Unchained - Bits + Bips: Why Apple Might Benefit More From AI Than AI Companies Will

Episode Date: April 14, 2026

The US Naval blockade is live, markets are holding, and Ram thinks the bottom is in. Austin and Chris are not so sure. --- Thank you to our sponsors: Citrea  As Bitcoin's application layer, Citrea gives you access to the first trust-minimized BTC on a fully programmable platform and a native stablecoin for Bitcoin, ctUSD.  You can now participate in Bitcoin capital markets with lending, privacy, payments, Bitcoin yield, trading and predictions. You get expanded Bitcoin utility without sacrificing its security.  Citrea mainnet is live. Put your BTC to work at citrea.xyz/unchained.   Etherfi Ether.fi is giving Unchained listeners 15% cashback 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. Laura switched and loves her card! Go to ether.fi/unchained to claim your offer. Nexo Nexo is a premier digital wealth platform offering: ● crypto yield up to 15% (based on stated annual interest rates) ● crypto-backed credit lines from 1.9% ● a wide range of digital assets.  Join today and get 30-day access to exclusive rates. Join Nexo. ---- The day the US Naval blockade of the Strait of Hormuz went live, peace talks had just collapsed in Islamabad and markets were holding. Ram, Austin, and Chris work through the tactical logic behind CENTCOM’s move, why regional powers are standing down, and how long Iran can sustain the economic pressure.  Then: Anthropic previewed a model called Mythos, cybersecurity stocks fell, and the question of whether AI security risk is real or manufactured now has real money behind it.  Meanwhile, World Liberty Financial borrowed $75 million against its own governance token on a platform co-founded by its own advisor, Justin Sun is accusing the team of treating investors as a personal ATM, and the stablecoin bill clock is ticking.  Which sectors are most dislocated? What would it take to bring the next wave of investors into crypto? And is this actually a market bottom? Hosts: ⁠⁠⁠⁠⁠Austin Campbell⁠⁠⁠⁠⁠, Host of Bits + Bips, Zero Knowledge Consulting ⁠⁠⁠⁠⁠Ram Ahluwalia⁠⁠⁠⁠⁠, Co-Host, CEO of Lumida ⁠⁠⁠⁠⁠Chris Perkins⁠⁠⁠⁠⁠, Co-Host, CEO of 250 Digital Asset Management Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, everybody, and as always, welcome to bits and bimps, where we explore how crypto and macro collide one basis point at a time. We're here to discuss the latest stories in the worlds of crypto and macro, but just remember that nothing we say here is investment advice. Check unchained crypto.com bits and bips for more disclosures. And before we begin, a quick commercial break. Bitcoin changed how money works. Satrea changes how Bitcoin scales, with a trust minimized BTC and a native stable coin CTUSD, Citraia enables Bitcoin capital markets with lending, privacy, Bitcoin yield, and more. Get started at citraea.xie.xie. slash unchained. Introducing Nexo, the premier digital wealth platform. Receive interest on your digital assets. Barrow against them

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Welcome back. As always, I'm your host, Austin Campbell, High Scholar of Zero Knowledge Group, here with my co-hosts, Ram Al-Awalia, maister of wealth, the leader of, of Lumida and Chris Perkins, CEO of Chris, it's still 250 digital asset management, correct? Yes, sir. Yes, sir. All right, cool. Today, we're going to start with the topic that keeps on giving, which is Iran, the blockade,

Yuan myths, and, well, everything else. So today, the blockade went live and the exit ramps are already getting exciting. The U.S. naval blockade on Iranian ports took effect. April 13th, the 10 a.m. Eastern after peace talks in Islamabad collapsed over the weekend, according to NPR. As a reminder, rough estimates, 12 million barrels per day normally transit the straight, and now that is going to roughly zero. Trump warned Iran's fast attack ships. If any ships come anywhere close to our blockade, they will be immediately eliminated. And Fortune has said, this is a big task and a big gamble. So the Saudi and the UAE are working to bypass these corridors.

The Saudi East-West pipeline, which is $7 million per day capacity is rerouting crude. The UAE has their own pipeline. Both corridors are live since mid-March at full capacity, but it does not entirely make up for the straight. And Iran has been targeting both of these exit ramps. This puts, I'm going to start with this before we get into the details there, which is what do we make for now of, call it the military and tactical feasibility of this blockade and what's going on in that region, Chris? Yeah. Thanks, Austin. Really interesting things happening. So first we had in the last week, we had the attempts at the talks. They broke down. They broke down over. nuclear what uh you know the uranium we wanted to recover the uranium we want to make sure they wouldn't enrich totally understood that um that seemed reasonable for my perspective but it also seems like the iranians did not present a uniform front um but anyway so after that what i'm glad

to see is that we haven't destroyed civilizations uh that's that's a good thing i think um and what the administration is now doing is they're really trying to take put put a lot of pressure on the iranians I mean, I don't think it was made a lot of sense to have the Strait of Hormuz. At the end of the day, we cannot have the Iranians control the Strait of Hormuz. To me, that that's an international requirement. We need freedom of navigation through that strait. You saw the Singaporeans talking about the Strait of Malacca, which is another choke point. And they're like, we cannot have this.

Straits must be open. We need freedom of navigation. And so by closing the strait via a U.S. naval blockade, you know, it brings into question, you know, Who is controlling the straight? Because the Iranians were. They were charging commerce as it was going through. They were making money. They were still able to fund their illicit activities.

And we've talked about this on the show using Bitcoin or the yuan. But now the U.S. has said, you know what? No, like you're not going to fund your activities. You're not going to control the straight. We're going to shut this thing down. We're going to cut your liquidity. We're going to cut your exports. And I thought, I think, though it will result in near-term,

The Saudis rock up and start pumping oil to the east-west corridor, which it hasn't, and the Amaradis are doing the same. We're not at full capacity, but we are able to meet some of the global demand through that. Meanwhile, if you saw over the last week, you have tankers rushing to the U.S. to buy U.S. oil. The markets are hanging in there. The markets are definitely hanging in there. So I think where do we go from here is the big question. This will put incremental pressure on the regime.

