The Exchanges

Q So how do these three components, the equity beta long vol and trend work together such that you took equity beta and as you looked at it historically, this outperforms?

A What we do is we take say a hundred dollars of equities. We replace that with futures contract. And we actually put in a 110 dollars of equity exposure. Explain that in a second. So that probably takes seven dollars of margin to do that. So now we've got 93 bucks left. And then we layer in the risk responders program, which is 23 dollars out of every hundred. And we put a hundred percent of that risk responders, which is dynamic convexity and trend falling in there. In a benign market, we call benign market that's drifting or trending upwards. We're going to expect in dynamic convexity to lose two to five percent a year. So having a 110% equity beta basically just looks at that strategy and says, well, if the market drifts up, there's going to be some drag because you're long this dynamic convexity, you're long your hedge essentially, and that hedge is going to cost you. So if you combine those two things, you should still end up with a hundred percent of the equity performance on the upside. And then you look at trend following and you go, okay, over the long haul, let's say trend is going to deliver a plus .2345 sharp, something like that. But for the purpose of this portfolio construction, just imagine it does nothing in a year. So now what happens in a strong S&P year? Well, your S&P goes up, let's say, 15%. You invested a hundred dollars, it's now worth a 115. What you can…

AI assessment note: “if you combine those two things, you should still end up with a hundred percent”

Q When you've traded across all different markets, why do you choose equities and not some mix of all different assets?

A The real use for dynamic convexity is to help our clients reliably lean something up against the biggest risk in their book. We work with pensions, endowments, sovereigns, If you look at the real risk in their portfolio, it's probably 90% driven by equities, and it comes in all sorts of different forms, private equity, public equity, credit. You end up with portfolios that there's just one risk factor, which is equities. So having a strategy that was highly convex to, let's say, a move in oil or gold or something like that, it might work for those investors, but it might not work at all. So that's biggest reason, but there are also liquidity reasons. The VIX market is an incredibly deep liquid market. So we can move through that market without having a footprint, and that's a great thing.

AI assessment note: “it's probably 90% driven by equities... So that's biggest reason, but there are also liquidity reasons.”

Q What were some of those initial big bet strategies?

A Examples would be one that everyone's aware of is Japanese reflation. That seemed like the type of bet that we would look to make. One of my favorite was Dutch disease. Dutch disease is a kind of a wonky economic term, but it was It was coined years ago, I think by The Economist to describe a situation where the Netherlands made a big natural gas discovery and it created lots of capital inflows into the Netherlands, pushed up the value of their currency, hollowed out their manufacturing base, and then their natural gas boom turned to a bust and their whole economy kind of fell apart. And so we saw something very similar unfolding with the leveling out of the pace of Chinese urbanization. And so Chinese urbanization created this huge demand for natural resources, not just in one country, but globally, whether it's Australia or Brazil or South Africa. And so we saw a much more widespread phenomena developing. And we felt that as soon as that demand curve even leveled out, forget about reversing, we thought that those emerging markets would suffer profoundly. So that was a really good theme that we had. We had some other ones like Potemkin village, which was betting against Russia at the time. They had just had the Olympics and it's not infrequent. That countries can kind of peak in terms of their capital markets once they get past the glow of the Olympics. And so a big kind of, I…

AI assessment note: “Examples would be one that everyone's aware of is Japanese reflation.”

Q So Peloton had, for those who remember, had a great rise and then a spectacular fall. Why don't you touch a little bit on that experience?

