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I I have like very little time or patience for like people who only write negative articles. Um, you know what I don't get about Peter Schiff is, you know, he seems like a very smart guy and I have never met him before, but I like the world is not black and white. Like there's room for gold ownership and Bitcoin ownership and so like and by the way there's room for tokenized gold ownership, Bitcoin ownership, physical gold ownership if you want ETF ownership. Yeah. Like it doesn't make a difference. Like it's not as if you have to put all of your assets in one class. And by the way, you shouldn't be putting all of your sort of like assets in one bucket. But um I like I think that I think that people sometimes dig their heels in and it's hard to undo. um uh people's perspectives like when I I'll never forget when I took time into web 3, right? Um a lot of people called me up and were like, "What the heck is wrong with you?" Right? Uh when the article came out, you know, in Yahoo back in I think it was like March of 2021. And when the article came out that we made as much money as we made, you know, a lot of people changed their mind and were like, "Oh my god, this is a real business that you can actually launch." At the same time, it wasn't until we did Artists for Peace and we started to use crypto to start to show that it can be used for good efforts that people started to um really change their tone. And you know, like one of the things that I feel has always um changed people's perspective is when you could show that the crypto community is actually providing good to the world um and is not just a financial tool or an efficiency play. And that's hard because it really is an efficiency play and a financial tool. Um, and so like I try to apply it wherever I can which includes like my initiatives with New York Haires and you're going to see a big one come out, you know, in a few weeks for Stan with students where I, you know, with everything that's going on in New York. I went to a bunch of these New York um based companies and I said to them, I said, "Look, like I sit on the board of New York cares, the largest volunteer network uh you know in the city. Um I oversee and chair Stand with Students, which I've done for the past 5 years, which helps the Title One schools, right? And what I'd really love to do is I'd love to show that the crypto community cares about people other than themselves and the community and crypto technologies. So I'd love for you to participate in this, right? And um uh you know like the overwhelming response has been incredible. you know, everyone from the Salana Foundation to Ripple to Dapper Labs to Exodus to um you know, Broadlight to Falcon X um and I can continue to name on and on and on have stepped up and said we want to participate and have donated, right? And uh you know cake wallet was another great one where it's like like people you wouldn't even expect but are building a business in New York are saying we want to stand up to help this New York environment when it's there's a little chaos and and we know that New York is trying to do good for the crypto ecosystem too. Um I think that helps people wrap their head around crypto and starts to sort of nullify this. I don't know the FT will say crypto bros try and bribe the city by you know what that that's all it's just a very frustrating thing and again as you say once social consensus is fully behind something the opportunity is actually been captured already.
Yeah, I look I I will say this is it's really hard for me to feel like um comfortable being called a bro. Like we I there was an article in Decrypt the other day referring to crypto on-ramps as sexy and I was like this is fantastic. Like I'm sexy now. Like I I'm very rarely sexy. I'm very rarely a bro. I just want to build, right? Like I like this, right? At the end of the day, the world is just getting faster, more efficient, cheaper. Like we're seeing that AI is accelerating things. ML is accelerating things. And guess what? The only technology that can keep up with those accelerations are blockchain technologies, right? And so it's all the same sort of trend line that's taking place and I'm just having fun building with it and I think you are too.
So what is your crypto journey? How did you end up in the ridiculously difficult idea of trying to build a um a mobile phone for web 3 network? Yeah. Uh I was not actually super deep in crypto at the start of this. I was at Google before I was here. Um, and before that I did a consulting gig where I was building primarily mobile apps for a lot of the big Fortune 500 companies, right? Like in the in the mid- teens there was this moment of realization where every big company realized, oh, our mobile our mobile strategy is terrible. Like we have terrible apps, nobody wants to use them, terrible mobile websites. And so I really kind of built a love for the mobile space first. Um, you know, how can we build great apps that people want to use no matter where they are? And then as I entered Google really was primarily focused on AI. So it was this this concept of you know there's an emerging technology that's maybe not quite ready for mass adoption yet but what can we do with it? And so that love of mobility and that love of cutting edge tech that maybe is still trying to find its way to mainstream uh led me to this opportunity with Salana. And so I had a colleague who had been at Google for a time and uh he made he made the intro. who pitched you the idea of hey come to a web 3 network which you probably didn't know of that had gone through the wars and said oh look I've got a really good job for you EMTT why don't you come and build a mobile help build a mobile for this I want to hear that pitch yeah so the way it started was uh the person who I knew at Google who was running payments at Salana Labs at the time he said hey you get emerging tech you get mobile the team is doing something that's totally crazy totally ambitious. Hear them out. Uh, and I was a little skeptical. I did know Salana. I did know crypto. And, you know, I I held uh like I had a portfolio, but I really wasn't like actively using apps and trading all the time. But I said, "Sure, I'll I'll take the call. Like, I trust you." And so, I met with a few of the early team members. There was basically one full-time hire, this guy Stephen, who was effectively the founding engineer who was hired by Anatoli to kind of get this off the ground. And then there were a few other Salana Labs folks who were supporting. They weren't full-time mobile people. They were kind of doing other Salana stuff. Um, and I just picked their brains. I wanted to learn more about what they were doing and why. And they each gave their own sort of earnest version of the pitch. But to be totally honest with you, I'm not sure everybody really knew what we were doing and why back then. So, there was no concise version of the pitch. I was mostly reading the opportunity space. The one thing they were all super clear on was like, hey, crypto is going somewhere and it can't get there without being successful on mobile. Like, they all totally had that vision down. Um, and they were just really smart. I could see that there was a big opportunity space and doing something from zero to one, uh, including building a phone seemed like too good of an opportunity to pass up and I'm very grateful I took the opportunity.
