Bitcoin is in an uptrend, but it's still got some resistance in play around eleven thousand three. You know for us it's, mostly just making sure that we get capital to the most promising projects what's up guys I'm. Giovanni welcome back to our weekly crypto market show this week with us general partner at the blockchain capital, spencer, Bogert and Bitcoin analyst and trader Jacob Canfield welcome guys, let's start talking about the markets. So, on some day Bitcoin broke through the benchmark level of 10000. Then it's suddenly retraced back to the 9800 more or less and now, in the last couple of minutes we saw a Bitcoin going back up to the eight to ten thousand two hundred more or less so what is happening right now in the Bitcoin market? How do you interpret these latest moves and what we should expect in the nearest future Jacob? Well, the there were a couple different components. There was a combination of technical and in a combination of fundamentals, so early on in the in the in the rise. We definitely saw some accumulation activity in the 65 to 7000 range. The support held really really well, and so there was a lot of demand in that area and then there were some fundamental catalysts: the Iranian tensions that saw gold and Bitcoin kind of moving in tandem, which helped to propel us over that 8000 mark, which that was Kind of the benchmark for me from going from bearish trend to bullish trend and that's, when I decided to flip basically full bullish after that, and so once once we broke 8000, I think that now it's, just it's more or less a trend and we're getting continuous Short squeezes to the upside volume is picking up.
Open interest is picking up so from a technical perspective, as well as a fundamental perspective. We'Re, seeing kind of all things line up for bitcoins, continued, uptrend and thousand level is a psychologically important level and it and it broke it easily, but had a nice retrace, sell off and then and then pushed right back up as if it was nothing. So all in all, I see Bitcoin continuing to push up and for me from a technical perspective, we're still in a range, if you take the resistance from the twenty thousand and the thirteen thousand, that will give us a high side resistance for this range of around Eleven three, and so if we flip that, then it's highly likely that we break 14000 and probably push for all time highs. But that would probably be the last level for forebears to defend if they've got a hope at defending this Bitcoin bullish run and I've got a couple of other theories, but all that Spencer give us his insights and then I'll go over a few other things. Okay, so Spencer, what do you think about the situation right now in the crypto market? Do you share the same view as Jacob or you have a different kind of interpretation? I think that's great color from Jacob and I'm looking forward to him diving into a few other things. Here I mean look for us any kind of short term. Price movement is mostly just noise to us all of our funds, and investment activity is structured as venture investments, so we make venture investments that a venture funds and we take a eight to ten year time horizon on our investments.
So you know what happens over any given weekend is always interesting to us. I mean we always watch these markets because they're very close, but you know what actually happens in terms of price doesn't have a huge impact for us now. Am i constructive on price over the next kind of call it twelve months, absolutely mm hmm yeah. So of course you have a much more long term perspective on these kind of things. Jacob is a day trader, so he is more focused on their on the short movements. 100. Leave it to the experts. So Jacob did you want to add anything else about what your analysis you said, yeah so there's, there's there's merit to both approaches, and you know, as a as a venture capital firm that's, looking at 810 20 year horizon similar to a lot of the other firms. In the space, I think that using futures is also a good approach, especially when you get high volume blow off tops like we saw in 13000, because it can save you from significant drawdown and so that's kind of how I approach it. I do have a long term hold in Bitcoin that I take hedges out against high timeframe resistances, and so I look at both short term and long term fundamentals, but for me, ever since I've been in the space all the way back to 2016, I think Spencer's Been in longer than I have, but my long term horizon for Bitcoin is is bullish both on a macro scale, technical scale and a fundamental scale.