We still haven't seen that strong man pop up. It looks like to General Marx's point weeks ago, this is not happening overnight. But the pressure is now increasing. Generally, when these things kind of happen, that's the people that hurt the most. But hopefully this will get people back to the table. I didn't read as well. Like the negotiations are ongoing. Then when you look at markets, it feels.

like it's still really uncertain. It's a very difficult market to trade. You still have this pressure stepping on crypto, keeping it down as an asset class. But it feels like we're more towards the middle or the end, not necessarily in the beginning. So I'm hopeful that, and it feels like the markets at least are seeing a bit of stasis here. And they've responded pretty well in the last couple of days. So I don't know. We'd love to get your take. Want to hear,

Rom, where you think the situation is. You know, Rom, you've been very critical to the regime. Yeah, well, look,

I think we lacked a coherent plan here, burned down 10 years of Tomahawks and interceptors and all the rest. But I do think this move by Sencom over the weekend was just clever,

if not brilliant. It was exquisitely timed moving these destroyers through the Strait of Hermuz during his negotiations when the IRC can't even convene to formulate a policy. And to your point, there are factions within that. There's a part of the regime that doesn't like the fact that a part of the IRC shook hands

with J.D. Vance. That's right. So the CENTCOM is, is, was very clever here. And then they stuck to the ceasefire when the destroyer was harassed by the patrol boat. They did not escalate. And last Thursday, Hex Seth in his morning remarks gave what was a very clear and decisive final, hey look we're done we're done we are wrapped up here Trump and J.D. Vance was also consistent with that messaging and then they followed up with action and not escalating at that very critical moment. So if you take a step back, Iran was able to close the straighter from Hormuz through what I call the Kaiser Soze maneuver. If you guys are seeing usual suspects, the guy is like everywhere and nowhere like is he real? Is he not real? Like Kaiser Soze had closed the straighter. Are there mines there,

are there not mines? Are there rockets? Are there guys in the trees? Or are there? We don't know. It's Kaiser-Ossu, it controls a straight. What CENCOM just did to introduce another meme was that I am the captain me now. Like, this is my straight now. So they're creating clarity and they're doing that control. And they said, look, we're not challenging you. This is a blockade. And now they put the IRGC in a vice. It's a damned if you do, damned if you don't vice. They have two choices. They can escalate. Right now, they've enjoyed. calm and peace for the last two weeks. Their cortisol levels have dropped. They've seen their families. They're starting to formulate a picture what the future might look like. They're glad

that they don't have bombs raining down their head. They appreciate that. They see that. They say, okay, look, we can preserve this and build off of this and go back to issuing menacing threats. or we can contest and strike back and escalate. And this is the best move Sencom could have done. You can't control the response of the IRGC, but you can shape the incentives. And they also said they would interdict Hankers going to China. Because if you're China, as I said last week, I think you're loving this. You're Putin.

China's trying to broker peace deals now. Putin's brokering peace deals. It's nonsense. It's chaos. They're soaking it up. But now, if you interdict those tankers, China has an incentive to get this resolved in a constructive way. So I thought the move by SENCOM this weekend was extraordinarily clever. The balls now in the IRGC court.

The IRGC chose not to escalate at the timetable when Sencom said they would enforce the blockade too. So things were looking pretty constructive. I think the bottom's in for markets overall. That doesn't mean you don't get to pull back. especially going to Optex later this week. But I think overall, I think you've got a bottom. There's so much hedging, so much shorting taking place. There's not many people left to sell.

And I think there are great opportunities out there. So I agree with Rom on the market action here. The fact that this occurred, it seems to have been, Ron, we'll call it relatively well received by the market. Right. That is to say this blockade didn't happen. The negotiations didn't. fall apart and we didn't immediately go straight back to hell in the market. We've kind of been like,

all right, let's see what happens as a reaction. And I agree that what you just said seems to be the key, which is we're out of the escalating spiral of, call it, kinetic intensification here with this move. We've instead now gotten into, call it, like, long-term economic negotiation, because if the Iranians can close the Strait of Hormuz, that's a threat. But if the United States can close the Strait of Hormuz, that is also a threat. And that means now the Iranians have to think about their own economics and ecosystem here. If we just maintain a blockade for a year and don't do anything else, they have a huge problem. Iran has significant inflation at home too. They have to address that. If you don't have a functioning economy, how do you contest the military?

Yeah, this, Chris was talking about this on a previous episode. but this moves the war for both sides to a different layer of the strategic level of war, right? Because now the Iranians have existential economic risk for an indeterminate amount of time into the future. And Rahm, as you noted, either they end up having to attack the force to try to break the blockade, which looks even worse if they fail, or you've got to find a negotiated solution to get out of this. it's also interesting to me to see the pressure around this vis-a-vis their regional like neighbors because after they launched rockets and everybody you know what we're not seeing for the straight of Hormuz blockade by the U.S. is criticism from the other regional powers like the Saudis are fine

the Turks are fine like everybody's just kind of like I mean yeah guys the Saudis want more escalation yeah they want to continue and one would reason that that Israel's incentives are also in that direction too, although both seem to be following U.S. direction. Yeah, we can go home. They can't go home. This is their neighborhood. They got to live there.

And so the status quo is just untenable. 50 years of aggression, Iranian aggression has to stop. So this is an opportunity. One thing I do want to talk about is China. As you see, I think this is really stepping up the pressure on China. only on the economic side, if we are now controlling, effectively controlling the straight, but there were reports that the Chinese were assisting the Iranians potentially with intelligence or even some man pads weapons. Trump's response to that was pretty profound.

