The Wolf Of All Streets - $100,000 Bitcoin, $10 Trillion Crypto Market Cap | Dan Tapiero

Episode Date: April 11, 2023

In this episode of The Wolf Of All Streets podcast, Dan Tapiero, a global macro investor and entrepreneur, shares his insights on the current state of the banking crisis, the future of cryptocurrency, and his experience as the founder of DTAP Capital and co-founder of 10T Holdings. Dan believes that the cryptocurrency industry will reach a market capitalization of $10 trillion and shares his Bitcoin price forecast with the audience. He also discusses some of the projects that his investment firm has backed in the digital assets space. Join us for an informative and thought-provoking conversation with one of the leading voices in global macro investing and cryptocurrency. Dan Tapiero: https://twitter.com/DTAPCAP ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

I spoke with Dan Tapiero almost exactly a year ago, and he talked about the crypto space 30Xing. Now that was from an original 300 billion going all the way up to 10 trillion. His belief that it could have a market cap or total value of 10 trillion is so fundamental in his mind that he named his company fund 10T. Well, now he thinks that maybe 10 trillion is a bit too bearish. We talked about everything under the sun. One of my favorite guests to talk to. You guys really don't want to miss this one.

I guess the most important question on everyone's mind right now is, do you trust your bank? Okay, so we're starting look i think um look um you know as you know i have a sort of this deep macro background and i was 25 years in the macro hedge fund business and you crises all around the world is something that we always were involved with one way or the other. As far as banking crises go, I mean, this is not that severe just yet. Credit Suisse, if you look at a price chart, has been going down for literally, I mean, 10 years.

I think it was zeroed out in most equity investors' minds many, many years ago. So, you know, regarding the U.S., I mean, look, it sort of reminded me a little bit of 1994 when Orange County took a wrong bet and got blown out. And, you know, I think that was a very clear, like, portfolio mismanagement situation. And this is what we had. I mean, I don't know how the Fed, I'm sure they were aware, but I don't know how they could possibly not be aware that you would have a whole group of not just banks, but insurance companies, pension funds, etc. not get caught in a long duration bet. And again, most of those entities don't have to liquidate, there's no forced liquidation. So in the case of Silicon Valley Bank, they were forced to liquidate and why they bought the 10-year when the three-month was pretty much the same thing in terms of yield.

It's just poor money management. But you know what? I don't know how the Fed or anyone else expects local banks out in the middle of the country to act as hedge fund managers, you know, and to act as, you know, to be so right on their interest rate forecast. I mean, it's very difficult. And so in a way, they were acting like a hedge fund. And that's pretty darn irresponsible for what I would call, you know, like a not a local bank, but like a non-trading focused bank. Right. Right. I giggle because you said, obviously, you don't know how they can be expected to behave like a hedge fund. The Fed also has no idea where interest rates are going to be. I mean, you said that these small banks, it's hard for them to predict and make these bets. You could also argue that the Fed dot plot is miserably mismanaged, generally wrong, and they also miss.

Yeah, that's the whole separate point. I mean, I think the peak in the rate cycle has happened. I think growth and inflation are going to be lower every quarter into the end of the year. And I think it's likely I was a little early in this call. I was on Twitter talking about this probably in May and June last year at the very peak. I just think inflation will likely CPI will likely be below four four, I think by the end of the year. And that's what's really, to me, going to be a big boost for assets is that what is the surprise? The surprise is that they've over-tightened. And obviously, there's so many signs of it. It's like,

I don't know, Scott, what you think, but it's pretty much the most obvious cycle that i've seen at least in 30 years right i mean but the fed continued to hike right i mean the most recent reason yeah they continue to hike and solely because seemingly i don't know i know that uh pal is smart and i know that all the fed governors are intelligent people i don't doubt that but it seems like they only look at cpi and nothing else matters. And every leading or forward-looking indicator says that inflation is already crashing. If you look at commodities, basically everything. And they seem to be working on lagging indicators of hikes that they did six months ago, waiting to see them come to fruition. It just seems like

they're completely incompetent, even though I know they are intelligent. Yeah, it's definitely a weird one because they even know that policy works with a lag. I mean, that used to be part of their mantra. So, but they made a mistake in not starting the tightening soon enough, right? I mean, we've all heard this story a million times and then they overcompensated at the peak and, you know, they completely turned and got very aggressive, really at the peak of the CPI. So yeah, I've never seen a central bank make its policy on the two most lagging indicators, CPI and unemployment rate. But the yield curve is super inverted. And I think, you know, tells us what the market is saying.

