Unchained - Bits + Bips With Nic Carter: Trump’s Promises, Kamala’s Shift & ETH’s ‘Narrative Problem’ - Ep. 681

Episode Date: July 31, 2024

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger, and Joe McCann dive deep with Nic Carter into the game-changing promises Trump is making to the crypto community, Kamala Harris’s unexpected policy shifts, and the explosive rise of Solana.  Plus, Nic reveals his unexpected journey into amateur fighting and tackles the pressing issues around Ethereum ETFs, and what ecosystem he’s been funding more as of late.  Show highlights: 00:00 Intro 01:23 Why Alex believes the conference was one of the most incredible moments in the history of crypto 10:00 Nic’s reaction to Trump mentioning breaking down ‘Operation Chokepoint 2.0,’ a term that Nic himself coined 13:44 Nic’s karate fight and his journey to becoming an amateur fighter 21:42 Why Nic thinks that there’s no chance that the Lummis bill proposing the US government establish a strategic bitcoin reserve will pass 29:31 The significance of Trump’s promises at Bitcoin Nashville 36:26 How Tether is comparable to the Eurodollar system 39:41 What the potential impacts are of the Fed's language during their upcoming meeting 47:17 The implications of the Harris campaign's outreach to reset relations with crypto companies 55:44 How the ETH ETFs launch went and why Nic says that Ethereum has a “narrative problem” 59:34 How Solana has been ripping lately and Joe’s response to some of the criticisms 1:07:22 How Nic, as a VC, sees the ETH vs. SOL debate and how founders are increasingly choosing Solana Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Alex Kruger, Founder of Asgard Joe McCann, Founder, CEO, and CIO of Asymmetric Guest Nic Carter, general partner at Castle Island Ventures Links Bitcoin Conference: Trump’s speech: Unchained:  At Bitcoin Conference, Trump Promises to Fire SEC Chair Gary Gensler If He Wins Trump Has Made Promises to Crypto Voters. If He’s Elected, What Could He Actually Do? Lummis proposal:  Unchained: A Bitcoin Strategic Reserve for the U.S.? Senator Cynthia Lummis Reveals Her Bill  The Block: Hong Kong lawmaker advocates for including bitcoin in financial reserves following Trump’s speech |  Democrats/Harris seeking “reset” Letter from Democratic politicians to DNC chair to put crypto plank in Democratic party platform:  ETH ETFs Debut: Unchained:  Grayscale Ethereum Trust ETF net outflows hit $1.5B Will ETH Follow Bitcoin’s Path and Reach New Highs Now That Spot ETFs Are Here? BlackRock: Our Spot Ether ETFs Are Complements to Bitcoin ETFs, Not Substitutes The Block: At this rate, Grayscale's ETHE could run out of ether within weeks |  Solana’s ripping: Unchained:  Solana’s Growth Metrics, Including Stablecoin Supply, Continue to Take Off -  Solana Exceeds Ethereum in Monthly Trading Volume for First Time, But Not When Ethereum’s L2s Are Included Learn more about your ad choices. Visit megaphone.fm/adchoices

For me, to me, the most important thing is not the Fed at this point is for Bitcoin, right? Not for equities. It's the Trump Kamala play. It's like who wins. That's what we really care about the most, I think, till November. Hi, everyone. Welcome to bits of bits, exploring how crypto and macro collide one basis point at the time. I'm your host, James Safer, Tradfai Archmister, Lord of Bloomberg's End, here with Alex Kruger,

Cougar Macro of House Asgard, Protector of the Realm, and Joe McCann, Lord Commander of Asymmetric and Master of Bunk. We heard discuss the latest stories in the world of crypto and macro news. Just remember that nothing we say here is investment advice. Please check UnchainedCrypto.com slash bits and bips for more disclosures. Also joining us today is a man that needs no introduction. Nick Carter, Lord of Castle Island, Destroyer of Livers, Karate Combat Influencer Champion of the World.

Nick, you really don't need an introduction. I'll see you are real quick, and then we can we can dive into talking about the Bitcoin Conference. Thanks, James. Yeah, I'm a GP Castle Island. We invest on the equity side and businesses in the crypto space. And for some reason, I'm an amateur fighter now as well. So undefeated, 1 and 0, soon to be 2.0, a cage fighter.

So that's a little thing about me too. Don't worry, guys. We are going to get into the karate combat fight here. But first, let's dive into the Bitcoin Conference. key takeaways. I guess before you're even getting talking to Trump's speech, was there any key takeaways you guys had? I guess turn it over to you, Alex. What was something you were watching or you noticed that you paid closest attention to? I mean, I think I have and we have so many takeouts, all of us, right? I mean, this was, I think, was one of the most incredible moments in history

for crypto overall. We can go from like from things Trump said to to the market's reaction, to people's reaction, which is not the same as the market, right? First of all, I've got to say, so today for traders, we, during the conference, price, like, pretty much stopped every short-term guy out, the spiking up and down. It was quite significant by the news, sell the rumor into the event. Then Trump, I think he delivered everything, almost everything, that we could have expected from him.

And we had like a quiet, surprisingly quite weaken. And then into the open yesterday we ran up up to like 69, almost 70. Today we hit 70,000 on the dot. And collapsed. And then and then wham. So it's very significant because we had a very, very significant news hit the tape. we run up to 70,000 again and went straight down 7, 7, 8%, down to 66. Pretty brutal movement.

And if today I was away from the market, but if I had, so I may have missed something, it's Monday, by the way. But if I had to rationalize what happened, I think is the Kamala Harris trade, is the market putting emphasis on the polls that are coming very strong. for Kamala. And the reason I'm saying this is because if you look at small caps, small caps is a key component of the Trump trade, meaning Trump is good for small caps. Small caps today are down 1.2 percent, 1.1. They were like sharply up on the open, then then dropped, not a collapse, but a significant move down. And in the meantime, tech stocks are flat in the day, the Dow is up.

So I think is the Camala trade and basically Bitcoin is the main or one of the main place in this Trump Camila trade. What do you guys think? I'll add a little bit just with the market structure color there. So I think Alex's point about the Kamala trade has some credence to it. But I do want to point out a couple things that happened over the weekend. And then certainly on the cash equities open for the stock market on Monday. So one week, like at the money evolves in options for Bitcoin were like 75 on Saturday. They were 50 today.

And so a lot of people were buying August 2nd, which is the expiration for this week, in kind of in lieu of the Trump speech, which, you know, kind of makes sense, right? If you think he's going to say something that's really material that can move the market and probably want to get some leverage on through options. But after his speech, those vols started to come down really fast. And today, the same thing happened. You had, you had Asia, like to Alex's point, they were buying all throughout the day. Even Europe, you know, pushed it up to call it 70K to the tick. Then the cash equity open happened. Vols got crushed and, you know, the cell programs began.

And you can just look at like the chart for the, from, you know, 930, Eastern to 4 p.m. Eastern. And it's basically straight down sell programs. Now, why did that happen? More sellers than buyers. But more importantly, there's also a lot of basis trading that still goes on. And folks tend to, you know, they can sell the CME futures and buy the underlying ETF as kind of like a quasi basis trade, if you will.

