decided to issue even more shares. And yet, AMC was still at 82%. Right. It's, it's clear to every equity analyst and every financial media journalist, hey, this is unnatural. AMC clearly didn't increase the value of its business by this much in a week. Therefore, this is just some sort of a joke, and it's retail trading. Right. So the media is very quick to say, AMC is not indicative of the stock market, the holy, you know, stock market, if the sanctity of the stock market is still intact, don't follow this outlier of AMC or, you know, GameStop. The opposite is true and digital assets. Whenever you see something unnatural, like Dogecoin, the narrative is Dogecoin invalidates all of the digital asset market. Look how unnatural this token trades because of an Elon musk tweak. And the reality is, like you said, it's the same thing. There's a handful of people out there who trade based on, you know, get rich quick schemes or what they heard from a friend. And there's always going to be outliers. But just like AMC, doesn't mean that all stocks are going to zero because it's fraudulent. In the same way. Dogecoin doesn't mean that all digital assets are fraudulent and go to zero either. These are both asset classes. They both have a lot of different players and a lot of different assets in the asset class. And you know, a story that you choose to Hell and the bias that you have either preconceived or forced upon you is, you know, largely not what's happened. And I think, you know, it'll be really interesting to see in three or five years, how that coverage changes to dismissing the outliers and digital assets, just like we dismiss the outliers, you know, in the equity world.



Yeah, no, I think that's exactly right. I mean, this is probably an understatement of the year. But there's a lot of disservice done by the media broad based. And there's a lot of disservice done by politicians as well. Which I have a long standing to stay in for, regardless of what your political opinions are. Interesting. Okay. Well, good. Well, what So? So obviously, there's a ton of positives going on still, you know, and we're both we're both extremely bullish, you know, kind of long term in the in the technology and kind of what this can represent. Give a couple thoughts looking forward. You know, I know, we have an investor call in a couple of hours to talk about this more, but um, you know, what are you excited about generally?



Sure, I mean, the most exciting thing for me is, what how many different sectors and token types are out there now, and how much the information is starting to actually resonate? We do investor calls all the time with big family offices, pensions, endowments, and the this the level of questions that we're getting are so much better and deeper than what we used to get right. It used to be a year ago, Hey, tell me about these other bitcoins that are out there right. Now can you tell me about decentralized finance, what's you know, what's your favorite part of web 3.0? You know, what do you think about value accrual at gaming and NFT? companies? Like, the questions are better, the interest is more focused. And quite frankly, the companies and projects that are utilizing digital assets are just way further along and better than they've ever been. So, to me, that's the most exciting part is you can see it in the conversations we're having every day, that there is a lot of interest in the space, not just because they feel like they're missing out on an asset class, but because they're starting to understand the actual components of the asset class, and what interest in the most.



I completely agree, not what I was expecting you to say. But I think it's a really astute point. And I think it very much speaks to, you know, coming full circle, what we first spoke about the marginal buyer, that matters being true kind of institutional dollars. I mean, you know, is interesting, I guess, intellectually to an extent this El Salvador News's? I mean, you look at the Treasury, they said they have what is it 150 million USD? I mean, it's nothing, you know, to buy bitcoin, like, there's nothing, you know, not to mention, I, you know, I guess the most interesting part of that to me, and I'm not gonna pretend to know a ton about it, though, I probably know more about it than some of the people who pretend to know a lot about it, is the fact that it being a legal tender makes in essence, it gains on a tax free, because like, you wouldn't be taxed on the appreciation of the dollar. So that if, you know, Bitcoin is essentially a legal tender, you wouldn't be taxed on capital gains of appreciation of Bitcoin, which to me is interesting. It'll never happen in the US, the US is going the opposite way of how do we collect more tax revenue? Not how do we how do we better we limit taxes? But But it's interesting, I don't know what you know, I don't know anything about El Salvador outside of what I read over the past week or so. So I'm not even going to kind of have commentary on it. You know, interesting.



I guess yeah for me, for me, my takeaway is, I hope this helps a lot of people. If it does, then, you know, forget one month charts, or three month charts, or one year charts, right. 10 years ago, one of the purposes of Bitcoin was, this is going to be a, you know, a global remittance network and peer to peer and if that is true, and that saves people in El Salvador or other countries, a lot of money, a lot of difficulty with regard to currency fluctuations, and fantastic now that is, you know, one more checkbox that Bitcoin is solving for people around the world. So I'm with you, I don't have a strong opinion, either way, on what this means for Bitcoin from a price standpoint, from an investment standpoint. But, you know, I'm largely encouraged that Bitcoin and other digital assets are penetrating different areas of the world for very different reasons.



Yeah, I agree. I think I think that's very well said, I hope it does. add a lot of value, you know, is the bottom line and at the very least, it would be a very, very powerful case study. Well, cool. All right. Well, I'll let you get back. Jeff. I know this was a relatively short and sweet one, but as always, it was a great chat.



Great thanks for having me, Peter.






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Peter Hans

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