He's just like, I catch you doing it, 50% tariff, see how that goes. And so I think that China is going to be on, it is going to play a crucial role to kind of navigate out of this thing because they're going to want this to stop. They need the natural resources. They need the oil. So Trump was supposed to have a meeting with Xi Jinping that was canceled, that made them furious. I think it's going to be rescheduled for May. All eyes are on that meeting if it happens.

And it's going to be interesting to see the role China plays going forward. They're a reluctant player on the international stage. That's not in their nature. They focus generally internally domestically. but this is really forcing them to be on the main stage. It's going to be interesting to see how they respond. Not in an easy place, but they can come out of this in a very good way if they play their cards right. So I'm watching China.

I think not just China. This kind of creates what's the right way to say this, a pro-peace contingent in a lot of Asia because Pakistan has every incentive to get this thing to. and India, quite frankly, has many incentives for it to end. Japan, Korea, everybody wants things to calm back down. And Chris, as you were noting, Singapore, who I think keenly understands these geopolitical dynamics because they are caught between many large, like powers globally, is making the point that what we need to get back to is free transit of goods,

free trade, without, call it undue tariffs or piracy. or attacks on people. And they were not saying that, I like reading their comments, I think in a biased way, they were simply saying like, hey, everybody ultimately is going to need to find a way to live together here if this is going to work properly. So what I'm curious to watch is how does this unfold for the peace process?

But, you know, Rom, you make the point all the time, watching the market is like a live poll in many ways of sentiment and how the world is thinking about things. We're not seeing huge distress in the U.S. and we're not seeing huge distress in China or Europe on the back of this right now. Is your take that markets expect there to be a pathway to peace or at least de-escalation here?

I'd say there's so many bargains in the market that it's hard for these asset prices to go down. We saw software get clobbered three days in a row, looked like capitulation selling, Microsoft's up quite a bit today. the AI Apocalypse trade has kind of spent too much time here. Accentures up, six points. We own both these names, by the way, and quite a few other names.

Like, there's this compelling value. You know, what's interesting about the last six weeks is you had a 9% correction in the S&P, but it's very pronounced in certain categories. So those categories that sold off the most is where I'm focusing my buys and opportunities. And the categories that held up the most, like energy materials, those and utilities, those should sell off from here as the risk fear premium gives way and people gain more confidence. So I think that's what's happening. People are off sides too.

They're overhage. There's too much short interest. And so the bias should be to get long. So I think dips will get bought. I do think you will see more red days this week too. but the bias should be to get long and focus on those areas that are highly dislocated, including categories that were sensitive to oil and sold up because of oil. If you look at like the home builders category or the airline category, both very sensitive to energy costs,

they stop going down despite increased kind of lengthening of the conflict. So it seems to me that a lot of bad news was priced in. Now, of course, if kinetics come back, you can head back down. That's of course the case, right? We're dealing with a land of probabilities here. But you've got a couple days of peace here. And if you can add another day to that, another day of that, that becomes the new norm. How about Bitcoin?

That's held up pretty well through all this. Yeah, it has. I'll add on the Bitcoin front, the other thing that, you know, talking to the bottoms here, CME volumes, Bitcoin volumes and bases collapse. Those things work together. And that's the bottom signal. as well, particularly in this institutional market where a lot of institutions, they're nervous about trading just the volatility asset class. So what they want to do is they want to get long

the spot, the ETF or dat and sell the future. If sentiment starts improving and people think positively about the future, the future price will rise. That's when the basis, that's when we're in something called contango, where futures prices are higher than spot. That's when it gets interesting. But that basis has collapsed. And so you've seen futures, you know, come down, like the volumes and the open interest have come down on the CME. That's another indicator to watch. If that basis starts creeping up, a very positive signal for the trajectory because then

institutions will start taking advantage of it again. I think Bitcoin's got a bottom. It's been acting well. It's taking a lot of negative news. There's obviously dependency on micro strategy and their capital issuance machine. Keep an eye on that, like every day, every week. I think Hyper Liquid could be a winner this cycle, by the way. That's my exposure to crypto primarily today.

I think they're taking share from incumbents. They've got good execution. They've got the 24-7 trading. Look, you've got to time this category well, though. The struggle with this podcast is like the day matters. I wouldn't buy it today. I would have bought it Friday. And maybe hopefully Thursday to buy it.

So it's one of those things. You really have to, the volatility is high. on this asset. So you've got to time things well. Buy on red days. Yeah, I mean, hyperliquid has been the manifestation of 24-7 markets. Their ability to go live with HIP3, you know, people turn to the, like, you know, what did I do this weekend? When the talks broke down, I look at what the S&P contract was doing. So you can, it's unlocked 24-7 markets for the, really for the first time. Crypto prices have shown that, but now we have real world asset price discovery on the weekends.

And then, of course, the other tailwind, sadly for them, was what happened with drift. And so I know that the security is at the forefront. That's the other thing that we're going to have to talk about today, I know is around some of the security issues that DeFi are facing. But I think you're right, Rom, very, very important to see that price discovery from teams like hyperliquid. So speaking of things that are experiencing some price discovery

and still causing some degree of fear in the market. market. We also had a large drop on Mythos. Was it threat or is this just marketing? So Anthropic gave a preview of Mythos, their new model, which has been autonomously finding bugs and things like OpenBSD, some MPEG vulnerabilities, and both of those had been missed, quite frankly, for decades. They found 181 Firefox JavaScript exploits versus just two for Opus 4.6. This is a significant increase in, call it, capability for AI to find various bugs. And they are continuing to manifest. Now, it's not publicly released. It's deployed via a thing called Project Glasswing to quote, critical industry partners at open source developers,

but there are some critics. So IEL research said several vulnerabilities could have been detected by openly available models. Fortune said the era of AI driven hacking is already here. These capabilities are not new. They're just slightly better packaged. And that Anthropic publicizes the threat to justify controlled rollout and build a competitive moat from Axios.