A Well, yeah, it did. I joined in May of 2007, and it failed in February of 2008. I think that the firm was founded in 2004 or five. It was a multi-manager macro fund initially. It became very successful, and it was at a And I think hedge funds were expanding rapidly and assets were growing. And, and so they ended up bringing on managers that were doing things other than just pure macro. And one of them was an ABS trader. And then he actually ended up launching for Peloton and ABS fund. And so they had two funds. They had their multi-strat fund and I traded into that. And then they had their ABS fund and that ABS fund was a big bet against subprime mortgages. It was a relative value bet. So they were long, a few, three units of Triple A mortgages short one unit of triple B's levered seven times. And so in 2007, that was an enormously profitable bet. I think they made 80% or something like that. But that bet went wrong in 2008 because in 2007, the triple B's went from, let's call it 90 cents on the dollar to 10, and the triple A's went from 99 cents on the dollar to 92. So it's a very profitable bet if you lever that seven times. I think that they thought that the triple A's would go back from 92 up to a hundred eventually, and the triple B's would go from 10 cents to zero. And what happened was the triple A's went from 92 down to 50 and the fund got stopped out and they lost, som…

AI assessment note: “I joined in May of 2007, and it failed in February of 2008.”

Q And then, so how did you evolve from there?

A Quickly found that, you know, I just moved my family down to Santa Barbara, California for that job seven months prior, and we had a group then of 10 people out there. There were six portfolio managers, including Jeff Grant, and then our support team, and we decided to start a firm together out there, and so we launched that firm called Grant Capital Partners in I think it was September of 2008, same month that Lehman went under. We just barely got into business, but we were supported by some large seeders and it was a really interesting firm and we did well for the next four years. We built that to over a billion dollar firm. And I think Jeff got to the point in his career where he'd done what he wanted to accomplish and felt that central bankers were becoming so active in markets that his skillset no longer matched the opportunity set and he decided to retire. And so, you know, four years after launching, we closed the firm. He returned capital. And then I started One River with almost the entire team from Grand Capital. And it was interesting because when We went to return capital. I was nominated to go around the world and thank our clients and five or six of the biggest clients that we had were very kind and said, look, we respect Jeff's decision, but we'd really love to work together with you. They said we have an alternative allocation. It's a good diversifier for our po…

AI assessment note: “we decided to start a firm together out there... And then I started One River”

Q So what are some of the strategies and themes you have in these vehicles today?

A So we think in terms of strategies, themes would be embedded into our discretionary strategies. It's just kind of how we think about the world. So we have a dedicated long volatility fund. So it's a discretionary fund that looks across asset volatility globally and looks for what we think are the best opportunities to be long vol Relative to what's happening in the world and relative to what we think are the potential catalysts. And so that's a fund that we run. We run a fund called dynamic convexity, which is also long volatility, but it is a purely systematic long volatility fund and only equity. So it doesn't trade cross asset wall dynamic convexity. We talked a little bit about quantitative investing earlier on is super exciting from my perspective and a career perspective, because it's taken. Three different investment approaches that we've had in owning equity volatility that we have traded for years, and it's codified them into something that's purely systematic and not only puts risk on, but takes it off and takes profit and crystallizes those profits based on What we think is sound trading logic. And so that's a great allocation for people to make that want to have some type of really thoughtfully constructed systematic convexity solution next to maybe the risk premium portfolio or next to their equity portfolio, or quite frankly, next to their trend portfolio. So it w…

AI assessment note: “we have a dedicated long volatility fund... We run a fund called dynamic convexity”

Q So get into the more interesting stuff on top of it. You mentioned that you're putting systematic strategies and not discretionary, and in the past, you've done both. Why did you come to wanting to do this with systematic strategies?

A I've been a discretionary trader investor my whole career, and when I launched One River in 2013, I tried to think of things in ten-year increments. So I really thought about what we wanted to build. What I concluded was that if we didn't embed technology within our firm, we would be unlikely to have a firm in five or 10 years. That was pretty simple statement, high conviction. Just because if you look at technology trends in every aspect of society, you want to be long innovation. And I thought without that, then I don't know, maybe I'm just reminiscent of the stock operator. Nothing's really changed for how discretionary investment decisions are being made. The upside is as a discretionary investor, you can potentially see things around the corner that have never happened before, haven't happened in such a long period of time that your quantitative strategies can't foresee it. So that's the advantage. The downside is you have a human making decisions and you have a lot of emotion involved. So I thought that if we could embed discretionary investing principles that I and the team have learned over time into strategies that are fully codified, and we could take out The emotion from investing. Build really well risk managed quantitative strategies so that if we were wrong and there was something that had never happened before, we have something to get us out. But that was the be…

