The Wolf Of All Streets - Veteran Algo Trading Architect Shares Advice For Crypto Traders | Dave Weisberger, CoinRoutes

Episode Date: November 30, 2021

Dave Weisberger is a Wall Street legend turned professional crypto builder. Dave went in-depth on how algorithmic trading works in the complex crypto market. Beyond describing his unique algorithmic style, Dave took a deep dive into the macro drivers in our market, including the ETF’s underpinnings, the SEC’s desires, and the hottest trends. If you’re looking for either a macro or micro market edge, this is your episode. -- Amber Group: Amber Group is an integrated digital asset platform serving retail and institutional clients by providing deep liquidity, attractive yields, and sophisticated portfolio management tools. With 12 offices on three continents, and nearly a trillion dollars in volume traded, Amber Group offers clients personalized, compliant, and secure service across dozens of digital assets. Find out more at https://thewolfofallstreets.link/ambergroup  -- HBAR Foundation: Fund your project quickly and easily with the HBAR Foundation. Apply for a grant and be put on the fast track to success at https://thewolfofallstreets.link/hbar  -- Horizen: Horizen is the zero-knowledge enabled network of blockchains powered by the largest node system with scalability and flexibility unmatched by others. Blockchains built on Horizen are enhanced by zk-SNARK privacy tech and provide massive throughput without compromising decentralization. Horizen can support up to 10,000 independent blockchains running in parallel and issue an unlimited amount of tokens.  More at https://thewolfofallstreets.link/horizen -- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is sponsored by Amber Group, Horizon, and HBAR Foundation. Please stay tuned for more information on all three of them later in this episode. What is up, everybody? I'm Scott Malker, and this is the Wolf of Wall Street's podcast, where two times every week I talk to your favorite personalities from the worlds of Bitcoin, finance, music, art, sports, politics, basically anyone with a good story to tell. And boy, does today's guest have a good story to tell, as proven by the fact that I once had him on a YouTube video, and it was one of my most popular ever. People absolutely love Dave Weisberg. He's the CEO of CoinRoute and has decades and decades of experience building trading

tools and trading systems for major investment banks, which he's obviously brought now to the crypto space. He can talk everything markets has strong opinions and is an absolutely great guest. I can't wait to chat with him once again. Dave, thank you so much for being here today. Thanks, Scott. It's always a pleasure. So listen, you obviously build algorithmic trading systems and bots and automate trading. Does your average human trader have any chance against the machines? I think that that's always a misnomer. The traders are really good at certain things. And frankly, you know, someone who listens to your podcast or your YouTube channel, in fact, this morning, I was commenting about it and going through technical analysis. Traders are really good, the good ones, at picking price levels, understanding swing trades, whether that be 10-minute, 2-hour, 5-day, or longer macro trades.

That's what traders do, analyze data and come up with it. What traders are terrible at in a world of electronic trading is implementing those trades. So actually picking an individual price level and sitting there and typing and typing on their screen, that's just, you're going to lose to the machine. That's like, if you had the ability in name that video game to put a robot instead of a human, not at choosing strategy aspects, but at actually aiming the gun, shooting it and hitting,

it would be unfair. And people would say, well, that's ridiculous, right? Because it would be an unfair simulation. Well, the reality is with trading, if you're actively picking individual price levels and trying to access liquidity as a human being and not using algorithms to do that, you're losing money. The truth is that's probably the biggest single advantage that enterprise clients, that our large institutional clients have over the individual trader that listens to you, basically. So my advice to those traders are don't worry so much about those last few basis points now, because it's going to be very, very hard to be that fine grain in terms of picking price levels. But pick where you believe is a good entry point,

what you believe is a good stop, and what you believe is a good exit point and be disciplined. As I mentioned to you before, one of the things we're doing over the next year is at CoinRoutes is we just are in the process of completing a Series B to give us a little bit of extra financial oomph. I mean, we're a profitable company as it is, but oomph never hurts. And one of the projects we're doing is we're actively building an active trader product. So individuals will be able to access our algorithms to trade on their accounts, whether they're U.S. trading venues like Coinbase or Kraken or Gemini or foreign ones like FTX, of course, FTX also is a US one, or Binance, or OKEx, or Bybit, or other futures exchanges. And so we're going to be rolling that out. And so to that degree, humans won't have to worry about competing with the bots on that edge. They'll be able to do it.

So that's really more of a nuanced answer. It's probably more than you were expecting me to say, but I can't help it. It's really the last mile issue. Yeah, I think it's actually a perfect answer because we all know, as you said, that execution is the hard part because that's where the emotion comes in, right? Even if you have a perfect strategy as a human, you may get greedy and say, well, maybe I won't quite take profit here. I'll let it run a little longer or it's going to bounce. I need to move my stop loss down, right. And an algorithm is not going to do that. No, it's funny. When I was at Two Sigma, which I spent quite a few years at having built Two Sigma Securities, David Siegel, one of the co-founders who's now unbelievably wealthy, having built such a such an enormous company, he and John Overdeck would always talk

about the advantage of algorithmic trading. And the major advantage that David would always talk about the advantage of algorithmic trading. And the major advantage that David would always cite is discipline. And it's exactly what you just said. If you have a strategy, stick with it, make sure it's back tested, understanding it. Now that said, there are traders out there who are good at picking price levels and doing and having and can create alpha. I think the more fine distinction is when you try to actually buy or sell at that instant, how do you actually do it? And you can save money trading algorithmically because after all, most of the markets are electronic.