But we've seen this now last week, Monday, through Thursday was just offered heavily ahead of the Trump speech at the conference. And on Friday, we caught a bid. And here we are Monday again, up near 70K. And it's just heavily offered again. Now, the one caveat I'll add that Alex was somewhat alluding to, there's this really powerful inverse correlation between Bitcoin price and NASDAQ. And when it goes heavily negative, it's usually a bottom for Bitcoin. So we saw this actually a couple weeks ago. Today, NASDAQ was up. Bitcoin was down. We've got huge tech earnings later this week. So that could be factoring into how some folks are playing this correlation trade.

I would suspect that if tomorrow or Wednesday when this airs, NASDAQ is down, you'll probably see Bitcoin up. Yeah. I mean, we talked about this last time. I think that breakdown in that relationship. Actually, I interviewed Robbie Mitch Nick at the Bitcoin conference on Thursday for people who were there for the industry panel. And I got them to, we can get into the stuff that he said. But he talked about how this breakdown and correlations between Bitcoin and Tech Sox is a very, a very good thing for as far as they're concerned. A lot of their clients care about the fact

that Bitcoin has low to zero correlation institutional assets. So the fact that it was so correlated tech stocks in some of the runups as what was going on with rates the last couple years was not necessarily a good thing. He also said that he basically didn't like the fact that people were calling Bitcoin a risk on asset. He thought that was doing a disservice to what Bitcoin was, which I kind of get, I've heard that from Bitcoin for a long time. I kind of view it as a bit of a risk on asset, but to hear BlackRock's heads of digital assets basically making that same argument as I'm used to hearing from hardcore bit pointers, I thought was pretty powerful. Nick, do you have anything to add? What were some of your key takeaways? Do you disagree

with some of the market topics that Joe and Alex are talking about? Well, just on Alex's point, the Camilla trade is interesting because Trump's the favorite in the prediction markets, as far as I can tell. But then we see very strong polls favoring Camela. So I don't really know where the market stands on that. I haven't seen her prospects. I haven't seen her rallying that much in the prediction markets, but the polls and just the general enthusiasm I see and her improvement and favorability on the Democratic base does suggest that she's rallying here. And certainly, you know, we haven't seen any real indications that she would favor Bitcoin in any way. So I think describing Bitcoin as part of the Trump trade is accurate. So yeah, that's just something that continues to puzzle me about the

market is the divergence between prediction markets and then the actual polling. Yeah, I think that are, I think basically my thing is that I saw. It's like June. It was like Trump was heavily favored or Trump was slightly favored in June and he really started picking out after that debate. And now he's backed out and Trump's might only be slightly faded as far as the polling goes. I think part of that might be that I think the prediction markets people tend to probably lean right would be my guess. So I think we probably have to discount the prediction market percentage odds. But that's who I don't know of any. the academic or real research, but that's just my inkling and finding that I've seen out there.

As far as the Trump speech goes, I don't know if you guys agree or I'll tell you my overall thoughts. I was there live. I almost fell asleep at some points. But I mean, he basically delivered on like 99% of what people hoped and dreamed that Trump would say. And people in my mentions were acting like it was the worst speech ever. And he didn't say anything that people wanted to say.

And people were complaining with the same. Hey, Jay, that's right. Jay, is people on the internet are upset about something? So weird. Yeah, I feel like these people, like, they just have never seen Trump speak before or something. Like, they were just like, he's just rambling on. I'm like, this is exactly how Trump does every other speak. He hit everything you want to.

He said he's going to fire Gary Gensler. He said he's going to end the war on crypto. He gave you a shout out. Nick, he said he was going to end choke point 2.0. Congrats on that. For those that are known, that's Nick coined that term. I mean, he said he was going to add us what we're, did he use a stockpile, a Bitcoin stockpile. He didn't say strategic reserve, but he said he was

going to hold all the, I mean, I don't know what else anyone could want, aside for the fact that they just don't like Trump's speech style, which honestly isn't that crazy, consider the way that he does, he says anything. But I'll turn over to you, Nick, how forward were you when he called out choke point two point out? Yeah, I mean, he's getting advice from some very smart people. And it is remarkable that I wrote a blog post on pirate wires and that that became part of the political discourse in this country. It blew my mind, actually. Hey, Nick, can you actually explain for the listeners what ChokePoint 2.0 is?

Yeah. So Choke Point at one point, it was the actual name of a official program under the Obama administration to marginalize certain types of businesses that they didn't like through unconstitutional means, basically by having bank regulators apply pressure to the banks to apply pressure to payment processors to unbank or de-risk certain businesses, primarily gun manufacturers, payday lenders, and then all sorts of other, the adult industry, all sorts of businesses, some of them politically disfavored like firearms, and then some were just random industries that were targeted by the Obama admin. They called it choke point. That wasn't something that, you know,

it sounds so sinister. That was the official name for it. It was incredible. And that sort of ended, basically ended when Trump came in office after FDX in January of 23, a similar thing resumed. Primarily the Fed and the FDIC were the driving forces. And the chair of the FDIC, Grunberg under Biden, was the same one. He was in office under Trump. He'd done it before. He was in office under Obama, sorry. And similar playbook, basically banks going or rather federal financial regulators going to banks

and using insinuations and threats and telling them to debank certain industries and specifically crypto. And I feel that they did it after FTCS because at that point they felt that the political air cover to do it. And it worked. I mean, you know, if you're an early stage startup and crypto and you want to get access to banking,

it's very hard, it's very expensive. It was very effective and it's still in effect. We are the ones that called it choke point 2.0 it's very reminiscent of 1.0. That's not the official name for it. But yeah, I mean, it is extremely sinister and it's really challenged the industry domestically and it remains a huge, huge problem. So it was very, very meaningful, I think, to the entire industry that Trump specifically called that out. Yeah, I agree. I mean, we talked, I think, on one of the first episodes of bits and bits about when the FDIC chair stepped down, it was like when all this

kind of sea change events were happening with respect to the Biden administration on crypto. I think it was in May timeframe. And we referenced choke point two, but I mean, as a, you know, somebody running an investment firm in digital assets, I know you know this all too well, Nick. It is incredibly difficult to get any sort of banking related services. And our portfolio companies run into the same issues. So to see it as part of this like, you know, political discourse from a presidential candidate who's a former president, irrespective of your views on politics, you know, for or against Trump,

like, it's pretty remarkable. And you actually mentioned this in a, in a tweet that you, you so rightfully got to post a shirtless photo of yourself after you won your fight. You talked about a couple of things. And can, and I don't want to, like, spoil it for, for the listeners or the viewers, but can you maybe, you talk about, you know, show point 2.0 in there. But the spirit of the I think resonated with a lot of people about what you can actually do. And can you maybe just talk a little bit about that and the points that you made in there? And then we can obviously dig into the fight. Yeah, people love this tweet, man.

So obviously the context is that I won a karate fight, despite never having fought ever. I've never thrown a puncher head in any, not even a school yard fight. I wasn't a fighter. And, you know, the point is, you know, the point is, anyone can become anything, obviously given various caveats. If you have desire and discipline, that's it. And I think the point of the tweet is, you know, you have agency and you just have to pursue it.

