Bitcoin, King of Crypto, Travis Kling’s Crypto Strategies Post FTX fallout

Speaker 1 0:00
year to date. The defining macro trend feels like going from six rate cuts to two rate cuts this year and pushing the first rate cut from May to I think now it’s in September I think

Anthony Scaramucci 0:19
So joining us now on speak up with Anthony Scaramucci, Travis Clang, he’s the chief investment officer of E key guy. Asset Management. I think Travis is very proud of me for pronouncing that right or almost right, given my Long Island upbringing and accent. But Well, welcome to the show, sir. I’m a huge fan of yours and I appreciate your journey. So let’s start with that you’re a wall Streeter. Okay, you were a traditional finance person. Explain your ikigai explain how you got from where you were to where you are now.

Speaker 1 0:54
Yeah, so I went into pretty straight direction the first 10 years out of college, which is energy investing, mostly oil and gas, some power and alternatives, and did a couple years oil and gas m&a out of college went to work for a hedge fund called magnetar capital in Chicago, doing long short energy equities and non controlled private equity and debt was there for four and a half years. And then with the point 72, and was running an energy and materials equities portfolio there. So not a tech guy by background, not a tech investor by background, not somebody, I think is you know, people come to crypto from various directions. And there’s, there’s some pads that are more well worn than others, a lot of guys come from more of a tech kind of background. I did not. And I think I felt that I mean, I fell down the proverbial crypto rabbit hole this summer 2017. And convinced almost convinced myself that all this stuff was going to be a big deal and left traditional to pursue crypto investing full time, decided to start my own investment firm in early 2018. And if you Google eKey, guy, you’ll see this Venn diagram, maybe you’ve seen what you’re good at what you’d like to do, what the world needs and what you deserve to be paid for. And if you find those four things, you find your EQ guy. And for me, I had a career in traditional hedge fund investing. And I liked doing it, I was pretty reasonably good at it made a fine living doing it. But you know, to be honest with you, the world doesn’t need another hedge fund manager, as the world can get another hedge fund manager, the world’s gonna be just fine. But you know, I felt like at the time and still do feel like the world needs this technology. And this technology has the potential to make the world a better place in various different ways. Potential, I think that’s an important word. And maybe we can we can dive more into that, but and I felt like if I can just kind of take my skill set in my background, there’s a lot of things I’m not very good at. And I had a career and, you know, investing basically. And if I could try and kind of take that skill set in that experience and apply it towards, you know, maybe helping bring this this technology to tilt, fulfill its potential to make the world a better place. And, you know, that’s like my fourth circle, the Viki guy.

Anthony Scaramucci 3:06
All right, well, the word is a phenomenal word, right. And before we got started, you said it was an 1100 year old ancient Japanese word. And it’s just the intersection of all those great things that you’re discussing. And that’s every live should be that purposeful. And I can just tell by the way you’re dressed, okay, you’ve transformed from traditional finance, which is in this window box on this wonderful broadcast show to D. Finance, or decentralized finance. And you had to have had a eureka moment, sir. So tell us the eureka moment. And then if the follow up question is going to be people that look like me dressed like this, or not, in a eureka moment, I just got off a television set where I had three skeptics, I was in a almost semi circular firing squad were three skeptics were shooting at me. So what was your rica moment? And why do very, very smart people that we both know, they they can’t seem to get there?

