The Wolf Of All Streets - Token Launches On Fire! Altcoin Season-Bitcoin to $47k? | Crypto Town Hall

Episode Date: February 20, 2024

Crypto Town Hall is a daily X Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in crypto and bring the biggest names in the space to share their insight. ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘2MONTHSOFF’ WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/    ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉  https://www.okx.com/join/SCOTTMELKER ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd ►►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/   ►►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    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.

Mario, I love that you're a CryptoX account again. You're just like little hints of crypto on your timeline again for the first time in a very long time. Not sure how to respond. True, true. I think because we're active again. You went through a very long period where you didn't tweet about this because it was obviously, to some degree, I guess in conflict with what you were doing on the other spaces or confusing for the audience. I mean, you have this huge audience that comes for politics and world news and stuff.

Now you're giving them a little taste, again, of what we're doing over here. I love it. Yeah, so what Scott is referring to is we're starting to post projects that we invest in. And we've done two today, one yesterday. So I posted for my personal account. We used to know we did that during the bear market, but yeah, so no, we did it during the bear market when my space was political and we stopped. So we're doing it for sure. So we did a shark tank show on the roundtable space on our other account the one that has my crypto punk and then we were posting a thread about all the the projects pitching on my account but then it just kind of it didn't fit with the page so we started

posting on the roundtable account and then reposting it on my page now we're starting to post on my page again projects we invested we did did two today. We did one yesterday, Pixels. Today we did BitCrunch. And what was the other one called? Octavia, the AI bot. Both did well. Both launched today. And I don't know.

We'll see how it goes. So far, it's okay because they're investments. So we talk, hey, these are investments. We put a nice, clean post about it. And that's it. Now the team, we are discussing behind the put a nice clean post about it. And that's it. Now, the team, we are discussing behind the scenes whether we should post from the Roundtable account, which is like people, the team likes to call it my DGN account. And then I repost, retweet on my account or just keep posting on my account. We'll see.

But yeah, but what do you think, Scott? I mean, I think it's important. I think it's important to be transparent with your investments where you can, and I think that's what you're doing. I mean, it's not like, you know. No, it's not about that. Yeah, the transparency is not my concern. Even if I'm getting tokens, would you say we're getting tokens?

It's not my concern. My concern is having crypto tweets on a non-crypto account. I'm always thinking, like, what happens if senators go on and see a post about some AI bot or something, or if Elon's going through and then sees a post about a Web3 game. I'm proud of them, but it's hard to explain to a US senator

or a Russian politician what Pixels is, even though it's one of the sexiest crypto projects. That's our concern internally. But we'll see. We're going through's our concern internally. But we'll see. We're going through the response to the audience and we'll see how it goes. I guess you'll find out relatively quickly

if you actually get negative feedback. Yeah, it's just the crypto community is a crypto community. But looking at the non-crypto community, for crypto, I'm pretty chill with it. Everything's locked up. They're VC investments. So I'm pretty chill with that.

But yeah, it's about talking about the elections of pakistan or today we're doing a space on nikki haley probably dropping out of the elections and then we just get a post about some crypto project that's where the conflict is what does nikki haley think of web3 that's the question yeah what does nikki haley think of pixels um but yeah we'll probably get one of these i like how we have our private chats out in the open because me and you don't get a chance to jump on a call. You're on your silly show all the time. And then after this space, I'm pretty busy.

So we just have our little one-on-one time live in front of, I don't know how many thousand people. It's probably not a good idea. We'll see. Nothing I've ever done has been a good idea. But YOLO, here we are. I made it 47 years so it seems to be fine let's get a danish uh i don't see if i can get danish up because i got

a couple of questions for him and we'll get alex up as well uh to talk about social tokens because he used to get his social tokens were very sexy we're getting a bit of attention in the last bull market and i'm waiting for their time to come. So he's, uh, he worked at diesel. So you probably give us. By the way, it says it's an error. So I don't know if we need to drop it. No, no, no, no. The panel's full. So we'll, Alex, we'll bring you up shortly. You stay there. Um, and, uh, but you know, we do have, uh, Ryan, uh, who comes on once in a while, once every few weeks, so it's maybe you can get a recap from him on, on his show.

It's a bull market. I'm trying to make money. i don't make money by being on the show here bro congratulations on shorting um bits no no what was it uh world coin they say they have a million users i mean i don't i don't know if how they have a million users a day and i don't know anybody that uses them. Never ever heard of anybody using a million users a day? Sounds a bit weird. Scott, do you believe it? How do they define user? I don't know. Any kind of user.

How would they have a million users a day? What's the use? What's the use? I thought they scan eyeballs and then you get money. Yes, that's a use case. That's the use? I thought they scan eyeballs and then you get money. Yes, that's a use case. That's a user? Yes, you scan

eyeballs, you get money. Cool. Yeah. All right. So yeah. And yeah, we spoke about that.

I mean, it feels like there's got to be, there's got to be a pullback to like 40, 48, 49 thousand because the funding has gone crazy. I mean, look at the funding rates. They're absolutely

insane. Like it's 50% plus on some coins per year on an annualized basis. That's ludicrous. Bitcoin as well or primarily at all coins? I haven't looked at it at all. I had it all open, but my computer crashed. I can open up CoinGlass and go

check myself. You can do that. Maybe in the meantime, can you explain to the audience why that's important? What funding rates are, why it's important and what type of indicator? Funding rates represent the appetite that people have got for going long or going short. So if you want to take leverage, you have to borrow money to take leverage. Leverage is effectively where you borrow money and you use that money to enter into tokens that you don't ordinarily have. And in order to do that, you've got to borrow money.

Now, as there's more demand for borrowing money, the funding rates go up. And right now, for example, if you want to be borrowing money on some altcoins, you're paying about 50% a year annualized to take leverage on those altcoins. That just shows that that's

a very good indicator to show how overheated the market is. So right now we're in a position where... Go ahead. I was just going to tell you the funding rates. I thought you were done. Go ahead. Yeah. So right now we're in a position where the amount of leverage that is in the market is at highs that we haven't seen since,

I think, November 21. November 2021 was the last time we saw these kind of funding rates. So that's where we're at. So to me, that makes sense. Whenever this happens, we get a flash. I mean, I can only imagine that this time we'll also get a flash. Yeah, I'm seeing Bitcoin funding rate 0.018. Not astronomical, but relatively high, 0.018.

That's every eight hours, right? Yeah, I mean, this relatively high, 0.018. That's $8, right? Yeah, I mean, this is just CoinGlass aggregated across exchanges. So, like, that's actually higher on Binance. It's 0.0221, it's 0.02 on OKEx, but then some of them are coming in lower. Obviously, 5, it's only 0.011. So, on average, about 0.018 ETH higher. So, ETH very high. 0.0264 is the OI-weighted funding rate for ETH higher. So ETH very high. 0.0264 is the OI weighted funding rate for ETH right now.

But Binance 0.027, pretty high. And then you start to drop down 0.039 on Solana, 0.039 on XRP, 0.034 on ADA. Some of them are pretty low. Matic 0.03, Filecoin 0.04. So yeah, these are high. Worldcoin is 0.06%. Yeah. So Scott, how does that contradict with what was said yesterday that leverage isn't too high? I think it's like open interest. I don't know if relative to that open interest is high, but these funding rates change very fast. So over the past few days, at large, spot buying was driving, and it still, I believe, is driving Bitcoin price up. And so there's also the relative relationship between how much is spot and how much is leverage. So we were saying that there was a heavier focus on spot buying.

But yeah, digging into this, it's starting to get pretty high. I'm going to go check you. And how important of an indicator is it? So Ryan, I think you were saying that it kind of shows that the market needs a correction. But if you compare this to previous bull markets, could you have funding rates at those levels and still see continuation of the bull market? It doesn't mean needs correction per se. It means that there's a huge opportunity for somebody to make a ton of money by flushing it that's the bottom line right like you could short the spot but if one of these

altcoins is extremely liquid with high uh with with high funding rates right now it probably a relatively small i mean large for retail but relatively small sell order triggers a liquidation cascade uh you can be short you. A big player can be short with leverage and then drive the price down slightly with spot, trigger a liquidation cascade. Price goes down 10%, 20%, 30%. Buy back at the bottom, rinse, repeat. I mean, that's basically what you see here. And do funding rates hit those levels at the beginning of bull markets if we look at the last two? Yes, they have.

This is pretty normal, and it can continue for a very long period of time, but it's just too early in the cycle to have extended funding rates. So, I mean, you know, usually towards the top of the cycle, you get these funding rates that are high for long periods of time. That happened in the last cycle. But I mean, this is way too early. And normally in this part of the cycle, you get the funding rates go up and then there's a flash up. And then you get the funding rates go up and then there's a flash up. But Mario, this is how you get the, you know, we talk about these bull market corrections.