For me, Bitcoin makes I mean it's mathematically, designed to go up in value based on scarcity and and the way that it's designed economically, whereas every other currency in the world is designed to go down in value. So for me, it macro bullish, a long term as well, but I like to play the short term movements to compound the the profitability of trading Bitcoin in a tweet. You said that you don't really care whether whether people think this is a bull run or not, and that there is no. That is zero, guarantee that this is continuing going up. That sounds a little bit of a contradiction of what you just said: yeah so you're, taking it all you're. Taking that tweet a little bit out of context. What I said was if you can take profits and it can eliminate student debt credit card debt, pay off a mortgage or upgrade your life substantially. I recommend taking profits. I don't care whether we're in a bull market or not, and you're gon na miss out on a few gains. If it can change your life, I would highly recommend taking profits, and then I followed that tweet up with I've watched, many friends and many people in the space make millions of dollars only to basically hold back down to zero multiple times whether they're in Bitcoin, rather Than an alt coins, and so that was the context of that tweet, and so if you are in debt, if you are, you know, are using too much risk in the markets, then I recommended taking profits.
So it was more of a tweet thread that context really came out of, and I think that's pragmatic and I think, that's logical. Whereas larger money, smart money, institutional capital, kind of like Spencer's fund, they can have long high high time frame horizons because they have the capital to be able to ignore the low signal noise. Whereas someone with retail, who maybe put in too much of their capital in the markets, they might not have that that time horizon. So that was the point of that tweet so going to another topic, so basically, Spencer. In a recent interview with Bloomberg, I believe you said that one of the things you are more excited about in 2020 is a shift from horizontal competition to vertical construction in the crypto space. Can you explain a little bit what you mean by vertical construction and the result of competition? Sure I think probably a little bit of backstory would be helpful here. So I tend to categorize the entire history of kind of Bitcoin or, I guess broader crypto – into five major kind of arrows, so the first of those was kind of 2009 to 2012, roughly 2011, which was the Bitcoin work era. So you know it's pretty self explanatory. Anyone heard of Bitcoin pretty much assumed it's not going to work pretty reasonable hypothesis to be honest, but after a few years of operating perfectly, we kind of entered this. We shifted from okay, Bitcoin won't work to find Bitcoin works, but it's for tulips and criminals.
So you know all of a sudden. Everyone starts saying: okay, fine! I can see that it's working, but the only real people that are gon na get utility from this are criminals and by the way, the price action of this looks an awful lot like the Dutch tulip mania. So this was the main popular kind of refrain that we heard and then from there you know, a lot of the skeptics in that period are saying like look. This thing's gon na crash it's gon na go to zero it's gon na disappear. Sure enough, in was that 2014 price did fall substantially, and so you know for one all. The blockchain, skeptics and pundits kind of said see. I told you so and then, in terms of the broader industry, things kind of shifted to the blockchain, not Bitcoin era, which was hey let's. Take these big open networks with these digital assets attached to them, let's strip, away the digital assets and let's, make them close networks for enterprise use cases. You know all together, not a terrible hypothesis, but after several years of watching a ton of proof of concepts. Inside of large enterprises and none of those really gaining material traction in the real kind of efficiency, not really bearing fruit, there, people kind of shifted in kind of 2016 and 2017 and realizing that okay, the power here. The true innovation is these big open networks with a digital asset that's attached to them, but then the common refrain kind of shifted to okay, fine.
We get that it's all about crypto. We get that it's about these open networks, but bitcoin was the 1.0. So let's go find out what's going to be the next Bitcoin or the next etherium, and so I kind of categorized that next era, as the ICO and horizontal competition era, which was hey let's, take any perceived shortcoming of Bitcoin or aetherium, whether it's throughput privacy expressiveness. What have you and let's go and try and address that issue by launching a new blockchain, and so over the past few years, we've seen gigantic fund raises for these and we've seen a lot of those blockchain ception get out and launch and a lot of them Honestly, they're pretty brilliant from a technical standpoint, but they're not really attracting users that are not really attracting developers, and so you know, I think that we're kind of seen an end of the phase where people are thinking. Okay for every perceived shortcomings go launch a specific blockchain that addresses that issue too, instead saying okay, how about instead of trying to launch a new chain? Why don't? We continue to build up the stack on top of the chains that have traction and have users so, instead of trying to solve throughput by going and launching a new high TPS blockchain let's go and create lightning Network. Let'S go and create plasma, let's, go and create optimistic, roll ups, other kind of scaling solutions, and you can say the same thing about kind of privacy and about some of the expressiveness as well.
