Unpacking the Latest Cryptocurrency Trends: Trump Coin, XRP, Bitcoin, and Tokenization

This is the first full episode with the full crew together. I am Phil Larmon. - I'm Ali Davoudi. - And I'm Douglas Borthwick. - And this is "Old Men, New Money." - What an exciting couple of weeks, right? We've got Trump now. He's sitting there. He's president. His family's getting involved in crypto. It seems to be everything on crypto Twitter is all about the Trump coin. Let's talk about Trump coin first. What do we think about the Trump coin? - I think it's dog shit. It's just a completely useless coin that's going to make it very easy for all the detractors of crypto to say that this is just about Trump enriching himself.

I wish he could have championed something much, much more serious. - Yeah, I couldn't agree with you more. I think the timing was in bad taste and I just don't understand the thought process behind it, especially with everyone and their mom that's anti-Trump wanting to point the finger of why he's running for president and all this. It just didn't make sense, but- - Take another back. - Yeah, it's a crap coin, but so are pretty much the other million coins that are out there other than Bitcoin. So in that respect, okay. In terms of the timing, I thought was perfect. Obviously, that was right before Gensler resigned.

And it's the sheriff saying there's a new sheriff in town and the rules have changed. You go out there and do what you want. After he put out the Trump coin and the Melania coin, now every influencer in the world's thinking maybe I should put out a meme coin too that has zero, absolutely zero. Utility. But it gives their fans something to play around with. And if they want to play around with them, like a Beanie baby, okay, good luck to you. People buy NFTs that are put out by a basketball player. They put out, people buy anything and you can't tell the market not to buy something if they want to buy it. There's no security aspect to this.

There's absolutely nothing essentially that tells you this is what it's going to be for. You're going to make money with this. So people are buying it just on the back of the popularity of a name. And you know what? That means the rules have changed. - I don't know about that, Douglas. I think if you really want the space to flourish that especially when it's the president of the United States, he's going to have to champion things that are a little bit more sound in this space.

Because what happens in this space is if you happen to be John Q public and you put $5,000, $10,000 into it in the Trump coin or in the Hawk to a coin or whatever crap coin, enter your silly ass name here. And you end up drawing back a stump. Chances are you're not going to have a good feeling about crypto and all the benefits that are associated with blockchain and things like that. And so from that standpoint, I'm with Phil. I think it was a miss. I think it was a bad move. And it was something that is detractors can easily point at him and go, look, see, he's just a shill. He's just there for self-enrichment for him and his family.

- How has he enriched himself? - He owns 75% of it. - It's 80%. And when is that 80%? - He can't sell it right now. It's got to be held for two years before he sells it. So you can have all this movement back and forth, but everyone knows that 80% of the supply is going to be hitting the market in two years time. So in two years time, the thing could be worth zero. - Yes, I think he's spending any time on it. - There is no point. That's what we're saying. There's no point. I don't think that it's there for enrichment.

I think that it's there to really say there's a new sheriff in town and now you can play around and you can do things with blockchain that you couldn't before when Gensler was sitting there in the SEC. There is a chance for ingestion, but look, if you're holding a token in two years time, knowing that 80% of the supply is about to hit the market, which means the price is going to go one way, why on earth would you still be holding it? - Yeah, but the average investor doesn't understand. Like they're just saying there's his names on it. They threw some money in it. The average person that doesn't understand the market. - This is not a security.

- I understand, but they bought one. - There is certainly a disclaimer. And then it says, unlike a lot of token projects, this actually has the lockup here and it's public. So it's very public that he owns a large percentage of it and he's going to be able to dump it in two years time. Most token projects don't have that. The rug pools are the ones that they say, "Oh, we're going to lock this up." And then they go out there and they sell it as soon as it goes a hundred times up. But this thing is pretty much out there. It does nothing. It has no utility. 80% is going to unlock in two years time.

Now, if someone buys that and isn't aware of it, that isn't the issuer's problem. But when people were buying Beanie Babies, did the company that make Beanie Babies sit there and worry about, "Oh my goodness, people are buying this as a collectible. I should be worried about the price moving." - That guy wasn't the president of the United States, Douglas. He wasn't the president of the United States. He was just a schmuck trying to make some money, which I get. And you know what? If Donald Trump was doing this and he wasn't president of the United States, again, I would agree with you.

But I think you have to hold yourself to a higher standard once you become president of the United States because of that office and what that means. And so as such, even if he hasn't said that there's no functionality for it, like he had the trading cards, he's had the sneakers, he's had all sorts of different things for people to play with. But when you issue a token, I think in this day and age, especially with those that are not sophisticated, their assumption is if they can buy a token, that it's got a chance to go up.

