Animal Spirits Podcast - Talk Your Book: The Nasdaq 100 of Crypto

Episode Date: May 24, 2025

On this episode of Animal Spirits: Talk Your Book, ⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠ and ⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠ are joined by Samir Kerbage, CIO of Hashdex to discuss price action in 2025, narratives around price action, how the index is constructed, Bitcoin's investment thesis, and much more! Find complete show notes on our blogs... Ben Carlson’s ⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation. Check out the latest in financial blogger fashion at The Compound shop: ⁠⁠⁠⁠https://www.idontshop.com⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here: ⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠ The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

This content is provided for informational purposes only and should not be relied upon in any manner as professional advice. Speculative investments have a high probability of loss. The Hashtex Fund is not a registered investment company and therefore is not subject to U.S. securities regulation under the Investment Company Act of 1940. Any opinions expressed do not constitute or imply endorsement, sponsorship, or recommendation by Ridholt's wealth management, or its employees. Today's Animal Spirits Talk Your Book is brought to a hashdex. Go to hashdex.com to learn more about the NASDAQ crypto index US ETF. That's ticker NCIQ. That's hashtags.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and

Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. It's been a wild couple of weeks for crypto. When it turned, that one Sunday night, when it seemed to be decoupling from the market,

it was curious because that had never happened. Well, you had a true risk-off macro environment, and Bitcoin was acting like, what's Shalamay's name from Dune? I don't know. It was acting like the prophecy or whatever. So people always say the stock market is forward-looking, but can we now say the crypto market is more forward-looking? So that's where I was going.

And on natural animal spirits, credit to me, I said, well, what if, what if actually what's happening here is that Bitcoin is front-running a balance that we're going to see in risk assets? So I threw that out there as an idea, not that I really took it seriously, but it turned out to be true, that Bitcoin was front-running, whether you want to call it the liquidity, the balance, whatever. And since then, it's went nuclear, particularly Eath, up 57% in the past week.

And I've been searching for answers. And we spoke to Samir about it and asked him what his stake was. And I was very, it was refreshing to hear him not make it up. Well, well, it's doing, it's up 50% because X, Y, the truth is, this is a wild asset class. and it's still an emerging asset class and it is still as volatile as ever and maybe that's one of the features for now anyway

but it is wild part of that volatility is upside volatility right downside and upside that's right so we spoke with Samir who is building the NASDAQ 100 of crypto right now it's only Bitcoin and Heath but hopefully with some regulatory tailwinds it will be a more diversified basket

of crypto assets to track the emergence of the digital economy. So with that, here is our conversation with Samir Krabage from Hashtacks. Samir, welcome to the show. Thank you, Ben. Thank you, Michael. For those of our audience who don't know what hashtag is, please explain to us what your company is, kind of the founding story and where you guys are now. So Hashtex is a crypto-focused asset manager. We've been around since 2018. We founded the company to build a bridge between the traditional financial markets and crypto as a new asset class. We started a company in the U.S., but we soon realized that the regulatory environment here was

not favorable for crypto asset managers. So we expanded our presence outside of the U.S. So we've been, we have like a strong presence in Latam, in Europe, and recently we started expanding here in the U.S., especially now that the regulatory environment is improving. And, yeah, so crypto-focused asset manager, we have something like $1.5 billion in assets on the management. And we largely do ETFs, and we're focused on like investment strategies. Our flagship product is a product that we've co-developed with NASDAQ to be a benchmark for

the space, like a NASDAQ 100 for crypto. It's the hashtag NASDAQ crypto index ETF. So, Samir, whenever we talk to people like yourself, I'm always. interested in the backstory, because getting into crypto, starting the company in 2018, you were relatively early. And you look like a tri-fied guy. I don't want to judge. You tell me, but what was your journey like from wherever you were before crypto to crypto to today? So I'm a software engineer where I always been involved in, you know, traditional markets. I started my career with high-frequency trading and quant strategies, like, working for hedge funds and all.

