Watch the full video of this Space session on Gamma Prime’s YouTube channel
Space session with Devin A. (VP of US at Everest Ventures Group), Dave Hendricks (Founder and CEO at Vertalo), Evan Szu (Co-Founder & CEO at Gamma Prime), Michael Terpin (CEO at Transform Ventures), and Thomas Dunleavy (Head of Venture Capital at Varys Capital)
In this episode of the GammaPrime Spaces Cast, host Evan Szu welcomes a panel of seasoned investors and crypto experts to discuss the rise of Bitcoin treasury firms and digital asset treasuries (DATs). The conversation begins with a casual round of introductions, highlighting the panelists’ backgrounds, experiences, and personal insights outside of crypto, setting the stage for an engaging and informative session.
The panel delves into the mechanics, opportunities, and risks associated with Bitcoin treasury companies, including high-profile examples like MicroStrategy and emerging European firms. Discussions explore how these vehicles allow investors to gain exposure to crypto assets, the impact of leverage and yield strategies, and the growing interest in long-tail altcoins and Ethereum-based treasury products. Insights from veteran traders emphasize both the potential upside and the challenges of market saturation, centralization, and volatility.
Closing the session, the panelists provide a broader perspective on the overall crypto market, touching on macroeconomic factors, institutional adoption, and revenue-driven valuation trends in digital assets. With diverse viewpoints and practical examples, this episode offers valuable guidance for investors navigating the evolving landscape of crypto investment vehicles and market cycles.
Evan (Gamma Prime)
Hello, welcome to the GammaPrime Spaces cast. We’ll be getting started shortly.
Hello and welcome to the GammaPrime Spaces cast. I’m your host, Evan Szu, co-founder here at GammaPrime. Thank you for joining us.
Looking forward to another fabulous session today. We’ve got a great group of speakers and our panelists, some familiar faces, some new faces. Looking forward to getting introduced to all of you and talking about today’s topic.
For those of you joining us for the first time, GammaPrime is a marketplace for uncorrelated investments. We really focus on private investments, known as hedge funds, more commonly. And we’re a marketplace that specifically likes to focus on things that don’t correlate with the general stock market.
Crypto is obviously one of those, but we also have a lot of other things like litigation finance, foreign exchange. We have reinsurance and those sorts of things. I myself have been a trader for 32 years. I’m one of the co-founders here. For those of you that stayed to the end, I’m going to have a little present for you. We’ll have what we traders call a free money trade, and it will relate to today’s topic.
We’ll get to that in a moment. But first, I’d like to go around and do a round of introductions with everybody. Today our opening question, in addition to telling us about yourself, is: if you could instantly master any skill outside of crypto, what would it be?
So, this would be the opener for our panelists. As you introduce yourselves, tell us who you are, what you do, and then tell us if you could instantly master any one skill outside of crypto, what would it be?
I’ll start. Mine would be other people’s trading styles. I love watching other people trade, and it fascinates me when they are doing something which I can’t myself pick up.
I have my own trading style, which I’m pretty good at, but it took me 10 years to learn. Now I’m trying to learn this other person’s trading style, and I suck. It’s amazing how long it takes to learn someone else’s mindset.
If I could just jump into their shoes right away, that would be my wish.
All right, maybe we’ll start with Dave Hendricks from Vertalo. Welcome.
Dave (Vertalo)
Hey, thanks for having me on here. I don’t want to master any more skills even adjacent to what we do. As a guitarist who has barely been able to put a band back together since I started Vertallo in 2017, I would like to master the minor pentatonic scale, which I have been working on for years.
And expressive lead guitar soloing. I think that is something which would benefit all people if I could do that better. So, that’s what I’d like to master.
Evan
That’s awesome. Thanks, Dave. Tell us a little about Vertalo.
Dave
Vertalo is a digital transfer agent tokenization platform that I founded with two co-founders in 2017. Just a minute after I first met Leo Steen and Michael Turpin at Polycon in March of 2018, Vertallo tokenized its own equity under Reg D and Reg S, possibly and arguably being the first such company to issue tokenized RWA. And again, all the way back in March of 2018.
