Bitcoin and Liquidity | Raoul Pal the Journey Man with Jamie Coutts

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0:47 Hi, I'm Ralp and welcome to my show, The Journeyman.

0:51 The journeyman is where we travel on that journey to the nexus

0:54 of understanding between macro crypto and the exponential age of technology.

0:59 Now, one of my favorite people to speak to about crypto is Jamie Coots.

1:05 Jamie is part of Realvision Pro with me,

1:09 but he runs the whole crypto side of things.

1:12 And it's always a pleasure to catch up with him, see what's on his mind,

1:15 what he's working on, because he looks at things a very different way than me,

1:17 but we have a commonality of understanding and language,

1:21 which makes it always super rewarding.

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1:58 Join me Ral Pal as I go on a journey of discovery through the macro,

2:02 crypto, and exponential age landscapes.

2:06 In the journey man, I talk to the smartest people

2:08 in the world so we can all become smarter together.

2:16 Jamie, how are you my friend?

2:17 I'm really good.

2:18 Ra, how are you, man?

2:19 Yeah, not bad at all.

2:20 I'm pissed off with traveling as I mentioned earlier, but you know,

2:23 if the show's called The Journey Man, I have to journey.

2:26 Well, if you got a couple of kids,

2:27 then travel just doesn't come an option anymore.

2:31 Yeah, that's a good point.

2:33 So, what's on your radar screen, mate?

2:36 Let's talk first top down, right?

2:38 The markets are sideways, choppy, uh, liquidity by my measures is growing.

2:46 Um, but not not hyper accelerating.

2:49 Um, while tech stocks are having a party,

2:52 what what's going on from your perspective?

2:57 Yeah.

2:57 So, look, I mean, global liquidity from my measurements too is also growing.

3:01 Um, I think we've just experienced a a liquidity cycle that has

3:07 been where global liquidity has grown slower than it has in previous cycles,

3:11 but that should be expected because the last

3:13 cycle was just the the bazooka, right?

3:16 I don't think we'll ever see anything like that.

3:18 Or maybe we will, but it'll it'll take something absolutely colossal to to do.

3:23 Don't forget with that, Jamie, it didn't produce the highest returns either.

3:28 And like they're all nuances at each cycle.

3:30 like 2017, the US was actually tightening liquidity generally

3:35 while China and Europe were accelerating.

3:37 You know, they all seem to be different and they all produce different returns.

3:43 Yeah, I think about this a lot as well.

3:44 Like we, you know, we all fall into the trap of sort of sizing

3:49 the current opportunity against previous cycles

3:52 and they all are very very different.

3:54 But obviously you and I would agree that the biggest

3:57 or the strongest correlation between asset returns is liquidity.

4:01 If liquidity is growing generally or if liquidity

4:04 is growing and we're early in the liquidity cycle,

4:08 that's when you generally capture the greatest returns.

4:10 And as that liquidity cycle matures,

4:13 even if liquidity is still expanding, generally becomes a little bit harder.

4:18 um and we sort of go into these sort of 5-year refinancing

4:22 cycles that drive the liquidity cycle which also drive asset prices as well.

4:26 So we've got to take that into consideration and I also

4:28 think you know for a lot of people in crypto uh

4:32 the sizing of the last cycles versus this one has been

4:36 problematic just because the competition for liquidity now is so fierce.

4:43 Right?

4:43 So the last

4:44 if you've got if you've got liquidity not exploding out of the gate it has

4:49 to somehow spread across all asset classes

4:52 and then even in crypto across all tokens.

4:54 So without large liquidity there is a competition I guess.

4:59 Yeah.

4:59 Like I mean AI wasn't around in the last cycle.

5:03 It burst on the scene,

5:04 I would argue through this current liquidity cycle in 2022 and it

5:09 really really ramped up in 2025 as the realization of the impact

5:15 of AI on many different parts of the economy was starting

5:18 to be I guess measured or factored into people's investment decisions.

5:22 And so we had the the scarce the AI related scarcity trade really

5:27 ramp up in Q4 just as in the US liquidity became excessively tight.

5:33 So that was hard for crypto.

5:35 And then you obviously had what happened with Binance.

5:37 You had a confluence of things in Q4

5:39 which really undid and also China's liquidity

5:43 because China's been pumping liquidity the whole time

5:45 using the balance sheet because they have to.

5:48 A lot of that flowed into gold and that sucked

5:51 out China's liquidity as the marginal liquidity driver.

5:54 So there's always people think it's a science.

5:56 It is if you can break it down and look back and what moved it,

6:01 but it's almost impossible to predict all of the levers moving at any one time.

6:06 I would agree.

6:07 And and and let's talk about where we go to from here.

6:11 So obviously the internal dynamics of liquidity matter.

6:15 Um, we haven't really talked about the types of liquidity.

6:18 I I now sort of look at the past as being

6:21 the QE era and now we're in the, you know,

6:24 the central bank QE era and we're now in the Treasury QE era.

6:28 That mechanism of of liquidity is still liquidity.

6:32 It's still bullish.

6:32 It's great for the business cycle which you and um you know Julian write

6:36 about all the time and sort of own uh in terms of the framework

6:40 that um maps to the asset to asset prices or um you know

6:45 to the global growth or US growth and the asset prices as well.

6:50 That mechanism of liquidity is also feeding

6:55 through the banking system like it hasn't before.

6:57 And I think that also changes how it's channeled into asset prices.

7:02 Now on face value, you can argue that that is

7:05 bad for crypto because it's going into productive use cases.

7:08 And I think this is where the market maybe in the next

7:11 12 months is going to start to wake up to something.

7:14 And that is that in the past crypto or blockchains,

7:18 let's talk about just the the base layer,

7:20 you know, we both call it the like the substrate of the new digital economy.

7:23 The substrate of the new digital economy was being driven by speculative forces.

7:27 So it was never seen as a productive asset class.

7:32 That is now changing because of what is happening

7:35 with payments and what is happening with AI agents.

7:38 And I think it's fascinating that when you started on this journey

7:41 before me and I came in a couple of years later, you know,

7:44 we thought by now we would be at 7 800 million users would get to a billion

7:49 by sort of 2028 where I think we're

7:52 probably around sort of 500 million maybe more.

7:55 But that's not really the point anymore.

