Unchained - Bits + Bips: Bitcoin's Geopolitical Upturn and the $100K Question

Starting point is 00:00:00 Hi, everyone. Welcome to another episode of Bits and Bips the interview, the show where we explore how crypto and macro collide one basis point at a time. My name is Steve Erlich. I'm the head of research at Sharplink and also your host, and we've got a terrific show again for you today. But before we get started, just a little bit of housekeeping. One, nothing that you hear on the show is financial or investment advice. For full disclosures, please see Unchainedripto.com backslash bits and bips. And then finally, before we get started, let's take a very brief moment to hear from some of the sponsors who make the show possible. EtherFi is giving Unchained listeners 15% cash back on food and ride apps. And that's on top of the 3% you get on everything else. Your bank is charging you to use your own money.

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Starting point is 00:01:12 So as I mentioned before the break, we have a lot to talk about today. A very tenuous ceasefire was agreed to a couple days ago with regard to Iran, and it's had ramifications all across crypto and the broader sort of macro economy. I've got a terrific guest to discuss all this today. Kavita Guta. She is the founder and general partner at Delta Blockchain Fund. Welcome, Kvita. Hi, Steve. Yeah, great to have you back again. Always enjoy our conversations. So let's just kind of dive right in. I want to know what it's like for someone like you. You have VC fund. You also have a liquid token fund. What has it been like trading the last 48, the 72 hours with so much whipsoling

Starting point is 00:01:54 back and forth rhetoric and will, they, won't they agree to a ceasefire? You know, I was just talking to my team today morning and I was like instead of trading we should be on prediction markets and just like basically doing predictions on these we would have made more money to be honest. It's been like it's okay so first of all the idea that everybody is now back to predicting Bitcoin is going to cross 80 and Bitcoin is going to cross 100. That's exciting because we have been sort of in a winter for too long. Eith picking, eat, actually. actually has outperformed in last 48 hours with around 6.7 to 7% then Bitcoin jump, which is great because as you know, I won't call myself Eat Maxi, but I'm a big eat believer.

Starting point is 00:02:42 Said that, I feel like this particular cycle has been very different than in the past cycles of every time we have a world political situation or the economy situation moving in. We have seen crypto going down. But right now we are in a sort of a ceasefire. which based on president's truth social account can disappear anytime like it's not a permanent resolution it doesn't feel we are out right and but still the first impact is on crypto market as soon as the oil prices went down or expected to go down so that's very good but i don't know how much of this is institutional waiting that they're putting money aside and let's bring in so much

Starting point is 00:03:30 much on ETAF, which we saw like a huge amount of money coming into ETFs. I just really don't know how much was it wait and watch versus, oh, this is this is an asset we have to go in sort of a thing. Yeah, it's it's really been a kind of an insane week. I wish I had a better, more eloquent word to describe it. But on one hand, President Trump was threatening the destruction of a centuries old, perhaps like civilization. But at the same point in time, I mean, I think many people, many industry watchers, and if you look at what happened on polymark and the position markets, I mean, they anticipated some type of ceasefire deal.

Starting point is 00:04:15 And I wouldn't necessarily call what Trump was doing a bluff, but it certainly seemed to, he certainly seemed to use rhetoric as a way to exact maximum leverage to try to agree to some sort of deal, because I guess theoretically he took that step to, attack all the civilian infrastructure. That's not really something that could be quote-unquote taken back. And I'm sure we've both seen some of the reports of people making gargantuan profits on like shorting oil right before the ceasefire was announced. It's actually, I was kind of curious and I was talking to some of my own colleagues and contacts, like, was that a case of insider training or was that just people sort of betting on the taco? And

Starting point is 00:04:53 it's hard to really know. I think it's hard to know for sure. And perhaps the answer is a little bit of both. But we have to... Can you take a pause there? Yeah. Yeah. I think how do you define an insider's trading on prediction markets which you don't even have a regulation? I'm connecting it to, you know, we saw that famous early days of NFTs what happened with OpenC