Speaker 1 4:09
Well, in some ways, it’s easy for me to have empathy for that, because it’s an incredibly strange thing. You know, and I think I’ll first start off by saying, let’s put Bitcoin in a separate category than any other crypto asset. I did not think about that at the time in the summer of 2017. But I’d say probably by 2019 My view develop it really you should think of Bitcoin completely different than the rest of these things. And I think that’s only that gap is only for further and since and Bitcoin doesn’t have any other competitors really in crypto that kind of competes with $1. It kind of competes with treasuries. We talk about that more if you want to, but it’s really in a class by itself. But going back to 2017 when I was kind of falling down the crypto rabbit hole I finally read the Bitcoin white paper in May of 2017. And it’s nine pages long. No, that doesn’t take longer. Read, and I had no idea what it was about. So I didn’t know anything about computer science. I know anything about cryptography. So I did have to start at just ground zero at the very, very beginning. And I always talk about it in just sheer numbers of hours, like I think you have to do, I had to do 300 hours of self study, before I really got to the point where I was ready to kind of bet my career on this direction. And but the first 50 hours or so Elementary, that, you know, I mean, it’s just Wikipedia pages, it’s real basic stuff. And I think as I went from 50 hours, 200 hours to 200 to 300, I just kept coming across revolutionary concept after revolutionary concept. And in aggregate, after about 300 years, I kind of came to the conclusion that it seemed quite unlikely to me that the world was going to look at all of this and say, none of this is important. None of this matters. I didn’t know which asset was going to make it I didn’t have I didn’t have developed views on the direction the ecosystem, but just the concept, the concept of of blockchains and decentralization, and the different use cases, it seemed like quite unlikely that the world was just gonna say none of this matters at all. And then the other thing is that it triggered this feeling in me that I had only had one other time in my life. Like I said, I’m not a tech investor. So I wasn’t used to seeing a new business idea wasn’t a venture investor, seeing an early stage business idea, saying, Wow, that is a phenomenal idea. It’s I can see how big it could be. I did not have career experience doing that. But what I did do is when I was living in Chicago, I took an Uber very early before, like any of my friends had ever heard about it. I read I randomly read this article, Chicago was the second city after San Francisco to get Uber I think it was like early 2012. And I got the app, it was black car only pick me up from my apartment, took me downtown dropped me off on the sidewalk drove away. And I remember standing on that sidewalk. And going, that’s gonna change everything. And I just had this incredible conviction. And I And as the years went on, and you saw what Uber went, did, I used to joke around, I should just quit my job that day, I took that first Uber, gone to work at Uber, Uber, pay me and shares and that would have worked out well for me. So the second time in my life that I felt that way was when I really jumped into crypto. Alright, well,

Anthony Scaramucci 7:28
I’m hoping the second time is good for you and me because I had Travis, in my office, the founder of Uber, the company had a $50 million valuation at the time, he was looking for a half a million dollars. And I said, Wait, let me just get this right. There’s going to be an unknown guy, and an unknown black car that’s going to be driving my daughter around the streets of New York. And he said, Yes, that’s correct. I said, Get the hell out of my office. I’ll let you know how smart I am. And so I was probably a retirement decision. Maybe the good Lord didn’t want me to retire at that moment. Because had I given them that money. You and I probably wouldn’t be talking about the life wouldn’t be good Travis. life wouldn’t be as good as it is now. Right? Yeah. I’m telling myself that but that was a big miss. For me. One miss, regrettably, that I did not miss which was a direct Bullseye for me. Was FTX and Sam Venkman fried. Both of us have a sandbank man fried story. Tell, tell me your story, if you don’t mind? Yeah,

Speaker 1 8:31
we were the 18th largest creditor in the FTX bankruptcy, we had a $65 million claim. It was the large majority of my hedge funds assets. And we had been doing the we have a pretty active trading strategy. And part of that the nature of the strategy was such that we keep a lot of assets on exchange a meaningful amount of time. And I did not have a firsthand relationship with Sam, I’d never never met him before. But I had just let my How do you say just kind of let the risk management slip. I never in my wildest dreams could have imagined that what would have happened would have happened and got caught up in it. It was, you know, brutal. You know, it was it was undoubtedly the most challenging career experience in my life. Definitely one of the most challenging life experiences ever, for sure. And in the months afterwards, it wasn’t entirely sure that we’re gonna be able to continue operating eKey guy and I think as you know, largely because the prices of crypto went up a lot and because anthropic ended up being a great investment, the bankruptcy for FTX just is turned out much better than what people were assuming in the initial weeks and months after the bankruptcy. So we sold our claim It’s not public, what we sold it for, we sold the claim at the end of November for price that we were very happy with, and took those proceeds. And, you know, we’re now you know, bid back in the market since then. And it was an incredibly painful experience and a bit of a, you know, metaphorical near death experience, but we made it out the other side of this thing. So, yeah, listen,

Anthony Scaramucci 10:21
he hurt me. I mean, I allowed him to buy 30% of my business, I guess the the good fortune due to my caution. He didn’t buy more than that, but he certainly hurt me hurt our reputations. I think we’re on the other side of it now, because the, you know, the Department of Justice has already rendered who they thought the guilty parties were, thank God. But it was very, very painful. But I think important to the story, which I want you to talk about Travis is your stick to itiveness, your, your persistence, you know, you’re you’re snagged in this, the markets are roiling your, your your Bitcoin assets or other assets down anywhere from 50 to 80%. You stay with it, you make the decision to sell your claim you get out and reinvest in November. And of course, these assets have been very well since November of 2023. So tell us about your stick to itiveness. As an investor the persistence I am,

