Unchained - Bits + Bips: Why ETH Is Soaring and How Long The Rally Can Continue - Ep. 886

Episode Date: August 13, 2025

Ethereum’s rally has captivated the market, but is it really about the GENIUS Act and stablecoins, or just raw flows?  In this episode of Bits + Bips, Alex Kruger, Ram Ahluwalia, Steven Ehrlich, and special guest Sid Powell of Maple Finance, dive deep into what’s driving ETH, the macro forces shaping crypto’s next leg up, and whether traders are completely wrong about the Fed’s next moves. From the potential flood of TradFi capital onto the blockchain, to the battle for stablecoin dominance, to whether Solana is about to get a major boost, the conversation dissects the signals in today’s market. Hosts: Alex Kruger, Founder of Asgard Ram Ahluwalia, CFA, CEO and Founder of Lumida Steven Ehrlich, Executive Editor at Unchained Guest: Sid Powell, CEO & Co-Founder of Maple Finance Links: Unchained: Custodia Patent for Bank Stablecoin Challenges Big Banks Entering the Field CBS News: CPI rose in July by 2.7% on an annual basis. Here's what that means. CNBC:  Circle shares rise as second-quarter revenue jumps 53% on strong stablecoin growth Fed board contenders Miran, Bullard say Trump's tariffs are not causing inflation CoinDesk.  ETH Transaction Volume C Much as $20limbs on Price Rally, Cheaper DeFi Costs Tom Lee's BitMine Immersion Aims to Raise asB for More ETH Buys Cointelegraph: SharpLink Gaming shares dip after $400M deal to boost Ether holdings Bloomberg: Godfather of the Mar-a-Lago Accord Goes to the Fed Timestamps: 🎬 0:00 Intro 🚀 2:52 Why ETH has been rallying so aggressively 💪 10:14 Why Alex says the ETH rally will continue 📉 12:53 How BitMine and SBET ended up with such wildly different mNAVs 🧾 14:07 How treasury companies are planning to deploy their crypto onchain 🏛️ 18:45 What TradFi institutions are looking for in Maple and other onchain finance apps 📊 28:07 What Alex is watching to signal the next breakout in crypto prices ⛏️ 32:57 Who really makes money during this new gold rush? 🔥 42:15 Why SOL could be on the verge of a big announcement 🧠 44:58 What Ethereum’s core purpose is in this new market cycle 🌍 47:34 How macro indicators are sending mixed signals 🤖 54:31 What the NVDA and AMD revenue shares with the U.S. government mean for the future of capitalism could mean for the broader market 🏆 58:13 Who stands to win big in crypto if the Fed cuts rates 💵 1:03:26 What Circle’s earnings reveal about its business model right now 🛡️ 1:04:33 Whether Custodia Bank’s patent could block big banks from launching stablecoins 📉 1:11:35 Why markets might be totally mispricing the Fed’s next moves Learn more about your ad choices. Visit megaphone.fm/adchoices

It's a flow story. The genius act, the stable coins, the fact that ETH is basically what is used, this is the narrative. He's being used for securing X amount of dollars on chain. I think it's a great narrative, but it's not really what drives the price. And that being said, I don't see any reason for these to stop, at least not just yet. I think it has at least a few more months of very high flows. Hi, everyone. Welcome to bits and dips, exploring how crypto and crypto and and macro collide one basis point at a time. Today we're going to talk about East partying like it's December 2021, Bitcoin trying to set a new all-time high, a bunch of additional crypto treasury news,

including some firms branching out into new tokens, a renewed Chinese trading truce and what to expect from the big CPI print that's coming tomorrow. But first, a few quick intros. I'm your host, Steve Ehrlich, high scribe of the Engine Kingdom, and I'm here with two of our regulars. first Alex Kruger, Kruger Macro of House of House Asgard Protector of the Realm. Hi, everyone. Ram Al-Walia, Maistair Wealth, leader of Lumida.

And today we are joined by our special guest, Sid Powell, High Chancellor of Maple Finance. So welcome, Sid. Thanks, Steve. Glad to be here. Why don't you, Sid, just for a brief moment, introduce yourself and what you do at Maple? Yeah, for sure. So for those who don't know me and Maple, I'm the CEO and co-founder. of Maple Finance. We are an on-chain asset manager with a particular focus on credit,

lending, and yield. So Maple's core product is we do over collateralized loans to institutional borrowers. And on the other side of that, we provide a yield in stable coins, and then more recently in BTC. But Maple's been around for about five years. We run 3.2 billion AUM, and we've got a line book of now over a billion dollars. Hands up, everyone. We've got exciting news. Bits and Bips, our Macro Meets Crypto Show, is officially spinning off into its own podcast feed, YouTube channel, and X account. If you've been enjoying the deep dives into interest rates, monetary policy, and how they intersect with the crypto markets, make sure to follow Bits and Bips wherever you get your

podcasts on YouTube and on X. You'll find the links to YouTube, X and other podcast platforms in the show notes. If you're watching this, there's a QR code on screen. We'll be posting here for a few more weeks, but starting in September, Bits and Bips will launch on its own feed. For now, we will publish longer clips from the show on those accounts. Remember, go to the show notes now and subscribe to Bits and Bips. That's Bits, plus sign Bips spelled BIPS on YouTube X and wherever you get your podcasts. Great. So we have a lot to talk about today.

We're going to cover all these big topics. But as always, nothing that we say is. financial or investment advice for additional disclaimers. Please check out Unchained Crypto.com backslash bits of bibs. So we are talking right before we began rolling. It's a really good timing for today's show. O.W. Eric Trump right now. ETH is, I think ETH may have hit as high as 4,300 today, perhaps a little over.

Bitcoin was clawing and trying to get back to $123,000. And it kind of reminds me of that theme song from the Lego movie. Everything is awesome. I was listening to it when I was running earlier today. Can you sing the tune? Everything is awesome. It actually reminds me this one really good friend I had. No matter what happens, it really amos me.

He finds a positive spin. Being from Philadelphia, I'm known to be a pessimist. So it's sort of unusual for me. Rom, why don't we start with you? Sure. Talk about what, yeah, I mean, what are, what are, using? Well, so first off, yeah, great to have you sit on the show too. Really, you're going to dig in on your thoughts on the Genius Sack stable coins lending. You're an on chain decentralized bank.

Definitely want to come back to that. So on Ethereum, look, I think the main story is that it is the cleanest expression of baiting on stable coins. We talked about how the backdrop of Ethereum with a tremendous amount of short pressure, some of that was caused by kind of basis trades, but O's hated. That was non-consensus. And also had more momentum off the bottom than other assets. And that backdrop combined with the news catalyst, starting off with Treasury Secretary Besson saying that we're going to have a trillion dollars potentially in stable coin funding. And then the Genius Act, which benefits Ethereum. Ethereum has the most stable coin activity. You know, Bitcoin story, by the way, is electronic peer-to-peer cash. That is what a stable coin is. That's what a stable coin is.

Stable coins have fulfilled on that promise. And so I think for those reasons, Ethereum has benefited, right? Think about the regulatory clarity that has arrived and is coming through the Clarity Act and what SEC Chair Pollock is saying. Who benefits most? Well, Bitcoin we knew was a commodity before. It's still a commodity. It will be a commodity after.

