[music] Thank you.
Thank you very much. I hope you hear me loud and clear. After this introduction, we would dive directly into the questions because as you know, we are on the run with time. So, I would like to start with Pascal. Uh tell us with um the lack of separation currently ongoing between traditional finance and tokenized um assets of all sorts currently um being introduced.
Um how should shall we think about our portfolio? So um right now the very cool thing about blockchain is that we tokenize and we can tokenize every asset. So before when you wanted to invest you had to decide whether you have to open an account in different venues like to trade stocks to invest in stock to invest in ETF or crypto and so on. So people like me for example I hate to have multiple accounts. So I was a bit very nerdy about this only I only wanted to buy invest in crypto because it's easier and so on.
But now thanks to the tokenized assets uh I no longer have any constraints. I can invest in gold. I can invest in stocks and so on. But there was still one thing that bothers me to do it. It's not about liquidity.
It's about yield. So I will just pick from my perspective but I don't like to hold assets that doesn't generate me income. So if I buy Nvidia, of course I would like if the price goes up, but I would be even happier if I can actually generate income with it. And actually the the reason why I'm very excited about tokenization assets is because first every assets become programmable, but also every assets becomes a Y engine. And so basically what I will recommend or what I will do now that you can access to all those different assets, uh it's uh it's It's in terms of allocation uh to always now dedicate part of the portfolio to stocks ETF especially again because you can generate yield uh with it in in DeFi.
The next question speaking of various assets would be to both Zco and Victor. Speaking of different assets, what is the role of actually holding the underlying asset be it Bitcoin which is obviously the most popular but among all other cryptos in comparison to strategies involving other types of um assets including treasury companies. uh we know that the strategy is mentioned often and how can we get acetric exposure with potentially more benefit and potentially more upside. So, Victor,
um, to me, one of the key things about owning different types of assets is, uh, let's say with Bitcoin, there's very little what we can do with Bitcoin, apart from, you know, obviously using it a as a collateral or just as a spot position that grows. Very little, um, potential when it comes to, as Scal said, yield generation outside of just holding the asset. when it comes to holding other types of assets uh that can be leveraged in DeFi that can be leveraged in in a variety of other strategies you can just exponentially increase the yield that you're you know generate having in the yield that you're generating for your strategy or portfolio. To me finding assets that have multiple use cases and assets that have multiple venues of yield generation is very important. let's say with assets like say hyperlquid.
Hyperlquid you can do quite a lot more things apart from just hold it. Um it has it's proven to have a massive asymmetrical value over the last few months and you know it's continuing to prove that it's one of the most valuable assets out there at the moment. So yeah just generally uh combining different asset classes and different strategies that have multiple use cases rather than just holding um single use assets like Bitcoin. Zarafco,
could you please repeat again the question?
The co the question is uh how can we give potentially better exposure by holding the underlying asset or via an alternative uh strategy but not intended but potentially with a company involving uh strategy and then I would also invite Pascal to answer the same uh question please. Well, um we have to be very aware of the fact that um holding proxy instruments compared to the underlying asset is a relatively pure market positioning that can give you asymmetry. And the biggest thing that I like about strategy is the idea that if we have, you know, relatively explosive moves in the underlying asset, this can reward pretty well the investors that are ready to take the risk, you know, and this is the important part to take the risk because regarding what the general market is doing, regarding what the leading uh coin Bitcoin in this case is doing, uh you can have potentially tremendous returns if you have the hype, if you have the momentum on the market, but in cases of uh slower markets, winter markets, uh it can get relatively uh tough. So um yeah, what I like about those uh different kinds of instruments that are following the underlying one is that they potentially can give you uh relatively big asymmetry and if you're riskier type of investor, I think you should definitely uh consider those opportunities. Pascal,
the question again is um uh what are the benefits and how can we get a better asymmetric exposure on the crypto market in the current um situation via holding the underlying asset on the one side or uh potentially via alternative exposures to let's say treasury companies or other types of alternatives.
Uh I think you said everything. It's about asymmetry, risk profile of course. Um, but I want to stress that it's not because you hold volatile or risky assets that you take a lot of risk. It's also all depend on the allocation. You can you can dedicate like 5% of your of a portfolio to a risky asset.
It doesn't mean that you take actually a lot of risk. In the worst case, you lose part of your 5% and that's all. Um and then as per holding the underlying assets, [clears throat] I will just say it again what I said before. Of course, I'm a true believer of tokenization just because when I have a token that represent another asset, I can do whatever I want with it. I can generate yield with it.