Speaker 1 11:19
oh gosh. Well, I’m I’m 39 years old. So that makes me a I am a crypto Boomer, a proper crypto Boomer. And, and I think you just have a few laps around the track. And you go through difficult periods of time. And I think in those instances, I get very one foot in front of the other one day at a time. And I don’t know if that’s the right way or the wrong way to do it. It’s how I have experienced difficult periods in my time of life previously. And, you know, in a fund situation, and my business partner and I were the largest investors, we’re the largest LPS in the fund. So there, nobody was sort of hurt more financially than we were by this mistake that I made. And there’s a fiduciary duty concept here, where you’re in the midst of this thing. And I’ve been a fiduciary for a long time. And this just means that you just put the investors, they just go front and center every day, in all ways always. And just, you know, I tried to keep that with my business partner and I and a lot of credit goes to him as well, too. We tried to keep that at the forefront. And then you just we had a lot of encouragement from our LPS a lot. A surprising amount given the magnitude of the mistake that was made. And that was also very heartwarming warming and encouraging that. Yeah, that was helpful. I want to before we get off, Sam, I wanted to ask you one question. How did you feel about his sentence? It’s a deep question. There can’t so

Anthony Scaramucci 13:02
so I mean, it is a deep question. I’m going to answer cursorily. The the overwhelming feeling I’ve had about Sam is sadness. I think I had some anger. When I was facing the music from the media and I was getting excoriated in the media and people were writing the obituary of me financially, at least my financial obituary, and skybridge is financial obituary. And so I was angry in the beginning, I’m not gonna lie. But today, I feel sadness when I see a troubled young man like that. And I would encourage you, not that will make you feel better about the situation. But just from a human point of view, I have five children when I read Sam’s testimony that he was about to give to the Congress, as a dad, listening to a young man who’s somebody’s son, talk about their trouble and the overwhelming depression that he had. And I think he was heavily medicated, by the way, which is a whole other topic that will probably come out sadness, could he have deserved more or less? I honestly don’t know, I don’t I don’t think a 35 year sentence is fair in a situation like that, given the circumstances. And given what you just described in terms of the harm that was done, was less than by the markets, thank God. But I feel sad about the situation I don’t I don’t I don’t feel really it’s not a murder. And now the person that murdered somebody is sentenced. This is a misguided person that hurt people financially. And so he’ll serve his time he’ll lose a very large portion of his adult life. And obviously, when he comes back from that, it’s anybody’s guess what happens to him. But I don’t see this as a Michael Milken situation, by the way, where I think Michael was unfairly penalized back in the 80s In my opinion, but he’s worth the last 30 years to reclaim his good A reputation. You know, how did you feel about the sentence? You know, I

Speaker 1 15:06
would have if you told me that part of his parole was that he could never manage a company again, of any kind. I feel way better about the situation. I think I was hoping for a sentence. And I think it’s kind of on the A if you assume that he does 80% of 25 years.

Anthony Scaramucci 15:27
Federal statute he has to unless somebody commutes him, he has to have a president commute the sentence, but he has to serve. Yeah,

Speaker 1 15:35
I saw when I was when I was researching this, I saw that. I think it was Jeff Skilling that worked through the appeals court for like three like years, and then ended up getting, I think he got some plead down stuff. And then he ended up only doing about half of what His sentence was okay. And so in my head, 20 years feels like plenty, especially if he told me that he basically can’t ever get back into crypto again, because one of the things that I had been, I’ve talked a lot, I kind of did a lot of soul searching, as you can imagine, in the wake of FTX. And my, to the extent I have a public voice in this space, my public kind of tone of my public voice change some, and part of it was this realization of the magnitude of the attack vector of bad actors that we have in crypto, yeah, how damaging they have been. And that if you’re being honest with ourselves, we’re not doing a good job of keeping bad actors from rising to places of enormous power and influence credible, right. And so part of this is like, and I feel the exact same way with check things out identical, same way, where it’s just where if you told me that he just doesn’t get to be in crypto anymore, I would feel so much better about that overall situation, right? Um, and I feel the same way for Sam, and I don’t know, maybe 20 years is enough that he’s gonna get out and he’s gonna be 50 years old. And you know, maybe crypto has moved on enough or he’s not in the mood or whatever. So Well, I

