Crypto’s Big Test: Bubble Risk or Reserve Asset Reality? | Alisia Painter
Summary
Market Outlook: The Jackson Hole meeting is in focus as Jerome Powell faces pressure to cut interest rates, with Treasury yields near 4.3% and gold trading around $3,350.
Crypto Volatility: Bitcoin's recent spike to $124,000 and subsequent drop to $115,000 highlights the volatility and the impact of profit-taking after reaching all-time highs.
Institutional Adoption: Ethereum ETFs have seen record inflows of $3 billion, indicating growing institutional interest and legitimization of crypto as an asset class.
Government Stance: The US Treasury's decision not to increase Bitcoin holdings contrasts with countries like Brazil and Indonesia considering Bitcoin reserves, reflecting differing views on crypto as a reserve asset.
Financialization of Bitcoin: The trend towards using Bitcoin as a financial technology and collateral asset is gaining momentum, with institutions like Harvard adopting Bitcoin ETFs.
Regulatory Clarity: The Genius Act and other regulatory developments are providing more clarity for stable coins and digital assets, though challenges remain in making them yield-bearing.
Investment Strategy: Investors are advised to focus on self-custody and understanding the trust assumptions of digital assets, with Bitcoin's role evolving beyond a speculative asset to a financial technology.
Transcript
[Music] I'm Jeremy Sappern. Welcome back. Well, this week all eyes are on the Jackson Hole meeting where Jerome Powell is under pressure from President Trump to cut interest rates. Meanwhile, Treasury yields are holding near 4.3% and gold is trading around 3350 as traders continue to wait for direction. And crypto is stealing the big headlines. Bitcoin spiked to about $124,000 before sliding back to 115 is a move that wiped out almost a half a billion dollars in leveraged bets. And Ethereum, we keep hearing about Ethereum. Well, their ETFs just saw a record $3 billion in inflows. So for investors, the question is simple. Are these safe havens or speculative traps? Joining me right now is Alicia Painter. She's a co-founder and CEO of Botnik Labs. Thanks for being here, Alicia. Appreciate your time. Thank you so much for having me. Uh, lots to get into and we know that this can kind of be a volatile market as it goes into summer and as we wait for the Fed. But I mean, let's start with that move. Bitcoin hit that 124, slid back to 115. I think it's trading around 116 now. But it wiped out billions of paper gains. Analysts point to two drivers here, right? I mean, they got the Fed rate expectations and Treasury Secretary Scott Besson saying that the US won't be adding to its crypto holdings. What do you think here, Alicia? I mean, what which one matters the most here? or is it macro policy or is it government credibility? I think it's a combination of both, but I do think the most important factor and something that we see in every cycle is once you hit an all-time high, there's a certain amount of profit taking that, you know, all investors engage in and that's what usually leads to somewhat of a draw down. So, we see that every single time Bitcoin hits an all-time high. So, this was very expected and in fact, there are some traders who also were shorting Bitcoin at the all-time high because they expected this this drawback. So I think that was probably the main factor and then of course with the upcoming expectation of the rate cuts that's obviously going to also positively benefit Bitcoin or at least that's the expectation from the meeting this week. And so I think it was a com a combination of one um investors behaving as usual and taking some profits after achieving an all-time high as well as broader macro movements as well as the expected rate cuts. So I think those are the main drivers we've seen and the really cool thing about Bitcoin is now we've had several cycles. So a lot of this behavior is much more predictable uh every single cycle. So we can expect to see these dynamics continue. Obviously the two major new factors that we're seeing this cycle is one broader governmental legitimization of Bitcoin as an asset class as well as digital assets uh regulatory as well as the influx of institutional capital with the ETF. So I think both of those are contributing to more upswings than we were expecting. Um but it's been very positive for the industry as a whole. Yeah. And I mean you look at the White House and they're talking a lot obviously about crypto within the US in in the in the atmosphere there. I think I mean it's important to say it's still up 25% year to date. So as volatile as it is, it's still been doing quite well. But I mean let's talk about the US Treasury. We saw Scott Bashon sit down with Fox News and he surprised a lot of people saying basically you know we're not going to be purchasing new Bitcoin. we're just going to be using the the coins that we've been holding. I I think they're holding about 15 to$20 billion in seize coins instead. At the same time, Brazil and Indonesia are considering adding Bitcoin reserves. Were you surprised by Bessie's comments or his announcement or do you see Bitcoin becoming, you know, a true sovereign reserve asset, or is it still just kind of an ETF or maybe a corporate story? That's a great question. I think the big headline here is the fact that the US even was somewhat entertaining this concept because the US is still the largest economy in the world. The US dollar is the currency of reserve. And so I think within the Bitcoin community, we weren't necessarily expecting uh the US government to accept it uh or start increasing their Bitcoin reserves because that would be a huge move, right? And it's obviously much more consequential than other countries adopting Bitcoin treasuries. So um obviously Brazil, Indonesia, like El Salvador, Bhutan, a lot of these countries are exploring or have are continuing to expand within Bitcoin, but that has less broader macroeconomic uh global risk or implications compared to the United States. So I think the fact that they're even commenting on this is a huge step. Um, and that's points to, as I mentioned before, the legitimization of