Unchained - The Chopping Block: Bitcoin’s 200K Dream, Tariff Nightmares, & the Altcoin Exodus - Ep. 815

Episode Date: April 10, 2025

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. In this episode, the crew is joined by Jeff Park, Alpha Liaison at Bitwise, for a deep dive into the chaos gripping global markets and what it all means for crypto. With tariffs ripping through equities and whispers of stagflation on the rise, Jeff breaks down why Bitcoin might still be headed for $200K – and why MicroStrategy might be the new altcoin. They also unpack Circle’s delayed IPO, Ripple’s $1.25B acquisition, and whether capital markets are finally warming up to crypto. Show highlights 🔹 Bitcoin’s $200K Endgame? – Bitwise’s Jeff Park explains why BTC could thrive even in stagflation or full-on macro chaos 🔹 Tariffs, Stagflation & the Dollar – Why Trump’s “Liberation Day” tariffs might mark the end of U.S. stock market dominance 🔹 Bitcoin vs. Gold – Jeff breaks down how BTC is winning over the next-gen investor as the ultimate store of value 🔹 Altcoins Are Just Leverage – Why institutions may abandon alts for Bitcoin ETF options and MicroStrategy exposure 🔹 Circle’s IPO Delay – What Circle’s numbers really show, and why Coinbase is eating half their yield 🔹 Ripple Buys Hidden Road – The biggest crypto M&A ever? What it means for prime brokerage and TradFi on-chain 🔹 The Return of the Bitcoin Wolves – Jeff’s theory on “positive vs. negative rho” Bitcoin and how both narratives can win 🔹 The Impossible Trinity – Jeff connects the dots between FX regimes, U.S. dollar hegemony, and Bitcoin’s global role 🔹 Crypto’s Macro Decoupling – The panel debates whether Bitcoin is finally unhooking from traditional risk assets 🔹 The “Altcoin of TradFi” – MicroStrategy’s secret sauce, and why it’s become Wall Street’s favorite crypto casino Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️ Jeff Park, Head of Alpha Strategies & PM at Bitwise Asset Management Disclosures Links Circle S-1 Filing https://www.sec.gov/Archives/edgar/data/1876042/000119312525070481/d737521ds1.htm  Ripple Acquires Prime Broker Hidden Road for $1.25B in One of the Largest Deals in the Digital Assets Space https://ripple.com/ripple-press/ripple-acquires-prime-broker-hidden-road/  Timestamps -  0:00 Intro 02:49 Impact of Tariffs on Crypto 03:27 Bitcoin's Role in Investment Portfolios 06:14 Retail vs. Institutional Investors 07:29 Bitcoin's Sensitivity to Interest Rates 12:31 Altcoins & Institutional Interest 15:02 MicroStrategy: The Altcoin of TradFi 23:25 Geopolitical Implications of Tariffs 36:55 Global Currency Models & Bitcoin's Role 38:20 Bitcoin's Performance in Different Economic Scenarios 45:12 Circle's IPO & Business Viability 57:31 Ripple Labs' Acquisition of Hidden Road Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, Bitwise's price target is 200K by the end of the year, and I still think we have a good shot at it. Even in stagflation? Yeah. I think there is a version of it where Bitcoin still can be the fastest force in that world, where people do need to seek returns. Okay, so you think Bitcoin wins in stagflation. Okay. Let's say that instead of stagflation, Fed just starts really cutting, stimulating, QE,

and that brings the economy back up and running. Inflation is still high. How do you think Bitcoin does that? I would say it does even better. Not a dividend. It's a tale of two quond. Now, your loss. are on someone else's balance.

Generally speaking, air drops are kind of pointless anyways. Unnamed trading firms who are very involved. D5.E.O.E. is the ultimate problem. DFI protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective

on the crypto topics of the day. So quick intro, sirs you got Tom, the Defy Maven, and Master of Memes. Hello, everyone. Next, we've got Robert, the Cryptoconisurer and Tsar of Super State. Good evening. Joining us today, we've got special guest, Jeff, AlphaLeak liaison at Bitwise.

Hello, hello. Happy to be here. And I am Haseeb, the head hype man at Dragonfly. We're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see Chopin Block that XYZ for more disclosures. So, guys, it has been once again another historic week. And this time, it's not just historic week for crypto.

It's been a historic week for markets generally. we've had one of the most volatile periods in markets in basically the last few decades. The only time that we've had this sharp of a sustained drawdown was during COVID. And in terms of running tally, some people are comparing this to even periods of time. We haven't seen since the 80s. It's been incredibly volatile in the stock market. And a lot of that has been driven by Trump's quote unquote liberation day, which was his unveiling of, quote, reciprocal.

I'm going to keep doing these quotes. quote-unquote reciprocal tariffs against basically almost every single country in the world, with the exception of Russia and Belarus. What we've seen now is what's effectively the largest increase in tariffs in U.S. history in a very short period of time, bringing us back to tariff rates that we have not seen since the Smoot-Hawley tariffs, which were a century ago. And we've also implicitly the largest tax increase in a very short amount of time that we've seen in a long time.

It's caused absolute pandemonium in international markets. And of course, crypto has been no exception to that. So we want to bring in Jeff. Jeff, you're at Bitwise Asset Manager, and you also have a lot of knowledge that you're bringing to macro. Help contextualize this for us. We'll talk a little bit about kind of the overall geopolitical story, but obviously, a lot of people have been telling us, please don't be the 1,000th show talking about

tariffs and what you think about tariff policy. Let's talk about how this impacts crypto. What happened in crypto markets? And why should we expect this to be so impactful in crypto? So when crypto obviously is not getting tariffed, we're not getting importer exported. So why does crypto markets care about what's happening with respect to tariffs? Yeah, absolutely. And, Steve, if it takes a $10 trillion wipeout for me to be a part of my favorite podcast show ever on crypto,

I will say that is a price I am happy to pay for. So thank you for having me. I hope that's not the pretense that we have to bring you back on the show again. But the upside will be that I hope I'm able to at least mark the bottom in ways that we can relive this episode for years to come. All to say, no doubt crypto and Bitcoin has been at the center of all investors' mindsets. And the role of Bitcoin and crypto in particular continues to change as it fits into the investment portfolio's mandate. The reality is, ever since the ETF launched, the ability to have mainstream investors leverage Bitcoin as a global asset in the ways that it

can serve a function in a portfolio buildout has become, I think, more stronger than historically it ever has, which is why you're seeing more correlations. to the risk on and risk-off sentiment in general. In particular, my view is that in many ways, because the store of value construct is so powerful for Bitcoin as it is for gold, the number one feature in which how investors express some risk preference between those two narratives on the store of value is the defining feature of volatility. And so in general, you will have seen older people prefer gold and you would have seen younger prefer Bitcoin, but, Part of the reason why young people prefer Bitcoin, make no mistake, is the volatility.