Anthony Scaramucci 17:09
mean, you’re bringing up a lot of interesting points. So I, I’m in the category that the SEC has hurt the industry and also helped the industry. So it’s hurt the industry, because it’s not providing any clarity. It’s not providing any regulatory guidelines, and the result of which these lawsuits and this lawsuits and regulation by enforcement, obviously not helping, not helping anybody makes them look bad. And they’ve lost a ton of court cases. And they’ve even been shamed in the court for lying on some of their complaints that they’ve written to the courts. But they have helped in a weird way, Travis and just bear with me for a second. They should have approved a Bitcoin ETF a cash ETF or a spot ETF in the first quarter of 2022. For political reasons they elected not to and of course, they lost the court case, because they needed to pursuant to administrative law, but then not passing that or not approving it. Open the door for the slide and crypto and the exposure of Sam, three arrows Celsius. I could name five or 10 companies, Terra Luna, all of which imploded as a result of the fact that we didn’t get the ETF in the first quarter of 2022 we could still be living in a SAM Venkman fried world. Yeah. And that world would have led to an even bigger, more cataclysmic explosion but I just think we need to cut it out in the United States if we want to maintain our financial services leadership we just got to regulated and regulated fairly improperly let’s go to the macro for a sec is sorry.

Speaker 1 19:00
I gotta put you on the spot. So it takes for a second you think’s gonna win the election and what is your confidence level? Well, I cannot answer that to not answer the prompt when I’m on a podcast with a guy like you I gotta ask right yeah,

Anthony Scaramucci 19:15
Travis the viewers and listeners are gonna hate me for this because I think we have a lot of right leaning listeners on wealthy on and I’m a right leaning person. I’ve been a right leaning person my whole life. I fit in with the Dana White’s and the Joe Rogan’s and so forth. Those guys are guys that I respect and admire, but I don’t fit in with Donald Trump. I work for Donald Trump. And I understand the danger of him. So I get why people are supporting him though. We’ve got a big crisis. At the border. We have this whole woke culture war, we’ve got the crime in this beautiful city that I’m sitting in the urban crime as people upset so I understand why people are not going to vote for Joe Biden at least a lot of the people that I’m friends with an intellectually insane With I just understand the danger of Donald Trump, but the the answer to your question is who do I think is going to win the election? Not Who am I going to vote for. And I think Biden wins the election handily, because you’re gonna have way more money than Trump, when push comes to shove, and he’ll have five or six field offices in the swing states, relative to one or two offices for Donald Trump. And that, that’s going to be the game changer because I submit to everybody listening. These guys have 50 years of being brands in America, this is not the Barack Obama introduction tore a 2008 was everybody knows who these two entities are. And everybody has an opinion. And so this is going to be a Get Out the Vote exercise, as opposed to anything else. And I think the President will have way more apparatus to do that. And I don’t think it’ll be bad for crypto because, you know, he’ll no longer be beholden to Elizabeth Warren. He has a lot of pressure on him right now. From the likes of people like myself and the Ron Conway’s of the world and the Brian Armstrong’s, who are actually supporting him and telling him that this is wrong, what you’re doing to the world of crypto so, so we’ll we’ll see. What do you think’s gonna win the election? Now that we’re on the election?

Speaker 1 21:17
I have no idea. I don’t feel like I have an informed view at all. I really don’t. All right.

Anthony Scaramucci 21:21
So what about macro economics? You have a view on that you’re really good at that. So what do you think’s going on there? Where do you think the Fed is?

Speaker 1 21:31
Yeah, you I mean, year to date, the defining macro trend feels like going from six rate cuts to two rate cuts this year. And pushing the first rate cut from May to I think now it’s in September, I think, maybe October. And risk assets had been able to hang in pretty well through that going NASDAQ’s up 5%. This year, crypto has obviously done well, this year, the market has gotten a little skittish, just over the last risk assets. In general, we’ve gotten a little skittish over the last, I guess it’s been a week or week and a half now since that CPI print came out and took another cut out of the curve off that print, push the date back, some are the first cut off that print now people are thinking or what happens to you know, tech stocks and in turn crypto, if we go from two rate cuts this year to zero rate cuts this year, is there a chance that they’re going to have to hike rates again. And that just seems to be kind of front and center and then with with some sprinkle of it not to not to talk about it flippantly but some kind of world war three risks sprinkled in there as well, too, which is, you know, that’s obviously a really sad thing. But it does, I think to a lesser degree have market skittish, but those are the types of things that can obviously escalate really, really, really quickly, in a really scary way. It seems to me like there’s an enormous amount of cash sloshing around. Crypto is is heavily beholden to global liquidity characteristics, monetary and fiscal policy into money supply, that type of stuff. And I think specifically with Bitcoin with these ETFs, we have had a there’s enough of a structural inflow that has occurred there. And I think there’s some more of that to come just directional slow structural inflows, and you would know better than me, I’d be curious to hear your views on that, that it’s gonna, if that’s going to probably big ones probably going to trade fine this year, even if risk assets broadly, are going from two cuts to zero cuts and getting nervous about maybe a hike instead of a future cut. I do think that would probably, you know, meaningly meaningfully curtail how high bitcoins price might get this year, as opposed to you know, if they cut, say, four times this year, like you would just expect bitcoins price to be higher in that scenario. But I wouldn’t be super worried about the kind of downside in Bitcoin. Yeah.

