The Unknown World of Crypto Hedge Funds Exposed
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
😀 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.
🌐 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.
🤔 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.
💡 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.
🔍 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.
🚀 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.
🤝 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.
📉 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.
🏁 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.
🌟 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
💡Liquidité
💡Glissement de prix
💡Hedge funds
💡Crypto-monnaies
💡Volatilité
💡Stratégie d'investissement
💡Marché des capitaux secondaires
💡Effet de manège
💡Allocation de capital
💡Révolution numérique
💡Échange automatisé
💡Risque d'investissement
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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docomo hey everyone look sorry this is
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sorry again for the cheese but it is
important I appreciate it so much take
care hi I'm Ral pal and welcome to my
show the journeyman where I travel with
you to that Nexus of macro crypto and
the exponential age of
technology I have been in the hedge fund
industry for 30 odd years now um I've
both sold to hedge fund funds many of my
friends are hedge funds uh I've run a
hedge fund and so they're dear to my
heart I even have an asset management
company called exponential age Asset
Management xan which invests in crypto
hedge funds you see my thesis it's a
fund of funds my thesis is that if you
really want to capture the
performance of this space in cryptos it
goes from $2 trillion to1 trillion
dollar you're not going to get it all by
being just in Bitcoin ethereum or salana
you're going to have to figure out what
the next big breakouts are where the big
gains can be made where's the next 100x
and that is incredibly complicated with
the thousands of tokens that exist and
tens of thousands of memes and all the
other stuff in the space you kind of
need to rent it to
experts and these hedge funds are the
experts now what's interesting about the
hedge fund industry in crypto for me is
it's incredibly small versus the VC
industry it's about a fifth or less of
the size maybe a tenth of the size of
the VC industry there's actually not a
lot of secondary Market um professional
participants in crypto which makes it
very very inefficient which means it can
be very profitable so hedge funds can
make super normal
returns they focus all day every day 24
hours a day uh s days a week cuz it's c
crypto on doing this in traditional
markets there's about $4 trillion in
hedge funds in crypto Market it's about
10 billion i. nothing the big players
who push prices around you know some
people would say the more manipulative
players tend to be the kind of private
trading shops out of Asia they're very
big in the space then there's the market
making firms uh people like um well jump
Capital who are now moving out of the
space but there are other Market Mak
firms and then there's some hedge funds
but a lot of retail you know as retail
investors we got to front run a lot of
the money coming into the space and
that's been the gift that keeps on
giving in crypto is being aead of all
streak for once but there is a group of
hedge fund managers who really are
fabulous because they understand this
Market it's super de their job is to
find the big trades and one of my
favorite managers and as a disclosure
Pam has invested in dacm Richard galin's
firm is Richard galin he grew up as a
TMT analyst um over the tech years he
understands the technology deeply and he
runs a very large hedge fund in the
space but he's also just a brilliant
thinker and I love to sit down with
Richard from time to time pick his
brains where we are what's going on and
what we should think about so I really
hope you enjoy this conversation with
Richard Galvin now before you go I do
urge you to pop over to the real Vision
platform because a conver conversation
like this is long form there's going to
be a lot of information for you if
you're on realvision docomo
join you can then use the AI summary
that's already there once you come on
the transcript you can clip it into your
own AI or the real Vision AI That's on
platform that will help you summarize
you can you can search for the keyword
so you can understand and also so if
there's a great trade idea you can post
that trade idea on real Vision either
privately for yourself and it populates
the um the p&l to show you how you're
doing or you can make it public and
share it with others so people can see
your ideas too comment on it like it
that kind of stuff there's a lot going
on on the realvision platform there's a
lot of crypto content there that's not
on this channel so go to real vision.com
and see if you can watch this interview
there because I think you'll absolutely
be blown away by the experience anyway
let's speak to Richard
join me Ral pal as I go on a journey of
Discovery through the macro crypto and
exponential age landscapes in the
journey man I talk to the smartest
people in the world so we can all become
smarter
together Richard Galvin how the devil
are you I'm okay we live in very
interesting times yeah listen before we
get cracky into all of this just for
some people who don't know you um you
have a bit of your background what you
do now just to frame up our conversation
sure I was a banker for 20 years uh
largely TMT so Tech and TCO Banker at uh
at Goldman and JP Morgan and and started
a crypto investment management firm dacm
back in early 2017 so we've been running
institutional family offers Capital
through the crypto space for what is it
six years now and um we're we're an
investor so we run long only B NVC
strategy so we're long Market uh looking
to play the growth of long TR trajectory
growth we see over so multi think growth
in his s class and you know for people
who don't know DM is one of the larger
crypto hedge funds and one of the longer
established ones as well yeah so we run
around about 4 400 450 million of uh of
outside
Capital so look we're recording this on
a Monday it's it's Tuesday morning for
you Monday evening for me um this won't
go out till Thursday so you know we we
can't talk particularly you know in
granularity but what's your take on
what's going on in the markets right now
because it's it's actually been a pretty
crappy market for a while sideways
sloppy corrective pattern what's your
take on the on the overall market for
now before we dig into some more stuff
yeah I think one of the interesting
things we we've kind of seen this is
probably the second or third time
crypto's kind of acted a little bit like
a canary in the col line so you know as
you mentioned crypto has been weak for
you know for the last six or seven weeks
right so it's kind of in a way uh been
ahead of what we've seen over the last
24 hours in traditional markets and to
be honest we kind of saw this back in
20122 as well where crypto was kind of
weak well before we saw traditional
markets kind of fall over um I think
we've been in uh and we can talk a
little bit about this later later on as
well I think putting aside the the sort
of the short-term Market factors we can
talk about also think there's been some
structural issues in crypto over the
last 6 to 12 months and we've got a
we've got a substantial mismatch between
the capital that's in the the
pre-listing or VC Market versus the
capital that's in the listed market and
we've seen that play out particularly
around the altcoin space and then on top
of that you've seen the ETF launches
which is driven you know incredible
Capital inflows but very much focused at
that Bitcoin and now on the ethereum
level and then at the other end of the
Bel at the other end of the barbell
you've got the mcoin kind of mania so
you're in a you know you've seen some
pretty different sort of structural
flows in the way the capital's been
allocated across crypto than we've seen
probably in the last sort of six years
before that so let's talk about just how
you're navigating the current volatility
because you've been through plenty of
volatility in the past you're a long
only guy so you know this is all part of
the game uh you know you come in over
well you're looking like we all were
over the weekend and everything turns to
what do you do how do you think
about it you know what discussions you
have
internally yeah I think we've um we've
found that we've been rewarded over the
journey for being patient and I think
the crypto Market one thing it
definitely doesn't have his patience so
we generally try to stick to kind of our
knitting through these sorts of periods
and and make sure we battle test the
portfolio and everything that we own
continue to sort of test that we own it
for the right reasons and clearly owning
Assets in this market for momentum based
reasons when something like this happens
can be a disaster so we're very much
focused around what we'd say is that
sort of fundamental into the crypto
Market assets that we see can ride
through this volatility and prosper on
the other side I guess a period like
this is just a chance for us to sort of
retest the thesis on what we own and