We always had clarity on Bitcoin. it's Ethereum that is benefiting from this backdrop and also the fact they've all these Treasury companies now that are axed to go buy Ethereum and build a next micro strategy. Rom, just a quick follow-up. I think a lot of us are familiar with some of those big narratives. I'm curious about the follow-through. I mean, I know that Ethereum recently hit, I think, an all-time high on daily transactions. I know that there's some more activity occurring on the platform. I'm interested in your research if you've seen any of that sort of like carry over.

And if there's a story that you can tell on what people are doing on Ethereum that can kind of explain. Just explain the price. Well, so a funny thing about it, by the way, is like the best time to buy digital assets and especially Ethereum, excuse me, is when the funding costs are low. That's the main thing. You know, when transaction activities are low and gas costs are low, that's actually the contrarian buy. That's the contrarian buy point. When the demand for the asset is high and funding rates are high, then you have to start opening your mind up to the possibility of a rotation. You have to ensure you ride the rally.

But I think one of the areas that's super interesting on chain is how Maker has repositioned into Sky. I don't know, Alex, if you've looked at that or Sid, too. I think it's really interesting. So Akerdao, one of the OG protocols on chain, and if you haven't read the maker paper, you all should read it. I think after the Bitcoin web paper, it is kind of an incredible piece of innovation, this idea, again, of a decentralized central bank, which I find quite fascinating. You mean the original maker?

The original maker. The original maker paper, yeah. I haven't read it. I think it's an incredible, incredible paper. I mean, that's where we're going now. What follows the growth of stable coin? stable coin. Well, defy, defy is the logical beneficiary. But makers have been repositioning, they rebrand it to Sky, and they're launching call it like mini pods. I almost want to liken it to

like a pot shot in Millennium, except instead of trading equities, you're making credit investments. And I think what Cid is doing with Maple is kind of related. It's in this kind of the same concept space. But that's what we're seeing, you know, primarily on chain. I don't know, Alex if you're seeing anything else on chain. I'm primarily looking at asset prices and funding rates, but on-chain activity, I thought that was worth calling out. I can talk a little bit to the, you know, the Maker Sky ecosystem. So I think you're spot on ROM.

It's, you know, it's acting kind of like a central bank. And then they almost have, you can either call it kind of a pod shop model, similar to Millennium, where they have their stars, which in turn are kind of asset managers seeking yields. The other way to look at that is you almost have the central bank and then you have commercial banks. And so the stars can also be likened to commercial banks. But one of the ones that we work quite closely with is the Spark team.

And so they allocate on-chain. And then Maple actually has a partnership with them where they're one of our largest allocators into our syrup product. So we have about, call it half a yard with them. And in effect, the problem we solve for them is how they can access higher yields by dealing with institutional clients, because we lend to institutions off chain. And then the other useful thing that is in kind of in place for the Sky ecosystem is that they solve this kind of principal agent problem. So if Sky was allocating directly to us, they can't be sure of the credit quality. But by having this intermediary that's almost like a fund manager, Spark, they're able to kind of address the principal agent problem.

They keep us honest and then we go and allocate. And if we're not performing up to scratch, they can always allocate elsewhere. But I think it is really one of the most interesting ecosystems on chain today. Excellent summary. And one thing I'll add to that is the way the online incentives is to risk retention, namely first loss risk is borne by the manager, which incidentally was the. was the response of 2008 crisis in terms of how the Dodd-Frank regulation came out, the issuers of asset-backed securities

are obligated to own first-loss risk at a minimum of 5% or vertical stripe of 5%. So it is funny how crypto has done so much speed-running of the banking system and then they discover what delegated governance is or delegated authorities are and alignment of incentives and risk retention.

But I think it's very, very creative in it. Alex, what are you saying? I mean, right now, one question I know with the son of mind, a lot of retail investors watching this is Ether, I think I saw a statistic, 97% of all eth positions are in profit, which makes sense at this point. So there's a lot of fear about a local top and selling. Is that something that they should do?

I wouldn't, and I'm not doing it. I mean, it's all about Ether right now. And I don't think, I have a different view than you run a little bit different. It's not really about stable coins or the Genius Act and all of that. That's a good narrative. It's about flows. It's about Zvet and Bitmine and Tom Lee. And I mean, these guys, they've accumulated so far.

What do they have? Bitmellon has $3.6 billion. dollars that accumulated since, what is it, since early July, like five weeks. It's really impressive. So it's a flow story. The genius act, the stable coins, the fact that ETH is basically what is used, this is the narrative, is being used for securing X amount of dollars on chain. I think it's a great narrative, but it's not really what drives the price.

And that being said, I don't see any reason for these to stop, at least not just yet. I think it has at least a few more months of very high flows. And Alex, do you think those flows are going to be driven by the kind of the treasury companies, the debts? Yeah, yeah, yeah, yeah. It's mainly bit main and sped, those two. There's a few new ones coming out, but I think we're at the stage where the winners, the winners are already out there. There's a very machine too.

And by definitely, these are all in performance chase. They have to buy if it goes up. Like, what are they? Is that accurate, Alex? I think that's correct. Like, if the Ethereum price goes up and they've got access to liquidity, what do you do? I mean, don't you have to participate to some extent? Well, what matters is the MNAB going above one, right?

Then you can print to Ymore. That's the decision. Right. I mean, it's a typical ponce if you think about it, but I welcome it. I mean, then I'm not going to be criticizing something that works, right? Here's the question. Yeah. What do you make of the divergence in the MNAVs between Sharplink and Bitmine?

Because I saw earlier today, Sharplink is close to almost one at this point. bitmine is, I think, over two. I think it's a matter of salesmanship and how an execution and management. And something else is, for example, bitmine is, and I would have to guess it has to do with Tom Lee being, I mean, Lee, he's from Korean descent, right? Bitmine is extremely popular in South Korea among traders. I was just reading an article about it in Bloomberg. By the way, I agree with Alex's point on flows. It's always about the flows.

I think narrative also a follow price. But I think you could see the backdrop that built up toward this. I do think that tactically, though, if I just look at SBET and Binion today, just technically they're overextended and, you know, they have what I call the inverse wicks and the candles aren't that, like, I wouldn't buy here. That's a tactical view, though. That's a tactical view of like one to five. days. That's not a midterm multi-month view.

One of the reasons I'm really happy to have sit on the call today is because of your insight into the lending market. I mean, one of the things that we've talked about over and over again in recent weeks is how these companies are going to put their massive treasuries to use. And that's going to involve taking out leverage, so on and so forth. What are you, like, what types of conversations are you having? with some of these firms. And I think one question on the minds of a lot of investors is,

what are some of the warning signs, the red flags that they should look for when they're trying to evaluate these companies and basically what they say publicly about how they're going to manage their stacks? I think it's a good question. And the answer is we've spoken to a number of these companies now already. So I think, you know, somewhere between half a dozen and 10 of them. around offering a facility from from maple. So how we pitch it is the companies currently access capital through either pipes or convertibles or just outright equity issuance.

But the cost of capital on those deals is quite high. If you think most of those investors are kind of looking for, you know, a 15 to 20 percent plus IRA on their investment. Whereas if you look at the debt option, you know, we can lend for, let's say, between 7 and 9 percent. So much, much more competitive cost of capital. But also the way we pitch it is it's an opportunistic facility. They can draw down within a day to purchase dips if they see opportunities for buying. And they can have the flexibility to pay it back relatively quickly if they do go and do another pipe or convert or ATM. So that's how we've pitched it.

