The Unknown World of Crypto Hedge Funds Exposed

Raoul Pal The Journey Man
8 Aug 202473:17

Summary

TLDRDans cet épisode captivant, Richard Galvin, fondateur de DACM, partage son expertise sur les marchés des crypto-monnaies et son approche en tant qu'investisseur en fonds de hedge. Il discute des stratégies d'investissement, des défis et des opportunités du secteur, ainsi que de l'importance de la patience et de la persévérance dans un marché volatil. Il met également l'accent sur la croissance des utilisateurs et des protocoles émergents, et comment cela peut conduire à des revalorisations futures sur le marché des crypto-actifs.

Takeaways

  • 📈 L'importance de la patience dans les investissements en crypto-monnaie, même face à la volatilité, est soulignée.
  • 🤔 La réflexion sur la répartition du capital entre les marchés primaires et secondaires en crypto-monnaie et les implications pour les investisseurs.
  • 💡 L'accent mis sur la croissance des utilisateurs et des protocoles comme indicateur de la santé du marché crypto, malgré la stagnation des prix.
  • 🔑 La discussion sur les stratégies d'investissement des fonds d'hedge en crypto-monnaie, notamment la préférence pour les investissements à long terme.
  • 🌐 L'intérêt pour les nouvelles technologies et plateformes, comme Telegram et Solana, qui attirent une croissance significative d'utilisateurs.
  • 💡 L'approche des fonds d'hedge pour identifier les protocoles et applications avec des modèles de revenu et d'utilisation en croissance.
  • 💰 L'observation de la tendance actuelle du marché qui récompense la croissance des utilisateurs plutôt que les revenus ou la valeur des actifs.
  • 🔄 La prise de conscience des défis et opportunités liés à l'allocation du capital dans l'espace crypto-monnaie, y compris les cycles de capital-risque.
  • 🚀 La perspective乐观的未来 de l'industrie crypto-monnaie, avec une croyance en une croissance exponentielle à long terme.
  • 🛠️ L'importance de la mise en place de modèles de lancement équitables pour les projets crypto, afin de promouvoir une croissance durable et une répartition équitable de la valeur.
  • 🧐 L'analyse des facteurs extérieurs au marché crypto, tels que les élections politiques, qui peuvent avoir un impact sur les tendances du marché.

Q & A

  • Quel est le service proposé par Kraken OTC pour les transactions importantes en crypto-monnaies?

    -Kraken OTC offre un service de trading en temps réel pour les transactions de plus de 100 000 dollars, offrant un accès 24/7 à une liquidité profonde, une faible écart et des services de transaction et de règlement compétitifs, avec des options de discussion sécurisée avec leur bureau des transactions pour un service haut de gamme ou l'utilisation d'une demande de devis automatisée et rapide (RFQ) pour le trading OTC.

  • Quel est le rôle de l'entreprise Exponential Age Asset Management (XAM) dans le secteur de la crypto-monnaie?

    -Exponential Age Asset Management (XAM) est une entreprise de gestion d'actifs qui investit dans des fonds de hedge funds de crypto-monnaie, cherchant à capturer les performances de l'espace des crypto-monnaies en identifiant les prochains gros décollages et les gains importants.

  • Quelle est la différence de taille entre l'industrie des hedge funds et celle des investisseurs en capital risque (VC) dans le secteur de la crypto-monnaie?

    -L'industrie des hedge funds dans le secteur de la crypto-monnaie est considérablement plus petite que celle des investisseurs en capital risque, représentant environ un cinquième ou moins de la taille de l'industrie des VC.

  • Quels sont les défis auxquels les hedge funds de crypto-monnaie sont confrontés par rapport aux marchés traditionnels?

    -Les hedge funds de crypto-monnaie font face à des défis tels que l'efficacité du marché très faible en raison du manque de participants professionnels, ce qui peut rendre le marché très profitable, mais aussi à la nécessité de comprendre les technologies complexes et les tendances émergentes à un rythme rapide.

  • Quel est le rôle de Richard Galvin dans le secteur de la crypto-monnaie?

    -Richard Galvin est le fondateur d'un grand fonds de hedge de crypto-monnaie et est considéré comme un penseur brillant et un expert sur la technologie et le marché des crypto-monnaies.

  • Quelle est la stratégie de Richard Galvin pour naviguer dans la volatilité du marché des crypto-monnaies actuelle?

    -Richard Galvin recommande d'être patient et de rester concentré sur les actifs fondamentaux du marché des crypto-monnaies qui peuvent résister à la volatilité et prospérer à long terme, plutôt que de se baser sur des raisons de/momentum.

  • Quels sont les facteurs qui influencent la répartition du capital dans le secteur des crypto-monnaies?

    -La répartition du capital est influencée par des facteurs tels que les lancements d'ETF, les tendances de capitalisation pré-évaluation, les flux de capitaux entre les marchés des crypto-monnaies et les marchés traditionnels, ainsi que les performances des projets au sein de l'espace des crypto-monnaies.

  • Quels sont les risques associés au trading fréquent des crypto-monnaies?

    -Le trading fréquent peut augmenter le risque de manquer les périodes de hausse les plus importantes qui sont souvent très concentrées dans le temps, ce qui peut nuire considérablement aux rendements à long terme.

  • Quelle est la position de Richard Galvin sur l'importance de la patience dans l'investissement en crypto-monnaies?

    -Richard Galvin souligne l'importance de la patience dans l'investissement en crypto-monnaies, en évitant de réagir de manière paniquée aux périodes de baisse et en restant concentré sur la stratégie à long terme.

  • Quels sont les avantages potentiels des nouveaux protocoles de couche un (layer one) dans le secteur des crypto-monnaies?

    -Les nouveaux protocoles de couche un peuvent offrir des avantages tels que des utilisations spécialisées, des fonctionnalités uniques, et la capacité d'attirer des applications et des cas d'utilisation spécifiques qui peuvent les rendre compétitifs par rapport aux protocoles existants.

Outlines

00:00

😀 Introduction à un service de trading OTC de crypto-monnaies

Le script introduit un service de trading de gros volumes pour les transactions de crypto-monnaies via Kraken OTC, offrant un accès 24/7 à des liquidités profondes et une faible dérive, ainsi que des services de trading privés et sécurisés.

05:02

🌐 Importance de l'engagement des abonnés pour la croissance du canal YouTube

L'orateur insiste sur l'importance de l'engagement des abonnés, notamment les abonnements et les commentaires, pour guider la création de contenu pertinent et attirer des invités de qualité. Il souligne le rôle crucial de l'engagement pour la croissance et la réussite d'un canal YouTube.

10:04

🤔 Réflexion sur l'industrie des hedge funds dans le secteur crypto

Le texte présente une discussion sur la petite taille de l'industrie des hedge funds dans le secteur crypto par rapport à l'industrie des capital-risk, soulignant les opportunités potentielles pour les fonds qui peuvent tirer parti de l'inefficacité du marché crypto et générer des rendements atypiques.

15:05

💡 L'importance de la patience et de la stratégie dans l'investissement crypto

L'orateur partage son expérience sur l'investissement dans le secteur crypto, mettant l'accent sur l'importance de la patience et de la persévérance dans sa stratégie d'investissement, malgré la volatilité du marché.

20:06

🔍 Analyse de la phase du marché et de l'allocation de capital

Le texte explore la manière dont les investisseurs analysent leur positionnement dans le cycle du marché et comment ils utilisent divers indicateurs pour mesurer leur allocation de capital et leur stratégie d'investissement.

25:08

🚀 Opportunités d'investissement dans le marché liquide crypto versus VC

Il est question des opportunités d'investissement dans le marché liquide crypto par rapport aux fonds de capital-risk, et des facteurs qui pourraient conduire à un réajustement des valeurs et à une répartition plus équilibrée du capital dans l'industrie crypto.

30:09

🤝 Interactions entre les grandes plateformes de trading asiatiques et le marché crypto

Le script discute de l'influence des grandes plateformes de trading privées d'Asie sur le marché crypto, ainsi que des stratégies de trading et d'allocation de capital utilisées par ces entités.

35:11

📉 Analyse de la dynamique du marché et des facteurs affectant les prix des crypto-monnaies

L'orateur partage ses perspectives sur les facteurs structurels et cycliques qui affectent les prix des crypto-monnaies, y compris les tendances de l'industrie, les allocations de capital et les changements de dynamique du marché.

40:12

🏁 Conclusion de la discussion sur les perspectives d'investissement dans le secteur crypto

Le texte conclut la discussion en identifiant les défis et les opportunités d'investissement dans le secteur crypto, ainsi que les stratégies d'allocation de capital et de prise de décision pour naviguer dans ce marché dynamique.

45:13

🌟 Introduction de services supplémentaires et invitation à rejoindre la communauté

Le script se termine par une présentation de services de trading OTC supplémentaires et une invitation à rejoindre la communauté de Real Vision pour partager des insights et devenir une part de leur espace d'apprentissage continue.

Mindmap

Keywords

💡Kraken OTC

Kraken OTC fait référence au service de trading à grande échelle proposé par la plateforme Kraken, qui permet aux traders d'effectuer des transactions importantes en dehors de l'échange public. Dans le script, il est mentionné comme une option pour bénéficier d'une liquidité profonde et d'un service de trading en temps réel avec un faible glissement de prix.

💡Liquidité

La liquidité est un terme clé pour comprendre le marché des crypto-monnaies. Elle fait référence à la capacité de négocier迅速 et avec facilité des actifs financiers, y compris les crypto-monnaies, sans que leur prix ne soit fortement affecté. Dans le script, l'accès à une liquidité profonde est promu comme un avantage du service OTC de Kraken.

💡Glissement de prix

Le glissement de prix est un concept important dans le trading, qui décrit la différence entre le prix demandé et le prix réalisé lors d'une transaction. Un 'faible glissement de prix', comme mentionné dans le script, indique que les transactions peuvent être effectuées à un prix proche de celui demandé, réduisant ainsi les pertes potentielles pour les traders.

💡Hedge funds

Les hedge funds sont des fonds d'investissement gérés par des gestionnaires professionnels qui utilisent divers stratégies pour maximiser les gains, souvent en prenant des positions spéculatives. Dans le script, l'auteur discute de son expérience dans l'industrie des hedge funds et de son intérêt pour les hedge funds liés aux crypto-monnaies.

💡Crypto-monnaies

Les crypto-monnaies sont des formes de monnaies numériques décentralisées basées sur la technologie blockchain. Elles sont mentionnées à travers le script entier comme étant l'objet central des discussions, des stratégies d'investissement et des transactions sur les marchés financiers.

💡Volatilité

La volatilité est un terme clé pour décrire la tendance d'un marché ou d'un actif à fluctuer. Dans le contexte des crypto-monnaies, comme mentionné dans le script, elle est souvent élevée, ce qui signifie que les prix peuvent changer rapidement et de manière significative.

💡Stratégie d'investissement

La stratégie d'investissement fait référence à l'approche ou la méthode utilisée pour allouer des fonds dans différents actifs ou marchés. Dans le script, l'importance de la discipline et de l'adhérence à une stratégie d'investissement bien définie est soulignée pour naviguer dans les marchés des crypto-monnaies.

💡Marché des capitaux secondaires

Le marché des capitaux secondaires est un marché où les investisseurs peuvent vendre ou acheter des parts de fonds ou d'autres investissements qui ne sont pas échangés sur un marché public. Dans le script, il est mentionné que les hedge funds peuvent tirer parti de ce marché pour obtenir des rendements supérieurs.

💡Effet de manège

L'effet de manège est un terme utilisé pour décrire une situation où les investisseurs achètent et vendent fréquemment des actifs, souvent dans un court laps de temps, pour tirer parti des fluctuations de prix. Dans le script, l'auteur mentionne que les grandes erreurs dans les crypto-monnaies se produisent généralement à la fin des marchés, et éviter l'effet de manège est un point clé de leur stratégie.

