Surfing the Crypto Wave ft. Chris Burniske

28:27But the rest of the space is attention, and it tokenizes attention in various forms, whether it's helping build a product via awareness or just a meme, whatever it is. It doesn't really matter. The issue I've got is we are growing tokens faster than we're growing net new attention. So there's a finite amount of attention that's currently in the space, and therefore, we're all struggling with this. You simply can't keep your eye on everything. So you have to farm it out, right? Somebody like Ansem will be looking at the real kind of risk end of the table. Somebody else will be looking at different parts because you just can't keep on top of it, which tells us we probably got too – we don't have enough attention for the amount of opportunity or whether those turn into opportunities or not, which is one of the reasons why the long tail is very difficult now.

29:21Yeah. Yeah. Well, the fire hose of attention will come from further integration with Web2 and traditional finance. Right. And those bridges are being built everywhere. Right. Like the Bitcoin ETF is a fire hose bridge right from traditional finance into Bitcoin. And as we talked about, that then flows into other things, just in a capital context, not strictly an attention complex, because traditional finance actually doesn't have that many people in the grand scheme that we're going to. No, but the capital goes out of the risk curve, which drives attention further down. Exactly. So, you know, that bridge is coming into Bitcoin.

30:02It's going to come into ETSU. It probably comes into Solana by the end of next year at the latest right through ETFs. Um, so that's the, the, the traditional finance to, uh, crypto bridge of capital and attention. And then, you know, the web two stuff, um, I think that's, that's harder to reason about. I mean, the, the blades drop, you know, from the, the, the dialect and Salama ecosystem, I think is quite fascinating. And it's going to get people thinking just flipping the, the framework from, okay, it It used to be that you try and get normies to come to crypto apps. And instead, it's going to now start to be experimentation around crypto apps embedding in normie environments.

30:47Right. And I think that's going to be the next application trend, let's call it. So, you know, Blinks is doing that. I think it's worth paying attention to, even though it's very small at this point, to the move ecosystem. so things like movement apto sui um just because there you have like crypto as a whole actually on the foundation of sui okay well so you're already there um and like people are not really talking about that ecosystem right now in a way that i find interesting because i always like to go where like people aren't talking about something much it's an uncrowded wave that might get very good And, you know, when you look at the birth of Moves and Sui and Aptos, you know, it came out of Meta.

31:39That's a big deal. People don't realize, like, how much, you know, time and work and money went in from the Meta side to make something for normies, right, that got pulled in the last, you know, in the week before launch, let's say. and then spread out to the broader ecosystem. And it's like, crypto people so hate the incumbents that they'll be like, ugh, Meta and Facebook. But normies will be like, wait, Meta built a lot of this core tech? And especially in normie dev, they might find that more credible than the whole rest of crypto. And then also with things like ZK Login or some of the innovations that are happening there, you know, you might, we might get to a world where we're spawning, you know, wallets and, and, and there'll be lower security wallets probably, but just like we have a wallet versus like a bank account versus a safety deposit box and different, you know, gradations of security, but we might be spawning low security, high use wallets off of our Gmail or, you know, our phone number or whatever people choose.

32:50And so those types of integrations are coming too. And so we're 16 years in now, right from the launch of Bitcoin, and we're just finally getting to a place where we've abstracted everything enough to the place where like normies can probably just continue to exist in the environments they're comfortable in and use, you know, with crypto being used in the background to give them experiences they want. Yeah, I've been very interested in following the whole SUI journey just because these guys are really at core Web2 people who then became total experts on Web3 and just seeing how they're abstracting away a lot.

33:30And also, they've got a lot of technological breakthroughs, the whole new Mr. Sentai thing, Mr. Setti or whatever it is, the latency. That latency is really important in a Web2 world because we're used to zero latency. But in crypto, we're used to latency and it's actually a bit clunky. So there's a lot going on there. But I do think you're right. I think the big breakthrough is going to be integration into that gigantic world of 8 billion eyeballs or 6 billion eyeballs. the blinks one at first i was really like this is incredible and it is great but like i use a safari browser i can't even see these things even if i use chrome and i gave it to a friend who's not in the space if they don't have a wallet it's nothing so it's actually for crypto people when they're having a web 2 experience we haven't actually bridged that gap to make it web 2 or web and nobody knows what it is or cares.

34:27Yeah, that's fair. That's fair. And I mean, you know, this might end up requiring more competition on, you know, the phone manufacturers with, which salon is of course, you know, attempting with the saga phone. And, you know, let's say Elon gets real about launching, um, a phone to compete with Apple, you know, um, that could get very interesting in terms of like how open that could be to blockchain backend systems. You know, so I think it's so hard to, to figure out the exact unlocks and vectors through which major distribution is going to happen. But, you know, I guess to reassure people, because sometimes people just ask, they're like, how do you maintain conviction through all these years, you know, and all this volatility and like, you know, all the questioning.

35:19And for me, it just always goes back to, you know, these open data structures that are, you know, can also be thought of as like global keepers of time for global coordination. They're so foundationally important. And in being keepers of time, they're also timeless. And so they have forever. And maybe that's too grand of a thing to say, but it's like, they're going to just continue being there, chugging along, timestamping information, and we will find ways to use them. Another way to think of it is they're the property rights recorders of the internet, right? And property recordation and preservation is what in many ways was the kernel to allowing capitalism to blossom.

36:03Because I'll invest into doing things if I can reliably maintain my property rights. And this is the native property rights system for the internet. And nothing, nothing comes close. Like it is, um, it like it is layer one or layer zero or whatever of property rights to the internet. And so, um, right now, you know, for all of us who have been in the space for a long time and are on crypto Twitter and whatever, I think one of the sicknesses that we suffer from is we're constantly going to like, what's the next day? What's the next day? What's the next thing? Like, how is it going to get like water and more abstract and like more entertaining?