And if you look at any point in time during the day, the amount of activity that's going on is enormous. I mean, CoinMath processes 15 terabytes of market data a day. Now, that's uncompressed. That's just the kind of the raw streams that we get. But in Bitcoin, you really are looking at 5,000 to 10,000 individual orders at any point in time that constitutes an order book that's within 1% of the best bid and best offer. That is an enormous number of orders. And there's no human being that can even process

more than 5 or 10, much less that. And when you go compound that by looking at all the derivatives and looking at all the other pairs, looking all the other, and you follow lots of the altcoins, it's just too much for a human being to manage. What humans can do is pick what their long-term trends are, their intermediate term trends, follow the various signals that you're following. That's really kind of the point. That makes perfect sense. I want to talk more about the market as a whole. Obviously, we've seen a pretty major bull run over the past few months, largely, at

least if you listen to the media narrative, you'd say on the backs of the Bitcoin futures ETF, or at least the idea that it was going to be approved, which it ultimately was. I would love to hear your thoughts on a Bitcoin futures ETF, I guess, versus what could ideally be viewed, obviously, the Bitcoin spot ETF and what the Bitcoin futures ETF's role is in the market. Yeah, that's a lot. There's a lot to unpack there. First, let's talk about what the rally was based off of. The rally was based off the fact that it was massively oversold on a bunch of FUD. And the fundamentals of Bitcoin in particular are stronger now than they've been, certainly in my lifetime, certainly in the five years that I've been in crypto. So we had a situation where last May, we had three to four weeks of period of time dating back into April, where the basis, where people were speculating long enormously. Funding rates were very large.

The basis was very positive. And so you had this huge buildup of leverage on the long side. At that time, after it had plateaued and was going sideways at the top for a week or two, you then saw an avalanche of what I would classify as not necessarily FUD, which generally when they talk about fear, uncertainty and doubt, they generally talk about false stories. But you had an avalanche of negative news with plenty of FUD. You had China banning miners. You had all the environmentalists going absolutely on a coordinated basis apeshit about how Bitcoin was going to destroy the environment. You had all the leverage happening at the same time. And frankly, you have the vested interest of many of what are labeled progressives, although I hate the fact that they use that word, in order to try to

kill Bitcoin. We should talk about that in a bit. The fact is all that simultaneously culminated at one time. And you saw everything from that to Elon Musk's waffling at the time, and he's kind of moved back and forth on the issue. And whammo, you saw a massive avalanche start with all that leverage having to come off, driving the price basically down 50%. Well, I mean, when you do that, technically, a 50% correction is almost always going to find some footing and bounce. But in this particular case, it found its footing. It found huge fundamental demand. And over those multiple months that it started to recover, you saw something amazing.

If you look at the hash rate of the Bitcoin network today, it stands almost where it was back at the previous all-time high, but without China. It is also without mostly coal. Most of it is now renewable or stranded energy. And the environmental FUD has basically, people talk about it from time to time, but it's more like kind of a weak shadow line because as Nick Carter always points out, Bitcoin, if anything, is incentivizing significant amount of renewable energy by being the marginal buyer to allow those projects to be profitable. This is a big deal and people don't understand. So you take the environmental out, you take the China control

over the network fear out. And what do you have? You have a significantly better macro backdrop. At the same time, we have all of the macro items are still going. Money printing is still happening. We passed another trillion dollars in infrastructure. We're on the cusp of passing some version of build back better or build Bitcoin better, really, because at the end of the day, the more you print, the more people are going to be disillusioned with current fiat money. But the reality is, is the macro backdrop and all that is there. So the reason we saw that rally was to back to those levels, it was more or less baking the cake. The real question is, where do we go from here? So now we're sitting at a little bit below the all-time highs, having had all the leverage wiped out of the system again in the much smaller sell-off from the high 60s

down to the high 50s where we are. And I would argue that it is very much a bullish setup, but it's bullish understanding that these things take time. And sideways action generally is the catalyst towards a big move. Well, we've already seen that big downside move and we saw what it was met with. So, you know, you have to weight the odds toward the upside. I mean, that's the way I look at it. So that is the macro picture. But you asked about the ETF.

So, sorry, but now we're going to go into a diatribe about the ETF. Look, a futures-based ETF is a good product from the purpose point of view of traders who can't buy Bitcoin or Bitcoin derivatives products natively. So people whose all their money is in a 401k and want to trade the market can now become Bitcoin traders. OK, so if they are a bullish net, the futures product is going to be a positive to the market. If you are looking at long-term investors who can't buy Bitcoin natively because it's in 401ks or whatever, it's sort of a mixed bag. It is certainly arguably better than GBTC, the closed-end fund that was, you know, that Grayscale's closed-end fund was when it was trading at a premium. But you have to make an argument, do you want to pay for a futures ETF, which you know is going to bleed money based upon roll costs, and I'll explain

that if that's necessary, versus something you're buying at a discount where you have to believe at some point the discount will close. So if you're a really, really long-term buyer, you're probably better off in GBTC right now. If you are, although the management fee is certainly higher than a spot ETF would be, which would be the best of both worlds. So the real question is, what has been the effect of the ETF? I think the effect of the ETF was just like the effect of futures, only muted. Futures, when they were announced, caused the first big bull run of bitcoins you know screaming up to 20 but then when people realized they could short them all of a sudden it collapsed the spreads and all the speculation on around out of the market and we had what we call crypto winter on the very day on the very day that they were launched right i mean literally and so yeah of course so look the result then was something