And I don't know that anybody's looking at that and thinking that they're buying this as a novelty or as an NFT type of token. I think a lot of people- - Do you think people are buying it and saying if I own a million of these, I'll get access to the president? - Absolutely. I have so many smart people that were calling me up and asking me how much they should pile into the money. And I just thought to myself, "Holy shit. How can you have made the money that you've made in your life and think that this is a good thing to buy?" - Now, obviously if that happened, I would be against it. And I think this is horrible.

But in terms of, look, if there's someone out there, caveat emptor buyer beware. But if it's then used as a tool such that you can say I own a million, like it's in my wallet, I'd like to meet the president and have a talk with him, then you're buying time and that's not good. - Yeah, not at all. Especially 'cause if you have to buy that million you're essentially saying, "I'll take some of the bags you're gonna sell if I can have an audience." Last time I checked, that's no different than how the politics of usual have always worked. And for me, I'm looking for blockchain and Bitcoin to take us to the age of the individual.

I am tired of even having a representative democracy because all these people are captured by special interests. But much rather you wanna talk about a good use of blockchain, how about all of us voting with blockchain? If you wanna bribe us, you don't bribe 100 senators and the representatives, come bribe 330 million Americans. I'd much rather do something like that. But I do think that our elected leaders owe us a greater duty of care when it comes to pitching financial products. I don't think a single damn member of Congress should be allowed to trade. Not while they're in office. - I think we all agree in that.

- Yeah, that's why I think that the optics of it for me was just a miss, right? 'Cause if we're talking about Pelosi's, her and her husband's increase of wealth over the years, they're talking about Newsom's increase where he's buying this $9 million house and he's made $224,000 a year as his salary. For me, it's just strictly optics. It's not that he doesn't have the right to do it. - Politicians are just smart and lucky. Hillary Clinton was very good at commodities trading. - Extremely. - Yeah, you know what I mean?

You really don't think that politicians, once you get into Washington, maybe they sit down and there's a class, how to trade options, how to trade commodities. And maybe this is part of the 101 that they go through in their first week and we're just not aware of it. - Yeah, they turned out samurais in options trading. - That's right, that's right. - There are folks you can follow now on Twitter that every single trade that they do, you can mirror. - Yeah, they actually have it automated. - I think it's an ETF now as well. - They have a Pelosi tracker. There's a poison tracker, that's easy. - Yeah, that's a good thing.

You can actually see how she's trading and you can go along with it. I'd say one of the things when it comes down to the Trump coin is that, and with all of these different Trump things that are on the blockchain is the transparency. Some people will do things and you won't be able to have the transparency of what they're doing. For example, you're seeing one of the Trump units right now buying a lot of Ethereum. They also bought wrapped Bitcoin as well. I think they bought Solana. And you can see this on the blockchain in a lifetime. And that I think that level of transparency is good now.

It's not good if it's affecting US policy, but it's certainly good. One thing I am enthused about is the fact that we do have a blockchain friendly administration. And it's not just Trump. - Pete Hepseth, also a big supporter of Bitcoin. You've got percent big supporter of Bitcoin. I think RFK big supporter of Bitcoin. I think you pretty much have a cabinet where every person has talked about Bitcoin in a positive way. And we haven't had that before. And also you see the power of crypto when it comes down to lobbying now. And we saw that in the election, obviously, and now it's having a great effect too.

If you vote against something, you're going to have the crypto community vote against you. Now, this is the way that every special interest has worked for hundreds of years. So it's nothing new, but crypto finally has a community that is willing to vote in or vote out their choices based upon what they want. - Yeah, I don't disagree with you. I do think it's a good day for crypto. The problem is I think that what we're doing is we're getting captured just like the others did. So we're not really changing the system. We're joining the system.

Now we're going to have to bribe the same people too, or we're going to have to go either throw you out or make donations to you. To me, it's good to see the positivity of it, but I don't really see a change in the system. I see it pretty much continuing the same as before. - Now, did either of you buy Doge when Elon started up the Department of Government Efficiency? Do you think people are buying Doge on the back of that? - I think some did, but I didn't. I think for sure.

I think they probably just for name association thought, "Oh, this is big." I think those would be the same people that were eating the horse-based ivermectin as opposed to like the tablets. - All right. And what do you think about XRP Ripple, right? Ripple spent, Brad spent a lot of time in Washington pushing for XRP to be part of the strategic crypto reserve. There's a huge discussion right now in crypto Twitter where they're just turning around and saying, "That's ridiculous." Ripple essentially prints XRP. No one had to mine for it. No one had to work for it. No one had to buy it out of their treasury.

So that seems rather self-interested right now as well. - They issue a hundred million new XRP a month, if I'm not mistaken, to finance their operations. So it's not decentralized. It's almost like they're just issuing stock to continue funding their company. And there's no finite number. When people think that it's gonna be a good store of value or if it's gonna replace Swift for money transfers, okay, I don't disagree with you on that, but like how is that gonna increase the value of your token when they are able to print them indefinitely?