And that goes for getting into mixed martial arts as an untrained person. And that goes for my reporting around choke point 2.0, which was very politically impactful, even though I'm not a journalist at all. It was a rabbit hole. I decided to chase and I talked to sources and acted like I was a journalist, but I'm not, wrote that one up,

and then it ended up influencing political discourse in this country. So, I just wanted to encourage people and share a bit about my journey, which, you know, I don't often share personal details on Twitter, but,

you know, I thought it was a pretty opportune moment to do so. Yeah, it was awesome. But now, let's talk about the fight because everybody's wanting to know about the fight. I mean, we obviously know that you won. Can you maybe talk about your opponent, like your training, you know, what it was like in the ring? I think a lot of folks will see these, you know, we watch the karate combats and, you know, these kind of like, you saw Bit Boy fighting and it's, you know, it's a bit entertaining at least. But like, I think you took it a little, you know, you took it seriously.

So do you want to just walk? through like the journey and then you know ultimately that the fight itself what it was like and your opponent and all that yeah so for context karate combat is a fight promotion with actual professional signed fighters and then also in parallel there's an influencer fight promotion on there which is very amusing that it's a mashup of sort of like real fighters and then ordinary people like me the format is mixed martial arts basically like ufc but without submissions so that's the main difference so you can't put someone in a chokeholder an arm bar or anything And it's designed for action. It's designed for knockouts. And I saw BitBoy fight. He fought. He won. And people are like people's attitudes to BitPoint changed after that. Remarkably. I actually saw him after my fight. He's pretty nice guy in person. I'll say that. And I had been to these fights because I'm a fight fan. And they asked me to fight. And I didn't know the first thing about fighting. This was in sort of March or February March.

and I figured that I could do it. I wanted to challenge myself. And as I said in one of the tweets yesterday, I had really tough health issues in December and January. And I wanted an excuse for trying to get into excellent shape. And I know that being in shape for fighting is basically the best shape imaginable. And so I did like a fight camp. Like I actually,

and I was slated to fight David Hoffman, of course, the first time. until he had to pull out a week before. And so I did my first camp, didn't get to fight. And then the organizers found me, someone who's roughly my experience level and my exact size. He's called Cody Kuhn. He works from one of my portfolio companies, DFX finance. So wait, wait, wait, time out.

Time out. You're glancing over that. So you, you, you, you, you, co-ed one of your Portco's employees. Yeah, unfortunately. Yeah. Good luck on sourcing good deals going forward. Hey, hey,

I'm going to invest, but I might knock you out. He knew what he was signing up for. And I knew that he could kill me, right? Yeah, we both took it seriously. He was ex-military.

He was military veteran. And he was in shape. Like, he showed up. He had abs. He looked good. And he had a little bit less training than me because I sort of had two training camps.

He had one. But I was starting from absolute scratch. I think he had more of a wrestling background, actually. If you watch the fight, you can tell he had a single leg take down on me, which is a wrestling take down. And he was game and he was a really tough guy. And I take it seriously, I knew that the format was very prone to knockouts. And I sat in that locker room all day as the other fights went on. And these guys would trickle back into the locker room and they'd be completely busted up.

Just horribly bruised in some kids. It got knocked out. And I'm like, oh, my God, this is what await. This is my fate in a few minutes. How long are you sitting in the locker room? Seven hours. I waited in the locker room, just the distress levels building. I did sit next to Al Jermaine Sterling, who's an active UFC fighter,

Bantamweight, really successful fighter, which was very, very cool. I got to harass him and asking him some questions. But yeah, and then I got to the fight, and it was completely instinctual. I wasn't able to really execute my fight plan at all. I had actually mainly trained boxing, but my boxing skills were not on display that night. I looked terrible from a hand's perspective. I didn't throw a single right cross, which I was meant to. I didn't level change on the jab.

I didn't throw an overhand right, which I was meant to do. And in the end, it came down to knees and kicks, and I landed a few really good knees to the body and the clinch. I grappled with him effectively and I landed a liver kick that shut him down and was able to finish him with the hand so I am very very glad that it lasted only a minute because I was getting tired

and I didn't want to fight three rounds so very very lucky I was able to get the KO and walk away totally unscathed yeah I was I was gonna say I was there for I was waiting for you I thought I was gonna miss your fights so I got there a little after nine and I was like I think he's gonna fight like 930

and I was there for two and a half hours waiting for you. I was actually, for those in the audience, I already told Nick this. I was like literally 10 feet when he got the CO, which was awesome. So shout out to Nick O'Neill or Cheez Root Nick for getting me in there. But yeah, it was awesome. Congrats, Nick. It was, it looked awesome. It was a good fact. I wish it lost it longer than a minute, though. It would have been a little more entertaining, but that's okay. At a curiosity, why seven, seven hours in the locker? That seems like a really, you know, kind of like counterproductive, no, for, for, you know, being ready. Yeah, I actually brought my laptop and I was working in there and everyone was like,

Nick, what are you doing? I'm like, guys, you don't understand. I'm a venture capitalist. You guys are you guys are professional fighters. I do Excel for a living. I have to do Excel right now. They're all like hitting pads and like warming up and like talking to their coach. And I'm tapping away writing a stable coin report in the locker room. Yeah, but yeah, they made it, they made us way because the Tennessee Athletic Commission needed everyone there for the whole duration. I was the last fight. It was the main event. And they made us all due medicals in the stadium.

And actually, one of the influencers failed the medical and they'd cancel a fight because of that. So they took it extremely serious. It was a sanctioned fight, drug tested, physicals, blood tests, everything, like seriously. real deal fight. Wow. Well, if this Bitcoin thing doesn't work out, you know, MMA is in your future. There may be another fight.

I will, I'll tease that. Oh, are you breaking news on bits and biffs? Yeah, come to Singapore. Come to token 249. Yes, awesome. Well, I know we talked a little bit about some of those stuff that's at a conference, primarily the Trump speech, but one thing that we should probably talk about is, what happened immediately after the Trump speech, which was Senator Loomis announcing an announcement

of a bill that she's looking to author for creating a strategic Bitcoin Reserve in the United States. So for those of you who aren't necessarily familiar with this, Senator Loomis out of Wyoming, Wyoming's a very blockchain Bitcoin-friendly state. She's very pro-Bitcoin, pro-crypto. she more or less, I think, wanted to get some credit for what Trump, if Trump gets elected, hey, I wanted to put this bill out first or whatever it may actually be. But in essence, what stood out to me was some of the details behind it. One, wanting to actually create like a strategic reserve of Bitcoin. Two, the amount, which is roughly, I think, 5% of the supply, which I think, five percent of the supply,

which I think is, if my math is correct, roughly like $68 billion with the Bitcoin at current prices or roughly in that neighborhood. And that would be purchased over the course of five years. But three, and I would love to get Nick's perspective on this, given that you're pretty knowledgeable with the Bitcoin miner space. I think she had mentioned something to the effect of the United States actually creating sort of their own secure,

sort of decentralized set of Bitcoin miners to secure the network. So to me, this is, I mean, obviously it's great for all of us in crypto, but it's a pretty forward-thinking bill coming from Senator Loomis. So, Nick, why don't we start off with you, and we can pass it off to James and Alex State if they have any perspective? What was your kind of original takeaway or thoughts from the Loomis bill? And do you think it's going to pass?

Do you think there's going to be like some additions or subtractions from it? What is your overall view? Well, I think Trump's proposal. is much more pragmatic politically, and he's basically saying we're going to keep the Bitcoin so we've already seized, which itself is actually questionable.

