Raoul Pal: This Is How the Rich Get Richer in Crypto ft. Kevin Follonier (Round 3)

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1:55They really do everything. These guys are true OGs in the space, and they're good friends of mind too. So please go and check out Bitwise. They're really excellent. Go to bitwiseinvestments.com and see all that they've got to offer. That's bitwiseinvestments.com or just email them at james at bitwiseinvestments.com and let them know that Raoul sent you. Anyway, there's a million ways to access crypto. Explore how you can access it best with Bitwise. And remember, carefully consider the extreme risks associated with crypto before investing. Anyway, thanks so much. Hi, everyone. I'm Raoul Pal, the CEO and co-founder of Real Vision.

2:31Here at Real Vision, we're committed to give you the best knowledge, tools, and network to help you succeed in your financial future. If you're enjoying this podcast, please take a moment to give it a five-star rating. It truly helps us continue to bring top-tier content. Thank you so much. It's fucking terrifying for me. Will I get it right? Will I end up with egg on my face? Will everybody hate me again? I don't know. It's pretty miserable doing that, but I know it's the right path. Because when you understand that, you realize how powerful it is to help people. Because if I'm right, that we're going from 3 trillion to 100 trillion.

3:07We're only 3 % there. Raoul Pal is the co-founder and CEO of Real Vision, host of The Journeyman Podcast, and a globally recognized macro investor. He is known for breaking down complex financial trends and shaping the conversation around global economics and digital assets. How to get rich crypto without getting lucky and without falling for all the scams it's the same advice to everybody comes into the space just buy bitcoin there's no such thing as free money bitcoin on average has like 150 returns since 2012 but then once you start seeing the rest of crypto 100 but that bloke just made 100x i'm all in on farm coin no ai is becoming super super tangible one thing i do know is crypto has a superpower behavioral incentives of tokens the crazy thing is ai is doing better of the 99 % of all analysts.

3:53For me, if it looks like a duck, smells like a duck, quacks like a duck, it's a duck. These things have some elements of sentience. He's so cooked now that the crazy meme coin meta is behind us. I'm massively overweight, Sui. Percentage is one. Over 70%. People lose their fucking minds. They sell their houses and buy crypto. This space is so full of risks so you have to be paranoid at all moments. Tell me something about your life that I can take with me for the next half of my life. Get out of your comfort zone. Don't do something that's different. I need to find a girlfriend. You've got to stop wearing that T-shirt for starters.

4:24Hi, Raoul here. Listen, I think we've got until 2030 before the economic singularity arrives. Now, it might not be the exact date, but it's around then. So we have about six years to figure out how to unfuck our future. I've put together a report to help you called Prepare for 2030. It's going to help you take the first steps in that journey to make sure you're secure past 2030. So just click on the link below and start your journey now.

5:18Wences Caceres, he was like OG Silicon Valley. He bought$2 million of Bitcoin at three bucks. And he's like, I asked him how much he works now. And he said, an hour a day. He's still doing the Bitcoin vault example thing. Yeah. But he doesn't work on it. But the point being is like, it's very difficult to build any business, even a SaaS amazing takeoff product that does the same returns as just owning Bitcoin. Yeah. I have a friend of mine yesterday who we do business together. I have a data analytics company since 10 years, not in crypto. And he's been bringing me a lot of business because they do ERPs and this data collection systems that are underneath the data analytics.

6:01So we're very complimentary. And he's buying back the shares of one of the co-founders because they have issues in the business. And he came and he asked me for a loan. He was like, hey, do you have some, I'm just going to my friends to get some cash so I can buy back, I can buy these shares, right? and I mean I know it's going to be good for business because it's he's less motivated because of these co-founder issues right but I'm thinking in my mind I mean I'm like I need to help him because he helped me when I was in tough moments so I'll do it but this USDC I mean Swiss franc in that case could be in bitcoin fuck right I know he's like he's like and you choose the interest rate you want I'm like okay let's do it zero interest because anyway like versus bitcoin it's a bad bet it's just throwing money away i know it's like the nasdaq is down 99.97 since 2012 against bitcoin and tech stocks have been the next best performing asset in the world so what do we do you know just try and get as much cash flow as possible and stick it into crypto yeah absolutely that's what i'm doing now with the with the media company 60 % is going into Bitcoin.

