Unchained - Bits + Bips: How Bitcoin Treasuries Are and Aren't Like the SPAC Bubble - Ep. 845

Episode Date: June 4, 2025

The Bitcoin Conference in Vegas is getting more political. Crypto treasury companies are exploding across the globe. And macro markets are flashing mixed signals, with geopolitics entering the chat. In this episode of Bits + Bips, the panel dives into: Key takeaways from Bitcoin 2025 The possible bubble forming around Bitcoin treasuries How the SEC is fighting back against staking in ETFs Whether Ethereum is finally catching up How Ukraine just redefined trade risks Why ETFs have seen so much inflows since the market bottom How AI will impact growth and the job market And … why James hates Las Vegas 😀 Thank you to our sponsor! Bitwise James Seyffart, Research Analyst at Bloomberg Intelligence Joe McCann, Founder, CEO, and CIO of Asymmetric Ram Ahluwalia, CFA, CEO and Founder of Lumida Noelle Acheson, Author of the “Crypto Is Macro Now” Newsletter  WSJ: Bitcoin Goes All In on MAGA, Shedding Its Antigovernment Slant Unchained:  Pakistan Sets up Strategic Bitcoin Reserve Crypto Treasury Companies Are All the Rage. Could They Cause an Industry Collapse? Decrypt: Another Bitcoin Buyer? Nasdaq-Listed Reitar Logtech Plans $1.5 Billion BTC Purchase The Defiant: Trump Media Closes Roughly $2.4 Billion Financing to Establish Corporate Bitcoin Treasury Bloomberg: SEC Flags Concerns on Crypto ETFs Offering Staking Rewards The Guardian: Ukraine launches major drone attack on Russian bombers, security official says   Timestamps: 0:00 👋 Intro 2:02 🎰 - Why James hates Vegas, but was impressed with Bitcoin 2025 4:48 🐘 - Has bitcoin moved too far right politically? 10:02 📈📉 - If bitcoin treasuries are all the rage, why isn’t the price moving? 13:26 🌍 - One big reason why the treasury bubble differs from SPACs 18:26 📉 - Are these companies destined to implode? 22:55 🤔 - One big (but hidden) opportunity to profit from this market 34:23 🏦 - How some ETF issuers tried (and failed) to pull one over on the SEC 43:19 🤐 - Why James sees one quiet, but bullish, trend in ETF flows 47:48 🌎 - Why Noelle thinks that numbers don’t matter - it's all about geopolitics 58:10 🐂 - Ram sees a secretly bullish setup. Here’s how he says to play it 1:07:33 💻 - How AI is going to eat the world, and turn markets upside down Learn more about your ad choices. Visit megaphone.fm/adchoices

This is actually the time, in my opinion, not that I'm doing this because I have plenty of other things to do, but I would love to do this. This is the time to start, you know, building a raising capital for a distressed fund vehicle. So when some of these companies end up having to sell their crypto at a meaningful loss, there's somebody with arms wide open will want to pay 10 cents on the dollar. Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide, one basis point. at a time. Today we'll talk about Bitcoin 2020-25, Trump as usual, a whole bunch of other things, but first, some quick intros. I'm your host, James Safer, Tradfai Archmaister, Lord of Bloomer's End. It would Joe McCann, Lord Commander of Asymmetric and Master of Bunk. Also joined by Noel Atchison, high seer and keeper of the Crypto's Macro now newsletter.

Hi, everyone. And last but not least, Ram Al-Alawalia, Macer of Wealth, Leader Lumida. How's it going? This year. We're here to discuss the latest stories in the worlds of Crypto and macro. Just remember that nothing we say here is investment advice. Check unchained crypto.com slash bits and bits for more disclosures. Crypto moves fast. It's why Bitwise launched the weekly CIO memo, a jargon-free summary of what's moving crypto markets, written by one of the best in the business, CIO Matt Hogan.

Get up to speed in five minutes or less. Check it out at bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. Big news. Unchained just launched a brand, new newsletter, Bits and Bips. Just like this podcast, it's all about how crypto and macro collide, one basis point at a time. Get expert analysis, market insights, and the biggest stories shaping both worlds, straight to your inbox. Subscribe now for free at bits and bibs.bibs.bhive.com.

That's bits andbips.bhive.com. Find the link in the show notes. I'll just say real quick, I was at the Bitcoin conference. None of you were there, right? None of the the three of you were at Bitcoin in Vegas. For a long time, but no. Yeah. One, I'll just say I am not a fan of Vegas, period, stop. I really do not like Vegas. Why not?

Why not? Tell us why. I mean, I don't want to get too off topic. But if you've been to casino, you know what it's like, except it's like that times a million. And it's deliberately kind of confusing when you're in there. Like, they deliberately make it like a maze. So like I had side events. I was supposed to meet people at that I was like super.

late to despite leaving early. It was so hot anytime you had to walk outside. It was like 100 degrees. I don't know. And I'm just, I don't, I don't, I'm not a gambler as much. I don't know. I much prefer like nicer scenes like, you know, conferences when they're in Austin and Miami and stuff like that and Southern California, just better views. I mean, Joe lives in Miami, so I guess he doesn't really care as much. But like, yeah, that's my reason. Vegas isn't my scene, but we'll be back for next year. So it is what it is. Your eyes dry out too, right? Go ahead, Joe. You got to do Vegas differently, man.

Avoid the casinos. Some of the best restaurants in the world are there. They have amazing shows. Like, you just avoid the casinos. To that point, the Vegas hack is this. You get bottomless, Alaskan crab legs, either at the Bellagio or the Cosmo brunch.

When I land, I take my luggage, though. I pull up. They look at me like, all right, was this guy again? We know this guy. He's going to just, he had a famine for the last 48 hours. He didn't destroy protein.

They hide it in the back corner. They know how to optimize. But a good investor knows where to find the value. So we just go through that. Avoid all the insom distractions and the salad. Straight to it. I will say, the one thing that's there, the restaurants were phenomenal. And any side event I went to or any dinner I went to is amazing.

I actually went to dinner with iron, one of the Bitcoin mining companies. And like the food was unreal. So yeah, everything. shout out to them for that. But like I went to a whole bunch of different restaurants and they were all absolutely top notch. It's just, I don't know. It's a scene. It's a vibe. And ironically, my, I go to a TradFi ETF conference every year and that's also in Vegas for the next couple of years. So I'll be in Vegas probably at least twice a year for the next few years. So let's get into the conference. One, they had over 35,000 people there, I think, and I believe it based on the amount of, it was huge,

bigger than anything I've ever seen from the Bitcoin. It reminded me a little bit of Bitcoin 2022, which was in Miami at the convention center of Miami Beach. That was also obscene, but they did like a festival on the weekend that year. So there was a lot of people who were just tertiary interested in Bitcoin that were going for like a party. This was, they had that many people and then some and it wasn't really as much of that scene. So one, that was impressive. The other thing I thought is very politically leaning right for the most part. J.D. Vance was there that spoke, Don Jr. Eric Trump. Lomas obviously spoke about her Bitcoin bill that he's going to bring back to the floor.

One thing I did notice from J.D. Vance that I liked it, like he referred to, he likes Bitcoin. Obviously, we know he holds it. He referred to it as a hedge against bad policymaking, which I thought personally was like a really good quote. But yeah, overall, it's very feels. Some people saw the guest list and they were like, is this like a Republican convention? Somebody that I know was like, you're going to a Republican conference. And I don't know. I kind of wish it was a little more bipartisan, but I guess under that Biden admin and it's not going to be the case.

So Pakistan made an announcement that they were basically going to do a Bitcoin reserve and they were going to start using the electricity to start mining. But then shortly after like somebody else from the Pakistani government said, no, we're not, it's still illegal here. And the IMF is upset. So they're asking Pakistan to confirm what exactly is going on there. So Pakistan seems to be leaning towards doing something on that front, but that was also very interesting. Nigel Farage of the UK talked about a bill that he wants to do to lower cap gains on critical. and Bitcoin. Eric Adams actually spoke about doing municipal bit bonds for New York. PSG, one of the biggest football clubs in the world, is adopting Bitcoin as a Treasury Reserve

asset. Saler gave one of his textbook presentations calling for Bitcoin market cap to being 60 to 100 trillion, 15 to 20 years from now. I think that was the years. I'm not just actually sure. And then, I mean, overall, I could keep going on. There's like 15 other things. Those were the key things that I thought were the main takeaway. It felt like it was growing up compared to what I had seen in earlier years of the Bitcoin Conference when I was going in 2021 and 2022. But it still had the same sort of vibe, excitement, young crowd. But it felt a little more grown up, I guess, is the way to say it. But the one thing that really stood out throughout everything talking to everyone, everyone's talking about Bitcoin treasury companies, which is perfect

for us to get into our next topic. Before I do that, anything that I said that you guys want to dive into aside from the Bitcoin Treasury stuff, which we'll do first. Yeah. I'll just mention something quickly. So I wasn't personally there, but members of my team, including Dan Held, who's a general partner on our Bitcoin D5 venture fund, we did an event with UTXO management and Franklin Templeton. UTXO management is the company that produces the event.