- I think that's key is that people buy XRP thinking that the more Ripple has its products being used in the market that'll transfer into XRP going higher. And yet because the supply essentially is coming out of thin air, that's probably not the right decision. And I've said a lot about XRP. We've got a video on this channel that I did in 2018 at Monica's with Modern Wall Street, where I talked about back then, Ripple was the industry's darling. So if you were a large financial institution, a large bank, or you're in the government, you were very aware of what Ripple was doing with XRP and they made great inroads.

And then obviously the SEC came in and said, hold your horses here, you guys issued a security and things went pretty dead for XRP, for Ripple for a long time. Now, obviously you've got the lawsuit now finally dropped by the SEC and they're sitting in the White House. So I think that there's probably a lot of banks that are dusting off the products that they were using on that blockchain. And you could see, I think a use case for payments, but the nice thing with payments and with dollars is that dollars just get printed all the time. So there's no difference there. What's the difference between dollars and XRP? I don't know.

Both seem to be able to be printed out of thin air. - Yeah. Money printer go brrrr. - Which is needed sometimes for payments. - Which is needed sometimes for inefficient governments. - I don't think it's something I'd put in a reserve. It's almost like, why would you put USDC in your reserve? It's not going anywhere. - By that matter, I don't think Ethereum is decentralized either. I think there's a reason we have Ethereum classic. We have Ethereum classic because Vitalik proved that Ethereum is highly centralized.

- Ethereum has been making a good point about how they're decentralized whilst the leaders of Ethereum are arguing with each other about who's the leader. And that sort of shifts itself in the foot in that everyone's saying, no, we're really are decentralized, but we're trying to figure out who's in charge. - Perhaps the meaning of the world decentralization. - No one's doing that in Bitcoin. No one's saying I'm in charge. No one's saying I'm Satoshi because everyone is Satoshi. And I think that's a significant difference. Now, Bitcoin has been sitting here at $100,000, it seems for weeks. And yet every single day we get a piece of news.

Like today came out to check central banks now looking at it and it's going to push forward to having it part of a strategic reserve. You've got a lot of US states now, all the legislatures moving it through committee and now moving it onto the floor. And yet still not a lot of movement. You've got more companies around the world that are saying we're going to add this to our reserves that are issuing notes in order to buy it using the sailor method. Still no real movement. Who are the big sellers? A lot of folks saying the big sellers are the market makers. They're trying to push it down so that they can buy more for their clients.

But it's very surprising. Obviously today we've got the FOMC. So there's some uncertainty there, but you would expect given all the momentum. Remember if a Senator just said Bitcoin back about six months ago, Bitcoin went up 10%. Now everyone's talking about it and Bitcoin settled down. Now there's really only one reason why you see volatility collapse in an asset class. And that's because you see larger institutions get involved. So when the SNB started getting involved in buying equities, you saw equity volatility collapse around the world. When a central banks and their smoothing movement in FX, volatility collapses.

And so you're seeing a slight move back in volatility in Bitcoin perhaps because it's not just leveraged players anymore, but rather it's getting hoovered up by large institutions very quietly. And remember the Czech central bank has talked about what they're doing publicly, but we all understand quite fully that central banks in the middle East have been buying for quite some time. They're just not public about it. - I guess to our listeners that maybe don't understand finance, how is it that sailor keeps on buying, these institutions are buying now again, as you said, the States are looking to have reserves. Why are we not seeing that jump?

- You're not seeing that jump for some number of reasons. If you look at how much Bitcoin is left on exchanges, it's nearing all time loose. In other words, you just don't have it. So the supply is coming over the OTC market. OTC market means someone calls up a big Bitcoin whale and says, look, we need some Bitcoin. Can you give it to us? And they say, okay, here we go. Now, and then that essentially is coming from someone that had it locked up for quite some time. And it's then being sold into the market without it hitting the exchange. And so you get some people maybe taking profit around this a hundred thousand level.

I think that's maybe part of it. Now, the other question people would say was maybe the supply is being replaced by paper Bitcoin. 'Cause for a while, iBit couldn't do in-kind transfers. And they've obviously now just applied for this. Where if I own iBit, that's the ETF associated with Bitcoin, then I could hand it into BlackRock and they would send me Bitcoin in return. It looks like that's gonna go through where essentially that then takes away anyone's questioning about whether BlackRock actually owns the Bitcoin that's behind iBit. So I think that's pretty exciting. But I think that there's gonna be profit taking at different areas.

