The Wolf Of All Streets - Why Mega Bull Billionaire Mike Novogratz Has The Majority Of His Net Worth In Bitcoin & Crypto

Episode Date: April 7, 2024

Come join us for the newest episode of the Wolf Of All Streets podcast, where we delve into the realm of cryptocurrencies with Mike Novogratz, CEO of Galaxy Digital. Known for his support of Bitcoin on Wall Street, Mike has been instrumental in making cryptocurrency more mainstream. In this episode, we tackle important topics such as the debt crisis, tokenization, ETFs, the promising future of Bitcoin, and why Mike allocated two-thirds of his portfolio to crypto. Tune in to gain valuable insights from one of the most influential and bullish experts in the field. Mike Novogratz: https://twitter.com/novogratz ►► Sponsored by iTrust Capital Invest in Bitcoin, Crypto Assets & Gold with Your IRA Using iTrust Capital. 👉 https://bit.ly/itrust-scott ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► JOIN SNIPER SCHOOL W/SCOTT MELKER - LEARN LIFE CHANGING KNOWLEDGE! Join Sheldon the Sniper and Scott Melker for Expert Insights & Strategies in Crypto Trading! Starting January 31st!!  👉 https://cryptoschool.cryptobanter.com/sniper-school?source=scottmelker   ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉 https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘25OFF’ FOR 25% OFF WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker     ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd  ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #trading  Timecodes: 0:00 Intro 1:01 Crazy year for crypto 4:41 iTrustCapital 5:40 BlackRock’s impact 8:00 Tokenization 11:30 Debt problem 19:00 The crux of the Bitcoin conversation 21:10 Communities 24:30 What will happen if volatility comes back? 28:40 Rate cuts 33:00 Restructuring the debt 38:00 Crypto ETFs 41:00 Politics and crypto 46:20 Stablecoin legislation 47:40 Who is pro-crypto? 52:00 Making people’s lives better 57:20 Follow Mike The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

But what's interesting is the game has started, right? The price of a house in America has doubled in 12 years. And you're like, my salary's not doubled. And that Bitcoin rally gives air and oxygen to the rest of the crypto revolution. Those segments do better than the normal segments. And it's not because of this pretty face. It's because it's crypto. One can make the argument that there's been no better spokesperson for the crypto industry than the CEO of Galaxy, Mike Novogratz. But he also has tremendous skin in the game. He told me in this podcast that he has two thirds of his net worth in crypto. We talked about this and basically every other topic you could possibly want to hear about in this hour-long podcast that you need to

listen to right now. Obviously, last year was a banner year for Galaxy. After, I think, people had a lot of negative things to say about our industry. You guys, $296 million net gain. You basically handling all of FTX's estate in the bankruptcy. ETF approval. I mean, what a turnaround from the winter of crypto, right? Yeah, I was actually just on Bloomberg TV and they asked me about Sam Bankman Freed.

I said, we went from a, you know, a young kid in baggy Bermuda shorts and a shaggy haircut as our spokesman to Larry Fink all in one year. You know, the head of the biggest asset manager in the world. And, you know, there's a lot to that. We have digested, I think, a lot of the bad actors. I think Sam gets sentenced today or tomorrow. There'll be more trials from some of the other bad actors, but they've been pushed off the playing field. I think people woke up to the fact that the value proposition of Bitcoin, right, that it's a, it's a really a report card on financial stewardship, right? It is a hard asset, which really works in times of populism. That story resonated, it resonated with Larry Fink, he got orange pilled, it resonated with lots of people. And as long as we have governments,

both here and abroad, that are spending more than they should, spending more than they tax, and creating some form of inflation, it's not always CPI inflation. It's asset price inflation. The price of a house in America has doubled in 12 years. That's crazy. You're a young kid coming out of college, you want to buy a house, it's double what it was in 2012. And you're like, my salary's not double. And so pricing power gets eradicated, eviscerated in time with printing too much money. And I think that story worked. And that Bitcoin rally gives air and oxygen to the rest of the crypto revolution, which is still in its infancy, right? You know, the Ethereum, you know, platform, Solana, all the other platforms who are really building block space to then build on top of. We haven't made that transition as a world yet, right? So Bitcoin as a macro asset, we get. It's a finished product. You don't need to do anything. But the second part of crypto,

the fun part, the real revolutionary part, right? Decentralized stuff is just in its infancy. That platform is still used mostly for speculating, right? And then there's, you know, and I don't want to knock speculating, right? Macau is an amazing business. Vegas is an amazing business. Sports betting is an amazing business. The lottery is an amazing business. And so I would hope for my soul that I didn't spend the last 10 years of my life in the next 10 years working on a building as a giant casino.

I would hope that we see more and more payments, that we see decentralized finance, we see decentralized ticketing and lots of stuff. But that's happening now. And this Bitcoin move gives oxygen and time for the rest of that stuff. And so for me, I'm really optimistic. Galaxy is kicking on all cylinders. We have a really good plan. Now we just got to execute. And executing is hard in a fast moving world. self-directed IRA from iTrust Capital. Guys, not only can you open a new self-directed IRA and fund it with the limits each year, but you can actually convert over from your 401k, your Roth IRA, any other IRA that you already have, and you can do that tax-free, just transferring over the balance. And then you can go to cash, buy as much Bitcoin than you want, and not pay taxes when you

sell it. You absolutely have to try this if you are in the United States. Use the link down below. I always joke that the best marketing for Bitcoin is higher prices. I guess you could make that same argument for almost any asset. But if we had not seen this run, we would not be seeing the interest, right? So it's pretty crazy that we're so tied to the price. Yes, we are. It makes it really difficult to manage a company, right? It just does. But that's kind of the game we chose.