This is often the catalyst for the very quick correction, big wick down, reset, backup. We saw this, by the way, on the fake SEC tweet and on the Matrixport news about the Bitcoin spot ETF not getting approved weeks before the spot ETF, if you guys remember. The Matrixport news, I think it flushed like a billion or something. I don't want to quote the wrong number, but a huge flush. And then the day before the spot ETF was approved, when we had the SEC fake tweet,

you saw the rest of the leverage effectively flushed, which is why there wasn't that much price action on the actual day. But this is not uncommon, and we've seen it quite frequently even in the past few months. It links to an article by Coindesk about an options trader taking a 20 million dollar bet you guys are both traders i think you ran your i think you had a butterfly yeah yeah i saw that exactly i guess that you know what a butterfly strategy is i don't know

i barely know what a butterfly is and it's a strategy involves some multiple trades costing over 20 million dollars the bet is that the floor it will hit a floor of 47 000 protecting protecting against the drop of a correction to $47,000. So maybe you can explain the strategy, guys, and your thoughts on it. We can pivot to the panel on that. Brian, Scott, you want to take that one? I haven't read close enough to understand the size and the weight.

No, I'll read it. It's effectively a complex hedging strategy that makes sure you don't lose too badly on either side. the size and the weight. It's effectively a complex hedging strategy that, you know, make sure you don't lose too badly on either side. But it's a trade that options traders take to basically take a directional bet but hedge the other side. I can dig in more deeply

to it, but people use them in very different ways. I don't want to speak out of line about what he's doing. Yeah, I'm just going through the article now. Ryan, any comments on a correction to 47K? Do you think that's extreme? Do you think we could go lower? I think I wouldn't be surprised if we get 48, 49K.

Great. We're going to keep going up. That's nothing. It's not even a 10% drop from here. We'll just go to the panel. I'm not going to go to Danishish yet it's a bit too early for danish uh but we've got we've got uh christian here uh from by bit we've got peter and william you're there as well your thoughts on the markets and probably dig into altcoins a bit later as well

altcoin season um and a few narratives but your thoughts on the markets guys and what you can expect to see next hey Hey, guys. Great to be here. Good to have you, Christian. Your thoughts? Could we see a correction of 47K? Do you think we could see a pre-halving correction or are we past that and only up moving forward? I feel we're still in the speculation times. The big push happened also with the ETFs

way before the action happened. When they happened, not much changed. And now it feels like the same is happening. So I think when it actually drops, not much will change. And I don't think we'll see a massive correction anymore. And what comes – sorry, I thought you were from Bybit. You are a partner of Bybit. Oh, yeah, yeah.

But why don't you – I'm not from Bybit. No, all good. Yeah, all good, all good. But I made the mistake there. But can you elaborate a bit further? Why do you not expect a correction? I feel that there's too many traditional investors in there.

We're not going to get out anymore at this moment. It feels similar to what happened over the last six, seven, eight, nine months, where you see massive news coming out or rumored to be there or big events happening like the halving, like the ETF that was coming, which was hype for months. And then you see the growth leading up to it. And then these events happen and the price doesn't really have a big impact anymore afterwards. And it just seems like it's accumulating very strongly towards further growth and reaching

soon an all-time high, it feels like. That's good to see you bullish. Ryan, you were making the argument yesterday that this time the traditional, the retail investors are not in, you're kind of using the metric of your YouTube, not your subscribers or YouTube views per video as an indicator that retail is not in yet.

Scott, I'm not sure if you're seeing similar numbers. Probably this space is seeing similar numbers. The numbers are not pumping like they do in the bull market, which kind of shows that institutional investors are entering the market now. And even on that point, even when it comes to institutional investors, you were using, I can't remember what the metric was, but the majority of institutional investors were independent advisors, have not yet entered the market still too early.

So even on the institutional side, we're early, let alone retail. We ran an analysis yesterday, and we looked at who's actually buying this market. And what we realized is that a lot of the old latched accounts, accounts that have been dormant since like 2022-ish, since FTX days, those accounts are starting to now become active again. So we've seen like a whole lot of accounts that were dormant for a long time, they're starting to become active again.

Much more active than the new accounts that we're opening. And we use that as a gauge. Like we know how many accounts we're opening versus how many uh um uh exchange accounts we have where the old accounts are just starting to trade what we found now is that what we're seeing now is we're seeing the second stage of the bull market so the first stage of the bull market is where people like us who've been around for the whole time and just continue to degen into coins. And then the second part of the bull market is where the lapsed traders from the last cycle actually decide that they're coming back. And then the third part of the bull market is when new users actually start coming in.

So we are now at the second part of it, where the lapsed users are actually starting to come back. I think that's really interesting. Yeah, I've never dug into my data, but I would say that it's certainly not like peak full market numbers. I think right before the ETF approval ran, I know you were seeing, but like insane, insane numbers, right? I mean, at that point, you were sort of all-time high in traffic, but now it's dipping a bit back down to normalcy, correct? I mean, yeah.

I mean, our numbers are still very high. We're not as high as we were in December in terms of subscriber growth. In fact, I'll publish that number tomorrow. I'll publish that number tomorrow and I'll drop it on my Twitter just to show you subscriber growth. In fact, I'll publish that number tomorrow. I'll publish that number tomorrow and I'll drop it on my Twitter just to show you subscriber growth, which kind of shows how retail is playing in. But it's nowhere near.

Really interesting. Alex, you had your hand up. Go ahead. Yeah, I have kind of an interesting theory on this that's a bit related to what Ran was talking about. But it's kind of this idea of financial nihilism among retail investors, with the idea being that retail especially, I think, tends to speculate and enter the market in more of a speculative phase than maybe as deliberate

as some of the institutions. And one active theory I have here that I would love people to kind of give feedback on is, you know, if we assume that this is like speculation or, you know, for a certain amount of people gambling, you have to like look at the overall sort of like online gambling speculative marketplace. So obviously in the past like decade, I think there's been a lot of online sports betting and gambling that's absolutely started to take off. And one of the reasons I think we'll start to see an uptick that's really underappreciated what you'll see is that online sports betting tends to basically peak during the Super Bowl.

And it completely captures the zeitgeist. And then what you see is there's a massive drop every year in like online sports betting. And so one of my theories around this financial nihilism or like a sub thread of that is that I think when there is that vacuum created in the culture, people look for a different place to speculate. Like, I don't think this is going away, especially in the United States. So I actually think this will have like a non-trivial impact on the amount of speculative dollars that come into the crypto market. So I'm curious your take on that. But I actually think this is an underappreciated part of why crypto tends to capture the cultures. A lot of young people see it as like their only way out. I think a lot of dollars going to flow in now that crypto is once again becoming basically the most attractive and

culturally relevant sort of casino, if you will, again. I agree with all that michael did you just lift your bike uh do you have a comment michael turban yeah yeah i mean i think there's two things going on retail always comes in late right i mean they wait until all of a sudden the all-time high is here or their friends are buying dogecoin and remember last time i mean doge wasn't really powered it up um and because people think bitcoin is too expensive but I just don't see us going down very long or very far with the amount of ETF buying that's happening every day. And I think it's going to continue for months. Yeah. I mean, this is the first time that we can provably show a fundamental floor, right? I mean, we literally can see those flows on a daily basis.

We saw exactly what happened when GPTC outflows were the net. And we see exactly what happens when we have strong inflows from the ETFs. And to your point, Michael, I just don't see it stopping soon. Eventually. Now, listen, we've seen a narrative that I see constantly below and reply guys below my tweets that now that we have an ETF, Bitcoin can never go down again because of inflows. That's just an absurd and stupid take. Right now we're seeing that inflows, but people have to realize that if there's some FUD or panic or price starts to drop and people start to panic sell, they can also panic sell an ETF just like they could panic sell their Bitcoin and that would cause outflows. So for anyone who thinks that just because we now have ETFs, price can't go down, you're smoking something that I don't want. So I think that you just got to be careful, very careful about the narratives you read and the things that you believe. But to your point, Michael, I mean, this is just starting.

People are just getting access to these. We haven't even really opened the gates yet. So I just don't see those inflows stopping yet historically we got you know 12 18 months until the end of the bowl and you know yes people will start selling that and that's when retail historically fomos in because you know it hits 100 000 150 000 they read somewhere it's going to a million and they you know start uh pouring everything into bitcoin to dogecoin if it's at a dollar or whatever. And that's the time that the smart money is saying, yeah, we're at 95% pure and breed, probably time to sell.

People forget in the last cycle that Dogecoin and Elon Musk effectively drove the entire retail wave of the last cycle. And I remember doing interviews with CZ and other exchange heads during that time for the podcast. And every single one of them said the same thing. We don't have enough customer service people to onboard. You guys might remember there were two, three-month waiting periods to get signed up for an exchange. And if you ask any of those people why, they said because there's so many people coming to trade Dogecoin.