I, like, started to get involved with crypto in the narrative back in 2015 that, you know, crypto is for anarchists, for criminals, but blockchain is something that's going to transform financial markets. And so I started studying blockchain and then eventually I, like, understood what crypto was all about. about and started to invest in 2016 and like, and then once I realized I was spending more of my time, you know, studying crypto and looking at crypto, investing in crypto, than looking at traditional markets. So, you know, I might as well just go to the other side and dedicate my career to it. And we saw this as a big opportunity, you know, crypto emerging as a new asset class.

So back then, like the industry and still is like pretty much retail driven and we saw this big opportunity of like building a bridge for institutional investors. So do you think that your software background helped you understand it sooner? Because my traditional finance brain, it took a long time for me to really understand crypto. And I read the white papers and I listened to the podcast and I read about it. And it took a long time for it to really click. But so do you think that your technology brain made it easier if you to understand it quicker?

Yeah. And it took a long time for me as well, Ben. So I've read the Satoshi's white paper. First time in 2012. And I started on the technology side, not much on the investing side. So I think that that helped. But, you know, it's such a new paradigm, crypto and the transformations like that it brings to our society, that you need to have an open-minded approach to it.

So it took me a long time. And I normally like to say, like, our challenge here at hashtags is to, like, it took me five years to understand crypto, I hope that by education, by research, we can help, like, other people to accelerate that curve. So, yeah, it's a big challenge. So, Samir, when you say it took you five years to understand, what was the aha moment? And was it, was it, was it a different L-1? Was it ether, something else where you saw the technological applications?

What was it that made this finally make sense to you that you wanted to spend your career dedicated to it. That's a great question. So it wasn't Bitcoin. And actually, so back then in 2015, I was working in a project to create a new stock exchange. And it's in a clearinghouse. It was a very sophisticated project complex.

And then I started to hear about blockchain and smart contract platforms. And I saw that basically you could replicate the same structure that we were building, like a huge exchange, like 100. of employees, a lot of capital, you could replace that by, you know, 50 lines of code in a smart contract and you can build it like a decentralized exchange. That was like revolutionary for me. So I really like the first thing that caught me in crypto and really like caught my attention was how can we use more contracts to make the capital markets more efficient.

So that's why I started. And it took me a while until I see how we actually go from the technology application to actually the investment case. So I started with smart country platforms, decentralized finance, and then understanding like smart country platforms, Ethereum, Solana and others, and then go into Bitcoin. So, yeah, I didn't start with Bitcoin, especially because back then there was a lot of speculation and I was never much into the speculation. So that didn't attract me much. So I had to start with the technology, with the underneath technology and the capabilities and start building from that. There have been a lot of shifting narratives over the years about what that underlying technology could do.

And it's interesting to see how it has all shaped and evolved. And at first it was, well, it's going to be a currency that you're going to spend with. And then it's no, no, no, why would you ever spend this when it's going up? And then it kind of did transfer into, like, no, this could make market structure more efficient and cheaper. Like, where do you stand on it? Like, where do you see crypto going in the years ahead? And what are the actual applications for something like this? I like to compare this with the Internet back in the 90s.

Okay? So if you asked us, like, if you asked Bill Gates in 1995, like, what was the Internet for? It was going to be very hard for him to answer. He would talk about all the possibilities, like all the things we could use the Internet for. But if you tried to use it, then back then, like, it was very expensive, was very complex and slow. So we're in the early phase in which technology, like, you can think about blockchains and smart contra platforms as a tool. And you can use this for anything you want, like the creativity is the limit.

