Why Crypto Could Be Near A Major Turning Point w/ Richard Galvin

Are we at or near the bottom of the crypto cycle? And I actually think that's a pretty easy call to make. You know, volume's going to skyrocket from where they are today. I don't think you need to overthink it. So we are going to underestimate how fast the agents roll out. It's probably a 50x. As both sides of the equation start just tokenizing all assets, then the use of blockchain explodes. And so therefore, value should explode. Calm before the storm, let's hope. Token 2049 Singapore, the world's largest crypto event, returns to Marina Bay Sands on the 7th of 8th of October. On stage will be myself, Jeff Yan from Hyperliquid, Shane Copland from Polymarket, and the Real Vision community gets 10% off tickets. Claim yours using the link below. See you there. Hi, I'm Raoul Pal, and welcome to my show, The Journeyman, where we journey together to that nexus of understanding of macro crypto and the exponential age of technology. Now, crypto has been on everybody's minds because it's not been a great market. But it's all about time horizon, and it always has been. And I like to get the perspectives of people who have been around a while and understand how this market works and when the opportunities are there. So today, I'm going to speak to a good friend of mine, hedge fund manager Richard Galvin, who runs a crypto hedge fund and VC firm in Australia. And he's a really interesting and thoughtful person to look at the opportunities. I think he's got to be more built. He's got to be more bullish than you imagine. I think most people are when prices have been down. Well, certainly those have been around for a while. Join me, Raoul Pal, as I go on a journey of discovery through the macro, crypto, and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together. Richard Galvin, how the devil are you? Yeah, good, thanks. Good to be with you again. Yeah, it's always good. We haven't caught up for a while, so I'm looking forward to this. Yeah, last time I think was a little bit after 10th of October last year, so hopefully in happier times. Yeah, so what's your read right now? Where the hell are we? What's going on? Yeah, I think we're at a pretty good intersection, actually. It feels like we've kind of come through and done the hard yards, right? And the market's been pretty broadly reset. A lot of assets that don't really have a clear connection to AI, we've sort of struggled to catch up and sort of keep, grow up with everything else. And it feels like the market's in that sort of nice little place where you get to get some good entries into some, you know, if you believe crypto is not going away, it feels like a pretty good place to enter a lot of different things. Yeah, I mean, I do a simple thing. It's like I do a log channel, log regression channel, you know, on a weekly chart going back to, let's say, 2017. And once it gets to like that two standard deviation, one and a half standard deviations oversold, that's when you start paying attention to, okay, what should I be buying here? Yeah, I think, you know, crypto is extremely good at doing stupid things at the top and the bottom, right, in both directions. So, look, the bottom always feels dramatically bad and the top always feels like it's never going to end. And that's just kind of what crypto does. I think the barometer we like to follow is, you know, one of the core attributes of crypto is clearly trading and decentralized trading and looking a lot at sort of decentralized trading volumes. And it's a pretty clear cycle. If you look at, you know, it sort of peaked around May 21st, sort of, you know, at the $200 billion, kind of from nothing, then fell away over a bit over a year, over 18 months, down to, you know, 33 billion dollars. So 84% dropped to the end of 2022, which was, you know, equally pretty depressing time. Then went on a 16x rally through to January 2025 to 500 billion. And it's come back to about 140, 130 billion, whatever stat you kind of use. For us, that feels around sort of a cyclical bottom for crypto. And, you know, interestingly, sort of as night follows day, we're starting to see a little bit of a pickup through that through August and into September. And this has happened, this kind of pullback has happened without any real fireworks. It's just frustrated people more than anything else. Yeah, look, I think 10th of October was pretty fiery. Yeah, that was a pretty nasty one. And I think we probably, you know, I think from our perspective, the recovery from that has taken probably longer than we would have hoped. But, yeah, I think it's, you know, it's like a typical kind of capitulation, sort of what happens when markets bottom, right? People lose interest and suddenly crypto traders start trading quantum computing stocks or whatever it may be. I realise that's probably not their cup of tea. So, yeah, we end up in a typical market bottoming cycle, which we think we've gone through. And, look, I think unless you think crypto is going to go away, which we clearly don't, and I'm sure you don't, it feels like we're either at or pretty close to sort of the bottom of volumes for a lot of things. And just remind people how many cycles you've been through as well. Yeah, too many. So, yeah. I started this business back in early 2017. So, look, I've seen this movie before and I'm not sure why I keep watching it, but I've seen it before. Yeah, we're just gluttons for pain, I think. That's all it is. Yeah, yeah. In the end, you get paid for these downsides. I mean, it's just how it works. Yeah, I think, you know, if you look across most markets, I mean, crypto is the one that rewards patients probably more than any other, but it's also the one to be the hardest patient in, right? Because, as I said, it's so dramatic. It's one of the tops and it's so dramatic and fearful at the bottom. And, you know, if you haven't seen it before or you don't hold your nerve, you make bad decisions. And I guess that's where the edge comes from in