WEBVTT 00:00:09.679 --> 00:00:11.759 Welcome back to The Rate of Change with York 00:00:11.759 --> 00:00:14.339 Wealth Management. As advisors to some of the 00:00:14.339 --> 00:00:16.079 wealthiest families in the country, The Rate 00:00:16.079 --> 00:00:18.160 of Change is a podcast designed to help you in 00:00:18.160 --> 00:00:20.359 the pursuit of building long -term wealth through 00:00:20.359 --> 00:00:22.280 the insights of some of the brightest minds in 00:00:22.280 --> 00:00:25.059 asset management. I'm your host, Murdoch Gaddy, 00:00:25.059 --> 00:00:26.820 and in today's broadcast, we're joined by Clint 00:00:26.820 --> 00:00:30.140 Maddock, founder and director of Digital Asset 00:00:30.140 --> 00:00:36.560 Funds Management, or DAFM for short. DAFM operates 00:00:36.560 --> 00:00:38.960 multiple funds, including the digital income 00:00:38.960 --> 00:00:41.899 class, an income focused fund in digital assets 00:00:41.899 --> 00:00:44.280 that applies a trading strategy originally developed 00:00:44.280 --> 00:00:47.420 by a hedge fund partner of theirs for traditional 00:00:47.420 --> 00:00:50.920 fixed income markets. If you're familiar with 00:00:50.920 --> 00:00:53.740 digital assets like Bitcoin and Ethereum, or 00:00:53.740 --> 00:00:55.799 you're still trying to figure out what exactly 00:00:55.799 --> 00:00:59.280 is a digital asset, this conversation will be 00:00:59.280 --> 00:01:02.219 very interesting for you. We explore with Clint 00:01:02.219 --> 00:01:05.400 broader questions about crypto markets like where 00:01:05.400 --> 00:01:09.500 is the industry headed? Has it matured beyond 00:01:09.500 --> 00:01:13.640 its early development and volatility? What if 00:01:13.640 --> 00:01:16.659 another Sam Bankman freed FTX style collapse 00:01:16.659 --> 00:01:20.299 happens? Can investors gain exposure to crypto 00:01:20.299 --> 00:01:22.939 in a way that avoids the extreme price swings 00:01:22.939 --> 00:01:25.420 we've seen in Bitcoin recently in the past five 00:01:25.420 --> 00:01:29.620 years? And is there a structured regulated approach 00:01:29.620 --> 00:01:35.560 to integrating digital assets into various structures 00:01:35.560 --> 00:01:40.200 such as self -managed super funds? For me, one 00:01:40.200 --> 00:01:43.060 of the interesting takeaways is how the digital 00:01:43.060 --> 00:01:45.959 income class fund, which is established in 2021, 00:01:46.280 --> 00:01:50.000 has produced a three -year compound return of 00:01:50.000 --> 00:01:57.239 48 .21%. a 30 .98 % gain over the past year. 00:01:57.400 --> 00:02:01.540 And last month, as of time recording, did 4 .05%. 00:02:01.540 --> 00:02:06.040 For context, since May 2021, Bitcoin, if you 00:02:06.040 --> 00:02:08.539 look at them side by side, has delivered an annualized 00:02:08.539 --> 00:02:15.650 return of 19 .94%. But... with substantial volatility, 00:02:15.969 --> 00:02:18.889 including deep drawdowns along the way. By contrast, 00:02:19.069 --> 00:02:22.110 the digital income class has maintained consistent 00:02:22.110 --> 00:02:25.569 returns with only one negative month in 44 months. 00:02:25.810 --> 00:02:28.310 For me, this really raises an interesting question. 00:02:28.889 --> 00:02:34.150 Is it long -term success in holding digital assets, 00:02:34.449 --> 00:02:37.409 a hodl? as everyone likes to call it, is it purely 00:02:37.409 --> 00:02:40.550 about the price appreciation and you just hold 00:02:40.550 --> 00:02:43.330 on for dear life and hope that it's going to 00:02:43.330 --> 00:02:48.229 the moon in 10 years? Or is there merit in still 00:02:48.229 --> 00:02:50.849 having exposure to this asset class in a more 00:02:50.849 --> 00:02:55.129 structured way or method that generates steady 00:02:55.129 --> 00:02:58.129 returns without relying on market direction? 00:02:58.389 --> 00:03:02.419 It's a good question. Another aspect worth unpacking 00:03:02.419 --> 00:03:04.500 is the strategy itself. Originally developed 00:03:04.500 --> 00:03:07.219 to identify inefficiencies in traditional fixed 00:03:07.219 --> 00:03:10.280 income markets, such as, but not limited to, 00:03:10.280 --> 00:03:14.419 bonds, term deposits, bank bills. It has since 00:03:14.419 --> 00:03:16.800 been adapted and refined for digital assets. 00:03:17.219 --> 00:03:19.780 One of the key reasons it continues to generate 00:03:19.780 --> 00:03:23.120 returns is due to the higher borrow costs in 00:03:23.120 --> 00:03:27.539 crypto markets compared to historic credit markets. 00:03:28.479 --> 00:03:32.560 When investors borrow Bitcoin or Ethereum, and 00:03:32.560 --> 00:03:34.139 why do they do it? Well, essentially, they're 00:03:34.139 --> 00:03:35.800 just borrowing Bitcoin or Ethereum to leverage 00:03:35.800 --> 00:03:37.159 up the position because they want to go longer. 00:03:37.580 --> 00:03:40.979 They're using futures and forage contracts, which 00:03:40.979 --> 00:03:44.159 they often pay a premium for. This creates yield 00:03:44.159 --> 00:03:46.819 opportunities for those on the other side of 00:03:46.819 --> 00:03:49.939 the trade to essentially make money from this 00:03:49.939 --> 00:03:53.219 with the right strategy. This conversation with 00:03:53.219 --> 00:03:56.599 Clint is a lot of fun. Listen to him explain 00:03:56.599 --> 00:03:59.560 how... All this works, the mechanics behind the 00:03:59.560 --> 00:04:02.659 strategy and what it tells us about the broader 00:04:02.659 --> 00:04:05.879 evolution of the digital asset markets and where 00:04:05.879 --> 00:04:08.379 it's going. So before we get into this conversation, 00:04:08.620 --> 00:04:11.439 please remember this broadcast is made for entertainment 00:04:11.439 --> 00:04:14.020 purposes only. I encourage you to listen to the 00:04:14.020 --> 00:04:16.379 disclaimer at the end of the broadcast and keep 00:04:16.379 --> 00:04:20.339 your feedback coming. You can reach me at mgatti 00:04:20.339 --> 00:04:25.779 at ywm .com .au. So, look, this particular podcast 00:04:25.779 --> 00:04:29.980 is actually referred to us by another group which 00:04:29.980 --> 00:04:32.019 we've had on before. It's a very interesting 00:04:32.019 --> 00:04:34.079 strategy. So, if anyone's out there, you know, 00:04:34.079 --> 00:04:36.439 has a strategy which you want more details on, 00:04:36.519 --> 00:04:39.000 you would like to get on the broadcast, you know, 00:04:39.019 --> 00:04:41.589 please introduce us. Also... If you're looking 00:04:41.589 --> 00:04:44.230 to invest or any of these guests we've had on 00:04:44.230 --> 00:04:45.769 you found very interesting, you want to learn 00:04:45.769 --> 00:04:49.870 more, please reach out to me via email on mgatty 00:04:49.870 --> 00:04:52.569 at ywm .com .au. And we'll have a look at your 00:04:52.569 --> 00:04:55.089 portfolio and see whether or not it's the right 00:04:55.089 --> 00:04:58.089 fit for you and your family. With that being 00:04:58.089 --> 00:05:00.410 said, I hope you enjoyed this conversation as 00:05:00.410 --> 00:05:03.050 much as I did. So sit back, relax, and enjoy. 00:05:12.960 --> 00:05:15.519 Clint Maddock, welcome to The Rate of Change 00:05:15.519 --> 00:05:18.959 with York Wealth Management. Hi, Maddock. Thanks 00:05:18.959 --> 00:05:22.560 for having me. Good to have you on, Clint. If 00:05:22.560 --> 00:05:24.220 anyone's wondering where I came across Clint, 00:05:24.500 --> 00:05:27.879 one of our guests that we've had on in the private 00:05:27.879 --> 00:05:30.379 lending space said that they were looking into 00:05:30.379 --> 00:05:32.819 these guys personally, right? And we're very, 00:05:32.860 --> 00:05:36.579 very happy that I should reach out. And why don't 00:05:36.579 --> 00:05:39.000 we, Clint, begin like we always do and why don't 00:05:39.000 --> 00:05:40.939 you tell us a little bit about yourself and how 00:05:40.939 --> 00:05:44.540 you got into financial markets? Yeah, no problem. 00:05:44.879 --> 00:05:47.620 Look, it's been more years than I care to admit, 00:05:47.759 --> 00:05:53.579 but going right back, I found myself at UNSW 00:05:53.579 --> 00:05:57.040 studying engineering and I received an email 00:05:57.040 --> 00:06:00.420 from my uncle over in London. He said, what are 00:06:00.420 --> 00:06:03.500 you doing? What are you up to? and said, look, 00:06:03.579 --> 00:06:04.959 I'm not really sure. I'm not really enjoying 00:06:04.959 --> 00:06:07.480 engineering so much. He said, well, I'm working 00:06:07.480 --> 00:06:09.699 at a bank at the moment and there's these guys 00:06:09.699 --> 00:06:12.339 with a background similar to yours and they're 00:06:12.339 --> 00:06:15.220 making more money than they should. So if you 00:06:15.220 --> 00:06:18.259 like maths and engineering, then give it a crack. 