AI assessment note: “take out The emotion from investing. Build really well risk managed quantitative strategies”

Q So a couple of years ago when we were talking, you were pretty focused on Bitcoin in the ecosystem. How have you thought about Bitcoin versus everything else happening in crypto?

A There's always talk about, well, how dominant is Bitcoin relative to the other coins? And right now it's around sixty-ish percent of the overall market. And there tends to be this cycle where in really big spec cycles, a lot of the lesser known coins get a big following and their value goes up and the dominance of Bitcoin relative to the whole ecosystem declines. And my view has been that there are all sorts of reasons to be bullish on Bitcoin. I think a Bitcoin is this really unique store of value. It's an asset unlike any other asset that I am aware of in the history of the world in the sense that no matter what the price is, the supply will not respond. It has a predefined schedule of supply over the next, you know, a hundred years or whatever, a 120 years. So no matter what the price is, there's no supply response. Everything else in the world Everything. A condo, gold in the ground, oil, television set, housing, everything. If the price goes up, people figure out how to make more of it. They can't make more of Bitcoin. So it has this unique store of value feature to it, but I also think it's the most secure network ever created by human beings. So we don't yet know what humans will find to attach to that secure network. It's still early. And I think to bet that humans won't figure out how to use that security network For something in addition to store of value is to be bet…

AI assessment note: “how dominant is Bitcoin relative to the other coins? And right now it's around sixty-ish”

Q And in the last couple of months, Michael Saylor's out at MicroStrategy talking about it. We've seen Elon Musk do a huge purchase for Tesla. What are you hearing and seeing from institutions of their interest going forward?

A There's enormous interest and intrigue. Really, I mean, rightly so. And that's driven by a lot more than just the price of this stuff going up. And I know that just because, I don't know, let's go back to the dotcom bubble, which we lived through. When we have calls with investment firms, it's often the case that we have 10 to 15 people that they're all the senior investment people at every area of a huge firm. And the questions that are asked are a lot less about what do you think is the fair value of this or anything. It's, they tend to be more Questions about what's going to be the impact of these assets in the future of finance, in the future of our company, in the future of the insurance industry. How do we think about this in a portfolio context? Can we really go into some of the currency debasement risks and what happens with inflation? So there, part of the discussion is on This appears to be a new asset class is I think what most people are recognizing, and they want to make sure that they At least have a baseline perspective on what it might mean, so they can kind of go and do further research. I think some portion of them will allocate, and some will wait, and then eventually will allocate in some way. There really is enormous interest.

AI assessment note: “When we have calls with investment firms, it's often the case that we have 10 to 15 people”

Q Well, in the last couple of years, there's a lot that's changed in this entire environment, and I'd love to start with how have you structurally addressed the changing environment?

A Boy, our business has gone through a lot of change. Twenty-twenty is the place to start. Prior to twenty-twenty, we were in this world of Perceived secular stagnation. And something was gonna come along to propel us out of that. That was the rise of talk about MMT. And it made sense that whenever the next crisis hit, we would see a much different policy response from what we've seen in prior cycles. And then COVID hit. So prior to twenty-twenty, we had thought that inflation was gonna pick up. I felt like we had the right strategy lineup for our clients. So we had trend following We had long volatility. We had inflation strategy that we're trying to get off the ground. We felt pretty well positioned for that going into, for what we thought the next cycle would look like. And then that cycle hit, which was an incredible catalyst relative to anything I could have imagined, but all those themes started to play out. Big fiscal deficits, monetary debasement, inflation, and that provoked all sorts of changes in how we thought about our business and our solutions. So that was really the kickoff.