new to the bitcoin community the The Bitcoin community had never experienced derivative trades, et cetera. Yes, they had experienced winters before, whether it was caused by Mt. Gox or something else, but it was different. People who think that the same thing should happen here are delusional because the new entrants in the market over the last few years have seen this movie before. And frankly, there's nowhere near the speculative excess right now, having gone through basically since April, since we've had long-side speculative excess. There's just none of that. And so you don't expect this to sell off to be massive. But certainly, that little sell-off, I mean, calling it 20% correction, little is sort of kind of funny, but we aren't talking about Bitcoin after all. But that little correction, that 20% correction is probably the extent of what you're seeing from

the ability to short futures. But my favorite screed, and the one I did last time, and I'm going to continue to say it, is the fact that the SEC knowingly allows the futures ETF to go through and did not approve a spot ETF product in their last attempt to do so is actually embarrassing for the United States. It's bad. I was talking with an SEC commissioner the other day, and I actually told her that I thought that the declining release on the most recent BANEC filing had arguably the single stupidest paragraph I have ever seen

written by someone at the SEC. And I will be willing to bet that most of my friends at DERA on the economic side and quantitative side would have refused to put their name on it, or they would have probably quit in disgrace for saying it. It was that dumb. And it's been repeated by multiple people. So let me tell you what is the single dumbest thing ever said by the SEC. They actually made the statement that the futures ETF is okay because the CME is a primary source for price discovery and therefore can't be manipulated. Coinbase, Kraken, Bitstamp, FTX US, et cetera, even though they're regulated as money-centered businesses, even though they're fully electronic and transparent, those can be manipulated by overseas money. Well, this is dumb for two reasons, but the first one is obvious.

Those two sources are 99.99999% correlated, meaning if the Bitcoin spot price moves, the Bitcoin futures price moves and vice versa. The reality is that it is literally impossible for the price of Bitcoin futures to be free from manipulation while the price of Bitcoin spot isn't. Literally impossible. In point of fact, it is far easier to manipulate Bitcoin futures because the Bitcoin futures in the CME have trading halts and don't have 24-7 markets. Now, they're close, but they're not fully 24-7. So that creates gaps. Anyone who remembers anything about an August of 15 when the S&P futures were closed while the market opened and saw what happened then, understands that futures

markets are not perfect for the purpose of price discovery. They're pretty good, but they're not perfect. Frankly, the futures markets outside of the US are better because they have real-time liquidation engines and they have real-time funding, and therefore they have more continuity. So when the SEC actually put pen to paper to say that their concerns over manipulation were more on the spot market, it is literally absurd. Now, the second reason it's absurd is because the order books from those exchanges, which would be used for any reasonable price discovery, are fully transparent. And you don't have to pay for them. Meaning, as I said to this SEC commissioner that I was talking to, I have 100% certainty that if the SEC wanted to

surveil those markets, they could. How do I know? Because CoinRoute's processing that data. So the reality is, is the SEC could, of course, process that data and see what's going on. And all they would have to do is get an agreement from the exchanges to give up who was it that entered certain orders if they saw them being manipulative. And the reality is, is I am sure they would be willing to cooperate with that because why wouldn't they? It's in their best interest to do so. So the entire notion of this declining release was just moronic. The obvious reason is they had to come up with reasons. And we've all seen this in life. Like you're raising kids. I've raised three kids. When kids do something horribly dumb

and you ask them, why did they do it? The answer is because they wanted to. And so they'll come up with all these ridiculous excuses that we all know are stupid. And that's what happened here. I mean, Gary Gensler wanted to support the futures model because his former CFTC chairman, he understands futures market structure. He doesn't understand the other market structures, or at least if he does, he doesn't want to credit them, but he didn't want to approve it. Why not? He wants regulatory authority over the spot market. And since he doesn't have it, he's using this as his club to get it. And so therefore the why in the adopting release was like your six-year-old kid who ate, you know, half a package of Oreo cookies, you know, an hour before dinner. And you ask them, why did you do it? You know,

it's going to spoil your appetite. You know, it's bad for you. And they come up with little reasons like, oh, well, I saw the package was damaged and I just, I ate the one that was broken and I couldn't stop or some other really dumb reason. It's really that. And so, yes, I'm calling, you know, a professor who taught at MIT dumb no not really he's actually quite smart but what he said and what he had put on paper was dumb and there's just no other words to describe it and it's my feeling that as a result we won't see a spot ETF anytime soon well I mean you know at the end of the day if Congress passed legislation giving the SEC oversight, they'd pass it immediately. Because why? All you have to do is look at USO, the oil fund, versus GLD, the gold ETF. Now,

they're both ETFs. USO is based on futures. GLD is based on spot. Why there's a spot gold ETF with no surveillable spot gold market, well, that's a different story, but we won't go there. The fact is, with roughly similar performance over the last couple of decades, the gold ETF has tracked gold reasonably well. Its management fee takes a little bite out of it, but it's been reasonably well. Because when you run a futures-based ETF, every expiration, you have to sell your futures contract and buy the next one. And if that is not directly in line with your funding costs, that role that is, it costs you money. That bleed out in Bitcoin futures is likely to be pretty high. We won't know a year from now. We should have another conversation and we'll be able to look to see how did the last four roles do and how did Bitcoin ETF members do with it? But the truth of the matter is history tells us that they're likely to suffer significant bleed out of our tracking error. And so, you know, that's something that's important. Now, if you're the SEC, you really want investors to suffer and literally want them to suffer. And the answer is, of course, they say they don't, but they have another agenda, which is getting control. And so in this particular case,

