FULL TRANSCRIPT
Slava Rubin (00:00)
Thank you everybody for joining. My name is Slava Rubin. I'm one of the founders here at Vincent. We are your spot for getting access to all kinds of information about alternative investments. We have our newsletter, the Alternative Investment Report, as well as our Smart Humans podcast. This has been a fun series where we try to bring all kinds of new interesting topics. And you all the audience have demanded hearing about where is the market action now.
So we're going be talking about crypto, gold, and prediction markets. With us, have a special guest. We have John Gillen from Milk Road. John, say hi.
John Gillen (00:32)
Hello, good to be here. I'm looking forward to the conversation today.
Slava Rubin (00:36)
Amazing. And we have none other than the famous Jan-Erik, the brilliant, always has the answers with us from Sacra So Jan-Erik, say hi.
Jan-Erik Asplund (00:46)
You're too kind, Slava too kind, but yeah, great to be here with you and John.
Slava Rubin (00:51)
All right, perfect. So let's get started. So first, a word from our compliance department. So nothing in this presentation should be construed as an offer to sell securities or solicitation of an offer to buy securities. All investments involve risk and the possibility of loss, including loss of principal. And neither past performance nor forward-looking information is a guarantee of future results.
All right, who's with us here in the audience? So quite a few are accredited, about two thirds, which means you can get into more interesting stuff and you probably have a bit more experience for sure, which is shown here that 80 % have intermediate experience or more. Almost a quarter of you are advanced. So you're probably gonna be asking tough questions or maybe you should be here as one of the guest speakers. So, you know, take it easy on us. And this is interesting here, which is the audience that is listening in here.
is already interested in investing into these areas. So crypto, quite a bit into crypto, even though it's a very volatile market. So we're to have a lot of conversation there. Quite a few of you are interested into commodities like gold and silver. And then, you know, only a small percentage of you are not planning. So I guess that's why you're actually here. Pre IPO companies as well. So we're going to make sure we try to add in a little flair here with some pre IPO companies. About one out of three of you are interested in prediction markets.
We'll see if that changes in terms of how you think about it by the end of this conversation.
Okay, so let's just baseline what are we talking about here? know, typically me, I'm a close my eyes, 10 years later, hope to try to make a lot of money. I'm, you know, really a buy and hold sort of guy. If any of you listen to my podcast or any of these conversations, I probably am a terrible trader or terrible at making money quickly. I'm pretty good at making money slowly, but I'm really bad at making money quickly. But a lot of people,
like to make money quickly. And I would call that like chasing alpha, which trying to get that big pop at the right time, just as it's happening, riding the correct wave. And now the scary things with really fun, exciting waves, if you catch them, it could be amazing, but if you miss it, you might crash really hard. So let's just take a look at some of the things we've been talking about for the last 10 years. This is not an exhaustive list, but this just shows you some of the things that people have been
I'm gonna call instead of chasing waves, chasing giants, chasing alpha. So you have everything here from gold, Bitcoin, one of the early ones, early in comparative is really GameStop, right? GameStop, I feel like as part of the conversation as like a meme stock really became normalized as part of COVID. So then there's been a lot of this movement since that, I'm gonna call it gambling.
betting since the really be trying to bet on GameStop happened. Everybody's now like, what's the new GameStop? What's the new GameStop? Is it AMC? Is it gold? Is it silver? Is it Bored apes? Bored apes. It's, know, NFTs. Let's get into NFTs. These things change very fast. You have to be listening on X. You have to be tracking Reddit. You need to be in with the, you know, all the finance bros. You need to have alpha.
inside of Wall Street. So you need to always be understanding where all the information is headed. And sometimes, you know, it's just Tesla. Tesla is just a meme stock and people just chase it and it's awesome. I'm not saying you should invest. The point is, you know, sometimes you don't know where to go and you just have to figure it out. So that's what we're to be talking about today, which is where is the market action? So I'm just going to put like my own disclaimer on this. I don't think we're talking about like what is the best long-term investment.
We might bring that up, but that's not what we're navigating here. It's really like, where's the action at and what's been happening in the last few days, weeks, months, what's been changing over the last years. But there might be hidden gems here that maybe you should be buying low for a decade out. Okay, guys, John, Jan, Eric, anything you want to add there?
John Gillen (04:44)
Yeah, I got a lot of thoughts on this. I think that this has been a trend that's existed for centuries, if not longer. Isaac Newton got burned in one of these pump and dump, I think it was the East China or South China Sea trading company or something like that. So this has been going on as long as there's been markets. The difference is now that this has accrued to be several hundred billion dollars of capital that is pursuing what I would call financial entertainment as opposed to investment. And it has the power of technology, the internet.
and one of the deepest and most liquid capital markets in which to play. So I think you could also put the ICO boom that happened in crypto in the 2017-2018 bull run and this before that. this evolves, it continues to grow. But I think the thing to note here is that this is no longer just something to wave your hand at. Retail investors have taken up a much larger portion of all markets now. And there's several hundred billion dollars of capital here that can drive swings in market capitalizations of these assets in the trillions.
So this is something to be aware of and pay attention to because it's a major force in the markets now that's empowered by technology. And so it's coordinated and it's fast and it's very strong.
Slava Rubin (05:49)
So financial entertainment, I love that term. So is it to make money like finances or is it entertainment? And I understand it's both, so I'll just put a comparison to it, which is, you some people are professional gamblers, meaning they're just really great at poker and they just love going to Vegas. They get kicked out and they're like literally as a job, they can make money. And a lot of other people, majority of other people,
They're trying to have some fun, but they also really want to make some money. And they get really aggravated when they lose money because they were hoping to make money. You know, I'm in the camp when I go to Vegas, it is literally like watching a movie. I'm in the entertainment bucket, meaning when I spend $100 or $1,000 and I end up making one X, two X, three X, five X, that was super fun. And when I end up losing,
my one X and end up with a big fat zero, it was still fun. Cause I was like having entertainment. So where is this on that spectrum? Like is it really just like that, you know, the bell curve I just explained, which is very few are actually making real money. A lot just get really upset and then just, you know, looking at as pure entertainment. What do you think is that percentages?