retest the the data and the the data and
the statistics we follow to sort of get
a update on the assets and check that
everything's still in line with what we
think and then really our approach has
been long only and we're are 80% plus
long in our liquid strategies through
these periods is then just to hold our
nerves now we found through the
Journey crypto the biggest mistakes
people make in crypto generally happen
right at the top of the market and right
at the bottom of the market so we're
very disciplined on making sure that we
don't panic in these types of periods
just like we're try not to get too
euphoric on the other side of the coin
as well when things go away and I've
found sort of over these sort of six to
seven years that's the period where
you've really got to focus and stick to
your strategy strategy and your
allocation process and make sure you
don't deviate from that because it's
hard not to get caught up in this yeah
that's right and how do you know what
Market phase you're in because that's
what I find gives me the comfort is like
where are we in the market structural
phase you know in the cyclical elements
of this how how do you think about that
when it comes to testing so you'll test
your individual tokens you have we got
the right stuff do we still believe in
the thesis but then there's the market
question you know are we just stupid
what are we testing against what do you
use as a as a as kind of metrics to
measure where we are yeah I think when
we start with the the the macro tole and
I think you'd agree with all got that
we're you know we're owning digital
assets going through digital Revolution
so yeah the the the longer you the
longer you sort of zoom out um the more
comfortable you get that you're in the
right place now as you start to get onto
smaller time frames you start to get
into the questions you asking around you
where we are in that specific cycle as
opposed to that sort of
structural sort of societal change I
think we're going through over the next
10 to 15 years which is definitely in
our favor so where we're at in the cycle
I think we try not to rely too much on
the individual sort of cycle Maps um
they've been when you look back they've
actually been pretty strong in crypto
but it's Al it's it's always a risk that
things change and I think to be honest
if we look at sort of 2023 2024 it's a
little similar to sort of 2019 2020 but
it is pretty different and the portfolio
constructs we have used have been a
little different in that regard I think
we've seen a skew much more towards the
majors than we would have seen if we
tried to track it back to the previous
cycle and that's probably partly been
driven by the ETF as well but we also
have seen crypto sort of revert back to
its somewhat uncorrelated sort of uh
sort of behavior which I think is
generally our Assumption of the steady
state that in a normal Market where
tread is either not going crazy
exponential up or down crypto kind of
does its own thing and that's probably
what we've seen over the last six to n
months periods like yesterday where you
start to see substantial volatility
that's when the correlation start to
come back to normal and do you
hold Cash ever for times like this so
you you've got flexibility to add when
you get you know great prices again yeah
so we run uh up to 80% 80 we're 80% low
uh through the Journey we're probably
been sort of low
90% and we'd actually built up close to
20% cash up through sort of June into
and ahead of the sort of the crashing
July we deployed most of that capital in
early July with the market for 20% in
sort of five days which is sort of
similar levels to it's got did today um
we do do that look we take a we take a
view that when you when you sort of zoom
out from a macro level if you're in an
asset class that's got you exponential
growth potential over a 10 to 15 year
time period the last thing you want to
do is Sho yourself in the foot for by
being in and out of that asset class at
the wrong time and the other factor to
consider is crypto returns and losses
come in very concentrated periods so you
could be out of the market um for only
three or four days each year and you can
dramatic Ally reduce the returns that
you get over a 5 to 10 year period in
crypto because they the 3 to five days
where 30 40 50 60% of the use gains are
made so we've sort of stuck to that we
we extremely strong tile wind as an
asset class we know if we're in the
asset class and we make sensible
allocation decisions we can win and make
make outsize
returns will we try and smooth
volatility through that well that's kind
of undo the first point right like if we
don't get the trading right and getting
the actual trading days right is much
harder than just getting in the right
asset class it's got the toe wins behind
it so many people don't understand this
they're desperate to dampen the
volatility but dampening the volatility
risks you missing the upside volatility
and then you screwed up the whole game
yeah I think and you would know through
your history like even the greatest
Traders you can't get it right yeah are
wrong a lot of the time right and if
you're wrong those three or four days of
the year or in a couple years in row
you'll substantially hurt your returns
probably more than moving in out of the
market now I think the
general um problem a lot of people a lot
of investors have even you know at a at
a retail level up to the largest head
fund manager is to fiddle around right
because you feel as if you got to do
something um we try to sort of step back
as much as we can try to step back from
that and sort of make that sort of
decision and stick to stick to that
decision no matter what the sort of
intraday moves do and it is very
tempting to sort of play around and
around from time to time but you know we
try to stick to picking the right asset
that's where we're going to generate the
elf for beating the right assets that
can make it through these sorts of
cycles and deliver the outsid returns
over sort of three to five year view
it's interesting I have hourly charts
open next to me yet I never trade but so
I can kind of mentally trade to fight
that urge but I just don't trade I kind
of lock it away on my ledger so I can't
do anything to it because you know
you're Your Own Worst Enemy in this kind
of stuff I mean a friend of us who are W
name that we we both know very well a
legendary hedge fund manager he's like I
mean he's one of the best traders of all
time he's like I just refuse to trade
this because it's it's very hard to
trade and there's a lot of you know 22
year old kids on on Twitter who think
they're genius Traders at it but it's so
hard to trade them and my guess if you
look back and look at their returns over
a couple of Cycles they're unlikely to
be as good as just a Buy and Hold yeah I
think you and and look you find it from
the you know the greatest
hedge fund and prop Traders at
investment Banks the the amount of
people that think they're a great Trader
is quite a big population the amount of
people that are a great Trader is a
pretty small population and that even
those great Traders would admit that you
know they're wrong a lot of the time and
you know you look at crypto look at
who's made some of the most substantial
returns and if you look at sort of you
know interesting sort of Topic at this
point in time the mount g distribution
like you look at the Monstrous Returns
the people getting coins back from that
process of made just because they had no
access to their Bitcoin for like yeah
what is it almost coming up on 10 years
now and they get the full returns back
now the ones that the people that get
that opted to get coins back some of the
substantial returns they're going to
make right just because they've had no
ability to trade like you're saying
putting your Ledger in a vault making
that Vault hard to access is sometimes
the best in investment decision you can
make in crypto now we try to we try to
bring that patience to the way we invest
we're a little bit more active of course
because we're you know we're moving down
the stack a little bit where things can
go wrong or things can go right in
shorter time frames and you've also got
to make sure that you know part of
crypto is that emotion part of that is
those new trends is that new technology
that comes around so you need to live
and breathe it dayt day to make sure
you're not missing those sorts of things
and you're you're across that but it's
getting that balance right of living
that sort of day day by day Keeping Up
with the Kardashians type sort of
atmosphere in crypto but they're not
letting it not letting it over take a
sort of trigger finger on the buy and
sell bu so as a disclosure you know
exponential age asset management xam is
a an investor in your funds so just so
everybody knows that
but what what I want to understand is
why is the hedge fund industry still so
small I mean you're one of the biggest
funds there's a few others bigger Allen
how and a few others but there's not and
the others tend to have a lot more mix
of VC and other stuff in their assets
why is it so so small as an industry
compared to the kind of two two and a
half trillion asset class it is why is
that because it feels like it's a place
where you need professional Capital to
manage the kind of other stuff yes sure
we can all hold Bitcoin and a few tokens
