Ep 10 - May 29, 2024

Topics covered in this week's episode:

• $IBIT surpasses $GBTC for AUM
• Trump’s $ETH address made its first crypto purchase
• SEC ordered to pay $1.8M in damages
• Eight $ETH ETFs approved
• US House passes FIT21 with strong bipartisan support
• Crypto super PAC raises another $25M, $110M to date
• Crypto startup funding hit $2.4B

Creators & Guests

Host

Andres Sandate

Husband, 3x Dad, Latinx, SpecFin, FinTech, Private Credit, ATLalts Pod Host, SEAFA Pres., Ball Coach, Kansas Jayhawk, Raised in Newton, KS, Reside in Smyrna, GA

Host

Robert Swarthout

GP focused on commercial use case cryptocurrencies. #XRPL dUNL validator operator, Founder/CEO at @tetoncryptocap, Co-founded @ShootProof, formerly @yahoo

What is Weekly Crypto Check-In?

Hosts Robert Swarthout and Andres Sandate cover the last week's worth of crypto news, providing insights and opinions on this quickly evolving space from a fund managers perspective.

Robert Swarthout: 00:11

Welcome to another episode of the weekly crypto check-in recorded on May 29, 2024. I'm your host Robert Sworthout. I'm joined by my co host, Andres Zendate. How's it going, Andres?

Andres Sandate: 00:20

Good, Robert. Just kinda getting steamy hot here in Atlanta over the last week. We, had a great Memorial Day weekend, and, it wouldn't be too bad to be out in the Tetons about right now. Well, cooler weather. Yes.

Robert Swarthout: 00:36

I got I would think on my computer here, it's 57 out that way, and it's 80 here in Atlanta with obviously very different humidity. So

Andres Sandate: 00:42

Yeah. It couldn't

Robert Swarthout: 00:42

be much different.

Andres Sandate: 00:44

But it's been a busy week since, our last update.

Robert Swarthout: 00:47

Yeah. We were we're talking right before we started here about how, you know, a lot of times in in the summers of crypto are kind of unless it's a bull market, which can be different, but, usually the summers are quiet, and it is not the case right now. It is fast and fast and heavy news cycle right now, so we probably should just jump right in. In, you know, in the spirit of kinda continuing a theme we basically talked about the entire time, Bitcoin ETFs, this one, was inevitable. You know, the iShares, BlackRock ETF for Bitcoin IBIT surpassed the grayscale GBTC for assets under management, and it did it, I think just at or just under 90 trading days.

Robert Swarthout: 01:30

Not surprising. The fees couldn't be any different on these. There's the investors in the Grayscale one were jumping ship. It's a 1 and a half percent fee versus, 0.2 or 0.21 for, the iShares. So, you know, the graphs are basically mirror options of each other.

Robert Swarthout: 01:47

So

Andres Sandate: 01:48

Yeah. I I wore my red in, solidarity. Yes. Not not not that the performance is dramatically different, but, yes, the Yeah. When it comes to index, products, you know, there there there's a lot of innovation still, but, obviously, people are generally going to the index for something that's easier, something that's lower cost, something that, they can get, you know, probably in this case from even bigger well known asset manager.

Andres Sandate: 02:17

So, yeah, not not terribly surprising news. It's just, you know, hard hard to supplant the marketing, branding Right. Size of a BlackRock. Right.

Robert Swarthout: 02:29

And you know what I mean?

Andres Sandate: 02:30

The product and the fees. Right.

Robert Swarthout: 02:32

And at the end of the day, they're selling the same thing. I mean, there's Yeah. Outside of the fees and maybe the way that they do custody, which most people aren't gonna understand those nuances, they're they're selling exactly the same thing. So fee fees do matter at that point. So

Andres Sandate: 02:45

Yeah. It'll be interesting to see how long some of these other, offerings or products, that are effectively doing the same thing. And And especially as we get into the conversation today, like, as we see more index proliferation, we're going to talk about Ethereum. Like, how many of these shops are gonna be willing to, you know, hang around if they're the 5th or 6th or 7th largest, you know, provider?