And until the real demand comes in, the demand won't be there. But just because a legislature says we're going to approve this doesn't mean they've started buying. - Correct. - How long it's left? - How much is left in weak hands? You've got a total issuance of 21 million with 4 million irrecoverably lost that have already come out. So out of the 17 million, there's 1 million left that's gonna come out, let's say over the next five years. So that leaves basically like when you take a look at Tesla, MicroStrategy, all these folks that have it, those are city-states like when you got El Salvador, you've got the Middle East, they're not selling.

I don't think they're trading it, right? They're just buying and holding. So I would argue you probably have about 4 to 5 million of these tokens and what are considered weak hands. Individuals that might've held it for a long time, now they're looking at, hey, we've had it, we've seen it run up and stuff over the years and maybe they wanna take some off the table. But you've only got 450 new Bitcoin being created a day, which is $45 million of world supply being added for a product that is sought worldwide. So I just don't believe that price discovery and what we're seeing is really accurate right now.

I think given the fact that a lot of, there isn't a whole hell of a lot of structure to this market and like you said, it's not a security, it's not really that regulated. I think there's a lot of funny business going on 'cause I don't know people that are selling their Bitcoins at this price. And I'm trying to figure out where all this volume is coming from at this price. A lot of what we're talking about right now is talk as opposed to action. And I think that's what we're gonna see.

This is the calm before the storm where you've got this sort of sitting around the 100,000, but it sounds to me like there's a tsunami about to come in that's just gonna start ripping this higher. Obviously, this is where Samson comes in with this $100,000 candle. We're gonna see an Omega candle, it's gonna happen. The question is, is it gonna be in three months time, six months time or a year's time? But because of the lack of supply and the lack of weak hands, it's very unlikely that you're gonna see Bitcoin make a move up gradually, rather it's gonna be rather sudden and violent.

- And then you have the introduction of the weapons of mass destruction. So if you go and take a look at the rise back in 2017, when I think it was of course 10 trading days it went from a couple of thousand to over 20. If you take a look at the precipitous drop down to 3600, it almost mirrors exactly with the introduction of futures contracts. And while it's a finite issuance and product that you have created so many synthetic contracts on a much higher number of the actual underlying.

And I think that's actually how the tools that they're using to manipulate the price is basically the old world synthetics that they have yet now used to put around this. Because if you look at it, anybody that was buying Bitcoin, you couldn't get whipsawed around like you could in your brokerage account and everything because nobody was giving you leverage. If you wanted to buy Satoshi, you had to pay for that Satoshi upfront in cash from your bank into that one discount, there was no leverage. And so now that they're creating leverage, you start seeing all these supports about, oh, we've got $8 billion of contracts expiring on this Friday.

Oh, we've got $35 billion of contracts. And so they just create these headlines and things like that. But at the end of the day, if you just focus on the underlying, that a hundred thousand Omega candle, it has to arrive at some point 'cause it's gonna be the mother of all shorts. 'Cause at some point when everyone says, hey, I'm not selling it to you at this price, what you've got demand, staying steady or going upwards. You've got supply falling off the cliff with having events. I'm not an economist Douglas, you are, but last time I checked, what happens to price? It goes parabolic.

It goes up, but if there are games being played, the nice thing is, I think it was Buffett that always said when the tide goes out, you see who's wearing the shorts. And I think that we're gonna see that in that when the larger guys start actively going in there, look, I wouldn't be surprised if Facebook started buying. Zuckerberg is doing absolutely anything he can these days to get in tight with Trump. And they've got a big cash on their balance sheet. I could see them getting involved. So I think we're gonna see this absolute tsunami. And this is the time to prepare for the storm as to abandon all hope you enter. But there's also fear.

I think there's a lot of guys that still believe that AI is gonna come out and it's gonna break Bitcoin. And yet, I don't know how many studies I have to look at or Adam Beck obviously says some great things about this. And it just, the likelihood is so de minimis. If that happens, then people have the ability to hack into the Fed, hack into the treasury, hack into so many other things that why would they even worry about the Bitcoin? - 100%. - So who cares? By that time, we've all lost everything. - We were talking payments.

Let's talk about, so Elon Musk and X, they were just announcing that there's a partnership going with Visa to do X payments. How does that impact? Is that a competitor to XRP? Is it, he's trying to build this super app they're saying. Does that impact? Is that a crypto-based solution? Are you guys familiar with this? - I haven't really read into it, but my understanding is right now it's not a blockchain-based solution, but maybe it is. I need to look into this. - All right, we're looking at that. And then... - If he'd said we're gonna start using Doge now, we've got empty licenses that now we can do it all across the United States.

And you can send money from one to the other using Doge as a payment system. And that's pretty exciting, but doing something with the old world and calling it a payment is less thrilling to me. - I think it's the super app like the Chinese super app. - For sure, this is exactly what he's doing. He's building the super app. So I can go into that Chinese app and I can buy stuff. And I can buy things directly without having to get out of the app. What he wants with X is to keep you on there. Whether it's reading articles, sharing news, watching videos, this is gonna become the new TikTok. And I've already seen a lot more videos now on my stream.