the ability to control the market is considered more important than the ability to protect investors. And to me, that's sad. I can't use another word for it. It makes me mad too. I mean, people like Ryan Selkis from Masari are visibly angry. And I don't know if you've talked to him on your show. Three times. Yeah. So Ryan will go about this and he and I are in full agreement on the issue. I just think that I'm more sad because I do know many people at the SEC, including a couple of the current commissioners, and they're good people who really want to do the right thing. I think that right now, they've lost their way, however. So the narrative, of course, behind an ETF in general, regardless whether it was spot or futures,

was that it would give a tool for institutional investors to gain access to this asset when they otherwise couldn't, right? Your endowments, your pension funds with the risk managers that they just can't buy a spot. They're not going to custody it. That said, is a futures ETF enough for them? Are they still going to sit on the sidelines? I think that there are two things that are important here. The first are retirement funds. And so you will see more active trading of the people who actively trade their 401ks, who are financial analysts, RAs, et cetera, to trade those 401ks will absolutely use it. It will exaggerate upside volatility when it happens and exaggerate downside volatility. As it gets bigger and bigger, you will see more swings in on the ups and swings down on the down.

So the greed and fear in Bitcoin is going to get exaggerated by this. Nobody needs that. And that's effectively like trading with leverage, right? And so that was certainly not the intention of the SAC to give us an asset that was supposed to protect consumers and you give them sort of this de facto leverage tool. Yeah, I mean, it's not that the tool itself is leverage,

but it will act like that. No, it will behave in that manner, of course. It's going to exaggerate volatility in both directions. The net effect will be slightly positive, however, because there are RIAs out there that had no vehicle that they could invest for their clients, because a lot of them don't have the ability to buy over-the-counter non-listed securities. So GBTC, well you can buy it in your schwab account or your ameritrade account or your e-trade account you you the fact is a lot of rias are not allowed to buy it's stuff that's not listed on nizee and you know or nasdaq or you know one of the major exchanges the word they use

is national market system or nms stocks but the etf an NMS stock. And so therefore it will open up the ability to invest in Bitcoin to more RIAs. The other big question here, though, when you talk about pension funds and endowments are when do consultants consider it an investable asset class alongside gold? And that is 100% happening. It's slowly, slowly, slowly, but the old expression is slowly then suddenly. I don't know when suddenly is going to happen, but it will happen. And so at some point, you see that avalanche starting. And this is yet another of the chips against people being able to do it. I think that a spot ETF makes people's lives easier because they don't have to jigger their accounts. But there are multiple firms who are offering products that cater to those audiences that get around, not get around, but solve some of the issues that those particular asset owners have in terms of owning the spot.

So, you know, whether it's derivative contracts or notes or whatever, it's happening. Plus, there are also spot ETFs available in quite a few countries outside the United States, Switzerland being the first, Canada and others, they're there. So look, it is becoming more mainstream, but that's just Bitcoin. The other big story that's gone on over the last, you know, whatever, six to 12 months has been DeFi.

And the explosion on the scene of things like coins like Solana. And people continue to talk about DeFi coins and altcoins. And it's a different narrative, but it's fascinating to watch that narrative as it develops because it's still very, very early days from the traditional financial types. One of the most frequent complaints we hear about platforms in the digital asset space is that they're not reliable and trustworthy. That's why I'm so excited to tell you guys about Amber Group. If you don't know about them already, Amber Group is an integrated digital asset platform that serves both retail and institutional clients by providing deep liquidity, attractive yields, and sophisticated portfolio management tools.

I talked about them being trustworthy. Well, they have 12 offices on three continents and nearly a trillion dollars in volume traded. Their leadership team has extensive finance experience from firms like Morgan Stanley, Goldman Sachs, Citadel, and Bloomberg, and their investors are huge names like Tiger Global, DCM, Paradigm, Pantera, and Coinbase Ventures. They've made heavy investments in cybersecurity, crypto security, and operational security across the firm with regular audits and penetration testing. They're proactively committed to regulatory compliance in the 100 countries that Amber serves. If you're looking for a platform where you can trade, earn yield,

find deep liquidity, and manage your portfolio, look no further than Amber. You can check them out at the wolf of all streets dot link slash Amber group. That's the wolf of all streets dot link slash Amber group. The future of cryptocurrency is a multi-chain world, and you can't have a multi-chain world without Horizon who allows these chains to be interoperable. Horizon is the zero knowledge enabled network of blockchains powered by the largest node system, larger than either Bitcoin or Ethereum, with scalability and flexibility unmatched by others. Blockchains built on Horizon are enhanced by ZK-SNARK privacy tech and provide massive throughput without compromising decentralization. Horizon can support up to 10,000 independent blockchains running in parallel and issue an unlimited amount of tokens. That's why

huge projects that you love like Celsius, Dash, IOTA, GameStation, Hero Engine, and LTO Network are all building their blockchains with Horizon. Anyone can build on Horizon using their platform Zendu, and Horizon is going to issue their own first token on Zendu this year, ZeniToken. If you're not familiar with all the amazing things that this project is doing, check them out at the wolfofallstreets.link slash horizon. That's H-O-R-I-Z-E-N. Do it now. Everybody in cryptocurrency already knows about Hedera Hashgraph. It's one of the fastest, most secure and trusted networks on the planet. But what they might not know about is the H-Bar Foundation. With a budget of $2.5 billion already, they are funding entrepreneurs and projects that want to build on their blockchain and build within the ecosystem.

Absolutely incredible. And they're not only giving them funding, they're actually helping them to develop it and then to get the word out as well. You guys should check out the HBAR Foundation and what Hedera Hashgraph is doing. You can do all of that at thewolfofallstreets.link slash HBAR. That is thewolfofallstreets.link slash HBAR. Do it now. Yeah, I agree. And I was a big proponent of sort of the spray and pray approach to layer one for that very reason. Right. Six months, a year ago, I was saying, listen, I'm going to buy all these layer one Ethereum killers, although I don't believe in that narrative, but anything that can sort of

compete, become a force in DeFi or in NFTs or in gaming or any of these, why not gain exposure to all of them? Because they'll likely each win in some niche. And I think we are seeing that as you talked about with Solana, we've seen Avalanche going absolutely nut. Elrond, I mean, these coins have gone crazy. Right. I mean, look, at the end of the day, the reality is people in traditional finance, and I talked to a lot of my old friends. I mean, I think I told the story last time about how they thought I was crazy, then sorry for me, and now, you know, et cetera. Hardly a week goes by that I haven't had multiple inbound calls from someone who I used to be, you know, I used to talk to all the time.

And now we're just in what's going on in crypto. But let's put a very simple use case out there, which I think is funny. So one thing that the Gensler SEC has done recently that I completely agree with is call for more transparency in the securities lending markets. Now, your viewers probably don't care about that too much, but it's arguably one of the most oligopolistic markets out there. There's basically a cabal of the top prime brokers that own that market. And so anybody who's going to short stock has to pay the rates to borrow that stock that that cabal sets. There's no transparency pre-trade. There's very little transparency post-trade, et cetera. Well, my answer to this is that in 20 years from now, and I don't know how long it's going to actually take, but at some point, this will all be done on the blockchain. The rules will be much clearer, and it will all be completely open and transparent.

I think most financing activities will ultimately go and use technology that we currently call DeFi. But the reality is, it'll be some regulations, there'll be some gatekeeping in terms of beyond on and off. But you're going to use those sorts of open protocols to do that. So what actually has happened? Well, the SEC put out a proposal to create a 15-minute delayed tape that shows what transactions were, which is kind of funny. It's like saying, okay,

we know we have a problem. So let's go back and pick the 1990s technology that we used to first open up the NASDAQ OTC market, which we knew had lots of collusion. Hell, there was a court case and a billion-dollar settlement, which seems cute in terms of the small size of it now, considering the big scope of it. But there was a settlement for collusion. In the case of securities lending, we know there's collusion. There's multiple class actions going on. I don't know if any of that stuff will go anywhere. So what's the answer? Look, it's positive that the SEC is actually trying to do something about it, but it's cute, funny. I don't know, anachronistic. You picked your words that they want to use old technology from the 90s to just kind of take baby steps to start in this market.

I don't know how long it's going to take, Scott, but at some point when you start looking at the various layer ones that are out there to facilitate financing markets. I would be stunned if securities lending, interest rate swaps, pretty much everything financial doesn't go the way that the modern technology is going. And by the way, that also includes, there was a story the other day of something that Sam has made very, very clear, that FTX US wants to revolutionize the way that derivatives are traded in the US, because there is a better way than 24-hour settlement and once-a-day margin calls on derivatives. So the technology that we live with in the crypto world is certainly going to influence what's going on in the traditional world. Some would say that's a tail wagging the dog because one is so much smaller than the other.

But in my mind, it's really just what you're getting a glimpse into the future. So I think a lot of what we see in the crypto world is glimpsing the future of what you're going to see. And just at some point, it won't be called crypto. Some of it will be called digital assets. It'll just be assets because everything will trade digitally. That's sort of my base. Now, I know that's far out there. That's very future. I don't think that's far out there at all, actually.

I think, you know, inevitably you tokenize everything. You know, it becomes a superior technology. It's faster. I mean, that's obviously a meme to say it in that regard, but that there's a better way using the blockchain. Listen, you mentioned, Sam, we had that weekend where Elon Musk basically went on Twitter, said, I'm doing a poll. I'm going to sell 10% of my stock. Right. And so markets were closed. But you mentioned, Sam, FTX and more efficient markets. FTX, you could trade tokenized Tesla stock. And that was trading and dropping on the weekend ahead

of the open on Monday. Yeah, it's such a funny story because, look, at the end of the day, the way the current regulation in equities is in terms of insider trading and disclosures and whatnot is really kind of screwed up. I mean, you know, they make a big play of like there's no inside information, yet there's entire businesses of people who collect and provide access to companies, right, you know, to investors. So look, I don't know one way or another. But what I do know is this. It is absolutely undeniable that a 24-7 market cushions volatility. And what do I mean by that? It doesn't stop things from moving. But it is better for things to happen in waves in real time than to happen in gaps at one focus period of time in the morning. Now, the Tesla is an interesting case because we had FTX, but it was really small relative to the amount of volume that happened. But the real big one was Robinhood. When they had announcements and they had an 80% up move in one day, trading halts the entire day, and gaps that were crazy before it actually

settled. The fact is, is markets when they digest news are like a big rock thrown into a pond. The waves are big, and they eventually settle down to some reasonable thing. If it happens, that rock gets thrown in when the market is closed, then you, of course, have enormously exaggerated issues, right? Because there's no time. So if you have more, the more time you have, the less that kind of gap volatility happens. And so, you know, the argument that people make about trading hours, I mean, there's a lot of people, they don't want 24-7 trading hours. I don't blame them. Stockbrokers have a really nice lifestyle. Stockbrokers have a really nice lifestyle. My company processes over $6 billion

of trades a month now. And I'm not going to lie. I wake up at 3 in the morning. I make sure that my technology is all running. I want to check not just the prices. I want to check that nothing is broken, that everything is OK, that our market data is operational. I can't stop myself because it's something we do. Now, yes, we have automated ways of looking. We have people who are on call, et cetera. We've adapted to this. We understand that. If you're in the traditional financial world where, you know, we used to have something we used to call rule 420.

It was actually rule 430, but 420 is a funnier number. And basically, it's like at 430 hits, all the traders leave for the bar because they're done. Their trading day is over. They started early in the morning and the market's closed at four. They got all their tickets all filed and they could go off and celebrate their day done. That's a culture that it doesn't exist nearly as much today as it used to because most trading is done by human traders. But still giving that up, giving up the

weekend to understand that you have to make sure your systems are running. It's kind of a big deal for people. I mean, I tweaked my friend, Jim Angel, who's a professor of finance down at Georgetown Business School. And Jim is a great guy. And he totally gets the joke. But he made a tweet the other day about how we should all be thankful that everyone on Wall Street, that there are people who are spending three hours on a Saturday testing their systems, because after all, that'll make sure the markets are continuity, etc. And my tweet to him was, well, in crypto, we're trading 24-7. So you could thank all of us for making sure the systems stay up all the time. And it's not just three hours on a random Saturday. And of course, there's no response to that. I mean, it's not Jim's fault. But the truth is that we've adapted and these

markets actually work like this. And you see really interesting behaviors. It's also a global market, which is different. So when myopic US regulators look at things as if it's the US, it's like, well, no, I mean, it's a 24-hour global market in multiple asset classes that's maturing and is well over $2 trillion of value. And so it's pretty hard to ignore it right now. Right. You alluded to the fact earlier, obviously, that we had this massive bull run up. We discussed the reasons and we've been sort of chopping around and 20% from the highs. Do you think that it will naturally continue to rise? I know that we're both bulls, obviously. Or do you think that we need some other catalyst to get retail and institution interested again? Another Tesla buys 1.5 billion type news story.

You know, it's really funny. What you notice with markets is in retrospect, there's always something that people can point to as a catalyst, but sometimes those catalysts are inevitable. So I kind of like to look at the crypto market as two markets, as Bitcoin and everything else. Maybe it's three markets. Maybe Ethereum deserves the fact that it should be called something, you know, its own separate market. But, you know, look at what they're doing. I mean, you get these periods of time when Bitcoin goes on a run, yeah, it pulls everything else up with it, but Bitcoin outperforms. And then you get to a period of time where it flatlines for a while. And during that period of time, other stories emerge. I mean, you know, we've seen the NFT boom, we've seen the gaming boom. To be blunt, I think that there are,

I'm bullish on both, but the NFT boom is much more troubling from an asset management point of view than the gaming boom. I mean, look, I personally spend way too much money playing in-game purchases in video games that I play. And I'm an old dude, right? You got the gray in the beard here. So I understand that gaming moving to a open ecosystem where you can buy and sell things, it's a natural. It's a natural outgrowth for people to have maintained control of their own data and not have big tech companies having control of it. So-called Web 3 is not just inevitable, but necessary. Frankly, it's the only way to preserve individual financial freedom. And then there's a market for it. So when you have product market fit like that, to me, it's going to work.

So that is a massive, massive, positive, bullish trend over the next five years that, of course, is going to see ups and downs. But the ups are going to be much larger, I think, than the downs because the trend is up. The fact is, however, there are lots of current projects that won't make it. I mean, how much do you use Lycos' search engine or AskJeeves? And those were big companies back in the internet bubble days. I mean, there are going to be failures. There's going to be winners. But the net of it is it's going to be worth a lot more than the sub-trillion dollars that

that sector is probably worth right now. But NFTs are troubling and also exciting at the same time. On the one hand, the prices being paid for art or really not, you know, really kind of, what would I call it, fad-like art. It's one thing. JPEGs. What? JPEGs. Yeah. When you look at a JPEG that someone could theoretically write or build in an hour, and the price starts going up as crazy as they are because it's kind

of a culty thing it feels more like beanie babies on the other hand when you look at art that is done by named artists that people will pay for uh why is that any different than art in general which has been on a very big bull run as well whether you're talking bank go to you know to banksy to you know whatever so you So we're people. It doesn't really matter, digital or otherwise. The concept of NFTs are really important. One story that is absolutely worth talking about is the Constitution story. I mean, other than the fact that Ken Griffin is now the world's greatest troll, in my opinion, is having trolled the entire crypto community. I think that is hysterical. But think about what actually happened, what could happen in the future, and what regulators

are probably gnashing their teeth over. The concept that a distributed autonomous organization without any previous organization came up with the ability to raise a significant amount of money to buy a tangible asset that they had to use a governance token, which is idiotic, but a tangible asset that is now, quote, owned or controlled by this group of people. Think about what that means. How long is it going to be before instead of going to private equity firms to take a company private, someone's going to come up with the idea that a distributed autonomous organization should do it. Think about GameStop. It was a publicly traded company. What if instead of bidding up the publicly traded company, a DAO was put together to produce an

offer to buy GameStop at, let's just say, $36 a share when it was trading at 18. The CEO would have taken it. The investors would have taken it. And then that Dow could have relisted the stock or kept the stock, had the ownership of the stock and forced the bull run at the same time and actually changed management to do what they wanted it to do, to create a community. Now, I'm not saying that could have happened or would have happened or will happen. What I'm saying is the concept of DAOs, of autonomous groups of people in an open source way buying assets, that's not going to go anywhere. That is a trend to watch over the next decade because at some point that's going to be very interesting because the concept of an NFT is it's non-fungible. Non-fungible meaning it's really not a security because your piece and my piece, they're not the same, right? You can't just exchange them, et cetera. The reality is NFTs are going to become fungible in some sort through the

idea of a DAO. And so I think that it's sort of a futurist way of looking at organizing individuals. Now, the SEC was going to say something about this with accredited investor rules and all sorts of stuff. There'll be roadblocks thrown in its way. But this story is not going to go away. This is a kind of a very big deal. The fact that people could organize to put $40 million together in two days. Think about how long it takes the average company to do a $40 million profit in traditional capital markets. It's about a year. So that efficiency is not going unnoticed. And it's really important for people to understand that. Because when you start looking at the way financial markets are organized, I think fundamentally they're going

to change. It's very early, but it's going to change. Right. There's a flip side to that, of course, which is that Constitution Dow has become a bad version of Lord of the Flies since they lost. Right. You've got $40 million, people trying to take their money out, trying to decide what that Dow is going to do. And at the end of the day, you have humans and a lot of personalities with conflicting views. So I think there's going to have to be a happy medium or a pocket where they work, or there's actually a plan beyond, let's just buy the constitution. And when that plan fails, there's no idea of what's going to happen next. I mean, it's true. But the funny, I have two comments that first, it's true. And because it was set up so hurriedly, arguably, the governance probably left something to be desired. So the funny, I have two comments that first it's true. And because it was set up so hurriedly,

arguably the governance probably left something to be desired. So I think, yeah, you can spend an extra week or two and come up with governance that people understand that question. What happens if we lose, but how is that much different than what is a far, far, far, I don't have enough time to say how many far different loss scenario from SPACs that don't find. SPACs are much worse, for sure.

So people buy into a SPAC, which the SEC says, yo, sure, no problem, you can buy these things. And what are they? They are open shells that have different rights that half the people investing don't really understand. Yeah, you can probably find those rights in the prospectuses, but no one's really telling you what you're buying. And if you look at the performance of SPACs, there are so many that have basically gone back,

any premiums have gone away. And then there are others where the stuff they bought was just insane, insanely overvalued. And so they haven't done too well. And so because it's a flavor of the month sort of thing. The reality is, who's to say that a dow construct constructurally is inferior to a spac i guarantee you the dow is not are going to be paying significantly less management fees significantly less premia to the people who organize it etc etc uh as long as that's disclosed now obviously someone could put together a dow that's just as i'm, obviously, someone could put together a DAO that's just as, I'm going to use a SAT word, rapacious as a SPAC, where maybe the people who form the DAO will keep 50% of the economic benefit for themselves and hope that nobody figures it out. But this thing called the internet tends to expose people like that. And as long as it's public,

as long as it's disclosed, as long as everyone knows the rules, I just think it's a big deal. And while it doesn't really help your viewers figure out what's going to go on in the market in the next five minutes or even five weeks, it's a very important trend to watch because it will matter in the end. Yeah, I mean, they've basically been recognized as LLCs already in Wyoming in advance of all of this. And just a day after the Constitution Dow, there was a Dune Dow that bought the screenplay of the unfinished version of the movie Dune in the 1970s. So even just literally a day or two later after Constitution Dow, we've already seen, you know, millions of dollars raised for a similar situation just on the hype of seeing it happen before. It's absolutely inevitable, as you said, and really exciting. Yeah, it is. So when people talk about NFTs, I mean, NFTs are very exciting for what it will mean to

musicians, to artists, to pretty much every type of product or service that can be marketed that way. It takes away from a lot of the economic rent, which that's extracted by the intermediaries in the spaces and provides significant less friction. So I think you'll see a freer flow of that. Has it enabled certain rampant speculation? Yeah, sure. I mean, I'm just waiting for NFTs of various cubes. This know, this is my, my, my little one inch tungsten cube because there's only thing I could get delivered. Uh, surprisingly heavy, right? Yeah. But my point is, is that whatever is the fat of the day, and this is,

you know, look, I'm not, I'm not going to lie. It better for me than the fidget spinners because the fidget spinner, I was causing my fingers to hurt after a while. Whereas this, I don't get any pain holding on to it. But the truth is fads come and go. And the ability to put money into those fads as an NFT will, of course, exaggerate the volatility. But frankly, is it more or less dangerous than any other fad? No, it's not. But the underlying mechanism is amazingly, makes me amazingly bullish about the, just about the value of the technology as a whole, because it can do so many good things. Those third party intermediary toll collectors

that you mentioned, they're not going to go quietly into the night though, because when you, when you dig deep into who this threatens on a larger level, it's the largest companies and infrastructural pieces we have in the world, really, right? I mean, that's how the biggest companies make their money by being the intermediary. Right. And so when you boil down to it, the one thing we haven't talked about, you know, I know we're running out of time, is our stable coins. And if you think that stable coins, which underlie DeFi's ecosystem, aren't a critical attack vector for the elites to try to push back against this, then you're crazy. And if you think that isn't why there are white papers being written by various governmental agencies against stable coins, then I got a bridge to sell you. I used to be able to see it out of my

old apartment. Now I have the Miami view. I don't see any bridges back there. But the fact is, is that the stable coins, I think could be very, very bullish for the US dollar, keeping the dollar as a reserve currency. I think it's a very good thing. But they are being painted in all sorts of interesting brushes. And I think that most of the case is wrong.