7:09The rest is in USDC. And then I have my personal portfolio for like all the more risky stuff. Yeah. Welcome back. It's good to be back. Third country. Third country. You're doing, we're meeting in more places than I met a woman in my life. Yeah, we're not dating yet. No, we're not. Not yet. As you said, you asked before, what is this caste thing? Because I think the rest, you're kind of familiar with them. yeah pudgy penguins always there always there yeah uh cast is how i bought your coffee today so this is uh on solana it's a very low cheap sponsorship it's actually it's actually an amazing sponsorship because i use it all the time what is it so you spend your stable coins right if you want to leave if for example the again what are these stable coin things i don't own any stable coins i've never owned any so in the business in the business again uh everything is paid in stable coins right so i have this i have this data company since 10 years normal world cash right yeah takes days or weeks you're paid late and then you have crypto right and if you're a crypto business you can be paid in stable coins and if you're paying stable coins that's why people say it's a killer app right it you paid so fast it's incredible but then the next step is how do i not off-ramp this money to spend it you can use a credit card or debit card like cast is an application the only function today is spending your stable coins yeah and it just works that's it it's beautiful it's life-changing actually it's so simple but it's so life-changing the off-ramp is so hard it's absolutely in the cayman islands none of the banks will accept it so all the crypts i've ever bought i've never been able to sell because i can't take it out yeah know let's start with the basics yeah for people who might be new to the man i have in front of me let's say i'm your uber driver if you have to explain me what it is you do and why you do it that's really hard i don't what would you say well when people say what do you do i'm like i'm sort of in finance but i'm also media and i'm also in crypto um do you say crypto yeah because now a daze i feel it's still kind of it's still a bit dirty still but i like it that way i like it dirty um will do and so uh yeah it's kind of like finance media crypto um and you kind of see where their interest lies but if it's an uber driver it's usually crypto they don't give me shit about the rest do you try to go a bit deeper so they ask more questions or do you actually like people to just not ask too much questions.

9:52We can kind of move on. I don't mind. If they don't know you. Have you ever wanted to trade Bitcoin, but haven't dared try? With Plus 500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus 500 gives you access to a wide range of instruments, S &P 500, NASDAQ, gas, and much more.

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10:56If they don't know me, they tend not to ask the questions because they're really, they're topics that scare people. Finance, media. Oh, does that mean you have a podcast or do you do whatever? And then if they don't like crypto or don't know about it, it's daunting. So they don't ask. Another podcast. Another podcaster. Yes. And in crypto. It's probably the worst combo you can ever find for people who don't understand or don't know crypto. That's right. I mean, there's enough bloody crypto podcasts, that's for sure. There's enough bloody podcasts, that's for sure. Yeah. The world was freaking out a few weeks ago.

11:31Oh my God, tariffs, tariffs, end of the world. Nasdaq was down bad. Crypto was down bad after most of the coins had been down only mod for two months already. So it just happened after. At some point, that's always with crypto. You feel like this should be over. this should be over and then you have this big news that destroys thing another 90 when it's already down 90 right for all our for all our beloved shit coins so there's all this madness and this panic happening and then there is Raul getting pissed on live streams and loathing at everyone why because I've tried to explain to people this space is long term the hardest thing to do is not lose your shit every newbie who comes in loses their shit you tell them hey listen because of the tightening of financial conditions last year the market's going to start weak they're like yeah yeah yeah when it happens it's like oh my god what's happening like i told you the market should be weak because the financial conditions another week later what's going on nothing the market's going to be tight you know and then they start assigning narratives to it and everyone And that's why I try and be flippant on the podcast to get people to understand that what they're doing is building narratives to describe why the price action is.