7:57 The point is that what was being built was

7:59 the foundation for an enigic economy that didn't exist.

8:04 That certainly wasn't on my um radar because hey,

8:07 I I wouldn't consider myself a futurist.

8:09 I mean, maybe people like Kathy Wood and even you

8:12 could see it coming a lot earlier than I could,

8:13 but really when 2022 arrived and I

8:16 was having um investment meetings with, you know,

8:19 heads of research and sort of being laughed out of the room that the agentic

8:23 economy is just around the corner and blockchains are going to service that.

8:26 Here we are 3 years later and I think portfolio managers

8:29 and asset asset allocators are going to start waking up to this now.

8:33 And so the argument about liquidity and the types of liquidity,

8:37 it's all sort of going to be abstracted away.

8:39 And I I I think this a lot.

8:41 It's like people are going to start to understand that blockchains are

8:44 the co coordination layer for the new digital economy and that it's not,

8:51 you know, the fight about who's got the hardest money.

8:54 It's not about any of that anymore.

8:56 It's actually this is the infrastructure layer for the digital economy.

9:00 That's it.

9:00 And once people understand that, you understand that this has a very large role

9:06 to play in the future of the global

9:08 economy because it literally can't function without it.

9:11 I know we first would say that and now

9:13 it's becoming really[ __] clear that it's the only way.

9:17 Yeah, it doesn't feel as strange to be saying that because

9:20 we've both been saying this for a couple of years,

9:23 but now the evidence is stacking up.

9:25 I mean, you've got corporate chains or I I call them corporate chains.

9:29 probably a little bit unfair,

9:31 but let let's talk about Stripe and Circle

9:32 and what they actually mean for uh global payments.

9:35 These are massive companies with massive distribution, especially Stripe,

9:40 bringing in the corporates that we always thought would

9:42 come in, but it needed a Stripe with the distribution,

9:46 with those connections,

9:47 with the relationships to really

9:50 supercharge the whole blockchain adoption thesis.

9:54 That's now happening.

9:55 Circle's going after the FX market with a 100 partners now and so

10:01 it's looking like it's going to be a massive company of the future.

10:04 Tether already owns the emerging market sort

10:07 of um distribution channels through Tron and through

10:10 Ethereum and and the other blockchains and now

10:12 it's building its own chain as well.

10:15 It's just the you know the the argument for an asset allocator

10:21 used to be well you know it's speculative number go up you know

10:24 scarcity on the bitcoin side smart smart contract platforms they're kind of like

10:28 utilities now it's becoming a lot more clearer and so the question is

10:33 not okay should we invest it's like what is the right allocation now

10:37 I might be a little bit ahead of myself you're speaking to these asset

10:40 allocators in in Geneva in the Middle East you tell me what

10:43 they're what they're saying about in terms of what's the allocation size now?

10:49 I think it's it's between 5 and 10% um is what they're trying.

10:56 Is that what they're saying?

10:57 Yeah.

10:57 Right.

10:57 I mean I've been you know you know several of the sovereign wealth funds

11:02 in in uh uh the UAE and they're all trying to get to much larger allocations.

11:08 They're just not able to do it yet

11:09 because they need to retrain the portfolio managers.

11:12 They need to understand the research.

11:13 But that that's the top down signal is like 10%.

11:17 So 10% of you know sovereign wealth funds assets

11:19 is a officially I think a[ __] ton of money.

11:23 But the other thing I just want to go back

11:24 to what you were talking about these private chains or whatever.

11:29 How do they drive economic activity in the underlying other layer ones

11:35 that are open- source and distributed ledgers

11:38 as opposed to they might be distributed,

11:41 they might not be permission entirely permissioned but somewhere in the middle?

11:46 How does that drive into the overall economy into the crypto economy?

11:51 Because we've also got a big consortium of banks uh what's that one called?

11:54 Um um they oh well you've got you've got Canton

12:00 Canton that's the other one tokenized yeah tokenized assets um which from you

12:06 know if you look at websites like RWA accounts for a huge amount of sort

12:10 of repo back office reconciliation so recordeping not

12:15 as much on the trading front but obviously

12:17 the the partners that they have suggest

12:19 that that is going to be a significant chain of the future and so you know It's,

12:24 you know, it's permissioned.

12:26 It's distri distributed but permissioned.

12:28 And also, it's bringing those assets up

12:30 to machine speed as opposed to human speed,

12:33 which is where they've been right now.

12:35 So, it kind of makes them so it can

12:37 then flow through the rest of the crypto economy.

12:39 I get that, but how does Stripe fit in?

12:42 Yeah.

12:42 So, I think I mean Stripes um white labeling uh stable coins.

12:46 So, I think the I think the role that they're going

12:48 to play is that they're going to bring dollars into the crypto economy.

12:53 And so a door dash dollar will be transferred

12:55 amongst sort of stripe partners on the stripe network.

12:58 But essentially that is money now that's coming to the crypto economy.

13:01 And the one thing that we know from conversion to fiat into stable

13:06 coins is that that those dollars in the crypto economy become very very sticky.

13:12 Yeah.

13:11 So there isn't a direct mechanism for a Door Dash dollar

13:14 into you know a a DEX protocol but it's all fungeable.

13:18 Right.

13:19 So if you if you've got a balance or you've

13:21 got a wallet where you've got Door Dash dollars,

13:23 you can exchange that for USDC and do whatever you want on Ethereum or Salana.

13:27 It's just bringing more capital in.

13:29 USDC on the other hand is I think is a far more um direct um and easier sort

13:36 of interplay into the crypto economy because USDC is

13:39 already the largest um sort of DeFi stable coin.

13:44 It's interoperability protocol is the largest protocol.

13:47 So it's moving dollars across chains.

13:49 It's very So USDC is chain agnostic, but USDC or Circle is building its own

13:55 chain and I think that's really they're going after

13:58 the FX market and with already sort of 50

14:01 to 100 um major partners in that space.

14:04 I can see that growing into a huge opportunity because the FX market

14:08 as you would know from your days uh is where insane margins are captured by

14:15 insane margins and insane volumes.

14:16 I mean stupid LA volume per day.

14:21 Yeah.

14:20 So the opportunity size is is amazing.