And so if you believe that is one of the foundational inputs of how people drive value in Bitcoin, the other side of that argument is that if other non-Bitcoin-related macro assets become more volatile, then the opportunity cost to actually hold Bitcoin goes up as well, because now you're competing for the attention of volatility with non-traditional assets, I'm sorry, traditional assets in ways that has intercepted the Bitcoin mania through the ETF wrapper for institutional investors. And so my view has been that Bitcoin is generally the best horse for a risk on trade. But the timing does matter in the path dependency of how other assets behave.

And no doubt with what you've seen, the Move Index and the VIX index, frankly, there's a lot of people who are thinking about the discount to equity, they think they might catch on Tesla being half off or Nvidia half off where they're going to sell Bitcoin potentially to make that paralyzed trade. And I think some of that noise is essentially what you're experiencing over the past few months. I mean, so what we've seen is that obviously markets have sold off over the last several days. I mean, if you're counting Thursday and Friday, which was the market trading period after Liberation Day tariffs were announced, you saw each of those days markets were down, you know, four to five percent. And then on Monday as of, or sorry, as of, as a, uh,

Tuesday close, they're down another 2%. So roughly speaking, we're down almost 16, 17% from the market high for the year. And depending on what index you watch, it's even worse for others. And so far, Bitcoin has not really been operating as a safe haven. It's really trading pretty closely in line with what we're seeing from other major indexes. The story for the stock market has been that actually retail has been stepping into buy. while institutions have been dumping, right? So if you look at institutions and head funds, they've been mostly driving a lot of the outflows.

And I think JPMorgan reported that Thursday and Friday were the largest days of retail buying in basically like the last decade or a couple decades or something like that. Crazy record amounts of retail buying. So retail's buying the dip. Whether that's MAGA retail or whether that's just retail, retail saying, oh, finally I get a chance to,

this market only goes up and so finally I get a chance to buy. It's unclear what that story is. Is that also the story for crypto? Is it that, well, crypto is this retail market. Yeah, there are institutions in crypto, but still retail is the kind of predominant holder, even of the ETF complex. Retail is the predominant holder. So given that crypto is retail heavy, is that why Bitcoin is holding up as well as it

is? Would it be doing worse if it was more of an institutional asset? I think Bitcoin has always shown an ability to be leading indicator for the channel of global liquidity as a proxy for its expansion. And for the most part, I would say that's still. generally true, that the thing that tends to drive energy to Bitcoin is the anticipation of the global liquidity factors that people have expectations for. I will say at some level, the calibration of that lead-lack relationship has changed a little bit where the Twitch speed

might be a little bit faster with institutional capital now than it would have been with retail capital two years ago. But I think that is still today the most important thing. The unique challenge with Bitcoin is that it's actually a complex story as to what that asset represents to the end investor and the outcomes are trying to achieve. And one of the ways I framed this discussion with institutional investors is there's two versions of Bitcoin. There's what I call like the positive Roe Bitcoin and then there's the negative row Bitcoin. Ro is a Greek used as a sensitivity to the price of an option relative to interest rate. And what I'm conveying here is that there are some people who believe that depending on interest rates, whether it's inflationary or deflationary,

that Bitcoin might behave in a certain way. So the negative-row Bitcoin is the one that I would describe where interest rate going down is generally good for Bitcoin because financial repression will continue forever and there's going to be inflationary dynamics to it, which Bitcoin will emerge as a store of value. And hence, negative-bitcoin, positive-row, negative-row Bitcoin wins, right. But the other side of this is the positive row of Bitcoin, which is actually the world is falling apart. And it's actually become incredibly deflationary. And things are really horrible. And now we're kind of in this short humanity situation. And again, Bitcoin emerges as the savior. And it is the thing that people want when the world is falling apart. And hence, that positive

real Bitcoin is actually the thing that drives market sentiment. And I think yesterday, actually, what we saw with China was like the perfect moment in which you saw that tension, right? Because in response to what Trump is doing, China actually came out and widened his currency band to let the yuan depreciate in ways that it hasn't historically been wanting to permit that outcome. And today what we saw is that it actually allowed the yuan to depreciate so much that it's going back to like 2008 levels, like in a day. Like it's a pretty crazy move. And if you really think about what that impact is, the actual weakening of the yuan is a deflationary outcome, right? That's actually in general going to reduce global prices around the world in which it's more

likely we're going to import deflation as a result. That's a positive bro Bitcoin world, right? That's actually kind of like not the world in which the U.S. wants, and it's not actually the one that China wants either. They're kind of just doubling down on this brickmanship. The other version of what China could have done is they actually could have gone through like a massive stimulus program internally with fiscal stimulus that just drives consumption. And that is actually like the inflationary version, right? That's actually the negative row China QE that releases the Bitcoin valve. And yesterday you basically saw Bitcoin couldn't make up its mind. It was like kind of excited. And then today it realized we actually were not excited about a deflationary world.

So now it's back going down. So all to say, the fundamental tension is this dynamic of Bitcoin's sensitivity to interest rate in itself being very unstable relative to where we are in the moment of time of Bitcoin's broader global adoption. Today, I personally believe we live in a negative real Bitcoin world where generally people want inflation, they want easing. Those are the things that drive Bitcoin, but make no mistake. The long-term end that I think perhaps we all believe where Bitcoin will emerge as the most strategic asset is, in fact, the positive real Bitcoin when it does become so chaotic and unmanageable. it is the ultimate store of value.

So, okay, inside Bitcoin, there are two wolves. One of those wolves, maybe is a baby wolf that will emerge someday when it's a more mature asset. What we've seen, okay, so Bitcoin has been a little schizophrenic. It's kind of hard to read exactly how Bitcoin is supposed to respond and how it is even responding to, like, some days it's core, like there were a couple days where Bitcoin was not responding at all to this incredible historic macro onslaught. And then over the weekend, it suddenly weakened a lot.

and, you know, we've seen today it's trading just alongside the NASDAQ. Alt, on the other hand, have been much more battered by what's going on in the, you know, broader market. What's the story that you're internalizing about how you expect alts to fare in this environment? Because as you mentioned, there's a lot of expectation now about easing. Obviously, tariffs aside, there will be a big set of tax cuts, and it's very likely now the market is pricing in that the Fed is going to be cutting. much more than was previously anticipated. So we're now up to, I believe, five rate cuts for the year that the CME is currently pricing, up from basically just a couple. And at one point, it was even just one rate cut for the year. So how are you thinking about that and how that's going to reflect in the alt market?

