AI Eats Wall Street Research with Anthony Pompliano

0:00Alex Thorn:Welcome to Galaxy Brains.

0:25Alex Thorn:Welcome back to Galaxy Brains. As always, I'm your host, Alex Thorne, head of firm wide research at Galaxy. Bitcoin, not zero. We have a great episode for you this week. Anthony Pompliano from ProCap is our guest. He's back on the show and I met with him on the sidelines of Consensus 2026, gosh, several weeks ago at this point, Phineas. And we had a great conversation about his thesis in crypto now with the institutionalization and the convergence with TradFi, what they're doing at ProCap with AI and their new AI products, and a bunch more. It's a great interview with Pomp. And then, of course, we'll check with our good friend, Bimnet Abibi from Galaxy Trading, as always, to talk about markets.

1:02Alex Thorn:Markets sliding here. It ain't just Bitcoin that was down and crypto, but all of equities over the last several weeks after nine consecutive bullish weeks. A little bit of a rollover here and questions about inflation. We'll get the read of the environment from Bimnet, as always. And before we get to that, I need to remind you to please refer to the link to the disclaimer in the podcast notes. And note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. Let's hop right into it with Bimnet Abibi.

1:32Alex Thorn:Let's go now to our friend Bimnet Abibi from Galaxy Trading. As always, Bimnet, welcome back to Galaxy Brains. Thanks for having me. So two weeks ago you said 60K in 60 days. By last week we had hit it. Now we're floundering around down by 60K. what are we thinking about with Bitcoin right now specifically just same track right no change in trend since we've last spoken. No change in trend but I would say that the price action today is notable because it seemed like a relative outperformance versus broader equities which were down NASDAQ was down over 2 % as of this podcast and energy prices you know we're going higher today oil was a little bit bid and so like unlike you know a couple weeks ago when bitcoin was just trading heavy and macro was holding up like it's the opposite now and i think that speaks to the fact that you've already had such a huge corrective move um in bitcoin and you know you're kind of getting to um a little bit of like seller uh exhaustion uh but i also think that there's a little bit of a short base in Bitcoin and in crypto right now.

2:47And it feels like it's trading that way. And you can also kind of look at the funding rates on perpetual contracts. And, you know, they've started to go a little bit negative. And, you know, implied vols, especially on short dated, you know, Bitcoin options are reasonably elevated. And so it seems like, you know, people have de-risked, some have gone short, and some have, you know, put on, you know, protection, which makes, you know, a move lower a lot more challenging. But taking, like, you know, a step back, like, we just went from 80 to 60, ETFs are still, like, not buying. In fact, you know, there are outflows on the Bitcoin side.

3:29You know, the story with micro strategy has not improved because, you know, Stretch is still trading around, you know, 96, 95.5. So he was not going to be able to issue at par to repurchase shares. The only thing he can do is, you know, effectively just sell MSTR, you know, more aggressively, which I think is not accretive, you know, by their metrics. And so the setup is still in play and the historical analogy is still in play and i think that you know strongly suggests a bottom um you know about a year after you you topped and so that puts you in this september october yeah like you know late q3 early q4 area as as kind of a bottom um and that's still the the core thesis i think right here right now um you know i think bitcoin could easily go to like you know we were just at 64 i I think, on Monday, but 64%, 65%, 66%, 67%, like a 10 % to 15 % rebound from the low, I think, is feasible.

4:38And that wouldn't change the medium term here. It would not change the medium term outlook.

4:46And I think right now what is capturing the attention of the market are two things. One, it seems like the left tail risk on the Iran situation is increasing. At the same time, I do think we're about as close to a deal as humanly possible or as close as we've been. And so it feels like the left tail and the right tail outcomes are kind of getting fatter. It's interesting. And the hold, hold, and delay kind of stuff, it feels like less of a likely outcome. You're either going to get a deal pretty soon or you're going to kind of escalate. I think I'm still optimistic that a deal will get done. But the back and forth between Iran, Israel, and then now U.S., Iran, it doesn't feel good.

5:33At the same time, you know that negotiations are happening behind the scenes. And so there is a diplomatic channel that's being pursued.