So, the point being that I think here in 2020 and for the years ahead, what we're gon na see is a race to kind of build up. The stack of a couple winning particles so I'm a little bit less constructive on the idea that we're gon na have thousands of block chains that matter and instead on the more constructive on the idea that we're gon na have one two. Maybe four block chains that really matter and most of the innovation and development will happen so called up the stack of those wedding protocols: okay, that's, a pretty interesting theory, so you think that will materialize in 2020. I think that we're already starting to see it. I think that there is a there's, a few different things here, one if you're gon na go and dedicate the next few years of your life to building something you want people to actually use it, and so I think, a lot of people that went out and Launch new blockchains for one have not found a terrible amount of users, so you know, I think the next wave of developers entering the space is thinking about a different strategy to that, and then also just investors are not willing to pay the types of premiums they Were for teams to go out and launch a new blockchain? They were in 2017, for example, you know the returns from these kind of investments in some cases have been okay. In other cases, they haven't been so great.
So, overall, I think that there's less funding going towards it and less developer appetite to do it. So therefore, we see this kind of shift, that's, really already underway. What I think plays out over the next few years right and Jacob. What what do you think do you agree with the Spencer's forecast regarding this evolution towards vertical construction, yeah you're already, seeing that quite a bit you're seeing capitulation, you're, seeing you know infighting amongst developer projects, but I'll expand on that just a little bit so history, doesn't, Repeat, but it often rhymes, so what we're seeing and what he basically just explained is the dot com era. All over again we had a protocol war. Then most people don't remember it, but we had a similar protocol war where we had our protocols that were designed and then other protocols came along and they had Fu's first mover advantage. So, even though later protocols came along, they were faster, more scalable and we saw enterprises tried to co, opt a lot of these protocols as well and make people pay for them, but eventually competition in that vertical construction that he's talking about drove fees really really low And so I would agree a hundred percent, but what I think that will also happen is those main protocols that have staying power will have more regionality based on the part of the world that they're in in the support of the the government's or regulations or ecosystems.
That are around them that will give them staying power because of the users because of the government backings because of the enterprise level participation on those on those specific protocols, so I think yeah, a ton of the protocols that were developed. They might have good architecture. They might have scalability all that stuff, but taking out incumbents like aetherium and IO CEOs has you know billion dollar capital to be able to stay for a long time develop? They can pull a lot of developers away from other competing protocols. So I think that he's completely right in his prediction, but I think that it's going to have a little bit more locality and regionality that's going to play into those protocol developments and in which ones stay so that's that's my thoughts on the yeah, the protocol war, That we've got facing okay. So if I went understood your point of view, you are seeing you're saying that this is a vertical construction. That Spencer is talking about, is a little bit more it's gon na be a little bit more fragmented. Like you talked about this regional, these regional concentrations of capital and resources which are going to make a protocol thrive, despite the fact that it might not be like in terms of quality, they like the best one yeah. So you know in common protocols: oftentimes have the network effect going for them, and so they might not be the best technically, but because of that, incumbency like Bitcoin may not be the best protocol, but it has the network effect and it's the strongest network it's it's.
A it's, a very powerful network, so it's got the network effect going for it, which makes it the strongest and we can get into the enterprises that are working with aetherium and stuff like that, which gives it a massive leg up as far as first mover advantage. But yeah, so I think that a lot of these other protocols will die not because they're not technically better, but because they don't have the network effect or early mover advantage that these other protocols have and they've they've. Also don't have the capital resources because 25 million dollars isn't going to get you far. We saw that a lot of projects blow through 25 million dollars in less than 12 months and got really not not much to show for it Spencer. You mentioned this vertical construction so to get more specific like what are the protocol or what do a project need to have in order to be one of these few ones which will participate into this vertical construction? You are talking about a very good question, so I think it remains to be seen. I don't think that there's any one set of kind of criteria that you can apply. That would say that, like okay, this is going to be a critical part of the Bitcoin stack or the etherium stack. So to speak. You know, and I think in a lot of ways I mean you know speaking again from the venture perspective: it's, not even necessarily an any or all of those layers will be directly monetizable right, so those might not be investment opportunities at all.