So I'm curious what you guys are making of this thing, especially given that things happened like Besson convening some of the major financial players, in the United States to talk about this. Is this a real threat? Will it cause problems? Will it have impacts on some of these entities and their stocks? I think this is an incredible marketing for Anthropic.

It is an extraordinary market. I read about that best in convening these CEOs of financials. It reminded me of like Y2K, for those that remember, which was a big Nothing Burger. It spent a lot of money and nothing really happened. It's incredible marketing. When Claude released Mythos, right? announced the release of it.

Even that's disputed by it. Some say it doesn't even exist. Claude, back to Kaiser Sose, Vitos is a Kaiser Sosei. They're dealing in mythology. They're this legendary concept and they're selling it from fear, right? This is a, it's a masterful marketing

that Claude has done. When they announced that or it was leaked, cybersecurity stocks went into a tailspin. Every time Claude releases a product, these stocks go into a tailspin. I think, again, that's probably behind us now. I don't know how many products they can possibly release every week. So 12 days of Anthropic. But I think it's mostly marketing. This is a, it's just a lot of hype. I don't think that many security vulnerabilities are waiting to be zero-day exploited by AI.

I don't know. I feel a little bit different. I feel like you can't ignore the threat because living in crypto every day, you know, one vulnerability could cost you tens, hundreds of millions of dollars. That said, most of the threats we've seen in crypto are social engineering. And so that's something to be aware of. But if it is true, to me, it's not just a threat. It's an opportunity. You have to look at it through both lenses. So what it tells me is that as a country, we need to accelerate AI. We need to accelerate crypto. as this technology gets better, I would rather corral it, use it to fix our vulnerabilities because as much as they can discover vulnerabilities, AI can also fix vulnerabilities.

And so I don't know. I'm not aware of any major crypto foundation that was invited to the White House if this was such a threat. I would expect them to be at the table in the near future. but like we need to embrace these tools in a major way across every single industry from not only just to be scared but to fix the threats that exist and there are plenty of threats across defy we get hacked all the time we need to be better and so like I think this is a humongous opportunity not just a threat they want to win back that DOD contract which they lost to open

This is what this is all about. If I could go long, anthropic and short, open AI, I think they're both bubbles and both overvalued. But if I could get market neutral on long Claude, long, anthropic, short opening. I think we'd do really well. Claude is eating Open AI's lunch.

And they did it because they focused on the enterprise customer. They had no distractions, no bring the guy from Apple, John Ivy, build glasses, build a new hardware form factor, or try to compete in the video, let's do a fad, let's straddle across different customers. So the execution is incredibly impressive. What's happening now, though, is that the demand for token consumption is so high

that the throttling usage and the quality of output just isn't as strong as it was even two weeks ago. Like the product market fit is there, but can you charge for value and capture that value now? That's going to be the question. If they can, then that's great for semis and a lot of other categories out there, if they can't capture that value and it's really VC subsidizing customer consumption, then we're going to have some issues around the AI trade. So you're not going to the World Coin event on Friday? Friday and Puerto Rico, I think. So I don't have to make that choice.

So I will say, Rob, I think you're hitting on something important that we've talked around on the pod previously, which is as you look at the AI trade, in addition to the value, capture like what is the sustainable pricing model? Like if this is one of those businesses where to capture a dollar of customer revenue, I've got to spend a buck 50, these companies have a problem in the long run. And as you look at what's happening with, call it open AI, anthropic, to some extent, Gemini, like throwing the ball back and forth between each other over time, I think a lot of the competitive advantage is going to come down to cost structure as people work on things. because exactly as you said, Open AI lost market share to Anthropic.

And now Anthropic is throttling people because the math is not working for them as they're trying to grow and so on and so forth. And you saw Gemini trying to use totally different chips to train. And I think what we're seeing here is the competitive arms race is accruing ultimately to the benefit of the consumer. Like I still don't remain totally certain that these companies aren't incinerating huge amounts. of CAP-X that they will never get back and that the end value will ultimately be in the hands of the consumers. So I know we've talked about this before, but hilariously, the name I remain the longest in terms of benefiting from AI is Apple, right?

Because they're just going to use somebody else's and sell it. They've got all the devices, so you're going to have to play by their terms. Well, look at Google and meta, these are ad businesses, and they charge $0 for their products. So you've got a price cap. And Google also has an enterprise focus too. So it's a tough spot to be in, but, you know, Anthropics got the attention. So on the note of building for consumers, like I've got a friend of mine who's in the creative space,

and one of the hardest things to get people to switch out of is web browsers. Like, I don't know if anybody's particularly familiar with that market, but I would say most modern web browsers are like riddled with security vulnerabilities over time and do all sorts of user data tracking. And there are better options like Brave and Opera and people just won't use them because the switching cost is too high in many cases. But AI has her using the perplexity browser now. So to me, if you're building for consumers in the right way, exactly as you were saying, it's like the distribution and consumer capture is where the value is going to be. If you're competing purely on capabilities, I feel like, are you in this forever escalating arms race where you're getting revenue, but your costs scale even faster? All right.

Yeah, we saw that with fiber optics in the dot-com era. I mean, we had what valuations are based on number of eyeballs. I was going to say, I feel like part of where we're going to start seeing it now is potentially an advertising, because I want to pick out another market thread that we've talked about before. related to AI here, Rom, which is we're starting to come up, you know, as the calendar rolls to when we're going to start getting results from people and we would normally get into buyback season. What is going to be happening with many of these stocks that for many, many years have had very strong tailwinds due to significant free cash flow and buybacks this time around? That's a great question. That's a great question. Because last year we had a trillion dollars in

buybacks, a trillion dollars in buybacks and stocks that have buybacks up from stocks that don't have buybacks. There's a bid to the market. And much of this correction that took place happened during the blackout period when most companies cannot buy back their stock. It's like that bid matters. Buybacks are back now, by the way. It's like they're on.