36:39But it's like, no, actually, like the basic stuff that people talked about from the beginning will remain the most important. But we're so like ADD and needing the next dopamine hit that we just keep going for the next thing. But then normies that come to the space and maybe just buy Bitcoin, that could be life changing for that. Or, you know, that decide to set up a wallet so that, you know, they can send stable coins to a family member somewhere that could be life-changing to them. Right. Or if not life-changing, like a significant boost in, you know, to one of their, say, day-to-day activities or life, you know, long duration life activities.

37:19And so that reassures me too, right. That like, while we're all trying to figure out what's next, a lot of the world is still just slowly onboarding to the core basics that will remain most important. How I started framing this, I always try and simplify, simplify, simplify, and I've got it down to this. This is the underlying... It's the new underlying infrastructure to the internet, as we've talked about. And people get confused. When I go around marketing our thunder funds, people get confused still is but there's this bitcoin narrative this this narrative that narrative i'm like stop these are all decentralized businesses that sell block space and they have different qualities to their block space or a different narrative on what makes their block spaces um effective and that is once people see that that these are essentially decentralized businesses that operate and sell block space, people start to understand that what's unique about this infrastructure layer, it's the first infrastructure layer in history that we can all participate in because of the behavioral incentives of a token system versus equity.

38:32And so when I look at it, I just look at the growth of the space and it grows up 100 and something percent a year, which is twice the speed of the internet because obviously it's built on internet rails, which should go quickly. And I just extrapolate that trend out and I look at it It's like, well, it's a$2.5 trillion space today. If we carry on by 2032, it's 100 trillion. I'm like, that's the largest accumulation of wealth in all human history in the shortest period of time. Even if I'm wrong by 50 % because I'm a total moron, it's the same as 100 years of value accrual of the S &P 500 in eight years.

39:08It's bananas. It's because we can own this adoption layer. And all of these businesses selling block space, that's all it's about. The best thing is just try and capture that growth first. If you're going to do anything in the space, stop trying to focus on the one thing. Just capture$2.5 trillion to$100 trillion. You'll be absolutely fine. Right. Raoul, you're making my calls for$10 trillion this cycle look bearish. Well, I got to – I mean, my view is like$10 to$15 trillion for this cycle. So roughly in line with you,$10 would be normal. $15 would be kind of a blow-off end of cycle. and we don't know what the structure of the cycle is going to be.

39:45But if you just take that rate of growth and extrapolate it out by 2032, you get pretty close to$100 trillion because the compounding of these numbers goes up so wildly. Right. So I'm curious, you have a longer track record in investing than I do. And I'm really like a born and bred crypto investor, right? I worked under Kathy for a few years, cutting my teeth on equities at the same time that I was learning about crypto. But it is just for me, it's been 100 % crypto, right? For the most part. I'm curious for you, what are the ways in which you manage the information flow and manage your own focus?

40:36within the space? Because it's like, I would presume in areas where you were investing before, it was less distracting, or there was less opportunity, or not as broad a set of opportunity. Now, do you take that in your approach to say, hey, I should, within crypto, have plays in all these different environments? Or do you still narrow down to a handful or 20 to 30? This is a great question. I try to explain this to people a lot. I don't care what people's philosophies are. That's not how you make money. What you make money on is owning the best performing asset on a risk adjusted basis. So what I tend to find is that the mid to upper part of the curve, which is networks gaining adoption, do best, eat last cycle, slum of this cycle, and whoever it's going to be this cycle, whether it's SUI or whether it's Nia or whatever it is, I don't know.

41:39We will see that, right? That is the easiest opportunity we get in the space to generate wealth. So firstly, focus on that. That's the like, do not fuck this up thesis. If we're going from two and a half trillion to a hundred trillion, do that and you'll make a lot of money. And so then I just filter out as many people as possible. I really only get signal from a few people that I'll ever listen to. If you tweet something, I'll always read what you tweet because I think you'll have a high signal to noise ratio. Most people are high noise to signal ratio. And so I'll observe it for sentiment and any nuggets, but I try and filter out as much as possible and just stick with, unless something shows that network adoption is slowing, I'm right.

42:25So just capture that. Then I don't FOMO in the rest. I just don't do it. So I did that last cycle. I tried to spread about this narrative, that narrative. And what I do now is really simple. It's idiot proof. I just put the chart against Solana. If something looks like it's a sustained trend against Solana, I'll allocate some capital to it. And again, only about 10 % of my portfolio will I do in that kind of stuff, but you can make a lot of money in those. And so, you know, that's what got me into Whiff and Bonk because they were outperforming Solana. So I'm like, okay, I can do that. And now, you know, if anybody shows me something, I have to say, well, show me the chart outperforming Solana and I'll take a look.

43:11That discipline makes it ultra easy for me because I think because of this everything code, liquidity cycle, everything is correlated, every asset in the world, which makes it the, and it's all driven by the same debt refi cycle, which makes it, I think, the easiest macro risk-taking environment of all time. Because the central banks have also taken the left tail out by saying, we can't let collateral fall too far, so we will debase currency. Holy shit, if this is the case, then we have the simplest, easiest risk-taking opportunity of all time. So hyper concentrate, I think is the way. Now, there are people who can do the tail part, hyper concentrate and get it right.

43:52But the probability is lower. And then you break the first rule, which is don't fuck this up. Because if you get taken out in the cycle and lose your capital, and this cycle is going from two and a half trillion to 100 trillion, that's bad. Yeah, no, totally. If you have to start over compounding, it's brutal. Well, and, you know, I guess to really highlight it, even when you're talking about whiff and bonk, you're talking about less than 10 % of your overall allocation. And in reality, it's probably 1 % or 2 % max that would go to any play like that. And I think that's right. I'm really, you know, when I look at it, I'm 90 % sold.

