Crypto Market Cycles with Dan Matuszewski

23:48Alex Thorn:That's kind of what I was telling, you know, my wife was complaining once rightly about like, you know, how scary it is to have your information on the dark web. And I was like, you just got to treat all government like ID info is compromised. Like, you know, social security number now, apparently just, I read photos of driver's license. Yeah.

24:05Dan Matuszewski:Right.

24:06Alex Thorn:If you just assume going in that like your information is already compromised, then you just got to take other steps on your own like data or like your your home or like the things you can control. because like that government. So then this led me to, I was saying this internally at Galaxy in reaction to this driver's license leak story. I was like, you know, it's actually kind of crazy. Like, why does my address have to be on the driver's license? Like, surely there could be some kind of like encrypted hash or something like the cops can look it up, but like, it's not like visually written on it.

24:39Alex Thorn:And then, you know, one thing led to another and somebody sent me a picture of the world corn orb. World corn orb. or yes which is dear to me is that the solution i don't know but i want one i don't i don't understand anything i don't have you been requesting one all right so i i basically

25:01Dan Matuszewski:anytime somebody like says they're with one or they're getting their like id photo or something i was like listen if you get me that orb i will give you i will handsomely reward you to get and I reached out. CoinFund said they were going to get me one. That was a lie. Spencer at Theory Ventures told me he was going to get me one. That was a lie. I almost don't believe they exist because everyone keeps telling me they can get me one and nobody has been able to procure it. And I've offered real money to get one. They won't give me one. I've harassed multiple people that work at WorldCoin for one.

25:39Alex Thorn:I mean, they are kind of cool they're dystopian i was telling you dan a moment ago that um so a16z put out a thesis or something a video explicitly defending flock cameras um i guess i'm assuming they're an investor i had this tweet in 21 that where i said that world coin was so incredibly dystopian that it's hard to believe it's real and i basically criticized investors for harvesting um people's biometric data. And I think this is why, and it's still true, Chris Dixon still blocks me. I think it was right after this. So I, you know, I don't, right. I think, actually, I think he just unblocked me.

26:20Alex Thorn:He must've just unblocked me.

26:21Dan Matuszewski:For a long time,

26:22Alex Thorn:he blocked me because of this.

26:24Dan Matuszewski:He's blowing up your spive right now. I guess so. Dude, that tweet, that tweet to 2021, we're so old. I know. It's five years ago. Yeah, it's five years. I have not been able to get one in five years. There's like a mini orb that they have now. Can't get that. I've like multiple times like filled out paperwork. Like people have been like, it's in the mail. Somebody sent me a tracking number. They're like, it's coming and bullshit. Like they just like, you'll get one of these things.

26:52Alex Thorn:I want it because like I collect,

26:53Dan Matuszewski:like I collect crypto memorabilia. Like I have like every hardware wallet I think that's ever been like created. Like I have like a bunch of, I have Dan held like held node. I have like random all kinds of like great stuff. and I like want an orb and I can't get one.

27:07Alex Thorn:It's pretty iconic and like you can imagine if, you know, I'd like to see a cyber truck with an orb mounted on like the front hood like driving around. Yeah, just like

27:15Dan Matuszewski:just zapping people as it goes by like getting their information.

27:19Alex Thorn:Yeah.

27:19Dan Matuszewski:You pull up to like your kid's school and you just throw it in the back. Yeah.

27:24Alex Thorn:What are you doing, sir? You're like nothing. Just providing secure identification services to the populace. I swear it's not weird.

27:31Dan Matuszewski:My conclusion is they don't exist.

27:34Alex Thorn:I think there was one actually right I didn't actually see with my my own eyes but I recall people saying in the oculus in New York so the train station that's below the World Trade Center that they had one there at one point and they were doing the thing it's like Sasquatch like

27:50Dan Matuszewski:people claim to see it all the time but it's like a blurry photo of one in the bag well this is um

27:57Alex Thorn:such an interesting time in crypto markets as they frankly always are um but we're at somewhat of a possible pivot point in a number of ways right you've got the the suit corners in the rwas

28:09Dan Matuszewski:yeah go ahead it was boring over the summer it wasn't like it was yeah from like june like low

28:15Alex Thorn:to you know two weeks ago it was low volatility nothing to nothing moving right oh yeah it was

28:22Dan Matuszewski:like i think it was like i remember looking and it was like 25 million dollars volume for like coinbase over like a sunday or something like that for bitcoin i was like this is dark yeah i mean that's extreme it was something very low like that the volumes were low and um what do

