#1370 Will Clemente on Bitcoin Bull Market

Will Clemente is the Co-Founder of Reflexivity Research. In this conversation, we talk about Bitcoin, Ethereum, Solana, meme coins, portfolio management, ETFs, regulation, culturally relevant ideas, what you should be paying attention to, and where opportunities exist in the next 18 months. ======================= CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet like Metamask can spend crypto through a physical or virtual visa cards anywhere in the world where Visa is accepted. Be one of the first to get your hands on a CrossFi card and a prize pool of $3 Million Dollars by joining and participating in their testnet today: ⁠https://xfi.foundation/users⁠ ======================= Introducing Espresso - the world’s most interactive portable display. They have a portable screen that is incredibly light, comes with a nice stand, and the user interface is very easy. Anyone who listens to this podcast can go to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠us.espres.so/pomp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. They have a brand new offer waiting for you. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. All right, guys. Bang, bang. Today's conversation is with Will Clemente. The young wizard is back. Co-founder of Reflexivity Research. We talk about Bitcoin, Ether, Solana, meme coins, how he actually allocates his capital in his portfolio, what you should be paying attention to,

• 0:45Anthony Pompliano?

  whether it's ETFs, regulation, or culturally relevant ideas. All of this is Will trying to unpack what's happening in the market, how you should be thinking about investing, and where opportunity lies in the coming 18 to 24 months. Will doesn't disappoint. He's always in top form, and this was no different. I hope you enjoy this conversation with Will Clemente.

• 1:07Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:31Anthony Pompliano?

  Today's episode is brought to you by CrossFi. CrossFi is the Apple Pay for crypto. For the first time in history, anyone with a Web3 wallet like MetaMask can spend crypto through a physical or virtual Visa card anywhere in the world where Visa is accepted. No more exchanges or middlemen. Just link your wallet, get your card, and start spending today. CrossFi card transactions have already been successfully processed in New York, Los Angeles, London, Dubai, China, Japan, and over 20 other countries. Be one of the first to get your hands on a CrossFi card in a prize pool of up to $3 million by joining and participating in their testnet today. You can go to xfi.foundation users. Again, that's xfi.foundation users. Go check it out today.

• 2:17Anthony Pompliano?

  Today's episode is brought to you by Espresso, the maker of the world's thinnest portable display. Now, listen up. If you're like me, you feel like you are at a command center when you sit down at your desk. I got a gazillion tabs open and different windows for different activities. There's my web browser, my text messages, I have Slack open, and I got a notes app. I normally work on a desktop and it can be very, very productive. But everything falls apart the second I leave my desk. If I'm traveling, if I go to a coffee shop to do some work, or just want to work from the kitchen table, my laptop doesn't have enough screen space. I lose my command center and my productivity falls off a cliff. It's a major problem. But this is where Espresso comes in. They have a portable screen that is so beautiful that you think Steve Jobs came back from the dead to create it.

• 3:01Anthony Pompliano?

  The thing is incredibly light, it comes with a nice stand, and the user interface is so easy that I figured it out, how to do it in less than three minutes. If you listen to this podcast, you know that's not an easy feat. So the Espresso team and I, we became friends. I got to know them because I really liked the product. And those screens, they now want to offer them to any fan of the podcast. So we struck a little deal. Here's how it works. Anyone who listens to this podcast can go to us.espress.s or, if that's too confusing, just go click the link in the description. If you go to Espresso's website, they've got a brand new offer there sitting for you. You get a little discount and you'll get a beautiful screen. Trust me, I use mine every day.

• 3:44Anthony Pompliano?

  You'll love the Espresso screen and I think it'll make you more productive. Go check them out today by clicking on the link in the description. I thought a great place to start the conversation would be Bitcoin, the king of the crypto market. It's just going sideways. Three of the last four times that it had broken through an all-time high, it doubled very quickly. That hasn't happened here. And on that fourth attempt, the one time it didn't double very quickly, it kind of went sideways for a while and then took off. Is that what you're expecting to happen with Bitcoin through the summer?

• 4:14Speaker 02

  Or the end of the year. First of all, it's great to be back in in person once again back in the studio. Yeah, I mean, that's kind of my base case is Bitcoin is just consolidating below all time highs. It's kind of difficult to say exactly how long that'll take place. Some people are saying that we're gonna have this kind of, you know, sideways summer. Some people are kind of coining. Great alliteration.