And I was chatting with Dan today about this. And he had mentioned that there were so many side events that to have a packed event, is challenging at this conference of this size. So we were really pleased with that. But the composition of the attendees at our event, that's the only I can really speak to, was everything from, you know, OG bitquiners to institutional allocators,

to existing LPs of ours, to builders in the Bitcoin DFI space. And, you know, something that really kind of resonated with me was the fact that the Bitcoin conference now, to your point, James, it's a bit grown up. The fact that we were doing an event with someone like Franklin Templeton, coupled with the fact that pretty much every asset manager in the space was there, major political figures and politicians and policymakers globally were there.

It has grown up. There's no doubt about it. I saw a photo. I forget some, I think one of the organizers tweeted it the other day where it shows like the first Bitcoin conference and like, like, you know, 2012 or 13 or something. It's like three people in a room for it cares. And then it shows this one. There's thousands of people. It obviously has come a long way. But I do think that it is a mature, no surprise. It's maturing to the extent that it's at now. And I don't think this is going to slow down

anytime soon either, especially as this kind of global institutional wave kicks off, which is likely a good segue into these public company, corporate treasury, Bitcoin buying sprees. Yeah, I would confirm that. I mean, it was really high quality attendees. Like even like my clients, like I had a lot of my clients that were there, people who are already involved in the space, VETFs and other things, or people that are like literally doing their research

and trying to like figure out how to get into space. So yeah, it was a really high quality conference. Shout out to David Bailey. He put on a hell of a show. And I thought overall side events, the events actually associated all of it was really well done. Yeah, no, briefly, the conference made Wall Street Journal might have been the front page if you go to the online publication. So, you know, Bitcoin has arrived here.

But they make the point that the conference, the title's article is Bitcoin goes all in on MAGA shedding its anti-government stand. So, you know, interestingly enough, last year at this time, Bitcoin was, conference was very neutral. Trump came and gave a speech there. And then two months later, Bitcoin community got behind. Trump and Fair Shake Pack and the rest of its history. It's one of the three probably deft political moves that Trump made. And now it's leaning further into that. So I thought that was a good observation.

And you're seeing the Wall Street Journal, like acknowledge that. Yeah. All right. Let's get into crypto treasury companies real quick. It feels like they're all the rage. I feel like we're hearing about, you know, everyone's copying sailors playbook or some level of sailors playbook. I mean, we have it going on in the UK.

We have it in countries all the world. I feel like there's a new announcement. other day, even if it's not somebody launching a Bitcoin treasury company, it's another company adding Bitcoin as part of their treasury as part of their Treasury Reserve allocation. I mean, honestly, it's kind of insane. With how much announcements I'm hearing and the dollar amounts, a lot of them are in the billions, if not hundreds of millions, and still the Bitcoin price isn't, I mean, obviously we hit an all-time high recently, but I feel like if I was hearing this type of announcements and

conversations, the price would be higher. So there's a whole bunch of areas we can go. So I'll let us dictate where these rabbit holes we go down. But Joe, what are your thoughts like overall on like what's happening? And it's not just Bitcoin, but let's start with Bitcoin for now because it's also happening in the auto and Ethereum. Yeah, I mean, I have seen, I feel like I see a new deal like this every day for the past few weeks now.

I just want to rewind the clock a little bit here because I think a lot of the, you know, we had a discussion. I don't remember how many months ago this was, but we had a discussion. of like there's so much token supply hitting the market and who's going to be the incremental buyer and et cetera, et cetera, et cetera. And at the time, what I had mentioned was that people have a mindset that the current state is like this fixed amount of money that's going to be allocated potentially to various cryptocurrencies. And here we are with, I mean, how many, another one was announced today, right to our log tech holdings, buying a billion and a half

of Bitcoin. Now, those aren't alt coins or shit coins, but there are other entities doing this type of stuff. So the irony here to me is that while so many in crypto Twitter were focused on the retail bid and when is it going to come back and are they going to buy all coins and shit coins, you now have institutions just throwing around billions of dollars to buy crypto. Now, obviously, the majority of that is Bitcoin and rightfully so, but there are other vehicles out there that are buying all coins. I think that there's, you know, it's a double-edged sword, okay? So Michael Saylor has pulled off like the, you know, one of the most incredible trades, I guess you could say in history. And there's a very, I don't want to say an easy case, but it's an easier sell if you're going to be doing a clone or a copycat with some minor tweak to it and be able to pitch that to investors to say, hey, do you get into this?

you know, pipe deal, your lockup for six months, but look at what happened with micro strategy and meta plan and it's going to be a good deal. Like, I'm not surprised that these folks are raising a significant amount of money. We have myself, firstly, already especially, we have no investments in any of these. Not that we wouldn't, but, you know, we haven't seen anything that has made sense for our fund. But the thing, the other, you know, the other kind of double edge to the sword is this has, uh, and Rom, I'm sure you can, probably, agree with me to some extent. This has a bit of flavor

or a reminder of the SPAC craziness in 2021. I was thinking of the exact same thing. Go ahead. And because like, you know, one of the things I try to do as a trader is just pattern match. And they're, I mean, I'm seeing a deal

like almost every day. So, just like SPACs right now. And you know, we've got like Bitcoin treasuries.net. So there's all these sites that are tracking all these things. I have a watch list in trading due to track all these companies and it just keeps getting larger every single day.

So on the one hand, the SPAC boom was certainly during a zero-interstrained environment and helicopter money being dumped to people during post-COVIDs or during COVID. It was a very, very different, I would say, a little macro environment than today. And SPACs were specific to the United States. this is fundamentally different because one, the macro is fundamentally different.

We've been in a, I don't know, I don't say, we're not in a tightening cycle anymore because we peaked on that. But like, we've held rates pretty restricted for a pretty long time now. We're not like at zero, right? But the concern that I have is this is going to be a global phenomenon, right? So these are companies in Canada and Hong Kong and, of course, the United States, Brazil, there's nothing wrong with it. I'm just saying that SPACs were centralized to the United States. This is a global phenomenon. So although the SPAC boom lasted, I don't know, depending on how you look at it, 18 to 24 months, most of them imploded. This type of a bubble, if that's what you want to call

it, could last for a long time. It's a bubble. It's a bubble for sure. Yeah, yeah. But like it's only a bubble if you're not invested in it, right? So like my point, a lot of people could be investing this thing for a really long time before you see this thing has for a catastrophic ending. The first money in the bubble, make the money. So if you're the first out of the gate with your SPACs and your offerings are good. If you're putting a business plan together now

or you're seeing the deal that you're the 30th person to see the deal, you're going to lose money. What's the investment thesis, Joe? Like if you're pitching an investor, they're pitching you, is it that you get warrants in the pipe and is it a SPAC like structure? or what's the opportunity?

With micro strat is very different. It's a balance sheet play. Then they wrapped debt and capital markets all around it. Yeah, I mean, it's super deal specific. And I will mention any names. I'll just speak at a high level. The majority of it is you're getting basically a price per share at a discount to whatever the market rate is, right?

That's generally. Now, some of them are, some of these are, I'm trying to make sure I don't disclose anything too sensitive. But some of these are basically like, we're going to go buy $100 million worth of Bitcoin or so long or whatever it is, right? And then it's just going to be on the balance sheet. Like, that's it. I'm just like, you know. Economic value creation there.

Well, and so that's what I'm, that's the part that I'm like, I don't, that's the bubble part that, you know, stands out to me. We got six months to go, guys. That's the clock started. Now, here's the thing, right? depending on, I don't remember James or someone else mentioned this, but a while ago, but one of the fascinating things that Saylor did is that he started issuing debt, right? He started targeting a buyer, the bond market, that couldn't buy Bitcoin, right? So like, really fucking smart move by him, you know, really, really smart.