Robert Swarthout: 03:09

You know, it it will be interesting. It, again, there there's not one tons of differentiator on the product. Maybe once you get towards further versions of ETFs that have other things like a cash flow component potentially. But right now, it's, pretty pretty boring stuff that they're selling. So Yeah.

Robert Swarthout: 03:27

So talk about selling or versus, I guess, the opposite side of buying. So the kind of random piece of news that I found a little entertaining was the, Trump's wallets that he sold his NFTs out of. He had an n NFT series he sold a year or so ago. I don't I I didn't follow it all that close. But that same Ethereum address, so that same wallet, made its first ever crypto purchase, and he bought, or the wallet, assuming it was him.

Robert Swarthout: 03:53

He bought $500,000 worth of Ethereum, so roughly, 50 big 50 Ethereum, 50 full Ethereum. So it's, I don't know. Interesting. He's been very pro crypto the last, call it, 3 or 4 weeks. Yeah.

Robert Swarthout: 04:09

And he's been anti Bitcoin. He's kinda followed the, Jamie Dimon model of, I'm for it, I'm against it.

Andres Sandate: 04:16

Right. Well, I know. And we're not gonna do politics every week, but we are in the political season. You're in blue, kind of light blue. I'm wearing red.

Andres Sandate: 04:23

We're not making a political statement, but it is interesting that we're talking about, this because, you know, there was such a uproar in congress around the disclosure of some of the, you know, folks in the house and senate's, holdings when it came to public stocks. And I'm really curious because crypto is so transparent and decentralized. I'm really curious, as more and more, of the discussion around legislation makes its way through now the senate. We're gonna talk about the the fit 21 bill, but, like, what is the ownership in, you know, in DC look like on Capitol Hill?

Robert Swarthout: 05:05

Yeah. It will be interesting to see, you know, it's not like likely that we'll find out their actual wallet addresses, so we can't follow it too closely. Sure. Whenever they do their disclosures, there's those big brackets that things fall into. So I certainly know that senator Loomis from Wyoming has, disclosed she owns Bitcoin, and then she talks about the number.

Robert Swarthout: 05:24

I don't remember it offhand, but it's it's a rather small percentage of Congress that has, I think, reported owning any, actual crypto of any kind. So

Andres Sandate: 05:35

Right. And, you know, for a long time, there's been conversation around, well, they shouldn't be able to they being, elected officials shouldn't be able to own single stocks. They should have to divest and own indexes and and, you know, for example, mutual funds. Well, in the case of crypto, like, there's now

Robert Swarthout: 05:52

Right.

Andres Sandate: 05:52

You know, one one, one token indexes. I think that that's gonna evolve over time. But, yeah, it's just gonna be something to watch.

Robert Swarthout: 06:02

Yep. So this

Andres Sandate: 06:05

This has gotta be one of your favorite headlines.

Robert Swarthout: 06:09

You know, I was kind of shocked when I read this. So the 3rd topic here, the SEC was ordered to pay $1,800,000 in damages to Debtbox. Debtbox is the case, that we've referenced a few times that happened last fall where the SEC was trying to prove that they, that they should have these fines and penalties and all this kind of stuff. And the ruling was that for there to be disgorgement, the, people actually had to lose money. Like, if you made money in the process, like, what are we really fighting over here?

Robert Swarthout: 06:42

And, which has turned to help well, Ripple's using that point in their case with the SEC. So it's it's kind of coming back around to the SEC pretty quickly. Yeah. And and what the SEC did in this debt box case is they lied to the judge. Like and they had the ability to come clean.

Robert Swarthout: 06:57

They didn't. They doubled down. We've we've gone over all that. So I I still can't believe that the court did this. I'm happy to see it.

Robert Swarthout: 07:04

Yeah. You know, I saw I think it was Pat Toomey or one of the senators tweeting that, you know, kind of referencing this $1,800,000 damage, that they have to pay that this is this how we're supposed to be spending, taxpayers' dollars? You know, a bit of a jab. He's always jabbing, Gary, but, you know, point is made here, that maybe they Yeah. Certainly went over the line, and also they're getting in trouble, yet again for it.