We haven't done any deals yet. But I think that's more a factor of these being a relatively new phenomenon. But I would say correctly what these guys are nervous about is they don't want to set a liquidation price on their stack. So they're concerned about how the market would receive that if they have a liquidation price that can be targeted or below which they wouldn't be able to post more margins. So that's what they're concerned about. So I think they are correctly identifying this as a risk and trying to manage around that. So in the conversations, we're generally trying to talk to them about conservative leverage levels so that they have, you know, very low chance of being margin called. And if they are, they could easily post more margin.

But that's what they want to avoid signaling to the market is that there's a liquidation price on their stat. And if you look at their capital structures today, the converts, the pipes, they don't really introduce the possibility of any of these companies being liquidated or losing their treasury balance. What were the funding rates that you can fetch as an investor if you participate in Maple? What's the range of that and what credit risk are you taking? What term, et cetera, is offered to investors? Yeah, for sure. So we have broadly two to three different kinds of products on the stable coin front. Two of them are similar.

So I'll just talk about the ones that give you a better perspective of the range of rates. So we have Syrup USDC where you can fetch around 6.5% today. And this is under the hood all loans to institutional borrowers, which are over collateralized by BTC, ETH, Seoul, XRP. Generally large caps. We have a couple of smaller caps in there, but they are a very small proportion of the overall loadbook. And then the other one, just to contrast the rates, is we have one. that accredited investors can use when they onboard with us. And that's paying around 10.5% today.

And that's actually one of the products I personally use for the yield pickup. But that is, again, lending against BTC, Seoul, ETH. It's just, it has a wider remit of collateral than just BTC and ETH. And that's why you get the yield pickup. But it's a good question on duration realm. So generally, our loan book is, for the most part, open. term with about a 30-day recall period. So usually you can get your money back. I mean, typically, it's actually a matter of less than a week, but we communicate to users that they, you know,

it could take up to 30 days. But this is very short duration compared to Tradfai credit. And I think that's one of the appealing things about OnChang credit is very short duration, but you get similar, you know, similar yields to high-yield trad-fite products. Super interesting. The fact that it's all happy on-channel. I think people realize this in the real world. These offerings exist. Our protocols that are making money, they're doing borrow lend. Why does the borrower need to go on chain? The counterparties you mentioned, they exist in the CFI world.

Why do they need to borrow on chain? Are they not accessing funding in CFI? 600% for a fully collateralized or over-collateralized loan is a good deal if you're a lender. Yeah. it's that's um funny enough uh you actually see the the cheapest borrowing rates are often on chain on an arve or one of the other fully permissionless protocols uh but the answer is a lot of these all these borrowers we we deal with typically do also borrow from cfi now that will include players like tether galaxy coinbase uh two prime leaden um with varying degrees of kind of retail versus

institutional focus. But the answer is they come and borrow from us on chain because we have the capital available. And I think generally the space realm is still undersupplied when it comes to capital. And that's why, as you said, if you're a lender, you're getting pretty good rates. I think as the space matures, you could see those rates come down. But the relative yield you get, which on a risk-adjusted basis, I think is very good, is indicative that the space is kind of still under supplied of credit. One of the reasons they borrow from us, rather than fully on-chain, on an Ave or a morpho or a spark, is often they're holding BTC, native BTC, and they don't want to put that in a smart contract, and they don't want to wrap it. They don't want to wrap it

because it might be a taxable event. They don't want to put it in a smart contract because of the risk. So what we can do is set up an escrow account for them with an Anchorage or a Bickgo or one of these qualified custodians, and that just gives them an extra degree of safety for their for their collateral. Right. And here you've got a nice truck that Alex found from Dune Analytics that just shows the growth in AUN for this protocol. I mean, just like the OPEX efficiency from running this on chain.

Obviously, you've got real world people that are doing collateral analysis and underwriting and loan agreements and all the rules. This is still kind of amazing to see. Is there any role for a bank to work with the Maple? And where I'm coming from is this. Yes. There are 200 fintechs lining up to get an OCC charter. The OCC, the office to control, the currency, they regulate all the national banks.

That's because of the Genius Act. Dozens I'm hearing will be issued in that between September to year end. And banks have the ability to lend. They have the ability to move money. They're trying to figure out what to do on chain. So if you're talking to a bank with a balance sheet and they can move money, what's the value proposition? Is it, hey, just lend to me, give me back leverage.

or is there something else? Does it give me assets that I can finance or? Yeah. I think it's two angles. So we talk to, you know, there's a couple of the banks that have kind of crossed into the custody space. And one of the things we talk to them about is we can finance their customers because they might not be able to yet lend against Bitcoin.

And so we can enter a referral agreement, you know, pay them some kind of commission or revenue share. But we can lend to their customers and they can keep the. Bitcoin, their customers can keep their Bitcoin custody with the bank. So the bank retains assets under custody. They help their customer out and they get a nice piece of fee revenue from the partnership. But the other way would be, as you said, Ron, back leverage. Now, what I used to do in banking was I was a securitization banker and that meant we would provide large warehouse facilities to lending companies like Maple is today. And the banks would do that because they could get better

capital treatment by just tranching it out and taking a more, you know, risk protected piece of the structure and, you know, potentially get a rating on it. Now, I think ratings are probably, you know, we can talk a little bit about the rating that Sky just got from S&P, but I think ratings are very new to the crypto space, but what a bank could do is provide back leverage to us. And because of the seniority in that facility, they're going to get better risk in capital treatment, which means it's more profitable for the bank than lending directly against Bitcoin. So that would be where we want to take the banking relationships. And we're talking to a couple today about that type of facility.

Wow. It makes a ton of sense. They should lend in the real world, though, if the rates in the off-chain world are higher than on-chain. Right. So that would be the first port of call if you're a bank, right? Yeah. Well, I mean, effectively, our rates are kind of reflected. of the off-chain C-Fi rate of lending more so than the more so than the typical defy rate

because we lend to, you know, we we lend to these off-chain institutions. We just happen to settle the loans using smart contracts. And as you said, that's what gets us our operating leverage and the nice, you know, the nice operating margins. Yeah, you know, you're right on the mark. Like in the last 10 years, banks have shifted from originating risk and wearing on the balance sheet to originate to distribute. And now they're providing back leverage to private credit funds that originating

and bearing the first loss risk. And then the banks sit in a senior secured position providing that financing. And they get a better ROE because the risk-weighted assets, which is what RWA used to mean up until crypto profit. Now it's a real world asset. Yeah. All assets are real world unless they're like NFT, I guess. Yeah.

So it's worth noting. So even though the bank would earn a lower rate of interest, it's actually a better return because it doesn't have to hold as much capital to support the position. And that's why they would do something like this rather than doing it directly where they, you know, lend directly to clients against Bitcoin. Super interesting. Thank you. I said, I just had one more question for you. I think some people listening might shudder when they hear about how much the companies they want to avoid having anything resembling a liquidation price. So, and forgive me if this is a dumb question, but I mean, are you, like, are they asking for almost like something akin to an unsecured loan because it's such a short duration or like, like, what, what is it that like, what type of collateral are they trying to post in a way that they don't have to potentially liquidate? No, no, no.

It's a good question. And just to clarify what I meant, they would still be posting collateral. So if it was Sharplink, they'd be posting or S-Bet, they'd be posting ETH. If it was, you know, strategy, they'd be posting BTC or DDC or one of the, or ProC. They would be posting BTC or if it was a slana one, they'd post a lot. So they are posting their native asset. But what I mean is they would want to go to a very conservative LTV level. So typically we do 70% LTV.

