Bitcoin to Overtake $20K in 2020? | Spencer Bogart & Jacob Canfield


How about, instead of launching new chains
why don’t we continue building up the stack on top of the chains that have traction and
have users. Right now Bitcoin is in an up trend but it
has still some resistance in place at around 11K, 11.3K. For us it’s mostly making sure we get capital
to the most promising projects. What’s up, guys, I’m Giovanni. Welcome back to our weekly crypto markets
show. This week with us, general partner at the
Blockchain Capital, Spencer Bogart, and the Bitcoin analyst and trader Jacob Canfield. Welcome, guys. Let’s start talking about the markets. So on Sunday, Bitcoin broke through the benchmark
level of $10,000. Then it suddenly retraced back to the $9,800
more or less. And now in the last couple of minutes, we
saw Bitcoin going back up to $10,200 more or less. So what is happening right now in the Bitcoin
market? How do we interpret these latest moves and
what we should expect in the nearest future? Jacob? Well, there were a couple of different components. There was a combination of technical and a
combination of fundamental. So early on in the rise, we definitely saw
some accumulation activity in the 6,500 to 7,000 dollar range. The support held really, really well. And so there was a lot of demand in that area. And then there were some fundamental catalysts,
the Iranian tensions that saw gold and Bitcoin kind of moving in tandem, which helped to
propel us over that $8,000 mark, which that was kind of the benchmark for me from going
from bearish trend to bullish trend. And that’s when I decided to flip basically
full bullish after that. And so once we broke $8,000, I think that
now it’s more or less a trend. And we’re getting continuous short squeezes
to the upside. Volume is picking up, open interest is picking
up. So from a technical perspective as well as
a fundamental perspective, we’re seeing kind of all things line up for Bitcoin’s continued
uptrend and $10,000 level is psychologically important level in it. And it broke it easily, but had a nice retraced
sell off and then pushed right back up as if it was nothing. So all in all, I see Bitcoin continuing to
push up and for me from a technical perspective, we’re still in a range. If you take the resistance from the $20,000
and the $13,000, that’ll give us a high side resistance for this range of around $11,300. And so if we flip that, then it’s highly likely
that we break $14,000 and probably push for all-time highs. But that would probably be the last level
for bears to defend if they’ve got a hope at defending this Bitcoin bullish run. And I’ve got a couple of other theories, but
I’ll let Spencer give us his insights and then I’ll go over a few other things. Ok, so Spencer, what do you think about the
situation right now in the crypto market? Do you share the same view as Jacob or you
have a different kind of interpretation? I think that’s great color from Jacob and
I’m looking forward to him diving into a few other things here. I mean, look for us any kind of short term
price movement is mostly just noise to us. All of our funds and investment activity is
structured as venture investments. So we make venture investments out of venture
funds and we take eight to ten year time horizon on our investments. So, you know, what happens over any given
weekend is always interesting to us. I mean, we always watch these markets because
they’re very close. But you know, what actually happens in terms
of price doesn’t have a huge impact for us. Now, am I constructive on price over the next
kind of call it 12 months? Absolutely. Yeah. So of course you have a much more long term
perspective on these kind of things. Jacob is a day trader, so he is more focused
on the shorts movements. One hundred percent. Leave it to the experts. So Jacob did you want to add anything else
about your analysis you said? Yeah. So there’s merit to both approaches. And, you know, as a venture capital firm that’s
looking at 8, 10, 20 year horizon, similar to a lot of the other firms in the space,
I think that using futures is also a good approach, especially when you get high volume
blow off tops like we saw on $13,000, cause it can save you from significant drawdown. And so that’s kind of how I approach it. I do have a long term hold in Bitcoin that
I take hedges out against a high timeframe resistances. And so I look at both short term and long
term fundamentals. But for me, ever since I’ve been in the space
all the way back to 2016, I think Spencer been here longer than I have. But my long term horizon for Bitcoin is bullish
both on a macro scale, technical scale and a fundamental scale. For me Bitcoin makes I mean it’s mathematically
designed to go up in value based on scarcity and the way that it’s designed economically,
whereas every other currency in the world is designed to go down in value. So for me, macro bullish long term as well. But I like to play the short term movements
to compound the profitability of trading Bitcoin. In a tweet you said that you don’t really
care whether people think this is a bull run or not and that there is no, there is zero
guarantee that this is continuing going up. That sounds a little bit of a contradiction
of what you just said. Yes, so you’re taking that tweet a little
bit out of context. What I said was if you can take profits and