So, now you've been working on it for a while. What's the vision? What are you trying to do longterm? We want to build a new type of mobile platform. If you look at what's been built so far by Apple and by Google, it's a kind of known model, right? They they build a bunch of software and some tools and they say, "Hey developers, hey users, why don't you guys come together? We'll introduce you. We're going to take 30% of the action and we're going to set the rules of engagement, but we'll get to build a whole bunch of hardware." in the Apple's case or in Google's case, we'll build some hardware but we'll also license the hardware to some other people or the the software to some other people and uh it's been primarily in service of other revenue for them, other services revenue, other hardware revenue. For us, we don't see a world that crypto fits neatly into that model. The idea of giving up 30% of peer-to-peer transactions or no middleman transactions, it just doesn't work. Um, a lot of the tooling that's been built to support really seamless, really easy web 2 transactions like Apple Pay or Google Pay, there's not really a web 3 equivalent of those technologies because they're not incentivized to do it really. No, they're not incentivized to do it. It's it doesn't work with their business models. They wouldn't want to start eating their own opportunities. And so really what we're out to do is build a new type of platform, one that's open, one that's cryptonative, crypto first, but actually services mobile users. And so our path to that has been through building our own phones, which sucks. It's like very expensive and very hard, but it's been great. We've we got the opportunity to learn a lot. We get to connect directly with customers. Um, but long term, you know, we think of ourselves very much as a platform provider. And so we'll always sell our own phones, but we want to bring this to as many phones as possible, not just the ones that have our brand on the back.
And so if we were to look forward 5 years, what does that ecosystem look like? What is the phone at that point? What is it? Because we don't even know what phones are going to be in the future because of AI anyway. I mean, there's a lot changing, but what's in your head? Is this the marketplace for Salana? Is this the marketplace for web 3 and the tooling for the overall ec what is your where do you think we are in five years? Uh yeah, I we're Salana first. We think Salana mobile well we think Salana is going to be the place where mobile is successful. It's it's fast, it's cheap, it scales. These are all things that really matter in the mobile context. So I inevitably think this will be like the nexus of Salana activity. You know in 5 years I can't imagine uh a startup launching on Salana and not having an associated application available on our platform. I I think as users move more and more towards mobile and their expectations grow higher and higher. You know, historically it's been build a desktop app first. That's where traders sit all day and maybe eventually we'll build a mobile version of the thing that kind of works. I think that'll be totally flipped in five years and probably soon. It creates network effects by having your own platform. 100%. Yeah. And and we get to we're starting to see more competition, right? Like in the early days, we really had to muscle it. We had to like chase the teams down who were part of the ecosystem and say, "Hey guys, we're doing this thing. It's really important. Here's the vision. Like please believe in it and build something with us." And now that's kind of reversed where we have a lot of teams who say, "Oh, our competitors are in there. Oh, we're we're a trading platform like we can't be the last trading platform. We have to be the first one and we have to offer better features." And so a lot of the benefits of building a platform that you don't really start to see until you reach that little critical mass of flywheel adoption, we're like just now crossing into with 150,000 seekers being shipped out. That's enough of an addressable market to get most of the ecosystem teams who see the opportunity in and building with us.
