TRANSCRIPT

David Hoffman:

[0:04] It is the first week of october and the bearish market structure broke the weekly bitcoin candle and in addition to that the monthly bitcoin candle both closed above the previous may high i think the big question for the entire market to answer is that is

David Hoffman:

[0:21] this a green light for uptober ryan do you remember uptober last year.

Ryan Sean Adams:

[0:25] Oh my god you said it you cursed us now we're all doomed.

David Hoffman:

[0:29] You and I were very excited for Uptober last year, and the first week of Uptober last year was like a little bit green and we were kind of excited.

Ryan Sean Adams:

[0:37] Yeah, and then we said Uptober too many times and we cursed it, and the rest of the month sucked.

David Hoffman:

[0:42] It became down-tober.

Ryan Sean Adams:

[0:43] Yeah, it was bear market tober.

David Hoffman:

[0:44] It was bear market tober. But that was last October. That was last October. We still have Uptober possibly on the menu for this month.

Ryan Sean Adams:

[0:52] Well, I think a question to be answered is what's Macro doing, and could that disrupt our, I'm not going to say it, our October? Because there's a little bit of a paradox going on in markets.

Ryan Sean Adams:

[1:03] Inflation came in kind of cool, but the 10-year yields are going sky high and they're not stopping. Ben Hunt said this week, something in the financial world is going to break when referring to these yields. We'll talk about that. Also, David, you went to the Hood Summit. That was in Houston, Texas. I want to know why you went, what Robinhood is shipping. I'll find out all about that because I saw a lot of announcements coming out, but you were on the ground. I want to get your impressions on that as well.

David Hoffman:

[1:30] Also, there was a $400 million BitGet hack. We had an exchange hack on Friday of last week. And also that has turned into a conversation around near intense and the permissionless nature of that system and whether crypto wants that or not. Also, New York has sued Polymarket. A federal court has ruled that states can regulate Calci. And it seems like we're all taking this to the Supreme Court is just looking more and more inevitable these days. So we're going to cover all of this and

David Hoffman:

[1:56] more. But first, we're starting with the market once again. The Bitcoin weekly candle closed above the May high of this year. So the weekly candle closed was the highest Bitcoin price that we've had since like early January of this year. That is also true for the October monthly candle as well.

Ryan Sean Adams:

[2:16] The September you mean? The September. Don't get out of yourself.

David Hoffman:

[2:18] September, excuse me. September. We are now in October. Thank you. Thank you. If you are a trader, if you do TA, the importance of weekly and monthly candles closes. That's just what is going to be on the chart looking forward. And had we dipped below the May high, you would have seen a lower high. But instead, we got a higher high for the year. And so the idea here is that the bearish market structure that we previously had has broken, giving us potentially a green light, a runway for more bullishness in the remaining three weeks of this month. Yeah.

Ryan Sean Adams:

[2:55] I don't know what your quant is saying, David, but my quant, Michael Nadeau, has also signed off on what you just said. Yes, nice. He has said we are in the early bull and we got the confirmation this week because we got a second weekly close, what you just said, above the 50-week moving average, which is 76.8K. And we got a close above that 84.5K. So the last objection people had, which was like, are you sure? Is this sustained? I mean, the chart is rejecting that. And if this chart doesn't hold, not to say we couldn't go down, we may still go down. But if this overall structure, the structure that you said has broken now in an upward direction, broken the back of the bear market, if that doesn't hold after these monthly averages are locked in, then it will be the first time ever it hasn't hold it. So that feels like a good foundation from a crypto market structure to just say we are in the early bull phase.

David Hoffman:

[3:59] Speaking of good foundations, I do kind of enjoy, I don't really enjoy it because it's financially painful, but nonetheless, we are seeing some weakness in some alts for the first time. Lit is down 30% from the highs.

Ryan Sean Adams:

[4:11] Wait, wait, what are you enjoying about this? The buying opportunity? Are you getting like that?

David Hoffman:

[4:15] No, I'm fully allocated. I got no cash. But let's, it's just like, this is.

Ryan Sean Adams:

[4:21] You enjoy the pain of markets, right? I enjoy the pain.

David Hoffman:

[4:23] I'm a little bit of a masochist. You know, my financial era was born by buying like $1,000 ETH in 2017 and having that go to $80.

Ryan Sean Adams:

[4:32] And still believing.

David Hoffman:

[4:34] And still believing and then making that all back in 2020, 2021. And so it's just important that we just get a breather. Prices go down. There's some pain in the market for that to not be too frothy. We don't want to have a blow off top too soon. And things had gotten really frothy in like those five assets. Like Zcash, for example, down 20%, Morpho down 17%, Uni down 17%, while all of these tokens had painted between like 50% and 300% gains in the last like two or three months. Kind of in the same way that like this Bitcoin bear market, if we are indeed at the very beginnings of another four-year cycle, there's a bull market ahead of us, that was the easiest bear market of all time. If this is the only dip that we get, it's going to be one of the easiest dips in altcoins in the last like three months. I could see more pain being on the table. It feels about right. But also at the same time, there is just a new pattern happening in the crypto market right now. And so I think this is kind of something to pay attention to is like how how volatile are we to the downside these days? Because so far, Bitcoin is saying not not that volatile to the downside.