00:06:18.379 --> 00:06:21.720 So basically carpet bombed all of the investment 00:06:21.720 --> 00:06:25.379 banks around the year 2000 and see where that 00:06:25.379 --> 00:06:30.819 got me. I ended up at a market maker in Sydney 00:06:30.819 --> 00:06:32.920 that was just establishing their roots in Asia 00:06:32.920 --> 00:06:39.600 Pacific called IMC back in the early 2000s. They're 00:06:39.600 --> 00:06:42.639 a market maker, a Dutch market maker. I think 00:06:42.639 --> 00:06:47.120 at the time they had around six employees and 00:06:47.120 --> 00:06:49.939 they had something like 1 ,500 applicants. It's 00:06:49.939 --> 00:06:53.699 a pretty hot space to be in. I was one of the 00:06:53.699 --> 00:06:56.730 four people that got offered a job. back then 00:06:56.730 --> 00:07:03.230 and actually said no at the time and put my tail 00:07:03.230 --> 00:07:06.490 between my legs and chased up the MD at the time 00:07:06.490 --> 00:07:08.709 and said, look, I've made a mistake. Would you 00:07:08.709 --> 00:07:12.629 reconsider me? And fortunately he did and the 00:07:12.629 --> 00:07:15.750 rest is history in terms of my career in the 00:07:15.750 --> 00:07:18.689 markets and especially in market making and my 00:07:18.689 --> 00:07:22.250 approach to the markets. It was kind of set well 00:07:22.250 --> 00:07:26.480 over 20 years ago now. I've said it once, I'll 00:07:26.480 --> 00:07:28.339 say it a thousand times. I find some of the most 00:07:28.339 --> 00:07:30.839 interesting people in finance never had a degree 00:07:30.839 --> 00:07:33.240 in finance. They always like start, I want to 00:07:33.240 --> 00:07:35.620 become an architect. You want to just start in 00:07:35.620 --> 00:07:37.540 a particular path. And then, you know, you wake 00:07:37.540 --> 00:07:39.740 up one day and you go, hold on a second, if the 00:07:39.740 --> 00:07:41.620 market crashes, I might, you know, have to get 00:07:41.620 --> 00:07:44.100 a cab license because I'm not as phenomenal as, 00:07:44.139 --> 00:07:45.899 you know, the Da Vinci kid that you're studying 00:07:45.899 --> 00:07:48.040 next to. And then you find yourself in finance 00:07:48.040 --> 00:07:49.639 and the world's just so much bigger. How interesting 00:07:49.639 --> 00:07:51.980 is like when you meet people, the paths of how 00:07:51.980 --> 00:07:54.209 you got there is not where they started. It's 00:07:54.209 --> 00:07:56.970 so common, isn't it? I know, I know. So I was 00:07:56.970 --> 00:08:00.769 studying aerospace engineering. Really? Of all 00:08:00.769 --> 00:08:04.750 things, yeah, you know, of planes. You know, 00:08:04.750 --> 00:08:07.089 I was in the Air Force for two years at the Defence 00:08:07.089 --> 00:08:10.089 Force Academy and it wasn't for me, so I was 00:08:10.089 --> 00:08:12.889 kind of drifting. And, yeah, UNSW introduced 00:08:12.889 --> 00:08:15.649 the Master of Commerce degree at the same time. 00:08:16.389 --> 00:08:21.170 And, yeah, that was the path I was set on, a 00:08:21.170 --> 00:08:24.379 lot of chance. Really, isn't it? You know, when 00:08:24.379 --> 00:08:27.279 you're just doing one thing and the sliding doors 00:08:27.279 --> 00:08:31.000 and, you know, this opportunity presented itself 00:08:31.000 --> 00:08:35.620 and, yeah, there you go. But it was around that 00:08:35.620 --> 00:08:38.440 time in finance when they were starting to take 00:08:38.440 --> 00:08:43.559 on the more quantitative guys from science, engineering, 00:08:44.240 --> 00:08:48.299 actuarials. It was around the early 2000s and 00:08:48.299 --> 00:08:52.750 nowadays most of the hires in the... market making 00:08:52.750 --> 00:08:56.570 space and the banks will be from the more scientific 00:08:56.570 --> 00:08:59.309 background as much as you know economics and 00:08:59.309 --> 00:09:01.549 commerce so i was kind of on the on the start 00:09:01.549 --> 00:09:04.450 of that isn't it interesting like if you look 00:09:04.450 --> 00:09:07.009 back at it that was early the other thing that 00:09:07.009 --> 00:09:08.570 was really early was like doing graphic design 00:09:08.570 --> 00:09:10.830 which i did it personally just to get an architecture 00:09:10.830 --> 00:09:12.750 with orchards a waste of time now you fast forward 00:09:12.750 --> 00:09:15.879 20 years everything's essentially like ai can 00:09:15.879 --> 00:09:18.080 you market yourself you know can you sit in front 00:09:18.080 --> 00:09:20.340 of a screen can you use essentially adobe like 00:09:20.340 --> 00:09:23.419 it's literally can you program or you know do 00:09:23.419 --> 00:09:26.000 you understand how social media works yeah it's 00:09:26.000 --> 00:09:28.600 amazing how fast the world's changed so speaking 00:09:28.600 --> 00:09:31.559 about how fast the world's changed um with what 00:09:31.559 --> 00:09:34.220 you guys do your your world is essentially in 00:09:34.220 --> 00:09:38.919 the crypto space correct yeah look we we operate 00:09:38.919 --> 00:09:42.620 through investment strategies Just one second. 00:09:42.720 --> 00:09:46.139 So the firm is Digital Asset Funds Management, 00:09:46.460 --> 00:09:50.159 DAFM for short, correct? So sorry for cutting 00:09:50.159 --> 00:09:52.519 you off. I apologize. But why don't we just start 00:09:52.519 --> 00:09:55.840 here? Why don't we just give a bit of an understanding 00:09:55.840 --> 00:09:58.940 of, you know, who DAFM is, you know, what do 00:09:58.940 --> 00:10:01.399 you guys and girls do, you know, what's the philosophy 00:10:01.399 --> 00:10:04.120 and, you know, how do you operate, please? Yeah, 00:10:04.139 --> 00:10:07.620 no problem. So I've been trading Digital Asset 00:10:07.620 --> 00:10:09.620 Funds Management as the manager of the fund. 00:10:10.250 --> 00:10:13.409 And that's been going for just shy of four years 00:10:13.409 --> 00:10:18.750 now. So we've got an Australian unit trust, which 00:10:18.750 --> 00:10:22.629 is the investment vehicle. And its primary focus 00:10:22.629 --> 00:10:25.470 is to trade digital assets, which, let's face 00:10:25.470 --> 00:10:28.549 it, the volumes in Bitcoin and Ethereum primarily, 00:10:28.850 --> 00:10:32.950 looking at 90%, 98 % of the market volumes is 00:10:32.950 --> 00:10:37.309 going to be in those two products. So primarily 00:10:37.309 --> 00:10:40.889 we're trading Bitcoin and Ethereum. in the derivatives 00:10:40.889 --> 00:10:47.669 markets. So, I mean, where do you want me to 00:10:47.669 --> 00:10:51.429 go on the background of the AFM? Well, why don't 00:10:51.429 --> 00:10:53.110 we start here, right? Because what's interesting 00:10:53.110 --> 00:10:55.690 about what you guys do is, you know, people hear 00:10:55.690 --> 00:10:57.850 crypto, they just think essentially I'm buying 00:10:57.850 --> 00:11:01.149 and holding Bitcoin, correct? But what you're 00:11:01.149 --> 00:11:05.389 doing is completely different but in that space. 00:11:05.590 --> 00:11:07.610 And to my understanding, and please explain it, 00:11:08.059 --> 00:11:13.179 You're taking the strategy of, you know, let's 00:11:13.179 --> 00:11:15.059 call it what is real world compared to crypto 00:11:15.059 --> 00:11:16.600 world. You know, that's how some people perceive 00:11:16.600 --> 00:11:18.580 it. But now crypto world is becoming real world. 00:11:18.820 --> 00:11:22.899 You're essentially taking algorithmic trading 00:11:22.899 --> 00:11:25.440 strategies, which worked at major investment 00:11:25.440 --> 00:11:28.139 banks, you know, in the futures market. And you've 00:11:28.139 --> 00:11:32.539 applied that to the digital world and to digital 00:11:32.539 --> 00:11:35.879 assets. Is that how you best explain it or how 00:11:35.879 --> 00:11:38.110 would you explain it? So we've taken existing 00:11:38.110 --> 00:11:41.090 trading strategies out of the TradFi world, the 00:11:41.090 --> 00:11:44.549 traditional finance world, and we've repurposed 00:11:44.549 --> 00:11:47.649 those exact strategies from the user interface 00:11:47.649 --> 00:11:51.190 at the front end through to the code base on 00:11:51.190 --> 00:11:56.029 the back end, through to the teams running the 00:11:56.029 --> 00:11:58.690 strategy. So we've taken that from TradFi and 00:11:58.690 --> 00:12:01.350 then we've applied that into the digital asset 00:12:01.350 --> 00:12:04.830 markets, primarily Bitcoin. So we're able to 00:12:04.830 --> 00:12:11.240 do that. around 2019, because that's when the 00:12:11.240 --> 00:12:13.820 digital asset Bitcoin markets became mature enough 00:12:13.820 --> 00:12:18.539 that a derivatives market sprang up around them 00:12:18.539 --> 00:12:22.320 offering the ability to just as easily go long 00:12:22.320 --> 00:12:26.639 as short. So it really opened up our world in 00:12:26.639 --> 00:12:28.440 terms of the number of products we could trade, 00:12:28.600 --> 00:12:32.580 in terms of the style of strategy that we could 00:12:32.580 --> 00:12:35.899 apply into these markets, which