Yeah, great question. And something I deal with our institutional and RIA investors all the time as they flurry questions to us. You know, the all quite complex, I think, has two broad challenges, if you will. The first challenge, is that almost with the exception of just Bitcoin, the rest of the all-coin complex is fundamentally different, as you guys already all know, in the way that it seeks its consensus mechanism that requires a little bit more servicing than Bitcoin. Right? Bitcoin, you can kind of put it under your mattress, equivalently putting in cold custody and call it a day, and you're generally going to be okay. The problem with these all coins, if they are generally a proof of stake token, is that the

entire point of the value accrual mechanism is that you kind of have to participate in the ecosystem to be able to earn yield that ultimately lowers one investor's cost bases versus the one that wasn't generating that yield on top. And so if you're like an institutional investor and you're being pitched a variety of these all coins and you realize that there is a value accrual mechanism for which you can't participate, like, you know, hey, here's a special dividend on a stock, but you don't get one because you actually held your stock on bony instead of at this other custodian that lets you do on-chain stuff. So you're not going to get that special. special dividends, you're going to find some natural resistance to that because they don't want

an unfair playing field. And with all coins, sometimes there is that unfair playing field that could exist. The second dynamic is a lot of investors, and by opinion, looked at all coins as a way to play leverage. So they were really excited by Bitcoin volatility. And they thought all coins would give you more bank for your buck in a capital efficient way to trade more leverage, trade more volatility. But the thing that fundamentally changed is that last year in December, we now have Bitcoin ETF options. We actually can trade extremely interesting leverage through Bitcoin options in a regulated market that gives you pretty much, in my opinion, the same thrill of speculation and exhaustion

and insurance that you could leverage more thoughtfully without that weird, dirty basis risk of like, you know, the narrative or like who's doing what inside and like inside intelligence. Hold on, hold on. So let me interject here. So it sounds like what you're saying is that all coins were interesting to institutions because institutions found Bitcoin a little boring, not volatile enough, and they wanted to gamble. And that's what all coins are. There's sort of a gambler, splashier version of Bitcoin. Now you can trade Bitcoin options, ETF options on the CME. And so the institutions are like, oh, I don't want to gamble on these all coins now. I'd rather gamble on Bitcoin options.

I think that's why you see the rise of micro strategy, for example, because micro strategy to me represents kind of the alt-coin of chat-fi, which is essentially that it's kind of like crypto and Bitcoin. Okay. But it's got a little... I have not heard this theory before. Okay. Well, here you go.

My theory on this is that micro-strategy is kind of that extra hot sauce, right? It's actually more volatile than Bitcoin, right? So today, Bitcoin implied vol is sitting around 45, 50, 55, maybe on the high end. And micro strategy is trading at the low end right now of 100, where on the high end, it goes as high as 200. So actually, like, micro strategy is the most exciting altcoin like exposure for Tramify investors to experience the thrill, rather than having to trade altcoins that they don't understand the basis risk on the Bitcoin spread. And then on top of that, right, microstrategy is involved in a variety of financial engineering where they're able to create leverage in

the capital structure. As you know, they issued convertible bonds. They issued different structures of preferred equity, both profoundly interesting. and equity. And this is essentially like a variety of risk preference that investors can now choose. It's kind of like which altcoin exposure of like risk preference do you want of the Bitcoin buffet. And I do think micro strategy, there is a reason why it is the most traded stock, the most traded options contracts, why the 2x levered MSTR, ETF is one of the most successful, why the negative 2X is popular, why there are these covered call strategies, the whole financialization of Bitcoin morphed with traditional investors into crypto equities via the lens of micro strategy.

And that for sure, for sure takes the juice away from all coins, in my opinion. I have trouble buying the story. I think maybe for the micro strategy derivative weird structures, yeah, possibly. But if you look at the ETF complex, if you think, okay, that's how institutional investors were getting exposure to all coins, like there's only Ethereum. and the Ethereum Alcoin complex, or sorry, the Ethereum ETF complex has only ever been like,

what is it, like less than 10 billion? So it's not big. And that's all the all-coin exposure that there is in ETF's period. And so all coins, my mental model of all-coins that overwhelmingly they're owned by retail, they're not really an institutional asset class.

And so any story that you'd have to use to explain what's going on in the all-coin world has to start with retail. So it's kind of like, the tail cannot be wagging the dog of like, okay, well, institutional investors don't get yield and they're busy, busy trading Bitcoin ETF options or they're levering up on 2X reverse micro strategy stuff. Like that, maybe they're doing that, but that's not why ALTS are bleeding.

Yeah. Well, I mean, I think if you talk to most crypto-native traders and investors, they would say that with most of their tokens, they're trying to make productive use of it, right? So even last year, with like the price action of Ethereum looking a little bit abysmal relative to Bitcoin, some of the... that price spread can be muted if you put back like some of the other return streams you could have achieved using Ethereum for some productive purposes, right? So what I mean is like if you used ETH to do some restaking and you got some ability to leverage Eugenlayer or Etherfi or Renzo,

any of these restaking themes where you participated in air drafts, there is a way in which the total return of the ETH complex doesn't necessarily reflect just the price of ETH alone. It is the point that I'm trying to make. And so if you're an institutional investor and you can't touch Renzo and Etherfi and all that stuff, you almost start like a race with a little bit of a handicap. And that in itself can be a source of friction for entry. Totally. That makes sense.

I consider ether a major, you know, not an alt. And, you know, I think when I hear alt, I think the stuff that's like 30 and below on Coin Gecko. Let me ask you a couple other questions real quick. Do you think that Bitcoin has decoupled from traditional financial markets, or do you think, to your points before, it is still coupled and correlated? And do you think ALTS have increasingly decoupled from Bitcoin? Great question. I think ALTS have decoupled from Bitcoin. Yes, that is easier for me to say, because you saw Bitcoin dominance continually arising in ways that I think as a trend has been pretty solid for now.

And then, you know, it's also unfair to call altcoins as like one singular thing. Obviously, it's a population with a wide dispersion of outcomes. And the momentary capture around the trading possibilities of those all coins, I think is meant to be the proper index than like, you know, a top 10 market cap weighted exposure to all coins where the institution, like the constitution is changing quite a lot dynamically. You know, that being said, with Bitcoin in particular, has it decoupled with like traditional assets, I really hope that in the end, when we do get to experience relief in the ways we expect there to be some fiscal dominance to continue with some programs by the Treasury, that Bitcoin will emerge as an asset that will look a little bit different in the terminal path that it is on. Because one of the things I feel like I deal with at times with investors is like they'll pick like a correlation window and show like, oh, look the correlation to the dollar and look at the correlation to rates and see how correlated it is, but the correlation is only like a moving average of a particular relationship that is like a

moving window. And the moving window doesn't naturally capture the terminal difference in states. So like it's entirely possible for like Bitcoin to end up a lot higher and actually have those correlations like still kind of intact or varied throughout it where it all actually that kind of becomes irrelevant. And that's kind of my hope. And the fact of the matter is at this point today, I do think it is very correlated to risk sentiment and the risk sentiment most closely being aligned to their needing to be more stimulus. And I mean like real stimulus, not just kind of like, you know, having interest rate managed lower and finding like a normal path of growth. We need like real injection of creative, like, printing. I call it the Fed Scrabble where, like,

put together a bunch of random letters together and come up with a new acronym. So, you know, BTFP was cool last year, but now that magic is known. And people now almost expect those things to happen. So you need a new one, right? The problem with markets in general is there's incredible moral hazard. Like, once you introduce them to the construct of there being something that's going to be a put for you, it's going to be abused. And so every time you need, like, something newly invented to, like, create the illusion of printing beyond the scopes that people are used to. That, I think, to be honest with you, is the catalyst we need to truly get Bitcoin unhinged from this correlation with risk assets day to day.