28:38Alex Thorn:you make of the you know uplift and we'll use bitcoin price as the proxy like you know low 60s basically we ripped from the 200 week to the almost you know to the 50 week and cover that

28:48Dan Matuszewski:whole spread yeah i think people got really short um i because so there was the whole sailor saga which people love to work themselves up over um that he was gonna unwind it was over he'd like run out of like mousetraps um like he couldn't get out which ended up being wrong like he was able to like raise a ton of money somehow there's insatiable demand for like the common and that thing and like was able to get the stretch product close to peg or almost that peg i don't even know where it is right now but very close to it like put a ton of that back built a huge cash buffer like he retired a bunch of the converts early which was kind of kicked this whole thing off um but that whole panic ensued and there was like a material increase in oi um and that was obviously just people getting short and then it just blew out so like now we're sort of on the upswing i it's unclear like there's like a whole bigger move behind this uh it's interesting because like the robin hood meme sort of cycle mania that's going like that's that's it's got a lot of people like coming out of the woodwork there's like pockets of like interest in it um we got to see how it's sustained it is but things are moving a little bit like hype hit an all-time high like that was like material like some of the like revenue generating tokens have gotten some like real inflows like trump obviously did his presser like was talking it up but um like that stuff's cheap but anyway there's interest like flying around it's not like a full-fledged like bull market but people are hunting stuff around again um and like sailor also is in a great spot now So hopefully he continues to stay there.

30:17Dan Matuszewski:And I think these other gaps have gotten some inflows and sort of come back to pegs. So it's healthier, for sure.

30:24Alex Thorn:It feels like, you know, I've been calling for the weekly close above the 50-week moving average on Bitcoin to, like, declare it bear market, not necessarily bear market over, but bottom is in. If you had to get, so technically, of course, that hasn't happened yet. So that's the level that I've called out to draw a line in the sand. We haven't hit it, but do you think the bottom in Bitcoin is in?

30:48Dan Matuszewski:If the equity market stays robust, yes. I think the bigger issue is if there's any material weakness in equities, it'll take us lower. And I don't know anything about where that's going. I just think that's the bigger driver right now. I mean, there's a lot of tumultuous stuff going on. You still have a conflict in the Middle East. You still have pretty persistently high inflation. You still have equities that are roaring higher because there's like a massive boom in this ai build out and like that's like drawing a ton of money into the market but like if that all stays good or gets better like yeah like i think we're at the bottom there but if it were to like get nasty like no like we're not gonna yeah we're just gonna get dragged with everything else we don't have that much to give

31:31Alex Thorn:to get back to the local bottom if there is like an equity blowout or something so you're right you know if you're at you know 120 it's like now the 58 bottom was probably you know like a catastrophic, you know, risk off rally probably doesn't bring you all the way back down is my view. But, you know, in the 70s, we're still just a hop, skip and a jump above the local bottom. You know, we're not that far. Right.

31:54Dan Matuszewski:I mean, NASDAQ down 6%, like we're probably right there.

31:58Alex Thorn:Yeah, I would think. It's been so interesting to you. You talk about Robinhood and Robinhood chain, which, you know, I guess really launched in earnest only about a month ago, a month and a half ago i saw that it's dramatically outpacing base for volumes on chain also there's a lot of stock token trading happening there now um what do you this is one of the key metas i feel like a couple of the others are like the social trading fomo and pump still quite a you know decent a lot of volume here um and then all the rwa kind of stable coin stuff you know also still percolating you know the banks building stuff and whatnot outside of the bitcoin and ether story what do you make of Robinhood's formal entrance here?

32:43Dan Matuszewski:Yeah. Robinhood's got a great position because they have, obviously, their existing equities business and the rest of their brokerage sort of business. So they're uniquely in a great spot to drag this stuff in and have a user base already that can do it. I think it's great. I think the fact of the matter is we're going to have equities on chain. It's more robust. I mean, if you look at it, it's like a line straight up. It's growing like pretty rapidly there's we're in a weird spot it's almost like remember when circle launched usdc and there was there was really like four that got launched at the same time it was like uh gusd pax usd or whatever it was um usdc and then the what was the fourth one the oh h usd which was like kind of like the combo of like well there was like four at once and like you had the market was trying to figure out like which one they really wanted um and it was like consolidating you kind of have that with the rwas right now where there's like you've got wrapped versions of like nvidia trading in like five different like ways and they're not like fungible and like we're gonna have to like figure out what's gonna be the winner um robin hood has like a really good ability to probably set that um and they might just be exerting that like power over it um i'm skeptical about robin hood of the chain longer term but i think this is like a good way for them to push into it i just don't know if they like maybe they do want to just be like running like an l2 like forever but i think they have a much better business of being like the tokenizer and just like pushing the assets out into the ecosystem and like running it all on their own l2 is like not the optimal path long term that's my guess unless they wanted to run a native token but i don't think they want to be doing that either yeah that makes sense and and