And not surprisingly, like markets are back on too. They're acting normally. So I think you raise a great point. It's about positioning the right names, names that still have, free cash flow still matters. Amazon is a good question around this. Amazon is trying to compete with Starlink. They're launching low Earth orbital satellites.

They're going to launch a phone. They're building more data centers. They got to invest in Traneum. All that is called capital. That's all expense. The vision's amazing, but I love the vision. But the free cash wheels are low. So we'll have to see.

But on the other hand, you have other businesses where they've got a viable business model and a lot of pain has been impounded in these prices also too. So, you know, everything does come back to cash flow. I think it's the right metric to focus on. The CFOs have also got smarter around this. They see what's happening in the market. So like, okay, I got it.

I got to watch CapEx. I can't overspend. But there's still legitimately good opportunities in the market. Like, there are 20, 30% discount in AVs. Like, you're supposed to buy these assets. Like, right? I'm not saying all the assets. I'm not saying assets that don't have good free cash flow.

But there are pockets of the market that have, I would call compelling value. It reminds me similarly to like April of last year, almost to like the day within weeks, let's say. Yeah. For me, the market has come to rely in many ways on the bid. Right? Because if you look at shareholder returns for a lot of things like say the Mag 7, a lot of that has been propelled by buybacks, especially if you're also at companies where they're going to be issuing stock as part of compensation. If you're not simultaneously buying back, you're just going to be diluting, diluting, diluting over time as you do these things.

That to me, I think, is the most under-discussed story of AI. It's not just that all the CAP-X went into, like, say, invidia, right? But also that it's going to come out of the buybacks, and we're going to see a much greater differential in the market. it could be that the lasting effect of rates going up and then the Iran conflict is actually the decay of correlation in markets. Because for many years, it's quite increasing. Well, so Apple wouldn't be where it is today without those buybacks. And Buffett, if you recall, he exited his Apple position. And it was almost dollar for dollar mashed by buybacks from Apple's, $110 billion he was selling.

Apple announced the buyback quarter of like around $110 billion. dollars. So they bought now. Stocks go up if your capital allocation is productive. It's the number one driver of stock price returns actually. It's your capital allocation, right? So if you're buying a stock at too high a price, then your book value per share isn't compounding efficiently. So there are tradeoffs. You get a nice technical bid. You get flows from those buybacks. But that can create some downside protection, but it's hard to get an outstanding return. unless they're buying back their stock at good, cheap, discounted levels, which is what Berkshire Hathaway is doing right now,

and their price-intangible book is just north of 1.3. I prefer that, actually, versus some of these other companies. Yeah, in the crypto space as well, we've seen a lot of projects focus on buybacks because that's the only way they could do it. It was hard for them to return capital to their token holders from regulatory perspective over the years. What I think most people understand is that many of these projects,

are awful about timing the markets. And they always buy back at the exact wrong time. And so what we like to see is something that's more programmatic rather than discretionary because there tend to be terrible from a timing perspective, something that we continue to watch. I mean, you see the same thing in traditional financial markets as well. If you look at the people who have done well with buybacks, it's either people who sort of nibble, nibble, nibble, nibble perpetually because they can, can ensure they do average by using that method. And if it's an otherwise very profitable business,

that's a completely viable approach. Or it's the people who do exactly what Rom was saying, which is I allocate a bunch of money for buybacks, ideally somewhat quietly. And then when the market pukes and I'm down like 20%, I start buying back, right? You want to have an average level over time and bid at the lows of that range

and just sort of sit at the lows and take things in. You know, I think it's a, call it inverse of the problem that micro strategy has and part of why i get increasingly skeptical of that is they seem to have an uncanny ability to buy bitcoin at the highs right which to go back to rom something you've said earlier like whoever's executing over there you need to do better like you just call me up i will do the service for free okay i'll build you a little bot okay but yeah no i agree I agree. Micro Strategy is a capital markets issuance machine.

Yes. That's what they are. It is kind of phenomenal. It is almost like a ninth wonder of the world. But I'd be a little cautious, right? They've got all these tranches like Stretch, STRC and STRF, where they have a contractual obligation to pay out billions of dollars in dividends. That's the liability side.

that's how they're funding their asset purchases, right? They have an obligation to make those payments. But the assets don't generate free cash flow. So this is like, you know, Chris, we all know this from like 2008 crisis days. Like you got a mismatch in the assets that you're financing. And the only way at some point in the future, they'll be able to generate the cash to deliver to those bondholders is by. selling their common stock. That's called dilution. So that's not good for MSTR. Or it works as long as Bitcoin goes up. As long as Bitcoin goes up, you're good.

Yeah. The Bitcoin doesn't go up and you've got an obligation coming at you. You have no choice but to sell at the worst possible time. You want to be countercyclical. You don't want to be pro-cyclical and markets have all the data too. Like you don't want to trade. You don't want to trade against Mr. Market when they see your entire financial position, they know that you're a four-seller. That's not a great spot to be it. So we can't get away from talking about Dats then, can we? Here we are again. Exactly what you're talking about, the OG DAT. It all comes back to Dats. All right. So I was going to say as a final, I'm going to put this one to Romm because I'm genuinely curious about your views. As a final thought on all of this right now with where the

market is, right? We've seen over this span, call it energy exposed things get tanked, a lot of software get tanked. We've seen some degree of strengthening in things that produce energy, which all of that makes sense. Another thing we've seen throughout this is call it real yield cheapening and bond prices cheapening. Do you think where we're at right now is also a place where it would make sense to buy medium to long duration bonds, or is that a trade you're also staying away from? I'd be cautious on that because inflation is making a comeback, and inflation eats at the real return on bond assets. Add to that, the opportunity cost of owning assets to have an 8, 9, 10,