I hate to say it, because those Bitcoins aren't really the U.S. government's property. You know, like a lot of those Bitcoins came from the Bitfinex hack, so they belong to BitFinex users, creditors, whatever.

So I even actually have issues with that, frankly. But in terms of the political prudence, Trump's plan, it has a much lower attack surface. If he were to endorse just straight up market buying Bitcoin through whatever mechanism, I think that would really leave him open to attack from Democrats. And he still has to win the election. So, Lemus, you know, she, I don't think as great as she is for crypto,

I don't think she is that much clout in Washington. And so I see this as a statement of intent. It's a way to endear herself to the Bitcoin community. I don't think there's any odds whatsoever of this bill passing. But yeah, I like Trump's idea of just sitting on the seized Bitcoin, although we are going to have to work out who it belongs to. I mean, rightfully, some of those bitcoins should go back to Bipfinex. So even that one, I think, has some issues.

Yeah, two things. I would say, one, I was telling clients that I thought that's what Trump would do. I didn't think he was going to say of market buying. RFK was a lot more aggressive. I will also say RFK, I don't know how much Trump actually knows about Bitcoin. I know he knows what talking points ahead. He has very smart people that know this industry well and what to say. RFK, in the other hand, was able to go deep on various topics relating to Bitcoin and

blockchain and general, stablecoins, what have you. So that was one thing I want to say. The other thing I would say, you mentioned the BitFinnix Act. Eric Wall talked about that on Twitter. But also, Rosal Khan was, I saw her multiple times at the conference. She was at the fight. She was at the fight. I gave her a hug after her.

I won the fight. So for those that don't know, her and her boyfriend are the ones that have, I guess, have they been convicted? They've been accused of being the ones that perpetrated the Bithynethe. So a lot of those coins that we're talking about actually kind of came from her. When the U.S. becomes the Bitcoin nation, we have Razzlecan to thank for it. Yeah. Thank you, Razzlecan.

We could share now her sticker. She hands out the stickers. They're pretty great. One thing I do want to say on the lemmas bill is I did the math, and I think we own about 3.4% of all the above ground gold. So her proposal is actually more aggressive. Because if I was to come up with a number of how much Bitcoin we should buy, if we were to buy some,

I would imagine you would just match the amount of gold. And so she's actually going further than that because she wants to buy a million out of 21 million Bitcoins, which is 5-ish percent. So hers is even more aggressive. Well, the art of the deal is you ask for more than you actually want and then you settle on where you want to go. So maybe that's the plan. Nice plug on the art of the deal. Look, I mean, the fascinating thing about her, you know, yeah, going more aggressive on the sides.

I mean, obviously we know that there's a fixed amount of Bitcoin. And we also know that there's millions of Bitcoins that are lost. And so I think the true supply is less, which would increase the percentage even more if it's a million Bitcoin. But I think the point that you made, Nick, is that the above ground goal that we know of is 3.4%. We know the fixed amount of Bitcoin. And so I think RFK, I could be wrong, was coming out even more aggressive to match the notional value of the gold that we have, which would have been like $800 billion or something in Bitcoin. So it just all the Bitcoin. All the Bitcoin.

I was like, really? All of it. All of it. But yeah, look, I also agree. I don't think this bill actually goes anywhere, certainly ahead of a presidential election. If the Republicans can retain all three branches of Congress, then, you know, maybe there's a modification to it. Maybe there's a little bit more give and take with respect to it getting done.

But for me, like, and we've talked about this in the past, you know, crypto and Bitcoin specifically are very narrative-driven. It's a very narrative-driven asset class when you're speculating and trading it. And the fact that this is now kind of a quote-unquote official part of the discourse of creating this strategic reserve asset or strategic reserve of Bitcoin is now bleeding over into other lawmakers and other countries. And so we saw a lawmaker in Hong Kong who's been very pro web three, crypto, et cetera, also come out and say, you know, we should do something very similar. And I do think this is, to use the cliche, it's not priced in. I don't think a lot of people have priced in the idea that if this were to actually pass, what other sort of developed countries would end up actually needing or wanting to acquire

some percentage of the total Bitcoin supply for their reserves? That I think is a large potential number. But of course, it's path dependent, right? If this never sees the light of day in terms of becoming law, well, the narrative doesn't really matter too much in practice. But for now, it certainly has operated like a sufficient tailwind to the already big momentum that's happened since a failed assassination attempt of Trump. Yeah, it's like that Will Ferrell's saying, it just gets the people going.

I mean, it doesn't matter that it's not going to pass because, yeah, I think the odds of it passing are like almost zero. That's not the point. The point is to get the people going, to get other people talking is the fact that we're just talking about this and it's out in the news, it's incredible. Let me say a few things that like some phrases from Trump of things that he said that are also just incredible

to highlight how far we've gone is things he said. It's like Bitcoin is the new steel industry. Bitcoin will surpass the business. gold. Okay, this one is kind of funny. Bitcoiners are high-kew individuals. Yeah. I'm thinking how much Bim coins were slinging. Yeah. Other ones. Farragary Gensler, day one. And we talked about this. And choke point two zero. No CBDC, central bank digital currency, right to self-cacity, the freedom of transactions, turning the US into a Bitcoin mining powerhouse,

never sell your Bitcoin. All things that are just incredible, we went from basically just just a couple years ago. It's crypto was a disease in the eyes of the establishment. We were the faces of a disease and now they are here. I mean, I'm going to be a little bit explicit now. and I like being explicit sometimes. It's kind of like Trump came out and he gave us a joke. And just appreciate it.

He came and he gave us what we wanted. Yeah, he may not deliver and everything. He may not even become president. That's not the point. Everybody is now talking about it. That's what matters. That's right. Yeah.

And like we've said on the past, like remember, a politician's job is to get elected, and stay elected. And so, you know, definitely discount a lot of what Trump is saying. But to Alex's point, hey, we're talking about it. It's in the discourse. Mainstream media doesn't have a choice, but to start talking about this in some capacity and other countries' leaders are paying close attention to this. And he's also committing to like very specific things. So he's not just generally embracing the industry. Like those are very specific things. Fire Gary Gensler, repeal, choke point. create a crypto advisory council and create legislation within 100 days. These are very specific commitments, which are hard to walk back.

Although actually on the fire, Gary Gensler front, a lot of people are saying he can't do that. Yeah, he can't. But, James, I looked, I asked Chat Chupit and Chat Chbett said, if Gensler, or the SEC chair has sort of like significantly been derelict in his duty, he can be removed. And arguably, all I'm saying is there's like a maybe a loophole. The two things of that. One, the audience was by far the loudest on that on day one, I will fire Gary Gensler. And if any, he talked about freeing Ross.

He talked about all these other things that like usually Bitcoiners go up and arms are out. But the loudest by far that audience was that as far as I could tell it. I was in the room was firing Gary Gensler. As far as firing him. I mean, fortunately speaking, yes, he can't technically fire him. it's going to be really hard. But, like, one, it's standard procedure to, like, just roll out of your position if the president turns over and it's not your party.