And the Fed is aware of what the market is saying. So, you know, look, they only have that very short interest rate, the overnight Fed funds, to try to manage an entire cycle, not just the US, but really also the global cycle. I mean, I have some sympathy, but not really, because it's pretty obvious things are going to downshift pretty hard over the next six to nine months, and we're seeing it already. So I don't really understand why you need to make sure that people get fired to manage a liquidity cycle, right? Like, I mean, I...

They could break everything in their path, but if they don't break employment, they don't care. Right. It's strange. Take down every, like, bank out there. I mean, there would have been, if they hadn't come in, there would have been a massive run and there would have been a lot of bank failures. And, you you know they just came in and backstop the whole thing and uh I don't know in my mind that was it that every every crisis like that is always the end of a tightening cycle so I don't see any more tightening I think that you're going to get a massively inverted yield curve uh you know, maybe, I mean, I see 10 years down probably certainly below 3% this year, maybe down to like 2.5%, et cetera, regardless of what they do with the Fed funds rate.

I agree 100%. You mentioned maybe the most important point, which is if the Fed or if the FDIC, if the government, Treasury had not stepped in and backstopped everything, we would have had a massive run on banks and would have had a massive bank failure. But to do that, they effectively violated decades or hundreds of years of central bank policy. You know, every sort of policy they had put in place after the last financial crisis, it seemed like overnight they just decided all that was out the window and this is what they were going to do. So the question then becomes, did they solve it or is it temporary? I get that they can backstop

two banks, three banks, five banks, 10 banks. If we see another trigger for a bank run, can they backstop 20 banks, 30 banks, 50 banks? I sort of think that they kind of have. I mean, they've basically probably quietly are. Yeah. I mean, it feels to me like, you know, that's what they've done is, you know, they've backstopped all the deposits in the system somehow. And one would think that if that's the case, that you've increased the supply of liquidity dramatically and potential liquidity, right? And potential liquidity, to me, it's obvious fodder for a bear market in the dollar. And I think the high in the dollar has happened. And I think we're going to have a nice little bear phase here. And it's playing out. It's playing out. Because again, I said potential liquidity addition. So if we have more bank failures, there'll be more. And that probably pushes the

dollar down a little more, probably pushes down the rates in the back end. And I think pushes up equity. I think we're going to have a very strong year in the equity market this year. I agree. It's a wall of worry type thing. People thing people say well how can the equity market go up um before the the recession has even hit before growth and inflation have even dropped and it's because liquidity is the powerful arbiter here when you look at the stock market versus money supply on you know on a very long-term chart, it's basically not gone anywhere, right? Yeah.

I mean, right? Isn't that it? Yeah, it is. So it begs the question then, would you consider what's happening, the backstops, this form of liquidity as QE? Yeah. I mean, absolutely, it's QE. They don't have to call it that.

Well, they'll never call it that, and a lot of pundits refuse to call it that. And I keep saying QE. They don't have to call it that. Well, they'll never call it that. And a lot of pundits refuse to call it that. And I keep saying QE infinity and I get, you know, shots from every side. Yeah, I don't know. Pretty clear. You know, maybe maybe they're hesitant only because it's it's the backstop is liquidity, extra liquidity today, but also potential liquidity to backstop things in the future, which in a way is almost more powerful to me. Because it's the, you know, they really have taken away, you know, the downside possibility for, you know, banks that make mistakes. I mean, like, my goodness, if I were

in a mistake where in a business where I didn't get penalized for my mistakes, I mean, that's the greatest business in the world, right? I mean, are they going to push banks further down the risk curve? I mean, you talked about the fact that they're effectively have to behave like hedge funds. And I would argue that the Fed has forced that behavior by Dodd-Frank and the policy of what they are and are not allowed to hold. But doesn't that now mean YOLO, right? The bank can do whatever they want. They're going to be backstabbed.

I mean, they probably add another regulatory layer. So it's theoretically YOLO if the regulator is napping. But what I would say also is, and this is interesting, plays into Bitcoin and crypto a littlenationalized, but they become sort of non-corporate, non-capitalist entities. And it's very possible that instead of YOLO, they clamp down because they're backstopped by the government. And then all of a sudden, their ability to make return completely collapses. And so we always talk about like, oh, the TradFi banking system is going to go away. And what I call the digital asset ecosystem, which is everything in the new world, it's just going to replace it. I never saw it that way. I always saw it sort of as a merging of the two.