but when it comes to navigating what's
the next big thing it's not Bloody easy
what why is that yeah I think it's a I
think it's a multi a number number of
factors both to do with the way the
capital's allocated from
uh you know traditional institutional
investors and partly to do with crypto
as well so if we step back if you look
at the allocation of capital it's vastly
gone to VC funds in crypto so if you
look over sort of 21 2022 there's about
sort of 50 to 60 billion dos went to um
went to to crypto
VC um now why did that happen if you
step back firstly there's been some
incredible returns in crypto you we run
a an early stage crypto fund as well and
there's been some insane returns in that
category you know ey watering time
returns that most people have never seen
in their life right so you've seen those
returns attract Capital the second thing
is VC funds are closed end funds closed
end funds don't Mark the market every
day like a liquid fund or every month
like a liquid fund or even every quarter
yeah it's basically locking away your
Ledger really yeah it's it's it's the
equivalent from a from an allocation
from an allocator perspective of locking
away your Ledger you're giving Capital
to a space you're not getting a month
month-by-month decision to make on
whether you you know withdraw that
Capital increase that Capital you're not
getting that month-by-month
volatility um which you've got a report
back to investment committee you're
effectively making a you know five to 10
year investment decision and you get
reporting based on that investment
decision as opposed from a month to
month and that sort of fits I think with
a the mindset particularly given the
volatility of crypto um with the mindset
of you a lot of the way capital's
allocated these days most allocators
don't want 30 40% month-on-month
changes in in the way they in the in the
funds they invest in and realistically
that's what liquid crypto can give you
through certain parts of the cycle and
the other point is you know VC crypto
fits within a VC SLE within a
traditional allocation it's it's really
just a different it can be a tech
allocation right yeah it's a different
Tech within an already existing team
that's allocating Capital to VC whereas
liquid's not it's a it's a new tech but
it's liquid so it sort of fits within
hedge funds but it doesn't but it has VC
type returns with and it has volatility
like nothing else that they've got in
their portfolio so we've seen you know
both the returns and I think the fact
that it fits neatly within an existing
sort of bucket within an allocator zones
and it's got low volatility and if
you're you're an agent allocating
Capital you know you don't want to
allocate capital and the next you know
the next five days it's now 30% in the
first five days or whatever it may be
whereas that's not going to happen if
you're in a closed in fund that's got
sort of five to 10 year view five to 10
year in reports on that basis so we've
seen outsized allocations go to that
space versus the liquid market and
liquid funds where you've seen probably
20 to 30 billion of capital go over that
same period but a lot of that capital's
then G to Market neutral in long short
funds which AR providing the same kind
of you know buying of that BC Capital as
well he everyone listen if you want
unfuck your future
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comes out see you there what do you
think my hunch is that liquid market
returns over the 10-year time Horizon
will beat VC returns because there's so
little capital in the
space yeah well I think well how does
this get fixed so you know the way it
gets fixed is either more people start
to allocate to liquid to liquid to
liquid funds that start to buy more of
those sort of coins as they coins and
tokens as they come to Market or you see
price readjustments and that's probably
partly the the second one seems to be
leading the way as we go through things
now you we're starting to see some of
the more elevated Capital raising
valuations we've seen in VC Market just
not get met by the liquid Market you
know that the the the retail investors
have moved down to mecoin land for the
time being
where they can see a more sort of hon a
more honest kind of exponential bet
where they can make it against a sort of
a fix fix Supply mcoin Market um and
you've seen a lot of those new tokens
that had come to Market had that sort of
sort of graph that we're unfortunately
all all too familiar with where they
launch at a you know very small float
very elevated you know fully fully
deleted valuation and then Trend down
over a short period of time it's it's
just not the buyers or the Capital to
support those sorts of valuations and so
we're in that sort of period now
particularly it's been exacerbated even
more over the last 24 hours where we
start to see a lot of those projects and
even some of the high quality projects
start to trade down below their sort of
last liquid of their last private
Capital rates and so you start to see
the listed Market starting to buy some
of these assets at discounts to what
that VC Market paid and that's where you
start to see I think that kind of uh
that distribution of capital start to
play out as you start to see those sort
of
valuations reig to sort of match the
capital basis that they they're faced
with my hunch is if you under allocate
to secondary markets the secondary
Market opportunities tend to be
bigger versus the crypto the the VC
because VC is overallocated so
everything goes to high valuations
quickly it then falls into secondary the
secondary Traders wait they buy these
things at a discount when the market's
at the right moment and you tend I think
to do get better returns my view is the
liquid will probably do better than VC
for now until this this structural shift
changes the only other big players in
the market so I don't know if you see it
much is because we don't have that much
professional Capital so there's a bunch
of hedge funds and the number of large
hedge funds with anything over 200
million is you know there's like 10 I
mean there's not that many particularly
directional ones um is the Asian
trading groups you know those are often
kind of murky private go pulls of
capital do you and they seem to be the
ones who move size around do do you see
that I mean they seem to be the the main
Traders plus a couple of the market
making firms I me I think Jun Jump's
leaving the market but yeah you know
there's Jane straet a few others how do
you see those other players well I think
you know if we look through and and this
is why you each period in crypto can be
different if we step back to the last
sort of cycle we went through you would
see a much more kind of flow of capital
from the majes to the altcoin space and
they would be a that would be a material
mover of a lot of these sort of you know
outside the top 10 coins um I think this
cycle the difference is that capital's
gone straight to the mean coin space and
kind of jumped over the you know what
would it be the traditional kind of
let's step down from the majors to find
a higher a higher growth opportunity
that's gone to the frogs and dogs coins
as opposed to the Defi and AI coins in
in this cycle so that's probably
something that's changed from a
structural perspective in the market
well I wouldn't say structural cyclical
at this point in time has changed in the
market over the last few years and that
puts the advantage back to retail
right it does it does as as you trade
some of them and most of the hedge funds
trade some but it's a small allocation
to kind of understand Market structure
and that kind of stuff yeah and I think
you need to be across that and then a
lot of the tech that comes out of that
like trading Bots and those sorts of
things can be pretty relevant for the
way we allocate capital and play some of
that growth so then it brings you back
to the the more traditional investors
and of course I completely agree with
your view that longer term those liquid
returns can be very high when you're
buying those sorts of assets because you
know there's nothing better than buying
a you know high quality asset at a cheap
valuation at a material discount to what
the last VC round was at and you've got
liquidity right that's just a you know
that's just discount upon discount upon
discount now the one caveat I would put
on that is the market can stay
inefficient for a long period of time ra
so that there's patience right you need
to have patience and as I mentioned kind
of when we started this discussion
that's what's in shorted Supply crypto
and that's something that we sort of
make sure that we continue to keep up
the patience to buy those assets when
they are at that discounted level but
then the patience to hold them until the
market works that
out now one of the things that I thought
has kept the mark Lids on the market for
the last three six months um since it
peaked out in March was there's just an
enormous redistribution of tokens out of
old hands from the last couple of Cycles
into newer hands so as you mentioned
this Mount GX has won so that was a long
time ago but they're finally coming to
market the FTX estate that whole bunch
of stuff had to get sold took liquidity
out because a bunch of hedge funds and
family offices took up the liquidity but
it still takes liquidity out of the
