Felix Jauvin: Why The Fiat Debasement Trade Is Set To Explode Soon (Full Portfolio Construction)

0:00All right, guys, welcome back to the tokenization tower. We are here with Felix Javan, head of content at Blockworks, also my macro expert in-house macro expert great to have you beautiful day in the city. Amazing. Good to be here. Good to be here in person. In your studio. This is, I think, the third time we've done this, but never actually in your studio. Yeah, man. Cool to be here. Yeah, man. I mean, we've had a crazy 24 hours here with this SEC tokenization innovation exemption. So we got wind about this and it came out. And it's looking like a lot of funds are going to start tokenizing their assets, bring them on shame. And it just looks like this tokenization mega trend is going to continue. I just want to get your take on kind of like this new regulatory regime. And then I want to get into kind of how to invest in this new era of crypto. Yeah, I mean, it's nice to just finally know what you're allowed to do and not what to do. Like, I've had this belief for basically since, I don't know, 2020, like the Gary Gensler era where, you know,

1:01there were, it was regulatory enforcement by just litigation effectively and sending season to assist and that sort of thing. So nobody really knew what we were allowed to do or not, which I think really hampered innovation in so many ways. Like, we built obviously the infrastructure of crypto and blockchains over the last decade or so. And that's really all well and good. But then, you know, anything that was really tied to securities, you know, it felt like we really didn't know what we're allowed to do or not. So everybody just, you know, you didn't know if you're uniswap or whatever, you just wake up one day and you just get a well-snoted from the SEC. It's just like you can't operate like that. You're, so you know, you're trying to revolutionize the finance world with basically one arm behind your back, the entire time, which is kind of ridiculous. So to me, it doesn't really surprise me that we've been through this, you know, call it a five year period where it felt like there was this idea of like, you know, financial nihilism and all that stuff. And like, you know, we're just trading meme coins. I think that's super cycle. Yeah, and I mean, that's still a thing in certain sectors, like obviously it's going off right now. But that other component of the industry

2:02of just like true innovation on, you know, the finance like fundamentals and the better off of the industry, we just haven't really been able to explore that. It felt like the only thing we could really do was like governance tokens that really didn't mean very much. Yeah. And now under this new SEC, under the CFTC and this potential, yeah, clarity bill, it's like, okay, now we can start to actually know what we can do or not. And now all this incredible efficiency and, you know, transparency and quick instance settlement that we've developed on these crypto rails, we can start to actually experiment with it. So, you know, you're starting to be able to see what can we do. We're starting to get, you know, this crypto rig thing from the SEC where they're talking about, okay, now we know how much we can raise before we have to, you know, file certain disclosures and that sort of thing. So, yeah, I'm incredibly excited right now. I think, like for me for the last year or two, except for if you, you know, you call it like the revenue meta tokens. Like other than that, it felt like I was pretty bearish on a lot of those, you know, kind of useless governance tokens that didn't really mean a whole much. And now suddenly you have a lot more tangible value.

3:04So, it's just like off to the races, I think we need to reset all our priors and just look at the landscape for, you know, with a fresh set of eyes right now. So, that's what I'm focused on, yeah. Yeah. And for those of you guys watching who don't know, so at permissionless 2025 last year in June, I believe, it was in Brooklyn and it was really hot outside and we, first time, first time ever doing our roll up outdoor setup, right? And it's 94 degrees, but shut out to block works. They got us a killer sponsor. They got us a good setup right in the middle. We had great, you know, traffic and it was, you know, kind of like the, like the first like TVPN crypto conference, you know, thing. It was sick. It was like, you know, it was a great conference. The, you know, things were bullish. And, and I'm like the revenue meta is like the biggest clip that comes out of it. That and like is staking dead. Because that's where we were. Like, L ones are cooked, their inflation is bad. They make no money. Why do we need all this inflation? And it was really what we were really getting to was like, what are we really buying here?

4:05Like, is there any businesses that we can buy in this industry? And so, you know, let's take this tokenization mega trend and kind of unpack the second and third order effects. Because I think what we're getting to is, you think about the obvious of the world and the uniswops and the morphos and the hyperliquids and the lighters and the airdromes and just, you know, all these names, right? We've thought about them as being the backbone of the crypto economy, right? When you say reset your priors, what I think is, we need to start thinking about these as the backbone of the future on chain finance world. And that is not $3 trillion of total market cap and $160 billion of TVL and DFA. That is like trillions of dollars on chain. And multi, you know, eight, you know, 9, 10, 11 figure in market cap. And so talk us through like what this resetting your priors means for this kind of tokenization wave for just on chain assets. Yeah, so, so lending is a good dropping off point there

