The Wolf Of All Streets - Why Investors Believe In Ethereum | James Butterfill, Coinshares

Episode Date: February 15, 2023

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A recent fund manager's survey from CoinShares, I have a guest from CoinShares today, James Butterfill, of course, said that 60% of institutional investors are interested in Ethereum, meaning that potentially that is where the focus of institutional investors is at the moment. But the question is, are institutional investors actually involved or interested in the crypto market at all right now. Looking at all the regulatory scrutiny, all the question marks as to what's likely to come, all of the rumors about the United States banking system being cut off from crypto companies. There's a lot of uncertainty in the market.

So are institutional investors actually still here or interested? James and I are going to discuss it right now. What is up, everybody? I'm Scott Melker, also known as the Wolf of Wall Street. Before we get started, please subscribe to the channel and hit the like button. We've seen a lot of bad news for the crypto market, but we have not seen a lot of bad news with regards to price, which I find really, really interesting. Yesterday, there was about an hour where breaking news was circulating on Twitter that USDC was going to be investigated by the SEC, that they had received one of these infamous Wells notices that are going out to all the companies. That was quickly dispelled as false. The source was dubious, and that was not true. I found that fake news really, really interesting at the moment because my sort of base case for stable coins of late has been that the United States government will likely favor USDC and go after basically everyone else. And we've seen the opening salvo of that with their enforcement action against BUSD and Paxos, who obviously was minting that token until they stopped minting that token.

Speaking of macro, as I said, there are quite a few question marks. I don't know if you guys saw this headline that's going around on the Wall Street Journal that we're all memeing to death. To save money, maybe you should skip breakfast. Are we really at the point in the macro cycle where we're supposed to stop eating? Is this like a take control of your eating before your eating takes control of you? If you're going to be poor, be poor slower. Why stop at breakfast? Maybe you should skip lunch and dinner and you'll be a billionaire because of all the money that you've saved. I'm just astounded that at this point, we're now seeing mainstream media telling people not to eat as basically their advice on how to suffer through inflation, which we all know continues to

be a major issue. I'm going to go ahead and bring out our guest today right now, James Butterfield. How are you today? Great, thanks. Good to be on the show. So did I properly quote the fund manager survey at the beginning, 60%? Yeah, just about. I think investors, they were asked the question, investors, what do they believe has the most compelling growth outlook? And now 60% of people up from 40% a quarter ago believe Ethereum does. So it's quite a positive, potentially, sentiment indicator for Ethereum. That is very interesting and aligns with what I've heard from quite a few guests. I think that people believe there's a lot more upside potential, obviously, because of all the things being built, the merge, the ability to earn interest.

Yeah, lots of that. I mean, it's one of the only assets, crypto assets, which has a negative net issue. So it has the burn mechanism, but it also has income from fees. And whilst it does issue some, the burn's greater than the amount of issues. So it's almost like if you look at it from an equity analyst perspective, it's like something with a positive buyback yield in some respects. So I think that's really attractive. And then it ticks the box from an ESG perspective as well.

I think a lot of investors are paying much closer interest to us doing for that play and then one of the big hurdles for uncertainty unstaking end of march early april that will occur there's probably going to be a bit of a price wobble there because i think people will look at the unstaking queue and get very worried we estimate about 10 will want to unstake and that is around, will take around four weeks. So there might be a couple of nasty headlines, people saying, oh, there's a massive queue, no one likes Ethereum. But I also think it's close to balance it off with the staking queue as well. So they'll probably be quite well balanced as people restake.

Exactly. I think that that is a sort of nonsensical narrative. Not that it won't play out because people do believe it. But first of all, anyone who staked 32 ETH for this long in this smart contract was not the type of person who was excited to get it out, right? You had a question mark if you would even be able to get it out. So you obviously were not risk averse. You were willing to do it and you did it out of, I think, a core belief. And then more to your point, even if 10% are in the queue, which I don't believe will actually all cash out, there's a lot of people who wanted to know that they would eventually be able to unstake before they're going to stake, which is the case when this happens.