Yeah, that's actually it's actually very clever because what it it coaleses attention into one place because if not it's the internet and so then there's all the other thing you know all the other apps and everything else but if you coalesce attention to one place in in a delightful piece of hardware that has a good UX experience then suddenly it creates network effects and as you said what at 150 if you're trying to get 150,000 users that's what 10% of the daily active users 5% of the daily active users Um, and that's a big enough bootstrapping of a network to create network effects. Totally. Yeah, it's it's absolutely enough. And you know, it not only is it a reasonable enough audience, it's a growing audience and it's a high spend audience. One of the things we saw when we launched our first device, Saga, was the initial adoption was really light, right? We didn't sell as many devices as we were hoping to and eventually our fortunes changed. The market shifted and people saw an opportunity to buy the phone. But the one thing we did see was the people who bought the phone used it constantly. They were constantly trading. They were constantly buying things, selling. And so that activity story of this is where the whales of Salana are going to land. This is where some of you know the growing user base is going to be is really compelling for builders. And so if they get some consistent technologies to make the experience super delightful for their users, they don't have to worry about the hard stuff. They don't have to worry about the wallet infrastructure and trying to make it work great on a mobile device and overcoming some of the built-in restrictions that phones have. They can just build a great app and give users a great secure signing experience. We're pretty confident that they'll just continue to innovate and try new stuff and we're we're already seeing that. Um, so I think it'll continue to be a focal point for the growing Salana ecosystem and potentially additional ecosystems in the future.
The secret to being a great investor is seeing the world 6 months ahead. The macro investing tool at Realvision helps you understand the macro seasons and allocate your assets accordingly. It's like having a crystal ball, pure alpha from myself and Julian Battel. You can try it out by signing up for Realvision, Realvision Alpha for 30 days. The links below. Let's start with the global liquidity picture at top level. where we are from your framework, where we are from your understanding and then we'll deal dill into dig in some of the regional stuff because there's lots of interesting things going on. I read your note this morning about Japan. I think that's interesting as well. So at top level, where are we in the liquidity cycle? What are you seeing? Well, the answer is we're late. It's not inflicting downwards yet. We're still in an upswing, but you know, we got to remember here that the liquidity cycle is what, 34 months old. um that's pretty mature. Uh as things go, uh we got to be thinking of what could be the endgame. There's no I don't think there's anything on the horizon that could necessarily disrupt things. But, you know, there are clearly problems building. And I think, you know, as we look into 2026 and probably beyond, I mean, there are factors to think about. And to my mind, I mean, the two biggest factors, I mean, number one is that there's a lot of debt that's got to be refinanced out there because debt was effectively termed out during the COVID crisis, large amounts when interest rates were zero. And that's coming back into markets to be refinanced really from sort of later this year, but through 26 27. And the other thing we must, you know, remember is that, you know, strong economies don't always have strong financial markets. And the fact is that you've got uh US tech companies currently investing what is it a billion dollars a day in IT and infrastructure and you know over the course of a year or so couple of years that's going to take about a trillion dollars out of markets uh out of out of money markets. I mean these these are big amounts. So these companies may be seeing decent profits growth but their cash flows are really plunging and that's got to be a problem uh for financial markets uh in particular.
So let's dig in a little bit to the to the slowness of this cycle versus others from from our work is like normally the liquidity cycle peaks around the business cycle peak. You know they're all you know related and the business cycle has been super low. If you look at the ISM, it's been below 50. And the the strongest correlation to that is rates have been too high for too long and that has kept the ISM lower than expected, which means it feels like it's elongated the liquidity cycle. So that's one factor that I'm looking at. The other one is the fact that they've been shoving everything into the bills market and not refying, you know, in let's say the 5year sector that's kept this this, you know, cyclicality. Um and I don't know if that structure is changing things because it requires ongoing liquidity as opposed to cyclical liquidity. So firstly the business cycle and interest rates and then you know whether the structure of where they've been issuing makes a difference. Yeah. Well I think the I mean the first thing is we don't seem to have a business cycle and if you look at uh almost any economy since the COVID crisis uh everything's kind of flatlined. So there's there's no obvious business cycle around and you know we can conjecture as to why that may be. Is it because fiscal policy is dominant whatever but the fact is that there's none. There is a liquidity cycle and that seems to be paramount. And the interesting point is which I'm sure you'll attest is that you know financial markets are responded not to the real economy they responded to the liquidity cycle. That that's what's going on. So we need to understand this like it or not. I mean it's become the paramount issue in markets as far as we can see. So I think that's that's true and I think your point that about bill issuance is is really critical and you know the way that we've um sort of I suppose explained this before is to say what you're getting is a transition crudely from Fed QE uh to Treasury QE and the Treasury are basically coming in and issuing a lot of bills. They're starving the market uh of longdated coupons so there's not the liquidity absorption that you would expect. um uh people are being forced into the short end. Two things really come from that. I mean one is that uh there is uh lower volatility in markets as a result and in fact we know the Treasury is very keen to actually keep volatility down given the way they've up these buyback programs. Uh so that's significant and if you get a lot of bill issuance and shortdated note issuance the banks buy it with elacrity because this is the sort of security the banks like that matches deposit growth and if the banks are doing that they're effectively monetizing the deficit. So I think that's the route to a trend increase in liquidity over the medium term. We know governments basically have to find ways to fund themselves and what better uh through this mechanism.