AI assessment note: “we had trend following We had long volatility. We had inflation strategy”

Q As you think about building a crypto asset manager, most of what we talk about in Bitcoin is now readily available at low cost. ETF movements, BlackRock's, and largest ETF. How do you think about alpha when you're trying to build an asset manager?

A When we started the crypto asset manager, we were focused on beta products, actually, because there were not good access vehicles for institutions in the space. They didn't have ETFs. Really simple, well-structured, secure beta. So naturally, as you can imagine, now that we have clarity that we now have ETFs, there's really no purpose to have Simple Cayman beta vehicles. So we have a multi-strat fund. We do trend following in that, which is, I think there'll be a lot of alpha in trend following. We have a credit sleeve. We have an opportunistic sleeve in there. We provide solutions for clients. I built OneRiver, started as a solutions provider. We do that at Coinbase Asset Management. The Coinbase brand, the Coinbase balance sheet, the tech stack that we have at Coinbase so that our clients can work with us and have confidence they have a publicly traded Crypto behemoth that will stand behind its work, its strategies, its security. All these things are really positive. And what we're finding increasingly is that large family offices around the world, we can supply all sorts of services to these guys to help them get yield for their underlying assets. So solutions I wouldn't call alpha per se, but what we can do is we can sit across the table from clients and say, what is your asset mix right now? How can we optimize that? How can we help deliver a higher yield? How can we help …

AI assessment note: “So we have a multi-strat fund. We do trend following in that”

Q So when you circle back a couple of years before you were looking at it from an investment perspective, What was it about Bitcoin that felt real to you as it relates to this concept of money?

A It was very clearly a robust system in the sense that it was decentralized and it worked. And when I say it worked, it's interesting. A lot of people will look at the volatility that Bitcoin has had over its life, and to date, it's had six discrete boom-bust cycles, and they would say that's a weakness. And I would just point out that I think that that's an enormous sign of strength, actually. Weakness is pets.com, you know, the sock puppet stock that went to the moon and then collapsed and then basically flatlines at zero, right? To have something accelerate the way Bitcoin has over its life and then have deep corrections and then stabilize and then make new highs, that's something that's very interesting, right? And so the more people who I got to know who had either become invested or become just passionate About it, the more intrigued I became. And so then you do the, like, I always do thought experiments with things. So I'll look at, say something like, I don't know, oil. And you say, are we really going to all be using fossil fuel in a hundred years? The answer is kind of pretty clearly not. And then, and then you kind of start winding back and then it forces you to kind of think about, well, how quickly will transitions happen? It's the same thing for money in a hundred years. Are we really going to be using paper dollars and copper pennies and things like that? It's lik…

AI assessment note: “It was very clearly a robust system in the sense that it was decentralized and it worked.”

Q the formation and activities of OneRiver. We then turn to the current environment and get his sobering thoughts on what has transpired and what the turmoil will mean for private equity and asset allocation going forward. Please enjoy my first meeting with Eric Peters from One River. Why don't we just start with you going back and you get through your initial interest in investing, how that all came about?

A Sure. I grew up and my dad was a Wall Street guy and I watched him commute for lots of years and he didn't seem particularly thrilled about doing it. So I was in college. I kind of wrote off that as a possibility, but I did all the interviews and coming to senior year, Had an internship. I'd always started my own businesses over the summers. And so I didn't have any exposure to what I really wanted to do. And I figured, why don't I just go talk to a bunch of people who have been successful. And so maybe coming out of that, I'll figure out what looks interesting. And so I just reached out to different friends who I knew some guy's dad was a big real estate investor. And another guy was in international shipping. Another guy was in entertainment, whatever. And I begged to sit down and spend a half an hour with each of them. There were some other industries as well. And I kind of, by the time I went through each one of them, they each pretty much persuaded me that I definitely didn't want to do that. They just, everything seemed boring. And by the way, these are really successful guys and they're great careers. I don't knock them just for, but for me personally, I meet with a real estate guy and you go, so what do you do? And he goes, well, you know, I Borrow money here, and then I buy building, and then I kind of fix it up, and I, you got a little extra return, and he just seemed…

AI assessment note: “I figured, why don't I just go talk to a bunch of people who have been successful.”