5:06because yeah, you know, it's incredible. Okay, so when you compare what happened in no way, right? In the financial crisis. So much of what caused so much havoc there was nobody knew what the counterparty was and how much risk that they had on their books. They didn't know how rehype-pothecated all their assets were, right? So you didn't know what kind of risk you're holding. And then you look at what we have now with DFA with, yeah, lending, you know, Avian Morpho, you know exactly what kind of risk your counterparty has. And you know how like, yeah, how leveraged those assets are and everything. So I mean, yes, something I believe for a really long time is that if we had that sort of line of sight into these prior historical financial crises, I think they would have been a lot less damage because you know, it's not just like, we don't know what risk we have here. This whole book is toxic, like let's just get it out of here. You know, you could have a bit more of a Neil on's view and say, okay, like look, I know, I know how, you know, leveraged my counterparty is here. I know the quality of my book. So yeah, imagine that just being applied to the rest of the finance industry

6:07where suddenly these, you know, it's obviously right now everybody's talking about tokenized equities, right? And that's all well and good. I think that thesis there is that obviously, it's really easy to buy Apple stock when you live in the US or Canada or I'm at or whatever. It's not so easy in a lot of other countries. So obviously that's, there's really good compelling ideas there to be able to own tokenized equities in countries that don't have direct access to those financial markets. So that's awesome. But I think what's more exciting for me and on the tokenized asset aspect is, these more exotic Q-sips, like, you know, treasuries assets where there's just a lot more individually, you know, expires and maturities, durations and that sort of thing. We're suddenly, you know, some of those assets, they can be super liquid and, you know, you don't really know where the price is at and those sort of things. And if you have just much better settlement, instant settlement, you have much better line of sight into the amount of leverage in the system, suddenly I think those more long tailed exotic assets. I think the opportunity for tokenized assets

7:09and infrastructure we've developed is just absolutely incredible to be applied there. Yeah. Okay. So kind of taking this from the lens of like, the value prop here, right? Which is this kind of open transparent 24, 7 global market that is created to, you know, in effect, you know, the Bitcoin white paper came out after all the bank crises. And so, you know, now we've got this on-chain financial system, these new rails, as a result, all this kind of opaque kind of stuff that we see just down the block here, right? And so, so that's like the value prop. And I think the institutional allocators are starting to get that. But what are they gonna buy? Like, like, I'm an allocator, this is happening. What am I gonna buy? And like, how can we get in front of them, right? Like, this stuff comes through with the, you know, with the exemption, with the clarity act, whatever, right? They're coming in. Let's say, is it as simple as like, oh, I'm arc, I'm tokenizing my fund with secured ties, I'm gonna put my fund shares in more fovelled. So I'm also just gonna buy the more fove token.

8:10Like, is that that simple? Like, what are they buying? And how do we get in front of them? Yeah, so obviously there's just this like huge tidal wave of assets coming on-chain. And that's awesome. And like, the two-year point, the second question from there is, okay, with all that flow coming on on-chain, where does, you know, what gets pumped in that process? Um, and that's like, honestly, billion-dollar question. Yeah, exactly. And that's what's so confusing right now is that we're in this transition moment where, I would still say 75% of the tokens that exist right now have no meaningful accrual of value related to that tidal wave coming in. So that's confusing. And then the 25%, you know, you're calling it the revenue-medic tokens. Like, it's suddenly anything that has a mild, whether it's a buyback or what have you, anything with the token that associates with those cash flows is getting marked up at a premium right now. So obviously, you know, there's the hyper liquids, there's the pumps, et cetera. And I think that's the first shot of this next bull market of what things look like. And so the next question from there is, I would say the last six months or so,

9:12what's just this divergence between those revenue-generating tokens versus, you know, the useless governance token that has like no meaningful claim on anything. Obviously, an important part there is, because of this, you know, Gensel approach to the SEC for so many years, so many of these tokens had this dual equity token structure that has just been a mess to turn through. And you're starting to see that get solved. So like, Morpho is a great example of one where they just had that singular aversion. You have, you know, Athena recently, they just had their, they consolidate it and have been focusing on value occurring to the token and buybacks there. And you guys are doing great work there, just as excited about the token transparency stuff. Yeah. On, you know, it's now like, look, if you have a good token transparency report on block works and Andy likes your economics, your flying. Yeah. Exactly. But it's like, yeah, we're trying to do here. Yeah. So we're trying to help accelerate, yeah, to your point with the TTF is offering a block works right now, is we're trying to focus on, on shepherding and accelerating that transition through this,

10:13our openness that we're in right now, where we need to figure out what's, what's the value or not. So the first phase of that is, yes, understanding what has value versus what does not have value. The second part, which I think is going to become a lot more meaningful over the next year or so, is understanding what sort of multiple or price do we attach to those revenues, right? Because right now over the last six months, it's just been, oh, they have revenue and it goes towards the token and there's buybacks, okay, buy. But then you start to have the questions of, okay, well, like how much? And should we just be, you know, for a bit, like just, you gotta go back to like, basic finance 101, right? Which is that, okay, you have a corporation that is making, you know, profit, retained earnings. What does the company do with those retained earnings? Do they give it as a dividend to investors? Do they do equity buybacks? Do they reinvest it in the corporation? Into operations? And I think this is a nuance that is being missed right now in crypto. Because you have, okay, you have hyperlicate where, you know, the vast majority of their fees are going towards buybacks and burdens right now. You have pump, which is a bit more discretionary, right? You know, they don't have a set schedule