12:50And it may not be the accurate narrative. So it's like suddenly they go from, oh, my God, we're all going to be rich to Trump's ruined everything. Tariffs are going to destroy the world. The world's going to go into recession. This is the worst thing ever. Maybe it's not that. Maybe it's as simple as the flow of liquidity into markets. And over time, crypto gets adoption. so that's why i try and just like lighten it up because i know we've talked about this before all of our life savings are in this right it matters massively um and i get that so i'm not flippant about that what i'm trying to do is get people to relax and understand there are ways to do this that don't fuck this up thesis that we talked about on this podcast before just ways of of not worrying about it and so then it's been interesting to do that drinks with ral show that's kind of become cult viewing now because people love it because i insult everybody which is funny because if you think of the average audience age they're generally in their 30s they're generally learning about things like wine and stuff like that and they they like to be told that they're philistines and that they need to get more classy why do you think people like to be insulted i don't know but they come to me all the time so that's the best show that they know of because I just insult everybody.

14:08I don't know. But it's because it's genuine and it's fun and it shows a sense of affection for the people in the community that you kind of know what they're going through and who they are and it resonates with them. They're like, yeah, I need to kind of get classy now. I'm getting old enough to think about being a bit classy. Stuff like that. And it's just fun. And also just making fun of Americans is my favourite hobby in the world. Why? I love Americans. I love America. and because they always come from the you know we're the freedom country the strongest nation in the world and so to take the piss out of them is very funny and they don't quite know how to take it but they kind of like it as well so it's just a fun thing and brits and americans always had this relationship of taking the piss out of each other like english and french have you know there's this endless through the ages fun so what you said before is i mean something we say often in crypto right price leads narrative yeah so if you guys feel uh freaking out about the market just have a glass of wine it's kind of that right it's like don't forget there is life at you know you're supposed to be living a life the whole touch grass thing is actually really serious because a on a physiological level grounding yourself but yeah i spend my entire life in barefoot nice and so um yes that is really important um and then it's the point of just move away from your screens looking at tick charts and minute charts and hourly chart they're just not going to help you everybody thinks they can be a trader because they see ansum or somebody online and they think oh i'm going to make 100x i'm going to do this i'm going to trade in trade down when the reality is the true wealth in this space true wealth in all businesses are people who just buy and hold and i know it's less sexy but it is the answer i mean i see you post about this all the time is i learned yeah i learned we talked about this like you you i think the the people who spend their entire days we call them chronically chronically online right and you're there and you're just going crazy i mean first it's like a dopamine hit every time yeah but you get dopamine burnout as well it destroys you it destroys you completely yeah uh but you kind of have to i mean you have to go through that and get kind of screwed i guess especially when you're younger and you don't really understand markets and and and media and clicks and all that stuff and you probably have to go through like oh it's so painful i hate it so much or i feel so bad mentally that hey maybe i'm gonna go and do something else right and by the way it also works better at the same time and that's that famous bell curve thing is the moron on the left the jedi master on the right and the mid curve in the middle you all have to go through that journey you know the the the the moron on the left the first person in space is like buy bitcoin and just hold it then you go through the whole justification of everything and then you build this massive macro thesis that is entirely wrong and then you're trading out of your coins and then it's like i'm going to make the money by trading the early stage stuff and i'm going to do the ai tokens and this blah blah blah and in the end you come to the other side which is just buy and hold yeah absolutely and buy and hold but like only certain coins the rest is even the ones that we think i mean there's this logic right oh it's a smaller coin there's less liquidity is going to perform better but i mean you always call that where you say if you go too far down the left the risk curve uh it's not going to work but it's actually even closer to the i don't say like the top of the curve than we think then it doesn't work anymore already yes there's too many coins there's too many coins and it's a game of attention so the more coins there are the less attention can focus on the key ones or it hyper focuses on the big ones or a narrative holds for a period of time and it doesn't hold for long in this world.

18:05So if you look at what's happened in the last three years over the bull market from the bottom of 2022 through to today, it's essentially been a Bitcoin dominance game. So just owning Bitcoin has been the best bet, except for two asset allocation shifts, basically, that have been relatively long term for a year each one was by slarner at the bottom and the other was by sui last year and those have been the big bets there's been interim bets where you've made a lot of money from some of these but they've been less persistent so they haven't captured attention for long so some of them have lasted six months but really what you're looking at is in the top 10 top 20 projects what are the ones that have persistent network adoption that are growing and provable those are better quality bets how do you find that how do you find one that is going to persist through time in this crazy game where attention is everything and usually the persistent just doesn't it's not persistent so there's two ways that look at so this is what we're talking about now is metcalfe's law that's how this price is actually um priced so metcalfe's law is how to value networks it's how Amazon has valued, Google has valued, all of these things.

