Are We At A Turning Point For Crypto? | Crypto Banter

[Music] [Applause] [Music] Oh, it's a great time to welcome our friend Mr. Wonderful! Welcome back, and Jiren, welcome back to the show. Do you think that we've seen the bottom, and is — or are we headed for another leg down?

I have a slightly different view of what is occurring here. I've lived through many cycles, obviously, as everybody has on this call. What I find intriguing about the nature of this correction, if you want to call it that, or the potential of a recession, is that it is in the foreshadow and then the shadow of six trillion dollars’ worth of printing.

So you think about what occurred during the pandemic, which is unprecedented in any economy's history, to take that much and print it in basically 30 months and not to expect inflation? Well, of course, that's why we have what we have right now — a 40-year new high in inflation. But at the same time, if you could figure out the printing presses were going to stop, you would be forecasting a new leg up.

Here's my thinking on this: there are two bills right now in front of Congress. One is a watered-down version of Build Back Better; they're calling it anti-inflation, which everybody knows is a joke. This is very inflationary, but it's a spend over ten years. So, that's one attribute of more printing, which would maintain an inflationary stance and, of course, keep the Fed raising rates, which is not good for equities.

Then there's this interesting situation — the chip bill, where we're going to spend billions of dollars. It's again free money from a helicopter going into the Midwest to try and catch up with what's happened in our lack of ability to manufacture semiconductors. Now, cut it to what it is: it means that management — the Intels of the world, the AMDs — made a mistake. They moved all their production offshore decades ago, taking the U.S. down from 32 percent of manufacturing to less than 10. Now they’ve got to bring it home. We're going to print money to make that happen. That also is inflationary, and you can sell it as something as a defense to the U.S., but basically, you're supporting idiot management.

That's basically what happened. You're picking a sector; taxpayers are not getting anything from it other than just to give their tax dollars away to idiot management. I don't mean disrespectfully, but there's management that can execute and foresees the future, and that's why they're good managers. And there's idiot managers. So you could say many idiot managers guided manufacturing out.

Why I bring this up towards determining the future of the market is every midterm election — and this starts in about two weeks, okay? It's November 8th by midnight November 8th. This is my thinking as an equity participant, and I don’t think a lot of people think this through. You've got a situation now where normally any incumbent — you don't have to get into politics; it doesn't matter what party's in power — they lose seats in the midterm. That happens 100 percent of the time. There’s fatigue; people are tired; they want to make changes.

It's happening on a regional level. This time, though, in my view, there's at least a 50-50 chance that both the House and the Senate flip to the other party. I don’t want to get into politics, but the point is there's a lot of unhappy campers in America today based on inflation around food and energy. They're really pissed. So when that happens and it's so close — it's November 8th — this is the good news for investors: after that night, there will be total gridlock in Washington for the next two years. There will not be a single piece of legislation passed; it will be impossible to get anything done. And that's a great thing!

That's a wonderful thing because markets love Washington gridlock. I think whether you want to say it’s P/E expansion or earnings expansion — and it may be both — we’re going to continue this leg up. Now, not 30 percent, but if you have an option between making eight or nine percent, including dividends and yields on the S&P 500 at a 17 to 18 P/E, or getting two to three percent on long-duration treasuries, I think that's a no-brainer. You’re going to stay long equities, and that’s my position. I am underweight fixed income big time. I don’t care when the Fed stops raising. That’s another debate: do they do 50 basis points? Do they do 75? We're going to find that out; they may do 50.

The narrative has changed to a soft landing for the first time in decades. Nobody gives credit to the Fed for ever delivering a soft landing because they never do. Maybe because of the backwater of all this printed cash they have, they have that opportunity to do this. So bottom line: I make it very clear: the bottom is in. We’re going to be flatlining for a while while we wait to see what the Fed does. But if we get what I think is going to happen on November 8th, Katie, bar the doors — gridlock in Washington is a wonderful, wonderful thing.