And that was the reason, or to buy Dogecoin, I should say. Another interesting indicator, by the way, let's see who on stage, Michael, Dave, can maybe comment on that. But something I talk about that Ryan and Scott kind of laugh at me whenever I bring it up, but VC funding, which is a lagging indicator. But for the first time in two years, I just Googled it now and CNBC put out an article two days ago that for the first time in two years, according to PitchBook, VC funding has finally increased. That's the first time since the last bull market. There's only a 2.5% increase from the prior quarter, but it is an increase nonetheless. And that's in line with Bitcoin's price. I think, again, it is a lagging indicator.

Something is expected. There's other indicators that show this is happening. Obviously, projects that are launching, token launches, we're seeing the same pumps we see a long time ago. I think a couple of projects launched today that did really well. I don't remember the Xs, but there's obviously Pixels yesterday sitting at over 100X if you're in seed and 70X if you're in private. So we are starting to see those numbers that you saw in the previous bull market. And not a lot has changed either.

You know, Scott, we were saying yesterday, I can't remember who said that, the unlocks at TGE projects are being more careful with it. Yes and no. They are being more careful, but there's still unlocks of 10%, 15% at TGE. I haven't seen any 20% unlocks, at least none of the legitimate projects. There's many that are not offering unlocks at TGE, a lot more cliffs, which is good. So I hope we learned our lessons, and I hope it remains this way.

But we are seeing the same frothiness in the last bull market. And again, we're extremely, extremely early, as we all know. Your thoughts on this, Dave, Michael, anything else, any other indicators of VC appetite in the space? Sorry. I was going to say, for me, it's simple. VCs, and it's not just in crypto, they start putting money in when they see that they can start getting money out. And there was no rush during the bear market because there was no place to exit.

Now, when you see projects going at 20x and 100x they want to put money in and that's going to continue until the music stops well projects weren't launching in the bear market a lot of projects i remember a lot of our investments from the last bull market that kind of halted their launch throughout the entire bull market and they're waiting for the sorry the entire bear market waiting for the bull market um so two points yeah there's no no exit and that's for vcs that do get an unlock others will be you know that expect the launch to go badly the token price to drop even further and then come in in the public markets and which is a better strategy during bear markets and then the last strategy a lot so yeah projects not launching price dropping upon launch and uh

no unlocks unlocks. Unlocks are pretty useless. So there isn't that pump that you see in bull markets. Three reasons, in my opinion, VCs are not just jumping in. Or they're now finally coming back, and we're finally seeing it pick up. Dave, Alex? Yeah, I mean, they're tough. I mean, they're tough.

I mean, they're tough. I mean, they're tough. I mean, they're tough. I mean, they're tough. I mean, they're tough. I mean, they're tough. That was the craziest remix of Dave Weiss. Did somebody please tell me recording this space? I mean, you guys might not know I have a DJ and production background.

I'm making an absolute monster beat out of that when we're done here. This is, this is the first time this ever happens on a space. You remember we'd host three, four spaces a day. So unbelievable. Yeah. I never thought Dave would be, This is the first time this ever happens on a space. Remember, we host three, four spaces a day. God, that was Max Headroom. Unbelievable. Yeah, I never thought Dave would be. I thought it was on my end, so I'm like, should I mute him or not? Turns out everyone was listening to it and no one spoke out.

I was honestly, I was tempted to just let it ride and then crash the space so that we could end on that note. It was so good. Dave, are you there? Oh, he just dropped out. Damn. No, DJ's gone. gone Alex go ahead and we'll get Dave I assumed he was on my end too I was like this is crazy and then there was like a part

of me I was like is he just like repeating this over as a troll but okay good to know that it wasn't just me but I just wanted to weigh in on like two quick things as well you know with our project we're not like actively trying to raise right now but we've been getting a lot of appetite where people are literally asking us, can they send over an LOI or sign a staff? And we're not trying to raise. So I think that is a indicator of like

things starting to shift rather quickly in the funding. So that's like one piece that I think, you know, should definitely be appreciated with all this as well as like, yeah, the energy is getting back. The second thing is Arthur Hayes recently put out a really good article recently talking about the idea of points and why it's been such a good meta. And, you know, historically what would happen is a lot of projects, they would just do like a typical ICO. And then there was like a lot of regulatory crackdown on ICOs. So then they started shifting to things like yield farming, where people actually participated to get the token.

But then the problem was they would like overinflate the circulating supply into a tank. And so I think to speak to your point, Mario, about people taking their time, I think points has been a really good meta because it basically puts the control back in the hands of the team where you can say, hey, we will do a token launch at some point, but you still get the benefits of incentivizing participation where you say, hey, this is basically a corollary for a future token redemption that you will get. And so I think we're going to see a lot of teams who basically have run really active points programs and tried to use that as a way to incentivize engagement. We'll see them probably launching a token at some point in the next six to 12 months as well. And so that's just another thing to keep in mind.

Is this better now, Mario? Yes, DJ, it's safe. It's good now. Yeah, I have no idea idea i tried the desktop because it said it could do it and obviously it still doesn't work so warning to anyone who wants to try to use your desktop it works the day of day it works it just doesn't work for you just to be clear you're you're the anomaly unfortunately yeah well that's not the first time and it won't be the last so that's okay um yeah i just wanted to say two things. First, I can't really talk in depth because at CoinRoutes we're actually exploring a growth round now. I could just tell you that, you know, we weren't trying to raise money and, you know, we've become profitable.

So it's we're in a bit different situation. But the fact is, is just the incredible ease it is to get meetings and the number of people who are interested in a variety of different things is just dramatically different than it was, you know, six months ago. So there is that. But as you said, it's still early. The other other big difference in what's going on is, you know, a lot of people are talking about it. And I think it's worth it to talk about the ETF. There's this one guy, I don't want to dignify his stupidity by saying who, but it's a pretty well-written thread or a well-viewed thread about how ETFs will cause a major fall and will exacerbate downside volatility when it happens. All I can say to that is that's complete and unadulterated crap. It's possible. Obviously, anything is possible if there's real selling and everybody wants to get

out and there's like some news or something horrible. But the fact is, is in the world of ETFs, people in this world won't know this. But the exact same thing was said about high yield debt when HYG, the big ETF for that, came out came out and actually it's been very clear that it's improved liquidity conditions and none of these disaster scenarios uh has occurred and so it's basically no different than if you broaden the day can you sorry sorry just get i missed it what did the thread say exactly i missed the part where you found it i'll have to look it up um it was a lot of people have been chatting and talking about how having more etf ownership in tradfi will mean that the herd will leave as fast as they came in and the truth is anything is possible obviously if the narrative changes i mean like if every opinion leader says no it was peter somebody or

other and unfortunately i don't yeah don't opt to find it. There's just a lot of people talking about that. I just want to be very, very clear that it's worth digging into what the actual impact of ETFs has been on assets. I mean, it's all what happened with gold, but it's also true with bonds. And there's lots of evidence. There's another one which someone said, well, what happens if 50% of all Bitcoin is owned by the ETF? Which is complete nonsense. Once again, 50% of Bitcoin isn't for sale, not even close. Moreover, even in the most popular ETF, the S&P, less than 15% is owned by ETF. So there's lots of FUD going on about there. I'm just basically giving you the early warning, the new attack vector, the next time we get a downdraft is going to be ETF FUD.

I think what we should do, Dave, have your team clip that part and then play it again in a year and a half when the bear market hits. And if you're right, I think you get some points of clout. I had a question that I, fuck forgot it Yeah I forgot my question Scott Not sure if you have anything else to bring up You must have blacked out You must have gotten caught in the explanation It was a question before the Yeah exactly it was a question before the DJ one

I think it was I had an example to give So Alex triggered that example So I just realized we're a perfect example of this Scott So Scott you know Waheed Waheed is our biggest investor. He's our chairman as well at IBC. Well, I think he's going to be our chairman.

He's our biggest investor. And he was very anti-crypto. So when our company went down the news and politics side and kind of blew up on that front, not only on Twitter but beyond Twitter as well, I did a few acquisitions. He was just staying away anything to do with with vc investments anything like that he was very against and we have those debates and that's because investors were against they didn't want to talk about anything to do with crypto and that's completely shifted in the last two weeks especially in the last let's say 10 days that it's crazy how

fast the shift is now our investors are more interested on the crypto side, and they're looking at our investments, the performance of our portfolio. And suddenly now, Waheed and others are really interested again. And I don't blame them because the numbers don't lie. So I think, Alex, to your point, we're experiencing this ourselves. And we've spoken to other projects. Scott, you said that back in Token 2049, that shift started happening where projects are starting to fill their rounds. And now the projects are getting oversubscribed. Again, it's surprising and not surprising how quickly the mood shifts.