Anthony Scaramucci 24:15
Right. So I’m the contrarian here, right. And I and I appreciate the data. But I think that there’s something else going on and I and I’m, again, I could be completely wrong. The same thing that got the Fed in trouble at the beginning of COVID, which was the incredible induction of money into the economy, and the massive fiscal stimulus which led to this inflation that we have and just to remind viewers and listeners we’ve lost 22% of the dollars value. The US Dollar in terms of its purchasing power, has gone down 22% In the last four years, so it’s really putting a strain on lower middle income people. But but the Fed Miss sighs the inflation on the way in they said it was going to be transitory inflate They should, because they thought the supply chain was going to connect more quickly. I think what’s happening now is the the data is lagging, where the actual inflation is that we’re good numbers in Europe where I was this week. And I think when you get to the end of the first, the second quarter, when you get to the end of June, you’re going to see lots of these numbers better than people expect, which is going to force the Fed to cut rates, which will put pressure on there. You mean we debt side of the economy for everybody, not just the congressman, but also the real estate, the mortgage brokers, etc? Sorry,

Speaker 1 25:39
do you mean the data coming in weaker than expected so then that gives the Fed room to cut is that remember that weaker

Anthony Scaramucci 25:44
weaker than meat meaning meaning more inclination, the economic data is going to suggest that it’s time for a cut? What’s the when I say better than expected main data data that will allow them to cut obviously, it’s a weird thing about markets in the economy worse data, allows them to cut which gives the market a little bit more flexibility in terms of price appreciation, but yet, I could be wrong. It’s just these are my feelings about it. Let me let me go to a topic that I always like asking people, is there something today that this audience could take advantage of? If you had an idea or there was a spy, you say, you know, listen, this is something I think it’s gonna work over the next three to six months. Anything right there in the sweet spot of your investment zone?

Speaker 1 26:36
Well, I got to be careful about this stuff. As you know, from a regulatory perspective getting on it, this is absolutely not financial advice. But I can stick with an easy one. Do you know if you’re just gonna guess finger in the air? What percent of your listeners that are going to watch this own Bitcoin? Good

Anthony Scaramucci 26:54
question. I mean to say less than half, but I would say more than 25%.

Speaker 1 27:01
Okay, so then it’s very easy for me to give a Bitcoin dollar cost, average pitch, and even even up here, that’s a fine, very fine thing to do. You can Google around for kind of Bitcoin DCA trends, I think there’s a website that tracks this thing. But $1 cost averaging strategy for Bitcoin has just been such a great investment for such a long time, through incredible increases in price and stunningly decreases in price. And if you just chug along like that, that has just been so good for you. And if you want to get a little cute with it, you can put on incredibly basic risk management stuff around. There’s something called the mayor multiple, maybe you’re familiar with that, where it’s the distance that the current price is above or below its 200 day moving average, incredibly simplistic stuff. And so maybe if you want to get cute, you can like cut the DCA when you’re way up above the 200 day. Maybe you want to juice the DCA when you’re done

Anthony Scaramucci 28:01
pursuant to the mayor multiple where’s it now,

Speaker 1 28:05
I would probably be slightly like a bit above but not in a crazy zone, definitely still in a bye zone for sure. And then and then I think each person’s portfolio allocation about how much that’s a very person by person dependent thing, how old you are, what your family situation is, what your general risk appetite is, what’s your knowledge of crypto is just different things like that. But you know, I think 5% in Bitcoin makes sense for everybody, you know, my mother had 5% of our networks are 71 years old. If you’re younger, you want to do more, you can do more than I do 10% 15% Something like that, and you can DCAA into it and and I was trying to give just a quick kind of one minute pitch on what Bitcoin is. And so Bitcoin is a non sovereign, hard cap supply, global, immutable decentralized digital store of value. That’s six adjectives. That’s a lot of adjectives, but each one of them is important in its own right. And it is a insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. That’s what it is, if you are bullish on central bank balance sheet growth, and if you are bullish on into money supply growth, and and sort of the inverse of that is that you’re worried about the diminishment of your purchasing power over a multi year multi decade period of time. Bitcoin is a great financial instrument for that and I have a higher degree of confidence of that, certainly than anything else in the crypto ecosystem. Do

Anthony Scaramucci 29:49
you have a near term like what’s your urine price target for Bitcoin?