Um should it be integrated within Morpho, I can borrow against it, I can provide liquidity against it, I can transfer it to whoever I want. So it's it's flexibility, it's yield and uh also I I think it's sexier uh those kind of assets it it you know we speak a lot about education but it's very boring to buy anal stocks but it's very interesting very sexy to buy a tokenized stocks or tokenized ETF or whatever because in a way you are forced to do your research you you you learn a bit about the underlying you learn about the redemption system the liquidity issues because you you know you want to know in what you put your feet in and then you need all you you learn all those strategies where again you can borrow against it you can do looping market making and so on. So yeah
thank you. Uh speaking of fast it's a false source we as we all know one of the most important things on the market is liquidity. So, Zrafco, can you tell us uh please whether um are we at the point that uh crypto markets are still heavily dependent on global liquidity or we are already moving towards at least trading on their own fundamentals? Oh, that's actually a great question and uh it's a great question because um you know if you look the bigger picture since 2020 all the markets are dependent on the liquidity right one of the main reasons why we have uh those huge movement on the stock market is because since 2020 we got a lot of money from the central banks right and this is in a sense replicated ated 100% within the crypto market. So liquidity is always be a factor for the financial markets.
Expectations about liquidity will always be a factor for the financial markets. The key is that the fundamentals behind every single project are those important aspects that define that define which token or coin is going to behave well during the strong bull runs. So yes, liquidity is important when it comes to defining the general trends, especially when it comes to the risk assets. But fundamentals matter when you're making the individual picks of a certain project you want to invest. So I would say both of them are important if you want to make better investment decisions.
liquidity or fundamentals um still a lot of people uh gain on the upside during bull markets in crypto but many of them lose money on the downside. Actually some of them especially if they're trading uh um with liver rich can obviously lose more than their initial investment potentially. What separates gainers from losers Victor? So in my opinion the main separations are two. One is mentality um willingness to take a loss as well because again taking losses is essential to making money.
Um, as a trader, you know, you're on a daily basis, you're taking losses alongside with the wins. Um, as I said earlier in um in, you know, my keynote, understanding the upside is very important, but understanding the downside of any investment is exponentially more important. Uh, what separates people? A, the mindset, the willingness to, yes, take a risk, but also be willing to take a loss. Um, alongside also the a good understanding of what it is you're investing in.
uh what is the actual potential upside and is the potential upside worth the risk that you're currently taking? Volatility as well. Um you know, we're all very into tokens that are currently trending like let's say Zcash at the moment. I know it's going crazy, but at the same time, the volatility and trying to trade these very highly volatile windows is like trying to catch a falling knife. So, you know, being able to balance between those two worlds, I think is essential and differentiates gainers from losers.
You mentioned the following knife. I would like you to emphasize what are the most common psychological or mental uh let's not say issues but errors you observe when people trade. Speaking of mentality in particular and I asked this question because I totally agree with you that mentality on the markets especially on the more volatile market like crypto is extremely important. Yeah. Uh two of the main issues again people are way more willing to hold a loss longer hoping that it will miraculously turn around.
is generally one of the biggest mistakes. I've spoken to a number of people that trade um they don't respect their own risk parameters and their own stop-loss. Stop loss is there for a reason. Also, you don't have to necessarily get to your stop loss. If you just see that the market's not going away, take your loss, move on.
Very few people actually do this. And um especially on you know the perpetual on the futures markets, uh we often see where people just enter very late. Doesn't matter if it's a move on the upside or on the downside uh long or short. People just get into this formal or we all use the term formal quite openly and it's very true for the markets. You know you see a massive movement to the upside people would automatically like oh okay there was a huge move on the upside let me short here without even looking at actual fundamentals volume you know where the market's taking.
Is there confirmation of this trade? Same on the downside. Um if you we've seen a massive um you know we've seen a massive either liquidation or just the market's going down people are very often willing to enter long positions just because the market went down. You know the market going down doesn't necessarily mean it's going to rebound immediately. Other than mentality analysis is exceptionally important.
So Pascal can you brief us on the important um analysis and metrics that are let's say if not good but uh good to be understood when following the markets currently and what do you use and apply in your analysis as well. So first uh I al also add sociopathy because there is a no it's true there is studies that shows that good traders are sociopath because good good when you [clears throat] are a normal human with normal behavior trading is very hard almost impossible because it's it's against nature this is why we have gambling we this is why also we have many people losing so actually to be a good trader don't say it for you but you you have to be a bit a sociopath uh it's not just about discipline regarding your questions. Um so the the the tools I'm uh using uh first what what I want to do it's uh to allocate my portfolio but to always be allocated but sometimes to be overallocated to volatile assets sometimes uh underallocated. It depends on the market cycle. Uh there is no indicators today that can tell you where we are in which term of cycle.