34:27Alex Thorn:And, you know, part of me thinks, you know, if you take the base versus hood chains as interesting examples, you know, at least I know Coinbase is moving away from optimism, but basically to because Robinhood is an arbitrum roll up and optimize is an optimistic roll or op chain roll up. And they're kind of like two coming at a similar product with the two L2s, but from opposite locations like Coinbase wants to bring with their tokenized stocks, which they've launched now. They want to like bring stocks to crypto natives that are their clients, whereas Robinhood's bringing cryptos and crypto tech to their stock clients.

35:04Alex Thorn:It feels like Robinhood's, you know, it feels a little easier to get the stock traders to trade tokens on a chain maybe the other way around.

35:14Dan Matuszewski:Yeah, I mean, think about, like, Coinbase's experience is significantly worse than Robinhood because they've had to grow up in a world where they're constantly dealing with bearer assets and the security and KYC and compliance, like, hey, are just so high, the experience, like, sucks. Like, everybody says this. And, like, maybe they'll be able to get on par, but, like, Robinhood gets to approach it from the equity side where everything's gated, and it's a lot easier to just sort of, move people in and out and move funds and the experience is a lot better and it's like obviously like a lot bigger and now they can just sort of like move into crypto so it's a little bit easier for them but like i don't know anybody who's suddenly like oh i want to go trade equities on coinbase but i know people that like i'll go trade crypto on robin hood right i think that's an easier sort of and we've seen that right like i mean the market performance of the two companies is

36:05Alex Thorn:graphically different yeah that's true and um you know we mentioned by the way you said that hype had been making new all-time highs. You know, and the president, it was sort of on the back of the Innovation Advisory Council at CFTC that they had that meeting at the White House two weeks ago or so. The president said that he's looking forward to hyperliquid coming on shore in a fully legal and compliant way. It's a paraphrase, but it's pretty close. What do you think that means? Like, what do we, if they do, like, what would that look like, you think, for hyperliquid?

36:38Dan Matuszewski:Isn't it going through Kraken? then this isn't already happening.

36:40Alex Thorn:I saw there's a there's early yeah I don't know I can't confirm the story something like they may be working with Kraken to do that but would that be like putting

36:48Dan Matuszewski:you can just trade you just trade hyperliquid pups through a Kraken account that's what I guess it would look like.

36:54Alex Thorn:Yeah so you're like KYC'd through Kraken but like it touches the existing like HIP3 liquidity or something like that like a front end for I. Yeah.

37:02Dan Matuszewski:Exactly. It's just the front end same way you trade it through like Phantom you're just doing it through a KYC'd account I mean it's like bullshit right like I mean like hyperliquid exists for the U.S. already in your VPN. Like it's not like this is like a this is just like a this is like Binance U.S. existing where it's like oh like we put the U.S. people here but it's like

37:19Alex Thorn:yeah well I mean I think because it only it only works for hype if hyperliquid if they can if the KYC front end access can get to the actual global liquidity right it has to be siloed liquidity that's probably not a winner

37:33Dan Matuszewski:no it won't be it won't be they're gonna they're gonna push it to the main yeah it's all gonna be the same shared order book

37:38Alex Thorn:And like stock tokens, you know, the ones that are like, whether they're wrappers or, you know, what we did with our native token, like native ish, native stock token issuer sponsored one. Like those are kind of like spot. Like, do you think that like people, if you got like stock perps on chain, like hype, because like perps are doing all of this volume, so much more volume than the sort of spot stock tokens. Like, is there space for stock tokens versus stock perps?

38:05Dan Matuszewski:Yeah, definitely. Right. So I think the two different markets, like there's people who want to speculate on the price and there's people that like want to like own the asset. Right. And I think we haven't really moved into the people that want to own the asset like a ton. Think about it like this. So why is Tether so big? Like Tether's so big because there's demand for dollars internationally. Right. Then there's specifically demand for dollars for people in jurisdictions that can't natively hold dollars for like whatever reason. Right. Like they can't legally like have like US banking. There's like heavy restrictions on currency, whatever.