• 4:37Speaker 02

  Yeah, I think the price action very much resembles late 2020. So you go back to like the middle of last year, I posted this fractal. It was kind of a joke when Bitcoin was trading like 31K. And I basically just took the price action from the end of 2022 and then overlaid it on the price action at the time. And it's followed it almost perfectly of just, you know, partially, it's just Bitcoin's gone up only as it did at the end of 2020. It's all time highs. But then if you remember at the end of 2020, I mean, we consolidated below 20K for for some period of time. Obviously, this is slightly different because we we broke the all time highs, but very similar in terms of, you know, you just have a lot of sellers at the prior highs that maybe had been holding Bitcoin for some time. Are looking to offload once you get back to their kind of cost basis. And so they can kind of get out at break even.

• 5:23Speaker 02

  And then also, just in general, market very rarely, you know, goes up to all time highs and then pierces straight through without rejecting at least one or two times off of that. And the other piece is just, you know, following the derivatives data. Usually the way this stuff goes is, you know, you get people to, you know, get leverage long right at that kind of, you know, all time high breakout or whatever like key level that Bitcoin is consolidating up against. You flush those people out and then kind of go sideways until you almost get this apathy in the base of derivatives traders until they're no longer, you know, aggressively super, you know, long on, you know, 20x leverage or whatever it is. And then Bitcoin seems to move. So one thing I've been watching is like the derivative stuff.

• 6:06Speaker 02

  We've seen that cool off a bit over the last month or two, you know, things like watching the futures basis, which looks at the spread between spot and the three-month future as kind of a proxy for sentiment and, you know, how long people want to be in the market, as well as funding rates, which just looks at the difference between the perp price and the spot price that the perps are pegged to through that funding rate. The only problem is now that Athena's around, and this is something Quinn Thompson has talked about a lot, Athena has kind of thrown off those measures a little bit because it's putting downwards pressure on both the basis and the funding rate, specifically for ETH. So I think you've got to take those readings a bit, you know, with a bit of a grain of

• 6:49Speaker 02

  salt, but I think the relative changes still are pretty valuable. And what we've seen since the initial run-up in February is that the three-month futures basis has come down and it's kind of, you know, just grinding down near like 5% or so. Funding rates have kind of cooled off. We saw a lot of open interest that came in on this recent move as Bitcoin got rejected off of, you know, 72K a couple of days ago. But I don't have any super-strong, you know, short-term view on the market outside of, you know, the derivatives market is starting to cool off and isn't as frothy as it was earlier this year. Meanwhile, we're continuing to see inflows into the market, which is represented by, you know, on-chain data of stablecoin aggregate supplies, which is one thing that I look at pretty closely because that gives you a proxy of capital inflows, but also the

• 7:34Speaker 02

  amount, you know, liquidity on-chain that's being utilized in DeFi or whatever it is. And then the other piece is the ETF inflows that we started to see. So one thing I had been posting on Twitter for a little bit is the 14-day change in the holdings of the ETFs. So you had this kind of first wave-up, obviously, like right after the ETF's launch, that kind of cooled off. And then now it seems like over the last, you know, two or three weeks, we've started to see this kind of second move-up, maybe beginning in the ETF flows. I think some of that, which is reflected by the types of participants that were revealed in some of these 13F filings are probably just long spot and then shorting the future to put on that basis trade. So they're not like directionally long necessarily. But overall,

• 8:19Speaker 02

  we are starting to see those ETF flows.

• 8:21Anthony Pompliano?

  How does that affect the price, right? So if I'm long spot, but I'm shorting futures, is that net positive to price? Or is it basically just negating it? Like, I understand the exposure, but how do you expect the actual impact on price?

• 8:32Speaker 02

  Yeah, it's net neutral because the spot gets pushed up, but the future gets pushed down. So it's net neutral on the price.

• 8:40Anthony Pompliano?

  And so for those that maybe don't spend a lot of time on this on a day to day basis, because it is net neutral, even though you're seeing ETF inflows and some are pretty big number, I mean, hundreds of millions of dollars, you know, in a given week, but you're not seeing price necessarily run is because that is only one part of the trade these people are putting on. And so it's not really a net increase in the market cap.