The first application was Bitcoin. It's basically a currency. You can use it for payments. But because of like the, it has characteristics, it has a monetary policy that makes it like the inflation reduced over time every four years like the inflation drops by half so it has some good characteristics of a store of value so why would you use it as a payment you're rather use like a higher inflation currency for payments and then you need to save bitcoin but when you look at smart control platforms and the others like it's it's really like a cloud computing platform

so you can do anything you want the major applications that we see the major sectors we think that that can be transformed by this technology is first finance So with tokenization and stable coins, we can build a digital native financial system. That's what people call defy. And we have like the Web 3.0, which is basically transforming the digital services that we use and becoming like having control over our data again. And this is especially important in the age of AI, right? When we have AI agents interacting with us, we need to make sure that we preserve our identity,

that we have tools to have ownership of our data. So that's Web 3.0. And then you have the digital culture, right? Collectibles. You can use this for digital gaming. So there's a lot of different applications that we can use smart control platforms for. I think that the first one that we actually going to see

on our day-to-day basis is stablecoins, especially now with more regulatory clarity. So stable coins has been something that's been growing exponentially in the merging market. because that's basically the easiest way to get access to the U.S. dollar. So if we see regulatory clarity here in the U.S. for banks to start issuing stable coins, then we're going to have like our Apple wallet, we'll have like a stable coin wallet in which you can use for payments instead of using credit card networks, which normally charge like 5% transaction fees on top of all the transactions we do online.

So I think this is probably going to be the first application that we're going to use on our day to day. And starting from that, we can see, like, money market funds being tokenized, fixed income, instruments, equity. And then, like, we can build this digital first financial system. Samir, I have a question about the tokenization. So when I think about tokenizing assets, whether it's money market funds or gold or cash or stocks or real estate or whatever, my first thought is like, well, why did these assets need to be tokenized, do people need to be on the blockchain in order to access this? And then I thought, maybe I have it backwards. Is it because there are, there are so much money for crypto native investors that have their money on the blockchain? And if they would like to access traditional

assets where they are, that's what the tokenization is for. It's not to bring people onto the blockchain. It's for people that are already there that want access to broader financial instruments. Do I have that backwards or am I thinking about it right? Yeah, I think you're right, Michael. So you can think about this in two ways. First, there's a generational shift happening in our society. So if you look for the younger generation, they use more digital assets than traditional assets. In some countries, if you look at Brazil, for instance, we did a survey a couple of months ago.

Like, the people below 30, they invest more in crypto than in equities. So you're seeing this transformation in which people are getting more use, especially this new generation is getting more used to digital assets than traditional assets. They want to sign things digitally instead of using paper. So this is like this digital transformation of our society is happening. So as we see more people on-chain, those users would prefer to have own-chain assets in which you can invest in and invest out like 24-7. You don't have the limitations of the traditional rails.

But also, like, the thing that I think is going to be a catalyst for adoption, it's exactly stable coins because it's just going to make it easier to do payments. It's going to make so much sense that we're going to have more and more of our cash being tokenized. So instead of having, like, a checking account, you're going to have, like, a tokenized deposit. And as we have more and more of our wealth on chain, then the next natural. demand is, okay, what should I do with this cash? I will look for money market funds.

Then I would prefer to invest in tokenized money market funds than having to redeem that to my traditional checking account, sent to the broker-dealer and invest in a money market fund. So I think that's where I would say the normal users or the older generation will start to use tokenized assets is when we have more and more of our deposits being tokenized as stablecoin. So that's why we think that Stablecoin is the first killer app that will make sense, you know, that people will understand, okay, so it's just way much better to use this. Just like it was better to send an email or an instant message was way better than sending a telegram or fax. So you mentioned before that you're trying to create like the NASDAQ 100 for crypto.

So maybe you can talk about what that looks like in your foreign markets that you've already really made an impact in and what it looks like now that you've got to fund in the U.S. Yeah, so we've co-created with NASDIC, the NASDAQ Crypto Index, which is basically a benchmark for the space. It's an index that has a set of very stringent eligibility rules to select assets and has a quarterly rebalance process in which new assets might be included or excluded from the index based on those rules. So it's pretty much like the NASDAQ 100, but for crypto. We've launched this product outside of the US in 2021. Now it has nine assets, okay? And it started with five assets and 95% Bitcoin. And now has nine assets with, I would say, 70-something percent of Bitcoin.