💡Allocation de capital

L'allocation de capital est le processus de répartition des fonds dans différents actifs ou projets en fonction de leur potentiel de rendement. Dans le script, l'auteur discute de la manière dont l'allocation de capital dans l'industrie des crypto-monnaies a évolué, notamment envers les hedge funds et les start-ups technologiques (VC).

💡Révolution numérique

La révolution numérique fait référence aux changements radicaux apportés par l'introduction et la diffusion des technologies numériques. Dans le script, l'auteur aborde l'idée que nous traversons une ère de révolution numérique où les crypto-monnaies et les technologies blockchain jouent un rôle clé.

💡Échange automatisé

Un échange automatisé est une plateforme de trading qui utilise des algorithmes pour effectuer des transactions sans intervention humaine. Dans le script, il est mentionné comme une option pour les traders qui cherchent à effectuer des transactions OTC rapidement et efficacement.

💡Risque d'investissement

Le risque d'investissement est le potentiel de perte d'argent ou de non-réalisation des rendements prévus. Dans le script, il est mentionné que le trading de crypto-monnaies comporte des risques et que les investisseurs doivent être conscients de ces risques avant de trader.

Highlights

Kraken OTC 提供超过 100,000 美元的大型加密交易服务,提供全天候访问深度流动性、最小滑点和有竞争力的执行和结算服务。

通过 Real Vision 平台,用户可以使用 AI 摘要功能来总结和搜索关键信息,以更好地理解和利用交易想法。

Ral Pal 拥有超过 30 年的对冲基金行业经验,他创立了 Exponential Age Asset Management,专注于投资加密对冲基金。

加密货币对冲基金行业相较于风险投资行业规模较小,这为专业参与者提供了不效率的市场和潜在的高回报。

Richard Galvin 管理着大型加密对冲基金 DACM,强调了耐心等待和坚持策略的重要性,特别是在市场波动期间。

Galvin 认为,加密货币市场与 2019 年和 2020 年相似,但存在一些关键差异,特别是在资本配置和市场结构方面。

对冲基金在加密货币市场中的作用是寻找大交易机会,而不仅仅是跟随市场趋势。

Galvin 强调了在加密货币市场中保持耐心的重要性,避免在市场顶部和底部犯大错误。

讨论了加密货币市场中的 ETF 发行对资本流动的影响,特别是对比特币和以太坊的关注。

Galvin 分享了他对当前市场的看法,包括加密货币如何作为传统市场的一个领先指标。

分析了加密货币市场中的结构性问题,包括资本在风险投资市场和上市公司市场之间的不匹配。

讨论了加密货币市场中的流动性问题,以及如何通过持有现金来应对市场的不确定性。

Galvin 认为,尽管市场短期内可能保持低效率,但长期来看,市场会自我调整,为有耐心的投资者提供机会。

分析了加密货币市场中的交易策略,包括如何在市场波动中保持冷静和坚持投资策略。

讨论了加密货币市场中的技术创新和新项目,以及它们如何影响资本流动和市场结构。

Galvin 预测,随着市场的成熟,加密货币市场中的 VC 投资回报可能会降低,而二级市场的投资机会可能会增加。

强调了在加密货币市场中,对于新兴技术和项目进行深入研究和理解的重要性,以捕捉下一个大的增长机会。

Transcripts

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make large crypto trades with Kraken OTC

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execute orders of more than 100,000 off

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the open exchange through our premium

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OTC trading service get 24/7 access to

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competitive execution and Settlement

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Services private and secure trading

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options include chatting securely with

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our trade desk for a personalized High

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touch service or use our self-service

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RFQ for super fast automated OTC trading

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non-investment advice crypto trading

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involves risk of loss and is offered to

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Us customer customers through payward

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interactive Inc for more information go

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to realvision

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docomo hey everyone look sorry this is

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the cheesy Interruption that you get on

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YouTube channels but they're really

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important I'd really appreciate it if

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you just hit the Subscribe button you

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see it makes a difference to know how

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I'm doing seeing the growth in

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subscribers if we're getting the right

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content obviously comments help as well

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but the hitting the Subscribe button

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allows me also to book the best guests

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you do enjoy this content and I know you

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do cuz you keep coming back to watch it

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just please hit the Subscribe button

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sorry again for the cheese but it is

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important I appreciate it so much take

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care hi I'm Ral pal and welcome to my

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show the journeyman where I travel with

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you to that Nexus of macro crypto and

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the exponential age of

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technology I have been in the hedge fund

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industry for 30 odd years now um I've

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both sold to hedge fund funds many of my

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friends are hedge funds uh I've run a

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hedge fund and so they're dear to my

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heart I even have an asset management

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company called exponential age Asset

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Management xan which invests in crypto

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hedge funds you see my thesis it's a

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fund of funds my thesis is that if you

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really want to capture the

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performance of this space in cryptos it

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goes from $2 trillion to1 trillion

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dollar you're not going to get it all by

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being just in Bitcoin ethereum or salana

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you're going to have to figure out what

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the next big breakouts are where the big

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gains can be made where's the next 100x

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and that is incredibly complicated with

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the thousands of tokens that exist and

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tens of thousands of memes and all the

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other stuff in the space you kind of

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need to rent it to

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experts and these hedge funds are the

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experts now what's interesting about the

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hedge fund industry in crypto for me is

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it's incredibly small versus the VC

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industry it's about a fifth or less of

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the size maybe a tenth of the size of

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the VC industry there's actually not a

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lot of secondary Market um professional

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participants in crypto which makes it

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very very inefficient which means it can

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be very profitable so hedge funds can

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make super normal

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returns they focus all day every day 24

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hours a day uh s days a week cuz it's c

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crypto on doing this in traditional

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markets there's about $4 trillion in

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hedge funds in crypto Market it's about

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10 billion i. nothing the big players

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who push prices around you know some

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people would say the more manipulative

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players tend to be the kind of private

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trading shops out of Asia they're very

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big in the space then there's the market

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making firms uh people like um well jump

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Capital who are now moving out of the

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space but there are other Market Mak

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firms and then there's some hedge funds

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but a lot of retail you know as retail

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investors we got to front run a lot of

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the money coming into the space and

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that's been the gift that keeps on

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giving in crypto is being aead of all

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streak for once but there is a group of

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hedge fund managers who really are

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fabulous because they understand this

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Market it's super de their job is to

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find the big trades and one of my

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favorite managers and as a disclosure

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Pam has invested in dacm Richard galin's

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firm is Richard galin he grew up as a

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TMT analyst um over the tech years he

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understands the technology deeply and he

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runs a very large hedge fund in the

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space but he's also just a brilliant

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thinker and I love to sit down with

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Richard from time to time pick his

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brains where we are what's going on and

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what we should think about so I really

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hope you enjoy this conversation with

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Richard Galvin now before you go I do

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urge you to pop over to the real Vision

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platform because a conver conversation

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like this is long form there's going to

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be a lot of information for you if

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you're on realvision docomo

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join you can then use the AI summary

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that's already there once you come on

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the transcript you can clip it into your

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own AI or the real Vision AI That's on

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platform that will help you summarize

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you can you can search for the keyword

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so you can understand and also so if

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there's a great trade idea you can post

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that trade idea on real Vision either

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privately for yourself and it populates

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the um the p&l to show you how you're

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doing or you can make it public and

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share it with others so people can see

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your ideas too comment on it like it

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that kind of stuff there's a lot going

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on on the realvision platform there's a

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lot of crypto content there that's not

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on this channel so go to real vision.com

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and see if you can watch this interview

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there because I think you'll absolutely

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be blown away by the experience anyway

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let's speak to Richard

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join me Ral pal as I go on a journey of

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Discovery through the macro crypto and

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exponential age landscapes in the

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journey man I talk to the smartest

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people in the world so we can all become

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smarter

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together Richard Galvin how the devil

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are you I'm okay we live in very

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interesting times yeah listen before we

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get cracky into all of this just for

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some people who don't know you um you

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have a bit of your background what you

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do now just to frame up our conversation

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sure I was a banker for 20 years uh

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largely TMT so Tech and TCO Banker at uh

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at Goldman and JP Morgan and and started

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a crypto investment management firm dacm

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back in early 2017 so we've been running

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institutional family offers Capital

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through the crypto space for what is it

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six years now and um we're we're an

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investor so we run long only B NVC

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strategy so we're long Market uh looking

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to play the growth of long TR trajectory

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growth we see over so multi think growth

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in his s class and you know for people

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who don't know DM is one of the larger

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crypto hedge funds and one of the longer

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established ones as well yeah so we run

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around about 4 400 450 million of uh of

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outside

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Capital so look we're recording this on

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a Monday it's it's Tuesday morning for

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you Monday evening for me um this won't

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go out till Thursday so you know we we

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can't talk particularly you know in

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granularity but what's your take on

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what's going on in the markets right now

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because it's it's actually been a pretty

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crappy market for a while sideways

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sloppy corrective pattern what's your

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take on the on the overall market for

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now before we dig into some more stuff

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yeah I think one of the interesting

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things we we've kind of seen this is

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probably the second or third time

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crypto's kind of acted a little bit like

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a canary in the col line so you know as

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you mentioned crypto has been weak for

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you know for the last six or seven weeks

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right so it's kind of in a way uh been

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ahead of what we've seen over the last

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24 hours in traditional markets and to

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be honest we kind of saw this back in

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20122 as well where crypto was kind of

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weak well before we saw traditional