Just a few months ago, we're talking about, will we see a new bull market? Will this happen again? Will we ever see a bull market? And we're seeing a bull market that's bigger than that. It will likely be more extreme and bigger than the last two that we've had and more frothy than the last two. And potentially, we probably said this last time, but potentially the last bull market. But yeah, that's on that point, Alex and Dave. Matthew?

I think that's such a great point that you bring up with respect to sort of the fast changing guard in this space. And I think one of the real benefits of the ETF and sort of this regulatory affirmation of this as an asset class is the permission, right? We talk about permissionless ecosystem all this time, but now retail and institutional investors feel that they have permission to enter the space with a little more gusto and a little bit more risk on sort of mentality. And I think that that's just something to note here is that there's a vastly easily swifting narrative change. And I think a lot

of that has to do with, oh, okay, maybe it's fine for us to get into this. Let's go dig a little deeper. Let's uncover some of these projects. Are you just explaining FOMO in a more eloquent way? Yeah. I mean, I think that that's a fair way to think about it, but FOMO is really, you know, it's kind of too immature in some sense. Like FOMO really, really pre-requires you to be going out looking for a pump and dump, looking for quick returns. I think this is more about people dipping their toe into the water and having permission, you know, after eating 30 minutes, they've had permission to go enter the pool, you know, that their parents have said, okay, fine, you can go do this now matthew and even i don't think i don't think it's good mario

i was just gonna say even beyond permission yeah i i think fomo is partially correct but i think it's also the shift in reputational risk which is is more um important getting the stab of approval from a larry fink or from wall street in general means all of a sudden, even if you were effectively a closeted crypto enthusiast who was afraid to talk about it because you might lose your job. We saw this in the last cycle too, when obviously Michael Saylor came in and put Bitcoin on the balance sheet, then you saw Tesla and block do the same.

All of a sudden a bunch of CFOs and people with fiduciary responsibilities, managing treasuries had to have an opinion on Bitcoin. It could be a negative opinion, but they at least had to be informed or else you weren't up with the times. And now we're again, because prices are going up, let's be honest. Now, again, it's not dangerous to have a positive opinion on crypto for institutions and for these people. So they don't take reputational risks by dipping their toe, as Matthew said. So they have permission, but they also sort of don't have the downside they would have by opening their mouth and talking about it. Yeah, and I think it's also, go ahead, Matthew.

I was just going to say, there's also the opportunity cost of that reputational risk. Like you're going to be seen with egg on your face if you don't do this just as much as you now have permission to go do it. Yeah. And I think there's a mindset shift as well. After 2017, 28, or the 2017 hype, the sentiment, including people on this stage or that were on the stage as well, the sentiment was, will we ever have a bull market again? Or that's it. We had one bull market and now it's going to be a nice, steady growth over time. But the sentiment this time around is like, everyone, it's not about if we're going to see another bull market,

it's when. So it was when we talk about FOMO, when I talk about FOMO, Matthew, it's more about people timing their entry and not FOMOing saying, oh, maybe we should be there. Maybe they're like, okay, we're waiting for the right time. Okay, maybe now is the right time. Matthew, Alex, we're waiting for the right time. Okay, maybe now is the right time. Matthew, Alex,

Terrence. Yeah, I just wanted to add a comment on the institutional side. So I think one thing that gets missed a lot about the ETF is the fact that the reason so many institutions are actually getting involved now is because they're all set up with a very specific system and mechanisms in place in terms of how they actually go to market with financial assets, how they compensate their team, how they market things, what is the regulatory framework. And so in my opinion, that was the biggest unlock of the ETF. It wasn't necessarily that people didn't want Bitcoin before. These institutions could have bought Bitcoin, but notice they didn't go directly to the blockchain themselves. They wanted to use an exchange traded fund, which is a vehicle that they already equipped

to use. And I think this actually speaks to where the market is going in the future, because, for instance, I'm working on a real world asset project and all of our clients on the actual sell side are large financial institutions. And what you realize, or at least the thing I've realized in the past six months, is that what they're going to want to do is they don't want to go into the assets that we do on the D-gen side of DeFi. They don't want to deal with NFTs. They don't want to deal with social tokens. And this is someone who's a huge fan of those. What they want to do is they want to take their existing assets that and vehicles that they're using in the real world,

and they want to find a way to just basically get liquidity. That's what this is all about for them. And so what I expect to see are not only things like ETFs, but then people are going to start doing things like actually tokenizing private debt facilities. That's like a $1.4 trillion market in the US right now. And most people don't even talk about debt. They're going to want to start actually tokenizing private equities. So that is like one of the things I feel that the Bitcoin ETF spoke about that basically everyone's like kind of missing, in my opinion, I think they're like, oh, like, this means they're going to go start buying, you know, like random altcoins. And like, they're going to, you know,

try to like, ape into NFTs. It's like, no, that's not they're going to you know try to like ape into nfts it's like no that's not what's going to happen if anything the etf showed that they will get involved with crypto but they're going to get involved on their terms and using vehicles that they're already familiar with and built to support yeah alex people aren't talking about it but it's as wide out in the open as you could possibly desire when you have larry fink talking about tokenizing everything and talking about crypto being a flight for quality. It's so funny that there's this focus on the ETF, even last year. So it must have been, I'm trying to remember when BlackRock

puts out their annual investor letter. I think it's March. So it must have been March of 2023 in advance of even filing for the spot ETF, if my timeline is correct. There was a huge section in that investor letter on tokenization of real world assets and liquidity as you're talking about exactly. And the ETF just stole the narrative. But Larry Fink has not changed his narrative. He's talking about both with equal weight. And I think you're correct. That said, I think tokenizing capital markets and getting real liquidity is a next cycle thing, personally. I think we see the first iterations of it now, but I don't think it becomes huge.

We already have tokenized T-bills. I think the market, I'm not looking at it right now. There's a site, maybe it's rwa.xyz, something like that, led by Franklin Templeton, a huge institution. I think they've tokenized about $350 million in T-bills. And I think maybe that entire market right now is $900-something million, maybe just sub a billion. Very small and hasn't grown, but it is being proven and used. And the ability to use that. By the way, now, Sky, if you go to DeFi Llama and go over the categories, you'll see RWA is now up to $5 billion.

I was talking specifically about the T-bills was about a billion. Oh, the T-bills. Okay, yeah. Makes sense. Yeah, $5 billion doesn't surprise me at all. So minuscule, I think we're in the proof of concept phase of that, but that is going to be a great narrative for this cycle that will probably start to actually see the utility and usage in the next one. And by the way, three, four or five years, that's nothing.

I see a lot of people clapping and you guys clapping. I think you agree, but RWA is going to be huge and it's already widely being discussed. Wall Street just hasn't, doesn't get it yet, I think. Matthew, I saw you were kind of clapping for that. Dave, you're giving the hundreds, too. I'm assuming both of you guys agree. Well, I mean, Scott, look, I said I'll never forget the conversation because it was soon after I had left TradFi and co-founded CoinRoute. So I was talking with Larry Tabb, who I don't know if people know.

He's head of research at Bloomberg now, but he had started a big consultancy, is well-known in TradFi. And he asked me, why would I leave and deal with this crypto stuff where all the criminals, blah, blah. You know, the normal thing. I looked him dead in the eye and I said, because hopefully within my lifetime, but certainly, you know, within the next couple of decades, everything is going to trade digitally. Everything is going to use the rails that we're building, full stop. And I thought his head was going to explode. I then proceeded for a half hour, 45 minutes to explain why.

And by the end of the conversation, he was nodding his head saying, OK, I see where you're coming from. Basically, other people have done the same thing to Larry Fink. It's obvious. And it is in so many different places. It has everything to do with the transparency of the share registry. Just imagine an NFT share registry where you never have to have these fights, proxy fights, where you have multiple tens of percentages, 140% of ownership of a company knowing who it is. It's to the speed and easy of globalization. It's full multi-currency trading. It's all the innovations in the market

structure. It really goes up and down the line. And that will happen. And I think we all kind of take that for granted. I'm telling you, there are a lot of people in traditional finance who believe the same thing. But understand, it takes a lot longer for these things to happen than you would expect because there's so much entrenched interest, so much money made from the inefficiency. So it's going to get there. I don't know if it'll get there, quote, this cycle or not, but it's going to get there. I agree with that entirely. I think the VC funding up title that we have here is largely just because there's an opportunity for cash grabs, as Michael sort of alluded to earlier, because there's liquidity now and there's going to be interest. What do you mean cash grabs? What do you mean cash grabs?