crypto. A lot of the edge comes from crypto in just holding your nerve in those sorts of periods and keeping a straight head. Yeah. I mean, time horizon is the best edge possible in crypto, but yet so many people fail to have it, they just can't do it. Yeah. And look, and it's so cyclical, right? Like, I mean, you've got the cyclicality of. Of volumes, you've got the cyclicality of macro conditions over the top of it. And, you know, crypto does a pretty good job of shaking you off and making you do things at the wrong time. So that's what price action has been doing. But the other side of the equation is there's, I would say, a shit ton going on. I mean, literally the entire financial system has come alive and is now moving towards this, stable coins have been enormous and keep going. So what are the. What are the big. What are the big stories that people should actually be focusing on here? Yeah, I think if you look at, to your point, the financial markets coming to crypto for the first time, right? Like financial markets, we're not just talking, and it's like a typical technology type cycle. We've tested the technology. We've tested things like decentralized spot exchanges. We've tested things like decentralized lending. We've tested things like decentralized perpetual futures exchanges using native crypto coins. And we've proven, by putting that through probably one of the most violent tests you can probably have, which is surviving crypto cycles, we've proven that that technology is both like super robust and insanely cheap when you look at it compared to, you know, what traditional markets charge for similar services, and it scales now. And the rest of the world's kind of worked that out. And they've sort of been watching us from afar. And they've seen that, hang on, they're onto something here. This technology both can help us. you know, change how we do things 24/7 trading, but also can take a heap of costs out of our business as well. So maybe it's time we start to sort of introduce some of our assets into that sphere and see what we can do on those rails. And I think that's the point we're at now, where you're starting to see tokenized equities volumes dramatically uptick. You're starting to see traditional exchanges. I mean, basically every exchange in the world either has a plan or is already moving or migrating some of its business. It's on chain. So, you know, it's an incredible time. And when we talk about those things like spot volumes on decentralized exchanges, you know, that cycle I've spoken about in the past just relies on crypto tokens trading going up and down. It doesn't allow for the structural input of injecting the entirety of global equity market tokens through tokens onto exchanges and allowing them to sort of play in that sort of universe either. Yeah, I mean, I think people aren't really ready for it that when. I mean, we're seeing Robinhood and others starting to pioneer this, Coinbase, everybody else. But as both sides of the equation start just tokenizing all assets, then the use of blockchain explodes. Yeah, I think there's two things people miss. I think the first one is, and I get it, like a lot of views are driven from a U.S. perspective and it's like, what's the big deal of tokenized stocks? I can just log on. I can just log on. I can just log on to Robinhood and trade U.S. equities today. And it's like, well, that's a very privileged position to be in. Most of the people in the world can't just log on to Robinhood and trade U.S. equities. That's right. Right. And, you know, we're in a world where U.S. companies are still by far the best companies in the world, and that's the equities that people want to own. And so the same as we saw in stablecoins, like what's the point of me being able to own this tokenized U.S. dollar? I can just go into Cash App. Well, you know, if you're in Thailand, if you're in. If you're in Eastern Europe, you can't just log on and get a U.S. dollar cheaply and easily. So these things are, you know, really innovative, distributed technology that allows a whole bunch of people to access new things that have been, you know, there's a lot of barriers to it. And we're seeing the same thing with tokenized equities around the world. Added to that, you've got the ability to trade them on rails, to trade 24/7. You've got people that adopted early, like Robinhood, starting to see the margin advantage, right, of trading a tokenized equity versus trading a traditional equity. equity, both in terms of, you know, settlement, capital usage, and just pure throughput costs. And then you're starting to see people work this out and build new apps, things like FOMO app, right, where people are starting to marry together new social application trading, new social application technology with trading and starting to bring delivery mechanisms to those rails that allow you to sort of build new worlds and build new trading experiences and bring whole new audiences to markets that haven't been there before. Yeah, I just, the other thing is the speed because blockchain can deal at machine speeds and they're getting faster and faster. And, you know, a lot of the participants are not going to be us lot. It's going to be the agents. Yeah, I think that's the other structural overlay we'd put on that sort of uptick we see in volumes coming to CryptoLand that, you know, the ability to vibe code or anyone to vibe code a bot or build some sort of application that allows them to trade at speed and frequency like they haven't before, I think, is probably underestimated by the market. I mean, you never really want to extrapolate your own personal experience, but like I'm a finance guy, right? I'm not a coder at all, but, you know, I'm running bots now that I've coded with Claude and other applications that I've never been able to do before. So, you know, I'm running a couple of million bucks of volume, testing these things out, and that's new volume that's never been there before. And I think if you look across, you know, apps like