Although the 00:12:35.899 --> 00:12:38.659 underlying asset, Bitcoin, is very different 00:12:38.659 --> 00:12:40.940 from what we might have been trading otherwise, 00:12:41.220 --> 00:12:45.100 you know, an SX200 stock or a bond future or 00:12:45.100 --> 00:12:48.279 a bond, for example. Instead, we're trading Bitcoin 00:12:48.279 --> 00:12:52.279 and Bitcoin futures. But, you know, the core 00:12:52.279 --> 00:12:57.519 code, the core strategy, it's very similar in 00:12:57.519 --> 00:12:59.960 that respect. So, you know, we don't mind whether 00:12:59.960 --> 00:13:02.440 the market goes up. We don't mind whether the 00:13:02.440 --> 00:13:07.399 market goes down. All we care about is can we 00:13:07.399 --> 00:13:10.820 model these instruments mathematically? Can we 00:13:10.820 --> 00:13:15.019 work out what relationships exist between the 00:13:15.019 --> 00:13:18.120 underlying Bitcoin and the various products that 00:13:18.120 --> 00:13:22.399 exist on the fragmented markets that are popping 00:13:22.399 --> 00:13:25.519 up all around the world that trade these crypto 00:13:25.519 --> 00:13:30.350 derivative products? So a lot of people since 00:13:30.350 --> 00:13:33.470 2019, just to kind of paint the picture, what's 00:13:33.470 --> 00:13:35.669 the level of volatility being so hypothetically 00:13:35.669 --> 00:13:38.129 if you just held Bitcoin? Because, you know, 00:13:38.129 --> 00:13:40.590 there's been some really large swings in comparison 00:13:40.590 --> 00:13:43.250 to the performance that you've had with the strategy. 00:13:44.190 --> 00:13:47.070 Yeah, that's a really interesting point. We launched 00:13:47.070 --> 00:13:54.250 our fund publicly in April, May 2021. So just 00:13:54.250 --> 00:14:00.090 under four years ago. At the time, Bitcoin was 00:14:00.090 --> 00:14:06.429 around US around $40 ,000, $50 ,000, so $60 ,000, 00:14:06.450 --> 00:14:11.009 $70 ,000 Aussie. Its annualized return since 00:14:11.009 --> 00:14:15.090 then to, well, at least to the end of January, 00:14:15.330 --> 00:14:18.190 it's come off a little bit in the last month, 00:14:18.250 --> 00:14:20.210 but to the end of January, the annualized return 00:14:20.210 --> 00:14:28.139 was sitting around 20%, 22 % annualized. Performance 00:14:28.139 --> 00:14:32.179 was around 23 % annually. So it turns out that 00:14:32.179 --> 00:14:37.179 buying and holding Bitcoin performance was on 00:14:37.179 --> 00:14:41.139 a very similar level to our fund. However, what 00:14:41.139 --> 00:14:42.799 you don't see is what happened in the interim. 00:14:43.379 --> 00:14:48.980 From 2021, there's a big run -up, 60 ,000. FTX 00:14:48.980 --> 00:14:52.360 collapse. Bitcoin was down around 16 ,000, 17 00:14:52.360 --> 00:14:55.700 ,000, all US dollars. And then since we've seen 00:14:55.700 --> 00:15:00.379 Trump, Elected through November, hit all -time 00:15:00.379 --> 00:15:04.820 highs of around $110 ,000. So you've been on 00:15:04.820 --> 00:15:07.799 this wild rollercoaster ride with Bitcoin to 00:15:07.799 --> 00:15:12.240 achieve a return on par with what we were achieving 00:15:12.240 --> 00:15:15.860 market neutral. So we only had, in all that time, 00:15:16.120 --> 00:15:19.240 we only had one month where we lost money out 00:15:19.240 --> 00:15:23.700 of 45 months of being live now. So you had 44. 00:15:24.490 --> 00:15:27.230 positive months with Bitcoin on this wild ride. 00:15:28.250 --> 00:15:30.950 I think it's a pretty compelling argument to 00:15:30.950 --> 00:15:33.610 approach the market in a systematic, methodical 00:15:33.610 --> 00:15:38.210 way. And yeah, look, it's been our volatile markets, 00:15:38.470 --> 00:15:42.190 very volatile markets. And what we've seen happen 00:15:42.190 --> 00:15:46.389 over the years is that as Bitcoin especially 00:15:46.389 --> 00:15:51.710 is more widely adopted, that we've seen some 00:15:51.710 --> 00:15:57.970 of the volatility of Bitcoin. especially compared 00:15:57.970 --> 00:16:02.110 to the TradFi markets, say S &P 500, the VIX, 00:16:02.289 --> 00:16:06.490 for example. Those volatilities are converging 00:16:06.490 --> 00:16:10.909 over time. Yeah, that's fascinating. So what 00:16:10.909 --> 00:16:13.710 I'm understanding, because if you think about 00:16:13.710 --> 00:16:15.990 it, if you buy it and you hold spot, it all depends 00:16:15.990 --> 00:16:18.539 what price you paid for it, correct? And unfortunately, 00:16:18.700 --> 00:16:20.919 with crypto, haven't you found that the best 00:16:20.919 --> 00:16:22.679 time to buy is when everyone hates it and you 00:16:22.679 --> 00:16:24.919 think it's going to go in the bin? But no one 00:16:24.919 --> 00:16:27.519 does. It's like as if they require the thing 00:16:27.519 --> 00:16:30.039 to go from $33 ,000 to $60 ,000 just to get confidence, 00:16:30.279 --> 00:16:31.720 and then they blink, and then they're paying 00:16:31.720 --> 00:16:34.860 $70 ,000. And then it hits $110 ,000, and it's 00:16:34.860 --> 00:16:36.720 like everyone should sell, but no one does. And 00:16:36.720 --> 00:16:40.580 then when we wake up this morning, $79 ,701, 00:16:40.779 --> 00:16:42.759 I believe, this morning. But what's fascinating 00:16:42.759 --> 00:16:45.779 about this as well is last night in the US, stocks 00:16:45.779 --> 00:16:48.840 plunged. So today we're recording on the 11th 00:16:48.840 --> 00:16:51.659 of March, and pretty much it sold off because 00:16:51.659 --> 00:16:54.600 the anxiety of tariffs and government fringes. 00:16:55.360 --> 00:16:57.940 And I think the NASDAQ 100, as an example, posted 00:16:57.940 --> 00:17:01.200 its worst day since 2022, wiping off more than 00:17:01.200 --> 00:17:04.480 a trillion dollars in value. Meanwhile, Bitcoin 00:17:04.480 --> 00:17:09.039 briefly sank below 78 ,000. So it's very, very 00:17:09.039 --> 00:17:10.960 interesting markets. And look, why I'm painting 00:17:10.960 --> 00:17:13.039 this picture, and I wouldn't mind you explaining, 00:17:13.200 --> 00:17:16.130 but... Is it correct in my understanding that 00:17:16.130 --> 00:17:20.509 how you operate does better, you know, in sideways 00:17:20.509 --> 00:17:24.269 kind of markets and essentially, you know, the 00:17:24.269 --> 00:17:26.930 big volatile moves. So you benefit from essentially 00:17:26.930 --> 00:17:30.250 like holding patterns and like how does it work? 00:17:30.410 --> 00:17:33.569 Because, you know, if someone's looking here 00:17:33.569 --> 00:17:36.230 and going, what do I do? Do I, you know, wait 00:17:36.230 --> 00:17:38.410 to essentially buy Bitcoin on the dip or is there 00:17:38.410 --> 00:17:41.170 another way to make Bitcoin that might be potentially 00:17:41.170 --> 00:17:44.450 a... safer, less volatile means of doing so. 00:17:45.390 --> 00:17:48.369 In my understanding, that's essentially something 00:17:48.369 --> 00:17:53.210 that your company offers as a strategy. How does 00:17:53.210 --> 00:17:55.369 that all work? I think there's two things in 00:17:55.369 --> 00:17:59.710 that. There's market timing, especially of Bitcoin, 00:17:59.930 --> 00:18:05.910 and how do we profit from the volatility in the 00:18:05.910 --> 00:18:09.160 markets? I would say that... When it comes to 00:18:09.160 --> 00:18:11.039 market timing, look, that's not my strong point. 00:18:11.079 --> 00:18:13.859 That's not in my wheelhouse. I'm just as emotional 00:18:13.859 --> 00:18:17.619 as the rest of you when it comes to trying to 00:18:17.619 --> 00:18:20.220 time my purchase. And one of the hard lessons 00:18:20.220 --> 00:18:24.519 I've learned is to not try and to just stick 00:18:24.519 --> 00:18:27.680 with a market -neutral approach. So, you know, 00:18:27.700 --> 00:18:31.359 personally, yeah, I'll hold some Bitcoin and 00:18:31.359 --> 00:18:34.380 other digital assets. But in terms of trading 00:18:34.380 --> 00:18:38.319 that, I've learned to just buy and hold. or hodl 00:18:38.319 --> 00:18:42.579 as they say in bitcoin as a hold on for dear 00:18:42.579 --> 00:18:47.039 life so i think someone someone missed the belt 00:18:47.039 --> 00:18:51.160 hold on a on a telegram chat it's just taken 00:18:51.160 --> 00:18:55.180 off as hodlers in bitcoin so people typically 00:18:55.180 --> 00:18:57.920 people will buy their bitcoin and they just won't 00:18:57.920 --> 00:19:02.319 sell and uh i think that teaches you a lot about 00:19:02.720 --> 00:19:04.500 market timing as well, because when I was talking 00:19:04.500 --> 00:19:07.220 earlier about the wild ride that Bitcoin has 00:19:07.220 --> 00:19:10.440 been on, you know, if you did have cash on the 00:19:10.440 --> 00:19:14.940 sidelines towards the end of 2022 and you managed 00:19:14.940 --> 00:19:17.779 to see, you know, all of the bad news is out, 00:19:17.920 --> 00:19:22.319 Bitcoin's at lows not seen for quite some time 00:19:22.319 --> 00:19:24.200 in