Bitcoin Reserve, Trump Inauguration & Agentic AI | News-recap January

Alex (01:02.308) this time as Mr. Donald Trump has given us enough food to fill probably several episodes. So the inauguration of Trump and everything that happened around it, like the Trump meme coin, a potential Bitcoin reserve will be the main topic of today’s episode. If we have time, we’re also going to talk about a couple of other things like stable coins, agentic AI. But I also don’t want to over promise here in the beginning, since it might also be the case that we get stuck with Donald Trump for an hour. Anyways, I’m of course not alone today. So let me introduce the co-hosts and guests of today’s episode. First we have from the BFRR team, Michael. Hi, Michael. Michi (01:47.259) Hi to all of you. Alex (01:49.402) And then we have our long-term partner and co-host Stefan Grasmann. Stefan, I will give a quick intro since this is, I think, the first episode with you after we have switched to English. You’re the group head of thought leadership and chief of blockchain at Zühlke. So maybe first question, what is a chief of blockchain at Zühlke doing? Stefan Grasmann (02:09.429) if I would know that. And handling everything regarding blockchain projects and so the pre-sale stuff, thought leadership in that area. so quite a diverse job. Alex (02:21.68) And we enter into the second year of our partnership with Zühlke. So Stefan, very happy to have you on board. And similar to last year, Stefan is going to record roughly one episode per month, inviting people from his network, focusing on DeFi related topics. So I’m not sure Stefan, if there’s any outlook you can already give us on topics or guests you’re planning to invite for the coming year. Stefan Grasmann (02:48.002) No, as you know, our planning meeting is next week, I guess. So we need to discuss which topics to focus on, but I’m quite optimistic that we find very interesting guests and have a lot of fun recording these podcasts. Alex (03:02.638) Yeah, so definitely looking forward to that. And then we have one guest today, Maximilian Vargas. Max is the founder of Blockstories, my favorite crypto and digital asset newsletter. And I think Stefan, that also applies to you. So we are both fans of Blockstories. Max, I think the newsletter is currently only available in German. I’m not sure if there are any plans to publish also English content going forward. Stefan Grasmann (03:16.804) Sure. Max (03:27.15) We actually want to follow your lead and try to expand in other European countries this year. So yeah, that’s definitely also on our roadmap. Alex (03:30.254) Hahaha. Alex (03:38.81) So then that’s a big shout out to all the international audience here to have a look out to the internationalization of blog stories. Max, you are not only publishing a newsletter, among other things, you’re also currently organizing an event series called a digital asset season. And I was able to join the first event of that series in Zurich last week. So. What exactly is the digital asset season? is like your target audience? Where are the events? How can I join? And maybe you can give us a bit of an overview here. Max (04:14.51) Yeah, thanks for the nice plug. Digital assets season is a 10 week program designed for asset managers, fintechs, banks who are currently in the phase of drafting their own strategy when it comes to digital assets. And we partnered up with some industry leaders like 21 shares Solana, Nier, Fireblocks, Kyln and Deca and quite some others. Alex (04:16.304) you Max (04:38.206) And what we’re doing is we’re hosting events in several European cities like Zurich, like Frankfurt, like London. And we also combine that with digital activations like podcasts and also industry calls. And for those of you who are working at asset managers or banks who want to have a deeper look into how these industry leaders are already thinking about their own strategies and playbooks, I can also invite you to our upcoming industry call happening on Tuesday, like this week that is now coming January 28th. So have a look there. And then you can hear from about different tokenization projects and digital asset strategies. I think it’s going to be quite a lot of Alex (05:24.24) Yeah, it looked like a very interesting agenda for this call. So we will put all the links into the show notes to blog stories to the digital asset season to Zühlke, of course, for those who are interested. So I was part of the first event I said it was a great event. It was in the Google building in Zurich. And what I found, let’s say interesting or like special was that it was a good mix of TreteFi and DeFi people, let’s say what you usually don’t have at other at other events. So for all of you guys who are interested in joining, please take a look at the show notes and make sure you can be part of one of these next events. Alex (06:06.576) Alright, before we start, maybe one last comment. regular listeners will know that we always do a prediction episode at the beginning of the year and we have already done our prediction episode for 2025 a couple of weeks ago. And usually what we do is if a prediction turns out to be correct, the winner gets a beer. And usually I would say these predictions are rather bold. So we are all old, we can’t drink too many beers. So usually if someone wins, it’s already something special. And I did not win any beer for my predictions last year. But less than two weeks after the end of the year, actually one of my very bold predictions became true. And I just wanted to highlight this year because in January, 2024, I predicted that X, so formerly Twitter, is going to introduce a payment features, something like X payments. we actually two weeks after the end of the year, so unfortunately two weeks too late, they announced now that this is actually going to happen. So… the X app will become a payment feature that has been announced on the 13th of January. It’s currently unclear whether this will be extended and also include cryptocurrencies and stable coins. But I just wanted to mention this here and maybe convince now here in particular Michi that I still deserve a beer because just two weeks after the end of the year should still be within like a limit that makes me deserve a beer. Michi (07:33.541) Yeah, Alex, it’s okay. You can come over to my place tonight and you’ll get your beer. The thing is, this is an announcement. given how hardly predictable Elon Musk is, I wouldn’t entirely bet on it, but I’m always happy to drink a beer. Alex (07:50.352) could be that it’s only actually introduced in 2030 maybe. Stefan Grasmann (07:55.488) Maybe Alex, you need to put these bets on Polymarket to be a bit more objective with the results. Alex (08:00.496) That’s true. That’s true. That I can also use the intelligence of the crowd to see how big the odds actually are. by the way, Polymarket, I have written an article on Polymarket in the Frankfurter Allgemeine Zeitung in Germany earlier this year. And since then, the topic, at least in my bubble, seems to have gotten a lot of attention. So I have been contacted by several journalists since then. Die Zeit, for instance, the Süddeutsche Zeitung, so many German newspapers have given a couple of interviews. There was also