it can eliminate a student debt, credit card debt, pay off a mortgage or upgrade your life
substantially, I recommend taking profits. I don’t care whether we’re in a bull market
or not. And you’re going to miss out on a few gains
if it can change your life, I would highly recommend taking profits. And then I followed that tweet up with, I’ve
watched many friends and many people in the space make millions of dollars only to basically
hold back down to zero multiple times, whether they’re in Bitcoin, whether they’re in altcoins. And so that was the context of that tweet. And so if you are in debt, if you are, you
know, are using too much risk in the markets, then I recommended taking profits. So there’s more of a tweet thread that that
context really came out. And I think that’s pragmatic and I think that’s
logical. Whereas larger money, smart money, institutional
capital, kind of like Spenser’s fund, they can have long term high, high timeframe horizons
because they have the capital to be able to ignore the low signal noise. Whereas someone with retail who maybe put
in too much of their capital in the markets, they might not have that time horizon. So that was the point of that tweet. Spencer, in a recent interview with Bloomberg,
I believe you said that one of the things you are more excited about in 2020 is a shift
from horizontal competition to the vertical construction in the crypto space. Can you explain a little bit what you mean
by vertical construction and horizontal competition? Sure. I think probably a little bit of backstory
be helpful here. So I tend to categorize the entire history
of kind of Bitcoin or I guess broader crypto into five major kind of eras. So the first of those was kind of that 2009
to 2012, roughly 2011, which is the Bitcoin work era. So, you know, it’s pretty self-explanatory. Anyone who’d heard of Bitcoin pretty much
assumed it’s not going to work. Pretty reasonable hypothesis, to be honest. But after a few years of operating perfectly,
we kind of entered this. We shifted from “okay, Bitcoin will work”
to “fine, Bitcoin works, but it’s for tulips and criminals”. So, you know, all of a sudden everyone starts
in “okay, fine, I can see that it’s working, but the only real people that are going to
get utility from this are criminals, and by the way, the price action of this looks an
awful lot like the Dutch tulip mania”. So this was the main popular kind of refrain
that we heard. And then from there, you know, a lot of the
skeptics in that period are saying “look, this thing’s going to crash, it’s going to
go to zero, it’s going to disappear”. Sure enough, in, what was that 2014, price
did fall substantially. And so, you know, for one all the blockchain
skeptics and pundits said, “see, I told you so”. And then in terms of the broader industry,
things kind of shifted to the blockchain, not Bitcoin era. Which was, “hey, let’s take these big open
networks with these digital assets attached to them. Let’s strip away the digital assets and let’s
make them close networks for enterprise use cases”. You know, altogether, not a terrible hypothesis,
but after several years of watching a ton of proof of concepts inside of large enterprises
and none of those really gaining material traction in the real kind of efficiency, not
really bearing fruit there, people kind of shifted in kind of 2016 and 2017 and realizing,
“OK, the power here, the true innovation is these big open networks with a digital asset
that’s attached to them”. But then the common refrain kind of shifted
to, “OK, fine, we get that it’s all about crypto. We get that it’s about these open networks. But Bitcoin was the 1.0. So let’s go find out what’s going to be the
next Bitcoin or the next Ethereum”. So I kind of categorize that next era as the
ICO and the horizontal competition era, which was “hey, let’s take any perceived shortcoming
of Bitcoin or Ethereum, whether it’s throughput, privacy, expressiveness, what have you. And let’s go and try and address that issue
by launching a new blockchain”. And so over the past few years, we’ve seen
gigantic fundraises for these and we’ve seen a lot of those blockchains actually get out
and launch. And a lot of them honestly, they’re pretty
brilliant from a technical standpoint, but they’re not really attracting users. They’re not really attracting developers. And so, you know, I think that we’re kind
of seeing an end of the phase where people are thinking, “OK, for every perceived shortcoming,
let’s go and launch a specific blockchain that addresses that issue”, to instead saying,
“OK, how about instead of trying to launch a new chain, why don’t we continue to build
up the stack on top of the chains that have traction and have users?”. So instead of trying to solve throughput by
going and launching a new high TPS blockchain, let’s go and create Lightning network. Let’s go and create plasma. Let’s go and create optimistic roll-ups, other
kind of scaling solutions. And you can say the same thing about kind
of privacy and about some of the expressiveness as well. So the point being that I think here in 2020
and for the years ahead, what we’re going to see is a race to kind of build up the stack
of a couple winning protocols. So I’m a little bit less constructive on the
idea that we’re going to have thousands of blockchains that matter instead on the more
constructive on the idea that we’re going to have one, two, maybe four blockchains that