Bitcoin, and you were able to say, you know, 00:19:24.279 --> 00:19:26.980 I believe Bitcoin still has a future long term. 00:19:27.180 --> 00:19:29.160 You've got to remember at the time, there were 00:19:29.160 --> 00:19:31.980 a lot of people out there, big names. saying, 00:19:32.039 --> 00:19:33.799 you know, Bitcoin's going to zero. It has no 00:19:33.799 --> 00:19:37.839 intrinsic value. You know, you'd be right for 00:19:37.839 --> 00:19:39.740 not buying it. But, you know, if you had and 00:19:39.740 --> 00:19:43.240 you bought it for, say, 20 ,000 US, you're sitting 00:19:43.240 --> 00:19:45.599 on a return of, you know, today 4X, you know, 00:19:45.619 --> 00:19:50.900 as high as 4 .5X in barely over two years. But 00:19:50.900 --> 00:19:52.680 like I said, when we launched our fund, it was 00:19:52.680 --> 00:19:55.539 sitting around 40, 50 ,000 US. So now you're 00:19:55.539 --> 00:19:59.140 looking at a return of not even 2X, right? You 00:19:59.140 --> 00:20:02.710 know, 1 .5. One half, two X. Depending on when 00:20:02.710 --> 00:20:05.029 you buy it and look at the market dynamics and 00:20:05.029 --> 00:20:08.029 all the doom and gloom or not, it makes a huge 00:20:08.029 --> 00:20:16.049 outcome in your final P &L. So that's, I think, 00:20:16.049 --> 00:20:18.829 why there is a lot of this huddling in Bitcoin, 00:20:18.990 --> 00:20:21.049 because there's the belief that over the long 00:20:21.049 --> 00:20:25.089 term, given it's a scarce asset, that's not what 00:20:25.089 --> 00:20:30.539 we do at DAFM. What we do is we trade the ups 00:20:30.539 --> 00:20:33.019 and the downs in the market in a neutral fashion 00:20:33.019 --> 00:20:36.259 and look for the small inefficiencies that exist 00:20:36.259 --> 00:20:39.960 in these markets. It's a new market, Bitcoin. 00:20:40.579 --> 00:20:45.839 It's been around since 2009 as we know it, Bitcoin 00:20:45.839 --> 00:20:49.460 as we know it. The derivatives markets that have 00:20:49.460 --> 00:20:53.160 sprung up around it, you're looking probably 00:20:53.160 --> 00:20:55.779 six or seven years. They started to get a foothold 00:20:55.779 --> 00:20:59.140 probably around five. Six years ago, there was 00:20:59.140 --> 00:21:02.519 enough volume there for a more professional, 00:21:02.660 --> 00:21:05.740 institutional -grade outfit to start getting 00:21:05.740 --> 00:21:10.099 involved like us. So there's no point in us looking 00:21:10.099 --> 00:21:12.440 for nickels and dimes in a market that's turning 00:21:12.440 --> 00:21:15.099 over a few million dollars a day. We need people 00:21:15.099 --> 00:21:19.420 to trade against. We need interest from the public 00:21:19.420 --> 00:21:23.440 and investors. And it wasn't until the late teens 00:21:23.440 --> 00:21:25.480 that we were of the belief that that was there. 00:21:26.380 --> 00:21:32.640 We did our internal market analysis and saw really 00:21:32.640 --> 00:21:38.500 quite huge inefficiencies in these leading derivatives 00:21:38.500 --> 00:21:42.660 exchanges in that space. So we built, like I 00:21:42.660 --> 00:21:45.559 said, we modified our systems in order to take 00:21:45.559 --> 00:21:48.839 advantage of those inefficiencies and there just 00:21:48.839 --> 00:21:52.079 wasn't enough capital in the space to absorb 00:21:52.079 --> 00:21:57.289 the profitability that we saw. And that's why 00:21:57.289 --> 00:22:01.910 we decided to launch the fund. So we had been 00:22:01.910 --> 00:22:04.670 trading it for a couple of years, but the opportunities 00:22:04.670 --> 00:22:07.349 were just too big. And so by 2021, we'd got all 00:22:07.349 --> 00:22:11.190 of the documentation together in order to launch 00:22:11.190 --> 00:22:13.369 that fund and try and raise money as quickly 00:22:13.369 --> 00:22:15.769 as we could in order to take advantage. How much 00:22:15.769 --> 00:22:20.170 money is in the fund? At the moment, we've got 00:22:20.170 --> 00:22:27.869 around 30 million Aussie in there. And, yeah, 00:22:27.950 --> 00:22:31.109 like I said, it's all market neutral. How many 00:22:31.109 --> 00:22:35.910 funds are you operating? So I've got the Australian 00:22:35.910 --> 00:22:39.430 Unit Trust, which is the income fund, and then 00:22:39.430 --> 00:22:43.549 also sitting under that DAFM umbrella, we've 00:22:43.549 --> 00:22:47.509 got a Bitcoin tracker, which just, funnily enough, 00:22:47.650 --> 00:22:51.990 backs the price of Bitcoin in a unit trust. Does 00:22:51.990 --> 00:22:54.410 that pay any income on top of holding just the 00:22:54.410 --> 00:22:59.150 Bitcoin? It doesn't pay out any income. However, 00:22:59.269 --> 00:23:02.190 what we do with the Bitcoin holdings within that 00:23:02.190 --> 00:23:05.849 unit truck is we loan it to our market neutral 00:23:05.849 --> 00:23:12.390 strategy. And it nets around 3 % per annum to 00:23:12.390 --> 00:23:17.089 the Bitcoin unit holders. So over the years since 00:23:17.089 --> 00:23:21.869 we launched the fund, the Bitcoin return is roughly 00:23:21.869 --> 00:23:26.859 10, 12%. higher than the Bitcoin returns in Aussie 00:23:26.859 --> 00:23:33.240 dollar. Is that net after fees? Yeah, everything 00:23:33.240 --> 00:23:36.599 I talk about, it's all net after fees. You've 00:23:36.599 --> 00:23:40.059 got the security of having the Bitcoin managed 00:23:40.059 --> 00:23:44.000 by professionals like us, so you don't have to 00:23:44.000 --> 00:23:46.680 worry about your private keys. You don't have 00:23:46.680 --> 00:23:48.720 to worry about losing your password to an exchange. 00:23:49.519 --> 00:23:52.410 You don't have to worry about doing it. Know 00:23:52.410 --> 00:23:56.589 your customer on a crypto exchange, which you 00:23:56.589 --> 00:23:59.789 may or may not trust very highly. You're handing 00:23:59.789 --> 00:24:03.950 over passports, driver's licenses, plus deeds 00:24:03.950 --> 00:24:07.910 for your self -managed super or family. You don't 00:24:07.910 --> 00:24:10.910 have to worry about all that. And your accountant 00:24:10.910 --> 00:24:13.549 can get the tax statements at the end of every 00:24:13.549 --> 00:24:16.289 year and be happy enough to approve that as well. 00:24:17.240 --> 00:24:19.099 we're definitely going to get into how the Argo 00:24:19.099 --> 00:24:20.500 works and everything. But since we're talking 00:24:20.500 --> 00:24:22.339 about it, I wouldn't mind actually digging into 00:24:22.339 --> 00:24:25.339 this a bit because, and the topic which I want 00:24:25.339 --> 00:24:28.359 to discuss is, as an example, superannuation 00:24:28.359 --> 00:24:30.000 funds, like self -managed super funds, which 00:24:30.000 --> 00:24:33.539 are very, very tight. Like we had a client pass 00:24:33.539 --> 00:24:35.700 away and they deal with Westpac, right? And the 00:24:35.700 --> 00:24:39.259 fact the client held Bitcoin directly made it 00:24:39.259 --> 00:24:43.839 a nightmare to deal with probate, right? They 00:24:43.839 --> 00:24:45.960 locked down the bank accounts and the process 00:24:45.960 --> 00:24:47.720 that should have taken a couple of months ended 00:24:47.720 --> 00:24:50.119 up becoming substantially extended to the frustration 00:24:50.119 --> 00:24:51.920 of the family. So we dealt with that process. 00:24:52.259 --> 00:24:55.299 But can you just explain what changes, you know, 00:24:55.319 --> 00:24:58.759 have been made in the industry and maybe touch 00:24:58.759 --> 00:25:01.839 on as well, there's been a launch of a number 00:25:01.839 --> 00:25:05.279 of ETFs, right? So these ETFs can now be held, 00:25:05.359 --> 00:25:07.500 you know, within 501ks and essentially, you know, 00:25:07.519 --> 00:25:09.259 Australian super funds, right? So that's been 00:25:09.259 --> 00:25:12.789 the first launch. But then to my understanding 00:25:12.789 --> 00:25:15.910 is firms like yourself are now becoming available, 00:25:16.289 --> 00:25:20.609 which means that we can now get access to essentially 00:25:20.609 --> 00:25:24.390 crypto inside self -managed super funds. Because 00:25:24.390 --> 00:25:26.829 what I didn't like when I'm seeing these ETFs 00:25:26.829 --> 00:25:29.910 is the ETFs are ripping so many fees out. What's 00:25:29.910 --> 00:25:31.730 interesting is your Bitcoin on the huddle side 00:25:31.730 --> 00:25:33.589 is still paying 3%, so you're performing better 00:25:33.589 --> 00:25:35.789 than. But if you're holding these direct ETFs, 00:25:35.789 --> 00:25:38.400 I think it's about 10 of them. you actually work 00:25:38.400 --> 00:25:40.339 out that you're going to be receiving like a 00:25:40.339 --> 00:25:43.200 large percentage less than what the spot price 00:25:43.200 --> 00:25:46.079 is worth and say you held it for five years is 00:25:46.079 --> 00:25:48.160 that accurate and do you want to give it a bit 00:25:48.160 --> 00:25:50.000 of color around like what's actually changed 00:25:50.000 --> 00:25:53.500 that's led to this because that's quite interesting 00:25:53.500 --> 00:25:58.240 yeah the etfs are fascinating and they they launched 00:25:58.240 --> 00:26:04.000 in the us january last year january 2024 and 00:26:04.460 --> 00:26:08.299 the demand was immense. They went from launching 00:26:08.299 --> 00:26:14.039 to, when I checked the other week, they had $100 00:26:14.039 --> 00:26:20.619 billion invested into those ETFs in 13 months. 