So I might surprise you but I'm using many my six sense. So six sense is actually another way to call experience maybe or or you know something that you have seen already in the market. So what I try to do I try to sense where I in the markets I don't use indicators I just spend my time on Twitter I try to understand what is right now the feeling of the market if people are more foric and also there is new trends like now we have Robin Hood chain that brought a lot of liquidity a lot of hype again in the market we have all the tokenized stocks and so on so I felt that okay there is something going on also we have many bad news in the world and the market we are not crashing so I was like Okay, I have good feelings. Maybe it's not the bottom, but you know, I don't really believe in top and bottom anymore, but maybe here now we have like a good trend. And then when I will start feeling that the market start to be overexited and uh and and also that the le the the position in leverage market start to be higher.
Maybe you can also check some liquidation price then I will start to feel that okay maybe it start to be the top of the cycle and I will try to delever. But again, I want to stress on it that there is not a single indicator that can help you timing perfectly. Most of the time when you time it perfectly, it's mix between luck and experience and that's all. You just have to find ways to fill the markets. I can't give you actionable tips now just to spend time uh on crypto Twitter on on your charts and and try just to feel it.
At some point you feel it, but it's a long process to to understand it. Still if uh someone is new to the market and has not experienced the previous ups and downs, how do they develop uh this six sixth sense? Uh so of course you can use some technical indicators that can help you to represent uh the momentum of the price or the something in the price like the indicators I like to use are indicators called oscillator. You know it's indicators that go from zero to 100. Uh but you have to understand that sometimes they they work well if the market follows a certain cycle.
But when the market uh has a different frequency or different cycle, the parameters you use for your indicator are a bit broken. So you have to understand when an indicator works and when they don't work. But I would recommend to check something called the DSS. It's a double stochastic. It's a very smooth stoastic.
It can help you to identify some kind of momentum, some kind of cycle and you have to combine it with a indicator that shows some market trend. So for example, there is an indicator called the MACD. And so if you combine uh the DSS with the MACD, if you check long-term time frames like weekly charts or or you know daily charts, you can you can see a bit how the indicators behave and you could try to understand if we are a bit in a top or or on the bottom. But again, those are just indicators. They can't predict the future.
They just give you uh you know a snapshot of what's going on now. And then if you combine it with your what you read and what you feel and what you see in the world, you could try uh to time. But again, it's not a science. It's a
as we all know on each market we have at least an idea where an asset might go or in the best case scenario we want an asset to go somewhere. Obviously, it is a bad case scenario because the asset does not take into account what we want from it. Still Victor, how can you have a conviction that the price of a particular crypto or other crypto asset or tokenized asset can go somewhere but still how can you uh short it let's say in in the short run and how do you separate your vision for the future with what you are currently seeing or expecting at least over the short run.
Yeah. So conviction for me normally comes from a understanding the asset. Um I said it earlier as well. Understanding the the asset that you're investing in is fundamental. You shouldn't just invest in an asset because it's you know it's trending or you know it's uh doing very well or it's very popular.
You have to also understand and really believe in what you're investing in in my opinion at least. Um at the same time it's uh super important to again understand the underlying risks in in in those assets. Um so what was the second part of the question? The second part of the question was um how do you separate your conviction for the longer period uh vision of the price with the things that you are currently seeing which may go against it.
In my case in particular my conviction hold or my conviction investments are usually spot investments. You know these are investments that I'm willing to hold for a very long time uh and I see an upside. Usually it's assets that I see use cases for like security tokens, like decentralized um exchange tokens, you know, a variety of others uh that have proven to work, you know, in this current market cycle. And the sentiment that the market has, the way you hedge your spot positions, at least in in my opinion, is uh by, you know, scalping or rating them. At the end of the day, when you zoom in, the market is always going to be going, you know, up and down.
So, uh, if you don't want to leave money on the table, yes, have conviction trades where, you know, it's either a very low leverage long position or, um, just a spot buy, but at the same time, just make sure that you're range trading or scalping that particular asset and you're not leaving extra money on the table. Can you tell us what are the differences and what are the lessons when you're trading with your own money and when you're managing other people's money? Me personally, it's an emotional difference. Um, as bad as it may sound to other people with like especially I'm a fund manager, I don't particularly have any emotions to other people's money. It's just money as as weird as it may sound to others.
But you take more rational decisions and you're a little bit more enticed to you know again being able to take a loss is just a loss. You know it's part of the journey. Uh each and every one of us when it's all about our own capital there's a lot of emotions involved. Everybody knows how they've managed to earn the money. You're less likely to risk it or in some cases you're likely to risk it way more because you know you have no accountability over anyone else.
So, in my opinion, um, trading with other people's capital, investing with other people's capital is always better in the long run if you're a professional. If you're not a professional, my advice is always just to, you know, either do spot holds or, you know, very low risk. But, you know, leverage positions for non-professionals, not a good idea.
I was about to make the joke that if you want to exclude emotions from trading, you should operate with other people's money.