Okay. So previously on the show, Arthur Hayes was articulating his thesis that he thought, basically all of crypto is from a macro perspective, it's basically an index of liquidity. And when liquidity gets injected into the system, everything's going to rip and we're going to have a new golden age or blah, blah, blah, this kind of thing. And his view sounds pretty concordant with yours in that he thinks the Fed is going to be forced to inject liquidity, that they're going to have to find some contorted way to explain why they're doing this despite the fact that inflation is ticking up. And obviously, tariffs are very deeply inflationary, given that they're literally constricting the supply of goods crossing borders.

And so his view is that by the end of the year, there's going to be some kind of oil-gushing bonanza of liquidity coming our way. Do you take the same view? It sounds like you're taking a similar stance that, like, okay, the Fed is going to find some new Byzantine way to justify injecting a ton of liquidity. Is that your view? Yeah, that is definitely kind of the base case that I'm underwriting. I also have this kind of worst case, best case scenario in my head where there's another path for Bitcoin to succeed, right? Which is ultimately, you know, this whole tariff war is one part of the bigger imbalance

that exists in the U.S. as a global legitimacy. And ultimately, what we're talking about here is the trade deficit being subsidized by the capital account surplus as the social contract of the times that is being unwound. Right. So like tariffs is one part of like navigating the unwinding of that social contract. What I mean is like by definitionally, the U.S. to run a trade deficit, it must have capital inflows in which they are serving the role of providing dollar liquidity for the rest of the world. Like that is part of the same equation. It's a zero sum kind of output. And so if you if you want to reduce your trade deficit, definitionally, you also have to then reduce your capital account surplus. versus your current account. And that has really, really, really big implications. One of those implications, if Trump really follows through with this thing that nobody is actually hoping he would, means that there must be dollars leaving this country, right? That is the goal. And that's actually how you reduce the trade deficit. If dollars leave this country and American assets, we're talking

about a world in which U.S. stocks no longer play the role in the ways that it used to serve as a store of value for a lot of investors across the world. So that really is like a kind of underwriting that even like the Benjamin Graham's, the world, did not write their books for, right? Because this whole idea of like this kind of cash flow based on like growth and the ability to have a perpetual discount rate to bring present value to stocks implies like a certain interest rate that is meant to like permit that outcome. But if you actually think interest rate is going to be high and you think there's actually going to be outflow, you have to imagine that it's possible the U.S. stock market peaks, right? Just like it actually peaked in Japan, you have to imagine

there's a possibility that Tesla being off 50% today is not actually a sale. This is the renormalization of what it means to unwind the social contract of the dollar hegemony and valuations compressed. In that world, I also agree with Arthur Hayes, which is that there will always still be liquidity in need of chasing an asset. And in that world, I can also imagine where people say, hey, let's actually just go into Bitcoin and crypto, because U.S. equities is no longer going to be delivering the things that we were used to for now over 30 years in the ways that it exerted dominance. So there is this weird, like, very bearish version of this world as well, where it is actually totally deflationary and Bitcoin can still emerge on top because there is global

liquidity chasing an asset for which they must store value for growth. And you would also all hear, no, generation and secularly, right? Young people really like crypto. Like, that is an unstoppable trend in the ways that people want to store their wealth in Bitcoin versus almost anything else. So if I can reframe the story you just told, right now, global, you know, global wealth chases the U.S. stock market. And everywhere in the world, despite the fact that it's kind of weird, ex ante, that, you know, a country that is relatively low growth is getting all the world savings. In a world where we're trying to fix that trade imbalance and we're trying to, instead of having dollars come in, where instead reversing that direction, then there still needs

to be somewhere where people are going to yolo and send all their money and try to chase gains. And instead of that global thing being the U.S. stock market, that global thing might be crypto. Yeah. And in that world, I actually think is that positive row Bitcoin where we can at least at that point, start even contemplating the idea of like a strategic Bitcoin Reserve, right? Because all of the evolution of Bitcoin on the path in which it could serve that role requires a reset of that social contract of the dollar hegemony. Let me ask more point of questions, okay, because right now we're obviously a lot of fog of war. Nobody knows how this tariff situation is going to play out.

Markets are whipsong because- Wait, see, you don't know. Is it? I don't know. You know? Yeah, yeah, okay, got it. Well, Jeff, you had a post about two months ago, Plaza Cord 2.0, talking about this exact phenomenon, obviously, like using tariffs to reset the dollar, lower rates.

We're getting kind of like flavors of that. But then obviously, like the 10 years back before, like, is this kind of playing out how you thought it would play out? Like, what has been surprising to you so far? Like, how do you think we kind of deviate from this path? Yeah. So you're in the group chat. Yeah.

Yeah. You're not in the group chat? All right. I'll add you later, maybe. Well, no, Jeff is clearly running the group chat. That's what it sounds like. I don't know. I need to be in the other group that you guys on with Arthur Hayes here.

No, the thing that has concerned me a little bit since I was sharing my views on the long-term effects of tariffs on the price of Bitcoin is that it's definitely gotten less certain as to what the objective it ultimately is that Trump wants to accomplish. I think in a totally rational world, the ability to have like a plaza or core two points. know, is the sensible objective, right? Which is like the dollar generally does need to depreciate for U.S. competitiveness, but you do want foreign creditors to continue to buy your treasuries, and you do need to strike some kind of discretionary accord to achieve that outcome, right? That has to be manipulated. It's not going to happen without some consensus for different tradeoffs being made. And that is like the ideal scenario. The moment for me that I lost a little faith in potentially that being the most important priority at this moment was when Trump started

to actually blindly go after almost everybody, including, in my opinion, the most untouchable ally in this whole ecosystem, which is Japan. If there was one country that you kind of had to be a little bit softer or make the exclusion for to be mindful of what Japan represents to America is an ally who is now at this point, like the largest creditor to U.S. Treasuries, you require some sensitivity on it. And what you saw actually was that Trump not only did not give sensitivity, he literally bucketed Japan with China and said, you are also a currency manipulator, right? And that is like an incredibly shocking thing for me to witness because Japan, if they ever manipulate their currency, does it on the benefit for the Americans.

And so this lack of ability to nuance an ally in this conversation gave me a little bit of a wake-up call that perhaps the end goal is maybe a little different. And the end goal maybe is a little bit of a protectionism at an escalated level that I thought even was not likely. I've come around to the theory that it's not even about protectionism so much as it is creating the tailwinds for an opinion shift about protectionism, I think there's a lot of chatter instantly of companies saying,

oh, maybe we should be onshoreing things again, something because there's an unpredictability here. We want to be closer to the market. There's a lot of people that are actually pulling forward demand, right? I know a lot of people trying consumers get in front of tariffs by buying cars and furniture, and durables and all of these things. And I think, like, you know, yes, the administration wants to see manufacturing jobs return, and there's a lot of memes about that, and there's a lot of jokes about that as well,

because, you know, we're not probably going to be manufacturing sweaters and socks and Nike shoes here that much. Speak for yourself. I'm getting to work after the show. All right. I see. Hit the factory. You look pretty good in that AI video, Robert.