5:41Alex Thorn:And some of this heightened in the last few days, like escalation. There's some rockets or something and some vice versa, retaliations. that can also be part of positioning in the late stage of negotiations as well. Absolutely. Yeah. You know, it strengthens your negotiating hand if you're Iran that, you know, if you're willing to strike Israel and risk like blowing up the deal and re-escalation, that means like, you know, you're actually - It might get you a little bit more negotiating power. It may. And so it's just a tit for tat right now. Unfortunately, it comes at the cost of, you know, human lives and suffering and money and all that.

6:19But anyway, so that's one big driver. I think it is notable that energy markets haven't completely rallied like crazy. I think that is a sign that the market is optimistic about a deal getting done. And then the second thing that's driving market is really still the AI trade. And you've had some hiccups since the last podcast. Last Friday was particularly ugly, huge unwind, not just domestically but abroad and the Cosby and kind of memory and AI names globally. And you're seeing a continuation of that theme today in markets. And I think essentially what you got to is a point where positioning got really elevated.

7:12so did sentiment. And you hit against the reality that a lot of institutions are very concerned about their token spends. And so folks are looking to run cheaper models or run AI less. And so there are some concerns about just the cost of some of these models, and therefore you've got to question the business model of certain businesses. and then you just you're running into like physical constraints of of like you know i need more data centers or more gpus or more like you know commodities or you know other things like there is a limit as to like how much you can do and then more importantly though um i think you know last week you know google announced that they were doing a big equity raise um and you know that the space x-rays is happening this week on friday the ipo you know yeah and in theory like the money that's getting spent on ai has to come from somewhere and yes a lot of the companies spending on ai are massively cash flow positive some of the best companies in the world like balance sheets

8:23Alex Thorn:they've been buying back stock with like they have money they have well but the buybacks drain cash i'm saying but they've been using these giant stockpiles over the years the mag 7 companies mostly for buying back stocks. So they've been now using a lot of it for AI spend. Correct. Which means they're not buying shares. And they're actually selling, which is not. Well, that's the crazy thing was the, like, at the money. I don't know if they're at the money, but there's some more pipes. Yeah. Yeah, so there's, but the fundraisers from mega caps, have we ever seen that? I don't know. No, no. It's been a while.

8:54That's a totally new type of phenomenon. And it's not just equity offerings. It's debt. And so I think the market is positioning to absorb a lot of the supply. And so you're getting hit with equity supply and debt supply at the same time where the story is getting slightly less compelling. I wouldn't argue that it's still transformative technology. And the companies this year have had tremendous earnings, like 20 % earnings. We're just not at peak hype.

9:28Alex Thorn:We're somewhere below that, very notably, and the S &P shows that, right? I mean, we're not close. I mean, we're close, close if you zoom out. But the last several weeks have taken us well below all-time highs on the S &P, right? Yeah, absolutely. We're down meaningfully if you look at that chart. We were just climbing higher for most of the spring. We were up nine weeks in a row. Yeah. Right? And so that type of price action is generally not sustainable. And so I think the market just came to a head. And you've got to have a – it's always a cooling off period. Yeah. It doesn't mean the macro equities or the sort of big picture equity rally doesn't continue.

10:06But I think caution is warranted. We've never seen an IPO this big. It's happening on Friday.

10:13Alex Thorn:And I saw both OpenAI and Anthropic have filed. So we've got more mega IPOs on the horizon. Not clear exactly when, but coming. Yeah. Money's got to come from somewhere to buy that stuff, right? Absolutely. So that's a pretty interesting setup. And I think lastly, in terms of what happened today, you did have a headline CPI print that was a 0.5. The headline CPI prints are definitively inflationary. The core CPI came in a bit better at 0.2. but I think the markets, you know, focus, you know, over the next, you know, pass, once you get past the SpaceX IPO is really on Kevin Warsh and what he's going to say at the next FOMC meeting.