19:21And what it is, is the number of active users and then the total value transacted. So are those users valuable? So the Bitcoin network has a lot of users. They don't do anything except buy and hold and trade a bit. But the value of that is a lot. We've got sovereign states buying. So there's big numbers. So that's why Bitcoin is worth more than everything else. Ethereum has a huge number of users and a massive number of applications. Now, the layer twos have confused it somewhat, but that's why it has the value that it has. So what you're looking for is projects that are seeing growing user growth and growing applications that have value.

20:04And Solana, at the bottom of the cycle, it was being priced as if it was going to go to zero, yet you could see the developer community was actually growing and the number of users was stable and then bonk was like one of the things that kind of shifted the narrative a bit and you started seeing user growth so now you've got a big proven high quality team one of the best in the business with great technology and many other projects have great tech but they got the adoption and so that started to feel like it was a decent bet so he's the same thing yeah we're releasing uh tolly from solana he's a great guy he's such a he's a sweetheart like he's such a good person it's amazing like i we spent 90 minutes talking and you can see just like so so good and he's pure yeah and he's just super smart he's a very nice person and what they built is incredible and i asked him what's the moment that was the kind of inflection point in solana great comeback right and he said i thought it would be bonk but he said it's actually the the mad lads lounge oh really and that's probably that's i didn't understand mad lads until i talked to him i was like what is this i mean it's an nft right but like why is it like but it's actually the kind of key moment where Solana, the Solana team realized, oh man, we're able to have something happening that doesn't break the network and we're getting there.

21:35And he said, that's the moment I started to have less stress. And D-Gods had disappeared from Solana, if you remember. They disappeared at the bottom, yeah. That's right. And then Mad Lads came and Bonk came. And those were two test cases. I'm always looking for test cases where somebody's doing something that hasn't been done before that proves out, and we've talked about this before, is that means what they're really doing is massively stress testing these networks. And they've proven that these networks can take it. We're going to talk about that, obviously. I'm your Uber driver still. And I ask you, you tell me, I'm Raul, I'm in crypto.

22:13I'm a crypto podcaster. God, that's the worst thing. I'm sorry. It's the worst. It's fine. It is what it is. I'm the communicator. We're all trying our best here, right? We're all trying our best. So I have the Uber driver. There is a simple but not easy question that every new person coming into crypto asks themselves. How to get rich in crypto without getting lucky and without falling for all the scams? So let me ask you, how can I build wealth in crypto without any luck involved? So simply, it's the same advice to everybody who comes into the space. Just buy Bitcoin. And dollar cost average, so buy some with your paycheck and hold it and get a feel for it.

23:00And everybody have taken down that journey. At first, they do that. You're usually giving them that advice when the market's going up. Then they have the correction. They have to learn, oh my God, I can go down 40 % as well. Am I going to lose all my money? They have to go through all of this. But that's the learning curve. And then after a while, they get used to the volatility and they become numb to it. and then you can say okay have you listened to podcasts have you done research have you been on twitter not to listen to trading stuff but just to understand what is this technology because bitcoin is just a part of the space it's the you know the digital gold is the store of value but then people want to go they want to get more speculative in the space they want to try and make money so then you start saying okay listen only use the top three or four projects yeah but that so i'm the uber driver or anyone else coming into crypto first you say bitcoin right i'm like everyone without exception will say yeah but bitcoin is a 90k or 100k if it goes to 200k i'm only up to x fuck this shit bro i want to make money right no not yet not yet because at first they're coming out of 401k world or investing world or they've got a bank account they're getting 5 % interest on their deposits, right?