So it's designed to evolve as the market evolves. And institutional investors, they prefer to approach this space in a passive way, right? It's too early to pick the winners. And it's too concentrated to go just Bitcoin. when you're losing all the optionalities of the other different application. It's like back in the 90s with the Internet, deciding to invest only in the email when you could invest in like an Internet index, right? So getting all the different optionalities that the Internet would bring.

So this is a flagship product. This is the one that's available in most of the markets outside of the US. Recently, we introduced this product into the US, a US version of that product, which is the NASDA Crypto Index US. Right now, it's restricted to only Bitcoin and Eater because of the regulations here in the US. But we have a filing with the SEC that, if approved, would allow this product to have the same constituents as we have outside of the US. So we'll have those nine assets and could expand over time.

So that's why we're very excited about what this new regulatory environment, this new administrative. can bring more clarity to crypto and it can also allow us to have those, I would say, better products that we already have available outside of the US for a long time, finally made it available here. Samir, I'm glad you cleared that up because as I'm looking at ticker NCIQ, I see that, to your point, it's only Bitcoin and Ether for now. And you mentioned the regulatory environment. We'll get to that in a sec. I just, I don't want to forget, the current price action in Ether and Bitcoin over last couple of weeks has been remarkable. And when did it bottom? I guess it was early in April. I remember seeing just somebody tweet something about Bitcoin and the sentiment was so washed out.

And for the first time, I've held Bitcoin and Eath since 2020, I believe. And for the first time since I bought it, I thought to myself, all right, maybe I should sell a little bit. Like maybe I own too much. It's not going to happen. And then boom. ETH Rockets 50% in a week or whatever it's on the last week. Bitcoin went from 74 up to 103. And it seems to be like without an explanation, which is fine. But I've been following people on crypto Twitter that are looking for an explanation.

And it's just people are making shit up, which is fine. But do you have any sort of narrative or are you just like, yeah, this is what it does. It just sometimes it goes. Yeah, so the interesting thing about crypto is, if you look at all the asset classes, especially equities, you normally see the return distribution as a normal distribution, as a bell curve, right? So most of these distributions around, you know, zero to one or two percent. But when you look at crypto, you either have like very positive returns or very negative returns. So we have almost like a smile curve on the returns distribution. And this is a trap for our behavioral biases, right?

So it's either like this is going to transform the society and Bitcoin is all like it's going to replace the dollar or this is going to zero, right? This actually triggers our emotions. So that's why we like to take those emotions out of the investing and look for a passive way. So instead of trying to pick the right timing or pick the winners, just, you know, it makes sense. It's a long-term technology is a new asset class. It's historically uncorrelated with the other assets that you have on your portfolio. And you can use this higher volatility and the fact that this return distribution is like a smile to haverse that volatility to rebalance your portfolio over time. So it just makes sense to put a small allocation in your portfolio.

So normally, what we see, like, especially professional investors looking for, is like a 1 to 5% allocation for the long run, right? And a passive diversified way. So instead of being subject to all those behavioral biases and trying to pick the winners the right time or being influenced by all those emotions that, you know, that this price action brings, you know, just be long only. Look for this at the long term diversified. So, Samir, you also have no idea what's going on.

Yeah, no, I mean, we can find all the different explanations, right? So, I mean, it's easy to make up stories. Yeah, especially after the fact. So, I mean, the big topic now is the tariffs, right? Like this new policy brings uncertainty, and markets, they don't like uncertainty. So as we have more predictability, that's going to be good for prices. And what we saw in the last few weeks is it's, you know, those breaks on the tariffs, that deal with China, like all those things are helping to, you know, at least take some uncertainty

out of the markets, and this is positive for risk assets. And we've been seeing crypto reacting more positively to this because it's a global asset class. We're also seeing, like, when we look at the Ethereum, for instance, like more regulatory clarity coming from the US, this discussion around staking and giving regulatory clarity to staking, all the upgrades that the network has been passing through. Those are all positive fundamentals for a good price section. But really, on the short term, this is all noise, right?