Ryan Sean Adams:

[5:39] Well, this is like just probably some mean reversion here, right? Because alt, as you said, had been on a tear. Do you ever look at the Glassnode altcoin season index? Look at this. We got into almost like full altcoin season zone and we're taking a spin down from that. The last time we got here was like way last summer when things pumped and you could see some other phases when that has happened in the past. So this is a little bit just mean reversion after these massive leaps. And, you know, Bitcoin has been up so much, what, like 44% since the June lows. 96% of the top 50 crypto assets actually beat Bitcoin over the last 30 days. So Bitcoin's already up.

David Hoffman:

[6:22] That's like all of them other than one.

Ryan Sean Adams:

[6:24] Pretty much.

David Hoffman:

[6:25] The following 48 tokens by market cap beat Bitcoin in the last how long?

Ryan Sean Adams:

[6:32] That's right, 30 days, the last month. Wow. Yeah, last month.

Ryan Sean Adams:

[6:35] One other thing that might be weighing a little bit on altcoin markets or in general, we have to weight this into where crypto is going from here in the early bull case, is inflation and yields. And there is a story emerging that is somewhat of a paradox. So firstly, we got inflation numbers in this week. And the print was actually better than expected. So annualized inflations, that's CPI, 3%. Whereas expectations were about 3.3%. So below expectations, also the numbers were revised down from previous numbers in July. So July was actually revised down, and most of this was driven by high energy costs. So it was price of the pump, gas, oil, that type of thing that was really the driver. So inflation number's good, and in a normal world, in a normal market, what you'd expect to see is as inflation cools, longer or lower long-term yields. On bonds, right?

David Hoffman:

[7:43] And the reason for this... If the monetary asset is stronger over longer time horizons, people will accept less yields over that time.

Ryan Sean Adams:

[7:51] Exactly. So if you get a good inflation print, a low inflation print, you'd expect yields to fall. That's typically what happens. This time that didn't happen. So this week, yields rose.

David Hoffman:

[8:02] I think yields rose more than they had at all weeks previous. This was the fast acceleration of yield to the upside this week than the last four weeks we've been reporting this.

Ryan Sean Adams:

[8:12] Exactly. And so here's a tweet. So yields continue to rise, even on the back of this inflation news, not even budging from that. The 30-year is up to 5.64%. It's highest since 2022. 2022.

David Hoffman:

[8:26] No, no, no. 2002.

Ryan Sean Adams:

[8:27] Oh, my God. Sorry. Yes. 2002.

David Hoffman:

[8:30] Dyslexia. The highest since 2022.

Ryan Sean Adams:

[8:34] A little dyslexia on that readout. And the 10-year is back to 5.3%. So, yield's going crazy. Wow.

David Hoffman:

[8:43] Wait, what do you think is happening? 5.3% yield is going crazy.

Ryan Sean Adams:

[8:46] Well, that is crazy. I mean, this is the biggest market in the world. This is the risk-free rate for capital around the world. And we haven't seen these rates and this velocity and trajectory since before 2022.

David Hoffman:

[8:59] Right. Yeah. Basically, our financial lifetimes, because I was not paying attention

David Hoffman:

[9:04] to the bond market in 2002, Ryan, let me tell you.

Ryan Sean Adams:

[9:06] Yeah. Well, so I saw some tweets in the week, including this one from a friend of the show who's been on before. I haven't had him on in a while, though. Ben Hunt, he said this, not to be alarmist or anything, but this move in the 10-year, in the 30-year, isn't oil or Iran related. He says that because oil was actually down in the week. Something in the financial world is going to break, is what he said. Not to be an alarmist about things.

David Hoffman:

[9:31] If there's one thing I know about having Ben Hunt on the podcast is that he's kind of an alarmist.

Ryan Sean Adams:

[9:37] Sometimes he's right, though, right?

David Hoffman:

[9:38] Yes, yes. Not to discredit him in any particular way. He's just like, he's a bit of a, yeah, alarmist.

Ryan Sean Adams:

[9:44] Well, the mechanism here, the thing that he's worried about isn't necessarily the raw number yet, although that is something to be alarmed at. It's the speed at which this is happening. Yields are going up so quickly. We haven't seen that, as you said, in your entire investing lifetime, and a lot of investors feel the same. So he thinks something could break. What do you think? Do you think this is like The sign of something going really wrong, and this is why maybe Besant is panicking and he's trying to buy the long end and do all the intervention that he's been talking about lately. Why else would he be doing that if everything was normal?

David Hoffman:

[10:25] When something as large as the bond market moves this violently, something is going to break? Like somebody, somewhere, business, hedge fund, whatever, is positioned in a way where this really fucks their shit, to use a technical term. Does that mean, like, catastrophically, this messes with everything in the whole world? I'm not totally convinced. I was listening to Jim Bianco on his recent podcast. He just started a podcast. I think he's like five or six episodes in. He's a Bond guy.

Ryan Sean Adams:

[10:51] He knows Bond.

David Hoffman:

[10:52] He's a big Bond guy. Big Bond guy. And he was talking about how the whole world is freaking out because we haven't seen these rates in so long. Like, 5.6% is such a high number. And he's like, unprecedentedly high. He's like, no, no, no, no, no. Like if you go back into the history of bond market yields, of yields and interest rates, like 5.6% is a totally normal number. You know what's an absurd number? Anything below two. And so granted, ever since.

Ryan Sean Adams:

[11:20] That was the weirdness, not now, right?

David Hoffman:

[11:22] That was the weirdness. The whole ZERP era, post-2008, even pre-2008, that whole thing has been distorted. And finally, the clock has run out on like the era of low interest rates. But that was the weird stuff. And 5.6% is a totally normal number.