I think you should consider, you know, putting toys in the box. The tiny little nails, the little nails, the little screws. Yeah. I don't think realistically there's the expectation that we're going to be bringing, you know, low-end manufacturing back to America. I think, if anything, it's for a couple extremely targeted industries, like semiconductors and chips and things that are strategically important to us. But we didn't put tariffs on semiconductors.

I know, I know. Because, I mean, that's a sense of form. Like the one part of this policy that would potentially make a lot of sense geostrategically, was excluded from tariffs. Totally. But like, you know, we can't shock the system that hard. Can you imagine if we put tariffs on that too? To accomplish strategic goals of bringing, yeah, okay.

We can't do that. But I do think there is a piece that's being not talked about enough, which is, I think, the geopolitical, you know, strategic element to this. Beyond trade itself, it's, in my opinion, you know, attempting to shift the balance of manufacturing out of China and into countries that we're more closely allied with. That is absolutely not true. We've been trying to do that to get people to go build in Vietnam

and to go get people to build in Malaysia and Mexico. And then we slapped them with higher tariffs than we did on China. But we're going to find deals with them, and we're going to find amicable resolutions with those countries. We're probably not going to find it with China. The rhetoric and the escalation with China, it's a very different situation. And so I think an end state's going to be we might have significant tariffs with China and not

our allied countries. And if you're a business located in China, your first thought is like, I need to like uprooted go to Vietnam or go to Japan or go to one of these other countries that are more closely aligned with the U.S. Yeah. I agree with you, Rob, that this is the path we have to imagine at some level as Americans too, because that is kind of the most efficient. an optimal outcome. At the same time, it will be wrong for us to all assume there is no path

dependency in how you achieve that outcome. That could be net negative too, right? So for example, you know, I think yesterday the White House communicated Japan will have like priority track, right, as a way to engage tariff negotiations. Part of that, I'm sure, was to go back to Japan to give them a little something on what was probably a little bit of a big offense to give them a strategic advantage as an ally. So they're playing these. games, right? But guess what happened actually in the last week and a half? In that period, while Japan was annoyed and the U.S. did not give that priority pass. China actually came out and said that they are now exploring a tri-party relationship on trade with Korea and Japan. And for that

announcement to have been made public, to me already implies that some backhand conversation happened in a way that China will get something out of it, right? Because China wouldn't have put itself out there to make a statement like that of the three most unlikely countries, by the way, in Asia that kind of all hate each other to come forward and say, we're going to set up a new trade lines. So you don't know, like in the path dependency of what the U.S. is doing where side deals are being made that is ultimately like a net negative to the power vacuum that's being created by the U.S. That's kind of my biggest worry that there is collateral damage to these things in ways that comes back later because it is a multilateral world we live in, and we should be thoughtful about that.

I mean, I think I wanted to avoid getting into the actual kind of political tit-for-tat stuff around tariffs. Well, let's bring it to crypto. Yeah. Yeah. Look, given that we're here, I guess it's pretty obvious from what everyone's heard from me so far is that I think these tariffs are obviously incredibly misguided and that there is no coherent strategy, which you can see from the fact that, Yeah, we exempted semiconductors, which are the most militarily and geopolitically important thing that you could consider reshoring. We put our allies, many of them have higher tariffs than our stated enemies. Russia and Belarus are the only countries excluded from the list, such that we presumably

have the door to have free trade with Russia and Belarus. And China itself is taking advantage of all this by being an incredibly stable partner that is now increasingly committing themselves to free trade and being a more stable trading partner to more and more countries around the world. So I think Trump's instincts around negotiating and politics clearly are oriented around power and not around alliances and diplomacy. And there are times when that is tactical. I think peacetime, where everything's going great, where you have historically low unemployment,

where you're making money hand over fist, you're on the cusp of a technological revolution with AI and crypto, is not the time to suddenly start picking fights and making everyone your enemy. No, this is true. And the thing that I'm concerned with a little bit is that if we have the world reassessing the role of the dollar and the U.S. global financial system that is created, it is true that they're all alternative models that are out there. And one of the ways I like to have this conversation is reminding about the impossible Trinity, which a lot of econ 101 students may be familiar with. But it's this idea that in the way that we have floating currency post-Bretton Woods, there's actually impossible. Trinity, where you can only have two of the three things to run the monetary system that you want, right? The three things are you must have open capital border to flow. You have to have an independent central bank that can set your own monetary policies. And the third thing is the FX has to be floating, right? And in other words, if you take away one of these things,

the other thing has to give. So for example, the U.S. chose that they want open capital. They want the Fed, but because they, to do that, they need to let the dollar float. Whereas China has done something different, which is that they're actually not going to have open borders and they are going to have PVOC so they can fix the FX. And it is therefore closed and they can manipulate that. Euro has actually done the other version where they do have open capital borders. The euro obviously floats, but there is no like real sovereign central bank that is dictating, like, policies and the ways that it rolls up to, like, the greater entity of,

like, the euro trade area, right? It's not like each of these countries are represented to set their own domestic agendas. So there are different, like, models out there of how to design, like, a global currency. And the challenges that are now happening is that people are going to start asking the questions about, like, what other systems might work better than the one that the U.S. has pushed for, which is a free float peg. Or it's Bitcoin. And all three folk plagues eventually lead to Bitcoin. Okay, all right.

So real quickly, I want to end this segment with just one sort of playing out different ways that this whole year might end up going. One path, obviously there's high likelihood of a recession. And let's say that we end up in a stagnationary environment where there's both recession and inflation remains high because of these tariffs. How do you think base case Bitcoin is going to do in that world? Well, Bitwise's price target is 200K by the end of the year, and I still think we have a good shot at it. Even in stagflation, in stagflation.

Yeah, I think there is a version of it where Bitcoin still can be the fastest force in that world, where people do need to see returns. Bitcoin wins in stagflation. Okay, let's say that instead of stagflation, Fed just starts really cutting, stimulating, QE, and that brings the economy back up and running. Inflation is still high. How do you think Bitcoin does then? I would say it does even better. Okay, so higher than $200K.

That'd be the best case. And let's say, let's say Jeff's get walked back. Oh, man, man, you don't know. I mean, these things can go in ways that it is actually just a moment of time as a reflection as a flow of asset. I honestly think nobody knows where these things can go. It's a commodity, right? Well, we brought you on because we thought you knew.

Yeah, you're the Alpha Leak liaison. That's right. Well, I am a very path-dependent options priser. And so I assess the entire local. volatility surface, which requires us to recalibrate every month together. Okay, last question. Last question. Let's say that tariffs get walked back.