Exactly. Finally uh at least we are getting um and possibly we would have time for one or two questions from the audience but um Zafco what are the risks ahead of crypto obviously we are speaking about politization in the United States of America but uh with the introduction of central banks digital currencies do you see other potential issues in other parts of the world also uh here I would also also like to mention the situation in China where crypto is more or less banned.
Yeah. Well, um if we start from the big picture, I mean the the important micro factors that we're seeing for the past um for the past year and a half probably in the world. I think that we all can see that there is a lot of risk built up within the system. And I'm talking about the price of oil, right? The higher price of oil is something that is hitting very hard.
The consumer confidence in the United States. Now keep in mind that the US is economy which is driven from the internal consumption. So if the consumers are afraid uh it can have potentially negative effect on the economic growth in the states. So in general um I'm I'm not pessimistic about the risk asset about the stock market in the US but I believe that uh we have to be um relatively you know um conservative when if we are about to take uh bigger risks. So this is the first thing that concerns me.
Yes, I know that we have uh very good um uh pretty good gains in the crypto market for the past month. This is incredible. But if we happen to be around uh you know if we happen to be at the entrance of market cycle where we are more of risk off then it can be a very interesting um you know environment for the risk asset. But another topic which is especially uh important for the crypto market in general is what you said the political situation in the states and the fact that we're having midterms election something that's
probably you should borrow the mic because your is not operational.
Uh yeah it's okay. So yeah, um I would say that uh especially for the crypto market, something that I'm paying uh big attention is the midterm elections in the states. Now you all know that uh crypto had relatively good year um relatively good period after Trump got into the White House. there was a game with the crypto society and if we see
[snorts]
um [clears throat] sweep during the midterms elections if Democrats win both of the uh Senate and representatives, it could potentially trigger a bigger correction not only on the crypto market but also on the risk assets because in general the risk assets love Trump and you know it everything that's happening with AI I with manufacturing in this industry in the US is in a sense because of what Trump administration did. But if we have a sweep and if we have a harder sweep than what the market is currently expecting, uh this could this could trigger a bigger bigger correction. So yeah, we're about to see.
Thank you very much. Uh I don't see that we are out of time or we are out of time. Yes. We're almost out of time, but we have a massive number of questions actually from the audience. So, I'm going to
uh we have probably time for one question.
Yes. I'm going to merge two questions another merge in one that is gentlemen is the bull market confirmed in your opinion and what is your largest holding if you want to disclose it? Bull market and holding. Well, about the boom market, uh I talked with a lot of people uh recently for what's happening with crypto and I see that people are not so sure what's happening. So there is doubt and if you see how bull markets are being formed, you're going to see that the first step before a strong bull market is actually doubt.
So the fact that we doubt [music] whether the rising in prices recently is sustainable or not is a good fact by itself. We are going to see out wait for the midterms to pass and see the result and probably we're going to have more clarity after this. But my biggest position right now is in strategy. uh I don't think we're in a bull market because liquidity has moved to over markets uh AI stocks and so and so on and also right now I don't see any more unity in the crypto market like we spoke about gains but BTC is still at 80 ETH is still below 3K the there is just a few assets that actually are going up so I don't think Bitcoin bull market I personally don't believe anymore into the BN bull cycle I think it's just now a very mature market like in the stock market you have uh some stock sectors that goes up, some stock sector that goes down and for me now it's the same in crypto. uh as per the holding uh meets mainly ETH but if I could go back in time I would not sell my hype and uh I would like if hype right now will be my biggest holding because it's one of the token I believe the most in because it's absolutely decorated from the crypto markets and I think it's one of the best assets to hold
me I'll mirror a lot of what Pascal said I I no longer believe in b and bare markets as as much for crypto it's it's become a more mature market where you know generally we we have some certain assets that are outperforming the market and then certain assets that are just lagging uh which kind of represents my portfolio as well. My two biggest conviction holds are Solana Hyperlquid. Solana's been more than dead for quite a while after the memecoin cycle but at the same time hyperlquid I go earn in very early and it's been phenomenal and it's know outperformed same as Pascal said it's completely detached itself from the market. We've seen mass liquidations where the next day hyperlid hits an all-time high. So yeah, I I don't think uh a bull market quote unquote is confirmed same as as said like until the midterms, but I think we've experienced the most mild bare market we've ever had because if you're telling me that 58,000 for Bitcoin is a bare market, I'll take it any day of the week.
Uh well, if you're wondering, um my not conviction, but my belief is that there is still potential significant downside before things get better for crypto and especially before we reached the previous all-time high. Obviously, nothing of what you heard was an investment advice. With this, we are spot on on time, although it has been standing for zero for five five minutes now. So thank you very much for the attention and thank you very much for the question. [applause]
Wonderful. [music]
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