play07:41

markets kind of fall over um I think

play07:44

we've been in uh and we can talk a

play07:46

little bit about this later later on as

play07:47

well I think putting aside the the sort

play07:49

of the short-term Market factors we can

play07:51

talk about also think there's been some

play07:53

structural issues in crypto over the

play07:55

last 6 to 12 months and we've got a

play07:56

we've got a substantial mismatch between

play07:59

the capital that's in the the

play08:01

pre-listing or VC Market versus the

play08:03

capital that's in the listed market and

play08:05

we've seen that play out particularly

play08:07

around the altcoin space and then on top

play08:10

of that you've seen the ETF launches

play08:11

which is driven you know incredible

play08:13

Capital inflows but very much focused at

play08:15

that Bitcoin and now on the ethereum

play08:17

level and then at the other end of the

play08:19

Bel at the other end of the barbell

play08:20

you've got the mcoin kind of mania so

play08:23

you're in a you know you've seen some

play08:25

pretty different sort of structural

play08:26

flows in the way the capital's been

play08:27

allocated across crypto than we've seen

play08:30

probably in the last sort of six years

play08:31

before that so let's talk about just how

play08:34

you're navigating the current volatility

play08:35

because you've been through plenty of

play08:37

volatility in the past you're a long

play08:39

only guy so you know this is all part of

play08:41

the game uh you know you come in over

play08:44

well you're looking like we all were

play08:45

over the weekend and everything turns to

play08:46

what do you do how do you think

play08:48

about it you know what discussions you

play08:50

have

play08:51

internally yeah I think we've um we've

play08:54

found that we've been rewarded over the

play08:56

journey for being patient and I think

play08:58

the crypto Market one thing it

play08:59

definitely doesn't have his patience so

play09:01

we generally try to stick to kind of our

play09:03

knitting through these sorts of periods

play09:05

and and make sure we battle test the

play09:07

portfolio and everything that we own

play09:09

continue to sort of test that we own it

play09:11

for the right reasons and clearly owning

play09:14

Assets in this market for momentum based

play09:17

reasons when something like this happens

play09:19

can be a disaster so we're very much

play09:21

focused around what we'd say is that

play09:23

sort of fundamental into the crypto

play09:24

Market assets that we see can ride

play09:26

through this volatility and prosper on

play09:27

the other side I guess a period like

play09:30

this is just a chance for us to sort of

play09:31

retest the thesis on what we own and

play09:33

retest the the data and the the data and

play09:36

the statistics we follow to sort of get

play09:37

a update on the assets and check that

play09:39

everything's still in line with what we

play09:41

think and then really our approach has

play09:43

been long only and we're are 80% plus

play09:45

long in our liquid strategies through

play09:47

these periods is then just to hold our

play09:49

nerves now we found through the

play09:51

Journey crypto the biggest mistakes

play09:54

people make in crypto generally happen

play09:56

right at the top of the market and right

play09:57

at the bottom of the market so we're

play09:59

very disciplined on making sure that we

play10:01

don't panic in these types of periods

play10:04

just like we're try not to get too

play10:05

euphoric on the other side of the coin

play10:07

as well when things go away and I've

play10:10

found sort of over these sort of six to

play10:12

seven years that's the period where

play10:13

you've really got to focus and stick to

play10:14

your strategy strategy and your

play10:16

allocation process and make sure you

play10:18

don't deviate from that because it's

play10:20

hard not to get caught up in this yeah

play10:22

that's right and how do you know what

play10:23

Market phase you're in because that's

play10:24

what I find gives me the comfort is like

play10:26

where are we in the market structural

play10:28

phase you know in the cyclical elements

play10:31

of this how how do you think about that

play10:34

when it comes to testing so you'll test

play10:35

your individual tokens you have we got

play10:37

the right stuff do we still believe in

play10:38

the thesis but then there's the market

play10:41

question you know are we just stupid

play10:43

what are we testing against what do you

play10:44

use as a as a as kind of metrics to

play10:46

measure where we are yeah I think when

play10:49

we start with the the the macro tole and

play10:52

I think you'd agree with all got that

play10:54

we're you know we're owning digital

play10:56

assets going through digital Revolution

play10:58

so yeah the the the longer you the

play11:00

longer you sort of zoom out um the more

play11:03

comfortable you get that you're in the

play11:05

right place now as you start to get onto

play11:07

smaller time frames you start to get

play11:08

into the questions you asking around you

play11:10

where we are in that specific cycle as

play11:12

opposed to that sort of

play11:13

structural sort of societal change I

play11:16

think we're going through over the next

play11:17

10 to 15 years which is definitely in

play11:19

our favor so where we're at in the cycle

play11:21

I think we try not to rely too much on

play11:23

the individual sort of cycle Maps um

play11:27

they've been when you look back they've

play11:29

actually been pretty strong in crypto

play11:31

but it's Al it's it's always a risk that

play11:33

things change and I think to be honest

play11:35

if we look at sort of 2023 2024 it's a

play11:38

little similar to sort of 2019 2020 but

play11:40

it is pretty different and the portfolio

play11:42

constructs we have used have been a

play11:44

little different in that regard I think

play11:46

we've seen a skew much more towards the

play11:48

majors than we would have seen if we

play11:50

tried to track it back to the previous

play11:52

cycle and that's probably partly been

play11:53

driven by the ETF as well but we also

play11:57

have seen crypto sort of revert back to

play11:58

its somewhat uncorrelated sort of uh

play12:01

sort of behavior which I think is

play12:03

generally our Assumption of the steady

play12:05

state that in a normal Market where

play12:08

tread is either not going crazy

play12:10

exponential up or down crypto kind of

play12:12

does its own thing and that's probably

play12:14

what we've seen over the last six to n

play12:16

months periods like yesterday where you

play12:18

start to see substantial volatility

play12:20

that's when the correlation start to

play12:21

come back to normal and do you

play12:24

hold Cash ever for times like this so

play12:28

you you've got flexibility to add when

play12:30

you get you know great prices again yeah

play12:33

so we run uh up to 80% 80 we're 80% low

play12:37

uh through the Journey we're probably

play12:38

been sort of low

play12:40

90% and we'd actually built up close to

play12:43

20% cash up through sort of June into

play12:47

and ahead of the sort of the crashing

play12:49

July we deployed most of that capital in

play12:52

early July with the market for 20% in

play12:54

sort of five days which is sort of

play12:56

similar levels to it's got did today um

play12:58

we do do that look we take a we take a

play13:00

view that when you when you sort of zoom

play13:03

out from a macro level if you're in an

play13:04

asset class that's got you exponential

play13:07

growth potential over a 10 to 15 year

play13:10

time period the last thing you want to

play13:12

do is Sho yourself in the foot for by

play13:14

being in and out of that asset class at

play13:15

the wrong time and the other factor to

play13:18

consider is crypto returns and losses

play13:20

come in very concentrated periods so you

play13:23

could be out of the market um for only

play13:26

three or four days each year and you can

play13:28

dramatic Ally reduce the returns that

play13:30

you get over a 5 to 10 year period in

play13:32

crypto because they the 3 to five days

play13:34

where 30 40 50 60% of the use gains are

play13:37

made so we've sort of stuck to that we

play13:41

we extremely strong tile wind as an

play13:43

asset class we know if we're in the

play13:46

asset class and we make sensible

play13:48

allocation decisions we can win and make

play13:50

make outsize

play13:51

returns will we try and smooth

play13:53

volatility through that well that's kind

play13:56

of undo the first point right like if we

play13:58

don't get the trading right and getting

play14:00

the actual trading days right is much

play14:02

harder than just getting in the right

play14:03

asset class it's got the toe wins behind

play14:05

it so many people don't understand this

play14:07

they're desperate to dampen the

play14:09

volatility but dampening the volatility

play14:12

risks you missing the upside volatility

play14:15

and then you screwed up the whole game

play14:17

yeah I think and you would know through

play14:19

your history like even the greatest

play14:20

Traders you can't get it right yeah are

play14:23

wrong a lot of the time right and if

play14:25

you're wrong those three or four days of

play14:26

the year or in a couple years in row

play14:29

you'll substantially hurt your returns

play14:31

probably more than moving in out of the

play14:33

market now I think the

play14:35

general um problem a lot of people a lot

play14:37

of investors have even you know at a at

play14:39

a retail level up to the largest head

play14:42

fund manager is to fiddle around right

play14:44

because you feel as if you got to do

play14:45

something um we try to sort of step back

play14:48

as much as we can try to step back from

play14:50

that and sort of make that sort of

play14:51

decision and stick to stick to that

play14:54

decision no matter what the sort of

play14:55

intraday moves do and it is very

play14:57

tempting to sort of play around and

play14:59

around from time to time but you know we

play15:01

try to stick to picking the right asset

play15:03

that's where we're going to generate the

play15:04

elf for beating the right assets that

play15:06

can make it through these sorts of

play15:07

cycles and deliver the outsid returns

play15:09

over sort of three to five year view

play15:11

it's interesting I have hourly charts

play15:12

open next to me yet I never trade but so

play15:15

I can kind of mentally trade to fight

play15:18

that urge but I just don't trade I kind

play15:20

of lock it away on my ledger so I can't

play15:22

do anything to it because you know

play15:25

you're Your Own Worst Enemy in this kind

play15:27

of stuff I mean a friend of us who are W

play15:29

name that we we both know very well a

play15:31

legendary hedge fund manager he's like I

play15:35

mean he's one of the best traders of all

play15:36

time he's like I just refuse to trade

play15:38

this because it's it's very hard to

play15:41

trade and there's a lot of you know 22

play15:43

year old kids on on Twitter who think

play15:45

they're genius Traders at it but it's so

play15:47

hard to trade them and my guess if you

play15:49

look back and look at their returns over

play15:51

a couple of Cycles they're unlikely to

play15:53

be as good as just a Buy and Hold yeah I

play15:56

think you and and look you find it from

play15:57

the you know the greatest

play15:59

hedge fund and prop Traders at

play16:01

investment Banks the the amount of

play16:03

people that think they're a great Trader

play16:05

is quite a big population the amount of

play16:07

people that are a great Trader is a

play16:08

pretty small population and that even

play16:11

those great Traders would admit that you

play16:13

know they're wrong a lot of the time and

play16:15

you know you look at crypto look at

play16:16

who's made some of the most substantial

play16:18

returns and if you look at sort of you

play16:19

know interesting sort of Topic at this

play16:21

point in time the mount g distribution

play16:23

like you look at the Monstrous Returns

play16:25

the people getting coins back from that

play16:27

process of made just because they had no

play16:29

access to their Bitcoin for like yeah

play16:32

what is it almost coming up on 10 years

play16:34

now and they get the full returns back

play16:37

now the ones that the people that get

play16:39

that opted to get coins back some of the

play16:41

substantial returns they're going to

play16:42

make right just because they've had no

play16:45

ability to trade like you're saying

play16:46

putting your Ledger in a vault making

play16:48

that Vault hard to access is sometimes

play16:51

the best in investment decision you can

play16:53

make in crypto now we try to we try to

play16:56

bring that patience to the way we invest

play16:58

we're a little bit more active of course

play16:59

because we're you know we're moving down

play17:01

the stack a little bit where things can

play17:02

go wrong or things can go right in

play17:04

shorter time frames and you've also got

play17:06

to make sure that you know part of

play17:08

crypto is that emotion part of that is

play17:10

those new trends is that new technology

play17:12

that comes around so you need to live

play17:14

and breathe it dayt day to make sure

play17:17

you're not missing those sorts of things

play17:18

and you're you're across that but it's

play17:19

getting that balance right of living

play17:22

that sort of day day by day Keeping Up

play17:24

with the Kardashians type sort of

play17:26

atmosphere in crypto but they're not

play17:29

letting it not letting it over take a

play17:30

sort of trigger finger on the buy and

play17:31

sell bu so as a disclosure you know

play17:35

exponential age asset management xam is

play17:37

a an investor in your funds so just so

play17:40

everybody knows that

play17:41

but what what I want to understand is

play17:45

why is the hedge fund industry still so

play17:47

small I mean you're one of the biggest

play17:49

funds there's a few others bigger Allen

play17:50

how and a few others but there's not and

play17:53

the others tend to have a lot more mix

play17:55

of VC and other stuff in their assets

play17:58

why is it so so small as an industry

play18:01