But you can envision a world now where because the TradFi banking system is, let's say, impaired from the moneymaking process, that people do move in to the digital asset ecosystem, right? And I mean, investors, like they start to see that there are great businesses in the space. There are ways to make money in, I mean, I wouldn't call it new banking, but just in, you know, in our new world right and when we saw the banking collapse we saw bitcoin rise right it was effectively in between 19 000 20 000. now some will argue it didn't rise until the fed announced the backstop and we knew that there was going to be liquidity and once again liquidity trump's all and Bitcoin certainly has followed liquidity in the past as well. But it shot up to effectively just south of $30,000

in that week after. What do you make of that move? I've asked a few people this. I asked Michael Saylor this on Spaces. He curiously, I would have expected him as sort of a Bitcoin maximalist to say it's all happening. But what he he said was i think that a bunch of people in crypto moved into bitcoin right they moved out their alcoids they moved into bitcoin but i don't see a mainstream push yet into bitcoin do you think that that was real adoption holy crap banks are collapsing i need to buy bitcoin i do because um also remember eth Ethereum also rallied. And so I sort of see Bitcoin and Ethereum as together as very high quality collateral that can't be debased. And we know actually now Ethereum has a burn schedule.

So supply is being reduced. But let's put that to the side. Bitcoin and Ethereum, even more perfectly than equity, right, because the supply is limited, you know, respond to these shifts in liquidity. But you also had some of the, you know, what I call venture projects or the other protocols also improve in price, like the whole space improved in price. And um i don't think it was um you know i i there was obviously some um uh sailor i think is right in in saying some of the money into bitcoin came from within the ecosystem but i think a lot of it also came from without, from outside of the ecosystem, just because, you know, it does act a little bit like gold.

You know, Bitcoin and gold do have sort of a trading market connection. You know, I know Saylor watches the markets, but, you know, he's a technologist he comes from you know the tech background and maybe doesn't watch the correlations and the way the market is trading as much as um other people i mean certainly me and you see bitcoin trading with gold and liquidity and two year and ten year notes and you know nasdaq i mean it doesn't always and it certainly outperform absolutely every single thing, because even the NASDAQ, you know, any of those companies can increase the supply of their stock, you know, almost, you know, not whenever they want, but they can. And Bitcoin and Ethereum to a greater, a great degree cannot. And so I thought, and I was doing investor meetings during this time, and people were really excited

that the Bitcoin use case or the high quality collateral use case was being proven out. Everyone who was an owner wanted to see this action on this banking mess. And I'll tell you. About time. And you got it. Like we got it. I mean, it's up, what, 50 to 60, 70 percent. I think it's almost 70 percent on the year.

Yeah. Depending on the day. It's right. It just so it, you know, all these people complaining Bitcoin doesn't respond to this or that. It's not a hedge. It's not whatever it is. It did exactly as it was supposed to do. And look, I think the low for the space came in on the FTX collapse.

100%. It's very obvious to me that when Ethereum couldn't make a new low on the announcement of the FTX. It didn't even come close. Yeah, it was a few hundred dollars above. Yeah. And Bitcoin made a sharp move lower and then came back. And, you know, we know from the traditional markets that that's just a bullish divergence when you get the worst possible news you could ever imagine. And I think that was certainly the most surprising for 95% of the people in the space, that if the price of the most liquid asset can't even go down, I mean, that is clear that the selling is just finished. And so I actually was very aggressive in our fund three, and I put over $100 million to work in seven different companies in the space,

crypto blockchain businesses in the space in that October to December period. Because, you know, again, I'm probably one of the few private equity guys out there that actually feels like I need to time the cycle. Most private equity guys, they want to invest throughout the cycle because they don't know when there's a low. I'm pretty darn sure that was it. I argued over and over again that last summer was the low and then Sam got me. But I believe that even if you look at the Bitcoin halving cycle, the four year cycle, that summer low when Bitcoin then sort of just had a boring, choppy, sideways summer, I think that 17-ish would have been the low.

Sam gave us a better entry, obviously. But the very fact, as you mentioned, that that entire FTX drop was retraced by January. We were back at 21,000 in two months when FTX was apparently going to torpedo the entire industry. Yeah, and then Genesis as well, DCG's Genesis, people were saying, oh, I can't buy because what if that Genesis goes bankrupt?

Anyway, they announced bankruptcy, I think. They did, right? They announced bankruptcy, and on that day, it exploded. Remember that? I mean, like... That's the wall of worry, right? I mean, when bad news ceases to be bad news,

I think that that's a very clear indication that the bottom is likely in. And to your point, at 20, you know, 28, 30, 26, wherever we are when this podcast comes out, pretty hard to imagine there being enough supply even left to tank price back to the lows. I mean, what would it take for price to drop 50 the U.S government is selling Silk Road bitcoins 10 000 at a time and the market didn't even react or no

I agree I mean it's from a trader like if you would ask like a trader's perspective on this you would say it's trading really well. I mean, it's trading really well. It doesn't like, so even overnight we had, you know, the Saudis increased oil output and everyone's like, oh, oil's exploding up now. And now inflation is going to go up and the, you know, the stock market, they're selling NASDAQ. And so they'd sold some Bitcoin or some you know overnight and then it popped right back like I mean these very small like little trading things um are all I mean are all showing that it's

trading really well and I again I don't focus too much on this but I'm aware of it because you like to get confirmation, right? Your confirmation that the low is in, right? They're trying to sell it, and it holds very well. So. You actually retweeted somebody just a few days ago who said that when the S&P gains over 7% in Q1, 16 out of 16 times in history, the full year finishes green and up 23% on average.