Absolutely. There's so much to unpack in what you said initially. I want to talk about Larry Fink first, because as you said, we went from Sam Bateman Freed effectively in November of 22 to Larry Fink coming out and applying for the Bitcoin spot ETF, which gave that a ton of air. But not only that, in their annual letter, which gave that a ton of air. But not only that, in their annual letter, which people seem to have missed in that March, he was talking about tokenizing everything, right? And I think people focused in on the ETF side of it and now are starting to understand that he was very serious about the tokenization side as well. But how impactful was it just to have BlackRock file for the ETF, to have him coming out and going on his roadshow?

Yeah, it was wonderfully impactful. And again, it's not just Larry and BlackRock. There's a whole team of people there that have been pushing way before he. You know, he was a skeptic originally, and then he finally he got orange pill. And it was a group of people in the Bitcoin community that really worked on him. It was people in his own company. but he got there most importantly. And I think he realizes, A, Bitcoin's a great asset, but BlackRock's a technology company. And if you see a future where lots of assets are in tokenized form and you are a technology financial company, financial services company that really leads

with their tech, they have very small margins, they manage trillions of dollars, you got to be in that game. And so what we have seen is lots of investment banks and commercial banks spending lots of time and money trying to figure out the tokenization game. And Larry just made a big jump into it. And I think they plan on being a big player. Listen, what you tokenize, if you tokenize a money market fund, that's pretty freaking cool. I'm sure he's going to be in a wrestling match with the Fed and the SEC on getting a money

market fund tokenized. But if you get it tokenized and it gets approved, that's kind of like dollars in your pocket worth with interest, right? And you think about what the Federal Reserve does, right? We issue, there's a couple trillion dollars of cash in the system, right? You've got cash in your pocket right now, probably. That's interest-free, right? So if you're carrying, you know, 500 bucks, you know, that should be earning 5%, it's earning zero. And so a stable coin or a tokenized fund that pays interest in lots of ways could replace cash. Now, are the authorities going to let that happen? All of a sudden, you'd have a run on all your

commercial banks, I'm sorry, your regional banks, and lots of banks, right? We leave our money in bank deposits at zero half the time. And so there's lots of things to figure out in this process. But it's great that the biggest player in the world is in the middle of it. And I find it so interesting that yield became the four-letter word of the last cycle and was arguably behind the collapse of CeFi and a number of other platforms. And now the yield conversation is coming back with a vengeance, but with the adults in the room, as you mentioned, right? You talked about this fund that BlackRock has launched on Ethereum. They seeded it with $100 million. I love that it's called Build, but B-U-I-D-L.

They went ahead and took a crypto meme, you know, from HODL. But that is going to be, as you said, an interest-bearing, effectively stable coin. And this is stable yield coming from BlackRock, right? This isn't the Ponzi of Celsius going out there and pumping their own token to find fake yield for you. This is real players doing it in a real manner and potentially beating treasury bills while doing it. Or even if it was just treasury bills, right? Again, if that gets plugged into a PayPal and Apple Pay and Visa and MasterCard and Stripe as a payment option, all of a sudden, why are you carrying around non-interest bearing dollars?

Yeah, the ability to actually spend them in real time while earning interest anytime that you're not spending them is incredibly impactful. Right. And again, I think that's going to be tough for the Federal Reserve to allow. And because, again, why would you leave your money in a bank? Then your wallet is your bank bank and maybe that's the transition we make over time but it would be a unbelievably painful transition for the financial markets uh right and also like credit creation like there's not a defy parallel that could scale to create credit yet right so banks are credit creators right they take in this deposit they lend them out to other people and so if you were like i'm not leaving my deposit there because I get my interest rate right here, who's creating credit?

And so there's a lot of policy questions. But what's interesting is the game has started. And the game has been started, to your point, by the biggest player that could possibly start the game. You don't see BlockRock lose too much. No doubt. I had my doubts, actually, initially, that Larry Fink was legitimately orange-pilled. I kind of assumed he was jumping on board. There was an opportunity to make a ton of money, and they had the opportunity to be early. And then I asked Scaramucci about it, and he said the same thing that you did. He said,

listen, I talked to this guy in the lobby of a Four Seasons a few years ago. He asked me why I was into Bitcoin. It's a scam. It's a joke. Why would you even be mentioning that stuff, the reputational risk? And then he said, Mitch Nick came over and started working at BlackRock and really, truly, deeply orange-pilled him. And now you listen to Larry Fink talk about it. He gets it like you do. It really seems that way. Well, we also had, you know, what's interesting is up until Trump, we had neoliberal politics in America, right? If you start to go looking back at the difference between Hillary Clinton and George Bush, their policies were not that dramatically different. Everyone kind of agreed you're going to keep the budget at roughly 20% of GDP. Trump was the first populist president, right? And first it was Brexit,

then it was Trump. And Biden was the second populist president. So we went from a neoliberal world to a neopopulist world. And I don't think that dawned on people at jam one of 2016, right? It took a while for people to say, oh, damn. And now, like my best selling point for Bitcoin is 35 trillion. In 100 days, 36 trillion. In 100 days, 37 trillion. Like our debt is accelerating. When that happens, bad things happen. So I literally had a dream last night where I thought, oh,

we're going to wake up and maybe somebody will land and Trump will appoint or Biden will appoint a secretary of treasury who says, we need to cut spending and raise taxes and balance the budget, or at least head that way. That would be bad for Bitcoin, but it would be good for our country. I don't see it happening. I just don't. Do you think that's even possible at this point? You pointed to the fact, obviously, we had this sort of the debt ceiling fiasco last summer. We were at 31 trillion debt, I think 125, 130% debt to GDP already. Now, as you've said, we've added over 3 trillion to the budget in that amount of time, and it's accelerating to a trillion roughly every 90 days. I think you had even tweeted about it, that it's basically