You know I mean like the Lightning Network itself, is not an investment opportunity. There are companies that build around the Lightning Network that are investment opportunities, but my guess is that a lot of the kind of functional layers that we see here are actually not direct investment opportunities at all Jacobo. What is the most exciting event or thing that you are excited about for 2020? How much time do I have there's a lot? The having event is probably the most exciting event. It'S only happened to other times it's, the third time it's happening that's a massive massive deal as far as reducing inflation supply it'll get Bitcoin lower than most currencies of the world. As far as inflation is concerned, it'll reduce supply, reduced mining cell pressure, that's a you know, that's a massive event: you've got eath 2.0 that is potentially trying to launch moving from proof of work to proof of stake. I think they're in one of the best positions to do a proof of stake model that it that is decentralized, custody services. You see, I just saw a new story today: there's 40 German banks that are offering custody solutions, which means you know, we're starting to get into the financial product era of investment, advisors and that's, where you really start to see a lot of retail capital coming in You'Ve already seen, you know, fidelity some of these guys that are that are in the space. You know they've got trill, I think a trillion or something in capital that as far as retail is concerned.
So when you start to see custody services opening up not just back then futures but actual like retail services, open up, I think that's incredibly exciting because that's, you know, in order for a market to go up, you need buyers and you need you need capital and, And in so far we haven't seen the retail market really enter after the twenty thousand to three thousand drop. We never saw Google Interest really spiked up and so that's that's a big thing for me. I, like I, love watching the D five space and how that's unfolding almost a billion dollars locked in the D 5 space, and I could go on even more, but you know that's just a few of the things that I'm excited about for 2020 yeah. We hope that all of those like all that list is going to to be fulfilled in 2002 and 20, but we are mainly interested at least like a lot of people, are very much interested in the Bitcoin having so I would like to know from you guys What is your expected outcome from this Bitcoin having? What are you going to see we're going to see the price of Bitcoin really spiked because of this, or do you think it's something that is gon na be unknown event? What is your expectations, Spencer? Sure? So look. I mean lose the conversation around the having kind of revolves around this idea of is the having priced in or not.
This has been kind of the the big debate over the past six months, or so. I think that, in the truest sense of saying, is in a particular event. Priced in the answer is absolutely yes in the case of Bitcoin, in that there is no risk free return to be had from buying Bitcoin a few months before the having and so on. In a few months after the happy now that does not mean that I don't think the price will rise in the kind of months before and after the happy and the reason. Why is really a little bit softer it's? Not because nobody expects this? You know decline in inflation, no it's, not that nobody's, expecting the decrease selling pressure for minors that's associated with that it's, really just because in the having acts as a as a shelling point or a catalyst or a spark for a lot of capital. That'S sitting on the sidelines, so I mean if we zoom out a tiny percentage of people own Bitcoin today, but a much much larger percentage of people have become quite knowledgeable about it and are interested in purchasing some Bitcoin and owning it. And so I think that for a lot of the capitalist in the sidelines, the question is really just when right. So, like okay, you know, I think, I'm getting increasingly comfortable with this. You know we're now in bitcoins 11th year I now don't think it's as crazy as I did.
You know six years ago, so I'm thinking about purchasing some, but I don't know when, and so I think the having in the entire discussion that revolves around it, because we have to keep in mind this kicks off a pretty big media cycle for people covering this Particular event, like you said it is only the third one to ever happen. So you know you're gon na see major media outlets starting to cover the Bitcoin, having which again just acts as a spark for people's intrigue and to go ahead and go, learn a little bit more and maybe get all the way across the line and make a Purchase so you know overall, I'm, very constructive on price around the having. I think, it'll be another interesting event to watch, but I don't think it's any kind of risk free return of just buying before they happen and selling afterward right. So basically, if I went understood that you expect the having to have a positive effect because of the media hype which is going to create and which is gon na, make more people interested in in Beco in Bitcoin, is it correct, yeah? I think so. So I think it's partially the media hype and then personally just solving for the question of when right, so, if I'm already interested in purchasing Bitcoin and otherwise I'm relatively and different between drive by today tomorrow, a year from now two years from now like what am? I going to buy this thing all of a sudden.