compared to the kind of two two and a

play18:03

half trillion asset class it is why is

play18:05

that because it feels like it's a place

play18:07

where you need professional Capital to

play18:09

manage the kind of other stuff yes sure

play18:11

we can all hold Bitcoin and a few tokens

play18:14

but when it comes to navigating what's

play18:16

the next big thing it's not Bloody easy

play18:19

what why is that yeah I think it's a I

play18:23

think it's a multi a number number of

play18:25

factors both to do with the way the

play18:27

capital's allocated from

play18:29

uh you know traditional institutional

play18:31

investors and partly to do with crypto

play18:32

as well so if we step back if you look

play18:35

at the allocation of capital it's vastly

play18:37

gone to VC funds in crypto so if you

play18:41

look over sort of 21 2022 there's about

play18:44

sort of 50 to 60 billion dos went to um

play18:47

went to to crypto

play18:49

VC um now why did that happen if you

play18:51

step back firstly there's been some

play18:53

incredible returns in crypto you we run

play18:55

a an early stage crypto fund as well and

play18:57

there's been some insane returns in that

play18:59

category you know ey watering time

play19:01

returns that most people have never seen

play19:03

in their life right so you've seen those

play19:05

returns attract Capital the second thing

play19:07

is VC funds are closed end funds closed

play19:10

end funds don't Mark the market every

play19:12

day like a liquid fund or every month

play19:14

like a liquid fund or even every quarter

play19:16

yeah it's basically locking away your

play19:17

Ledger really yeah it's it's it's the

play19:19

equivalent from a from an allocation

play19:21

from an allocator perspective of locking

play19:23

away your Ledger you're giving Capital

play19:25

to a space you're not getting a month

play19:28

month-by-month decision to make on

play19:30

whether you you know withdraw that

play19:31

Capital increase that Capital you're not

play19:33

getting that month-by-month

play19:35

volatility um which you've got a report

play19:37

back to investment committee you're

play19:39

effectively making a you know five to 10

play19:41

year investment decision and you get

play19:43

reporting based on that investment

play19:45

decision as opposed from a month to

play19:47

month and that sort of fits I think with

play19:48

a the mindset particularly given the

play19:51

volatility of crypto um with the mindset

play19:54

of you a lot of the way capital's

play19:56

allocated these days most allocators

play19:57

don't want 30 40% month-on-month

play20:01

changes in in the way they in the in the

play20:04

funds they invest in and realistically

play20:06

that's what liquid crypto can give you

play20:08

through certain parts of the cycle and

play20:11

the other point is you know VC crypto

play20:13

fits within a VC SLE within a

play20:15

traditional allocation it's it's really

play20:17

just a different it can be a tech

play20:18

allocation right yeah it's a different

play20:20

Tech within an already existing team

play20:22

that's allocating Capital to VC whereas

play20:25

liquid's not it's a it's a new tech but

play20:28

it's liquid so it sort of fits within

play20:29

hedge funds but it doesn't but it has VC

play20:32

type returns with and it has volatility

play20:35

like nothing else that they've got in

play20:36

their portfolio so we've seen you know

play20:39

both the returns and I think the fact

play20:41

that it fits neatly within an existing

play20:43

sort of bucket within an allocator zones

play20:46

and it's got low volatility and if

play20:48

you're you're an agent allocating

play20:50

Capital you know you don't want to

play20:51

allocate capital and the next you know

play20:53

the next five days it's now 30% in the

play20:56

first five days or whatever it may be

play20:58

whereas that's not going to happen if

play20:59

you're in a closed in fund that's got

play21:01

sort of five to 10 year view five to 10

play21:03

year in reports on that basis so we've

play21:05

seen outsized allocations go to that

play21:08

space versus the liquid market and

play21:10

liquid funds where you've seen probably

play21:12

20 to 30 billion of capital go over that

play21:15

same period but a lot of that capital's

play21:17

then G to Market neutral in long short

play21:19

funds which AR providing the same kind

play21:21

of you know buying of that BC Capital as

play21:24

well he everyone listen if you want

play21:27

unfuck your future

play21:29

let me help you follow this channel

play21:31

subscribe click the notifications and

play21:34

you'll get everything as soon as it

play21:35

comes out see you there what do you

play21:37

think my hunch is that liquid market

play21:41

returns over the 10-year time Horizon

play21:44

will beat VC returns because there's so

play21:47

little capital in the

play21:49

space yeah well I think well how does

play21:51

this get fixed so you know the way it

play21:54

gets fixed is either more people start

play21:56

to allocate to liquid to liquid to

play21:59

liquid funds that start to buy more of

play22:02

those sort of coins as they coins and

play22:05

tokens as they come to Market or you see

play22:07

price readjustments and that's probably

play22:10

partly the the second one seems to be

play22:12

leading the way as we go through things

play22:14

now you we're starting to see some of

play22:17

the more elevated Capital raising

play22:19

valuations we've seen in VC Market just

play22:22

not get met by the liquid Market you

play22:24

know that the the the retail investors

play22:26

have moved down to mecoin land for the

play22:28

time being

play22:29

where they can see a more sort of hon a

play22:31

more honest kind of exponential bet

play22:34

where they can make it against a sort of

play22:35

a fix fix Supply mcoin Market um and

play22:40

you've seen a lot of those new tokens

play22:41

that had come to Market had that sort of

play22:44

sort of graph that we're unfortunately

play22:46

all all too familiar with where they

play22:47

launch at a you know very small float

play22:50

very elevated you know fully fully

play22:53

deleted valuation and then Trend down

play22:55

over a short period of time it's it's

play22:57

just not the buyers or the Capital to

play22:59

support those sorts of valuations and so

play23:01

we're in that sort of period now

play23:02

particularly it's been exacerbated even

play23:04

more over the last 24 hours where we

play23:07

start to see a lot of those projects and

play23:10

even some of the high quality projects

play23:11

start to trade down below their sort of

play23:13

last liquid of their last private

play23:15

Capital rates and so you start to see

play23:17

the listed Market starting to buy some

play23:19

of these assets at discounts to what

play23:21

that VC Market paid and that's where you

play23:24

start to see I think that kind of uh

play23:26

that distribution of capital start to

play23:28

play out as you start to see those sort

play23:29

of

play23:30

valuations reig to sort of match the

play23:32

capital basis that they they're faced

play23:34

with my hunch is if you under allocate

play23:38

to secondary markets the secondary

play23:40

Market opportunities tend to be

play23:42

bigger versus the crypto the the VC

play23:46

because VC is overallocated so

play23:47

everything goes to high valuations

play23:48

quickly it then falls into secondary the

play23:52

secondary Traders wait they buy these

play23:53

things at a discount when the market's

play23:55

at the right moment and you tend I think

play23:57

to do get better returns my view is the

play24:00

liquid will probably do better than VC

play24:03

for now until this this structural shift

play24:05

changes the only other big players in

play24:08

the market so I don't know if you see it

play24:09

much is because we don't have that much

play24:11

professional Capital so there's a bunch

play24:13

of hedge funds and the number of large

play24:15

hedge funds with anything over 200

play24:17

million is you know there's like 10 I

play24:19

mean there's not that many particularly

play24:21

directional ones um is the Asian

play24:24

trading groups you know those are often

play24:28

kind of murky private go pulls of

play24:30

capital do you and they seem to be the

play24:32

ones who move size around do do you see

play24:35

that I mean they seem to be the the main

play24:37

Traders plus a couple of the market

play24:38

making firms I me I think Jun Jump's

play24:40

leaving the market but yeah you know

play24:41

there's Jane straet a few others how do

play24:43

you see those other players well I think

play24:46

you know if we look through and and this

play24:48

is why you each period in crypto can be

play24:50

different if we step back to the last

play24:53

sort of cycle we went through you would

play24:56

see a much more kind of flow of capital

play24:58

from the majes to the altcoin space and

play25:01

they would be a that would be a material

play25:02

mover of a lot of these sort of you know

play25:04

outside the top 10 coins um I think this

play25:08

cycle the difference is that capital's

play25:10

gone straight to the mean coin space and

play25:12

kind of jumped over the you know what

play25:14

would it be the traditional kind of

play25:16

let's step down from the majors to find

play25:17

a higher a higher growth opportunity

play25:20

that's gone to the frogs and dogs coins

play25:22

as opposed to the Defi and AI coins in

play25:25

in this cycle so that's probably

play25:27

something that's changed from a

play25:28

structural perspective in the market

play25:30

well I wouldn't say structural cyclical

play25:32

at this point in time has changed in the

play25:33

market over the last few years and that

play25:35

puts the advantage back to retail

play25:38

right it does it does as as you trade

play25:41

some of them and most of the hedge funds

play25:42

trade some but it's a small allocation

play25:45

to kind of understand Market structure

play25:47

and that kind of stuff yeah and I think

play25:48

you need to be across that and then a

play25:49

lot of the tech that comes out of that

play25:51

like trading Bots and those sorts of

play25:52

things can be pretty relevant for the

play25:53

way we allocate capital and play some of

play25:55

that growth so then it brings you back

play25:57

to the the more traditional investors

play26:00

and of course I completely agree with

play26:02

your view that longer term those liquid

play26:04

returns can be very high when you're

play26:05

buying those sorts of assets because you

play26:07

know there's nothing better than buying

play26:09

a you know high quality asset at a cheap

play26:11

valuation at a material discount to what

play26:13

the last VC round was at and you've got

play26:15

liquidity right that's just a you know

play26:18

that's just discount upon discount upon

play26:20

discount now the one caveat I would put

play26:22

on that is the market can stay

play26:24

inefficient for a long period of time ra

play26:26

so that there's patience right you need

play26:28

to have patience and as I mentioned kind

play26:30

of when we started this discussion

play26:32

that's what's in shorted Supply crypto

play26:33

and that's something that we sort of

play26:35

make sure that we continue to keep up

play26:36

the patience to buy those assets when

play26:38

they are at that discounted level but

play26:40

then the patience to hold them until the

play26:42

market works that

play26:43

out now one of the things that I thought

play26:46

has kept the mark Lids on the market for

play26:49

the last three six months um since it

play26:52

peaked out in March was there's just an

play26:54

enormous redistribution of tokens out of

play26:57

old hands from the last couple of Cycles

play27:00

into newer hands so as you mentioned

play27:02

this Mount GX has won so that was a long

play27:05

time ago but they're finally coming to

play27:07

market the FTX estate that whole bunch

play27:10

of stuff had to get sold took liquidity

play27:12

out because a bunch of hedge funds and

play27:14

family offices took up the liquidity but

play27:16

it still takes liquidity out of the

play27:17

market um we've had the Germans selling

play27:22

distribution we've had jump liquidating

play27:24

a portfolio we've had a bunch of token

play27:28

unlocks from these things um plus new

play27:31

Supply coming and tens of thousands of

play27:33

mean coins and it feels like there were

play27:37

just was not enough liquidity so the

play27:38

market I think has done pretty well

play27:40

absorbing that by trading very sloppy

play27:42

sideways in the major sure the olds get

play27:44

crushed because they're getting replaced

play27:45

with these other things how do you think

play27:47

about that kind of structure going on

play27:49

yeah I think I'd had the Bitcoin ETF and

play27:51

now more recently The Ether one and the

play27:52

unwinding of the gray scale as well well

play27:54

I think the Bitcoin ETF in way is

play27:56

probably is is different sucked Capital

play27:59

out of the rest of the crypto market

play28:00

right so if you look at you know we

play28:03

speaking to our LPS speaking to our

play28:05

perspective LPS speaking to my PE group

play28:07

I think there is a bunch of capital that

play28:09

would have come more broadly across the

play28:11

market um over the last 12 months that

play28:14

hasn't because the etf's become a

play28:16

simpler easier sort of First Step

play28:18

solution for a bunch of family offices

play28:21

and institutional allocators and so I

play28:23

think there's a lot of capital in those

play28:25

Bitcoin ETFs that probably would have

play28:28

come more broadly across the crypto

play28:30

space ex that ETF wasn't there now

play28:32

longer term I still think the ETFs are

play28:34

an incredible uh positive thing for the

play28:37

crypto Market but we have been in that

play28:38

sort of short-term window where I think

play28:40

they have been on top of the other

play28:42

factors you've mentioned have taken some

play28:44

Capital out of the broader crypto market

play28:46

and partly driven sort of the out

play28:47

performance or the the extended out

play28:50

performance we've seen from Bitcoin um

play28:52

through the last s eight eight months

play28:54

