CoinFund President on Navigating the 'Macro Noise'

Our election process is very unique. The election really for the president is going to come down to a handful of states. And if crypto is important in those states, they crypto natives can swing the election. Um That's just how it is. It's June 18th, 2024 and this is Markets daily, a show where we get into the minds of some of the most experienced CEO S analysts, researchers, academic strategist and anyone with a hot or smart take on the crypto markets before we get into today's discussion. Let's take a look at what's going on in the markets. Crypto major slid further during the European morning with some of the predominant alt coins and meme coins leading the plunge Seoul and Doge were among the worst affected currently trading around 4.5 and 10% lower in the last 24 hours. Bitcoin retreated after a short lived bounce and is now sitting around $65,100. Ether is down almost 4% DJ T A crypto token minted two months ago on Solana rallied as much as 100 and 80% yesterday on an unconfirmed report that former President Trump is behind it and A I related coins slid as Google search queries show peak retail investor interest top coins supposedly associated with A I have dropped over 20% in seven days. Joining the show now to dive deeper into the crypto markets this morning is Chris Perkins Coin Fund President. Welcome. Hey Jan. Good morning. Good morning. Nice to see you again. We haven't spoken in a little while so I'm excited to hear your thoughts on what's going on. What are you watching in the markets this morning? Yeah, thanks for having me on again. And uh I think from a, from a general perspective, we're seeing some weakness in the crypto markets. Um but we're still believe that we're in a bull regime. Uh This can be expected and, and I think a lot of, of this impact, this negative impact on market is really a function of some near term macro inputs. And so, you know, there's a general sense now that the fed may stay higher for longer, but we're really not talking about raising rates at this point. And in fact, you know, maybe we'll have one rate cut. Um But, but it's this near term higher for longer impact that's been having maybe a negative impact on, on some of the obviously Bitcoin. Uh Bitcoin stayed a bit more resilient than some of the, the alt coins. Um And despite this near term macro pressure, we're still very excited about the setup that we have. And really, if you step back and you think through a little bit more of a long term perspective, we're seeing some very, very positive things happening from the top down. So for example, we're seeing a, a real material amount of regulatory deris. I mean, look what we've just gone through. We saw the congress vote on a bipartisan basis to repeal the dreaded SAB 121 which made it very punitive for um for, for custodians to hold crypto. We also saw bipartisan support 71 Democrats join um the republicans counterparts to vote for fit 21. Now look that that bill is probably not gonna pass and yes, SAB 121 was, was, was veto. But you're seeing this groundswell of bipartisan support which is really leading to regulatory de risking, which I think in the longer term is a much bigger unlock. Of course, that culminated with the approval of the 19 B fours for the E ETF, which I think is gonna be also very bullish as people start saying, wow, um what's this thing called E oh my gosh, it has stable supply just like just like Bitcoin. Wow, it has utility because I need to use it to pay for gas and wow, it has yield. But wait a second, I can't get that yield through the ETF. How do I go about, you know, learning about this thing called crypto so I can get that, that real yield, which I think is super exciting. Finally, we're seeing, you know, really strong bottoms up things happening with projects, you know, I'm very gifted and I'm not, I'm very lucky because I get to see these very gifted founders every single day and the things that they're building and the value that they're creating. Um And so whether it's, you know, all the building we're seeing on things like the ton ecosystem where Telegram has 900 million users and there's a Blockchain that, that supports it called to um very exciting things happening there. Uh Or yesterday, we saw um Robert Lehner and, and Superstate announcing that they're using their tokenized uh collateral, their tokenized money market fund for collateral. This is a major major unlock that I don't think people are recognizing so long term, long term, we remain very bullish. Uh We're gonna navigate this macro noise. Um But yeah, feeling, feeling very good. I want to talk about some of the points you just brought up. But first I have to ask you about something I just talked about in my introduction here, this DJ T Token. It is the talk of the town. People think that former president Donald Trump could be behind it that has not been confirmed, but there's really been this kind of resurgence of phi tokens if you will. And, and you brought it up a little bit there when you were talking about the regulatory clarity that we are seemingly getting in the United States. Um, crypto and politics are really becoming a conversation that is pertinent ahead of the elections coming up in November. What do you make of this token? What do you make about the convergence of politics and crypto that we're seeing? It feels like something we haven't seen before. Technology is not political, it's just technology. But when you're running into razor thin election margins, everything becomes political. And I think the light bulb is finally gone on on both sides of the aisle. And you know, DC G put out a really interesting report that talked about how voters in swing states and, and like, remember our election process is very unique. The election really for the president is going to come down to a handful of states and if crypto is important in those states, they crypto natives can swing the