Like, that's just the way things typically work. So he'd probably be gone with a few months anyway. And two, he can make his life a living hell. He can basically force him to, whether or not he can technically do it on the day one, yeah, that probably can't happen. But everything, he would be gone no matter what if Trump won as far as I'm concerned. I mean, theoretically, if Gensler really wanted, he could probably stay on as a commissioner, but he wouldn't be able to stay on as chairman because Gensler, I mean, because Trump would be

able to put somebody else on as chairman, I believe. Yeah, the chairman is chosen by the president. He can't fire him from the SEC, but he can fire him as the head, right? He still gets from both. There was one of the thing that Trump said that was new, which he hadn't previously said, and it wasn't in the Republican platform. So a lot of what he said was in the explicit Republican Party platform. He hadn't said anything about stablecoins before. I thought it was notable. He said he supports stablecoins, supports stablecoins for the sake of extending dollar dominance globally. That's obviously a talking point we've heard from folks like Paul Ryan, obviously something that we all talk about all the time.

I thought it was very notable that Trump said that too. 100% agree. Yeah, I mean, we've been, I think James has mentioned this multiple times on this podcast. Like, it just seemed so obvious that we would maintain the dollar hedgemanee by embracing stable coins. Hello, right?

And I also agree. the fact that it was brought up, and I don't know if it was, I doubt it was ad-lib, but, you know, the fact that it was in his speech, very, very compelling and powerful. And look, like, whether you're a fan of Tether or Circle or not, like, they're all growing and growing really, really dramatically, I would say. Now, granted, Stablecoin supply probably, certainly on the circle side isn't where it used to be, et cetera, but the kind of integrations where Stablecoins are going and even like PayPal, right, releasing their stable coin. Like it seems highly unlikely that stable coins are going to somehow be, you know, regulated out of the system.

But we haven't had any clear guidance on anything, particularly stable coins. And Circle spends an enormous amount of time and effort and energy and money in D.C. lobbying and trying to get, you know, things continue to move forward. The fact that it was brought up, I do think is also quite notable for the stablecoin space. Because whether you like it or not, it is actually probably the best use case beyond speculation for crypto right now. I mean, I certainly use it. I know other folks, especially outside of the United States when there's demand for dollars, it's a huge boon for folks to be able to get access to stablecoins.

So, you know, whether we like it or not, the dollar is indirectly maintaining its digital hegemony. it would be nice for, I would say, the U.S. government to embrace that. Yeah, I mean, Nick's done a lot of work in this. I've read some of his work. I mean, if Circle was allowed to do interest-bearing stable coins, I bet you they'd have way more dollars backed by Circle, right? And Tether is typically used by people internationally who typically don't have access to U.S. bank accounts where they can earn interest, so they're just worried about

that debasement. So that's why, Heather, in my opinion, that's why Tether's so I. I'm saying, sorry, James, something you want out of this. It's actually a question for Nick or could be. great for the audience, if you could expand on how terror is comparable in a way to Euro-dollar. Yeah, I don't know if Trump understands this one just yet, but maybe Vivek does. He will.

Vance might. Actually, one very quick side note is Vance has kind of suggested the dollar hegemony is actually bad for sort of like Middle America, which is kind of a a Lin-Ald and Luke Groman talking point, which I actually agree with. And so that almost trades against. That actually almost opposes this state. We should extend the reach of the dollar via stable coins talking point. But yeah, I don't know if Trump will achieve that level of sophistication.

And it's a controversial point anyway. But yeah, was the question how do, oh, how are tetherers like euro dollars? Yeah. Yeah, I had to talk on this at token 2049 last year. I think basically the idea is, you know, euro dollars emerged because there were various restrictions on the U.S. banking system, actually including interest that could be paid, but also there was just a desire to transact outside the U.S. banking system in dollar terms to avoid all of the sclerotic nature of that system and the risk of transactions being politicized.

That story was totally recapitulated with stable coins. Crypto users had a very hard time getting banked, and exchanges were not, linked to the banking system. Bitfinex was the creator to the other or the parent org was. So the traders could actually transact and they didn't have to use sketchy Taiwanese banks as intermediaries. And initially, stable coins were just used for settlement and collateral exchanges. Now it's become much bigger than that. It's become a digital dollar access tool for the entire world. And all of these folks, you know, XUS do not have access to dollar banking. And so it's an absolute godsend.

So very, very analogous to Euro dollars. We're actually going to publish a report in September, profiling five emerging market countries, looking at how folks in these countries are using stable coins, not for crypto stuff, but for everyday usage. And so I find that tremendously interesting and what you see is crypto-dollarization. Of course, we know about this in Argentina and Venezuela,

but it's much bigger than that. And I think it's going to be very, very disruptive to all these sovereign currencies and potentially cause the destruction of a bunch of weaker sovereign currencies in emerging markets. And something of note is Euro dollars is

about $13 trillion in euro dollar deposits right now. It's a big market. It's bigger than the onshore dollar market, I think. Yeah. Yeah. I was going to say, when I first started covering crypto in general

back in 2017. We tried, I think, Nick, you also, we tried to call these crypto dollars. I mean, it's like 98% of the stable coins are in dollars.

So, I mean, it really is the, it is hegemony at this point, whether or not how wide it goes. But it seems to be that, that term is not catching on. Well,

speaking of the dollar, it's probably worth talking a little bit macro, since this is a crypto and macro podcast, right? We have the Fed this week, Alex, I know you're on pins and needles like I am. Sorry, sorry, but not July. It's not happening, man.

It's a good bet. I think it's a good bet if you put it before. Listen, I saw the PC number and I am finally capitulating on my July call. But I am standing by 50 bifs in September and I know you're only 25, but that's fine. No, just for everyone to be aware, so this week is literally the last day of the month is the FMC meeting. There are zero cuts priced at, I mean, pretty much like 1% at this point. So you could just consider it a wrap. However, there's a lot also going on that would, you know, that's like after the fact of the Fed meeting.

But I think it's important to understand that the next Fed meeting is until September. And so what we're looking for at asymmetric is the language used in the press conference as it relates to weaker economic data, rising unemployment, the negative CPI print. We kind of envisaged that there are certain aspects of the economy that are slowing down. There are other aspects that are doing great. That being said, if the Fed waits too long to cut or doesn't cut enough in their first cut, then it's a policy error. And you'll have the ramifications of the hire for longer policy.

And so from our perspective, I think what we're kind of looking for is, you know, What is the language? Is the language doveish? Is the language, you know, we've seen some language suggesting that once they start cutting, they're not going to stop. It's not going to be like one cut and done, kind of what the ECB did back in June. There's going to be some sort of cutting for longer, if you will. And there's always the Jackson Hole event in August. I'll be attending that this year. What we're looking for at Jackson Hole is to try to see, are they going to be telegraphing what is going to be happening in September and how the markets react. to that. So, you know, right after the FOMC, well, maybe not right after a couple days later, it's also the Bank of Japan's turn. And I don't know what consensus is right now, but from what I've read, there appears to be a view that they may end up hiking rates. And so dollar yen recently, I guess at top of the dollar side bottom for the yen, started to pull back. So I think one of the things that we're looking at, like from foreign exchange is on Wednesday, how does the dollar react to the tone of the Fed, assuming that they don't cut, which I don't think

they will cut at this point? And then also, how does that impact the yen on Friday morning when the Bank of Japan is up? So, Alex, do you have any perspective on the dollar yen trade or how you're planning for the Fed on Wednesday? Yeah, I think Wednesday is a non-event is going to be basically no-cats. There, and it's priced in. As you say, it's all about the language, I think, and this is kind of like I gather there is market expectation, is Powell is going to prepare the market for September cuts. So the language is going to change. They're going to change the language on the statement,

and then reinforces on the presser, objective there being pretty much minimized volatility and trying to be predictable. Emphasis on good inflation numbers that are actually now consistently coming very well. on if one cat or two cut and the economy in general, I want to make emphasis on high-frequency data. And if you look at, for example, the Dallas Economic Index, the W-EI, it's actually, it's been ramping up since early June.