Ryan Sean Adams:

[11:38] I think that's right. Other bond people I'm listening to are saying the same thing. You know, I mentioned Howard Marks last week. Also, Michael Howell is someone who covers this fairly well. And he made the point that 5.3 percent, it was normal in the 90s. In the 80s, yields were 10 to 15 percent. And for huge periods during the 80s, the U.S. economy is growing like gangbusters. It's like boom times.

David Hoffman:

[12:00] The economy is growing right now. It is. And that's also outside of AI as well. Consumer spending is up. There are plenty of healthy indicators in the economy.

Ryan Sean Adams:

[12:11] There is a take here, though, that you see this is in the move indicator. This is something else that Howell follows. He calls it kind of the heartbeat of bonds and sort of his heartbeat metric for a global liquidity. And it's almost like the VIX. Do you know the VIX for stocks?

David Hoffman:

[12:25] Yeah.

Ryan Sean Adams:

[12:25] This is what the move index is for bonds, right? Right. So it's a marker volatility and jitters.

David Hoffman:

[12:31] When the VIX spikes, everyone is glued to TV screens, to Twitter, because something happened. Something big happened.

Ryan Sean Adams:

[12:39] And you can see some spikiness. Like, here's the ultimate bond spikiness on the move index back in 2008. Do you remember what was happening there? So we've got some spikiness right now. And Michael Howell's conjecture is he's watching that because if you get further spikiness, It is an indicator that liquidity conditions are shrinking, basically. So global liquidity is shrinking.

David Hoffman:

[13:00] As the spike spikes.

Ryan Sean Adams:

[13:02] As the spike spikes, liquidity shrinkage. And liquidity shrinkage is bad for our bags. It's bad for debasement trade. It means there's less fiat money supply in the market. And so he's watching this because he thinks there's the case where things could get bad before they get good. So basically, VIX spikes. And then in response to that government, Besant, Warsh, everybody has to respond with some policy. That policy is going to be money printing. And on the other side of that is launched the next global liquidity cycle. So he thinks that we're somewhat in a cycle wind down as far as global liquidity goes.

Ryan Sean Adams:

[13:40] And the next cycle will begin when there's some sort of jitteriness and crisis. So that could cause crypto assets to still dip, even though we're talking about this as if it's an early bull market. And that's one possibility there. I'm not saying it's the only possibility, but it's something that some of my quants are saying, David.

David Hoffman:

[13:58] Yeah, yeah, I can kind of see it. What do we call this? What's the bond market fix? The move. The move. So the bond market fix, I like that name better, actually. The thing to watch is like how spiky that's going to get. Is something going to break? Is a seal going to burst per what Ben Hunt is saying? We're all glued to the news because some bank went over, third bailout of the banks or whatever. Liquidity disappears because everyone has to cover their debts you know bitcoin crashes crypto crashes but then there's a flood of liquidity after the fact like that's the pattern that we've all seen i feel like that would be the worst case scenario there's probably a much easier case scenario like either way when this the, uh vix for bonds stops being so spiky and it eases out, the process of it easing out has got to be bullish just because great volatility is is leaving the bond market, stability is coming back to the markets, and Bitcoin has seemingly done acceptably well while the fix of the bond market has been spiky, which would be the time where you would expect it to not be doing well.

Ryan Sean Adams:

[15:06] Yeah, and it's going to continue to do well because deficits continue to mount. The U.S. fiscal policy continues to not improve, just get worse, of course. And that's the debasement trade. So maybe investors are seeing kind of the long-term picture here. And another simple explainer for yields, in addition to kind of the fiscal situation, is just what we've been talking about. What Howard Marks pointed out in his memo last week, which is AI CapEx, AI debt is competing against treasuries for those yields. The economy is booming. And so yields are going to go up the way they went up in the 1980s. And this is not actually in that context that alarming, except for the fact that the whole world is now based on the AI trade. And, you know, that could be alarming. Again, if we have all the eggs in those baskets and something happens with that. There was also this other minor point, David, that Kobayashi I saw made, which is it did something sneaky on the inflation methodology this month. So, they actually changed it. They changed how inflation was calculating. There's some details here. They revised it back. But they basically, according to Kobayashi, they recategorized some things like portfolio management, investment advice, put it in a different category.

David Hoffman:

[16:22] Is this like gerrymandering for inflation?

Ryan Sean Adams:

[16:24] It's goalposts moving. It's gerrymandering for inflation a little bit. And he said that alone could have knocked about 20 basis points off inflation. That could be the explainer. So, The other reason yields could be up is just the market's not buying these inflation numbers because there's a little bit of goalposts moving.

David Hoffman:

[16:39] That's some Soviet-style accounting is the idea that comes to mind. That's never good. I mean, it's good in the short term because we can all trade on paper and hot air. But over the long time, markets need truth. And if the government's not giving us truth, that's a terrible, terrible thing.

Ryan Sean Adams:

[16:57] I think the bond markets are really good at sussing out truth. There's nothing. There's no escaping bond markets.

David Hoffman:

[17:04] Soviet-era accounting, but in the United States of America, doesn't actually work.

Ryan Sean Adams:

[17:08] That's right. That's right. So, I don't know. Are you bullish? How are you feeling about things with this macro context?