Let's say that what happens, they get challenging courts. Courts overturn them. Congress doesn't have the stomach to, like, re-put the tariffs back on. And so the whole tariff strategy just ends up kind of fizzling out. Do you think Bitcoin is higher in that universe or lower in that universe than the world where tariffs stay on and we get stagflation and Fed inflates? I think that's still a decent outcome. But is it better or worse for Bitcoin?

I think that it depends on how other assets ultimately behave in that situation too. Okay, you got to give you a binary answer. No, no if maybe this, maybe that. Binary answer. No hedging. No higher. No, this is spicy. Options pricing.

Options pricing. Still good for Bitcoin. Maybe that's 175K outcome. Okay. So worse if we walk back the tariffs better if tariffs stay on and Fed stimulates. Yeah. Is that right? Yeah.

All right. Interesting. Yeah. What do you guys say? But either way, we're going to 175. I mean, it's impossible to say, but I think if we walk back tariffs and it's like nothing actually comes to this and it's like, oh, we like literally rewind it two weeks ago, the only real net change is that there has been a change in confidence between all of our different

training partners in the U.S. And I do think that that might continue. to be a festering issue for the U.S., but I also think that it could be good for alternate economic structures. It could be great for Bitcoin, right? I think people might say they're losing faith in U.S. treasury assets. They could lose faith in the U.S. dollars. But do you think it's better for Bitcoin if tariffs stay on and Fed stimulates, or do you think

it's better? Terrace stay on. Terrace stay on is way better, in my opinion. Do you think it's better for Bitcoin if tariff stay on? Yes. So I think in the – Do you think the market is in – correctly pricing Bitcoin lower, it should be pricing it higher.

Yes, because the market sees one step ahead. It doesn't see two steps ahead. Everyone markets operate looking at like what's happening right this second. I mean, I more or less agree with Robert that like you can't unsee what you've seen. And so even if tariffs are totally gone and we're back to two weeks ago, like dollar is still lower. And I think it's probably better for Bitcoin all as equal. I always struggle a little bit with the kind of global liquidity sync Bitcoin. story. Like, I feel like we've had a lot of T-ups for that. And it's kind of struggle. It's the contrary,

it's like a risk asset. Like, I love it to be another sort of, you know, gold rip, but it just, we haven't seen that yet. And maybe now is the time. I mean, there's always a first time for something, but it's hard to going to look at price action from past three, four years and be like, this is, you know, finally going to be the sort of flight to quality. Okay. Do you agree with Robert that tariff stay on is better for Bitcoin at the end of the year? No, probably not. I think it's going to take a while to kind of digest everything. Okay, so you think it's better if tariffs can walk back? Yes.

Yeah. Okay. Interesting. I am not sure what I think. I think it's probably true that tariffs staying on and like just kind of holding the pain and causing a lot more instability will likely result in higher Bitcoin price at the end of the year. I think that's one of those like crypto decoupling from real economy type things that I think is actually quite likely because the Fed and central banks around the world, like putting on real

stimulus to try to save their economies from the shock is going to be distortive of asset prices. And so I think that's likely. I think it's possible that that happens to Bitcoin and not to Alts. So there may be like, again, a sort of decoupling between Bitcoin and Alts in that world. But I don't know. I'm genuinely very, very uncertain about what happens in either world. I think it's like very, it's really counterintuitive because on any given day, Bitcoin's not doing what it's supposed to, alt are not doing what they're supposed to. correlations are breaking. Sometimes Bitcoin is trading with gold, sometimes trading with the NASDAQ. Sometimes it's like just leaving both both of them behind and doing its own thing.

So it's clear that like this asset is changing like right now. And we're learning something new about how crypto is going to behave. We've only ever really seen crypto as mostly a retail asset. And Bitcoin in particular now is increasingly institutional. And as a result, it's behaving very differently than it's ever behaved before. And so we're learning something really new. I think like by 25, 26, we're going to be talking about Bitcoin very differently than the way that we're talking about it right now. It's 25 right now. Sorry, 26, 27. We're going to be talking about Bitcoin very differently. And we'll have a different mental model, my guess, by call it the end of this year of how crypto really behaves in a huge macro

dislocation. Yeah, yeah, yeah, agreed. And global liquidity, too, I think people will start to be a little bit more nuanced about the levers of those conversations, right? Because Tom, as you mentioned, And one of the issues with global liquidity, too, is like, dollar weakening is actually a good event for global liquidity, generally speaking. But I'm not sure if the dollar weakening version of global liquidity increasing is the thing that drives Bitcoin valuation. And there's other ways to imagine people will be smarter and thoughtful about what this all means from a stimulus perspective. Yeah, I just remember very vividly Bitcoin and the rest of crypto doing quite poorly during COVID. until the effects of liquidity, you served the effects of fear. That's right.

That's right. So, okay, two other stories I want to get to on the capital market side that are, you know, somewhat connected to this overall story. The first, of course, was the announcement of Circle filing for their IPO. Circle was planning to go out at $4 to $5 billion. Obviously Circle has been one of these companies that's been trying to make their way into the public markets for years now. they've been stymied previously by Gensler and just the bullheadedness of the previous SEC

toward allowing crypto companies to go public. They finally got the green light ostensibly until, of course, the tariff tantrums began, and they announced that they were going to be delaying their IPO. So Circle pulled. But there was a lot of back and forth about the viability of this company, how it was going to be treated by capital markets, and whether or not they would be able to get the valuation that they were looking for, given the nature of the business.

Jeff, I don't know how deep you are in the Circle Balance Sheet or Robert, I'm sure you probably spend some time taking a look at that business. How do you guys size up how Circle looks? How do you think it's going to be treated? Obviously, right now there's a pause. All of these IPOs have been pulled. Everybody that was planning to go out is now sitting on the sidelines until market stabilize. But taking all that aside, how do you think about Circle as a business hitting the public markets? Yeah, my takes were that I actually think their numbers are not reflective of the growth in USC over the past couple months and quarters. USTC has been growing.

And, you know, when you look at year over your numbers, there's a lot of lag that's there because, you know, they're a business that earns interest off of the float of the reserve backing their stable coin. And if something is growing throughout a year, it's not going to be increasing revenue all of that much, right? There's an averaging out effect to it. And so I actually think their numbers are a little bit stronger than initially perceived, simply because their snapshot of like, what are they earning on a daily basis today is so much higher than it was a year ago.

And they also have a lot of heavy cost structures in there. And so if the USDC supply is growing, it will disproportionately benefit them. And so I think that's been underappreciated. The thing that I appreciated about everyone's takes on crypto Twitter was just how large of an organization's circle is relative to tether, you know, people are saying circles a fraction of the size and it has, you know, 40 times the headcount or whatever, there's also some efficiencies there. And like, maybe they can be more efficient with how they staff the firm, you know, on a going forward basis. You know, the executives are extremely well compensated. All of that came out, right?