So the point there being is there are things in the economy that are actually doing very well. They're not recessionary at all. this worry that is always lingering in the back among many people in crypto about we go into hard landing. The probability is always there. We don't predict.

We don't have crystal balls, unfortunately, but it's very, very low probability. That being said, if we only get one cut this year, I think we'd likely be a policy mistake. We need more than that, and we need to be steady. Then on the BOJ is, they're going to hike again, 25 bibs expectation, pretty much big team. The question is, how much are they going to taper the QE, the Japanese QE?

And that can drive even further move down on dollar yen. And this usually does not matter, but in this case it matters because it's been going up for so long. And it's basically used for planting lever, putting lever trades on U.S. assets. or in general, but U.S. assets in particular, basically, with the funding rates being so low in Japan, you get funding. This is the carry trade, basically, for the audiences. You fund yourself on yen locally, and then you take that and you reinvest or you put that money to work on things that pay more to make money. You leverage it up, right? And that's U.S. rates all across the curve. It can also be U.S. equities. and if the dollar yen, basically, if the funding gets higher, it makes your, it forces you,

if you have a carry trade position on, to reduce the size. And usually this is not a problem, but it can happen. You basically open up the door to trigger a cascade of risk-and-wind. So, yeah, there is risk there. But I think that mainly happened about like a week ago and it's kind of like in the price right now. Like the time to panic was a week ago. And then Jackson Hall, it's we forget about Jackson Hall, but we have a consistent recent history of the Fed coming in on Jackson Hall, Powell and basically tanking the market. Right.

So fingers crossed that it remains another event. We look into the FOMC in September. And that being said, for me, to me, the most important. important thing. It's not the Fed at this point is for Bitcoin, right? Not for equities. Is the Trump Kamala play. It's like who wins. That's what we really care about the most, I think, till November. I have the chart up for those watching on video. Just a little shout out to Joe here. We are pricing for about 100 or 10% chance of cuts, which means we're priced for more than one cut right now, potentially. So the odds are up there, but the market's still mostly expecting one. I'll go on record and say,

I'm only expecting one 25 basis point cut. But yeah, we'll see. You guys got to get more aggressive, you know? Come on. I think we could get three before the end of the year. I just don't think we're going to get two in September. I think the market's only pricing two for the most part now, but I think we could get three.

I'm actually concerned if we get two in September, that it may be interpreted by enough people as the Fed getting worried about hard landing. like wrong messaging. There's a probability that it's not minuscule that actually if we get two, it's actually, instead of being bullish cuts, it's bearish cuts.

Lower rates theoretically should be good for crypto, but things have gone crazy in the past. Before we move on, the Trump and Kamala trade, I think is our Kamala, sorry, trade, we should go back. We didn't really touch on the fact that

while the Bitcoin conference is going on, the Harris campaign, I've reached out and wanted to do like a reset with crypto companies. There are certain people in the crypto camp that are unhappy without this. My view is like if this can be less partisan, the better. I prefer it to be bipartisan. I don't know why anyone in the kid, like the odds are like super, super strong that Trump is arguably going to win and it's going to be better for the crypto industry.

I mean, there's still there's still a decent chance that Harris could win, the Dems could win. So I don't know why you wouldn't want to sit down with them. I know there are people in this industry who strongly disagree with me on that. We also have a letter from a bunch of, I think, 15 different Democrats basically asking them to kind of like, same thing, go over crypto policy, be a little more open to it in a way that the Biden admin has not, which really, as far as before with this podcast, many other podcasts, Nick, you've talked about on yours. It's the war nights of the world. It's the Michael Bars at the Fed, the Marty Gruenberg's the FDIC, the Gary Gunzer at the SEC. And it seems like that no matter what happens, we'll see what happens in the next few months,

but it seems like even if the Dems do win, it should be at worst, neutral, but it should even be more positive for this industry than a Biden admin would have been. What are your guys' thoughts on Harris reaching out and saying she wants to reset? Well, so with you, Nick. I know you have thoughts. Do you remember in, I think 2012 when Hillary Clinton went to Russia and she gave them a button that had the word reset written on it symbolically.

Is this a political thing that you guys remember? And reset was actually, they misspelled it in Russian and said something completely something different. I don't know. It's like,

I don't know that's like, accelerate or something. And this was like a major gaffe. And of course, we did not reset relations with Russia. In fact, they got much, much worse. That's what this reset reminds me of. I don't believe the Kamala, how do you pronounce her name?

Kamala? Sorry. I don't know. I just say Harris. I don't believe that she will ever be pro-crypto because she is a progressive. When she was in the Senate, she was the furthest left senator by her voting record. And progressives don't like crypto. You know, they tip on generalizing, but they would prefer that the state,

largely being control of, you know, financial activities for the sake of pushing policies. You know, you can talk about the various forms that takes, but that seems to be my interpretation. And crypto is all about transacting outside the ambit of the state. And, you know, these ideas around hard money. These are sort of like conservative, libertarian ideas. And so I do think there is something about crypto fundamentally. There is an impregnated ideology that is perceived as hostile by the progressive camps. I don't believe that, you know, there will ever be a sincere embrace of crypto by the left, as much as it would be convenient for crypto to be nonpartisan. So I'm not taking the reset concept seriously. I do think they have understood

now that electorally this is a losing issue for them because no one really votes for people because they hate crypto, but they will vote for you because you like crypto. So it's very asymmetric for them. So I think they're kind of trying to panic a little bit and want to see how they can reverse Trump's gains from his crypto embrace. But I don't believe this will be an authentic embrace the industry. I almost completely agree with Nick. Like this is politics at its finest, right?

They saw the metrics. They saw the activity. They saw the fundraising. and they were like, uh-oh, we can't be this way anymore. And I mean, you saw this with what happened with, you know, the 180 with the Biden administration when before Biden, you know, dropped out back in late May or June. It was, it seemed so, it seemed pretty obvious that this was an about face for political reasons. And so would I like progressives to be engaging with stuff like crypto?

Yes. do I think Trump aligning himself with crypto is going to piss off progressives even more about crypto? Probably. And so I don't think that there's a lot of, I don't put a lot of weight into the Harris campaign's desire to, say, build a comprehensive regulatory framework around crypto. I think they're trying to score some probably cheap political points and did some game theorizing and looked at it and said, it's probably better for us to at least appear that we're open to. who resetting in the conversation versus actually doing something. And I will note, I was probably overly broad in my statement.