So I know that this time is different is a very tempting thing to say, but we did it. So we would have to be 16 out of 17 for us not to end this year green, even on stops. Yeah, I think, you know, I that guy does tremendous work. And some people in the comments were saying, oh, you know, he tweaked the data, this, that, the other thing. Look, it's close enough for government work, as they used to say. I really think that stat is just incredible. I mean, I think there's a very high degree of probability that we end up nicely this year. And it's one of the most classic wall

of worry years that I've seen. And I would connect that to crypto and Bitcoin, too, because I keep getting it's just relentless, this FUD about how the U.S. regulatory authorities are going to shut it down. And there are no Fiat on ramps. And, you know, it's a choke point, this and that. And I'm just like, guys, the thing is trading like it's bulletproof i mean we've been hearing i've been hearing this fud stuff i mean it's five years that it was going to get banned and this is not then china banned it and the outside is back no impact is back yeah well and now they're back through hong kong and so i don't i i don't know what it. Maybe it's human nature just wants to find the weak spot or the focus on the one negative thing. But I don't know.

It looks like if you could get CPI down below five in the next six months, I mean, I hate it, but I mean, Bitcoin can be at 40,000. I mean, I don't want to trade it like that. I don't want to talk like that. But I mean, honestly, it's just this inflation premium thing that's got people a little worried. I mean, how many times in your career in crypto have you heard the over-concern about a China ban, an India ban, ESG energy narrative, or hey, even recently, Mt. Gox creditors getting their Bitcoin back and dumping it on the market? None of these things ever happened.

And we repeat them every single time. Now, China did ban crypto, but I'm saying none of them end the market in the way that people seem to expect. Yeah, maybe they're happening, but just the market's absorbing the news incredibly well. This is one thing, you know, there's so many people in the space who have not been portfolio managers, who have not been traders. You know, I mean, looking at price action for 25 years, you know when things are trading well, when they're trading poorly. How is that defined? It's a little bit nebulous,

but it's very easy. If a lot of negative news is coming out and the market's not going down, that's trading well. And that tells you that this is an early bull phase. And again, I think we could go sideways a little bit this year, you know. Yeah, I agree. I think in the second half, 24, which is post that halving and into 25, we're making new highs and I would suspect well over 100,000 on Bitcoin. And, you know, I don't think that's a very aggressive call either. I think, yeah, I think the exact same thing. I've said a few times, if you just look at a Bitcoin, you know, monthly chart historically or weekly chart and just draw

the halvings and the bottoms on it, you could have literally fallen asleep or been hit on the head by a rock and missed everything happening in the world and turn on price action right now and say, oh, we're just right in the perfect spot of the cycle. We'll have the halving in May, we'll chop until then, six months after the halving, we'll blast off. Right. Right. I mean, I think that's right. But look, it's hard to do it. We're talking about it sort of in a casual way, but it's hard to hold for the long term. It's hard to ignore all the zigs and zags and all the news and all the FUD. And Twitter today or yesterday was all about Elizabeth Warren saying something on Bitcoin. I mean, I don't know who is possibly more irrelevant than Elizabeth Warren,

except for Bar never passed. People wheeled out Barney Frank a few weeks ago. And I'm thinking Barney Frank for this choke this choke that it's all just fun. Right. Do you think that there's any truth then to a coordinated effort to cut it off? I mean, it is a bit suspect that effectively Silvergate, Silicon Valley and Signature were the three banks that were primarily servicing the crypto industry. And they're the three that and Signature Bank was quietly closed on a Sunday. I guess it's possible. But I mean, I look at the market and the market's response. And you know what? I look at the value of the dollar value that's within the entire, I call it a digital asset ecosystem. So the value of all the cryptocurrency that exists is $1.1 trillion.