Robinhood, some of the, you know, Aerodrome and Crypto, these applications are starting to launch bot functionality next to them as well, right? That starts to make trading, starts to allow, I guess, democratize the access to trading bots, allows people to experiment and trade. And I think that's these volumes explode. That's not just, you know, $4,000 or $5,000 here. That's people with relatively small amounts of capital being able to do hundreds of thousands of turnover a day. And we've got the rails and the applications that can now handle that. Yeah. And also the TAM explodes over time as well. Just because, you know, over time, there will be bot-based businesses that have balance sheets that will use treasury functions to rebalance what they're doing or whatever they're doing, maximizing their capital. So they become new economic participants in this thing. So they're not just Richard telling his bot to go and do something. There's bots building, you know, sort of strategies around stuff. It just, it just becomes a much bigger market with much higher velocity and a much larger array of products for everybody to use as well. So it brings capital from the old world into this new world through the back door. Yeah. And I think that's the thesis that we've lived in the last few years that we're building rails and we've been testing those rails through this cycle for the last five or so years to basically prove that they can handle that. And I think they've sort of, they've survived that test. There's been some ups and downs, but they've survived that test and they've proven that they can do it. And I think that's the real thing. pretty obvious, you know, his interventions in Japan and stuff like that. So you're getting to the point where they have to do something about rates. They have to hope that productivity picks up and inflation drops off, which I think it will. I think whether the Fed raises in a couple of days or not, I think it's irrelevant because I think the next 100 basis points is lower because you've got the big deflationary force and the dollar is weaker. You get that, you've got a perfect backdrop. That's what you really need. That's when liquidity starts really flowing. Yeah, I agree. I think the macro, and look, you know, we spend most of our day thinking about how do we allocate across crypto, but from a macro perspective as well, it does sort of feel like it's a pretty good time to be in assets outside of the traditional system. I think they've done more and more, you know, the risk-free rate has lost a lot of credibility, I think, over the last few years. And it's difficult to see it reversing that trend over that period, which means that I think that's outside of the traditional governmental type controlled system, are in for a pretty good couple of years. Where this system ends, I'm not sure, and what that means longer term. But yeah, it's a difficult environment to sort of say, step up and say, yeah, I'm going to go really long US bonds, right? And given the relative quantum sizes between, you know, US Treasury markets versus any other asset class, again, you only need a very, very small number of people to reallocate from that asset class to others, and you see massive inflows across, you know, across risk assets. The other thing I do to head check that is I look at the log channel of Bitcoin versus Nasdaq, and it got to two standard deviations oversold. So it's like, you know, if you're looking for the asset allocation switch, not just the outright, you know, do I put money into more money into the market here, but the asset allocation switch would suggest that crypto outperforms going forwards. And that kind of makes sense in the environment you're talking about where the macro is favorable for owning scarce assets outside of the traditional system that have a higher rate of return over time. I mean, tech stocks generally will do fine anyway, but they've already priced in a lot of goodness while crypto has done the opposite. In fact, I've never really seen that dichotomy so much as that this time. No, I guess, but you'd probably see a little bit. If you look more granularly through the Nasdaq at some of the software stocks, right? Some of the quality software stocks and the multiples that they're trading on. I mean, a lot of them are priced for, you know, going out of business to never growing again, which seems a little extreme. And look, I know they face a bunch of sort of structural changes, but the internet, the internet teaches us that not everyone dies in that environment. Like people reinvent themselves and, and find ways to sort of survive and rebuild their companies. Like, you know, some of them don't, but a bunch of them do. And, you know, if you look through at some of the multiples, sort of key software companies are trading that. I don't think they've had, look, I mean, it's all relative, but they're, they're, they're kind of in a similar position to crypto in terms of the time they've had over the last two years as well. Right. As AI has taken all their marginal dollar. And also it's, it's kind of, there's this narrative that goes in the market as well. Anybody can vibe code an accounting app or a payrolls app or whatever it is. So therefore all these software companies are worthless. People don't realize that you try and build an app that does that and then get distribution. Distribution is the hard part. And then you get, you get the institutional stickiness because companies adopt something like ramp or whatever payment platform or whatever it is. You can't get it out. So like SAP is like, you know, still like one of the largest technology stocks in Europe. It's cause you could never get rid of the thing. Yeah. It's sort of, yeah. And we do a lot of it in our business in terms of, you know, sort of dashboard type portfolio analysis type software that we've built, but you know, that's, that's a, you know, that, that's only one part of the market. You know, we're not, we're not building software that we're going