00:26:21.019 --> 00:26:25.039 Wow. It's huge. There's been nothing like it 00:26:25.039 --> 00:26:30.220 ever launched before. There's always the Bitcoin 00:26:30.220 --> 00:26:33.700 and gold comparison. And if you look up the gold, 00:26:34.259 --> 00:26:41.259 They launched in 2003 and it took years. How 00:26:41.259 --> 00:26:44.480 many years? I'm sure how many. It was like nine 00:26:44.480 --> 00:26:47.859 years or something until they reached the similar 00:26:47.859 --> 00:26:52.839 kind of AUM that Bitcoin reached in 13 months. 00:26:53.099 --> 00:26:55.700 Seven years it took for the gold to reach those 00:26:55.700 --> 00:27:00.500 sort of levels. And ETFs, the mechanics of that, 00:27:00.660 --> 00:27:04.789 subscriptions are made. money flows in, the ETF 00:27:04.789 --> 00:27:07.910 issuers go to the spot market and they just buy 00:27:07.910 --> 00:27:10.430 Bitcoin. There's no two ways about it. They want 00:27:10.430 --> 00:27:13.150 to reduce their tracking error. To do that, they 00:27:13.150 --> 00:27:15.349 buy Bitcoin towards the end of the day. They 00:27:15.349 --> 00:27:18.190 can publish their net asset values versus the 00:27:18.190 --> 00:27:20.470 returns of Bitcoin. As long as they've done that 00:27:20.470 --> 00:27:21.910 towards the end of the day, they don't care how 00:27:21.910 --> 00:27:23.289 much they've driven up the price of Bitcoin, 00:27:23.470 --> 00:27:25.390 as long as they got filled close to the closing 00:27:25.390 --> 00:27:29.150 price. And so you're seeing literally billions 00:27:29.150 --> 00:27:33.059 of dollars flow in over just 13 months. You know, 00:27:33.099 --> 00:27:38.900 we're talking, you know, 55, 60 weeks to get 00:27:38.900 --> 00:27:41.700 those sort of inflows. You're looking at hundreds 00:27:41.700 --> 00:27:44.960 of millions of dollars a day of Bitcoin purchases 00:27:44.960 --> 00:27:47.779 all focused towards that window towards the end 00:27:47.779 --> 00:27:51.359 of the day. So there's a huge tailwind for the 00:27:51.359 --> 00:27:53.740 price of Bitcoin. And, yeah, like I said, you've 00:27:53.740 --> 00:27:57.319 seen that go exponential last year, especially 00:27:57.319 --> 00:27:59.579 towards the end of the year with the Trump election. 00:28:00.829 --> 00:28:03.910 But primarily the ETFs are traded in the U .S. 00:28:03.910 --> 00:28:07.789 There are a handful trading now in Australia, 00:28:07.990 --> 00:28:11.450 but from what I've seen, their AUMs are still 00:28:11.450 --> 00:28:15.470 pretty low. I think what you'll also see in the 00:28:15.470 --> 00:28:17.569 States, obviously they're U .S. denominated, 00:28:17.670 --> 00:28:19.789 so as an Aussie you're exposed to the U .S. dollar 00:28:19.789 --> 00:28:24.930 risk. So it's not an obvious investment for an 00:28:24.930 --> 00:28:28.109 Aussie fund, and they are charging fees as well. 00:28:28.920 --> 00:28:32.799 I don't think they're too big in terms of fees 00:28:32.799 --> 00:28:35.559 charged, but relative to your index tracking, 00:28:35.700 --> 00:28:38.380 index -hugging ETFs, yeah, the fees are a lot 00:28:38.380 --> 00:28:43.779 higher. And with competition, they'll come down. 00:28:44.059 --> 00:28:47.140 And it'll be interesting to see what the ETFs 00:28:47.140 --> 00:28:49.059 do in Australia as well. There just doesn't seem 00:28:49.059 --> 00:28:51.240 to have been nearly the demand in Australia as 00:28:51.240 --> 00:28:54.380 there has been in the US, at least by looking 00:28:54.380 --> 00:29:00.559 at the AUMs of the ETFs here. Yeah, it's very 00:29:00.559 --> 00:29:03.259 interesting just the uptake. It's like everyone 00:29:03.259 --> 00:29:05.859 knew you could hold it outside. But look, what's 00:29:05.859 --> 00:29:07.720 interesting as well, right, you know, as an advisor 00:29:07.720 --> 00:29:09.799 in Australia, we're not allowed to essentially 00:29:09.799 --> 00:29:13.099 provide client advice even for a wholesale individual 00:29:13.099 --> 00:29:15.460 because it's unregulated, like technically, you 00:29:15.460 --> 00:29:17.279 know what I mean? And then essentially, you know, 00:29:17.299 --> 00:29:20.359 be, you know, reciprocated or remunerated for 00:29:20.359 --> 00:29:22.720 essentially that advice because it's not held 00:29:22.720 --> 00:29:25.960 within, you know, like the platforms, correct? 00:29:27.130 --> 00:29:29.069 It's my understanding the vehicle which you're 00:29:29.069 --> 00:29:31.670 operating, you know, it can be put on the likes 00:29:31.670 --> 00:29:34.269 of NetWealth, Premium, Hub24, right? And then 00:29:34.269 --> 00:29:37.329 held within, you know, a trust or a self -managed 00:29:37.329 --> 00:29:40.329 super fund and then easily accounted for, correct? 00:29:40.490 --> 00:29:42.869 And then since you got, just as something as 00:29:42.869 --> 00:29:45.049 simple as the Bitcoin, since it's Bitcoin, you 00:29:45.049 --> 00:29:48.750 know, plus 3%, you know, the ETFs are essentially 00:29:48.750 --> 00:29:53.170 the ETF minus, you know, the holding price minus 00:29:53.170 --> 00:29:56.400 the fee. Is that my understanding? of what's 00:29:56.400 --> 00:29:58.220 currently happening here? Yeah, the ETF will 00:29:58.220 --> 00:30:00.460 be, like I say, the Bitcoin price, less than 00:30:00.460 --> 00:30:05.359 50, 100 basis points per annum, typically the 00:30:05.359 --> 00:30:08.500 fees that I've seen, whereas our Bitcoin tracker 00:30:08.500 --> 00:30:14.720 will be Bitcoin plus approximately 3 % net. Yeah, 00:30:14.819 --> 00:30:18.019 it's just so interesting, just the uptake. Especially 00:30:18.019 --> 00:30:21.400 if you're going to hold Bitcoin for a number 00:30:21.400 --> 00:30:24.579 of years, yeah, you'll see some significant outperformance. 00:30:25.759 --> 00:30:27.900 Yeah, right. Again, we're getting back to the 00:30:27.900 --> 00:30:29.119 Argo, but since we're here, we might as well 00:30:29.119 --> 00:30:31.119 just tuck into the mechanics. So one thing everyone's 00:30:31.119 --> 00:30:32.700 going to ask is, you know, what's the risks? 00:30:32.900 --> 00:30:34.740 Because everyone saw good old -fashioned Sam 00:30:34.740 --> 00:30:37.539 Beckman Freed go under. And I think I saw the 00:30:37.539 --> 00:30:39.359 other day, was it Tucker Carlson proceeded to 00:30:39.359 --> 00:30:40.920 interview him from prison? It was hilarious. 00:30:41.400 --> 00:30:43.160 I think it literally popped up within the week. 00:30:43.259 --> 00:30:45.019 Like, he's literally, his hair's just still a 00:30:45.019 --> 00:30:47.259 mess. You know, biggest crook of the century. 00:30:48.059 --> 00:30:50.059 And, you know, he's doing an interview from prison. 00:30:50.119 --> 00:30:53.279 Just going, how's prison life, man? So which 00:30:53.279 --> 00:30:54.900 brings to the question, right, you've seen this, 00:30:54.920 --> 00:30:59.880 you've seen Binance, you've seen a lot of essentially 00:30:59.880 --> 00:31:02.400 third -party softwares, you know, fall under. 00:31:02.539 --> 00:31:04.700 But can you, for people that don't understand, 00:31:04.900 --> 00:31:06.619 can you please explain the difference between 00:31:06.619 --> 00:31:11.700 a cold wallet and essentially holding your, you 00:31:11.700 --> 00:31:15.059 know, Bitcoin on exchange? And what is the risk 00:31:15.059 --> 00:31:16.680 of holding an exchange and how do you mitigate 00:31:16.680 --> 00:31:19.460 against that? Because as you mentioned, you're 00:31:19.460 --> 00:31:21.259 doing high amount of algos, which require a lot 00:31:21.259 --> 00:31:24.559 of volume. So can you hold it in essentially 00:31:24.559 --> 00:31:26.819 a cold wallet or do you have to hold an exchange 00:31:26.819 --> 00:31:30.539 in order to get the liquidity? No. So one of 00:31:30.539 --> 00:31:34.500 the biggest risks that we face as a fund is the 00:31:34.500 --> 00:31:38.960 counterparty risk. And the only way to avoid 00:31:38.960 --> 00:31:43.259 that and own Bitcoin, I should make the distinction 00:31:43.259 --> 00:31:46.720 that we've got the Bitcoin tracker. And we've 00:31:46.720 --> 00:31:49.019 got the market neutral front. And our flagship 00:31:49.019 --> 00:31:51.259 fund is the market neutral fund. That's returned. 00:31:51.480 --> 00:31:53.099 It's actually returned more than what Bitcoin 00:31:53.099 --> 00:31:56.019 has returned since we launched without the volatility. 