David Hoffman:

[17:15] I want to throw a few things your way. We haven't talked about oil. Oil is actually still at wartime highs. So, there was the war, the height of the Iran war conflict. Oil spiked up to $90 to $110. It came down to like $60. It is now back up to $93 a barrel. So oil is at wartime highs. The bond market yields are cratering up. That's scary. The midterms are coming next month, and the markets never really like midterms. And the Hormuz situation is as resolved, unresolved as ever. But if you take all of these things into account—.

David Hoffman:

[17:55] The resolution of all of those things is bullish. Bond market yields are one day going to stop cratering to the upside. Oil prices are high. They can't really go much higher because there actually is a secret oil flowing through the Strait of Hormuz. The Iran and the Trump administration are in tension, and that's unresolved, but that could get resolved. Any way that this falls out is bullish. The status quo is all of these things are bad. Like the oil is high, yields are high, midterms are coming up, that's giving the market the jitters. And Bitcoin painted a higher monthly and weekly candle despite all of those things. The default path seems to be that Bitcoin is like bullish despite all of those things. But then all of those things could fall one by one like dominoes. And so I'm kind of seeing like, okay, Bitcoin has done well in a very hostile market environment for the last like two months. Each one of those things could clear up. We will get past the midterms. Bond yields will stop accelerating to the upside. Well, the Iran war and the Hormuz will eventually resolve. And all of that, those are each one of those things are catalysts that I'm seeing can see happen in the next quarter to a year.

Ryan Sean Adams:

[19:09] I think what you're saying is like given the debasement that's on the horizon, we can clearly see given crypto market structure has fundamentally changed to the upside. Right. And given some of these other things could get resolved, it's riskier to be offside. Right now.

David Hoffman:

[19:25] You want to be allocated. This is me. I'm trying to be bullish, Ryan. This is me trying to be bullish. David's never not allocated. I think it's a pretty good perspective.

Ryan Sean Adams:

[19:34] Yeah, I do too. And coming up next, David, I want you to give me the perspective, give Bankless listeners the perspective on Robinhood Hood's conference. What did you see over there in Houston? What are they up to? AI agents controlling portfolios? Are they doing anything in crypto? Also, there was a $400 million crypto hack last week. Has some implications for a lot of things. And there's a bit of discussion going on about it. I want you to fill me in all this and more. But before we get there, we want to thank the sponsors that made this possible. This is Frank Shapiro. Big news out of the Robinhood's Hood Summit today. He mentions a few bullet points. 24-7 stock trading, including weekends. Corporate earnings prediction markets. I guess corporate earnings, you can open up prediction markets on that. Perpetual futures for U.S. Customers. It says eligible U.S. customers, by the way. AI trading and also a social trading platform. This kind of reminded me of like, you know, the FOMO app that's picking up in crypto, Robinhood's version of that. All of those were some of the highlights that Frank mentions. I'm not sure if he was there. You were there in person. I was there. Why'd you, like, give me the context. Why did you decide, I know, You don't go to every conference, of course. There's lots of things you don't go to.

David Hoffman:

[20:46] I've been having on to very few conferences this year, actually. I think this might have been my first.

Ryan Sean Adams:

[20:50] You prioritized this one. Why this one? And what was the news coming out of it? What's the vibe, the news? What's your feeling?

David Hoffman:

[20:56] I mean, Robinhood has just captured such a centerpiece of attention in the crypto industry. Seemed worth going. They also invited me to speak with their two kind of like crypto leads, Nicola White and Hillary Skeffington. One is the VP of product who's doing all the crypto product stuff. And Nicola White, she leads Bitstamp. So Robinhood bought Bitstamp a while ago. Nicola was doing market making in crypto. Now she leads the Bitstamp and the crypto integration. So this was actually their trad conference. They kind of do this on-off thing with the Hood Summit, which is their normal Robinhood equities brokerage trad fi conference.

Ryan Sean Adams:

[21:35] That's what you were at, the Hood Summit.

David Hoffman:

[21:37] Which is what I was at. And then next, and also previously, they did their crypto event. The most recent one, you'll remember, was in London with Johan Cabrera, and that's when they launched the Robinhood chain and all the other stuff. This was their trad conference. And so we were not, I was not expecting crypto things out of this conference, and that is what we got. It was mostly trad stuff.

Ryan Sean Adams:

[21:58] And yet it's all fusing together, right?

David Hoffman:

[22:00] Because even Bitstamp is a crypto thing, isn't it? Yeah. So that's kind of like, well, then David, the crypto podcaster, Or why were you moderating a panel at the Trad Robinhood conference? Well, because perps, tokenized stocks, Morpho, these things are now all in the main Robinhood app. That's kind of cool. That's why they brought me in.

Ryan Sean Adams:

[22:18] And so what are they up to then? What's what were the highlights for you?

David Hoffman:

[22:21] So the highlights you had to run through with Frank Shapar, they opened up with 24-7 markets. So you can kind of see the priority and emphasis that they had. I thought it was pretty funny. They showed a bunch of Donald Trump truth social posts and tweets about the Iran war conflict. And they're like, wouldn't you have liked to trade these things because they happened over the weekend? Well, now you can. I thought that was pretty funny.

Ryan Sean Adams:

[22:45] Product market fit in this crazy era of tweets. Wait, but like, how are they able to do that? Why couldn't we do that before? Or how come we can suddenly do that now?