$2 billion in interest every day, which is $83 million an hour. And it's accelerated since then. Right? So, I mean, that to me seems like a debt spiral that's out of control and there's no solving it, but maybe I'm not a pessimist, naturally. It just sounds like a debt spiral that's out of control and there's no solving it, but maybe I'm a pessimist naturally. It just sounds like a big number. Well, I mean, Kevin McCarthy and, you know, fair disclosure, I am a center left guy at his core. And I didn't love Kevin McCarthy, but when he got on TV and spoke about that first debt ceiling showdown, he was speaking the truth. And he was the only guy that was like referencing our historical spending levels and like what happens. And, you know, we see what happened to Kevin McCarthy. He's no longer there. It's a really

hard problem. We got so used to, hey, there's a war, let's pay for it. And listen, there are lots of things in government that money needs to be spent on. You can have your opinion on forgiving student loans for people that are dying, being buried by them. What our government hasn't done well is prioritize. OK, we'll pay for student loans, then we can't spend on the military. Or we'll pay for student loans and we can't spend here, right? This is like, let's do it all. And there was this short-term belief in modern monetary theory, right? Elizabeth Warren was like, we can just keep spending, not just her, lots of people. And the Republicans were more guilty than the Democrats, right? Remember, Trump raised spending before COVID more than any president

we've seen because he's a guy who says, someone else will worry about paying for it. He's always been borrow, borrow, borrow. And so we've left ourselves in a really bad place. Yeah, I'm center left naturally as well. I'm a lifelong Democrat. But to your point, I don't think either party now can make the claim that they're fiscally responsible or even more fiscally responsible than the other. And over the past few years and since I became a Bitcoiner, obviously, I've become disillusioned with both parties in the entire process and would eventually register as a non-affiliated and exited it completely. It's very hard, I would say, even if you identified left

of center to identify with what's happening way further left of center within the Democratic Party. Yeah, no doubt. No doubt. And I get all that plays into Bitcoin. And so, listen, can we have corrections? Of course we can. We've gone from $35,000 to $73,000. But it does feel like there is a bid somewhere below $55,000, $62,000, you know, where I even saw the Japanese, I think it was Yucho, the Japanese post office said they're going to start looking into buying Bitcoin. I mean, that's the biggest pool of savings in the world. And so I think that the beast is, but the Kraken has been unleashed and we just need to sit patiently. So you guys obviously are, I'm assuming out on a bit of a roadshow trying to convince people to buy the Galaxy ETF. You're constantly raising money. You're now, I believe, over 10 billion AUM. That's up five times from just over a year ago. You're having these conversations every single

day. Are you convincing people that they need Bitcoin for all the reasons that you listed, the hedge against this insanity, all of those? To be clear, I do that on TV and on podcasts. We as a company are talking to mostly institutional accounts. And so it's less of a hand-to-hand combat. The ETF partnerships that we have, one with Invesco in the US, which has been off to a slow start, but hopefully picks up. One, we're starting with DWS in Germany, doing ETPs in Germany. DWS is the largest asset manager there, one with Itaú in Brazil. We provide them with the research, the story, the training, the fodder, the back. So we don't have the giant Salesforce

talking to retail and talking to... So most of our company is now helping people. You know, we were get engaged, not just in Bitcoin, but all the other coins as well. If it's Solana or staking it, if it's derivatives on stuff. I look back, maybe it was my big mistake of not having started a retail brokerage like Gemini or Coinbase or Kraken, because this was a bottoms-up-led revolution.

And it took a lot longer than I thought it would for the herd to come. I made that expression of the herd is coming in like 2016. And wow, I was eight years early. I remember when BAT came into the market and we thought that that was it. Institutions were all going to be here. That was the floodgates opening. And here we are five, six years later and actually starting to see that happen. But even with the ETFs, a number of these platforms, I mean, we know especially some of the retail facing ones like

Vanguard, have not even offered any access to these products at all. Certainly most RIAs still don't have access to these products. And we've still seen that bid that you're talking about. So to me, as these all continually get approved, as we have those conversations, it's only going to grow. What I was curious about is what is the crux of that conversation? Is it selling them on Bitcoin as an asset, why it's important? Or is it sort of the lighter lift of saying, listen, even if you hate this thing, look what it does for your Sharpe ratio. Like, look what happens if you put 1% in your portfolio, the math is indisputable. I think it's a little of both. But I think that this populism story and Bitcoin being one hard asset and a hard asset that young people like, right? Baby boomers in America have $80 trillion of American wealth, right? It's over half of wealth that's owned by baby boomers. They're going to die. You know, maybe some will

eat healthy and die older than normal, but they're all going to die. There's one certainty in life, you die. And that money is going to get transitioned, transferred to a younger generation who is just much more comfortable with digital assets. And so we're even going to have this secular shift. And so there are so many reasons you should have something in your portfolio, right? And again, you could have made the same argument if you believed in populism and debasing the currency. Like you should have equities because equities go higher when currencies do poorly. You should have real estate. You should have gold and silver. So, you know, I wouldn't advocate to a 60 year old, you know, wealthy guy to put all his eggs in the crypto basket.