And then doing payments. And you already have an email system, essentially. So yeah, if you can move everything onto one app and you get everyone's eyeballs, then it eats everyone else's lunch and you can bring on advertising. - Speaking of eating everyone's lunch, how about this deep-seek announcement that is a direct competitor with chat GPT that has crashed markets, that they said they developed it for $6 million rather than all the heavy capitalized solutions like the chat GPTs of the world that spent hundreds of millions of dollars to build.

What impact, and I guess my question is, if we were just talking about making TikTok illegal, now we're introducing deep-seek that jumped to the number one app in the app store, but they are blatantly obviously saying that the data is stored within in China. I don't understand. It's like a- - And using Nvidia chips that they've gotten around like the 50,000 chips that they've gotten around sanctions so they don't wanna talk about it and things like that. It was an announcement that just came out of left field. But when you look at it, nobody has really investigated it.

Nobody has really looked at the veracity of the data that they're presenting. And what did we wipe off of just Nvidia yesterday? 600 billion? - Yeah, so there's a couple of stories here. One is it was created by a hedge fund. That hedge fund could easily have shorted all of the US markets and then come out with this news and put in some thrilling information to make the markets collapse. It seems quite obvious that they use a lot more Nvidia GPUs than they said because of sanctions. But in the meantime, yes, it may be faster and maybe more efficient. And it seems like it certainly is, certainly from all reports.

But that should be a good thing for the world in that it means now that AI is moving and it's open source, which means that it can be copied. It seems to have educated itself according to Microsoft by just essentially copying US AI. So look, AI is gonna get smarter and smarter. What it does hurt is the guys like Sam Altman that are saying, look, it takes 500 billion in order to do this. And then someone else says, maybe it's actually 250 billion or maybe it's 125 billion.

So the market cap for a lot of companies is gonna get hit because now the valuation that folks thought it would be, whether it's in buying GPUs or whether it's using energy has gone down. If you can do this, if you can do AI 10 times cheaper, then you don't maybe need a nuclear power station. And maybe you don't need as many GPUs as people were talking about because up until a couple of weeks ago, there was this large worry in the United States that we're gonna run out of energy, that we had to build all these nuclear power plants that Microsoft wanted to buy nuclear power plants. This was like this super excitement.

And then these guys come out of China and they say, oh, by the way, we can do it for a lot less. Now, another interesting thing is it's not just the data, every single keystroke that you're making on this, the app is recording. So all the data that you're putting into that and asking it for answers, it's recording. Overnight, just over the last couple of days, I don't know how much information they've taken from US individuals that's moved to China. But my guess is a lot of people have taken a lot of their models, a lot of the things that they were working on, throwing it in there and asked it to optimize it.

And sure, it's optimized, but it's also given that model and that IP now directly to China. It's idiocy. It's sort of like- - Well, I was surprised by trying to put some data about it. - And update and put all of your data onto this without absolutely knowing what it is. But then again, think about all the apps that we have on our phones right now and how much data we give them and we don't think about it. No one ever- - The massive baby came out yesterday and said that nobody in the naval department's allowed to download it because of security concerns. And my guess is that's gonna be a trend that continues.

- But that was like, TikTok was like that too, where you were guys in the Navy that were on the aircraft carriers taking photos of all the planes and doing video and doing dances on the aircraft cars and all the planes and then sending that out there to the public. But I can imagine that there were probably people at a lot of different hedge funds, just a lot of industries that were loading up all of their models onto this platform to test it to see if it's faster than the other ones. And who knows where that data's gone? We do know where it's gone. And have you just lost all of your IP?

So I think that it's dangerous in one aspect, in the security aspect, in the IP aspect, but it's very good in terms of AI will become more efficient and there will be more efficient ways and it may not cost the price tag that everyone was looking at. - Yeah, like I said, I was surprised Trump was so calm about it 'cause he said, this could be good for competition. Again- - Well, it is good for competition because now it's- - Of course, of course, but especially being someone that it's been very much about, and again, I voted for Trump, right? So this is just surprising. - He didn't say that DeepSeek was good for competition.

He said that this instance of it happening is good for competition. - Okay. - But he's not certainly- - That guy is such a weirdo too anyway. - What you're going to find out is that it gets banned from the App Store after it's gutted everyone's information for the past week or so. And we won't hear about it again, other than OpenAI and all the other AI guys in the United States will probably turn around and start using similar method in order to calculate. - So question, if it gets banned, does that then rebound the markets, like OpenAI markets and the value of this, or does it stay where it dropped to?

