This episode of Bits and Bips dives into the explosive growth of corporate crypto treasuries, the strategic chess match of ETF approvals, and how escalating geopolitical tensions and AI's relentless advance are reshaping investment landscapes for Crypto AI specialists.
Bitcoin 2025 Conference: A Maturing Ecosystem with Political Overtones
- James Safford, your host, kicked off with observations from the Bitcoin 2025 conference in Las Vegas, noting its significant scale with over 35,000 attendees. He described the event as feeling more "grown up" compared to previous years, though he personally found Las Vegas a challenging venue due to heat and casino layouts.
- A strong political leaning was evident, with speakers like JD Vance, Don Jr., Eric Trump, and Senator Lummis. James highlighted JD Vance's description of Bitcoin as a "hedge against bad policy" as a particularly resonant quote.
- Key announcements included Pakistan's initial, then contested, move towards a Bitcoin reserve, Nigel Farage's proposal for lower UK crypto capital gains taxes, NYC Mayor Eric Adams discussing municipal Bitcoin bonds, and football club PSG adopting Bitcoin as a treasury reserve asset. Michael Saylor also presented, forecasting a $60-100 trillion Bitcoin market cap in 15-20 years.
- Joe McCann, whose firm Asymmetric hosted an event with UTXO Management and Franklin Templeton, corroborated the "grown up" sentiment. He emphasized the diverse, high-quality attendance, from OG Bitcoiners to institutional allocators and global policymakers, signaling Bitcoin's increasing mainstream and institutional acceptance.
- Noel Acheson pointed to Wall Street Journal coverage characterizing the conference as "Bitcoin goes all in on MAGA," noting a shift from a more neutral stance in previous years to a stronger alignment with Trump, especially following his speech and the community's subsequent support via Fairshake PAC.
Strategic Implication: The increasing institutional presence and political engagement at major Bitcoin events signal a maturing asset class. Investors should monitor the evolving regulatory landscape, particularly how bipartisan support (or lack thereof) might shape future policy and adoption.
The Surge of Crypto Treasury Companies: Opportunity or Echoes of a Bubble?
- The discussion shifted to the proliferation of companies adding Bitcoin and other cryptocurrencies to their treasuries, a dominant theme at the conference. Joe McCann noted seeing new deals almost daily, such as Ritar Logtech Holdings buying $1.5 billion in Bitcoin, indicating a shift from retail to institutional capital driving demand.
- Joe compared the current fervor to the SPAC (Special Purpose Acquisition Company – a shell company that raises capital through an IPO to acquire an existing private company) boom of 2021, noting this phenomenon is global, unlike the US-centric SPACs. Rahm Ahluwalia agreed, stating, "It's a bubble. It's a bubble for sure." However, Joe cautioned that such bubbles can persist, benefiting early movers.
- The investment thesis for these deals, as Joe explained, often involves acquiring shares at a discount in PIPE (Private Investment in Public Equity) deals. However, he questioned the economic value creation of simply holding assets on a balance sheet for many newer entrants.
- Noel Acheson raised two primary concerns:
- Struggling companies might use these announcements for a temporary share price bump, reminiscent of firms adding "blockchain" to their names in earlier cycles. This poses a risk of rapid offloading if strategies fail.
- The trend coincides with a surge in crypto lending, with mainstream players like Cantor Fitzgerald entering. Noel warned of potential systemic risk if these treasury companies heavily leverage their crypto holdings, drawing parallels to the 2021-2022 cycle's unwinding. "This is very reminiscent of what we saw in 21-22 and it unwound pretty fast," she stated.
- James Safford mentioned Strike, Jack Mallers' company, launching new Bitcoin lending services, further highlighting the increasing leverage. He also noted two companies planning to add the Trump token to their balance sheets and Trump Media's $2.4 billion private offering, largely for crypto treasury purposes.
- Joe McCann suggested this environment might be ripe for raising capital for distressed crypto asset funds, anticipating opportunities when over-leveraged or poorly managed treasury companies are forced to sell.
Actionable Insight: Crypto AI investors should critically assess the sustainability of companies adopting crypto treasury strategies, looking beyond hype to fundamental value creation and leverage levels. The potential for a "SPAC-like" shakeout suggests caution and a focus on well-structured, differentiated plays.
Ethereum and Solana Join the Treasury Game: New Frontiers and DeFi Integration
- The conversation explored treasury strategies beyond Bitcoin, with Consensys reportedly pursuing an Ethereum treasury. James Safford questioned why Solana treasury plays, like Soul Strategies and DFTV, appeared before significant Ethereum ones.
- Joe McCann speculated that Solana's earlier treasury adoption might have been due to a lack of clear ETF pathways and an easier narrative for institutional adoption as the "fastest horse" at the time.