Let's say you had 10 validators and you managed to accrue enough yield to create another validator on top of that, you'd have to unstake that first and then restake. So that's why looking too deeply, I think, into the staking queue is probably a mistake. I quite agree. So I guess the most important question of the day is, will you be skipping breakfast moving forward? Yeah, I don't think the market got the memo on this one. If the retail sales figures have literally just come out, and they were 1% above expectations up 3% month on month or something. So yeah, I don't think people are stopping buying stuff in the US. So but I think

that an important thing here, January, there was an unseasonably warm winter in the United States in January, this January compared to other Januaries. January tends to be a month with very variable data as well anyway. But I think people are extrapolating a lot of data that's coming out, whether it's purchasing manager indices, CPI, retail sales or whatever, and thinking, okay, now the US is on a much sounder economic footing. I think that's a mistake. A lot of this data is down to seasonal effects. And we could well see a lot more bad data come out. But saying that, I mean, people, if you look at the futures market now, they're pricing in 15 basis points of rate cuts this year.

So that's no rate cuts, essentially. I think that will change again as the macro data worsens throughout this first and second quarter. Yeah, I tend to agree with that assessment as well. Also, we all know that inflation data is a bit lagging. And if you take a look at the numbers of consumer debt, credit card debt reaching all time highs, people's savings reaching effectively all-time lows. That's not a healthy market. But interestingly, as you said, it doesn't seem like people have slowed down. Maybe there's a false retail optimism that they'll just draw down to zero and then things will get better and they'll improve. Or maybe people just don't get it and they need to buy their $10 eggs and that's what it is. Well, the delta of inflation is declining.

So it went from the core inflation went from 5.7 down to 5.6. I mean, trivial, really. But yeah, it's not really cooling that much. But I think the most important thing, though, from a monetary policy perspective acknowledged that we're not like the 1970s, which to me suggests we're very, very close to the peak rates in interest rates. Probably March, we'll see the last rate hike of this year. I agree. But then people think that we'll see this massive pivot to QE. And I think then we just stop seeing rate hikes. But I don't believe we're going to see rate cuts. But I think even a softer part of the reason why I think Bitcoin's done quite well this year is a much softer rhetoric coming out of the Fed. And when they've stopped hiking rates, start talking about weaker macro data,

I think that will start to be very supportive for Bitcoin. And why I believe, what we coin shares believe in the second half of this year, we really start to see much more meaningful price appreciation. That interesting, that aligns with the basic four-year cycle idea of how Bitcoin and the cryptocurrency market trades anyways. I've been talking about this quite a lot. But if you eliminate all of the noise, all of the news, all of the contagion, literally all of it, and just look at a chart, I probably have it. Let me see. Probably have it and can just share it. I don't have it pulled up, unfortunately, but I will get it.

But if you just look at the cycles, everything that's happened so far fits right in anyways. And you could have ignored all of it. And we would just see price sort of rise out at the end of this year, just even based on that very basic. What's really unusual about this cycle is we usually see a big decline in hash power at this point in the cycle. Those miners go bust and turn off their rigs, et cetera. But what's happened is some of the very liquid cash rich miners have just been buying all that hash power off the weak ones, such as, you know, Argo Blockchain selling a lot of their equipment. It's still turned on.

It's just owned by someone else. So that's quite, I think, quite an encouraging thing that a lot of miners find it very worthwhile still still actually mining crypto right but if you look at the way that we've come out of all these bottoms it's sort of a long choppy period sideways and then a slow grinding rise back up before the halving when you see this sort of parabolic rise again it's happened every time yeah i think sideways slowly up bottom here we go sideways slowly up right i mean this bottom go, sideways, slowly up, right? I mean, this bottom now would be here technically because of FTX. My point was that it would have been June if not for that.