really matter in most of the innovation and development will happen, so called up the
stack of those winning protocols. Ok. That’s a pretty interesting theory. So you think that will materialize in 2020? I think that we’re already starting to see
it. I think that there’s a few different things
here. One, if you’re going to go and dedicate the
next few years of your life to building something, you want people to actually use it. And so I think a lot of people that went out
and launched new blockchains from one have not found a terrible amount of users. So, you know, I think the next way with developers
entering the spaces, thinking about a different strategy to that. And then also just investors are not willing
to pay the types of premiums they were for teams to go out and launch a new blockchain
that they were in 2017, for example. You know, the returns from these investments
in some cases have been okay. In other cases, they haven’t been so great. So overall, I think that there’s less funding
going towards it and less developer appetite to do it. So therefore, we see this kind of shift that
are really already underway. But I think plays out over the next few years. Right. And Jaсob, what do you think? Do you agree with the Spencer’s forecast regarding
this evolution towards vertical construction? Yeah. You’re already seeing that quite a bit. You’re seeing capitulation. You’re seeing, you know, infighting amongst
developer projects. But I’ll expand on that just a little bit. So history doesn’t repeat, but it often rhymes. So what we’re seeing in what he basically
just explained is the .com era all over again. We had a protocol war then, most people don’t
remember it, but we had a similar protocol war where we had our protocols that were designed
and then other protocols came along and they had first mover advantage. So even though later protocols came along,
they were faster, more scalable. And we saw enterprises trying to co-opt a
lot of these protocols as well and make people pay for them. But eventually, competition in that vertical
construction that he’s talking about drove fees really, really low. And so I would agree 100%. But what I think that will also happen is
those main protocols that have staying power will have more originality based on the part
of the world that they’re in and the support of the governments or regulations or ecosystems
that are around them that will give them staying power because of the users, because of the
government backings, because of the enterprise level participation on those specific protocols. So I think, you know, a ton of the protocols
that were developed, they might have good architecture, they might have scalability,
all that stuff. But taking out incumbents like Ethereum and
EOS, EOS has, you know, billion dollar capital to be able to stay for a long time, develop. They can pull a lot of developers away from
other competing protocols. So I think that he’s completely right in his
prediction. But I think that it’s going to have a little
bit more locality and regionally that’s going to play into those protocol developments in
which ones stay. So that’s my thoughts on the protocol war
that we’ve got facing. Ok. So if I understood your point of view, you’re
saying that this vertical construction that Spencer is talking about is a little bit more,
is going to be a little bit more fragmented. Like you talked about about these regional
concentrations of capital and resources, which are going to make a protocol thrive, despite
the fact that it might not be like in terms of quality the best ones. Yeah. So, you know, incumbent protocols oftentimes
have the network effect going for them. And so they might not be the best technically. But because of that, incumbency like Bitcoin
may not be the best protocol, but it has the network effect and it’s the strongest network. It’s a very powerful network. So it’s got the network effect going for it,
which makes it the strongest that we can get into the enterprise that are working with
Ethereum and stuff like that, which gives it a massive leg up as far as first mover
advantage. But yes, I think that a lot of these other
protocols will die, not because they’re not technically better, but because they don’t
have the network effect or early mover advantage that these other protocols have. And they’ve also don’t have the capital resources
because $25 million isn’t going to get you far. We saw that a lot of projects blow through
$25 million in less than 12 months and got really not much to show for it. Spencer, you mentioned these vertical construction. So to get more specific, like what do a protocol
or what do a project need to have in order to be one of these few ones which really participate
into this vertical construction you are talking about? Very good question. So I think it remains to be seen. I don’t think that there’s any one set of
kind of criteria that you can apply that would say that like, OK, this is going to be a critical
part of the Bitcoin stack or the Ethereum stack, so to speak. You know, and I think in a lot of ways, I
mean, you know, speaking again from the venture perspective, it’s not even necessarily any
or all of those layers will be directly monetizable. Right. So those might not be investment opportunities
at all. You know, I mean, like the Lightning network
itself is not an investment opportunity. There are companies that build around the