44:32Why? Yeah. Because the chart is out for Bitcoin and ETH. And there's no philosophy behind it. It's like, I like Solana, love what they're doing, and it's proving it on the charts. If it doesn't prove it on the chart, it hasn't got network effects. Because you and I talked about this. I built Metcalfe's law thesis around this. And basically, I found that tokens are actually priced rightly. Almost everything prices pretty much according to the number of active users and the total value transacted. So in which case, prices are good. Right. Yeah, this is one of the tragedies that I see in the way in which social media, even though it propels crypto because it's intertwined with crypto, also is a medium that's set up to mislead from the core of what crypto is.

45:20So it's like, I'm a little more boomer than you on a personal basis. You know, vast majority is BCE soul. And, you know, and then, of course, I run a venture firm. Right. And so we do make venture investments and those. So you're actually set up the same way as me because you basically have a core portfolio of quality assets. The rest of your attention is focused on the tail, which is new business. Exactly. Because the core portfolio doesn't need your attention. it. Right. And I think that's the, like, one of the core things I think about for, for crypto at large is it's a way to better distribute capital.

46:02Cause it's like for capitalism to work, um, everyone needs to become a capitalist in the sense that they need to manage capital of some kind. And I do think that, you know, blockchains, it used to be, you just had the major leagues of, um, you know, call it liquidity. Now blockchains allow for single A, double A, triple A into the major leagues. And so there's a lot earlier distribution. There's a lot more granularity on what you can be a specialist in and the types of capital you want to focus on and do well off of. But you still invest in the indices and the indices are BTC, ETH, and SOL, right?

46:38And you don't have to do much work at all. Sure, you can like slosh around a bit through cycles to, you know, juice the multiplication. But, you know, going back to crypto Twitter itself, and the way that social media and TikTok and Instagram and whatever is misaligned, is it's like, those mediums are so fixated on virality and the news thing and who's got edge and who can stand out in that way. And so it sucks. Like, what is it 90 % of the attention into those things and 10 % of the attention on the basics of BTC and Sol, whereas in reality, the portfolio distribution is the opposite. Well, that's telling us the arbitrage is there, right?

47:26It's like attention, the fleeting attention is not quality attention. The quality attention is the attention that accrues to the activity on the main layer ones. Yeah. So it's kind of telling us that the more attention goes to memes or whatever the latest thing, airdrops or whatever, actually you're more likely to garner attention further on the infrastructure layer. And maybe there's something within that. I'm starting to believe there's something a lot bigger in attention that we don't yet understand in terms of how we can use this as a major metric. Because I think what you're saying is something important as well, is when all the attention is on short term, you generally make more money on the long term.

48:11And if everybody's focused on Bitcoin, you're going to make more money in memes, which is why memes crushed it in the beginning of the cycle, because everybody's focused on Bitcoin, because that's what you do at the beginning of the cycle. Exactly. Yeah. And, you know, right now it's like I look at B2C, Ethan Sol on, you know, weekly or monthly or whatever long duration charts and they look great. They're like textbook consolidating. Right. But then, um, and, and like, you know, that they want to spring at some point here and, and, and we'll see when, but you know, then I go and I look on Twitter.

48:45Are you referring to the banana zone? That's, that's on the chart. I'm here. I'm here for, uh, yeah. Banana zone is a fun ride, but, um, yeah. And then you, you go into crypto Twitter where the majority of the focus is on the new thing and the meme coins, at least right now, because those perform so well at the start of this expansion and it's just utter destruction. And so it is this, this constant flip flop between, you know, where the fixation is and where the opportunity is. And I think, you know, what makes that so hard for us as monkeys that want to belong is like the tendency is to go to the place where other people are, because then you experience a sense of belonging.

49:27But that means that the opportunity is already so richly priced that it's not an opportunity anymore. And so it's this constant like breaking away from a sense of belonging that you have to do, which is uncomfortable. Like most of us don't want to do that. And even in our personal lives, you probably don't want to do that, right? That's not good for your personal life. So then it's like training your mind to be comfortable doing it in a specific context while in your personal life, hopefully you do find senses of belonging. I also think with people with a bit more money, the answer is to rent attention from other participants.

50:05So what I mean by that is like, if I can't do VC and I agree with your thesis, I like your kind of anti-cyclicality, I should subcontract the attention of that early space to you. You're going to do a better job. My job is sit on my tokens, do fuck all. If I can do that, that's great. That's why we started Exponential Age Asset Management. Because of this tail stuff, I'm just going to give it to 14 hedge funds. One of the best hedge funds in the world, let them worry all day and all night about it because their attention is hyper-focused on that. And I think there's some way in that. I also think the markets are going to allow us to coalesce capital around these kind of things.

50:48We haven't got tokenized funds yet, but Christ, if we have them, okay, that's going to be a lot better because you could find an Ansum or a GCR or whoever it is, GSR, you give them the money in a tokenized fund and they can take care of that part of this. Totally. What are we supposed to do? Totally. Yeah, and BlackRock is taking us in that direction because they are going to tokenize all the things. but I have another question for you. How has your relationship with Twitter evolved over the years? Um, and, and what do you, you know, I guess what, what use do you get out of it now?

51:34That's a very good question. Any of us who've been around for a while have been scarred by it because at first you want to think out loud and you want to help, people. I come with a lot of experience. It doesn't mean I get everything right, but you think out loud. You bring people along and helping people. I get stopped everywhere in the world I go and just saying, thank you, you changed my life. I'm like, that's brilliant. But then when things go bad, they go really bad. And everybody, well, not everybody, most people are still grateful, but it just becomes this mob mentality and it becomes ugly.

52:06So you become more guarded. We've seen that with Kobe and we've seen it with everyone. Ansem is learning it right now. is like you can't because the internet is pretty ugly in how that works.