Kevin, why is that? Why? Because I’ve noticed this in the past; as soon as there’s a split Senate-House, all of this stuff — it’s suddenly good for equities. Why? Take for example what's happening right now in this Build Back Better inflation bill: they're adding a one percent tax to stock buybacks. Why would you do that? Why would you do that?

Then they put a 15 minimum corporate tax in the U.S. An idea floated by Yellen; all around the world, nobody followed her. Now the U.S. is less competitive. The politicians damage bull markets. They've never run businesses; they have no idea what they're doing. They're just throwing this stuff out there to raise money. I don’t want to be a cynic, but it’s a fact. They have no idea, and so they put these crazy policies in place.

The more you keep chipping away with stupid policy, the more damage you do long-term to your economy. Now, this 15 minimum tax does not help equities. It doesn’t; it’s just going to have companies contort and try and figure out how to get around it. Bottom line: the IRS: 88,000 more agents — that’s just going to hassle small businesses in America. Not a good thing.

So bad policy. The whole point is, when you have a situation where Washington can move policy, more than 50 percent of it is bad policy. When you have total gridlock, they can’t do anything; they can’t damage anything. Listen, it's important to have government for many different services, but not for making economic policy; they're really bad at it. So that’s why I point out: once you shut down the policy machine, markets get to move back up.

I can confirm, by the way, because I've done this study going back to 1850, I think that a gridlock scenario of some sort is the most bullish outcome for the markets, primarily during the presidential elections, but also the midterms. So we want both the House and the Senate to flip. That's what all investors are praying for now. It doesn’t matter if you just get the House; you're good, but you might get both, in which case a new party gets to put more pro-business policy in place. You know, you just don’t know.

But the chance that the status quo remains after midnight November 8th, I think is zero. If I think of the asset allocation process right, my view is weaker growth. My view is the Fed coming into play; they stop somewhere — set or up. I think the bond market rallies. What do you want to own? You want to earn the furthest out duration thing you could possibly own, which is crypto.

This is why crypto-based exactly around the same time as the market starts picking up that the Fed is going to pivot. So this moment, the Eurodollar market starts pricing in cuts, crypto bases. So that’s how I think of the portfolio allocation. I love bonds; I think nothing — well, I don’t want them for yield; I want them for price appreciation. But the real game in town is going to be crypto.

You want to go — the real game in time is risk. I want to weigh in on the bond discussion because it’s a good one, and I think in terms of allocation and distribution of your own portfolio I don’t care who you are. There is a place for fixed income. Now, we run a pretty big fixed income desk here. We look at all credits, right from treasuries and guppies all the way over to factoring for retailers.

The challenge we're having right now in pricing in risk is in a bond situation: if you get it wrong, you have to wait a decade to get your principal back. That’s not a good outcome. And you could go shorter duration, but what’s bothering me as a bond guy — that's how I started my career — is what BlackRock is doing right now. Instead of buying fixed income, and remember they’re trying to put to work billions every week, they’re buying U.S. apartment buildings instead. They're reallocating away from an actual bond, a covenant instrument, and they’re buying fixed income based on distributions of rent because they're not — it's not a good sign! I’m just after capital gains.

You know where are bonds in a year's time? Probably at one percent, okay, in terms of yield. So capital gain is my trade for yield; forget about it. These guys have so many pension liabilities or hurdles that, as you say, they have to do that. We'll come into the East yield later because it’s super interesting for these guys as well. But you’re dead right — I mean bonds really have no value even in a pension fund because it’ll never close the funding gap, ever, at three percent.

They have to just — the average distribution from a pension is about 5.7 percent they have to send it every year. You can’t get that from any form of fixed income without taking huge risk on leverage or duration. And so I think I get your capital gain play; you’re making a call on interest rates, and I would tend to think you’re going to be right in the next 24 months. But as an investor who’s got to kind of put capital to work every day, I’m having a real hard time on fixed income here because if my bogey is six percent and I’m only getting 300 basis points from a portfolio fixed income, I’m offside 300 basis points.