11:02It's his first meeting. He's going to, you know, effectively, you know, shape how the Fed communicates, what his outlook on policy is, you know, do they keep the dovish bias? Do they not? How does he, you know, address the balance sheet policy? Does he kick it, you know, kick the can down the road and yeah and you know I think what's most important in terms of at least the question I'll keep an eye out for is you know has his mind is he still of the view that AI is tremendously kind of like disinflationary and like it will lead to like a productivity boom and so I'm curious

11:37Alex Thorn:like if he's how he reconciles that with these inflation numbers that we're seeing correct yeah but yeah and so it's it's a very interesting time for markets I think that if I had to pick a trade right now, it's very hard. And I think what I would be more comfortable in is probably betting on there will be volatility. That's like saying that the sun will rise tomorrow. I totally get that. But right here, right now. Tough to decide what you like. Tough to know what to do. I think no trade is a trade. and so you know i think this is a market that you know on a headline you could you know lose your shirt um go up or down a lot up or down a lot and so you know i think it's really important to just stay humble and kind of you know less is more in this environment um you know i think one of the most interesting charts in the world right now is gold um it just broke its you know 200 day moving average i believe last week and today you're closing below the 50 week moving average for the first time in like a couple of years um and you know i i don't think it's got a great fundamental setup here because you know you real rates are arising you've got some you know central bank selling there's a technical break on it um and so you know the very interesting very been on a multi-year bull run gold um after you know languishing it tends to do well for a few years then languish for like 10 years if you look at the long the all-time chart um because like the last i guess structural bull run was like you know when i was in college in like the mid-2000s and then it basically went sideways for 15 years yeah i mean you just and then rallied hard then doubled i mean you have to remember like it's down a lot and it's the world's largest asset like you know if people are pulling cash from gold to go into spacex like or these other things it wouldn't shock me but i also think like there's a real wealth effect yeah to like the largest asset in the world like dropping four percent today after it dropped like you know like i think it dropped like two-ish yesterday but it's been on a pretty consistent downturn a percent here and there is a lot of money when you're talking about an asset as big as gold yes i agree yes So very interesting.

13:56Alex Thorn:Thank you, BimNet, my friend from Galaxy Trading, as always. Thank you for having me. Let's go now to our guest, Anthony Pomfiano, my friend. Welcome back to Galaxy Brains. A lot of people here. Does this feel like a bull or bear market to you? I think that this conference is proving one thing that I believe, which is much of the crypto industry is dead. It's never coming back and people don't realize it yet. There are two types of people at this conference. There are smart people who are working on things that are going to be valuable. things like Bitcoin, things like stable coins, things like equity infrastructure and tokenization.

14:25Then there's a lot of people who are walking around here and they are confused. They think that what they are working on is God's gift to the earth and they don't realize they are dead man walking. It is never going to happen. The dream is over. They should stop working on what they're working on. 2018 vision of the world is not going to happen. Reallocate the capital, reallocate the talent and go somewhere else.

14:44Alex Thorn:You are the CEO of ProCap, a Bitcoin company. Let's talk a little bit about this because you just acquired Sylvia, CFO Sylvia, which is an AI. We'll talk about Sylvia specifically. It's very interesting. But that brings sort of a real business inside of a Bitcoin treasury company. That's a trend we're seeing now. 21, Nakamoto. I guess not everyone can be Michael Saylor. How do you think about it? Like, is this DAT 2.0? Well, I think there's very big difference between the people who thought they were going to run a treasury company. And then if I had to give credit to David Bailey and Jack Maulers and myself, I think that probably the three of us understood that simply just holding Bitcoin on the balance sheet was not going to be a winning strategy.

15:25And so in our own different ways, each of us told investors early on, hey, we are going to build an operating business. We're going to look to acquire an operating business. I think David even said, hey, there's an option to buy my existing business, etc. Right. And so I think that there's really two different ways that you can accumulate Bitcoin on your balance sheet. You can do it inorganically by going and using capital markets, whether it's equity, converts, preferreds, et cetera. And you're going to buy that Bitcoin if you do it in a prudent way and you manage your risk correctly, then that can be a great business.