52:21I struggle a bit with X now. So I tend to use lists more for really trying to do it and just have a few people that I really want to hear from. I'm still probably over-scrolling on stuff that just makes no difference to my life whatsoever. However, I'd love to distill it down to, oh, lots of people are interested in memes or lots of people are interested in this and just kind of get signal from that. But I'm finding it very noisy. But one thing I do see very clear, Chris, and I think it's the most important thing for all of us to realize is everybody's hopes and dreams are in this. They've taken us seriously that this is the biggest opportunity of all time.

53:09and the nice people on Twitter, the people you don't see, all of their hopes and dreams are in this. And I think that's what also drives the emotion of this space as well is people realize there's no other thing like this, not a job, not going to work for Google at early stage, not doing it from investing in traditional markets. This is it. And that's quite a big responsibility, I think, for all of us. Yeah, it's huge. I mean, because it's not just, you know, open data. It's on top of open data is open finance, open opportunity. But then, you know, there also needs to be education and earnest distribution, you know, which you do a great job of doing with your platform to help people.

53:55Right. But like you and I both know you can be a good investor and still get things wrong all the time. and it's you know x is such an unforgiving place i was actually just sitting down with uh ansem yesterday and you know and and i'm sure you have this experience too and it's my experience as well is like the people that stop you in the street stop you to thank you you know if they're like hey you know are you oh are you ansem whoever and um that is the vast majority of the experience in real life, you know, for the work we've done in terms of distributing information about the opportunity. But, you know, it can almost feel like the inverse on X, where the people hear from are the ones who are like, remember back in 2017?

54:47And you will never be right ever again, you know, or like, and like, it is poking and it's like, they're direct pokes of the ego, right? And so that can be an exercise in and of itself. But, you know, I've gone through, I feel like I'm constantly asking myself how to use it. Because it's like, I started at ARC where I was a research analyst and I was going very deep. And it was like a lot of charts and threads and all that kind of stuff. But then like, when you're formulating thoughts in that level of depth, you know, once you get to a certain scale, well, people are going to just start to make fun of you when you're wrong on certain places.

55:27Because the more detail you go, the more surface area there is to be wrong. And so now a lot of that just stays internal. The placeholder... Yeah, because you want to think out loud and get feedback from people you respect. But as you say, then people misinterpret it when you're just trying to think something through. So I get more value out of a conversation with you when I'm saying, hey, what do you think about this? Because I don't know. Then I will do on Twitter because I can't get it. There's too much noise, not enough signal. Exactly. So then it's like, you know, it's actually a disincentive to think out loud.

56:01And I would even just say posting deep thoughts to X is a disincentive to have those deep thoughts because the castigation that you can get, you know, is so intense, right? So then it's like, I just do that less. Yeah, I worry less about castigation. I've learned to deal with that. I just ignore the bad comments unless it's something reasonable. and so I've managed to get a bit more stoic about that whole thing and upset me less because you you have to but you know if I you know if I look at your online presence you play a really important role which is like you are really the zoom out relaxed you know you play the surf dude with the big picture view really well and that is incredibly helpful to people because everybody loses their minds.

56:51And, you know, I try and do much the same kind of narrative is like, you don't need to do anything. And I think your pinned tweet is a very powerful tweet, which is like C or 10 trillion. Yeah. And I think it's important what you do. Even if you don't think out loud, you think enough for people to understand how generally well-constructed your thesis are. And you just keep on the right track and stop them panicking. Right. Well, thank you for that. It's reassuring because it's turbulent. And I think the way I've handled it right now is I just don't have Twitter on my phone. In fact, the only time I put Twitter on my phone is when I'm traveling.

57:36So often when I'm tweeting the most, it means I'm traveling because I'm in airports or whatever I want to kill. But then when I'm in a stable place or this place for two weeks or back home or whatever it might be, then it's desktop only. And that diminishes the perverse addiction cycle. But it is a bummer because it's such a powerful tool. And I really appreciate if someone tells me in earnest how I'm wrong. I appreciate that so much. Like that is probably my single favorite feature of all of Twitter is that I can be told in detail by someone, you know, anywhere in the world how I'm wrong. And it has helped me countless times.

58:18But it's gotten now to the point where I have to sift through, you know, so much excess to get the kernels that it's like. And so I just want a filtration mechanism, I guess, a better filtration. The superpower I found from X, which completely changed the experience, is as opposed to stating your view about something that you're unclear on, ask the question. Ask the question. Yeah. So, you know, when I first heard a fire dance, I just went on to X and said, can somebody tell me about this or when it's coming or whatever. Then the signal is incredible. So asking questions I found is better than I think this and see what the feedback is.

58:58and finally just asking the question, when you just go and say, I don't know what this means or what do you guys think about airdrops? You know, a conversation we were having. Is this perverse incentives or is this good? You find that most of the really interesting people take time to respond to that. Totally. Because it's got an intellectual honesty to it. Right. Socratic X, maybe that'll be my new approach.

59:25um well i have some other questions um you know we talked about market structure a bit um earlier you know what what are what's your view as like the the most important determinants to flows within market structure because you talk about you know um the the everything code a lot And then do you see it as like a waterfall of triggering of flows that starts in a certain place when liquidity comes back in the system and rates drop? Or is it everything gushes all at once? I'm just curious how you think about the sequence of flow and market structure. So there were two parts to what drives assets generally, particularly ones driven by liquidity, long duration assets.

1:00:21Liquidity is my belief is not a flow of funds. it's just a pure debasement of currency. Inject money here, debasement there, asset optically goes up in value. So because I went through for this for ages, and this is what got me, I was mid-curving the whole damn thing for so long because I was like, I can't see when there is liquidity or QE, there's no extra volume in the equity market. So therefore, it can't be doing anything. And that sat in my head for two years before I finally went, oh, because it's just re-rating. I saw it in the Cayman Islands over COVID. I mean, property prices went up 50 % like that.