Speaker 1 29:52
Oh, I try not to do stuff like that. There’s a lot of variance around it. You know, if I was gonna throw out a number or, I would say, somewhere probably right above or right below 100k. But that’s not a high, I’m not highly confident in that number there’s, and I’d say the tail is fatter to the upside. I think there’s there are pads where you really pick up steam and these ETFs and ETFs are what God is to new all time highs as quickly as we did. It was an incredibly straightforward reasoning behind the you know, Bitcoin was up, I think 46% In February, incredibly straightforward why that happened. 17% last month, incredibly straightforward. why that happened. So I don’t have like a great, you know, and again, I think I want to put it back to you about about your feeling around ETF inflows, I do not have a great sense of the range of outcomes for that ETF inflows over the rest of this year, and the likelihood that it’s this amount versus this amount versus this amount. But what I do have a high degree of competence in is if you can, if you told me which one of those they were, I can tighten up my price prediction a lot more, if that makes sense.

Anthony Scaramucci 31:11
Makes sense to me. I mean, I appreciate you. You you clarifying all this for us. I think look that’s that’s my number one investment idea. So I’m with you on that. We’re going to take some outside questions, Travis. So let’s let’s go to our first guy, how is Bitcoin good for America? And Americans and I don’t mean why it’s good for individuals to get rich. And this could be a macro question your is John from Rhode Island?

Speaker 1 31:39
Um, so what I would say bitcoin is good for Americans because it protects your purchasing power. I think I just laid that out. And that’s good for everybody on earth, no matter if you’re in developed or developing nation, that’s a good thing. What I would say is, if you’re thinking of it from a, you know, nationalistic perspective, America first perspective, actually stable coins would be which is not Bitcoin and some kind of dodging is question but I tried to answer this question just now but then broadening it out to crypto stable coins are unequivocally pro dollar this is this is dollar rising the entire world and getting into places that were unable to be dollarized based on you know, banking, logistics or relation, you know, geopolitical relationship type of stuff the whole world wants $1 Bitcoin is is not if you if you go somewhere where they’re experiencing an extremely unstable home currency, they want digital dollars, they really want tether on Tron. That is what they want the number of support that and they want that more than Bitcoin. And to the extent that that continues to grow the way it has, this is dollar strengthening pro dollar, the dollar gets even more powerful, and then America’s influence over the world gets more powerful.

Anthony Scaramucci 33:03
All right, I think that’s the answer. I mean, if you get if you get bitcoin in the equation, I think, John, I mean, I could be over overly interpreting the question, but John, could also be talking about the dollar supremacy and the need for us to maintain the supremacy in terms of the flexibility it provides our economy and I think, I think we both Travis and I believe is that the stronger bitcoin is, the stronger the blockchain digitization will be, and the US dollar will be in a digitalized format. Now, I would make the argument that we could do that in the private sector with things like circle. And I think we’ve got to get more transparency on tether, but I like tether. I think, tethers way more stable, and people give it a credit for it. Let’s go to the next question. What is your take on Dogecoin? This is Freddy from California. Let me duck under the table while you’re saying.

Speaker 1 34:01
So it’s a meme coin. It does not have quote unquote, fundamental value. There’s a longer we can do a separate podcast on what the concept of fundamental value even means, both in traditional assets and in crypto assets. Bitcoin has value because of its monetary properties. It has, you know, it helps to understand the investment case for Bitcoin to understand monetary history, the history of money, the history of debt, and the history of world reserve currencies. Bitcoin has the properties to be a good money so it earns a monetary premium Dogecoin doesn’t have that. What the sort of New Age answer that resonates with me to a certain degree is that human attention is the new oil you know, people used to say data is the new oil will sort of the funnel for data is just huge. human attention. And human attention is becoming incredibly valuable. Many of the most valuable tech companies in the world, they are valuable because of the attention the human attention that they have. And so you would back into this by saying sort of anything that has attention, therefore has value, that will be the pitch and Dogecoin has a lot of attention, therefore it has value. Now, does that mean it I can’t remember what’s market cap is right now it’s probably, gosh, it’s probably 30 billion or something like that. Now, is that the right number? That’s a separate conversation. And I would, I would never feel comfortable recommending somebody invest in Dogecoin. I guess one thing I would say is, some people have like 2% of their paycheck that’s like, Oh, when I go to Vegas, if I lose two grand at the craps table, you know, it sucks, but it’s not the end of the world. If I win to grant Oh, I had a fun time I paid for my trip. It’s not gonna make me or break me. If you want to take that or half that and go play around and mean coins, like Have at it, you know, but just two eyes wide open.