market um we've had the Germans selling
distribution we've had jump liquidating
a portfolio we've had a bunch of token
unlocks from these things um plus new
Supply coming and tens of thousands of
mean coins and it feels like there were
just was not enough liquidity so the
market I think has done pretty well
absorbing that by trading very sloppy
sideways in the major sure the olds get
crushed because they're getting replaced
with these other things how do you think
about that kind of structure going on
yeah I think I'd had the Bitcoin ETF and
now more recently The Ether one and the
unwinding of the gray scale as well well
I think the Bitcoin ETF in way is
probably is is different sucked Capital
out of the rest of the crypto market
right so if you look at you know we
speaking to our LPS speaking to our
perspective LPS speaking to my PE group
I think there is a bunch of capital that
would have come more broadly across the
market um over the last 12 months that
hasn't because the etf's become a
simpler easier sort of First Step
solution for a bunch of family offices
and institutional allocators and so I
think there's a lot of capital in those
Bitcoin ETFs that probably would have
come more broadly across the crypto
space ex that ETF wasn't there now
longer term I still think the ETFs are
an incredible uh positive thing for the
crypto Market but we have been in that
sort of short-term window where I think
they have been on top of the other
factors you've mentioned have taken some
Capital out of the broader crypto market
and partly driven sort of the out
performance or the the extended out
performance we've seen from Bitcoin um
through the last s eight eight months
yeah so so so I think that's one of the
other factors that we've seen it play
there that that that that sort of
changed the market Dynamic from what
we've seen the last few years now I
think you know at some point that that
that that plays out there's only so high
Bitcoin and you know now ethereum and
those sorts of really valuations can get
versus the rest of the space um before
you see those sorts of valuation gaps
close but again I come back to my other
point that takes patience I mean we look
at the altcoin space um and in
particular some of the sort of key key
defi coins and there's an index of about
the 12 kind of core defi apps that have
been around since you know since 2020
2021 and so they have good track record
of you know generating users and
revenue we look at we we look at that
that that that that subset that covers
you know all sorts of that sort of defi
activity um we we look at their their
revenue generation so this is revenue
that could go to token or fee generation
that could go to token holders they've
grown that by four to 5x from that FTX
Gap so from the bottom the market in
2022 so they've grown daily uses they've
grown Revenue sort of you know 4 500% or
four or 5x from that period over that
same period and you know adjusting it
for what's happened in the last 24 hours
their prices are flat right so you've
seen the fundamental side of the sort of
the non Bitcoin crypto sphere sphere
actually do keep up its turns with
bargain know they've generated the users
they've generated incredible Revenue
growth and these numbers are getting
pretty close to alltime high right we're
getting close to 2021 peaks in terms of
that fee generation token price has done
nothing now should the token price have
matched that Revenue growth um to a
degree well you got to have you know to
use a trfi term multiple sort of
recalculations in that as well but from
all the metrics we look at you know from
a fundamental perspective crypto
Market's healthy across the whole sphere
it's it's attracting users it's it's
generating the revenue the token prices
lag but at some point that's kind of got
to give you know when you're getting
tokens that are doing BuyBacks of 25% of
their tokens in a year or paying cash
yields of 20 plus percent there's only
so long that those sorts of things can
be sustained before people start to see
that sort of value you know one of the
things there was you know Kobe on on
Twitter he was one of the things he
mentioned was and that made me stop and
think he's like well I don't think the
altcoin bare Market has finished yet and
if you go back and look at 20
2017 olds didn't bottom until I'm sorry
you know 2016 the market bottom but
2017 olds bottom so a year later so the
equivalent of 2025 this year uh also in
2020 the same thing they bottomed later
before after Bitcoin so maybe there's a
delay in alts versus Bitcoin by maybe 12
months and maybe that that is something
we haven't kind of factored in yeah if
we look at uh 2019 2020 you had some
kind of false starts where you had some
kind of
initial uh sort of your layer ones come
come to the market toward the 2020 2019
early 2020 they got some pretty
substantial kind of market upticks and
some of that sort of ped out I think the
the thing that really sort of drove the
altcoin space um and it comes back to
the fundamental point I was just making
was really the the the launch of
defi at a at scale where they started to
see you know we saw compound come to
Market you saw saw RVE and other players
come to Market start to use tokens to
bootstrap a protocol start to see quite
enormous sort of growth amongst users
and tvl and start to see some sort of
real fundamental growth and that starts
to drag Capital away from the luxury of
just sitting in Mages and trying to get
beater into this sort of high gr sphere
and I think that's what gets the altcoin
market going it's got a you know we're
not we we try not to be too passive and
think thinking about what can drive
prices in the altcoin market it's not
just a you bitcoin's gone up a lot I'm
going to allocate to altcoins altcoins
they're a smaller higher risk less less
liquid investment they need to demand
that investment so they need to actually
perform to grab that capital and we saw
that in defi summer as it's
affectionately known back in 2020 as
they started to see huge user growth out
of conent zero right you started going
from sort of four users to 10,000 users
to 50,000 users over a few weeks and
that starts to demand investment as
opposed to just a passive reallocation
and I think that's what gets altcoins
going they need to demand that
investment now I think the difference
we're kind of seeing this time in the
way we see we're starting to see it out
from a financial perspective they're
starting to demand investments just
given some of the metrics that are on
offer for some of these more mature
protocols that have been around in the
market for sort of four or so Years
also if you speak to younger people in
this space
the more Bitcoin goes up and the more
you see this lag of
alts the more they say well what's the
point of owning Bitcoin ethereum salana
I can't make the
returns because they you know they're a
30 32y Old they've got $10,000 saved up
they like a three or 4X in Bitcoin just
doesn't move the dial from me I can't
buy a house I can't do anything and you
and I talked about this a bit in
Australia is like they they're forced
out the risk curve um which is why memes
have been so big but once alt start to
move it it feels like that Capital gets
recycled into those yeah I think that's
the difference this time around like
traditionally we would have seen with
the strong Bitcoin runs we would have
seen D5 or you know for this cycle AI
coins or whatever it may be attract a
lot of that Capital looking for that
sort of higher risk higher return today
to your point it's gone down in that
mcoin space where you can get that five
or 6X in a few days now that comes with
all sorts of other risks and all sorts
of things that you know everyone's going
be aware of but that has been one of the
differences this time that's attracted a
pretty substantial amount of capital now
the one thing I would say is as you've
started to see that get more attention
as you've started to see more kind of
celebrity coins and those sorts of
things I think that Runway and that
mcoin space where it was pretty open to
some good traders that made some
Sensational returns and you know credit
to them for taking that risk and you
know sort of taking you on that
marketing getting you that sort of
short-term specialized skill to pick
those sorts of coins that it
differentiate that's we're starting to
see that sort of slant a little get
little way little way against those
investors there as you start to see more
sort of inside of returns coming to that
market so yeah have you would be you
start you start to see some of the
Returns come out of that you start to
see retail investors looking for
probably a little bit more lower risk a
little bit more sort of a something that
a little bit more tangible that starts
is not so T against them as that mcoin
market seems to be trending towards the
mar don't forget it was a year ago much
easier there was Bonk there was a there
was like 10 you know new mean coins
there was the old ones from the old
cycle and then suddenly pump. fun comes
and there's 10,000 a day being
launched right and then it becomes
impossible good for salana of course
great for salana this is an attention
economy game right and there's a fixed
amount of attention yes the space is
growing but right now we still don't
have that many new entrance into the you