15:53And I think strategy is obviously doing a great job with it. I think strides going down that path, et cetera. But I think that there's this second group, which is trying to organically acquire Bitcoin. And what they're really doing is they're trying to build businesses that have revenue and profit. They'll sweep that profit into Bitcoin on the balance sheet, and they'll continue to grow the Bitcoin stack there. And so I think that the media is trying to label this as pivots. But if you go and you actually look, I know for sure those two guys and myself were very clear in a lot of the filings, et cetera, of like, look, we want operating businesses because we think that the organic acquisition of Bitcoin is a very different path than maybe what other people are doing.

16:26Alex Thorn:Yeah, I think it makes a lot of sense. And especially in an asset like Bitcoin, it's proof of work. You can't like run a whole validator business and build up like a MEV or all these other block building and stuff. So I think it makes a lot of sense. Let's stick on this topic with ProCap. So you did acquire, close the acquisition of Sylvia, which is an AI CFO, a financial AI. Tell us about Sylvia. Well, the way to think about what we've built is, you know, we started off, frankly, I think almost every AI product starts off as a wrapper on the general purpose models. And then you quickly realize that the general purpose models are great for general purpose, but they're not very good at doing a lot of the nuanced types of things.

17:01And so over time, what we have done is we've built proprietary agents, we've fine-tuned models, we've had to build a whole orchestration layer, we've had to build memory components, file systems, etc. And so you can kind of think of this as an engine, an AI engine that we've built. The Sylvia product is what I call bring your own data, bring your own query. So that engine, you can almost think of it like Palantir's ontology engine, right? So a user comes into the Sylvia product and they attach all of their accounts, their bank account, their brokerage, their crypto account, their private investments, cars, real estate collectibles, etc.

17:30When you bring all of that data into the engine, you've brought your own data, personalized to you. And then you begin talking to Sylvia. When you talk to Sylvia, you are querying the engine. So bring your own data, bring your own queries. When you query, you get answers back. Could be what's my net worth, how much is my cash position, do deep research on a stock for me, how to get my tax rates down, all that stuff. That is very helpful because it is a do-it-yourself version or use case for our engine. We then launched ProCap Insights, which is us as a company, we are going to bring the data, meaning that we are going out and getting data pipelines set up.

18:04We're going and trying to find these data sets. And then we're the ones querying it. And then we are selling the output as a finished product. So you can think of the do-it-yourself use of the engine. It's kind of like going to the store and buying wood and saying, I'm going to go home, I'm going to build my own chair. A lot of people can do it, right? Great use case. You get a very customized chair exactly for what you want. But there's also a lot of people who say, you know, I'm not going to build my own chair. I just want to go to the retail store. I want to buy the chair already pre-made. That's good enough for me.

18:29And so our business, if you think of from a technology perspective, is this engine that our engineering team has built. And then we allow people to use it from a do-it-yourself standpoint, or we will actually use it to create a finished product and then just sell that finished product.

18:41Alex Thorn:I think that's really cool. And with ProCap Insights, the agents scan markets, debate outcomes, produce research, make conclusions. Either the pro cap insights, which I don't think people quite understand, but actually, very interestingly, the mainstream media, if there's one thing they understand, they understand media. And so when you are creating content with AI, there's two things that tend to be true. You ask AI a question and you half believe it, right? Because you don't know, is it accurate or is it not? And so the way that this system works is it basically goes out, it looks through all of this data.

19:08It's very good at identifying undiscovered or, you know, less talked about insights. Then it brings it and it debates it among a bunch of AI agents. And so you get no different than in a newsroom, right? You get one person say, hey, you know, I think this about this. situation or somebody else says, well, I grew up in this area. And so I have this context, whatever. So you get a little bit better view of this aspect. Then we have a fact checking agent that goes through and actually looks at it. So for example, every single report not only has a thesis, it's got the data that backs up that thesis.

19:35We then provide you the counter argument. So we're not telling you buy or sell. We're not doing price targets. We're saying, here's the bull case. Here's the bear case. You're smart. You decide what you want to do with this information. But then every single data point usually is actually footnote cited. And so you can go and you can look and see what was the source material. And that's how we can ensure a lot of the actual accuracy is understanding, OK, well, how many sources actually back up this claim or this data point? And so being able to do this quickly and cheaply is obviously very valuable, but also doing it accurately with the citations is probably the most important thing.