Bitcoin and being perceived as this riskoff asset, as you'd alluded to in the in the beginning of the segment. Um, and I think it's going to be really interesting to see what the United States does next. I think the fact that we're even addressing doing something with these Bitcoin reserve assets is a huge step forward in in the positive direction. Um, and it'll be interesting to see um what the US government thinks about Bitcoin's status as a global money. So right now it's clearly established itself as a store of value almost as digital gold. But what we're seeing now within Bitcoin and especially at Botanics is the financialization of Bitcoin because at the end of the day it is an asset and an asset needs to be productive and be put to work. So that is the that is the main momentum that we're seeing and we're excited to lead forward especially at Botanics. Yeah. I mean you talk about I mean if governments aren't actively buying I wonder if it weakens the digital gold narrative a bit. I mean, more curiously, I mean, what's the bigger or not the bigger, but the actual trigger that you think will force sovereigns into buying Bitcoin the way they hold gold? It's a great question. I think in the United States, what's definitely going to cause broader exploration of buying Bitcoin as a reserve asset is going to be greater institutional capital and pressure. So you've already seen the ETFs have been an absolute gamecher in terms of you know being able to adopt Bitcoin accept Bitcoin and it being um a a gradea investment assets for both larger institutions as well as punchin funds endowment funds companies that are buying it for the and adopting a bitcoin treasury. So I think the more institutional capital that comes into the space, the more retail ends up buying it with ETFs, the adoption of Bitcoin within 401ks is going to be huge as well because that is a major savings instrument for most retail. So the more that adoption occurs both at a retail institutional level, that is going to cause that pressure on governments to adopt it as well. of course the the of course in addition to price action I think the more price action uh continues to trend in the way that we're seeing now the more that governments are going to be apt to to adapting it with some guard rails of course and I think that's really important for us to consider um because I think a lot of governments a lot of companies that are thinking about Bitcoin Treasury they also need to be thinking about the economics of the Bitcoin protocol how it works um and and really supporting miners as well because they're a very key part of the eosystem system. Yeah. Yeah. Well said. I mean, institutions are moving fast. Harvard is now in Bitcoin ETFs. Avenue puts put in what $1.3 billion. And of course, Micro Strategy keeps building its treasury. Coinbase just paid nearly $3 billion for DAR Bit. It's the biggest crypto options exchange. Is this the moment Wall Street fully embraces crypto? Yes. It's actually really interesting. I'm I'm a Harvard grad. So when I was doing my MBA at Harvard in 2018, we were discussing Bitcoin and actually I I briefly worked for the Harvard management company which is um the main management company that manages the endowment and I remember talking about Bitcoin at the time and there and they said back in 2018 there was no way they would ever consider it. Fast forward seven years, they're actually adopting it within within the endowment. So it just shows that you know all of these institutional players who were naysayers you know as little as you know 5 to seven years ago they're all changing their tune. Uh JP Morgan even is exploring Bitcoin more actively. All of these large scale all of these institutions all of these banks have accepted that Bitcoin is here to stay and it's largely because of the ETFs right that have really solidified Bitcoin's status as well as you know this in this adoption in other parts of the world. you know, El Salvador has Bitcoin perceived as an official currency. So, I think the more experiments we see both at a local and at a governmental level, um, the more we're going to, you know, feel that pressure and see that adoption within the United States. Um, I think one really interesting thing we're also seeing, right, is, um, the importance of tokenization and Bitcoin tokenization. So, um, one of the main use cases of blockchain and crypto is tokenization, clearing, settlement. in all of these use cases, um, being on chain and putting these on the blockchain is actually better and more efficient. And at Botanics, what we're seeing is a lot of people are excited about doing that on Bitcoin. And so, the more of these real world use cases we're seeing um, in terms of thinking about Bitcoin and crypto, not just as a speculative asset, but as an actual technology, a financial technology, that's when we're going to really see the needle needle moving forward. Um, and along with the financialization of the asset class. So, one thing that we're hearing from every institution, um, anyone who holds Bitcoin is, hey, I have Bitcoin, um, obviously the price going up is great, but what else can I do with it? And the number one thing that they want to do is earn some sort of yield, some interest on their Bitcoin, which is something we're helping enable, as well as using their Bitcoin as collateral asset uh, to borrow other assets or do other things with their Bitcoin without selling it. And so that that opening of the doors to Bitcoin finance is something that we think is really also going to be, you know, moving Bitcoin forward past just a speculative asset and just past a riskoff digital gold asset. It's the the potentialization of Bitcoin as financial technology as well. Okay, we got to unpack that. I mean, we we got to talk about the tokenization. Before we do, just going back to the institutions, I'm curious if there is any risk there. I mean, think about one US company kind of controlling both retail flows and a huge slice of derivatives. Does the concentration threaten stability in what's supposed to be a decentralized market? Absolutely. It's something that we talk about a lot within the Bitcoin community. Yeah. Um