00:31:56.200 --> 00:31:58.579 But, you know, I love digital assets. I love 00:31:58.579 --> 00:32:01.299 Bitcoin. That's kind of my personal view. That's 00:32:01.299 --> 00:32:02.720 beside the point. That's not what we do in the 00:32:02.720 --> 00:32:07.440 fund. But look, if you want to own Bitcoin and 00:32:07.440 --> 00:32:10.200 not have the counterparty, there's a saying, 00:32:10.319 --> 00:32:16.450 they say, Not your key, not your Bitcoin. If 00:32:16.450 --> 00:32:20.170 you don't own the password to access that Bitcoin, 00:32:20.369 --> 00:32:22.869 then it can be stolen. It can be hacked. It can 00:32:22.869 --> 00:32:25.549 be lost. It's not in cold storage. If you hold 00:32:25.549 --> 00:32:28.950 it in cold storage, you have the keys to that. 00:32:29.849 --> 00:32:32.470 You put it on a USB stick, you put that in your 00:32:32.470 --> 00:32:36.289 vault at home. You put that in your cell. Then 00:32:36.289 --> 00:32:38.309 it's secure. It can't be stolen. But then again, 00:32:38.450 --> 00:32:40.920 someone could... someone could come and steal 00:32:40.920 --> 00:32:43.420 your vault someone could steal your usb you could 00:32:43.420 --> 00:32:46.900 lose you could lose the password and then again 00:32:46.900 --> 00:32:49.200 you've lost you've lost the bitcoin so it's none 00:32:49.200 --> 00:32:53.019 of it's without risk none of us without risk 00:32:53.019 --> 00:32:56.299 so we understand the risks and our risk with 00:32:56.299 --> 00:33:02.039 our bitcoin background is is a large extent it's 00:33:02.039 --> 00:33:05.299 just the counterparty risk because we're a professional 00:33:05.299 --> 00:33:10.630 organization and we we know We think we know 00:33:10.630 --> 00:33:12.809 better than others how to handle those risks 00:33:12.809 --> 00:33:15.609 and that's counterparty risk. And we spread that 00:33:15.609 --> 00:33:18.490 amongst as many counterparties as we can and 00:33:18.490 --> 00:33:21.509 we monitor our counterparties. You know, we have 00:33:21.509 --> 00:33:25.349 all risk management systems and fail -safes in 00:33:25.349 --> 00:33:30.710 place to, as best as possible, avoid counterparty 00:33:30.710 --> 00:33:32.589 risk. And, you know, there have been enough examples 00:33:32.589 --> 00:33:35.930 since we launched the fund four years ago and 00:33:35.930 --> 00:33:38.190 we've been trading it for long enough to... They've 00:33:38.190 --> 00:33:40.670 taught us a few lessons, primarily that FTX lesson, 00:33:40.829 --> 00:33:45.609 which did burn us to some extent. So how do you 00:33:45.609 --> 00:33:48.529 deal with FTX? Is there a company which you can 00:33:48.529 --> 00:33:51.349 – my issue here is liquidity, right? Because 00:33:51.349 --> 00:33:54.329 you require to essentially have these argos running 00:33:54.329 --> 00:33:57.930 all the time and settle. You can't just hold 00:33:57.930 --> 00:34:00.869 cold storage, right? Like a give -up trade on 00:34:00.869 --> 00:34:03.069 those equities. You're not holding it. It needs 00:34:03.069 --> 00:34:06.230 to settle. So in order for the speed execution 00:34:06.230 --> 00:34:09.329 and the settlement, are you doing that in -house? 00:34:09.409 --> 00:34:12.469 Or I think one of your colleagues mentioned that 00:34:12.469 --> 00:34:15.809 there's maybe a company which you use that provides 00:34:15.809 --> 00:34:18.090 that level of liquidity which you can deal with. 00:34:18.550 --> 00:34:23.429 How does that work? Yeah, we use third -party 00:34:23.429 --> 00:34:28.630 custodian relationships to manage the equity 00:34:28.630 --> 00:34:32.510 between our... and between the wallets at the 00:34:32.510 --> 00:34:35.449 exchange and we'll have wallets at the custodian 00:34:35.449 --> 00:34:38.670 to hold the equity. So we try and hold as little 00:34:38.670 --> 00:34:42.590 as possible on exchange. We can't avoid holding 00:34:42.590 --> 00:34:45.929 our equity, some of our equity on exchange because 00:34:45.929 --> 00:34:48.670 we're trading futures contracts. We need the 00:34:48.670 --> 00:34:51.949 equity there in order to hold our positions. 00:34:51.989 --> 00:34:54.329 In order to open positions and hold our positions, 00:34:54.489 --> 00:34:57.070 we need to have equity there. So the more opportunities 00:34:57.070 --> 00:34:59.570 we see on the exchanges, the more equity we need 00:34:59.570 --> 00:35:04.179 to have hold there. to hold there. If there aren't 00:35:04.179 --> 00:35:06.619 opportunities, then we can hold that with the 00:35:06.619 --> 00:35:12.380 custodian. So there's this ongoing optimisation 00:35:12.380 --> 00:35:16.400 of where we hold the equity. We've got real -time 00:35:16.400 --> 00:35:19.820 risk management systems to show us where our 00:35:19.820 --> 00:35:23.320 equity is being held, where we're exposed more 00:35:23.320 --> 00:35:25.679 than other places and when and where we should 00:35:25.679 --> 00:35:28.789 move. But that's something that we can't avoid 00:35:28.789 --> 00:35:31.329 because we're actively trading the derivative 00:35:31.329 --> 00:35:33.989 contracts and you have to have the equity on 00:35:33.989 --> 00:35:37.070 the exchange to trade them. Now, the industry 00:35:37.070 --> 00:35:41.849 is moving away from having to have your equity 00:35:41.849 --> 00:35:43.690 on the exchange. They call it the off -exchange 00:35:43.690 --> 00:35:49.630 settlement, where we can use our custodian, we 00:35:49.630 --> 00:35:51.550 can use their relationship with the exchanges, 00:35:51.769 --> 00:35:55.849 and then we can reflect our balances with the 00:35:55.849 --> 00:35:59.639 custodian. onto the exchange and we have trading 00:35:59.639 --> 00:36:01.639 gains and trading losses they can be settled 00:36:01.639 --> 00:36:03.500 at the end of the day which will require our 00:36:03.500 --> 00:36:06.300 agreement the custodians agreement and the exchanges 00:36:06.300 --> 00:36:09.380 agreement in order to move those funds so something 00:36:09.380 --> 00:36:12.760 like ftx we could have our our equity at the 00:36:12.760 --> 00:36:15.880 custodian that will be reflected onto the ftx 00:36:15.880 --> 00:36:19.019 account we can trade ftx as much as we want ftx 00:36:19.019 --> 00:36:22.000 pulls all the money out fraudulently trading 00:36:22.000 --> 00:36:26.590 losses whatever we don't care And then at the 00:36:26.590 --> 00:36:29.170 end of the day, our money is still with the custodian. 00:36:29.329 --> 00:36:32.110 FTX has fallen over. We're still with it. And 00:36:32.110 --> 00:36:34.369 that's where the industry is moving. A lot of 00:36:34.369 --> 00:36:37.389 the exchanges have either set it up or are in 00:36:37.389 --> 00:36:41.369 the process of setting it up. And we're in discussions 00:36:41.369 --> 00:36:44.329 with the custodians and the exchanges in order 00:36:44.329 --> 00:36:48.409 to have all of our accounts set up with the off 00:36:48.409 --> 00:36:49.929 -exchange settlement. And we expect that will 00:36:49.929 --> 00:36:53.150 happen in production in the next three to six 00:36:53.150 --> 00:36:55.679 months. So, you know, that biggest risk that 00:36:55.679 --> 00:36:58.579 we face, the counterparty risk, will be largely 00:36:58.579 --> 00:37:02.340 removed. Thanks for discussing that. Because 00:37:02.340 --> 00:37:03.679 as you can appreciate, you know, there's a lot 00:37:03.679 --> 00:37:05.579 of families which we deal with, a lot of intergenerational 00:37:05.579 --> 00:37:06.900 wealth. A lot of people understand it, don't 00:37:06.900 --> 00:37:09.619 understand it. But now it's happening with digital 00:37:09.619 --> 00:37:11.639 assets. I'm sure you agree, it's now becoming 00:37:11.639 --> 00:37:13.760 an asset class that people can't not look at 00:37:13.760 --> 00:37:16.260 anymore. It's now part of the human fabric. You 00:37:16.260 --> 00:37:18.579 know what I mean? It's interwoven. It's as much 00:37:18.579 --> 00:37:21.039 as private lending or gold or, you know, Aussie 00:37:21.039 --> 00:37:23.360 or domestic. It's now just... technically an 00:37:23.360 --> 00:37:26.380 asset class right but at the end of the day when 00:37:26.380 --> 00:37:28.460 people were looking at this sometimes they're 00:37:28.460 --> 00:37:30.960 like everyone wants to make money right but i 00:37:30.960 --> 00:37:33.059 think some behavioral psychology says if someone 00:37:33.059 --> 00:37:36.360 loses 10 it actually affects them more than if 00:37:36.360 --> 00:37:40.900 they make 30 yeah you know what i mean so uh 00:37:40.900 --> 00:37:42.900 thank you for explaining the risk and how you 00:37:42.900 --> 00:37:44.619 mitigate against that because to my understanding 00:37:44.619 --> 00:37:48.460 the biggest risk after we saw ftx is you know 00:37:48.460 --> 00:37:50.840 the that third party everything's sitting on 00:37:50.840 --> 00:37:53.260 that particular platform and You find yourself 00:37:53.260 --> 00:37:54.980 in a world of pain where essentially the platform 00:37:54.980 --> 00:37:58.119 gets shut down, your money gets locked out, which 00:37:58.119 --> 00:38:00.619 can happen in Aussie equities as well. Look at 00:38:00.619 --> 00:38:03.800 Robinhood. It can happen, right? It's not unique. 