38:35Dan Matuszewski:but there's clearly a massive demand there right like i don't know what tether is right now but 100 billion dollars whatever the heck it is there's obviously as much demand if not more for u.s equities for people that can't like structurally hold them right like at minimum you have 100 billion dollars in tether that is really not earning any yield right like it's like a it's a poor product it's all stable coins are because they don't pay you anything they're just like a way to like not lose money in your whatever other currency but if that money is able to like hold equities like that's like a massive win right like if you can suddenly be like i don't have to own u.s dollars i can own the s &p 500 like i'm going to just switch my stable coins into that i think that's like a massive market i think that's like a gigantic opportunity i have no idea how like to even like figure out what that is but demand for like u.s equities from people that structurally can't hold them is probably gigantic it's probably trillions of dollars yeah and i think that's going to come through spot and you're going to see that i think it's going to be and it's also by the way it's a great thing for u.s companies right because you effectively get all of this like capital that has no governance right and like they are just going to agnostically like pour money into it's great it's a it's a win for everybody yeah i think it is too i think that's going to be a gigantic market yeah it's one of the things that makes me

39:56Alex Thorn:um think a lot about hood and their chain because it seems like it's a lot easier to say take profits from crypto trading or even i know there's launch pads and i think something called pawns and or there's a lot of meme coins trading on hood's chain now i mean this is this stuff's a little

40:12Dan Matuszewski:distraction it's like it's fun and it's like whatever but it's not it's not the like eye on

40:16Alex Thorn:the prize but i think you can make it from that uh venue like the robin hood chain um they they may be sort of knocking on the door of solving an interesting thing which is the overlap between the two asset classes because you could like you know trade cryptos on robin hood chain and then take profit into like equities more easily potentially i think it's quite interesting

40:37Dan Matuszewski:yeah but i think you got to think about it in terms of like the market that isn't even supplied right now and how big it is yeah that makes sense the i i read that like

40:47Alex Thorn:it's you need like a three thousand dollar minimum balance in india to even open a brokerage account

40:52Dan Matuszewski:which is just you know out of reach i know can you even trade like u.s equities like i would I assume not.

40:57Alex Thorn:Yeah. I don't know. But either way, it's hard. I think you have to be rich, basically.

41:03Dan Matuszewski:Right. But we know that there's, we know that this is sort of like proven because stable coins are so big. Yeah. That there's like clearly just like a massive demand for things that exist outside the traditional system for stable products, let alone like an investment product.

41:20Alex Thorn:Yep. You made a good point.

41:21Dan Matuszewski:The person who's going to win this is like the person who's able to like get overseas and just like on boots in the ground sell this stuff.

41:29Alex Thorn:Yeah. I think that, and that is kind of the Tether model too with their storefronts and their, you know, integration.

41:35Dan Matuszewski:It's great and it worked.

41:36Alex Thorn:Yeah. And you mentioned that as sort of an analogy as to how the multiple versions of non-fungible stock tokens might play out. The Tether, by the way, is at 183 billion and USDC is at 74 billion. That market, the stablecoin market is really like a 60-30-10 market where like one winner has more than half and, you know, Tether and USCC is 30. And then there's a tail of 10, you know, people in the 10 % bucket.

42:03Dan Matuszewski:I've coined a lot of flags. I'm so bearish, all the like long tail of like table coins. I just think it's just like, there's such a network effect with them that I just don't think people care about any of the other ones. And people always want to like talk about yield and nonsense. I just like don't think it matters.

42:17Alex Thorn:Yeah. I think there's like on-chain use cases, but like those aren't nearly as big as, you know, the banks and the trade system.

42:24Dan Matuszewski:The only one that's gotten any big is like USDE, but that's not really a stablecoin. That's like a trade that's packaged.

42:29Alex Thorn:Yeah, it's more, it's like a, it's just a great product.

42:32Dan Matuszewski:It's just like not really a stablecoin. It's just like they took a yield product and they call it a stablecoin.

42:36Alex Thorn:True. Yeah, they make the share in the fund kind of traded a dollar basically. You know, one of the big debates in stock tokens is the form that they should take. And you've got like X stocks and Ando and Robinhood and Coinbase all doing this like wrapper model where it's like you know you buy a stock or you buy the token and they use either a broker or something to buy the underlying stock and they put it in SPV and then the token itself is like a share in the SPV and then you face the SPV as the token holder which is really good for scale right like it's good for scale because they don't need like issuer approval for example but it's also very clearly some form of regulated activity what they're doing it's kind of like running like a single asset ETF, which, you know, you wouldn't.