the large inflow of institutional capital and if they can if they act in a concerned manner that would have an impact on on the Bitcoin protocol as well as the economics of Bitcoin. So it's something we need to be conscientious of and that is why I really um appreciate the more diligent approach that the US government is taking in terms of thinking about how to treat Bitcoin because it cannot be done very flippantly. And so we need to think through the implications of of any regulation that we put forward when it comes to Bitcoin as well as any largecale moves by governmental actors or institutions within Bitcoin. Um we're already seeing consolidation within the Bitcoin space. you know, some of the larger ETF issuers um strategy, they hold vast amounts of Bitcoin. Um, and that concentration risk could prove to be some form of a systemic global risk. And that's why actually one of the things we're very passionate about at Botanics is the importance of self-s sovereignty and self-custody when handling Bitcoin. Um, so not your keys, not your coins is I think the more technical term for it. But very important for everyday everyday investors or everyday retail that are holding Bitcoin to think about how they can control their Bitcoin themselves and and do it in the safest and most secure way possible. Yeah. I mean, the summer has brought a lot of clarity if you think about it. I mean, we got Ripple's court battle ended with XRP's public sales not classed as security. Stable coins are now treated as cash equivalents under this Genius Act. I I feel like we're getting more clarity, but there is that kind of under the new law, those stable coins can't really pay a new yield. Doesn't that make them less attractive, especially when tokenized treasuries are kind of taking off? Absolutely. I think um the Genius Act is the first step of trying to understand stable coins and treat them um in a regulatory compliant manner. I will say as you know, someone who's based in the United States, it's never been a better time to build in crypto. what we've been asking for from from the government and from industry actors for the past decade is just more regulatory clarity and more guidelines and we're finally getting that. So yes, stable coins and the Genius Act are the first step right towards the the eventual understanding of stable coins and yes they are not currently able to be yield bearing but I think the more we understand the space the more the more pertinent regulation will come about which will enable them to eventually be yield bearing or become more um interoperable uh instruments for us to work with within digital assets. Um, and that's why all of these other instruments like tokenized treasuries, tokenized money market funds, I think they're they're the most popular are actually going to be much more interesting and attractive and act and compared to stable coins, uh, being able to earn yield on your Bitcoin is obviously the biggest thing that we're seeing um, since we're a Bitcoin company. So the ability to hold your Bitcoin, earn some sort of passive yield in Bitcoin terms is the number one use case we're seeing because stable coins are great because they have that peg stability mechanism, but you can also why would you hold stable coins when you can also when you can hold Bitcoin which is an appreciating asset along with some form of interest or yield. So that's what we're seeing um at Botanics. Okay. I got to ask you, I mean you talked to a lot of clients over at Botanics too and and you know Trump's executive order now allows crypto in 401ks. trillions in retirement savings. But realistically, what's the safe allocation here? I mean, is it 1%? Is it five? And and how do you prevent retirement plans from becoming, you know, another leverage bubble? That's a great question. Um, so in terms of what is that correct allocation? Um, it's one of those things where it really depends on the individual risk profile and what they are considered of. I'm obviously a Bitcoiner and a Bitcoin maxi, so for me, I would probably go on the upper end of that spectrum. But I think it's very important for these retirement funds, these 401ks to provide that guidance and be and really illustrate that the fact that this is still a speculative asset, though it is very very riskoff compared to other speculative assets. And so it's really important for these 401ks to communicate the risks of that. But I still think it's going to be I think the the acceptance of Bitcoin and crypto assets within 401ks, it's going to be the next ETF moment. Um, for a lot of folks, the 401ks are, as I mentioned, their primary savings instrument. And now that you're able to participate within Bitcoin, within other crypto assets through your 401k, I think that's going to be the next level of unlock for retail adoption. Um, and retail savings as well. And I think now that people are thinking about Bitcoin and crypto assets, not just as a trading asset, but as a savings asset, that's going to be really, really pivotal. Um but in terms of allocation, it's it's really contingent upon both individual risk profile as well as the guidance given by the actual 401ks. Yeah. Yeah. Let's let's zoom out before I let you go here. Just talk a little bit about the macro. Obviously, Jackson Hole is in the spotlight. Markets want a September rate cut, but inflation data is keeping the Fed quite cautious. Does we talked a little bit about this Alicia, but I mean does does Bitcoin trade more like gold in this environment kind of gaining on easing or is it more like a a high beta risk asset that kind of sells off when inflation runs hot proving maybe that it's still hostage to Fed policy? Yeah. So, we've actually done some research at Botanics around this and it's really interesting if you compare Bitcoin to gold or to the NASDAQ. It kind of trades somewhere in the middle which highlights its status as well as a relatively riskoff asset but with the potential bit to become a financial technology. And I think that's the best way to think of Bitcoin. It's not just digital gold. Um, and in fact, that's actually not why Bitcoin was created. It was meant to become a full global money