Anthony Scaramucci 36:07
Alright, alright. So you’re you’re very polite, very diplomatic guy. So I would say Freddy, stay away from Dogecoin. Okay, it’s dogshit. And even though it has a $21 billion market cap, it’s not something that that I would recommend to anybody. But I understand what Travis is saying. If you’re a speculator, this is as good as any other thing to speculate on. But I’m not a speculator. And I don’t want people to be speculators be long term investors, long term thinkers. Let’s go to the next one. Iran’s attack on Israel seems to have triggered a dip in Bitcoin. Do you see a correlation? This is he from Texas. This is also the Andrew Sorkin question. If it’s a store of value, and it’s a quote unquote, inflation edge, should it have traded up on this exogenous Black Swan like news?

Speaker 1 36:56
Yeah, I have not thought about it like that. It’s an emerging store of value, it doesn’t have the characteristics of a gold or $1, or a treasury. It may have those characteristics one day, it may sort of represent that in a quote unquote, multifactor cross asset model one day, but it’s not that right now. You shouldn’t expect it to trade like that. And it really just didn’t dip that much. I mean, it just, it had just ripped the 100% in straight line. And, you know, I don’t know, we’re like 15% Off the top or something like that. So I think trying to tie that, you know, too much is is is I think is a reach from Andrew Ross Sorkin. And as you and I both know, that’s that’s his job is to kind of poke the bear in that kind of way. So, you know, journalists are going to do what journalists are incentivized to do. There’s geopolitical risk to the downside in crypto, I would certainly if conflict escalates, you know, I want to be crystal clear, people should not expect their Bitcoin to go up in value. That would not be my base case expectation in the near term. It would go down, it would go down by some amount. And there’s some situation where all risk assets are trading off really hard think think back to COVID, beginning of COVID, March of 2020. Traditional markets are under incredible levels of stress, that stress metastasizes over into the crypto market into the Bitcoin market, and then causes some kind of in March of 2020. It was bitmax, which was the time was the most highest volume, derivatives exchange for Bitcoin bit Mex basically broke and greatly exacerbated the price crash. And maybe you could have something like that in a real, you know, kind of Black Swan type of scenario. And

Anthony Scaramucci 38:51
he’s a great answer. Let’s go to the next question. I have a bunch of money that’s been held in Gemini, sorry, and a bunch of money that’s been held up in a Gemini earn account due to the bankruptcy of their Puerto Genesis. Can you explain what’s going on? This is Steve from South Carolina.

Speaker 1 39:08
Yeah, so definitely not legal advice. It is my understanding that, again, do not take my word for it, but you can find information about Googling around or looking on Twitter. It’s my understanding that they just reached a settlement between Gemini and Genesis. And the judge, I believe, just approved that portion of that bankruptcy, and I believe earn customers are going to get almost all of their assets back in time 90 over 90% I believe, is but again,

Anthony Scaramucci 39:41
yeah, yeah, I mean, it looks like it’s going the right way. Steve at these bankruptcies take forever. I think Travis and I’s message to you is that you’ll likely get 90 cents back on the dollar, but you got to be patient and of course, in a bankruptcy situation, they dollarized assets and so Travis knows this. And I know this if you

Speaker 1 40:02
Sorry, sorry to interrupt. So it’s my understanding that specifically in the Genesis bankruptcy, they have now introduced a extremely in my understanding rare waterfall concept whereby everybody gets paid back 100 cents on the dollar dollarized that petition date. And to the extent that there are then assets leftover, it starts a waterfall concept back to in kind investors. If you’re if you have Bitcoin, and they have your Bitcoin, and then I believe the estimate is that in kind, you’re gonna get 90 plus percent VAT. So if it’s if you’re not getting 90 plus percent of Bitcoin at January, I think 19th prices that you’ll actually get the actual BTC back, but again, don’t quote me on that. But I think that’s how it works. It’s very rare on that. And to your point, not the way that the FTX bankruptcy went. Or

Anthony Scaramucci 40:53
there you go. Yeah, that’s where we got Travis on the show. Let’s go to the next one. What do you see coming in the way of government regulation over crypto, this is Alex, from Ohio. Let you start with that when Travis? Well,

Speaker 1 41:07
it would it’s November is gonna make a huge difference. It’s gonna make a big difference if somehow we get a Republican in the White House. Gary Gensler, I would expect would not continue as sec, I would expect you you would immediately move into a much more cooperative rule bot, what’s the term when the SEC their rule, mate rule by exception? Is that what they call rule by enforcement?