- A key development highlighted was DFTV, a Solana treasury company, not only holding SOL but also staking it, creating its own LST (Liquid Staking Token – a token representing staked assets that can be used in DeFi), and deploying this LST in DeFi protocols like Kamino Finance. Joe described this as "pretty, you know, novel and interesting," potentially setting a pattern for active treasury management.
- Rahm Ahluwalia suggested Ethereum needs a "personality" like Michael Saylor to champion a large-scale Ethereum treasury strategy effectively.
- Noel Acheson queried if supply schedules (Ethereum's potentially deflationary EIP-1559 mechanism vs. Solana's fixed inflation) influenced treasury decisions. Joe McCann thought access and utility, like DFTV's staking, were more significant drivers than inflation mechanics for institutions. Lily Liu of the Solana Foundation had previously argued institutions prefer predictable inflation schedules.
- James Safford emphasized that many announced treasury deals were initiated months prior, indicating a pipeline of further announcements. Rahm Ahluwalia added that "differentiation does matter," citing a deal transforming dividend/staking income into principal appreciation as a clever, unique approach.
Strategic Implication: The expansion of corporate treasury strategies to include PoS assets like Ethereum and Solana, especially with active DeFi participation (e.g., LSTs), opens new avenues for yield generation and ecosystem growth. Researchers should analyze the risk/reward profiles of these integrated strategies.
ETF Innovation and Regulatory Hurdles: The Staking Conundrum
- James Safford detailed recent ETF developments, focusing on Rex Shares and Osprey's attempt to launch Solana and Ethereum staking ETFs. They aimed to use Rule 6C-11 (the "ETF Rule," which allows certain ETFs that invest in securities under the 1940 Act to come to market more quickly without a lengthy 19B-4 approval from the SEC) by employing a Cayman subsidiary for holding and staking assets, structured as a C-Corp.
- The SEC pushed back, arguing these products didn't qualify under 6C-11, effectively halting their launch. James and Noel Acheson saw this as a move by smaller issuers to gain a first-mover advantage before broader staking approval for spot ETFs, which James believes is forthcoming.
- Joe McCann contrasted this with public companies like DFTV already staking assets, questioning the discrepancy. He pondered if ETF staking delays might push more firms towards direct balance sheet staking.
- James clarified the SEC's main concerns with staking in Grantor Trusts (the structure for spot crypto ETFs) are more logistical and IRS-related (e.g., tax treatment of in-kind staking rewards) rather than a fundamental opposition to staking. He noted the SEC is actively working on solutions, with a final deadline for the first staking application on October 23rd.
- James quoted SEC Commissioner Caroline Crenshaw's skeptical remarks: "How is it these crypto assets are supposedly not securities when it comes to registration requirements, but conveniently they're securities when a registrant sees an opportunity to sell a new product?"
Actionable Insight: The regulatory pathway for staking within ETFs remains complex. Investors should monitor SEC deliberations closely, as approval could unlock significant institutional flows into PoS assets. The C-Corp and Cayman subsidiary structures attempted by Rex/Osprey highlight innovative, albeit currently challenged, approaches to product structuring.
ETF Flows: Institutions Quietly Accumulating?
- James Safford reported a strong resurgence in Bitcoin ETF inflows, with approximately $9 billion accumulated since the late April bottom. Ethereum ETFs are also recovering from previous outflows.
- He argued this buying is not primarily driven by the basis trade (an arbitrage strategy involving buying the spot asset and shorting futures), as basis yields remain in single digits.
- The dominance of BlackRock's IBIT in attracting flows, even exceeding 100% of net new money recently, suggests institutional buying, according to James. He posited that institutions prioritize IBIT's liquidity and options market, while retail investors might opt for lower-fee alternatives like VanEck or Bitwise products. Hedge funds were also net buyers in Q1.
- Noel Acheson noted the basis trade yield briefly neared 10% but then retreated, acknowledging some inflows could be basis-related but likely not the full $9 billion.
Strategic Implication: Sustained institutional inflows into Bitcoin ETFs, even with moderate basis trade appeal, indicate a broadening acceptance and long-term allocation thesis. Researchers should track 13F filings for Q2 to confirm the extent and nature of this institutional participation.
Macro Landscape: Geopolitical Tremors and Economic Puzzles
- Noel Acheson emphasized that geopolitics is the dominant macro story. She highlighted:
- A US court ruling that Trump overstepped authority with broad tariffs, though an appeal allows current tariffs to persist. The White House may use Section 122 of the 1974 Trade Act for 15% tariffs for 150 days.
- A deepening US-China rift over the Geneva Agreement and rare earth exports, with harsh rhetoric from both sides. Defense Secretary Pete Hegseth's comments on Taiwan further inflamed tensions.