12, 15% free cash flow yield. If you want to compare bonds to stocks, you can look at stocks have high free cash flow yield and they're real assets and they reprice. nominal terms. So the more inflation resilient. The upside you get on a bond is you get your principal back and your coupon payments, less inflation. Whereas with the stock, if it's growing earnings and it's got attractive free cash flow, as they do right now, like where we stand today, they have attractive free cash flow. Why would I own long duration bonds? It's hard for me to make the math score on that. Yeah, from a personal perspective as a rates guide, the one thing I might pick up right now is tips, but to your point, then you're riding along

with inflation, which is a totally different thing. All right. So this aren't bad. I mean, if you believe bad things are going to happen soon, tips aren't a bad idea, I would say. All right. So we will talk about whether bad things are going to happen soon more in a moment. But before we do that, we have to go to our second commercial break.

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it out, go to ether.fi slash unchanged to claim your offer. That's ether.fi slash unchanged. All right, everybody, welcome back. So thinking about other things that are going on in the world that have been pulling in a significant amount of attention from the crypto ecosystem, there is an increasing skirmish happening between World Liberty Financial and Justin's son, where to walk through the details, World Liberty deployed five billion roughly WLFI tokens as collateral on Dolomite, a defy lending platform similar to AVE, co-founded by one of World Liberty's own advisors, to borrow roughly $75 million in stable coins. So the trade briefly pushed the main pool to 100% utilization, meaning that for those unfurdy's own, familiar with borrow lend protocols. The lenders were not able to withdraw collateral and were

essentially stuck in the trade until the borrower repaid, though the borrower, in fairness, will face increasingly high interest payments or liquidation at some point. Now, as a reminder, the WLFI token is down 76% plus from all-time highs at this point, according to FX leaders. And Bloomberg shortly thereafter ran an article titled Trump-linked World Liberty Crypto Project faces investor result. broader transparency concerns beyond Just Sun. But let's get to Justin's son in particular. So Justin is, of course, the founder of Tron, but also an early World Liberty investor.

And he said WLFI treats investors as, quote, a personal ATM and accused the team of extracting value from the community. He alleges that there was undisclosed code, allowing insiders to blacklist wallet addresses and freeze funds without due process. Justin is probably particularly sensitive to this because World Liberty froze Justin's wallet last September, locking him out of tokens worth roughly $107 million at the time. World Liberty is filed back, threatening legal action over Sun's backdoor allegations. and then facing several comments online, including Bantag, saying, on-chain analysis shows the governance structure is more centralized than publicly advertised. So I want to start with this one.

Chris, and I want to start with you as a former investor in this space. Given that they're using their own governance token as collateral and borrows on a platform co-founded by its own advisors, like how have these things worked in cryptos? How do you evaluate this as somebody who's been an investor in this space? Let's, for a moment, take the Trump affiliation out of this. Just what do we think of the project mechanics here overall? Yeah, I think what this whole TIFT has shown, it truly highlighted the good, the bad, and the ugly of crypto that we've seen for a very long time. What's the good news?

The good news is that generally speaking, our markets are pretty transparent. You can stop and you can watch wallets. You can wash cash flows. And therein lies a lot of good things happening. That transparency allows investors and now investors equipped with AI tools to really unpack what's going on, distill it down. And that's one of the beautiful things about crypto is you have a lot more transparency. In traditional markets, I mean, I remember some of the things we used to deal with. Like you had no transparency.

You kind of felt something was off. And then all of sudden, you know, this guy, you know, Paragrin Financial goes down. Or MF Global was doing something they weren't supposed to do. You never had that visibility. You couldn't trace the cash flows like you can in the space. That's the good thing of this all. You know, the bad thing is that in the crypto markets, we've seen plenty of conflicts of interest over the years.

And you would, and part of that, frankly, is because the industry is so insular and closed in that, you know, even some of the major players, they had to create vertical stacks because they just couldn't, like, outsource custody as an example. And so there's a lot of naturally occurring conflicts of interest in crypto. Obviously, as we go forward into this institutional era, there's a lot more to play for in this institutional era. And institutions have much higher standards of disclosure when it comes to conflicts. You know, as an RIA, you have to always disclose outside activities, conflicts, and that's going to be more table stakes going forward. So that's the bad, all the conflicts of interest that we continue to see.

And then the ugly is like the, you know, all the crypto Twitter like screaming at each other, which again, it's not in my mind the best, that doesn't create the best conditions for a project who's trying to appeal to institutional investors. And so like the mud slinging has been around for a really long time in this space. We'd like to see that step back. You know, I'm not in a position to take sides on this one. I'm still evaluating it personally. But it does underscore the good and bad and the ugly of our industry.

It's changed. Like, we're in an institutional era now. And if you want to be institutional ready, there's certain standards you've got to uphold. And the folks who do it are going to be just fine. Did I read correctly that the IRGC said that you open to settling in the Wolfie token? I saw a tweet. I saw a tweet like that. I believe it was USD1. It was USD1.

Yeah. Okay. Good. But also, if you read the article, they did not specifically mention that. There's a relationship between the governance token and USD1. But there was also talk about Tetheron Tron, right? So both sides. Did they actually settle on any of those instruments?

I think that would be a pretty dumb move if they did. I totally get the Bitcoin thing, much harder to censor. But I think both sides of these guys were involved in the IRC, right? Trump has done on the scale, though. Like the Whitkoff family owns the economic entity together with the Trump family and their kids. Like, this is their thing. Isn't it reasonable to expect that they might influence that adoption? In fact, there is one of the GCC countries that has some commercial deal that they announced at USD won sometime last year.