There are a small handful of progressives that are pro-crypto. I think you could describe Brocana as a progressive and Richie Torres perhaps, but it is certainly not the sort of like your typical progressive. They're certainly not pro-crypto. Yeah, I think the overwhelming trend is the younger senator. It's Republican and skews younger is the two where. areas that pro-crypto people tend to skew. So hopefully that younger part of it picks up steam. I pulled that next tweet here for those watching and home, but I wanted to point out one that

I think is really true. One and regime of regulatory opacity, which we talked about, but also stop harassing Bitcoin miners for simply buying energy, which is pretty critical. And I don't think even if we do get some of the more positive things on like crypto regulations and what have you, I do think it's going to be hard for them to ever like come on board with with that view of things. I don't think that's the Bitcoin mining sign of things is something that they're ever going to fully get on board with, even if they do kind of open up a little bit on the crypto side of things, if that's something you truly care about. Yeah, that was an interesting moment in Trump speech when he started talking about AI.

And a lot of people didn't understand the connection, but it's very crystal clear to me. It's Trump's Vance, in particular platform, is re-energizing, re-industrializing. the American Heartland, and being opposed to energy-intensive industries is counterproductive. It's hostile to labor. It's hostile to creating a new American industry. And so it's natural for the Trump-Vance admin to oppose politicizing energy for Bitcoin miners or for AI data centers, which is becoming an actually much bigger issue in that will eclipse. Actually, in my view, my projection is it will eclipse the energy consumed by Bitcoin miners. So I thought those points were perfectly coherent, although a lot of people didn't like them.

Yeah. Now, I'm with you 100% Nick. The last thing I wanted to say about the Bitcoin conference is I did two panels. I interviewed Robbie and Mitch Nick. One thing that I want to tell before we go to the ETHETTS, which I'll have some comments from those guys as well. Jan Van Eck on stage was talking about how everyone involved in crypto tends to talk about this like 3% allocation mark, 2 to 3% that's what their clients are doing.

That's what they're doing. And he was like, but every single person I talked to involved in Bitcoin on the other side has way higher percentage allocation than that. And he was like, and then he said, I'm one of those people. And I was basically hinting at it. And I asked him, I was like, you're going to tell us how much it is? And he's the CEO of Van Act, one of the largest ETF issuers in the U.S. And he threw out there, he has over 30% of his personal investment portfolio in Bitcoin. So I thought that was like eye opening for me.

I couldn't believe he actually set it up on stage on the main stage there. But that was, I just wanted to throw that out there is something that like, for those listening, there are people. He also said Bitcoin was in his blood up on stage because his firm basically got, they got their start because they started offering gold mutual funds and investing gold miters and stuff back when holding physical gold was legal. That's how they became known for what they are. So he's fully on board with that, so I thought that was critical. But if ETHs debuted the day before the Bitcoin ETF launch, I'm going to say this, the volume is pretty damn good. It's trading about 20 to 25% of what the Bitcoin ETF did in the first few days. That said,

The flows aren't great. They've had net outflows of about $340 million. All of that is coming from Grayscale's Eth E for the most part. Well, not for the most part. All of it is coming in. So a lot of it's coming out. A bunch of it's coming back into the other ETFs, it seems. But on a net basis, a lot of it's coming out.

So I don't know if you guys have any thoughts on the ETH ETFs on their launch and what your expectations are. So, James, I'll just ask you directly. Like, was this kind of in line with what you? and Bakunis were assuming would happen? Volume-wise, yes. I thought they were going to do that like a quarter, a little bit less than a quarter of the volume that the Bitcoin ETS did. That was our guess, 15 to 25%.

We thought flows would be the same over like the first six months maybe. It's still very early, right? Like the Bitcoin ETS, the first 10 days also had, they had a bunch of days of outflows. They had net inflows overall because the first day was massive. But for the most part, it was 10 days of outflows that were now. aside, like, there was a bunch of days of outflows. And after that, that's when things really started picking up. That's when everyone started covering all the money pouring in. Then it slowed down

again. And then we went into another wave of massive inflows. And now we're at 17.5 billion on the Bitcoin ETFs. I don't think the Ethereum ETFs are going to get there. I don't think Wall Street and advisors are as keen on Ethereum as they do. It's a little bit harder to understand for many reasons. I think, Nick, you also agree with that kind of sense. What are you hearing from the people you talk to on the Wall Street side of things or what you're understanding for what you're reading. I think Ethereum has a narrative problem and also it's narrative hasn't been as seasoned on Wall Street.

We've had 15 years to understand Bitcoin and for that to percolate into the boardrooms and anyone that's an allocator. And Bitcoin is, its story is simple. It's, you know, a digital gold that is fairly well understood. Ethereum is stuck in the middle, and I think this actually places Salana's benefit, which is Salana is newer, it's shinier. And actually, its metrics look very good. We can maybe touch on that.

It's more performant. Ethereum isn't sure what, like even Ethereum people aren't sure what Ethereum is. Is it a Bitcoin-like asset where you're focusing on the scarcity and the deflationary aspect? and are you focusing on capital return to token holders via fees and burning the tokens as people use Ethereum more? Are you focusing on making L2 is cheap and making transactions as cheap as possible? Those things kind of trade off against each other. So Ethereum is constantly vacillating between these two. Are we going to be responsible to the token holders and create these capital return mechanisms?

are we going to actually appease the users and make it as cheap and we're going to make block space upon it? Those things are opposed to each other. Wall Street's probably not having that conversation, but I think even Ethereum itself has an identity crisis. And so it doesn't surprise me that maybe the launch wasn't as hot as the Bitcoin one. It was very notable. I thought that Ethereum kind of sold off on the day in Salonah rallied.

That I thought was the market telling us something, actually. I don't know how likely it is we get a Salina E. But that was kind of my big takeaway, actually. Yeah, the thing that's, there's a couple things that that stood out to me with respect to the Ethereum ETF. And by the way, like, Nick, I echo your sentiment. We had, we had an episode previously where I was like, Bitcoin, it's digital gold. It's like so easy to sell that.

It's like, Ethereum, it's what is it? And then Alex kind of like, rambled out some stuff. And I was like, yeah, exactly. It's too difficult. Like, how do you get a Wall Street guy to sell this thing, right? So, but one of the things that we did cover, I think, a couple weeks ago was we, we, I think many of us believe that the Eth E outflows wouldn't be as profound or pronounced as, as the, the GBC outflows, mostly because there wasn't like these forced liquidations or

forsellers or huge basis trades unwinding, et cetera, turned out to be dead wrong. I mean, the E-Vee, they slap that 150 basis point fee on it, and everybody else is 10 to 15 to 20 to 25. And it's just, it's getting, you know, pummeled again in terms of outflows. And so I think that caught some people off by surprise. But to your point, Nick, about the reaction for Solana, obviously I'm the Salana bull here. And what has stood out to me about Salana and its reaction to the ETH-TF, on the one hand, We saw this actually happen with Ethereum when the Bitcoin ETF finally arrived and was trading

is Heath ripped in the expectation of the next ETF. And I think that is largely becoming consensus. Whether this happens or not, to your point is, you know, we're not entirely sure if a Solana ETF is a slam dunk. I think Van X kind of call option they bought was a Trump presidency. And that will likely lead towards something like a Solana ETF getting approved. but it's easily a year away. I think James mentioned this a while back.

But it does underscore, I think, some of the points around the metrics with Solana. Most recently, you know, the total trading volume has flipped Ethereum, and it's still like one-fifth the value of Ethereum. Now, I have had these intellectual discussions with some big Ethereum proponents around, well, you have to include the layer twos in that.