• 9:03Speaker 02

  Yeah, yeah, that's true. But also, I would just say, like, people forget, you know, Bitcoin's a big market. It's a really liquid market. Like, these are big numbers that are coming through, you know, through the ETFs. We saw almost a billion dollar day last week, which is the second largest inflow day since inception. But, you know, there's still a lot of volume that takes place outside of the ETF. So I think the ETFs are something that's, you know, a good kind of narrative or like selling point for the market to grasp on to. But I don't think it's an end all be all, you know, we can have a down day if there's net inflows, etc. I also think ETF inflows in themselves aren't really a good proxy for like where the market is going to go on like a day to day basis,

• 9:47Speaker 02

  if that makes sense. You know, the general trend of the flows is important. But, you know, if you have one day of some certain reading, like, I don't think that gives you any, you know, a forward looking insight into what's going to take place. Because the ETFs are partially just a reflection of, you know, where the market trades. You know, we've seen people freak out because you have several, you know, days of net outflows in the market. But the market went down, people were selling, you know, the market went down. And then also, you know, people getting overly Excited when we see inflows, but the market has gone up. Well, yeah, well, the market went up. People, people were buying that's, you know, you're just seeing that people had bought for the day as the price went up. So I don't really follow them on like a day to day basis, but I do think, you know, things like looking at, you know,

• 10:29Speaker 02

  these kind of broader trends or maybe, you know, looking at like a seven day moving average or something of ETF flows is interesting. Just to see like, are we starting to see, you know, that kind of second wave up that we've been waiting to see since that first one in those ETF flows.

• 10:41Anthony Pompliano?

  Got it. Um, when we look at the next couple of assets, Ether, Solana, maybe the next three or four. Historically, you would expect Bitcoin to outperform stocks. And then you expect Ether to outperform Bitcoin, maybe Solana to outperform Ether, and it's kind of just like a market cap game. Bitcoin's been very strong this year compared to some of these other assets. Is that a good thing, a bad thing? Should we expect it to continue? Like, how do you just kind of think of, you know, Bitcoin, Ether and Solana? Actually Bitcoin and Solana seem to be outperforming Ether with an ETF inbound. Maybe that'll change, but like it's not following kind of the real simple, small brain, just, you know, bigger market cap, lower return.

• 11:23Speaker 02

  Yeah, that's been one very interesting thing this time around. You know, I got involved in the space at the beginning of 2020, so I was around for last cycle, but not 2017. But I remember in 2020, it was very much, okay, you know, you got on the risk spectrum. Those things are going to have higher beta to Bitcoin and you just get long all the vaporware and all that stuff goes up. We have not seen that this time. You know, a lot of the alt BTC or alt soul pairs have just been bleeding out for several months now. And it hasn't really been as simple as just buy whatever, you know, vaporware, all coin and you'll outperform BTC. Cause it's, you know, less liquidity and it's further off on the risk spectrum. Which I think is a good thing for the market overall, because people are thinking about, you know, what they're allocating to.

• 12:06Anthony Pompliano?

  Keeps people honest.

• 12:07Speaker 02

  Yeah, yeah, for sure. But we have seen dramatic outperformance in the AI coins, but then more, more so the meme coins. And I think that's kind of this reflection of the market sentiment towards a lot of the tokens that frankly exist in crypto. And, you know, do they have value accrual? And then I think the even bigger one is kind of the. Supply distribution and, and you know, how those tokens get distributed over time. So, you know, in 2020, 2021, a lot of this was kind of obfuscated away and, and, um, you know, we didn't have. Now, now there's data platforms, you can go on and just look at all the token unlocks and see when, you know, when exactly the cliff is going to unlock a certain amount of tokens, et cetera. We didn't have that really, it was very hard to find that data, uh, last cycle. Um, so I don't think people really fully understood the game that was being played.

• 12:50Speaker 02

  But now I think that's, that's very well understood by the market and that, you know, you raise a bunch of money upfront. And again, I'm not completely, uh, you know, speaking negatively against this because, you know, you need capital formation and all these types of things. Um, but I think there's a lot of questions being raised about what's the optimal way to do it. Um, you know, currently it's, you raise a bunch of money from VCs, maybe go through a couple of rounds of fundraising. You launch the token, you float a very small percent of it, like, you know, 10 or 15% of the token circulating supply. And then the idea is that over time, you know, you unlock more and more tokens, you know, the VCs are locked up for two or three years. And then ideally the tokens run up by then because the float was low and the price ran up and then finds equilibrium before the VCs or whoever, you know, was an early backer is able to exit.