VC funding, they get lockups for a year, two years, three years, four years. I don't see how that's cash. I'm not saying there isn't cash grabs. I want to put all VC funding in cash grabs. No, I'm saying that, like Michael said, nobody was interested in investing in the same quality projects when the market was down and they didn't think they'd get liquidity relatively quickly. Now that people think we're in a bull market, obviously, and there's a path to faster liquidity or a chance that price will actually be higher when they get that liquidity, they're much more interested. I'm not saying they're going to make money tomorrow, but I'm saying there's a very unique VC structure in crypto that we're all aware of which is that you get tokens before an IPO I mean you

invest in a you invest in a company uh in legacy markets or in other markets you get theoretical shares that maybe will be worth something if there's ever a liquidity event you get liquidity very quickly in this market yeah but I've given other reasons as well this is one and absolutely true but I'm saying this is not the only reason. Why invest quickly if projects are months away from raising and they're not being able to raise the capital? Why not wait a bit longer, let them develop their product a bit longer and mitigate your risk? So there's projects we could have invested in prior. So we invested in the bear market. I'm using us as an example. We invested heavily. We did pretty damn well, but we delayed a lot of projects that now we're investing in.

Well, in that period, some of them didn't develop their product, didn't have much progress. Others have Pixels, just had a listing on Binance, for example. Others today did really well because we've given them time to allow them to develop their product, allow them to raise more capital. And that mitigated our risk. So that will be another take. And still, spoiler, 90% of them will never develop a product. Yeah, exactly. Not because that's nefarious, because that's how VC works.

Yeah, true, true. But you've mitigated your risk from 90% of being able to develop their product or being a flop from 97% to 90% or 95% to 90% because you waited that period of time and allowed them six months, 12 months to develop their product. And that's a great strategy in the bear market, but in the bull market, if you wait and wait and wait, sometimes all the time... Oh, you can't wait. You can't wait. Michael, he's crazy. You get liquidity in the next bear market.

You get liquid in the next bear market. Right? That's your risk. That's your risk. I'm saying if you have a two-year unlock and you invest at the end of 2024, you might be in a bear market in 2026 when you unlock. I'm seeing two-year unlocks go away. I haven't seen any in a while because every objection that every company I'm advising or working with gets from – it's like, what?

You want me to lock in the bear market? And so you're seeing a lot more of 12- and 18-month unlocks for investors. Unlocks as we did in the last bull market, Michael, or it will be a bit more ethical this time around? You know, it's almost like hemlines and fashions, right? I mean, I think that, you know, define ethics here. I mean, I think for the most part, if the companies are using for real things, not just buying Lambos, then it's ethical, right? But I think that the pendulum swung too far in terms of having too much of an unlock because it was perceived as having too little of an unlock. And, you know,

you're coming into a project that you know is going to do well, or you think is going to do well, but you want to be able to get a sufficient amount out so that if it drops, you can go and buy back in. But if you never get out and it hurts the projects too, if all of a sudden the last six months people are unloading and driving it lower, whereas if your main investors are out by the bull market, it's going to dampen the, the downdraft. the down draft.

I couldn't, I mean, yeah, yeah, I couldn't, I mean, no, I, I, I was curious what you think of that. Do you think they're threading the needle basically now? Like, no, no, no. I'm changing my mind and I think he's going to have the same bullshit as we had in the last bull market, which is a hundred pieces, which I've said from day one for a year, we'll be dumping on retail. Retail that are coming in now did not learn their lesson.

And just for the audience, we're talking in language that the audience might not understand. So what happened with private fundraising is that VCs would invest, and KOLs, et cetera. But I'm just using VCs because I can speak from experience. So they'd invest, and they get a certain unlock at launch. And at launch, they usually dump on retail. And what happens? Retail comes in. They get hyped up.

The project hyped up. KOLs talk about it. Project launches and VCs dump a big chunk of it. Now, a 5% unlock, a 10% unlock could be okay for big projects if they have enough liquidity. I'm still kind of against it, but that could be okay. But then you start seeing crazy, stupid numbers, 20%, 50% unlock. And those happened in the last bull market and that becomes a no-brainer for a vc because they even if the project is shit what happens they put in

50k 100k 200k and they're like all right cool we if it does a 2x and there's a 50 uh 50 unlock then we get all our money back and then if the two percent chance they might succeed it's a free ride that we're gonna get get. That was the other side of the story. Yeah, the tokenomics effectively, especially in the last market, and I'm going to say it to some degree now. And, you know, listen, I never went off the, we will have a bigger and better and larger and crazier bull market next time narrative, right?

Because humans, I believe, will just human. And while this stuff is still legal, it's going to happen. But like I said, in legacy markets, if you get investors and you don't build a product and all this stuff is still legal. It's going to happen. But like I said, in legacy markets, if you get investors and you don't build a product and your product fails, nobody gets paid anything. In this case, the tokenomics allow for a VC to get at least their investment back, probably make some money and the thing can literally never launch and go to zero and people can make money on the token without there ever being a successful product right so it's just uh what happens

and what happens and what happens as well is that even ethical vcs or i'm using the word ethical as in they they're happy to hold long term like the the vc is doing the right thing doing what vcs should be doing and that's investing for the long-term. Even they look at the market, they're like, holy shit, like we're holding our bags. We're doing long unlocks and everyone's dumping on us. Why don't we, like, we have a responsibility for our investors to make their highest returns. And the game is flawed. They don't play that. I saw that in the last bull market. They're like, we're not going to dump. We're not going to dump. We're not going to dump. Fuck that. Everyone's dumping on us. We're exit liquidity now. And they start playing that dirty game of dumping.

So it's just, I invested, I invested in a few things already early in this cycle. And like, I, you know, when I talk to a project, they say,

I'm not the same as ran. Like, I'm not chilling this. I'm never going to talk about it, whatever, but I'm also not going to dump and got relentlessly dumped on by every other influencer. You know,

like I got my 10% unlock, whatever it was. I honestly, I claim it like five days later, I'm not even on top of it and just relentlessly dumped on. And I'm sitting there. Exactly. Like I got my 10% unlock, whatever it was. I honestly, I claim it like five days later, I'm not even on top of it and just relentlessly dumped on and I'm sitting there. Yeah,

I'm still up slightly, whatever. But like we're already seeing where there's enough dumping that it can destroy the entire community and project before they even have a chance

to launch it. Exactly. And we barely even started there. And I think, I think it's true. I do not have hope that this will be any different or whatever. It is what it is. I think it depends on that this will be any different or whatever.

It is what it is. I think it depends on exchanges and launchpads. If they put guidelines like, hey, we're not going to accept the project. And incubators and stuff, they tell projects, hey, you can't have a large unlock at the beginning or you can't launch on our launchpad on the exchange. That could help fix the industry. So that's my

take. But aren't the launchpads themselves taking an allocation and probably wanting an unlock early. That's what I'm saying. Like, listen, it is what it is. Like, I just think it shouldn't be glossed over. I actually, maybe you, you can have a feeling either way about how these VCs or how KOLs, whatever, how they approach it. Like you said, with the incentives being misaligned,

there's a lot of people who are just going to sell something because they feel like they're getting dumped on and need to exit the same way that retail panic sell any asset when it's dropping but that's i just don't see how that's good for a project i think as bad as the old vc model is it's better to keep people locked up to make sure that you, you know how this is, Mario, you've seen from projects where they like you, you go in their telegram groups, which I never joined, whatever. And they're like, these three people have dumped this relentlessly to zero.

Can you guys please stop? Uh, you're destroying the community and the project and everybody else is yelling. And it's like, it's like more of the flies out there, guys. Like if you're in these, uh, that's why I just don't participate. And then high unlocks on TGE is an indicator of a shit project because good projects don't need to provide a good unlock and VCs are happy, investors are happy to hold. The shittier the project, the more unlocks they need to give to entice investors. So that's a rule of thumb for any retail investor.

If you see a big unlock for a project, do not- Michael made the best point. Michael, you made the best point earlier, though. I think you were talking... And I said this, Mario, as you said, when I was at Token 2049 in September, you could see that the projects were coming back out to raise, as you said. Even ones that were from previous cycles were starting to talk about launching. It took a little while for the United States, I think,

and the other markets to catch up to what was happening in asia but there's a very firm shift happening that happened i think later in the last full market where product vcs excuse me product projects were going out to raise money and looking for investors and either struggling or filling but they were actively pursuing investment now we're already back in that place where people are fighting for an allocation so like the vcs are coming in saying i want in on this and the projects are saying what are you going to do for me uh to get your small piece there's already a shift where people are literally flooding into literally anything don't care what it is because they think there's money to be made we're already in that phase we're not even at the habit yet and i i'm seeing however

that more of the phone was on the token side than the equity side the last market you had these ridiculously high valuations in 2021 for you know nft marketplaces and celebrity you know nft plays and things would be at like you know hundreds of millions of dollars market cap raising 50 million dollars and they all pretty much went south whereas you know the tokens if they got out they at least provided some liquidity yeah that's what i'm saying so the token deal the token deal there's almost always going to be an opportunity if you're willing to exit at the beginning to at least get your money back that does not exist with equity, to your point. Exactly what I was saying before. William? Yeah, I was going to comment on what you said, Scott.