And I think that this, is a point that is worth debating because before L2s were a thing, how did you compare Ethereum to Solana as a layer one, right? Where you had data availability, execution, all of these consensus were all within one thing. Well, now the Ethereum community has chosen to abstract out execution into layer twos, and folks want to make the argument, well, you should be you should be comparing Salana's layer one to the layer twos. And I'm like, no. So Salana hasn't chosen to outsource its execution to a different layer. If somebody chooses to do that, well, then maybe we should compare those two. And the metrics are astonishing. I don't, you know, I think I got to give

a tip my hat to Kyle Simani over at Multi-Quine. He mentioned in a tweet recently that they don't ever really promise anything to their LPs, but one thing that he, you know, confirmed or affirmed to was that Solana was going to flip Ethereum and all the key metrics. And we're starting to see that. So is this impacting ETHETF flows? I'm not entirely sure. I think the point about, like, how do you sell this thing on Wall Street? And does it have enough familiarity with folks in the boardrooms, et cetera, is likely a

bigger proponent. But, you know, I've been saying this for a while, like the relative value trade for Ethereum versus Solana continues to favor for Solana. And so as the metrics increase, as activity continues to increase, and the kind of spectrum of applications that are getting built on top of Salana coupled with some of the upgrades that are coming, it's not like if you don't have bagholder bias, it's hard to look at it objectively and say, I should be overweight Ethereum versus something like Salana here. So on stage, I did ask both Robbie and everyone on stage and Jan obviously believes that Salana is next and it could happen within a year. because Jan Van filed for Salani ETI. But BlackRock, even on our TV show today on Bloomberg, one of the CIO for index products at BlackRock said,

we're not thinking about anything else. Robbie basically said it's Bitcoin that Ethereum, and then the next thing is so far down that they're not even concerned about it right now. I mean, BlackRock is building on Ethereum with their bidet fund and other stuff. I don't know how much of that is just like talking points versus are they actually looking into this.

But as you said, yeah, I think we're likely away away from a Salon ETF, absent a Trump victory and some massive run-up. But the final deadline for those applications is the end of March. And so if Trump gets in on January 20, I don't know how much he can really change to get these things launched by then. But I think Salon, it makes sense as the next chain is my overall view. And I will say, shout out to Steve McClurg, real quick, who used to be one of the guys, he's at Valkyrie, which is now owned by coin shares.

I have a bet with him. He's been super bearish on the Ethereum ETH, the flow's interest. And he's, I owe him a whole deal at Pupkin if it's under 15% of the Bitcoin ETFs after six months. So if it's over, he gives me a meal. But right now I am definitely losing that, considering they are negative since launch a week ago. I have a question for Joe. How do you respond to the criticism to Ursulana that FireDancer is just a way for Jamp to extract value from retail.

I'm very curious what you think on that. Yeah, yeah. It's a good. It's a thing, you know. You know, it's a thing. What a classic crypto-Twitter loaded question. So, look, I mean, I don't, I'm friends with the guys

to jump, but I don't, I'm not an investor. You can't even invest in them. So I don't have any dog in this race, except that I love the fact that some of the smartest computer scientists on the planet, or trying to synchronize global state at the speed of light. I think that that's pretty awesome. And I think retail actually benefits from that.

But let's be clear here. Jump is a for-profit business. And the way that they've been able to dominate the market making and algorithmic trading space is by creating customized hardware, FPGAs and A6, to run their software on. Right? So it's not a stretch to think that Jump is going to release Firedance, which arguably improves everybody's usage of Salana, that's using Salana. But if they, and I don't know if they'll do this, but it's not that hard,

it's not a big logical leap to assume that they may end up by building custom hardware to run FireDanser on to be slightly faster than somebody else, that they're going to make money from it. I mean, that is their core business, right? They make markets and they're really, really good at it. So is this a way to screw over retail? I mean, look, for years now, the narrative, whenever markets get really bearish is jump is pulling out of crypto. Jump is no longer involved in

crypto. And it's just never true. And so could somebody make the case that, you know, jump is aiming to screw over retail? Sure, somebody could make that case. Is that their core business? Not at all. So I just don't, I don't buy it. And also fire dancers an open source client. So if somebody wants to fork it and make it something else, they can do that. And I think that this is a kind of a big, leap in the way that a market-making firm like Jump is doing is that they're embracing the open-source nature of software development these days to the extent that they're paying literally some of the world's top computer scientists to work on something that's ultimately going to be free. Like to me, as a big open source guy, that's awesome, but it's also testament to the fact

that like if they were trying to screw over retail, don't you think they would be doing it in a close source fashion? Nick's got to run soon, but I actually have a quick question for him before you asked run. So you're, you obviously, you're a VC, so you're investing across different ecosystems and platform, Dick, Bitcoin, Ethereum, Therina. Are you, like, are you, like, how do you compare when you're looking at investing in a deal? Like, how are you viewing the Salana ecosystem when compared to Ethereum? We're probably more active in, in Salana than Ethereum right now. We don't come in with a particular

sort of normative view of what chain entrepreneurs should be building on. We defer to them on that. But just in terms of deal count by the numbers, I would say we're seeing more founders come to us and say they're building on Solana at the moment. But we generally take a pretty hands-off approach in terms of ecosystem focus.

Alex, did you have anything? to add on the Solano versus Ethereum side of things? Oh, yeah. Two things. Well, one is I think that, by the way, I was wrong on the ETF. I mean, volumes came in exactly where I thought they would come in. But I was not expecting such a massive outflow that fast. But that being said, I think it's like, first of all,

I prefer a combination of Bitcoin and Solano over Ethereum. I think that would outperform if that being said, people are being binary and have a tendency to basically go to the extremes and generate all this drama and panic. The ETF is still something that is positive in the mid-to-long run for Ethereum is going to drive inflows, how people think about it.

It's like basically if Bitcoin is running and you're lagging and you need to deploy, you look around and say, okay, I'm going to buy some ETHETF. Flows will come in, It's going to be positive for as soon as Grayscale is over, it's going to be positive on a net basis for Ethereum. Another thought is on adding the layer two's. I don't think a layer two should be added. But if you have to, if you're going to do that, you also need to add the evaluations, right?

Not just the transactions. It's like, okay, then it's not just if market cap is ETH plus arbitrarium, plus plus optimism plus the 300 layer twos are there right now in Ethereum, right? So it gets meatier. And the other thought is this is an analogy from a friend of mine who's been in crypto for a long time. That we're just talking about this over the week. And he said basically Bitcoin is digital gold. Ethereum is like AWS.

And Solana is like the absolute. store. And I thought it was, I think it's a pretty good analogy. I'd agree with that. And yeah, there is room for all three. So it's, yeah. Yeah, I kind of view it as like, I, the other thing that I didn't mention that Robin Mitchie did say was that he doesn't view Ethereum or Solana as true competitors to Bitcoin. He views them as being complimentary in many cases. And I kind of agree with it. I kind of think of like, Bitcoin has the whole store value. kind of narrative, the theme of exchange narrative down.

And I think the other layer ones are all competing for a different, arguably larger total addressable market size. It's just that there's way more competition in there. It remains to be seen who will long term own that market chart. Thanks for joining us for this episode of Bits and Bips. We'll wait back in two weeks to discuss more about how the world's crypto and macro are colliding.

Until then.