to integrate with our auditors and our administrators, right. We're not going to build anything. For 50,000 employees around the world in different languages. Yeah. Or just anything that's, you know, that's that business critical, like from an analysis perspective and from the ability to deliver data to me to help me make investment decisions better. I think it's astro, astro, astronomical and, and, you know, some of the most incredible technology that I've seen in my life. But that doesn't mean I then, you know, stake my whole business on, you know, the backend of my business and the, and, you know, other people's money on code that I've, I've built. There's no way that's gonna happen. Right. So I still think there's a lot of a place, you know, for SAP type software, where it's business critical. You've got a heap of different, you know, vendors and those sorts of things plugging into it. And there's a mission critical where, you know, th th there's insane expertise required to do that. I can't see that getting replaced overnight, but then, you know, we're, we're drifting off the topic. I'm, I'm far from a software expert, but I'm just trying to overlay what I see in my business. I, I, I think the AI technology is that, you know, and I've worked in technology basically since, since I left university, I think it's the most, most life-changing thing we've, we've invented today. And I do think it's gonna change the way we do all sorts of things, but I also think there's incredible opportunity coming out of that. The other big themes that have been around that wants to see what your thoughts are, perps hyperliquid, because there's been, there's basically been two decent size assets that are really outperformed on his perps and the other Z cash. What, what do you, you know, that whole privacy narrative? Cause that's a very, that's a very clean narrative is like, well, some people don't want to show that bank account balance to everybody, which is what blockchain so delightfully does. Um, and therefore, you know, 10% of Bitcoin's value could be in a privacy version, super clean and easy. And then everybody got behind it. Um, so that was a good one. And hyperliquid is, you know, has been amazing. What are your thoughts on those two themes? Yeah, let's start with the, um, uh, the privacy theme first. I've actually, you know, when I looked back at, and I often do this, look at the initial pitch book for our first fund back in 2017, and look at the thematics that we were talking about in crypto that we were going to allocate to. And, and privacy was, you know, one of the two key thematics we had in our fund when we first launched. And, you know, I had done a whole bunch of work around If you looked across any economy, you know, there's always a lean towards privacy or a privacy bent towards any economy versus the sort of the, I guess, the bright economy. And, you know, we had a bullish thesis on Bitcoin and, you know, our view was it was impossible to be bullish on Bitcoin without there being, you know, a privacy centric version of Bitcoin that would grow at similar rates to that. And so we actually owned a bunch of Monero back in the day when we launched the firm. Actually a pretty good penetration back there. People probably haven't been around a long, won't remember. They used to be trading against Monero pairs on a bunch of exchanges, right? So it seemed like a logical extension of crypto. Why wouldn't you trade it against a fully private coin? That thesis has taken a long time to be realized. It's probably, if I draw a chart from when we launched the firm in 2017, it's proven right. But it was pretty bad. It's sort of five or six years in the middle there. But it feels like the time has come that, you know, Bitcoin's re-rated to, you know, trillion plus asset. And you've seen the privacy space significantly lag that. And, you know, I still think that original thesis is right, that there is a place in the global economy for a privacy version of Bitcoin, for want of a better word. And it feels like Zcash is picking up that mantle. You know, Monero is still there and it's performed OK. But Zcash seems to be the one. And we own it across our long fund. And we own it across our long funds on that basis. Seems to be picking up the mantle and running with it. And I think everything that's happening in the world from a surveillance perspective, from even a technological change perspective, even from a quantum computing perspective, is playing into the privacy sector and the ability for these coins. Do you think it's harder to hack Zcash stuff that's been shielded? So therefore it's safer against AI? And the rise of, you know, agentic hacking and all that stuff? Yeah, I think it is. And they've also got a pretty good roadmap around quantum resilience as well. And look, these coins, you know, they meet their nameplate. You know, we've owned Monero in our funds in the past. And, you know, our auditor hasn't been able to prove that we own it. And so we've been, you know, they've tried everything they possibly can. And, you know, we've really struggled as a fund back in the early days to actually show. And we've had to do all sorts of things like move it on to a centralized exchange to prove we actually owned it. So, you know, they actually work. You know, when you get sophisticated top four auditor trying to prove that you own something they can't using all the technology they've got, it's kind of a decent sort of backward hack to check whether it's traceable. Right. And this technology is pretty impressive. And I just think, you know, from a macro perspective, everything that's happening in the world politically, like AI is doing for crypto from a. From a decentralized perspective, I think a bunch of things governments are doing from a surveillance and monitoring perspective is, you know, advertising the the use case for people to be able to allocate some of their wealth to a privacy retaining asset. And it's a privacy retaining asset that is also in scarce supply. So it