• 13:34Speaker 02

  We haven't, we, we've seen a lot of these, you know, low float, high FTV tokens just bleed out since the launch. And I, I just think that's the market kind of understanding what's, what's taking place. While meanwhile, you know, you have these meme coins where, you know, there, there, a lot of them are, are fair launches. There's no pre-sale, so somebody just launches them. At the hundred percent of the supply is, is out there, you know, circulating. And, you know, it's, it's much, much fair. I won't say it's, you know, the most optimal way to, to do it. I don't know if there is an optimal way to, to distribute, um, you know, tokens. That's been a widely, you know, um, debated topic for, for a very long time. But the meme coin launches are definitely much fairer than, you know, these kind of low float, high FTV games that are being played.

• 14:14Speaker 02

  And then the other thing is just, you know, if I'm a, if I'm a, you know, retail marketer, just like take myself, you know, I don't trade with any exorbitant amount of money. And so I'm able to get into a lot of these memes and I'd rather, you know, play around in that sandbox and trade these things where, you know, some of these things can run in a matter of days from, you know, a couple of million market cap to, you know, we've seen in north of, you know, Mid nine figures in some cases. And so, you know, essentially retail has the ability to basically, you know, capture a liquid unicorn, which I don't know any other market that that you could do that. So, you know, I speak to a lot of other guys my age as well, that's that seems to kind of be the the general sentiment is, you know, you've got Bitcoin as this hard money asset. Everybody understands that very well. You know, we have

• 14:55Speaker 02

  the ETF. I think the case for for allocating to Bitcoin is, you know, more clear than ever. And Larry Fink's kind of on TV in shoulder bags and kind of, you know, drilled down that thesis for Bitcoin. I don't think that's debated by anyone. But then you've kind of got this question of, okay, well, you know, if I want to go further out on the risk spectrum, you know, what should I allocate to? There's all these, you know, very highly obfuscated, you know, a lot of technical jargon, questions about the value accrual for a lot of these all coins that are, you know, mid nine figure, you know, billion, $2 billion market cap tokens. And, you know, the reality is, the average retail participant has a very low likelihood of, you know, 10 or 15 xing on something like that. But they have a much higher probability of, of, you know, doing so with with memes. So I think a lot of people

• 15:39Speaker 02

  that are coming into the space looking to speculate for the first time are participating there. And then also, I guess the last thing I would add is just, the pool of market participants that are playing that game is a lot less sophisticated than the pool of market participants that are trading Bitcoin. Like to, you know, to have edge in in trading Bitcoin, especially at this point, I think maybe this was a different story even before 2020. But I think now, you know, you just think about, you're gonna go play poker at a table, right? You're gonna go play with, you know, these high stakes guys that are, you know, they've been playing for 25 years, or you're gonna go sit at, you know, the table with with people on your same skill level. I think that's how a lot of people are thinking about participating in these meme coin markets as well.

• 16:20Anthony Pompliano?

  When we look at maybe with large caps first, I am very long Bitcoin, have been for a while, don't plan to sell, look at it as a, you know, a grandchild type holding. I'm gonna hold it and give it to my grandchildren at some point. I had some Ethereum, this is where I started my kind of crypto journey, mining Ethereum back in 2016.

• 16:46Anthony Pompliano?

  But I sold that, I think end of last year, beginning of this year, whenever it was, um, and bought Solana instead. Um, it was very much a decision like, I think that Solana is going to outperform Ethereum moving forward. I want to, you know, make this change in my personal portfolio. Um, so far that has been true, but, uh, I don't hear any talk of a Solana ETF in the United States. Uh, I do see the Ether one coming. How do you think about those two as like the two big competitors, or at least by market cap, uh, the two largest competitors for like the smart contract landscape and like, is it a, they both should go up? Do you think one will go up more than the other?

• 17:28Speaker 02

  Yeah, I, I definitely think ETH has more Lindy than Sol just because it's been around longer. Um, I think ETH probably has a higher likelihood of getting adopted by a lot of these institutions. And we saw BlackRock deposit a couple hundred million bucks on ETH as opposed to Solana. But at the same time, I think, you know, a lot of retail market participants, again, especially a lot of, I hate to keep bringing it up, but a lot of these meme coin games are taking place on Solana because it's faster, lower fees, et cetera. Um, so I think you've got some of that kind of dichotomy going on from a, you know, allocation standpoint. Um, obviously if, if the Ether spot ETF gets approved, then I think one important thing to keep in mind is you'll probably have a lot of, uh, portfolio managers or traditional guys that are going to look at this, say, I don't know a ton about crypto.