David Hoffman:

[22:54] I would like to actually explore that a little bit more. Part of the answer does come from having tokenized assets trading on Bitstamp because it's a 24-7, 365 marketplace. And so part of that answer is that they also have just extended their own brokerage services to beyond ours. And so like if one Robinhood user is buying an asset and another Robinhood is selling an asset and they both happen to be doing that at 8 p.m. On a Tuesday, they can just clear those things. And so they're just pushing the left and right earlier and later on the day.

Ryan Sean Adams:

[23:24] That seems so obvious and such a like product market fit for how people want to trade these markets now.

David Hoffman:

[23:29] Yeah, yeah. It was very clear that like if you were the Hood Summit and all the products they were releasing is for like speculators. It is not for the investor. Robinhood and their like, Their words that they use is like, we are for the day traders, the speculators, the people on margin and leverage. Like, these are for you. The passive investor was not really a target audience here. But yeah, anyways, okay, so that was one of them. The 24-7 trading was like definitely the headline thing. Prediction markets for earnings reports. I actually thought this was pretty interesting. They opened this section up with, hey, isn't it really frustrating when you're bullish on earnings and then you are correct? But then the price of the asset goes down in price. Isn't that annoying? Well, now you can just have exposure to an earnings report with a predictions market. And so I actually think of all the prediction markets that society hates, I feel like this one should not be included in them because it's a financial derivative about a financial company. It's just so finance coded. It's not like, it's not sports gambling. It's not betting on the weather. So I kind of, I really like this category of prediction markets because it's a financial product about finance.

Ryan Sean Adams:

[24:39] Wait, even Vitalik would approve.

David Hoffman:

[24:42] Yeah. The crypto element was the perpetual in the main Robinhood app. And so this was the big- For U.S.

Ryan Sean Adams:

[24:50] Users?

David Hoffman:

[24:51] For U.S. users, eight markets, Bitcoin, ETH, Sol, XRP, Doge, Cardano, Link, and Hype. And so for some U.S. users, they're rolling this out to a few select users. They're going to get feedback. They're going to roll it out to even more. They're going to get feedback and then one day they'll roll it out to everyone. They, I thought the interesting thing was they asked the audience, like, raise your hand if you've ever traded a perpetual or you know what a perpetual is. And like, less than one-fifth of the audience raised their hands. What? I thought that was really interesting.

Ryan Sean Adams:

[25:22] What are they doing? Options?

David Hoffman:

[25:24] Options, yeah.

Ryan Sean Adams:

[25:25] You're telling me this is a trader TradFi crowd, and they hadn't, like, four-fifths of the audience had not used a perp.

David Hoffman:

[25:33] Yeah, that's what they said, yeah. And maybe the audience just doesn't really raise their hand. That's always kind of a bias. But they asked earlier in the show, like, how many people are you guys going to buy an iPhone duo because they are building out a custom Robinhood app for the iPhone Duo, like the twofold one. Oh, wow. And like a third of the audience raised their hands. So it wasn't the audience being shy. Okay. The audience was willing to raise their hands. So more of the audience is interested in buying an iPhone Duo than has traded a perp before. Uh, so this is also the perpetual is also being offered through their Bitstamp exchange. And so they bought Bitstamp. It has the CFTC license that allows them to offer this to us, uh, customers, us users. And so when somebody on Robinhood main app goes and does a 10 X Bitcoin long or a 10 X Bitcoin short, it routes it through Bitstamp. Uh, one of the big news on the week was lighter. the LIDR token was down like 20%, 30% on this week. It was from disappointment that this was not LIDR being the service provider in the back end.

Ryan Sean Adams:

[26:36] Wait, so I know you've been following LIDR. You're a LIDR bull. Robinhood does have a partnership with LIDR.

David Hoffman:

[26:42] In the Robinhood wallet, which is their crypto app. It's like their MetaMask or Phantom. It's the Robinhood wallet.

Ryan Sean Adams:

[26:49] Okay, so they're doing both plays. It's Bitstamp for the main Robinhood wallet and kind of the whole buttoned up version and then LiDAR for the more crypto-native wallet.

David Hoffman:

[26:58] And also non-US because LiDAR does not have a CFTC exchange license.

Ryan Sean Adams:

[27:04] Got it. So LiDAR's still in the picture, but I guess there was some hope out there, market hope.

David Hoffman:

[27:09] Yeah, I mean, the distribution difference between being in the main Robinhood app versus the Robinhood wallet is massive. And so there was like a lot of disappointment from the LiDAR bulls on the timeline. The answer as to like why did Robinhood not put in LiDAR is LiDAR doesn't have a CFTC exchange license. You have to have that. It's just like the conversation stops there. Robinhood bought Bitstamp so they could do stuff like this, trade 24-7 tokenized assets and do perpetuals, and they have the CFTC exchange license. That's why they did this. I think the question is, in the future, if and when LiDAR does get its CFTC license, will then Robinhood also route orders to LiDAR, or will it actually just keep it for itself and only flow it through Bitstamp? Because why would they share it with anyone else? Like they will just route it through their exchange. Maybe Leiter does give better execution and Windows will always give better execution than Bitstamp, but Robinhood doesn't care because they get the fees. So like that's the fork in the road. You can interpret things both ways. The CFTC license to coming to Leiter, which I think is coming to Leiter inevitably. I think we will know this inside of two months. What are you laughing at?

Ryan Sean Adams:

[28:21] I'm just laughing because I think I saw your tweet where it was like flew all the way to Houston For Robin

David Hoffman:

[28:27] Hood to bud my bags.

Ryan Sean Adams:

[28:28] Yeah, to Robin Hood for my Leiter bags to be down 20%. Yeah. That's great. I'm sorry, man, but maybe it's only a matter of time.