I don't know if it had any substance to it, but they had some notable transaction. I wonder, like, this asset has hated so much. Do I go in the pool? Do I just kind of go for a dip? I think it's been hated so much. Like, everyone sold it. You know, is there some asymmetry here? Even though it, I feel like you have to take a shower.

If you did that, you got to take a shower afterward, maybe two. Exfoliate your skin as well. I mean, one of the dangerous things in crypto, though, is it's one of those industries where occasionally the bombs keep bobbing. Like, I remember a lot of people trying to buy the dip on Lube. That's a good point. Right. And like, we saw how that played out.

So I'm going to actually throw two rocks here, Chris. I will make some judgments. And I think losers here include both of the major American political parties. And the reason I say that is that the Republicans have themselves in a position where the Republican president has his family with an affiliation with this project that now appears to be being scrubbed off of the website. And I think that will raise valid concerns about. whether regulators will appropriately go after this, investigate this, or look into what happens here. However, the whole reason that we're living here right now is what the Democrats did from 2020 to 2024. Because if Gensler's SEC had made rules about crypto, had disclosure, made them clear, eliminated a lot of

these conflicts. And we know the SEC knows how to do it because they're doing it literally right now as we speak. I think they would have gotten in front of a lot of these problems instead of being behind them. So it's ironic in a decentralized space to make this statement, but is part of the reason we're here at all, just a failure of centralized governance on both sides over multiple years? Yeah. And you could also extend that to some of the heat that circles under right now for not seizing USDC. And they're like, hey, well, we need to have the right legal authorization. But if you had the regulations in place that gave them the ability to move quicker. We know latency is everything.

That's another example of what you're saying, right? So yeah, but look, on the clarity thing, I was in D.C. last week, I don't want to change the topic, but I was in D.C. last week. And it feels like every day we get one step closer. So the C.A. came out. I don't know people are challenging it now, but it feels like the Republicans are very close to being lined up. Next step is dealing with the Democrats.

The whole question here is like every time you negotiate, you whip. you bring it together. It takes time. And the shot clock's coming to an end. But Patrick continues to make progress down in D.C. As far as I can tell. Anyway, didn't want to divert from this subject, but you're right. There's a bigger issue at play.

Clear rules of the road. Transparency. Agree with that. Ironically, I worry, like if something major bad happens with World Liberty, aka they've taken this large loan from Dolomite, if they get liquidated and it's left with a bunch of bad debt, does that become a sticking point for clarity as the Democrats will get very agitated about the Trump family activities? The timing on this of like two steps forward, one step back, two steps forward, one step back has

been remarkable because I, one, I agree. I think in D.C. on at least some of the issues, there's significant progress being made on things like yield. I think part of that has been negotiation part of that quite frankly has just been education because some of the bank trades are now realizing actually there's some very good stuff for us around stable coins and what we're able to do to evolve our business models. I think that's been helpful. What I worry about is that Chris, exactly to your point because of timing, if this were done two months ago, we wouldn't be here right now. Yeah. Like I said, I'm not aware of any principled resistance on the Republican side to get in this Bill moving forward. There's some political stuff for sure. So that's positive.

Do you consider Rand Paul a Republican? I'll skip the jokes for everybody else. But all right. So the other point that I want to pick out here and Rom, like you literally at Lumina advise people on investments and things like this, when you're dealing with your clients, When you're dealing with people who I'm going to call it are crypto-adjacent, but not crypto-familiar, how is the space perceived nowadays, given like the major news stories that are swirling around? Are we seeing more interest from people, less interest? Do they take it more seriously? Like, I want a temperature check from somebody who's actually in the pool.

It's probably not a surprise that just given how crypto has been caught up with politics and like the Trump family that people are more skeptical. So I think that's a perception that's out there. I see a lot of that too. But now with retail investors and even some professional investors who are new to the space, they'll ask me, hey, like, how could you ever invest in a token or in crypto? Like, why aren't you not just investing in the equity constantly? Like, that makes no sense to me.

And my pushback to them on the token or the crypto aspect is that crypto is just a wrapper. Like, you're taking something and you're turning it and you're giving it new properties. Saying that the token or crypto is no good is like saying ETFs are no good. It doesn't matter. ETFs are wrappers. It's what's underneath. It's what's underneath. And so what does that token do?

It gives you 24-7 capabilities. It gives you global access day one to anyone with the internet, you know, respective of your regulatory constraints if you're security or anything else. But you have to do is we're returning to fundamentals. But the other thing that we talked about the good, the bad, the ugly, this industry has been terrible about educating. Terrible.

And like, we need to get better at it and explain exactly what I said. Fundamentals matter. Rappers unlock capabilities. And that's how it works. Like you think your meme coin went to zero. So there's no fundamentals. Yeah. Most interest in crypto happens at all-time highs and they're tossed, by the way.

Totally. So I don't know that there's much signal from the perceptions that are being shared out there. You know, it's almost all the time. It's the most interest shows up at the exact worst time. 100%. people are running for the hills at the best time. There's very limited interest right now, which is, you know, that's contrarian constructive. I mean, if you want to go back, sorry, go ahead, Chris. No, it's just saying typically there's some kind of catalyst. What could

that next catalyst be for retail to come back? Maybe it's the something, you know, the Iran thing goes away. You never know. There's always like some little tiny catalyst that kicks it off. And then you're right, Rahm, like, like price action is going to, it will lead to the next full cycle. If you're looking at. I mean, there's a lot of reflexivity. Like, Bitcoin is a part of the financial system now in a very meaningful way. That's right. Like hedge funds, global macro funds, they have to have a view on this.

Right. Now, can that perimeter extend into other digital assets is the question. And yeah, I think you're right. Like, what is the catalyst? So in the last few years, you had a couple really powerful catalyst. You had the, well, we're going to get replaced Gensler. We're going to have ETFs permitted. We see the Circle IPO.