And the value of all the equity, roughly the businesses in the space is, let's call it, you know six hundred billion so you're looking now at a space that has 1.7 trillion dollars of total value in it okay um and it was 300 billion in the middle of 19. so here we are four years later we're up almost six times. Think about how much stuff was thrown at this space. OK, they're in the last year. But, you know, over that period, all that negativity, all of that. Again, I'm a long term macro guy. I sit back, I look at the big numbers and, you know, one point, yes, at the high, that number was 3.5 trillion like a year ago. But we're 1.7 trillion dollars between the money that's involved in like NFTs and DeFi and stable coins, you know, in, you know, the even this layer twos on Bitcoin. You know, our people are getting excited about. And you've got Lightning and now Ordinals. And there are all these different new things popping up.

And these use cases, I mean, I read the other day, I don't know if you saw this, the state of California is going to put your license and your car deed title on the Tezos blockchain. Now, I don't know what specifically Tezos, but I mean, look, that's pretty mind boggling that a non-corporate, non, like, clearly not an economic agent, right, is embedding a blockchain into its in quotes business model right i mean starbucks right i mean starbucks rewards programs it's all very quiet but like we can ignore the price of coins and whether they need them or not but the technology is unstoppable yeah i and what the traditional world is now really you know i think leaning into it you mentioned um you know you mentioned starbucks but even like the big guys google apple and then you have all these like interesting nft use cases and i know the bitcoin guys think it's a big waste or

whatever it is but the reality, is that it's being integrated in one form or another. These companies are realizing they can build community, they can reach their clients better. They can build that relationship through NFT drops and ownership and have a tighter connection with their consumer. And so the car companies have done a bunch of things with it. I just, it's not like 18 and 19, where I felt like in 18 and 19, it was hangover from the ICO. So people ripped people off, which is a terrible thing.

You know, bad actors in the space getting involved with all these icos they plugged all of these retail people and it was just then about the price of the crypt of those coins right but today it's like you still have what um the the the dollar value settled with stable coins is I think eight trillion dollars last year you know the number of ad the monthly active addresses on for layer one blockchains just hit an all-time high if you're looking at you know Avalanche and Solana Polygon, ETH, you know, Binance Coin, that's an all-time high. That's usage, right? So in 1819, if you remember Q418, Q119, like it was like diabolical. People were, you know, they were on the ledge. And today, and then I got this other stat here, number of developers that have joined, have now worked in the blockchain ecosystem, all-time high in 22.

So the price went down 70%, 80%. But the activity and interest in the space overall, is that an all-time high? So why isn't the Financial Times, the Journal, why don't they report about all this activity? All they're doing is, you know, they report about Sam Bankman freed stuff or they report about, you know, all the regulatory stuff. It's just incredible.

And hashrate continues to make all, yeah, hashrate makes all-time high after all-time high after all-time high after all-time after all time high after all time high. So you said big numbers. Speaking of a big number, you threw out 100 million and said that you were able to deploy that between October and December of last year in the midst of the FTX collapse. That's a pretty big number in the crypto space, especially when, you know, most of these companies have relatively small market caps. It's hard for investors to get their money in. So what are you excited about and what are you actually investing in and what were you investing in sort of at the depths there?

Yeah, well, I mean, I would say they actually crypto blockchain space that had a valuation of over a billion dollars. And today, that's 14. And today, based on my account, there are over 100. And at the peak, there were 150. So if you look at, and we have a universe, this is my fun 10T, but the new iteration is called 1RT, One Roundtable Partners. Our assessment is that there are 223 companies with a valuation of over $100 million. So easy to get $100 million in. Yeah. And so I think it's $500 to $700 billion of total value now in the space. And we led one round for Quicknode, which is API and node infrastructure. They're basically the only competitor for Alchemy. We led that and invested. Actually, it's going to be close to 50 million there we also invested in the secondary we're very active in

the secondary and there were some companies and again i'm not uh i'm not supposed to mention them for some reason but there were companies that we were i mean my you know our our legal teams like dan i know how it works mentioned you know whatever it is but i will tell you we bought four different businesses at between 40 to 80 percent discounts from the previous round so the the and these are businesses that we like that have been on our radar for a while and there were people selling in the secondary who either wanted cash needed cash were in for a long time and wanted out so we were able able to, you know, procure these boxes. We're very active in the secondary market. And so we bought from another fund, we bought from

a seed investor. You know, it's that kind of thing. And people come to us because, look, we've deployed $1.2 billion in the the last two years and we now purchased 26 different businesses and so um you know and you can see them on our website on the 10t website what they are and i think like that's the story the story is that this is a thriving growing ecosystem and yes there are some bad guys out there. We passed on over 100 companies last year. Thankfully, we passed on FTX and we passed on BlockFi and Celsius, thank goodness, and some of these super high valuation companies. But right now, it's never been. This is why we're raising another fund right now, because the opportunity set has never been as big as reasonable, because a lot of also a lot of the sort of traditional private equity guys that came into the space last year and the year before, they've now moved out. And so as far as I know, we're still the only growth equity fund