Starting point is 00:05:18 and like just for $6,000 somebody was like taken through the mud. I'm not saying that, you know, having a knowledge, oh, this NFTs is going to get listed or this token is going to get listed, let's make money. That's a human behavior. But if there are rules, you know you have to change that behavior and that is the moral code. I am like, this is not the first time. I feel like polymarket has been, polymarket has been highlighting that there are multiple times when it comes to Trump administration, from his VP pick to then going into this Genius Act to like multiple things, like exactly before doing the first Miss Island to

Starting point is 00:05:58 Iran, et cetera, et cetera. We have been seeing this so-called insider trading. And now Binance has prediction markets on for the rest of the world. So I mean, do you think, like, can we qualify them as offensible, something which is crime, insider trading? Or right now it's a while, while, we're there? So good questions. I mean, obviously good questions. I think actually one of our sister podcast decks in the city, which the three hosts are all

Starting point is 00:06:28 lawyers, I think put a really good episode out on this. One of my writers at Unchain did a really good story on this. I'd say a few months ago, Jason Brett, because it really kind of comes down to how you're defining insider trading. And like, I'm not a lawyer, but U.S. securities laws. I mean, there's a very, there's very like concrete definitions of what constitutes insider trading because in securities markets, the whole idea is to sort of eliminate information asymmetry So everyone's trading a level playing field. And in prediction markets, which are regulated by the CFTC, it doesn't have the same types of requirements in like sort of fiduciary duties, so on and so forth.

Starting point is 00:07:07 And you can almost make an argument that people should trade on quote-to-quote inside information for prediction markets. That's sort of the whole point. It really kind of comes down to then, like, what happens if someone at the White House or not even just like a geopolitical one, but what happens if someone comes across information that maybe they shouldn't have? Are they allowed to trade on it? Well, sometimes it comes down to like what's the role in the entity?

Starting point is 00:07:30 Like if I quote unquote hear something and I trade on a prediction market that has nothing to do with my job and I just come across it, did I commit a crime? Probably not according to what securities laws are. But it's really sort of a fascinating thing. So I was actually going to get into prediction markets later on because I didn't want to talk about more about Bitcoin East and other assets. But I mean, you're fun. I mean, are you looking to trade on prediction markets? they're getting wider, they're getting more liquid, but sometimes they can also be very adversarial.

Starting point is 00:08:00 I'm sure you've seen the same reports I have to suggest that it might seem easy to make money on those, but oftentimes the bets, I guess the odds are not necessarily in people's favor and in a world where there are so many insiders. Perhaps it is a lot more challenging than people think. I think it really depends what sort of betting. So I started posting. I started posting. First of all, from the fund, we don't do it. But I started personally also as a way of learning and seeing what exactly is happening in the space on hyperliquid. And I think hyperliquid really started with this really deep perp markets.

Starting point is 00:08:38 And then from those perp markets, I basically started taking positions more comfortable on Coinbase, different stock perps and all. And then from there, we had Polymarket. And I think Polymarket went crazy about, hey, how many people are going to wear white tomorrow? you know so it is like anything and everything how many people are going to have indian versus chinese put tonight like you know and it started from there and i feel like um you know sometimes these

Starting point is 00:09:08 prediction markets with like if you list if you look at the top 20 trending topics or the top 30 trending topics i think you cannot have like yes you can have an insider like for an example, there was a big pool of like, what is bad bunny going to sing at half time, right? Of course, bad bunny can go or his manager can go who has a whole list of what they're going to sing and like participate in it, right? So I think when you are doing predictions like this, there's always going to be somebody who's going to have more qualified information than you have. And especially even if you can do KYC, right, how do you justify that an insider trading on a bad bunny thing. Like, of course, when are the bomb going to drop are a much more serious international topic,

Starting point is 00:09:56 right? But I also heard, by the way, that there are military defense all over the world who have now started looking at these prediction markets in this administration to see having defense analysis of expecting bombs. And like a lot of people in Israel I'm hearing are basically either banned or being asked to do a lot of. random betting to confuse a lot of analysis. Have you heard any of these things? I have heard that the Israel sort of disinformation betting on polymarket that is pretty fascinating.