yeah so so so I think that's one of the

play28:56

other factors that we've seen it play

play28:57

there that that that that sort of

play28:59

changed the market Dynamic from what

play29:00

we've seen the last few years now I

play29:03

think you know at some point that that

play29:05

that that plays out there's only so high

play29:08

Bitcoin and you know now ethereum and

play29:10

those sorts of really valuations can get

play29:12

versus the rest of the space um before

play29:15

you see those sorts of valuation gaps

play29:17

close but again I come back to my other

play29:19

point that takes patience I mean we look

play29:20

at the altcoin space um and in

play29:23

particular some of the sort of key key

play29:25

defi coins and there's an index of about

play29:28

the 12 kind of core defi apps that have

play29:30

been around since you know since 2020

play29:34

2021 and so they have good track record

play29:36

of you know generating users and

play29:38

revenue we look at we we look at that

play29:41

that that that that subset that covers

play29:43

you know all sorts of that sort of defi

play29:45

activity um we we look at their their

play29:47

revenue generation so this is revenue

play29:49

that could go to token or fee generation

play29:51

that could go to token holders they've

play29:53

grown that by four to 5x from that FTX

play29:57

Gap so from the bottom the market in

play29:58

2022 so they've grown daily uses they've

play30:02

grown Revenue sort of you know 4 500% or

play30:04

four or 5x from that period over that

play30:07

same period and you know adjusting it

play30:09

for what's happened in the last 24 hours

play30:10

their prices are flat right so you've

play30:12

seen the fundamental side of the sort of

play30:16

the non Bitcoin crypto sphere sphere

play30:19

actually do keep up its turns with

play30:21

bargain know they've generated the users

play30:23

they've generated incredible Revenue

play30:25

growth and these numbers are getting

play30:26

pretty close to alltime high right we're

play30:28

getting close to 2021 peaks in terms of

play30:30

that fee generation token price has done

play30:33

nothing now should the token price have

play30:36

matched that Revenue growth um to a

play30:38

degree well you got to have you know to

play30:40

use a trfi term multiple sort of

play30:42

recalculations in that as well but from

play30:44

all the metrics we look at you know from

play30:46

a fundamental perspective crypto

play30:47

Market's healthy across the whole sphere

play30:50

it's it's attracting users it's it's

play30:52

generating the revenue the token prices

play30:54

lag but at some point that's kind of got

play30:57

to give you know when you're getting

play30:59

tokens that are doing BuyBacks of 25% of

play31:02

their tokens in a year or paying cash

play31:04

yields of 20 plus percent there's only

play31:07

so long that those sorts of things can

play31:09

be sustained before people start to see

play31:11

that sort of value you know one of the

play31:13

things there was you know Kobe on on

play31:15

Twitter he was one of the things he

play31:17

mentioned was and that made me stop and

play31:19

think he's like well I don't think the

play31:22

altcoin bare Market has finished yet and

play31:26

if you go back and look at 20

play31:28

2017 olds didn't bottom until I'm sorry

play31:31

you know 2016 the market bottom but

play31:34

2017 olds bottom so a year later so the

play31:37

equivalent of 2025 this year uh also in

play31:40

2020 the same thing they bottomed later

play31:44

before after Bitcoin so maybe there's a

play31:47

delay in alts versus Bitcoin by maybe 12

play31:51

months and maybe that that is something

play31:53

we haven't kind of factored in yeah if

play31:56

we look at uh 2019 2020 you had some

play31:59

kind of false starts where you had some

play32:01

kind of

play32:03

initial uh sort of your layer ones come

play32:06

come to the market toward the 2020 2019

play32:08

early 2020 they got some pretty

play32:11

substantial kind of market upticks and

play32:13

some of that sort of ped out I think the

play32:16

the thing that really sort of drove the

play32:17

altcoin space um and it comes back to

play32:20

the fundamental point I was just making

play32:21

was really the the the launch of

play32:24

defi at a at scale where they started to

play32:28

see you know we saw compound come to

play32:30

Market you saw saw RVE and other players

play32:32

come to Market start to use tokens to

play32:34

bootstrap a protocol start to see quite

play32:37

enormous sort of growth amongst users

play32:39

and tvl and start to see some sort of

play32:42

real fundamental growth and that starts

play32:44

to drag Capital away from the luxury of

play32:47

just sitting in Mages and trying to get

play32:49

beater into this sort of high gr sphere

play32:51

and I think that's what gets the altcoin

play32:52

market going it's got a you know we're

play32:54

not we we try not to be too passive and

play32:57

think thinking about what can drive

play32:59

prices in the altcoin market it's not

play33:01

just a you bitcoin's gone up a lot I'm

play33:03

going to allocate to altcoins altcoins

play33:06

they're a smaller higher risk less less

play33:08

liquid investment they need to demand

play33:09

that investment so they need to actually

play33:11

perform to grab that capital and we saw

play33:14

that in defi summer as it's

play33:16

affectionately known back in 2020 as

play33:19

they started to see huge user growth out

play33:21

of conent zero right you started going

play33:23

from sort of four users to 10,000 users

play33:25

to 50,000 users over a few weeks and

play33:28

that starts to demand investment as

play33:30

opposed to just a passive reallocation

play33:32

and I think that's what gets altcoins

play33:34

going they need to demand that

play33:35

investment now I think the difference

play33:37

we're kind of seeing this time in the

play33:38

way we see we're starting to see it out

play33:40

from a financial perspective they're

play33:42

starting to demand investments just

play33:43

given some of the metrics that are on

play33:45

offer for some of these more mature

play33:47

protocols that have been around in the

play33:49

market for sort of four or so Years

play33:52

also if you speak to younger people in

play33:56

this space

play33:58

the more Bitcoin goes up and the more

play34:00

you see this lag of

play34:01

alts the more they say well what's the

play34:04

point of owning Bitcoin ethereum salana

play34:07

I can't make the

play34:08

returns because they you know they're a

play34:11

30 32y Old they've got $10,000 saved up

play34:15

they like a three or 4X in Bitcoin just

play34:18

doesn't move the dial from me I can't

play34:20

buy a house I can't do anything and you

play34:21

and I talked about this a bit in

play34:22

Australia is like they they're forced

play34:24

out the risk curve um which is why memes

play34:27

have been so big but once alt start to

play34:29

move it it feels like that Capital gets

play34:33

recycled into those yeah I think that's

play34:36

the difference this time around like

play34:37

traditionally we would have seen with

play34:39

the strong Bitcoin runs we would have

play34:40

seen D5 or you know for this cycle AI

play34:43

coins or whatever it may be attract a

play34:46

lot of that Capital looking for that

play34:47

sort of higher risk higher return today

play34:50

to your point it's gone down in that

play34:51

mcoin space where you can get that five

play34:54

or 6X in a few days now that comes with

play34:56

all sorts of other risks and all sorts

play34:58

of things that you know everyone's going

play35:00

be aware of but that has been one of the

play35:02

differences this time that's attracted a

play35:04

pretty substantial amount of capital now

play35:06

the one thing I would say is as you've

play35:08

started to see that get more attention

play35:11

as you've started to see more kind of

play35:13

celebrity coins and those sorts of

play35:14

things I think that Runway and that

play35:17

mcoin space where it was pretty open to

play35:20

some good traders that made some

play35:21

Sensational returns and you know credit

play35:24

to them for taking that risk and you

play35:26

know sort of taking you on that

play35:27

marketing getting you that sort of

play35:28

short-term specialized skill to pick

play35:30

those sorts of coins that it

play35:32

differentiate that's we're starting to

play35:34

see that sort of slant a little get

play35:35

little way little way against those

play35:36

investors there as you start to see more

play35:38

sort of inside of returns coming to that

play35:40

market so yeah have you would be you

play35:43

start you start to see some of the

play35:44

Returns come out of that you start to

play35:45

see retail investors looking for

play35:48

probably a little bit more lower risk a

play35:49

little bit more sort of a something that

play35:52

a little bit more tangible that starts

play35:53

is not so T against them as that mcoin

play35:55

market seems to be trending towards the

play35:57

mar don't forget it was a year ago much

play36:00

easier there was Bonk there was a there

play36:01

was like 10 you know new mean coins

play36:04

there was the old ones from the old

play36:05

cycle and then suddenly pump. fun comes

play36:09

and there's 10,000 a day being

play36:11

launched right and then it becomes

play36:13

impossible good for salana of course

play36:15

great for salana this is an attention

play36:18

economy game right and there's a fixed

play36:21

amount of attention yes the space is

play36:23

growing but right now we still don't

play36:25

have that many new entrance into the you

play36:28

know physical coin Space versus ETFs so

play36:31

the more coins you give the harder it is

play36:33

to focus attention so the harder it is

play36:35

to capture value when there's very few

play36:37

and people go oh this is a fun idea they

play36:39

all do well so you know you're you're

play36:41

trying to divide divide attention which

play36:43

is a finite resource only driven by the

play36:46

number of new people in the space or

play36:47

people yeah you get the you get the

play36:49

anomaly like in the mcoin space where

play36:51

you get stuck in in Sniper Bots and it

play36:52

goes from owning the right main coin to

play36:54

owning it first and getting out of it

play36:55

almost instantly right so you you create

play36:58

sort of micro attention periods even as

play37:01

a sort of another layer on top of that I

play37:04

think you know you do get that sort of

play37:06

that that velocity in that space that

play37:08

people sort of Crave in crypto that

play37:10

they've traditionally wanted from the

play37:11

altcoin space but yeah to your point

play37:13

you're starting to see that over Supply

play37:16

and to be honest that's you know that's

play37:17

that's that's a bunch of the story we're

play37:19

starting to seeing the altcoin space as

play37:21

well you we we've already spoken about

play37:24

the what I'd say is the underallocation

play37:26

into the liquid space V is a VC space

play37:29

which has driven that you know VC coins

play37:31

effectivity of VC coins and tokens come

play37:33

to the listed Market at some point in

play37:34

time um and so when you've got a $60

play37:37

billion Market trying to sell into a

play37:39

market where you've got 10 to 20 billion

play37:41

dollar of allocated capital A lot of

play37:43

that isn't even net long you can start

play37:46

to see what's going to happen right and

play37:48

so you're seeing the same Dynamic play

play37:49

out even in the altcoin space as a mcoin

play37:51

space there's just too many alts for too

play37:53

little Capital now as I mentioned

play37:55

there's two there's two ways that fixed

play37:58

you allocate more Capital to that space

play38:00

or that space gets vastree valued that's

play38:02

that new coins coming out and that's

play38:04

what we've probably seen over the last

play38:06

sort of 12 months or so we've seen a

play38:07

dramatic revaluation in Bitcoin in some

play38:10

of the majors and we've seen the alts

play38:12

that over Supply push the value of alss

play38:15

down and we're starting to see levels

play38:16

now where we're starting to see that

play38:18

sort of fun fundamental value come

play38:19

through yeah because I mean there is a

play38:21

limit to the number of layer twos

play38:24

because I mean what's the difference

play38:25

between one to the other it's you know

play38:27

we starting to see that narrative coming

play38:29

at first people like well let's see how

play38:30

these layer twos are going to be valued

play38:32

Etc the first round Matic and stuff from

play38:35

last cycle did pretty well and then

play38:37

they've just been nuked to death because

play38:40

these are kind of infant replicable

play38:43

things right yeah and I think the you

play38:45

know it needs to the markets fix them or

play38:48

heal themselves through all sorts of

play38:49

different phases and it means that you

play38:51

know VCS will start to make a lot less

play38:55

money and start to lose money on the

play38:57

next l Layer Two or the next layer one

play38:58

that they're investing and so you start

play39:00

to see the whole sort of structural

play39:02

shift in the market because I think

play39:04

today in crypto you know the the the big

play39:07

returns in the VC space which you we've

play39:09

been fortunate to to to participate in

play39:11

as well have been in picking those lay

play39:13

those those right layouts like picking

play39:16

that that salana picking that avalan

play39:19

that VC that that VC type around where

play39:21

you get those sort of your 100x type

play39:24

returns um and that playbooks played out

play39:27

probably longer than most people

play39:28

expected but I think we're starting to

play39:30

see that online now so you start to see

play39:32

the valuations come down in the liquid

play39:33

market for that next layer too and start

play39:36

to come down below the the levels that

play39:38

VC markets have funded them at and so

play39:40

you start to see less funding of those

play39:42

things happen and the market sort of

play39:43

heal themselves but it does take time

play39:46

also I I thought it was very interesting

play39:47

what coinbase did by launching Bas which