That is the problem. The problem is having token liquidity before there is any real traction and real product. And I'm afraid that we might be repeating the same mistakes that were made before. Ideally, there should not be any token liquidity before there is real traction, before there is real product to market fit. And I'm seeing now some of the more serious projects are doing that. They are kind of working behind the scenes. Yeah, they are issuing tokens, but they are not available in the market. Otherwise, you're just flipping a coin on success. And you're just speculating on the chances of the success, not on the success itself. And you're also adding another layer of complexity to the potential success of

your project because the unknown is what will happen to the token price which can destroy the sentiment around something very quality and you know worthwhile that you're building i don't even see why tokens exist before the projects are launched and effective and successful. I don't. Yeah. I mean, the correlation goes out the window. And then, yeah, that's the problem. It's not going to be a perfect world. There will be tokens that will be launched any way they want because it's a good way.

I mean, it's one way to raise money is to spend a token and then start. But then you have to watch your tokenomics and how much you're releasing and so on. But anyway, so. Right. But they've raised the money, right? So they're getting the money. Yeah. There is some good activity in the consumer web.

William, we're breaking up, buddy. We're having trouble hearing you. Oh, sorry. How about now? Yeah, William, we can't hear you, buddy. I'll bring it. Sorry. You can finish up. Your connection is better. Okay. Is it better now? I think so. Okay, good. Sorry about that.

So I was going to say, if you want to see what's going on in the consumer Web3, you really want to go to Warpcast. A lot of good activity is happening in Warpcast because I look more at the app level. I look more at the technology stack, not the trading side. And on the technology side right now, Web3 apps are going to be emerging and not repeating the same mistakes that were made in 2017 to 2021. Alex? Yeah, definitely.

I do think, though, it's important. I feel like I have to maybe correct the record or add some more context on kind of crypto VC versus regular VC, because I feel like there's this misnomer that, you know, crypto VC markets are somehow like inherently corrupt as opposed to regular VC. But that's actually not the case when you look at the data. So Scott Galloway, he's like an NYU professor, he had this really great article a few months ago called Private on his blog, No Mercy, No Malice, recommend everyone read. But there's a couple facts here that are like really important to know. So the first thing to recognize is that since 2021, only 10% of VC-backed IPOs were profitable after they listed. So the reality is VCs are dumping on retail in the regular markets.

It's just not as widely covered because, again, we look at these things as more regulated, as more legit. But that's the fact. It's only 10% of VC-packed IPOs are profitable since 2021. For context, back in 1980, that number was 78%. So what's happening is that private companies in the Web2 world or just traditional world of venture, they are actually protracting their dates. They go public. The second really interesting thing in terms of manipulation of

price, because we talk about token unlocks and things of that nature, the same thing happens in the traditional markets. So he has another great graph here, which shows that the median public float percentage at IPO, i.e. like how much is freely tradable on the markets. In the 90s, this used to be above like 32%. And now in 2022, went down to only 15 percent of the public flow percentage was available for IPO. So what's happening is that basically these VCs and these investment bankers, what they do is they basically squeeze all the value out of these companies while they're private. They keep stacking on later and later and later rounds. And then when they're ready to dump on retail, what they do is they actually skew the results of the IPO and drum up excitement by artificially constricting the amount of supply or flow that's available when they list. And the end result is that if you invested in a VC-backed IPO in 2021, only 10% of them were

you making any money. 90% plus, you'd be down on your money and there's numerous examples of this if you uh you know bought into instacart better.com blue apron these are all companies that respect your ip and they're down yeah you're 100 you're 100 correct i'm not saying like there's a moral difference in vc i'm saying that maybe it's the onus is on the projects for allowing the unlocks but let let me just tell you, there's plenty of instances here where someone invests in something and three days later it launches and they're up 100x. Exactly. Yeah. That does not happen. Right. And that's very common, guys. I'm not saying... And listen, they're up 100x on paper to be extremely clear, right?

They might be locked up for a year. It's just a paper gain. Who knows what the price will be when they get an unlock. But I'm just saying that some of these projects will go out and they're raising immediately, you know, and it's like, Hey, we're raising, we're raising, we're raising, we're launching next week. And then it launches and whoever just invested is up massively. Right. And you can decide whether that's fine. Not. I have no I have not my my place to judge, but I'm saying that is a fundamental difference. What you describe is a predatory practice that takes place over a longer period of time.

So maybe we can just agree that it's it can be negative in both just in a completely different structure. 100%. And I think the other piece of VC investing that most people in crypto do not understand or aren't willing to accept is that VCs invest around the concept of the power law, where they know that 90% plus of their investments are going to go to zero or barely return anything. We call that spray and pray, Alex. But yes. Exactly right. And I think the issue is that most people in crypto, they are not going to index. Everyone wants, you know, access to the successful project, you know, retroactively after it's already a success. But they're not willing to accept all the downside with it. So what happens is people try to pick a project or two.

You know, maybe it goes down for nefarious reasons. Maybe it goes down because the team legitimately tried to execute a project or two. You know, maybe it goes down for nefarious reasons. Maybe it goes down because the team legitimately tried to execute and they couldn't, whatever the case. But I think that's what happens with crypto. And I think it's really important people understand that because I think what the crypto market provide is it's a level of liquidity and sort of flexibility that is not available in the current markets. And if you talk to any VC or startup employee right now, like a lot of those people are hurting.

A lot of those people are underwater or they're in really tough positions where they're like, do I even execute or do I even execute on my options when I leave or exercise my options? And so to kind of sum this up in like a prediction, I actually think we're gonna see more traditional venture debt and venture capital actually moving on chain and trying to unlock the liquidity benefits. We're working directly actually with companies to do that.

But that is my prediction. It's not a perfect world, but I actually do think it's better than the existing opaque, illiquid secondary markets that exist today. Right. I just happen to believe and maybe you call me crazy but i believe if a project fails that the investor should lose their money alongside it yeah i think that like it's probably a fair statement to say but i also think that um where maybe i differ is i don't think necessarily though an employee should get racked if they spend four or five years of their time. Like that's why I think tender offers and secondary offerings are actually really great because you know, a lot of these employees,

they take four or five years of their time and I'm not saying they should get rich. Yes. They should get liquidity, especially if they're getting a fair price on the market. There's nothing wrong with that. There's nothing wrong with an employee who says, listen, I want to make sure I get paid. I'm hedging against the failure. I'm going to sell some of my shares. 100 sorry go ahead no i was gonna say like

the first point you made i just couldn't speak earlier the first point you make i think comparing vc investments um in cryptos to traditional vc investing is just i don't know what study you were referring i know the dr galloway is someone I follow, so I respect him. But I'm not sure what study you're referring to, but it just doesn't make sense. There's no industry where you can invest and then dump within days or weeks on retail and get your money back and invest again and cycle it through again and again. I just don't see how that works. But you're not just dumping on retail. You're also dumping on the actual project that you're supposed to be trying to support.

Yeah, exactly. But that's fine. This is fine. If it's only VCs dumping on each other, that's fine. They're playing the game together. But they're dumping on retail. It doesn't happen. But it's not if it destroys sentiment around the project and it puts them in a place where they're trying to build. But my bigger concern is retail getting dumped on and that's showing their reputation to crypto. And Mario, the only point i was making is that that same dynamic is playing out in public capital markets it just happens on a longer term time horizon like that that's just a fact i'm happy to pull that data you mean you mean you mean when the project you mean when the projects list um retail investors on the markets get he's talking like take a look at the robin hood ipo right is that a good example

yeah that's a great example but you know most of these companies most of the kind of his point is that most of the companies first of all most companies vcs uh invest in in traditional markets never make it to a liquidity event right so vcs are throw whether they find a way to exit get their money back they never make it to a liquidity event they never end up being traded but his point is that even of the ones that do end up at an ipo have a major liquidity event if you look at them historically usually then the vc once they're finally unlocked it's not 10 days it's uh could be 10 years here are still dumping relentlessly and look at even the coinbase site. I mean, Coinbase was a direct

listing. It's a little different, but we've seen it every single time. All the companies he named, Robinhood, retail jumps in, they're excited it's going to IPO and it's down 90%. Yeah, but then the VC took the risk on whether that project's going to, whether that company is going to get to a liquidity event.

That's correct. And in crypto, they're not taking that risk. They're going to get the token to be able to sell. Exactly. And then the opportunity cost of the money, the time value of the money as well invested. So I think it's a big difference because you said, Alex, it's the same, but over a longer time horizon.

That longer time horizon is the issue. If a VC is waiting for years for a liquidity event that might not be possible, very different waiting days for a guaranteed liquidity event. But a lot of them aren't waiting for years. I'll give you another really good example. So there's this guy, I think his name's Ryan Breslow. He was the founder of Bolt.