Q So part of the case, at least a couple of years ago, in that store of value was an inflation hedge because of the scarcity of Bitcoin itself. As you've looked at how the markets have reacted over the last couple of years, how do you think about Bitcoin as a risk asset compared to a diversifier?

A It's a beautiful asset because it's sufficiently unpredictable that it makes it hard to hold. And I know that that might sound like an oxymoron But I think that markets are built to make it hard to make money. So I like going into markets where I understand why it's really hard for people to do things. Institutional investors have been dancing around these assets now for a bunch of years. They got really close in 21. There were digital asset working groups all over the world, and then the rate hikes came, and then FTX blew up in Celsius. Different funds had made big investments in venture equity and some of these things and the press beat the hell out of them. So these investors didn't do anything. They could have bought Bitcoin between 15 and 20,000 again. And now here we are at 95 or something like that. So they didn't get in. So I think what you're seeing is you're seeing an asset that's just doing its job in a way as a brutal market where the big pools of capital go, well, I only want it if it's an inflation hedge. But basically, you just talk yourself out of buying something that is a highly convex inflation hedge over the medium to long term. Doesn't mean in any given quarter, any given year. At some point, it won't be that highly convex because the overall market cap will be so high and so many people will be in that it'll probably trade a bit more like gold, where gold …

AI assessment note: “something that is a highly convex inflation hedge over the medium to long term”

Q As we look out over the next year, in all the conversations you have with the allocator CIOs, I'm curious, what issues are you hearing is top of mind?

A We've spent a lot of time in Asia because those are the folks that are most open to total portfolio. Increasingly, that's arriving here in the U.S. because they've published work They've produced outstanding performance. The thing that investors increasingly are talking about is capital efficiency. And when you have a positive rate, so rates went up from zero to much higher level and not a whole lot changed initially, but now you're starting to see people really think about what's the cash usage in a particular strategy and how do I get the most out of it? We're hearing more about that. The quandary investors find themselves in is if they've been underexposed to equities, they've underperformed. So they feel like they need to be exposed to that, but they're increasingly just nervous because valuations are high, and that's the right thing to be. By the way, last time we got valuations up into these types of levels was 2000, and then it all went wrong. But the previous time was in the fifties, and it stayed up at these levels of returns for years. So we don't know which one it is. I would argue that because of AI, it might be more like the fifties than 2000. It might be 2000, but maybe we're still two years before that crash, or maybe it's two months. I don't know. That's why I want to have portfolios that are resilient to all sorts of different outcomes. Investors know they need…

AI assessment note: “The thing that investors increasingly are talking about is capital efficiency.”

Q What do you think portfolios will look like? Pick your timeframe, five or 10 years out when this washes through And people have the time, right? Some of these investments just take time to recycle and shift allocations.

A This is the kind of thing that may make me look foolish. I think private equity is done. I think that it will always be an investment style like it has for over the course of my career. It was just LBO investing when I started, I guess now it's private equity, but there will be people engaging in that. But I think the private equity guys are going to come out of this looking terribly because when When we finally go through this and really go through the analysis, people are going to say, holy cow, all these guys went out and bought whatever the number is, you know, better than I, 25% of all the private companies in America. They bought them. They put how many turns of leverage on this? They borrowed all this money. They pulled that money out for themselves. Of course, also their investors as well, but those investors won't get the scrutiny so that the guys who run those firms pulled all that money out themselves. Look at how wealthy they got. And then what happened? The economy stumbled. They all went broke. They fired everyone or almost all the people. And a lot of these companies didn't survive, but they kept on their money. So in that environment, I think to imagine that you're not going to have a lot of new rules, taxations, regulations, I think we will. That's going to be something that looks different, but in terms of big picture around how investors, what their portfolio…

AI assessment note: “I think it will inevitably be with less leverage. The portfolios, my guess is they'll be less complex”

Q It sounds like when you talk about Buying Bitcoin and having to be sensitive to Twitter, it's hard not to raise the alarm bells of what's happened with all the crowdsourcing convexity of these assets, Robinhood and whatnot. How have you thought about what that means for cryptocurrencies?