There are a lot of technical traders, aren't there, I mean, in Bitcoin. So it might be in some part a self-fulfilling prophecy. But, you know, I'm always a bit cautious around the stock-to-flow model just partly because the supply is perfectly known. It doesn't matter if there's 2 million miners or 2 miners. We know the supply. So we know when the halving is going to happen. And so it theoretically shouldn't have any impact on price. But the reality is it probably will have some. Yeah, I agree that all technical analysis actually is self-fulfilling prophecy. It's just because same people are looking at the same lines and making

decisions based on them, not because there's any magic sauce there, but hey, use whatever edge you've got. But it does make sense, obviously, that we would see these cycles where it would take a few months after the halving for the supply decrease to really play in and then for things to move up. But let's talk a bit more about macro. I think we've sort of covered rates, but interestingly, it seems that Bitcoin for a while there was a bit untether macro. I think we've sort of covered rates. But interestingly, it seems that Bitcoin for a while there was a bit untethered or less correlated than it was and starting to correlate once again. Correct? Yeah. So, I mean, I think the big thing throughout 2022 was how correlated Bitcoin price was becoming to macroeconomic releases, particularly interest

rate sensitive ones such as inflation or FOMC statements. And if you look intraday on pricing throughout the whole of 2022, when the FOMC says something in particular that's very hawkish, you saw an immediate price response to say gold and Bitcoin and almost the exact inverse in the dollar, for instance. And then obviously FTX happened and Bitcoin price just totally decoupled from all that macro story. But I think this year, particularly when we had the FOMC statement this year and the CPI data release, if you look intraday, there's an immediate price response to that data.

So it really tells you that crypto is very much tracking what's going on in the macro and monetary policy world. So then let's talk macro. I happen to believe that the Bitcoin bottom is likely in, doesn't mean we won't go back down near it, but I believe that it's likely in. Can we then sort of reverse engineer the correlation and say maybe the bottom is in for stocks as well? I think, well, perhaps not. So Bitcoin, and I keep on pushing the point that Bitcoin is not a risk asset. It's an interest rate sensitive asset. Equities are risk assets, but they're also interest rate sensitive. But for different reasons to Bitcoin, equities in the face of rising rates tend to decline

because, you know, rising rates squeeze margins, essentially. But for Bitcoin, it's a store of value. So it's very inverse to the dollar sort of thing. So it's slightly different to equities. So my view is if we're entering into a recession, that is not positive for equities, but it's probably quite positive for Bitcoin because it's monetary policy reversal. So that correlation we saw with equities and Bitcoin throughout 2022, I think will really start. It already is deteriorating, but it will continue to deteriorate. And that's the point where ultimately when the US hits recession, I don't think it would be a very deep one, but it will be acknowledgement that the Fed's made a mistake. And Bitcoin is a

good monetary policy hedge. And if the Fed's made a mistake, And, you know, Bitcoin is a good monetary policy hedge. And if the Fed's made a mistake, that should be quite supportive for something like Bitcoin. Well, Bitcoin should be a million dollars because I'm not sure that the Fed has ever gotten anything right. Right? Yeah. They cause a problem and they overshoot and then they try to solve the problem by overshooting

and that's been their MO since the beginning of the Fed. Yeah, that's exactly right. They'll knee-jerk here. They should be holding back on rate. They should be stopping rate rises now, but they're not. I totally agree. Yeah, they knee-jerk on the way up and are too late on the way down.

So you have some very solid data and some insight that maybe your average person doesn't have on the way that investors are now positioning, especially from the institutional side, which is what I discussed a bit in the intro. A lot of that can be seen through fund inflows and outflows. It can be seen for retail, I think, through exchange inflows and outflows, but that's not what we're talking about, fund. And of course, your recent fund manager survey. Do you think that people are viewing this as sort of a time to take some profit, enjoy one of the best Januaries that we've ever had in the market and skim a bit off the top?