43:21Alex Thorn:So the questions at the SEC have been, you know, there's this innovation exemption pending for how to do these things legally in America for Americans. And, you know, the other sort of wing of the bird is the issuer sponsored, where the issuer itself uses a transfer agent and like either issues it or provides for the conversion. and I feel one of the big arguments against the rapper ones is sort of what you were saying of like well do I want like NVDA C? Do I want NVDA like R? Like which version of it? And my view is like the market will probably even if those are allowed to widely proliferate and they are widely proliferating now offshore that it'll probably still be okay.

44:04Alex Thorn:The market will converge on like a 60 30 10 type of you know model.

44:08Dan Matuszewski:Do you know who should? I don't know if they will but who should do it? the winner should just be the stable coin issuer. They should just take their model and just be like, this is dollars. Now this is like equities. And they should just like get in the tokenization of those things again. Like they, they already have the distribution and the branding.

44:24Alex Thorn:Yeah. I mean, and those, those wrapper models are kind of just stable coins of stocks, basically, you know,

44:31Dan Matuszewski:right.

44:31Alex Thorn:Keep it preserved.

44:32Dan Matuszewski:It's really a similar business end of day.

44:33Alex Thorn:Yeah. I think that'll be really interesting to see. You know, I wanted to talk about another one of my favorite topics, Dan proof of reserves.

44:40Dan Matuszewski:it's still going great it's going great yeah i forgot about it um wy wyoming uh just announced

44:48Alex Thorn:today that it's adopting chain link to help improve proof of reserves or something as a for its own stable coin but there have been a bunch of backsliding i saw darabit is done with its proof of reserves i guess because they're probably getting folded into coin bases now right um it discontinued it i think phobia long ago discontinued it um crypto.com has discontinued it so it seems to me like the ones that are still doing it kraken still doing a really good one um the exchanges that are still the first one yeah yeah i don't know if it's no but jed the one who did it i mean it's it's one of the best ones um if we start scorecarding them but doesn't it seem like the best exchanges are still doing it and the less i'll say less best exchanges are the ones not doing it and does that kind of um like undermine my whole point about wanting it i just don't even keep track of it i think that's like and i don't think most people do yeah you just think it was sort of like window dressing it didn't quite matter it's like some we

45:53Dan Matuszewski:have a risk event everybody talks about it and then like we get over it and then they forget about it it's just like we've been doing this in perpetuate it is from mount gox this has been like a thing yeah and we just we're doomed to do it forever but i guess like you have but stuff like hyperliquid is is verifiable always right so like you have like sort of that constant proof

46:16Alex Thorn:of reserve model for like the full dexes yeah some some of the like newer products and protocols have adopted sort of principles of proofs of reserve in their designs yeah right exactly

46:26Dan Matuszewski:indirectly.

46:27Alex Thorn:This isn't really POR, but Tether also completed its first financial audit.

46:33Dan Matuszewski:People said it couldn't be done.

46:34Alex Thorn:I know. And I remember, I think you were really the first one talking with Matt Walsh on Castle Island's podcast. Went in 2020, maybe? Oh my God, 2019.

46:44Dan Matuszewski:No, no, I just flipped circle. Yeah. Yeah. So you were one of the first ones to tell the market that

46:49Alex Thorn:indeed you had created and redeemed a bunch of Tether and it was indeed possible. And so I remember

46:56Dan Matuszewski:I remember it dearly.

46:58Alex Thorn:This was like one of your sort of breakout like public moments because at the time Bitfinext and the hated Mora et al. academic paper that has been widely disproven since.

47:10Dan Matuszewski:Oh, the Texas guy, right?

47:11Alex Thorn:Yes, they were all alleging that Tether was printing money out of thin air and using the fake stablecoin supply to buy Bitcoin and prop up the Bitcoin price. And I think you were the first person to come out and say that actually, like, you had created and redeemed for real money many times. So what's your reaction now to this audit?

47:30Dan Matuszewski:To be fair, I was kind of just getting the opinion that, like, it was never going to happen because, like, Tether didn't care anymore. like i think it was the market wasn't demanding it really not really exactly like there was like no like yeah people were chirping but like nobody really cared right so like there was no impetus to like have to get it done but i do think paulo was like as a source of pride was like i have to eventually get this done so no yeah i i'm not surprised it probably could have been done a long time ago just nobody wanted to take the heat right nobody wanted to be you didn't want to be the person stamping that thing right we're just like a it's a it's a bad business bet yeah i think

48:11Alex Thorn:um yeah that's totally right and and they had had like uh what their attestations and whatever else but it was never um at this level i think to me this is sort of also a sign of the times because they they're going to have usat uh apparently right that bo hines is running there which is

48:29Dan Matuszewski:That seems like Binance US, where it's to say, who is this for? Is this product just to tell regulators you have it? I don't want to see the market.