that has properties that are specific to money and not to gold. And you can see that it is obviously has less physicality, less tangibility compared to gold um inherently. And so that is why we see it closer to financial technology. So we see it currently it's trading like gold because it's closer to that store of value, but eventually we expect it to trade more like something like a NASDAQ. So that's roughly how we're seeing Bitcoin be positioned relative to other assets. But it has definitely proved itself to be one of the best performing riskoff assets. And in fact, what's really interesting for someone who is working in Bitcoin and speaks with a lot of Bitcoin companies as well as institutional capital and retail capital, um it's really interesting to see the transformation of Bitcoin over the last 6 months. Um and in in terms of that broad-based acceptance, uh so people who were never considering Bitcoin, now that we're firmly in the 100K plus range, you cannot ignore it and you must think about it within the context of a balanced portfolio. Um, and so that's something that is going to be really exciting and it's going to be exciting to see Bitcoin grow more and more and once we once the financialization kicks in and you see that an entire financial system being built on Bitcoin and obviously that's our vision at Botanics is is building that full financial system on Bitcoin. I think that's going to be really compelling because what you're going to see and that's what Botanics is helping enable they're going to be whole companies being built on Bitcoin. So using Bitcoin as the base asset and then using as collateral to trade, to lend, to borrow with it. And once you're once you see that next wave of Bitcoin companies that are building new applications that are launching new equities on Bitcoin, tokenized on Bitcoin, I think that's going to be when you see the second and third order effects of Bitcoin as not just a store of value, but as a financial technology. Yeah, it's moving fast. And of course, you know, we have a lot of gold bugs that watch this show. Do you see a future where you know gold bugs and bitcoin advocates kind of align treating them as complimentary hedges or are they ultimately competitors you know I mean what are your thoughts it's really interesting uh from what I've perceived the two are quite similar and there's there's the ven diagram between gold bugs and bitcoiners is is is quite uh overlapping um so bitcoiners in general tend to be more aware or cognizant of macro movements um and macro understanding and volatility and they tend to be gold bugs as well. So actually one of the most requested assets within the botanics network is tokenized gold. So a lot of bitcoiners who have large bitcoin holdings they also tend to al tend to hold gold significantly. So, we see quite a lot of overlap between these two. And I think it's because Bitcoiners and folks who hold Bitcoin are in general very aware of, you know, portfolio diversification, broad-based macro movements, and so that's why we tend to see that overlap as well. Yeah, it's interesting. I mean, I talked to some people, Tether's $100 million tokenized gold projects in Dubai and Singapore. They kind of tie that blockchain to physical bullion. Does tokenization make gold more accessible to these younger investors who might otherwise only buy Bitcoin or is it just kind of repackaging an old asset into a new rapper? You know, I think the the main purpose of tokenization is that it's the democratization of an asset class for people who would not be able to access it and the fractionalization to enable greater accessibility. So, one of the things when I first got into Bitcoin, I was I was living in Brazil and there was a lack of access of to you know the S&P 500 to these top performing assets within all of these other countries of the world. That's why we see such a large demand for stable coins for example in emerging markets is because they want exposure and access to the US dollar. So, I think that is the main use case of tokenization and that is why tokeniz tokenized gold is very compelling. That's why tokenized equities are so compelling. It's because it enables that democratization as well as a fractionalization of the asset class for people who don't have access to it. Um, and I think that's the beauty of building a global and borderless and permissionless financial system is is is that open access to everyone, right? Yeah. And I mean they're they are coming together, believe it or not. I mean, as we wrap up, a lot of investors in our audience are always weighing, you know, gold on one side, Bitcoin, tokenized assets on the other. If you had to leave them with one guiding principle for the next say 5 years, whether it's about trust, maybe custody or even navigating central bank policy at this point, what's the single most important takeaway they should be keeping in mind? I would say the the main thing to keep in mind as you navigate digital assets specifically is to do do your own research and understand the trust assumptions involved in a specific technology and a specific protocol and really take control of your investment. So I I I mentioned this previous previously, but the importance of self-custody, the importance of self- sovereignty, um owning your keys and I think that's the most important thing. I will I would advocate to anyone who's waiting into the space. Um we have seen the you know the rise and fall of centralized entities maybe not doing the best job of this in the past. Um, I do think that the global systemic risk has reduced with the professionalization of digital assets as a whole, but it is still very important for the everyday investor to really be cognizant of the risks involved with digital assets, take control of their keys and do their research and um really doing taking the time to understand how to put these assets to work because buying Bitcoin is only the first step. There's also a whole world of things you can do with Bitcoin as an asset. So doing more exploration there I think is is where the next wave of alpha comes from. All right, Alicia Painter, co-founder and CEO of Batonics Labs joining us right now from New York. Thank you for this uh it was this was great. It was fascinating. Thanks again. Thanks again for having me. Appreciate your time. We'll see you soon. Okay, Bitcoin remains near 116,000 after last week's record high. Ethereum ETFs are seeing record inflows and the gold market is steady above $3,300 an ounce as we continue to weigh guidance from the Federal Reserve in Jackson Hole. And we'll continue to track how these developments in moves in gold, crypto, and policy will shape the future in investment. Stay tuned right here at Kiko News for the latest. I'm Jeremy Saffron. We'll see you next time. [Music] Heat. Heat. [Music]