I remember very fondly meeting Michael outside at the Bahamas or Bermuda or wherever that Polycon conference was. Then the next day, issuing our tokenized RWA. We’re SEC-registered transfer agents, and we’ve been tokenizing RWA for over 100 issuers since we went commercial in 2019.
Evan
Awesome. Well, you’re in the right space for today’s wave. It’s great to hear it.
We’re going to get to Michael in a moment. We’re going to start next with Devin from Everest Ventures Group. Devin, welcome to GammaPrime and our space cast.
Tell us a little about yourself and if there’s a skill that’s on your mind that you’d love to master or something else.
Devin (Everest Ventures Group)
Thank you so much for having me. Yeah, I’m Devin from Everest Ventures Group. I’m just a conglomerate investor. I’m a member of a global subsidiary. Conglomerates are great. They offer a lot of options. And lots of things to consider. Plus, liquid. So, we do check sizes ranging from 100K to 2M for early stage and then up to 24 for liquid.
I am currently the VP of U.S., so everything U.S.-oriented falls under my purview, which includes all three verticals in terms of top of funnel—just sourcing things—and then developing relationships and partnerships from there.
If I could master any other skill outside of crypto, I would have to say probably skateboarding. It’s been a while since I’ve injured myself, but it would be nice to do that again.
Evan
Awesome, Devin. Thanks. You were breaking up just a little bit in the beginning. You sound better now. Yeah, skateboarding is a nightmare for me. There’s a skateboard at an old actor’s shop.
I stepped on it once, it slipped out from under me, and I banged my elbows, I think. After that, I was just afraid of those things. Great to have you.
Michael Terpin, welcome. Good to see you again, hear you again. Michael has come to several of our events. Last time, I believe, I actually interviewed you and talked briefly about your fabulous book. Welcome.
Michael (Transform Ventures)
Glad to be here. Nice to reconnect with Dave. Those fond memories of the Bahamas—it was for the Polymath, not Polygon Conference. But the Polymath, I was an early advisor and investor in.
They’re really one of the first companies to actually go out and say, “we’re going to do security tokens” before they even started calling them RWAs. Those were good times. Trevor put on a fabulous event. That was early 2018 with the peak of that bull market.
And now here we are, a couple of bull markets into the future, two more cycles. We’re heading into some really glorious times, in my opinion, coming up in the next few months. And then the inevitable blowoff top and the crash that follows.
A big part of that is the subject here of Bitcoin going public. I believe the digital asset treasury companies, which I’m involved with a few, will be the big catalyst for the blowoff top and then the potential catalyst for the crash with some overleveraging, like happened with lending four years ago.
Evan
Fascinating. Well, that’s going to be my free trade idea as well—free money trade.
Michael, tell us a little about yourself, your background. Mention your book too. It’s a fabulous book for those that may not know.
Michael
Thank you. So I’ve been a serial entrepreneur my whole life in tech largely. Have the blessing and curse of recognizing things early and being the pioneer with the arrows in the back in many cases.
Got into the Internet in the early 90s, around 1992, and started an Internet-based company when there were very few of them. It was originally called InternetWire. It was the first press-release distribution company on the Internet, competing against the brick-and-mortar BusinessWire and PR NewsWire.
Raised money from Angels and then from Sequoia Capital. Partnered with NASDAQ, changed the name to MarketWire, sold it, and today it’s a half-a-billion-dollar entity called Globe NewsWire, number three newswire in the industry. So that was my introduction into tech, tech investing, tech marketing.
Followed it through the social media wave and the OOs. In 2013, I went to the first Bitcoin conference in San Jose, having heard about it and looked at it a little since 2012, and fell down the rabbit hole. That’s pretty much all I’ve been doing since: working in the Bitcoin and crypto space.
Started BitAngels that very month. It’s now 30-something chapters in different cities connecting investors with founders. Last year, I wrote my book out of frustration that more people I knew who were bright investors did not listen when I said to invest at $100, $200, $1,000, $5,000. They went to their broker, were told it was a scam, and never considered it again.