20:08Alex Thorn:I mean, I'm a researcher, not in stocks, but in crypto primarily. This is getting me a little concerned because that sounds very good. The adversarial sub-agents that check and are skeptical and, you know, create this good product. We're doing some stuff like this. Think about what you could do. We should do a deal together, actually, right? Why not live pitch you? You guys keep your human team, right? And do what humans are really good at. But then there's a whole body of research that the AI is really good at doing. And you offer it all as one single offering, right? There's the Galaxy human team and then there's the Galaxy AI team.

20:41And really then the consumer of the information can decide, do I want to read from a specific person? Do I want to read the humans or do I want to read the AI? And what you'll find is different people want different things.

20:52Alex Thorn:Do you think the equity research on Wall Street costs like six figures for subscriptions or soft dollars or however it's done? How do you think this type of thing is going to upend Wall Street research, generally speaking? I think that two things are true. One, they're going to fight it for a long time and say, oh, this is written by AI. Oh, it's slop. It's whatever. I can tell you by looking at the data, though, people trust the AI more than they trust humans. And so if you look over five or 10 year period, you draw your own conclusions. Let's talk about Wall Street a little bit, what we call the great convergence between crypto and TradFi.

21:25Alex Thorn:It's definitely in full swing. You can see that here at ConsenSys. I saw last week at Bitcoin in Las Vegas, plenty of suits, although the suits have been here for a while. You know, not just you. You spent you came into the space as a Bitcoiner. you've over the years, I would say, warmed up a little bit across the stack. You're interested in stable coins and DeFi and stuff like that. How do you think of the banks, the big banks, getting into crypto or into Bitcoin? First of all, do they even like Bitcoin? Have you seen them liking Bitcoin or are they more of a stable coin? Can I tell you a crazy story?

21:58Alex Thorn:Is it like stable coins, not Bitcoin now? So there are a lot of big financial institutions that we've done a lot of work with, with our media business, our events, our investing firm, you know, even our public company, et cetera. Right. They like Bitcoin. They like stable coins. They're trying to figure out how do we use this stuff, right? I recently saw Franklin Templeton. They had the five-year anniversary of their Benji fund. Can you believe that's been five years? Five years, right? It's pretty good. Now, on the other hand, we did the Bitcoin Investor Week this past February, and there was one large financial institution that they were going to send their head of digital assets to speak at the thing.

22:33So they agreed that they were going to do it. and they said, hey, can we send you some topics as to what we'd like to talk about? Sure, no problem. I tend to be very collaborative in setting up these agendas. So they sent me a bunch of topics and the word Bitcoin was not in any of the topics or descriptions or anything. And I said, all this is fine. I'm happy to talk about all this stuff, but we're also going to talk about Bitcoin. And they said, well, this person doesn't have anything to say about Bitcoin. And I had to then send them a picture of the website and say, the conference is called the Bitcoin investor week and we have to talk about Bitcoin or, you know, what are we doing here?

23:04Yeah. They pulled from the conference. Wow. They would rather not attend the conference than have to say anything about Bitcoin. Now, I then went to the head of digital assets and I said, hey, my guess is it's probably the comms people more so than it was the actual like operating team. To be fair to them, it was the comms people. But I think that that is a very good anecdote on there is still a lot of uncertainty and you know, maybe a nervousness around Bitcoin. It is way safer. They feel like to talk about stable coins or tokenization or blockchain or whatever.

23:36Alex Thorn:Yeah, yeah, yeah. It's crazy because I remember back in like 2016, we used to joke that it was the blockchain, not Bitcoin era. Yeah, of course. Yeah. And it's rearing its head again. You even have some of these like permission blockchains, digital assets out here with like their fifth version, right? In Canton. Like, do you think that open blockchains are actually going to win at the banks? They are looking at it, the big banks. It's not like they're not looking at Bitcoin, Ethereum, Solana type as a platform for what they're building, but they do still seem enamored with this centralized private database idea.