Crypto’s Big Test: Bubble Risk or Reserve Asset Reality? | Alisia Painter
Summary
Transcript
[Music] I'm Jeremy Sappern. Welcome back. Well, this week all eyes are on the Jackson Hole meeting where Jerome Powell is under pressure from President Trump to cut interest rates. Meanwhile, Treasury yields are holding near 4.3% and gold is trading around 3350 as traders continue to wait for direction. And crypto is stealing the big headlines. Bitcoin spiked to about $124,000 before sliding back to 115 is a move that wiped out almost a half a billion dollars in leveraged bets. And Ethereum, we keep hearing about Ethereum. Well, their ETFs just saw a record $3 billion in inflows. So for investors, the question is simple. Are these safe havens or speculative traps? Joining me right now is Alicia Painter. She's a co-founder and CEO of Botnik Labs. Thanks for being here, Alicia. Appreciate your time. Thank you so much for having me. Uh, lots to get into and we know that this can kind of be a volatile market as it goes into summer and as we wait for the Fed. But I mean, let's start with that move. Bitcoin hit that 124, slid back to 115. I think it's trading around 116 now. But it wiped out billions of paper gains. Analysts point to two drivers here, right? I mean, they got the Fed rate expectations and Treasury Secretary Scott Besson saying that the US won't be adding to its crypto holdings. What do you think here, Alicia? I mean, what which one matters the most here? or is it macro policy or is it government credibility? I think it's a combination of both, but I do think the most important factor and something that we see in every cycle is once you hit an all-time high, there's a certain amount of profit taking that, you know, all investors engage in and that's what usually leads to somewhat of a draw down. So, we see that every single time Bitcoin hits an all-time high. So, this was very expected and in fact, there are some traders who also were shorting Bitcoin at the all-time high because they expected this this drawback. So I think that was probably the main factor and then of course with the upcoming expectation of the rate cuts that's obviously going to also positively benefit Bitcoin or at least that's the expectation from the meeting this week. And so I think it was a com a combination of one um investors behaving as usual and taking some profits after achieving an all-time high as well as broader macro movements as well as the expected rate cuts. So I think those are the main drivers we've seen and the really cool thing about Bitcoin is now we've had several cycles. So a lot of this behavior is much more predictable uh every single cycle. So we can expect to see these dynamics continue. Obviously the two major new factors that we're seeing this cycle is one broader governmental legitimization of Bitcoin as an asset class as well as digital assets uh regulatory as well as the influx of institutional capital with the ETF. So I think both of those are contributing to more upswings than we were expecting. Um but it's been very positive for the industry as a whole. Yeah. And I mean you look at the White House and they're talking a lot obviously about crypto within the US in in the in the atmosphere there. I think I mean it's important to say it's still up 25% year to date. So as volatile as it is, it's still been doing quite well. But I mean let's talk about the US Treasury. We saw Scott Bashon sit down with Fox News and he surprised a lot of people saying basically you know we're not going to be purchasing new Bitcoin. we're just going to be using the the coins that we've been holding. I I think they're holding about 15 to$20 billion in seize coins instead. At the same time, Brazil and Indonesia are considering adding Bitcoin reserves. Were you surprised by Bessie's comments or his announcement or do you see Bitcoin becoming, you know, a true sovereign reserve asset, or is it still just kind of an ETF or maybe a corporate story? That's a great question. I think the big headline here is the fact that the US even was somewhat entertaining this concept because the US is still the largest economy in the world. The US dollar is the currency of reserve. And so I think within the Bitcoin community, we weren't necessarily expecting uh the US government to accept it uh or start increasing their Bitcoin reserves because that would be a huge move, right? And it's obviously much more consequential than other countries adopting Bitcoin treasuries. So um obviously Brazil, Indonesia, like El Salvador, Bhutan, a lot of these countries are exploring or have are continuing to expand within Bitcoin, but that has less broader macroeconomic uh global risk or implications compared to the United States. So I think the fact that they're even commenting on this is a huge step. Um, and that's points to, as I mentioned before, the legitimization of Bitcoin and being perceived as this riskoff asset, as you'd alluded to in the in the beginning of the segment. Um, and I think it's going to be really interesting to see what the United States does next. I think the fact that we're even addressing doing something with these Bitcoin reserve assets is a huge step forward in in the positive direction. Um, and it'll be interesting to see um what the US government thinks about Bitcoin's status as a global money. So right now it's clearly established itself as a store of value almost as digital gold. But what we're seeing now within Bitcoin and especially at Botanics is the financialization of Bitcoin