works for the debasement side of it as well. So it's like got the double kicker to it. Yeah, I think one of the things that's changed materially and one of the things that sort of rugged our initial thesis around. And I think that's the thing that's changed materially and one of the things that's changed materially and one of the things that's changed materially is that we've got a lot of people who are now looking at it as a kind of a. You know, it's one thing to buy a privacy asset, but you want liquidity just like Bitcoin. If you don't have liquidity in a privacy asset, why would you allocate capital to it? Because you can't get in and out of it when you need it now. Now, I think what we've seen, particularly with NIA, NIA Intense Platform, we've seen the privacy assets, particularly Zcash, be reintegrated into the whole crypto liquidity framework. And the volume that has gone through the NIA Protocols Intense Platform with Zcash, it's been the leading asset on its platform a lot of the time, has basically reintegrated that privacy asset into the liquidity framework around decentralized exchanges and has removed that risk of sort of delisting and those sorts of things that we lived through for those first sort of three or four years of our cycle. So, look, it's not a surprise at the same time as you can trade it and liquidity bumps up that we've seen a re-rating across both Zcash and Monero. But surely the governments will come back and say, we don't like it at various points because it depends who's using it. My guess is part of the recent run is the seizing of the Iranian assets in Bitcoin. And so the Iranians. Who've always used crypto as a way of, you know, staying outside of the system, will just move some of it into Zcash. I mean, that's going to be the issue is the dual use of it. But that's without all money, obviously. Yeah. And look, I think we've kind of seen that playbook to a degree when everyone made the same arguments around Bitcoin, right? Now, it's clearly traceable and technology has come a long way to help governments do that from their perspective. I do think that's where the intense platforms, things like, you know, things like Nier have built that allow people to trade these in a decentralized way, basically, you know, materially reduces that risk because you could effectively off-board Zcash from every exchange today. And don't get me wrong, that would clearly impact its liquidity and impact its value. But it would still be readily tradable through Nier Intents and, you know, does tens of millions of dollars of volume through there a day. And so what about Hyperliquid and what's happening with that? Because that was the other phenomena. Yeah, I think getting back to the purpose platforms and decentralization. Yeah. Decentralized exchanges, we've always been massively bullish on the ability to trade in a decentralized way. It's always been one of your core thesis is the whole DeFi and just the trading thing has always been a core thesis of yours. Yeah, because I think that's what crypto does best. And again, in a world of not trying to overthink it too much, right? Like if you look at a spectrum, will crypto disrupt and change the world's gaming space? Or will crypto disrupt and change the trading space? Now, I think, you know, you can make valid arguments for both of those, but there's a hell of a lot lower risk around trading, right? Because it's just a core part of what crypto is. And it's just such an easy vertical for crypto to disrupt and change. Now, I think a few things have happened that across that journey have made that more and more inevitable is, you know, the technology has got better and better. And the ability to build an experience that matches a centralized exchange experience and then overtakes it has really come down. It's really come to fruition over the last few years. And look, you know, I think we've spoken about it in the past. I'm an old guy, so I can remember when there were still newspapers, right? And you often see competing technology. People, utility drives technology. Now, there's a small cohort of people that will muck around with things and test new technology just to check it out. And we'll put up with the quirks and the hard things about using it just to sort of try it out. And, you know, we saw the same thing back in the sort of mid to late 90s as people were. Messing around on message boards and online newspapers. But that was still a much clunkier experience. And the utility of it was way lower than the thing that got thrown and delivered to your door every day, right? That you just opened up and it gave you the news and that sort of stuff. And then we saw finally we saw bandwidth increase and we saw all of a sudden those clunky websites became fast. All of a sudden they started having high res photos of them. All of a sudden they started updating every half hour and they started to have video. And then all of a sudden that newspaper. The thing you had starts to look clunky and slow and you get rid of that in a zero to one type experience. Then you start to move everything online. And I think that's what we're starting to see around decentralized trading applications in crypto. That we've gone from that period where it becomes a much clunkier, harder technology to use than the centralized experience to one where it's a hell of a lot easier. Look, I mean, if you have an idea on a Saturday, you know, you see you see anthropics from announcements. Emotions pronouncements over the weekend and you have an idea. Maybe I want a short memory stocks. There's only one way to do that. If you're on Aussie time on a Sunday morning, I actually did it myself. There's only one way to do that on a Sunday morning. Aussie time, right? Like you can't open your interactive brokers. You can't go and open another account somewhere else. You trade in a decentralized fashion and you can execute that view in literary seconds. And, you know, there's no KYC AML uplift. There's no barriers to entry there. There's no. You