- Well, the market cap drop wasn't just, but OpenAI didn't have a market cap drop. - I'm sorry, not OpenAI, Nvidia. - Nvidia, the GPUs that were being used by the Chinese company weren't their most efficient ones. They were less efficient ones. And so China had to find more efficient ways with lower quality GPUs, which is how they came up with the process that they have. And so I think what you find is Nvidia realizes that maybe it was over its skis in terms of its valuation because now things have changed. If you can make something more efficient and people have to buy less GPUs, the price is gonna go down.

- We don't know if they have done that. We just know what they claim to have done. Like last time I checked, I'm sorry, but whether it's a Chinese hedge fund or whether it's luck in coffee or whether it's one of the umpteen number of scams that China has pulled on US investors, we don't know that yet. And when you have very little analysis done and all of that market cap coming off, to me, those are a lot of reasons to play Misty with the market. And I think there's a lot of Douglas. - This is an example of having a small door and a lot of people in one place.

During the elections, everyone was watching Polymarket and saying, look, this is how much the election is going up and down based upon what's happening on this thing. And maybe there was 500 people that were trading on that platform, but it was moving up and down markets in the United States. During the European crisis, you had everyone looking at Greek CDS credit default swaps on the top corner of Bloomberg television. And it would maybe take up and people would say, oh my goodness, Greece is going to collapse, the Euro is going to collapse, and your Euro would drop by two or 3%.

Meanwhile, only four people were actually trading that CDS swap in the United States. If you can have something, have blockbuster news about it, knowing that everyone's positioned in one way, then you can spend a very little amount of money in order to make a heck of a lot of money. And I think that the markets sometimes just get ahead of their skis. Now, this product was out there about a week ago. It didn't just come out Sunday night. Rather it started getting reported Sunday night, but folks on Bloomberg were talking about this on Twitter for the last week, for the week before everything started happening in the market.

I don't know, I think that we've got a market that's frothy, that can get a little hysterical at times, that sees news and jumps on it, and you get tremendous moves. I don't think it should do anything to Bitcoin, but Bitcoin on Sunday night was seen as being the macro way to trade because nothing else was open. So people sold Bitcoin thinking that this was a way to essentially sell the market ahead of time, and they did that, but now Bitcoin has been recovering. - Yeah. So what we haven't talked about is Robinhood and tokenized pre-IPO stock.

- So I think that one interesting thing that came over the tapes today obviously is tokenized pre-IPO equity. So if you want to trade something like OpenAI today, you can't. There's lots of people that own stock options or own stock in it around the United States, but you, Joe Investor, can't invest in it. Now I have a company, Dibs Capital, that's actually tokenizing these types of private equity plays and pre-IPO stock. And we take it, we create it into a token, and then that token is then put into a public available product, like an ETF, that then can trade the underlying.

So it's a private company still, but you can buy it in the public markets. Robinhood today came out and said, look, we'd like to be able to offer pre-IPO stock or private equity to our clients, and we can do that through tokenization. You can do it through tokenization because you can fractionalize the investment. You can keep the investment after you verify the ownership and the rights that it has, fractionalize it in a token, and then have that token related to something in the public markets, a public vehicle, like an ETF.

Or they could be trying to do it through a private vehicle, where you could actually, but then only accredited investors be able to buy it, 'cause it's probably under Reg D, or foreigners outside the United States. So my guess is that what they're trying to do is do an ETF that's invested in pre-IPO stock. And we saw an ETF come out about a week and a half ago that had SpaceX in it, and the market went wild. And the ETF was coming out from a no-name issuer, but because they had SpaceX, everyone was very excited about it.

So there is trapped liquidity out there in the world of options that have been held by employees, and these employees are holding onto fortunes. And instead of holding onto a fortune and having no liquidity, they've said, "You know what, I'll sell this to someone else." - That was that different from second market. - No, it's probably not. But second market, I think, is more about private markets rather than stock options. - No. Oh, but OpenAI is still privately held. So it's stock options in a privately held company. - That's right, but it's not offered right now in these other markets.

So tokenization allows you to fractionalize so you can just buy three cents worth, as opposed to $25,000 worth. Making an ETF makes it accessible to the world. And that's what Robinhood is trying to do. Robinhood, obviously, has all of the younger generation as their users, as opposed to Morgan Stanley, that's probably ranked a little bit to the older scale. So Robinhood doing this shows that there's going to be movement in the private markets.

I've said for a long time that private companies, and I talk to a lot of private companies right now, they either want to reshuffle their cap stack or they want to bring in new investors, and tokenization allows them to do this. Before tokenization and ATSs in the digital space, it was very limited. But now there are ways where we can do this and it's much more effective. So not only was Larry Fink said at Davos, will all equities and bonds move onto the blockchain, but you'll also find that private companies move onto the blockchain as well.