John Gillen (07:09)
think most people who participate in these sorts of market frenzies end up getting rinsed and some of them don't really care so much. So the way I would kind of frame this is that we've seen this rise of what I would call financial nihilism, which is the sort of belief that it doesn't really matter if at the end of the month you have an extra 50 bucks or a hundred bucks. It doesn't really matter if you save that too much in 20 years, you put that in the S &P 500.
that's not really gonna lead to a change in your circumstances and there's no dopamine hit that comes from doing that. So a lot more people in the market have started to treat that little excess bit of cash that they have more like a poker chip or a lottery ticket. And I think a great example of this is the movie Dumb Money about the game stonk trade and all the entertainment that went into that. There's all these memes that are generated. People feel like they're part of a community. Buy $100 of Dogecoin and then go on Reddit or Discord and hang out with your friends.
So I think that there has been an emergent entertainment element of it, especially for people who are like, let's say market participants, investors who don't have a lot of capital, but you know, for a hundred dollars of Dogecoin, you can get several months of entertainment out of that. And maybe that's worth more to you than the chance to have a little bit of an S &P 500 in your 401k in 20 or 30 years from now. So I don't know. Like I think there's a wide spectrum obviously on this, but I do think in recent years,
the internet and the communities and the social element of this has made financial entertainment a bigger part of what goes into some of these things.
Slava Rubin (08:36)
And it seems like what was the tulip craze of many decades ago is just happening much faster now with our connected selves on the internet, right? What seemed to maybe take us for a quarter or weeks is now happening potentially in seconds or minutes or days. It's just crazy how fast things are going. So as always, anybody can jump in with any questions. I'm gonna do my best job.
John Gillen (08:47)
speedrunning this
Slava Rubin (09:02)
to try to review all the questions and incorporate as many as possible. then, so financial entertainment, how much of our net worth should we be putting in financial entertainment? Should it be 1%, 10%, less than 1 %? I mean, should it be a lot? How do we think about it?
John Gillen (09:28)
Jan, Eric, would you like to take a stab at that?
Jan-Erik Asplund (09:32)
As someone who has dabbled here and there as a younger millennial, I think of it always as part of sort of, I don't really budget, but if I did, it would be sort of part of my, whatever money I set aside per month for kind of sheer entertainment. So if I was into gaming, maybe that would be a gaming purchases budget. But rather it would be for throwing in some money into Kalshi
and treating it completely as a kind of, know, ideally you withdraw that money from your bank account and you imagine it's already gone, essentially. And that's the amount of money that, you you spend that amount of money, you know, that you can be happy already being gone, I think is safe to sort of to play with. But I think where you sort of get into with a lot of that is when you, you know, start thinking about it as an investment.
or rationalizing it as an investment without definitely doing some of that diligence, some of that thought ⁓ and long-term thinking about it the way you described Slava. So I think it's easy to maybe cross that line without necessarily intending to. And I think a lot of the platforms are of gamified and set up to help you do that.
But yeah, I think it's entertainment and you're seeing in Gen Z, this is all like, this is what a lot of the sort of Gen Z economy runs on, right? It's like loot boxes and gaming. It's like these like WAP storefronts for creating paid discord groups. It's like live streaming, mystery boxes. It's offshore crypto casinos. It's like everything's like this dopamine sort of casino. And I think as long as it's kept to a portion of your budget, you know.
that you can be happy losing, then I think it's, you then I don't have a problem with it.
Slava Rubin (11:18)
Okay, great. So let's move on. We are saying you should be happy losing it, but there's a chance you're gonna make 2X, 5X, 10X, 100X. You can make a lot, which is why people are here. So here's today's focus. We're gonna talk more about where we're at with precious metals and gold, crypto and Bitcoin, and prediction markets. So that's kind of the agenda for today. There's many other things we could cover, but we're gonna try to do that in the next half hour. So before we do that, let's just take a quick vote, which is, which of these three?
Only one, do you think you're gonna be investing more into this year, this calendar year, 2026? You could pick none, but do you think you're gonna pick gold or precious metals, Bitcoin or crypto, prediction markets, or maybe something else? So which area excites you most for investment this year? Just pick one.
Okay, survey says crypto is actually in the front. We actually got 43 % actually voted across one of these three. Prediction markets about one out of every five. So very interesting and gold and metal, one out of every three. Perfect, let's move on. Let's see if this changes at all by the end. Let's dive in. So let's start talking about our actual asset classes. First, we'll talk about precious metals. Jan-Erik, you wanna give us an overview?
Jan-Erik Asplund (12:30)
Yes. So it's funny going to precious metals after that sort of intro because gold is one of those assets that has the reputation of being, you know, it's a sure thing. It's like it's the ones are reliable investment long term. And yet now, you know, or sort of over the last 10 years, it's at least it's sort of become more and more of a meme stock, more and more of something that is sort of traded by, you know, retail.
Like a decade ago when I was first using Robinhood, I remember that these gold miner 2X, 3X leverage ETFs were like a huge thing that these kind of, know, DGENs love trading on Robinhood. And it was very small cap gold miners. So there's kind of this duality there where, yes, it's sort of financial entertainment, but it is also potentially a good long-term hold or historically, you know.
Historically, it has been a sort of good way to maintain value except for sort of a blip in the mid 2010s there. Otherwise, it's sort of the namesake of reliable long-term investing. And similarly with other metals, silver and platinum being sort of the biggest other two ones out there. But yeah, I think right now, obviously, we're in a really good
phase for gold. think, yeah. So it'd be great to hear what you guys think, know, Slava John, about sort of where we are and where we're going.
Slava Rubin (13:53)
I I think what you say is totally a good foundation because for years, if not decades, gold was very stable. I'm not going to call it flat, but it grew slow-ish, was not the most exciting return investment opportunity. And then a couple of few years ago, it just springboarded off of 2000, right? And is now at like,
5,000, 6,000 just hovering up and down in that area, which it's a pretty steep curve. It's a pretty steep curve. mean, it's pretty Everest like, like it's going to be, you know, that's, mean, you could put board apes next to that. I don't know. It'd be so different or a GameStop stock. So it's a bit weird, right? So John, what, what, what happened? Like, why is Jan-Erik's foundation? What you said is like, it is the essence of a stable asset class. What's going on?