Bitcoin Supercycle talks about why Bitcoin is so important, how it controls everything else in the crypto space, and that the cycles are real and you can profit from them.
Evan
Thanks, Michael. Personally, I’m a cycle trader as well, so I love it. And last, certainly not least, Tom Dunleavy. Tom, great to see or hear from you again. Tom’s been a friend of GammaPrime as well for quite some time, now with Varys Capital, I believe leading them or leading the investment group.
Tell us a little about yourself, Tom.
Tom (Varys Capital)
Yeah, Evan, thanks for having me. Good to be here, good to see everyone.
I’ll keep it fairly brief. Head of venture for Varys Capital. Varys Capital has been investing in the space since 2018. Our big differentiator is the lead LP for our fund is one of the members of the Royal Family of Qatar. A lot of connections and integrations in that region that we can help portfolio companies with, which seems to be of interest these days.
Been investing in crypto personally since 2017. Professionally in the industry since 2021. I was with Nisari for a bit leading their research team and then also investing in Varys and a few other shops. Glad to be here and excited to chat about today’s topic.
Evan
Thanks, Tom. Yes, connection and history and really knowing each other is so key to investing in Mina. It’s not something a lot of Westerners may come in and just try to shake hands and do a deal. It doesn’t work that way there. They want to get to know you. Congrats on your new post.
Let’s jump into today’s topic. We’re talking about Bitcoin going public, entering Wall Street, hitting the IPO circuit, and Bitcoin treasury firms. For those who may not know, they’re becoming pretty popular now.
They were sort of launched by Michael Saylor, who originally had a company called MicroStrategy. They essentially were a sleepy, boring software company, some B2B business intelligence type of business. Their stock was creeping along, doing nothing. They had a decent-sized treasury but weren’t really growing. People called them dead money and other not-so-nice names. Their ticker is MSTR. You’ll see it as a flat line around $12–$13.
Then Michael Saylor decided to put all this treasury into Bitcoin, and suddenly their stock jumped to $100. Today it’s around $340.
This became a thing. People would just raise money and stick it into cryptocurrencies, eventually including Ether. These are broadly called Bitcoin treasuries. They are publicly listed companies, and their primary holding is cryptocurrencies. Different variations exist: some use leverage, staking, or other ways to generate yield.
We now have a treasury firm backed by the Winklevoss twins set to list in Amsterdam. They hold 1,000 BTC, currently raised about $126 million—not huge.
Order-wise, I like to go 1, 2, 3, 4, then 2, 3, 4, 1, then 3, 4, 1, 2. We’ll start with Devin, then Michael, Tom, Dave, and then step forward after that.
Devin, what are your thoughts? What do you think about these Bitcoin treasury firms, Europe’s potential role, Bitcoin adoption? This is going public in Amsterdam as opposed to the U.S., doing a reverse merger, using SPACs. Do you think we could see more of this happening? Thoughts, Devin?
So I’m not hearing anything.
Dave
I left him speechless. I know. That was a big question.
Evan
We’ll come back to you, Devin. We can’t actually hear you. We’ll go to Michael Terpin next. You get the first word.
Michael
Fantastic. And probably the last word of this particular X space because I do have to drop off in 10 minutes for a call that I had previously scheduled. At any rate.
Evan
No worries.
Michael
Yes, I think this is definitely going to be a huge thing for the next few months. Right now we are at about $40 billion that’s been raised by funds that specialize in SPACs and pipes. I project it will probably be closer to $100 billion raised by the end of the cycle.
If the kind of FOMO that happens at the bubble top of every four-year cycle continues to play out the same way, many of these firms will be way overpriced. That’s going to lead to the crash next year.
I would say that actually MicroStrategy was not really the first Bitcoin treasury company. GBTC was. GBTC was when Barry Silbert basically in 2013 made the first Bitcoin trust. He and Dan Moorhead around the same time were saying, “Hey, this thing’s worth more than $60. We should sell it to accredited investors.” He raised about $100 million for the trust back in 2013. It went from $100 to $1,000.