David Hoffman:

[28:36] It just takes some time. We are going to find out whether or not Leiter gets a CFTC license inside of like two months because they've been talking about it for a while and the CFTC has 180 days to give a response.

Ryan Sean Adams:

[28:49] Well, we know the Vlads are very tight, so that's great. There was a couple other things I want to ask you about. One was the social trading element. So somebody described this to me as like, it's almost like the crypto FOMO type of experience. There's a social trading thing that they were talking about. And then also agents, AI agents. What, you can get an AI agent to like manage your trades?

David Hoffman:

[29:11] How many times have you heard about agentic trading, Ryan?

Ryan Sean Adams:

[29:14] That's been all crypto has talked about for the last like 18 months, I feel like.

David Hoffman:

[29:17] Have you ever used it?

Ryan Sean Adams:

[29:19] I would not trust, like, right now, no. Like, actually, I would like to. I would like to give an agent, like, you know, a couple hundred bucks and just

David Hoffman:

[29:26] See what happens. Yeah. Okay, so during this section, I'm like, agentic trading, you can now, you get the power of a hedge fund's brokerage information advantage inside of Robinhood using agentic trading. And I just turned to the guy next to me. I didn't know him. We were just strangers. And I just asked him, I was like, who the fuck is doing agentic trading? And then he opens up his phone to the agentic trading tab. He's like, me, I'm doing it. He had given his agent like $2,000 and his agent had done a bunch of trades. And I'm like, okay, fuck me, I guess. Wait, what do you do?

Ryan Sean Adams:

[29:58] So like, how does this work? Do you just like, hey, agent, you know, generate overperforming, like performance over the next 90 days. Make no mistakes. Go.

David Hoffman:

[30:09] I think it's one of those things where like the quality of the output is downstream of the quality of the input. and so you need to prompt pretty well and be like, okay, like I am interested in this kind of exposure. I'll be cautious about this. I don't know. I still haven't used it.

Ryan Sean Adams:

[30:22] But some people are doing agentic ratings.

David Hoffman:

[30:25] I feel like any input I would give.

Ryan Sean Adams:

[30:25] Would make it like dumber.

David Hoffman:

[30:27] Probably.

Ryan Sean Adams:

[30:28] I just, I don't want to give the input to the agent. You know what I mean? I want the genius, super smart agent working for me and to figure it all out. But then I feel like someone has already front run me on that. If some of their hedge fund is using a much more powerful agent, better data.

David Hoffman:

[30:43] I don't know.

Ryan Sean Adams:

[30:45] Maybe you could just kind of, if you set a strategy, maybe you could just like automate a strategy. In that context, I would be okay with it.

David Hoffman:

[30:54] Yeah, yeah, yeah. Let's see, anything else? Yeah, Robinhood Social, they launched, you said it was like FOMO. It's like FOMO and Fintway. It feels a little bit more like a little bit more trad than FOMO because this is definitely built by millennials and FOMO is built by Zoomers. But it's very similar. So like verified trades, verified PNL. It's like a Twitter kind of form factor um.

Ryan Sean Adams:

[31:17] Very good. That's the conference. There was also a hack that we should talk about, a $400 million hack of the BitGet exchange. Did that happen earlier this week or late last year?

David Hoffman:

[31:29] That was Friday of last week.

Ryan Sean Adams:

[31:30] Friday of last week. BitGet, if you're not familiar, it's an offshore exchange. So outside the U.S., it's one of the biggest offshore exchanges. Top five, let's say. It's definitely not of the scale, Binance. And it was a $351 million hack. What are the details behind this and what was the conversation it spawned?

David Hoffman:

[31:50] Yeah, so not a crypto or protocol hack. This is just a kind of a hack of BitGet's internal security. Just the hot wallets.

Ryan Sean Adams:

[31:57] Right? Not the cold wallets.

David Hoffman:

[31:58] Yeah, just the hot wallets, not the cold wallets. So attackers spoofed internal transfer data and drained hot and warm wallets across multiple chains. Private keys were not stolen. Private keys were not lost. But the total sum of the losses came to about $387 million, which is the largest, exploit loss of crypto in 2026 so far. I had to kind of explain the technical terms of how it all worked, but I don't really understand it. But it was an internal big-cut security thing. uh there was there is a 464 billion dollar protection fund from bit get and so users are whole not no user will lose any money, uh withdrawals were paused and then they resumed uh and so kind of nice that no users were harmed in this exploit uh i think it's probably north korea i think is the assumption here there's that that's the lazarus group that did this but i'm not sure if that's actually confirmed um, A lot of the assets moved through ThorChain. ThorChain said they can't do anything about it. I'm sure Taylor Monahan.

Ryan Sean Adams:

[32:56] After they were stolen. So the assets were stolen by, let's say, it was a hacker like Lazarus Group. Then the next thing is the hacker has to then launder those funds in order to get liquidity on them, right?

David Hoffman:

[33:06] Exactly. Yeah, yeah, yeah. ThorChain is a pretty common place for these funds to go. A bunch of Bitcoin did go through Wasabi CoinJoin, which is a Bitcoin mixer. And then about half a million dollars tried to go through Near Intense. And this is when the story moves into the Near Intense space. So Near Intense is an application on top of the Near blockchain that does cross-chain transfers. $500,000 about dollars tried to go through Near Intense. And Near Intense has this shield thing. It's like an intense security. It's like a security filter, like a bouncer filter. You know, checks every swap before it goes through Near Intense. Alex, the general manager of Near Intense, he kind of describes it as like a risk intelligence layer. Kind of like, yeah, a bouncer, cops, preventing firewall.