1:01:07It wasn't because they traded. They just went there because of liquidity. I'm like, okay, I'm starting to get it. It's just like magic force that we kind of don't see. And the global debasement is about 8 % a year. So we're mutualizing the cost of servicing the debt across everybody in the world by about 8 % a year. And that's like a tax. The other way I looked at this, because at first, how dare they tax us? Then you say, well, what price would you put on a put option that your equities don't go down more than 30 % and that your house prices are secured and the global economy is secured, would you pay 8 % a year for that put option?

1:01:51Yeah, it's probably not wildly mispriced. Yeah. And that's kind of changed my head. This is why I think we've taken the left-tail risk out because we're basically using this 8 % as a put option in the entire system. So the other question you're asking is, okay, this is more about the flows. The actual flows, and I'm thinking here of whether it's into tech stocks or whether it's from Fiat World to Cryptoland, that bridge, let's say the Bitcoin ETF bridge, which is, I think, of as hot money flows and VC as foreign direct investment. Yeah. So what drives both of those flows is really simple. It's the business cycle.

1:02:36Why? Because when earnings go up, people have more money to invest. Yeah. And so the flows pick up. So right now, if we look at the ISM, it's still kind of below 50 and struggling to pick up. The forward-looking indicates it's screaming higher. So it's about to pick up, but we're not seeing mass retail participation in crypto. Why? Because jobs are still a bit tight. The economy is still a bit shitty. People just don't have the liquidity. You know it from the VC businesses. Nobody's had releases of liquidity, right? All the way from the stack from private equity all the way down to growth VC, there's a real problem, except in the early stage token stuff, that's it.

1:03:15So capital is trapped because there's no earnings going up. So if you think of Tesla stock, why is Tesla stock relatively low, even though it's got all of the technology stuff, it's because people buy cars when they've got money and they don't have much money right now, rates are a bit high. So that business cycle, as that picks up, now, Now, again, if you go back to the everything code and the macro seasons or crypto seasons, the macro summer is really when the ISM starts going up, earnings start increasing, and guess what? The world's a wash with risk-taking. So it's as simple as that, I think, which is why it's so beautifully on repeat.

1:03:58Right. Right. Well, and that's a new puzzle piece for me at the very base of debasement as the invisible force that just kind of naturally makes prices ratchet up. But then that's the invisible force. And then within the business cycle, you have the flows that pick up with earnings. And so separating those two, because I've been thinking of it more as because I think of crypto as often so flow driven. especially as we get later in the cycle. It becomes really apparent. But the debasement re-rate as the invisible static force is useful for me. So thank you. So then when you go back and look at 2022, liquidity was being withdrawn everywhere.

1:04:48So guess what? All asset prices went down. Why? Because the value of it was rebasing currency, not debasing currency, because you were reducing the supply of currency. Oh, yeah, then you get it. It's like, oh, it's like share buybacks, or it's like burning tokens. It's all the same fucking mechanism. And it's like, once you see it, it's like, oh, it's so obvious. Yeah. Which is why when I chart all assets against global liquidity, they all look the same. NASDAQ's 97.5 % correlated to global liquidity. The rest of it is the outperformance because it's a seculable market. The S &P 500 actually performs in line.

1:05:28Why? Because it's a very broad-based, economically sensitive index. And so it just kind of follows global liquidity. It gives you no outperformance. Owning S &P 500, I think it's done about 8 % a year since 2011. Well, that's the same as the debasement. NASDAQ's done about 17. And then Bitcoin in La La Land has done 150 because we've got network adoption models as well, which we see in individual stocks, in technology stocks that get network adoption in video. Okay, suddenly it does that. But we've got a whole technology stack that's doing it en masse. So it's so fascinating. Right. And then my last question for you, at least for now, you know, there's always conversation about the cadence of the crypto cycle.

1:06:22Right. And I totally buy the everything code. But then, you know, thus far in crypto, it has materialized that, you know, keep it simple, stupid for your cycle. Right. It was a Q4 2013 top Q4 2017 top. I guess 2017 was December 17 for Bitcoin and Jan 18 for Ethereum, but whatever. Like, you know, same rough thing. And then, you know, Q4 2021 top. And so part of me is like, hey, don't overthink it. You know, Q4 2025, people always want to, especially smart people, they want to think of the new thing. Right. And so they convince themselves different things will happen. And certainly like different things always do happen.

1:07:13But a lot of things are roughly always the same, you know, and so it's holding both those in your mind. Let's save time. And I do have some thoughts, of course, because I want to think of ways that things could be different and it could be election based. But I'm curious what your approach is to the timing of the cycle and if it even really mattered to you until you see certain price points for BGC and ETH and SOL. What I've learned over the years is if I have a core investing amount to this theme, I'm just not going to take it out. I mean, it removes all of this. So my entire objective is to buy the sell-off.

1:07:56So it kind of shifts your focus because you know the highs are lower and the lows are higher and the highs are higher. So you actually just compound. If you want to keep it really stress-free, you just say, I can't wait for the next 85 % correction when it comes in 2026 because I can buy more at cheap prices and you keep compounding. The hard thing is last time around was difficult because most people's earnings were coming down. But generally speaking, you get a bit of a slow down. But generally, if you can just inject new earnings in, you will just compound wealth, which is why Bezos and all these guys are the richest people in the world because they take one bet and never got out of it.

1:08:32And people, I see this, people are now desperate because they understand it's a cycle to trade this thing. So my particular view is don't use price, use time. If you want to take some lifestyle chips off, you want to buy a new house and buy a new car, whatever it is, take some off at the end of this year at whatever price. And then you can run the rest. So then I try and break it down probabilistically as, okay, what does the structure of this cycle look like? Just out of interest, really. And this is what I'm using signal from on Twitter. It's just trying to listen to everybody. People are insanely fearful of the short stunted cycle, end of the cycle last time.