know physical coin Space versus ETFs so
the more coins you give the harder it is
to focus attention so the harder it is
to capture value when there's very few
and people go oh this is a fun idea they
all do well so you know you're you're
trying to divide divide attention which
is a finite resource only driven by the
number of new people in the space or
people yeah you get the you get the
anomaly like in the mcoin space where
you get stuck in in Sniper Bots and it
goes from owning the right main coin to
owning it first and getting out of it
almost instantly right so you you create
sort of micro attention periods even as
a sort of another layer on top of that I
think you know you do get that sort of
that that velocity in that space that
people sort of Crave in crypto that
they've traditionally wanted from the
altcoin space but yeah to your point
you're starting to see that over Supply
and to be honest that's you know that's
that's that's a bunch of the story we're
starting to seeing the altcoin space as
well you we we've already spoken about
the what I'd say is the underallocation
into the liquid space V is a VC space
which has driven that you know VC coins
effectivity of VC coins and tokens come
to the listed Market at some point in
time um and so when you've got a $60
billion Market trying to sell into a
market where you've got 10 to 20 billion
dollar of allocated capital A lot of
that isn't even net long you can start
to see what's going to happen right and
so you're seeing the same Dynamic play
out even in the altcoin space as a mcoin
space there's just too many alts for too
little Capital now as I mentioned
there's two there's two ways that fixed
you allocate more Capital to that space
or that space gets vastree valued that's
that new coins coming out and that's
what we've probably seen over the last
sort of 12 months or so we've seen a
dramatic revaluation in Bitcoin in some
of the majors and we've seen the alts
that over Supply push the value of alss
down and we're starting to see levels
now where we're starting to see that
sort of fun fundamental value come
through yeah because I mean there is a
limit to the number of layer twos
because I mean what's the difference
between one to the other it's you know
we starting to see that narrative coming
at first people like well let's see how
these layer twos are going to be valued
Etc the first round Matic and stuff from
last cycle did pretty well and then
they've just been nuked to death because
these are kind of infant replicable
things right yeah and I think the you
know it needs to the markets fix them or
heal themselves through all sorts of
different phases and it means that you
know VCS will start to make a lot less
money and start to lose money on the
next l Layer Two or the next layer one
that they're investing and so you start
to see the whole sort of structural
shift in the market because I think
today in crypto you know the the the big
returns in the VC space which you we've
been fortunate to to to participate in
as well have been in picking those lay
those those right layouts like picking
that that salana picking that avalan
that VC that that VC type around where
you get those sort of your 100x type
returns um and that playbooks played out
probably longer than most people
expected but I think we're starting to
see that online now so you start to see
the valuations come down in the liquid
market for that next layer too and start
to come down below the the levels that
VC markets have funded them at and so
you start to see less funding of those
things happen and the market sort of
heal themselves but it does take time
also I I thought it was very interesting
what coinbase did by launching Bas which
is a layer two with no token and that
kind of made sense to me in some
respects is some of these things don't
need tokens
no and we're starting to see people sort
of reinvent the way these tokens are
launched you know if you look back at
the the broad crypto environment that
probably generated the the broadest
spread of returns you know of retail
versus insiders was back in the Ico
craze of
2017 now that had a whole bunch of other
issues around legal risks and
disclosures and I'm not stepping back
from that but if you looked at it that
was probably the most even playing field
in capital markets across any asset
class we've seen for a long period of
time right like as crazy as it was you
know retail investors were making huge
returns and the returns they were making
versus the Insiders in that market were
probably the most balanced we've seen in
the crypto market today right and now
that's gone away for a whole bunch of
different reasons but oddly enough that
that that that sort of
drove um a much more balanced Market
where people were investing in the
liquid Market because there was still a
lot of valuation upside left on the
table from those I Ico launches and a
weird way it had got to a place in a
very short space of time that the IPO
Market you know where I spent spent a
bunch of my time as well has got to over
50 years in the equities right you don't
list an IBO and ibos don't price at
their maximum price they price at a fair
price to leave something on the table
for secondary Market investors so
initial investors make money secondary
Market investors who take that risk on
day one day two and IPO generally make
money as well and that's a much more
conducive Capital Market to what we
we're seen in crypto lately where either
the Insiders W way too much money or the
listed Market waste way way too much
money and it's just getting that balance
right so I think what we're starting to
see is teams more sophisticated teams
think about how do I approach the crypto
market and the funding Market in a more
balanced way that avoid some of the
pitfalls we've seen over the last few
years and so we're starting to see what
we think is a trend towards more of a
fair launch type approach you know
something that's just really interesting
that we're following at the moment is
you know the rwe team launching their
protocol AO where it's a completely Fair
launch the team don't have any tokens no
insiders have any tokens you effectively
have to farm that token by giving either
owning our weave and getting access to
the Token or staking your e so you stake
your e to a contract you earn AO tokens
for doing that and the team gets to keep
the staking rewards to effectively fund
the development and anyone can access
that that contract anyone can
effectively earn those AO tokens over
the next you know over the next three or
four years in size by giving up the
yield on their e to effectively earn
them and it's a fair launch it's open to
anyone with you know half an eth to
10,000 eth and you know the team even
starts with none right so you start to
get that sort of fair open access
allocation to anyone that wants to take
the opportunity to get involved in the
ecosystem and turned up and so when that
protocol launches you're not going to
have this Capital that's got in a much
lower price in the prices and um is
looking to exit um that's you got
different sort of you know a different
sort of risk return profile that people
buying the sign Mark yeah and people try
to get around this whole concept by air
drops and kind of
um um
points but it it still disadvantage
everybody and and it it it just also
felt like what you did was rent
attention and you didn't boot bootstrap
most of the networks who did it people
just went there got the airdrop dumped
it as fast as they could did exactly
what they accused the VCS of doing which
most of the VCS actually don't because
they're usually locked up but they'd
farm this stuff figure out how to get it
get the airdrop dump it and move on to
the next one and it's like well that
doesn't not work either no and then that
start to get gamed right so I think the
um
yeah there's two things that make people
committed to an investment longer term
which is what you want when you're
building an asset when you're building
an ecosystem or a protocol you want
people alongside you that are committed
now there's two ways to be committed
it's either capital or time capital and
overtime right now I think the the
problem the airdrops faced was that made
people committed but over a very short
period of time and so attention just
moved to the new new thing as soon as an
air drop passed and you effectively gave
away
substantial quantities or ownership of
an asset to people that were only there
for a few weeks for a few weeks in time
now when you're building something and
you're a team and you've got tokens and
you've got you've got skinning the game
over a five year plus time frame that
kind of doesn't make a bunch of sense so
what I think we'll start to see is
things where you're making that
commitment to an ecosystem over time
like staking capital and giving their
return or giving up a return over a
longer period of time to earn those
tokens over a longer period of time and
so you start to get alignment between
the
investors um and and the team and the
ecosystem that's building that's
building over that longer period and
look this isn't rocket science this is
how traditional markets have work right
VC is make investments in traditional
markets over five to 10 10 year time
frames you know they go through the the
good and the bad of building things from
the ground up and you know that's