in the world that exclusively focuses on crypto and blockchain businesses. So I think now is a great time to buy. And it does correlate a little bit with Bitcoin and Ethereum prices. But look, we have investors that legally aren't allowed to own cryptocurrency. So for them, we're a great exposure. You know, the businesses that are a little more developed, it's not venture. You know, I don't think we have as much upside as like a venture, you know, investment would. But're investing it is going to zero either right nothing we have actually we had one out of the 26 unfortunately that we think is impaired um but that's not the end of the world it was only two and a half percent of the total assets i'm gonna make a mistake every once in a while. But I'm still shocked that we're the only guys out there investing in this space.

I think it'll change. But so we kind of had our pick in that October, December period. And we put, you know, as I said, we put over $100 million to work. And that was the end of our third fund. Yeah, I mean, I'm looking at your investments, Fund 1 and 2, Kraken, eToro, Hobie, Gemini. I mean, these are the biggest names in the bit. Bitfury, Ledger, Prime Trust, Darabit, Animoca, Yuga Labs. I mean, you've got the big ones.

I see Babel there. I'm assuming that might be the one. Yes, that's the one. Thanks for pointing out that one. You catch it on it on the site yeah i made a mistake there i'm like ftx celsius what no so that said as we continue through this sort of i guess down cycle with these down rounds what's exciting you about what's still being built i mean it's very clear that you have a picks and shovels approach. You're invested heavily here in the infrastructure. And that's where those investors you talked about who probably can't get exposure anyways, where they want to be, right? I mean, you know, there's so

much going on. I like, for instance, I love the stable coin business you know i think that 700 million dollars this quarter what's that tether made 700 million dollars in the first first quarter yeah yeah i think circle i think circle did the giant numbers as well and they did huge numbers last year and i mean that's a company that's really run by first rate CEO. He's pivoted a few times in his career. I mentioned before how much was settled in stable coins this year. I mean, it's trillions of dollars. And basically, there's only one player.

I mean, Tether is hard for a guy like me to invest in. Of course. But Circle, I think, is a phenomenal business. And I only see that, you know, that business exploding. And really, honestly, there should be more than one stable going provider legitimate in the entire world. And I suspect within the next sort of five years, you'll see others. And, you know, one of the things we're doing in the new fund

is we're going to be focused on help. I mean, helping shepherd some of our companies towards realizations, either, you know, M&A or IPOs. And I just put this one thought in your head, like there's one large crypto, you know know blockchain business in the world that is public that's it it's coinbase there's one in five years from now okay there is zero chance literally zero that there's only going to be one and I think there are going to be tons of them. And right now, this mid-stage, again, you have a huge number of people in the venture with, you know, Andreessen and Polychain and Paradigm and all these guys,

Pantera, all in the early stage. But I think for at least for us, like it's not really a competitive environment in this mid-stage. And look, five years ago, there were only, or not even four years ago, there were only 14 companies that were over a billion in valuation. And now there are over a hundred. At some point, you get, and this goes back to your point before, you get adoption happening as people are able to buy equity in businesses that are producing revenue. And I think that, you know, revenue for in the VC space is maybe a bit of a novel concept, but the space that the space that we're in really sits somewhere between PE and VC, right? Because the PE guys, I think, think of anything touching crypto as VC.

But in reality, that's not really true. There are some really solid businesses here. And we have, last thing I would say, we have five or six businesses that actually made more money in 22 than in 21. I bet Ledger is one of them. What's that? Is Ledger one of them? Ledger is flat to up, I would say. If you look at the currency.

I was going to say the move towards self-custody that I think we've seen sort of happening was post-FTX. So it would have had to have happened at the very end of the year. So, yeah, I would be surprised if they messed it up. How excited are you about their new wallet? Oh, my goodness. I, you know, that was one of the original reasons we invested in April, May of 21 was because they had this prototype built. And I thought, that's the coolest thing ever. Are we going to actually get that?

And we are. I wish there were more guys out there who could help us produce them because I think the entire, they've pre-sold their max amount that could be pre-sold. So I'm just hoping that we can find a producer out there who can get us to the, you know, to, to have, to have more capacity for us because like, I think demand is off the charts and look, it's going to be sort of the wallet that we all kind of wanted, like on our phone and have a lot of flexibility, have that screen.

So I'm just thrilled. And they, it looks awesome. Yeah. Did you pre-order one? I didn't pre-order one because I'm a moron, but I will, I will be on the next list for sure. You know, I kind of saw the news and I was like, it looks amazing. And then I realized that you couldn't get them anymore. Right. But I'll find a way to worry.