A It's a good question. I would say that there's a near term and a long term answer for that. The near term answer is that it's just a feature of the market. And there are a lot of people saying all kinds of things in the marketplace. We've chosen to be very selective. This is the fourth formal thing that we've done in this interview with our activity in the space by design. Cause we're kind of treading very cautiously into what to say and when to say and how to say it. And it's been interesting because I think we're viewed as having important insights into what institutions are doing. So each time, well, the first three times, you know, Though we've said anything, Bitcoin has moved by 15 to 25% within a couple days, which is kind of wild. But I think that that's If I were to think about like what's really moving the market and I look at the various things that have happened, obviously Elon's announcement was really important. I think those times that we've had something to say, not because it's one river, but because it reflects what we've done the first large institutional transaction. And I think are seen as being knowledgeable in that space. Those have had real impact. So my view is don't say a whole lot. I think a lot of the Twitter stuff that people say so many things that It's part of the landscape, but does it really mean anything? I think Elon's thing was important. I th…

AI assessment note: “The near term answer is that it's just a feature of the market.”

Q Were there some formative models, either mental models or quantitative models that you adapted to using while you were in the pits to not lose as much?

A I was really intrigued and always have been about trend following. So one of the fellows that I stood next to in the pit in the early years was a disciple of Richard Dennis. So that was my first introduction into quantitative trading. And over the rest of my career, I've always Wanted to take whatever I'd learned to do on a discretionary basis and tried to codify it in a way. The early days were just very much about trying to be disciplined around losing money. There were a number of really hairy experiences I had with that. And those were hairy years. It was my own money and you can go bankrupt doing that. And most people do, by the way. So I remember when we Went through the process to be approved to trade on the floor. I was in a room with 30 other people, and it was like one of those war movies, and it's not as serious as war, obviously, but where the person giving the speech said, you know, look around you, in a year's time, there are only gonna be two of you guys left, and that actually was about right. There were. You know, it's really all about just managing your losses and being sensible and trying to figure out what is it that you see in the market that gives you some type of advantage. The problem is on the floor is you don't have any information really. You have a ticker that's running across. You're just trading off of emotion and flows and things like that.

AI assessment note: “one of the fellows that I stood next to in the pit... was a disciple of Richard Dennis”

Q What is it that makes it more capital efficient than another comparable strategy?

A There are all sorts of different strategies that people use to try to attempt to be long vol. We have a very purist approach, and when I'm purist, I mean, we only ever are long-fall. We never are short-fall, and the reason for that is over my career, which is now 35 years, at every cycle, I have seen people who have convinced themselves they're long-fall on a net basis because they're long-fall somewhere, and they're short a little bit somewhere else because they don't think it's really going to hurt them, and then there's some unique aspect to this latest crisis, and then they either don't perform or they Really underperform or in some cases they lose everything. So we come at it with the appropriate amount of humility, which is to say, look, we understand these markets really well, but we don't know what the future holds. So we're not going to be shortfall anywhere. In our case, not much is going on. We have extremely low capital usage. We could have as little as five percent of capital that we're using in a really quiet market, but it's very dynamic. So that can ramp up in a crisis like COVID. It could ramp up to 3040, 45%. When you think about combining solutions like this into something like total portfolio, cash efficiency is vital. Without it, you can't do it.