an article in Die Bild, so that’s like the German version of the sun, of the British sun. It was accidentally or by chance two days after I wrote the article in FRZ and it was basically focusing on exactly the same topic, exactly the same betting markets. So it might have been inspired by my article. But I think it’s a great thing that This is receiving more attention. I’m also a bit kind of hesitant since there are some risks that come with something like polymarket. So maybe one question to you guys, I would be really interested in your opinion. Currently, polymarket is of course a relatively unregulated betting market. I mean, there are some, let’s say rules around which betting markets can go live, but by betting on something like will person A, B or C become president? I’m of course also betting indirectly that this person, and now I’m exaggerating a bit, will still be alive until then, right? Which is of course not an issue when we talk about Donald Trump, but what if it’s possible to actually bet on local politicians gaining office or not gaining office, right? Isn’t that, can’t something like this become a danger to the, let’s say, private or personal security of these people? Or am I like too pessimistic when it comes to these things? Stefan Grasmann (09:57.697) Actually, I had a look into Polymarket and wanted to see how easy it is to create your own bet. And it’s not easy. they heavily, so you need to propose topics and they have a look and they check how to actually come up with a credible result in the end. So I was thinking about betting how long California will stay part of the US. After this week. Yeah, I also wouldn’t have known how to measure that or how to express that with a good oracle on chain. don’t know. So I think it’s not as easy as most observers think to bring in new bets on there about the future. Max (10:47.438) I think that has always been the main concern when it comes to the polymarket. That’s something that I’ve been hearing for the last two years, that there’s some personal risk involved and betting on different also political outcomes. I think in the end, it’s just another market where you can express your opinion. And before that, were also industry players already that were heavily influenced by the outcome of elections. And there were already big economic incentives to somehow manipulate or interfere in this outcome. I think, yeah, I don’t know if if PollyMarket somehow increases now the odd of tragedies. I just want to say or point out that it’s not like it introduces a completely new dimension into this whole debate. and the possibility of opening up your own prediction markets on Polymarket. I was told by some insider that it might be a feature along the line when Polymarket introduces their own token and then somehow also combine that with the possibility of StakeIt in order to gain access to creating your own markets. And then I think it’s going to be quite interesting. And for now, Polymarket is also incentivized not to… go too broad because it’s always a topic of liquidity. And I don’t know, you don’t want to have these negative headlines where you have some weird odds on different outcomes just because there’s only like a thousand euros of liquidity in these markets. And then somehow polymarkets gets also bad headlines. So I think that’s the main reason for them not opening up new markets. Alex (12:34.34) Yeah, that’s that’s a that’s a fair point. And of course, I agree that these risks have existed before with like, normal betting markets, let’s say, I mean, we have like, many of these sports betting platforms when you where you can bet on the I don’t know, the fourth league in Italy football league, right about the outcome of games and stuff. So that’s what I find totally fascinating with polymarket is that it’s like a live ticker of public opinions and stuff. for instance, what I did, was I took a look when Alice Weidel from the German AFD, so the right-wing party here had her interview or her conversation with Elon Musk. You could basically observe whether this has any impact on the attractiveness or perception of AFD in Germany, which was not the case, by the way. But that’s something that has definitely not existed before. And that’s something I really like with Polymarket. Alex (13:25.284) All right, then let’s move on and let’s maybe slowly move into the Bitcoin Trump topics. Maybe we start with taking a look at the Bitcoin price first. What has happened over the last weeks to the Bitcoin price? Michi (13:40.827) Yeah, sure. Let’s talk Bitcoin and ETH and in particular prices and ETF developments respectively. Let’s start with Bitcoin and there we immediately start talking Trump. There was an inauguration peak in the Bitcoin price, so the price reached a new all time high of about US $109,000 on January 20th. So right one day after the inauguration, but the current level went down. to about 102k, which I checked this morning on January 23rd. So we had a new high, new all-time high, and a high in the last 30 days of about 109k, but also a low during the last 30 days of 89,000. So there is about a 9 % retracement from the all-time high to the current price of 120k. And in my interpretation, we see relative stability despite the heavy volatility in the market. So first observation is new all-time high in Bitcoin price. And then there are, of course, also the ETFs, currently total assets under management of 126 billion, which is the result of additional incoming net flows the last 30 days of about 800 million. There’s a consistent positive trend in flows over the last month. And interesting about Bitcoin is that there are higher average daily volumes compared to ETH consistently, and the major providers still show very strong market share. So much about Bitcoin, anything to add regarding Bitcoin from your end? Alex (15:40.026) So I’ve just seen a lot of not Bitcoin directly, but to the ETF story, I’ve seen a long list and I think that was posted by one of these two Bloomberg journalists. think Eric Balcones, a long list of crazy ETFs that are now filed in the US. I’m not sure if any one of you has seen this, like there is a Doge ETF filing now and some other crazy ETF filings. So let’s see how many ETFs we are seeing being issued in the US this year. Stefan Grasmann (16:08.081) We will for sure see a Trump ETF, I mean, meaning the meme coin. Michi (16:08.24) Yeah, very. Alex (16:10.672) Yeah, yeah, that was, I think, I think there was also one issue, one filing for Trump coin ETF. Stefan Grasmann (16:19.1) That’s what we need. Michi (16:20.433) There was. Let’s talk about that later. Maybe a short glance at ETH2 and its price and ETFs respectively. So current ETH price checked this morning around 3,200K. The high these last 30 days was 3,700 and the low 2,900. So ETH is more stable than many altcoins. One big support for the current price is the Ethereum Foundation’s commitment of 50,000 ETH to the DeFi ecosystem. So that’s a strong signal by the Ethereum Foundation to support DeFi and the DeFi ecosystem. And then moving on to ETFs that we have total assets under management of 47 billion and a current net flows the last 30 days of additional 74 million. Regarding the ETH ETFs, we see more volatile flow patterns