So if you give me $10 million or $100 million of BTC, I would give you $70 million of loans. but what we're talking about here is going to a lower LTV, so let's say like 50%, so that they have more protection in the price of Bitcoin. Got it. Okay. The further Bitcoin has to drop, the less likely they are to have any liquidation or margin cold event. And that's what they want to ensure. I want to another quick one.

Have you had any discussions with them about posting shares as collateral as opposed to the actual asset themselves? It seems like it might be more efficient for them, given the premiums, to do that. than posting the assets, but you may not be interested in taking shares. It's an interesting concept. We have not had any of them suggest they would post their shares. I would be more hesitant to take their shares because, as you know, their shares could trade from a premium to a discount, as we saw with Grayscale back in the day.

So that would give me cause. And also, you end up in kind of a bit of a reflexive event, whereas if there's issues in their shares and where, you know, people anticipate that we're going to be selling, you could see a lot of front running of it. But I think one of the areas that these companies are going to try and compete now with each other more on will be getting yield on their treasuries. So it was less important, you know, when Sailor introduced the first one of these, it was very unique. There was little competition. But now that you have, you know, 30 or 40 of these, the 40th entrant needs to think how they differentiate themselves.

And I think they will look more and more at getting a yield on their treasury. So, you know, you can see this is more applicable to the proof of stake ones like Heath or Seoul, but there are increasingly BTC staking options. And some of these companies have kind of come to us and in conversation explored the idea of getting a lower interest rate by allowing, you know, allowing BTC or whatever treasury asset they hold to be staked. So they're actually trying to get more and more efficient to compete with each other on cost of capital. I want to talk about Bitcoin for a second. I'm curious if any of you have any real opinions on it right now. I know there was a bit of a bump.

I mean, I guess a little more than bump because of Trump's EO targeting 401Ks last week. And then I guess with the off again or on again now, I guess off again tariffs on gold being imported, I think from from Switzerland, which may not, apparently I don't think is a thing anymore. Off now. Off now. Yeah. So that definitely spooked some, I guess some gold bugs. But, yeah, I mean, Alex, what are you seeing in terms of Bitcoin?

Like, what will it take for it to push past this 122, like get above 123? Maybe that it takes patience, to be honest. I agree. Yeah. It's most of it right now is noise. We're just waiting for, I mean, we have CPI tomorrow. unless it's a very off forecast. I put my money and it won't matter much.

Jackson Hall is going to be important. That's weeks away. Then the next payroll is going to be very important. That's, I mean, that's four, three and a half weeks away. So right now we are in August summertime. And I expect just a whole lot of noise until we get the next move up, which I think is going to be driven by, it's going to be payrolls. It's checks a whole payrolls and the next FOMC that are going to cut.

It's pretty cooked in the price, but crypto tends to be somewhat inefficient and just get excited, even if things are priced in. Yeah, I agree with Alex just saying. I agree. Look, August is the worst month for Bitcoin seasonally. That's one. And two, by the way, these are these inverse wicks I was referring to, Alex earlier. It's just like a technical pattern. There's a lot of excess enthusiasm here. These buyers are

trapped. Generally, you kind of get a hangover after that for at least a few days. And I see that across different assets. Obviously, Ethereum is a bit stronger, but Ethereum has that. If you look at, say, SVET in the mine, I see the same phenomenon on high volume. On high volume. That's a characteristic of a kind of a peak sentiment or local enthusiasm event. So I said, I think a few weeks ago, like, hey, Bitcoin will be hard to get to 125K and beat that sustainably. If it does, it tags and rolls over. Still my view today.

I mean, a lot of people are trying to sell it 125, by the way. So the market's not going to let them do that. I'm still bullish, longer term. It's a question about time horizon. I think August, September, animal spirits cool off. And then we reset and then going into Q4 around October, you know, you want to be exposed. Just one thing, like, you know, six days, eight days ago, the entire industry was already fretting about the end of the cycle. As you guys remember, we all forgot that it like just like, yeah, it was around the corner, right?

And like there was a lot of theories around how basically, for example, the Mnab of Svet and Bitcoin had collapsed to one. And therefore there would be no more flows. it was over. So, yeah, I'm trying to zoom out at this time. That's what I'm trying to do, to be honest. I'm trying to figure out, is Eric the ETH whisperer or not? Like, Eric Trump? Because what should you?

Come on. I go to the ETH story like in June, and then someone said, no, no, no, Eric Trump, Eric Trump beat you this. So is Eric? I mean, Eric is in a position where he's informed, let's say. Is Eric the ETH? whisper or not. I don't know. I don't know. Is he the Nancy Pelosi for Ethereum? I mean, the first time he said to buy the deep, like price proceeded to collapse. What do I said,

60%? Maybe that. Maybe that. In a month and a half. I think this was the case of the wish being the father of the thought. I'm not quite sure what type of insight information he could have had on East. When Trump said buy stocks, April 7th, you were supposed to go buy stocks to the day bottom. The same thing happened on December 23rd, 2018 after Terra 4.0 ended. And you've got that's insane, hey, look, these digital assets are going to, our core. I just don't know how to situate Eric Trump in this. Is he talking to dad regularly or not? Where is that relationship? I made a telegram chat together. Can I get in that? World Liberty-I telegram chat?

Yeah. While we're on topic of World Liberty, I mean, Let's just go through a couple of recent treasury announcements. I mean, there's a 1.5 WLF deal. I'm not in sure if those tokens are liquid yet. I guess maybe at some point they would have to be. And then I know BACT is getting into the Japanese market. And there's a couple more that are just slipping off to tip my tongue. But out of all the new announcements, I mean, what do you guys see?

I mean, let's talk about WLF. I mean, it's a token that as far as I can tell, doesn't have a business. yet. But obviously it's close to the president and has a lot of, has a lot of influence in D.C. So it's just, this is just another way for people to kind of just support the overall administration? Or like, what do you guys think? I think it's a gold rush. That's what it is. We're in a gold rush. Everybody trying to grab a, what is the, how do you call it? What, what you guys did in, in the West?

picks and shovels. Yeah, Langrave in a way. But like in the 1800s, the conquest of the west and the US, right? It's like everybody was out there for like. You mean manifest destiny? Is that what you're trying to? No, so the goal was 1948, right?

Yeah, the gold rush. Yeah. Right. So everyone went out west. It's an initial goal. There's the herd followed. And that's where Levi's genes was born. So the joke is,

and actually informs a lot of venture. investing in public markets today is that when there's a gold rush, you bet on the picks and shovels. So in that case, it literally picks and shovels and Levi's jeans, which is still around today. So what is the gold rush? What does the picks and shovels play for all these miners and these publicly traded treasury companies like Bitminor and Sbed and backed? Is it the custodians? Is it? It used to be number one. It used to be the next strategy. I agree. So that's the winner.

Yeah, that's their goal. But how do you pick a secondary target to invest in that's ROM set that's what's going to benefit from because they'll all need to use it? I think custodian fees are still kind of challenged. See the exchanges too, but I mean, we're talking about such big size that the fees are very small. And if these are truly buy and hold, they're just one-time fees. Custody fees are 10 biffs. That's going to be race to the bottom. Coinbase owns that market.

but other banks are going to get involved. So it's not clear. I don't know. It'd be interesting to, you know, what are the infrastructure needs that these firms need? I'm hard to say. Maybe it's, maybe it's some of these investment banks that I don't know if they're going to start getting involved. And if with this new EO, maybe some of them will become more accessible to. Someone said Galaxy in the community chat there.