I know, I know, I know some people, but I will definitely get my hands on one. Is there anything in this wall of worry, anything with the regulation, anything with the banks that's concerning to you to any great degree? You know, I think it's easy to be dismissive of it. But I mean, there is really a major pushback against our industry. I know. I know. I mean, look, I would say, yeah, there's always something out there, I guess.

But I'm not as interested in what's actually out there. I'm more interested in what the impact is of what's out there will be on the market. So I'm a market guy. I'm not like a journalist. I'm not like a statistician or a historian. I'm not any of that. I'm a market guy and so i only care about a fundamental piece of news if i think it's going to impact the market long term well i yeah i mean long term i mean let's just say for the course of the year yeah um i don't think there's any piece of news that i could envision that will not have Bitcoin and Ethereum closing higher in price by the end of the year than it is today. Anything, like by the end of the year. Now, that doesn't mean- I tend to agree, but people are obviously terrified about the Wells notice to Coinbase. In a worst case scenario of Coinbase, could only offer Bitcoin like going in Ethereum or something like that. And obviously the CFfdc's action against cz but people need to remember that the coinbase

hasn't actually been charged with anything and cz's port right now is completely civil i mean the binance case right now is it's civil for now i mean they have been going after cz for so long i mean that's almost as old as tether fun or it's almost as old it's not quite as old as oh when the matcox you know the matcox going i'm available right my favorite um so i mean i i i'm not dismissive just because i'm bullish i'm dismissive because I see how the market has reacted, right? I've seen the price action. Look, there is no piece of information or data that we're going to get that will be more shocking than Sam Bankman-Fried going from $20 billion worth and the wonder kind of the entire space to being fraud and bankrupt in this period of a month.

We're not going to get anything worse than that. And even when that happened, Ethereum couldn't make a new low in price. And look, Coinbase, let's just talk about that for just one second. The market cap of Coinbase is around $15 billion. The space swings around more than $15 billion in a day. So again, I look at this broader metric, this digital asset ecosystem value, sitting at $1.7 trillion. $15 billion. If Coinbase went to zero tomorrow, it's unfortunate. I don't expect that in any way, shape or form. But that's 15 billion dollars. Like, so what? I had the same response. I was speaking at London 2049 after the SBF fraud the day after. And I said, listen,

what's the total value that could be lost here? 10 billion? 15 billion? And it's going to be less than that. I'm like, look at how big the space is. This isn't just about one story. There are literally hundreds of stories in the space now. I mean, as I said, if you've got the California DMV engaged with it, just imagine all of the economic actors, all of the corporate people. Every luxury brand is talking about what their NFT metaverse strategy should be. Every payments business is thinking about it. I was just in Australia. The largest banks there are thinking about how to... They're really thinking a lot about tokenizing assets, which is another thing that hasn't even started, which we all know is, you know, at some point is going to take off.

And one of our companies figure is very focused on that. So, I mean, this is just a whole, again, I call it this digital asset ecosystem because I need like a phrase to describe something so big, right? And again, it is really, this is the digitization of value is what we're living through. So you're telling me that Elizabeth Warren doesn't think Bitcoin is important. That's going to stop the digitization of value. I mean, it's a joke, right? It is a joke, but what's sad to, I mean mean i was shaking my head as you were talking because what's sad to me is that that's so obvious to anyone who actually takes five minutes to dig into this and understand it but as a result of that attitude our country the united states that's always been

ahead on technology and entrepreneurship and has been a leader we are going to be woefully behind in this industry for years to come. Because right now, nobody is going to try to innovate here. So anything that's being built that's going to be important for the next five years is being built somewhere else. Yeah, I think it is unfortunate. I don't count the U.S. out. You know, we we sort of live on two year cycles and, you know, things could change if we get a 45 year old president, frankly, on either side. This is age oriented. It's very hard. You know, we've got 80 year olds running the country and, you know, they don't have a particularly long term view. They're not particularly tech savvy. You know, you go, there are places around the world where they are super enthusiastic.