John Gillen (14:55)
So I think there's a couple of pieces of this. The biggest one I would point to is geopolitical uncertainty. Once the Biden administration applied sanctions to Russia, once the war in Ukraine started, there began to be this like development of sort of this international thesis that, okay, maybe we need to find an alternative to the swift system, to the dollar system, and to get out of the dollar denominated reserve assets. The thing that the market has shifted towards and gravitated towards is gold.
because BRICS nations, other nations that want a neutral store of value, because they don't want to use each other's currencies either, right? Because they don't trust each other, even less than the United States in many cases. So they need a reserve asset that's neutral and international and global. And so that seems to be where that has gone. There's also been this rise of this idea of the debasement trade, which is saying that central banking fiat of all countries is losing its value sort of like permanently.
And so all these things, these have kind of combined to create this narrative and it's a reality, which is that central banks around the world are accumulating gold, but they're also leading to this, you know, retail investors have caught on to this. And so now all of this speculative capital that we call this hot ball of money colloquially has recognized this as a trade. And that's where you start to see this game stunk like, you know, hockey stick that's happened on the gold chart. So I think if you look historically,
gold, silver, precious metals, base metals, they do go through periods of overvaluation and they have spikes like this, but then they do tend to come back down. I think that there's a number of things that could change the retail sentiment and kind of end this speculative frenzy that we've seen. But for right now, think that gold is what we've highlighted here. Silver has been even more in a bull market and sort of like this wild period of over-evaluation and speculation. I think you might see similar things from copper in the near future here.
But regardless, would say that historically speaking, the expectation would be that more supply comes on the market and the speculative frenzy breaks and we see a sharp correction. One other thing, I mentioned this at the intro when we were prepping for the call, but I think something that could change this narrative strongly is that just today, Bloomberg reported that there's been conversations between Russia and the United States about what a peace deal might look like, collaborations on economic activity, energy resources, and so forth. But also as part of that deal that's being discussed, it's not
like made yet, but it's being discussed, would be reintegrating Russia back into the SWIFT system, back into the US dollar denominated ⁓ global financial system. That would potentially harm this sort of BRICS Nation narrative, this gold backed alternative system narrative, and might be something that could break the speculative fever that we've seen in gold and in other precious metals. So I think that there's a lot of uncertainty here and buying a chart that looks like a hockey stick like that is generally not something I would recommend.
So there's been a ton of action, a ton of attention and capital in these markets. But I think that the uncertainty around this point and where it is just the valuation spike that we've seen, to me, it makes it seem like something to watch and pay attention to. But I'm not really touching this right now. And I don't think it's really a good idea to go getting involved at this stage of the market.
Slava Rubin (17:58)
You're not touching gold.
John Gillen (17:59)
No, this is one of those ones I'm just going to let it ride and just watch and see what happens because it's obviously moving a lot of markets and making a big, the earth a lot doing this. But I think that there's a lot of reasons to think that eventually this fever breaks and we see very sharp corrections. yeah, it could go higher. I'm not saying it can't go higher, but the risk now of a correction to me is very elevated at this point.
Slava Rubin (18:21)
Yeah, mean, gold's not supposed to have sharp corrections. Like, it's supposed to be much more stable. So when a month ago, a few weeks ago, you see in that bottom right chart that kind of falling off a cliff and you go from 5,300 to 4,600 in literally like a day, I mean, what's happening there?
John Gillen (18:41)
I think that there's a lot of things that drive that. The Chicago Mercantile Exchange changed their margin requirements. So that kind of took some of the speculative capital, like the ability for speculators to speculate with their capital, it reduced that. So you saw some sharp corrections in gold and in silver. think we saw like a $10 trillion market cap swing in a single day between the two assets. So yeah, what's driving that, I would say it's like, you know, it can't go up forever. And when you're seeing these huge rushes of speculative fever,
You often get sharp corrections. The, the bounce and recovery after that to me suggests some strength, but it's difficult at this moment to say whether or not that's just like a dead cat bounce and a lower high, or if we might see another run up and another big spike in gold here. but you know, I think one of the big signs that you're at a top historically in one of these like fever overvaluation, is, you know, people will say we're in a new paradigm. The old system is gone. We're moving to a gold back system. The dollar is dead. And that's.
you're hearing from a lot of people and sort of what people are using to justify these new price levels and valuations of gold. And I think that there's reason to suspect that that may be overly optimistic, ⁓ at least in the short term here.
Slava Rubin (19:50)
Speaking of which, talk about Steve Kerbs. So trying to ski up gold would only be a single diamond, but trying to ski up silver would be a double diamond because from October to January, you went from like 45 to 115 in like three months. And then in one day you drop like 30 % and it hasn't had quite the dead cat bounce.
Is silver the way to play it or are you just gonna get run over?
John Gillen (20:25)
I feel like you're probably gonna get run over. would say copper is the one I would look at that hasn't spiked yet that might. But I personally don't really think it's ever a good idea to go chasing pumps like this. Once these things have blown up to these, a gold at $1,300 an ounce is a whole different conversation than $5,300 an ounce. yeah, don't think it's a good idea for anybody to be.
Slava Rubin (20:50)
We're here to chase alpha. So, you know, we're not going to get to gold. We're not going to get to silver. Which precious metal should we try to get into? What are our choices to try to
Jan-Erik Asplund (21:02)
Coppper is the one.
John Gillen (21:04)
Copper is the one I would look at just because it hasn't had one of these huge hockey sticks quite yet. It's rising, it's probably going to continue to rise, but I don't think it's had one of these huge blow off tops yet. And so to me, it seems like there's more of a thesis for legitimate reasons, like economic reacceleration, that is driving demand for copper and silver, but also for copper. And because copper hasn't had that huge spike yet, I would say that it's more likely you'd see ⁓ a spike in copper
and sort of like this general commodity shock as opposed to seeing all this capital that's just been drained out of gold and silver come rushing back in. I feel like the speculation, they're trying to sort of tamp this down in those markets as opposed to copper where that hasn't, we haven't seen that kind of explosion yet.