play39:50

is a layer two with no token and that

play39:53

kind of made sense to me in some

play39:55

respects is some of these things don't

play39:56

need tokens

play39:58

no and we're starting to see people sort

play40:00

of reinvent the way these tokens are

play40:02

launched you know if you look back at

play40:05

the the broad crypto environment that

play40:07

probably generated the the broadest

play40:09

spread of returns you know of retail

play40:12

versus insiders was back in the Ico

play40:15

craze of

play40:16

2017 now that had a whole bunch of other

play40:18

issues around legal risks and

play40:20

disclosures and I'm not stepping back

play40:22

from that but if you looked at it that

play40:24

was probably the most even playing field

play40:26

in capital markets across any asset

play40:28

class we've seen for a long period of

play40:30

time right like as crazy as it was you

play40:32

know retail investors were making huge

play40:35

returns and the returns they were making

play40:38

versus the Insiders in that market were

play40:40

probably the most balanced we've seen in

play40:42

the crypto market today right and now

play40:46

that's gone away for a whole bunch of

play40:47

different reasons but oddly enough that

play40:50

that that that sort of

play40:51

drove um a much more balanced Market

play40:54

where people were investing in the

play40:56

liquid Market because there was still a

play40:57

lot of valuation upside left on the

play40:59

table from those I Ico launches and a

play41:03

weird way it had got to a place in a

play41:05

very short space of time that the IPO

play41:06

Market you know where I spent spent a

play41:09

bunch of my time as well has got to over

play41:11

50 years in the equities right you don't

play41:13

list an IBO and ibos don't price at

play41:16

their maximum price they price at a fair

play41:19

price to leave something on the table

play41:20

for secondary Market investors so

play41:22

initial investors make money secondary

play41:24

Market investors who take that risk on

play41:26

day one day two and IPO generally make

play41:28

money as well and that's a much more

play41:30

conducive Capital Market to what we

play41:33

we're seen in crypto lately where either

play41:35

the Insiders W way too much money or the

play41:38

listed Market waste way way too much

play41:40

money and it's just getting that balance

play41:42

right so I think what we're starting to

play41:43

see is teams more sophisticated teams

play41:45

think about how do I approach the crypto

play41:47

market and the funding Market in a more

play41:49

balanced way that avoid some of the

play41:52

pitfalls we've seen over the last few

play41:53

years and so we're starting to see what

play41:56

we think is a trend towards more of a

play41:57

fair launch type approach you know

play41:59

something that's just really interesting

play42:01

that we're following at the moment is

play42:02

you know the rwe team launching their

play42:04

protocol AO where it's a completely Fair

play42:07

launch the team don't have any tokens no

play42:09

insiders have any tokens you effectively

play42:11

have to farm that token by giving either

play42:15

owning our weave and getting access to

play42:17

the Token or staking your e so you stake

play42:19

your e to a contract you earn AO tokens

play42:23

for doing that and the team gets to keep

play42:26

the staking rewards to effectively fund

play42:28

the development and anyone can access

play42:30

that that contract anyone can

play42:33

effectively earn those AO tokens over

play42:35

the next you know over the next three or

play42:38

four years in size by giving up the

play42:40

yield on their e to effectively earn

play42:43

them and it's a fair launch it's open to

play42:44

anyone with you know half an eth to

play42:46

10,000 eth and you know the team even

play42:49

starts with none right so you start to

play42:50

get that sort of fair open access

play42:54

allocation to anyone that wants to take

play42:56

the opportunity to get involved in the

play42:57

ecosystem and turned up and so when that

play43:00

protocol launches you're not going to

play43:01

have this Capital that's got in a much

play43:03

lower price in the prices and um is

play43:07

looking to exit um that's you got

play43:10

different sort of you know a different

play43:11

sort of risk return profile that people

play43:13

buying the sign Mark yeah and people try

play43:15

to get around this whole concept by air

play43:17

drops and kind of

play43:21

um um

play43:22

points but it it still disadvantage

play43:26

everybody and and it it it just also

play43:28

felt like what you did was rent

play43:30

attention and you didn't boot bootstrap

play43:32

most of the networks who did it people

play43:34

just went there got the airdrop dumped

play43:36

it as fast as they could did exactly

play43:38

what they accused the VCS of doing which

play43:40

most of the VCS actually don't because

play43:42

they're usually locked up but they'd

play43:44

farm this stuff figure out how to get it

play43:46

get the airdrop dump it and move on to

play43:49

the next one and it's like well that

play43:50

doesn't not work either no and then that

play43:53

start to get gamed right so I think the

play43:56

um

play43:57

yeah there's two things that make people

play44:00

committed to an investment longer term

play44:02

which is what you want when you're

play44:04

building an asset when you're building

play44:05

an ecosystem or a protocol you want

play44:07

people alongside you that are committed

play44:10

now there's two ways to be committed

play44:11

it's either capital or time capital and

play44:13

overtime right now I think the the

play44:16

problem the airdrops faced was that made

play44:18

people committed but over a very short

play44:21

period of time and so attention just

play44:23

moved to the new new thing as soon as an

play44:26

air drop passed and you effectively gave

play44:28

away

play44:29

substantial quantities or ownership of

play44:33

an asset to people that were only there

play44:35

for a few weeks for a few weeks in time

play44:37

now when you're building something and

play44:40

you're a team and you've got tokens and

play44:41

you've got you've got skinning the game

play44:43

over a five year plus time frame that

play44:46

kind of doesn't make a bunch of sense so

play44:48

what I think we'll start to see is

play44:50

things where you're making that

play44:52

commitment to an ecosystem over time

play44:54

like staking capital and giving their

play44:57

return or giving up a return over a

play44:59

longer period of time to earn those

play45:01

tokens over a longer period of time and

play45:03

so you start to get alignment between

play45:05

the

play45:06

investors um and and the team and the

play45:09

ecosystem that's building that's

play45:11

building over that longer period and

play45:12

look this isn't rocket science this is

play45:14

how traditional markets have work right

play45:16

VC is make investments in traditional

play45:18

markets over five to 10 10 year time

play45:21

frames you know they go through the the

play45:24

good and the bad of building things from

play45:25

the ground up and you know that's

play45:28

traditional markets have worked out

play45:29

that's the best way to get alignment

play45:30

with capital and Builders and the crypto

play45:33

Market will get there over time and

play45:34

starting to get there out and the other

play45:37

thing is as you mentioned because of

play45:39

this misalignment between um between

play45:43

tokens that have a lot of VC investors

play45:45

that come to Market or have token

play45:47

overhangs from

play45:49

unlocks they tend to get really quite

play45:52

cheap at this point in the cycle you've

play45:54

got this hugely stretched relationship

play45:58

and for me I think the big game that I'm

play46:01

looking at is usually there's a chosen

play46:03

group of

play46:05

four you know the four horsemen the ones

play46:08

that get chosen for the next cycle if

play46:09

you remember last cycle it was avalan

play46:13

polygon Luna salana they were the kind

play46:17

of that was the big race where this huge

play46:20

gains CU they got sold off they were all

play46:22

like eth was sold off as soon as it had

play46:25

its um Ico as well they came off like

play46:28

70% they kind of stabilized and then as

play46:31

the market regime changed the capital

play46:34

came in I'm really eyeing kind of I'm

play46:37

doing a lot of charts of One Versus

play46:39

another trying to figure out okay what

play46:40

is strong once you filter out Market

play46:42

movements but that feels like that's a

play46:44

big game and it feels like it's probably

play46:46

a layer one game because they're bigger

play46:48

sure there's going to be other stuff

play46:49

we'll talk about the other stuff in a

play46:50

sec but how do you see that layer One

play46:53

race I mean do you agree with that

play46:54

thesis that there is probably going to

play46:55

be another group um my current view is

play46:59

it's probably and again I don't know

play47:01

don't really have don't really have an

play47:03

Insight but I'm guessing it's something

play47:05

like Avalanche even though it's last

play47:07

cycle token they seem to be doing

play47:09

interesting stuff um s an atos because

play47:13

they are you know a whole different kind

play47:15

of ecosystem but all all of these have

play47:17

this kind of high LDV low you know low

play47:20

float um I think monad has not not come

play47:24

to market yet that's another one U Maybe

play47:27

I don't know what do you what do you

play47:28

think is what do you think is this this

play47:30

race and again it's very early to pick

play47:32

it so I'm not holding a gun to your head

play47:33

but what's your hunch yeah I think we we

play47:36

look at ler ones as a um we've always

play47:38

had a view that there's going to be a

play47:40

number of what we'd say a multi-trillion

play47:42

dollar layer one protocols now how big

play47:46

that number is I think is a harder thing

play47:48

to predict but when you think but

play47:50

they're but they're going to offer

play47:51

different things right they're going to

play47:52

offer different opportunities different

play47:55

they're just decent centralized

play47:57

businesses that sell block space yeah so

play47:59

they need to have something that's

play48:00

unique about that block space either

play48:02

it's you know speed of transactions it's

play48:04

security whatever it may be it's

play48:06

language on them whatever it may be so

play48:09

you know we've always taken a view that

play48:11

there's going to be multiple

play48:13

multi-trillion dollar layer ones um

play48:15

they're all going to find some area

play48:17

where they have a comparative

play48:20

advantage that comparative advantage is

play48:23

going to lead to more and more apps and

play48:25

use cases being built around that and

play48:28

that's going to crowd out other use

play48:30

cases and you know we've already seen

play48:31

that play out I would suggest between e

play48:35

ethereum and salana you know it's it's

play48:38

not you know it's not a coincidence that

play48:42

the pump dot farm and all the mean coin

play48:44

activities happened on salana versus

play48:46

ethereum because it's a it's a fraction

play48:49

of the price to do that on Solano versus

play48:51

ethereum now that's not a bad thing for

play48:54

Sol not a bad thing for ethereum it just

play48:56

means that ethereum has become more

play48:58

valuable to people like us that are

play49:00

moving millions of dollars around in a

play49:03

transaction right and we're happier to

play49:05

pay the higher fees although that's been

play49:06

addressed a little bit by layer TW but

play49:09

we're happier to pay the light the

play49:10

higher fees for the security and that

play49:13

that comes with ethereum but then that

play49:15

left the door open to Someone Like A

play49:16

salana to grab that you know initially

play49:19

that nft Marketplace and now that mcoin

play49:22

marketplace where you've got that sort

play49:24

of Rapid transaction speed and that

play49:26

launch capability to launch tokens at a

play49:29

at a minute fraction to what it was on

play49:31

ethereum and so salana has grabbed that

play49:33

market from ethereum now that's not you

play49:36

know that just plays into our thesis

play49:38

that there's not going to be a chain

play49:39

that's you know everything to everyone

play49:42

they're going to find this specialist

play49:43

use case that use case is going to

play49:45

become successful that's going to grab

play49:47

all that block space that you talk about

play49:49

and dominate that block space and Crow

play49:51

out other use cases and those use cases

play49:54

will find another another chain that

play49:55

suits the purpose they want yeah and and

play49:58

my view is this space is you know $2

play50:01

trillion today after the selloff um and

play50:04

I think it goes to 100 trillion that's

play50:05

just extrapolating out the log trend of

play50:07

adoption or just the market cap total

play50:10

market cap chart put it on the log scale

play50:12

put a regression on it it guess 100

play50:14

trillion by let's say 2032

play50:16

2034 so you can see the space is still

play50:20

player versus player a lot they're like

play50:22

oh my God sana's robbing

play50:24

ethereum it's not the whole thing is

play50:27

going to explode so as you say there's

play50:29

plenty of space for five six seven

play50:32

multi-trillion dollar ecosystems yeah

play50:35

we've never we've never seen the we've

play50:37

never adopted the you know ethereum

play50:39

killer or Bitcoin killer type approach

play50:42

to anything because I just think it's

play50:44

the wrong mindset um I you know we we

play50:47

have exactly the same view as you that

play50:49

this asset class is growing Way Beyond

play50:51

anything it's at today which means that

play50:53

you know you know Rising tide can float

play50:56

or votes it means that you know salana

play50:58

and ethereum can definitely win together

play51:00

it doesn't mean you know the P the

play51:02

player versus player is the interesting

play51:03

thing and you know to degree that

play51:05

actually plays in the favor of crypto

play51:06