There's a lot of speculation in this asset class. We need to remember that. So they tend to react faster to those silos. So we don't look much into the short term and trying to come up with narratives and explanations for why it went up yesterday. But we really try to look, zoom out and look at the fundamentals of this technology.

So I'm curious how you go about building the index. So the hope is, obviously, you said you have nine holdings in the international funds. You have two holdings in the U.S. one. And the hope is once regulators allow you to have more holdings, you'll add them to the fund. Is this just purely market cap? Do you, I'm curious how you handle like meme coins. If Dogecoin or fork coin is in the top 10 or nine, are those part of the portfolio? Do you screen them out? How do you handle that? Is it purely market cap, or do you have other screens involved? Yeah. So the index has a set of eligibility rules. So like the asset must be supported by regulated exchanges, must be supported by qualified custodians, needs to have a minimum liquidity threshold, minimum market representation. And on top of that, you have NASDAX governance. So the same index governance structure that runs the NASDAQ 100 is responsible for the NASDAQ cryptocurrency. index. So they run this very stringent eligibility criteria with a very strong governance. And one of the aspects that they look for when they look for assets is like meme coins, for instance, are not accepted in this type of index. Right. So it's not only being big in the market cap, you need to have institutional acceptance. And you need to have a decent investment thesis and, and, and, uh, and, uh, fundaments behind it. So it's a passive approach. Once you satisfy all those eligibility criteria, then the assets are weighted by the market capitalization.

So the real secret about the methodology is how those eligibility rules are implemented in a way that can both give you the exposure, the broad exposure to the space, but also protecting investors and looking for, like, you know, assets that have like a higher quality and a higher institutional acceptance. Samir, Bitcoin currently has a $2 trillion market cap. Does Bitcoin need to be anything more than Bitcoin to go to $10 trillion? Does it need to be adopted as an actual payment technology? Or can it just be the equivalent of digital gold, which is how I've always thought about it.

Is that enough for it to keep growing? Yes, we believe so. So the investment teasies that we have for Bitcoin right now is that it's It's an emerging digital store of value, okay? So it has some good characteristics of a store of value, but it's the first time in our society that we have a digital way to store value. So it's something very new,

and it's not, like, especially just older generation and the central banks, they're not used to it. So that's why it's emerging. It's gaining, it's representation, its pace as we see a generational shift in our society. and as we see the digital transformation of our society. So we believe that over time, we're going to see increased adoption of Bitcoin as a store

of value. And this is enough to take this as a class like to take Bitcoin specifically, maybe like a 10x opportunity in coming 20 years. I think that's reasonable to assume that if Bitcoin keeps its exponential adoption that like we've seen, and especially now with the US government talking about Bitcoin as a store value and having a strategic Bitcoin reserve, that is a catalyst for adoption. So, yeah, I think the major investment thesis that we have for Bitcoin right now, the major reason why we think people should look at this as an investment, not just on the speculation

side, is this opportunity of going from an emerging digital value to a consolidated store of value in maybe five or 10 or 15 years. We don't know. That's a big question, right? And that's why we've seen so much volatility. After Bitcoin becomes a good store of value, then its volatility will not be 50% annualized. It will probably be something like 5% annualized. And then we'll start talking about potentially using Bitcoin as a payment net mechanism.

So right now, Bitcoin is not a good payment mechanism because of its volatility. But once it becomes a good source value, then the investment case will not be there, at least not as we see now. but then we could use Bitcoin for payments. So you think if Bitcoin becomes digital gold, even with the 24-7 nature of the markets, that volatility will drop substantially. Yeah, exactly. And this is happening.