24:22The Uber driver. And he's thinking, well, how do I make money? I've owned some. He might have bought a share or two or owns an ETF. So when you say, well, Bitcoin on average does like 150 % returns over the last, since 2012, they're like, holy shit. But then once you start seeing the rest of crypto, you're like, 100 %? But that bloke just made 100x. Okay, this is the danger zone now. is this is when they start you know you talk to them they're like i'm all in on fart coin you're like no no and i try and explain to them is you have to go down that learning journey do that with 10 of your portfolio because then you can fuck it up billions must fart billions must fart i saw something brilliant tweets uh i think was yesterday fart coin is ai fart coin is a meme fart coin is the coin of the cycle fart coin is rwa tokenized farts do you hold any fart coin by any chance i don't why i'm still i'm still holding on to my smoking chicken fish which was down 90 and is rallying well i've kept with that meme because look i don't have an edge in memes and as you know all you end up doing is switching from one narrative to the other at narrative peak because people are really in the trenches can see this and there's a different set of signals they look for so i don't so i you know i have that's the one meme i've got still oh and i own doge do you have faith do i still have faith in the chicken fish yes lord fishnew will be will save us will rise from the ashes um but i don't know and i don't care is the point it's fun it's fun to do and whether fuck coins your final whiffs your final bonk well it doesn't matter just don't let it be a large part of your portfolio because the probability is something like 85 that it will go to zero yeah only 85 to go to zero oh yeah something i learned with the luna thing was it never goes to zero it goes to 0.1 then to 0.01 then to you can always add a zero and it's like it's crazy it's crazy it's actually i'm laughing but when you're in the thing like it's not i'm surprised that luna didn't become a mean coin i thought it was going to happen where people just rage bought it for the for the hilarity of it that was the narrative of a bunch of like big big luna ways i knew a bunch of guys who lost like 250 million dollars actually i had the one guy on the podcast who lost they lost 3.6 billion dollars in luna they're the biggest loss with the binance labs they were a vc and i think people got so hurt maybe they say we're not gonna have fun with that but a bunch of the the guys who were putting 500k at five dollars in luna to buy the dip right they're the same ones were like i'm buying more luna because you're gonna become the best meme coin never happened it didn't ever i thought it would have been i thought that would have been the most outrageous outcome would have been it was the meme coin of the cycle but no it would have been so painful uh anyway it's been three years and you're still scarred but that's good that's important like that's how you're like okay do i even want to buy this shit like or too much of this shit or this fart i want to have some but not too much for me the main thing i learned from you and from getting very wrecked is a portfolio allocation and it sounds so boring when you're in your 20s you're having crypto you listen to these macro guys talking about portfolio allocation you're like man these guys they're so boring and then you realize like two two months ago when everything got like wrecked oh most of the okay most of my portfolio is in solana it's down 60 or 50 it's not great but i'm not bothered and i realized i was thinking about the difference between this big liquidation that happened like one two months ago and march crash 2020 because some people were making comparisons right and in march crash i was levered 2, 3x on BitMEX and lost all my crypto in the crash.

28:30And I was like, you actually, no one asks you to put yourself in these situations, but you do it because you're a fucking idiot. And then if you learn asset allocation, I mean, risk management, all these boring concepts, then it becomes like a walk in a park and you can focus on building businesses and doing something useful, right? Or you can drink wine online and insult people. But, you know, the other issue is, is that's not the only risk. This space is so full of risks. You have to be paranoid at all moments. Because before you know it, you're like, well, I'm buying and holding, so I want to get some yield.

29:06Next one I want you to ask. Yeah. And then you're on some DeFi protocol that's giving you yield and something goes wrong, goes to zero immediately. Okay. That is a classic one that happens endlessly. Or you expose your wallet and get hacked. and people don't understand wallet hygiene and how to keep things in different wallets and never expose your key wallets to things always have a step in the middle you know the custody side of stuff there's so many ways you can get hacked there's people impersonating me online or new online trying to get your wallet or impersonating coinbase online everybody's after your money um and you have to be paranoid at all points that's that's very true I would say even in life in general, when you have businesses, right, it really helps you.

29:52If you're always paranoid, you're always thinking about everything that could go wrong and you're never becoming complacent. And therefore your business, I mean, your life is more stressful. But for example, I was the opposite of that when Luna was going to the moon, right? I was like, I can go to Bali for three, four months. I'm just making money, doing nothing, doing arbitrage from my bedroom, like pressing one button, making 1.5 % every 21 days and printing money like crazy in UST, obviously. and then I got so wrecked, right? And I'm like, now I'm thinking the opposite. I'm thinking, if I'm not paranoid, I'm paranoid if I'm too chill, basically.