Now, if you kind of extrapolate a little bit here and go to, say, other markets where people can't buy Ethereum or can't buy Salon or it's not as easier for them to do that, or there's not ETS available and they want some level of levered exposure, I can see people then using this as a vehicle to go and do that. But the 50th NASDAQ listed company that's buying a billion dollars with a Bitcoin on their balance sheet, I don't, maybe I'm just not smart enough to figure it out. But to me, it just feels like that trade is over. And that was micro strategy. And in Pan, it was meta planet. And I don't know who the additional one in the United States actually is. This is a gap for Ethereum, I would say. Ethereum needs a micro strategy. And that

all happened. The rest, I don't quite really get it. There's no incremental access to your point. That's what this is doing, right? They're doing any one of these. Sorry, go ahead and Noel. We're talking about all this. I'm seeing right now that strategy just announced another perpetual preferred offering. There you go. Yeah, STRK and STRF, they're having STRD that's IPOing soon. The gift that keeps on giving, right? There's two concerns here. And I guess it would be just leaving micro-stratology aside, because that is the OG and it does. have an interesting flywheel effect, which I won't even pretend to fully understand. But leaving that aside, there's the concern, two concerns, two concerns, both of which

we've seen before. One, companies that are struggling using the announcement to get some PR and also perhaps a bump to their share price. I mean, this is reminiscent of the early days when you would put blockchain in your name and suddenly your share price would go through the roof. So we're seeing a lot of shaky companies adding to their balance sheet, and we do have to ask ourselves what happens if that doesn't work out and they have to offload. hurry. Two, this is coinciding with a surge in crypto lending. We saw the Cantor, the Cantor Fitzgerald

announcement last week that they're now finally live on their institutional crypto lending. That's institutional. That's like as mainstream as you get. And there's a whole lot that are crypto-native lenders. And so it's not a stretch to imagine many of these Bitcoin treasury companies using their Bitcoin as collateral for a loan to buy more Bitcoin and laying on a scene. Again, this is very rip in what we saw in 21, 22, and it unwound pretty fast. So there's also that risk. Meanwhile, yes, buying demand, but also adding potential leverage that we won't necessarily get transparency into a market that is feeling kind of fragile anyway. Yeah, those are great points. I mean, I actually thought at the beginning of the year when the banks were going to start doing

crypto-related services, particularly on the prime brokerage side, that's where we'd see the leverage from. and ironically it's these public companies that are shoving a ton of crypto on their balance sheet and then potentially lending against it. I met with a company last week that's looking to do something fairly large in the crypto space, very similar concept. And the number one question they asked was, where can we get yield? And I was like, well, for that size, I'm not really sure. You're going to have to kind of like either wait for the banks to open up and or a lot of the kind of brokerate dealers that we,

trade with it asymmetric can handle pretty decent size, but, you know, it's a supply to bad issue. If all of a sudden you're chucked at half a billion dollars with a Bitcoin into, you know, a lending market, what does that do with the yield? It is actually worth the counterparty risk, et cetera, et cetera. Especially if many of these are in less regulated markets, if you said earlier, Joe. Yeah. They're looking for a yield on Bitcoin by pledging that as collateral. They're looking to yield more generally. Pro proof of stake networks. I mean, this particular company, again, we'll go in name, but they were just asking my opinion on some things. I was like, yeah,

like, you know, you're going to earn yield from proof of stake networks. Like, you're not going to earn yield from Dogecoin unless you're lending it. Right. So, and this is more or less the same thing for Bitcoin, right? You're the way to earn, I mean, typically the way to earn yield on Bitcoin is to lend your Bitcoin. You could, of course, run some cover call strategy or something like to that effect, but you could end up getting called away, which has tax implications and all that. So true yield, right, borrow lend is basically it. Or you're, you know, you're utilizing the proof of stake network token. like Ethereum, Solana, et cetera.

For me, this just feels like, I'm not quite at the point where, like, I think this is going to cause an implosion in the markets at some point down the line, but I do think there's going to be a lot of these companies that end up coughing this stuff back up at some point. Like, it's only a matter of time, like, in the next fair market, if people didn't structure their debt properly or term it out well enough, like, it's only a matter of time before people are, like, you know, coughing this time. But I say that, and people are like, sailors very smart. I'm like, I'm not even necessarily, strategy could be completely fine.

There's so many of these things out there now that are doing this with like billions and billions of dollars. And you're injecting leverage into the system. So I don't think we know like exactly how this is going to play out. And the other thing I would say is like I know strike, Jack Muller's strike. They're big. They just launched new lending for Bitcoin now so you can borrow against your Bitcoin. So all this stuff is coming online more and more and more. And it's kind of exciting to watch, I guess, is what I was.

And getting kind of crazy as well. Last week, I saw two announcements from companies that are looking to put the Trump token on their balance sheet. Imagine why. Jim Chano should short all these other companies. Why he keeps shorting micro strategy doesn't make any sense to me. But shorting all this other noise around the perimeter, that's where you should focus, Jim. Well, so there's a couple things here. One is the, what is it, S-Bet is the ticker, S-BET.

They announced last week that they're raising, I don't know, $450,500 million to buy Ethereum and consensus is going to be helping them. Yep. Source that, et cetera. So the price of the stock went from like $3 to $130 in like three sessions and then collapsed. It's trading like in the 50s now. Part of this is the fact that these stocks are so illiquid to trade that, you know, you can't really short them with size, right?

Yeah. Now, the second thing that I'll point out is this is actually the time. in my opinion, not that I'm doing this because I have plenty of other things to do, but I would love to do this. This is the time to start, you know, building, raising capital for a distressed fund vehicle. So when some of these companies end up having to sell their crypto at a meaningful loss, there's somebody with arms wide open will want to pay 10 cents on the dollar. That's actually a really good idea, especially since we've got the Mount Gox distributions coming up soon. And we all know what interest there is around those.

Funny thing about distress, by the way, is, you know, over the last 15 years since the 2008 crisis, there hasn't been a year where, like, distress has done well. And part of this is just so much money in the system. So much liquidity in the system. They have these distressed funds that raise and they never get a chance to call capital. Someone shows up with a bag of money and buys the asset. I like the thesis, Joe, just a remark. And by the way, that excess liquidity is part of what's driving.

digital assets. Yep, exactly. Well, I will say back in 2022, there were a pretty good number of distressed minor deals, but that adds a fraction to the size of the city and tradfow. You're right. There was. Like in 2023, public markets and private markets, you could have done extraordinarily well for the six month window. That's right. Yeah, real quick, we didn't even mention it, but I think most people already know this, but of anyone listening who doesn't know this Trump media actually closed the deal to do $2.4 billion in a private offering. And most of that is going to go to be buying Bitcoin and crypto treasury deals. So that's another one that's just huge. And like, I don't know, I still like, it doesn't feel right to me that Trump's company is doing

so much in the space with his name on it and he's president. But I guess like if you're in this space, you have the most powerful man in the world, I guess, behind you at least theoretically. So that's a big, that's a big plus. I guess I don't know if anyone has in comments there, but I also want to as Joe or getting other guys, anyone else's opinion, like the first announcement is the one that Joe just brought up with Ethereum. Like, no one was doing this with Ethereum yet. There's only one that's coming down the pike. We've had a few Solana ones.

Like, why did Solana happen a bunch before Ethereum? Is that just because everyone basically wrote Ethereum off a few months ago? I'll go to you, Joe, versus the sole maxi. Progress Maxi. As long as you're making progress, maybe. So look, I have no knowledge or anything. This is pure speculation as to why I think the Solana one was first. I think it was sole strategies.

They reached out to me many, many months ago. And at the time, I kind of looked at it and was like, I'm pretty long Solana. So like, I don't know if I need to lever it anymore. And, you know, shame on me. I probably should have done the deal. But I think part of the reason was that at the time, time, at least when this was being formed, there wasn't a clear path for ETF. There wasn't really,

like, I would say, easier institutions or adoption. The CME futures have launched, none of that kind of stuff. And so I think, I think the idea was we can package this thing up as the fast, you know, the fastest horse. There is no other real way to get access to this token, you know, in a public market's perspective, therefore, this should be the vehicle to do it in. And it's worked. I don't know. I don't have any investment, like I said, in it. But I've looked at the share price. It's up dramatically from when they launched. DFDV, I think, is another one that's done very well in a short amount of time. And in fact, what's interesting about some of these Salon ones, you should probably expect to see this with Ethereum. I don't think it's unique to Solana. But with, I think it's

the DFDV, they announced even today that last week they announced that their salon that they have is staked and they created their own liquid staking token, liquid staking token. So they have an LST now. And then that LST is now available in Camino Finance, Angel Investor, full disclosure, but Camino Finance is a kind of borrow land market with some other interesting DFI primitives and kind of applications. This is now kind of this interesting full circle moment where you have a public company that has slot on their balance sheet that then took it and staked it and created their own liquid staking token and then took that LST and now put it onto a defy borrow Lend protocol. That's, I don't think that's been done before. That's pretty

novel and interesting. Maybe that's the beginning of a pattern for more of these companies to say, hey, instead of just like parking it in a custody provider and sitting on it, why don't you do something with it. Well, and with Bitcoin, most of them just want to hold it. Now, there are plenty of, you know, Bitcoin Defi or BitFi protocols. We've invested in a bunch of these. We look at these deals at asymmetric that you could do stuff with. But with Solana, you know, for whatever it's worth, it is very easy to do these things. It's very easy to create an LST. It's very easy to then, you know, team up with someone like Camino and have that be a post as collateral on their platform. And it all happens, you know, really, really quickly because the FDD didn't announce that much that I think it was only a few weeks ago.