And do you think that this stops them issuing at the longer end um or is it just a delayed process until they can get rates lower? And we'll come into that in a little bit. But is this a structural change that's going to ongoing and because it's bills that that feels like ongoing stimulus and it might change this whole cycle? Well, I think the answer is that it's uh it continues until it doesn't. And the fact is we know that these things always end badly because they tend to end in inflation. Uh and that's the experience we've had in the 1970s. So, it's going to go on as long as it uh as long as it does. Uh and then it will be forced to stop presumably by concerns over inflation pickup. Now, I think everything they're doing is trying to bury that inflation news by whatever means, fair means or foul. So, we're never too sure what the inflation rate is. And I'm always, you know, instructed by the fact that, you know, one's personal inflation rate is always way, way above what you read in the CPI. So there's obviously a lot of manipulation going on anyway. But the fact is you've got inflating asset markets which is really testing for the testing for the fact that you've got strong monetary inflation and monetary inflation is not just a cycle as we know it's a trend and that trend is accelerating. And I think what the world doesn't realize is that that things have changed dramatically since co uh we're in a world of monetary inflation, monetary debasement. It's not, as I keep stressing, it's not one of financial repression. It's one actually more it's worse than that. It's actually monetary inflation. And you've got to start thinking about uh how to invest in a monetary inflation world. Yeah. And you know, and both of our hypothesis is you know longduration assets tend to do very well in that environment. And we've seen that with technology stocks and crypto. Uh you know, gold has acted very well in this environment as it should do. And you know, all the signs are there that the debasement is ongoing and it's not going to go away.
One of the things that um is interesting to me is obviously Trump and Bessant have focused on what they can do with the Federal Reserve. You know, the the shenanigans around changing the governor and various board members. Clearly they want to see if they can force interest rates lower. I think personally interest rates are too high versus uh GDP or you know whatever your kind of real interest rate measure you look at. Um and that that there's room for rates to come down 200 basis points which allows them to refinance again. Any thoughts on on the kind of Fed board shenanigans? Yeah, I mean I I'm silical enough not to think it really matters too much. I mean, at the end of the day, I don't think the Federal Reserve really controls uh interest rates, certainly across the curve. I mean, it's rather the other way around. Long-term rates tend to drive the Fed rather than the rather than vice versa. So, you know, ultimately, you've got to say, well, okay, what's the what's the fair value for the long-term bond, and that has to be related to nominal GDP growth ultimately. So, you're talking of something like about 5%. And then you take what is a normal spread between the short end and the long end. what is it you know 125 basis points. So that gives you your benchmark for Fed funds. So there's not much they can do sort of either side of that and they can dance on the head of a pin and come out with their you know their projections. But re in reality the FOMC doesn't have that much sway. I don't think it's really a signaling tool more than anything else. Uh as far as I can see uh what matters more is is really the balance sheet what they're doing there.
Yeah. I mean although the other side of this is we're all kind of expecting yield curve control in some way shape or form at some point just because of the debt refinancing mechanism. And one of the things is interesting is and I only read about this this morning that there is some changes in the Federal Reserve Act that may allow them not to pay interest on bank reserves which would force it into the bond market. um that feels like, you know, a backhanded way of yield curve control by forcing banks to go further out the curve. Does that factor in at all? Yeah, it could be. I mean, I think there's a there's a lot of, you know, all these things that they're lining up, you know, whether it be, you know, elimination of the of the SLR, the supplementary liquidity ratio, uh, you know, whether it's changing stress test rules, all these things are really trying to get the banks, give the banks more capacity to buy government debt. And we know ultimately this is you know this is what tends to happen in a monetary inflation. Uh banks tend to come in and buy government bonds then monetize the deficit and that that's the route that's the route to to funding. Uh the question is how quickly we are we going to get there. Uh or how quickly we get there and inflation really becomes the the issue. I think they can probably push inflation down over the longer term and I think there's a lot of factors in there in the equation as you will know things like AI which are probably going to depress uh consumer prices but at the end of the day what makes all this very confusing in a way is that high street inflation is very different from monetary inflation and you can have a background of strong monetary inflation but because you get you know cost deflation in other words productivity wins or uh cheap Chinese goods the high streets less affected for some time and ultimately investors have got to invest about around monetary inflation, the debasement of the currency much more than uh what they're seeing in the high street, but it will come through in the high street at some stage. Yeah. And it usually comes up as the business cycle picks up as well, if it if it does pick up, which I I think it does.