1:09:12Yeah. And I remember the 2017 top and how bananas that was and the 2013 yeah and like 2013 2017 were much more similar than the last one and don't forget we gone through a global pandemic there was a lot of other factors at play so i'm like that was probably the outlier don't expect everything to repeat perfectly but like you i'm probabilistically saying well it just probably goes to the end of the year my macro work on liquidity says liquidity peaks out just peaks out not goes negative or does anything else just peaks out by about june or july so 25 of 25 so but i'm seeing twitter just tie itself in knots about that fear of the the last stage part and so they they desperately want to sell earlier.

1:10:13Yeah. They're so scared of it that they want to sell earlier, which makes me think 2013 cycle feels more similar where everyone's going to try and take profit. The market goes down and they're rips in your face again because it's not over yet. So there's a lot to play for here. You know, could it just finish in March or something? That'll be really on. The short cycle, I think that's off the table. A slightly stunted cycle, I think is PTSD. I think your intuition is right. It's like, well, it's finished the end of the year every time. The everything code is the same debt-fit refinance cycle. Why necessarily would it change?

1:10:51Because as you pointed out before, the end of a bull market is not about liquidity. It's about flows. Yeah. So the end of the bull market is where it kind of disconnects because it's all of those people who stupidly didn't get in when we've been begging them for the last two years. that's when they make their mistake. Totally. Because in 2021, liquidity probably peaked, what, six months before the top? Like global liquidity? Yeah. I suppose the only way I can entertain a stunted cycle is if Biden remains president and Gensler is further empowered. And I wouldn't even think of it as a stunted cycle.

1:11:32I would just think of it as a longer consolidation. you know, and, and, and, and I think that would weigh on some people and other people would be like, this is great. Like we can remove some of like that will, uh, uh, an extended consolidation will wash out a fair amount of financial nihilism and excess of speculation because it'll just be too boring, you know? And especially if like you're on leverage, then, you know, it, it, it just won't be profitable enough. That's the only way I can struggle with that from a pure investment perspective, I get it. A bit of lower volatility will produce great outcomes, i.e.

1:12:12the applications there can build properly. We've got time to test stuff and everything's not driven by price. But I don't think the financial nihilism is going away because it can't. It's like the average 35-year-old, 30-year-old is so screwed that they really don't have a choice. If they don't do this, they're just going to go on polymarkets or they're going to go to the lottery. Well, lotteries for boomers, they're just going to polymarkets. You can't stop it now because they don't have the upside. Yeah. And so, you know, I think the attention of speculation and the dream of wealth just keeps doing it.

1:12:55You know, it's that whole I need to unfuck my future idea that I talk about. That's so pervasive. I think it's difficult for it to go away out of crypto. If it is the big opportunity, who are us to say to people, well, you can't drive the next leg of it? I don't know. I just. That's that's totally fair. That's totally fair. I mean, I try to I feel like about, you know, five, six years ago, I think I put my value set on investing more. And then I was disabused of that notion because I was like, no, the market is pricing the aggregate value set of all individuals. And so it's actually like hubris to think that the market will conform to your value set and it's a good way to get destroyed.

1:13:45So I took my lickings there. Um, but you know, I think that I actually lean, I gave the, say a scenario where I could see this being stunted, but I give that very minority odds and really just would think of it as longer consolidation. I actually think there's a chance it goes longer. Um, and, um, you know, there's, there's a number of reasons for that, but I suppose, um, at the end of every week and every month, it really doesn't matter to me because people are always asking like, when's the top? and I put out like October 2025, whatever, who cares? But it doesn't actually dictate any of my action because my action is dictated week to week, month to month, really based on what BTC, ETH, and SOL do.

1:14:29And then looking at what those three do, then looking at what the mid-tail of risk does, and then looking at what the long-tail of risk does. And mean coins, the main mean coins have entered my kind of daily assessment of risk appetite or weekly assessment of risk appetite. And so looking at the risk spectrum is really what drives my investment decisions. And so it's not, I think a lot of people look to both of us as like long-term oracles because we do have a long-term view and that keeps us mostly in the market regardless of what happens. But any at the margin action, I'm still taking based on weekly, monthly or quarterly updates.

1:15:14so here's another thought i'm thinking through you it's based a little bit around your idea of a longer cycle and again i think this is probably more likely from technology stocks than crypto but i think it probably applies is i think one of the parts of most pain is 2026 liquidity gets drawn out the system a bit it's not 2022 all over again people have ptsd why was it bitcoin only goes down 40%. The Nasdaq goes down 20%. And then we go into a bubble cycle. Because if you think of the AI narrative, the robotics narrative, the EV narrative, I mean, these are all combining into one super narrative, right?

1:15:55This exponential age idea is going to be ridiculous. And I think this is going to be the last pause that we get before we really go into complete banana zone for everything. And my actual risk is all the people who come out of the market don't get back in again because they can't. Right. Right. Yes. God, that would be brutal. You can see why, right? Because everyone's now like, I get it. It goes at 85%. It's a free gift. I'll take this every time. I'll make my 20X and move on. If you don't get that, you might still get your 20x because of a bubble cycle but you you won't get in because you're still waiting yeah you'll be down it'll be down 40 and you're waiting for a couple more 50 drops and they never come that would be agonizing for a lot of people and and you know it's part of why i do entertain these thoughts even though as i just said you know my actions are based you know weekly monthly quarterly, annual, whatever, because it's, I am, I am suspicious of the perfectness of the pattern.

1:17:05Oh, we should be. That's the job is, you know, you find the everything code. Then your job is entirely to be paranoid about it for the rest of time. I mean, that's how you test a hypothesis is like, where am I wrong? Where am I wrong? Where am I wrong? Right. And actually this goes back to X where I feel like sometimes I've had longer term ideas that were ultimately right, but I got spooked off of my conviction in that because for a while I got faked by the market and then abused, you know, by the people's court. And then it ended up happening later. And I'm like, damn it, I should have just muted everything and like, you know, long-term listen to myself.