And they're already doing a lot of this more advanced defy related stuff on Solana with the tokens that they have on their balance sheet. Well, I'm excited about the Ethereum one. I think that could catalyze that category. I think the reason why there's not been an Ethereum equivalent to micro strategies because you need a personality. I use memetic in digital assets. There's a tribe. You need a leader with personality. the tallach's not going to do it.

Joe Lubin could do it. It's a candidate. There obviously consensus are going to advance the ball around this. But there's just a handful of people that have a voice like a Michael Saylor or or Jack Mahler.

That's what you need to make it come together. I was just going to say quickly for all those people that think I hate Ethereum, I actually flipped long Ethereum last month. I think it's a good idea, actually. I have a question actually that's relevant to that. Do you think the supply schedule has anything to do with it. I mean, Ethereum with more activity does have negative net new supply. Salana doesn't,

is that relevant? I'm not asking about the overall thesis. I'm asking about its case as a treasury asset. One of the cases that being made for Bitcoin is that we know that however much the demand, the supply isn't going to change. We also know that with Ethereum, the greater of the demand, the lower than new supply. But with Salana, is that the same situation? That's actually a really great question in Point O.L. When I was speaking with this company last week, that was looking to, they were asking me about staking and yield and these types of things, that was one of their questions. And I had mentioned to them that a few weeks or maybe a month and a half or so ago, there was a proposal put forth to this Lawner community of validators and developers and investors and

stakeholders, as well, to change the inflation schedule. And one of the counterarguments to doing it came from a good friend of mine, Lily Liu, the president of the Thalana Foundation. she's absolutely brilliant. And one of the things that she mentioned was that institutions don't want a variable rate as it relates to this inflation. And we're, you know, we're getting Salana ETFs, you know, et cetera, et cetera. Now, there was a counter argument to it as well from Tushar at multi-coin, which was also very valid. The point is that was the first question that was asked on this call. I don't know if that is why they're choosing to do it, how it relates to Ethereum. But currently, Salonah does have the fixed inflation schedule, and that could change. But I'm pretty sure that's not

the reason people are putting on the balance sheet. I'm pretty sure it's because it's likely what I was mentioned prior. There's a lack of access for people that just want to open up Robin Hood or Schwab or, you know, get on the phone and call their broker and buy something. That's likely the case. But DFTV is actually proving me a little bit different here because they're actually doing stuff with the token itself. And I think to Ram's point, that that should be the case with Ethereum as well. And maybe that is what helps kind of open the eyes to, you know, the broader investment community to say, hey, there's more than you can do than just speculate and hold these assets. Look at these companies that are actually doing it with putting to work the, the cryptocurrency

that's on their balance sheet. Yeah. So this is a really good transition point. So the one, the last thing I would say to wrap a bow on this is Joe is kind of hinted at it. He's heard a lot of these deals are coming that are not public yet. I've heard of a few deals that are not public yet. I know of other people who said they've seen decks on this stuff. Like the stuff that's being announced now wasn't started like two weeks ago. Like this stuff was started months ago. Like there's a lot of lawyers involved. There's a lot of capital that needs to move. Like these things are not happening. So like as things are ramping up, it's not necessarily this is going to stun. It could keep, it's going to keep going to keep going for some time. So who knows when we'll get out of

this spec like bubble in these things. I don't think long term it makes sense to be adding some of these assets as a Treasury Reserve asset personally. But yeah, I would just say, like, anyone listening to this, like, these things that are happening now started months ago. Like, this is not something that people can just spin up in a couple weeks, particularly if you're starting a completely new entity. If you're just, like, another company that's adding it, okay, maybe it could have happened somewhat quickly.

But all these new IPOs, these new companies, these things have been long in the planning stage. Two brief points. One is no idea is original. They get inspired in people around the same time. Execution matters. too is this is the late part of it but differentiation does matter last one of this i i saw a deal i can't show much about it now but it's a clever way to transform dividend and staking income into

principal appreciation through structuring so it's like a berkshire hathaway version of one of these things i think that's clever it's a differentiated version of approaching this that is unique yeah yeah all right i'm going to talk about with something going on with the e tts which is absolutely fascinating, but I'm a nerd, so maybe it's not as fascinating. You guys can tell me after I give a rundown. But let's hear from our sponsors for quick. Hey, everyone, Matt Hogan, Chief Investment Officer for Bitwise Asset Management. Every week, I write a short, five-minute memo on the biggest topic facing crypto investors. This week, I tackle Bitcoin's role in a traditional portfolio and how I think most people approach the topic wrong. Specifically, I explain how you can mix Bitcoin into a

portfolio of stocks and bonds to create a new portfolio that, at least on a back-tested basis, has both higher returns and lower risk. Intreat? Check out my memo at bitwiseinvestment.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing. If you love the conversations we have here on Bits and Bips, you're going to love our brand new Bits and Bips newsletter. Our team will break down the key macro trends impacting crypto, the biggest market

moves and expert insights you won't find anywhere else. Whether it's the Fed, inflation, or major Dow proposals, if it affects crypto, we've got you covered. Best part, it's completely free. Stay ahead of the market and subscribe now at bits and bibs.bibs.bohythe.com. That's bits andbips.bhive.com. Find the link in the show notes. Yeah, let's talk about what happened with ETFs over the last few days, which kind of started

happening while I was at the Bitcoin conference. Real quick, REC shares and Osprey are kind of like they're interrelated companies, sisters, if you will. And they had a bunch of filings, including one for Bonk, I believe, but they had a whole bunch of these filings that were structured as 40AC products. I don't want to go like two in the weeds here, but you do, I do need to start at a level, like, so you can, there's some little bit of understanding. Most ETS back in the day had to go through that process that we go through for these spot crypto assets, where they go through the 19B4 process. that's when you hear about all these delays for, you know, people trying to do in-kind or staking and all these different things. Any ETF that launched, it kind of had to go through that same process. They created this new rule called Rule 611, commonly referred to as the ETF rule.

It does a whole bunch of stuff for ETS that makes filing and launching them a lot easier, a lot cheaper, all these different things. But the main thing it does is you don't have to go through that long, drawn-out, 19B4 process to get approval from trading and markets to list an ETF if it qualifies under the 1940 Act. So if it's a mutual fund, yada, yada. If we have questions, you guys can ask. But really, what's happened is what Rex and Osprey did is they tried to go a unique way to get staking products to market. And there's two unique things here. One, they filed for two ETSs a while ago. They changed those filings.

And they filed for a Solana staking ETF and an Ethereum staking ETF. And the way things work under that rule 6 or the ETF rule is once you launch theoretically after 75 days, you can go effective, which means you feel. file as an effective perspective, and then you can list the product within a couple days. What they did, they filed for that on Friday for Salonist staking ETF and Ethereum staking ETF. And the way they say they qualify for Rule 6C11 under that 40 Act is basically saying we have a Cayman subsidiary in here that's holding the underlying assets that will be doing the staking, the hold staking tokens, as we were just talking about before Joe. And the other unique thing is they're going to be structured as a C-Corp.

So like a traditional corporation, there are a couple of ETFs out there that do that to get over some of the issues with like pass-through entities. So like ETFs are passed-through entities. So essentially you're not paying taxes when they go through. But the C-Corp, they thought they had a way that was like a silver bullet. So using this came in subsidiary, using this unique obscure regulatory structure that's not typically used for an ETF, that they found the silver bullet to get to first and get out first. And so they filed for an effective prospectus on Friday. but shortly thereafter the SEC was basically like, yo, not so fast.

We don't think you qualify for these rules, and they're going back and forth at them. So they're basically saying you can't launch, we're going to fight this. So I don't know how far this is going to go. I don't know if it's going to go to court. But essentially, you have this niche smaller issuer trying to get out first. It makes sense that they would try something like this, because if they have to wait when everyone else has to wait when staking is allowed in a Granter Trust, which I do think is ultimately going to happen, they're competing against Black Rock and everyone else right off the bat.

So they figured, let's jump the shark here and try to get this out. And it will be interesting to see if it actually gets through, but the SEC seemed keen not letting this happen. Anything I said that didn't make sense or anything that you think is particularly interested in on, I'll go to you, Noel first or Joe. I do have a question. Did you see this coming? Is this anything like what you've seen before?