You only want to rent fixed income; you don’t want to own it, if you know what I mean. It’s fine for a trade, but it’s not something you want to marry because you’re just going to lose money. And there's an analogy to the 40s and 50s here, especially in the 40s, where — I mean the Fed is not doing yield curve control, at least not yet; maybe it will at some point. But you know that once the inflation rate on a structural basis — let’s say a five-year CAGR of the CPI crossed over the 10-year yield, you had a decade and a half of negative real returns.

And you know if you hold a bond to maturity, as we all know, the yield on that bond is your return, right? If you hold it. So a 10-year at two and three quarters, that’s going to be your nominal return. And if inflation is at four, which is not a prediction, but then you have a negative return. So I’d rather even just buy utility stocks, you know, which — if you, between the dividend of three percent and earnings growth or maybe some buybacks, you can get high single digits.

Back to the 40s, as you and I talked about several times — there was a period where it traded sideways and then equities went up 900 because of negative real rates. I look at the trend of negative five-year real rates since 2000; they’re just trending lower. The average, if you draw a nice average line on it, is negative one percent. We got to plus 50 basis points and broke the economy. I mean we’re — I mean there’s no way we can hold positive real rates in this economy.

So the reality is, I think negative one percent real rates, as you said, which is fantastic for equities, terrible for fixed income investors. I think for crypto — digital coins, I think bonds is a non-starter. I’ve got to be really honest, and this channel is full of digits. I think fixed income is probably the furthest away they want to be. It’s either going to be Tesla stocks and meme stocks, or it's going to be crypto.

Speaking of BlackRock allocating funds, they made two announcements this week. The first announcement is that they partnered up with Coinbase to bring crypto trading into their Aladdin system and to make it easy to buy and store crypto. And then they made a second announcement that they’ve started a Bitcoin private trust, which allows their investors to invest directly into Bitcoin. So — two announcements in the span of, I guess, a week.

How big is this news around Aladdin and allowing their investment base to be deployed?

I think you missed a third announcement, a third announcement from BlackRock and Fidelity simultaneously. They each put 200 million dollars of equity into Circle in the F round at a nine billion valuation, less a discount they got, which I'm going to assume is 15. That is huge! Remember, this is a very controversial asset class. Stablecoins are a [ __ ] show right now, and there you have the largest, most conservative, completely compliant institutions on Earth putting 400 million dollars now.

I have to disclose, okay? I participated in that round; I saw that happening. So I’m in that round. I own a piece of Circle now in the F round beside Fidelity and BlackRock, and I did it because I saw them going into it. I would have never done that without the endorsement of such compliant SEC-regulated entities making a bet in the middle of a shitstorm on stablecoins. It’s a turning point for crypto — that’s what I think!

So the turning point is the three pieces of news put together, just to get it all right. No, it’s not just that we're going to get regulation. Listen, we were supposed to get a policy just on stablecoins reviewed this month; they pushed it — and I'm talking about now on the Hill in Washington — they pushed it to September to consider it. You got to remember, there’s Hagerty, there’s Loomis, there’s Toomey, and Toomey is going to retire in January. He wants to get one piece of policy done; he wants to get stablecoins regulated.

And the policy they’re putting forward — I've been spending a lot of my time in Washington on these bills, and I’m not the only guy doing this. I’m totally transparent on my interests here. I want to get some kind of payment system for my global businesses when we’re transferring cash. I want to use USDC between here and Geneva. We index; I have an indexing business, so we’re constantly, every day, taking U.S. dollars, taking it over to Zurich. They charge me a fortune for that. It takes 36 hours sometimes. Then they nip me on the FX trade when I go into Swiss francs and buy a Nestle or Roche, whatever I'm buying to index it, and then they screw me again on the way out. I could completely eliminate that with a payment system, and everybody knows that.