And much as Trump can create a meme coin today, I think soon the private companies will create their own coins in the future, and those own coins will likely be security tokens. - I'm curious that on the private companies and the smaller startups, is that more geared towards the larger private company that people are aware of? Because the smaller private company is more maybe like thinking of it as like a crowd fund, right? Like a very early stage type thing where- - That's only in a primary raise, but when the startup does a crowd fund, that's a primary raise essentially.

When open AI has already been issued and then is moving out into the market, that's a secondary trading. Now there's a space for both. You can give liquidity to your stock without raising money, without doing a crowd fund. If I own a company and it's got a $50 million in revenue and I've got 800 shareholders, then I could send a token to every shareholder and have them trade that right now in an ATS. Now there's liquidity in a stock that isn't public, rather it's still private, but I'm not doing any capital raise there. I'm just reshuffling the deck when it comes down to my cap stack.

And a lot of companies that I talk to right now want to reshuffle the decks in their cap stack, have no interest in going public. But the way they do that is creating, essentially tokenizing the equity and then putting it somewhere where people can sell and buy. - Yeah, a lot of people have switched places. Those who want to get out, those who want to come into it. - Right. Because private equity is such our stock options are things that can sit on your balance sheet for a long time. And you may have millions of dollars tied up in these things, but you can't touch it.

If you've got $25 million of SpaceX right now, you may, that's like the market worth. You may say, I take 20 million today in order to get this off my balance sheet. - Yeah. So question, let's talk about Saylor and his preferred stock. If, what is the difference between someone buying like micro strategy and rather than just buying Bitcoin? Why would someone buy micro strategy over just buying Bitcoin? - Get a leveraged way to play it. He's borrowing at 0% and buying it for you. He's custodying it for you and it's cheaper than an ETF.

Those to me, if I was, if I didn't want to just directly hold Bitcoin, if I was worried about self custody, to me buying micro strategy is far more efficient than buying the ETF because A, you get a leveraged play on it. B, you're not having to pay any expense fee associated with the custody of it. - No, look, micro strategy is essentially something that changes what it is to whoever is the buyer. A lot of people want access to Bitcoin, but they're not allowed to buy it. If I'm sitting there in a pension fund and I'm told you can't buy Bitcoin, but you can buy single name equities, okay, I'll buy micro strategy.

If I'm sitting there at a pension fund and I want to buy Bitcoin, but I can't buy Bitcoin and I can't buy micro strategy because the volatility is too high, maybe I'll buy their new preferreds 'cause preferreds are gonna have a lot lesser liquidity. If I'm in a pension fund and I can't buy any equity whatsoever, you know what? I'll buy a convertible note. So what Saylor's done is he surrounded himself with financial engineers that understand here are the different pockets of buyers around the world.

Some can invest in equities, some can invest in low ball equities, some in higher ball equities, some can invest in fixed income, some need this type of coupons. And based off of all of these, he's now creating instruments for people to have access to Bitcoin through these different instruments. Now the preferreds that he just announced are very interesting because essentially you're buying here a call exercise, but you're getting an 8% interest rate on it as well, a coupon, that's not bad.

Some guys are only allowed to invest in notes that have a coupon above a certain amount, but also it's gonna be much lower volatility than the underlying equity. And so he's creating products for absolutely everyone and when he creates these products, like when he sells equity right now and that equity is priced one and a half to two and a half times his underlying Bitcoin exposure. And then he uses that money to buy Bitcoin, essentially he's getting Bitcoin for a third of the price that he's paying for it. Great, that's great for equity.

But at a time, after a while you'd say, maybe we want more to be accretive towards the common stockholders as opposed to dilution, without the dilution. And the answer there is we can do convertible notes. Okay, now you're putting some debt on the balance sheet, but at some point that's gonna transfer into equity, but a much, much higher price again than where we are today. And the shareholder wants to get as much Bitcoin as possible on the balance sheet without being diluted. And so you've got to find all of these ingenious ways in order to do that. And if you can borrow at 0% to buy Bitcoin, you'd be borrowing it all day long.

And if you can spy Bitcoin for equity that's priced two or three times over what the underlying is, you'll sell equity all day long too, in order to buy that underlying. When you have that vision that Bitcoin is going to the moon, you want to buy as much Bitcoin as possible in as fast a time as possible. And you want to reach every single pocket of buyers because when people think the pension funds are gonna start buying, okay, maybe they will, but they have to buy it in a vehicle that makes sense to what they're allowed to invest in.

When people say that the central bank's gonna invest, again, it's got to come in a vehicle or a packaging that they're allowed to invest in. And so Bitcoin will be purchased by many people. It's just gonna be in lots of different packages. - So basically he just reverse engineered how to do business with these different folks that have exorbitance amount of money and packages it with a nice bow on how within their guidelines that they can buy these equities. - He says it himself because in CNBC almost every day and says, look, we sold this many shares. We bought this much Bitcoin.