It's a little bit more fun. And it has been more profitable. But, you know, it's, it's had a pretty big run. And I don't think the, the returns can continue to compound the same way, relative to everything else. But we do have a position now, right? We are on like, I remember one of my great personal, like, you know, you think, how did you contribute to the community? Because I think everybody, I said this early on, these are communities. If you're in the Bitcoin community or the Ethereum community or the freaking Solana community or the Dogecoin community, and you can either be a free rider, if everyone's a free rider, the community doesn't go anywhere. Or you can do what you can to contribute.

And so because I'm a sales guy at heart, my mom's a sales guy, my brother's a... We're storytellers. Me being a Bitcoin storyteller was how I contributed. But my second best contribution was I got Bitcoin put on Bloomberg. Pretty big one. Well, we and Moore had a couple of us. And I always thought that was important because it legitimized it as an asset, that we did the Bloomberg Galaxy Crypto Index, which never really took off. It was ahead of its time, but it was like, we're going to create the S&P for crypto. So how do you legitimize this asset class? And that's done now.

It's on the ticker of every financial news show now, right next to every stock and asset forex. It's as legitimate an asset in the mind of certainly the media as any other. I love a point you made before, and I want to ask you. You said, I wouldn't tell a wealthy 60, 65-year-old guy to put his eggs all in the crypto basket. But we all know that it's concentration that gets you rich and diversification that keeps you rich, right? So what would you say to someone who's 20, 25, and is going to inherit that boomer wealth that you talked about? Yeah. Listen, investing is a hard game.

Sometimes everyone thinks they're geniuses because they were just lucky to be in the right seat at the right time. You know, entry point is really important. Right. If you put all your wealth in at 70 and it goes to 50, you want to literally have a heart attack. And so you probably want to cost average in after a big run. You know, when it when there's blood on the streets, when it was the Sam Backman freed month and Bitcoin was trading under 20, 17, 16, there was so much deleveraging and blood on the streets. Then I would have said, dude, you want a chance to get rich? Put a lot in there. Buy Solana. $80 Solana. Yeah, exactly. But, you know, $180 Solana, it's a different bet.

It just is a different bet. Could Solana go to $300, $400? Of course it could. A lot has to go right for that to happen, but it certainly could. But that's from $180 to $540 is 3x. From $8 to $180 is 24x, right? And so entry point's really important. Being sober about what volatility is is very important, right? These are 100 of all assets often. Like, that does not warrant any leverage. It warrants negative leverage.

Yes, exactly. And so many people play in these markets and they just want more and more leverage. And I'm like, you know, it's literally like telling a crackhead, hey, along with that crack, why don't you take a little fentanyl? And now double that fent all each time you're going to die you're going to die at one point and so I would just try

to tell people to stay sober you talk about that incredible volatility I guess one of the questions has been what happens if Bitcoin has

one of its normal 30-40% drawdowns even in a bull market what happens to all those people that just decided to buy these ETFs I don't think those people that just decided to buy these ETFs?

I don't think those people, I think those are hodlers. I agree. You know, you've just put a percent, you're not putting 10% in. So it's like buying a stock. You buy a stock, when you buy 1% of a stock, it goes down, you know, 30%, you lose 30 basis points. You don't notice it as painfully, right? If you've got 10 percent of your net worth and it goes down 30 percent, that's three percent of your net worth. If you've got your whole net worth and you don't want to jump out of a building. And so. Listen, I I say one thing and I behave in a separate way. I have a tremendous amount of net worth tied up in crypto and crypto assets. Partly because I decided to make this chapter of my life all about crypto and crypto assets. And partly because the third that's not tied up in crypto and crypto assets is still a pretty substantial sum of money, you know, a pretty safe and in pretty safe investments. And so I can afford to run the table or to try to run the table.

But if I didn't have that other money, I wouldn't have all my money in crypto. Just to be clear, you just said you have two-thirds of your assets in crypto or something crypto adjacent. Yeah, roughly. Does that include Galaxy? Yes. Well, and to be fair, just to be really clear, all my crypto assets are in Galaxy. Right. I made that decision when we started in 2018. I didn't want to be, you know, making money here and having the company not make money. And so when I make money, when Galaxy makes money, I make money. And when it doesn't, I suffer.

And I would also say that your average retail investor who bought a small amount of the ETF probably won't even notice if we have one of those 30% drawdowns because they check their portfolio so infrequently that it might be back to where price started before they even realize that it happens. And I also think that people who allocate a certain percentage to their portfolio don't really check, right? Yeah. And listen, so there will certainly be volatility in this, right? Right. There's not very many assets that just grow infinitely. And right now we've had one of the greatest runs of momentum. So NVIDIA, meme stocks, crypto, it's all very correlated. And momentum has outperformed everything by the largest percentage in standardization terms that it ever has. And so if you end up

getting a real correction in NVIDIA, I'm looking at the chart now, right? It's broken a little bit in the last two days. It would not surprise there to be a correlation in the rest of momentum stuff. And so you never know what creates what I call correlated risk unwinds when every position in your portfolio goes to hell in a handbasket, right? That's usually an exogenous shock. It's usually something you don't see coming. But sometimes it's just the positions get too heavy. Right now in the S&P, we are the lowest daily range we've had in the last six years and the second lowest since 1990. I didn't realize that. Right? So everyone's being lulled to sleep. Stocks go up every day. Risk assets go up every day. Fixed income is not doing a whole lot. And so it feels really safe. You can buy puts on the S&P really, really cheap,

but they don't seem to. I keep doing it and you just keep burning your money. So it's when you say, I'm not going to buy puts, that's when it ends up happening. And so I do throw that warning out to at least monitor all these other assets. There's a big correlation, right? We don't live in a vacuum. And it's been a pretty hefty run for the last six months for, I mean, literally since the Fed decided to pause hiking and pivot towards, just look at the S&P, straight line. Look at the Russell, look at the NASDAQ. So what do you think happens if the Fed actually pivots and decides to cut? I mean, Powell said he still sees three cuts this year. But to be frank, we've paused for a long time.