Oh, yeah. Yeah, that's one. Yeah. They might be involved in a lot of them. I think potentially staking services as well, but that's also, you know, it's kind of a little bit of a commoditized space or it's, you know, it's very competitive. It's hard to see a clear winner there either. I think Alex is right. It's a gold rush.

There's too many. You're going to have one dominant market leader per category. In Bitcoin, it's micro strategy. You might have a number two. For every Coke, there's a Pepsi. Maybe that's a meta planet in Japan going up for different base. But you're always going to have a leader that is the voice and the brand and the mascot. Michael Saylor got Jack Mahler.

In Ethereum, maybe it's Tom Lee and Andrew Keys, let's say. And Solana, you know, I think probably maybe one of our co-hosts on the show, let's say. I don't know, just saying. But there's too many of them, right? There's way too many of them. Like, you need to cut through the attention. It's cut the noise. You need agents, agents or analysts.

It's way too many. It's like they're completely dominating my dashboards now. It's just all pressure companies. I think it'll be interesting when we hit the consolidation phase, because I think right now we're seeing a lot of new ones being issued as there are premiums. But once some of them start to turn to discounts, I could see, you know, Sailor or Micro Strategy. He can effectively buy Bitcoins for less than a dollar, which is even more leverage on his model if he can pick up some of at a discount.

So I think that would be interesting. Well, the backed callout is an interesting one. So I followed back closely since inception. I've made fun of it a lot on Twitter. I can take a look at that. But this is, let me show you the entire time frame. This is a SPAC in 2021. So Backed was a spinout of ICE.

Ice is an extraordinary business. It's a clearinghouse. They're too big to fail. They clear interest rate derivatives. So they spun out back, which was spending like $80 million a year, it's unprofitable. And they pivoted to be crypto. I think they brought in the president of Coinbase.

They were doing like crypto rewards and they're trying to make rewards points, fungibles. Fungible, that failed. Then they pivoted to another business model. They acquired a business that wasn't generating money. That failed. And this is the third pivot. This is a pivot now to be another treasury company. They were at risk of being delisted for a while.

But they have new management now, by the way. I'm not, I don't know. I'm just trying to get perspective that this is where we are in the cycle. The early IPOs and the early deals of high quality, then the investment bankers show up. And they say, all right, who's next? Let's get, you know, when the ducks are quacking, let's go issue. Let's go self-security to public markets. I find the back deal.

I mean, back is in some ways of tragedy. I mean, it's a launch with like $180 million. And it's kind of funny because, Ram, I think, as you said, they wanted to do physically settle Bitcoin futures until they realized nobody wanted physically settle Bitcoin futures. They just wanted to have been on a price. And I think, I mean, the Japan move is kind of interesting just because of like that, that arbitrage play between like the tax treatment of cryptocurrency in Japan.

I mean, you guys all know, it's like 20% capital gains on a stock, but it's 55% on crypto. So Metaplanet has taken advantage of that to like ungodly levels of success. I'm not aware of too many other companies that are trying to follow suit there. So maybe it's something. But like there are companies that have done these crypto pivots and have not seen anything, I have not seen that bump. And yeah, me, backed is just one of those like, I mean,

the ICE has to write down the value of their holding in it for for years. And it's just one of those. Oh, ICE held it on their balance sheet after they spun out. I'm sure they invested in it. So, I mean, they, I think they had the rights and the value of their investment. They, they seeded the company. Because when they spun it out, they spun it out at an absurdly high valuation. I thought it was an incredible move by their corporate dev team to take this loss-making business, dump into the public markets,

basically selling on retail, wash their hands of it and move away. Yeah. And that's why I was skeptical about this stuff happens. Like, be careful of Wall Street sales, the old adage. Yeah. So I need to take a quick break to just let everyone know about an exciting announcement that we have coming up. As I've said on recent episodes, Bits and Bips is going to be getting its very own podcast channel. It's going to be the same great content that you see, the same weekly shows,

often some interviews with me, with some newsmakers based on some recent reporting, so on and so forth. All that you have to do is subscribe, and you can do that by clicking on the QR code on the live stream right here, or you can go to unchain.com backslash bits and bibs. We're going to be rolling out pretty much all of this content starting in September. For now, it's just an extended clip from shows to give you a taste of what this is all about. But we're really excited. We're proud of the traction the show is getting, and it's the right time for it to roll out into its own feet. So I hope that all of you subscribe.

When is the airdrop for Unchained? Is that on next week or that's the topic? But to be very clear, there is no official Unchained token before someone launches one on pumped up on or bunk. Right. Again, Alex. I was just saying that Back is one of the, the only two positions I'm sitting on a loss on. So I'm not very fond of the ticker. You got to tell us the other one.

The other one is Figma. You know, I'm running a very, very profitable strategy similar to Kathy Wood. You know, it's like, you know, I'm farming losses so I can offset against the future profit. So the reference for those I don't get it is that Kathy Wood said the reason why you show on ARC is that we've accumulated all these tax laws harvest for you. So there's a tax benefit to owning this thing. That's just kind of been bleeding money. But the funny thing about ARC is, like, they pivoted their portfolio entirely to companies actually make money. So it's not, I used to hate an arc a lot, but they change something in, in like they own, they own Robin.

Robin's a real business 60 times earning. It's expensive, but it's a real business now. It's not ginkgo biosciences, which was losing money every single year. Just before we move on from the treasuries and that's topic, I just wanted to point out that I think there is, there is one coin out there that is a major coin that can have a major debt. doesn't have one, which is sold, if you think about it. Like, the ones that they do have, they're kind of like on the small side, and there was a big one coming up, accelerated. Yeah.

That's going to be like one and a half billion, right? Yeah, exactly. So it just got pulled right out of the market and for whatever reason. And I just wanted to say, I think it opens up to the, there is like an opportunity there. I think somebody's going to pick it up, you know. Do you see what BlackRock said about Solana? I know they're not going for the ETF. What did they say?

That's exactly right. They said there's not focused on that for what it's worth. Yeah. Yeah, yeah. That was like Flana, don't hate, just the messenger, just sharing. Yeah, I mean, I can understand that. I mean, like most people that don't live in this rabbit hole that we all exist. And like their eyes don't go past Bitcoin.

ether for the most part. Yeah, I mean, the idea that, especially with with XRP, I mean, like, that would be akin to black rat getting, like offering mean coin ETS, at least with with XRP, in my opinion. I mean, Salon is a real blockchain with, with, with like real, that generates real revenue. Anyone that has read anything I've written about Ripple and XRP or heard some of my comments, like I, I go to great pains to point out how little money the blockchain actually creates for how much it's worth. And they seem to now just be using their treasury to buy actual businesses to sort of create a revenue-generating business. So aside from the legal entitlements to XRP and Ripple just got out of, I think it would be a tremendous reputational risk for BlackRock to offer XRP.

And I say that someone has been proved many times in the past about how investors seem to care very little about fundamentals, at least when it comes to that particular token, because it remains very brilliant. The chain that benefits from tokenization, I think, is going to do very well also. And Block Rock is all over that thesis. They see all assets going on chain. You know, Larry Fink's story for Bitcoin is that it's decentralized internet, global money. And they've been focused on getting assets on chain and working with Singapore, which had a framework way ahead of the U.S. That's a narrative that still hasn't come to the fore yet.