Or do you think that people are still bullish for a continuation here? Yeah, mid-January, we had a couple of really chunky inflows, a couple of hundred million, or 230 million year to date. And I think that was off the back of a 40% rise in assets under management. So people are clearly doing quite well from it. So, yeah, I do think there's an element of taking profit. I think the whole regulatory narrative that's really kicking in right now is denting sentiment to some extent. I mean, certainly not Bitcoin prices, but it is spooking investors.

I was just running the numbers to this month of this week sorry so far and we've seen 37 million dollars of outflows this week very predominantly bitcoin you know 99 bitcoin um and uh we've seen some inflows about 3.8 million dollars of inflows into short bitcoin so there does seem to be a bit of a reversal and sentiment at least among these institutional investors but i don't think necessarily it's extrapolating across to the rest of the market just yet right well a uh institutions just like the rest of us can be wrong and b that doesn't that potentially set up for a short squeeze situation i mean you kind, sometimes the reason that Bitcoin has such volatility and huge moves to the upper downside is because the larger players are positioned wrong and someone takes advantage of it. I think the short stage, particularly on the CME, is a little bit kind of hard to read because basically what we know a lot of our clients are doing is

buying Bitcoin spot and exploiting the arbitrage between the futures market. And particularly when it's quite a bullish market, that arbitrage is quite big. So, you know, when the market's rising, you see quite a big rise in short positions. But it's not because people are increasingly negative in sentiment. It's just purely because they're exploiting this arbitrage. I mean, for the broader market, it seems a bit more balanced, I think. I don't think necessarily we'll see sort of a big short squeeze at this point. I do think that Bitcoin is being remarkably resilient in the face of pretty negative news around regulations, particularly in the US.

We're going to go into that in a second. But interestingly, I haven't really looked at the Bitcoin futures market in quite a while. Obviously, I think we all know that a lot of CeFi was getting their yield from that cash and carry trade that you effectively just described where you take advantage. But are futures currently, you may not even know, are they currently still in in contango are they in backwardation we're seeing backwardation across some other markets uh they're currently in contango so that trade is still there yeah yeah absolutely makes perfect sense so obviously that uh gives us the obvious move into a discussion about regulation, because this has been a clear, aggressive uptake,

at least from the United States regulator. Some would say other regulators as well. What do you think is going on there? And do you think that that could be the reason we're starting to see these outflows? Yeah, I mean, on our fund manager survey, which is based on about $400 billion of assets, it's the top concern. If you ask them what concerns you about crypto, it's not about custody. It's really about regulation.

But what's interesting, that's really increased. But what's really decreased is the government ban. So I think the story is regulation, not a ban, which is quite a positive one, if you were to think about it some way. But clearly, after FTdx the regulators are really kicking into gear now and wanting to kind of really hobble people so we've seen kraken as the first one and actually part of that settlement agreement was that they never offer a staking service again so um that's obviously they've had some there's been some pretty harsh words between

the regulators and kraken um i think one of the mistakes a lot of the crypto community makes is they look at the Howey test. That is, is something security in a too simplistic way? Correct. I'm not a liar, but I speak to my allies here on a regular basis. You know, you think about the Howey test, there's four parts to it. Is it an investment of money? That's quite a vague thing.

Is it a common enterprise? Does it have the expectation of a profit? You know, I think like for a lot of crypto ticks that boxes, but is it derived from efforts of others? And this is where it becomes quite vague. So, you know, you could argue if you're offering staking as a service like Paxos was, then you are theoretically issuing a security and it does come under the purview of the regulator. But in reality, if you look at Section 5 of the 1933 Act, there are 22 different terms to look at. And to really do it justice, you have to look at the, you know, each of those terms and their legal structure. And it's actually way more complicated than that. And I think what I'm trying to say is if the SEC want to try

to find a way to kind of hobble you, they probably can. And in reality, when you look at these instruments, they are quite similar to equity and debt. So, you know, it's chances are. But I think the reality is regulators will try and pick the low-hanging fruit here. You know, if you are Binance or Coinbase and you're offering staking as a service, they are centralized.

It's much easier to target them. Whereas Ethereum, I'm not sure it is. I'm not a legal expert here. I'm not sure it is really staking as a service because if you are a validator, it is your own effort. But ultimately, it's a decentralized entity it's you can't subpoena ethereum so you know i think this the focus will be on these exchanges and we're already seeing this trend now away from centralized exchanges to decentralized ones and

perhaps this just accelerates that i don't think the move against kraken is as surprising as i initially thought for the very reasons that you're saying yes we have a lot of armchair quarterbacks just accelerates that. I don't think the move against Kraken is as surprising as I initially thought for the very reasons that you're saying. Yes, we have a lot of armchair quarterbacks on Twitter who just see no expectation of profit and think that all of a sudden the Howey test is invalid. People on Twitter are usually wrong, let's be honest, right? As you said, there are a million ways. But even Charles Hoskinson, and I didn't get a chance to watch it, but I think he just did a video saying that what Kraken did actually was a security and that the SEC is right, which is a pretty unexpected ally, I think, for the SEC coming from one of the founders of Ethereum who founded Cardano. But if you are taking people's money and providing a service and bundling that in some sort of way that could be viewed as a security. So to me,

the real canary in the coal mine isn't Kraken. It will be if we see enforcement of something that is uniquely DeFi or is arguably extremely decentralized. Will they have a problem with an average American directly staking or utilizing a decentralized protocol to do so. We haven't seen evidence of that yet, but my sneaking suspicion is that we eventually will. Yeah, I mean, maybe it impacts Ethereum more because up to 85% of Ethereum volumes are through stablecoins. So, you know, if we see that decline or shift away from the US, this kind of Reg Arp story thing, then it could impact Ethereum more than Bitcoin in terms of overall trading volumes. But, you know, actually, Bitcoin still has a lot of its volumes in stable coins of 70 percent roughly. And I think partly

because of the popularity of the dollar over the last year, but it's risen from 50 percent volumes to 70 percent. So, you know, we could see a decline in volumes just because people aren't using stable coins as much. But, you know, I was looking at the market share of USDT, so Tether, and it was averaging this year around 66% of the last few days has risen to 70%. So, you know, it does seem to be a bit of this regarb happening, people leaving BSD and others because they're worried about their classification under the SEC. Yeah, for you guys who don't understand the concept of reg arb, it's basically go somewhere where the regulation is more friendly and arbitrage that. Just leave the place where the regulation is poor and go operate in a place where the regulation is better. To your point, the tether increase is absolutely no surprise, and I think for two reasons. One is that

everybody's panicking in BUSD and they're selling out to USDT. But why are they selling into USDT and not USDC? You may remember that a few months ago, Binance basically cut off USDC from the platform. They automatically converted any deposited USDC to BUSD to sort of encourage, wink, encourage, force people to utilize BUSD on the platform and obviously to increase the market cap of their own stablecoin. And there's nothing wrong there. It's a centralized exchange. But it's very hard now on Binance if you want to exit BUSD to do that into USDC instead of USDT. And I think there were sort of questions, you know, USDT was losing its market

share over time because I think there were a lot of question marks around the heterogeneity of its underlying assets and its audits etc but it has a better auditor now it's paid it has a lot less commercial paper there's a big worry big question it's had some really big tests last year if you look at FTX and it sort of unpegged slightly from the dollar and it did during the lunar crisis too. Both times were big tests and both times it really managed to deliver liquidity. So I think it's been tried and tested. And I think that worry about what are its underlying assets

is kind of falling by the wayside a bit. So I think people are more comfortable with it again. Architect Jeff here in the comments makes a really interesting point. Says Gensler has been clear in his recent messaging that client disclosure is a big part of the problem he has with centralized platform staking. Then says, I haven't read the fine print, but if cracking was fine, I'm curious if the details of the staking were not clearly indicated in their client disclosures. And that has been a

huge problem for the crypto industry and somewhere that they can probably attack from a regulatory standpoint is lack of transparency and disclosure. So even if the products being offered are not necessarily just securities are on the line, if you lack disclosure and transparency as to exactly what's being done with the money and do that in a specific manner, that could also get you in trouble. I think that's really on the money, that point. I mean, one of the looming things that we've not really heard much about is the Bank Secrecy Act in the IRS. So, you know, reporting on suspicious transactions. I mean, Tornado Cash is a good example last year.

Perhaps you see a lot more of that. I think there'll be a lot of much greater push for transparency there. So perhaps that's next in line after the regulators. Do you have any concern in the news that, or I should say the conjecture that's coming out right now, that the choke point could be the banking system and effectively the best way to kneecap the crypto industry in the United States would just be to cut it off from the banking system. Now, for some context, last April at Bitcoin Miami, I sat down with Caden LeBlanc from Custodia Bank, who obviously was just denied a Fed master license.

And she said to me 10 months ago, the fight that's coming is not with the SEC and the CFTC. It's with the FDIC and the OCC and the Fed. She said the bank regulators is what nobody's talking about. And that's where we need to be focused, because if they say you can't bank a crypto exchange, it's over. Yeah, I mean, I suppose we've i think when you look at a lot of big banks they are in increasing their initiatives into the crypto world they're increasingly trading crypto funnily enough um and even our products too so i find it a bit difficult to see how they can kind of reject a lot of people at the moment um it is possible that you have to be under extreme pressure. I mean, I think what we're just seeing now is this is not banning. The message here, certainly from our surveys,

is that it's about probably more regulation, not banning. But I do admittedly think for a lot of exchanges, crypto exchanges, the idea that they can just overnight suddenly become regulated is a big challenge in the US. And you might see this push away towards Europe where actually the blueprint for regulations are much more developed. It's interesting. There's a great thread here from Jake Chervinsky, who's from the blocks. He's the lead counsel, I believe, for the Blockchain Association. He makes the same point as you. He said that there's a lot of problems.

We have a lot of issues, but the choke point is not really one of them. And was sort of anyone can go read this Jake Chervinsky, Jake Chervinsky. But his point was basically that we've had horrible policy. We have a lot of problems potentially coming from regulators, but they can't in mass cut off the entire industry from the banking system. That legally that that would not necessarily work. I'll let you talk about that as well. But you just talked about Europe being more favorable. There's been some sort of fud or conjecture

that Mika may also not be that positive. So is it really a better regulatory environment over there? Or are you just saying you're further ahead, so there's more clarity, so you know what you can do? Well, there's more clarity in certain areas. They've also kept the scope quite wide. So they've left it open. So they know that technology can change very rapidly and they will want to respond to that very quickly. So that kind of scope is quite vague and quite broad. But they've also not really spent much time looking at DeFi. I think that could be

a big focus for them this year so i have no clue what they're going to say but they tend to be a lot more amenable to they're not quite you know the how we test in the us is not quite how the europeans do things so i don't think it would be such a cut and dry case is this the if this is yielding asset it's a security and therefore it's got to be regulated i think it we don't have that quite the same challenges in Europe as they do in the US. So I still think they'll be more amenable. You mean that you're not applying 1930s laws to technology that was created in the 2000s? Well, to be fair to the 33 Act, I mean, it's come a long way since then. It's a bit more developed. Yeah, I still find it incredible that we don't

have any further clarity or any movement on this. Actually, I have an interview coming out, I believe on Sunday with Hester Purse from the SEC. And we talked that to death. So for everybody who's once more, that topic expanded, then I've got you covered coming obviously on Sunday. So is there any other environments where you think that that regulatory arb could really start to come to play? A lot of people were talking about the United Arab Emirates, Malta, Bermuda, you know. So people are just kind of, I really like Alex Gladstein's stuff from the Human Rights Foundation.

He really talks a lot about the growth and of usage in emerging markets and this is something we're really missing you know we're sitting in this in the developed world we're very comfortable with our fiat currencies and low volatility etc but in emerging markets people are being faced with massive currency depreciation currency volatility etc and there's whole sort of under sort of subcultures in places like le where we're seeing big increases in volumes of Bitcoin. So I think this is a small but increasing groundswell of usage for Bitcoin that has actually really solid foundations. And so that is an area where I think we should watch over the next few years. It could really grow. And, you know, I think that will help

facilitate global trade as well. So, you know, if people aren't utilizing things like Bitcoin in the longer term, I think it might be to their disadvantage. So here's a full pivot. What do you make of ordinals and NFTs on Bitcoin? Yeah, so I like to think they're kind of graffiti on the blockchain. So or some people say tattoos because, you know, they kind of divide opinions. Some people don't like tattoos. But, you know, I suppose with Segwit and Taproot, it allows bigger block size and therefore people could do these things. I don't think there's anything wrong with that. Looking at some interesting data on SKU,

we have seen a big pickup in fees, et cetera, but it's not really blocking the mempool too bad or causing any kind of real problems. I do think, you know, it's such an early space. You know, it's only been here for a month or so. And clearly people are getting very excited, but technically it's really challenging to do. You know, you have to run your own node to inscribe an ordinal.

And to sell, it's all OTC, people in Discord and chat groups and this weird barter system. It's not like the open scene. The old days of Bitcoin. Yeah. And also, I think it's hard to determine if something's genuine at the moment. So if you have the technical know-how, if someone inscribes an ordinal and you can see that ordinal is the first in the ledger to ever being created you know it's the first one in its original but that's a big technical ask i think to ask people to figure that one out so it's quite prone at least at the moment

so i could create multiple identical board eight yacht club board eight yacht club equivalents on on the bitcoin blockchain it'd still be quite hard for many people to figure out which one is the original, so to speak. So I do think there'll be these kind of groups or organizations that will help sort of highlight, a bit like OpenSea, what are the originals and which, and these clubs might create together. Still very early days yet. So burgeoning business though. That means there could be a real burgeoning business here. Like this could be the start of something I mean if we're comparing it to what could put you know that there could be an open C for ordinals that could be a very large opportunity and I do believe yesterday we saw the

largest Bitcoin block ever as a result of these I think what's really cool about this is that you know that what you don't realize about nTs is there is a repository in AWS somewhere that has a record of those NFTs. And if that bit of AWS breaks and you lose that record, then it's lost forever. But these things are inscribed directly on the Bitcoin blockchain. So that's why I call it graffiti

or like a tattoo on the blockchain because they're there forever now. There's a permanent record of it. So anything I might have missed that we should have discussed? Any final thoughts before I let you actually go back to your job? No, I think these are the things we're thinking deeply about at the moment. You know, ordinals has been a really interesting subject. But, you know, obviously the macro side of things is I think the most important

in terms of trying to understand Bitcoin prices. And I can't wait for the day as you described, because not many people have the guts to come on and say, yeah, Bitcoin could go up the rest of the year and stocks could go down. That's not a narrative that you're hearing so often. So I do love to hear it because I tend to agree, but never feels like it's going to happen

when you're in the bear market, right? Yeah. Well, thank you so much. You're Jay Butterfill on Twitter, everybody. Please go follow him. Check out CoinShares. James, always a pleasure to have you, man. Thank you very much. No problem. Good to speak. Cheers. Guys, James, awesome insights and a lot of things that I find encouraging and very positive. Before I let you go, I just got to show you, because I love to show you my chat GPT experiments. I was playing with it this morning as usual. So listen, I did, I don't know if you can see that. Let me take, make it bigger if I can. Did chat G explain Bitcoin to me like I'm five and it gave a great explanation. So, and then I did explain Bitcoin to me like I'm five and it gave a great explanation.