Lightning network that are investment opportunities. But my guess is that a lot of the kind of
functional layers that we see here are actually not direct investment opportunities at all. Jacob, what is the most exciting event or
exciting thing that you are excited about for 2020? How much time do I have? There’s a lot. The halving event is probably the most exciting
event. It’s only happened two other times. It’s the third time it’s happening. That’s a massive, massive deal as far as reducing
inflation supply, it’ll get Bitcoin lower than most currencies of the world as far as
inflation is concerned to reduce supply, reduce mining, sell pressure. That’s a you know, that’s a massive event. You’ve got ETH 2.0 that is potentially trying
to launch moving from proof of work to proof of stake. I think they’re in one of the best positions
to do a previous stake model that is decentralized. Custody services, I just saw a new start today. There’s 40 German banks that are offering
custody solutions, which means, you know, we’re starting to get into the financial product
era of investment advisors. And that’s where you really start to see a
lot of retail capital coming in. You’ve already seen, you know, Fidelity and
some of these guys that are in the space, you know, they’ve got I think a trillion or
something in capital as far as retail is concerned. So when you start to seek custody services
opening up, not just Bakkt and futures, but actual like retail services open up, I think
that’s incredibly exciting because that’s in order for a market to go up, we need buyers
and you need capital. And in so far, we haven’t seen the retail
market really enter after the 20,000 to 3,000 drop. We never saw Google interest really spike
up. And so that’s a big thing for me. I love watching the DeFi space and how that’s
unfolding. Almost a billion dollars locked in the DeFi
space and I could go on even more. But, you know, that’s just a few of the things
that I’m so excited about for 2020. Yeah, we hope that all that list is going
to be fulfilled in 2020. But we are mainly interested, at least like
a lot of people, are very much interested in the Bitcoin halving. So I would like to know from you guys what
is your expected outcome from this bitcoin halving? What are we going to see? We’re going to see the price of Bitcoin really
spike because of this? Or do you think it’s something that is going
to be a non-event? What is your expectations, Spencer? Sure. So look, I mean, most of the conversation
around halving kind of revolves around this idea of is the halving priced in or not. This has been kind of the big debate over
the past six months or so. I think that in the truest sense I’ve seen
is in a particular event priced in. The answer is absolutely yes in the case of
Bitcoin in that there is no risk free return to be had from buying Bitcoin a few months
before the halving and selling it a few months after the halving. Now, that does not mean that I don’t think
the price will rise in the kind of months before and after the halving. And the reason why is really a little bit
softer. It’s not because nobody expects this decline
in inflation. It’s not that nobody is expecting the decrease
selling pressure from miners associated with that. It’s really just because the halving acts
as a shelling point or a catalyst or a spark for a lot of capital that’s sitting on the
sidelines. So, I mean, if we zoom out, a tiny percentage
of people own Bitcoin today, but a much, much larger percentage of people have become quite
knowledgeable about it and are interested in purchasing some Bitcoin and owning it. And so I think that for a lot of the capital,
it’s in the sidelines. The question is really just when, right? So like, okay, you know, I think I’m getting
increasingly comfortable with this. You know, we’re now in Bitcoin’s 11th year. I now don’t think it’s as crazy as I did,
you know, six years ago. So I’m thinking about purchasing some, but
I don’t know when. And so I think that halving and the entire
discussion that revolves around it, because we have to keep in mind, this kicks off a
pretty big media cycle for people covering this particular event. Like you said, it was only the third one to
ever happen. So, you know, you’re going to see major media
outlets starting to cover the Bitcoin halving, which again, just acts as a spark for people’s
intrigue and to go ahead and go learn a little bit more and maybe get all the way across
the line and make a purchase. So, you know, overall, I’m very constructive
on price around the halving. I think it’ll be another interesting event
to watch, but I don’t think it’s any kind of risk free return of just buying before
the halving and so on afterwards. Right. So basically, if I understood right you expect
the halving to have a positive effect because of the media hype, which is going to create
and which is going to make more people interested in Bitcoin? Is it correct? Yeah, I think so. I think it’s partially the media hype. And then personally just solving for the question
of when. Right. So if I’m already interested in purchasing
Bitcoin and otherwise, I’m relatively indifferent between drive by today, tomorrow, a year from
now, two years from now. When am I going to buy this thing? All of a sudden halving just like I’m not
sure exactly what’s happening here. Maybe I’m just gonna go ahead and pick it