Did you expect this? Yeah, so we knew about the Cayman sub-filings. So basically what they did is they filed this a long time ago, back when all these other, the first salon, a spot ETS were filed earlier this year. And basically right after Trump's, right around Trump's inauguration, all this filed in January. And like I said, it's 75 days. So I was looking at these and I was curious what the SEC was going to do because it became in something, which usually people use for tax purposes and for complex strategies and partnerships.

It like kind of makes things smoother for end investors theoretically. But usually they're for securities. So like you kind of need them to be securities to kind of do this. There's all these complexities in there. What they did was they had this filing and they just changed it to be sole staking and Ethereum staking rather than just Solana and Ethereum. So they kind of changed these things at the last minute. So did I see this coming? I kind of heard rumblings that something was going on.

But no, I didn't really see this happening. But I thought it was a good play because I'm mainly watching those 19B4 processes for these types of products. Like the products you want are the spot products, right? Those are the ones like it's like the Bitcoin futures ETF, the Eat Futures. ETFs. Yeah, they were successful. They got hundreds of millions of dollars or a billion dollars in the case of the Bitcoin futures. But if you're an end investor, you want the true, tried and tested, simple spot products. So I do this kind of similar to that. But if you're a small issue, if you can get a couple hundred million by offering exposure to each staking or

salinas staking, even if it's an obscure wrapper, even the not the best way to get exposure, it might be valuable to get it out there. And I think that's what they were trying here. It's not done yet. They seem to think they're going to be able to satisfy the SEC's concerns, but the SEC is kind of saying, I don't think so. So it'll, I don't know, we'll see. And so it sounds like it was a play just to get out fast rather than wait for a decision on the staking distribution of the spot ETFs as they come through, right?

Exactly, 100%. Well, so this actually raises an interesting question from my perspective, given that we were just talking about DFDV, the Svalor corporate treasury folks that stake their tokens, and now they have an LST, et cetera. Like, the interesting thing here is, here's a public company that's doing staking, right?

Like, sure, they're not an ETF issuer. And I know there's a whole host of other rules and regulations associated with issuing an ETF, et cetera. But it's like this company was able to do this with no issue and the value of their shares now can be justified to some extent by having a revenue source from staking. Right? yet it's not okay from the SEC.

And so for ETS, from what it sounds like, do you think that these companies assume worst case, I know I'm in the same camp as you that the staking probably gets approved, but assume it does it. Does this, do you think in your mind accelerate some of these other companies to just start going down that path? And instead of issuing ETF, they go buy some $3 million market cap company and say,

hey, we're going to shove a $200 million dollars worth of Solana or Ethereum onto your balance sheet and start staking it and generating yield from that strategy. I mean, it's possible. I think people are pretty optimistic. I mean, the SEC, I know for a fact, is having meetings. They're working towards doing this. I mean, part of the main concern is like, these things are grant or trust. So I talk about CCorp, like some are set up as partnerships. Most are set up as 40-act mutual funds, open-end funds. The spot products are set up as grantor trust. And there's issues, there's potential issues with the IRS around getting income. distributions essentially from that staking.

So like the concerns are more around that side of things and just logistics and getting like the legal and regulatory framework set up to allow these things to actually do staking, more so than like the SEC doesn't want ETS to do staking. It's more like it's more like dotting T, dotting eyes and crossing T's and allowing this to like fit in the overall regulatory framework than we don't think these things should be allowed. So I'm confident that the SEC and these issuers will be able to get to the bottom of this to figure out a way to fit this in current rules, but there's no guarantees here. I mean, the final deadline for the first application for staking is October 23rd.

So they still have many months before, like, they have to make a decision where it's going to be yes or no. And I think they'll be able to figure it out. And I think that's part of the other reason why the SEC's like, we're having, we're trying to figure out how to do this. And you guys are like this other companies coming in trying to do this. And I know the guys at Rex and Osprey. They're awesome.

And I was rooting for them because. I don't know. I like this obscure stuff, but the SEC is kind of annoyed. I'm going to read a quote. So Caroline Crenshaw, who is like the most anti-cryptop person left at the SEC at this point, she was further left on crypto than Gensler against it. But when she issued comment to my colleagues in Blumrick News, she basically said, how is it these crypto assets are supposedly not securities when it comes to registration requirements, but conveniently there's securities when a registration sees an opportunity to sell a new product.

And then she said, if you're confused, join the club, which is, Pretty spicy, which I got to respect it because I kind of get both sides, but yeah, pretty funny. Much I do have to say, and again, I don't want to praise you too much in public, James, obviously, but you made a really confusing situation sound understandable. So hats off to you for that. Thank you. Yeah, I've been a little bit too far in the weeds on this, but I guess it's my job. It's a job, dude. Yeah. It's like sometimes you know, you're doing stuff and you're like, You have imposter syndrome, you know, and then sometimes you're like, I actually, you know, some of this stuff, I'm not completely.

I actually know this. Well, you know what? So speaking of your job and you're an expert, and can you talk briefly about ETF flows? Yeah. I mean, so every, basically one of the last times I was on here, some of the money was pouring out of the Bitcoin ETS, money was pouring out of the Ethereum ETFs. I was saying a lot of that seemed like it was the basis trade. Basis trades now still single digits across Bitcoin, Eith, and Solana. when you're looking at the ETS versus like the CME futures.

But despite that, we're seeing tons of buying. I mean, from the bottom at the end of April, the Bitcoin ETFs have taken in like $9 billion so far on a net basis. Actually, one thing that's interesting is this year, Ibit has actually more than 100% of the flows because technically there's been more money that's come out of the funds, and Ibit's been the one that's taken in money over the last month, which is kind of interesting.

I don't know what that means. So Eric, my boss actually thinks that might be a signal that its institutions coming in. So I think, you know, everyone was talking about the decoupling. I actually think it did garner institutional interest because the money that's pouring in into those Bitcoin ETS, also with Ethereum, Ethereum is almost, they saw $800 billion of outflows, which was like a third of the assets that had come in. They're at over $800 million that has come back in since the bottom.

So like money's pouring in, and it's not for the basis trade. So this money's coming in likely more from the institutional side. Because if you're, you know, a retail investor, I don't know, you probably, look for the cheaper thing. Like VanX Holden is still a 0% fee right now. It's like if you're doing due diligence, you might be buying some of these other products, but for the most part, all the buying is Ibit. And the people who really care about like ultra liquidity that Ibit and GBDC actually has

as well for the most part, but Ibit's the leader. Options liquidity, which is all on Ibit, it's the institutions that are going to care about that if you're a retail investor looking to buy, you're probably going to go for the cheapest one like Grayskills BTC, which only has a 15 basis points or Van X Holder or somebody a bit-wise product is actually cheaper. sponsor of the show, then Ibit. But still, Ibit's the one getting all the money, which tells me it's likely institutions that are buying.

Now, are they short-term buy, or are they long-term buy and hold? We'll have to wait until we see the 13-ups from the end of the second quarter. But, I mean, these things are still raking in money, hand over the fist, a lot of investors, even hedge funds are coming into the space. So I pointed out that I thought, like, we have the end of 331, and I'm like, I bet we'll see outflows from hedge funds. Now, a lot of money went into registered investment advisors and some other areas that we're buying the Bitcoin ETS.

Ironically, hedge funds actually did buy a little bit. So on a net basis, I'm sure a lot did sell. But hedge funds overall bought through the end of March. What it is, my bit has more liquidity, so does the EFA. So this is easier, less gap risk too. I think it's more than institutions. Why do you think it's not the basis trade, yeah? Because the basis trade really picks up when you see like double digit yields.

And we're just not there. Like the basis trade actually went negative, but not. fully negative, but it went real low rather recently. So you need double-digit yields essentially on like a net basis probably before people start pouring in like what happened in end of November and into December and even into early January. And then that's when we saw a lot of these outflows happening because basis literally went negative. So money's pouring out and we're just not seeing it. And also when you look at the CME futures like the open interest, like if we saw a ton of flows and open interest was rocketing, I'd be like, okay, maybe this is the basis trade. And we're

just aren't seeing that. So like when flows were coming out, I was able to see, see me open interest dropping and you're just not seeing it to that level. Obviously, it is ticking up, but it's not, it's not the same like one-to-one relationship I saw in December and January that was pointing to the basis. That's true. I was tracking the basis trade last week, and I noticed that the, a lot of inflows last week, but also the basis, the annualized return really, it got up really close. It went just over 10%. Came way back down on Friday and his heading lower still, but it did head up for a bit. And so I thought, A ha, basis trade inflows. But yeah, you could be right.