Robert Swarthout: 07:33

So

Andres Sandate: 07:33

Yeah. My, yeah, I know you followed this particular Debtbox case closely. Does the SEC just pay this fine or and and it's kind of yesterday's headline, or do you think this appeal this appeal process plays out? And

Robert Swarthout: 07:49

I don't know if this is appealable. That's a great question. I'm not an attorney. I don't know if it's a fine because it's truly a fine that the that the court ordered against the SEC. Yeah.

Robert Swarthout: 07:59

Most things are appealable at some level, so maybe.

Andres Sandate: 08:02

Yeah. Maybe the fine isn't. That's interesting. So they're gonna have to cough up a couple $1,000,000 in damages for effectively overreach and lying to the court.

Robert Swarthout: 08:11

Right. So Yeah. I, admittedly, I don't really wanna follow this one anymore. If it pops up, it might be great. But I am ready to move on from these SEC lawsuits in general.

Andres Sandate: 08:22

Well, you don't see these types of headlines often, so there is some accountability out there. Yeah.

Robert Swarthout: 08:26

Absolutely. You know, it's it felt like the judges have been holding the SEC accountable, but this, in some ways, goes even a step further. Actually, you know, monetary damages, and fine. You know, $1,800,000 is nothing to what the SEC typically, is trying to get the other direction. So Yep.

Robert Swarthout: 08:43

We'll see. My and and I maybe it only may maybe some of the fine money is getting paid back to that box for attorney's fees. I don't I don't know. I didn't really dive into the details, but it was, entertaining nonetheless. So Mhmm.

Robert Swarthout: 08:58

So, jumping back on the ETF, bandwagon here. So we recorded last Wednesday, and by Wednesday we we finished recording around 2 o'clock EST. By 5:30 PM, so 3 and a half hours later, the, the SCC had conditionally approved, 8 Ethereum ETFs. So, I mean, we thought it was gonna happen after the the call last week 2 weeks ago, we had thought there was no chance this is happening. This is a big change again, and, you know, again, they're conditionally approved.

Robert Swarthout: 09:30

I think it's, like, a 19 b form was approved. The s ones have not. They've kinda kinda worked through some details. We might see trading starting roughly in 2 weeks, is kind of what I've read, but it's, again, surprising. Yeah.

Andres Sandate: 09:43

Yeah. I I mean, like you said at the very beginning of of, of our check-in, you know, the the summer sometimes in the market can be synonymous with, you know, it's quiet, and, you know, there's there's there's obviously activity when it comes to crypto. It's it's 247. Right? So, yeah, one one, you know, one of the things that I think we have seen a trend over the last 3 to 6 months is there is a lot more movement in DC.

Andres Sandate: 10:16

There's a lot more movement on a regolith on the regulatory front. And particularly when you think about the indexes and these issuers behind the ETFs. And you you've said this for several years. Like, when the institutional machine wakes up and recognizes the opportunity and starts to say, we want to do crypto, we wanna do digital assets, you're gonna start to see things happen.

Robert Swarthout: 10:42

Mhmm.

Andres Sandate: 10:42

And it it now you can look at multiple outlets, both financial press and mainstream press, and see headlines like voters are not crypto voters. You know? And it's like all of a sudden the discussion is is shifted, and I think that these ETFs getting approved, while not a political issue per se, it's part of this broader backdrop narrative that Right. The train has left the station. And if you didn't think that was the case, then Bitcoin ETFs were approved.

Andres Sandate: 11:15

And now we have Ethereum. The bigger question you and I, I think talked about before we went on is, you know, Bitcoin is is an easier pitch to the everyday investor. It's digital gold. Right? Yep.

Andres Sandate: 11:32

The question becomes, if these are approved and start to trade in the next several weeks or month, what is the pitch on Ethereum to the everyday guy or gal that wants to go buy Ethereum? You know, what is that same PR branding message?

Robert Swarthout: 11:48

There there's functioning. I mean, I've heard it's the world's Internet computer. Yeah.