It might not be the tightest run ship right now. And that might be a product of the fact that they're into good types. They have 4% plus the tax. they're earning on tens of billions of dollars without too much effort. And so there might be good time syndrome, but if the good times get even better, their business is going to take off. And if it gets worse, they'll have to make some difficult decisions. Well, so one of the central questions looking at Circle is trying to figure out how are public markets going to treat this business, like how are they going to categorize this business? Is this an asset management business or is this a tech business? And depending on which you think

it is, you're going to sign a very different multiple. Robert, what's your take of how you think public markets will perceive circle when it goes live? Yeah, I think it's an asset management business, simply because they're earning a whopping, we'll call it 4%, and a little bit of change on every dollar. I mean, they have to split some with Coinbase, blah, blah, blah, blah. But they're earning four percent. They've just put a lot with Coinbase.

Yeah, yeah, a lot. Most some might say. That might be a better. It's an asset management. They earn a massive fee on AUM behind the stable coin. And so, you know, it doesn't matter what bills and whistles they roll out for developers. Like, none of that's really going to change revenue. The driver of their revenue and of their margin and all of that is just going to be how many USDC are issued and what is the Fed target rate.

That's it. That's the whole business. Yeah. Yeah. Yeah. Yeah. To that point, Robert, I would almost argue likewise that it is an asset management construct, but it might be an inverse asset management multiple.

What I mean by that is actually this could be the scenario in which as an asset management business, it is wildly profitable where rates are high as an alternative's asset manager, right? To your point, it's long rates. And actually, like most of the Blackstone types of the world that are publicly traded benefit with lower rates. And so it's actually got like a different relationship to the duration component of the asset management business that I think has some profound implications.

What might even say that a Bitcoin portfolio paired with Circle as like a rates hedge could be, could be a useful utility in that purpose. Sounds like only Bitwise could sell. But, you know, just double clicking too on like the revenues split with with Coinbase. I feel like for me that was the most like alerted thing. I was surprised and shocked to kind of focus on, right? Because at the end of the day, you know, the multiples come down to the ability to have a strategic moat that is defensible.

And it does make you wonder, like, how defensible the mode of the business can be, if the take rate on being a distributor partner can be so high in the way that Coinbase, you know, is obviously taking half of it. And that kind of, I think, for me at least, made you think a little bit about, like, the defensibility of the moat, or whether it's really not a tech play at all, and it's actually a distribution play. And if it's a distribution play, then that's very different than the underwriting that you have put towards that multiple. We'll see. Tom, how do you think about Circle? I'm going to bite my tongue a little bit because I don't want to be known. Maybe we were more known

as a Circle hater because I think very nice people, and I really appreciate what they do for the industry. I just had a half-joke tweet about a year ago that Tether should just buy Circle, or they could buy them easily with like one quarter of profits. And frankly, I think I think it's kind of a less of a joke as time goes on. Like, I think Tether is much better structured in terms of like overall company operating costs. They could easily buy this thing. They don't have anyone who's trying to, in Washington who's trying to kill them anymore. And they can easily like, you know, tear up these agreements with Coinbase.

So frankly, just wind down the product and after a conversion into USDT and like end up with a much better sort of company structure than what Circle has right now. And so I think when I look at how they've been changing it, they're at the third. the years, like, if you think we've sort of top ticked rates, but their margin continues to shrink, and actual overall profitability continues to shrink. And so I just like don't really know what the bull case is. I think the tech story is cool, but not really kind of played out. It just really just looks like an asset manager. Okay, I will, I should confess, I haven't studied the Circle S1 at all, but I've seen some of the takes. There is a countervailing force that, you know, we saw when rates started ticking up, that total stable coin supply went down, which is, which makes

sense because now there's a, you know, when rates are zero, then, okay, there's no opportunity costs to go and put your money on chain and like have the yield be captured by, you know, some of these companies as rates decrease that should bring more dollars into the stable coin complex. So there's some countervailing force. Is it one for one? I don't, you know, probably not. Maybe not. Maybe it is in a time when stable coins are more regulated and they're perceived as being less risky than they were in 2021, 2022. So, so one, That's not totally clear to me. Second, clearly it's also true that Circle can charge large fees on creation and redemption.

And ultimately, like, if you own the species that people are using to pay each other, and if Circle ends up having an advantage in a post-stable act slash genius act world, because of the fact that it's easier for them to get licensed, it's easier for them to, you know, win, getting the good graces of regulators, they may end up being a large lead over Tether in terms of, of the regulatory stuff. And if so, can they monetize that? Probably, especially if there's going to be a race for other people to try to partner up and integrate stable coins into their businesses domestically. So there's a lot of storytelling one can do beyond just, okay, well, you're a bank,

you have assets, you have liabilities, you collect the float. I agree with you, that's currently the way the business looks because rates are high. As rates come down, they're going to find other ways to monetize this business, because of course they will. I mean, you know, these things are, it's basically a duopoly right now between Circle and Tether. And increasingly, I think what you probably will see is that the market will get cut up into, you know, like you already see in DFI, DFI, UCC rules the roost. And when it comes to emerging markets, overwhelmingly, it's Tether that's used. You may see that, like, if it works this way, that there's basically separate domains that each of these stablequin issuers own, that kind of means that each of them can monetize

really aggressively in their own domains. And they're not going to be as afraid of price competition, because if you're in defy, there's just no other option. If you're in emerging markets, there's no other option. You kind of have to use their token, and therefore they can charge a lot more on on ramp and off ramp. Look, for example, at Tron. So, Tron has historically high fees right now. If you go look at Tron, like right now,

if you go look at blockchain fees, most blockchains, the fees are very low right now because it's kind of a lull, right? Everyone's focused on macro, activity is pretty low, is not a lot of trading volume. And yet, Tron fees are really high. Why are Tron fees so high? Tron fees are not really high because of congestion.

Tron fees are high because the validators voted to raise fees, which is basically you can sort of think of that as, you know, Justin's son, you know, if you sort of round up to say Justin Sun decided, you know what, I'm going to monetize the fact that people have to use Tron. And so basically, Tron is just taking a huge cut of all the payments activity that's happening on Tron. And they're making shit loads of money. This, to me, is a glimpse of, that's what it looks like when you have a monopoly on

a payment substrate. So could it be that Tether and USC figure out a way to make that kind of fee for themselves? I don't see why they couldn't in a world where the core business model of Treasury is no longer as attractive. Yeah, I think that is, I mean, the story, I think certainly the reg capture story is part of that. But I'm like, I think the balance sheet almost tells a different story, which is like, that is the percentage of USC that's on Coinbase effectively. And so, like, therefore, it's not being used as a payment substrate. And so I think it's great. And I really want that to be true. And I would love to see this, this market form into more of a duopoly and have more competitors. But like, practically speaking, again, short of their efforts to

basically make Tether illegal, I don't really see how that kind of becomes true. That's what I think Tether should buy it. You get a nice discount. I give the devil's advocate. That would be such a crazy outcome. That would be such a crazy outcome. I mean, that would be so monopolistic and sad as well. I mean, I just kidding. I mean, I also think. Well, Andy, It's over, so it would work. Yeah. Well, I also think that it is almost so unlikely for it to happen because the strategic vested interest the U.S. would even have is to actually keep it as separate entities, right? Because the great exorbitant privilege that you're describing of Tron, Haseeb, is essentially the value for which you can actually earn a fee off of foreigners that are willing to park their money and dollars.