• 18:13Speaker 02

  I'm going to go 70, 30, you know, these two assets, because these are the two ones that got approved by regulators. So I think ETH will get some flows just from that, you know, just in terms of like, general portfolio construction and how people think about it and what they're able to access in a compliant way, et cetera. One thing I'm keeping in mind in like the shorter term is, once the ETH ETF theoretically does launch, which it seems like it's a, it's a done deal after they approved, um, the, you know, general ability to launch ETFs. They just have to approve the individual filings now, um, is the people that have been arbitraging, uh, the ETH spread. So ETH traded as, as much as I believe a 60% discount at the bottom of the bear market. Um, it was still quite, quite a.

• 18:55Speaker 02

  Discounted even, you know, you go back like a month and a half and I was just people underestimating the odds of an ETH getting approved. The question is, once, once, you know, the, the conversion is allowed, what's going to be the net, you know, buying or net selling? I, I would expect that there's probably a couple billion dollars of, of sell pressure that maybe negates out any initial inflows on, on ETH in the same way that we kind of saw it play out for, for Bitcoin when GBTC got, got, uh, pulled out of, of great scale at the beginning.

• 19:23Anthony Pompliano?

  Yeah, I'm, I'm very fascinated by what, um, what is going to happen between those two because, uh, it feels like Solana versus Ethereum is what Bitcoin versus Ethereum used to be, right? It was very tribal. It was very much like, uh, I'm better than you, you're better than me. I don't agree, I agree, whatever. Um, I think now it's very clear to people like Bitcoin is trying to be some one thing and Ethereum is trying to be this other thing. And maybe there's some like online tribalism just within, in the community, but it's not really things where on a substance basis, they're competing with each other. Ethereum, Solana feels a lot closer, like it feels much more like, you know, um, two social networks going at each other rather than, uh, kind of just two random technology companies. And so, um, it does feel like that battle is more a winner take all, uh, or, you know,

• 20:08Anthony Pompliano?

  definitely winner take most. Um, but then you look at the market caps and like, you know, Ethereum's market cap is still growing, so is Solana's. And so maybe actually the like theoretical doesn't apply and it's like, no, we're all drastically underestimating how big of a market opportunity this is. And there will be, you know, two, three, four, or five different winners, uh, and they'll all get, you know, significant market share and, and, uh, trying to pick between the two is actually a losing game.

• 20:34Speaker 02

  Hmm. I, I think when it comes to money, Bitcoin is, you know, clearly money and nothing's going to compete with Bitcoin being money. And historically, we see that money typically is a winner takes all game. So I don't think that we'll see anything that takes on Bitcoin for the kind of store value monetary premium properties that it's established itself with. I agree with you wholeheartedly on the ETH stuff. I think where they messed up was kind of trying to pivot into this whole ultrasound money thing and then competing with Bitcoin as money. I don't frankly think that Ether is money and this whole idea that all of these things need to try to be money is kind of silly. It'd be like saying that all the companies

• 21:15Speaker 02

  in the tech bubble were competing with the US dollar. I just don't really like that framework. I think ETH should be trying to directly compete with Solana for the smart contract landscape, for sure. So the question is, how do you incentivize people to come on as opposed to Solana? And I think just the more competition frankly, the better for the end user, right? As it is with almost anything in capitalism. Because you're going to have to have all these tough questions that have been asked over the last year and will continue to be asked about, what does an optimal smart contract platform look like? What are the trade offs in design that you're willing to be willing to make? Maybe what subset of users is willing to look at using this specific smart contract

• 21:57Speaker 02

  that has these trade offs versus a different market participant using a different one? So I think it's an interesting time to be involved.

• 22:03Anthony Pompliano?