48:38Alex Thorn:Yeah, because if it can't convert and stand on the shoulders of the Tether USDT supply, then it's the pitfall we were talking about with Hyperliquid. Also, if it can't connect to Hyperliquid's underlying liquidity, it's like Binance US.

48:53Dan Matuszewski:Right, and I can use Tether. I'm a US person. like what is like why do I need this other together

49:00Alex Thorn:yeah right what am I getting

49:02Dan Matuszewski:that I'm not currently

49:03Alex Thorn:well and I think yeah under the Genius Act US regulated I forget what they call them in the Genius Act but like basically like VASPs right digital asset service exchanges they have like a three year period where they can just keep offering all including non genius compliance stables but then they would have to I believe switch off those without the who's they who switches off like crypto exchanges in the u.s basically service providers i believe so like coinbells can't take a usdt deposit i think at some point now but then you could easily imagine uh like otc firms that are your principal traders that easily just swap between usat and usdt to facilitate it make it easy um so it's not like a hard barrier the statutory barrier is if you don't have a genius act compliance i don't know stamp license whatever we call it you can't be used for interbank settlement so it's basically like the banking system couldn't use tether um they would use that is that really like a problem for tether i don't think so to your point yeah right they've been experts at onboarding you know the global population to dollars not to serving americans so it seems like they're still fine i do you think um what about the chain wars you know Ethereum, Solana, Monad.

50:22Alex Thorn:Oh my God. What's your view right now on the L1 wars?

50:25Dan Matuszewski:That's where it still feels like a bear market, right? There's just not enough incremental inflow of investment to satiate everybody. And it's just like, that's causing the pain. Yeah. Still, in my opinion. I think that makes sense. There's been almost no real funds raised. You saw a handful, but they're like multi-purpose funds now. like the crypto pure like bet is just soured so hard over the last three four years that it's just like everybody's like fighting for that incremental dollar so it's hard it's hard it is very hard to

50:59Alex Thorn:be a new token out there the last two years yeah and and you had that sort of solana uh not necessarily on metrics per se but sucking air out of ethereum's went uh sales over the last couple

51:13Dan Matuszewski:gears but that's come down a bit but everybody like everything's still 50 percent off the highs of 21 like you know yeah like we popped up a bit like the dad's like but it's like we have not had material enough inflows to like hit high and you can make the argument we just like flew way too high in 21 which is fair and we did but like the subsequent level of investment have not kept pace

51:33Alex Thorn:yeah i mean um ethereum it grazed an all-time high in 25 if you count the staking yield it hit it yeah so if you like adjust it in yeah like in a you know what do they call it in stocks like

51:48Dan Matuszewski:a total value uh it's been adjusted yes yeah but if we also adjusted it for inflation it didn't get close actually i believe well but there appeared to declation oh you're saying it's a dollar no

51:59Alex Thorn:yeah no like for the dollar if we readjust the dollar and if you compare it to like equity that

52:03Dan Matuszewski:got smoked so it's like yeah it's it's just been tough and i think like look like you do this for like let's say you joined in 2020 or 2021 or like you basically have like made no money like operating in the majors and like i don't know you've seen a giant bull market in equities you've seen like people randomly stumble into an ai company and make a fortune like it's tough right like that eats it people you see your peers raising huge amounts of money like that's gotta if you're like a crypto fund operator i'd be like just driving you fucking mad yeah you throw like

52:38Alex Thorn:data centers ai like robots into your thesis and all of a sudden the you know atms open again

52:46Dan Matuszewski:so yeah you see the i don't know it's tough so i think that's like where you still see like the

52:51Alex Thorn:bear market sort of like so is that like you know i've thought about this a lot and you know you have like i don't know metas like you know the ico and then nfts and then uh um you know web 3 like we're talking about the orb and and like id was thought maybe would be a a big run then of course it sort of like degrades into like the meme coin trade and now you've got like the the launchpad meme coin era right where it's like you know the meme coins used to be like a doge fork now it's like a coin that we launched like 10 minutes ago like do you think that we need those sort of classic crypto models to come back like the ico to reinvigorate or are we relying here on rwa stock tokens things like that to reinvigorate chain usage i did the rwa stuff just got so much