The idea was to buy in at par to the trust and then convert it into shares of the only public vehicle where you could own Bitcoin at the time. It was trading at about a 30% to 40% premium. But then when things crashed and the narrative was “Oh my God, there’s never going to be an ETF,” because Gary Gensler wouldn’t allow it, there were concerns about lawsuits and selling Bitcoin to pay losses. It went down to a 50% discount. Anyone brave enough to buy then made a killing because it was bottom of the cycle. Bitcoin was maybe $30,000 and you were buying effectively at $15,000—up 8x already.
I project, as someone on the board of one digital asset treasury company announced today called Alpha Ton, which does Telegram tokens, that there’s going to be a frenzy. I’m in conversations with a few others that include Bitcoin.
One thing I’ll add is that the newbies of this cycle are different. Many YouTubers say retail is not involved. YouTube views on my channel are not up, therefore retail is not involved. The newbies now are the ma and pa, the 401k folks looking at their Schwab account to buy digital assets, ETFs, and debt.
Evan
That’s fascinating. I love that perspective, Michael. You’re right, Grayscale was the first pure play.
The thing I always get confused about is the hybrid, where a company is really a Bitcoin treasury—raising money by Bitcoin—and the slightly different idea where a company is doing something totally unrelated, like a construction company, and then goes and buys a bunch of Bitcoin.
Michael
The newest adaptation is what folks like David Bailey did. There are two things. One is going to foreign jurisdictions where there’s a tax benefit or other advantage. In Japan, Metaplanet is a leading example. They were a $14 million failing travel company. Now they’re seven or eight billion because they have the sixth largest amount of Bitcoin of any public company.
For investors in Japan, buying Bitcoin via a company like this was beneficial due to high crypto taxes compared to stocks—that was the arbitrage.
David Bailey, who did the digital asset treasury company Nakamoto, buys profitable companies in jurisdictions with tax arbitrage and uses profits to buy more Bitcoin. They raised 700+ million and just announced a new offering of about five billion. It’s heating up.
There’s a hunger for FOMO, people wanting to own Bitcoin while it’s going up, often at the peak, which is the wrong time. You should buy with blood in the streets.
There’s also a hunger for Wall Street. These firms could do almost nothing during the Biden administration—not because of anti-crypto regulations, but because of anti-M&A and anti-IPO policies. Now public markets are opening up, combined with Bitcoin and Ethereum. That’s real rocket fuel.
Evan
Thank you, Michael. If you have to go anytime, just poke your head in and say goodbye.
Michael
I’ll be saying goodbye. I’m leaving now. OK, thanks. Chat with everyone.
Evan
Good chatting with you, Michael. Let’s go to Tom. Tom, what are your thoughts on this? We can open up to both questions here. We have the question around Bitcoin treasuries, but also Ether Machine, a similar example with a little bit of yield. Thoughts, Tom?
Tom
Yeah, more broadly, I’m very bullish on digital asset treasuries. I think they’re great vehicles for folks who couldn’t get exposure directly to the asset in their country, and they earn a yield on top of holding the native asset.
If you’re looking at Bitcoin, Solana, or Ethereum, the ability to get more of that asset to work in the vehicle rather than an ETF, which has to hold some assets for redemption, is positive. A lot of positives for digital asset treasuries.
That being said, Bitcoin, Ethereum, and even Solana have a huge influx of these DAX. The Ethereum DAX and most Bitcoin DAX, besides MicroStrategy, trade close to or below it. I think we’ve reached saturation for major assets.
I’m interested in long-tail assets as more come on board—Sui, BNB, and others. Some hyper-liquid ones have had varying degrees of traction, but this is where I see more market adoption. Most don’t have ETFs yet, which gives financial advisors tools to allocate to these longer-tail assets.
One dollar into those smaller assets is more powerful than one dollar into Bitcoin or Ethereum. Putting that one dollar to work within those ecosystems is more powerful, as there’s less capital there already. I’m really bullish on the longer tail.