Having is just like hmm, I'm, not sure exactly what's happening here, maybe I'm just gon na go ahead and pick it up beforehand. Right, like I mean if I was interested in making a real estate purchase, and I found out that hey by the way, the rate at which new real estate is gon na be created is going to fall in half this year. I might want to pick it up before that event. It just acts as kind of a forcing function for decide when so it's a very soft kind of catalyst to be honest, yeah. Actually that works even with me, because I still haven't bought any Bitcoin in my life, but right now I am really thinking about buying it because of the whole thing. So probably this psychological effect is affecting even me, yeah, definitely so a Jacob. What do you think do you agree with the Spencer's theory about the helping? I think that if you look at previous having's there was always some sort of 20 30 percent drop. I mean we've. Only the the problem is: is the previous having's aren't, a good metric of what's gon na happen in the third having because it's a very small sample size. So, as a trader, I use data and a lot of data to be able to make the best and most educated decisions back testing and forward testing strategies, and so in almost all markets, it's buy the rumor, sell the news, and so sometimes that works and sometimes That doesn't work for me right now, bitcoin is in an uptrend, but it's still got some resistance in play around eleven thousand three and so right now, there's, no reason to not trade, the trend or or at least be spot long until that trend shows any signs Of weakness and right now right now there's no signs of weakness, and so I think the having is potentially priced in.
But it depends on how crazy the FOMO gets on Bitcoin, where it could create some significant psychological FOMO from retail, but still in so far I don't think we've seen that retail participation I tweeted not too long ago. Smart capital will trick you into thinking that Bitcoin is a scam until they've accumulated enough, and then the price will rise. The price will rise, controlled, but it'll be priced out of the you know, price out of the hands of a regular consumer to own. At least one Bitcoin or something to that effect – and so we saw this with the dot com era, a lot of retails sold in the 90s, and then we saw this massive calm boom and they picked it up in 2008, a lot of smart money bought. There was significant volume purchases on some of those big tech company plays, and so I think that we probably saw something similar around the 3000 region with Bitcoin, where retail got completely shaken out and I don't I don't even think they were on board to the 14000. I don't think they're on board now, and so I think we'll have to probably break 20000 before we see that psychological retail FOMO back into the markets, so among blockchain capital, 2020 predictions. You said that Bitcoin will blow past the all time highs in 2020. That is a quite daring prediction. Why? What does it make you think? So what what doesn't make you think that we will go through the all time highs this year, yeah, I mean look behind the scenes.
We'Re, seeing a lot of large credible companies enter in the space, so you know that's very encouraging, perhaps even more encouraging than that. That was just a level of talent that we're seeing enter the space. So I think that all of these things kind of combined are priming up to set up for the next kind of market cycle. So you know whether it's the having it's the number of large kind of FinTech and financial institutions that are serious and moving into the space, the level of talent, that's entering and then also just the increasing kind of comfort with Bitcoin itself. So one of my favorite things is to see Bitcoin just discuss, not as this novel new thing that we need to. You know, write a separate news article about, but something that's mentioned. Just you know in a bloomberg news article where it's, you know the SampP gold and Bitcoin rallied on the day right as just like one quote in the middle of a paragraph, so this normalization of Bitcoin I look at as as very constructive, particularly when you think About I mean, as recently as a couple months ago, we've probably been in the depths of our kind of bear market right in the depths of the last prior bear market. There was still a widespread assumption. The Bitcoin was going to zero and that it was going to disappear. Now, when I talk to even skeptics, they very few say, I think bitcoins going to go away and be worthless almost all of them they might have different, takes on what its role in the future plays, but nobody's counting it out.