Andres Sandate: 11:53

But App store It

Robert Swarthout: 11:54

still doesn't mean anything to anybody. You know, we we need oh, it can run a dApp. Well, what is a dApp? Like, this turns into a 5 minute conversation. It is not a 30 second elevator pitch that Bitcoin Right.

Robert Swarthout: 12:05

Gets to enjoy. And, you know, obviously, it hasn't been around as long as Bitcoin, but even still, there's there's more people that are working for things that run on Ethereum than there is Bitcoin, and we still don't have a good elevator pitch. Right.

Andres Sandate: 12:18

And there's gonna be no staking with the Ethereum. Is that right? Correct.

Robert Swarthout: 12:22

When that begins trading Well, there is staking with, like, if you hold, like, raw Ethereum, in your own wallet, you can do that. But if you are going to buy it through these ETFs, they're not allowing staking. I don't know if it's they're gonna be allowed to add it later. I think that the maybe the SEC is kind of like saying, oh, we're gonna give you your ETF, but we're not giving it all to you. It does get more complex for sure.

Robert Swarthout: 12:45

And I think that the you know, we talked about it. It could be, like, considered a cash flow component if it's allowed in the future, does give some yield there, but we, we will not get that out of the gate, which Yeah. You know, rather have something than nothing at all. I guess, is maybe my stance on this one.

Andres Sandate: 13:01

Well, I mean, it you know, look, we we we are not in the prediction business, but in the crypto check-in, I think another, another sort of sub headline to these approvals is, you know, Bloomberg's ETF analysts, you know, are are sort of on the beat talking about this stuff on a regular basis. And I think I saw one prediction that, the Bloomberg analyst, Eric Balconis, we need to find out if that's how we pronounce his name, but I think that's I think that's close. But he predicted that there could be between 10 15 percent adoption, in terms of the amount of flows relative relative to the current market cap of the BTC, ETFs. And so currently, you know, as of last week, that was around $13,000,000,000, which if you took the high range of 15% of that, you know, it's it's it's not a it's not a ton of capital. And, and the question is is is this a retail investor, like that early adopter of the Bitcoin ETFs?

Andres Sandate: 14:08

Is it the financial professional that's representing the adviser? Because I think some of these platforms, warehouses, private banks, and others, I don't know that they've even approved Bitcoin, ETFs unless it's reverse inquiry. So now you have another product that could start trading in June or July. I mean, I wonder how quick those firms will be to adopt much less to understand how it works.

Robert Swarthout: 14:33

Right. I mean, they're certainly gonna have to have the marketing department give them a good flyer. Like, so I was just quickly looking up. So, you know, when he said 10 to 15%, you know, it doesn't seem too far off. But if you look at the market caps of those 2, Bitcoin and Ethereum, so Bitcoin is currently at, like, 1.32 trillion and Ethereum is 452,000,000,000.

Robert Swarthout: 14:57

So call it roughly a if it's closer to 20, 25%, I think maybe the higher end for, Ethereum even if it kinda got got that high. So Yeah. It wouldn't surprise me over time if those ratios kind of are more in sync with each other when you're looking at if if you only can hold those 2. Over time, we're gonna have more ETFs and it become more blended, but it's a, interesting world.

Andres Sandate: 15:23

Yeah. I wanna ask you before we go to these last three bullets, on the ETF. You know, you you're in the markets every day, Robert, and I'm curious what your take is on what will be the, what what do you think will be the market's reaction to these, you know, 8 new ETFs being approved? And, I mean, the investor market, what what do you think the interest level will be relative to, I guess, the only other comp would be Bitcoin at this point.

Robert Swarthout: 15:53

Right. You know, if you're comparing it to what happened in January for Bitcoin with that launch in the lead up to it, The I mean, yes, Ethereum's up a little bit since the news last week, but, like, nothing like Bitcoin would have been on that same type news. I think it's gonna be a bit of a sleeper, admittedly. Yeah. You know, kinda going back to what we originally said is, like, what's the what's the sales pitch for these things?

Robert Swarthout: 16:17

Like, yes, you want exposure and you wanna diversify. But outside of and that's what most people would get. Outside of that and you start talking crypto stuff, good luck. Yeah. Yeah.