know, I've got to wait till Monday morning. And that's, you know, that's that point where I talk about the utilities overpassing. That's a much better experience than your traditional CFD provider or your interactive brokers or your stock broker. And we're at that sort of that newspaper to internet type crossover, I think. And that's why I think we're pretty comfortable that volumes explode from here. And also on the other side is the kind of ease of which you can get high quality yields now without, you know, you've got. You can have manufactured yield, which can be riskier. The state straightforward stable coin yield. This there's a lot of yield opportunities. The whole kind of the complex of what you can do now between define trading is getting really sophisticated. Yeah, I think, you know, as you know, in traditional markets, the the efficiency of capital, given the amount of balance sheet, given the amount of bank balance sheets that are available to traders keeps yields relatively low. And, you know, if you look at. Traditional, you know, we use a pretty simple sort of framework here that in traditional markets, you've got sort of 80, 90 percent plus institutional type ownership and then you've got 10 to 20 percent top retail speculative ownership. Right. And so you've got these massive wallets of liquidity on the institutional side that provide the liquidity to all the traders in that ecosystem. And and, you know, there's a there's a yield that they'll provide that liquidity and they'll they can effectively flood that market whenever they need to flood it. But if the yields get a little bit above, you know, we're talking basis points above where they can get it in traditional treasuries or bond markets, crypto kind of flips that on its head. Right. You've got a market that's probably at best 10 percent owned by institutional investors, 80 to 90 percent owned by retail speculative investors. And so when trading picks up and they need that capital, they need that collateral, you've got a really small amount of wallets providing that capital into that trading ecosystem to allow. Then to take that leverage. And so you get overpaid. And, you know, I don't think that dynamic I think that's, you know, we've seen that I've seen that slowly come down and down through my time in crypto, but it's still not an efficient market. And to your point, you can still get pretty attractive yields for providing that liquidity. And it's the same as traditional markets. You're just providing liquidity to people that want short term capital. It's just a crypto. There's not enough people providing that liquidity versus the wave of people that want to borrow it. And you get yields that are pretty attractive versus. Most sort of standard benchmarks. So a quick break in your regular programing. If you're serious about your future, grab my free report called Prepare for 2030. I think you've got five years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now. The other thing that's talking about retail that's been fascinating is the rise in speed of Robin Hood in this space and what they've been doing. And now they've got a mean coin revolution. Going on and massive volumes. I mean, where the fuck did that come from? It's because they onboarded different people. Yeah, I think that and this is the time, right? You start to get a marketing machine of the strength and experience of Robin Hood that's got serious marketing capabilities and experience marketing financial products to retail investors married up with crypto rails. And, you know, that's one of the things that we've kind of missed today, right? Like we've been a very engineering head. We've been a very engineering heavy type sector. And that's, you know, because we've been in that developing technology phase and, you know, we work across the venture space as well. And, you know, one of the key things we spend a lot of time talking to founders around is, you know, you can't just have a bench of developers. You've got to have some marketing capability because, you know, they build it and they will come business model. Distribution is the most important thing or you don't have a business. Yeah, and look, engineers rightly, you know, and a lot of people sort of underestimate the ability of that. But, you know, I think, you know, in my career, a bunch of inferior products that win because they've got better marketers and and they've got a better marketing team and a better ability to place their product in front of users. And I think, you know, one of the interesting, exciting parts of crypto is we're seeing two things. We're starting to see fintech type businesses that have proven their leaders in distributing products to retail users, you know, the revolutes, the Robin Hoods of the world marrying up with crypto rails. And so you're starting to get that engineer, that engineering kind of disruption. Married up to that sort of marketing expertise. And at the same time, you're getting some more experience under the hood for some of those crypto founders that are now delivering products like FOMO apps and some of the things happening on pump that are starting to deliver products and innovate products from a distribution perspective. Well ahead of what we've been able to do sort of through previous crypto cycles. And, you know, we're starting to see, you know, if you look at FOMO app, the amount of people they've on boarded in a short space of time, it's it's pretty phenomenal. And, you know, Robin Hood. going from, you know, it's done $40 billion of Dex volumes in two months, which is kind of staggering right from kind of zero are you seeing through the vc side are you seeing anybody actually figuring out token economics properly yet because you know there's the amount of businesses that launch with the token and the token just gets sold by the original owners and there's no there's no demand for it and so i've yet to see many token economies forming outside of chains themselves for other things you seeing anything yet