As Michael mentioned, a Telegram or TON digital asset treasury is really exciting. I’m sure there will be scams and risks, but net-net, for investors doing their homework, it’s going to be a good thing.
Evan
Yeah, you put your finger right on one of the key points, which is what’s your barrier to entry? Right. If all you’re doing is publicly listed and buying Bitcoin, it’s like, how much of a model is that in terms of your unique ability to keep other competitors out?
Like you said, everyone’s piling in. But that long tail has not yet whipped up in the same sort of way. In trading, we would always say, look at the spread. Right. So when those guys start to saturate out, maybe we’re nearing a top. But right now, that’s where the upside seems to be going.
Let’s flip over to Dave. I’d love to hear your thoughts on this.
Dave
Yeah, I’m kind of a jerky contrarian. For anyone who knows me, I’m a contrarian on the RWA narrative. I think most of that’s bullshit.
But let’s talk about Treasury companies. I’m increasingly surprised, but becoming less surprised over time, at the acceptance of an excessive amount of centralization and concentration represented by things like ETFs or Treasury companies. I think for those cycle traders, this totally screws up your model.
Maybe I’m wrong, but if you don’t have a lot of circulating supply, you’re not going to have much volatility. Every time Treasury companies are out there and their mandate is to emulate, you end up with another Tom Lee problem: there’s no Ethereum to buy. Where are you going to get price volatility?
Maybe I’m not smart enough to understand why this is good. But as you start throwing all this stuff into cold storage, practically custody with Treasury companies, I don’t think that ends well. Then weird derivatives are created, so you get many hops away from the asset.
I’m trying not to be an orthodox purist, but I think it really screws up the decentralization thesis to have these “two and twenty” trad-fi people throwing things together to make fees.
Yeah, maybe it enables normies to buy through other means. By the way, that’s not really a thing right now because RIAs using things like private ledger can’t buy this stuff—they can’t run it in their systems.
I never understand why people get excited about these pleated pants investment products. I’m not a fan of a lot of this stuff. I’d like things to be less centralized and less controlled by people who went to Stanford, Harvard, Goldman Sachs, and BlackRock making these products.
Evan
I understand what you’re saying. If everybody’s on one side of the trade, who’s taking the offer? Who’s selling? The analogy in trading is: if too many people pile onto one side of the cruise ship, at some point it’s going to flip back the other way. It’s a crowded trade.
I do take a little bit of resentment at the Stanford comment because I did my PhD at Stanford. I guess I’m part of the problem. But I do not wear pleated pants, so maybe it’s OK. I don’t know, Dave. We’ll get back to you.
Dave
I don’t know. It’s the same thing. You got a PhD from Stanford. That’s awesome. Hopefully it’s applied toward individual good and not just the company.
Evan
It’s looking backwards. PhDs are existing knowledge, even though they’re supposed to be new research. Crypto is all new, and it’s new every day. Maybe the methods and rigor are applied, but not the knowledge. That stuff is out of date.
Let’s go to Devin, Everest Group. Give us your thoughts on this. We can’t hear you again. Remember, we had a little bit of audio issue before. Go ahead and keep trying. It looks like you’re unmuted, but we cannot hear you. Maybe it’s an audio issue. OK. Devin, if at any point you get a better signal or reconnect, just jump in. Shout, interrupt us—we want to hear your thoughts regardless.
Let’s go ahead and open up to the second question, which is around Ether Machine. Dave, this might be a potential counterargument: yes, you can get exposure by just buying the coin. Why do you need to do this through a fund? There are ETFs, futures, and many ways to get exposure without this kind of convoluted vehicle.
Ether Machine has a twist. Yes, they hold Ethereum, and they are a crypto treasury product. But they’re adding yield. Through their knowledge of Ethereum and the ecosystem, they’re doing things like staking, maybe restaking, which is a little bit of the derivatives thing you mentioned. They’re also doing funding, leverage, futures, and basis trades.