Andres Sandate: 16:28

So I Yeah. And and it wouldn't be the only index product created by one of these issuers that, you know, does take a while for flows to really start to look more material. I mean, a lot of these ETFs, launch, and they're they're they're very they have a fairly narrow following. And then over time, you know, just take AI. Like, anything AI related right now over the last year or 2 is probably thematically like a pretty popular ETF to get that kind of tactical exposure.

Andres Sandate: 17:02

If you'd asked for an AI ETF 4 or 5 years ago, people might have thought, you know, go to the science fair. Like, we're trying to make money here. So it it it'll be interesting to see what happens. But this this this third this third to the last one, the the fit 21, this is a meaningful update in terms of when you break down the support, it was bipartisan. And now this bill, which effectively how would you summarize it is is, I guess, my first question.

Robert Swarthout: 17:35

So how to summarize what

Andres Sandate: 17:36

The bill. Like, the purpose of the bill. Yeah.

Robert Swarthout: 17:39

It puts market structures in place, for helping define certain keywords that the current securities laws don't define. The the SEC is trying to shoehorn crypto into those old ones is, admittedly, I think, the biggest trouble.

Andres Sandate: 17:52

Does it give the SEC more clarity around what's a security and what isn't then?

Robert Swarthout: 18:00

More power to to I I believe there is some things there, but I think more specifically what it's doing is it's more carving out what crypto could be elsewhere than trying to keep it in the current framework. It I think it's trying to play off of, you know, the the laws that are in place now. It's not trying to create a whole new, like, Yeah. You know, vertical for it. But it's, you know, it's early days.

Robert Swarthout: 18:23

So I did read that, there's some stuff that does need fixed in it. There's some terminology that's maybe some definitions that could be tweaked. So it passed the house. It would go to the senate. If the senate makes those changes, it turns around and has to come back to the house for rebooting.

Andres Sandate: 18:37

Right.

Robert Swarthout: 18:38

And then we go to the the, potentially, the president. Consensus, the conference, is happening right now, and there is a, get which which senator or or I know, some government representative, house rep or a senator is up there. And he was saying how I think it may be Pat Toomey, by the way, but he, had said that, you know, if we kind of go through that process that I described, it is probably going to the president's desk potentially during the lame duck session, assuming there's a new president coming in, or, you know, there's obviously some senate and house seats moving. So it it could take a while. As as quickly as this move, it feels like it's gonna happen next week, but certainly it's not gonna be the case.

Robert Swarthout: 19:21

Yeah. But it's, interesting to kinda see how it's playing out. And, you know, these these are moments that, you know, maybe not this time around, but other times I've gotten to learn kinda how congress works again. Like, you know, the process You're back

Andres Sandate: 19:35

to civics and government classes.

Robert Swarthout: 19:36

Exactly. Yeah. Right. And may maybe you actually care about it this time and learn something.

Andres Sandate: 19:40

So Yeah. What are you suggesting you weren't paying attention?

Robert Swarthout: 19:43

You know, I'm suggesting I don't remember.

Andres Sandate: 19:45

Yeah. It's been a while for both of us. Yeah. So so, you know, it it it it we talked about this last time, but now we have some more numbers around this. And, you know, the the the bullet point, right below the the US House passing fit 21, No shocker.

Andres Sandate: 20:09

There's a crypto super pack, announced they raised another 25,000,000, which brings their total for this particular super pack to a 110,000,000 to date.

Robert Swarthout: 20:20

Yeah. Who do we have to

Andres Sandate: 20:21

thank for that $25,000,000 check?

Robert Swarthout: 20:23

That is a 25,000,000 a second $25,000,000 check from Ripple. Okay. So they, Ripple is, as a company, is doing well. They're a private company. Yeah.

Robert Swarthout: 20:34

But they, you know, Brad Garlinghouse, the CEO's quote is saying, this is not a one time thing, or this was not a one time thing. So I don't know if that means potentially there's more coming later. But the crypto industry as a whole is kinda feeling itself right now.