anything interesting yeah i think defy still does a pretty good job of putting the token in the middle of it and and using the token from an incentive perspective you know the aerodromes of the world and curve who basically use the token as you know the center of their economic universe but also as an incentive mechanism to make sure that you know liquidity on the aerodrome perspective is is you know is efficiently allocated i think one of the things we're starting to see on the event like no one is launching a crypto project that generates a token with expectations that it's going to be an easy run right like we've we've had uh well no one by now yeah no one that's sensible right so i think we are starting to see a recalibration of expectations around that um i think there's a few missing pieces i think the the thing that crypto needs to get right and we spend a bunch of time with our founders you know i've got a lot of experience in the traditional ipo market spend a lot of time with our founders trying to walk them through the best way to launch a token and crypto is unfortunately going to be a little bit different than what it used to be you know we've unfortunately had the opposite experience to equity markets where you know crypto tokens unfortunately often trade at their best price on the first day and then rapidly trend down now a lot of people in the twitter universe will get quite upset at that they actually miss that's actually a terrible experience for the founder as well most founders don't have any liquidity on day one so the day one price is largely relevant to them and us as a vc we never have liquidity on day one either so from us that's actually a burden right because a bunch of people lose money it's the wrong moment it's the it's the wrong directory no one wins in that that environment except maybe the exchanges that had a bunch of tokens at the start i think what crypto needs to get right and we're starting to see some more serious focus on this is more like the ipo market right where buying on day one post an ipo has been a good strategy or buying through the ipo process at a small discount has been a good strategy and working out that a slow trajectory that matches the growth upwards is a much better outcome than booming at top blast prices on day one so i think you know getting that listing experience right getting a deeper capital market around that listing experience which we're starting to see i think will fix some of that and people getting smarter around how they choose vesting and those sorts of things i think the market's wised up a lot more over the last few years and you know some of the games that we saw traditionally aren't going to work again and there can't be a lot of capital being allocated in the vc market right now because yes a16z raised another fund and stuff like that but a lot of people just haven't got the capital or they've moved on to ai for vc investing you know we've seen people like delphi digital who are good friends of mine you know they've now built that you know reasonably big sized ai business attached to it so you might the deal prices must be decent in crypto are there opportunities in terms of there's a lot there's a lot of opportunities because i think you know and we've run a venture fund we've got an evergreen venture fund that's allowed us to invest um since we launched that in august 2018 so we've always got capital to deploy and we've always been deploying capital through crypto cycles and you know it's a hard hard structure for us to administer but it's been a it's been a it's been a godsend in terms of the ability for us to operate through crypto cycles and always have capital for the right founders and we're still allocating capital uh we closed a deal last week but the ability to the market to adjust in the venture space it is a bit slower and you do find a lag i find in the venture market a trailing lag that expectations of crypto founders on the vc side trail what we see on the liquid side and you know the liquid market might fall 60 80 but venture values take a much longer time to get there i think we're starting to see them come down to levels that the risk reward looks pretty good to us and i think you know we've also been you know to the earlier discussion we had the ability to exit you know in hot token markets shouldn't be on your framework of how you're valuing your venture investments either right and so you know both from a less amount of capital chasing the deals bringing values down to exit pars being much harder and much more difficult than they've probably looked since crypto sort of the crypto vc sort of market started um they both suggest that the entry prices need to come down on vc and we have seen some of that adjustment i think for us the sort of the sweet spot that we're starting to see is yeah again you don't have to overthink it like you don't have to find a venture project that's trying to do some crazy frontier thing of crypto in some vertical that no one's ever thought of before we still think there's so much addressable market for new crypto founders even starting today just in traditional spaces like lending like trading like stable coins that you don't need to go and find the craziest off off sort of beaten track venture investment make venture type what do they have to do to be better than what's out there already i think that's that's the hard part i think they've just got to market and release applications better than we've done before and things like fomo even things like robinhood prove that the ability to scale those applications at insane kind of like crypto type speeds is still there for people that execute properly um and so i don't think i don't think any of these markets are settled whatsoever like i don't think the ability for you to end to some of these mark it's not like we've only got these players and that's what there's always going to be um i think yeah there's a there's a because the the pie here is going to grow so fast as well right like