around you know that whole ecosystem

play51:08

building having people that are

play51:10

passionately focused on one asset or one

play51:12

ecosystem actually is you know

play51:14

advantageous to that ecosystem but from

play51:17

a purely Financial perspective doesn't

play51:18

mean one fails or the other prospers

play51:21

because I just think this space is too

play51:22

big to be CED for by one one protocol I

play51:26

mean we're starting you see a whole

play51:27

bunch of consumer apps start to come to

play51:29

Market start to get that sort of

play51:31

traction that we haven't seen previously

play51:33

in crypto and that opens a new

play51:35

opportunity for new layer ones you know

play51:38

we're we're sizable investment across

play51:40

our firm in year for example which is

play51:42

started see real sort of uptick on that

play51:44

consumer app level that we haven't seen

play51:45

in crypto before you know and that's a

play51:48

new market that we think you a ler one

play51:50

AER one can grab that some of the some

play51:53

of the players like a salano or ethereum

play51:55

don't don't have or probably probably

play51:57

won't grab it this more given the use

play51:59

cases they're chasing so you see new

play52:01

opportunities come along and you see new

play52:03

protocols like a year or a telegram or a

play52:06

ton open network start to grab those

play52:08

opportunities and that doesn't mean that

play52:10

takes growth away from salana or etherum

play52:13

at all it just means that you're

play52:14

broadening the market and I think as you

play52:16

know as investors in crypto and as in

play52:19

people that also passionately want

play52:20

crypto to succeed and blockchain

play52:23

Technology to get to where we wanted to

play52:24

get to that's what you want to see you

play52:25

want to see a broad B based growth

play52:27

across multiple protocols and across

play52:29

multiple apps that have different use

play52:31

cases so any other layer ones that are

play52:34

on your radar screen that might

play52:36

participate you talked about ton uh

play52:39

you've talked about neara anything else

play52:41

that's kind of on your radar screen yeah

play52:43

outside of the outside of the I guess

play52:45

the recognized Mages they're the two

play52:47

biggest Investments that we've got at

play52:49

this point in time they're the ones that

play52:51

we think bring something differentiated

play52:52

to crypto outside of the outside of the

play52:56

Salan an ethereum um you know telegram

play52:59

is a is a unique approach in crypto you

play53:03

cryptos generally build the tech and

play53:05

they will come type approach right and

play53:07

and you know some something like ether

play53:09

has been incredibly successful at doing

play53:11

that um but that's a very different

play53:13

approach to the telegram where you've

play53:15

got this you know billion plus user

play53:18

ecosystem with a chain now getting

play53:20

introduced to that so it's the other way

play53:22

around right like let's grab the users

play53:25

from an existing EOS system onto a

play53:27

protocol which is something that crypto

play53:29

hasn't had

play53:30

before um given the amount of

play53:32

bootstrapping that's gone into the tech

play53:34

today and we think that's a super

play53:36

interesting opportunity we also think

play53:38

with the way a lot of the consumer apps

play53:40

are going and even the way a lot of the

play53:41

trading apps are going you know the

play53:42

things like banana gum bot and and uni

play53:45

bot and some of those other trading Bots

play53:47

which are pretty incredible technology

play53:49

you're starting to see that sort of that

play53:51

that sort of crossover between web to

play53:53

Consumer apps like a telegram into the

play53:55

crypto system sphere and you're starting

play53:57

to see a much more seamless user

play53:59

experience around that whole let's get

play54:02

users across to crypto without having to

play54:06

interact with the Ledger that's in the

play54:07

vault that he talk about right start to

play54:09

get those clicks down to a more web to

play54:12

type basis start to reduce that friction

play54:15

which has been one of the key issues I

play54:17

think that crypto's had in terms of

play54:19

getting those new users onto onto

play54:20

platforms and we're starting to see

play54:22

things like Telegram and things like

play54:24

some of the consumer apps starting to

play54:26

abstract away that crypto thing that

play54:28

that crypto part finish your crypto part

play54:31

of the equation and use crypto what it's

play54:32

good for processing transactions

play54:34

providing security moving value at high

play54:37

speed but let's make a web 2 interface

play54:40

or let's use an existing Web Two

play54:42

interface to bring that you that

play54:45

usability to it to a whole new user

play54:46

class of people and that's how you get

play54:48

to the billions of users as opposed to

play54:50

to the millions and tens of millions the

play54:52

other one that I thought was a was a

play54:54

great breakthrough for the industry was

play54:57

poly Market it's just a beautiful

play54:59

application that nobody knows really or

play55:01

cares that it's on blockchain and it

play55:04

works exactly as it should and it's

play55:06

captured the world's attention and

play55:07

people don't even know it's crypto yeah

play55:09

I think that's what that's what we get

play55:11

most excited about when people are

play55:13

starting to use use

play55:16

applications for their solely for their

play55:18

utility and it's got nothing to do with

play55:20

it having anything to do with crypto or

play55:22

anything to do with an underlying coin

play55:24

or whatever it may be they're using it

play55:26

because it delivers more utility than

play55:28

the web2 version that they've been using

play55:30

and so things like things like poly

play55:32

Market yeah which prosers because of the

play55:34

utility off has got nothing to do with

play55:36

the fact that it's using crypto it's

play55:38

kind of like the the Holy Grail right

play55:41

what we want to see there's a there's

play55:44

investment we've got on the VC side in a

play55:45

small messaging app called session um

play55:49

which has you know over a million users

play55:51

today um growing at sort of getting

play55:53

100,000 downloads a week out of the app

play55:55

out of the App Store

play55:57

and you 80% plus of the users have no

play55:59

idea that it has anything to do with

play56:00

crypto you know it offers a messaging

play56:02

app that's just got far better security

play56:06

because it uses a decentralized NW

play56:09

Network to deliver those messages so

play56:11

it's effectively completely private and

play56:13

untraceable and so it's offering a

play56:15

solution better than an open source

play56:16

solution like signal with better

play56:18

security um with functionality that's up

play56:21

there with web2 functionality and you

play56:22

don't have to know anything about crypto

play56:24

to use the app you download it from a

play56:26

App Store just like you download signal

play56:27

and you can use it just like you can use

play56:29

signal and it's using web 3 to deliver

play56:32

the

play56:33

security benefit that you can't get in a

play56:35

web3 environment and that's what we need

play56:37

to see more apps like that that sort of

play56:39

have web3 under the hood and deliver the

play56:42

benefits of web 3 without making users

play56:44

go through a whole lot whole new gates

play56:45

to sort of get that utility so on the VC

play56:48

side are you seeing less deep Tech and

play56:50

more application stuff or is it still

play56:53

more Tech infrastructure and still less

play56:56

applications because we're kind of

play56:58

waiting for this applications layer yeah

play57:00

I think we're starting to see a little

play57:01

bit more on the application layer I

play57:03

think we're starting to see that cycle

play57:04

play out like I mentioned earlier

play57:06

because the returns from sort of deep

play57:08

Tech um are rapidly reducing right and

play57:11

so the VC Market starts to get more

play57:13

sensible about how they allocate Capital

play57:15

you know the next you know creating a

play57:17

layer three or a layer four isn't the

play57:20

easy money that people started to think

play57:22

it you know started to think that it was

play57:24

right and so you start to see overtime

play57:26

turns force that Capital to look for

play57:29

look for Investments that offer better

play57:31

risk rewards and we see that more in the

play57:32

application space to be frank on the on

play57:34

the VC side now where we're starting to

play57:37

see apps you know like the ones I

play57:38

mentioned where they're starting to get

play57:40

sort of tens of thousands hundreds of

play57:42

thousands millions of users trading at

play57:44

Material or or raising Capital at you

play57:46

know vastly discounted valuations versus

play57:48

anything in the protocol space so from

play57:50

our perspective that's that looks like a

play57:52

much better risk reward bet for us on

play57:54

the VC side now we're not seeing as much

play57:56

of it as we'd hope to see at this point

play58:00

but I think that's driven by success we

play58:01

just need a few of these apps to get the

play58:03

sort of the returns to the investors and

play58:05

the founders that we think they'll get

play58:07

over the next one to two years and then

play58:08

that

play58:09

drives that drives part of that

play58:11

allocation and part of those Founders

play58:12

just F focus more on those apps and get

play58:14

that sort of success and it only takes

play58:17

you know you see it in crypto all the

play58:19

time right like you see one D app like

play58:21

compound suddenly bootstrap users out of

play58:23

nowhere and it drives a whole sort of

play58:25

vertical in the space it only takes one

play58:27

of those success you see something like

play58:29

an axi come out of nowhere with users

play58:32

from sort of zero to gazillions

play58:34

overnight and it drives the whole sort

play58:36

of gaming allocation both at a VC and a

play58:39

liquid space so you just need those

play58:40

success stories I think to sort of show

play58:42

that show that what could be achieved

play58:43

and capital follows I think one of the

play58:46

things that you know I follow from from

play58:49

people that I know is I think there are

play58:52

some very big game launches coming I

play58:55

think Off the Grid is the first one

play58:56

that's probably this month um which

play59:00

these are kind of AAA Ultra good games

play59:04

and that becomes if anybody has a

play59:07

breakout in that that's very interesting

play59:09

because obviously the user the size of

play59:12

the number of users for a big game it's

play59:14

not an easy game in itself to launch

play59:16

games you it's pretty difficult thing

play59:18

but if you get it right somebody's going

play59:20

to really bootstrap a network

play59:22

unbelievably on this yeah I think yeah

play59:26

you basically got people taking two

play59:28

approaches right like it's take the

play59:29

traditional approach of building a a

play59:33

game that's competing with a web 2 game

play59:36

today but uses crypto for that sort of

play59:38

value transfer or functionality that you

play59:40

can't get in the world Garden approach

play59:42

of most with two games today and I think

play59:45

that's super interesting and and like

play59:46

you we're waiting to see the the game

play59:49

that kind of sort of cracks that nut and

play59:52

that's the you know that's where a lot

play59:53

of the capital's gone in the VC space

play59:55

when you look over over the last two to

play59:56

three years so we'd expect some big

play59:58

Winners to come out of that but you know

play60:00

like developing games in a web to space

play60:03

or movies when you step further back Pi

play60:05

wi it's h you know one of the one of my

play60:08

earliest memories from uh banking days

play60:11

is listening to our our analyst who was

play60:13

covering News Corp at the time come in

play60:16

and give the download to the morning

play60:17

meeting about what a massive flop News

play60:19

News Corp had wasted billions of dollars

play60:21

on called

play60:22

Titanic um and how this movie here just

play60:24

being to like the pre screening as one

play60:26

of the analysts was going to be the

play60:28

biggest fire year in in movie history

play60:31

right and it ended up being a massive

play60:33

money spinner and you know really smart

play60:35

guy sophisticated guy covering you he

play60:37

was a top rated media Analyst at the

play60:39

time but it just goes to show how hard

play60:41

it is to pick winners when you start to

play60:43

get into that kind of artistic type

play60:45

overlay into the investment space I

play60:48

think one of the other interesting

play60:49

things is games that have taken the

play60:51

other approach that have taken a much

play60:52

more crypto specific approach crazy

play60:55

thing like you combat hamsters and those

play60:58

sorts of things where you're getting

play61:00

like you hard to verify these numbers

play61:02

but you're getting tens up to hundreds

play61:03

of millions of users that are coming out

play61:06

a much more crypto Centric type approach

play61:08

so I think you know we're we're starting

play61:10

to see two kind of valid options come

play61:13

here one takes a one takes a more

play61:15

traditional approach and sort of bolts

play61:17

on crypto in a in the way that it can

play61:20

add utility to an existing Avenue and

play61:23

vertical the other ones taking a more

play61:26

traditional crypto sort of off the- wall

play61:28

the pro let's come up with a game where

play61:29

you got to click a screen to effectively

play61:31

earn something over time and that's

play61:34

bootstrapping yeah but we seeing those

play61:36

can be very fleeting right they're

play61:38

almost payto playay you kind of do it

play61:41

cost you money you get a bunch of users

play61:43

and they off to something else so

play61:45

it's kind of but I mean that's the

play61:46

challenge for the developers right can

play61:48

they then develop that game into