There's still so much to do around tokenization. I think ETH is kind of writing that narrative a bit at the moment. Like you see it in kind of the, you know, the marketing, you know, the marketing talk about the ETH, Dats. But also I think one of the things we've observed is most of, most of Maples AUM happens to be on Ethereum. And I think one of the, you know, one of the commentaries we've seen recently has been this sort of, you know, call out that Ethereum is. kind of where debt capital markets live. So you think stable coins, you think tokenized RWAs, you think crypto credit, most of that's taking place on Ethereum. It's also where, you know, where Athena has most of their TVL as well. And then Solana had kind of emerged as the place where

you launch, you know, you launch meme stocks, but also, you know, tokenized equities like Robert Hood is looking at using, oh, you know, Robin. Robin Hood was looking at using it. So I think ETH has kind of benefited a lot from that tokenization narrative. And it does have significant network effect. Like when we look at going onto other chains, a big question is, well, how many borrowers can we find there? How much lending capital can we find there? A lot of that still resides on ETH.

And, you know, and most of the growth we see is on ETH. That's a great distinction. I don't thought about that, but it makes a lot of sense. Equity, capital markets, Solana's focused there. Ethereum's got that capital markets. I'm sure we'll collide in the future, but that makes sense. go ahead. Sid, would you have any views on Athena on basically any underlying major risks that, you know,

something, things to watch there because it's been growing so dramatically right. They're their TVL, right? So, yeah, just curious if you do. Yeah, I don't have any special insights on it. I mean, we know the team. I mean, you know, the underlying, you know, the underlying backing of Athena right is the basis trade, which is relatively, you know, well established at this point of time. And I think the big innovation they did was they took it out of private OTC funds

and effectively found a way to tokenize it, package it, get economies of scale on the costs, and distribute it to the masses. You know, probably the other tests they faced earlier was when Bybit had the hack. You know, but they pointed out that they basically use off-exchange settlement and mirroring for most of their assets. They're actually on the exchanges. They're in copper or other custodians. being mirrored on exchange. So, no, I don't have any big risks that I see there or that I think

on, you know, considered or discussed by people. Just a quick note here, we are now going to discuss the CPI print for July, which showed that prices rose 2.7% on an annual basis, slightly cooler than what economists had expected. So I want to turn just a little bit more to the broader macro picture. I think, Alex, it might have been you who said that, I I brought up earlier that we were getting a new CPI print tomorrow. Expectations are for a slight uptick in base CPI and core CPI. And there's a lot of questions swimming around. Like what is that going to mean for any Fed rate decisions in September?

And then to the end of the year, I know there are some people that are asking, can we trust whatever the data is that comes out of the DLS given what happened a couple weeks ago? I'm not so concerned about that, but at this point, at this point, that's a question that can be asked. And this is all happening at a time when markets are, I mean, like large indices are at or just below all-time highs. Again, despite the fact that tariffs are now in place for the most part, but we haven't seen follow through on earnings yet. So, like, how does that all fit in? I mean, looking at both crypto and non-crypto assets, especially like Alex and Rahm, you guys are making investment decisions. What are the signals that you're looking for tomorrow with the CPI prep?

Unless it's off by 0.3% month and month, I don't really care about it. I think it's, unless that's the case, I think it's noise. As I was saying before, I'm really trying to zoom out and focus on the bigger picture right now, which for me is not really about one inflation print. but we have there's there's more than one and then we have more than we have payrolls as well and I think it's much more important to be focusing on what's happening at the Fed and basically who is going to be the next chair and paying attention and what the FMC members, the governors and the rotational presidents.

What they're saying about inflation, they're like checking their actual words and see if they're lining up with the new chair, whoever he ends up being or she, or not. That's what I'm more focused on and it's not happening in August, to be honest. So, yeah, unfortunately, no excitement on when it comes to tomorrow, right? Like, right now, we have so many contradictory signals in the market. Like, for example, when it comes to cash levels, cash levels, there is a very important survey that Bank of America runs on a regular basis that basically looks. It's the FMS fund manager survey.

And that survey is signal when it comes to, for example, positioning. They're very good at highlighting. When you see some asset is like the most favored asset, it tends to be around, you know, you tend to be around a major top, right? So cash levels on that survey, survey from the fund managers they survey, they're at very low levels. They're like very close to,

they're below 4%, which is a cell signal. There is, but CTAs are, for example, extremely They can't buy anymore. They're all in. Exactly, they're all in. But then you go to, there's different sectors in the market.

They're exactly the opposite. They're actually thereish, right? So there is a lot of contradictory signal. So that means to me, trust the trend, stay put, make no investment decisions. I would not be allocating here. I think, for example, ETH makes sense for ETH to consolidate a little bit here. Ideally, you know, go like swing below 4K briefly to stop people out before we continue higher. the Bitcoin move of last night,

if you look at the open interest, it was all leverage driven, so that, you know, it deflated entirely. But yeah, yeah, it's not concerned or not. Great perspective. I'm sharing here the AAI sentiment server. The survey has been done for a few decades now. They sample the members of the AAII retail base.

And here you can see it's actually another contrary signal. So when this is at extremes, you want to go the other direction. People are overly bearish according to this survey. And I look at the BAML fund manager survey drops, I think, the 15th of every month. And you're right. Commodity traders are all in. But hedge funds are off size. And hedge funds are price setters in the market.

Like the net exposure, if you look on a percentile basis of hedge fund equity exposure versus the last five years, is extremely low. So I think they're in a performance chase. They must remain invested. that said, the way we've positioned our portfolio is just targeting a beta of one. Since May, we've been targeting a beta of 1.2, which means you're getting more upside for every dollar increase in the market. And in the last two weeks, we've recalibrated our beta to one. On a bullish side, they're like visible market. Just be very clear. There's no recession

in sight. The non-farm payrolls is weak, in part because in my view is, yet you just have less immigration. The revisions went back five to six months. That's when Trump policies took place. If you have less labor supply, less labor formation, you're going to have less NFP. And it's also less demand for labor too. You have heightened productivity rates that play a role into all of that. That's a nothing burger. Also, all of the sectors in the S&P, except two, healthcare and staples, are experiencing positive earnings revisions. That's a positive predictor indicator. Where earnings go, stock prices follow. If you look at within the Mac 7, everyone's always, just like there's TDS, there's like Max 7 derangement syndrome, it's too much, it's too big,

this and that. But if look at the valuations of the vast majority of the names in the Macsub, maybe all of them, I got to check. Someone fact check me on this one. They're at lower valuations than they were at the 21 peak. Amazon had 100 times PE ratio in 2021. Now it's in the 30s. Obviously, Microsoft has re-rated, given their strong growth. But this is not a bubble. This is not a bubble. Are there pockets of excess? Of course. Costco doesn't need a 48 times earnings ratio. The stock's going nowhere as a result. But this is not a bubble. Next year, you're going to get lower rates, maybe the Q4. Trump keeps saying 1% and 1% and you have the World Cup coming. This is going to juice and invigorate animal spirits. You have midterm elections. That's going to

motivate the administration to keep stimulus going. What do you make of the announcements, Nvidia and AMD offering 15% of, I guess, receipts to the Eddunford for sales to China? That's a great. By the way, that's exactly the question. Our team and I are struggling to answer this morning. I asked GPT-5.