30:28So I become scared if I become too chill, right? And if I'm paranoid, it actually makes me feel good because I know I'm not going to, I have less chances of being... The upside will take care of itself. Yeah. So you don't need to worry about will the market go up over time? As long as the central banks keep printing money and this technology gets adopted, you'll be fine as long as you're adhering to not being too far out of the risk curve. and then you need to be paranoid about every single other part because don't forget in the end we go back to the point i made earlier everybody's life savings is in this this is the single most important thing for most people in their financial lives and there are so many ways you fuck it up by getting a little bit greedy does the six percent yield actually matter to you oh but it gives me cash flow i saw but if i'm six percent you get six percent and there's a there's a percentage chance of losing all of your money and you don't know what that percentage chance are now that's not the case with all defy or anything else but it's just that people end up doing dumb shit the yield is a very interesting point because now there's a big new narrative that a lot of very smart people even bitcoiners believe in which is bitcoin defy yeah and earning yield on your bitcoin and this bitcoin staking and restaking and all these different things right I'm actually, for this drop series that I told you about before, I'm interviewing a bunch of them.

31:45I'm always thinking about you and another dude I interviewed on the podcast a year and a half ago. It's called James Wu. He's the youngest crypto billionaire. He runs a digital finance group. He's like 30 years old. And he said, the same as you said, I'm not in crypto for yield. I'm in crypto for capital gains. Any yield that I can get is not worth the risk. I can go in bonds or whatever, try to fight to get like some yield. what do you tell all these new these people were trying to push the the yield part on the most pristine collateral i mean you were saying on one side it's pristine collateral bitcoin but you don't want to freaking lose your bitcoin like for for a yield paid in another token like i don't understand i and they're saying uh these bitcoin etfs with TratFi is going to become a big thing because Bitcoin ETF will want to have yield on their Bitcoin.

32:39What do you think about that? And you're probably talking to a bunch of these institutions. Would they want yield on their Bitcoin? Well, they've dealt with no yield on gold, but they've never owned a lot of gold because there's no yield. So they do prefer it. And, you know, that's why I think when the ETH ETF has yield, which will come, it'll be more attractive to them. how do you get the Bitcoin ETF? Well, it'll be the same as the safest yield will be this kind of borrowing fees for borrowing it. And if it's run by large institutions, you've got some backstop protection. You know, all ETFs have some sort of yield from borrowing that's often taken by the asset manager.

33:22I just don't like it because the capital gains is so big. We're not trying to eke out an extra few percent here. And, you know, even stuff like, And I don't really understand Lido, the aggregator for staking. It's huge. But what you've got is a yield curve mismatch. So you're able to have short-term access to yield, but really they have to lock it up. So managing that liquidity, and they're smart people, is complicated. And we don't know what can go wrong and when it goes wrong because we've never stressed tests at it. And that could be a weak point. And we've talked about weak points many times.

34:02It's just like Deribit, who I love, is a weak point because it was 80 % of all the option market or 90%. Now, it looks like they might get bought by Coinbase, which is much better for the market. But we need more options platforms. They need more competition to spread risk. Have you thought about other weak points? No. It's the yield enhancement stuff I don't like, without naming names. But I just don't like them. And they're all smart people and they're good people and they're all trying their best. But I think those products should be in the hands of professionals and not retail. I really do.

34:37So only institution can invest in them, you're saying? Yeah. To put their capital, because they understand the risks. Where are the counterparty risks? All of that stuff. And if they want to get the extra yield from doing that, great. You're Brevin Howard hedge fund and you've got cash and you want to reinvest that or you've got crypto holdings. That's your job. but for the average person to see 20 % yield and think this is amazing I'm going to be rich you don't know what risks you're taking I know a bunch of I mean you know a lot of very OG Bitcoiners I know a bunch of them too who made billions of dollars with being early a bunch of them think that what Saylor is doing is retarded and the others think he's a genius what do you think?