Ryan Sean Adams:

[33:53] Firewall almost, I guess.

David Hoffman:

[33:54] Firewall, I think that's a good term, yeah. So $166,000 did get through, but it blocked about $503,000.

David Hoffman:

[34:02] This spawned kind of a conversation. These aren't really the biggest numbers, but it spawned a conversation around.

Ryan Sean Adams:

[34:06] These are tiny numbers in the context of $350 million, right?

David Hoffman:

[34:10] Yeah, but really the conversation was around the permissionless, around Near Intense. Near, due to the crazy price action going from like $2 to $5, is now kind of the center of attention. And so the, you know, the hardcore cypherpunk nature of some of these systems is being, you know, we're kicking the tires here. And I think people are learning that Near Intense is not like a completely permissionless, censorship-resistant cypherpunk protocol. This is the first time a lot of people learned about that.

Ryan Sean Adams:

[34:37] So when it comes to a hacker steal some funds and they try to kind of, you know, launder it somewhere, they'll use different protocols for this, right? One is Tornado Cash, which cannot be turned off. Right. Another is ThorChain, as you said, which has operators. But their stance at ThorChain is basically like permissionless, credibly neutral. We can't do anything about it.

David Hoffman:

[34:59] That's always been confusing to me about ThorChain is like there is an off switch and they're like, we're not messing with the off switch.

Ryan Sean Adams:

[35:05] Right. And Taylor Monaghan is among those who've called him out and saying, no, you actually do have an off switch. You could do something about it. Now, this is near has an automated sort of firewall bouncer at the door that sort of flag these things as stolen funds, transactions and paused it almost automatically. And so what's the debate in the crypto community as to whether you should have the authority to do this or is it a debate around neutrality?

David Hoffman:

[35:31] A little bit. I think really the reason why this is a bigger debate than it really needs to be is that there's some of the words that Near is using, like they're using the words like we are permissionless infrastructure, but we're not neutral. And somebody is saying, well, then then you're not actually permissionless. Like, don't use the permissionless word. Then there's other people who are saying you shouldn't have this ability at all. And I'm throwing a flag at that of like, we have some of the hardcore cypherpunk protocols, the permissionless ones, we've got that stuff.

David Hoffman:

[36:01] Exchange hacks and bridge hacks have lost the most funds in crypto ever. Like it put over $8 billion combined on those two things. So now we have this cross-range infrastructure that also, the news of as of this morning, got exploited today for $3.8 million. And the reason why it wasn't worse— Wait, a separate hack. This is a separate thing. A separate hack. The near-intense application also got exploited for $3.8 million. The reason why it wasn't worse was this same shield mechanism detected the transactions and prevented the loss of further funds. And so all of the people that lost money in this Near Intense exploit will also be returned the money because Near Intense makes $3.8 million in like a week. So it's like not really that big of a deal. And so my take is like we have this system that is like discerning between bad and good. And we've had the previous systems where like, you know, code not kings, you know, we've had the previous systems already. And like now this new system is more discerning. Sure there is trust there is custodianship for a moment in near intense these have historically at least with my, vernacular been bad but then also at the same time you know what else is bad is losing like nine billion dollars of user funds and so like my stance is like hey man like, this is a new strategy let's see it play out.

Ryan Sean Adams:

[37:24] Yeah, I guess maybe it's a semantics debate over like definitions of words, right? So there's a person quote tweeting, permissionless doesn't mean neutral. Yes, it does. And so calling out Nier for using the words, I guess, permissionless and also, you know, saying we're permissionless, but not neutral. Now, Ilya on the Near team had a response to this. Cryptospace really has a choice. Grow the F up or get sidelined with random regulations. So he's making the point, hey, we're building a product. We don't want the product to have money laundering capability. Actually, we have the ability to do this, and therefore it's a good user experience. We should be doing this. It's kind of the right thing to do for our users. It's what everyone wants. And I guess your point is like, that's a fine experiment to run. We already have the super credibly neutral infrastructure, the tornado caches, the Ethereums, the Bitcoins of the world. And so like why, not everything has to be like that, especially when you're a layer up and you're on kind of the intense layer.

David Hoffman:

[38:25] So- Yeah, I think people are also confounding Near with Near Intense. Near is a blockchain. It is permissionless. It is censorship resistant. It has all of those like same properties that we know and enjoy in crypto. Near Intense is an application that has no technical dependency, vice versa with Near the blockchain. And the Near Intense application is a little bit more trusted, has a little bit more opinions about it, is not fully like cypherpunk. And that's also true for any bridge whatsoever. Cross-train bridges have dependencies in them. That's just the nature of how they are.

Ryan Sean Adams:

[39:00] Yeah, I mean, there's another thing that happened this week, which is a base. So Coinbase, they have a protocol. It's not the ERC-20, but it's a base standard. So you can run something called the B20. It's a token protocol standard on base. And you can also do ERC-20s. But B20 now added a seize function on top of it. So that the author of the B20 token standard has the ability to actually seize assets if they are stolen in a hack like this. And this is not the full cypherpunk, cryptopunk version, but it is product market fit for something like equities. If you're the issuer of an equity and North Korea steals your, you know, your capital, essentially.