11:15in terms of their buybacks, they're a bit more nuanced. And I think these are gonna be really important questions, which is that, you know, if I'm really bullish on a token that has some sort of claim and, you know, closer to like a tokenized equity in some version or another, I wanna be able to have a management team that is making a decision on the best use of those profits that they're generating. You know, does it really make sense to give 99% of the fees a way to token holders versus reinvesting in the company and growing? Because what if that equity value hundreds X if you reinvest? And so- That's the more fothesis that's what Paul says. He's like, look, I'm not going for a 10% move here. I'm going for the 100 X. Like, why am I gonna- Yeah. And so what you're getting at is like, hyperlicate would have this massive run and success. And everyone is now looking at them being like, okay, that's the model. But what you're saying is that that's not always the model. I mean, you look at equities, you look at other companies, you know, one could argue that hyperlicate could probably tone down their buybacks a little bit at this point. Yeah. Right? Yeah. Like why keep doing it?

12:15Why not go from 99 or whatever it is to 92? Yeah. Or 90? Yeah, probably just baked in the price. So as an investor, right? You're looking at this. I don't know a lot of hyperlite. I'm very bullish on it. No, no, not. But I'm just saying, like, buying back all the hype at 90 is different than buying it back at nine. Yeah. Yeah, yeah. So, and so you start to kind of look at these like discretionary decisions from the CEOs and founders. And I guess kind of like what you're saying is like, we're entering that next kind of era of market sophistication. Yeah. Within the sector of the companies that are actually making money on chain, there's still this massive fat that is just like, you either making money right now or you're figuring out or you're gonna shut up, you know, you're gonna shut down. Pretty much. And that's gonna happen. But there is now this kind of like tier, tier creating in the revenue meta category or we call it just like on chain businesses. And there's more kind of like sophisticated actors coming in, not just being like, oh, company makes money, bye. Yeah. Yeah, I mean, so basically we're just getting back full circle to we have this really interesting new innovations

13:16in infrastructure. And then we're attaching traditional financial analysis towards it. Right. Yeah, we're getting towards just analyzing companies. Like in fact, like I'm not saying that DCF's are the only way to go here to decide whether you buy or something or not. But the nuance, like, you know, there's a lot of people in this city that are spending all day and night deciding on whether a company should, you know, issue debt, issue equity, buy back equity, give it as a dividend or reinvest in operations. Like that is, that is finance. And now we're gonna be doing that for tokens because the tokens actually have, you know, capital is associated with them. So it's great. Like we're finally getting to that point where we've been paused for five years. And the only thing we could really do is just keep, you know, repeating this quote unquote, innovation of infrastructure, but we have plenty of infrastructure now. We're good. Like, you know, we're not paying $150 for a gas, like for a transaction on main net anymore. We're in a good spot. So like, let's go to the next phase now. And we got the green light from the regulator. So like, yeah, it's time to really just get going on this.

14:18And so I totally agree. And a lot of my portfolios positioned in a lot of these names. Yeah. And one of my portfolios and how we're thinking about is this barbell thesis, which is you've got on-chain revenue-producing businesses. And you've got these kind of store-of-value assets. Namely for me, right now, Bitcoin, gold, outside of crypto, ZEC, and ETH. And so these are like my four reflexive, less clear-value-cruel if any, less revenue, if any, but to find properties of monetary policy, potential for massive re-radings, especially Bitcoin, compared to gold, then I think ETH compared to Bitcoin, and I think ZEC compared to Bitcoin. And so this is also like a separate tide. And if Robin was here, we'd go so deep down the macro, rabbit hole, which is, Besson's coming out tomorrow and he's gonna buy a bunch more long-daded bonds. It's unlikely that Warsh hikes in September. And Arthur Hayes comes on the show and says,

15:20the Euro yen is gonna collapse, and we're gonna see massive printing across the board. The AI expenditure has gotten to be so crazy that if politicians go and lobby for midterms and say we're gonna stop the spending of AI, we were wrong. That is just, that is outlandish to think that's gonna happen. And so you've got these all these factors lining up for kind of like the Fiat debasement part of this barbell. And it makes a really good portfolio. Give us your sense here on the macro side. Arthur says Warsh is irrelevant. Arthur says we're kind of in this transition here phase into much more accommodative financial policy. Give us your read of the macro and then how that kind of pertains to what I come to understand is kind of like your, you're also kind of like reflexive Fiat debasement portfolio. Yeah, so first off, I fully agree with that barbell thesis. Like I'm positioned very similarly. Yeah, I think it's a little bit more consensus. And like why is it so consensus? I mean, it's consensus because it's early and everybody else has like basically left the space so there's only the people that are just insane enough

16:22to actually be here. Like I don't think it's, yes, consensus around the 20 people left that were just, you know, resilient enough to go bail, to not just go bail and work in AI, right? So I mean, I don't think it's a bad signal that we're all aligned. Like we're, I don't know, I feel like you're very smart person and pretty tapped in. So no, I think it's good. Okay, so on the macro side of things, yeah. So we have Scott Besson and I agree on Arthur Hays's point that more and more of the Fed is more and more relevant versus the Treasury versus what physical authorities are up to. Yeah, we're moving a lot right now in that direction. So tomorrow, Treasury, Secretary Scott Besson is gonna be doing his first buyback then he announced. And what was so interesting about when he announced that a couple of weeks ago was that, you know, typically the guidance for how much debt they're gonna issue the composition of that debt and how much buybacks are gonna do comes on every quarter, right? The quarterly refunding announcement that happens every quarter. So that happened, that QRA happened like two weeks before this announcement.