35:23I don't know it's so hard right? It's so hard. And I think it's either or. And I don't really know. What I do know is by him doing what he's doing, he's creating leverage in the system. So he's basically, via the convert, selling cheap options. They're being bought by option arbitrages and who are then laying off the option risk on exchange, whether it's against Bitcoin or whether it's against MicroStrategy's listed options themselves. But also, they're trading the NAV versus Bitcoin, which moves around. And that's feeding also within it the perps versus spot, the futures versus spot, all of the arbitrage in the system.

36:13And arbitrage uses a lot of leverage because you're making smaller returns and they use leverage to enhance the returns. It seems right now that most of the buyers of the converts are TradFi hedge funds and others. So there's people like Norgous Bank who are a sovereign wealth. They buy it for just the Bitcoin element of it. But then there's a bunch of Citadel and Millennium and 0.72 and all these giant hedge funds, and they're doing the arbitrage. These guys understand risk very well, and they're probably systemically backstopped as well. and their position's not big enough to blow them up. It's who else is going to take the risk further out the curve that blows up.

36:54This market always blows up from leverage every time. And we're seeing basically micro-strategy copycats everywhere now in every country. Yeah. There's no such thing as free money. No, for sure. And when people start calling it like the free money machine or whatever it is, it's like, no, no. And the other thing is, you know, there's a lot of ETFs that are attached to microstratches, the 2X longs that creates this convexity, but it also on the way down, microstrategy falls more. And then it starts trading at a discount to NAV. And then that blows up the arbitrage people. You know, there's easy ways to see as this thing builds and builds and builds, how it can create systemic risk in the system, in the crypto system, and maybe in the finance system.

37:43We talked about Tully before and Solana. Last time you shared your crypto portfolio with us, let's have a look at what changed probably nothing or almost nothing you own a majority of solana is soul cooked now that the crazy meme coin meta is behind us i'm massively overweight sweet over soul massively can i ask you percentages wise more more or less i'm definitely over 70 percent sweet and that's not anything to do with the foundation that i'm on that's my just capital allocation of my savings and simple it's not because i'm on the foundation and people are like he's just shilling his coin it's because the fucking chart of solana sui versus solana broke out and solana was the strongest horse in the race so if another large token is outperforming solana on like weekly charts daily charts you know significant time horizons and the chart pattern looks good and you can see the adoption and it's got a lower free float and there's large demand and there's a lot of developer activity and all the things we talked about then i'm forced to do that i then also looked at anything versus three now because that's now your benchmark yeah and then what's funny is you see well there's one token that's doing really well versus it deep deep book and deep book is the liquidity layer sui so i own some of that too i have a question on both of them actually yeah you tweet for three i love soul but three is my favorite child if i need to have a favorite other than three to soul chart what's new in the three ecosystem because you're pretty close to it since we last recorded together that makes you hyper bullish on three it's really interesting because when you talk to we're here in the middle east right now you talk to people they know sui because it's facebook you speak to people and everybody says yeah they're really interesting you see i mean without giving away stuff from the foundation you just know the quality of the people i mean you've interviewed adenny i went to the sui office in march to interview evan and sam is not out yet because like we're they're actually a sponsor of the podcast, we're an ecosystem partner.

39:58And I did the George for the launch of Walrus, right? Yeah. And yeah, I went to their office and there was Adini, there was Sam and there was Evan. And we're in this office. The energy was insane. I brought a friend of mine. We spent the entire afternoon. I did this podcast there. And then it was like a party in this office, like you could feel and they were saying oh look this is the same office as we had in facebook literally like the atmosphere was incredible and we we just left so energized it was incredible and you you feel that you feel throughout you see the type of projects they're going for it's interesting because you know i get called into a few meetings with um some people that they're talking to and like christian who's the head of the foundation his opening question now to projects that want to work with sui is like well show me the path to a billion users right because it's built for that scale and if you're leading with questions like that is like yeah okay it's interesting you building this whatever but is this going to bring me a billion users if it's not it's not a high priority and so their mindset is really big um and they back it up by you know all of the projects that they've been launching so you know i've been privileged to be on the foundation to see the inner workings of an amazing group of people um and see how they all come together they're basically all like facebook and google um and they're very smart they understand scale they understand how to solve really difficult things you know walrus stuff like that it's super interesting um and so i think the market's picking up that narrative now it's very early stage you know it's going to have to go through a bear market um it'll go down a lot because low free float goes down a lot like it goes up a lot um and then you need to see how well does the team manage a bear market do they have cash are they investing are they building which is what solana did really well last cycle you know tolly did a magnificent job of doing that under extreme pressure um and that's when lindy effects kick in you know tolly earns his stripes from that and so it's still early but you know it's got all of the hallmarks of a massively growing ecosystem massive growing number of users massive growing number of applications have they had the big breakout application yet no but it there will be one this cycle and that'll be the first start of the bigger narrative so 70 percent in three what are you going to do with that because you say buy and hold right yeah are you planning at somebody say i'm going to put some of that in bitcoin or in soil or saying if it goes down it goes down i believe in the the team and no i mean i've got locked tokens which will go down and stuff like that from the foundation um i will as i've talked to you before take some lifestyle chips off the things i want to do with my life um Um, and so I've not had any big capital expenditure for five years now.