53:40Dan Matuszewski:momentum and it's just like such a clear like possible like path i just i don't i don't see any world that doesn't happen like there's going to be fighting because it's like touches a lot of regulatory points but like it's just so inevitable i really think that's like where it's all going yeah i think that's going to have like a huge boom for all the l1s yeah they had um i think

54:01Alex Thorn:it's mostly on ethereum right ultimately today or lts you know i it's unknown right like it's so small compared to how big it's going to get i just think we're if you like flash over two years

54:13Dan Matuszewski:maybe we'll do a podcast in two years you can check it big me my words like i will have a ton of this like stuff mostly equities but like even moving on to fixed income products like on chain and there's going to be a whole bunch of like different like product built to like service that stuff so you can like functionally operate on chain outside of a brokerage if you want to and like most people won't especially US people like it won't make a lot of sense and be better but a huge chunk of the population it will and they'll be operating there and I think that's going to like pull all the communications back into all these like because everybody's always like someone blocked space we don't need all this it's like listen like this stuff can get bigger like I know you've all just like become so pessimistic about everything but like there is a world that just like get back there

54:56Alex Thorn:yeah i think that makes sense like you know one of the things i wonder about is that integration between the two there's all these rules you know like for example like trade reporting right like when you sell stock on fidelity they like send the trade into the trade reporting facility the trf as well as like finra blue sheets and all this other stuff right but like a lot of that stuff the blockchain it can be the you know system of record the order record right yeah right about but it seems like a meaningful, you know, improvement when you think about it that way. Another thing I wanted to ask you, Dan, you know, you, you have been trading this market for a long time.

55:34Alex Thorn:And so do you think, you know, I'm thinking back to like the 2017 ICO period, right? You were at circle then, right? Oh yeah.

55:42Dan Matuszewski:Yeah.

55:42Alex Thorn:And I mean, there were so many fun ones and humorous, tragic, exciting stories around that period. The SEC just released a proposed regulation crypto assets, RegCrypto. It's formal proposed rulemaking, but it creates a new regulated way for a project or an issuer to issue non-security crypto assets. It's effectively a legalized, enhanced version of ICO. So one of the things, you know, not I'm excited about this because one, the ICO was like one of the first, I think, really good ideas that crypto had, you know, after Bitcoin of, you know, you could raise funds in a more egalitarian manner. You could, you know, distribute your in the case of like a new blockchain, your your blockchain assets more widely, like where Satoshi just mined them.

56:36Alex Thorn:and ETH had a pre-mine allocation, like the ICO had like a more democratic concept, could disintermediate VCs. Obviously, like there was very, like no regulation and a lot of that benefit accrued solely to the token issuers at the expense of, you know, retail or whoever, in some cases they were outright scams or just failures. Do you think though that if this thing can be implemented in a way that is enticing to crypto, that we could see a resurgence, you know, of everything from good new projects, but also to like Long Island blockchain company?

57:07Dan Matuszewski:Yeah, it'll get, it'll get, it'll get stupid again. The problem is right now there's just like, like people are so negative on tokens that like nobody wants to do it because it's like just like a net negative to issue it. But once that changes and you only need a couple of them to like do all right, like change that sort of thing, then it's like everyone starts doing it and it just like snowballs again. So like, yeah, I think that's going to happen. But like right now people are just so negative on tokens. Yeah. But like this is not on, this is not like 2019 was like this, right? Like everyone was like, nobody's ever going to issue a token again.

57:33Dan Matuszewski:It's over. and then like you changed in a dollar. So like nothing's permanent with this stuff and it goes in waves.

57:39Alex Thorn:Yeah. Do you see any catalysts in the near term here that are not like macro, you know, crypto, macro equities related that could take us higher or lower like in crypto?

57:50Dan Matuszewski:I still think it's going to be the RWA stuff pulling in. I like really think that's going to be big. I think that's like the single biggest thing going on. I think we got some headache because you've got to like figure out the right form and somebody's got to get inertia and some of it's got to like get like it going but like once it does it's just going to take off

58:07Alex Thorn:are you guys doing investing on this theme a lot or uh you know what would have been your focuses

58:12Dan Matuszewski:lately it so i mean it's i guess it's kind of hard on like an investment side like a lot of these things are like you can like you can just like buy coinbase or robin hood right like they like exist or circle if you think they're going to like get in the business um i mean we own a position in ando like that's like sort of the one token bet that's like out there on it um but Otherwise, we're more interested in the second order effect. We think that's where you'll be able to crypto-natively make more money. Where these things live, what do they do to fees, what products actually get used on top.