Maybe even 10% is not enough. I mean, some of it, I'm sure some of the money, people are still willing to take, like, you know, 10% returns on their basis trade. It's almost risk-free, not quite. But the real money that pours in, like, some of the flows might be that. But, like, it's not causing $9 billion of flows from the bottom into the Bitcoin. Yes, there's just no way. All right. Let's go, we're pretty far in.

But let's go to macro, the BIP side of bits and Bips. I guess there's a lot of things going on in the trade deals. We can talk about geopolitical stuff. I know Rahm wants to talk about jobless claims and softening markets there on the job side. But, No-Bal, like, what are some things that you're specifically looking at on the macro side? For me, it's a geopolitical story. I mean, the macro data is interesting and it is sending some very interesting signals about interest rate moves. But it's a geopolitical story right now is so much uncertainty.

The actual data points aren't that relevant. and the geopolitical uncertainty arguably ratcheted up a hell of a lot over the past few days. I mean, last week we saw the Court of International Trade unanimously rule that President Trump had overstepped his authority when he used the International Emergency Economic Powers Act to declare national emergency that warranted broad tariffs. And it was unanimous. And, of course, the White House appealed right away. And they got a stay. They are allowed to continue to apply the tariffs while the appeal works its way through the system.

the White House has said they're going to send this all the way to the Supreme Court, but that doesn't necessarily mean they're going to win because this particular Supreme Court has not been hesitant in curbing what it sees as executive overreach. So there's still going to be tariffs. The White House, the administration is looking at applying Section 122 of the 74 Trade Act, which means they can apply 15% across the board for 150 days. Now, that could hurt, but it's still not what President Trump has been talking about so far. And 15% most trade partners can probably well.

whether that, and it's question now for how long that would last, would Congress actually approve an extension? So tariffs are still there, still going to cause some economic damage, but nothing like they could have had Trump thought he had the bargaining chips he thought he had. More uncertainty, even more uncertainty in a really uncertain environment. And then, on top of all that, you have the deepening rift between China and the U.S. with the Geneva Agreement, apparently torn up and both sides really mad at each other. By now, we're used to extreme rhetoric from President Trump, but I have never seen such stern wording from the Chinese authorities before.

On Friday, Trump unleashed an angry post in lots of all caps accusing China of breaking the Geneva agreement and regretting being Mr. Nice Guy. And then on Sunday, Treasury Secretary Scott Besant elaborated that China had been slow-walking the export approvals for rare earths. And this came just a couple of days after Reuters had reported that two auto manufacturing associations had sent a letter to the White House warning of production stoppages because of the looming shortages of rare earths. Now, China has responded with accusations that it is the U.S. who is breaking the Geneva agreement. This really is starting to feel like playground stuff. The U.S. is not acting in good faith, et cetera, et cetera. And defense secretary

Pete Hegseth's comments over the weekend in Singapore at the Asia Shangri-La Security Summit certainly didn't help. He pretty much accused China of preparing to invade Taiwan no later than 2027. And he advised all there, all the military chiefs of Asia and many developed countries as well, to beware of China's ramp up in defense spending. While China did not like this at all, it accused the U.S. of being a hegemonic power stuck in a Cold War mentality and warned it to not play with fire, those were its words, on the Taiwan situation.

So things have really, the heat has been turned up several notches, and that's not going to necessarily be good for, against stability and investors to be able to figure out where market direction is going. And that's not even taking to account what Ukraine did yesterday in launching the drone attack against Russian

airfields. I'm not even talking about the damage to the Russian Air Force, which was considerable. What Ukraine did was weaponized trade containers. And we have yet to get our heads around what this is going to do to supply chains around the world. Trade changed

yesterday. So it's not a surprise that gold is shooting up. It's up 4.5% I think since Thursday because alarm bells are going off in boardrooms around the world. Oil is heading up despite OPEC plus increasing the production quota increases that they'd already planned. Those are another, the more alarm bells going off there. And at the same time, you have VIX really low. It's down by 18, which shows the market is not really paying attention to all of this. So the geopolitical environment right now is saying caution. It's interesting that Bitcoin is not acting either like a safe haven or like a risk asset, despite, as we opened with, the flood of announcements coming in from big buyers. So it's worth looking at what's going on there.

Yeah, I mean, that Ukraine, I mean, if you, anyone who's listened to this, if you haven't, like, just look and read about what they did, it's kind of, it's going to be written about in history books, probably it's kind of crazy what they were able to do against Russia. But yeah, this isn't a war podcast. So we don't really need to go down that too much. But Joe, what are your, what are your thoughts on what Nibel just said? I mean, the which he made about trade is kind of fascinating and not something I was going to, that's what I was going to know. I think, I think Nile was spot armed with saying like it's all geopolitical right now. And if you kind of take it a few steps removed, you know, from the actual attack that Ukraine did on Russia's Air Force,

I didn't even destroyed like 40 bombers or something, and it was like 2,500 miles away. The potential impact is, how does this affect trade? And, you know, I immediately saw no surprise on Twitter, people saying that this has already infiltrated the United States. And maybe that's true, but like it's odd that no one mentioned that until this happened, right? But there is real risk there, right? Because if you can treat supply chain and the trading containers, the ships, whatever, as mobile military bases to launch things from, I mean, that's not great for supply chain, right?

That's certainly not good for trade. And I don't think that maybe in the United States, I'm not sure about the rest of the world, maybe the IDF in Israel, but I'm just speculating, don't have the technical capacity to manage this type of stuff because the technology is moving way too fast and governments move typically very, very slow. So for example, these swarms of drones that could affect, that could be in containers and ultimately affect supply chain and it could launch attacks on various countries, could it just easily be trained by AI agents as well to, run them, right? You could have these things be entirely autonomous and then who do you go after

if someone's not claiming those types of attacks. So it's a real concern. I do think it will be written about. This is Mossad style work. It's, it's, I read it was just like, this is unbelievable. But I look at the VIX and the point that Noel is making, like it seems to be rather subdued. market is somewhat shaking this off. I think part of it is the, yes, this is a material attack on Russia, but I think the market's just kind of like, oh, yeah, there's a war going on between the Ukraine and Russia. And I'm not meaning to downplay the impact and importance of that, but it's just not currently affecting things like equity markets. Oil has been, oil is a barometer for war. So it definitely ticked up today. But there was also a lot of

of heavy short positioning near below. So could have been just a technical bounce or something. Gold, interesting move for sure. And I do think that part of the move in risk assets today, and, you know, Bitcoin aside, the, I wrote about this, I still think this is the case today. There's just so many managers that are underweight equities still. And, you know, like if you saw, we're recording this on Monday, June 2nd, meta was up like almost, almost. 4%, 3.5% today. And it was just a straight line basically up all day to day. A lot of these stocks have more than retraced the moves. And it's almost mechanical. Like I talked about this a few months ago, I was saying like the selling was just this mechanistic, systematic selling that had

to happen out of these multi-platform pod shops that were running all these factor strategies. Well, now we have this CTA bid, VAL control fund bid, as well, as the corporate buybacks into the second week of June. This has been going on for weeks. And so, you know, I've been seeing a lot of Dumers on crypto Twitter or FinTwit basically saying like, stocks are topping. It's going to crash. It's going to go back to the lows. And it's like, there's just billions and billions of dollars worth of passive bid in this market right now. And that's not changing. Even the face of the rhetoric between the U.S. and China, the Ukraine, you know, Russia conflict, rising price of gold, rising price of oil.

because there's really only one direction that this stock market goes when you have that big of a passive bit. Yeah, like I think these geopolitical risks are nothing burgers. I agree with Joe's perspective too. Like just zoom out. What drives asset prices, especially stock prices are earnings growth. We just saw 12% year-over-year earnings growth. Interest rates, I think, topped out.

There's a scare that's behind us now. Third is inflation. Well, we got disinflation core PCE came in just fine. And then we've seen peak fear around tariffs. That's receding. You got the Volta K, which creates a natural mechanical bit, to Joe's point. China's not going to invade Taiwan in the next two years. I'm glad, Hex, Seth, sounded the alarm to create more defense spending locally.

That can actually de-risk things. I'm sure China's looking at the asymmetric benefits that Ukraine is achieving versus Russia right now. Taiwan can benefit from that and their own drone development. These geopolitical risks are just noise. their distractions. It's a bullish, it's a very bullish setup. I agree. People are off sides and wrong way positioned. I think what you're going to see is more rotation because the mag 7 names rallied quite sharply and quickly. Meadow is like one of my favorite names I sold recently if only because they're approaching like their valuations, levels. We usually see them

tap out. And now you're seeing rotation to other catch-up names and other areas will start to pick up. So you should be bullish. And you got rate cuts coming in Q4 as well. The coincident indicators are fine. Productivity growth is fine. The flying in the oint is that you will see an impact from tariffs in the July, August, September. It'll be like a whiff of bad air kind of thing. That's what I expect.