So and then I did explain Bitcoin to me like I'm 12. OK, those were great. Explain Ethereum for kids. I said, explain Ethereum to me like I'm five. I really loved this one. I want to read it to you. Sure, I'd be happy to explain Ethereum to you like you're five. You know, you can use money to buy things like toys or candy, right?

Well, Ethereum is kind of like a special kind of money that you can use to do all sorts of things on the computer. Imagine you have a big box of toys, but instead of just playing with money that you can use to do all sorts of things on the computer. Imagine you have a big box of toys, but instead of just playing with them, you can use them to build cool things. That's kind of what people do with Ethereum. They use it to build all kinds of different things on the computer, like games or websites. And the really neat thing about Ethereum is that nobody controls it all by themselves. Instead, lots of different people all over the world help take care of it together. They make sure that everything is fair and that everyone plays by the rules. So that's what Ethereum is,

a special kind of computer money that people use to build all sorts of things and nobody gets to be in charge all by themselves. A, I think that's beautiful. And B, you will trigger every Bitcoin maximalist in the world by how many times that explanation used the word money. Okay, so then I did Cardano and it likened it to a piggy bank. And then I wanted to see if I could trip chat GPT up. So I did explain shit coins to me like I am five. And it was amazing. Okay. So I thought it would be like, you would never say shit coin to a five-year-old, but no, no. Okay. So you know how there are different kinds of money like dollars and euros and yen? No five-year-old knowsold knows that well there's also something called cryptocurrency which is like a special kind of digital money that's i'm gonna

blow this up oh they're too big didn't i the special kind of digital money that some people use instead of regular money now some people create their own cryptocurrency and they call it a shit coin but just like how some toys are really cool and fun to play with, and some toys are kind of boring, some shit coins are good and some are not so good. So some people like to buy and trade these shit coins, hoping that they will become really valuable in the future. But just like how sometimes you buy a toy and it turns out to be not so fun, some people buy shit coins and they don't become valuable at all. So it's important to be careful and do your own research and do your research because you'd say that to a five-year-old before you buy any shit coins, just like how you should

be careful and pick out the toys you really want to play with. I just found that to be amazing, amazing, amazing. I don't even know why I talk to people anymore when I can talk to chat GPT all the time. Maybe I'll just start having my guests being chat GPT and I'll ask questions to chat GPT and can have a running dialogue there. There's got to be a way for chat GPT at this point, something that somebody has created to vocalize so that you can just have a conversation with it. If not, I'm sure one of you in the comments has the technical know-how to make that happen. Guys, that's all I've got for you today. But man, have I got something for you tomorrow. I said to Misha, we call Mike Misha now, by the way, my producer.

He's the same person. He's Mike to us Americans, but he's Misha to the people who truly love him. So we're going to Misha him. I said, dude, we need Caitlin Long, right? Got to get Caitlin Long, all this fud about the banks. So he did me one better. He got Caitlin Long for the round table tomorrow. Caitlin Long, Simon Dixon, who if any of you have been following along in the Celsius saga in particular, but obviously on all the Twitter spaces, guy knows more about these bankruptcies, what's happening and what's likely to happen than arguably anyone and one of our um most engaged with podcasts of all time stacy warden

from algorand this is an epic epic epic epic panel if you guys miss it um then i i can't i can't uh really just can't can't make you see it any clearer. It's time. This is going to be the conversation. You guys absolutely need to show up. I knew Drucify would be here and going, Algorand. We know. We know.

We know. Anytime we get an Al going there. But yeah, Stacey Worden, absolutely brilliant. And I believe between the three of these people, we can get down to the bottom of what's happening right now in this market, the regulatory environment and such. Guys, thank you so much for joining. Oh, PrimeXBT, sponsored by PrimeXBT. You guys see it right down there. Anyways, guys, that's all I got. I know that you're going to show up tomorrow because you have to. I mean, you literally have to have I want to hear what they have to say so badly that if it wasn't

my show I would be there see you guys tomorrow bye Let's go.