Starting point is 00:10:31 That's probably worth something doing a story on. But one thing, actually one account I do try to follow sometimes kind of just in a jocular way is there's this Twitter account. It's called like the Pentagon Pizza account or something like that. Yeah, yeah. Yeah, like it'll detect like huge uptakes and activity for this like pizza place right by the Pentagon. Actually, I used to work in the Pentagon, but I didn't, I never went there. But sometimes people use it as a signal of incoming activity. So it is pretty fascinating.

Starting point is 00:11:04 All right. Let's turn back to the markets because as you mentioned, there's a lot of kind of unusual behavior. Maybe we even go back to April 6th, Monday. There were huge inflows in Bitcoin, ETH, ETFs, et cetera, et cetera, after obviously like months and months of withdrawals. I mean, billions of dollars in withdrawals. I'd like to know kind of what you thought about what was happening there. I mean, obviously the deadline was Tuesday. So this was at least 24 hours before.

Starting point is 00:11:31 Some of those inflows that seem to have continued. Bitcoin is up to, I think, $72,000. As you mentioned, ETH has been outperforming Bitcoin, which I guess suggests there's a bit more of a risk on. behavior, but like kind of just to the extent you can walk me through your week, like, what were you seeing, what were you thinking, and like were you positioning yourself long, short, a little bit of both? So our fund is a long term, right? So our trading fund is also not day-to-day active trading.

Starting point is 00:12:01 It is more about let's get into the market at the right position and then let's fold. And then even if it takes six months or an year to get out on a certain positions, let's do. Some of our tokens are also which we have directly gone, the public tokens that are already listed, but we have gone with the foundations. Because another respect of blockchain or companies which does their token is once you have done your token, people think that you are suddenly sitting on a lot of cash

Starting point is 00:12:29 for next 20 years to run your companies, which is not true anymore, or for 99% of the companies. So a lot of these founders, if they have done decent in the market after launching their token after a year or two, they still need to either sell their tokens in the market to raise money for the foundation to grow, etc., etc. So we have also bought a lot of those foundation tokens from different companies. And what we do is we don't want to put them a lot in the market in the same go, especially if the market is not stable because it can really take their prices down. And from our position, we do believe that the market is going to go much more long than this.

Starting point is 00:13:10 And so going and selling is not even an option right now because I don't think that we would have successfully made an exit. The thing, the way we have looked at the market is two things. First, that means crypto is not completely dead, which a lot of news media host started saying, everything is done in crypto, AI it is. So that has not happened. thank God the prices are moving we are alive we can survive the second thing which we have started paying attention to is that as soon as the oil prices went up crypto is one of the first asset which has moved without any other impact whether like on employment numbers labor numbers or any of the

Starting point is 00:14:01 like the white house announcements right and the and the second thing is if the institutional money coming back, which is a big volume as we talked about the ETF, then that institutional money is definitely going to take the blue chip tokens up. Now the two things which we are on the watch for, which hasn't happened. One is digital asset treasuries. They are all still super negative. None of them have really, really moved. So I'm hoping the public equities also going to slowly move up. And the second thing is the old cycle movement hasn't happened. So if I go, from like Bitcoin, B&B, E, Solana, Solana has moved a bit, like come down to the next level, Apto, Say, Sui, Monard, a bunch of them.

Starting point is 00:14:52 That hasn't really happened yet. So what I'm, so what we are watching now is how the other tech tokens, which are associated with different L-1s or the alternate L-1 is going to go, and how the institutional ETF flow going to affect. dots. Okay. Let's unpack that a little bit more, a lot there. I mean, for one, again, as we're recording this on Thursday afternoon, the ceasefire, I guess, appears to be holding. There have been reports of further strikes from Israel and Iran into the Gulf region, etc. It also appears that the straight remains largely closed, just the trickle of ships are going

Starting point is 00:15:34 through. So and a lot's at stake. I think with at some high level diplomacy, I believe it's going to be in Pakistan this weekend. So all then outwithstanding, I'm curious like your sense, like you expect another V-shaped recovery assuming that the ceasefire is able to hold and perhaps be extended like we saw after the tariffs. What type of duration would it take to kind of get there? How long would it last? And then, I mean, I think that leads directly into your thought about, like, this new alt cycle and pulling up things like that's and other tokens. Like, how long might it take to really kind of see that filter through? Because I've talked about on the show, and I know you've seen in the past before, like there are some narratives out there that alt cycles maybe aren't necessarily a thing of the past, but there are new ways for people to try to get like high beta exposure to risk assets, be it like AI plays or, or even now prediction markets.