14:22 And look, you know, all these interchange fees, you know,

14:25 are have to go away because agents are going

14:27 to either route around them or everyone is going

14:30 to collapse the interchange fees to allow the agent

14:33 economy to proliferate because it won't accept 50 basis points,

14:37 100 basis points for a transaction,

14:39 especially when it's going to be dealing in high velocity micro payments.

14:44 Yeah.

14:44 I mean, I just see I've been arguing about

14:48 this for a while is the whole discounted cash flow

14:52 idea of looking at chains makes no sense because

14:55 this new world it's always going to root to the cheapest,

15:00 fastest, most efficient, most intelligent,

15:02 dense network because that's what agents will do.

15:06 So, it goes back to the old net's law and how I

15:09 started thinking about this is how do you value a layer one?

15:14 Well, let's talk about Ethereum.

15:15 The best way to value Yeah.

15:18 The best way to value Ethereum is say, "Okay, I'm going to turn the switch off.

15:24 That's all of stable coins, all of DeFi,

15:26 every layer 2, every NFTt, all going to zero.

15:30 Okay, that's the value of Ethereum.

15:32 Do the same with Salana,

15:34 you know, do the same with and that's how you get the valuations.

15:37 You invert it.

15:38 It's the other way round.

15:39 So they attract assets capital velocity because they

15:44 are dense with intelligence because you know Ethereum has

15:47 the most developers it's programmable it has the biggest

15:50 depth it's got the whole ecosystem you know but Salana

15:54 suite much faster much cheaper much more efficient

15:58 different feature sets and that's how I think about

16:01 it and the discounted cash flow model when I've

16:03 had that argument in the past it's just nonsense.

16:07 Yeah, like I mean I I agree and you call it call it density,

16:12 I call it intensity.

16:13 It's the same thing.

16:15 So you you look at the sort of you look

16:17 at the the blockchain itself and there is layers within the blockchain.

16:20 Um it is the obviously the base layer of the digital economy,

16:24 but the base layer itself has very important sub layers that make up its value.

16:30 And so you would argue that the base layer

16:33 of the base layer is the consensus layer, right?

16:36 So the the validator set, how distributed it is, how decentralized it is.

16:42 Then you've also got obviously the L1 itself.

16:46 Um so fees matter, the type of fees matter,

16:51 but they aren't it isn't the core of a valuation argument for the chain itself.

16:56 Well, because what comes

16:58 if I'm right, every agent will self- select away from any fee,

17:03 any chain with fees.

17:05 That's fees will fees will collapse.

17:08 Like we're already seeing like on on Sooie and on Salana that fees are 0.01%

17:18 one of a percent or less.

17:20 Swed going to do stable coins at zero cost.

17:23 So that's zero now, which is the race.

17:25 Everything digital goes to zero in cost.

17:27 I mean, that's rights law playing out right in front of your eyes,

17:31 right?

17:31 Is that because they're capturing on the on the on the float?

17:34 So, they're basically creating their own stable coin.

17:37 It's the yield and how you get the yield because Yeah.

17:41 Um, and what you do with that yield allows them to do that.

17:43 So, you can fund the cost and, you know, other benefits.

17:47 You know, you can buy back tokens, you can do other stuff as opposed to keeping

17:50 it as a profit-making entity like Circle does.

17:53 you can actually reinvest the yields into the network.

17:55 It's actually quite a smart idea.

17:57 Yeah.

17:58 Yeah.

17:58 I've seen I've seen what they've been talking about on that front as well.

18:00 Yeah, I agree.

18:01 But then you've also got that that that final layer,

18:04 the critical layer because all of that matters for not if people

18:07 aren't building or if applications are not being built on top of it.

18:10 So you've got to measure the application layer, the intensity of that layer,

18:15 what is the profitability of that layer because actually

18:18 at that layer profitability does

18:20 matter because essentially for businesses, right?

18:22 So you can call them decentralized applications or open applications,

18:26 but they essentially need to be able

18:28 to sell above their costs and reinvest those uh

18:32 because they have they have the end customer which is the user.

18:38 You you and I don't use Salana.

18:42 It's just we actually use the applications.

18:47 Mhm.

18:46 So Salana is the infrastructure that makes it

18:48 happen and nothing would happen if that didn't exist.

18:52 But that's a very different proposition to pump fun.

18:57 Right.

18:58 And look, I I think I've spoken to you about this in the past as well.

19:01 I think the application layer becomes more interesting

19:05 as the liquidity grows and as that sort

19:08 of ownership of the end client accelerates for those protocols which truly have,

19:14 you know, product market fit.

19:16 I always look at everything on a ratio chart like

19:18 you and I just don't see that playing out yet.

19:20 So, I've not made any major plays in the application

19:23 space because the charts simply don't tell me that.

19:26 But that there will come a time when some

19:28 of these break out and they deserve an allocation in the portfolio.

19:32 But for now, it's really it's really about the base layer.

19:35 Yeah.

19:35 I mean, I just think the layer one bet is just easier, right?

19:38 It's the infrastructure layer.

19:40 There's still excess capacity.

19:41 We've got plenty of use cases coming in front of us.

19:44 It's just easier to capture.

19:47 It might make you less money than product market

19:50 fit occurring in a applications layer as you said,

19:55 but they're much harder to figure out.

19:57 Well, the base layer is pretty straightforward.

20:01 It's pretty straightforward.

20:02 Um, especially now because the concentration of activity is very clear in terms

20:08 of the chains that you know the chains that are going to win.

20:12 There's always going to be newcomers and there's

20:14 always going to be potential to make

20:15 outsized returns in chains that exist today or chains that exist in the future.

20:20 But if you think about it just from an, you know,

20:22 like you said, like very simple asset allocation mentality,

20:26 if you allocate to where the activity is and maybe size it slightly

20:30 differently if you're looking for a little bit more beta in the market,

20:33 that's kind of all you need to really think

20:35 about within that slither that you allocate to crypto.

20:39 And this, you know, I I've been thinking a lot about this and, you know,

20:42 we see it a lot on the real vision platform in the discussions.

20:45 Everybody's hyperfocused on either the cycle or the intracycle

20:53 moves when the big picture is so[ __] obvious,

20:58 you would never sell if you didn't have to.

21:01 You know, it's like it's so obvious

21:04 that this is the infrastructure layer for the whole

21:06 the coordination layer for the whole thing

21:07 that I I start struggling with, you know,

21:11 you can basically just buy a basket of this stuff

21:12 and never actually do any analysis ever again.

21:15 It doesn't really matter.

21:18 Yeah.

21:18 But the problem is humans and their their inability to size the position.

21:25 So the opportunity be as it may,

21:29 there still is a question of like what is the right

21:32 position size for your psychology that constantly trips people up.

21:37 Like we're both extremely bullish on this.

21:39 We probably have far too much allocated towards it.

21:43 Um but we also accept that accept those risks,

21:45 but I think for other people um it's really

21:48 difficult to see like what happened in in Q1.

21:51 And look, I I do trade around my positions

21:53 on the edges and I think that, you know,

21:55 because we have that community within Real

21:57 Vision that are looking at different time frames,

21:59 we can offer that as well, but for most people,

22:04 the sizing of the position relative

22:06 to the opportunity still is the biggest challenge.

22:09 And they need to sort of also take into account that this is

22:14 a 3x 4x volatility asset relative to what they're used to within the S&P basket.

22:19 That is the that's also a measurement of the return potential.

22:23 And why do you think that we can't have nice things right now?

22:27 That crypto underperforms what everything else and we're

22:31 used to being like the the beta squared

22:35 of the entire space and now we're just kicking

22:37 around feeling like we're holding utility stocks at the moment.

22:40 What why is that?

22:43 You know, we Well, I think Yeah, nobody shows us any love anymore.

22:48 It might be the Clarity Act, you know,

22:51 and the structure of liquidity probably, but it just feels weird.

22:56 And I know people are,

22:57 we see everybody now moving to tech stocks, which is great.

23:00 They're all actually the same bets.

23:02 People don't really realize that, and the market's going phases,

23:04 but what's your thinking behind it all?

23:08 I I I I come back to I think

23:10 the the feel the notion that liquidity even if it's expanding

23:16 is still finite and it is it is now being

23:19 channeled in more directions like people are investing in the hardware

23:23 names that are exposed the AI scarcity trade the commodity

23:27 names the chemical names the component parts and so

23:32 they're all going through these these waves and they all

23:36 make sense from a thematic perspective, don't get me wrong.

23:39 So, it's just the competition for capital at the moment is more intense than

23:43 what we've ever seen before because AI

23:46 is definitely the largest thematic of all time.

23:51 It's just that people don't fully realize that it's

23:55 also by nature a blockchain play as well.

23:59 So, maybe it's just time is time horizon.

24:02 We are sort of in the the you know

24:04 the latter stages of a liquidity cycle as well.

24:06 So everything's a a little bit more volatile.

24:08 Um but look, I mean, Bitcoin priced in a a 50% decline,

24:13 55% decline from its high from Q4 to Q1.

24:17 Um now I think that has sort of reset a lot of things within the space.

24:23 Um the markers that I saw on that February 6th

24:26 low were indicative of a capitulation low that I've seen before.

24:31 everything alive dashboards for this and like everything that I

24:34 was using in 2022 which helped me pick the low

24:37 in Q4 except for liquidity because we were coming

24:41 through the the year the typical year of a liquidity

24:45 downdraft whereas this year we're still in a liquidity

24:48 bull market but towards the end of it and so

24:51 it's I think it's going to reset and it's going

24:53 to quite frankly[ __] with a lot of people's models

24:56 because it feels like four year cycle and everything it's like everyone's still

24:59 attached to it I don't think they're thinking longterm

25:01 enough and that the wriggles and the the moves

25:04 in this are now going to be shaped differently.

25:06 Not only because the time has come blockchains are productive assets.

25:10 AI agents are going to start showing up and activity is going to show up

25:13 in a very very structural way but also asset

25:16 allocators Morgan Stanley Charles Schwab saying that they should

25:20 have 5 to 7% in Bitcoin and then that fans out into other you know these are

25:24 different buyers than the the crypto native buyers

25:27 of the past that were really cycle orientated.

25:30 So, you know, we get a smoother cycle.

25:32 Probably don't get those bigger returns, but we get the kind of investor base

25:36 that actually understands where all this is going.

25:39 And then one of the things I think about in this is like everybody's saying,

25:42 let's say you should be five to 10% waiting.

25:45 Okay, let's say that.

25:47 Now, currently, you can tell with the market that they're not.

25:51 So, it kind of tells me that if we do start to accelerate from here,

25:55 that either we put in the low or we're, you know,

25:57 we're still forming the low, but let's assume it's not going to be in October,

26:02 November, which everybody thinks in, but it's somewhere around now.

26:04 Okay, fine.

26:05 If the market does start accelerating at any point,

26:09 there's an enormous amount of capital that flows in because when you

26:12 look at the relationship of NASDAQ to Bitcoin as a simple measure,

26:18 you know, it's right on the bottom of the log regression channel,

26:21 it's like two standard deviations oversold.

26:24 Bitcoin gold, Bitcoin everything.

26:27 So unless the unless the the relationship and the sort of metaf's law

26:32 and that logarithmic chart um chart of Bitcoin and crypto assets is broken.

26:38 These are the accumulations.

26:39 So I describe this year as not an easy year.

26:43 I don't see a breakout in crypto.

26:45 I still think that there is a nonzero chance.

26:47 So we get one more flush down in some

26:50 sort of second half um selloff which could be due

26:54 to the amount of liquidity that will be required just

26:58 to rotate into all these AI names that are going to IPO.

27:02 Um that's there's a potential there.

27:04 It's happened before.

27:06 It's it's you know it could happen again.

27:08 So this year is like the accumulation year into the names

27:12 which I think will have outstanding 2027s, 2028s, 2029s.

27:17 Um so I've, you know,

27:19 I write about this all the time because I do get into the weeds

27:22 of like where the lows could be and all that sort of stuff.

27:25 Um that there is a non-zero chance that we get one more flush,

27:29 but where does that sort of bring us down?

27:30 So probably, you know, on Bitcoin it should be low 50s.

27:35 Um, and we are right at the point like I just wrote a report.

27:38 I'm not sure if you saw this, but it was out today.

27:40 Um, you look at all the onchain um,

27:42 cost basis of short-term holders and the average

27:45 or the true mean of the network, it's right on 80,000.

27:49 80,000 is where a ton of volume traded on the centralized um,

27:53 on the centralized exchanges, but also where a lot of spot traded.

27:57 This is typically in a counter trend move where things roll over.

28:01 But it's very clear that if we clear high 80,000 that this is

28:06 essentially this bare market is technically over like it's now broken out.

28:12 So you know I love two minds but it doesn't really matter cuz we've

28:15 got this sort of you know a view that looks beyond the next 6 months.

28:19 So a quick break in your regular programming.

28:21 If you're serious about your future grab my free report called prepare for 2030.

28:27 I think you've got five years to make as much money

28:29 as possible and this guide will help you navigate what's coming.

28:32 The link is in the description.

28:34 Download it now.

28:35 I agree with you.

28:36 There's a the the probabilistic outcomes are quite complex right now.

28:41 Um and we'll see.

28:43 It'll clear up.

28:44 Don't forget we've got[ __] war.

28:46 We're in the middle of a war.

28:48 After we had the government shut down, then we go straight into a war.

28:51 We don't have a clean market.

28:52 We've not had a clean market.

28:54 What we've got is a very easy market to allocate capital in towards AI.

29:01 Yeah.

29:01 Because it's kind of immune to everything.

29:03 Very clear.

29:03 Yeah.

29:04 Yeah.

29:04 So that's winning the narrative.

29:07 Yeah.

29:07 And narrative is everything really.

29:10 It's how capital flows is what wherever's got

29:12 the strongest narrative gets the most amount of capital.

29:14 You know, if you also think about the VC cycle, you know,

29:17 look at the size of the raises for the latest

29:20 A16Z crypto fund versus their other funds, right?

29:24 I mean, the VCs are getting gigantic amounts

29:27 of capital going into the intelligence part of the equation,

29:32 you know, robotics, the biological stuff, the AI, all of this stuff.

29:38 um but they're not raising as much money in crypto and that a often

29:43 leads to increased opportunity but it just

29:47 shows where capital is flowing right now.

29:49 It's like everybody's got one focus.

29:52 Yeah.

29:52 Look, I I mean I I hear that data point

29:55 and that actually makes me a little bit more bullish.

29:57 I mean so what does what does crypto really need in terms of capital?

30:01 Like the base layer is essentially built

30:03 the the networks that matter are scaling.

30:07 Yeah.

30:07 They don't need

30:08 We don't need another We don't need another

30:11 layer one in any way, shape, or form.

30:13 Layer twos are just commodity.

30:14 They're just business pipes that plug into the layer 1.

30:18 A franchise, call it that.

30:19 Call it a franchise business or something built on top of Shopify.

30:24 It's basically what it is, right?

30:25 That's what a layer 2 is.

30:27 Um, fine.

30:28 That all applies.

30:29 You know, you can build your business on Amazon by selling products on Amazon.

30:33 But it's all the same thing, right?

30:34 These are all network models.

30:36 So we don't need any of that.

30:37 We just need product market fit to scale.

30:41 Um we've seen hyperlquid but that is really crypton native platform for now

30:47 and without any VC as well.

30:49 So that's the that is your proof that you know the VC

30:53 capital cycle is is doesn't drive or shouldn't drive crypto any further.

30:58 And it also led to a lot of the look

31:01 not you know slagging of VCs um because they play

31:05 an incredibly important role but like there was excess capital

31:08 that was invested in crypto in 2020 and 2021 and the hangover

31:12 has been too many tokens too much supply too much

31:15 inflated valuations were ridiculous these L2's uh valuations coming out

31:19 even the you know the applications and what the valuations

31:22 were and it's just basically hung over the over the market.

31:26 So, you know, you get people like my former

31:28 colleague at uh at Bloomberg Intelligence, Mike McLean,

31:31 talking about 21,000 or 21 million coins and how that um you know,

31:36 how that dilutes the value of crypto.

31:38 He's partly right in that it dilutes attention,

31:43 but he's very very wrong when he under when you look at the activity

31:46 numbers and see that actually all the activity is concentrated in the

31:50 It's the same with equities, right?

31:52 It's the same with it's the same with every asset.

31:54 There's gazillions of them.

31:57 Yeah.

31:57 The Russell 2000 is not even all the US stock market.

32:00 I mean, there's t there's so much of this stuff.

32:02 So, you you give it the same argument.

32:05 It doesn't apply.

32:06 It just it's nonsense to say that.

32:08 But you're right.

32:09 I mean, there's tons of I think one thing

32:10 we do know is not everything should have a token.

32:12 Like, not every company should be public.

32:14 It's as simple as that.

32:16 And they they they shouldn't have it because they

32:18 don't have a business model that can satisfy a token.

32:23 Yeah, I would agree.

32:23 I think it'll be fascinating to see what

32:26 circle does because they've launched their L1 arc.

32:30 You know, the the gas uh or token of the of the network obviously is USDC.

32:35 So, why do they need a why do they need a token?

32:37 But they've they have talked about the potential for a token.

32:40 So, it'll be interesting to see, you know,

32:43 in this sort of where are we third, fourth generation now,

32:46 whether a company like that um does it and whether,

32:49 you know, Coinbase does it with Bass as well.

32:51 would argue it not really all that necessary.

32:54 We don't really need it.

32:54 You can buy equity.

32:55 You'd rather you can acrew it to the equity.

32:58 You don't have you know you can have all the network effects and all the value.

33:03 You know would you spin out

33:06 Amazon's kind of network structure separately capitalize it

33:10 maybe if you're trading at a massive discount possibly.

33:14 I don't know.

33:15 But the issue is issuing Coinbase issuing a token is it's kind of oneoff event.

33:23 Yeah.

33:24 Like well it's funny because I well I did the numbers

33:28 actually for that la last report looking at what led

33:31 in the last cycle what performed you know and there's

33:35 a sub sector of the market that no one talks about.

33:38 I don't talk about it and that is centralized exchange tokens.

33:41 They all outperformed.

33:42 They did really well.

33:44 But that's I think like a an example of like how to use

33:47 a token smartly because what they're effectively buying is discounts on trading.

33:52 Makes total sense.

33:53 You're a centralized exchange.

33:54 You issue a token.

33:55 You get the tokconomics right.

33:57 You don't do like air miles tokconomics where they just

34:00 inflate the hell out of it and destroy the value.

34:02 Like you keep the tokconomics smart and you allow the people using

34:07 your exchange to use the token to acrue benefits or discounts or whatever.

34:12 and makes and and people if you're Binance,

34:15 people access your liquidity by building on your chain.

34:18 So what you're doing is leveraging your network even

34:21 further and it flows through to the exchange itself.

34:25 So yeah, it does make sense.

34:26 And you know, do you need the token or not?

34:29 I'm not sure, but definitely, yeah, you're right.

34:31 I mean, these centralized exchange tokens tend to work.

34:35 Yeah, I mean it's not a call on the equity.

34:37 Um, and you know, don't know enough about them,

34:40 but it's not like you're getting,

34:42 you know, centralized exchange dividends through the token.

34:44 It's just a sort of a a a membership benefit token and and look,

34:49 they've done extraordinarily well.

34:51 So, it's just an interesting data point.

34:53 So, what other sectors are you looking at right now?

34:57 What what's interesting to you?

34:58 Or you just thinking, listen, this is not the time.

35:00 Let's just focus on the layer ones.

35:02 There's a bit of the privacy one is interesting.

35:05 The whole tow intelligence one is interesting.

35:09 Um both still unproven in terms of are they going to get adopted at scale.

35:19 So I wrote a paper on Zcash.

35:22 I know you've talked about it.

35:24 Um, what I found fascinating about Zcash is that something

35:29 something happened with Zcash which I've never seen before

35:34 and I'm kicking myself that I didn't see it

35:37 was that fees obviously like it's a very vanilla chain.

35:41 It's just it's a payment chain, right?

35:42 It doesn't have a smart contract platform.

35:43 So, what do people use it for?

35:45 These are for either store of value.

35:47 Uh in Zcash, in Zcash's case, because of privacy,

35:52 fees went from virtually nothing in 2023 and it was under SEC investigation.

35:59 It like 10,000xed.

36:00 It became in terms of blockchains like the third

36:03 or fourth largest fee generating blockchain by midpoint of 2025.

36:09 And the price didn't the price didn't move.

36:11 Why?

36:11 cuz people were people were moving into Zcash and using the shielded um

36:16 the shielded pool to protect or to create privacy for their for their value.

36:22 And this is the this is the feature that obviously Bitcoin and other chains

36:27 don't have although privacy now is starting

36:31 to take hold within the Ethereum ecosystem.

36:33 So they're bu going to build privacy into the to the base chain which is amazing

36:38 right because this is essential you have to get

36:41 doing it as well that's yeah I was with Kostas

36:44 who's the co-founder and the head of cryptography um

36:48 in Athens he was at the GMI round table

36:50 event and you know that's coming soon I mean

36:52 he's they've kind of cracked it and just figuring

36:55 out because no financial institution will use chains at scale

37:00 without obscuring who it is But it's permissioned privacy.

37:05 So therefore if regulators or anybody need it.

37:08 So it's not like Zcash privacy.

37:10 Uh Zcash privacy is you know at individual level to hide from state which

37:15 is as we know can be used for nefarious needs means or really important means

37:21 and it's difficult to separate out.

37:24 It's like gold.

37:26 That's right.

37:26 Yeah.

37:27 I mean, look at a core foundation of, you know,

37:31 western liberal democracies is is is privacy.

37:34 Um, I know it doesn't feel like that right now

37:36 given everything that's happened in the last couple of years,

37:38 but to see it restored on chain, I think is very positive.

37:42 And we've got an SEC now that dropped the charges against um,

37:46 Zcash and I think is respecting that need.

37:49 Um, we'll see how it plays out.

37:50 It's not without risk.

37:51 Things may change, administrations change, who knows?

37:55 Um, but the product market bit of of Zcash was critically important.

37:59 And just a sort of a side note to go back to what you're talking about.

38:02 Yeah.

38:02 Hold on one sec with that is as I think about it,

38:06 Bitcoin is basically chasing global savings, right?

38:10 It's going to absorb larger and larger share of it

38:12 until it gets to wherever its natural level is.

38:16 Zcash is going to take a share of Bitcoin share,

38:18 which is the people who want a global

38:21 savings vehicle with the same economics as Bitcoin,

38:23 but want privacy and and it's very early in that journey.

38:27 So, it kind of just makes simple sense.

38:29 It's a very clean narrative.

38:32 Yeah.

38:31 The world we're going into, it also makes a lot of sense, you know.

38:35 It's Yeah.

38:36 I mean, yeah.

38:38 Touche.

38:38 Like I that's how I think about it, too.

38:40 It's it's it's percentage of Bitcoin.

38:42 like what's the percentage of Bitcoin that Zcash um should command

38:45 because I don't think that privacy is coming to Bitcoin anytime soon.

38:49 It's got its own challenges and we can talk about quantum.

38:52 Not that I'm an expert.

38:54 Um but with Zcash, they're very much

38:57 on the forefront of that development and they've

38:59 they've got a roadmap to get themselves

39:01 to quantum resistance in the next couple of years.

39:03 So, it's not a chain you have to be concerned about in that respect as well.

39:06 Shielded transactions are around 31%.

39:08 like the the the the the thing that I was amazed

39:12 by was just this explosion in fees and really not a price reaction.

39:16 Um typically in in crypto it's reflexive the other way around.

39:20 Price moves, fees moves cuz it's a it's it's um

39:24 you know fees are denominated in the in the token,

39:26 but that encourages liquidity to come in and then

39:29 organic fee growth actually happens as part of it.

39:31 But it wasn't that way with Zcash and I thought that was amazing.

39:34 I was late to the trade like it was a Q4 trade um and it

39:37 pulled back about 70% and that's when

39:39 I started getting interested again because if

39:41 you look at it on a relative chart to Bitcoin um very few charts have

39:45 broken out against Bitcoin in a meaningful way and I think that is a tech

39:49 you technicals are like our bread and butter like that is a meaningful signal

39:53 it just needed a pullback now it could roll over again um but I think

39:56 that thesis is playing out 31% shielded transactions it might it need you know

40:01 that needs to grow to show that Zcash is being utilized for its core purpose.

40:06 So that's the key metric that people need to look at.

40:08 But I think it's an interesting story and just on the privacy aspect

40:11 that you know SUI is obviously um now integrating in was like you

40:17 know if privacy was thought about earlier by the existing L1 blockchains then

40:24 Canton would have had a harder time

40:25 launching right because Canton addressed that need.

40:28 So it's good that the other L1's are recognizing this and they can

40:32 do that in the way that you manage that that that you explained.

40:35 It's like you know selective privacy.

40:37 You don't want to see you don't you don't want to see

40:39 the counterparty or you don't want other people to see your trades

40:42 necessarily if you're trading you know tokenized assets on chain but it

40:46 should be available to certain counterparties

40:49 if needed and that's all programmatically possible.

40:54 Yeah.

40:54 So I think it'll be so that may take a No,

40:58 in theory it would take away a bit from Zcash,

41:00 but it's not because Zcash is purely a non-s smart contract store of value

41:06 for individuals.

41:06 Yeah.

41:07 Yeah.

41:07 And therefore you got Bitcoin or that.

41:09 So that's pretty And how are you thinking through Bit

41:12 Tensor and that ecosystem right now because that's been wobbly.

41:16 We've had a few problems.

41:17 You know, performed really well, not been doing anything for a bit.

41:21 Uh it's kind of very early stage to figure out how much traction it's getting.

41:26 What are you thinking?

41:28 So it's definitely interesting.

41:30 I haven't done enough work.

41:32 Um and I know that you've written about it.

41:34 So yeah, I've not written a deep dive on it yet.

41:37 I keep thinking about it,

41:38 but price action I don't know doesn't feel right yet and don't know.

41:43 The stories the story's getting traction like the tokconomics

41:46 have been improving the size of the network.

41:48 You can see the network growth.

41:50 Yeah.

41:51 So these are the things that we would typically

41:53 look for and it is one of the, you know,

41:54 the few that are actually growing throughout this whole,

41:57 you know, downdraft that we've experienced in the last six months.

42:00 So it's got the ingredients there.

42:02 I just haven't done enough.

42:03 I mean, I think looking at the, you know,

42:06 the profitability of the subnets themselves is kind of like

42:09 the key thing like are they generating real value?

42:12 If that's the case, that's the that's the case

42:15 for the application layer performing which is critical to the threeprong

42:20 sort of the three layer approach that I use

42:22 for um network intensity being a driver of the token value.

42:27 Um so it's interesting Venice is very interesting.

42:30 I haven't Yeah, I really like what he's doing there as well.

42:34 Yeah, I mean I don't I don't know what I know you're using Claude,

42:38 but I'm not sure what your sort of agent orchestration layer setup is.

42:41 And I'm looking into that after using various other al alternatives,

42:45 but I really like I personally very much like Eric as a Exactly.

42:50 He's always great.

42:50 I'm trying to get him on at some

42:51 point to talk about this because it's super fascinating.

42:55 Yeah.

42:55 Yeah.

42:55 I definitely like to learn a little bit more about it.

42:57 that so I mean you know then you've got the uh decentralized

43:00 compute which always made sense but never was quite clear in terms

43:05 of how it was um playing into the playing into the ecosystem

43:09 but they are you know potentially interesting

43:11 I don't know the tokconomics on them

43:13 is doing a ton you know I've had a lovehate relationship with NIA

43:16 because of um I guess this massive pivot it took in the last

43:19 cycle which I think will pay off in this cycle because they

43:23 have essentially um an agent orchestration layer in ironclaw for as well.

43:28 They're using NA's decentralized cloud.

43:31 Um, and they're using, you know,

43:32 decentralized compute from a cache and render as far as I'm aware.

43:36 So everything that, you know,

43:37 Ilia is doing in the near ecosystem is customuilt for the world

43:43 we're moving into and that token is very um depressed.

43:47 It's just hard to understand.

43:49 Um, you know, there's also near intense,

43:51 which is basically this interoperability layer.

43:53 It's doing a ton of volume.

43:54 A lot of Zcash is actually trading through the uh intense um protocol.

43:58 So you're able to trade Zcash on Salana for example.

44:01 The other one that's discounted that way is Chain Link.

44:04 I mean they're doing a lot doing a ton on the IWA side.

44:09 Um sort of murky to tokconomics.

44:13 Um not too yet.

44:14 So I haven't really been able to dig in there.

44:16 It's not but you see the announcement that literally everybody the whole

44:19 finance sector uses chain link as the interoperability layer.

44:23 Yeah.

44:23 Yeah.

44:24 Yeah, I mean look, I haven't done enough work on it.

44:26 It's kind of like, you know,

44:27 XRP, like Ripple's doing partnerships with everyone,

44:30 but like how does that actually acrue to the to the token?

44:33 It's very unclear.

44:34 Like Ripple itself as an equity as an equity business.

44:37 That's why Fortress and Citadel invested massively into the Ripple business,

44:42 you know, at half the value of the XRP token that they have,

44:45 you know, on their balance sheet,

44:46 which tells you something about the value of the XRP token, I think.

44:49 Um yeah, those it's just harder to it's harder to understand those protocols

44:53 and um I mean there's there's one

44:56 little pocket which I'll mention is onchain options.

45:02 So per have been the story for the last 3 years.

45:05 Hyperlid has done amazingly well and continues

45:09 to innovate uh which is a great story.

45:12 onchain options.

45:14 It feels like with you know there's been a myriad

45:17 of attempts through AMM structures which just do not work for options

45:23 but the same central limit order book approach that hyperlquid has taken

45:27 is now you being used by a small token called derive which

45:31 I think is really interesting um doing partnerships with a lot

45:34 of the um the prime brokers in the space uh you know

45:38 and then we saw Coinbase go and buy derabit so there's

45:42 a huge opportunity uh onchain options if they can get the tech right.

45:46 Um, derive is a very interesting one

45:48 because the tokconomics is actually um fairly strong.

45:52 They've got a buyback um and you know it's it's

45:56 a micro cap so like it's you know it's way out.

45:59 I remember someone mentioned it to me at the GMI round table as a good trade.

46:02 In fact, it was one of the trade ideas

46:04 from one of the CIO from CIO from Switzerland.

46:10 Interesting.

46:10 There's a couple of onchain option ones I think.

46:12 Yeah, there's a there's a couple coming up on um on Salana um

46:16 and there's a you know eventually Hyperlid

46:19 will get there um into options as well.

46:22 So you can't discount them just being massive in that space.