David Hoffman:

[39:42] Your Apple shares. Yeah.

Ryan Sean Adams:

[39:44] You're not just going to be like, oh, I guess that, you know, North Korea is on my board now. I guess they have a seat on governance, right?

David Hoffman:

[39:51] Let's send them the Zoom call.

Ryan Sean Adams:

[39:54] Yeah, you just like won't issue your tokenized shares in that format at all. So we have space for fully cypherpunk, you know, store value assets. We haven't lost that. And now we're getting, you know, other product market fit for different use cases. I mean, I think it all makes sense.

Ryan Sean Adams:

[40:14] And this is much ado about nothing.

David Hoffman:

[40:15] Yeah, totally. Speaking of near, we also got a near ETF this week out of Bitwise. So this is ticker NRR, the Bitwise Near ETF. Pretty notable launch if you compare it to Solana, who has some pretty healthy numbers. Something like over half a percent of the total near supply flowed into the Bitwise Near ETF on day one, which is pretty crazy, half a percent of the total supply. If you look at like the Bitwise narrative as like what near is, because Bitwise educates to the next marginal circle of investors outside of crypto.

Ryan Sean Adams:

[40:49] Yeah, how are they selling it?

David Hoffman:

[40:51] Intersection of crypto and AI. Near Intense, which is a primary near product, is seeing rapid growth. Near is quantum resistant and private, highly scalable, low inflation with revenue funding buybacks. So.

Ryan Sean Adams:

[41:05] All makes sense. Good time to launch an ETF when you're on the upswing like that. Let's talk about what's next. New York says prediction markets are actually illegal gambling. What's the news there? Is this going to go to the Supreme Court? Also, Vitalik with a post on the week. He says Ethereum isn't a blockchain anymore. Actually, not just a blockchain. It's something else. And it has the words world computer in it. We'll talk about all that and more. But before we do, we want to thank the sponsors that made this possible.

David Hoffman:

[41:33] The state of New York has filed a lawsuit against prediction market company Polymarket saying that the platform is operating an unlicensed gambling business in New York. State officials have asked the judge to stop the company from operating in New York and are also seeking financial penalties and payments to users who took part in the platform. Also, additionally...

Ryan Sean Adams:

[41:53] Wait, users too? Yeah. Oh, no.

David Hoffman:

[41:57] Got to protect the users, you know? A U.S. appeals court on Friday ruled against the prediction market operator, Kalshi, saying Ohio and Tennessee can regulate its so-called event contracts under their gambling laws. So two blows to prediction markets this week. Poly market getting sued by New York, Kalshi losing a case against Tennessee and Ohio. Uh, This the outcome of this, the current state of there's like a game of risk being played by the prediction markets teamed up with the CFCC versus the states. And it's pretty split. And so there's different like circuits with with the court. The states have won the sixth circuit. That's Ohio and Tennessee. And the ninth circuit, that's Nevada. Kalshi won the third circuit with New Jersey, and New Jersey's attorney general already asked the Supreme Court for a review. And so there are still some circuits to play out, but it seems kind of inevitable that this is heading to the Supreme Court. David, actually, the writer David from Bankless has been writing on this, so if you want to follow, I think he's actually the person producing the best content about the inevitable conclusion of prediction markets in the Supreme Court. So you can subscribe to the newsletter.

Ryan Sean Adams:

[43:10] I mean, it's definitely going to the Supreme Court, right? Well, states want their cut. They've had their cut on other sports gambling in the past, and so they're going for their cut. I guess that's what the judges are ruling. The CFTC is on, you know, team, these are just markets, any event contract markets. And so the Supreme Court, I guess, is going to have to decide. That seems pretty, not existential, but incredibly important. That ruling will be incredibly important for the future of prediction markets. And it's sort of a binary type ruling, right?

David Hoffman:

[43:44] Yeah, yeah. Meanwhile, Coinbase has received a CFTC approval for Coinbase Clearing LLC. This is the third of three licenses that one can get out of the CFTC. Coinbase now has all of them. So Coinbase can now be the exchange, the broker, and the clearinghouse for fully collateralized derivatives. So this is not margin. This is not perpetuals. This is prediction markets. And this is also crypto binaries and fully paid options. So just getting a little bit more options in the derivative space, which includes prediction markets. This is what Coinbase needed to do to fully ignore Calci, kind of in the same way Robinhood did previously. Robinhood first had Calci as its prediction market supplier. And then Robinhood just gave Calci the boot for its own prediction markets platform. Coinbase now has the ability to do this as well.

Ryan Sean Adams:

[44:38] Do you think, do you wonder if like Polymarket and Kelsey will kind of fight back in the form of launching a crypto exchange? So if Coinbase and Robinhood are going to come into their territory, then what's to stop Polymarket from, say, becoming more an exchange and kind of, we're seeing this with the AI labs, right? You know, the frontier labs are all somewhat circling around and launching the same thing.

David Hoffman:

[45:02] Mm-hmm. Sure. I mean, they're going after Coinbase's gargantuan business. And like Robinhood 2, for example, honestly, that's why I'm kind of a hood bull is because the best thing to have in all of this debate, if everything is going to become the everything finance app, the super finance app, then like you want to buy the one with a distribution, which is kind of why I'm bullish Robinhood. Because like Robinhood has all of those things. And then it also has the 50 million customers or whatever.

Ryan Sean Adams:

[45:29] Product skills too, right? They have the ability to stitch it all together in a pleasing user experience. And that is a cut above.