There hasn't been really a great reason to cut. Nothing in their mind, or unless they know something we don't, nothing in their mind, their mind is broken. I think Powell wants to cut once or twice. He got the election coming. He's got to do it soon. So he's not seen as political, partly because this could be the end of his stint, right? Depends on who gets elected. And it is almost an exclamation point or a period to his chapter, right? Listen, he started off a little slow, but he deserves a lot of credit, right?

We've had a, one of my friends had a hack called Golden Pal. Economy's still chugging along. Inflation's come down. Measured inflation's come down. We haven't had a recession. Everyone thought we were going to have a terrible recession. Now, a large part of it is because

when the banks started going under, we bailed them all out again. We injected a ton of liquidity into Silicon Valley, that chapter. But Powell's done a pretty darn good job. And so I think this is a way he would just say, game over. Get his Volcker moment, head out the door and let the next guy deal with it. Yes. I mean, basically, as long as it doesn't explode before he's gone, then he can kind of wipe

his hands. He can wipe his hands and move on. And you keep seeing parts of the economy slow. House prices are coming down finally. You see parts of the economy slow. Man, if you go out in New York City, you still can't get into any restaurant on a Tuesday night. Like other parts of the economy just still feel bustling. Yeah, to me, that is the sort of wealth effect, obviously, of everything going up, but also speaks to the disparity between what's happening on Main Street and what's happening with people who can afford hard assets. You talked about the fact that inflation will, you know, benefit. If you own a house, it's doubled in two years, great, in 10 years, great. If you own stocks, great, all these assets are going up if you own real estate. But 90-something percent of people can never afford

to own any of those things, and they're suffering. So isn't this just a greater contributor to that massive wealth divide that Bitpointers and others have been talking about since the beginning? Yeah. I was talking to a friend about this. It is troubling, and I don't know how you get out of it, but I said this eight years ago, and every year it feels more and more like we're hurtling towards Blade Runner 1, where there's a small group of elites that live in this bizarrely wild world, and everyone else is the teeming masses. And I look at what AI is or the concentration of wealth in AI and talking to my friend, he's like, I should look at buying this AI company.

It's the fastest growing, you know, private company I've ever seen. They have three employees and they're already valued at multi-billions. You know, the amount of work you're going to be able to do with less people is changing rapidly. And that, to me, is just going to be a bigger concentration of wealth. Societies don't do well when wealth changes hands that fast, right? We're used to an equilibrium. What worries me, quite frankly, is if we do get into the runaway trading crypto. Right. There is a scenario where you can see crypto become a runaway trade. It's just self-fulfilling. It eats itself. And, you know, you're you're not at one hundred thousand, but you're three hundred or four thousand. It's not my base case, but I can make that scenario up. That's not good for society. Right. Society doesn't like all these new people are all, how did that guy get so rich

and I'm not, right? It's what creates, it's what creates revolutions. It creates wars. It creates breakdown in civil society. And so we can have wealth transfers at a moderate pace, but when they happen at rapid paces, it really is often not good. Yeah. So I would say we're on a definitely a dangerous path. Yes, there's no doubt. From a dangerous place. It's not like where we are now is not dangerous in that regard because of that wealth divide that we talked about. You made the point, obviously, about it happening too fast. I always sort of joke with the Bitcoin maximalists who say that Bitcoin will become the global reserve currency. It'll be worth millions of dollars.

And I'm like, I don't want to live in a world where that's the case because it's Mad Max. Yes. I've got my Bitcoin, but we... I said the same thing. I say, go to bed every night and I pray that we have good stewardship of the economy, even though I know that'll hurt my Bitcoin position. Because I think Bitcoin can go up just because of adoption, but to see it explode usually will be because we're losing control of our debt. There are 35 countries, I think I got this right, that have had debt to GDP of 130, 34 have had to restructure their debt.

We're at 125. Yeah, I was going to restructure their debt. I guess it was 30. Yeah, I was going to say, that's us. What are we, 35? We're at like 125 right now. We're heading towards 200% of debt to GDP if we keep on this path. 250, I think, is the 2050 CBO prediction. It just doesn't, That dog don't hunt. Yeah, I mean, you talked about spending

and there's certain things, obviously, that the government needs to provide for their citizens, but we're at the point where the interest payments on that debt will dwarf all of those and may start to be more than all of those combined. And it's pretty frankly, you say that that's one of the reasons Powell really wants to cut rates, right? Because the Fed is burning money every year. He might look

like a great central bank governor, but look at his P&L. Yeah, I mean, monetary policy and fiscal policy are supposed to be untied, right? The Fed's mandate isn't to handle the national debt. But if we know that a meaningful percentage of that debt is going to have to be refinanced from 1% or 2% now to 4% or 5% or whatever the number is, it's only going to accelerate this problem. I just don't see how you stop this train without literal austerity. And if you talk about restructuring the debt, how do you do that when you're the global reserve currency? Yeah, you know, you know, that's real trouble. Listen, we need a really tough president,

tough treasury secretary to cut spending immensely. And we need to raise taxes. And no one wants to do that. We need to raise taxes. We need to raise taxes on the wealthy and we need to cut spending across the board. And that's just really unpopular. And we need to make the tax system more fair, which is also hard to do. Right. You've got real estate guys that don't pay tax. You got, you know, finance guys that pay tax. You've got some people that set up... There's just so many different ways that people have gained the system. And net-net, we're not taking enough tax dollars and we're spending too many. So you've got to change both those vectors.