The trade-off is this, right? So if you're subject to tariffs from sales, let's say Taiwan Semiconductor, others and you've got to admit 15% of the treasury. Well, first off, the importer pays that to the treasury. So it'd be the hyperscalers, Google, meta, Amazon, Oracle, and plenty of others, by the way, but those are the principal buyers of that, right? So their earnings has an impact. Their cap-ex goes up. That's net negative for the stock, right, on the margin, right? The more cap-ex you have on balance, it's bad. On the other hand, though, the admin linked that announcement

with permitting Navidia to export to China. So it was a carrot and a stick at the same time, which is very thoughtful, by the way. They're thinking about these things. This must have been a negotiation between David Sachs and Howard Lutnik, no doubt. David probably advocated for no tariffs whatsoever in some of these, which I believe would be the right policy. But if you look at, you know, It's a great question. I don't have the answer to that. It depends on what market reaction was. And market reaction was kind of muted to down 35 dips, it's kind of nothing.

So it's like markets anticipated this. And Trump did a taco today, right? We kicked out 90 days on the China tariffs, right? Yeah. So that came out this morning. So markets are saying, hey, look, this is all kind of nothing to worry about here. Yeah. It's, I feel like there's a call.

And Alex Serbs said, I want to hear what you guys think, too. But you can look at this in a few different levels. I mean, for one, I mean, 85% of something is better than 100% of nothing if Trump was going to theoretically ban the sale of this chips to China, even though I know Jensen Huang and others made the case that like that in the long term would have been, would have been harmful to U.S. interest because then that would have an accelerate adoption of Huawei around the world. We'd go away from that. But then, but then it gets to the, so maybe like you can look at it as beneficial to earnings for. for NVIDIA and perhaps any other companies that follow suit. But then the big meta question is, I think the Wall Street Journal today had an article

asking if this is like a new form of state capitalism in the United States. And they were like taking that into account with the golden share that the administration got from approving the Nippon takeover of U.S. steel. Industrial policy. It's industrial policy. But just to answer a question directly, like most of NVIDIA sales are not in China. Yeah.

10%. Yeah. So on balance, it's net negative, 15% on the entire base versus 10%. Yeah, well, 15% on that. So finally, the market really cares. So like the AI story is real. The ROI is there. The earnings are exceeding expectations.

12% of your earnings growth. Alex, do you guys have any thoughts on? No, not as much on other stocks. So then we, yeah, on the AI front, we're sort of seeing a lot. little bit of activity on the on the crypto side we get pitched a lot of the you know these kind of concepts of AI agents that would manage people's funds and put them in pools and stuff in defy but um i don't think it has as much sort of direct impact on what we do day to day yeah i want shathecc't cheapy to manage my money that's certainly take gently take the emotion out for uh for most of us

yeah one other thing just before we move on for macro so i'm i'm looking at kind of the you know the the prospect of rate cuts later this year. I think one interesting phenomena that you see is that if there's rate cuts in Tradfey, the crypto credit spreads will widen and yield on chain generally widens because it pushes up risk assets. So the borrowing rate on Bitcoin goes higher. The yield you can get on chain goes higher. And so I think it'll be interesting to see, you know, how traditional allocators respond to that and whether more money pours on chain. This is a good. If you I want to highlight what you just said is so important and so counterintuitive, right? It's very unique, the fact that the rates go the other way around.

Yes, yeah, exactly. As traditional rates drop, crypto spreads and rates widen, which I think will pull more money on chain. And it's kind of similar to a phenomenon we saw in 2020, 2021, when Tradfai rates, were near zero and you could lend in crypto at, you know, 10% or north of it, so exceptionally wide spreads. And I'll be interested to see now whether, you know, using some of these vehicles like treasury companies, ETF, CTPs, whether those start to be used as vehicles to get money in to take advantage of these, uh, of these spread.

Right. Because you have a closed end fund linked to assets on chain that spits out of yield in the CFI world. And is that active or is it just a pass-through and things to sort out? But all to say, we'll have more products to come. Wall Street will find a way to make that a product and sell it. Yeah, exactly. BDCs for crypto.

Like we had BDCs in traditional finance. Yeah, just to think a little ahead of me, who would be the big winners and losers in terms of like the DFI space? I mean, Avi is by far the biggest. I know curve is something. I'm keeping my eye on just because it's dominance in the stable coin market. But even anyone who plays in the on-chain yield space, so I mean, us, obviously I'm going to be a little bit biased there, but folks like Athena as well, because they're running the basis trade, which will push wider as trad-fi rates come off. Are they other lending protocols, morpho, Camino? So I think-

Where's Sky and all that? You mentioned the- Sky. Sky would also be a winner because if you look, they have allocations to us. They have allocations to Athena. So they're going to pick up more income and their balance sheet. Their balance sheet will expand if trads by rates drop. And so they will also be a winner.

What's going on with the DeFi protocols that launched like Waldorf institutional versions? Like the AMLK where I seek ones. I know Avey has one. I think Compound has one. I guess they be competitors to you in a way. But I mean, what is happening there? Are any of them doing real sizable volume? And is that something for investors to keep an eye on,

especially if sort of this yield spread widens if rates go down? I think definitely keep an eye on them. I don't think any of them are doing sizable volumes yet. And that's for a couple of structural reasons I kind of touched on earlier on this session. But a lot of those institutions hold native BTC. So they don't want to wrap it and put it in a smart contract because they'll consider that a taxable event. And they don't want to take the smart contract risk on it. So even though it's only, you know, AML KYC parties in it, the AML part wasn't necessarily the decisive blocker for them.

It's the fact that they want to continue to use native BTC and they don't want to put it in smart contracts. Also, from a pricing perspective, there's one view that it's the retail depositors in protocols like Arfei or or more flow who are effectively kind of subsidizing the cost of borrow because they're not earning as much as you typically would in the CFI lending markets. And so when you have institutions facing institutions, they're not going to accept that kind of mispricing. Great analysis that I agree. Back in 2021, I was leading the crossroof crypto business. We actually enrolled to be a member on chain. We did this work. We go there. And they reminded me in my high school dance party when I was 15. You got all the boys in one side holding like a cup, all the girls in the other.

There was no market making, no action. It was dead. And I think that was because of a KYC-AML pool was a response to the regulation at that time. I don't think that is necessary in the current world. But we still need more clarity. We need the Clarity Act. Just a quick note here. We are now going to discuss circles,

second quarter earnings, their first quarterly earnings released since becoming a public company, which showed sizable growth in both revenue and circulation of US DC. So look, I don't study those stocks and I don't own them because Circle has been incredible IPO and it's got a 128 PE ratio and there's an unlock ahead. So why would I want to get in front of that unlock, although it's a phenomenal business. Coinbase makes more money on that deal. I think they're a longer term winner. I love CERC.

I think what they did from the industry is incredible. We have clients that work out CIRCELs, I have to say that. But the issue with Circle is that the pioneers have the arrows in their back. And you're going to see a thousand stable coin issuers try to take share in niche ways and the big banks get after it. A lot of VC funding. It goes back to the earlier common around 200 fintechs lined outside the OCC. So they have to protect their domain. They have to protect their domain.

They're on defense. They need more distribution. Where's the distribution come from? Robin has building their own coin, teaming up in a consortium. Crocken is, I believe, is a part of that. JP Morgan's got their own. City's got their own. So I think they have more to lose than to gain.