Starting point is 00:16:34 24-7 perps on oil futures, other things. Like there are other ways to occupy your time rather than investing in alls. So I think there are two questions or three questions, and let me unpack it one by one, right? So the first question is, how do I see the market? Do I see the V shape recovery? I think we are in up and down. We're going to be in waves because Lebanon,

Starting point is 00:17:01 Beirut just got bombed, even during the ceasefire. So it's not like the conflict there was a bomb in, which I've heard in Qatar and Kuwait, so as a retaliation of the Lebanon bombing. So I don't think the conflict has really disappeared from the ground, right? And I think it's a matter of fact that the gas prices have gone so crazy in the U.S., that the U.S. is taking a little bit of like thinking through face of saying, let get the oil go, let the business go. But do I trust that U.S. is out of the war or do I believe that?

Starting point is 00:17:38 I don't think so. And so I feel like if we get stuck in this situation, which is a very high possibility that we may, then I don't think we have like a proper, like an upside recovery. I think we are in swings. That's one. Secondly, I think with respect to whether all coins are dead or like what are the different ways of making money, I feel like there's always going to be options. Have you forgotten the whole meme coin phenomena which nobody is talking about anymore?

Starting point is 00:18:14 One of my last big stories of Forbes was on Pump.com, a big profile for the magazine. I've been very much on the record. I think meme coins are mostly useless, but I know there are smart people. You disagree with me. I'm with you on this. I'm maybe not that smart person who got it or made any money out of it, but just generally. So I feel like there's always going to be things which people are going to make alternatives or have fun, basically any sort of gamifying system, said that even in the past when everybody

Starting point is 00:18:50 thought in 2018 and 19 crypto was dead again. came 20 and then DeFi took the market and then NFTs came back. So you never know. I still feel like one of your sponsors just to point it out because I'm a huge fan of that company, Etherfi. I mean, they are still generating eels. They are generating yields more than my bank accounts or my saving accounts or my SMP accounts and one of the reason the Genius Act is getting stopped by the banking lobby. So those are the connections and relations makes me feel like the institutional and conservative investor who may not go to a prediction market. Like, you know, as a fund, I am not going to go to a prediction market and put my institutional capital there. So I'm still going to go

Starting point is 00:19:39 and play in these spaces where there is more, the base has a strong base, you know, I know the yields are coming. I know the business on chain. Said that, if you look, I was just reading chain analysis recent report that how not only Iran, but a lot of Middle East countries are doing trading in crypto now, like the shipping trading, the movement or money because the banks are not working anymore. Like, so we are going back to the core of why crypto was created, you know. And so it's sad that it has come to that, but it also gives me a little bit pat on the thing that, okay, this is the reason we all got into this space 10 years back. Yeah, really fascinating.

Starting point is 00:20:28 Just the last couple of questions on the current environment, and then I want to, after the break, we're going to expand out a little bit. One, I'd love to just kind of nail down your thoughts on Bitcoin and ETH, and in particular, the way that they relate to each other. The Bitcoin-Eth ratio had, I guess, the Bitcoin's performance. performance vis-a-eathe had been, even though they're both going down, had been, Bitcoin had been doing better than beneath for most of the year and even go back into the last year. That's reversed over the last couple of days, or I would say like a week or so.