We added $1 billion to our shareholders in terms of equity of value. If you can do that all day long, you do it all day long. - I know Trump was going in pretty good on the banks, on lending and then wanting to be able to service different folks within, are you gonna get active in BTC or not? Are you gonna start lending to entrepreneurs that are conservative or not? He was very adamant about that and open. How does our traditional banks getting in and holding BTC and acting as a custodian, how does that impact the market? Look, the SEC had enacted SAB21 now has been taken out. That's SAB121.

What that said is that essentially banks can't hold Bitcoin on their balance sheet. Now, if I want to buy a house and I go to Chase, Chase says, how much money do you have in your account? And how much do you have in equities? Okay, we'll lend you this much for your house. So I can borrow against my equities and I can borrow against my cash, but you couldn't borrow against that Bitcoin with the bank. And now with this change, it means you can. And I was Bank of America CEO was in Davos and sitting there and he says, look, we'd love to get involved in this space, but it's not legal yet. Now it is.

And so you're going to see Bank of America and Chase and all these other banks start calling you up and saying, hey, why don't you custody your Bitcoin with us and we'll be able to lend against it. Wealthy folks don't take a loan and don't use credit cards. What they do is they have a large equity portfolio and you get a loan against your equity portfolio without having to sell your equities. And you'll be able to do the same thing with Bitcoin without having to sell your Bitcoin. And so this really opens up a lot. It also means that banks will start accumulating Bitcoin for their own balance sheets, which is good.

And it will be shown against them in terms of the accounting, which is good. So it just creates more demand, makes it more mainstream and opens up cash liquidity. 'Cause maybe now I can keep my Bitcoin custody to Chase. It'll give me more cash and I can buy more Bitcoin. - That would have helped me back in 2018 'cause I actually had to liquidate some Bitcoin to buy some commercial buildings, which obviously hurts my heart today. - We could get by with the lending program. - Yeah. - Oh, there are plenty of lending programs, yes. But those lending programs are a little bit predatory in nature, I'd say. - There we go.

- And so as the banks come in, it'll become less predatory. It's still going to be predatory, but it's less. But it means that if you have a portfolio, and I know a lot of guys that I'd say that 90% of their portfolio is in Bitcoin and the rest is in real estate and equities. And they've got a lot of equities and a lot of real estate. But that Bitcoin has not been something they've been able to essentially use on a day-to-day basis. Okay, you've got $10 million, $100 million in Bitcoin. That doesn't mean anything to the bank if they're gonna be lending you money. - Yeah. - And now it does. And so now that's gonna open up a little bit.

Now it could mean that now you get fiat and you can use the fiat without selling your Bitcoin to invest in something. But if the bank, if Chase is gonna give me 6%, I can borrow 40% of the Bitcoin that I own, let's say, and at 6%, and I think Bitcoin's gonna go up another 10 times, then maybe I should be doing that trade all day. Just buy more Bitcoin. Okay, now I have more Bitcoin, I'll borrow more. - You sound like sailor. - You turn yourself into sailor. And there's lots of folks that have said that they're kind of like sailor, but they're not borrowing at 0%. They're borrowing at 13% on their credit card.

But the problem there is you need the cashflow to keep up with those payments. If you don't have the cashflow, then forget about it. So Bitcoin has to move faster than you're paying back the payments. - I gotta look at the fine print too, 'cause I thought I read something about in the event of volatility downward, it could potentially trigger a sale. - Well, that's the case with your house too. If you borrow against your equities and your equities collapse in price, there's a margin call, equities are gone, or you lose your house. That's the nature of borrowing.

- This goes back to what I was saying was so good about the early nation days of Bitcoin was your ability to buy it unleveraged, because now they have so many different forms of crack that they give you to get exposure to Bitcoin. And none of them are the conservative way, which is just to own the underlying with zero leverage. And then they get whipsawed around, because emotionally you got a thousand in it, and all of a sudden it drops 20%, 25%. Somebody's gonna wanna sell it. - I think we've covered a lot today. This is a great kickoff episode of the three amigos here. But we've got an exciting interview that's gonna be coming up next.

Wendy, Ali, do you wanna tease that? - We've got a friend of mine, Wendy Starland, who is coming on. Wendy is on for discovering Lady Gaga and writing and co-producing her first album, which I think was on the billboard list for the longest period of time of any artist. And she is gonna come on and talk to us about her latest venture and how blockchain is working in the music industry with new artists and talk a little bit about crypto with us. - Awesome, awesome. Until then, I'm Phil Laarman. - I'm Ali Davoudi. - And I'm Douglas Borthwick. - And this is Old Men New Money.