17:22And then suddenly, you know, in that announcement, you would think, okay, if they're planning to do more buybacks than the long end, they would have announced it then. But then suddenly two weeks later, out of the blue, on just a random day, Besson comes out and says, hey, look, we're gonna increase long end buybacks from two to four billion on September 9th. That is really interesting to think about. Like what happened there to cause that? And then in the lead up to it, obviously, there was all this stuff going on with the yen, Japan, obviously, you know, we've seen some pretty meaningful interventions, the first, you know, aligned intervention between the US and Japan, I think in 30 years or something like that. So very meaningful moments and a couple of interviews there from Besson saying that, you know, there's information, there's information asymmetry that he has that the market does not quite yet in terms of what's going on with Japan. Feels to me, like, you know, there's some news over the weekend that we got the monthly release for the Ministry of Finance of Japan where they talk about their foreign exchange holdings. So like, how much treasuries they own? And they saw the biggest decrease on a month from a base, $87 billion of sales of treasuries in August

18:26to fund that intervention of their own or a US treasuries. A US treasuries that they own. Right. So they sold the treasuries to buy to buy dollars to then go and buy the end. So I have a feeling that's what it was kind of referring to in terms of that information asymmetry, which is that look, you know, if Japan's selling treasuries, that's not a good look right now for where we're at. You know, we have the 10 year, the 30 year, knock on on 5% yields right now. So, you know, any sort of huge holders in Japan's, you know, the biggest of treasuries, that's obviously not a good thing. So it starts to make a lot more sense about why he was being so proactive and how he was talking. So, you know, obviously as soon as we start to talk about outright fiscal intervention like that, especially in currencies, those classic debatement assets that you mentioned start to park up. And obviously on the day of that buyback announcement, we just saw Golden Bitcoin rip. Gold's given up quite a bit of those gains in recent weeks. And I think that has to do this worse hysteria or fear, maybe not hysteria.

19:26But it's just, you know, the market's been so used to for so long knowing exactly what the Fed is going to do every meeting. And now like my working thesis has that been going in every meeting, we should see odds of 50, 50 between where we're at and where we might potentially go. So I think it's, you know, last meeting in July, we headed at 50, 50 where there's going to be a pause or a hike. We got a pause right now. We're coming into the meeting next week and we're around 50, 50 as well. We have this really important CPI print on Friday. That'll probably be the deciding factor on where we go. But in the interim, you know, if there is hawkish policy coming from the Fed, just the simple correlations and algorithms reflecting that are going to sell the gold. So obviously that's been been taking the Brent of it and golds and sorry, Bitcoin's been chopping around. It hasn't really given back as much gains. And I think that's just because it was so sold down in the last year or so. And there's so many shorts. So, you know, all that to say, I think obviously a lot is going to lie on the CPI print on Friday. I don't think tomorrow, I mean, look, if Besson comes in tomorrow and just does the four billion, like he says,

20:28I don't think that's going to really be much of a market moving event. Not like a buy the room or sell the news or buy the news and pump it. It's just kind of like it's coming. It's kind of like, except for the fact that in that initial release, he said, four billion was a floor. He really made it seem like that's the absolute bear minimum. So I don't know, maybe he comes out and actually does five billion tomorrow if he wants to get that certain reaction that he wants. The fact of the matter is, like I don't think it's, you know, there's a lot of people that are trying to fade this and fight it. And you know, there's a certain cohort of macro thinkers right now that believe that, you know, the Fed is going to hike and that Besson can't fight the bond market. I mean, they're saying the same thing about the yen when it was at 160. And you know, this intervention and then went back to 160 and everybody was laughing at him and, you know, taking laps. And now suddenly I didn't look this today yet, but we were trading around 153. So like, yeah, working. So I'm that point. Yeah. So I was at Jackson Hole. It was wild. Yeah, that look crazy. Fans are washed. Yeah. Yeah. I met all these poor people. Yeah. I was way out of my own belief, but it was fun.