Starting point is 00:21:01 I'd love to get a sense from you, like if there's any undercurrent thoughts as to why. And Bitcoin really played a unique role here because while tech stocks went down during the conflict, et cetera, Bitcoin and went up. And I've had debates on the show the last couple of weeks. Is this a sign that it's a safe haven or not? I mean, was it just a factor of gold sort of having such a high run-up that people were going to sell out and they had to move money into somewhere else? And what does it mean now? Like, oils, tanking, Bitcoin's going up. Like, in the past, it's sometimes been a hybrid safe haven slash risk asset. And maybe it has that jankle and high quality again. But I, I'd love to just get your thoughts on how those two tokens in particular performed and how they relate to each other. So it's a very good question. Historically, Bitcoin has always been the first one to move. And then Eid is the second one who is trailing behind. And then we see alt coins slowly picking up.

Starting point is 00:22:03 And if everything is going great and it's just like a yield up market, then we would see like Bitcoin going up. and we would take three days to a four days delay of ETH going up, the percentage difference would be like one 50, like half, half of it or 70% of it, and then we would see all coins going up, but much faster with respect to the growth rate, right? So I think if I just stick to Bitcoin and connecting it back to what I was just talking about, we are seeing a lot of transactions on Bitcoin happening at the very big, institutional level in supply and chain in the Middle East. So it is becoming or it is being used as some sort of a currency

Starting point is 00:22:52 transactions by the big corporations slash governments. I don't have that much clarity, but it's huge numbers, right? And so suddenly we are seeing Bitcoin being stable or moving up, like the demand increasing. Of course, the gas prices are coming down and the gold, you are absolutely right, there was a time goal, was high, people are getting liquidity, when they are getting liquidity. Gold also traditionally has been thought of like if you get into trouble, you save gold, you sell gold, and then you

Starting point is 00:23:21 do the transaction. So I wouldn't be surprised if there's a percentage of those gold deposits are getting converted into Bitcoin to trade, use Bitcoin as a currency. And those are the places which I'm seeing with respect to global market. With respect to the US market and the institutional spaces, I feel like there is a very strong feeling that the Bitcoin is about to cross 100K again. People are already predicting 80K in next week or so. And so that does make institutional flow and a lot of hedge funds flow. Like if you look at the auto books in the market, whether on finance or Coinbase, I haven't seen Cracken yet.

Starting point is 00:23:59 But like you suddenly see the price movements or people putting put calls big volumes, right? So, and I haven't seen a big sell order. So in the past with ETH specifically, but we saw that every time EAT would move up, especially after 4K, there would be a big sell order already in the queue, which we would see. So which would give us an idea at MECO and then it's going to come back because there's a big sell there. We are not seeing a big queue of sell so far in any of the perps markets, in any of the centralized exchanges. and there are a bunch of buy orders at different, different, different levels for people who are probably like moving things together. So I think that is how I see Bitcoin. I do see Bitcoin like not going significantly down to like, let's say, under 65K or something.

Starting point is 00:24:50 It has really held itself strong. But I do see Bitcoin going above 80K over next some time. Now, with respect to Eid, I am actually very happy that during this whole year, of like going up to 4.9K to coming down, ETH has actually not gone down to like last year's low of like $800 or $1,200, right? ETH has really held itself. And you see a big movement in Eid because of institutional money. And especially when there was this big Google report,

Starting point is 00:25:24 which came out about the quantum computation can probably can create security issues with the Ethereum ecosystem. I think Eid did not completely crash out even with that news. There was some movement, but it was not like, oh, there's a 20% down. Like, you know, so I feel like ETH as a technology token with respect to institution and ETF is probably going to have a good growth this time. Okay. All right.

Starting point is 00:25:51 Well, that's a good place to take a quick break. So let's just take a moment and hear from some more sponsors who make this show possible. Etherfye is giving Unchained listeners 15% cash back on ride shares, groceries, and restaurants right now, which honestly is kind of wild for a card like this. On top of that, I'm getting 3% cash back on every single transaction, using my actual crypto. No conversion fees, no nonsense. My bank never once did that. And it goes beyond just spending.