  When you think about investing in the space, a lot of people who are going to listen and watch this and they're going to say to themselves, hey, I'm trying to think about how to allocate capital, right? There's going to be people who are overly conservative and they're going to say, look, I'm putting up 1%, 3%, maybe 5% max into this industry. There's other people who are going to say, actually, this is the equivalent of the stock market to me, right? Is just like the older generation went and they put 60, 70, 80% of their wealth into the stock market and the variety of different strategies. I'm going to do that with this market. With the conservative people who've only put 1% to 5%, it seems like you're more likely to kind of buy one asset, maybe buy Bitcoin, right? Maybe you stretch and you say, I'm going to buy Bitcoin and Ethereum, or you buy some sort of market weighted index or something. I don't think there's a lot to

• 22:48Anthony Pompliano?

  kind of debate or talk about on that end. But the people who are treating the crypto universe as if it was the stock market that the older generation did. So they're going to go put a significant amount of money to work in that industry. How do you think about allocating capital? Is there a certain framework you use? Are you more kind of a barbell? Just talk about like the investing philosophy as you kind of look at the total landscape across liquid tokens that are large cap, you've got the meme coin stuff, you've got public equities that are crypto related. Like, there's a lot of opportunity here.

• 23:19Speaker 02

  Yeah, I think there's a lot to unpack there and it just depends on like your personal situation, you know, your risk tolerance, you know, what assets you do currently own. I guess I could talk about my personal portfolio construction. It's Bitcoin and cold storage that I've never touched and never planned to touch and, you know, never planned to sell because hopefully one day you don't have to sell that famous Bitcoin meme with Neo. Then I have Coinbase as kind of an index on the whole crypto space.

• 23:47Anthony Pompliano?

  Public stock of Coinbase.

• 23:49Speaker 02

  Public stock. I should disclose that. Obviously, you know, I have a position in that. I think that's going to be viewed as kind of a proxy. Robinhood also increasingly so. I think they're kind of the biggest threat to Coinbase's business at the moment. As they, you know, just came out last week that they're going to acquire Bitstand for a couple hundred million bucks. They've seen a lot of, you know, rise in retail volumes over the last couple of weeks. Robinhood originally had delisted a lot of different assets because regulators had kind of hinted at them about, you know, potentially violating some security stuff. But if that regulatory, you know, kind of clarity comes about, then I think you'll start to see them push back into crypto again.

• 24:31Speaker 02

  But I don't own any Robinhood. I think Coinbase for now is kind of viewed as that index on the space that you can at least get access to publicly. You know, I don't own any, any Sol, Solar Eath, but you know, those are obviously the two leading kind of smart contract platforms. Serve as kind of an index for all the activity taking place on these chains. So, you know, for example, if you're bullish on activity taking place on Solana and then driving, you know, demand for the Solana token to participate in these on-chain games, then maybe you just allocate to Sol instead of trying to, you know, rotate in the, in the kind of meme coin casino, if you will. But then I'll add on the other end of that barbell. So I would say, you know, kind of Bitcoin and Coinbase on one side. And then on the other side, for me, it's just a lot of these memes that I've been more actively trading.

• 25:14Speaker 02

  I know you've, you've gotten a spew of text from me over the last couple of months with these random coins.

• 25:18Anthony Pompliano?

  It's interesting with the meme coins, right? Because so much of the analysis is almost like. Does the coin make you laugh? Right? Like, if you think of a meme, right? Just forget coins for a second. If you think of meme on the internet, if the meme says the truth, then no one wants to say what everyone believes, it usually takes off, right? If a meme is funny, it takes off. If it is culturally relevant, right? And like high qual- it takes off. So like, if you think of these things that make like a just, I'm thinking about a traditional meme, you know, on Twitter or something. Yeah. Like, there's very, you know, specific boxes that you can check and you're like, why did this meme take off? And you can put it in one of these. Sometimes it checks more than one box, right?

• 26:02Anthony Pompliano?

  When you and I have talked about some of the meme coins, sometimes it is, oh, this is culturally relevant, right? Sometimes it's like, that made me laugh. Sometimes it is, uh, understanding some sort of trend or, you know, something that fits a moment, right? Yep. And so when you look at it, it, it does feel like for the first time ever, uh, these like cultural moments or word of mouth, you know, even before the digital age, now there's just like a ticker symbol to them. And I, I go back to, um, you know, when Reddit went public, there's a Reddit coin. Interesting. Like you could buy Reddit the stock or you could buy Reddit the coin. The coin gives you absolutely zero economic interest in the company. There's no rights, there's no, you know, equity, there's no any of that stuff.

• 26:46Anthony Pompliano?