Slava Rubin (21:49)
How do you know when it's time to get, to leave the party?
John Gillen (21:54)
when you feel like it's never going to end and you feel euphoric. Like whenever you feel euphoric, you should de-risk from your position. Like if you bought gold at $1,300 and it goes to 5,000 and you don't take profits, know, Godspeed.
Slava Rubin (22:10)
chart on the top chart from 2023 all of sudden to 2026. I mean, that's pretty steep. So you're saying if you want to some profits there, like that's probably an issue.
John Gillen (22:23)
Yeah, I think you should take profits along the way here. Go ahead, Jan-Erik
Jan-Erik Asplund (22:27)
I was just saying the Wall Street bets, to go back to meme trading, the saying is always if it's good enough to screenshot, it's good enough to sell. So if you feel inclined to brag about the win, think that's when you're ready to sell.
Slava Rubin (22:41)
never heard that one. Financial entertainment. And if it's good enough to screenshot, it's good enough to sell. Nice. All right, audience, if you have any additional questions, keep them covered in.
Do either of you use any specific software or AI to help you trade to try to track this alpha?
Jan-Erik Asplund (23:00)
Just a little bit of some deep research just to sort of gather information looking at names, but nothing like, but not so much like signals, not so much like technicals or sentiment to do like short-term trading.
John Gillen (23:18)
So I have ⁓ outside of my position at Milk Road, I'm a general partner at a crypto focused fund called True Capital. And we use proprietary algorithms to backstop our fund to do those trading, to take the trading signals for us and help manage our trading positions and make it non-emotional, non-human. I don't think AI itself is quite fit for purpose yet on the actual management of capital and taking trades. there's, there's experiments that are being done and it's getting better.
But I do leverage a lot of AI tools for research purposes. And I think that that's a very powerful tool. It's a great way to leverage intelligence to make you smarter and then to continue to use your tools to navigate markets. But I don't think AI is quite fit for purpose yet for management of capital. That's just my opinion.
Slava Rubin (24:01)
So my quick point of view here is gold, copper, et cetera, are nice long-term holds. I am afraid personally of these steep rises. I definitely have missed this and I am not chasing. Then again, it could be where we were, just trying to play devil's advocate, bitcoins show this a few times at one tenth the price. And if you would have huddled.
you know, it would have looked really good. So everybody needs to make their own decisions. It's not financial advice. I said HODL, so I guess we have to go to crypto. Let's go to the next slide.
So John, why don't you give us an overview?
John Gillen (24:43)
Sure. So crypto digital assets is one of the most important emerging industries and asset classes in the world today. I'd like to hear Jan Eriks take on this as well. But I think one of the ways I'll break this down is Bitcoin is generally put in an asset class itself as a long term store of value. There are other assets that can serve that role. But Bitcoin seems to be generally where the market is settled in terms of a store of value asset. Ethereum, Solana.
These are what we call layer ones or smart contract platforms. And so there's a lot of businesses and technologies that are built on those platforms that leverage that technology. And so that you see things like decentralized exchanges, you see different kinds of meme coins. Solana was very much known for that. And then Ethereum has become sort of the de facto home of a lot of real world asset and tokenization. And so as you see tokenization begin to be adopted by financial institutions around the world, they're likely going to be settling.
transactions on Ethereum or Solana. Citi just this week completed a tokenization project, kind of a proof of concept on Solana. So that's live and working there. Ethereum has seen tokenization accelerate a lot on their real world assets now on Ethereum, I think are over 10 billion. And real world assets overall are now I think somewhere around 25 billion. So that's seen exponential growth because just two years ago, we had less than a billion dollars of tokenized assets and now we're already over 25 billion.
And that's projected to continue to accelerate. So I think that, you know, as the digital asset ecosystem continues to grow and expand, there are a lot of other assets outside of these three that we've highlighted here. Those have unique value propositions and places in the market as well. But these are sort of the places where a lot of institutions and investors are focusing their attention right now. And it's a good place, I think, to just like get a high level overview of the market. And, you know, these are kind of considered the majors.
⁓ for most people. And you get a lot of debate about that if you get deep into crypto circles. But that's kind how I would frame the conversation at a high level. Jan-Erik I don't know if you have a different view or something to add there.
Jan-Erik Asplund (26:41)
I think it's perfect. think here, looking at price, feel like, starting with price, feel like there's, with Bitcoin, of easily consumable narrative that it's digital gold, Via digitally enforced scarcity and sort of the, similarly to gold, it has sort of the value that people impute on it. over time, the price increase is sort of a function of more and more people believing in Bitcoin while it's
remains scarce. think most people understand that. I think maybe the question and something useful to start with or talk about would be around Ethereum and Solana and other kinds of assets that are more programmable money. Essentially, what do you see as being these underlying dynamics that control price there? it
impart the similar kind of scarcity and, you know, kind of enthusiasm, or is there sort of a degree to which like utility is driving price? How do you think about that?
John Gillen (27:42)
Yeah. So I think we used to see a lot of the valuations and prices of these things driven by speculation. There was a lot of people who were invested in the digital asset markets because they believed in the long-term future benefit of these things rather than their present day value. A lot of them are still, you know, just getting out of beta, still under development, still making improvements. But I think now we're starting to see that narrative shift towards a place where the valuation of these things is actually being underpriced by the market. And we've seen a huge
a huge drop in sentiment around digital assets recently in the last couple of months, along with a drop in price, which has been a bit of a market anomaly because the rest of the market is still in a bull run. But in any event, the fundamental value ⁓ thesis for these assets is getting stronger. The economic value that's being created is getting stronger. The adoption is getting stronger. BlackRock is just one example. I used to work at that firm for six years.