But it wasn't that long ago. I mean, Clinton balanced the budget. So it was doable. One time in my lifetime. Yeah. But it was doable. One time in my lifetime. Yeah. But it's doable. Maybe not from this starting point, but there was a time when that was actually a legitimate possibility. But can raising taxes, and even if somebody got elected on the promise of raising taxes, which won't happen, and cutting spending, is that even enough with the debt this high and

accelerating this fast? Listen, you need to change the direction. You need to change the second derivative and then the first derivative. So right now, we're accelerating. We're getting worse at an accelerating pace. That's a horrible place to be. It's like when you're investing in growth stocks, if the second derivative of, you know, earnings is positive, doesn't matter what you pay for them. The opposite happens when you're trying to get out of the deficit. And so if you if you stop digging, at least the hole's not getting bigger. And that's where we've got to get to. That makes perfect sense. Yeah. But it's hard. Again, if it was that easy, I'm sure, you know, like it's not like Jerome Powell is not a patriot and not a smart guy or that Janet Yellen or like, you know, one thing we have going for us in our country is our civil servants.

And I look at them as civil servants, even though Yellen is in a political position now. They are immensely bright, immensely well-trained, immensely decent people. I've met tons of Fed governors in my career. And to a man, they care about our country. A man or a woman, they care about our country. They're trying to make the right decisions. Like, we don't have a schlocky civil service.

We have a world-class civil service. These are just really hard problems that they've been handed by schlocky politicians. Who in the world would want Jerome Powell's job? That's the question. Who in their right mind would want that job right now? That he gets to go to Congress and answer to Marjorie Taylor Greene or, you know, Ilyan Omar or, you know, you name them. Yeah, it really is an embarrassment when you look at it like that. I want to circle back to something you were saying before, that your focus largely when we were talking about the ETF is now on sort of the long tail of crypto assets beyond

Bitcoin, Ethereum and Solana and all of these others. How do you think we start to bring more mainstream awareness and make those mainstream assets much like Bitcoin has become? What does that path look like? And where are we on that path? What's happening? Listen, I think Ethereum ETF will be a really interesting debate this year. Again, I haven't spoken to Gary Gensler since he's been at the SEC. And so I get my information the same way other people do. But when I look and analyze, it feels like the only companies that have gotten through the SEC are Bitcoin-only companies, right? Some miners, very few companies. And he's approved the ETF for Bitcoin only because he had to. He's made that very clear, very begrudgingly. And so I think the risk for him for saying Ethereum is a commodity. Now, he said it. Galaxy had a conference four months before he was there. He said in a very nice way, this is definitely not a security. It's definitely a

utility. And so he believed at one point that Ethereum was a utility. But I think if he says it's a utility, that opens up all the proof of stake. Well, if Ethereum is a utility, what about Polkadot? What about Solana? What about, you name it, right? There are hundreds and hundreds of coins that use a fairly similar protocol. You know, they have a staking system that are some more decentralized than others. Like, where do you draw the line? And I think he is worried about opening up Pandora's box and broadly saying, OK, I give up their all utilities. And like to me, again, I don't know that for a fact, that's just my

intuition. I haven't spoken to the guy, I haven't spoken to the people there. But just looking at they behave, that feels like it. He's got a tough position because there is a, you read the Congress's response to him yesterday, pretty vicious. There is a ETF on the future regulated by the CFDC. So we've already said it's a utility, at least in part of our government. And so to change your mind, does that make everything they've done illegal? Do they have to shut it down the next day? We're at kind of crazy land at this point. This fake brokerage company that got approved. Prometheum. Prometheum.

You know, that's supposed to be now custody, you know, ETFs. I'm sorry, Ethereum. Like, I thought, you know, it almost feels like you set this company up as a bizarre sham. 100%. Like, what is going on in D.C.? And that I think, you know, it's all going to come, you know, come to fruition sometime in the next three to four months because, you know, tick tock, tick tock, the elections in November. And so like the Gensler era will come to an end, most likely. I think no matter who gets elected, you know, you'll have a changing of the guard. And so I don't know what his end game is anymore.

But my sense is he's digging in here again. Why does it matter? The American people have voted. They voted. They like digital assets. Look at the reception of Bitcoin's ETF. And so like politicians, they look where the wind is blowing and they change their mind. And so I can see it already talking to Democrats. They don't want to be on the wrong side of Bitcoin, right? They don't. And you're going to see elections, John Tester and Sherrod

Brown, both very tight elections that Democrats need to win. Now there's this crypto pact that's funding their opponents because they've been anti-crypto. That is being noticed at the highest levels of the Democratic Party. Why do we get ourselves into this position? And John Dean is running against Elizabeth Warren. Yeah. For what it's worth.