So that alone to me is very, very significant and then the last thing I'd mentioned here is just you know again, because we're thinking about things on a long time horizon we care about things like demographic shifts over time. So we've commissioned a survey. We'Ve done two of them actually through Harris poll, this survey, the American public and what it shows is, you know consistently. The age group that is 18 to 34 is by far the most aware, most knowledgeable. They have the greatest conviction. They have the greatest propensity to purchase Bitcoin, and so, as that particular age, demographic you know continues to comprise a larger portion of the economy. They will have a more significant impact on financial markets than they do today, and I look at that as like a major mega tailwind over the next kind of decade or so. But you know, I think things line up pretty well here, even in the short term. In 2020 mm: hmm: okay, Jacob! What do you agree with the with with this prediction? Do you see Bitcoin breaking the all time eyes in 2020 in 2020? Maybe at the tail end I don't know if we go straight to 20000 at this point, there's still some other fundamental catalysts in view in the markets that I think need to be shaken out, but because we still have cloud token and plus token that still have Some Bitcoin reserves and have a pretty massive aetherium treasure trove that they could dump on the market at any point in time, similar to how they did in in mid 2019.
There they have far less than they did, but I think that if we see you know it's possible, we see other Ponzi schemes exchanged hacks. You know all kinds of other things that you know we're still in a in a nascent market that has those types of events that they can come into play with, that are, you know, more Black Swan that can be predicted by either fundamental or technical reasoning, and So we are on pace right now, where we're moving right along, but there's still lots of key resistance levels to get back to 20000 20000 is, is, is you know, it's still 200 percent away from where we're at and so do? I think it'll break 20000. I I don't, I don't, think it'll break 20000 in 2020, but it's Bitcoin, and so what I would say just play it level by level. Yeah don't expose yourself to too much risk because you know the the rate of return right now. If it breaks 20000 P, then people will move a hundred percent up on their money, and so it was much better to buy at a lower price, especially when we're. You know this overbought in a market, but with the having coming up. I think anything is possible, but there are definitely some fundamental events to watch out for overall in the market from a risk side mm. Hmm. So talking about odd coins. Do you think Jacob that this is a good time to invest into alkynes and if so, which ones we should keep an eye on at the moment? Well, there's, yes, and no, so I think that there are, I think, the right time to invest in alt coins was probably a month ago or two months ago, and right now there a lot of them are coming up on high timeframe, resistances, and so what I Say buy into all alt coins right now I don't think so.
I would expect some form of a pullback first, and so it really depends on your time horizons and what exactly you're looking for. But most of the altcoin projects that I'm in are up over a hundred percent in USD on the on the year, and a lot of them are up over 40 50 percent up on Bitcoin on the year. So, from a from a trader standpoint, a lot of them are getting. You know, a lot of them are in high overbought markets. They'Re in the trades are getting pretty crowded, a lot of people are taking the long side, and so I do expect some sort of an event to wash out those late, long traders or investors, and so I would wait for a pullback to enter a lot of These altcoins at the moment and the Spencer I read your end of the year predictions and among the predictions you were talking about alt coins as well, and you were. You were saying that privacy coins will be the least of the major exchanges. So why do you think so yeah so I mean look I'm see coins. I think they have a real place in our industry. I think that of all the various types of all coins – they're – probably one of the few – that may have a real purpose in the industry, but that said, there's, certainly a huge target for regulators. You know, I think that regulators are absolutely more concerned about Manero and potential easy cash than they are about Bitcoin at this.
At this point, so you know, I think, it's really just regulators are getting much more serious about the space and I think that privacy coins are a probably the first major target to get delisted and I think for exchanges honestly it's, not a very substantial portion of Their trading volume that comes from privacy Quinn's, so you know if regulators are going to be, you know causing some headaches for you by supporting them, then I think it's a pretty easy decision to just deal with them and it's, not the outcome that I would like To see, but I think it's there's a decent probability of that happening in this year next year. What are things that you wouldn't? Invest your money? I mean the money of your company into one of these anonymity folk used coins, I mean listen. Every investment case is made on a case by case basis. We do think that there's gon na be some concern for very strictly oriented privacy coins, so that would definitely be present a major major headwind, but I can never say that we absolutely would not do that. Yeah, so it kind of remains to be seen, but I certainly I hope they don't get why they delisted, but it's very possible and, like you said it's, you know largely a focus around kind of US regulators, and so you know, they've been among the more active In terms of expressing concerns – and I think that if we're going to see any kind of broader delist into privacy, coins, it's, probably as a byproduct of some fad of guidelines, so fat, if being the Financial Action Task Force, which is a multi country, International Financial Crimes, Kind of fighting force so that's, probably where we'd see it from but we'll see if that happens this year next year, or maybe hmm yeah, because actually we we saw that even in not only in the US but also in Europe.