because at the end of the day it is an asset and an asset needs to be productive and be put to work. So that is the that is the main momentum that we're seeing and we're excited to lead forward especially at Botanics. Yeah. I mean you talk about I mean if governments aren't actively buying I wonder if it weakens the digital gold narrative a bit. I mean, more curiously, I mean, what's the bigger or not the bigger, but the actual trigger that you think will force sovereigns into buying Bitcoin the way they hold gold? It's a great question. I think in the United States, what's definitely going to cause broader exploration of buying Bitcoin as a reserve asset is going to be greater institutional capital and pressure. So you've already seen the ETFs have been an absolute gamecher in terms of you know being able to adopt Bitcoin accept Bitcoin and it being um a a gradea investment assets for both larger institutions as well as punchin funds endowment funds companies that are buying it for the and adopting a bitcoin treasury. So I think the more institutional capital that comes into the space, the more retail ends up buying it with ETFs, the adoption of Bitcoin within 401ks is going to be huge as well because that is a major savings instrument for most retail. So the more that adoption occurs both at a retail institutional level, that is going to cause that pressure on governments to adopt it as well. of course the the of course in addition to price action I think the more price action uh continues to trend in the way that we're seeing now the more that governments are going to be apt to to adapting it with some guard rails of course and I think that's really important for us to consider um because I think a lot of governments a lot of companies that are thinking about Bitcoin Treasury they also need to be thinking about the economics of the Bitcoin protocol how it works um and and really supporting miners as well because they're a very key part of the eosystem system. Yeah. Yeah. Well said. I mean, institutions are moving fast. Harvard is now in Bitcoin ETFs. Avenue puts put in what $1.3 billion. And of course, Micro Strategy keeps building its treasury. Coinbase just paid nearly $3 billion for DAR Bit. It's the biggest crypto options exchange. Is this the moment Wall Street fully embraces crypto? Yes. It's actually really interesting. I'm I'm a Harvard grad. So when I was doing my MBA at Harvard in 2018, we were discussing Bitcoin and actually I I briefly worked for the Harvard management company which is um the main management company that manages the endowment and I remember talking about Bitcoin at the time and there and they said back in 2018 there was no way they would ever consider it. Fast forward seven years, they're actually adopting it within within the endowment. So it just shows that you know all of these institutional players who were naysayers you know as little as you know 5 to seven years ago they're all changing their tune. Uh JP Morgan even is exploring Bitcoin more actively. All of these large scale all of these institutions all of these banks have accepted that Bitcoin is here to stay and it's largely because of the ETFs right that have really solidified Bitcoin's status as well as you know this in this adoption in other parts of the world. you know, El Salvador has Bitcoin perceived as an official currency. So, I think the more experiments we see both at a local and at a governmental level, um, the more we're going to, you know, feel that pressure and see that adoption within the United States. Um, I think one really interesting thing we're also seeing, right, is, um, the importance of tokenization and Bitcoin tokenization. So, um, one of the main use cases of blockchain and crypto is tokenization, clearing, settlement. in all of these use cases, um, being on chain and putting these on the blockchain is actually better and more efficient. And at Botanics, what we're seeing is a lot of people are excited about doing that on Bitcoin. And so, the more of these real world use cases we're seeing um, in terms of thinking about Bitcoin and crypto, not just as a speculative asset, but as an actual technology, a financial technology, that's when we're going to really see the needle needle moving forward. Um, and along with the financialization of the asset class. So, one thing that we're hearing from every institution, um, anyone who holds Bitcoin is, hey, I have Bitcoin, um, obviously the price going up is great, but what else can I do with it? And the number one thing that they want to do is earn some sort of yield, some interest on their Bitcoin, which is something we're helping enable, as well as using their Bitcoin as collateral asset uh, to borrow other assets or do other things with their Bitcoin without selling it. And so that that opening of the doors to Bitcoin finance is something that we think is really also going to be, you know, moving Bitcoin forward past just a speculative asset and just past a riskoff digital gold asset. It's the the potentialization of Bitcoin as financial technology as well. Okay, we got to unpack that. I mean, we we got to talk about the tokenization. Before we do, just going back to the institutions, I'm curious if there is any risk there. I mean, think about one US company kind of controlling both retail flows and a huge slice of derivatives. Does the concentration threaten stability in what's supposed to be a decentralized market? Absolutely. It's something that we talk about a lot within the Bitcoin community. Yeah. Um the large inflow of institutional capital and if they can if they act in a concerned manner that would have an impact on on the Bitcoin protocol as well as the economics of Bitcoin. So it's something we need to be conscientious of and that is why I really um appreciate the more diligent approach that the US government is taking in terms of thinking about how to treat Bitcoin because it cannot be done very flippantly. And so we need to think through the implications of of any regulation that we put forward when it comes to Bitcoin as well as any largecale moves by governmental actors or institutions within Bitcoin. Um we're already seeing consolidation