58:43Dan Matuszewski:Is it become, this is a boom for Aave because suddenly everyone has tokenized equities that they're lending out in a sec lending business builds. That's a much more material sort of thing. We're looking at all that stuff where people want to borrow against it. There'll be secondary effects of stuff I think comes out. backpack in particular we're not an investor but they seem to be like tackling this like great and like have like a big lead on it so yeah like that's like a possible i think they have a token it's unclear like if that's like how you want to buy it but um so there's ways but yeah that's i guess like how we're in it now um and you know anything that you're thinking about

59:18Alex Thorn:in uh crypto policy or politics i know you've been involved in some packs in the past you know a lot has changed in the last two years.

59:26Dan Matuszewski:It hasn't. It hasn't, though. Like, I mean, I'd like to see the Clarity Act get through. Do you guys, and what's your guys?

59:33Alex Thorn:I think it's a pretty low chance.

59:35Dan Matuszewski:Your guy was there, right? Wasn't like the Galaxy guy in running the thing?

59:37Alex Thorn:Tyler Williams, yes.

59:39Dan Matuszewski:Yeah.

59:39Alex Thorn:Tyler was the senior counselor to the Treasury Secretary for Digital Assets. Yes, he just left after I guess 18 months or so, which is, you know, I would just say that's a normal time period for someone to work and the government and then get back out into the private sector. Like, you know, government's a tough job. I think the odds are pretty low here now, to be honest. I think I've publicly said it was 10 % odds now because it didn't get done before the August recess. There's still a chance. I'm well aware of ongoing negotiations and back-channeling, but the problem is people are like, oh, you got this session in September and October.

1:00:15Alex Thorn:And I'm like, sir, they come back into session on Tuesday, September 15th, And I think they leave the first week in October. So you're talking about two and a half weeks, basically. And who knows, they did just cut a deal to keep the government open through the election. So that session in September will not be bogged down by a government shutdown, thankfully. Yep, thankfully. So, but yeah, I think that to me, clarity now is pretty well priced. I think Polly and Calci have it at like 16, 17 % by end of the year, which I think is, you know, I'm a little bit even more pessimistic than that, but call it like price to perfection.

1:00:54Alex Thorn:So I like this because I like that it is that the market is aware that the odds are low because it feels to me like the downside impact of, you know, a failed vote, if that's what happens or no vote is relatively capped and so you're looking at like a possible huge upside catalyst with like minimal downside if nothing happens because the market's kind of wise to the fact that it's unlikely.

1:01:14Dan Matuszewski:Yeah. It makes sense.

1:01:15Alex Thorn:I'd like to see it though.

1:01:17Dan Matuszewski:I would. Let's see something.

1:01:18Alex Thorn:Well, what are your old OG trade? You've been trading this market. What are your old counterparties?

1:01:24Dan Matuszewski:Everybody's gone, dude. There's nobody left. It really is. People have moved on.

1:01:29Alex Thorn:Yeah, I'm thinking about like DGN Spartan and Flood and Kobe and Lumdar. Where are all those guys?

1:01:38Dan Matuszewski:What are your thoughts on Kobe going

1:01:40Alex Thorn:to Coinbase running product there now?

1:01:43Dan Matuszewski:I think it's good for Coinbase. Coinbase, I think they need a change in management. The fact that the stock has been so bad over so long and they're getting their lunch eaten in multiple areas. Circle shouldn't exist. I'm happy it does. Coinbase shouldn't have just taken that entire business. The fact they didn't is is wild to me like things like that like they're letting robin hood just run laps around them

1:02:08Alex Thorn:yeah it's been it's a fast the coin hood chart is a fascinating one to look at the uh the pair trade there um they're similar but like opposite in various ways which is really quite and yeah i mean hood has had it been on a run um you know or at least you know was um well dan i really appreciate your time as always, sir. And, um, you know, until next time I'll have you on again. I always like hearing your thoughts. Thank you so much.

1:02:34Dan Matuszewski:All right.

1:02:41Alex Thorn:Thank you for listening to galaxy brains, the weekly podcast from galaxy research. I'm Alex Thorne head of firm wide research at galaxy. Follow me on X at intangible coins, follow galaxy research on X at GLXY research, Read our written reports at galaxy.com slash research. And don't forget, if you like Galaxy Brands, to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts, and more. We'll see you next time.