election. Um That's just how it is. And so we're seeing, um I think what we've hoped for all along and that both sides of the aisle are saying, well, wait a second, we need to pay attention to this because from an American perspective, we've always prided ourselves in innovation and, and lead leadership in technology and it's simply un American to look backwards and to try to suppress these things. So, um whether and I talked about the bipartisan support that we're seeing, um the, the prediction markets are, are fascinating. I mean, look what's going on with poly market. You know, President Trump, I'm told, looks at it almost every single day to see how he's polling because, you know, that's how people are discovering truth. Um Look, I, I think it's great that it's, that it's an important part of the political discussion right now. I think it's great that both sides are coming around. Um Look, even yesterday, Paul Ryan published a piece on how important stable coins are for the future of America. Amen. To that. It's about time um that, that people are realizing how important it is. Um And, and let's not forget that we've seen Senator Schumer, we've seen Senator Booker Nancy Pelosi all voting in, in favor of political policy. This is nothing but a very good thing for the long term future of our industry. Let's go back to that E ETF. Um the Bitcoin ETF approved in January, we saw a lot of positive market reaction. Some of the folks I've spoken to recently have said, maybe we're not going to see the same thing when the E TT F hits the market. What do you think? Again, we think through a long term lens and I think that the Ethereum ETF is just a, a great unlock. Um Are we gonna see inflows? Absolutely. We're gonna see inflows are, how long is it gonna take? Well, look, a lot of the, the, the, the wealth in this country is controlled by the boomers and they um as that, as that wealth migrates into, you know, other generations you're gonna see more adoption. This is gonna be a long term trend as the E ETF builds, but there's some issues with the ETF out of the gate. Um And, and one of those issues is that market participants are not going to be able to avail themselves as one of the most exciting parts of Ethereum. And that's its yield. Uh You know, we track the yield via an index called Caesar, um which, which, which captures that, that East yield. Um It's pretty, it's a pretty nice yield. Actually, it from a real yield perspective, it outperforms treasuries. And so my thesis is that yes, it's gonna draw a new, a new um set a new generation of folks to crypto, they're gonna look at this thing called e and they're gonna say, well, wait a second, this is actually a gateway into things such as defi what else is out there. And I think there's a lot of folks who got their start in the in Ethereum and it really, they, they, they took that they, they opened up a wallet and then they started navigating and really learning about the power of smart contracts. So again, very, very bullish for the long term outlook for our industry. What do you think needs to happen for folks to have that intrigue that interest and then start to educate themselves on the different features of Ethereum because the ETF is one thing, but really diving into the Ethereum ecosystem is a different thing. And a lot of the people I've talked to on the show have kind of separated out the two different audiences. The person who might, uh, or, or the entity who might dabble in the E ETF wouldn't really interact with the Ethereum ecosystem. It sounds like you see the ETF as being a gateway drug into the Ethereum ecosystem and see people kind of uh being more open to decentralization through the ETF. Yeah, it's, it's a great point. I do. I, I think it's a gateway drug. But let's talk about how ironic this is. You know, we've spent countless, like countless hours trying to convince people that Ethereum is a commodity and it looks like it is. But then we do is we advocate, we say no, no, no, let's turn it into a security so that people can trade it, which is what the ETF is. So there's a, there's a ton of irony around that. But why are we doing that? Two things? It delivers regulatory certainty and it also delivers operational scalability. So anyone can just go on their phone, on the brokerage account, just press a button and not have to worry about it. Right. But again, it's, it's not the perfect product because you can't achieve that yield. And so my sense is that, you know, as this, we were continuing to see this regulatory de risking and you know, the amount of infrastructure that's being built like Coinbase just released its smart wallet. It's, it's pretty awesome, but you're gonna start seeing a better and better user experience and so that operational scalability and that user experience is going to improve. Obviously, you know, if you're investing some in something and you research it, like I said, one of the most exciting things about Ethereum besides, it's got three things, stable supply, utility and yield. Well, well, in order to understand that utility and access that yield, you, you're probably gonna need to get into the native space. So I think it's a gateway. I want to talk a little bit about coin funds, investment thesis. Now moving towards the end of the year, what are you looking at? What kind of projects are exciting over at Coin Fund? Yeah. So again, I I feel so lucky I get, I get to meet and interface with some of the most, the brightest founders in the world. Um We're still seeing a ton of global activity. Um Almost half of our investments are overseas. Uh We're seeing incredible development continuing, you know, across infrastructure, there's some, some amazing gaming projects that are about to come out. I think we're expecting like um 12 or so token generation events uh coming out from projects that have been building. Um Like I, I talked about the ton ecosystem very, very exciting space. I mean, look