up beforehand, right? Like I mean, if I was interested in making
a real estate purchase and I found out that, hey, by the way, the rate at which new real
estate is going to be created is going to fall in half this year. I might want to pick it up before that event. It just acts as kind of a forcing function
for people to decide when. So it’s a very soft kind of catalyst, to be
honest. Yeah, actually that works even with me because
I still haven’t bought any Bitcoin in my life. Right now I’m really thinking about buying
it because of the halving. So probably a psychological effect is affecting
even me. Yeah, definitely. So, Jacob, what do you think? Do you agree with the Spencer’s theory about
the halving? I think that if you look at previous halvings,
there was always some sort of with 20, 30 percent drop. The problem is, is the previous halvings aren’t
a good metric of what’s going to happen in the third halving because it’s a very small
sample size. So as a trader, I use data and a lot of data
to be able to make the best and most educated decisions back testing, forward testing strategies. And so in almost all markets, it said buy
the rumor, sell the news. And so sometimes that works and sometimes
that doesn’t work for me. Right now, Bitcoin is in an uptrend, but it’s
still got some resistance in play around $11,300. And so right now, there’s no reason to not
trade the trend or at least be spot long until that trend shows any signs of weakness. And right now, right now, there’s no signs
of weakness. And so I think that halving is potentially
priced in. But it depends on how crazy the FOMO gets
on Bitcoin, where it could create some significant psychological FOMO from retail. But still in so far, I don’t think we’ve seen
that retail participation. I tweeted not too long ago. Smart capital will trick you into thinking
that Bitcoin is a scam until they’ve accumulated enough. And then the price will rise. The price will rise controlled, but it’ll
be priced out of the hands of a regular consumer to own at least one Bitcoin or something to
that effect. And so we saw this with the .com era. A lot of retail sold in the 90s. And then we saw this massive .com boom and
they picked it up in 2008. A lot of smart money bought. There was significant volume purchases on
some of those big tech company plays. And so I think that we probably saw something
similar around the $3,000 region with Bitcoin where retail got completely shaken out. And I don’t even think they were on board
to the $14,000. I don’t think they’re onboard now. And so I think we’ll have to probably break
$20,000 before we see that psychological retail FOMO back into the markets. Do you have anything to comment on Jacob statements? No, I think that’s all fairly reasonable and
definitely agreed that we don’t have, we can’t rely on anything that’s happened from prior
halvings as an indicator of what’s going to happen in this halving. As Jacob mentioned, I mean, with a data set
of two, it’s extremely non-significant. And also just in market environment was extraordinarily
different through each of those halving events than it is today. You know, we have a much more robust set of
exchanges, infrastructure and derivative contracts that I think could have could produce a different
outcome than you’ve seen historically. We’ll see. So among Blockchain Capital 2020 predictions,
you said that Bitcoin will blow past the all time highs in 2020. That is a quite daring prediction. Why? What does make you think so? What does that make you think that we will
go through the all time highs? I mean, look, behind the scenes we’re seeing
a lot of large, credible companies entering the space. So, you know, that’s very encouraging. Perhaps even more encouraging that there was
just the level of talent that were seen into the space. So I think that all of these things kind of
combined are priming up to set up for the next kind of market cycle. So, you know, whether it’s the halving it’s
the number of large kind of fintech and financial institutions that are seriously moving into
this space. The level of talent that’s entering and then
also just the increasing kind of comfort with Bitcoin itself. So one of my favorite things is to see Bitcoin
just discussed, not as this novel new thing that we need to, you know, read a separate
news article about. But something that’s mentioned just, you know,
in a Bloomberg News article, whereas, you know, the S&P gold and Bitcoin rallied on
the day. Right. Just like one quote in the middle of a paragraph. So this normalization of Bitcoin I look at
as very constructive, particularly when you think about. I mean, as recently as a couple of months
ago, we’ve probably been in the depths of our kind of bear market right in the depths
of the last prior bear market. There was still a widespread assumption that
Bitcoin was going to zero and that it was going to disappear. Now, when I talk to even skeptics, very few
say “I think Bitcoin is going to go away and be worthless.” Almost all of them, they might have different
takes on what its role in the future plays, but nobody’s counting it out, so that alone
to me is very, very significant. And then the last thing I’d mention here is
just, you know, again, because we’re thinking about things on a long time horizon, we care
about things like demographic shifts over time. So we’ve commissioned a survey was done, two