And he got in really hot water because they had this really screwed up program where they were trying to lend their employees money to basically exercise their options sooner. That company was worth like 9 billion at its peak. It's down to 300 million. But Ryan Breslow did not hold all of his equity for that. He was selling on secondaries markets. So he has made tens of millions of dollars. Right. And other VCs do that, too. Like there are secondary transactions that are happening before the IPO

window. In fact, that's what a lot of these VCs are doing. And I agree. Maybe it's a little more pronounced in the crypto world. But I just think it's important that people know that like, there's this like, notion that like all of these VCs and like the web to traditional world, like they're come, they're holding all their equity straight to IPO. And that's not true. A lot of them are actually selling it on secondary markets, like Forge Global or things of that nature. And they're actually getting out earlier. And then what they do is they then work with the investment bankers to basically manipulate the amount of flow. They put on a roadshow and they get people excited about the company. And then what they do is then they offload the rest of their stocks when that window opens.

So they are doing a lot of the same thing. Again, I completely agree. At times, it's more pronounced in crypto, but I think it's like an important like like sort of like battleground philosophical battleground that like crypto should not give up so easily because a lot of these players like want to trash crypto for that reason. And they want to only focus on the downsides while completely ignoring the way that they're manipulating their own markets and they're dumping in a different way. And whether it's on employees or retail investors by manipulating flow and waiting until they've already offloaded a bunch of secondary markets and have actually made money. And to kind of play devil's advocate, Scott, the failure, and we'll go to Terrence, but the rate of failure for crypto projects is significantly higher than traditional

businesses for good reasons. It's 99.9999. Exactly. And if you look at the numbers, crypto VCs aren't doing as well as many people would expect them despite these unlocks. So it's kind of maybe capital, maybe efficient market hypothesis is applying here. There's bigger unlocks because the rate of failure is much higher. I'm still against it. Right.

Like I said, I mean, you can say i'm a 100x but like by the time you have liquidity you might be flat literally but but a big difference is that you could as a retail investor you could have the ethereum uh ico that was that was public again yes you probably needed to know the right person but there was nothing stopping you same with bitcoin right you could have been early you could right? You could have been mining blocks in the early days and actually accumulating Bitcoin. There's no traditional finance corollary to that of getting into a project like Bitcoin, which is above a trillion dollars, Ethereum, which is hundreds of billions. There were no gatekeepers there. And there are everyday people that are filthy rich from that.

And they could have never done that. They would have never got into Stripe early because they weren't an accredited investor. They would have never got into Uber early because they weren't accredited investors. So that's just the other side. I just I get passionate about it because I think that is part of the case of like crypto is that it can actually transform capital markets and it can actually give people a chance to own something and yeah even if 99 of things fail i mean 99 versus 90 in the real world like it's the power law is going to shine through no matter what i just would rather have a world where there's at least an option uh for me to do that i agree but that means that the odds of retail choosing correctly on some launch of something that's going to make the money be successful are extremely slim.

And we know that most people are taking that last $100, $500, $1,000 trying to hit that 100x lottery ticket. And something's going to do it, but probably not the thing they're invested in. Yeah. Index funds, by the way, are probably the answer to this for crypto. That's correct. 99% of people would be better off investing in public indexes anyways. So we need something like that for crypto if we want to make it something where people can see the upside. Yeah. And I think that if you deeply believe in one of these things and do your due diligence, I'm not giving financial advice, but you don't need to buy it the second that it is released. If you're retail,

you can actually wait, see how it does. I'm sorry if you only get a five X instead of a 10 or whatever it is, but you can see how it sort of shakes out in the early days, early weeks, whatever. Right. Terrence, did you have a comment? Another, yeah. Another big difference is in the traditional VC world with these pre-IPO secondary sales, they're all going to credit investors, not to retail. Whereas in crypto, the VCs are constantly dumping and the founders, to be honest, constantly dumping on the working class, middle class and poor. Yeah, of course.

But credit investor laws, I actually think they are a bit um antiquated i mean you can go to las vegas you can get blacked out drunk and go to a blackjack table and you can gamble away literally your entire network but if you want to go buy you know a few shares of like yc uh demo day companies that's or if you want to invest in your friend's company who you've known your entire life yeah so you're you're not wrong terrence in that sense i just think that argument i like i hate when like regulators like use that argument because it's like if they actually cared about like the financial well-being of you know like everyday americans like vegas would literally be likelawed. All these sports betting apps would be

completely outlawed. A lottery is literally advertised. I mean, lottery tickets is the best example because everybody can buy them everywhere. And it's not rich people buying them. Exactly. But the reason these accredited investor laws, in my opinion, have stayed sticky is because of the dynamic I was just mentioning, which is that there are actors with a, you know, financial incentive to ensure that they are the only ones that can have access to these private markets early on. Because if you start letting, you know, anyone go and invest in things early, then you start to see people like what you see with Bitcoin and Ethereum, where it's like there's so much disdain held by, you know, traditional and hedge fund managers and financial investors.

There's so much disdain towards the early adopters of Bitcoin and Ethereum because they recognize that those were a lot of them were everyday people and they hate that they got into an asset class before them. They absolutely despise it. And so I think that is, you know, the case for why we should have more lax rules. It's just I believe in financial autonomy. And yes, obviously, bad actors or people that do bad things, they absolutely should be held accountable to the full extent of the law. But at the same time, you know, especially in the society where we're starting to see a larger and larger divide between the haves and have not, you can't cut off one of the best wealth generating mechanisms in the United States, which is basically investing in early stage private companies with asymmetric upside.

Accredited investor laws are completely broken, completely fixed against to make sure that the wealthy remain wealthy and that everybody does not. If the United States was serious about accredited investors, it wouldn't be based on arbitrary benchmarks of wealth. It would be based on a test or some sort of financial knowledge, some sort of checkoff that you understand the risks of what you're doing. The same kind of disclosures that the SEC asks for almost anything. It's literally a broken system made to keep the wealthy wealthier and only give access to the best investments to them. But I guess you could argue that the spirit of it is correct if you believe that the spirit is actually to make sure that people who understand what they're investing in and the risks they're taking are doing so accordingly. But the accredited

investor laws are absolutely broken. It's one of the first things they need taking are doing so accordingly. But the accredited investor laws are absolutely broken. It's one of the first things they need to fix in this country. I don't disagree. I'd say that the accredited investor laws, even with that, the people that have access, if you're an angel investor, you're barely an accredited investor, you're not getting the deal flow that Sequoia or white combinator gets or andreessen horowitz so it's very different and then alex if we're talking about loosening these laws then we may as well have 24 7 online gambling and lottery tickets which we do would make it more yeah i

think we call that crypto that's called crypto there's also sports betting apps are like, I don't, I don't know if you've seen, but in most states they are like, they are fully allowed now in Las Vegas runs 24 seven. I can go walk in to casino at four. At least you have to travel out of state, right? For a lot of people that have to travel to a Vegas or an Indian reservation. Just go look at when the Mega Millions hits $500 million and go look at who's lined up in a convenience store to spend every last penny of their savings or their

paycheck on lottery tickets. I don't know. I have to go to a store. Mario, you sound terrible, by the way. You don't need to go anywhere to sports. In Florida, they don't pitch that as gambling, Mario. They say that the money is going straight to the education of your children. Okay.

How did you know I was going to say what I was going to say and respond to it before I even say it? Because I could hear it through the robot and my neural links pinged. Mario and I, since I'm affiliated with Mario and he's best friends with Elon Musk or whatever, I got an early neural link test with Mario and I can read his thoughts, especially when he goes robotic. Go ahead, Dave.

Wait, can I respond to Terrence real quick? Just on that last point. Yeah, just respond, man. You don't have no permission needed. Okay, sorry. Didn't mean to cut you off, Dave. I think it's just directly related. But on the point of deal flow and things like that, again, I think it's worth recognizing that there are mechanisms in place to allow people to get access to deal flow. There's syndicates on platforms like AngelList where you can actually join a syndicate and they'll actually source the deal flow and all that. So again, just my last point is like, I think like personally, a lot of things you've repeated are things that I think a lot of these entrenched players have kind of pushed as a narrative in the form of protection,

but in reality it is to gatekeep, right? You can get deal flow through a syndicate. Of course there are the power law dynamics, but. You can get deal flow through a syndicate. You know, there are of course, there are the power law dynamics. But if you do something like invest in a syndicate, you get a portfolio of seed stage companies. That's literally how Y Combinator invests, by the way, and why they've been so successful. They index at the seed stage. So basically, I just push back on that notion of like the accredited laws like being there to protect like the they're very antiquated and they were also written at a time when companies would go public within four to five years i mean apple amazon google salesforce they were all public within six years of their founding um now you have companies like stripe that are you know private for 10 12 plus years and no retail investor has been able able to touch it, and it would have been one of the best wealth-generating mechanisms available.