  But the coin went up more than the stock. That's interesting, right? And then if you go and you look at, um, in some of the earnings reports, GameStop, when, uh, the Roaring Kitty stuff, when he came back, all of a sudden the stock went up, but actually the GME meme coin went up more. And I'm not here to say that buying the GME token is the same as buying the stock. Obviously it's not, right? But I do think that, uh, people underestimate how much risk-taking happens on Wall Street. And it almost feels like we're getting a mirrored version. So you have the traditional stocks or assets and now you're getting these like, really are just brand relationship.

• 27:28Anthony Pompliano?

  And there's a whole generation of people who are saying like, I see something that's happening. All of the, you know, kind of traditional folks are gonna go buy this stock. Like, I'm just gonna go buy the thing in my universe that plays off of something else. And so on the upside, it works. Now, obviously, on the downside, there's nothing, there's no assets, there's no cash flow, there's no, you know, rights. And so it's, it's not as clean of a story. But it's fascinating to me that now we've seen multiple occasions where these meme coins are going up more than maybe their traditional counterparts are.

• 27:57Speaker 02

  Yeah, um, I'll preface with saying participating meme coins is totally gambling. And it's, you know, it's not rooted in any fundamentals. That being said, I think there's a lot of very real drivers of why they've taken off. One is markets rallying, people want to take on more risk. There's a wealth effect of asset prices going up, people have more money to play around with. Maybe a little deeper is I think, uh, you know, you've got wealth inequality, which is a result of monetary debasement. So as the US is continually debasing the currency, you bail out continuously now on, you know, these large corporations, but also the people that own assets. So the people that have already owned assets continually benefit for owning those assets,

• 28:42Speaker 02

  while the people that don't hold the assets get further and further behind. I also think in our, in my generation, there's somewhat of what I like to call a dopamine epidemic. So, you know, at your phone, you've got access to more dopamine than anyone in, in, you know, any previous generation. You can go on social media and see as many videos as you want. You know, all types of explicit content that's there, you know, for access online. The ability, you can either, you know, order things like nicotine or, or weed or other various substances, like literally to your door now. Uh, I can go on my phone and order, you know, horrible food straight to my door from my phone. You know, all, all these things, I think, uh, just the ease of access to dopamine is greater for my generation than ever.

• 29:25Speaker 02

  And that leads people to, you know, want to speculate, want to take more risk, et cetera. And then I just think to go back to the wealth inequality piece, people feel priced out of things like real estate. I don't really see a path to create generational wealth from, you know, maybe if I've already created wealth, I can preserve it by holding real estate. But I don't see really an option to create wealth of the same magnitude that, you know, the baby boomers did when they began, you know, buying houses back in the day. And I guess I could also toss in, I think this falls in with the dopamine epidemic stuff. If you look at just online gambling numbers, especially after years back, they shifted regulation to the state level from the federal level, gambling revenue has just gone up and to the right. And I just think a lot of that is going to come into these

• 30:07Speaker 02

  these meme coins because it's, A, you feel like you have more control over it. You feel like you can kind of define your risk a bit, but also to be a bit more cynical, you know, once all these things are going up only, you know, then you have almost this perception that it's more plus EV to participate, you know, whether it actually is or not, I don't really think it's the thing that matters. It's what's the perception of, you know, whether this is like a higher probability for for me to, you know, hit on whatever gamble that I'm that I'm essentially putting on through speculating on these memes. And I think our generation has a higher susceptibility to understanding these trends. I would actually say that younger guys have a much bigger edge in in finding the next big meme coin

• 30:51Speaker 02

  over somebody that's older. Because we grew up on, you know, Instagram, Snapchat, Vine, that's a throwback, you know, all these different apps, you know, Twitter, Twitter as well, obviously, where, you know, we were constantly exposed to these memes. There's all, you know, the the spread of, you know, sayings and in culture and things like that was just much greater. And so I think over time, you know, over the last 10 years, my generation very much kind of understood this, this kind of developed this keen eye for for finding, you know, these phrases or things that are funny are going to catch on, etc. So again, when I speak to people my age, it's, you know, they talk about, oh, I, you know, I'd love to own Bitcoin. But, you know, I feel like I'm not going to, you know, create generational

• 31:36Speaker 02

  wealth, same with housing or index funds. I'm going to go speculate in this crypto casino. I don't know if that's a net good or bad thing for society, but that's just me being objective and, you know, observing what's going on.

• 31:47Anthony Pompliano?

  I don't think it's different. I think people have been trying to get rich quick forever.

• 31:51Speaker 02

  Yeah, right. In a weird way.

• 31:55Anthony Pompliano?