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Starting point is 00:27:22 Satrea Mainnet is live. Get started at sitrea.xyz slash Unchained. All right, welcome back. So we were talking about kind of the immediate market reaction to the ceasefire and and sort of highlighting or forecasting what might happen next. I wanted to just get your thought, Kavita, on just some of the big shifts that we've seen in market structure over the last, I guess, a couple of months or even years at this point, because a lot of forces are converging at the time of these kind of acute geopolitical hotspots.

Starting point is 00:28:01 You talked about hyperliquid and sort of how they've kind of come out of, I wouldn't say nowhere, but have really taken the world by storm, especially with the ability to launch markets focused on traditional commodities. I know that their oil futures markets were doing more than a billion dollars a day in volume, which is massive. I think it became their second biggest market after Bitcoin. We're increasingly moving into a world of 24-7 stock trading, either by just exchanges and regulators changing the laws, but then also through tokenized stock offerings from like some coinbase crack and Robin Hood, et cetera. And we're seeing more stable coins come on chain. We're seeing growth in other tokenized assets, treasuries, yield-bearing instruments, etc.

Starting point is 00:28:46 I'd like you to kind of just put your VC hat on a little bit. Or I guess maybe your VC hat slash your Liquid Token Fund hat and just kind of talk about how that is changing the way that you look to invest and maybe highlight or discuss how some of those forces are going to grow in the future. I think, again, Steve, your questions are so loaded across so many space. Let's take the institutional adoption one, right? Which is great.

Starting point is 00:29:22 Institutional adoption has, institutional adoption on the liquid side has got huge flows into the space, right? You have the famous CEO of banks saying Bitcoin is bullshit to those banks providing ETF services for those assets. So that has definitely on the liquid side have done really well. Now, on the, I think technology side, we only see stablecoin adoption, which is great for the technology of settlement and like on ramp and off ramp and like the companies cross border transfers, etc. So those particular companies around it have done well. They have good acquisitions, they have like from web to companies, they have like some volumes, etc.

Starting point is 00:30:16 But the core decentralized technologies, whether those are on eels or whether those are on, you know, different type of products regarding storage, etc., hasn't been picked up. Now, some sort of a computation and storage like there's a core weave meta partnership with Nvidia, which I think is going to be very interesting for decentralized storage spaces. Similarly, a lot of GPUs and chip mining companies within the space has moved into AI computational, like one of our portfolio companies, GMI, which started as a Bitcoin, ether mining companies, now a prominent AI computational company and cloud storage company. So I think we're going to see a lot of that movement, and that's where the money will start.

Starting point is 00:31:08 start going. The money will start going, have already started going actually, into the infrastructure, which has an overlap with the bigger institutional adoption and the AI adoption at the Web 2 level. So these two we are already seeing a huge change. Now, there have been some surprises. For an example, for the longest time, people within crypto have always assumed places like polymarkets to be a very native game, which is now becoming with coin. Like, I wouldn't be surprised if Robin Hood and Coinbase at some point will start having their own prediction markets, right? Then there are-

Starting point is 00:31:47 I think they do, or they've started partnered with Kalshi and I think Robin Hood. They have started partnering. They do allow the accounts to be associated, but they are not offering on their own platform, like the way Binance has started, right? You can put the pools right. Similarly, I feel like there are going to be other use cases which are going to slowly and slowly become mainstream. Now, there are two things, and I don't have exactly my finger on what is going to be, but I feel like either it's going to be too big division where you are like, you know,

Starting point is 00:32:23 in a typical Silicon Valley world building products for a big adoption or you are building it for a niche open source society sort of a thing, which is like your native crypto society. Or over time, this place, which is a big institutional, like the banking world, is the only world which is going to survive. So I am still understanding, but the second part of it completely depends upon where the crypto prices go, because if the tokens are not going to do well, there's going to be less money in the space and less founders' ability to be able to create and just chill in the space. That's how. That's how I see. Said that, I think the next big institutional adoption, if we can figure out the banking lobby, is going to be the eels, the decentralized yields on at the institutional level. Just imagine

Starting point is 00:33:17 that's going to be like a big win-win for even retail people, like conservative retail people, you know, then instead of holding treasuries, you can just get 6%, 7% yield on your cash, which is available at any given point of time for you to use. And then the eel-bearing stable coins are a complete different story on top of it. I don't know when and how we're going to be okay with it. But yeah, that depends upon how the institution works, how the government works. And what if this government changes in 28? Yeah.