- Ukraine's drone attack on Russian airfields, potentially "weaponizing trade containers," which Noel warned could profoundly impact global supply chains. "Trade changed yesterday," she asserted.
- Market reactions: Gold and oil rose, while the VIX remained low, suggesting market complacency. Bitcoin showed ambiguous behavior.
- Joe McCann agreed on the geopolitical focus, particularly the trade implications of Ukraine's tactics and the potential for AI-trained autonomous drone swarms. He noted the equity market's resilience, attributing it to underweight managers, systematic fund buying (CTA/Vanna control), and corporate buybacks.
- Ram Ahluwalia presented a more bullish view, dismissing most geopolitical risks as "noise." He pointed to strong earnings growth (12% YoY), topped-out interest rates, disinflation (Core PCE, a key inflation indicator, behaving), and receding tariff fears as primary drivers. He anticipates Q4 rate cuts but a potential tariff-related slowdown in Q3.
- James Safford discussed the "asymmetric warfare" aspect of the Ukraine conflict (low-cost drones causing massive damage) and the possibility of current strong economic numbers being inflated by tariff front-running. Ram Ahluwalia shared an anecdote about consumers accelerating purchases ahead of potential price hikes.
- Joe McCann highlighted that CEO guidance during Q1 earnings was surprisingly optimistic, not reflecting widespread caution, which made him more bullish on risk assets. Noel Acheson noted the US dollar was heading down due to geopolitical uncertainty.
- Regarding the US fiscal situation, Joe McCann cited analyst Warren Pies, suggesting the yield curve is returning to pre-GFC levels and that current steepening isn't inherently a crisis signal. Ram Ahluwalia believes Ray Dalio's viral clip on US fiscal issues marked the top in interest rates. Both James and Ram pointed out that bipartisan government spending is inflationary and generally bullish for assets like Bitcoin and gold.
Actionable Insight: Crypto AI investors must navigate a complex macro environment where geopolitical shocks could abruptly reprice risk, despite current market resilience. The divergence in expert opinions on the severity of these risks underscores the need for dynamic risk management and scenario planning.
AI's Unstoppable March: Productivity Boom and Labor Disruption
- Ram Ahluwalia highlighted Nvidia's continued strong performance and CEO Jensen Huang's forecast of $1 trillion in AI-related capital expenditure (capex) by 2030. He cited Michael Dell's report of $12.1 billion in AI orders in Q1 and a $14.4 billion backlog, alongside CoreWeave's $8 billion backlog, as evidence of the AI boom's reality.
- Ram also pointed to AI's impact on the labor market, including job cuts for software engineers at tech companies, but framed productivity growth from AI as "the one free lunch in economics"—disinflationary and driving earnings.
- Joe McCann referenced Mary Meeker's extensive report on AI, calling it the "next computer super cycle." Drawing from his experience running a software company, he explained they are not hiring more engineers due to AI's increasing capabilities in handling tasks like UI development (e.g., with React), bug fixes, and automated testing. "Don't come to me with headcount requests if it if you haven't evaluated whether it can be done with AI or not," he instructed his team.
- Joe believes AI will fundamentally change software development roles, emphasizing the importance of continuous learning and mastering AI tools like prompting. He shared advising his college-bound babysitter to "get really good at prompting."
- Noel Acheson noted that AI-driven layoffs are now significantly impacting white-collar jobs (McKinsey, Business Insider, IBM, PwC), a shift from previous technological disruptions. This creates uncertainty for a generation promised job security through higher education in fields like computer science.
- Ram Ahluwalia identified owners of capital and founders as key beneficiaries. He advocated for investing in "human capital" and learning entrepreneurial skills.
- James Safford mentioned Meta's layoffs, explicitly linking them to culling low performers and increasing reliance on AI.
- Joe McCann invoked the "lump of labor fallacy" (the mistaken belief that there is a fixed amount of work), arguing that while disruptive, new technologies historically create more jobs and wealth, though individuals whose skills become obsolete face challenges.
- Noel Acheson concluded this segment by emphasizing that in a rapidly changing, AI-driven world, "the questions matter more than the answers," underscoring the value of critical thinking and effective prompting.
Strategic Implication: The AI revolution presents a dual reality for Crypto AI investors and researchers: immense opportunities in AI-driven companies and protocols, alongside significant societal and labor market transformations. Staying ahead involves not just investing in AI, but also understanding its deep integration into workflows and its potential to reshape industries and skill demands.
Conclusion
This episode highlights a crypto market buoyed by institutional treasury adoption and ETF anticipation, yet shadowed by potential leverage risks and geopolitical instability. Simultaneously, AI's accelerating integration promises transformative productivity gains while posing fundamental questions about the future of work, urging investors and researchers to prioritize adaptability and strategic foresight.