They use that to generate yield. So instead of a passive holding, they’re giving additional value, giving access to specialized use of tools to support the underlying blockchain infrastructure, and passing that yield on to investors. At Gamma Prime, we’ve only seen this in hedge funds. Ether Machine is making it available to a much wider audience.
Dave, I’m going to kick that back to you before going back to Tom for your reaction.
Dave
Now, this is better. It’s not actively traded, but if it’s actively supporting further use of Ethereum Layer 1, maybe Layer 2 too, that’s promising. In my industry, Ethereum is slow and expensive for tokenizing real-world assets, hence all the Layer 2 solutions abstracting the base chain.
If these folks can put it to work in novel ways, I think that’s a great use of a treasury company, rather than just a custodian waiting for price appreciation. Many Bitcoin treasury companies do just that.
So I like it—it’s promising—but it hasn’t started yet, really. The things it’s going to do are great. Put the asset to work. The problem is, if you’re taking assets out of circulation and just storing them, there’s nothing to buy to mark up the price.
It might be different here. Maybe instead of foundations giving out grants like other Stanford grads, they invest in the ecosystem, which has price impact and makes it more valuable. Not negative on this.
Evan
Interesting. Yes, I can see your view on it. And it’s doing something more, right? It’s actually contributing to the running of the infrastructure. It’s not just another bucket or basket.
I would add to it: it’s not these other ones that concern me. It’s not so much that they’re just sitting there waiting for price appreciation—they’re doing some crazy engineering. They’re starting to lever and sell debt to buy more.
Dave
No, it’s super cool. Rather than just custody, I love it. Putting it to work—I think that’s cool.
Evan
You have an ecosystem, but it’s not really the most efficient. The most efficient is that long tail Tom that you’re talking about—these newer chains designed for speed and throughput. Low cost, sometimes no cost.
Nowadays, as we’re moving toward a multi-chain, abstracted world of crypto, which is less and less chain-dependent, one could argue that’s where the puck is going. Maybe that’s where it’s going in addition to things like crypto treasuries, which brings us back to the original comment, Tom. Take it away.
Tom
Yeah. I think one key reason we’ve traded effectively sideways since 2022, before this recent run-up, is no net new capital into the space. These vehicles give the ability for net new capital to come in.
One of the speakers mentioned that financial advisors or others don’t have these things on their platform. That’s true if they’re holding spot assets, particularly if it’s in Coinbase or cold storage—it’s very hard to look at a holistic portfolio of stocks, bonds, and crypto.
But if your crypto exposure is MSCR, or Bitminor, or something else, that’s very simple to see in a brokerage account. It’s very simple to bucket that as, “Here’s my 5 or 10% position in crypto.” That becomes even easier when a client comes in and says, “Hey, I heard about this Monad thing. I’m interested. My friends are looking at it. Give me 1% or 2%, or maybe a $1 amount.” Previously, you would have had a lot of trouble doing that.
Now, if Monad launches this quarter and spins up a digital asset treasury a few weeks later, you can effectively allocate to that asset, whereas an ETF might take quarters or years. The allocation to that ecosystem is going to be much more powerful in terms of dollars coming in versus dollars into a major, particularly when they’re putting it to work in their DeFi ecosystem.
I think we’re going to get a second wave of these things, particularly in the longer tail, as folks get curious about finding the next trade. People will continue to put money into Bitcoin, Ethereum, Solana, but everyone wants the next trade. That will drive speculation and asset allocation to some of these newer digital asset treasuries (DATs).
Evan
I’m going to draw an analogy here, which will get to my “free money” trade in a moment: SPACs. These special purpose acquisition companies became popular in 2012–2014. Essentially, it’s a blank-check company—they raise $10 million and then go public. There’s nothing in it. They just go buy another company, allowing that company to go public via a merger.
In a way, Tom, what you’re describing is similar with altcoins. If you’re waiting for an ETF, you have to go through all the regulatory steps, which takes forever. This vehicle allows smaller long-tail coins to become more widely available faster. It’s an end run around the SEC, which I personally love.