And then we'll get beyond that. Initial claims and continuing claims did go in the wrong direction last Thursday. By the way, this seems to happen at this time of year, almost every year. year. It's really funny. I don't know if it's like how to do a summer seasonality and all this stuff, but there's always these weird surprises and people, if you want to see bad Roar Shark text, you're going to get that probably the next three months. But, you know, there's a good article from the Wall Street Journal that was also published today. And they highlighted, I'll show my screen here, that the tariff rate, you know, is going from, you know, 2.2% to

something like 18%, and that'll impact, you know, lower income individuals. So I think it's a bifurcated economy. Look, the top one-third of consumers drive two-thirds of spending. It's not going to matter. However, it's a bifurcated set of outcomes that will play out, right? In terms of retail versus consumer discretionary. It's hyper-scalers are going to be fine. Data centers are going to be fine.

They're still going to keep spending. Two things. One, you said asymmetric, which aside from being Joe's firm's name, I wanted to point out some of the numbers. It's correct with the warfare because the drones, like a couple thousand dollars for those drones. I mean, we'll aggressively say the cost of materials for the attack they did was a million, maybe a couple million. And the estimates are like $7 billion in damage, which like if that's not asymmetric warfare, I don't know what is. So like those numbers I just want to throw out there are absolutely completely insane.

The other thing I want to say is talking about macro, like one of the things I've been thinking about, and I've heard on other podcasts and people I respect, like, how much of like some of the numbers we're seeing now is partially due to, like, people front running the tariffs. I mean, there was a huge front running of tariffs. And then all of a sudden there was no buying. So, like, some of that stuff you were talking about the Versaarch test coming over the next couple months. Like, part of it could be there's like a slowdown because there's a gap between people ordering and the tariffs being lessened and things like that. Like there could be a gap there. Things could actually be slowing down.

It kind of does matter like what actually happens with these tariffs and whatever, what actually happens. Check out GDP now. It's clocking in hot, 4.6% hot. And you're right. There is acceleration. I talked to the sharpest retail consumer analyst I know. She's my hairdresser, three blocks down the street.

I don't see her often. I don't have enough hair, unfortunately. But I asked her, I said, like, what do you see on the ground? And she's a shopper. like the handbags and the whole thing, Ulta, she knows the brand and the retail layout. And she said, yeah, people are accelerating purchases. I said, huh, that's pretty interesting.

I said, what about big ticket items like cars? She said, well, she knows parents that are purchasing ahead of their kids turning 16 or 17. They're getting ahead of the birthday, just pick up a bit more savings. And autos are the number two expenditure for consumer after a mortgage. we're also seeing more activity on homelessness. So that's increasing. But yeah, I do think there's a pickup. You know, it's not usually the case that you get a strong GDP quarter and the next quarter is also strong.

You know, in Q421, you have 20% year-over-year earnings growth. That was the last quarter of Stimmy checks and stimulus and all the rest and everyone's on a sugar high. And then, of course, you had a bare market start. So I think that's why I do think like a step back in the next quarter, maybe around mid-July or the next negative seasonality kicks in. That's kind of my base case right now. I would expect something like that to play out. You probably get some good bargains sometime in September. Okay. I'll wind this up by saying that precisely for the reasons you mentioned, the economic data is just confusing. And so there's not really much to be gained by dwelling on it a lot. Front running,

we're seeing that in the data. This is also going to come through in some of the employment data we're going to be getting this week as well. The economic data, I'll go out and eliminate say, Right now, it's not that relevant. I do think that the biggest story is the geopolitical because we're underestimating the impact of the turmoil. It's not priced in. The only thing I will add is, and frankly, I'll admit that I was wrong on this. I thought more CEOs for Q1 earnings that came out this quarter would be more cautious or negative on their guidance and they weren't. That was very surprising to me.

and it actually made me more bullish risk assets and particularly equities. Clearly, there were some companies where they, you know, guided lower or didn't guide at all. But there really wasn't a lot in guidance from these CEOs that was just pervasive across, say, the S&P 500. And I thought that that is worth mentioning because I would think coming out of Q1 into the April 2nd Liberation Day, like your CFO and your PR firm is coaching you on how to be very conservative on your earnings call. And I just didn't see that be the case. I mean, maybe it's anecdotal, but I think I saw a stat suggesting that, you know, the Lyme share of companies that have reported, which is the majority of S&P 500 at this point,

haven't really changed guidance and in some cases increased it. That doesn't typically happen if tariffs are going to destroy the economy or that the economy is slowing down. True. And margins are still very healthy, if not even increasing. So there's plenty of cushion. Yeah, I'm not worried about waves of bankruptcies or anything like that. And I certainly don't go into individual names or even sectors. It's the dollar, basically, is what I keep an eye on. And that is heading down because of the geopolitical uncertainty. Okay. Any other comments on macro before we get to ROM to talk a little bit on AI and so we can wrap up? I'll mention one more quick thing. Hopefully it'll be quick because it'll certainly be somewhat controversial. But I don't think the, you know, Fed or the Treasury or pick somebody has lost control the long end of the curve.

There's a guy, I'm going to probably mispronounce his last name, but I highly recommend him following him on Twitter. His name is Warren P-I-E-S. I don't know how to pronounce the last name. I'm assuming it's P-E-S. He's really, really good. And he posted something, I think, either this morning or yesterday. over the weekend showing, you know, sort of a dot plot of the yield curve. And we're kind of like we're finally getting to pre-global financial crisis yield curve, even though it bears deepened

this year, which is typically in a healthy growing economy. So I see a lot of doomers around. Oh, my God, the 30 years is that 5% or whatever, and it's the end of the world. it just wasn't the end of the world before the global financial crisis. So I didn't want to point that out that, you know, the yield curve steeping the way it is isn't necessarily a harbinger of bad things to come. I agree. Ray Dalio's clip that went viral talking about how the U.S. fiscal situation is going to end in that. That was the top in rates. That was it. Yep. Yep. I'm more pessimistic on rates, but I agree with you, Joe, and that this right now is not the crisis level. I think that's much higher.

Yeah. I mean, we didn't really talk too much about Trump's big, beautiful bill. But like it's just, it's funny to me because I feel like you hear about all this stuff, and it's like the Republicans are going to come in and they're going to, you know, they're not going to spend and cost them the issues you're talking about potentially with the long end of the curve. But like Republicans and Democrats like to spend except the Republicans like to spend by cutting taxes and regulations and the Democrats like to spend by increasing taxes and putting out like other like you know. Everyone's spending. It's insane.

Yeah, wartime deficit. You know, it's bullish. It's all bullish. Like as an American citizen, I wish Congress had their act together and weren't spending like drunken sailors. But it is bullish. Like don't miss sight of the main takeaway. $1.00. That's also why rates are going up.

The other part, like, their baby boomers are running the economy. $60 trillion in wealth, they're spending. They're going to shift from savings to consumption. So the big trends are still bullish. You know, I think don't lose the, don't miss the squiggle for the bigger trend. Let's wrap up with talking about some AI. There's a whole bunch of other topics on here, but it's okay. Ram, let's talk about AI disrupting.

I mean, quick highlights. We get a Super Bowl every week. in financial markets, which is great. This past week, it was in the video. They reported it was a beat and a beat, which is kind of amazing because every time they report, it's always a beat and a beat. You know, I think the main takeaway, though, is that he said in 2030, you'll have a trillion in CAPX, which is the reaction where you are now. And those numbers sounds sensational, except what Jensen says, he over delivers on. It's a credible number. Yeah, he's not much.

Right, it's incredible. Those are a credible number. But, you know, he doesn't get those numbers out of thin air. He calls his customers, most to which are concentrated. You can pick up the phone or telegram and say, hey, Mark, what's your CAPEx spend forecast? Because they have to do capacity planning on the other side. They just coordinate. Listen to your customers.

So they're getting a good signal. Check out Michael Dell, this tweet here says, in Q1, we received 12.1 billion in AI orders. That's Q1, surpassing the total shipments of. all of FY25 and leaving us with a backlog of $14.4 billion. If you look at other data center names, they all have this kind of story. I can't find one that's not growing with a backlog, like Powell, Sterling, Oracle, Corwee. Cori's got $8 billion backlog. So, yeah, like, AI story is real.