of them actually through Harris Poll to survey the American public. And what it shows is, you know, consistently
the age group that is 18 to 34 is by far the most aware, most knowledgeable. They have the greatest conviction. They have the greatest propensity to purchase
Bitcoin. As that particular age demographic, you know,
continues to comprise a larger portion of the economy, they will have a more significant
impact on financial markets than they do today. And I look at that as like a major mega tailwind
over the next kind of decade or so. But, you know, I think things line up pretty
well here, even in the short term in 2020. Okay. Jacob, do you agree with this prediction? Do you see Bitcoin breaking the all time highs
in 2020? Maybe at the tail end. I don’t know if we go straight to twenty thousand
at this point. There’s still some other fundamental catalysts,
in my view in the markets that I think need to be shaken out, but out because we still
have cloud token and plus token that still have some bitcoin reserves and have a pretty
massive ethereum treasure trove that they could dump on the market at any point time
similar to how they did in in mid twenty nineteen there. They have far less than they did. But I think that if we see, you know, it’s
possible we see other Ponzi schemes, exchange hacks, you know, all kinds of other things
that you know, we’re still in a in a nascent market that has those types of events that
they can come into play with that are, you know, more black swan that can’t be predicted
by either fundamental or technical reasoning. And so we are on pace right now. We’re moving right along with there’s still
lots of key resistance levels to get back to. Twenty thousand twenty thousand is it is. You know, it’s still 100 hundred percent away
from where we’re at. And so do I think it will break twenty thousand? I don’t I don’t think it’ll break twenty thousand
twenty twenty point but it’s bitcoin. And so what I would say just late level by
level and yeah don’t expose yourself to too much risk because you know the rate of return
right now, if it breaks twenty thousand feet then people move 100 percent up on their money. And so it was much better to buy at a lower
price, especially when where you know this overbought in a market. But with the halving coming up, I think anything
is possible. But there are definitely some fundamental
events to watch out for overall and market from a risk side. So talking about altcoins. Do you think, Jacob, that this is a good time
to invest into altcoins? And if so, which ones we should keep an eye
on at the moment? Well, Yes and no. So I think that there are I think the right
time to invest in altcoins was probably a month ago or two months ago. And right now there are a lot of them are
coming up on high timeframe resistances. And so would I say buy in to all altcoins
right now? I don’t think so. I would expect some form of a pullback first. And so it really depends on your time horizons
and what exactly you’re looking for. But most of the altcoin projects that I’m
in are up over 100 percent in USD on the year in. A lot of them are up over 40, 50 percent up
on bitcoin on the year. So from a trader standpoint, a lot of them
are getting you know, a lot of them are in high overbought markets. They’re in the trades are getting pretty crowded. A lot of people are taking the long side. And so I do expect some sort of an event to
wash out those late, long traders or investors. And so I would wait for a pullback to to enter
a lot of these altcoins at the moment. And Spencer, I’ve read your end of the year
predictions. And among the predictions you were talking
about altcoins. And you were saying that privacy coins will
be delisted on the major exchanges. So why do you think so? Why do you think so? Yeah. Yeah. So, I mean, look, I like privacy coins. I think they have a real place in our industry. I think they of all the various types of altcoins
that probably one of the few that may have a real purpose in the industry. But that said, there’s certainly a huge target
for regulators. You know, I think the regulators are absolutely
more concerned about Monero and potentially ZCash than they are about Bitcoin. at this point. So, you know, I think it’s really just regulators
are getting much more serious about the space. And I think that privacy coins are a probably
the first major target to get delisted. And I think for exchanges, honestly, it’s
not a very substantial portion of their trading volume that comes from privacy coins. So, you know, if regulators are going to be,
you know, causes of headaches for you by supporting them, then I think it’s a pretty easy decision
to just delist them. And it’s not the outcome that I’d like to
see, but I think it’s there’s a decent probability of that happening in this year, next year. What you’re saying is that you wouldn’t invest
your money. I mean, the money of your company into one
of these anonymity focused coins. I mean, listen, every investment case is made
on a case by case basis. We do think that there’s going to be some
concern for a very strictly oriented privacy coins. So that would definitely be present a major,
major headwind. But I can never say that we absolutely would
not do that. Yeah. So it kind of remains to be seen. But certainly I hope they don’t get widely
delisted. But it’s very possible. And like you said, it’s, you know, largely
a focus around kind of U.S. regulators. And so, you know, they’ve been among the more
active in terms of expressing concerns. And I think that if we’re going to see any
kind of broader delisting of privacy coins, it’s probably as a byproduct of some FATF
guidelines so FATF have been the Financial Action Task Force, which is a multi-country
international financial crimes kind of fighting force. So that’s probably where you’d see it from. But we’ll see if that happens this year or
next year or maybe never. Mm hmm. Yeah. Because actually we saw that happening not
only in the U.S. but also in Europe later today implemented a new regulation against
money laundering and terrorism financing, which is touching upon thousands upon anonymity
and personal data issues. And that’s potentially worrying for for privacy
coins for Europe as well. Yes, yes. Yes, exactly. And all of those recent moves are a byproduct
of FATF releasing new guidelines in summer of last year. Lane now the fifth anti-money laundering and
anti-terrorist financing guidelines. And what about you, Jacob? Do you agree with this prediction? Like, we’ll give us a call, I mean, if not
immediately de-listed from major exchanges. And if so, like what’s going to be the impact
on your trading activity? Yeah, I mean, I can’t say, you know, with
certainty these things are going to occur. I think it’s a very pragmatic prediction. We’ve already seen it. We’ve seen a lot of privacy coins get de-listed
already from certain exchanges. But then at the same time, you’re seeing tokens
like ZCas be approved by the New York State Financial Licensing to be sold on Gemini. And so you’re seeing kind of a mix where,
you know, ZCash has the ability to turn on and off private transactions. And then the Jerome Powell of the Fed came
out today and said it’s not a good thing that you can see transactions publicly on a ledger. So it’s kind of an odd nod toward privacy
coins in a weird context. But yeah, I think the government wants to
be able to track everything, I think with companies like Chainalysis. You know, we saw the child pornography sting
where they took down a whole network using bitcoin to analysis where they were actually
able to trace all the people any time they cashed out to USD. So Bitcoin in and of itself is probably one
of the best currencies in the world for a government to applaud or not get. It’s not a approval for because everything
is trackable, especially if you want to be able to move into a fiat currency zone where
you can track it is way like clean coins from a miner. I mean that those are, you know, non trackable
because they were just fully created, you know. But anytime you move to cash, you’re still
going to have an ID all on a non KYC exchange. But I think that privacy coins are interesting. But I think that stable coins and if they
create, you know, privacy, stable coins, I think that’s probably where you’re going to
see more interest because they’re stable or they’re pegged to some form of currency. Right. So are you trading some of these privacy coins
at the moment? if it moves and is volatile I will trade it. Do I hold them long term? The only I hold long term is Zen Cash. I like Zen Cash. I like what they’re doing. It’s an offshoot of Zcash and it’s got a whole
suite of products behind it. And Barry Silbert has a as a trust us that’s
kind of backing Zen Cash. So I like Zen Cash. There’s a couple other privacy coins like
Grin & Beam that have some interesting Nimble Wimble technology Zcash itself just came out
with some new innovations on the zk-SNARK protocol. So there’s there’s some really cool innovation
going on in the privacy, but I’m mostly excited to see some of these companies build privacy
layers onto bitcoin and that that’s kind of what I’m really hoping to see overall. So moving we recently knew that Blockchain
Capital is raising two hundred and fifty million dollars to launch a fifth investment fund
and which will be investing 25 percent of its assets into crypto and the remaining 75
percent into equities. So can you tell us a little bit more about
these funds, Spencer? What are the projects that are on your radar
that you want to invest this money into? Well, from a regulatory perspective, I’ll
decline to comment specifically on what we’ll do with fund five. Just so I don’t cross any boundaries as far
as like advertising forth, but instead, I’ll just talk about in general, you know, we followed
a very consistent strategy over time, which has largely been to invest primarily in the
equity of companies in the industry and then also to take exposure to the digital assets
that might be native to any of these particular protocols. So in some of these cases, the only way to
get a direct investment opportunity is via a native kind of crypto asset. And so we always reserve some level of flexibility
there. In general, across all of our funds, you know,
seed and series, A investments are kind of our bread and butter. But as our funds have gotten larger over time
and as the industry has progressed and we see more credible late stage rounds, we’ve
been increasingly active at the series B in point, participate more series C and later
financing as well. So we tend to be stage agnostic. But industry specific, but even within that
stage agnostic, we still tend to focus a lot on seed and series A. And you, Jacob, you as part of your product
at Signal Profit you offer investment break down on what project to invest in. So what are the most promising crypto projects
an investor should keep an eye on what you do at the moment. As far as the investing, you know, obviously
DeFi is a huge one in the space. So Nexo and Land both of those are two to
keep an eye on. But again, like I said, I NEXO so is already
up almost 100 percent on the year in USD and almost up 40 percent against Bitcoin. I really like exchange tokens. I’d like to exchange tokens that if those
have been really big part of my portfolio as far as my investing thesis for quite some
time. So Binance exchange token. Huobi exchange token and FTX exchange token. Those three comprise about 10 percent of my
overall investing strategy portfolio. And you know, EOS is one that I was very heavily
critical of in the beginning. But the one thing you can’t knock against
EOS is there are capital reserves. They’ve got a significant amount of capital
reserves for building out their protocol and improving it and pulling developers away from
the theoryand ecosystem in other places, top tier developers. And so I like Eocene from a technical perspective. It’s it’s looking really strong on a year. That’s one of my larger positions. I think that’s up against 50 percent, almost
against bitcoin and bitcoin is almost 40 percent on the year. Cardenal isn’t as big of a position, but they’ve
got their Shelly launch. That’s coming up. Very, very strong protocol in regards to the
scientific approach to it, the way that they’ve done it. What I’d like to see more out of Cardano,
though, is the business marketing operational standpoint, because you see, you know, a protocol
like Tron where it’s pure marketing, you know, less development technically than something
like Cardano. So, you know, when you find one of those that
has a high rate but bitcoin and etherum, I honestly are to do the best long term fundamental
plays just because of the first mover advantage and the network effect and the amount of developers
that are building on on both protocols. What do you think is the main role that Blockchain
Capital should play in terms of making this industry grow faster? When one project grows, it tends to benefit
the industry as a whole. So whether it’s a particular protocol or whether
it’s a company providing infrastructure to make it easier for other new entrepreneurs
entering the space to go ahead and spin up a company without dealing with every piece
of underlining infrastructure, you know, these are all kind of critical pieces going forward. So, you know, for us, it’s mostly just making
sure that we get capital to the most promising projects. That makes sense. So if you had to mention three characteristics
for the most promising projects, just three. What would you mention? Like in terms of characteristics? Yeah, fair. So I mean, like given what I said before,
that early stage tends to be our bread and butter. So Seed and series AL Look any time you’re
investing very early stage what you’re really betting on is a team. So we’re really investing into Is this a team
that we think is going generally in a fruitful direction? And do we think that they have the kind of
vision and awareness to be able to adjust their course as needed? So, I mean, if we look through it, the most
successful venture investments of all time, whether it’s crypto or not, most of those
companies did not originally set out for the exact product that ultimately made them wildly
successful. So most of them, they might have had a an
intermediary product that was mildly successful before they got to a bigger opportunity. But the point being that ultimately you’re
putting a lot of conviction behind the founding team of any particular company and project. So team is one. It’s also just going to be in terms of timing. So we see a lot of investment opportunities
that I think could be. Maybe the industry is not quite at that stage
yet. So, you know, over the course of the past
six years, a simple some popular ones in that category have really been things, investment
opportunities that revolved around paying with crypto. And so always that we’ve seen over the past
seven years that people don’t really want to spend their crypto. So having a startup that revolves entirely
around the notion that people will want to do this hasn’t been fruitful yet. But I think it can be in the future. So again, team, timing and then probably just
the size of the market opportunity they’re going after. So regularly, we’ll see things where. Listen, it’s a good team. We think the timing is right. But given that we operate venture funds, we
really need to see teams going after a very, very large market opportunities and not ones
that can be kind of middling outcomes. And so if you look at the breakdown of returns
across any successful venture fund, typically what you see is that a couple of out like
entire fund’s returns, as opposed to a situation where maybe all of the investments do decently
well. So turn that into a baseball analogy. Typically you have a few companies that end
up being grand slams and those drive the vast majority of returns as opposed to a bunch
of investments that kind of became singles and doubles. So, you know, again, we’re looking for team,
timing and market opportunity. Guys, thanks a lot for watching this video. And always remember to like, subscribe and
hodl.

Leave a Reply

Your email address will not be published. Required fields are marked *