traditional markets have worked out
that's the best way to get alignment
with capital and Builders and the crypto
Market will get there over time and
starting to get there out and the other
thing is as you mentioned because of
this misalignment between um between
tokens that have a lot of VC investors
that come to Market or have token
overhangs from
unlocks they tend to get really quite
cheap at this point in the cycle you've
got this hugely stretched relationship
and for me I think the big game that I'm
looking at is usually there's a chosen
group of
four you know the four horsemen the ones
that get chosen for the next cycle if
you remember last cycle it was avalan
polygon Luna salana they were the kind
of that was the big race where this huge
gains CU they got sold off they were all
like eth was sold off as soon as it had
its um Ico as well they came off like
70% they kind of stabilized and then as
the market regime changed the capital
came in I'm really eyeing kind of I'm
doing a lot of charts of One Versus
another trying to figure out okay what
is strong once you filter out Market
movements but that feels like that's a
big game and it feels like it's probably
a layer one game because they're bigger
sure there's going to be other stuff
we'll talk about the other stuff in a
sec but how do you see that layer One
race I mean do you agree with that
thesis that there is probably going to
be another group um my current view is
it's probably and again I don't know
don't really have don't really have an
Insight but I'm guessing it's something
like Avalanche even though it's last
cycle token they seem to be doing
interesting stuff um s an atos because
they are you know a whole different kind
of ecosystem but all all of these have
this kind of high LDV low you know low
float um I think monad has not not come
to market yet that's another one U Maybe
I don't know what do you what do you
think is what do you think is this this
race and again it's very early to pick
it so I'm not holding a gun to your head
but what's your hunch yeah I think we we
look at ler ones as a um we've always
had a view that there's going to be a
number of what we'd say a multi-trillion
dollar layer one protocols now how big
that number is I think is a harder thing
to predict but when you think but
they're but they're going to offer
different things right they're going to
offer different opportunities different
they're just decent centralized
businesses that sell block space yeah so
they need to have something that's
unique about that block space either
it's you know speed of transactions it's
security whatever it may be it's
language on them whatever it may be so
you know we've always taken a view that
there's going to be multiple
multi-trillion dollar layer ones um
they're all going to find some area
where they have a comparative
advantage that comparative advantage is
going to lead to more and more apps and
use cases being built around that and
that's going to crowd out other use
cases and you know we've already seen
that play out I would suggest between e
ethereum and salana you know it's it's
not you know it's not a coincidence that
the pump dot farm and all the mean coin
activities happened on salana versus
ethereum because it's a it's a fraction
of the price to do that on Solano versus
ethereum now that's not a bad thing for
Sol not a bad thing for ethereum it just
means that ethereum has become more
valuable to people like us that are
moving millions of dollars around in a
transaction right and we're happier to
pay the higher fees although that's been
addressed a little bit by layer TW but
we're happier to pay the light the
higher fees for the security and that
that comes with ethereum but then that
left the door open to Someone Like A
salana to grab that you know initially
that nft Marketplace and now that mcoin
marketplace where you've got that sort
of Rapid transaction speed and that
launch capability to launch tokens at a
at a minute fraction to what it was on
ethereum and so salana has grabbed that
market from ethereum now that's not you
know that just plays into our thesis
that there's not going to be a chain
that's you know everything to everyone
they're going to find this specialist
use case that use case is going to
become successful that's going to grab
all that block space that you talk about
and dominate that block space and Crow
out other use cases and those use cases
will find another another chain that
suits the purpose they want yeah and and
my view is this space is you know $2
trillion today after the selloff um and
I think it goes to 100 trillion that's
just extrapolating out the log trend of
adoption or just the market cap total
market cap chart put it on the log scale
put a regression on it it guess 100
trillion by let's say 2032
2034 so you can see the space is still
player versus player a lot they're like
oh my God sana's robbing
ethereum it's not the whole thing is
going to explode so as you say there's
plenty of space for five six seven
multi-trillion dollar ecosystems yeah
we've never we've never seen the we've
never adopted the you know ethereum
killer or Bitcoin killer type approach
to anything because I just think it's
the wrong mindset um I you know we we
have exactly the same view as you that
this asset class is growing Way Beyond
anything it's at today which means that
you know you know Rising tide can float
or votes it means that you know salana
and ethereum can definitely win together
it doesn't mean you know the P the
player versus player is the interesting
thing and you know to degree that
actually plays in the favor of crypto
around you know that whole ecosystem
building having people that are
passionately focused on one asset or one
ecosystem actually is you know
advantageous to that ecosystem but from
a purely Financial perspective doesn't
mean one fails or the other prospers
because I just think this space is too
big to be CED for by one one protocol I
mean we're starting you see a whole
bunch of consumer apps start to come to
Market start to get that sort of
traction that we haven't seen previously
in crypto and that opens a new
opportunity for new layer ones you know
we're we're sizable investment across
our firm in year for example which is
started see real sort of uptick on that
consumer app level that we haven't seen
in crypto before you know and that's a
new market that we think you a ler one
AER one can grab that some of the some
of the players like a salano or ethereum
don't don't have or probably probably
won't grab it this more given the use
cases they're chasing so you see new
opportunities come along and you see new
protocols like a year or a telegram or a
ton open network start to grab those
opportunities and that doesn't mean that
takes growth away from salana or etherum
at all it just means that you're
broadening the market and I think as you
know as investors in crypto and as in
people that also passionately want
crypto to succeed and blockchain
Technology to get to where we wanted to
get to that's what you want to see you
want to see a broad B based growth
across multiple protocols and across
multiple apps that have different use
cases so any other layer ones that are
on your radar screen that might
participate you talked about ton uh
you've talked about neara anything else
that's kind of on your radar screen yeah
outside of the outside of the I guess
the recognized Mages they're the two
biggest Investments that we've got at
this point in time they're the ones that
we think bring something differentiated
to crypto outside of the outside of the
Salan an ethereum um you know telegram
is a is a unique approach in crypto you
cryptos generally build the tech and
they will come type approach right and
and you know some something like ether
has been incredibly successful at doing
that um but that's a very different
approach to the telegram where you've
got this you know billion plus user
ecosystem with a chain now getting
introduced to that so it's the other way
around right like let's grab the users
from an existing EOS system onto a
protocol which is something that crypto
hasn't had
before um given the amount of
bootstrapping that's gone into the tech
today and we think that's a super
interesting opportunity we also think
with the way a lot of the consumer apps
are going and even the way a lot of the
trading apps are going you know the
things like banana gum bot and and uni
bot and some of those other trading Bots
which are pretty incredible technology
you're starting to see that sort of that
that sort of crossover between web to
Consumer apps like a telegram into the
crypto system sphere and you're starting
to see a much more seamless user
experience around that whole let's get
users across to crypto without having to
interact with the Ledger that's in the
vault that he talk about right start to
get those clicks down to a more web to
type basis start to reduce that friction
which has been one of the key issues I
think that crypto's had in terms of
getting those new users onto onto
platforms and we're starting to see
things like Telegram and things like
some of the consumer apps starting to
abstract away that crypto thing that
that crypto part finish your crypto part
of the equation and use crypto what it's
good for processing transactions
providing security moving value at high
speed but let's make a web 2 interface
or let's use an existing Web Two
interface to bring that you that
usability to it to a whole new user
class of people and that's how you get
to the billions of users as opposed to
to the millions and tens of millions the
other one that I thought was a was a
great breakthrough for the industry was
poly Market it's just a beautiful
application that nobody knows really or
cares that it's on blockchain and it
works exactly as it should and it's
captured the world's attention and
people don't even know it's crypto yeah
I think that's what that's what we get
most excited about when people are
starting to use use
applications for their solely for their
utility and it's got nothing to do with
it having anything to do with crypto or
anything to do with an underlying coin
or whatever it may be they're using it
because it delivers more utility than
the web2 version that they've been using
and so things like things like poly
Market yeah which prosers because of the
utility off has got nothing to do with
the fact that it's using crypto it's
kind of like the the Holy Grail right
what we want to see there's a there's
investment we've got on the VC side in a
small messaging app called session um
which has you know over a million users
today um growing at sort of getting
100,000 downloads a week out of the app
out of the App Store
and you 80% plus of the users have no
idea that it has anything to do with
crypto you know it offers a messaging
app that's just got far better security
because it uses a decentralized NW
Network to deliver those messages so
it's effectively completely private and
untraceable and so it's offering a
solution better than an open source
solution like signal with better
security um with functionality that's up
there with web2 functionality and you
don't have to know anything about crypto
to use the app you download it from a
App Store just like you download signal
and you can use it just like you can use
signal and it's using web 3 to deliver
the
security benefit that you can't get in a
web3 environment and that's what we need
to see more apps like that that sort of
have web3 under the hood and deliver the
benefits of web 3 without making users
go through a whole lot whole new gates
to sort of get that utility so on the VC
side are you seeing less deep Tech and
more application stuff or is it still
more Tech infrastructure and still less
applications because we're kind of
waiting for this applications layer yeah
I think we're starting to see a little
bit more on the application layer I
think we're starting to see that cycle
play out like I mentioned earlier
because the returns from sort of deep
Tech um are rapidly reducing right and
so the VC Market starts to get more
sensible about how they allocate Capital
you know the next you know creating a
layer three or a layer four isn't the
easy money that people started to think
it you know started to think that it was
right and so you start to see overtime
turns force that Capital to look for
look for Investments that offer better
risk rewards and we see that more in the
application space to be frank on the on
the VC side now where we're starting to
see apps you know like the ones I
mentioned where they're starting to get
sort of tens of thousands hundreds of
thousands millions of users trading at
Material or or raising Capital at you
know vastly discounted valuations versus
anything in the protocol space so from
our perspective that's that looks like a
much better risk reward bet for us on
the VC side now we're not seeing as much
of it as we'd hope to see at this point
but I think that's driven by success we
just need a few of these apps to get the
sort of the returns to the investors and
the founders that we think they'll get
over the next one to two years and then
that
drives that drives part of that
allocation and part of those Founders
just F focus more on those apps and get
that sort of success and it only takes
you know you see it in crypto all the
time right like you see one D app like
compound suddenly bootstrap users out of
nowhere and it drives a whole sort of
vertical in the space it only takes one
of those success you see something like
an axi come out of nowhere with users
from sort of zero to gazillions
overnight and it drives the whole sort
of gaming allocation both at a VC and a
liquid space so you just need those
success stories I think to sort of show
that show that what could be achieved
and capital follows I think one of the
things that you know I follow from from
people that I know is I think there are
some very big game launches coming I
think Off the Grid is the first one
that's probably this month um which
these are kind of AAA Ultra good games
and that becomes if anybody has a
breakout in that that's very interesting
because obviously the user the size of
the number of users for a big game it's
not an easy game in itself to launch
games you it's pretty difficult thing
but if you get it right somebody's going
to really bootstrap a network
unbelievably on this yeah I think yeah
you basically got people taking two
approaches right like it's take the
traditional approach of building a a
game that's competing with a web 2 game
today but uses crypto for that sort of
value transfer or functionality that you
can't get in the world Garden approach
of most with two games today and I think
that's super interesting and and like
you we're waiting to see the the game
that kind of sort of cracks that nut and
that's the you know that's where a lot
of the capital's gone in the VC space
when you look over over the last two to
three years so we'd expect some big
Winners to come out of that but you know
like developing games in a web to space
or movies when you step further back Pi
wi it's h you know one of the one of my
earliest memories from uh banking days
is listening to our our analyst who was
covering News Corp at the time come in
and give the download to the morning
meeting about what a massive flop News
News Corp had wasted billions of dollars
on called
Titanic um and how this movie here just
being to like the pre screening as one
of the analysts was going to be the
biggest fire year in in movie history
right and it ended up being a massive
money spinner and you know really smart
guy sophisticated guy covering you he
was a top rated media Analyst at the
time but it just goes to show how hard
it is to pick winners when you start to
get into that kind of artistic type
overlay into the investment space I
think one of the other interesting
things is games that have taken the
other approach that have taken a much
more crypto specific approach crazy
thing like you combat hamsters and those
sorts of things where you're getting
like you hard to verify these numbers
but you're getting tens up to hundreds
of millions of users that are coming out
a much more crypto Centric type approach
so I think you know we're we're starting
to see two kind of valid options come
here one takes a one takes a more
traditional approach and sort of bolts
on crypto in a in the way that it can
add utility to an existing Avenue and
vertical the other ones taking a more
traditional crypto sort of off the- wall
the pro let's come up with a game where
you got to click a screen to effectively
earn something over time and that's
bootstrapping yeah but we seeing those
can be very fleeting right they're
almost payto playay you kind of do it
cost you money you get a bunch of users
and they off to something else so
it's kind of but I mean that's the
challenge for the developers right can
they then develop that game into
something that becomes more sticky so
you've got the audience and you know as
we know getting the audience is
generally the hard part
so that's can someone you know someone
can someone again crack that n off you
know I've got these tens of millions of
users from clicking the screen can the
second iteration of this game now hold
them yeah and you know someone will get
that right as well right someone someone
will get that next iteration of that
game that'll become the next Candy Crush
so what other sectors interest you right
now I know this might change you know B
you know what what are you kind of
focused on in other sectors thinking
this opportunity yeah I think we started
off as uh
um particular looking a year or so back
pretty skeptical around Ai and the
crypto o overlap um I think when we look
forward sort of five to 10 years we
could absolutely see that that we could
see the the two coming together I mean
you you start to think about agents
operating in a digital world you agents
aren't going to be sending Swift
transfers right so you you yeah it's
natural that when you start to operate
you know at a autonomous level at
digital speeds that crypto is going to
play a part in that I think we became
more skeptical when we started to see
some of
the shorter term sort of use cases on
the radar around you know the ones that
could use you know kind of more the
models in AI space today um and overlay
that with crypto just given you know the
amount of capital in some of the
traditional players and the amount of
growth they were starting to see I think
where we got a little more excited is
where we started to started to see two
things happen firstly the use cases and
some of the entrepreneurs we talk to
come up with more sort of tangible
shorter term you use cases around AI
that made sense to us and we started to
see which I think was interesting on the
traditional side some pretty big
missteps from some pretty big players
you know people like Google you we also
around their sort of um their image
generation and those sorts of things
starting to skew their AI down avenues
that sort of started to show that there
was a place for open source and
verifiable type attributes to play in I
AI you know where people could actually
understand the model they were using and
understand the output was coming from a
model that they understood was unbiased
or giving the results that they wanted
to see they wanted to see unfiltered um
and I think we didn't we didn't we
thought that use case would come over
time I think it's going to come faster
than we thought just given some of the
missteps made on the made from some of
the traditional play where in arvie
they've kind of sh shot themselves in
the foot to a degree it open the door
for new players so just to summarize
because we've been talking for an hour
already I can't believe it where's the
biggest position your portfolio knowing
that it may change tomorrow or it may
not or whatever but where's the where
where's your concentration of position
you know what what are the the names
that that you're mainly focused on
obviously you look at a lot of stuff but
just the general direction yeah look I
think we've um uh we've actually our
biggest position across the f is in
Salah and we've we've done that um
basically if you look across crypto at
this point in time growth at most points
points of time growth is getting reward
growth in users gets rewarded and that's
where Sal wins at this point right um
fees and revenue and those sorts of
things we think uh ultimately will drive
Vue longer term but at this point where
we're at in the market as users that
have been driving growth and when we
look across the CH very active users and
they're very active on Solana right yeah
and and and so the three you know three
the bigger positions we go across the
firm are the three that have got the you
know the growth in daily daily users and
monthly users that's salana that's year
and that's Telegram and that's what the
market at this point rewards so when we
we spoke about earlier around those sort
of 10 or 11 defi apps and how they've
grown Revenue by 3 four 5x but their
prices are basically
flat you know so Revenue tvl those sorts
of things aren't getting rewarded what
is generally getting rewarded is users
and that's the one metric that we follow
that has get has been rewarded with
price and that was I mean that when you
go back to your TMT days the early stage
of the Internet Was the Same it was used
first and then eventually business model
gets the reward in the end wins the game
yeah and I think that's you and so it
makes sense that investors are
allocating capital and rewarding that um
given that they're the chains that got
momentum and that's what people want
they want to see growing ecosystems they
want to see chains that are attrac
attracting that sort of you triple digit
us a great level and there's a bunch of
protocols out there that you know have
reached all-time highs in their in their
user levels sort of month- on month as
we see here even in July as prices are
trading in a fraction of their all-time
highs so that's when value starts to
emerge so you know three of the biggest
positions we got across the firm salana
and Nia and telegram for that reason
they're the ones that have got user
growth outside of that new protocols
coming to Market AO is one that we're
excited about and so we we hold a bunch
of our weave to effectively get access
to that you know it's a fair launch it's
doing an approach that we think can see
a token grow over time in a much more
traditional Fair Way without that sort
of VC Dynamic and overhang that we've
spoken about and it's interesting Tech
focused on new use cases and so we own
our weave to get that and we also use
some State uh State death to earn that
as well over time so that that's also
bigger positions and AO will also you
use R we on the storage site so we think
it can drive that sort of high user
growth high high functionality growth to
our so we sort of win on both sides of
that both sides of that investment if it
plays out the way we think does the next
12 months and are you
thinking that we see price acceleration
at some point relatively soon you know
relatively soon meaning next two to
three months that we start to see you
know the more typical crypto price
action for you know that kind of
election period postelection period how
are you thinking about that in terms of
structureal prices going forwards again
not talking about Market timing but just
talk about overall
structure yeah I think we um look
there's a lot of there's a lot of
factors I didn't say the word banan Zone
but you know you know what I
meant yeah I think we uh look I think
the name of our game is to be patient
right so you know we remain supremely
confident that that that you see a vast
revaluation of the space um over the
medium term whether that's three months
six months one year it's hard to be
there's a lot of factors outside of
crypto's control right you've got us
presidental
elections are playing a big part in you
know price direction of crypto now more
so than never before right and that's
clearly something that well apart from
the money that crypto is giving Which
does influence to some degree that's
clearly something that's out of all of
our control right and but it's going to
have a big influence on on which way
crypto trades we're seeing things on the
macro Market particularly last 24 hours
which which might change the sort of
short sh short-term liquidity profile
materially and that could sort of give
crypto a jol in one way or another that
we can't sort of predict in the shorter
term I think where where where we take
comfort is when you know we see price
moves like we we've seen over the last
to be frank over the last six weeks in
the last 24 hours but the underlying
things like user growth and tvl and fees
generation is just trending in One
Direction One Direction only and so at
some point as you know markets generally
get this stuff right over medium or
longer term so things need to fix so you
if we were seeing altcoins trade like
we've seen them trade or we were seing
defi trade like we've seen a trade over
the last 12 months but use accounts
looked and emic and all those sorts of
things then going be much more panicked
than we are today but we know longer
term these things get you markets get
these things right over the longer term
brilliant as over my friend really good
to talk to um let's see how it plays out
you've given me some stuff to think
about this I think there's something
really strong in what you're saying is
some of these alts have prices near
their lows over the cycle yet their user
growth or other quality metrics are
expanding I that's a really good thing
for people to look at now the problem is
there some of these kind of a gained in
terms of user growth and stuff so you
need to do a bit of work on doing it but
I think there's something really big in
that idea that becomes very interesting
because this is very discounted versus
you know as you said the the VC markets
and other stuff Richard fantastic to see
you and uh let's see how it all plays
out right thanks for having me good to
speak again
yeah great to see you
cheers so a fascinating conversation
with Richard as ever we covered an
enormous amount of ground we got out of
him what some of his favorite tokens are
we understand his thesis on salana and
where the space is going overall I
really like Richard's view that which is
basically my view which is tomorrow is
going to be more digital than today so
in which case the super Trend continues
and everything else is noise now I also
like the fact that he's tends to be just
a long only investor and is's looking
for interesting opportunities as the
markets sometimes dislocate I found it
profoundly interesting when he's talking
about some of these VC tokens that
people don't like that's the narrative
are now getting very discounted in the
market and I see that myself in many of
these tokens and you're start to think
huh maybe that is interesting because
maybe now that's been taken accounted
for in the price and therefore there's
big opportunities so I for one i' be
looking for the next big trade here what
the next big layer one is and starting
to look at this stuff that's got pretty
discounted you know when salana is near
the highs many of these are near the
lows and it's was like okay time to
start doing some work um the good thing
the hedge funds will get them first so
xam should benefit from that but um and
obviously I'm an investor in that that
helps but I I also am intellectually
interested in the next big trade which I
think is coming so lots to do there
again if you get a chance do me a favor
um son it's a real Vision because I
think you'll prefer the experience there
I know YouTube's easy for you comes into
your feed but that if you really want to
dig in and become an expert and go on
that Journey from um from information to
knowledge to wisdom that's the place to
do it we built it for you so go ahead
and use it anyway see you next time
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