21:30It's fun. And so, um, Worsh starts that hike or starts that speech. Yeah. Literally referencing to physical hikes that he's done in Jackson Hole. So I told you trolling. Yeah, yeah. Just messing around. And then he spends like five minutes talking about how he hates for guidance. Yeah. And so my left curve smooth brain take is like, if this guy hikes, yeah, he literally just, he literally gave it to us on a platter by his five minute monologue trolling us about hikes. And I know it's not always that simple. Yeah. But all that to say, do you think he hikes? I don't think he hikes, but I'm ready to get proven wrong. But, you know, that's where I'm staking my claim. I don't know. Like, obviously, again, it's going to depend on the CPI print. If we get a scorching hot inflation print on Friday, like, that is, you know, especially with the super hot jaws report that we got last week, like, yeah, probably they're going to hike. And I'm going to have a go my face. So, but whatever. I mean, just got to make his bets and markets. Um, estimate CPI is 3.4% for is 2.4.

22:32Yeah. Yeah. So, I don't know. I mean, like, how much higher do you think than the estimated number? Would it would like, would would just breaking even be a hike? Would point 1% higher be a hike? 0.3% what kind of. Yeah, it always, it always depends what part of the inflation structure is moving. Because obviously, like, headline includes energy and food and that sort of thing. So energy, you know, it's super volatile, especially with an around war happening right now. Like, obviously, over the last month or so, we've seen oil go higher. But this is for the previous months print and the oil prices were pretty reasonable. So, you know, if headline is a little bit hot, I don't know if that will be what breaks it. But if you start to see just this widespread of like, you know, what is, what is the median rise in inflation across the board? Or certain certain sectors of that? Like, it really depends. So, you know, if I see core, probably the most important one I'm looking at is core CPI month over month, basically. Yeah. Yeah.

23:32If that's hot and you know, I think, go quote me on this, but I think, you know, it's roughly been around like 20 bits month over month for quite a while now between 20 bits, 30 bits, something like that. If you get 40 bits core month over month, yeah, they probably hike. But I don't know, like, I just don't really see that happening. I think it's, it's, it's warranted to say that a lot of this inflation has been the AI thing and then the AI build out. Like, that's been pretty clear cut at this point. Like, we're not quite in the productivity boom side of things. We're in the investment boom side of things right now. And that's just going to be inherently inflationary. So, you know, I just, so you think he could hold a rate steady like he's been doing in July and maintain credibility amongst the American, you know, the American people. I mean, no, no, like he should, this is the thing. There's what he should be doing and what he will do. Well, that's what I mean. Yeah, what he should be doing is probably hiking. Or at least, you know, one insurance hike. Just get it done as established credibility. So, you know, there's a, there's a certain narrative there.

24:34But, you know, you just hear, you know, again, I'm just so much more attached to this idea that the Fed is a lot less independent than it was. You know, it's never really independent, but it's a lot more influenced by fiscal authorities. You know, Besson and Worshroom meeting every week. Worsh is talking to Trump all the time, you know. Yeah. How will only talk to Trump a handful of times in his entire 10 years? So, there's a lot more coordination. And then you have an interview where Besson's talking about, you know, what's your worst tune? He says, I'm not in the business of predicting, but typically you don't hike into a supply shock, as what he said, which is kind of like, you know, don't hike. And then obviously you have Trump tweeting plenty last week talking about, you know, we should have rates at 1% because we have the best credit and that's his perspective. And so, I don't know. I just don't, I don't see how you can square that with Worsh's background and how he gone to the tenure for him to commit. On last, he says, hey, look, we're going to do one hike and just establish credibility. Right. But I don't think we're going to go into a state hike cycle. I truly don't believe that. So, you think Worsh may feel some sort of pressure or kind of feel the anguish of central banking?

25:40Oh, yeah. His committee is super divided. I mean, there is multiple descents last meeting. And I think, I think there'll be more, but this is the thing, right? Like, there is a Governor Waller was out last week with a fairly maybe dovish speech. But again, this is his whole way of doing things right now is he says, look, if we, so his framework getting back to CPI is that if we get a hot CPI, I'm voting for a hike. I think like there's a decent probability you have an almost evenly split F1C in next week, which so yeah, like he has pressure in the committee right now to get that done. So, it's about whether, how he navigates that and whether he says, okay, fine, we'll get it in there, we'll get the hike. And I think that hike would actually help bring lower long-term bond yields. Depending on how that hike is perceived, if it's perceived as this hike that the market is kind of screaming for, which it kind of is. Like, if you look at the July meeting, we went in 50-50, he chose the pause, and then the long bond sold off and yields went higher.

26:44Soon, if you get the opposite of that, I would imagine that long bonds would go lower. You know, a lot of the move hiring yields recently has actually been, like we don't need to get too nerdy here on bond math, but you know, you either have this inflation expectations component within long bonds, or you have this term premium, term premium, which is just basically this premium that investors want for holding a longer duration asset. You can almost view that as a component for Fed credibility in general. And a lot of this move hire recently hasn't actually been the inflation expectations going higher. It's been the term premium going higher. So because that's what's been going higher, I feel like if we saw hike long bond yields would actually go lower, which I don't know, like if that's perceived, it's just like the one and done hike, and long bond goes yield. It's kind of bullish. It's kind of bullish. Yeah, yeah, exactly. But if it's perceived as like, oh, this guy's a hog, and he's starting a new hiking cycle than we're in trouble, I spoke to senior economist Adam Poston,