within the Bitcoin space. you know, some of the larger ETF issuers um strategy, they hold vast amounts of Bitcoin. Um, and that concentration risk could prove to be some form of a systemic global risk. And that's why actually one of the things we're very passionate about at Botanics is the importance of self-s sovereignty and self-custody when handling Bitcoin. Um, so not your keys, not your coins is I think the more technical term for it. But very important for everyday everyday investors or everyday retail that are holding Bitcoin to think about how they can control their Bitcoin themselves and and do it in the safest and most secure way possible. Yeah. I mean, the summer has brought a lot of clarity if you think about it. I mean, we got Ripple's court battle ended with XRP's public sales not classed as security. Stable coins are now treated as cash equivalents under this Genius Act. I I feel like we're getting more clarity, but there is that kind of under the new law, those stable coins can't really pay a new yield. Doesn't that make them less attractive, especially when tokenized treasuries are kind of taking off? Absolutely. I think um the Genius Act is the first step of trying to understand stable coins and treat them um in a regulatory compliant manner. I will say as you know, someone who's based in the United States, it's never been a better time to build in crypto. what we've been asking for from from the government and from industry actors for the past decade is just more regulatory clarity and more guidelines and we're finally getting that. So yes, stable coins and the Genius Act are the first step right towards the the eventual understanding of stable coins and yes they are not currently able to be yield bearing but I think the more we understand the space the more the more pertinent regulation will come about which will enable them to eventually be yield bearing or become more um interoperable uh instruments for us to work with within digital assets. Um, and that's why all of these other instruments like tokenized treasuries, tokenized money market funds, I think they're they're the most popular are actually going to be much more interesting and attractive and act and compared to stable coins, uh, being able to earn yield on your Bitcoin is obviously the biggest thing that we're seeing um, since we're a Bitcoin company. So the ability to hold your Bitcoin, earn some sort of passive yield in Bitcoin terms is the number one use case we're seeing because stable coins are great because they have that peg stability mechanism, but you can also why would you hold stable coins when you can also when you can hold Bitcoin which is an appreciating asset along with some form of interest or yield. So that's what we're seeing um at Botanics. Okay. I got to ask you, I mean you talked to a lot of clients over at Botanics too and and you know Trump's executive order now allows crypto in 401ks. trillions in retirement savings. But realistically, what's the safe allocation here? I mean, is it 1%? Is it five? And and how do you prevent retirement plans from becoming, you know, another leverage bubble? That's a great question. Um, so in terms of what is that correct allocation? Um, it's one of those things where it really depends on the individual risk profile and what they are considered of. I'm obviously a Bitcoiner and a Bitcoin maxi, so for me, I would probably go on the upper end of that spectrum. But I think it's very important for these retirement funds, these 401ks to provide that guidance and be and really illustrate that the fact that this is still a speculative asset, though it is very very riskoff compared to other speculative assets. And so it's really important for these 401ks to communicate the risks of that. But I still think it's going to be I think the the acceptance of Bitcoin and crypto assets within 401ks, it's going to be the next ETF moment. Um, for a lot of folks, the 401ks are, as I mentioned, their primary savings instrument. And now that you're able to participate within Bitcoin, within other crypto assets through your 401k, I think that's going to be the next level of unlock for retail adoption. Um, and retail savings as well. And I think now that people are thinking about Bitcoin and crypto assets, not just as a trading asset, but as a savings asset, that's going to be really, really pivotal. Um but in terms of allocation, it's it's really contingent upon both individual risk profile as well as the guidance given by the actual 401ks. Yeah. Yeah. Let's let's zoom out before I let you go here. Just talk a little bit about the macro. Obviously, Jackson Hole is in the spotlight. Markets want a September rate cut, but inflation data is keeping the Fed quite cautious. Does we talked a little bit about this Alicia, but I mean does does Bitcoin trade more like gold in this environment kind of gaining on easing or is it more like a a high beta risk asset that kind of sells off when inflation runs hot proving maybe that it's still hostage to Fed policy? Yeah. So, we've actually done some research at Botanics around this and it's really interesting if you compare Bitcoin to gold or to the NASDAQ. It kind of trades somewhere in the middle which highlights its status as well as a relatively riskoff asset but with the potential bit to become a financial technology. And I think that's the best way to think of Bitcoin. It's not just digital gold. Um, and in fact, that's actually not why Bitcoin was created. It was meant to become a full global money that has properties that are specific to money and not to gold. And you can see that it is obviously has less physicality, less tangibility compared to gold um inherently. And so that is why we see it closer to financial technology. So we see it currently it's trading like gold because it's closer to that store of value, but eventually we expect it to trade more like something like a NASDAQ. So that's roughly how we're seeing Bitcoin be positioned relative to other assets. But it has definitely proved itself to be one of the best performing riskoff assets. And in fact, what's really interesting for someone who is working in Bitcoin and speaks with