Anthony Scaramucci 41:35
And they’re, they’re bringing cases? You know what I mean? Yeah,

Speaker 1 41:39
yeah. What I meant was, I think it’s my understanding that the expectation is that if you got a more cooperative SEC chair, that there could be a series of no action letters that were issued, that would then begin to sort of back into a framework that is constructed by way of No, I have no, no action letters. Yeah. And that that would be able to front run legislation, which hopefully you would be able to get in that next legislative session. 2526 kind of kind of deal. Right?

Anthony Scaramucci 42:13
Exactly. Yeah, I mean, listen, I’m I’m of the view that Gensler has gone one way or the other, he said a unsatisfactory time as commissioner. He’s trying, if you like answer, go to Twitter, because he’s out there praising himself and all the things that he’s done at the SEC, but it did really does sound like a whining session from Gary Gensler. But then again, if you look like Jiminy Cricket in real life, you’d be taking it out on us, as well, Travis, so on

Speaker 1 42:46
the you know, okay, again, to put you on the spot, do you have a time period for guns are stepping down as your base case?

Anthony Scaramucci 42:54
I think he steps down right after the election. I think it’s embarrassing for him to step down before the election. It would help Joe Biden if he did, but Joe Biden’s got too much pressure on him from this, this woman called Elizabeth Warren, who I’m spending money time and energy trying to defeat in Massachusetts, she’s the scourge of the industry, and a longtime regressive, she’s against the poor and the middle class. And she’s a servant of special interests that that literally pay her to stay in Congress. So anyway, let’s keep going. We’ve made you and I’ve made the show more political than I thought. Let’s keep going. One more question. This is our last question. Do you expect another major dip this year in crypto prices? Or was this just a correction? This is Ashley from New Jersey? What do you think Travis?

Speaker 1 43:47
So we have not had a 25% correction since Sam collapsed FTX and this is in Bitcoin price. Which I am not entirely sure Bitcoins. I’m not sure if anyone’s ever gone that long. I think it actually is the longest period that bitcoins gone without a 25% correction. And that in and of itself is interesting. I so the way I’ll try and specify the question is sort of what do I think the likelihood is that Bitcoin has a Down 50% Move from the top. So let’s define it as that this year. And that feels like a 30 to like a 30 to 40% probability as well as where I’d put that down. 50% move and I can imagine the scenarios where that would happen. Like for example, if you told me that inflation is running hot, the curve goes from two cuts to zero cuts while we get an increase or maybe because we get an increase in conflict risk abroad. You know, if you’ve got that then the likelihood we do it down 50% off the top, that would increase my likelihood. And then, you know, what’s the likelihood that we get only 25%? Or, or or maybe, let’s say 25 to 50% dip that feels like pretty likely to me. Um, you know, maybe I’d put that at a 50% probability or something like that.

Anthony Scaramucci 45:23
I think it’s well said, you know, actually expect big corrections. You know, we’re, we’re sitting here when the show is broadcasting at 63,000. But I don’t have that in my head is my figure for Bitcoin in terms of his permanency? Both Travis and I know that this is an early adapting technology. It’s got to go through a billion wallets before I think it stabilizes from a volatility perspective. So but it’s like I said to Anthony pomp Leon, oh, Travis, you gotta act like you’re dead. When you own Bitcoin, you’re dead. People don’t look at their accounts. And it turns out that the dead people at Charles Schwab, they do better than the living because they’re dead people have a tendency to be more patient and less emotional than living people so well, it’s a good idea to act like you’re dead when you own Bitcoin. Travis, any other things you want to add before I say goodbye to you today?

Speaker 1 46:15
No, it was a great conversation. I appreciate the time. Anthony was a pleasure. I’ll see you in Jackson Hole.

Anthony Scaramucci 46:21
Oh, good. We’re excited to have you there. It’s gonna be a lot of fun. I’ve got I’m working on swag too. Okay, so we’ll have some Wyoming blockchain Association swag for you when you arrive. Looking for thank you so much for joining us today. Of course, you’re here on the wealthy on network. And as Travis said that we’re not here offering direct financial advice but if you want that, you can go to wealthy on.com. And we have registered investment advisors on the platform that can fit your needs. And until next time, this is Anthony Scaramucci for speak up