Yeah. For what it's worth. Yeah. I, you know, that he's got a, he's got a, a steeper hill to climb. A mountain to climb. Yeah. But I think, but I wish him well. I wish him well. The, the Democrats noticed this. And so the mainstream Democrat in DC, they see this as bipartisan. They want to move on. They don't want. No one wants this flank open that that Elizabeth Warren

and Gary Gensler and a few others in the White House open. Right. It's a it's a it's a it's a lose lose flank for them. They're not going to win on saying crypto is terrible. Just look at the price. America doesn't think that. And so I think you'll see a change in behavior as soon as this election happens. There are no soldiers in the anti-crypto army now. I mean, that's sort of the joke of it, right? You've got a couple, I guess, colonels and sergeants up at the top, but it's not popular, as you said. But it's interesting to see how fast that flipped because after SBF, it was the opposite. The politicians couldn't run away from crypto fast enough because even if they believed in it, they didn't want the stink of it on them, right? Or the fact that he had met with Gensler,

met with them. SBF was really good at what he did. He charmed people. He had that dopey haircut and dopey outfit. And, you know, I'm sure there are pictures of him sitting on Biden's lap, you know, like Santa Claus, you know, giving away the money or maybe the opposite. Like, you know, he was politically well-connected, both left and right. Maxine Waters and him were very tight. You know, that it was just embarrassing for people. And it was more embarrassing for the Dems, even though that whole infrastructure gave just about as much money to the Republicans. Yeah, they just did it in a quieter and perhaps slightly less legal manner. Yes, good point.

Yeah, but it is good to see, I mean, a bow wrapped on that. I mean, we talked about earlier, I think there still will be more sort of contagion. I just don't think that the market cares anymore. And you're talking about the security. I mean, Prometheum, to me, looks like, to your point, they just created this company out of nowhere just to deem Ethereum a security without having to say it. But on the other side, KuCoin just got criminally charged recently for allowing Americans to trade and money laundering. And the

CFTC in that claim said Ethereum and Litecoin are commodities. So we can't even get agreement amongst our top regulators. It makes running a company difficult. I would tell you that because you can take the approach that Brian Armstrong has taken at Coinbase, which is very brave, and I applaud him for it, where he was like, we're doing our work. This is what we think. And we think you're wrong and meet us in court. His business was mainly retail to start. Retail doesn't seem to care. Other people get a Wells notice and their customers get nervous, their funders get nervous. And so I think a Wells notice is not what it used to be. I think Gensler has, with his

throwing so many out, has in essence demystified the Wells notice or debased it. But it is still, you're tied up in court and your regulator is your regulator and they can fine you and charge you and shut you down and make your life really difficult. And so it is a very hard place to be for small businesses, for big businesses. The amount of money we spend on legal is breathtaking. And a lot of it is just answering other people's subpoenas. But like, you know, they subpoena you on some other protocol, you know,

what did you have to do with it? And then you got to check every email and you've got to, you know, you've got to do what you're supposed to do when you get subpoenaed. And it costs money. They don't give you the money for it. And so it's been a terrible tax on our industry, an unfair tax, I think, on our industry. But I'm hoping that changes. What's the path to at least some legislation on the low-hanging fruit, stable coins, things like that. We all, we obviously had Gillibrand Lummis, right. And that sort of disappeared. And then we had a number of acts coming from committee with Patrick. There were two bills in October, one on stable coins and one on, um, you know, market structure, market structure.

When I, I, I visited the same time, Brian Armstrong brought a bunch of people to D.C. And we sat with Hakeem Jeffries. We sat with a bunch of people. And they weren't perfect bills, but everyone said, guys, good enough. And, you know, McKendree on the right, and they were ready to sign. And, you know, you just couldn't get the left. You just couldn't get them there. And they were close, right? There are plenty of people that want to get something done. Cory Booker wants to get something done, like lots of people.

And that's a shame because our industry, we were kind of like good enough. Just let us get something to move on. And I think some variation of both those bills need to get passed in the first semester of the next administration. But nothing in this election year? No, no chance. Yeah, literally no chance. I think the ball got kicked, the can got kicked far enough down the road that there was just no chance until that happens. I mean, do you think that either of these potential administrations can make the claim that they're more pro-crypto than the other? I think Trump can make the claim because he's not in power right now. Right. Think about it. Like, I mean, listen, Jay Clayton has become a very, you know, in essence,

friend of the crypto industry. And he is an advisor to companies and he is a very smart guy. But if I'm honest, he didn't do a lot for us. Luckily, he didn't do a lot against us. He was just kind of a neutral. He didn't want to deal with crypto during his administration. And in some ways, it was a very small and infantile market, right? Now, again, we have the 17 up down. That happened quick. But overall market cap, overall, remember, in 2018, right, in the heart of Clayton, crypto market cap had fallen 95%. Yeah.

From, whatever, a trillion and a half dollars to 95% of that, right? Like, uh, big flame went from 20 to three ETH went from whatever it was. 1400 to 80, I think. 1400 to 80 and everything else went to zero. And so, you know, I can sympathize a little bit with Jay saying this can't be my biggest thing. You know, I would wish he had done more. I wish I'd gotten my company public when he was the SEC chair. We were too slow by a few months and got stuck into the Gensler web.

And that, you know, I never would have thought. I thought Gary was going to be good for crypto. We all did. We cheered him. And, you know, listen, I know Gary well. He is unbelievably smart. He works harder than almost anyone I know. Like, there's a lot of positive attributes.

He has not been friendly to our industry. I think he's been disingenuous. I think he's been very ambitious and political in this. And that's frustrating to see, because I think in the long run, it will tarnish his legacy. Do you think he wants Janet Yellen's job? I think that was the original play. And, you know, now I think, like, I don't think they ever imagined crypto would be such a lightning rod. I mean, it's interesting.