So you had a nice lineup of not just the wall of worry, but a potential resolution to that. So, like, what is it now? It's harder to see. Clarity. Like, I know we've tokenized everything under the sun. I was a big proponent of that, but it goes back to value capture, right? And there are other themes that are crowding into this. For example, like defense infrastructure theme.

Like, that's capturing imagination. The AI story semiconductors, the microns of the world, robotics. They are capturing the attention. And these are attention assets. So you need something powerful. Like if Iran were to settle in digital currency, that would be significant. That would be like, wow. Like, we are all off sides on this.

That would be something that we should all look at in a very different way, this asset cost then. Well, let's go back to something Chris actually was saying earlier. So, Chris, you get this question from investors. Why wouldn't you just buy the equity? And here would be my counter to them. How would one have gone about buying the equity of hype? Right. That is not a thing that it was possible to do.

But this is the engine powering 24-7 markets right now. It's showing up in major mainstream media, right? It's being used as the barometer. It's being cited in Bloomberg. This is actually a pretty significant signal of adoption. And I'm not arguing that hype is perfect. And this is not investment advice. But to say there's nothing going on there seems clearly contradicted by the frequency with

which it's appearing in the media. And from a fundamentals perspective, if we talk about what is generating fees, and what is buying back tokens, Ram, to your earlier, like fundamentals, fundamentals, cash flow, cash flow point, they're one of the best projects. And just, you know, for reference, I looked at up all these two were talking.

Three months ago, hype was trading in the low 20s, all right? And as of now, when I'm looking at this thing on Coin Gecko, I pulled 43.60 as a price. And so if we're talking about thematic structures within crypto, one of the things that I'm actually looking for for the next wave of adoption is who has users and who has cash flows and who is actually talking to the mainstream. Because like, let us be honest, the crypto media landscape is broken.

And I know this because I am a professor. I literally have students. And all the time they ask me, hey, what is the single source where I can take 30 minutes every week and read about crypto? and that will tell me everything I need to know. And I'm like, well, okay, so go look at who I follow on Twitter is about the best that I can do for this. Or you're listening to a couple of exceptional podcasts and also our podcast.

But like, it's a pretty small list is my point. If you're so theoretically, let's take somebody who's been very skeptical about crypto is very well known, Jamie Diamond. If Jamie told you I have 15 minutes to read something on crypto and you could recommend him one thing that's got to be understandable to him in 15 minutes, is there something reliable? I think the answer is no. So part of what we're struggling with here is there are things out there like hype, like mini pay, which nobody knows about and has like 12 million users that is pushing around a huge amount of stable coins. And it's also because of this educational and landscape

fragmentation. So actually, Rob, I'm going to turn this one back around to you because I know this is a talent you have. If crypto people want to be able to communicate with regular investors, what would your advice be to them as somebody who's done very well talking with regular two-legged people about this space? Crypto entrepreneurs or crypto-natives? Like speaking to, call it, regular humans in the United States? I would start with pain points and problems. Like the main One issue with the category from an entrepreneurial perspective is that people keep chasing the shiny object. We're going to tokenize stocks and take out BlackRock.

As opposed to say, for example, we've got this $5 trillion asset cost class called private credit and people can't get real-time measurement of delinquency, non-accruals, payments, loan performance data, credit quality. It's crying out for a solution. and you've got an attentive audience because there's at least $5 trillion worth of investing in it. So it's focused on problems that real customers have as opposed to buzzwords.

Like we're going to have machine-to-machine, agentic AI, transact, and go shop for me on Amazon because it sounds cool, but it's a problem no one actually has. Like we got to get out of Star Trek future and say, what are the problems today with, banks and credit and money movement and access to financial services that a defined customer segment has, how do we service them with a solution that has a value exchange? That's the world we need to get to.

That's been part of the challenges of this industry since for three years. I mean, I remember sitting at my desk at Citigroup at 2017. Oh, my God, I have this amazing technology. Like, okay, like, what do you want to do with it? I don't know. It's just so amazing. You can do so much with it. And so I would say back then, a lot of the technology was not advanced enough to handle enterprise needs. But that's what makes this cycle so interesting because now it does. The TCC is integrating like four or five blockchains right now. You're seeing it actually getting. So like the old blockchain, not Bitcoin

thing, it's actually happening. The blockchain is getting integrated all over the place. But you also can't ignore the Bitcoin. You can't. can ignore the tokens that are accruing value. And they are. Not all of them. In fact, most of them don't accrue any value. But you can't ignore that as an asset class. And I think as time goes on, the smart institutional, traditional investors are going to, yeah, first they're like, yeah, we're going to integrate this stuff into our rails.

Well, wait a second. We forgot about these token things. And that's why I think it's a very constructive setup right now because sentiment, awful, worst I've ever seen. Fundamentals continue to improve on the token side of things, on the native token side of things. So to pile on to that, I think part of what crypto is greatly underestimated is the complexity and difficulty of transforming financial markets, right? Like the space notoriously builds 10% of the solution of the easy part and that thinks they're done. But in a weird way, a lot of the ideas that people started talking about from call it 2016 to 2018 are finally ready. for prime time. Right. Like, Chris, you know this may be better than anybody on this podcast, given

your background at City, but with the Genius Act, with the ability to integrate stable coins at traditional financial institutions and with traditional rails, we're finally at a world where we can do the remittance use case with stable coins. It's 2026, right, eight years after people really started talking about that at scale, but I think we're finally there. So one of the things I am also watching for is call it the things that many of the crypto OGs gave up on long ago may finally now be timely for this industry. All right. So on that note, since I can see we are at time, we are going to call it here. So thank you everyone for tuning into bits and bips. Hit subscribe, drop a comment. What did we get right? What did we get wrong? What are you angry with us about? And we'll be back in one week

to discuss more about how the worlds of crypto and macro are colliding. So see you. you next Wednesday at 430 Eastern. Thank you.