And they're happy to do it at whatever cost, right? So you can actually discriminate a bit against foreign holders. versus the way you have to treat your American citizens. And that exorbitant privilege itself is the premium that you can extract. So you almost kind of want that entity to be different than the entity that is servicing the needs of the domestic Americans as like a payment solution. So for those reasons, even at like a philosophical level, even as an American like version of supremacy, like you want those two things to be separate. And so actually, I think it would be a very bad outcome. if that were to happen because you probably still then will find another, you know,

Patriot confiding, like American company emerge and try to compete with Tether. And it's going to be that much harder for the U.S. Sure. Okay. So last story, again, on the capital market side, we just had today an announcement of the largest M&A transaction in the history of the crypto industry, which was the acquisition by Ripple Labs, of Hidden Road for $1.25 billion. So Hidden Road is a, if you're not familiar with Hidden Road, they're kind of an institutional

product that I think most retail investors will not have come across. Hidden Road is basically a prime broker. They're the second largest prime broker in crypto behind Falcon X. And they facilitate, I believe it was $3 trillion annually. They've over 300 institutional customers. So it was really, you know, a lot of times when you see these M&A transactions, they are, the headline number is kind of a mishmash of a bunch of different things. or it's like earnouts and all this other stuff,

that's kind of a convoluted structure that gets rounded up to a big headline number. But this was unequivocally, biggest M&A, very, very large transaction that I think for Ripple is very strategic for them trying to, one, use their balance sheet more effectively because obviously they have a huge amount of cash that they're sitting on.

And second, also to increase the expansion of RLUSD, which is Ripple's new stable coin that they're trying to internationalize. So very interesting M&A. So we're actually investors in this company. So now we're investors in Ripple Labs. Congratulations.

The Hidden Road Team pretty well. Thank you. But it's, I think for the industry, it's kind of an interesting moment, especially given the backdrop of what's going on macro-wise and like all the instability that's been happening in markets.

Markets are down across the board. It's a bad look for most things in the crypto industry being down so much this year. And yet, there's this countervailing force of stablecoins growing, institutions coming into the space, the, you know, the ETF complex looking really strong. So just want to get quick reflections from everybody around the horn here. Robert, what did you think when you saw the story about this huge transaction? Yeah. Well, small disclosure, super state that I'm the CEO of. We are a client of Hidden Road.

We use them for train execution. Things are a great team and a great product. You know, when I saw it, was kind of like a little bit of a ha. There were some rumors going around that Falcon X was looking to acquire them. I could have also seen them going to a Coinbase or some other exchange. So to see that Ripple was the acquirer was a little bit eyebrow raising when I first read it. I think it makes sense for Ripple. It's not that expensive for how much market share hidden road has. and if it even vaguely increases use of the XRP ledger,

I think that they can sell that narrative to the public and sell enough XRP to finance the whole thing. So it seems like it's accretive to ripple, and it seems like a savvy move. I just didn't really see it coming. Yeah, I think I shared the same sentiment. I was a little surprised, maybe also not surprised in the sense

that there has been this overwhelming trend of consolidation of crypto services merging with traditional financial services and offering that kind of multi-asset solution may be the worthwhile end game. I think the thing that surprised me a little bit was, for me, like, I've always associated a hidden road as a little bit of like a down payment Citadel made into the chance to think about crypto as a foray.

And, you know, I would have thought two outcomes of this means either like Citadel would have found it to be a worthwhile thing to take upon themselves in this regulatory clarity, or two, they would continue to fund it as an outsource business. They actually still want to have a strategic state for it, but not touch yet. And for me, then it confirms what I think I always knew, which was that it's almost much easier for traditional companies to go into crypto to offer some of the auxiliary services than vice versa, right? Because I think for me, as an outside observer, what I've noticed with Hidden Road is they've tried to branch into more things.

that are not crypto at all, right? Like they have crypto, sure, but they're also trying to offer like a full suite of multi-asset solutions where they want to become like a fixed income clearing partner or dealer. All the things actually Citadel can do. And so it reminded me at this moment where you have like the Goldman's of the world trying to offer a prime brokerages now to compete with Falcon X. It's actually kind of challenging for crypto to go to Tratfi as it's much easier for TratFi to come to crypto.

And maybe this deal reflects that kind of trend as a moment in time. What was was kind of my developing thoughts of it? Tom, what's your take? I mean, I was really surprised given as a portfolio company, but that's great. Can't believe it. Yeah, incredible. I love to be a Ripple Labs investor. So, yeah, I'd say, you know, from my perspective, I think the, so, you know, for most people who are listening to this, it probably, the average person probably doesn't even know what a prime broker is. So I think for many people, they hear like, wow, biggest M&A and crypto, and it's like this Byzantine thing that 300 customers use. So there is a little bit of, I think this is kind of the financial plumbing of crypto growing up.

And in a way, Hidden Road was kind of a response to FTX as well. Like a big part of why this thing exists and why it's so important is because more and more institutional traders, especially in a post-FTX world, they don't want to deal with counterparty risk. They want some kind of neutral players sitting between them and the exchange. And that's what Prime Brokers and Hidden Road fundamentally does. There's a lot of other stuff that it does in terms of making an increasing capital efficiency. But that's kind of one of the main stories.

As you mentioned, they were spun out from Citadel, which is a big hedge fund asset manager. And so it really is this kind of intersection slash marriage of traditional finance and crypto market structure. So to me, the big story here, all the strategic synergies aside of, okay, yeah, Ripple, clearly you can understand why they see the advantage of distribution with using something like having something like Hidden Road in their wheelhouse. That being said, Hidden Road has to be still a neutral party and it's going to be operating separately in order for it to still be a useful prime broker. And that's one of the reasons why Coinbase can't really have a prime broker because Coinbase is the exchange, right? So it's not perceived as being neutral. So I think the big thing is that this is vindication that crypto is growing up. Like this kind of real M&A, like M&A of this size, but also this company being this successful,

they're both vindications of crypto's growing up, the industry is maturing, And I think for everything in the space, it's a good signal of what's to come. For markets right now, it's really hard to be positive, given everything that's going on in the world and given how much markets have given up this year. But things like this, I think, are these bright spots that there are forward-looking reasons to be optimistic about what's going on in the space. And I think for long-term capital, there's a lot of people who see that and are willing to make big bets on it. For me, that's the takeaway, if nothing else of like, hey, there's still, you know, there's still money out there in M&A that's happening, which is also a good sign.

So I think, you know, we saw last year, Bridge this year with Rebel Labs doing this M&A. So open challenge, whoever wants to best this one. Circle. Circle. Watch out. Tether. Tether. Largest O'FAR.

That's right. That's right. You can top them. You can top them. You can top them. Just have to credit Tom to be, as long as Tom's in the tweet, we're okay with it. Yeah. okay excellent all right well we're up on time we got a wrap thank everybody and we'll be back next week