compared to the Bitcoin ETFs. We have lower but stable daily volumes and the fluctuation or we see more fluctuation in assets under management as a percentage of the market cap. I think key market factors that affect both Ether and Bitcoin are amongst others, political events. So Trump’s inauguration created an initial surge. But then we have a lack of crypto mentions during the inauguration speech, which then led to a pullback. So Trump didn’t meet our bubbles or communities‘ expectations, as there was no crypto mention during his inauguration speech. And then again, another key factor is the appointment of crypto friendly SEC leadership, which is one of the specific or tangible results after Trump’s inauguration. Alex (18:28.26) So since we have two experts here today on the Ethereum network, I wanted to spend another couple of minutes on ETH because my kind of view of ETH has changed a bit over the last months and years. And it has turned, I guess, together with like market consens a bit more negative than a couple of years ago. So Max and Stefan, I would really be interested in your take on ETH and like ETH future. I mean, what we are seeing is that ETH like price wise is underperforming Bitcoin and also some of its direct competitors. And I mean, my view has turned a bit more negative because comparing ETH to Bitcoin, mean, Bitcoin is like Bitcoin has no competition in its kind of attempt to be something like digital gold or the store of value. It’s Bitcoin and Bitcoin only. While with ETH, of course, being that smart contract capable platform that world computer whatever you want to name it. There is of course more and strong competition, like of course, first and foremost Solana. And of course you have these two approaches with Solana being a very scalable layer one, maybe a bit more centralized than Ethereum and then the Ethereum with its layer two approach to scaling. So I would be really interested in your take on kind of where are things going in your opinion and how is this going to… turn out? there a spot for ETH in the future? Will it be passed by its competitors at one point in time? Stefan Grasmann (20:03.023) Do you want to start, Max? Max (20:05.198) I can definitely give it a try. think it’s quite multi-dimensional topic with no single answer to come to the whole reason for the relative underperformance of the ether. think starting out, I think a big risk or something that the market perceives as a risk is that Ethereum tries to tackle too many things at once. And it’s not clear what the overall Ethereum story really is now moving forward from this point. So on the one hand, it tries to compete with Bitcoin as a store of value. But then I think Bitcoin is already gaining a lot of momentum and really has established itself as the digital gold also within the Threadfy hemisphere. So it’s really, really difficult for Ether to really now outcompete Bitcoin on this dimension. think this discussion might be becoming more relevant again in a couple of years when Bitcoin might not move up in price as heavily as to overcompensate for the lack of issuance. And then there’s again some security budget conversations again, and people are wondering, how can we really accelerate? the adoption and interaction on the Bitcoin network in order to really compensate for decreasing issuance for miners in order to stay profitable. That’s something that you might foresee in the future to become relevant again, but it’s always also a function of the Bitcoin price and how heavily this is debated. On the other hand, with its overall roll-up-centric strategy, It tries to compete with alternative data availability solutions on this overall hypothesis that we are going to live in a world of a thousand chains who all want to settle or gain settlement assurances on the underlying base layer. And if you zoom in into this market with alternative solutions like EigenDA or Celestia, Ethereum still is the Max (22:31.742) like the least scalable solution for rollups or layer two solutions. And thus a little bit more expensive for their usage. And then you can argue the point, okay, but if we really also here accelerate adoption, at some point, these layer two solutions have an incentive to move to other DA solutions in order to boost their profit margins and leave Ethereum. So that is also like difficult to compete currently. And then there’s the other dimension where Ethereum used to be quite strong, which is the execution layer or Ethereum mainnet. And there they had been like, obviously extremely out-competed by Solana with all the like, like metrics that are relevant when it comes to trading volume, TVL and so on. Really like on a relative basis, increasing heavily on the Solana network. And we don’t see that much of growth. Ethereum mainnet, which is also obviously part of the strategy because they want to move that whole pie to the roadups themselves. And mixing all these different frontiers where Ethereum tries to compete makes it difficult for them to really develop a compelling narrative that investors can understand and invest in the outlook of Ethereum together with also, which brings me to the other dimensions of this whole topic, questions like value accrual. with activity moving on to rollups, Ethereum itself has lot of less transactions being processed on the network, which results in less transaction revenues and less ETH burned and so on. And it’s just really, really difficult environment for ETH the asset. which I think is reflected on both the ETF flows, but also crypto native capital that is moving out from Ethereum to either like two tokens, but also I think most of it to Solana and other alternative layer ones that might be more compelling from a risk adjusted basis and their current valuations. Stefan Grasmann (24:48.397) Yeah, very good analysis Max. I think we are very close in that take. For me, it’s all about long-term versus short-term. So I think Ethereum is acting along its strategic approach to make roll-ups great, make them competing with Solana. So that’s what we are seeing, BASE competing with Solana these days on many fronts, many use cases. And the question for me is, if Ethereum manages to keep these layer 2s very much aligned with themselves. And that’s exactly what you were talking about, Max, with the data availability story. And there are movements going on by Justin Drake to talk about these based rollups that rollups are very, close to Ethereum mainnet that you will have maybe when the story plays out that you will have atomic swaps across layer 2s and Ethereum mainnet. think that’s very, important that this is a close atomic relationship and not a loosely coupled one because then you lose the advantages of being in the Ethereum ecosystem. And if a layer two chooses to use the data availability, for example, on Celestia, so a third party, then you will lose part of that atomicity of transactions across chains, which will happen. We can obviously see that there will be more than one chain. you will need to act across blockchains. And then the question is, do you have synchronous communication in the end between these blockchains or do you have asynchronous communication, which makes everything much, much more complex? That’s then you can compare that to calling a trigger solution with the ECB. That’s also an asynchronous communication usually, and you can compose that into more complex transactions. So I think it’s a very, we are at a very crucial point here if the whole ecosystem idea of Ethereum plays out and everybody stays aligned. Or if someone drifts off and says, okay, there’s greener grass elsewhere and I just make best of breed solution with different data availability solutions, et cetera, et cetera, which might make very much sense for a roll up in its own, but it’s very bad for the Ethereum ecosystem. So, yeah, interesting to watch how this plays out. And maybe one thing on top. Stefan Grasmann (27:17.409) There’s this week an intense infight. So many people complain about Ethereum Foundation, its leadership. So Aya Miyaguchi gets attacked in the open by many OG Ethereum veterans. So the whole DeFi ecosystem is really angry how the Ethereum Foundation actually works. I think some of them have points. It’s all about spending. the treasury paying the bills by selling ETH instead of using DeFi and gaining interest. say, okay, actually, the Ethereum Foundation is not aligned in these questions. They could use DeFi services in their own ecosystem instead. They sell some of their treasury assets. So these are intense discussions. But let’s see how this plays out. Alex (28:15.088) Yeah, thanks for your your overviews. hope everyone, everyone listening to this has taken notes now over the last five minutes. That was free alpha here for everyone. Let’s maybe let’s maybe move on since we’re already almost half an hour in and have still have some points in our agenda. Before we jump into the Trump rabbit hole, maybe one additional topic, which also gained a lot of attention over the last weeks. namely, agentic AI. Stefan, I know that you have been taking a look at this topic. Maybe you want to give us first a quick explanation of what agentic AI actually is and then why it’s so popular at the moment and what’s going on there. Stefan Grasmann (28:58.997) Yes, think I’m motivated from multiple dimensions here because we at Zyuku, have many, many people working in data and AI. So we actually build agents for clients also in the finance industry, for wealth management, et cetera. So I’m biased before that whole crypto craze went on. We discuss agents all day long in the company. And then in October, November, things went crazy from my perspective because what’s happening here is that you combine agents with money, capitalism, motivation, and maybe to explain what an agent is, an agent is something more autonomous than what we used to know in the past when we just used large language model to ask them interesting questions and then they answered us, but we as humans, we were in control. Agents are all about setting up tasks, giving intention and then let the thing run. And it’s one thing to let something run on a conceptual level, but it’s very obvious that it won’t stop there. I want an agent maybe to plan my holiday trip next summer vacation or something like that. And now imagine you combine that with giving this agent a wallet with regulated stable coins, for example. So they now have a legal tender of money. can pay services. And this, okay, this might trigger some fantasies, but yeah, it’s getting much, much more crazy from my perspective because now new frameworks like AI16z on one hand side, virtuals is another one. on base, for example. So again, it’s Solana on one hand side and the base ecosystem on an Ethereum layer two on the other hand side. They both garnered a lot of attention, a lot of projects, a lot of funding. So we’re talking about 15 billion market cap, I guess, beginning of January out of nothing. So I think there was nothing in September last year. So crazy speculation again. Stefan Grasmann (31:18.865) loads of money moving in. think Max can elaborate on that. what I see very critical now is that these agents are conquering social media. So we have crypto influencers, so agents being the most visible crypto influencers working for 24-7. Now people mixing in biological stuff, so evolutionary agents. Agents join forces and breed other agents. I’m really worried what’s going on there. think the humans not even lost control. They don’t even want to have control who bring these things to life sometimes. So I think, yeah, we see crazy stuff happening. And now I shut up and ask Max what’s his take on that. Max (32:09.55) I think with agents, are somehow speed running the Gardner hype cycle. So as you said, couple of months ago, were agents run out of thing in crypto. Obviously, since like the whole emergence of open AI and so on, we’ve been thinking about and discussing openly in our little crypto bubble, how crypto might play a role in the advancement of AI. it used to be focused on the payment layer. And now it’s… becoming more focused on how can agents also transform decentralized governance? How can they transform DeFi? There’s a whole sub-vertical now emerging within the AI sector and crypto called DeFi that is somehow the combination of DeFi and AI. think when I’m mentioning speed running Gartner hype cycle is that we just reached the hype like a couple of of weeks ago and then people found out, they are at this point, more or less glorified chatbots that somehow gain a lot of attention on X and plus get capital allocation from investors who are speculating on the AI sector also dominating this year’s headlines and also especially the agentic wave dominating this year’s headlines. But I think with all like the advancements in the AI and it’s really like a significant speed of things evolve over there. think we will see in a couple of weeks also the next iteration of these frameworks and the next iteration of utility of these AI agents. And then it starts again with people getting hyped up and investing and the overall market cap will grow again. And then there’s also the disillusionment once again, and then we repeat it. But I spoke to Elia, the founder of Nier, and he was quite an expert on this topic because he was one of the fathers of AI at Google. And then he moved on to found his own blockchain in Nier, which is now positioning itself as the blockchain for AI. And he was quite optimistic on the utility side of things that we’re going to see this year with agents being really able to handle. Max (34:36.044) capital autonomously and allocate into DeFi protocols and investment strategies intelligently. And that might be a big revolution or transformation on the UX layer of crypto and DeFi, which still is now a couple of years in the DeFi sector, still hard to navigate for average users. So I think this might, you have to think about more about it more like abstraction layer for crypto itself. that at some point could replace current user interfaces and you just interact through agents with decentralized financial protocols. Stefan Grasmann (35:14.343) And that’s what we see with agents in general. So when we talk to clients, we talk about, you need to care for your API because the next buyers might be agents. So they won’t use your web surface anymore. They want to interact with your API. And I think that’s the very same thing we see with this crypto-motivated and token-based agents. And one last. One last comment on that. If crypto was fast, so acting in months, this is ultra fast. So you can’t follow up. It’s every week. It’s crazy. It’s number one project on GitHub. So Eliza is the framework behind AI16C winning out the love of devs on GitHub, thousands of times forked framework so that everybody can use that. It’s open source. So it’s actually competing a bit with the closed shops of most AI development we see from the US. So it will be very interesting on different levels. now maybe closing this topic. Michi (36:20.305) Stefan Max, I agree with you that there is certainly relevance in this topic. This relevance led our friends at Bankless to even branching out a dedicated podcast to AI in crypto, which I find pretty cool and which might be my little piece that I’m going to share with you in the end. What helps me in thinking about agentic AI or AI in general in crypto is its comparison to smart contracts. So that was quite intuitive for me to grasp. That is, smart contracts automated or do automate basic financial functions, AI agents can actually handle complex and multi-step strategies across different protocols and chains. And this was kind of an observational lesson. that makes it understand for me how relevant they can be if they’re implemented properly. Michi (37:22.733) OK, then now we’ve probably reached a point to come to a big topic of today, which is the Trump inauguration. Yeah, there is really much to say about it. I tried to cluster all the different discussion points. One of them and the first one is the shift that the Trump admin brings. to the general US crypto stance. So Trump and his new administration signal a major crypto policy shift through strategic appointments of Paul Adkins and Mark Hedman with the name I’m gonna budget you yet at SEC. And with that, the previous enforcement heavy approach under Gensler is finally dismantled. But. After the inauguration, there was a first wave of executive orders that focused on other priorities. So unfortunately, there is no big executive order by Trump that alters immediately any crypto policy in the US. Nevertheless, I anticipate a significant regulatory relaxation based on the promises Trump made during his campaign. But again, there is a lack of immediate crypto-specific executive actions. So much about the administrative shift that can be partially already observed and is to be anticipated after the campaign and after the SEC appointments. Another domain are certainly new token developments that came along with and happen after the inauguration. So of course, there is the heavily covered launch of the Trump and Melania tokens. So shortly before his inauguration, Trump launched the, in my opinion, meaningless Trump coin on the market. The crypto industry criticizes this move because it Michi (39:38.107) kind of underlines Trump’s greed and Trump’s transactional approach to his presidency. with transactional, mean, Trump usually asks himself, what is in it for the United States? What is in it for me? And launching for the first time a token by an acting US president is a pretty new move. So this represents a first major political figure backed cryptocurrency, if you will. these two tokens, so the Trump and Malania tokens, temporarily reached 44 billion combined market cap with a heavily discussed three-year lockup period. And this, of course, these tokens raise questions about centralization. So meme coins in general do, but that there was a discussion in community about these tokens centralization. So much about the Trump and Melania tokens, probably you have something to add about their quality and the first time in history that a president launches his own token and… Alex (40:49.39) Yeah, let’s talk about the quality of the Trump token now. I found it interesting that Trump was asking at a press conference, whether he wants to comment on it and how he thinks how things are going. And he said he actually doesn’t know much about Trump coin apart from when he launched it, but he hasn’t observed it and how much money he has made. And then the reporter says, several billions. And then Trump said, and I’m not sure who exactly was standing next to him, but some tech billionaires, guess, from the US. Max (41:20.302) It was the Softbank CEO, Son, who just promised to invest like 500 billion into the AI sector in the US. comparatively, it was peanuts. And that’s what Trump said. Alex (41:28.496) Yeah Alex (41:34.032) Yeah, exactly. It’s peanuts compared to those guys that the billions he made. And maybe that’s an interesting question. How much money did he did he actually make? So let’s maybe quickly look at the token economics. I think there is an overall there’s like 999.99 million tokens. So that’s the total supply. But only 200 million tokens have been have been issued. The market cap at the moment is 7.4 billion. And so for these 200 million outstanding tokens, the fully diluted value is at the moment 37 billion. And now the interesting question is, of course, these 800 million tokens that have not been issued and have a market cap of close to 30 billion at the moment. In which possession are these 800 million? Stefan Grasmann (42:28.911) In his, I analyzed that on Sunday. Sorry. And I wrote a quite visible LinkedIn post on that exactly at the moment when it came to its top. I’m quite proud of that. So when the coin was at $69 or something like that, I said, okay, please be cautious. Look at the token distribution. So 80 % is actually in the possession of the issuer. and 20 % are out circulating and they are locked up for three months with a vesting of three years. So in three months, we will see what will happen when, and yeah, we can speculate what they will do with that. they, speculated about maybe they, if they were smart, they would add drop some of them to US citizens to make some value out of that token. This is a nice hypothesis, but I think it won’t happen. I see it extremely critical actually. And I’m completely frustrated that even DeFi guys jump on that wagon and trade the deal, stuff like that. Some people I admired for many years, like the Synthetix founder that he even wrote a tutorial on Twitter, how to do the trade on Saturday. Despite playing with his kids, he was trading Trump meme coin. Great. That’s what I was in for, I think. This is totally going crazy. think long-term it’s bad for the industry because there’s all about get rich quick and not about any of the values that this whole scene had once upon a time. for me, you see it split into different areas. There’s no one crypto anymore. I think there are these meme coin areas, are these agentic AIs, there are solid DeFi stuff. I think this will… Yeah, I think this will get clearer this year if you’re in for serious use cases or if you’re in the trading game in the end. And yes, they are technologically connected and everything interacts with everything and profits go from one area to the next maybe. I’m completely clear about that, but I see it very clearly. Michi (44:44.561) Yeah, and the if you will traditional crypto market, there are mixed reactions to these political token entrances, if you will. One stream of discussion is excited over mainstream adoption sickness. That is, if a president launches a token, it receives worldwide coverage and therefore brings people to thinking about it, potentially investing, which is kind of a mainstream adoption motivator or signal. But on the other hand, of course, there are concerns about the market integrity and kind of the bad connotation political tokens bring to the space because if early adopters or first time retail investors have this as their first contact point and come to the conclusion this is crap, then they might think Bitcoin is equally crappy. these are the two discussion streams I observe, at least in the broader coverage about these political tokens. Alex (45:54.352) Let’s maybe quickly come back to the question, how much money has Trump actually earned with it? Because I’ve read across the news that he has earned like 30, 40 billion. And if it’s really true that these 80 % are 100 % in his own possessions, so Bloomberg has reported that there are two companies behind these 80 % non-issued tokens with this one, one is called CIC Digital LLC, and that’s an affiliate of indeed the Trump organization. And the other one is a recently incorporated business was called Fight, Fight, Fight LLC, which of course, I mean, might also be related to Trump. So that’s for now, assume the really these 80 % tokens are in his own possession. Then indeed, mean, on paper, he is currently worth, I don’t know, 30 something billion. But of course, that’s nothing that can be realized because I’m pretty sure, of course we have that vesting, but even if he had these tokens and wanted to sell them now, I’m pretty sure he couldn’t sell them even close to the current market price. Stefan Grasmann (47:01.87) It’s obvious on the website. that’s where I had my, so in my post, I showed the distribution. I heard that it was only published after the launch of the token, which is also a no-go, an absolutely no-go. So people were just aping into that trade, but I’m not sure. So I wasn’t awake Saturday morning at 3 a.m. in Germany. I was sleeping. But yeah, and this is the distinction between theory and practice. So in theory, Trump is rich with that coin, no practice will show what it worth in three months. That’s why I felt obliged to post this caution message to everybody because I think many people might be burned who think they are extremely smart and out trade the market. But Max, what’s your take on that one? Max (47:53.28) Yeah, first of all, I’ve heard from several sources that are a little bit closer to this topic that this was rather like a very strategic play from Trump. So it took everybody by surprise, but it was something that has been in the works for quite some while with several discussions also going on with major custodians and so on, on how to operationalize this whole execution of the meme coin launch. And so far, think past behavior, the history of Trump doesn’t indicate that he isn’t really trying to maximize his own wealth out of this meme coin, but we don’t know yet. So I also find it a little bit difficult to blame him too much before we really see him selling off all his tokens that belong to him. So I think I’m also like… pleading for, let’s wait and see, but also make everybody aware of the risk involved in this trade and investing in the Trump coin. And then also on a higher level, think we cannot have it all. cannot raise permissionless new financial market infrastructure, permissionless capital markets, and then be too much annoyed by the launch of meme coins also from big celebrities. So that’s on a meter level of discussion. What’s my take on that one? When it comes to how much did he earn from it so far, I think we can be quite sure that he has made a couple of million bucks already just because he provided liquidity on these markets that were heavily traded. And if you provide liquidity, that usually comes along with like trading fees that you earn by the people moving in and out of your pool. Alex (49:52.176) Max, can I ask a question that because I also wondered how this is actually working because he’s of course not selling actually selling these 200 million tokens that he issued at the beginning because otherwise he would have earned right away like 2 billion. That’s of course not the case. Is he somehow just posting the liquidity there and then he’s earning he’s earning trading fees or how is that working in the Max (50:10.968) Yeah, there’s some in the smart contract. It’s defined how much trading fee you earn by providing liquidity, which is like in a very small percentage. nevertheless, with over like, think 70 billion of trading volume over the last weekend, it can add up to quite a substantial amount of money. And then you have also him transferring part of this liquidity to centralized exchanges. At this point, it’s not, I think, clear yet whether it was sold also in trenches on these exchanges or whether it was also a move to provide liquidity on the exchanges themselves because they were quite fast in listing the token as well just after a couple of days with all major centralized exchanges now offering the trading of Trump. I think overall, we can assume that he has made some money on the trading fees and he might have already sold a little bit, but we don’t know yet. So that’s something that we still have to find out. Alex (51:22.658) It of course opens up potential for corruption, Similar to Trump probably expecting now his people who want to get access to him to sleep in his hotels. I think he’s trying to buy a hotel that he owned years ago that’s very close to the White House in Washington. He tries to, and it’s currently owned by Waldorf Astoria. He’s trying to get that back now because of course he wants all his guests probably to sleep in his hotel that next to the White House. And very similar, could be his expectation. Like if you want to get access to me first, maybe buy a couple of million of my tokens, right. And then, and then we can talk. And that’s of course something you, you don’t want to have with, with a, with a politician or even, even a president. Max (52:05.368) Yeah, but maybe also back to the airdrop hypotheses that Stefan pointed out. That’s something that I consider to be very unlikely. I just want to once again understate that we don’t know yet the true intentions of what’s going to happen with the 80%. Just what I know is that the team behind it is really quite strategic about this whole project. And also like Trump is indicating that he doesn’t know anything about the launch of the token, how it went so far besides that he launched it as you guys stated. I think we might also be still in for a bit of surprise because the team will also know that they just cannot sell all the supply that’s going to be unlocked within the upcoming months because that would just signal the market. Okay, this one is over. It would go down to zero very quickly. So they would like just sit on hugely like unrealized gains. So let’s wait and see. But I think there’s a nice opportunity for him to really like establish himself as the crypto president and just make it the largest onboarding campaign in crypto history. And maybe also connected with his own Trump empire and his all casinos and hotels that you also. indicated as another form of payment method over there. So that’s something that’s being speculated on also in insider circus. But all past behavior, once again, point towards the future where he wants to just maximize his profits. So I wouldn’t consider that to be very likely. Michi (53:52.527) Yeah, these two launches of the Trump and Melania tokens inspired at least two institutions to file relatively groundbreaking ETF applications. So I’m talking about Rex shares and Osprey. Rex shares is an investment product provider and Osprey is a digital investment firm and yet a their ETF applications cover both traditional cryptocurrencies like ETC, XRP, and so on. But they now include these two political mean coins we just talked about under the so-called Investment Company Act of 1940. yeah, within one week, These, at least the Trump token already made it to ETF applications. So yeah, super interesting development from my perspective that I mean, coin would make it into an ETF. Alex (55:00.305) Let’s maybe spend the last minutes at least on that topic on the Bitcoin reserve because that was something that has also been discussed, of course, for weeks already in the US, but now it seems to become more more prominent in Europe as well. I’ve also heard that Trump has opened up that topic above and beyond Bitcoin only and was talking about a crypto reserve instead of a Bitcoin reserve. have also been articles published across Europe on the topics I would be really interested in in your opinion. Michael, I’m not sure if you want to maybe give us a quick overview of what’s going on and then we can discuss a bit on the pro and con and the likelihood of a Bitcoin reserve being implemented. Michi (55:43.087) Yeah. So what did we know so far? So there is this idea to designate cryptocurrency as national priority. And this would mark for the first time a major world power officially recognizing Bitcoin as a strategic reserve. That’s what we discussed so far. What we know, what we have major predictions and our predictions episode. The news is now that there is a move from Bitcoin only to even a multi cryptocurrency national reserve. So there is a focus to shift from Bitcoin only to include and that’s important, US founded cryptocurrency. potentially prioritized tokens would include USDC, Solana, XRP. So there is an emphasis on US founded cryptocurrencies. Of course, it fits into Trump’s story of what’s in it for the US, what’s in it for me. Yeah, and the crypto community in my reading and understanding is pushing back against the altcoin inclusion. Yeah, the crypto maxis want Bitcoin only, of course. And one, bittening CEO, Kashif Raza, warns, for example, about the altcoin volatility risks in such a strategic reserve, which is an understandable argument. Alex (57:07.308) And then we have the discussion in Europe as well, right? In European Parliament we had in Germany an event in the German Parliament in the Bundestag where the Liberal Party in Germany invited the digital asset space in Germany and the former finance minister Christian Lindner has at least brought up the topic that we should consider or think about a Bitcoin reserve. I thought a bit about that the topic also US versus Europe and what Bitcoin reserves actually means because my understanding of the proposal in the US is that actually the US, for instance, also gold is held by the treasury. While in Europe, the gold is actually held by the national central banks. In the US, this has historic reasons. There was this Gold Reserve Act of 1934 where the FED actually handed over or had to hand over the gold to the treasury. So in the US, actually this Bitcoin Act of 2024 that proposes building up a Bitcoin reserve actually wants the Treasury to build up that Bitcoin reserve. While in Europe, I think it would be a different discussion. It wouldn’t be like the national Treasury is building up the Bitcoin reserve, but it’s more about the European Central Bank potentially building up a Bitcoin reserve. And that’s a bit of a different discussion we are having in Europe that only became clear to me after I spent a couple of minutes thinking about that. And what I found interesting is that I’ve taken a look into this Bitcoin act in the US that tries to build up or proposes building up that Bitcoin reserve. And they want to finance it because they want to buy up to 1 million in Bitcoins over the next couple of years, which is course worth billions. And one thing they want to do is they want to revalue the gold they own because the gold that’s owned by the US is currently valued at $42 per ounce. Why the gold prices at, mean, I’m not sure if I think close to 2,700, 2,800 US dollars. So the gold that’s held by the US Treasury is massively undervalued. And what this act proposes is to let’s let’s just mark to market our gold earnings, then we would be super rich and we could use that money to buy Bitcoin. And indeed, when you do the math, it’s like, Alex (59:31.468) several hundreds of billion of US dollar that could be spent. Of course, it would be highly inflationary without doubt to now spend several hundred billion on buying assets. But I found that an interesting fact. And then I took a look into how we Europeans do it because we also own a lot of gold, in particular in Germany. But unfortunately, it’s mark to market. So in our books, the gold is already worth 2700 US dollars. So we can’t apply this trick in Germany or Europe to… to now invest into Bitcoin. Michi (01:00:04.069) Yeah, Alex, one dimension in comparing the European stance and the US stance certainly is how to actually implement it. So would it be the European nation states? Would it be the European central bank? Another dimension certainly is the actual perception of such a strategic Bitcoin reserve in the two, yeah, in the US versus Europe. And there we couldn’t be more different. That is, in the US, we have a positive president as of January 19th. We have a Bitcoin Act. And in the EU, we have two employees of the European Central Bank, is Ulrich Binzal and Jürgen Schaaf, who are strongly opposed to either European nation states or the European Central Bank holding Bitcoin as a reserve. So they are really critical of the Bitcoin fundamentals. In my reading, the arguments are sometimes a bit on a shaky ground. my opinion, they published a paper about that. yeah, while both regions or geographies discuss a strategic Bitcoin reserve, their stance could be more different. Alex (01:01:21.668) Yeah, I we have Binzile and Schaaf being very vocal. mean, both employees of the ECB, of course, always publishing under a privately private opinion and not the ECB opinion, but still they are very vocal about their anti anti Bitcoin stance. I mean, I’m usually a big fan. need to make sure that this is not becoming a rant now, but I’m a big fan of constructive criticism, especially when it comes to Bitcoin. stopped mainly talking to Bitcoin Maxis on X and I stopped going to Bitcoin conferences because I just don’t learn anything from these guys because it’s very unidimensional, these discussions. So I much rather listen to people who are also critical about Bitcoin. That being said, I’m not taking away anything from Binsight and Schaaf because their criticism is just very unidimensional. They are not like… They’re not considering the pros and cons. They’re not going into any particular detail about their criticism. They’re just repeating over and over again, the same points. I mean, they have written this latest article in FRZ and I’m also writing a monthly column in FRZ and I’m spending a lot of time on making sure I get the facts right. I’m sending all the links to the editor, kind of presenting these are my sources. This is the data where I’m taking the numbers from. And they are just coming up and writing things that are just not fact based. And they call it an opinion. then in the end, apparently it’s fine to just go out there and say that Bitcoin is hardly used for legal payments. For instance, that was one statement. I mean, I’m not sure where they are taking this from, where these numbers come from. And that’s just not a fair way, in my opinion, to argue about Bitcoin. no one is going to learn anything or taking away anything from just repeating wrong facts. And that’s true for both directions being overly optimistic and overly pessimistic. So I’m not a big fan of their way of arguing and writing and talking about Bitcoin. Michi (01:03:19.799) And besides their rather critical stance, we must not forget that there are alternative European perspective. is a the European Parliament or one member of the European Parliament proposing a strategic Bitcoin reserve. So there are other individuals that propone such a reserve. There is a Swiss initiative for central bank Bitcoin holdings. And we had the leader of the German FTP, suggesting ECB Bundesbank integration. We even had in the German Bundestag a discussion about whether Bitcoin is the better money. So there are also positive voices in the… Stefan Grasmann (01:04:08.108) May I suggest something? I think this discussion is again, thinking about crypto as just an asset, which you put into your reserves or use as collateral versus the technology that can be used for democratic values in our pluralistic society. And I think I’m getting crazy over time that to me, everything what motivated me to join this whole ecosystem. very much with a lot of time and energy is the potential that the technology can actually have with its decentralized values, whatever that means in detail. But for me, and that’s my personal problem with this total focus on Trump and his meme coin and stuff like that, that we just talk about the asset speculation, getting rich quick, stuff like that. And we completely have lost the narrative. about what you can do to organize cross borders to do the right thing to improve climate or whatever. think I see a lot of value in token-based economies to do really great stuff. And now all we talk about is speculation and value of assets and stuff like that. This is not at all okay with me and I would like to change that. Let’s see how we can get there. Alex (01:05:30.896) you Alex (01:05:35.428) Yeah, no, that’s a fair point. And I’m actually opposing, I’m against the Bitcoin building up a Bitcoin reserve. I don’t think it makes sense. I at least don’t understand it because strategic reserves for a country is stuff like oil and gas reserves, emergency food, like medical supplies. That’s a strategic reserve a country has to build up. I think the only reason to build up a Bitcoin reserve, in my opinion, would be for geopolitical reasons. It’s because I believe this technology is becoming extremely important and with it, Bitcoin is becoming extremely important. And I need to control some of this Bitcoin in order to not be at a disadvantage from a geopolitical sense. apart from that, I don’t think the state has to build up a reserve because it needs to save money or something like that in Bitcoin. Alex (01:06:26.862) All right. We already a couple of minutes over the hour. So maybe we slowly, slowly wrap up and you guys please jump in if you want to add anything. Otherwise, I would quickly highlight two very short news that happened in the stablecoin space, which are very important. First Circle has acquired a tokenized money market fund named Hashnode, which I found very interesting. Of course, with the idea to provide yield in the DeFi. space, maybe they will integrate a feature that makes it very easy to swap from USDC into that money market fund and providing that chance to, yes, generate yield, use that money market fund as collateral. I think it’s already used as collateral and Max, you might know more about it with that usual stablecoin. think that USYC money market fund is a very prominent collateral already. Max (01:07:21.822) I’m not too familiar about the specifics of USDY. I think it’s called from Hashnode. I just know that it’s one of the most like one of the tokenized money market fund with the biggest supply. So I think there’s something like 1.2, 1.3 billion in Westall is outstanding. And I think, just as you said, they had a bigger picture for Circus to Alex (01:07:41.541) Yeah. Max (01:07:49.012) really evolved the utility of USDC and provide both the savings and the checking account for the new financial system that you can move freely in and out of these two different tokens to have yield and the capital working for you, but then also the velocity and the stability of a stablecoin to just settle transactions. Alex (01:08:14.778) Yeah, so I think it’s called USYC. And what I’ve read on on Ledger Insight, at least is that currently 97 % of this money market fund is held as collateral in this usual protocol, which is a whole whole other story we could have talked about today. So maybe Google usual stablecoin, there’s also much to say about that. But for the sake of time, I would move over to the very last but also in particular for Europeans very relevant. news piece on stable coins, which is what happens with unregulated stable coins on the Mika. And there is some more clarity now for a couple of days because ESMA has published a guidance on what’s going to happen with stable coins like Teva. And that’s of course, first and foremost, interesting for USDC. And apparently USDC and other unregulated stable coins in Europe have to be delisted until the end of January from. Sorry. Stefan Grasmann (01:09:08.159) Alex, you USDT. Be careful, you said USDC. Alex (01:09:12.072) Thanks for jumping in. No USDT, so Teva of course, needs to be delisted until the end of January this year. The only thing that is still allowed to be there is a sell only option and this is allowed to be there until the end of Q1 this year and then there will be no unrecorded stablecoins including USDT, so Teva on European exchanges. It will be very interesting to see what that makes with, let’s say for instance, the market cap of Teva. Alex (01:09:50.19) All right, with that, I think we can wrap up. I would leave out the discoveries of the week that we usually have, since we are already a bit over time. Just want to thank Stefan, Max and Michael for joining. So thanks for being here. Interesting discussion. Thanks to all the listeners for bearing with us until the end. Make sure to like and subscribe. Make sure to join our Telegram group if you want to continue the… discussion and then I’m very much looking forward to our next episode next week. Thanks and bye bye. Stefan Grasmann (01:10:28.033) Bye bye. Max (01:10:29.112) Thank you, bye bye. Michi (01:10:29.553) Thank you.