Andres Sandate: 20:49

Right? I mean,

Robert Swarthout: 20:49

like, the last month and a half, with all this stuff with sub 21 121 and then, like, this fit 21 thing, the ETFs, the Bitcoin. Like, there's some momentum and they're trying to build upon that and, you know, being a political season, the way you're gonna do that is spend some money on

Andres Sandate: 21:06

Spend money. Yeah.

Robert Swarthout: 21:07

Yeah. So it's good. You know, immediately, I'm, happy to see these, you know, companies stepping up that have the capacity to do this because quite honestly, you're not gonna get meaningful dollars out of Joe on the street. It's gonna have to come from the companies and the, super packs are the, you know, the way the current country currently does it. So Yeah.

Robert Swarthout: 21:28

So Is the,

Andres Sandate: 21:30

the

Robert Swarthout: 21:30

name Yeah. So Coinbase was another one that was included.

Andres Sandate: 21:33

There's, 6 or 7 other companies. Bigger ones. Yeah. Yeah. Yeah.

Andres Sandate: 21:37

That makes a lot of sense. And and we know that, like, these super packs now have a lot of, you know, influence. They have the ear of not only the the lobbyists, but also the congressional aids. They can get information in the hands of, lawmakers and at least raise the issue to one where folks are noting it. And when they're going on the campaign trail, they're making sure to insert that talking point or 2 that speaks to the issue.

Andres Sandate: 22:12

Right? And so whether this is a crypto voter or not, you gotta think in these competitive races up and down the ticket. Right. You're gonna start hearing more about crypto and digital assets. And, you know, at some point, I would imagine taxes and other things that that start to play play, play a role as we get closer to November.

Andres Sandate: 22:32

Yep. Anything else on the on the on the political front or on on the legislative front over the last, week that that caught your ear or caught your eye?

Robert Swarthout: 22:42

I don't think anything's coming to mind. Admittedly, there's a lot that's happened. Yeah. I don't know if I hope that every week is this, fruitful. Maybe maybe once we get regulation, then I'll I'll be fine with it going to 0.

Robert Swarthout: 22:53

But right now, maybe they can keep the the steam and keep surprising us in a positive way. It'd be great.

Andres Sandate: 22:58

Well, the fact that you have, you know, a lot of these digital asset and crypto conferences kick off around this time of year. So consensus, as you mentioned, is going on right now. I think, there's another big digital assets conference coming up in Austin in early June. And when you look at who's speaking and we look at who's accepting invites to speak, there's a lot more politicians this year than there were 2 years ago. So there are people that wanna get their message out.

Andres Sandate: 23:27

There are people that wanna be looked at and viewed as pro crypto. And so I think that we've seen that shift taking place, over, you know, over the last 18 months, but but really over the last 6 months. So it's, it's becoming more of a retail asset class as these, ETFs, are making it, you know, click and buy, and people like the easy button as I've always said.

Robert Swarthout: 23:55

Yes. I'm sure. Which maybe brings us to our last, topic here. So crypto start up funding from VCs hit 2,400,000,000. I think that was was that q one or, Yeah.

Robert Swarthout: 24:08

That

Andres Sandate: 24:08

so that's 2,400,000,000 in q one of 2024, which is up according to PitchBook data, up 40% from, q 4 of 2020 3. So, you know, there's not a lot of details about the funds that were raised. Speculation and reporting is that the majority of these, of these funds that were raised of the 24, 25, are going into early stage venture, or what's called crypto VC. And I think you and I might have some theories about that because, you know, we we we spent time with a lot of these bigger asset owners and institutional investors, and it just felt like a lot of them, when we talked to them a couple of years ago, were like, do you also run a crypto VC strategy? Like, do you also invest in projects?

Andres Sandate: 25:01

And I guess part of that is just the notion of kind of like venture being early and maybe their association, they being these investors association that we're in such a early stage of this whole cycle and ecosystem Mhmm. That they wanna make bets and place bets in the project level, which you can argue, maybe it's too early. But the other way to do it would be to, you know, deploy capital into tokens, which are actively traded. So Right. And then there's a whole bunch of stuff in between.