Starting point is 00:33:52 Election? Yeah. That's going to be a very big part defined, given a lot of conflict of interest, of how the new administration, if different, going to look at this space. And let's kind of stay on that last thought that you had. I'd love to get your thoughts on what may or may to happen with the Clarity Act. I know Treasury Secretary Vesson actually just published an op-ed in the Wall Street Journal, sort of urging passage of this.

Starting point is 00:34:20 How would you sort of, what odds would you place on passage and what might be the ramifications if it fails? else to get across the finish line. You know, if they actually put it sort of like in the sand that you cannot have eels on stable coin, I don't think with respect to technology or the retail customers, which the government should watch out for is good. Because I actually have talked to a lot of those people who are in the rooms, have been in those rooms myself, just to understand with one simple question, which is how is it bad?

Starting point is 00:34:58 like how yield bearing stable coins which you can control, you have a collateral, it's not failing, it is packed by US treasuries, auditing are happening, how by providing extra yield to local individual whose $1.06

Starting point is 00:35:16 instead of 1.02 or 1.03 is not good for normal people. And I do not have satisfactory answer to that. I mean, just the devil's advocate. I'm not saying I have this position, but I mean, two things I hear. I mean, for one, it'll suck liquidity out of the banking system, which I know you've heard

Starting point is 00:35:35 and can disproportionately hurt smaller banks, not necessarily like the big G-Sibs. And then two, stable coins. I mean, they're not FDIC insured. They theoretically shouldn't need to be because they're not allowed to re-hypothecate deposits, but at the same point, not every stable coin is treated equally and has the same type of rigorous standards and maybe Genius Act could standardize some of that. But those are just two things that I know are in the air supply. I would imagine some people listening might be thinking to themselves.

Starting point is 00:36:06 So perhaps you could just quickly respond to that. So let's just go to them. The first point which you said, right? You are saying basically that you didn't set up the small business, small banks or the banks in a right great technical manner. So a regular Tim and Joe should not have more money in their bank. account, I think that's a bullshit answer. I'm sorry. That's not my problem. That's your problem. You figure it out. That is basically saying, hey, we're not going to use computers because the small

Starting point is 00:36:35 banks would die, you know. So that should not be like the government should be thinking about a normal citizen. They should not be thinking about saving this big managers and the bank. That's one. The second one is a good legitimate question that every stable coin is not seen. So then please allow the people, like a normal regular person who's putting their money in JPMorgan Bank of America Chase, any of these big banks, those banks should have those standards. So you have a choice to make it that if I'm putting my money in a Bank of America current account, which I am, I'm just generally getting more yields by trusting that bank and that bank should be taking care of the quality of the collateral and the auditing around it. So again, that is like, cannot be an

Starting point is 00:37:21 excuse. That's a very doable problem. Can you handicap, I mean, just to stay on this topic. I mean, but moving a bit aside or aside from the yield stable coin question, which is sort of hamming everything up. Can you handicap the odds of clarity based on what you know? And then two, crypto has a history of buying rumors and selling news, but clarity, it's hard for me to get a read on exactly what's going to happen. And so if things come together quickly, clarity passes.

Starting point is 00:37:57 What type of boost could we see in the market? I think honestly, at this point of time, it depends upon what pieces of it passes and what pieces of it doesn't pass, right? So markets are like, if you take away creating regulations for every new type of technology, which is getting built on the space, then you are basically just saying,

Starting point is 00:38:19 oh yeah, crypto is fine, like, which anyways, is the way market is moving. If you have cases like Kalshi getting investment from New York stock, like I's and all that stuff, you are already doing that, right? So you are just basically saying, okay, fine, it is happening. Let's accept it. So I feel like, yes, it will help big pension funds to be able to hold probably.