you've only got to capture a small man i guess robin hood proved and as did hyperliquid how fast you can grow in this space if you have decent ux which is i know something crypto never has ever managed to do but you have decent ux and suddenly people use it fast yeah and i think the other thing that crypto probably undersells itself on is just the capital leanness of it as well like if you look we see it in the ai world like it costs literally tens of billions of dollars in capex to build meaningful ai businesses in crypto you can still start a crypto business and launch a crypto app literally in weeks with close to no capital right because the back end of it's already built for you and so the ability to scale businesses in crypto in a capital light fashion i think is nothing like we've seen before in other technology markets because that back end is built for you you can basically scale off the end scale off the back of rails that are sitting there pre-built for you that you can just plug in on to on day one with the added benefit that there's no geo blocking there's no geographic distinctions between this technology if i launch a crypto trading app today it's available in every country in the world at the same time as i launch it to as the same time as i basically hit go right it's the capital leanness and the ability to globally launch literally on day one yeah the fact that we're dealing in a globally homogenous product you know the tokens themselves it's like you know you talked about us equities or how difficult it is for me to buy australian equities it's a pain in the ass but this is the same product everywhere in the world um and it's fractionalizable so everybody can afford it so the whole ethos of this thing is is super different so what are you how much how much time left do people have to get in again because there's a lot of people not sure are we going to pull back again do we trust it surely the the the um the magic cycle finishes in december and we should be waiting for that what do you think yeah i i think the road is littered with disappointed people that tried to try and keep crypto cycles both at the top and bottom to the month right i think you've got to take a longer term view that you know are we are we at or near the bottom of the crypto cycle and i actually think that's a pretty easy call to make and yeah does it take another second leg down in october november january maybe but does it still have the quantums yeah even the midpoint of the cycle is you know magnitudes away from where we are today right so even if you bring a cyclical mindset without adding on some of the structural benefits you've got around tokenization of other assets and increases in addressable market just playing the cycle um but i think that's a pretty easy call to make and yeah i think that's a pretty um suggests that there's meaningful upside you know as i mentioned you know when we started out this discussion yeah decentralized trading volumes um in the last cycle went up 16x from the bottom right so there's a lot of room for error in timing when you bought that that's still having material upside and then if you look at the tokens that that sort of uh the decentralized exchange tokens they're you know they're they're beta or they're they're reflexivity to that volume is you know why one one plus right up to two so they've got you know incredible cool they've got incredible correlation to the links and increases in those volumes so you know the ability for for to have access to just thematics that increase like volumes increasing in crypto you know i don't think you want to overthink it too much and if you're waiting a portfolio which you obviously do do are you overweight defined exchanges and that kind of stuff the activity layer or you more overweight the layer ones where's the kind of broad asset allocation mix for you right now yeah so we we're materially either white they So if I looked across, and we still think this is an opportunity, and I think we spoke about this last time we talked, we still think that the application layer in crypto is materially undervalued. We think there's more than enough block space to handle the volumes we're going to see over the next three to five years. So I think the scarcity of block space, the ability for layer ones to scale fees or see that increase in fees, I think is somewhat constrained. They'll see massive volume upticks, and that's fine. But I think where we see the real sort of mispricing is across that application layer, where you've not only seen them hold their fees, you've seen them priced at material discounts to what you see on the layer one type level. Look, I think apps and DeFi type applications still make up sort of 5% to 7% of the total crypto value, which to me is just kind of nuts when you look at, you know, they make up more than 50% of the revenue across crypto. And we can see that going higher and higher, right? So you're basically saying, well, for sort of 5% of the market value, I'm getting over 50% of the revenue in this story. So, you know, we're running rates close to 50% across DeFi applications in our long-only funds. Amazing. Richard, as ever, my friend, good to speak to you. And let's see how it plays out. Yeah, last time it was around the bottom, and then it rallied and then didn't do a lot ever since, really, did it? It tried, didn't do anything. So hopefully this is it now. And we can just get on to some happier days, because it's been a bit boring, to be frank. I'm used to the volatility, so I don't care about that. It's just how boring it is. It has been a little bit boring, but calm before the storm, let's hope. Exactly. All right, my friend, good to see you as ever. Yeah, good to speak again. Thanks. This episode is brought to you by Pith. Pith Network is the fastest growing financial data company today. Trusted by Fidelity Investments, the U.S. Department of Commerce, Revolut, CalSheet, Jane Street, Coinbase, and many more. 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