Robert Swarthout: 25:37

Yeah. You know, it's you know, one's not right and the other's wrong at the same I mean, like, the the both can be right, the both can be wrong.

Andres Sandate: 25:44

At the

Robert Swarthout: 25:44

end of the day, like, it's just I think people are more comfortable with the VC. I mean, that's what Yeah. They've run through with it probably their whole career. Yeah. And you start to start seeing the, you know, the way that I might describe Teton from time to time is it's a a PE, style research process, married with the liquidity of something that's actively traded.

Robert Swarthout: 26:05

Yeah. But in projects that might sometimes fit a VC's time horizon, like the early stage VC. So it's it's kind of an hybrid of sorts, but at the end of the day, it is a, it's new, and and sometimes people get uncomfortable with things are new, whether they're good or bad. Yeah. And I, you know, I think that the people will slowly come around, but, you know, investing in picks and shovels is a time tested, strategy to, you know, good returns if you can pick the right markets or look right locations.

Robert Swarthout: 26:32

So

Andres Sandate: 26:33

Yeah. I mean, some of the analysts that when you read about this amount of capital that that's raised because 40% can be, you know, it can be looked at through a couple of different lenses. This is a very small amount of money relative to the broader venture space, which has been through a tough, you know, couple of years. Fundraising has been very difficult overall for early stage venture, and part of that is because valuations are down valuations are down because exits are down. Exits are down because there's less of an m and a market, with the exception of energy, which has been super hot.

Andres Sandate: 27:07

We seem to be seeing tons of activity there in the oil and gas space. But Mhmm. In in terms of venture, let's say, the 2 a half 1000000000, most of that's probably going into early stage venture. Right. And most of that early stage venture are probably folks that are gonna be investing in a lot of the same types of projects.

Andres Sandate: 27:28

So the the AI angle on crypto, the language model angle on crypto, for example, gets talked a lot about. And to your point, I think a lot of LPs, investors are just more familiar with venture. They're more familiar with that and putting it in an allocation, in a portfolio, in a bucket, and the idea of owning something that has volatility, you know, or can swing from a price perspective.

Robert Swarthout: 27:55

Right.

Andres Sandate: 27:56

You know, for for them is they they haven't yet gotten their risk model or their their models overall around that. I equate it to, like, micro cap, small cap stocks versus, like, the mega caps.

Robert Swarthout: 28:09

Right.

Andres Sandate: 28:10

And and so it's just it's gonna be time to me that's gonna, allow investors to get more comfortable with that.

Robert Swarthout: 28:17

Yeah. You know, it's it's been fascinating to me as I think about this VC when it comes to crypto is crypto is a rather volatile market. Right? I mean, that's one of the things it's known for. VCs love to mark things up, but they don't like marking things down.

Robert Swarthout: 28:31

That's right. So it's just kind of like this dichotomy that's happening. Like, is is one representative or the other or not? I don't know. It I'm not invested in any VC style funds that are crypto focused, but I'm sure they like those markups, but they they the, the fund is probably not accurately marked all the time.

Robert Swarthout: 28:50

It would be my guess. So

Andres Sandate: 28:52

Yeah. There's definitely a process all of them need to follow or have to follow. And, you know, yeah, it it begs the question. I would think that so much of this, venture investing at the early stage comes down to, like, some of the same variables, though. Like, who are you backing?

Andres Sandate: 29:10

What's the traction? What's the process? What's the exit? What's the liquidity? If there's gonna be some some kind of, token issuance, etcetera.

Andres Sandate: 29:19

So more to follow, but, I mean, it's just been a really kind of abnormal last few months in terms of the busyness of the space. Mhmm. So you can't run off to the mountains, or the beach or the lake this summer because we've gotta do crypto updates.

Robert Swarthout: 29:34

Yeah. Well, we'll we'll keep at it.

Andres Sandate: 29:36

So Yeah.

Robert Swarthout: 29:37

Yeah. Well, thanks for joining us on this episode of Weekly Crypto Check-in. If you wanna stay updated on future episodes, you can find us in any podcast player by searching Teton Crypto Capital or the Weekly Crypto Check-in. Take care.