1:17:48One thing I do notice with the everything code is yes, there's a lot of people who kind of understand it, but there's a lot of people in total disbelief. People just say it can't be this easy. Maybe it is. Maybe it is. And it's not until everybody believes in it that then it's more likely to be super wrong. Hearing the opposite opinions, you know most of them are just not very grounded opinions. They tend to be from the peanut gallery about, Well, inflation is coming back and it's going to be the 70s over again or whatever. You can kind of discount all of that stuff unless somebody has a reasonable argument in a way that why liquidity wouldn't come back, how they could allow the debt to refinance.

1:18:35The only way for me is somehow GDP growth has to magically, trend rate has to change. And that can't happen, I don't think, until about 2030 when the AI and the infinite population of AI and robots kicks in and productivity from lower electricity prices and all of this. I'm like, I just, you know, unless you could show me one of those things that's, that's going to change the game right now, I can't see it changing. Yeah. Yeah. In my mind, I boil down the everything code to capitalism is designed to grow capital. And I so fundamentally believe that and see that. And, you know, I was raised by teachers and I've talked about this in other places before, but like I was raised pretty distrustful of capitalism and finance.

1:19:24And, you know, my dad did participate in investing as a retail investor in the tech and telecom boom. And interestingly, I think it was probably a more successful pursuit for my grandparents because they bought AOL at the right time. But like I think it was all like largely turbulent. And so, you know, I was raised like, you know, really don't touch capital or don't think too much about finance, but in a relatively mean middle class, but relatively like financially constrained environment. I mean, we would travel, but, you know, very middle class for America. And then my big unlock when I came to New York in 2014 and worked for Kathy and then, you know, got to know a lot more players in the financial scene is like, no, no, like, you know, everyone has to be in capital.

1:20:15And, you know, that is the goal of blockchains and that is the goal of crypto and like removing the stigma, you know. But the trouble is the majority of people are still not majority in capital. And so they will continue to hate capital because it grows without that. And so then how do you, because capital, because capital, how do you get capital in the hands of the people who don't have it and then help them grow it? This is why I'm really passionate about where the future of social tokens and digital network states and tokenized smaller economies. Because that creates community and capital that's the same thing.

1:20:58And they tend to be different. And so I'm seeing this blending of community and capital everywhere, whether it's GameStop in the last cycle, or even this cycle, or whether it's crypto overall. But I do think that social tokens in whatever format they end up being, We're still testing them between NFTs and memes and all this stuff. It's all around the same idea, but somehow we're going to tokenize economies better, small economies that you can participate in. And now you've got capital in them. Before you just couldn't do that. Yeah, totally. And you can understand that, right? Because it's been the fracturing.

1:21:41We've seen already from the internet, the fracturing of media. So everyone can participate in media and truths. And we have to go through better filtration mechanisms now. But now that same splintering and kind of nichification of media is happening to finance and capital. And so then it splinters into all these pieces that people can understand and interface with. Because it becomes distributed as well, right? As opposed to if you think of media, it was the big broadcasters and then it became YouTube and now it's everywhere. And with finance, it was the big wire houses and asset managers. And it's broadening out and soon it's going to go everywhere.

1:22:18Exactly. But then I fear what like right now, the media, we're in a post-truth state and we will work humans innovate. And so we're going to figure that out. But I fear that we will enter a similar kind of post-truth and maybe we're already in it for crypto. Like what is a good investment? Right. There's a lot of like skepticism and like, is this a rug? Is this not? And so a little bit in that splintering, it's like when you have the, you know, the wire houses or the three new shows, channels, you just assume that's the truth. And then you splinter for a period, right? And you have, you know, mass diversification and variety.

1:22:57And then that's like, okay, well, what are the good investments or what is the real truth? And then the next stage from that is back down to the, you know, filtration or selection of like, these are the things relevant to you, these are the things relevant to you. So perhaps that's the next step for us. I actually spoke with a team recently who's thinking about using machine learning to recommend to people tokens that are relevant to their interest. And so it starts to look at your social and information graph and then filter down to tokens that could be relevant to you that are pre-selected as being quality.

1:23:36And so that's very early stages of seeing that type of filtration, but we definitely need it. But the issue is a lot of what is quality is social consensus. It's like you don't really know. That's true. I was having a great conversation with Meow from Jupiter, and we were talking about the fact that utility, in many cases, is the least valuable part of anything. If you think attention is everything, and the more attention you get, the more status you get, If you think about the wine industry, Louis Vuitton handbags, all luxury goods, right? The utility is actually very small. I can carry my lipstick and hairbrush and money in a bag.

1:24:26The difference between bag pricing is attention and status. Totally. So it becomes very difficult in how to think about these things in this new world. Now, it's easy on the layer ones because there's metrics. We talked about this before. But the further out you go, the less you have anything to measure this on outside of social behavior and somehow measuring it. And does it matter to somebody? I don't know. There's just something in understanding this. And we've seen it with some of the more interesting memes that have tried to have utility. The moment they do it, you can value them on cash flows.

1:25:07and you just nuke the value because it's like you shouldn't do that. You can't do it. But attention, unlike a cash flowing business, cash flowing businesses, something you can value, can drive investment over time, means it's just as long, or whatever it is, it's just as long as you can capture that attention. It's really hard to do. Right. Yeah. Well, capturing society's attention for any sufficiently long period It is an exercise on futility for the most part. So I figured out the easiest way to play all of this, including the move from$2.5 trillion to$100 trillion, the largest wealth in history.