what just happened with Knot Coin. Um you know, and, and another gaming projects that are, that are coming out there, just the, the distribution associated with that, you know, e essentially Killer app is, is profound. Um Seeing some very interesting things in the deep in the, deep in front, like deepen, hasn't really had its moment yet. Um But gosh, some of these projects are, are delivering really amazing utilities. So that's another very interesting vertical. Of course, we we continue to look at other D five projects. Um and, and some centralized projects, I think um non us dollars, uh stable coins are interesting. We're about to have Mica come into effect June 30th. So we're, we're looking across the globe uh across verticals. It's an exciting place to be. Uh And we remain very excited about the long term prospects of this industry, any particular region that you're seeing, I guess exponential growth or um regulatory clarity coming faster than we have it in, in the States. I know that the Middle East is looking to create a few web three hubs. Hong Kong wants to be a web three hub. You mentioned gaming there. I know a lot of the gaming projects are coming up out of the Asian region, any specific region that is excited to you at the moment, you know, I I think all the regions have different levels of excitement. Um And in, I also think the the sleeping giants started to wake up here. Um So I'm very, very bullish about, about the US, um very bullish about the UK. Um We met with the Economic Secretary of the Treasury not too long ago. He said, hey, bring your portfolio companies, we really want your help to understand how to be the best in the world. Um And obviously they're feeling pressure from the Europeans and that, that's a very healthy amount of competition. Um You can't, you can't ignore the UAE um the the building that's going on from a regulatory perspective, whether it's the team in VA or AD GM again, they're, they're trying to take a leadership role, they get it, they're trying to work with portfolio companies every time I go to Abu Dhabi, they say, you know, when you're moving here, you know, we want you to come here, bring your companies with you. This is all very healthy. And then of course Asia Asia is always very exciting. Um you know, Hong Kong is on the move and then that makes Singapore have to be on the move. So um it's hard to isolate a single region. I do think that the US is um is quickly catching up as things start stabilizing and, and we start seeing clarity. Um So you, you really can't fade the US markets. Um We're a giant and I do think that this regulatory risking is going to be a very, very good unlock for the industry. Tell me a little bit more about that. I know that you're an advisor to the CFTC, but we just finished consensus a few weeks ago at Consensus Sec. Commissioner Hester Purse told me that she really doesn't think that people in Washington care that innovation is going overseas because they still don't really understand the technology and the opportunity that it brings. And many lawyers I've talked to have told me they are advising their clients to um set up shop overseas in places where there is more regulatory clarity. Tell me a little bit more about your excitement and, and why you maybe see through some of those comments. Sure. So I am on the CFTC Global Markets Advisory Committee. They've asked for uh insight and regulatory recommendations uh for a few things, I've been tasked to look at NFTS uh and also look at uh things like utility tokens. So we're, we're working really closely uh if anyone ever wants to, you know, provide feedback on things that we should include. Um Please reach out to me uh but it's been a very healthy dialogue. Um We don't always agree on everything but it's healthy. Um The other thing that I'm really excited about, uh we announced this recently, the CFTC is that we, they put out this uh this recommendation that we should recognize ETF S as eligible collateral to the extent they have treasuries underneath them. And I piped up and said, well, I agree we shouldn't have, we should, we shouldn't focus on the wrapper, we should focus on the underlying. Therefore, you know, tokenized treasury market, uh money market funds, these things should be used as collateral. And I think that that's going to be a big area of focus. So look, I know I'll tell you the truth about the US markets is that time is on our side. Um Why do we have some challenges? Uh because we have a pretty old uh many of the folks who, who govern our country right now are, are a little bit on the, they're, they're on the old side. It's very hard to convince them about nuances of new technology. Um Nature has a way of working itself out. Um And that said, we're still seeing some of these very um prominent congressmen coming around and embracing crypto because they're listening to their constituents. And so I feel again pretty good, just look at what's happened in recent weeks that trends only gonna continue and accelerate into the election. Um And it, and it sounds like, you know, both presidential candidates are now focusing on, on reasonable crypto policy. All right, we'll have to wait and see if crypto comes up. And the debate I believe is next week now, Chris, we do this thing on the show where I ask our guests for their hottest, take it can be on anything. So I don't wanna put you on the spot. It doesn't have to be a prediction, it can be a prediction. You can highlight a different area of the industry that you are really excited about, which I know you did throughout this interview. But what's your hottest take on the crypto markets right now? You're gonna see a number of uh new ETF applications uh by the end of the year and that will be with a number of different alt coins um that currently have uh features listed in the US Chris. Thanks so much for joining me. It was a pleasure speaking to you this morning. Thanks Jen. Always good to see you.