BlackRock this week announced that they are making a strategic partnership with Uniswap, which is the largest decentralized exchange on Ethereum. And they've bought a undisclosed amount of Uniswap tokens, which a couple of years ago would have been the most degenerate dream possible. The world's largest asset manager is buying altcoins ⁓ and getting into DeFi. ⁓ So I think that that's kind of the narrative shift that we've seen. The US federal government is now much more
I'm positive about this. The CFTC and the SEC are collaborating as their top priority, ⁓ enabling tokenization, giving market structure and clarity on these things. The president is personally holding group therapy sessions between banks and crypto companies to try to resolve the Clarity Act and get that through Congress. So this is sort top of the regulatory agenda across the US federal government and in other jurisdictions around the world. There is an enormous amount of capital going into this and it's kind of the focal point for
figuring out what the next century of finance looks like. So I think that the future value thesis that used to be what people were speculating on is now coming to fruition. And at the same time, retail sentiment and market sentiment is in the toilet, ⁓ like historic levels that we've never seen in some cases. So I think that disconnect eventually resolves, right? Because eventually that economic value does bring back investment attention, capital, and positive sentiment.
and the price will correct to follow that but I think that that is the biggest shift that I've seen in the last couple years in digital assets.
Slava Rubin (29:58)
So for the longest time, people said Bitcoin was a really strong debasement trade. US or other places are printing money, fiat currency, and devaluing it. So Bitcoin was the way to maintain value since there's not going to be more printed or more created. That seemed to work. That narrative worked. Then it seemed as if, you know, you could do gold or you could do Bitcoin. They're kind of the same debasement.
Same, same, but different. But now, gold is still kind of, for simplicity's sake, pumping. And BTC, again, using real round numbers, went from 125 to 65. It's a pretty big drop, even though if you're in Bitcoin for a while, it's kind of called a Tuesday. So how can you say, and you is not you, John, but how can one say that these two are the same?
Bitcoin and gold and then they are now so different in market. Does it have anything to do with the basement trade or is it something totally different?
John Gillen (31:03)
I think the debasement trade is a narrative that's been constructed to rationalize the price action and doesn't really have much to do with the reality here. I think that the debasement of currency is a fundamental reality of monetary circumstances and it benefits all risk assets. think it benefits Bitcoin disproportionately. So look, historically speaking, think Michael Howell has done a lot of great work on this, but he says that directionally Bitcoin and gold move together, but they do it out of sync. And you can say that there's a lot of reasons for that. It's who's participating in the markets and so forth.
But this big spike in price that we've seen from gold usually will be followed by a big spike in price in Bitcoin, just not a synchronized ⁓ time on the calendar. So that's, think, kind of what we're seeing here. JP Morgan had an analyst just this week put out a report that said that, like, hey, Bitcoin is now a value opportunity because the thesis on, like, again, the thesis on all these assets has not changed. The reality of the economic and market circumstances hasn't changed. It's just this huge negative shift in sentiment that we saw.
because a lot of OG started selling and there's this sort of like four year cycle theory religion within the digital asset native investor community. So people look at their calendar, like it's time to sell, so they start selling. And then that leads to this cascading and all this fear in the markets. But look, in four months, in four months, as you said, Bitcoin has worked through most of the bear market price action that you would expect it to do over 12 to 18 month period in a normal bear market. And there hasn't been really any like clear or super strong catalyst for that.
So think that we're sitting at levels here that are irrationally oversold. The market will eventually come around on that, think. I just don't think this is going to be a persistent selling thing. The deviation here, though, think historically syncs up with what we've seen. Gold and Bitcoin do trend higher together, but they do it out of sync with one another. So I think that the big movement in gold that we've seen, historically speaking, would be followed by Bitcoin following that higher. And as long as the backdrop of the market doesn't deteriorate, like we have
relatively stable inflation, weakening dollar, an accelerating business cycle, and strong liquidity circumstances supporting that. Eventually, I think that that leads to a return of investors recognizing the value in the digital asset space, and that'll lead to speculation, which will lead to overvaluation again.
Slava Rubin (33:12)
All right, John, I'm gonna put you on the spot. So you said that gold and BTC are supposed to fall in line over time. So does that mean, given the delta, that gold comes down this year or that Bitcoin goes up this year or both so that they fall in line?
John Gillen (33:29)
Probably both. mean, look, I think that there's a thesis to say that both of them continue higher from here. But I think eventually my expectation is that you're going to see, look, historically in these commodities, and you have many thousands of years of history to look at this, but historically in these commodities, precious metals, we see more of spiking tops rather than rounding tops. And I would expect that to kind of play out here again. I do think we'll see sort of like a coming back down to earth of precious metals. But I think that the exponential growth that we've seen in Bitcoin and other digital assets
is going to continue to accelerate. so for this period of this, like, you know, three or four months, it's played out this way. But I don't think that this holds over a multi-year period. And I think that long term gold kind of cools and Bitcoin accelerates.
Slava Rubin (34:13)
So I'm saying the word Bitcoin again, but really Bitcoin is excellent proxy for all of crypto, not every single one, but it has a significant weight and the other major cryptos have been moving in a similar fashion as BTC. So when you said BTC typically has a 12 to 18 month drawdown and that's actually all been pulled forward in four months, does that mean you think the drawdown is over? Have we hit bottom? John is picking a bottom.
John Gillen (34:43)
I'm not saying, so this is, you're making a good point here. Bottoming in my view, and especially in digital assets is sort of a process, right? So on price terms, I think there's a lot of things you could point to to say that we're approaching a bottom or in the vicinity of a bottom. In terms of the dollar value of Bitcoin, that could fluctuate. We could see lower lows, but I don't think we're gonna see like drops back into like the thirties or twenties, right? So like you could see some continued stagnation.
Slava Rubin (35:09)
Why
not? Why not? Some people thought it wasn't gonna go below 100, it went below 100. Some people thought it wasn't gonna go below 79, it went below 79. Some people thought it was gonna bounce off of 60, it bounced off of 60. That's fine, it looks right now, why is it not gonna go down to 39?
John Gillen (35:28)
Yeah, because I just don't think you're going to get a lot of capital to sell at those levels. I think we're seeing aggressive accumulation right now. I think a lot of investors who are thinking about it are seeing the value opportunity that the market is presenting here. And I just don't think that there's going to be a likelihood of that happening. The other thing too, is you can look at the technical analysis. So historically speaking, the 200 week usually provides a floor. The previous market cycle top usually provides a floor. We're kind of in the vicinity of both of those. So like I said, I'm not saying this is the Pico bottom. We could trade lower.
But like, you know, okay, look, maybe we get to the 30s. That happens to me. That's like a wick, right? It's not something I would plan for. We're not going to spend a significant amount of time there. But I think, you know, we could see a climb to recovery mid-year. We could also wait till November, October, which is kind of historically when you would start to see that huge appreciation and price from Bitcoin to come back. But, know, across that chasm of here to there.
I know we're going to go higher. I don't know exactly what that path looks like in terms of time or price, but this is sort of a historical, there's many things historically that would indicate that we are in the process of bottoming or around a bottom. We're much closer to a bottom than the top. And so I think, yeah, that's, that's kind of my view on that.
Slava Rubin (36:38)
You mentioned in your other day job you have a fund. So are you buying Bitcoin right now or buying?
John Gillen (36:44)
Yeah,
well, so the whole point of the fund is to stay long on the asset class, right? So we want to get long and stay long. We have different algorithms that we deploy in different market environments to ensure our performance in different circumstances, because the algorithms are designed to capitalize on market opportunities that are presented in different times. So if we're seeing what I call a crab market or just sideways chop, you want to run a different kind of strategy. If you're seeing a big sell off, you want to run a different kind of strategy. If you are in a bullish period and the price is just,
climbing its way higher for you, like we saw for the last several years, you want to just be comfy in the spot and maybe taking some trades here and there, but mostly you just want to stay long. So the view that we have at our fund is accumulation. This is a golden opportunity for accumulation. I'm also personally accumulating.
Slava Rubin (37:28)
Did you buy the dip? Did you buy the dip? Yeah.
John Gillen (37:31)
I've got standing orders now in case we go lower again, I bought, I'm going to keep buying. I bought it 69, 420 just for the vibes. I'm going to continue to buy as long as we stay.
Slava Rubin (37:40)
29,
420 for the vibes just so people understand. Okay, sounds good. Yeah.
John Gillen (37:44)
So yeah, look, below 70K in my view is a great opportunity to accumulate Bitcoin.
Slava Rubin (37:49)
below, what'd you say?
John Gillen (37:51)
70k
Slava Rubin (37:52)
below 70k. Why is that? Why is below 70k good? Why is it not going below 60k?
John Gillen (37:59)
I'm not saying it won't dip below 60k. I have a bid set at 58k. ⁓ Again, just for the culture, there's a meme in the Bitcoin community of the 58k gang. So if it goes back there, I'm going to get some of it. I had a bid set at 60k. I didn't get filled. If we come back, I will. But yeah, I'm just I'm kind of not in a rush or a panic about this. think, you know, just like in the last bear market, I didn't freak out when Bitcoin was stagnating for a while. It just kept stacking. I'm going to do the same thing again. So I don't really care if it takes.
Six months or if we recover in a couple of months, I'm gonna continue to accumulate at these price levels.
Slava Rubin (38:30)
So with crypto, we're focused only on Bitcoin, but there's lots of other options. Should we be getting into ETH? Should we be getting into Solana? Should we get into hyperliquids? Should we be getting into Coinbase and just going straight through the public market? Should we get into miners? Should we get into other opportunities? Should we go in pre-IPO into Kraken? Before we maybe double click on Kraken, what do we think about the optionality set there?
Jan-Erik or John.
John Gillen (39:00)
Jan-Erik, you wanna go?
Jan-Erik Asplund (39:03)
I can speak to Kraken, which I think is, from our perspective, looking at pre IPO companies, really exciting one in crypto, given that it's sort of one of the very early OG crypto exchanges been around for a very long time, was very Eurocentric sort of to start, but now is more global and tripled revenue over the last couple of years. They have very exchange business model similar to Coinbase.
and currently sort of number two to Coinbase, but they have sort of over the last few years really moved in this, as a lot of companies are doing, moving towards this everything app vision, right? Where they have a sort of core user base of these more tending professional traders, institutional traders, and around that they're layering all these other products. tokenized public market stock,
in the future, private market stocks, layering on prediction markets and all this kind of stuff, P2P finance and sort of building what we're also seeing happen at Robinhood and although they've been slower in the uptake Coinbase, we're seeing this movement, this sort of hybridization, which kind of goes to what John was saying about sort of reshaping finances that we're seeing personal finance, fintech.
re-bundled and reinvented around crypto, crypto primitives and crypto rails at companies like Kraken. I think if you want to invest in, if you want to buy Bitcoin, you can buy Bitcoin. If you also want exposure via public markets, soon to be public markets, I Kraken is a really interesting company there.
Slava Rubin (40:39)
Kraken's supposed to IPO soon. It should have already happened. And then it seems like it's getting somewhat delayed and then their CFO just got fired. Who knows what the connection is, whether directly with the market, any sort of IPO issues. I don't know. I don't have any insider information. Should somebody right now be looking at Kraken in the private markets as an opportunity or waiting for it to go public or maybe look at the other options to play crypto?
Jan-Erik Asplund (41:06)
Investing in Krakat as a private now, I maybe slightly too late. mean, yeah, probably worth a try. But I think I would say, probably would have been better, you know, a months ago. But yeah, John.
Slava Rubin (41:16)
John, what do you think about the asset class choices, meaning across the asset, what about the choices across the asset class?
John Gillen (41:22)
I like Kraken. I think it's an interesting opportunity. think there's been a lot of speculation in the IPOs around crypto focused companies. think coin and hood are undervalued. I think that there's a lot to be said for these very large and robust.
Slava Rubin (41:36)
and Robinhood.
John Gillen (41:38)
Right, right. And look, think that, you know, at Milk Road, what we're trying to focus on in the content we're making is not trying to find the next meme coin on Solana, but really trying to show what robust, sustainable, economically viable businesses with defensible moats are being built around the digital asset space. so Coinbase and Robinhood have two of the stronger theses is there. And so we're following that closely as those develop and they continue to roll out new products and services and expand their digital asset offerings to the market.
So I think that's a great way to play that. That's one thing we're doing. There are also a lot of other projects in digital assets that don't get a lot of attention, that are very successful, have very strong businesses. There's DeFi projects like Sky. And I think that there's a lot of other things that are being done that are interesting. Look, I'll just say like between Bitcoin and Ethereum, right? The differentiation of the investment thesis between Ethereum, Solana and a Bitcoin is starting to emerge and get stronger in my view. And one of the ways I like to think about this is that
There's a lot of things you can do on Ethereum that you can't do on Bitcoin. So all this tokenization that we're seeing coming out of the White House and the SEC and BlackRock and all these other places, that is largely going to capitalize itself in the Ethereum ecosystem, which will drive a lot of value to ETH. And another thing I'll say that a lot of people aren't thinking about, but that I think about a lot, is the agentic economy. So artificial intelligence and AI agents are going to start conducting a lot of economic activity on behalf of
humans and humans themselves are not going to be the ones doing a lot of these things. So the AI agents are going to look for tools, primitives, use cases, opportunities that are native to them and are more seamless for them. So they're not going to have a bank with coins and paper dollars. They're going to leverage things like Solana, like Ethereum. There's a lot of projects that are being built right now to make these blockchain ecosystems fit for purpose for that. That could be a ⁓ multi-trillion dollar economic ⁓
wave that's coming. Elon Musk likes to say this supersonic tsunami. I think that Ethereum and Solana are very well poised to capitalize on that and benefit from it economically and in price appreciation. Bitcoin does not have that same thesis. it's not to say that Bitcoin is better or worse. It's just there's a differentiation coming to the market and I think a strong thesis around these ⁓ smart contract platforms.
Slava Rubin (43:50)
All right, we could probably talk about crypto for another three hours. Somebody asked to get educated on Kraken. We've actually covered Kraken in separate sessions, so we're not gonna do a deep dive on Kraken here, but you can listen to some of our other content. My quick view here is crypto is very interesting. It's volatile and it has lost a lot of ground already. I do think there is a great accumulation range here.
For what it's worth, for those of you who are consistent listeners to our podcast and to these shows, my New Year's predictions when we were still at six digits was that we were going to see Bitcoin probably come down into the 60s and by Q1 of next year be nearer at an all-time high a year later. So I didn't predict it would be in the 60s this early. I thought it would be closer to H2, H3.
I am in the camp of, let's call it the 58 gang personally. So I just have to challenge John because that's my job here. But I do think we're in a strong accumulation place. I do think that between Bitcoin layer ones like Ethereum, Solana, maybe some hyper liquid and some others, you can look pretty good a few years out. I can't promise anything for the next three months or three days. Like I said, I'm terrible at that. But yeah, this could be a great place to DCA in. We are talking so much.
We gotta move on. All right, prediction markets. John, give us the quick skinny.
John Gillen (45:06)
Prediction markets. So this has been something that's come up very fast, very strong and gotten a lot of attention. think people thought there was a lot of speculation around the last election. And now the activity that we're seeing in prediction markets dwarfs that by a lot. So I think that we have some charts on the screen to visualize this and give some numbers around it. But this is a way that people are speculating in the market and trying to capitalize on information that they have. yeah, it's kind of like to me, the next iteration of this financial entertainment thesis that we've talked about.
So I think that this is one of these things, it's it's growing so fast, it's hard to say how far it's gonna go, but it doesn't seem like it's running out of steam yet, and it seems like it's gonna continue to evolve and transform and be a big impact on a lot of markets.
Slava Rubin (45:49)
So we've covered. Go ahead, Jan-Erik
Jan-Erik Asplund (45:52)
I
was just gonna say we've covered, if folks are interested, we've covered prediction markets on separate sessions, but I think there's been a sort of very fast mainstreamification of them, especially around sports. The election and Polymarket being the leader there was kind of the big, 2024 election was like the big moment that prediction markets had. But since then, I think now on Cal-Sheet 80 % of volume is sports betting.
Right. And so it has really quickly taken shape. DraftKings, FanDuel are launching their own prediction markets. Coinbase, Kraken, Robinhood has their own that they're working on. So, or that they've built. So it's quickly becoming a sort of feature of everything. But I think, you know, yeah, there's a lot of questions around how far it'll go, especially with sort of state lawsuits, a lot of this sports betting, sports gambling legislation that's coming out to challenge prediction markets, the legality of it.
Slava Rubin (46:48)
Good chart in the bottom left. This is insane. mean, brought to you by John, thank you. But this is incredible. Robinhood, 41 million visits in January. At a polymarket, mean, polymarket, forget adding up, polymarket is right behind it at 38 million. I mean, take a beat. Like, it is way bigger than Coinbase. That is nuts. I mean, absolutely nuts. mean, prediction markets have come here out of nowhere.
Look at the chart in the middle, right? Back in 2023, when people are starting to get excited about gold, when they're like, oh, Bitcoin maybe is a little boring, let's go with the gold. Look that, you have a whole year of not movement, and then all of sudden in 2025, prediction markets just takes off. I Caoshi, which is quote unquote second, still has 10 million. Rounding up, I learned this seven, it's closer to 11, right?
So I mean, we're talking more than Kraken and Kraken's talking about going IPO for 10, 20, who knows how many billion dollars, right? So I mean, this is just fascinating. ⁓ And these massive gambling sites, FanDuel and DraftKings combine them together. They're not even the size of Polymarket. What is going on? I mean, is this Financial Entertainment 101?
John Gillen (48:05)
Yeah, this is it on steroids. Yes. And look, I think all of these companies are competing with one another in various ways. And so you're going to see a big knife fight over market share and attracting users, retaining users. And I think the idea of this financial super app is something that has been debated a lot. think the winner of that contest is going to have to have prediction markets. So Coinbase is rolling these out. Robinhood is rolling them out. They're going to continue rolling them out. They're out.
⁓ And they're going to continue to grow. I don't know what the regulatory risk here looks like in terms of like having this be ruled gambling or not, or all those sorts of things. That's not my area of expertise, but it's clear that there's a huge amount of market demand for this. And we haven't found where that limit for the demand and for the appetite in the market is yet. until we do, I think it's reasonable to assume that this is going to continue to grow as this rolls out, it gets more adopted, more mainstream and more socially acceptable and just normalized.
Yeah, it's this is the next iteration of that financial entertainment like you said
Slava Rubin (49:04)
Has prediction markets stolen the juice? Meaning, has the energy in prediction markets taken away the potential for me being right that in Q127 we're going to be at or near a new top in crypto strictly because the money is going to chase in prediction markets?
John Gillen (49:24)
⁓ I hope not. I'd be really curious to hear Jan Eriks take on this. think that, so the way I'll frame this is that you're kind of looking at two different pools of capital, right? I think that the pools of capital they're going to be interested in a longer term allocation to Bitcoin and other digital assets are different than the billions of dollars that are speculating on if Jesus Christ is going to come back in 2026. So I think that it's possible for that financial entertainment narrative to shift onto prediction markets and out of things like digital assets or altcoins.
and still have that strong performance in Bitcoin and digital assets because the marginal investor now in that asset class, I think there's going to be more institutions and more like smart money, longer term capital.
Slava Rubin (50:04)
I'm going to ask it again, even though you already answered the question. Can the second pool of capital, the financial entertainment pool of capital, move away from crypto and us actually get to new or near the all time highs? I believe the answer is potentially no.
John Gillen (50:23)
Well, lay out your thesis and I'll attack you for a change.
Slava Rubin (50:28)
Well, I think when Bitcoin and crypto catches a bid, know, some of that financial entertainment is going to come back. If it doesn't, I think crypto has an issue. That doesn't mean that crypto can't be a great asset, just like gold year after year, decade after decade. But it can't have another Mount Everest very easily, is my opinion. And I think the power of the retail trader, otherwise known as financial entertainment now,
I think it's really important to know where financial entertainment dollars go. So that's my point of view. I'm not saying it will stay away from crypto, but it does seem at the moment like prediction markets is hoovering up all that money. Where do we think the energy for financial entertainment is going to be at Christmas this year? Which of these three markets?
John Gillen (51:20)
That's a trillion dollar question. Jan-Erik, what do you think?
Jan-Erik Asplund (51:23)
That's a good question. I yeah, I like the way Slava framed it. You know, I think Bitcoin and I think back to like 2021, you know, it was very novel for a lot of people and had this incredible price action. And I think now the last few years, you know, there hasn't really been anything like that in Bitcoin for the most part. don't know how Gen Z thinks about it. It doesn't seem to me, you know, being a slightly out of remove. It doesn't seem that exciting.
of a trade and maybe this is kind of what you were saying, John, is it's a little bit more now become a, it's like the boomer, or sorry, ⁓ millennial kind of investment to buy Bitcoin. I note, mean, Gen Z is much more sort of, Gen Z is driving a lot of the prediction market activity. And I just think prediction markets, like you said, on steroids are very well optimized kind of form of this kind of betting activity.
There's different categories of financial products you can buy that you can imagine, you you have the expertise to exploit, you know, with your information or your thoughts. And I think there's definitely an argument to this idea that these have sort of taken maybe some of that trading activity away, but I'm not sure that I think that it would prevent a, you know, parabolic.
you know, parabolic price activity on Bitcoin. If say, you know, I'm thinking of like stagflation, you know, in the 70s, like the price of gold went crazier than it did now. You know, there's reasons to have parabolic activity. Bitcoin is like this, you know, unmoored asset. You know, if it goes up, it can just keep going up. And so I can see it having that kind of price action again, but maybe just not being so in the public eye could slow it down. Yeah, I'm not sure what I think.
But I like the thought.
Slava Rubin (53:12)
All right, let's close this out. Let's put up our survey again. Let's see if anybody's changed their mind. So what gets you excited about 2026? Which of these three options or are you in the other camp? My point of view on prediction markets is, you know, the actual main players, the two, Polymarket and Kalshi are quite impressive. We have done an entire episode covering them for an hour more. So please take a listen to that. So we're not digging deep into those in this session. I also think that, you know, if you have
incremental alpha, or you feel like you have unique access to information, you should be betting on whether Jesus is coming back, whether there's gonna be 12 inches of snow in New York City, whether or not the Seahawks are gonna win the Super Bowl again, you should go after that. All of those are really interesting opportunities. The Oscars are coming up. Maybe you know who's gonna win, best supporting actor. But another way to play it is this entire chart on the left, which is, this entire chart is one way or another.
you know, financial entertainment, which is really what we're talking about across this entire hour. So you can think about trying to invest into any of these, whether it's the public markets, the private markets, through crypto, to equities, et cetera. It's interesting. We have a little bit more people leaning into crypto. So I'm sorry, Gold and Metals Association, we didn't push your agenda nearly well enough, but you know, no one paid us to do that. That's a joke, everybody. We're totally objective, just trying to be interesting.
So with that said, that ends our session. And I think we covered a lot of ground. John or Jan-Erik, any closing thoughts?
Jan-Erik Asplund (54:42)
John please as the honored guest who is taking my job here.
John Gillen (54:46)
for you. So I close all my podcasts with the same phrase, which is stay safe, stay educated and stay bullish. I think that this is an awesome opportunity wherever you're allocating in the market to learn a lot. There's an opportunity for education here. This is something I'm very passionate about. One of the reasons why I joined Milk Road was to try to share information with the community ⁓ and just like, you know, help people feel like they're educated and informed about the investments that they're making. So, yeah, but I think that there's there's a lot of risk in these markets because of the volatility, but there's also a lot of opportunity. So.
Make sure you're staying safe, stay educated, don't miss the alpha of education at this time in the market, and then stay bullish because there's always a bull run some.
Jan-Erik Asplund (55:22)
Beautiful.
Slava Rubin (55:23)
Perfect. Thank you, everybody. Financial entertainment. You know, do it at your own risk. Have a good one, everybody. Bye.