SPACs had a heyday too. They existed since the 1990s, but during their peak, they started trading above net asset value. Imagine raising $10 million at $10 a share, and it trades at $11.50 just because it’s hot. I argue we’re seeing something similar with these DATs—they’re trading at a premium.
Unlike SPACs, which just hold cash, DATs hold coin, some with leverage, and some continually adding leverage. When has adding more leverage ever caused a problem? Well, with SPACs in 2020–2022, the bubble started bursting. Valuations underperformed net asset value. Holding $10 million, the share price went from $10 to $9.50—a swing against cash value.
In crypto, it’s easier to arbitrage. You can short a DAT and go long the underlying, e.g., Bitcoin. You’re trading the degree of heat—the premium swinging back. In this case, the premium could be 70%, and if it flips, they could be in big trouble.
I have that trade on—not financial advice, just for entertainment. I like being a contrarian. There’s thrill in making money by running against the herd, for a trader. In my mind, this is waiting to blow up, the premium swings the other way, and I’m hedged because if things keep going up, I have my long in the underlying coin.
That’s my so-called free trade. It’s not free—very margin-intensive, because you have to short stock without margin relief.
All right. In our remaining minutes, let’s go to our last question: a broad overview of crypto markets. Devin, can you jump in before we move on?
Devin
Is this working now?
Evan
Yeah, you sound great. We’d love to hear your thoughts.
Devin
I switched my computer—my phone was having problems for some reason.
Evan
That’s probably X. Seems like every time I’m on X, it does something when we run these spaces. Yeah, tell us your thoughts on digital asset treasuries.
Devin
I think initially, digital asset treasuries were a net positive when Michael Saylor was accumulating a large sum of Bitcoin. The types of DATs that are particularly interesting to me are those where you could actually stake and earn yield. They operate more like a pseudo crypto bank. That explains trading above NAV—you’re accumulating yield.
The biggest concern right now is that we’re going up the risk curve. Many DATs for longer-tail assets are purchased using locked tokens from foundations, making them more illiquid. Every incremental dollar in pushes up the price, and every dollar out decreases it more. Many of these assets are volatile and have zero fundamentals.
Leverage is also a concern. MicroStrategy was uniquely positioned with very favorable debt terms. Newer companies have shorter duration, higher interest rates, and the arbitrage opportunity isn’t as strong. When leverage unwinds, things trade below NAV. MicroStrategy could succeed by purchasing and liquidating the underlying crypto if it’s not Bitcoin-related.
Regarding Europe, the market is poised for some of these DATs, and their regulatory regime is not the worst. They have MiCA, so there is appetite for digital assets. Overall, that’s my point of view on these DATs.
Evan
Cool. Thank you. I love these sessions because I learn something new every time. Everybody brings different—not just perspectives, but different pieces of information on the puzzle. Because these are brand new, right? No one’s an expert. No one has a history on this, even if you did go to Stanford, because they didn’t exist.
Michael Rossner, one of our co-founders, has a similar view: look, there’s an unwind when there will be, because these things don’t always go in one direction. The further along this goes in terms of the positive direction, the more violent the unwind in the negative. And that’s just kind of a rule of markets and trading.
When you start seeing these guys get taken out of the woodshed and forced liquidated, things could very easily overshoot the other way. For those with some courage and some dry powder, it’ll be a hell of a buying opportunity.
All right, let’s jump to our last question here. Tom, we’ll start with you, then Dave, and Devin, you can have the last word—broadly on crypto markets. We’re seeing market caps increase a little, trading volumes up a little. There are some predictions for higher Bitcoin prices. Of course, it’s a fool’s errand to predict the future, but just broad thoughts on the overall crypto markets. We have this lovely tap of $1.25, actually just short of it. Did we go to $1.25? I’ll have to get back to you guys in a minute. Oh, yeah, the futures went to $1.25 too on the Merck, but spot may not have quite touched it, which is classic, right? A bunch of limit sells at nice round numbers.