00:38:04.679 --> 00:38:07.760 It's just that the popular press loves to beat 00:38:07.760 --> 00:38:10.579 up on crypto. People love to beat up on what 00:38:10.579 --> 00:38:20.139 they don't understand as well. Yeah, no, it makes 00:38:20.139 --> 00:38:23.280 a lot of sense. Yeah, so thank you very much 00:38:23.280 --> 00:38:25.880 for explaining that. So why don't we get into 00:38:25.880 --> 00:38:28.920 the fun part now, right? You know, how is the 00:38:28.920 --> 00:38:31.619 jam made? You know, how is this manufacturing? 00:38:32.380 --> 00:38:35.559 How's the algorithm? How does it work? You know, 00:38:35.559 --> 00:38:38.320 can you give an example of, you know, today's 00:38:38.320 --> 00:38:41.219 the month of, you know, it's currently March, 00:38:41.440 --> 00:38:43.860 right? You've got futures contracts. What are 00:38:43.860 --> 00:38:46.519 you doing here? These monthly futures, how does 00:38:46.519 --> 00:38:50.960 the process work? So the futures contracts, like, 00:38:51.420 --> 00:38:53.619 most markets, you'll see the majority of the 00:38:53.619 --> 00:38:58.940 interest in the short -term contracts. So I liken 00:38:58.940 --> 00:39:03.260 it to trading yields. So whether it's term deposits 00:39:03.260 --> 00:39:06.699 or bonds, you can think that there's a lot of 00:39:06.699 --> 00:39:08.659 interest in what are the yields doing in the 00:39:08.659 --> 00:39:10.139 short term. You can have a lot of confidence 00:39:10.139 --> 00:39:12.300 in, you know, I want a term deposit in three 00:39:12.300 --> 00:39:14.099 months. I can go to four different banks and 00:39:14.099 --> 00:39:16.440 they'll all give me pretty much the same price. 00:39:16.980 --> 00:39:19.039 But if you go out, you know, I want a term deposit 00:39:19.039 --> 00:39:22.260 for five years. Maybe you struggle to get a quote. 00:39:22.659 --> 00:39:26.239 The prices are quite a bit different. Now, it's 00:39:26.239 --> 00:39:29.219 the same with the futures we're trading. We know 00:39:29.219 --> 00:39:31.320 very precisely what's happening in the short 00:39:31.320 --> 00:39:33.920 term and in the long term. Yeah, it's a little 00:39:33.920 --> 00:39:39.039 bit more uncertain. What our expertise is, is 00:39:39.039 --> 00:39:43.579 in working out what yield should the market be 00:39:43.579 --> 00:39:46.539 paying in the short term and the long term. And 00:39:46.539 --> 00:39:50.860 because we're connected to all of these... exchanges, 00:39:50.980 --> 00:39:57.059 which are quite, how should I say, there's a 00:39:57.059 --> 00:39:59.079 lot of uncertainty within exchange. You know, 00:39:59.099 --> 00:40:00.860 there's jurisdictional issues. Some will be in, 00:40:00.860 --> 00:40:04.559 say, Japan, Singapore, some in Ireland, some 00:40:04.559 --> 00:40:08.320 in London. There are particular investors that 00:40:08.320 --> 00:40:10.239 can access some exchanges, not others. There 00:40:10.239 --> 00:40:12.860 might be some jurisdictional issues. And so we 00:40:12.860 --> 00:40:15.840 find that on the exchanges, they can be trading 00:40:15.840 --> 00:40:18.469 at different levels. levels of yield say i want 00:40:18.469 --> 00:40:21.230 to get a term deposit in the uk we might find 00:40:21.230 --> 00:40:22.909 that there's there's a better rate there than 00:40:22.909 --> 00:40:25.230 there is in in tokyo maybe it's because people 00:40:25.230 --> 00:40:28.969 the style of investor changes as the world spins 00:40:28.969 --> 00:40:32.389 but what we what we do is we'll trade 24 hours 00:40:32.389 --> 00:40:36.090 a day seven days a week and we're able to do 00:40:36.090 --> 00:40:39.090 that at high frequency so even little small changes 00:40:39.090 --> 00:40:41.690 in what those yields are doing we're able to 00:40:41.690 --> 00:40:43.550 take advantage of those we might be able to buy 00:40:43.550 --> 00:40:47.519 it by cheap in tokyo and then sell a seller yield 00:40:47.519 --> 00:40:49.460 a little bit more expensive in london but we 00:40:49.460 --> 00:40:53.079 do that all day every day you know our turnover 00:40:53.079 --> 00:40:56.019 per month will be in the billions of of dollars 00:40:56.019 --> 00:41:00.420 just trying to chip away at making those markets 00:41:00.420 --> 00:41:04.500 more efficient and so again with the bond analogy 00:41:04.500 --> 00:41:08.699 we might say you know i some of the banks in 00:41:08.699 --> 00:41:10.980 the us right they they sold they sold yields 00:41:10.980 --> 00:41:14.320 at one percent you know tenure yield one percent 00:41:14.920 --> 00:41:16.840 You know, over that 10 years, they know they'll 00:41:16.840 --> 00:41:19.820 get their 1 % return. But what happens in the 00:41:19.820 --> 00:41:22.519 meantime? Yields might go 2%, 3%, 4%, 5%. And 00:41:22.519 --> 00:41:23.780 that's what happens. And they're underwater. 00:41:24.960 --> 00:41:26.940 But they know if they can hold on with enough 00:41:26.940 --> 00:41:30.360 liquidity, they'll get their 1 % yield. So what 00:41:30.360 --> 00:41:32.719 we do in the digital market, digital asset markets, 00:41:32.820 --> 00:41:34.900 it's a similar thing. Primarily on a Bitcoin 00:41:34.900 --> 00:41:39.059 yield maybe up for 12 months, we might be able 00:41:39.059 --> 00:41:43.760 to get 12%. That's a fairly realistic yield. 00:41:44.480 --> 00:41:48.019 on bitcoin out for one year and we know that 00:41:48.019 --> 00:41:52.320 if nothing happens we'll still make 12 but if 00:41:52.320 --> 00:41:55.340 the yields go up you know we can sell that 14 00:41:55.340 --> 00:42:00.059 16 if they come down 10 8 then we can take off 00:42:00.059 --> 00:42:03.599 the position and make money so we make money 00:42:03.599 --> 00:42:07.920 from yields moving up and down and providing 00:42:07.920 --> 00:42:11.059 liquidity into that space and we can make money 00:42:11.059 --> 00:42:16.079 because the yields on other exchanges are different 00:42:16.079 --> 00:42:20.260 relative to each other. So we're able to really 00:42:20.260 --> 00:42:24.079 actively trade the yields on one exchange versus 00:42:24.079 --> 00:42:28.079 another, but also actively trade the absolute 00:42:28.079 --> 00:42:32.679 level of the yields. And so combined, we're able 00:42:32.679 --> 00:42:35.599 to market neutral. So the direction of Bitcoin 00:42:35.599 --> 00:42:39.599 goes up or down. We don't really mind. What we 00:42:39.599 --> 00:42:42.079 really care about are what are the yields doing 00:42:42.079 --> 00:42:44.519 in that space? Because that's what gives us the 00:42:44.519 --> 00:42:50.119 market neutral returns in that space. So just 00:42:50.119 --> 00:42:53.000 to understand correctly, the algorithm isn't 00:42:53.000 --> 00:42:55.960 looking, is the algorithm looking at, say, mixed 00:42:55.960 --> 00:42:59.360 prices on, you know, if Bitcoin's showing, you 00:42:59.360 --> 00:43:02.820 know, 80 ,000 on one and today it's 79 ,000 somewhere 00:43:02.820 --> 00:43:06.610 else. Are you looking at arbitrage? Are you purely 00:43:06.610 --> 00:43:13.250 operating inside the fixed income component offering 00:43:13.250 --> 00:43:17.769 of Bitcoin and taking the ARPA there? You're 00:43:17.769 --> 00:43:19.909 looking at spot or is it purely just the income 00:43:19.909 --> 00:43:25.070 side? We look and trade spot, but primarily our 00:43:25.070 --> 00:43:27.670 alpha is generated from looking at the yields 00:43:27.670 --> 00:43:30.429 in that spot. You'll find that the spot markets 00:43:30.429 --> 00:43:35.059 now in Bitcoin are so efficient. If there's liquidity, 00:43:35.280 --> 00:43:38.880 those markets are so efficient. You can get some 00:43:38.880 --> 00:43:43.139 proper size away. If you wanted to buy Bitcoin, 00:43:43.320 --> 00:43:45.280 you get some proper size away and you won't even 00:43:45.280 --> 00:43:49.019 move the market. They're so efficient. Sure, 00:43:49.079 --> 00:43:51.199 if you go to smaller, less trustworthy exchanges, 00:43:51.619 --> 00:43:58.320 yeah, you might find that pure arbitrage, but 00:43:58.320 --> 00:44:02.090 it's pretty rare, right? In these markets, there 00:44:02.090 --> 00:44:03.929 are enough professional players out there that 00:44:03.929 --> 00:44:11.429 those ARBs have disappeared. So if I was to surmise 00:44:11.429 --> 00:44:13.369 what this does, the algorithm does essentially 00:44:13.369 --> 00:44:16.130 in like a paragraph, I would say that the algorithm's 00:44:16.130 --> 00:44:20.070 taking advantage of different prices on yields 00:44:20.070 --> 00:44:25.530 over a duration and you're