So there’s a lot of utility. The second reason you got to be bullish here is this: both sides are supporting this. Dems and Republicans, because it makes the dollar—if you get a U.S. stablecoin policy in place, it makes it the default payment system of the earth. Not the Swiss franc, not the euro, not the British pound, not the Chinese yuan — the U.S. dollar! So this is coming back to the House on the floor in September, and it may be the first piece of legislation that provides the launch ramp for more crypto policy. Now you know there’s a war going on between the SEC and the other regulators — a turf war on crypto — but you can’t deny crypto is here to stay.

In fact, I believe in the next ten years, it’ll be the 12th sector of the S&P, and I’m trying to make bets all through the continuum of projects. I own everything; I have 32 positions. I don’t know which ones are going to work; I don’t need them all to work. I just need a few huge positions — Ethereum, huge in Bitcoin, Solana, Polygon, Helium, Pollen, the new one I just took on. There are all kinds of projects, and the thinking for me is this: you go teach a class of MIT graduates in engineering right now — I do guest lecturing there. One third of the class are entrepreneurial. Where do they want to go? They have no interest in working in any of the 11 sectors of the economy; they want to work on the blockchain. They want to be in crypto. You can’t pour that much intellectual capital into something and not have great outcomes one day.

It’s like being in the beginning of the internet. I'm talking about the smartest, brightest men and women from around the world say, “Screw everything else; I want to work on crypto.” I don’t even look at the Bitcoin price anymore.

It's ETH.

Me too.

It's a good segue, but you’ve got to remember we’ve been talking about the merge for five years, okay? You know, let me be the skeptic. This is my largest position right now. Ethan’s moved up and put it at the top of the heap of my 32 positions. I’m a skeptic until I see it happen because you’ve got to think about who loses in the merge.

If you’re a miner right now, you’re not loving this merge idea, and there’s a lot of capital tied up in that. And so when it happens, I’ll believe it, but we have seen this thing punted down the road five times. So what makes you so confident it’s going to happen?

Okay, so let’s quickly talk about that. So yesterday they moved on to the last of the test nets, which is called the Gurley test net. That was a successful move, so pretty much they’ve gone on all the test nets and everything’s worked, which kind of means that in practice, in theory, everything works.

Now I agree with you that the miners have got a lot to lose, and that’s why the miners are now forming this coalition to actually fork Ethereum. So what you’re going to get is you’re going to get an ETH proof of work and you’re going to get an ETH proof of stake chain. That’s currently what’s happening, okay?

So I’m not sure that that’s a good thing, but what we know for sure — let me just give you the facts: So right now, there’s a derivative of the proof of work Ethereum, which is trading at 3.8 percent of the value of the proof-of-stake Ethereum. So what people are forecasting is that the chain will split; you’ll get a proof of work Ethereum and a proof of stake Ethereum, and 96 percent of the value will lie in the proof of stake Ethereum and 3.8 — the value will align with the proof of work chain.

Earlier this week, that was 8 percent, so the value of the proof of work chain is coming down. Look, right now the futures are pricing the merge to actually happen and actually happen on time, which is quite ironic because anyone who’s been around for any amount of time always knows that Ethereum is delayed on things.

But I mean these are the facts right now; this is what the market’s talking about. Right now, some of this is causing havoc in capital markets around data centers. I want to point something out here that I think we haven’t touched on — and again, I’m tracking this from indexers.

So if one of my core businesses is to index for sovereign wealth — seventy percent of capital that’s invested around the world and it may be, when we measure it again, 75 percent is in sovereign wealth and pension. So I can report to you faithfully that they own no crypto, zero. And so for all the excitement, and the reason they don’t is they don’t have any infrastructure to be compliant. It’s not just that they’re not allowed to because it’s not regulated; they have no infrastructure to mark to market and so that their compliance departments can monitor whether they’re over-levered — whatever their mandates are.

Let’s say you're maxed out at a name at five percent; they don’t have any infrastructure to make that work like a stock or bond. They’re working on that. So is FTX, so is Binance, all the major trading platforms are trying to provide that infrastructure. But as it stands right now last year, up to just before the correction, they were using public Bitcoin miners in the U.S. as a proxy to own Bitcoin because it traded in direct correlation.

I know that because I indexed for them, and I’ll never forget this — this is crazy! I — we were indexing; other indexes were doing the same thing. The indexing business is about making three basis points. So you know, if you're an oil-rich country and you’re bringing in 500 million U.S. dollars a day, the only place you can put it is the S&P 500. You don’t move the market with, you know that, and so at the end of the day they say, okay index to S&P.

X oil, X airlines, because most of those countries own their own airlines, and they don’t want any oil because they’ve got plenty of oil. So when it came to Bitcoin, they said, “Look, we want 50 basis points, come up with an index that is a proxy to the risk on Bitcoin.” Bitcoin’s the only one they care about.

And so everybody designed these indexes. Now, the morning the SEC memo came out calling for auditors to sign the carbon credit claims — in other words, if you’re an S&P 500 company and you say, “Look, I’m carbon neutral because I buy carbon offsets,” well, the SEC wants you to sign that because everybody knows carbon offsets are [ __ ].

And if you’re if you’re a polluter and you say you own an acre of the Amazon, that’s BS. Now why would that matter to Bitcoin?

Here’s what happened: within minutes, everybody was — an extra got a phone call from sovereign wealth saying, “Dump every public mining stock in Bitcoin you’ve got because none of them are going to be able to pass this audit.” It’s never going to work, and they are agnostic to price. We were selling into the clients at 20 an hour, and I didn’t want to do that, but we did it.

You go look at a chart of a Marathon or a HIVE — that was the indexers dumping those stocks. And now there’s no way they’re going to give a proxy for Bitcoin because half the world won’t buy them because they’re polluters. They’re dirty miners. So now you have to do mining with hydro or you have to do mining with nuclear power.

The biggest investors in those facilities, like the one in Norway, there's a company called Bit Zero Private, is the UAE. Same with North Dakota — the Burgan announcement last week that old nuclear facility that’s been on the market since 1975 just got sold to Bit Zero to turn it into a giant clean data center.

So new money moving into it, which I say is bullish for Bitcoin because at the end of the day, the highest return when you're stabilizing a giant $600 million data center before you sell it to Microsoft, is you rent it to Bitcoin miners. So you’ve got these massive facilities being built.

Another index, which I think is a foreshadow of demand, because when we get policy on Bitcoin and it gets indexed to one percent in a $900 billion fund, that’s really good towards getting that price up to a hundred thousand. That’s the only way you’re going to get it because if there's volatility, you’ve always got the underlying bid from the sovereign wealth fund. You have to be bullish if you believe in regulation; that’s my point.

Let’s talk about the ETH because I think, Aral, you touched on the ETH, huge implications for me. If I think about it logically, if the merge is successful — and look, right now all the test nets have been successful, you’ve now got yourself the opposite of Bitcoin; you’ve got yourself an ESG-friendly asset because it’s now moved from proof of work to proof of stake.

You’ve got an asset that is now truly deflationary because remember, rewards are cut by 99, and there’s EIP-1559, which actually burns Ethereum. So net-net, you are decreasing on your Ethereum, and you’ve got a high yielding asset, which Bitcoin is not. So remember institutions who are looking for yield can now go into Ethereum and get themselves real yield.

And when I say real yield, it’s the reward for validating on the network; it’s not a proof-of-stake validator reward. So you’ve got yourself — dare I say, a better asset for institutional investing.

So look, all of those points are correct, and no — get policy. Will they get somebody in Washington to say, “That’s okay?” If you’re a public pension plan, they need the policy on crypto in the sense even if they only regulate Bitcoin and Ethereum. Many people in the crypto world are against regulation, but I say that’s false. If you get regulation, you get more capital.

You’ve made a great case right there for why we want policy on Ethereum. Do you see Ethereum flipping Bitcoin at some point?

And I’m going to say, at some point, without question you’re — I’m having a hard time with that because when I talk to sovereign wealth, I don’t care if it’s Norway, or the UAE, or Saudi — they want Bitcoin. They have not got to the analysis that we’ve just gone through; they want the proxy of Bitcoin, and they want that volatility.

I think for financial services, I agree that ETH — the gas fees are a joke; that's the problem — this will help solve for it. But if that becomes the default platform for other digital assets, that will help. But in the immediate term, the demand is for one to three percent of a portfolio — a standard. These sovereign wealth portfolios look like this: no more than 20 percent in any one sector, no more than 5 percent in any one name.

So you’re never gonna find, you know, Boeing or Bank of America more than 5 percent — the $900 billion fund. All the indexers know that. When you ask them, if you could buy a digital asset, which one would it be and what allocation? It’s about 50 basis points on the low end up to 300 basis points on the high end, and 99 percent of the time they say Bitcoin. That’s all they know.

And so it’s going to take a while for that demand to come, and I think it would be number two, and they certainly like USDC, and they love Solana, and Polygon. You go down the list by some market cap — I get it. But right now, if we had policy on Bitcoin, I swear to you, the price would be sixty thousand dollars in two weeks.

And Kevin, what if you index like Bitwise is doing, a bunch — a basket of crypto — let’s assume they’re not ready, as you say. But let’s — when they come in, they’re gonna want that kind of product, right? Because then that gives them — because we don’t know, like you, we’ve all got a bunch of positions; we don’t know what’s actually going to win here or not; we could all have opinions, but it means nothing until we find out.

But surely there’s going to be big demand for index products in this space at some point, except the really big guys do their own index; they basically — they rent indexers like me and they say “Design this,” because most often those commercial products are doing 20 basis points to 45 basis points. They’re never going to pay that; you’re lucky to get two basis points out of them.

And so you do the work, and then they have a custodial, and that’s where it gets interesting because Bitcoin trades 24 hours a day, and all of the crypto does, and that’s a new beast for the compliance departments of these giant funds. But the demand — I mean, the reason I’m long now with all this volatility — we have 20 percent of our operating companies’ assets; that’s our max in crypto across 32 positions.

I’m about to add Pollen, which is a decentralized telco we’ve done a lot of research on. We like it; we think there’s a lot of interest there, but that’s a really fringe project. The point is I’m trying to get ahead of the day because we’re all agreeing that at some point we’re going to get policy. I need to be long before that happens, because that’s the reward you’re going to get is when that stuff gets indexed.

And whoever gets to index it, the demand for at least Bitcoin and Ethereum in the out of the beginning is insatiable. It is insatiable at the sovereign and pension level. And for all the skeptics that are, you know, don’t like crypto, they’re going to watch that asset move into an indexed price, which I think is 60,000.

I have a quick question for you on this. What regulations do they need? Do they need UAE regulation because Dubai is doing a pretty good job? Saudi’s doing a pretty good job now. Or do they need global regulation? What regulatory framework does Norway need? Does, you know, in general?

So the ADGM, which is the — let’s talk about the UAE, because this is a fantastic question. Last month, I got my UAE citizenship, and I did that to go through the scrutiny of the background checking so I could act as an operator and an indexer in that market and a financial services entity. And so that was a lot of work, and it was worth it. I’ve been trying for three years, and they don’t grant many of them.

So when you look at UAE, it’s Abu Dhabi — it’s 95 percent of the capital, so you have to operate out of there. It’s called the ADGM, and they set policy on crypto; they grant licenses for exchanges. But here’s the thing that they won’t do: They will not — let’s call it jump, hop the SEC. They will not do this and make it a standard for their own sovereign wealth before the SEC gets a chance to move.

And the reason for that is really political in nature. The largest manager of sovereign wealth in the world is BlackRock — that’s Larry Fink. He’s not going to do this until he gets the go-ahead from the SEC. And so they’re not going to ever mess around with their largest manager, and Larry’s telling them — and I’m speculating this, okay? I don’t know this for certainty — but he’s saying, “Let’s just wait because when we get the SEC to approve this, whatever approval it is, we’ll build you the infrastructure so you can mark to market it so that you’re staying compliant in your mandates.”