AI assessment note: “We could have as little as five percent of capital that we're using”

Q Have your clients thought about the use of Bitcoin, maybe other cryptocurrencies, in the context of their portfolios?

A You speak with all the same people. I think one of the major struggles that guys are contending with is, okay, let's say everyone in the world has a sixty-forty portfolio that they dress up in one way or another. Maybe they leverage it and it's some form of risk parity. Maybe they amplify it with private equity, whatever, but it's a sixty-forty portfolio in one way or another. The problem is, The 40 just doesn't work anymore, right? And the reason that you love the 40 for the last few decades, our entire trading career, your and mine, has been that interest rates have been declining, and they finally got to a point where they just really couldn't decline meaningfully. So, so investors are looking at their portfolios, and by the way, this is, I think, a, a slow and painful realization because it lacks great answers or great solutions, but they're slowly realizing, it's like, okay, so I own a lot of equities. I need to make seven percent ish, and maybe it's six or maybe it's eight or whatever, but it's in that zone. Equities are really expensive. My 10 year bond yields 80 base points. It's the math just does not work. So they're looking at that and they're going, okay, so how do I think about a more robust portfolio? And some of them are thinking about the risk to monetary debasement and inflation, and that's very scary risk, right? Because then your bonds turn into losers. And i…

AI assessment note: “some of them are thinking about the risk to monetary debasement and inflation”

Q We've talked a lot about what you did in Bitcoin, and without going too much into it, because we'll do that over the next couple of conversations, how do you think about extending that to other, either cryptocurrencies or blockchain assets?

A So, after we did this first purchase of these assets, afterwards, only after, I called Alan and just said, Revenon's a stake in our firm. And I just said, it's important for all of our clients to have an allocation to this space. It just is. What I've learned through this process is that there just aren't good vehicles for them to invest in. Which is not to say there are no vehicles, right? Because you could go directly to Coinbase, you could go to Any number of firms. Or you could go to some of these firms that have built their businesses for the last five years in digital assets, and there are a number of them, and they're great firms. Some of them, I'd say, look more or less like venture capital firms. Some of them look more or less like investment banks, but there's no firm that really looks like One River, which I would say, if I were to create a parallel, it would kind of be the vanguard of digital assets. And so I think that there's, in any new ecosystem, you need to have You need to have strong players in each of those, you need to have strong venture players. And of course you're going to, you need to have strong investment banks and you're going to their great trading counterparties. You need great custodians. And those things have been built agency trading desks or OTC trading desk, but then you need a Vanguard to kind of bring the best in class parts of the ecosyste…

AI assessment note: “there's no firm that really looks like One River”

Q So if we take for granted the operational infrastructure component of it for an institution, how do you start thinking about value? We know this isn't a cash flowing asset or how you think about Bitcoin in particular in the context of a portfolio.

A So I partition my brain. As part investor and part trader. Sometimes that can confuse even me. Uh, in some ways you're thinking about different time frames and different drivers. One of the things really unique about this asset class and this opportunity is that what I see as a trader and what I see as an investor are completely aligned and highly convex. The easy answer is to just throw a number out there. I mean, we can talk about numbers, but I won't throw one out there initially. I'll just tell you how those different parts of my brain think about it. So When I think about it as a trader, when we decided to get into this marketplace and made at the time, which was the biggest institutional asset allocation in the space, we wanted to figure out what were the best sources of liquidity to quietly get the exposure, anonymously get the exposure and get it on quickly before anyone figured out what we were doing and ran the price up on us. And so this goes back to early November with Bitcoin around 15,000. So We called all of our counterparties, which shall remain nameless. One of them we asked to get a line to trade futures. So now let's imagine that we need 10,000. I'm just going to make up the numbers. We need to be able to trade 10,000 contracts, and we need to get our papers, and we want to do it quickly, and get this on before news leaks out. So let's figure out, can we get …

AI assessment note: “we wanted to figure out what were the best sources of liquidity to quietly get the exposure”