The other thing that's that's been interesting to me is the shift in how the Fed and the Treasury have kind of managed the debasement. It started simply with the balance sheet. Then everyone kind of figured out that game and then it turned into this Fed net liquidity game and now it's gone to what we look as a total uh liquidity which is including the private sector of the banks as their main mechanism of debt monetization. Does that make sense to you? Makes complete sense. Yeah. Well, I mean let's talk about like market psychology. Um I think you know every cycle is different but the same and it just feels like the scar tissue from the last cycle which we all felt is manifesting in a lot of the commentary that's coming through at the moment. Agree. Now it's a four-year cycle. This is when it has to end. Therefore it will. You know, last cycle it was like to the moon forever because no one was keeping an eye on or no one really well there were people such as yourself who are really getting a good handle on it and it was really in early. No, even I failed in the last cycle cuz I thought there was another leg to go. So yeah. Yeah. So then everyone's sort of I I guess truncated this cycle and for good reason. And it's not without, you know, that there are frameworks out there that are credible um that should say that, you know, this is, you know, a time when things start to get, you know, peakish. Um but we haven't had the typical business cycle and not many people do that business cycle analysis that you and Julian do. So that framework that underpins everything at Real Vision and GMI um is sorely missed elsewhere. But it just feels that you know it's a mechanical response to like the market that this is now when we should be peing and it's it's been um yeah interesting to see the commentary flying on Twitter and everyone else and even within our membership here about you know is the top in. So yeah I'm always fascinated by market psychology and you know and how it how it manifests in the market. I also think what's quite interesting is that everyone is very attuned to the liquidity cycle aspect now and how that is going to change the outcomes in the future as much as we think that you know we've still got more to go. Um and all those things are sort of they're the unknowns but the framework that you know we have here is is very I think very clear that we have got more to go. Um, I've got a, you know, we've talked about like my Bitcoin cycle risk framework and the topping indicators that I've been building. I mean, they're not screaming at me euphoria. Um, there is definitely definitely and I highlighted this in that last report ra um trend exhaustion signals in the Bitcoin chart and fundamental um deterioration as well. But I think that's a function more of the transition into higher beta crypto through ETH primarily, the falling of Bitcoin dominance, which is typical of this point in the cycle anyway. Right. Yes. Yeah. and and that transition really started, you know, second quarter, but it was very clear by sort of July when I was on paternity leave that transition had occurred because I looked at the onchain data on Bitcoin, the ETF flows between Bitcoin and Ethereum and obviously the price action and it very much lines up with, you know, that transition period in the crypto market from Bitcoin dominance to um high quality alts, not, you know, a Dash for trash sort the market that we saw in 2021 when people were getting stimulus checks, but a high quality alt season um run at the moment. So, that's kind of where I'm at.
And when we talk about the high quality alt season, I want to see what where your head's at. My head's at is quality layer ones, revenue generating projects, and a few big things that capture attention, whatever they may be, that don't come with revenues or anything else, but they capture attention. We're seeing, you know, Hyperlit's obviously one of them. Maybe Athena is another. Um, we're seeing obviously Suie, Salana. What are you, how are you thinking this next phase and what are the types of tokens that participate? Yeah, I like the way that you've just distilled that down into a very clear sort of representation of what really matters. um cash flows, you know, are these are there protocols that are fundamentally strong, meaning that they have cash flows, they have usage, they deliver utility and have very strong tokconomics and there are a handful of those and they are being rewarded by the market as they should. Um I was I've always had this view that as this as the asset class grows and as the you know for lack of a better term sophistication of the uh the marginal new investor uh comes in that they're going to look at fundamentals more and more has always been my base case. Um and I think that's playing out. I mean you mentioned Hyperlquid generating a huge amount you know generating the sort of cash flow or revenues that would make a you know NASDAQ 100 company sort of water like in terms of just the growth um in terms of like the multiples I know we're not talking like for like but in the case of Hyperlquid um you know it's trading on a on a revenue multiple that would put it you know and the median of a um a tech stock in the S&P um but it is those high quality um tokens um L1's and the DeFi protocols and yeah the things that will grab attention because um that is not going away. Um memes are definitely not going away. In fact, I've I'm starting to entertain maybe my first uh meme position which we can talk about later.
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