27:45in Jackson, I'm not sure if you're familiar with any of his workers, the name is a president of an economic institute out in DC, and he basically gave me a shrug of a shoulders of fur to the September meeting, but he gave me 100% by December. So if it doesn't happen in September, it happens in December. I can see December. What is your what is your read on this kind of quote unquote insurance hike? Is it better for us? Because I'm going to ask you what you're new with your portfolio in these different events. What is better for the market, do you think? Now or then? I mean, yeah, he gets, I mean, this is the thing he says he doesn't like for guidance, but he could be like, we're pausing here, but maybe hike in December. Yeah, I mean, man, if he doesn't hike in September and we still get pretty positive, hot economy, like we have right now, I could totally see December. And you know, that's after the midterms too. Like the Fed isn't going to, if they really have to hike, they will hike in front of an election,

28:45but they would prefer not to. I think it would be like the month before. Yeah, exactly. Because we have the terms coming up in November, right? So the hike in September is kind of messy versus in December. I feel like it's a lot. So I met perhaps that's like what he's thinking, and I would definitely agree with that. Yeah. I don't know, it feels like eventually we have a hike coming, whether we like it or not. Sure. Okay, so then let's talk about, you know, your portfolio. Imagine you're, you know, diversified across equities, bonds, or stocks, or commodities, etc. But on the crypto side, what do you do here? Right? So your bullish, I assume. I think you're in the camp that the bottom's in. And you know, maybe there's some volatility, but you're looking for like a cycle level return from your Z cash entry, told me around like 700 bucks or 800 bucks. I don't know if you're coming with that being public, but here we are. We're live. Sorry, I feel it's, you know, what's your take? Like, are you trimming on a hike? Are you buying dips on a hike? Are you getting cash ready for a hike?

29:47Are you just holding through it? You know, what's your take? Yeah, so in the Z cash thing, I, so, you know, near the bottom there, between, I don't know, 55, 60, care, whatever. I was just like slowly accumulating Bitcoin. And I'm just like, you know, it's time. You know, back in July, I thought that Max Hawkeshness was priced in and that we, we couldn't really go any further. I don't know if that's been proven right. I don't know if it's proven wrong. It's just kind of taking a long into play out, but I was like, okay, look, like this feels like a good spot to start building in there. We've had a lot of pain in crypto markets. I'm gonna start allocating. So start to do that. And then really just started to research more and more on the Z cash side of the thesis. Yeah, to be honest, like, you know, I always have like long-term holdings and then maybe I'm just like trading short-term stuff. And you know, hell Z cash for a little moment since here in the air as a trade. And that was all well and good, but never really dove deeply into the thesis of it. And, you know, it got more into it, more into it, more over the last little bit. And I was like, look, I think I'm gonna rotate some of that, some of that Bitcoin in the Z cash.

30:50I like that it's private. It obviously has this shielded thing. And I think that's really important. You know, here, here guys like Ray Dalio, right, talking about, he loves gold. He would like Bitcoin, but he thinks that privacy should be a core tenant there. He's gonna love Z cash. Exactly. And then, you know, for those big institutional allocators as well, the quantum thing is a really serious thing. It's serious. Yeah. Like, it's, you know, it's not, we're not gonna go to zero overnight because of that. But we're not gonna see as much allocation towards it. If there's this hang up over the next eight years or so, right? Like, these are long term allocators. Well, part of an asset that you want to hold as a out of the system asset, the whole point with these assets is to be able to put them away. Yeah. Some people bury them, some people put them in banks, some people put them in ledgers. Yeah. And you want to be able to have the same asset 10 years from now without having to go shift to a quantum secure wallet. Yeah. That's the whole point, right? Yeah. Like, you want to go get your gold from the ground and pick it up and it's still going to be that same one ounce of gold.

31:51Yeah. So, with the privacy, with the quantum aspect, I just think it's, you know, they have a much clearer roadmap right now for, for, for getting to be quantum resilient versus Bitcoin right now. Yeah. Um, the core devs are a lot more aligned than that and proactive versus just kind of, you know, head in the sans approach of. Sure. Of Bitcoin. Yeah. I still own Bitcoin, but it's just like, yeah, there's like a crisis. It looks really good. And you know that, that the hang ups of it, like, I don't think anybody would be surprised to hear that. I've been critical of like, say, learn and that whole thing. Of course. And so I just, it just feels a lot cleaner. So I'm like, okay, well, you know, on it, on the next, you know, say two-year time horizon, I think it's a pretty compelling idea to buy it down here, sub a thousand. Yeah. So that's that. And then some gold and some Bitcoin. That's again, I'm fully aligned with you on the barbalthease. Yeah. So that's my barbalthease. Good to know. Yeah. Smart guy. Yeah. That's all this good. Yeah. And then the other side, it's, it's the whole, you know, everything we talked about at the start of the show. Yeah. Of actual value occurring tokens. So yeah, hyper liquid, um, let's gray, like lighter.