If you look throughout the last 10 years, the volatility, Bitcoin's volatility, went from 200% annualized to something like, right now should be something like 40% to 50% annualized. So volatility is going now, especially as the market cap increases, as the adoption increases. And, yeah, if the TZ is correct and if Bitcoin becomes a good store of value, we probably see that volatility going below 10.

And once that happens, then the investment opportunity will not be the same as it is today, right? Because you cannot expect an asset that has a 5% volatility to go up, 2x, 3x, 5x in the short term. That's the whole nature of risk and return. Samir, talk to us about about adoption. Over the last four weeks, the, I'm sorry, since the bottom on April 8th, the top flows for assets have been, this is from our friend Todd's own, it's been like ultra short-term bonds, then short-term bonds. I can't remember what number three is, but number four, number three might be VLO, but number

four is spot crypto or crypto ETFs. That's a lot of money. Is it still mostly retail driven or are the institutions really coming in a major way? No, I think there's a big shift now, especially because like the geopolitical environment is more favorable for a non-sovereign store of assets, right? So if you look at like gold's price has been rallying in the last few months, this creates an environment in which people are understanding now that Bitcoin can be a good alternative. And now with the US government talking

about it, that reinforces the thesis, right? So, we're seeing more and more professional investors looking at this. Institutional investors, like pension funds are taking a serious look at this. Hedge funds are trading this heavily, right? So most of the

flows, when you look at the, especially at the Bitcoin ETFs, you're head funds doing like augs charge trading, like basis trading against the futures and all that. So it's a highly liquid asset class and it draws a lot of attention, a lot of flows, a lot of volume. So yeah, no, definitely like most of the volume that we see now, most of the interest has been on the institutional side. Samir, we should mention that maybe one of the reasons we're hearing a little background noise is because you were actually at the NASDAQ exchange today ringing the bell.

Just give me a little bit of background on what that was like for you. Yeah, no. Today we did a bell ringing, the opening bell serenial. the NASDAQ market side. So to celebrate the launch of the NASDA crypto index CTF here in the US, it's the first crypto index CTF in the country. So we're very excited about it. So where do we send people who want to learn more about this product? Yeah. So, I mean, there's a lot of information on our website. So we encourage people to look at this like hashtags.com. We have an insights hub in which we produce a lot of different material, educational material,

and especially for, you know, long-term investors, right? So not much on the price section and short-term speculation, but really on the long-term investment thesis around crypto. So we encourage everyone to look at our website. Perfect. Thanks so much, Samir. Thank you, Ben. It was great to be here. Okay, thanks to Samir again.

Remember, check out hashtags.com. Learn more about their index. Email us, Animal Spirits, the CompoundNews.com. This material is for informational purposes only. A registration statement, including a prospectus, has been filed with the SEC for the offering to which this communication relates and can be found here. Hashtex dashetf.com slash NCIQ slash prospectus. Before you invest, you should read the prospectus in that registration statement

and other documents that have been filed with the SEC for more complete information about NCIQ and this offering. You may get these documents for free by visiting Edgar on the SEC website at SEC.gov. Alternatively, hashtags will arrange to send you the prospectus if you request it by calling toll-free at 9-17-525-5635. The fund invests directly in Bitcoin and Ether, aiming to track the NASDAQ crypto-Settlement price index. Crypto asset investments are highly volatile and may result in total loss of your investment. Instruments whose underlying investments include crypto assets are not suitable for all investors. The fund is an exchange-traded product and is not an ETF or

mutual fund. The fund is not registered under the Investment Company Act of 1940 and is not subject to the same regulatory requirements and protections. Carefully consider the fund's objectives, risks, charges, and expenses before investing. Investing in the fund involves significant risk and may not be suitable for all investors. The fund is new with a limited operating history. Investing in Bitcoin and Ether is new and highly speculative. Nothing herein is intended to imply that investing in any crypto asset or crypto asset related product may be considered conservative, safe, risk-free, or risk-averse. For more information, Read the prospectus at hashtags dashetfs.com slash NCIQ slash prospectus.