Let’s back off some thoughts on the general broad market as we wrap things up. Tom, looks like you’re having connection problems too. It’s not you, Tom. It’s definitely X. It’s not me. It’s not you. It’s me. Let’s go to Dave, and Tom, if you can, rejoin back in.
Dave
Can you guys hear me?
Evan
Yeah, you sound good.
Dave
Okay, cool. So there’s a lot of really interesting things happening in the macro world. There are folks who think we might be in a devaluation cycle with the US dollar. If everything’s pegged to the dollar—and we’re always talking in dollar terms—devaluing the dollar is likely to logically correlate with an increase in value, if you’re pegging Bitcoin or anything else to the dollar. I think you’ll see that.
Also, from a macro regulatory perspective, with what’s happening in the US—the upcoming Clarity Act and a bunch of other things—you’ve got to expect rotation into crypto. It’s still nearly impossible to buy most crypto if you work with an RIA or wealth manager. My family owns a wealth management firm—they don’t touch this stuff. It’s a totally untouched market there because the systems, RIAs, etc., generally can’t handle it.
But if you look at crypto as a US dollar hedge, if that’s your belief, it’s a strong conviction that devaluing the dollar means higher crypto prices. Does that mean more wealth created? Not necessarily. Does it mean crypto price is up? Maybe. That’s where I’d land on this one.
Evan
Let’s use gold as a proxy, because that was the original devaluation hedge—it’s supposedly more fixed in supply. Gold is at all-time highs and looking strong. I would say that’s supportive. Generally, that’s the thing with fiat: everybody can devalue, everyone wants to devalue.
Dave
Yes, to serve the debt. The US wants to reduce the cost of servicing its own debt. I think that is bullish for Bitcoin, Ethereum, and maybe larger crypto.
Evan
I agree. I think this is one big reason governments hate crypto—it shows the race to the bottom, every country devaluing their currency because they have the incentive. They think, “If we all devalue together, no one will notice.” That shows up brightly when you look at it versus gold or Bitcoin. I’m with you on that. Let’s go to Devin for final thoughts on the Bitcoin market.
Devin
I think the Bitcoin market overall is probably… Bitcoin exists in an asset class of its own compared to the rest of crypto, being the safest trade and in a passive investment machine, as I would call it. It’s easiest for larger allocators or pension funds: if they want crypto exposure, they just buy Bitcoin—it’s fairly clear.
The rest of the market, in my opinion, is not in that gold four-year cycle. There’s too much liquidity fragmentation across many tokens. The next incremental buyers will be institutions, which is obvious by DATs and other vehicles. I think it’s going into the majors mostly, then a few sector-specific tokens.
The tokens poised most for growth are the ones I’m excited about—Hyper Liquid is interesting. Not financial advice. I’m not the best trader, so take it with a grain of salt. But they have good revenue. A lot of people use perps—I’ve been destroyed on funding rates—but it makes money. If it makes money and has fundamentals, those tokens will do well, as they could be underwritten by larger institutions.
Evan
Roger, that R word—revenue—is kind of a foreign language in crypto. But you’re starting to see more of it now. Those are guys with some fundamental heft under them.
Devin
Yeah, to be fair, revenue was bad. I know that’s a harsh take, but when you have revenue, you can actually value things appropriately. In past cycles, you just benchmarked against the next L1 and the token price popped. Now, with revenue, you see multiples may not make sense anymore. It’s becoming a necessity. Many newer and older investors, burnt in the past, are becoming more sophisticated.
Dave
Yeah, the story is canonical here. Recent events support that.
Devin
That’s a lot of interesting market-making, is all I’ll say.
Evan
It’s called valuing the dream. All right, Tom, take us home—final thoughts if you’re able.
No, I think we may have lost him. Really, it’s X. Every time I’m on, there’s something.
Listen, it was great to chat with you guys. I love the perspectives, how much we learn, the different views, and I look forward to having you back in the future. I hope you’ll join us next time.
For X Spaces and Gamma Prime, I’m Evan Su. We’ll see you at our next Spacescast. Bye-bye.