Don't dismiss it. You know, you're starting to see changes in the labor market, which I think people need. to talk more about that. What does this mean in three years when human always come online and you see displacement? You're seeing actually AI cause job cuts for software engineers at software companies. So it's like tech-eating tech. So I think that's, you know, I'm optimistic on all this stuff, just to be clear. And productivity growth is the one free lunch in economics, right? It's disinflation and it drives earnings, it drives productivity growth.

Incomes can go higher. But I wouldn't count out the AI theme. I think it's still a significant driver where we are. Yeah, I'll chime in a little bit on this as well. Two things. One, Mary Meeker, who I think she used to be at Sequoia, is that right? She was at Kleiner and then Morgan Sam before that. Yeah, yeah.

So she released something like a 346-page report on AI. I haven't gone through yet, but I saw some clips from it. And it's the next computer super cycle. Like, it's super obvious. You know, it should be obvious to everyone at this point. It's just happening at a massively accelerated pace. So, you know, I'm not surprised seeing Michael Delves tweet out in example or Jensen mentioning what he mentions and then over delivering on it.

they're just this is this is like oh iPhone and androids are about to take over all of the internet so like everything associated with that just has to be built and go up and there's a whole ecosystem around etc I will say the second point so I have a separate kind of stealthy software company where we've been building software for my fund for the past three years and

we're not hiring engineers And, you know, I'm an engineer myself, that the team is five engineers at this point, five plus a, you know, really talented product manager. And a lot of it has to do with how we're utilizing AI and building our own workflows and work streams to do certain things. I will say that, you know, so at the beginning of the year, I'd mentioned my team, like, don't come to me with headcount requests if you have it evaluated, whether it can be done with AI or not. And, you know, that's, I've seen this at Shopify and a handful of duolingoes doing this. Like, there's other companies that are going this route. I think it's wise, not because it's meant to say we're not going to hire people. It's that it's forcing your kind of product managers and engineers to level up their skill set with the modern tooling that is available.

And so, you know, as an example, I don't think that currently today the models aren't good enough to be like using natural. language and build some really complex back-end piece of code that's tied into, say, AWS or GCP. It's just, it's still, there's still a level of complexity and then security concerns and risk associated with that. That will be solved over time. But there are cases to be made to say, hey, you know, if your front end, your, your web app, your user interface is using React, which is probably the most commonly used front end

framework on the planet, that's a standard tool set. if there's standard UI components and styling and all these things. An AI model is pretty good at understanding that. And so there is a case to me made that like, hey, maybe some of the bug fixes or tweaks to your user interface or automated testing within your browser app or whatever the thing may actually be, that should be handled by AI because then it frees up your engineers to work on more complicated or more value driving tasks. And we're doing that at asymmetric with our software.

I know other companies are doing this as well. You will absolutely see the media never let this story go of the solo founder that created a billion dollar company. It's never going to stop because that headline just is too juicy. Does it happen? Probably. There are absolutely companies in Silicon Valley where it's one or two people and they've got to 10 million an ARR in 30, 45, 60 days. And a lot of it has to do with how they're utilizing the eye. So as more of that starts to kind of permeate into the enterprise, you should start to see,

I don't know if you're going to see these kind of mass layoffs and software developers, but it's going to change the role fundamentally. And so, you know, I actually, my babysitter for my kids, she's about to go into college. She's 18 years old, really smart women. And she was asking me, like, what should I, what do you think I should do? Like, you know, going to college, I'm like, just get really good at prompting. I've been thinking about this show too. I've got small kids.

And the only thing you learn in college right now is prompting. You're getting rewarded if you prompt better than someone else, which is terrible education. It's really critical thinking. Oh, yeah, yeah, yeah. You need to focus. But I agree with everything. I think everything you said,

like I think all these software engineers are getting laid off. They're going to go found companies using AI also, which is another productivity cycle that we haven't seen yet. Yeah. I mean, I think back, like, there's definitely going to be a lot of positives that come out of this, right? Like, you talk about deflation, productivity growth. There's going to be a lot of people that lose their jobs. Hopefully, I'm not one of them or none of you are one of them.

I mean, I'm a little bit younger than you guys. And, like, I just think, thank God I got into my role when I did because, like, it's getting to the point now where, like, AI can do a lot of the, like, when you start in a research role, like, you do a lot of the grunt work. Like, you're doing a lot of, like, Excel work, modeling and doing things like that. and like AI is getting really, really good at doing some of this stuff to the point where like I don't really like I can see a point a few years from now where like you might be like I don't know if we need like three associates or analysts to come help us with this stuff. We just need one who's good at AI. And like I don't know what that does long term. Everyone always complains about new technology destroying jobs like long term and eventually like a bunch of jobs are built on top of it like over the long term. Enough of it lays out. But there are people to get left behind. And I think that's just I don't know. That's just the way this is going to go. Yeah, I'm just happy I got into the role when I did. James, that is called progress, unfortunately.

Yeah. That is progress. There is this, called the lump of labor fallacy. Folks should look it up or just go to chat TV or GROC and have them explain it to it. The lump of labor fallacy assumes that there's a finite amount of work. It's not true, right? It's just simply not true. And in fact, the Internet itself in the 90s, people were saying,

this is going to be the end of so many industries, what happened? It's just the amount of wealth creation and, you know, middle class mobility, I'd say globally increased. Like, it's just simply not true. It can be terrifying when it's your job, right? And software developers are not, they're no longer impervious to this. You know, software developers for probably the past 20 years have, the world is their oyster. Like, they can just get a job anywhere, right?

that might be changing, which is one of the reasons why I always emphasize folks to be doing the kind of continuing education work on the latest and greatest tooling, irrespective of what your job is, because it's going to give you an edge against someone who's not. Yeah, and I think, Joe, you've hit the nail on the head of the big, big, big shift here. We've been through technological waves of layoffs before, but this time it's hitting white collar. I keep a track of white-collar layoffs. And just last week, just last week, we saw McKinsey layoff 10%. We saw Business Insider lay off 21%.

IBM laid off 8,000 PWC. Again, I may be a roughy on the dates on that. But this is something that culturally in society we're just not used to seeing because you're told to go to university and you study computer science, you study economics, you study basically the white-collar jobs because you'll be fine. And especially given the uncertainty that the young generation is dealing with on a daily basis with the world around them changing so much

and how are they ever going to be able to afford a home and have a family kind of thing now? The job security that they were promised when they started their education is not there. The winners from all this are owners of capital, right? If you're McKinsey shareholder, you need less associates running around. You benefit, same for Business Insider.

The two types of capital. There's financial capital, and then there's human capital. So to Joe's point, if you've got a differentiated skill set, you'll do well. The real winners are going to be founders. Everyone should be learning how to be a founder because you've got to reinvent yourself, learn. Go to founder university, whatever that might mean instead of the four years, or go there and find

someone, drop, build businesses. I think that's the best return you can get for your education, invest in your own human capital. Skip University because you can learn it online with the help of artificial intelligence. Yeah. Yeah, Rob, earlier when I was telling my babysitter, like just get really good at, My other alternative was selfishly because I studied philosophy. I was like, just go get a degree in philosophy. And it'll teach how to think, right?

Like, I learned, I learned. Yeah, there was a study, I think it was in the economist or something a couple of weeks ago saying that's the number one degree at the moment to get in the US. No. You do you're a philosophy major? Yes. I had no idea. So was I.

I learned that Joe's also software engineer. Yes. That is very, you see here we have two examples of why that actually. actually does matter. Yeah, critical thinking matters, sustained focus, grit, perseverance, resilience, and athletic mindset. And asking the right questions because, you know, Joe, pulling on your just learn how to prompt, it's all about asking the right questions. And in a world in which everything is changing so fast, the questions matter more than the answers. 100%. Absolutely. Yeah. I wanted to add like meta also earlier this year,

got rid of 5% of its staffers in the process of getting rid of thousands of people, which it's not, I think I said it's like 4,000 people, I remember correctly, but like explicitly saying like they're getting rid of the low performers and going to lean on AI. And that's like it's almost, it's so meta. Like they're building AI, they're building open source stuff and they're getting rid of the software engineers that are building it. It's just kind of, yeah, yeah, the ticker is meta. It's all very, very meta.

That is going to spin up divisions to go build product offerings. you're not going to have a business unit leader. I'm trying to terminate myself. We're building a Google VEO3 avatar, and it's trained on my newsletters, and it's going to spit something out, hopefully, next week or two. But literally, I'm looking at my workflows, and I say, all right, which of these can I systematize in AI?

Well, I need to be doing more with AI, it sounds like. There's a lot of other things we want to get to. We went over, as usual. Well, next week, we'll talk a little bit about the FTE bankruptcy distributions and a few other things, but that's enough for now. All right. Thanks for joining us for this episode of Bits and Bips. We'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone.