#819 How Macro Investors Are Investing In Crypto w/ Dan Tapiero
2/9/2022 · 35 min · transcript via mlx
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Key topics
— Macro hedge fund managers show bifurcated interest in crypto, with younger operators (Alan Howard, Mike Novogratz) actively investing while older billionaires like Paul Tudor Jones maintain smaller positions and avoid deep involvement.
— Bitcoin and Ethereum valuations remain reasonable in the mid-to-late stage private market ($500M–$1.5B range at 10–12x revenue), despite headline raises at inflated multiples like Alchemy's $10B valuation.
— Early-stage digital asset ecosystem valuations exploded from 14 companies valued over $1B (18 months ago) to nearly 100 today, reflecting exponential growth in the underlying market.
— Stablecoin yields of 7–9% vastly outpace legacy bond yields under 2%, creating a structural mismatch that will eventually redirect hundreds of billions in capital toward crypto-native yield products.
— Interest rate policy remains accommodative despite Fed tightening signals; negative real yields (overnight rate ~0%, CPI ~7%) mean traditional bond markets offer poor returns compared to digital asset opportunities.
— 10T Holdings focuses on three subsectors: digital asset ecosystem gateways (15%), new-era DAE infrastructure and businesses, and NFT/metaverse companies, betting the digital asset space grows from $2.5–3T to $30–40T over 8–10 years.
Market & price signals
— Recent volatility tied to Fed tightening rhetoric caused $15 trillion in global stock market value loss, with Bitcoin and other risk assets selling off in correlation with equities. However, Dan views this as short-term trader noise unrelated to long-term institutional conviction. He maintains that the macro fundamentals—negative real yields, disinflationary structural forces, and technology's deflationary impact—remain strongly supportive of digital assets. Global cryptocurrency trading volume surged from $4T (2019) to $10T (2020) to $60T (2021), demonstrating exponential adoption.
Actionable insights
— Ignore short-term correlation trading: Bitcoin's correlation with equity risk-off episodes reflects trader models (VAR-based hedging) with no fundamental relevance; focus on 5–10+ year holding periods as institutions gradually allocate capital.
— Monitor stablecoin yield arbitrage: As capital flows from legacy bonds (sub-2% yield) to crypto stablecoins (7–9% yield), valuations of DeFi lending protocols and yield-bearing platforms will compress significantly; positions established now at current yields may face pressure.
— Evaluate mid-to-late stage crypto companies at 10–12x revenue: Most attractive entry points exist in the $500M–$1.5B valuation band where asymmetry remains, well below the headline inflated rounds of infrastructure leaders.
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