32:54Okay. So that's your portfolio, right? Yeah. So, you know, we don't get into all the names. Start pumping shit. Come on. Yeah. No. But not financial advice. But what we do need to know is what is your plan? Yeah. What's your plan with both sides of this barbalthe with relation to the hikes? But really just like going in it's one in 27, right? Because I mean, men, stuff's going crazy fast. Yeah. I think it's only going to get crazier faster. Yeah. But then like, are we, yeah, like what's your plan? Um, yeah. So I mean, it always comes down to the price you got into the positions. I have enough of a buffer in now that I'm willing to, again, if I'm wrong on hikes in September and I get smoked, whatever, that's fine. I think over the next year or so, there'll be a lot higher anyway. So I don't really care. I'm willing to, to ride some, some pain in the short term to, to have that bet on. So yeah, I'm, I'm not trimming into it. And then in 27. And then in 27. Yeah. That's like 20, 20, 20, 20, 20. And it's, you know, everything I own right now, I plan to still on over then. Um, but that's like the core holdings.

33:54And then, you know, I always have like an active trading book, which is just, you know, perps and all that stuff. Yeah, I cut that bonus long this morning. I was feeling like I was you for it coming to the office. The base 16 Z long. Yeah, I was so you for it. I smashed it in size. No, 30%. Yeah, yeah, I, yeah, I miss that whole thing. No, I mean, but that's why I have a purpose account. Yeah, exactly. I mean, it's just like for fun almost, but it's, but in bull markets, you can run it up. Yeah, I'm always, I'm always a fan of having it be separate. Like I have the boring, you know, SPY ETF. I don't touch it ever. I have, you know, the core holdings that I'm going to have for the next couple of years. And then maybe a small portion that I'm just messing around with. And, you know, maybe try to run it up and, and try to rotate that into long holdings. And just, yeah, that's my take. Like my, yeah, like my purpose account is a funnel for spot Z cash. Yeah, exactly. That's what it is. It's just this constant. Like, and I, and I literally was writing in my trading journal on my flight. I was like, all right, I've round, I've almost round trip my purpose account twice

34:56and brought it back to new ultim highs. Yeah. Every new ultim high or every new big trade, I'm taking my profits into, yeah, into ZEC in a different account. And I'm just storing it there. And if I need to run it up again, I'll do it again. But I'm not just doing this whole thing where I'm like, you're up 50K and then you're down 40 and then you're up 50 again. And then it's just like, dude, I just made 100K, but I only have 20 left. It's like, what did I just do? Yeah. So, yeah, it's insane. I guess just to close out here. Damn, what was I going to ask? I mean, just, I'm just bullish, man. I'm just bullish. Yeah. Yeah. I mean, it's like, maybe we can talk a little bit about the state of the industry. Because obviously, over the last year or so, there's just been this kind of, I don't want to say existential crisis. But like, you just see everything popping off in AI right now. And it's incredible. Yeah. And then we're all left here being like, you know, are we doing the right thing right now? I know. Like, there's obviously some some pretty dark moments there over the last year. And it's, I just feel like, yeah, the vibe has shifted, started to turn. And, you know, I am a believer that, you know, price leads in narrative follows.

35:58So obviously, you know, we had this, this is a moment a couple of weeks ago, where there's just, there's a lot of shorts in Bitcoin. And there is a lot of people who, if they wanted to sell, had already sold. And it's just like a beach wall under water. And then there's just that one moment like, doesn't even really matter how true this debasement thing is or not. It was enough to spark something. And then you get the shorts closed, you get the short squeeze, suddenly we're above the 200 moving average. And it's like, okay, we're back. And then suddenly people get excited again. And then suddenly you have the SEC come out and say like, here's what you guys are allowed to do or not do. So go out there and experiment and have fun. And, you know, create some really cool stuff. And like, yeah, I don't know. It just, it feels good to see the tight turning. But, you know, I don't think, I don't think everyone is on board yet. No, definitely. I think so. I always think about, and you know, I've learned these things through now four cycles of getting wrecked. Right. Which is who's the next marginal buyer? If you can't even, if you can't answer that question, the position probably needs to be sold. But right now, I mean, I feel like it's crypto natives one.

36:58So there's still a lot of crypto native capital people that left. But people who's still here, but just miss the lows. Yeah. Waiting for a pullback. Like, the right guy keeps saying, bro, Bitcoin has to go to 72K because it's guaranteed to go there. And you're going to buy the dip perfectly and everything's going to be great. So still, that kind of like, who's, you know, who's in and who's not in the industry. I think that capital takes us to mid 80s to like high 80s on Bitcoin. And then, FOMO on alt. Probably some pullback, whatever, chop, chop, chop. Pullback on like big moves. And I think the next buyers after that is the smart high net worth individual. Yeah. And ETFs and then funds. And like people that like, oh shit, we miss Bitcoin. It's at 85 now. It's down from 93. Let's get it now. So that's like, you know, all your big funds and your rich friends who are calling their advisors who, you know, five to 10 mil net worth. And they're like, hey, like, I, you know, 5% allocation of Bitcoin. Let me just just get me in. Yeah. Yeah. And then that takes us to an all time highs, in my opinion. There'll be this FOMO that is be aggressive institutional buying.