43:07So I would like to be able to do something. Um, and then yes, I'll do an asset allocations shift, whether it's to, I'm not one to really go out of the market. Um, yes, a bit of cash to have cash buffer, but I'm not one to go out of the market because I don't think, you know, the shape of the downside. My fear is that Bitcoin only goes down 40 % this cycle and everybody sells out and says, well i can buy it down 70 isn't this an easy game and it doesn't go down 70 it doesn't go down 60 it doesn't go down 50 it goes down 40 and then it takes off again as liquidity comes and everybody's caught offside um so i'll probably allocate whether it's towards bitcoin or whatever i'm not sure but yeah when you say uh take some uh lifestyle chip do you have a time frame do you have a price target for example for three or do you have an amount dollar amount that when you reach yeah it's kind of like the best way to look at that because it's so hard right like it's it's so hard um and it's a function of where you are in the cycle you want to de-risk a bit earlier than you feel comfortable doing yeah because then the back end of the cycle can play out short or long it doesn't matter um but you need to have enough wealth that you're feeling a little bit hubristic like oh i king shit that's when you take some money off as soon as you start thinking you know you start thinking well if i just double it again i'm going to be really just take some money off we've not got there yet for me um so you know another another larger move in the cycle i'll then take some money off and it'll feel too early and i'll hate doing it and i'll regret doing it but i'll know it'll be the right thing you regret doing it until you don't regret it because it went so high and then it went back so low that you're like i did the right thing yeah i mean you're always going to feel bad right that's that's the rule you're always you should feel bad yeah you're not going to time the top perfectly and the thing is is let's say you're buying a house with the proceeds you've done well you buy a house nobody can take it away from you right that's an asset that you don't have the fear of somebody stealing your wallet getting your seed phrase you don't have a fear of putting them defy you the bricks and mortar are yours you own it you've got a house over your head you've got an asset that's a long term that is an incredible thing um and so people just need to do that and that de-risks your whole life because then basically it's what i bought my first house was a house in spain it was a holiday home and i bought it in cash and i realized i won the game and it wasn't an expensive house but i realized i could have a bar job in spain and live in that house and nobody could take it away from me and i was like i won the game of life and then you make much better decisions miles yeah of course because low stress yeah it's like you know we we talk about this the importance of income that's another one like the most reason why all these people in crypto freak out is because they're depending on their portfolio but if you're working you don't even need the yield right you're just fucking work just work and make money yeah and your excess savings put it in crypto and worst comes to the worst, something goes horribly wrong, you've still got your income.

46:21And then imagine if you'd bought a house during the cycle. So now you've got income and a house and you've got your crypto portfolio. It's just these simple decisions, but people lose their fucking minds. They sell their houses and buy crypto, which is, I've just got, a good friend of mine has just done that. I'm like, that's so stupid. Do you dare him? Yeah. what does he say he doesn't listen he doesn't listen he sold his house yeah for cash to buy bitcoin or crypto yeah bitcoin bitcoin no no no no he's right at the risk curve do you have a what do you call that in english uh a guest room in your house for the eventual day yeah i'm just gonna buy a tent and put it on the beach where it's really hot, the mosquitoes bite, and said, well, that's where you're going to suffer for doing these stupid things.