Starting point is 00:38:41 You know, so more institutional capital inflow onto this. And then SEC and CFT has to figure out if the government changes, like the, if there is a change in the party system, then somebody else cannot come. They have to go through the Congress. So those two things are big. And I completely understand. But it should not come with the constraint of saying outside any of this is all illegal.

Starting point is 00:39:05 I think for me, that is the problem, that you are going to hinder something which is already working and the progress in that innovation by saying you are in a legal box, but the legal box is this small. And everything around this whole universe around the legal box can be now questioned and opened up. That scares me a little bit. Okay. We're just about out of time, but I just want to wrap up by asking you a few quick-fire questions. One, what are one or two charts or assets that you're really interested in paying and going to pay attention to over the next few months? Like with respect to currencies or technologies?

Starting point is 00:39:46 Anything. I mean, digital assets or macro. I mean, the shows about how the two collide. What are you watching to kind of be a signal for what's the common? I think ETH has always been a good middle ground for me. Because if only Bitcoin is moving and ETH is not moving, then I am feeling like the rest of the crypto market is not going to move. And when ETH moves, I started watching Altcoins moves, right?

Starting point is 00:40:11 So like the next top seven coins for me, say, Solana, Apto, Sui, I start watching that bucket very quickly. and then a defy bucket and then nowadays more of like raW ETF buckets so if those started showing positive sign then we are getting ready to basically a good jump up with respect to technology i feel like of course we are waiting on bunch of IPOs right everybody has been expecting crack an IPO falkan x IPO a bunch of more IPOs and i think that more dependent upon overall the tech IPOs where the SpaceX or I don't know how open AI is going to be now, but like SpaceX or Anthropic or something. And I think once that IPO markets open up, that's also going to have a lot of liquidity moving into back into the space. So those are the two I'm really waiting for. Now, with respect to the political movement, I honestly do not think that we're going to have a very stable political space for a good, decent amount of like short term six months to an year. Now, the only thing which I am trying to microwatch between that is, are the oil prices going to be a problem?

Starting point is 00:41:27 Because if the oil prices goes up again, then that's not good for crypto. Yeah. And I mean, just staying on oil, I mean, everything you said, I agree with. But just because there's the ceasefire, I mean, as I said before, the strait still remains largely closed. And it's not like you can just flip a switch and all of a sudden, oil flows can be back to where they were before the war. and oil is going to be back into the 60s or $60, $70 a barrel. So we'll have to kind of see what that looks like. Just to wrap up, anything that we did not get a chance to discuss,

Starting point is 00:42:00 you'd like to share or do you have any other big expectations, predictions, things you're looking out for through the end of the year? I think the crypto AI game, which is basically having, and robotics, actually, I think the big space, which I am watching is how decentralized identity for different AI agents, the settlements, the AI bots to use for crypto trading and different things. I think this overlap of this world, not the first generation which we saw like a big boom two years back within the crypto world where very random AI crypto companies were raising

Starting point is 00:42:36 crazy amount of money and have all disappeared. I'm talking about the real use, which is revenue driven day zero, then to like VC driven, is being super, super fascinating. And I think especially in the robotic world, where big, big, like, you know, infrastructure companies using robots for different services and their identification is on Ethereum as like a public blockchain.

Starting point is 00:43:02 I think those use cases are making me much more excited. And I think this is how going to be the evolution of blockchain into a blend infrastructural economy on a much bigger scale than what we are seeing only in the financial space. I think that's very exciting for me to watch. Great. All right. Well, that's a great place to end it.

Starting point is 00:43:20 So, Kavita, thank you for joining. As always, we'll have to have you back. And thank you to everybody for watching and listening. That's the end of this episode of Bits and Bipsy interview, but don't go anywhere in a few minutes. Laura is going to be here with another episode of Unchained. She's going to be talking with James Sefer, senior research analyst at Bloomberg. intelligence and a former host of bits and bibs as well and they're going to be discussing the

Starting point is 00:43:46 big debut of morgan stanley's bitcoin etf and where the overall crypto crypto etf space is going so stick around and we'll we will be back after this short break

Unchained - Bits + Bips: Bitcoin's Geopolitical Upturn and the $100K Question

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