Yeah, I mean – Let me expand on that. Sorry, that was directed at me, so I just want to respond real quick. I was an angel investor, and I was part of those syndicates. can get in on, angel investors can get in on, is very different from you being Andreessen Horowitz and then Paul Graham at Y Combinator when he was head of it or whatever. He would kind of tell Andreessen Horowitz, by the way, you should look at this particular YC company. So the best YC kind of incubated companies, the best startups. You're still locked out of that.

The angel-less syndicates are not getting access to most of the best projects. If they change that law, though, I guarantee YC would launch an index and they would allow open trading because they would get more capital and they would absolutely welcome the LPs. So like, yeah, maybe that's the case now. But that's because of a result of what the accredited investor laws are today. Like so many of these things are second and third order effects of the law keeping people pushed out. So yeah, obviously overnight, right, it won't change. But I guarantee if you change the accredited investor laws, I know it's because I

talked to a bunch of YC partners who have looked into offering index funds like this, they would absolutely start listing publicly tradable index funds for different rounds of the YC Demo Day companies. I mean, that was literally going to be my point. I mean, I think people need to understand. And the problem with what you were saying, Terrence, is that the gatekeeping aspect of the reason we have accredited investor laws is to protect VCs. It is not to and to protect the people who are accredited and have the big poles of capital, not to protect retail. Because the reality is, first of all, there's zero correlation between wealth and intelligence and investment acumen. I mean, we've seen this time and again. And yet that is what that law,

as it currently stands, does. The fact is, is we already can see, believe it or not, in the Bitcoin ETF, there are plenty of brokers that are enforcing a percentage of net worth idea. And there's no reason why, if you really want to protect retail, just to say, hey, you know, percentage of net worth, this is what you can do. Now, the truth of the matter is that one of the other factors here is that companies themselves don't want to deal with enormous share registries that start bumping up against legal limits. And so no matter what kind of syndicate you do, it's still a hell of a lot easier if you're going to be private to use the types of exemptions that are a limited number. I mean, the fact is the entire law is dedicated towards helping and keeping and maintaining the gatekeepers on the private side. It effectively is one of the major causes of wealth

inequality because it effectively means when something is already IPOing, that's when people are looking for an exit. Now, I don't know about you, but most people want to invest in things when the founders aren't actually thinking about exit, when they're thinking about building. And the reality is the law doesn't allow that. I mean, of all the laws that we have, it's probably the one that makes the least amount of sense on pretty much any vector that you look at it. Yeah, I'm not defending accredited investor laws. I'm just saying the inconsistency can be explained in part by the fact that despite the inconsistency that accredited investors like angel investors are not doing well. Like I've known a lot of angel investors.

They tend not to do well unless they really have inside information. It's similar to crypto where 99.9999% of retail loses money speculating because they don't have access that some of you folks have. And even if you guys start funds that enable or index funds or whatever, there's an issue where they're still not going to make money because they can't help themselves. So they'll buy high, sell low, which is their own fault. But because of the hype and mania, they are poor or working class, and they do want to hit that home run or grand slam. So they do bet on double zero at the roulette table. They do buy lottery tickets.

They do buy kind of these small altcoin projects and they get wrecked. So that's just the reality. But they're also getting wrecked on IPOs, Terrence. So why are they allowed to invest in IPOs even? I mean, only 10% of IPOs in 2021 were profitable. Yeah, I'm not defending that. That doesn't mean you just kind of, you know, remove all the laws for IPOs and just level the playing field, quote unquote, and open the floodgates. I agree with that. Hold on. We know that time and again, retail is just going to wreck themselves. So a lot of the, yes, Dave, the accredited investor laws end up serving the VCs and the

big banks. But part of the effect of that, having these credit investor laws, is at least retail by locking themselves out. They're not buying the Robinhoods and secondary and getting wrecked. Or these other projects that don't even IPO, not even Robinhood, they can't even go public.

So that's the equivalent of buying these crypto projects that don't even have a project like Wolf was saying here. Scott. I like that you got laser eyes mid conversation, at least for me, for me, your avatar changed in the middle of the conversation and you've gotten the,

we progressively Bitcoin maxing you further with the broken crypto VC conversation in real time. And I'm here for it. Yeah, Michael, go ahead. I think we're gonna wrap soon, guys. Actually, a great conversation. We're way over our normal time. But Michael, go ahead and share your thoughts and head towards wrapping. Yeah, no, and I just wanted to pivot real quick. So it's good. I came in at the end, I just wanted to say a lot of this is a very interesting discussion about micro rules of how cryptocurrency is going to go forward. But in order to really make any of this happen, or even to get any progress in the United States, we have to have elected officials

who are willing to actually put forth rules and regulations that are going to allow this industry to prosper. Earlier today, John Deaton launched his campaign for Senate against Elizabeth Warren. And I don't care if you're someone in here with 10 followers or 100 or 1,000 or a big influencer. I mean, this is something, whether you're an altcoin person, a Bitcoin maxi, Elizabeth Warren is someone who's against all cryptocurrencies, Bitcoin, all companies to support John Deaton then going against Elizabeth Warren. And this is something I think everyone can help contribute to. So I just want to throw that, throw that out there.

Yeah, guys. Yeah. So I, I, I would speak, I was speaking to John all morning in advance in advance of his announcement. So you guys may have seen, there's a video it's on my page. I also just pinned in the nest the donation link. Really, really important. I don't like, like Michael said, I donation link, really, really important. Like Michael said, I don't care where you're from, if you can vote in Massachusetts. Otherwise, in my view, Elizabeth Warren is hard to say the final boss, but the single largest antagonist that we have in this industry and in the United States financial system outside of the crypto industry. She's the reason we have Gary Gensler at the SEC. She's the reason that we have a White

House that's anti-crypto. She's the reason for the anti-crypto army. Whether you believe John can or cannot win, every penny that we spend on him is another penny that will be spent trashing Elizabeth Warren and her crap narratives. And to me, that's worth every dollar we could ever spend in our lives. I will be aggressively donating. I'll be having John. We'll be having John on this show. We'll be having John on my shows. He'll become a regular. We all need to do, as Mikkel said, our part to spread the word because, A, we need to support the people who have supported us from the beginning.

John is an absolute American hero, a legend. But we also need to do what we can to fight the enemies of this industry. And at this moment is the single best way to do that. But I love John. I know a lot of people here do. I think he's been incredible for this industry, but my love for John is only equal on the other side by my disdain for Elizabeth Warren.

And right now we can basically feed both of those beasts at the same time. I highly encourage you to do it. Mario, does that enough? Yeah. I love your passion. I was just reading your tweet about it as well. This is somewhere that every, every single one of us should have a passion because it's a, it's a huge problem for our,

she's a huge problem for our industry and he's a huge advocate for our industry. You know, you don't see that. You don't see that ripple judgment. You don't see us talking about altcoins not being securities with a, with a straight face without John Deaton. Right. And the other thing about that, and the other thing about that, Scott, is that was one of the things at the time where everyone said, there is no way he could actually make that difference. There's no way he could do it. So if anyone can beat Elizabeth Warren,

I actually think it's him. John Deaton's a pit bull. He never gives gives up and if there's one person who's going to lay his absolute heart out there to win it's him and just i spoke to him really quickly like he's yeah he's doing uh he has to do his local media run first basically campaign rules but he's going to uh be joining us for a solo show very soon to talk about yeah go ahead yeah so so just also want to add like john is a very strategic guy we so me and scott have spoken to him at length in the last few days uh prior to this announcement and he went through his strategy i'm guessing he did the same with you scott it's not just someone just doing it for for clout or or just to you know we're spending money on just um um bringing down elizabeth warren or kind of bringing down her narrative, her anti-crypto narrative.

But there's actually a genuine chance he could win. So, yeah, John is a very smart guy. And by the way, I don't think he wants to be a senator in his heart. I think he just wants to do what's right. I don't think any part of him wants to be a lifelong politician. The first thing you'll hear in his video is that he wants to impose term limits on. Well, it would be on himself if he won. Correct. So I think very clear he's doing this for the right reasons. And I have high confidence that if he wins, he will be one of the few that does not get chewed

up and spit out by the Washington machine. Beyond crypto. I just want to point that out as well. Yeah. He's an amazing guy. Amazing guy. Even even guys it's just really really important if you have anything even small to give like i said i think it will be tremendously appreciated and it'll go a long way so mario i think that's it we went an hour and a half today pretty awesome uh really really good conversation i think we had the right panel for it so i'm glad we honed in on uh that sort of the vc angle and the comparisons there. I think it's really interesting even for me, who's pretty deep in it. You guys know we went too long when me or Scott began eating. Today it's me.

So I think it was a great discussion. I haven't even started eating yet. It's a shame now. I'm starving. Cool. Yeah. All right. Thanks, everyone.

Appreciate it. See you tomorrow. All right, guys. Bye.