And actually, you know, I was in Dubai and Abu Dhabi. Those places are making a very strong attempt to encourage crypto blockchain businesses starting up there and there are all sorts of incentives they think it's the future they see it singapore is another hub you have tsug in switzerland which is also another hub um so there are people uh australia i think is super advanced um in their understanding. So other people around the world who are smart, I've got some investors who are really top of the line investors. They get it. You know, it's just the U.S. legislators for the moment haven't done enough work. And the New York Times and the Post and the FT Journal, they're not helping either, because those guys are sticking to a very traditional,

you know, very traditional outlook. And look, put it this way, I think for us, I mean, selfishly, we need all those people not to get it for us to benefit. The minute everyone gets it, the opportunity, I wouldn't say is gone, but is reduced. But I think it's so early still for this opportunity. I saw some stat the other day. Only 4% of the world have digital wallets. And that's equivalent to in terms of like the adoption of the internet, 4% of the world had internet access in 1998. So basically, it's still early and we're nowhere near any sort of massive wholesale adoption. And just look at how much stuff is going on underneath the hood, all that stuff that I

mentioned before, right? Yeah, I think I was looking it up. We spoke a year ago and you said the Space Wolf 30X, I believe, right? And I think at that time, Bitcoin was probably 30, $40,000. Right. Yeah, I think so. So you say, do we still got a 30 X in us from here? You think we're looking at like a 35, 40? No, the view that I've held since the founding of the fund was that the value in the space, which in the middle of 19 was $300 billion, was going to 30x and get to $10 trillion. And that's why I called the first three funds, they were called 10T, that stood for $10 trillion.

So I put my view of the growth in the space in the name of that fund. And so that was the 30x that i was referring to a 10 trillion value on the digital asset ecosystem based on my the way i'm looking at it puts bitcoin between 300 and 500 000 which has kind of been where i think it's going to end up. I thought that in 19. I think that now, and again, markets get to where they are going to get to on their own, like program on their own time and plan. And there's just, you know, I think that 10 trillion is probably a little too conservative right now. I agree. We're at one and a half. I was just saying, why so low? I know. We're one and a half today. And a year ago, we were at three and a half.

So I think in 10 years, we'll be over 10T. But again, you don't want to, you under promise, over deliver, right? Well, it's hard in this market not to look like the crazy guy when you start throwing out numbers like 10 trillion. Right, but we got to it through some good math and we thought about this number a lot and I put it into the name of the fund. So I obviously had conviction about it, didn't come from nowhere,

but I did a panel probably a year ago with Dan Moorhead and Mark Yusko, and they asked the same question, what's the value of the space, the whole digital asset space going to be worth 10 years from now? And I think Dan said $50 trillion, and I think Mark said $30 trillion. And I was sitting there thinking that this may be the first time in my career, well, certainly in this space, where I'm the bear, where I'm the low guy. And I was originally going to say, I'm just going to say 10 trillion, but I upped it to 20. I couldn't go above that. I think that's working out. If we tokenize everything, if the tokenization of everything happens and you include that in the total value of all those assets, then you're talking about no ceiling.

Correct. Correct. And I do think that that is going to happen. All things of value. We didn't even talk about this, but now with ChatGPT and the whole AI figure, I think blockchain has a huge, right? You're making an amazing look at it right now. The two are born for each other. It's like it should be an arranged marriage.

I know. I know. I know. I know. I know. And that just basically started like a few weeks ago. Literally. So crazy.

I thought the growth of crypto was exponential, but just using chat GPpt i we are i i i'm a bull on ai i'm not concerned about uh the overlords i'm sorry if i'm safe they hear me uh you know but i think that the increases in productivity and the way that you'll be able to capture value using crypto uh integrated with it is just going to send the ledger i mean look the fact that you're going to actually be able to have it you know some of these images verified and unique and i mean it's the images that blow me away um that it's like trump getting arrested choose your side i don't care but yeah it's good it's good. It's, I mean, it's, I'm not saying it's not scary. Like I, how it plays into an election.

I cannot even begin to fathom, but I do think that as far as human productivity and innovation, it's the, I think it's the biggest innovation we've ever seen. I mean, the internet, I guess it's hard to argue. So Dan, listen, I know we're up against time. So like, I'm hoping that A, we will not wait a year. Okay. Because you're welcome back anytime. And B, I'm hoping that we force you

to call your next fund a hundred T. And we're calling it one RT, one round table partners for a bunch of reasons. But I mean, in like five years. Maybe after that, maybe after that, I don't know. We'll see. So where can everybody follow you and keep up with you after this conversation? Well, I mean, on Twitter, DTAPCap.

And then, you know, LinkedIn, I've actually found to be sort of a pretty good community. For adults. Yeah, Twitter, not so adults. Yeah, for adults. But thanks for having me. I enjoyed this today. This is great. Yeah. Thank you. I was, it was funny because as I was looking back on our last conversation, I realized just looking for it to see what it was.

And it was one of our highest engaged and most popular conversations we've actually ever had. So here's to this one doing the same. Yeah. You're very popular. Thank you so much for taking the time. And I you're very popular. Let's hope. Thank you so much for taking the time and I really would like to do this again soon. Thanks, Scott. Thanks, Dan.