a lot of Bitcoin companies as well as institutional capital and retail capital, um it's really interesting to see the transformation of Bitcoin over the last 6 months. Um and in in terms of that broad-based acceptance, uh so people who were never considering Bitcoin, now that we're firmly in the 100K plus range, you cannot ignore it and you must think about it within the context of a balanced portfolio. Um, and so that's something that is going to be really exciting and it's going to be exciting to see Bitcoin grow more and more and once we once the financialization kicks in and you see that an entire financial system being built on Bitcoin and obviously that's our vision at Botanics is is building that full financial system on Bitcoin. I think that's going to be really compelling because what you're going to see and that's what Botanics is helping enable they're going to be whole companies being built on Bitcoin. So using Bitcoin as the base asset and then using as collateral to trade, to lend, to borrow with it. And once you're once you see that next wave of Bitcoin companies that are building new applications that are launching new equities on Bitcoin, tokenized on Bitcoin, I think that's going to be when you see the second and third order effects of Bitcoin as not just a store of value, but as a financial technology. Yeah, it's moving fast. And of course, you know, we have a lot of gold bugs that watch this show. Do you see a future where you know gold bugs and bitcoin advocates kind of align treating them as complimentary hedges or are they ultimately competitors you know I mean what are your thoughts it's really interesting uh from what I've perceived the two are quite similar and there's there's the ven diagram between gold bugs and bitcoiners is is is quite uh overlapping um so bitcoiners in general tend to be more aware or cognizant of macro movements um and macro understanding and volatility and they tend to be gold bugs as well. So actually one of the most requested assets within the botanics network is tokenized gold. So a lot of bitcoiners who have large bitcoin holdings they also tend to al tend to hold gold significantly. So, we see quite a lot of overlap between these two. And I think it's because Bitcoiners and folks who hold Bitcoin are in general very aware of, you know, portfolio diversification, broad-based macro movements, and so that's why we tend to see that overlap as well. Yeah, it's interesting. I mean, I talked to some people, Tether's $100 million tokenized gold projects in Dubai and Singapore. They kind of tie that blockchain to physical bullion. Does tokenization make gold more accessible to these younger investors who might otherwise only buy Bitcoin or is it just kind of repackaging an old asset into a new rapper? You know, I think the the main purpose of tokenization is that it's the democratization of an asset class for people who would not be able to access it and the fractionalization to enable greater accessibility. So, one of the things when I first got into Bitcoin, I was I was living in Brazil and there was a lack of access of to you know the S&P 500 to these top performing assets within all of these other countries of the world. That's why we see such a large demand for stable coins for example in emerging markets is because they want exposure and access to the US dollar. So, I think that is the main use case of tokenization and that is why tokeniz tokenized gold is very compelling. That's why tokenized equities are so compelling. It's because it enables that democratization as well as a fractionalization of the asset class for people who don't have access to it. Um, and I think that's the beauty of building a global and borderless and permissionless financial system is is is that open access to everyone, right? Yeah. And I mean they're they are coming together, believe it or not. I mean, as we wrap up, a lot of investors in our audience are always weighing, you know, gold on one side, Bitcoin, tokenized assets on the other. If you had to leave them with one guiding principle for the next say 5 years, whether it's about trust, maybe custody or even navigating central bank policy at this point, what's the single most important takeaway they should be keeping in mind? I would say the the main thing to keep in mind as you navigate digital assets specifically is to do do your own research and understand the trust assumptions involved in a specific technology and a specific protocol and really take control of your investment. So I I I mentioned this previous previously, but the importance of self-custody, the importance of self- sovereignty, um owning your keys and I think that's the most important thing. I will I would advocate to anyone who's waiting into the space. Um we have seen the you know the rise and fall of centralized entities maybe not doing the best job of this in the past. Um, I do think that the global systemic risk has reduced with the professionalization of digital assets as a whole, but it is still very important for the everyday investor to really be cognizant of the risks involved with digital assets, take control of their keys and do their research and um really doing taking the time to understand how to put these assets to work because buying Bitcoin is only the first step. There's also a whole world of things you can do with Bitcoin as an asset. So doing more exploration there I think is is where the next wave of alpha comes from. All right, Alicia Painter, co-founder and CEO of Batonics Labs joining us right now from New York. Thank you for this uh it was this was great. It was fascinating. Thanks again. Thanks again for having me. Appreciate your time. We'll see you soon. Okay, Bitcoin remains near 116,000 after last week's record high. Ethereum ETFs are seeing record inflows and the gold market is steady above $3,300 an ounce as we continue to weigh guidance from the Federal Reserve in Jackson Hole. And we'll continue to track how these developments in moves in gold, crypto, and policy will shape the future in investment. Stay tuned right here at Kiko News for the latest. I'm Jeremy Saffron. We'll see you next time. [Music] Heat. Heat. [Music]