1:25:50I just sat down and thought this thing through. I was at Beeple's studio, turn of the year, and all of the big NFT people, artists were there. And so were MoMA and so were Sotheby's. And there was just a bunch of trad art people. And you could see, firstly, I realized I was teaching them about macro, how it drives the NFT prices because they're artists. They're like, why is my NFT prices down? I said, it's nothing to do with you. It's the same as Rolex watches, the same with fine wines. It's driven by the business cycle, blah, blah, blah. Thank you. Thank you. I love that, Raoul.

1:26:25Because they were so worried about it. But what I learned from then was realizing how small a group of people really own the culture of the internet in that kind of way in art. And that it's basically art world split into two. There's the generative artists. So that probably started with Fidensas, Ringers, and Autoglyphs being the primary example. There's punks. They're just punks. And then there's X-Copy and Beeple, who are culture. And when you speak to Beeple, in fact, you speak to everybody in the space. They're like, well, X-Copy was there first. and he and if you think of those two they've been commenting on social culture the culture of the internet the culture of crypto from the beginning i mean people turns up every fucking day to put a bow around the internet and say good night everyone here's my comment of the day true r right it's brilliant now some of these you don't like something unite but every single day he's putting a bow on the internet and wishing everybody good night and i suddenly realized okay if you're going to generate a lot of wealth.

1:27:40I've seen this before because a lot of my ex-colleagues were the big hedge fund managers who own the big hedge fund businesses. They became obscenely rich. What do they buy? Property and art. All of them. Many of them have got multi-billion dollar art collections. Then I remember the Russians coming in after the Berlin Wall came down. They started really getting wealthy in early 2000. They bought everything in the art market and everything property market. Then we saw it with the Chinese. We saw it with the Indians. We saw it with the Silicon Valley guys. They've all done the same trade. And we're going to do that all over again.

1:28:19And what's so interesting is humans like to take a snapshot of culture from when the magic was happening. And we all know, Chris, that the magic is happening now. It has been for a few years, because we're all one degree of separation from each other. And that goes over time. And, right, so anybody who makes a lot of money is likely to celebrate this with high-end NFTs, particularly the culturally relevant ones, because it captures this essence. And then once you rinse$100 trillion of capital through, they just trade at infinite prices. Yeah, I'm with you because the property and NFTs, and I mean, I think of property in this environment as East Seoul, BTC, well, property and art.

1:29:07And so we know what that is in the real world. And then in the digital world, I do think of the property as BTC, East Seoul and whatever the major maintainers of property rights and state. And then there will be the art, of course, as part of that. And the physical property too. I mean, a bunch of rich crypto people are going to buy a bunch of big properties. I mean, it's just what happens. So I just think, if I look at this space, I started buying as much as I could afford of XCopy and Beeple. And just putting it in a long-term holding because I'm like, okay, I know where this bet is going. If I give myself a 15-year time horizon for this, this stuff is going from 50 grand, 100 grand to 100 million.

1:29:53It's a very simple thesis. and I've gone to all of the big art collectors I know in the space and traditional guys, giving them my thesis. They're like, it's a no brainer. So they all started buying them as well. I kicked off a whole frenzy when I wrote about this thesis, but I'm just thinking for myself selfishly is where do I keep long-term savings? Because you don't want necessarily the kind of optical volatility of always being in the layer ones or whatever it is. I don't want to go back to TradFi. Yes, I'll buy some real estate to use for lifestyle, but what is the thing that I'm going to store money in?

1:30:27I'm like, it's going to be NFTs probably. Well, I might have to go NFT shopping. I can't say that I've ever purchased it. I'll send you my article. I'll send you my article because it's all still part of the same thesis. I'm just trying to think what are the knock-on effects of a lot of wealth being generated and saying that this is a culturally relevant moment in time. This is as relevant as the 70s were to the Warhol collectors, right? It was like, that was the thing. They all remember it, Studio 54, it's Warhol, it's what Jackson Pollock meant to the whole period. All of that stuff is culture.

1:31:08It was the Rolling Stones, it was the Beatles, it was the Led Zeppelin, it's all capsulate in that one picture. and you have a bit of that cultural history and it gets more and more importantly with time to the people who were there when it was happening and everything that comes afterwards and then you know everyone's purchasing power increases and so it makes total sense that they go up in value over the very long term um yeah i only have you know the only valuable nfts i have are really mad lads um and the reason i bought some of the mad lads is because that was born in the fire of the last bear market of Solana, you know?

1:31:43And I was like, okay, this is interesting. Like if you're paying attention here, then you're a bear market survivor. And you know, there was a lot that's going to fall off from this, but you know, I'm not a, I suppose I'm too much of a surf bum to be much of an art collector. Yeah. But there again, why is, I would imagine that X copy or people are right up your street because it's cultural. It's not about art. Yeah. The generous of art. Yeah, that's all about art history and, you know, sipping a glass of Pinot in a gallery. This stuff is just, it's funny. It's just cool. It's striking. You know, it's that.

1:32:21Right. Totally. Well, I very much enjoyed this conversation, Raoul, as ever. I'm going to end up getting lunch before my next meeting, but thank you for making this happen. Thank you, as always, my friend. I just love having time to think stuff through with people. You know, as I think people realize is neither of us pretend we have all the answers. But when you get a chance, just to the fact that suddenly you say, what do you think about this? How do you think about it? This is how we all actually form opinions. It's not from the screaming and shouting at Twitter. It's just talking to people and having a meaningful conversation.

1:32:52So thank you, Azed, my friend. Totally. Yeah. And it's why I agree to this because it's I enjoy the conversation. I'm a bit tired of doing the podcast and, you know, just being asked endless questions and pretending like all the answers are for sure true. So it's a good context that you operate in. And I suppose I'll see you in the metaverse. Absolutely, my friend. Take care. So as ever, a fabulous conversation with Chris. To get an hour and a half of his time is just really special. To be able to just bounce around ideas, think stuff through, pick each other's brains. It's really what this show is to me.

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