Then they’re going to put on their waiting, and so I think this thing is going to happen after the midterms, after we get the policy unstable. They’re going to start looking at Bitcoin. I don’t know which regulator is going to get to regulate it because there’s a turf war going on, but if you’re a speculator and an investor like the three of us are looking at this — and both of you guys are so down the rabbit hole as I am — I need to be there ahead of this decision, because it’ll happen quickly and you won’t be able to put on your position and that the market will move against you so fast.

I am extremely optimistic on Bitcoin and Ethereum over the next call of 24 months.

And the way you should measure your enthusiasm or curb it maybe is they struck down the Bitcoin ETF just weeks ago, even though the Canadians have one. And I believe that the OSC, which regulates the Canadian ETF of Ethereum, which is marked to market real Bitcoin each day, they basically are the petri dish for the SEC. They work so close together in Canada.

For example, you know how Coinbase is at war with the regulator right now? There’s a company called Wonderful with 700,000 accounts — 720,000 accounts, regulated by the OSC. Canadians are allowed to trade 14 different tokens legitimately regulated with the authorities — being tax reported; they’re so advanced and we haven’t even got there yet stateside.

And so I think they’re using Canada; UAE is talking to the OSC. Why do I know that? Because I own that company, and I showed them the order from the OSC, and I went to Abu Dhabi and sat down with the ADGM and said, “Why can’t we use the Canadian order and build it here?” And they are thinking about it. But I know they’re hesitating because the FAB Bank is the largest bank in the UAE. They want the central bank to regulate.

I mean we’re getting down the rabbit hole here, but final question then, Kevin: the question everyone wants to know — when do you think, best guess? You’ve got no idea. Best guess — we’d get the clarity SEC, CFTC, and yes, no by second quarter 2023 after the midterms.

If the House flips, you get the Republicans on this — they’re more — they’re way more pro-crypto; most of the bill initiatives are coming out of red states. And I don’t want to be political, but if you get the House flipping, they’ll put that on the agenda. But don’t expect every token to be regulated; they’re going to focus on the market capitalization and say here’s policy on Bitcoin; here’s policy on ETH.

I think you want to be long after November 8th. I mean this is — everybody's got to speculate on what to do here, but you’ve seen the winter at the bottoms; we’re slowly crawling out of the toilet here. Your portfolios are up, you know, 20 in some cases 23. I mean our 20 position went down to 15.2. That’s pain, that’s pain my friends.

And our desk was saying, “What do we do, what do we do?” I said, “We do nothing.” We know we’re in this volatile asset class, and we’re going to have to wait for some policy. That's why whenever I talk about crypto now, I’m pro-regulation. I want the sovereigns backing me up with a bid every night.

Guys, we do have like two more minutes, and I do want to ask you a question, and it's not a bullish question, and that's around the U.S. sanctioning an open source protocol in Tornado Cash this week. Admittedly, as per Chain Analysis, about 10 percent of the activity of this protocol is for hacks and thefts, and 90 percent of it is actually for legitimate privacy transactions.

I say this is a good thing for the market, scraping the patina off the bad actors, the idiot managers, the over-leveraged unsophisticated traders. It’s important to do that because it makes the rest of this ecosphere very, very stable. And the more you get — I love it when these guys using leverage, who've never done this before — I’m assuming because they blew their brains out the old-fashioned way, they’re eliminated from the market. The lawyers will pick over the carcasses in litigation; that’s okay. But these players are out of the market, and that’s important.

The DNA of the remaining survivors gets better — that’s my whole point. So, you know, any — these crazy — the Luna story, this story — get rid of all that crap because I can tell you right now, algorithmic-based stablecoins are not going to be popular in the market. You can’t wipe out 50, 60 billion dollars and get everybody back on board; that’s not easy to do. So I think that’s a good thing.

I’m pro on this thing, and I just want to — I want to scrape out the idiot management more. Scraping of idiot managers — it’s better for those managers that remain and survive.

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