They always focus on tether, but they're painting as securities for different reasons. The truth is, is that they're providing enormous value to their users, whereas a central bank digital currency is one of the scariest propositions out there. Because a central bank digital currency would allow the central bank to control not just the interest that gets paid, but also who or what you can buy or sell. So think about what's going on with the nomination of Amaroba. You have a person who has previously written that the oil and gas industry should be starved of liquidity and who thinks that we should nationalize banking and is obviously a proponent of a central bank digital currency. I mean, it's so Orwellian that it's almost a lampoon.

But the truth is, the danger is very, very real. Do you want to have a central government with the power to starve an industry of capital at will? I don't. And I think it's extremely important for economic freedom that stable coins be allowed to prosper, that a central bank digital currency be an option, not just the option if the government wants to create it. I think that is maybe the most important political issue that will come out of the whole crypto argument. But central bank digital currencies are inevitable, right? I mean, even just considering technology and not the nefarious side of privacy violations and control, it's just a superior way for the dollar operator.

And that's why the focus needs to be that central bank digital currency should be a way of transacting in that fiat currency, not the way. And that's the difference. Allowing competing stable coins and competing assets to trade with economic freedom, as kind of the rallying cry, is really, really important for all of the reasons. Because a central bank digital currency, that becomes monopolistic. And the only way to basically exchange goods or services means the government would have total control.

With cash, the government doesn't have total control. With a central bank digital currency, they do. And that is a very scary proposition if no competition is allowed. Forgive my pessimism, but it seems like that would be the route the government would push for. Well, certainly there are people in government who will push for it. What's interesting about it is we're seeing the crypto sphere wake up to the fact that perhaps the previous people that they had been supporting might not be the ones that are supporting in their interest. You're seeing, you know,

kind of interesting, you know, look, I'm not going to lie. The notion that Ted Cruz is the most articulate senator, or the second most articulate senator, Cynthia Lewis is the most articulate senator when it comes to crypto, is one that is very troubling to large parts of the crypto community. You know, and so but the reality is you're seeing, you know, Rand Paul, of course, and Cynthia Loomis and Ted Cruz now and others take up the mantle of financial freedom. The truth is, is if the Democrats are smart, they won't allow that to be the Republican ground, because there's no reason that it should be. The only reason it is, is if you believe that the Democratic Party is made up of the squad and people who believe the government should be controlling everything. And I still have to believe in my mind's eye that the average voter, most people in America don't want the government to have total control. So hopefully this will be, you know, we'll look back on a few

year period where wins and things are changing. But this should be a bipartisan issue. It really shouldn't be Republican, Democrat. It really shouldn't be, you know, whether big government versus small in a sense of what you wanted to do. It really is big government versus small in the sense, do you want a government to control everything? That's really the issue. And I phrase it that way because you have a lot of viewers, many of which come from different sides of the political spectrum. And there's common ground in anyone who understands crypto, which is that economic freedom should matter to everybody, not in the sense of being able to pollute at will or

any of the other things that people associate with those far-right policies. I am not saying that. What I am saying is allowing the government to completely control commerce through a central bank digital currency that has no competition would be a bad thing. And I think that the crypto community all understands that intuitively. Totally agree. So unfortunately, we have to end here, but we are going to follow this up with another conversation a few months down the road for sure. Where can everybody follow you? And also, of course, check out what CoinRoutes is doing. I

know you mentioned, obviously, that you're going to have some more consumer-facing products and give us that edge that the institutions have had on us for so long. Yeah, you can sign up for our mailing list on CoinRoutes.com. We will be curating that. We are going to put together a soft launch list from people from our list uh in the first or second quarter of the year uh i'm dave weisberger one or at dave weisberger one on twitter we are also on linkedin and coin routes has both twitter and linkedin and we'll be using the social media more and more as we get closer to launching a more retail rather than institutional product and you'll see some press releases about our funding round, which while small, because we really don't need to raise a

lot of money, is important to us. I mean, it's been reported and it's a little bit over $15 million at a valuation that puts us on a little under a hundred million, give or take. We're not really talking about valuations. It's below, it's there, whatever. I mean, at the end of the day, we're trading $6 billion a month through the platform. So it's pretty consistent. And our clients are finding value and we're just continuing to grow. And we're hiring. So, you know, people who are developers and support people, you know, definitely find us because we're doing our best to try to get that message out there. Unbelievable to hear the level of hiring in this industry is absolutely astounding. Every day you see another story of some major institution hiring another 100, 200 or 300 people. Very clear that we're not going anywhere. Thank you so much for taking the time once again for your perspective on all markets. I find, as you mentioned before we were talking, that you and I tend to agree on almost

everything. Yeah, it is. It is one of those things. A certain kindred spirit is certainly there. Anyway, take care, Scott. Much appreciated.