play61:50

something that becomes more sticky so

play61:52

you've got the audience and you know as

play61:53

we know getting the audience is

play61:54

generally the hard part

play61:56

so that's can someone you know someone

play61:58

can someone again crack that n off you

play62:00

know I've got these tens of millions of

play62:02

users from clicking the screen can the

play62:04

second iteration of this game now hold

play62:06

them yeah and you know someone will get

play62:07

that right as well right someone someone

play62:09

will get that next iteration of that

play62:11

game that'll become the next Candy Crush

play62:14

so what other sectors interest you right

play62:17

now I know this might change you know B

play62:20

you know what what are you kind of

play62:21

focused on in other sectors thinking

play62:22

this opportunity yeah I think we started

play62:25

off as uh

play62:26

um particular looking a year or so back

play62:28

pretty skeptical around Ai and the

play62:31

crypto o overlap um I think when we look

play62:35

forward sort of five to 10 years we

play62:37

could absolutely see that that we could

play62:39

see the the two coming together I mean

play62:42

you you start to think about agents

play62:43

operating in a digital world you agents

play62:46

aren't going to be sending Swift

play62:47

transfers right so you you yeah it's

play62:50

natural that when you start to operate

play62:52

you know at a autonomous level at

play62:55

digital speeds that crypto is going to

play62:57

play a part in that I think we became

play62:59

more skeptical when we started to see

play63:01

some of

play63:02

the shorter term sort of use cases on

play63:05

the radar around you know the ones that

play63:07

could use you know kind of more the

play63:09

models in AI space today um and overlay

play63:13

that with crypto just given you know the

play63:15

amount of capital in some of the

play63:17

traditional players and the amount of

play63:19

growth they were starting to see I think

play63:21

where we got a little more excited is

play63:22

where we started to started to see two

play63:24

things happen firstly the use cases and

play63:26

some of the entrepreneurs we talk to

play63:28

come up with more sort of tangible

play63:30

shorter term you use cases around AI

play63:33

that made sense to us and we started to

play63:36

see which I think was interesting on the

play63:37

traditional side some pretty big

play63:39

missteps from some pretty big players

play63:41

you know people like Google you we also

play63:44

around their sort of um their image

play63:46

generation and those sorts of things

play63:48

starting to skew their AI down avenues

play63:51

that sort of started to show that there

play63:54

was a place for open source and

play63:57

verifiable type attributes to play in I

play64:00

AI you know where people could actually

play64:02

understand the model they were using and

play64:05

understand the output was coming from a

play64:06

model that they understood was unbiased

play64:08

or giving the results that they wanted

play64:10

to see they wanted to see unfiltered um

play64:13

and I think we didn't we didn't we

play64:15

thought that use case would come over

play64:17

time I think it's going to come faster

play64:19

than we thought just given some of the

play64:20

missteps made on the made from some of

play64:22

the traditional play where in arvie

play64:24

they've kind of sh shot themselves in

play64:25

the foot to a degree it open the door

play64:27

for new players so just to summarize

play64:31

because we've been talking for an hour

play64:32

already I can't believe it where's the

play64:34

biggest position your portfolio knowing

play64:35

that it may change tomorrow or it may

play64:37

not or whatever but where's the where

play64:38

where's your concentration of position

play64:40

you know what what are the the names

play64:41

that that you're mainly focused on

play64:44

obviously you look at a lot of stuff but

play64:46

just the general direction yeah look I

play64:49

think we've um uh we've actually our

play64:52

biggest position across the f is in

play64:53

Salah and we've we've done that um

play64:56

basically if you look across crypto at

play64:58

this point in time growth at most points

play65:01

points of time growth is getting reward

play65:03

growth in users gets rewarded and that's

play65:05

where Sal wins at this point right um

play65:08

fees and revenue and those sorts of

play65:10

things we think uh ultimately will drive

play65:12

Vue longer term but at this point where

play65:14

we're at in the market as users that

play65:16

have been driving growth and when we

play65:18

look across the CH very active users and

play65:20

they're very active on Solana right yeah

play65:23

and and and so the three you know three

play65:25

the bigger positions we go across the

play65:27

firm are the three that have got the you

play65:29

know the growth in daily daily users and

play65:30

monthly users that's salana that's year

play65:33

and that's Telegram and that's what the

play65:35

market at this point rewards so when we

play65:38

we spoke about earlier around those sort

play65:40

of 10 or 11 defi apps and how they've

play65:42

grown Revenue by 3 four 5x but their

play65:45

prices are basically

play65:46

flat you know so Revenue tvl those sorts

play65:49

of things aren't getting rewarded what

play65:51

is generally getting rewarded is users

play65:54

and that's the one metric that we follow

play65:55

that has get has been rewarded with

play65:57

price and that was I mean that when you

play65:59

go back to your TMT days the early stage

play66:01

of the Internet Was the Same it was used

play66:04

first and then eventually business model

play66:07

gets the reward in the end wins the game

play66:10

yeah and I think that's you and so it

play66:13

makes sense that investors are

play66:14

allocating capital and rewarding that um

play66:16

given that they're the chains that got

play66:17

momentum and that's what people want

play66:19

they want to see growing ecosystems they

play66:20

want to see chains that are attrac

play66:22

attracting that sort of you triple digit

play66:24

us a great level and there's a bunch of

play66:26

protocols out there that you know have

play66:28

reached all-time highs in their in their

play66:31

user levels sort of month- on month as

play66:33

we see here even in July as prices are

play66:35

trading in a fraction of their all-time

play66:37

highs so that's when value starts to

play66:39

emerge so you know three of the biggest

play66:41

positions we got across the firm salana

play66:43

and Nia and telegram for that reason

play66:45

they're the ones that have got user

play66:46

growth outside of that new protocols

play66:49

coming to Market AO is one that we're

play66:50

excited about and so we we hold a bunch

play66:52

of our weave to effectively get access

play66:55

to that you know it's a fair launch it's

play66:57

doing an approach that we think can see

play66:59

a token grow over time in a much more

play67:02

traditional Fair Way without that sort

play67:04

of VC Dynamic and overhang that we've

play67:06

spoken about and it's interesting Tech

play67:08

focused on new use cases and so we own

play67:10

our weave to get that and we also use

play67:12

some State uh State death to earn that

play67:14

as well over time so that that's also

play67:17

bigger positions and AO will also you

play67:19

use R we on the storage site so we think

play67:21

it can drive that sort of high user

play67:23

growth high high functionality growth to

play67:25

our so we sort of win on both sides of

play67:27

that both sides of that investment if it

play67:29

plays out the way we think does the next

play67:30

12 months and are you

play67:34

thinking that we see price acceleration

play67:37

at some point relatively soon you know

play67:40

relatively soon meaning next two to

play67:42

three months that we start to see you

play67:45

know the more typical crypto price

play67:46

action for you know that kind of

play67:48

election period postelection period how

play67:50

are you thinking about that in terms of

play67:51

structureal prices going forwards again

play67:53

not talking about Market timing but just

play67:55

talk about overall

play67:56

structure yeah I think we um look

play67:58

there's a lot of there's a lot of

play68:00

factors I didn't say the word banan Zone

play68:01

but you know you know what I

play68:03

meant yeah I think we uh look I think

play68:06

the name of our game is to be patient

play68:08

right so you know we remain supremely

play68:11

confident that that that you see a vast

play68:14

revaluation of the space um over the

play68:17

medium term whether that's three months

play68:19

six months one year it's hard to be

play68:22

there's a lot of factors outside of

play68:23

crypto's control right you've got us

play68:25

presidental

play68:26

elections are playing a big part in you

play68:28

know price direction of crypto now more

play68:29

so than never before right and that's

play68:32

clearly something that well apart from

play68:33

the money that crypto is giving Which

play68:35

does influence to some degree that's

play68:36

clearly something that's out of all of

play68:38

our control right and but it's going to

play68:39

have a big influence on on which way

play68:41

crypto trades we're seeing things on the

play68:43

macro Market particularly last 24 hours

play68:45

which which might change the sort of

play68:47

short sh short-term liquidity profile

play68:50

materially and that could sort of give

play68:52

crypto a jol in one way or another that

play68:53

we can't sort of predict in the shorter

play68:55

term I think where where where we take

play68:58

comfort is when you know we see price

play69:00

moves like we we've seen over the last

play69:02

to be frank over the last six weeks in

play69:04

the last 24 hours but the underlying

play69:07

things like user growth and tvl and fees

play69:10

generation is just trending in One

play69:12

Direction One Direction only and so at

play69:14

some point as you know markets generally

play69:16

get this stuff right over medium or

play69:18

longer term so things need to fix so you

play69:21

if we were seeing altcoins trade like

play69:22

we've seen them trade or we were seing

play69:24

defi trade like we've seen a trade over

play69:26

the last 12 months but use accounts

play69:28

looked and emic and all those sorts of

play69:30

things then going be much more panicked

play69:31

than we are today but we know longer

play69:33

term these things get you markets get

play69:35

these things right over the longer term

play69:38

brilliant as over my friend really good

play69:40

to talk to um let's see how it plays out

play69:42

you've given me some stuff to think

play69:44

about this I think there's something

play69:45

really strong in what you're saying is

play69:48

some of these alts have prices near

play69:51

their lows over the cycle yet their user

play69:54

growth or other quality metrics are

play69:59

expanding I that's a really good thing

play70:01

for people to look at now the problem is

play70:03

there some of these kind of a gained in

play70:05

terms of user growth and stuff so you

play70:07

need to do a bit of work on doing it but

play70:09

I think there's something really big in

play70:11

that idea that becomes very interesting

play70:12

because this is very discounted versus

play70:16

you know as you said the the VC markets

play70:18

and other stuff Richard fantastic to see

play70:20

you and uh let's see how it all plays

play70:22

out right thanks for having me good to

play70:24

speak again

play70:25

yeah great to see you

play70:28

cheers so a fascinating conversation

play70:31

with Richard as ever we covered an

play70:34

enormous amount of ground we got out of

play70:37

him what some of his favorite tokens are

play70:39

we understand his thesis on salana and

play70:43

where the space is going overall I

play70:45

really like Richard's view that which is

play70:48

basically my view which is tomorrow is

play70:51

going to be more digital than today so

play70:53

in which case the super Trend continues

play70:55

and everything else is noise now I also

play70:58

like the fact that he's tends to be just

play71:00

a long only investor and is's looking

play71:02

for interesting opportunities as the

play71:05

markets sometimes dislocate I found it

play71:07

profoundly interesting when he's talking

play71:10

about some of these VC tokens that

play71:11

people don't like that's the narrative

play71:14

are now getting very discounted in the

play71:16

market and I see that myself in many of

play71:18

these tokens and you're start to think

play71:20

huh maybe that is interesting because

play71:24

maybe now that's been taken accounted

play71:26

for in the price and therefore there's

play71:29

big opportunities so I for one i' be

play71:31

looking for the next big trade here what

play71:33

the next big layer one is and starting

play71:35

to look at this stuff that's got pretty

play71:37

discounted you know when salana is near

play71:39

the highs many of these are near the

play71:40

lows and it's was like okay time to

play71:43

start doing some work um the good thing

play71:46

the hedge funds will get them first so

play71:48

xam should benefit from that but um and

play71:51

obviously I'm an investor in that that

play71:52

helps but I I also am intellectually

play71:54

interested in the next big trade which I

play71:57

think is coming so lots to do there

play72:01

again if you get a chance do me a favor

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um son it's a real Vision because I

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think you'll prefer the experience there

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I know YouTube's easy for you comes into

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your feed but that if you really want to

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dig in and become an expert and go on

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that Journey from um from information to

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knowledge to wisdom that's the place to

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do it we built it for you so go ahead

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