Lately they implemented a new regulation against money laundering and terrorism, financing which is touching upon anonymity and personal data issues and that's put actually worrying for for privacy coins in Europe as well. I guess yes, exactly and all of those recent moves are a byproduct of fatik. Releasing new guidelines in summer of last year laying out the fifth anti money laundering and anti terrorist financing guidelines, so we're seeing the repercussions in the world, and what about you Jacob? Do you agree with this prediction? Like will privacy coin bility be lately they listed from a major exchanges and if so, like what? What is gon na be the impact on your trading activity. Yeah, I mean you can't say you know with certainty. These things are going to occur. I think it's, a very pragmatic prediction, we've already seen it we've seen a lot of privacy coins get to list it already from from certain exchanges, but then, at the same time, you're seeing tokens like Z cash, be a pro approved by the New York state financial License seem to be sold on Gemini and so you're, seeing kind of a mix where you know, Z, cash has the ability to turn on and off private transactions, and then the Jerome Powell of the Fed came out today and said it's, not a good thing that You can see transactions publicly on a ledger, so it's kind of an odd nod toward privacy coins in a weird context, but yeah.
I think the government wants to be able to track everything. I think with companies like chain alysus. You know we saw the child pornography. Sting where they took down a whole network using Bitcoin chain alysus, where they were actually able to trace all the people anytime, they cashed out to USD so Bitcoin in and of itself is probably one of the best currencies in the world for a government to to Applaud or not of get it's not of a bootable approval for because everything is trackable, especially if you want to be able to move into fiat currencies you can track. It is with like clean coins from a minor and that those are you know, non trackable because they were just fully created. You know, but anytime you move to cash. You'Re still gon na have an ID Dwolla t' on a non kyc exchange, but i think that privacy coins are interesting, but i think that stable coins and if they create you, know privacy, stable coins. I think that's, probably where you're gon na see more interest, because they're, stable or they're pegged to some form of currency right. So are you trading some of these privacy coins at the moment? If it moves in is volatile, I will trade it do. I hold them long term. The only one I hold long term is Zen Cash. I like Zen Cash. I like what they're doing it's an offshoot of Z, cash and it's got a whole suite of products behind it, and Barry Silbert has a as a trust, that's kind of backing Zen cash.
So I like Zen Cash there's a couple. Other privacy coins like Bheem and grin that have some interesting member wendel technology, Z, cash itself just came out with some new innovations on the ZK snarks protocol, so there's there's, some really cool innovation going on on the privacy but I'm mostly excited to see some of These companies build privacy layers onto Bitcoin and that that's kind of what I'm really hoping to see obrah okay, so moving on. We recently knew that blockchain capital is raising two hundred and fifty million dollars to launch a fifth investment fund and which we'll be investing 25 of of its assets into crypto and the remaining 75 into equities. So can you tell us a little bit more about this? Fan Spencer, what are the projects that are on your radar that you want to invest these money into well from a regulatory perspective? Oh, we declined to comment specifically on what we'll do with fund five just so I don't cross any boundaries as far as like advertising for it, but instead of just talked about in general, you know we followed a very consistent strategy over time, which has largely been To invest primarily in the equity of companies in the industry and then also to take exposure to the digital assets that might be native to any of these particular protocols. So in some of these cases, the only way to get a direct investment opportunity is via a native kind of crypto asset, and so we always reserve some level of flexibility there in general, across all of our funds.