38:01And then I think then we get retail. Yeah. So that's kind of like my path right now of like, who's going to buy my positions higher from us? Yeah. And obviously I'm not really like thinking about selling quite yet. Yeah. But that's what I'm thinking about as next marginal buyers. Do you agree with that? Yeah, I'd rather agree. I feel like this initial move was, yeah, short squeeze. People getting smoked. And then I think it was the, the hot money momentum traders coming out of the AI trade, it's like all the bottleneck stuff, the memory stuff. Like they all are like, oh crap, like kind of, you know, bought the highs of the memory stocks. And now I'm going to go buy on the hot money in crypto. So then he saw that continuation. And then it got until like Bitcoin just hitting resist like that was, that was the move I feel like from, I don't know, low 70s to 82 or whatever. Was that money coming back from the AI trade and pushing it? And now we're just sort of digesting that. And yeah, I think it's a little bit of a long period that also aligns with macro. And the whole work thing that we talked about. And then yeah, I fully agree. I think it's the, you know, that bigger long term money is just going to slowly move in.

39:04And I think that's where you need to make decisions of what are they looking at? And what are the time horizons that they're playing for? And then I think what's get, what gets a bit confusing there is that I think it's important to look at you know, crypto tokens as much as, you know, equities on the public exchanges. Like I think it's all going to come together, right? Like there's not going to be this like, you know, crypto equities and the crypto tokens and the governance tokens or whatever. Like I think the form factor is all coming together, which is just like a, it's an equity security. That is built on better infrastructure. And it's your job now to look at how much money those companies are making. And whether you think it's a, it's at a good spot relative to that multiple on, on its revenue. And how the management team associated with those companies is planning to use those profits that they're generating and, and whether you agree with that or not, whether you agree that it's good, it should all go to buybacks or go to reinvestment into the operations or as a dividend or what have you.

40:04So I think like those are the things that also those big institutions are going to be thinking about. And then same thing on the store value thing like, I think obviously there's a certain cohort of that money that is, you know, you just, you just go to the top two or three assets or whatever you know, you just bid. Yeah, Bitcoin, you know, whatever. Sort of just like accumulate a community. But then there's also the more nuanced takes of those that are looking at stuff like what's the roadmap for quantum for Bitcoin versus eCache and like how serious are they there? Because if I'm holding this and I have to go to an investment committee and say, look, this thing can go to zero if we get to, to Q day. Yeah, you don't want to be there. And, and you know, the core devs are just saying it doesn't exist. It doesn't matter. Yeah, it doesn't matter. Two weeks to care. Yeah, like you think you think a risk committee is going to agree with that? Like no, they're going to be like show me a roadmap. Like what's the plan? I love the eCache bull thesis here. I love it. Yeah, I mean, I just, you know, I just got on board and started to understand it all. No, but it's mind, it's, it's all consuming. The last thing, do you own any SpaceX? Are you a SpaceX bull? Yeah, I do actually. I, some like, I know I'm a huge AI believer in bull and I try everything and I was just,

41:12I tried GROC bot. Yeah, and I was incredibly blown away. It's incredible. So, so that, so that cursor purchase, you know, plus all this incredible data that they'd have from X. That is a huge, like data is the moat in AI now, right? So you have that, you have this cursor team and then you have these products like GROC bot come out. And dude, I literally just like bought because I was so blown away by GROC bot. Like I was like, I don't care about the lot of those. That was like a couple weeks ago then. Yeah, it was like one 30 or something. Yeah, the great entry. I was like, look, there's lockups, but everybody knows about them. I don't know. Like we, yeah, I just like, I'm held in you. It's too good. OG Bitcoin guy. Yeah. He's now half port in SpaceX. Yeah, I'm not that big. You know, because you pressed number two, half port in SpaceX, half port Bitcoin. He held Bitcoin from 2012 to 2021. Sold some of his cracking equity and some of his coins apparently. And is now he bought SpaceX equity at a Hunter Bill, pre-launched five years ago.

42:13And is now half he's he told me $100 trillion market cap in 20 years. Biggest company in the world. It was possible, man. I don't know. Like, I'm not full of like for the size that I have in it. It was just like, wow, this product is insane. And I can see what they're doing. And like they're really catching up to the frontier models. Like, yeah, worth a shot. And that was it for me. Maybe if I start doing more research, I'll put more into it. But for now, it's just like, man, this thing's really good. Like, yeah, blown away. Beautiful. Pigeon, man. Yeah, old slug or something. That was, I mean, we're just, we're just so bold up here, guys. We just, I mean, look at the market. I mean, we're about to, if we get a big breakout here on Ethan, Bitcoin to the next kind of level, I mean, we're going to be in euphoria. So, and yeah, I mean, guys, stay long. Stay strong. Thanks, Pigeon.