  Again, usually trying to get rich quick doesn't work. You know, the great things take time to build. One of my favorite sayings is excellence doesn't have a watch. And so it's this idea that like, in order to build a great company, it's going to take 10, 20, 30 years. I mean, think of SpaceX. SpaceX was started, I think, in 2001. Right, we're in 2024, 23 years later. And now it's like, oh, shit, this works. Right, took 23 years to get there. It took them almost a decade to get the first rocket to not explode on the way up. And so when you think through that, you're like, all right, well, that's a great company. Took a long time. People who were like, hey, I'm going to go put some money in this, you know, coin or this stock or this, you know, whatever.

• 32:38Anthony Pompliano?

  And I'm going to get rich in three weeks. It's really hard, right? And probably unlikely. And so I do think that there is a weird dynamic of hopelessness leads to that, but also lack of education. Right? And if you go back, I was having lunch with somebody over the weekend and we were talking about Bill Miller. And he bought Amazon, crashed from $80 down to six. He started buying on the way down and kept buying, get buying, get buying. He ended up being the largest individual outside shareholder other than Jeff Bezos. And he also ended up being the, owned about 15% of the company across his fund, personal, everything.

• 33:22Anthony Pompliano?

  So you look at that and you're like, man, that sounds a lot like risk taking. That's scary, but it worked. So we celebrate and say, this is amazing. For every one of those, how many people were buying a stock going down in 2001, you know, 2000, whatever? And went to zero.

• 33:38Speaker 02

  Yeah. Right? They were essentially meme coins, the, you know.

• 33:41Anthony Pompliano?

  Yeah, of course, it was dot com, right? Now, now we have coin, whatever coin, they had whatever dot com. And so I do think that in a weird way, this is a story as old as time. And every generation likes to look at the younger generation and be like, oh, you fools. Right, but they're like, well, you guys should do the same thing.

• 33:58Speaker 02

  Yeah. The other interesting thing, I guess I would say to differentiate the meme coins from maybe some of these, you know, dot com bubble vaporware companies. Is that they're almost this kind of embodiment of this deep desire to. Be a tribal person and have connection with people. One very troubling statistic from my generation is just if you look at loneliness, particularly male loneliness, it's skyrocketing. So I think to some extent, these meme coin communities, people also look at them as a way to build some camaraderie, you know, you're posting memes together in the Discord and buying the dip together, like all these types of things. It's definitely sad, but I think that that's another piece of it, too, especially if you

• 34:41Speaker 02

  have some coin that represents something that's significant to the person. So Vitalik actually wrote a blog post about this, but one specific example I'll give is this Trump coin, because it's very large now, it's like $700 million market cap. Trump has been very interesting because it's it's served as kind of this vehicle for people, not only to speculate on, you know, their views on the election, but also just the general attention around Trump and likeness that they have towards Trump. So for example, when we got the verdict in the case last week or the week before, we saw the Trump coin dip down like 40%, but then ripped right back up and ripped to new all time highs within a matter of a day or two.

• 35:26Speaker 02

  And that was almost like this representation of people's, you know, views on Trump. So in some ways, I think, you know, you can now like spam social media with bots and it's a very low cost, low friction way to kind of almost, you know, have like online warfare, if you will. But now I think you'll start to see people vote with their dollars and express these views through some of these tokens. So, you know, someone tries to ban something or whatever it may be in the token associated with that thing, starts to move. Another one was, this was a while ago, so I can mention it now, like OpenAI, there were some issues around OpenAI and Elon was saying it was supposed to be open source and it's almost essentially now closed source. And so a token called ClosedAI started pumping.

• 36:08Speaker 02

  It's a very micro example of that, but I think you'll start to see these, you know, tokens almost move as a representation of how people feel about things in society.

• 36:18Anthony Pompliano?

  Yeah, it's fascinating. I don't think it's gonna stop. I think it's only gonna accelerate and there's gonna be more of them. Doesn't mean that they're good, doesn't mean that, you know, people should go put money in them, but it's gonna happen and it's worth paying attention to. Where can we send people to find you or find out more about Reflexivity Research?

• 36:32Speaker 02

  Yeah, sure. You can find the research firm at ReflexivityResearch.com. And then my Twitter is W Clemente III.

• 36:38Anthony Pompliano?

  Awesome. Thank you guys so much for listening and watching and we'll do it again in the future.

• 36:49Anthony Pompliano?

  You