You know seed in Series. A investments are kind of our bread and butter, but as the as our funds have gotten larger over time and as the industry has progressed and we see more credible late stage rounds, we've been increasingly active at the you know, Series B and we'll probably participate more In Serie C and later financings as well, so we tend to be stage agnostic, but industry specific, but even within that stage agnostic we still tend to focus a lot on scene Thursday and you Jacob you as part as part of your products at signal profits. You offer investment breakdowns on what projects to invest in. So what are the most promising crypto projects? An investor should keep an eye on according to you at the moment. As far as the investing you know, obviously, dphi is is a huge one in this space. So Nexo and lend both of those are two to keep an eye on, but again, like I said I mean Nexo is already up almost a hundred percent on the year in USD and almost a forty percent against Bitcoin. I really like exchange tokens. I'Ve liked exchange tokens that have those have been a really big part of my portfolio as far as my investing thesis for quite some time so by Nantz exchange token Halabi exchange token in the FTX exchange token. Those three of comprise you know about 10 percent of my overall investing strategy. Portfolio – and you know, yosh is one that I I was very heavily critical of in the beginning, but the one thing you can't knock against EOS is their their capital reserves.
They'Ve got a significant amount of capital reserves for building out their protocol and improving it in pulling developers away from the um ecosystem in other places, top tier developers, and so I, like EOS and from a technical perspective, it's uh it's, looking really strong on the year. That'S one of my larger positions, I think that's up against 50, almost against Bitcoin and Bitcoin, is almost up 40 on the Year card. Ah, no isn't as big of a position, but they've got their Shelley. There Shelley launch that's coming up very, very strong protocol in in regards to the the scientific approach to it the way that they've done it. What I'd like to see more out of Cardno, though, is the business marketing operational standpoint, because you see you know, protocol like Tron, where it's pure marketing, you know less development. Technically, then something like card a No. So you know when you find one of those that has the hybrid but Bitcoin and etherium. I honestly are to to the best long term fundamental plays just because of the first mover advantage and the network effect and the the amount of developers that are building on on both protocols. What do you think is the main role that blockchain capital should play in terms of making this industry grow faster in one project grows. It tends to benefit the industry as a whole, so whether it's a particular protocol or whether it's a company providing infrastructure to make it easier for other new entrepreneurs enter in the space to go ahead and spin up a company without dealing with every piece of underlying Infrastructure, you know these are all kind of critical pieces going forward, so you know for us it's, mostly just making sure that we get capital to the most promising projects that make sense.
So if you had to mention three characteristics for the most promising problem programs, just three yeah, what would you mention like in terms of characteristics? Yeah, I mean like given what I said before in the early stage tends to be our bread and butter so preceding series. A look anytime you're, investing very early today, participating on is 18, so we're really investing in do. Is this a team that we think is going generally in a fruitful direction, and do we think that they have the kind of vision and awareness to be able to adjust their course as needed? So I mean, if we look through it, the most successful venture investments of of all time, whether it's, crypto or not. Most of those companies did not originally set out for the exact product that ultimately made them wildly successful. So most of them they might have had an intermediary product, that was mildly successful before they got to a bigger opportunity, but the point being that ultimately you're putting a lot of conviction behind the founding team of any particular company of project. So if team is one it's also just going to be in terms of timing, so we see a lot of investment opportunities that I think, maybe the industry's, not quite at that stage. Yet so you know over the course of the past six years, a some popular ones in that category have really bent things: investment opportunities that revolved around paying with crypto and so obviously we've seen over the past seven years, and people don't really want to spend their Crypto, so having a startup that revolves entirely around the notion that people will want to do this hasn't been fruitful yet, but I think it can be in the future.
So again, so the team timing and then probably just the size of the market opportunity they're going after so regularly, we'll see things where listen it's, a good team. We think the timing is right, but, given that we operate venture funds, we really need to see teams going out there very, very large market opportunities and not ones that can be kind of middling outcomes done. So if you look at the breakdown returns across any successful venture fund, as opposed to a situation where maybe all of the investments do decently well, I'm, so turned that into a baseball analogy. Typically, you have a few companies that end up being grand slams. I mean those drive the vast majority of returns, as opposed to a bunch of investments that kind of became singles and doubles.