I was with a senior guy at the CFTC. You know, their job isn't just crypto. It's a small part of their job, but it's over 50 percent of their cases. Yeah. Right. We're a tiny part of the global economy market wise. And we're 50 percent of the CFTC cases. And so we've got to clean our own act up as well.

And so the oxygen that crypto takes at both the SEC and the CFTC is way above the market volumes. I think it's fair to say on the positive side of that is that in the mainstream and in the media and in perception, we're also taking the oxygen out of the room to some degree and probably get a hell of a lot more attention than the market cap deserves, which is a good thing. But it shows how much people care about it and how much just influence this market could have as it continues to grow. You know, even at the bottom of 21, I'm sorry, 22, I spoke at some conference, Bank of America conference, and the head of research came over and he said, do you know our single largest red research paper ever was like the crypto paper? And the one they had just

done was like their fourth and that might have been it might not have been back in america but it was a bank like that uh like it is interesting even like when i go on cnbc right there's people ask why you go on switch well they ask and i it's a good platform to talk about crypto they those segments do better than the normal segments and it's not because of this pretty face it's a good platform to talk about crypto, those segments do better than the normal segments. And it's not because of this pretty face. It's because it's crypto. It's great clickbait. It's an incredible talking point.

So just before we get done, we all know the case for Bitcoin. You made it very clearly at the beginning. As we slowly start to advance and become more mainstream, when do we start talking about ETFs for a basket of altcoins? When do we start to get real mainstream attention, do you think, on the Solanas and the other layer ones? And to that end, what is your focus and what are you really excited about that's coming up that may not be on people's radar? I think what needs to happen is we need to use block space for things that make people's lives better. And so we're seeing it in payments. There's a tremendous amount of cool stuff happening in payments abroad and here, but mostly abroad? I get a coffee and a taxi every day, and I just do the with my phone. It works brilliantly. So we don't have this terrible need for payments for most of us in the United States, right? But abroad, right? People use

Tether on Tron. It's become a payment system for half the world. We need people to be powered by Solana or powered by Ethereum and not just our community speculating. Listen, I think for the next three to five years, the broad value of each of these ecosystems will be some variation of the way we look at Bitcoin. It's tell me a story and get me to believe in that story. And I'm going to participate and hold my wealth in this new magic internet money. And it's likely to be the case, right? Matter of fact, you can look at speeches I gave in 16, 17, 18, 19, where I would say, hey, there are 214 elements on the periodic table and only gold has value as a store of value. The rest have a

utility. And so I really was focused on what Dogecoin would have to do or what Cardano would have to do. And the Cardano community learned to hate me because I said, well, no one I know is building on Cardano. But what I didn't realize was because of the economic regime of getting more people that makes the price go up, right? This kind of multi-level marketing regime of each of these assets, that the staying power and the ferocity of that community would be so strong. And so who would have thought that Doge was a $25 billion asset? Some of that as young people have a different relationship with money than old people do, because we gave it away, because zero interest rates are so long, because they can't afford

houses. And so because of their spirit, so like, you know, from dog with hat to, to, to all of these things are somewhat means, right. You know, like what's being built on, you name the, you name the, the 15th, you know, chain out there. And, and so I don't know how long they will continue to hold value but i know that their community just needs to get more people in it and so their their cardano meetups their solana you know like each of these guys have their own conferences in their own like i i in our portfolio have three core positions and it's bitcoin, Ethereum, and Solana. The rest of the stuff we're in route with Bob, we leave, we help. We have a huge venture book. We have a lot of gaming stuff. Right.

We were in gaming is all of a sudden becoming really exciting. And that might be, you know, we waited and waited for kind of some of the games to finally work. Right. The decentralized, the token based games, but it feels like you're right on the brink right now. There's AAA games. Yeah, there's AAA games coming that are blockchain games, or at least...

Unmutable, mythical, both in our portfolio, in our interactive business, both feel very different than they did a year ago. And so that's exciting. But that's what really needs to happen for us to feel great about being in this industry and then it's easy right like i can sell salon i can sell ethereum like you're

building this decentralized computer network to process authenticate store data right it's block space it's a database company and then what gets built on top of it but like and you can explain to people how you get yield from staking and what their inflation dynamics are outside of Bitcoin and USDT on Tron, as you said. And I talked to Justin Sun yesterday, actually, and it's pretty incredible how many people are using USDT on Tron. Justin is, he is quietly probably one of the most successful guys in crypto, period. By far. No doubt, like not just with Tron, with his trading, every once in a while you're like, how old is that guy? Really? And he's a survivor.

That's the understatement of this entry. Mike, I know we're up against time. Thank you so much for all of your insight. Where can people follow you and keep up with you after this conversation? I'm on Twitter at at Novogratz and I'm on Instagram at Mike Novo. That's it. I've got a podcast called Business Untitled, which is, you know, tries to give business advice to underserved communities. We've had a lot of fun with that. And we've got a Galaxy podcast about Galaxy brains

that Alex Thorne is the host of. And so- I love Alex. We're trying to get the word out there. Yeah. Did you just have Snoop on one of those? We had Snoop. We just had Mayor Adams.

Awesome. So we've had good guests. I'm glad you- I just had Arthur on Sunday sunday yeah it just came out so i love what you're doing thank you so much for uh you know remaining a pioneer and keeping to push us forward and uh you know for putting your money where your mouth is and putting your money into this stuff always impressed thanks mike be well Let's go.