But I haven't studied the earnings themselves. It's an incredible business. The earnings could do well, but the qualitative aspect of the business is, I think they're not in the ideal position. One thing I want to point out, one of our reporters, Jason Brett, put out a really interesting story on Friday, and we'll link to it in the show notes. Custodia, run by Caitlin Long, I'm guessing all of you know personally or at least have certainly heard of. She's claiming to have a patent covering bank-issued stable points. And she told us in an interview that she is prepared to wield it against the likes of JP Morgan and Citibank and Bank of America.

anyone else, any other bank that might try to do such a thing. Nationally, naturally, Jason and I, we interviewed a bunch of patent experts. People that have argued patent cases before the Supreme Court, et cetera, et cetera. And we really kind of, without getting into all the details, like read the story for the details. But basically what we were told is that her patent is probably not as airtight as she is trying to publicly promoted at as where as she's

publicly trying to promote it but at the same point she may still be able to use it as a card in negotiations

for licensing or maybe acquisition or to just delay some of the efforts by these by these big banks to get into

the stable coin race and if that happens any of that I mean that theoretically could be bullish for circle because I mean at Ram as as you said

like any of these big banks I mean they have trillions of of dollars in deposits. Like, they could issue stable coins tomorrow that would dwarf, circle, and tether. And if there is some sort of delay, so the circle can continue to grow without having to face that competition, that's something worth keeping in mind because Circle, I know Custodias

patent really focused on bank issued stable coins. So Circle would not fall under it. Great. First off, that article you referenced discussing Custodia, that blew up my cell phone. That made all the rounds, especially. in kind of my part of the world where we're looking at the intersection of banks and digital assets. And first I think, Caitlin Hero is a hero to the industry. She sued the Federal Reserve.

It looks like there was choke point two planet two point all over that. She's denied a Fedmaster account in violation of due process. So she's a hero. We should get her on the show. Number two is I don't think she can overplay her hand because the banks will find a way. That way might be call Steve Besson, Scott Besson, say, look, we want to, we want to buy treasuries on chain. Hey, we're blocked. You know, please fix, something like that. So she, you know, I think she has a hand to play, but, you know, she has to figure out where and how to apply it.

Maybe get a licensing deal. That's not a bad opportunity. Yeah. To pay in the, in the, through a royalty stream. Yeah. And that's how Jason kind of ended the story as, as, as, as, as, as, as, just as you alluded to Ron, I mean, she has some cards to play. But, I mean, right now the Genius Act is the signature achievement, I would say, of Trump's entire crypto policy. And I can't imagine a world where, like Jamie Diamond and Jane Frazier and Brian Moynihan, go to Bessons or whoever and say, we want to do this. You pass the law. But this tiny bank in Miami that most people have never heard of is saying we can't.

Yeah. They're going to do. I mean, that's not going to fly. When do patents stop competition? They don't. Is there any case in the technology history? I mean, the big tech companies, they all have tons and tons of patents, even the banks, but they don't enforce them upon one another.

They just use them as patent war chests. They say, okay, we won't enforce. You're not going to enforce upon us. And they keep accumulated IP. And one thing we also learned is just how many crypto-related patents banks have that people don't even really know about yet. Because, I mean, they're just, they have somebody in real. room thinking stuff up and patented

R3 has been out there, other consortia, yeah. So, yeah, so that was just my couple of quick thoughts on, on circle. And, Rahm, I'm glad you said that about Jason's article. I know he put- I think I read that article in the last paragraph said that. And I was like, yeah, this makes sense. So credit to Jason for that.

Yeah, I know he put- you basically here. So. I was like to end it with you guys, like, either sharing your contrarian opinion or just something that you wanted to kind of get off your chest that sort of left on the cutting room floor. So, say, why don't you go first wallet?

I think banks will try and issue stable coins, but I don't know that the volume you'll get out of banks will be trillions straight away. Like I think I'm taking the under bet on how fast they issue or ramp up their issuance because effectively it's tantamount to them issuing a zero, you know, zero percent interest checking account, right? Like circle and tether keep all the interest from T bills. And then also when they take the money and buy T bills, they can't put it into other loans. So if you're a bank, your opportunity costs is that you now can't put the money into real estate back loans or other lending assets that you are in a higher return on equity on.

And you're, you know, you're effectively issuing a 0% checking account, which most of your, most of your clientele, your existing clientele won't want. And a lot of the clientele who wants stable coins is already with effectively banked by Tether or Circle today. So I think it's competitive, but I don't think they're going to come in and crush circle and tether. Actually, I'll go next. They usually go less, but like my, I don't know if this is quite a contrarian opinion, but building on what you said, said, if I'm a bank, I'm with you. I mean, it's much more efficient from a capital point of view to issue deposit tokens, like what JPMorgan's trying to do on base. I mean, why would they issue stable coins that have to be 100% collateralized when you can issue a deposit token that can be five or 10% collateralized? And then you get other questions.

I mean, like, is there a way to apply FDIC insurance to that? Like, also, and can they be fungible with other, like, deposit tokens from other banks? At least a bunch of other coordination questions that would have to be addressed. But, yeah, if I'm a bank, I mean, aside, like, issuing stable coins would be, I mean, yeah, you do it because it's a growth industry. You're not sure how it's going to evolve. But I would almost see it as sort of like a lost leader type of defensive strength. And if I were them, I would issue something big enough to make a mark, but as small as possible to not cannibalize my other businesses. So I'm sure that's kind of what they're thinking about.

Ron or Alex. Briefly, look, I think not consensus view. Tether's a big winner here. They have the international market all to themselves. Well, I guess Tron is in there also. Trump gave Tether a call out. Tether is more strategic than Kleiner Perkins, Sequoia. They're minting.

They're extremely profitable. I said before, if I could own a slice of tether, I would love to own that. They have connection to the admin through counterfeit-Gerald. To, by the way, no position, no opinion on Circle. Two last parting thoughts. One bullish, one bearish, different timeframes. The first one is on the Fed. The Fed is basically the market is pricing three cuts by the Fed.

25 pipsage by January 26, right? Between January 26 and July 26, market is pricing in one additional cut. That to me is the market mispricing the dovishness of the coming chair. It's heavily mispriced. Misprice which way? Same that. Misprice by the futures market. It should be more.

An ultra-dobbish, assuming we get an ultra-dobish chair, which I think is a fair assumption, an ultra-dobish chair only putting in one cat in his first two, 125 bibs cat in his first two meetings. It's mispriced. You think he can't go to FOMC though? He's one, I mean, he's a leader. He's got a big thumb on the scale, but I think he does. It's never happened in history.

that the FOMC votes against the chair. Never. So that's one on the other hand on inflation, not in August, not now, not tomorrow, but later in the year, starting in October, I think. Let's put it this way. Right now, U.S. businesses, they are absorbing about two-thirds of all tariffs. That's why there has been very little pass-through into inflation. It's happened, but it's been little. Historically, consumers, US consumers, or whoever puts the tariffs on, they end up absorbing about 90% of tariffs.

This is widely documented. There is dozens and dozens of papers with empirical studies and data on this. So inflation is going to start biting later in the year. Not right now, but later on. The thing is this is also, it's kind of like, well, it's not kind of, China. It's priced in. Economists have this in their forecasts already. So it's either going to be neutral or bearish. Let's put it that way. But inflation matters. I mean, yeah, it's like it seems like the Trump crowd is like living in an alternative reality, to be honest.

But the inflation is born in private markets, not public markets, is another conclusion I have. So you're right, small businesses are taking the hit. But in public markets, you know, fine, Walmart, Costco takes a head, they can adjust their supplier. It's a great point you're raising. I just don't know that public market firms have as much exposure as, say, the mom and pop on Shopify importing hockey sticks from Vietnam. Private small business. Yeah.

It's an interesting point, though. Yeah, definitely something worth following. Well, I think that'll wrap it up. Thanks to everybody for watching and listening. Thank you, Sid, for joining. Really enjoy the conversation. and we'll be back to next week with another episode of bits and bibs have a good week everybody