46:24 But there's probably given the the next upgrade

46:27 for um Hyperlid is focusing more on the prediction markets.

46:30 It's probably another 12 months before they even try to tackle that.

46:34 But it just it regardless of the protocols like onchain options just seems like

46:39 the next vertical because the technology

46:41 the tech stack has improved so dramatically over

46:44 the last couple years from the first

46:45 generation of these protocols which all failed

46:48 miserably um that it eventually gets there and people want to you know want

46:51 to trade different types of risk and perpetuals are great um you know

46:57 they're eating the world but they don't

46:59 offer institutions the kind of risk exposure

47:02 that they need and options will do that and especially when assets real world

47:07 assets start moving on chain options on chain

47:10 makes a total sense as a complimentary yeah it just depends how they solve

47:14 the risk equation of you know who settles who

47:17 goes bust who's collateral you know all

47:19 of that kind of stuff for the option seller side

47:21 an insurance fund yeah insurance funds are critical yeah

47:24 yeah and that's the issue that I always had with derabit standing

47:27 on its own being 85% of the entire options market in crypto

47:30 I'm like this just doesn't make any sense because if something goes wrong,

47:34 everybody goes under.

47:35 Um, and then having Coinbase bring it and then

47:39 CE and everybody else bringing options as well,

47:41 it's kind of calmed it all down because

47:43 it was that was an accident waiting to happen.

47:46 Yeah.

47:47 Yeah.

47:47 Yeah.

47:48 I think I think it gets a lot more distributed now as well

47:51 in terms of the activity because Deret was obviously the main player,

47:54 but it was and it was independent.

47:57 Now it's part of Coinbase.

47:58 What is Coinbase?

47:59 Coinbase is a multi-prong crypto financial institution.

48:03 One one part is um prime brokerage.

48:06 So obviously it's going to route all of its clients orders through der bit.

48:10 Now if you're another prime brokerage account

48:13 um sorry prime broker um you obviously

48:15 trade where the liquidity is but you'd want to see competition in that space.

48:19 So I think there's an opportunity for other protocols to grow

48:22 on the back of the fact that Coinbase now owns the largest options venue.

48:28 So let's just look forwards a bit.

48:32 Let's talk a little bit about okay,

48:34 we've kind of laid out a nice clean structure where we think we we're not

48:40 entirely sure how this year plays out in terms of do we have another low?

48:45 Have we put in the low?

48:46 You know, all of that stuff.

48:48 I think liquid is accelerating.

48:50 I'm really quite bullish into year end.

48:52 Let's see.

48:53 Um but I said I could I could see another low.

48:56 The only thing I can see that's the problem is

48:59 if this Iran war doesn't go the way that we think, which is it gets solved.

49:05 And if it doesn't get solved and oil goes up to $200 a barrel,

49:13 it's going to get pretty ugly again.

49:16 Yeah, there's no two ways about it.

49:18 So, it needs to get solved.

49:20 If it doesn't, I think markets are looking at another pretty sharp decline.

49:25 like you can't the the the share of the economy

49:29 resulting from oil is less than it was in 2007,

49:32 but it's still not insignificant.

49:34 So the longer it remains at above these levels,

49:39 the worse it is for the economic outlook and for financial markets.

49:43 Yeah.

49:43 Because it may not be the worst for the US because

49:47 it has all its own oil and all of that stuff,

49:49 but it's certainly bad for everybody else.

49:52 So the rest of the world's slowing down.

49:54 We can see it in like the European economic data versus the US economic data.

49:58 You know, the US is going up like a rocket ship right now.

50:01 You know, arguably high oil prices just bringing

50:03 more cash into the US for anything they export.

50:07 But Europe is the opposite and you know, Australia is the same.

50:09 All of that.

50:12 Yeah.

50:12 I mean, yeah, let's not talk about Australia

50:14 because the economic situation down here is dire.

50:17 Um, but yeah, like I'm still surprised you're there, mate.

50:21 Every time we speak, you're like,

50:22 "This place is so fucked." But you're still there.

50:25 Yeah, I guess I'm a glutton for punishment.

50:28 That's why I'm in crypto.

50:30 That's right.

50:30 Your tolerance for pain is so enormous that nothing matters anymore.

50:36 Yeah.

50:36 So that's the big that is the big outlier.

50:39 It can't be discounted.

50:40 Um we all thought it would be over by now.

50:42 Um so hopefully it does get resolved.

50:46 So gun to your head, end of the year, higher or lower or same?

50:52 I think we I think it's bit uh Bitcoin can touch high 90s,

50:56 but I think we go down from here um in the short term.

51:01 Um I think it's going to be a really bumpy year and look,

51:04 I mean, gun to my head, I think we make higher highs from here,

51:08 but I don't think it's directionally going to go there immediately.

51:12 Um so, you're just saying we can't have nice things.

51:15 We're just going to have to watch the NASDAQ just going up, you know,

51:18 20% every month as it's just gone up

51:20 and we just stand there looking at it thinking,

51:23 why doesn't anybody love us anymore?

51:27 Not this year round.

51:28 Not this year.

51:29 Oh, Jamie, that's no good.

51:32 Listen, mate.

51:33 Fabulous conversation as ever and uh let's see how it all plays out.

51:38 Yeah, absolutely.

51:38 Thanks a lot, Ralph.

51:39 Okay, mate.

51:42 Cheers.

51:42 So, as ever, a fantastic conversation with Jamie,

51:45 just kind of kicking the tires of what's going on, where we are,

51:48 where the attention is headed, where the opportunities lie.

51:51 Um, I think we're both coalesing on the idea

51:53 that still the easiest bets are the layer ones.

51:56 Uh, the layer twos and not the lay twos,

51:58 but the applications layer is still harder to select.

52:03 Um, I think there's still a disagreement between

52:06 us about where we are in the cycle.

52:08 Jamie doesn't see higher prices.

52:10 I see higher prices, but let's see how it plays out.

52:13 There's so many factors at play.

52:15 There's no perfection in trying to forecast things as everybody knows.

52:19 It's, you know, you're taking your best

52:21 bet with all the information you have today,

52:23 but tomorrow can be a different day.

52:24 Anyway, stay safe out there.

52:26 Remember, long time horizons.

52:29 That is what matters here because where this is all going is oh so[ __] obvious.

52:34 See you next time.

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