essentially, you know, 00:44:25.530 --> 00:44:27.570 what you're really doing by the sound of it, 00:44:27.610 --> 00:44:29.070 you're essentially running a carry trade, you 00:44:29.070 --> 00:44:31.219 know, picking up money. you know borrowing cheaper 00:44:31.219 --> 00:44:33.360 in japan and then essentially lending it out 00:44:33.360 --> 00:44:35.659 in uk australia or something like that which 00:44:35.659 --> 00:44:37.940 all makes sense but if you do that in in essentially 00:44:37.940 --> 00:44:40.820 normal currency land uh just like we've seen 00:44:40.820 --> 00:44:43.599 happen historically when the japanese yen ran 00:44:43.599 --> 00:44:47.400 up to you know 100 to 1 in australia from 60 00:44:47.400 --> 00:44:50.460 right in a very short space of time it all unwound 00:44:50.460 --> 00:44:53.599 incredibly quick and anyone essentially borrowing 00:44:53.599 --> 00:44:57.369 in japanese yen and then purchasing nvidia proceeded 00:44:57.369 --> 00:44:59.489 to get their hands completely torched and then 00:44:59.489 --> 00:45:01.510 unwind really quick and you got a short squeeze 00:45:01.510 --> 00:45:07.329 right does that happen in the land of you know 00:45:07.329 --> 00:45:12.670 chasing yields in digital assets absolutely meltdown 00:45:12.670 --> 00:45:15.849 so the example you used there was this big currency 00:45:15.849 --> 00:45:19.570 risk involved in that yeah so we don't we don't 00:45:19.570 --> 00:45:23.279 have the currency risk in what we trade so Everything's 00:45:23.279 --> 00:45:25.559 hedged back into Australian dollars for Australian 00:45:25.559 --> 00:45:28.340 investors. Essentially, our exposure is US dollars, 00:45:28.440 --> 00:45:30.739 and then we put an Aussie dollar hedge over that. 00:45:31.019 --> 00:45:35.280 So we don't have to worry about where people 00:45:35.280 --> 00:45:37.619 are borrowing and investing so much. Although, 00:45:37.679 --> 00:45:42.019 look, definitely that's a trade, that carry trade, 00:45:42.159 --> 00:45:45.239 that pure carry trade. That exists. It's a part 00:45:45.239 --> 00:45:48.639 of what we do. It's not a large part of what 00:45:48.639 --> 00:45:53.260 we do. But what we see happen is in times of 00:45:53.260 --> 00:45:56.659 exuberance, those yields in the digital asset 00:45:56.659 --> 00:46:02.719 space, they do get really heated. So we saw in 00:46:02.719 --> 00:46:06.019 the past 12 months, I think it was last April, 00:46:06.159 --> 00:46:09.940 those yields got to around 25 % annualized in 00:46:09.940 --> 00:46:12.579 digital asset space. I mean, it's huge. You know, 00:46:12.619 --> 00:46:15.539 you could borrow fiat in the US, you know, 4%, 00:46:15.539 --> 00:46:18.369 5%. And you could invest that into the crypto 00:46:18.369 --> 00:46:24.429 markets at 25 % if you were carrying. What we 00:46:24.429 --> 00:46:28.170 found is that the yields, as they get bit up, 00:46:28.250 --> 00:46:30.409 might happen slowly over the course of months. 00:46:30.909 --> 00:46:33.489 But when they collapse, they collapse very, very 00:46:33.489 --> 00:46:37.769 quickly. And when we launched the fund, we were 00:46:37.769 --> 00:46:40.630 very bullish on how we would go. The yields, 00:46:40.670 --> 00:46:45.409 when we started, they got, you know, In our first 00:46:45.409 --> 00:46:47.929 full month of results, those yields got close 00:46:47.929 --> 00:46:52.269 to 50 % annualized. And so you see our first 00:46:52.269 --> 00:46:54.909 published month of performance was just under 00:46:54.909 --> 00:46:58.469 30 % for the month because that collapse in yields 00:46:58.469 --> 00:47:04.489 was so severe. So we had these positions. And 00:47:04.489 --> 00:47:06.110 if nothing had happened, like I said, you're 00:47:06.110 --> 00:47:09.510 selling bonds or buying bonds with a yield of 00:47:09.510 --> 00:47:13.230 50%. You don't even mind if it takes six months 00:47:13.230 --> 00:47:16.079 or 12 months. for that to play out no other trades 00:47:16.079 --> 00:47:17.900 you know you're going to make that sort of return 00:47:17.900 --> 00:47:21.219 but what we saw was it didn't take six months 00:47:21.219 --> 00:47:23.699 to play out it played out over over the course 00:47:23.699 --> 00:47:27.900 of one day so instead of making 50 annualized 00:47:27.900 --> 00:47:31.000 over six months we made just under 30 in the 00:47:31.000 --> 00:47:34.219 first month alone so that that's they're the 00:47:34.219 --> 00:47:36.840 sort of collapses we see there's this exuberance 00:47:36.840 --> 00:47:40.420 people get leverage leveraged positions into 00:47:40.420 --> 00:47:44.429 digital assets typically long We can trade into 00:47:44.429 --> 00:47:47.429 that. We can provide efficiency. But when that 00:47:47.429 --> 00:47:49.690 leverage disappears, it disappears very quickly. 00:47:49.829 --> 00:47:52.869 And that's what leads to us having some really 00:47:52.869 --> 00:47:57.090 good returns for the fund. I suppose another 00:47:57.090 --> 00:47:58.730 simple question that I'll probably get asked, 00:47:58.889 --> 00:48:01.230 right, is people might completely understand 00:48:01.230 --> 00:48:05.250 how the borrowing game works in essentially the 00:48:05.250 --> 00:48:06.630 old world. Let's call it the old world or the 00:48:06.630 --> 00:48:08.769 new world. Nice and simple, right? We've just 00:48:08.769 --> 00:48:10.869 had an interest rate cut in Australia. Interest 00:48:10.869 --> 00:48:13.559 rates went up, went down. And people can very 00:48:13.559 --> 00:48:16.000 easily see compared to their mortgage, you know, 00:48:16.019 --> 00:48:18.059 essentially their interest rates went from 2 00:48:18.059 --> 00:48:22.420 % to 6%, right? And everyone can feel that pinch 00:48:22.420 --> 00:48:24.730 at home. And then they can understand completely 00:48:24.730 --> 00:48:27.150 why, you know, if they're getting a private lender, 00:48:27.250 --> 00:48:28.809 they might be getting IBA cash rate plus five, 00:48:28.909 --> 00:48:30.829 six, seven, right? And then people are taking 00:48:30.829 --> 00:48:32.449 that capital, borrowing that money, purchasing 00:48:32.449 --> 00:48:35.030 profit, properties, doing a business or something 00:48:35.030 --> 00:48:37.250 equivalent, right? So for people out there that 00:48:37.250 --> 00:48:38.969 don't really understand how digital markets work, 00:48:39.210 --> 00:48:43.110 why would a borrower in digital asset land be 00:48:43.110 --> 00:48:46.789 seeking, you know, essentially an interest -based 00:48:46.789 --> 00:48:51.119 loan in digital currency? Is it purely... From 00:48:51.119 --> 00:48:53.179 a trading perspective or are there other assets 00:48:53.179 --> 00:48:56.360 which you can now purchase since this market's 00:48:56.360 --> 00:48:59.820 become a lot more mature that you can actually 00:48:59.820 --> 00:49:02.719 quite literally borrow a million dollars worth 00:49:02.719 --> 00:49:07.019 of Bitcoin at 12 % to do something else? What's 00:49:07.019 --> 00:49:09.719 happening? Economically, they're really just 00:49:09.719 --> 00:49:13.099 borrowing to get long the underlying. So you're 00:49:13.099 --> 00:49:15.380 borrowing to get long Bitcoin. You're borrowing 00:49:15.380 --> 00:49:17.079 to get long Ethereum. You're borrowing to get 00:49:17.079 --> 00:49:21.170 long some point. If you believe that's going, 00:49:21.349 --> 00:49:24.090 you know, traditional finance markets, what's 00:49:24.090 --> 00:49:27.349 a good year for the ASX? 220%, 25%, right? Like, 00:49:27.389 --> 00:49:30.510 yeah, sure, I'll borrow in the hope it goes up 00:49:30.510 --> 00:49:33.329 that much. But a good year in digital assets, 00:49:33.449 --> 00:49:36.309 that's like, you know, Bitcoin going from $30 00:49:36.309 --> 00:49:38.690 ,000 to $100 ,000. And that's like the bellwether. 00:49:38.809 --> 00:49:42.969 That's probably like your least leveraged return. 00:49:44.309 --> 00:49:47.349 Solana and any number of what they call shit 00:49:47.349 --> 00:49:51.659 coins. I'll go up 10, 100x. So what does it matter 00:49:51.659 --> 00:49:54.659 if I'm paying 12 % to get that? I'll happily 00:49:54.659 --> 00:49:57.820 do that if I'm so confident. And so that's what 00:49:57.820 --> 00:50:01.099 we're seeing is just this exuberance in the market 00:50:01.099 --> 00:50:04.219 and people are happy to pay for that. It's a 00:50:04.219 --> 00:50:06.079 completely different world, old world and new 00:50:06.079 --> 00:50:09.179 world. It's on steroids. Everything happens so 00:50:09.179 --> 00:50:14.980 much faster. Yeah. That's a great way to explain 00:50:14.980 --> 00:50:17.039 it. It's old world, new world. It's just on steroids, 00:50:17.199 --> 00:50:20.619 right? But yeah, it's interesting. Okay, so if 00:50:20.619 --> 00:50:22.579 I'm understanding your strategy now and it's 00:50:22.579 --> 00:50:25.059 starting to really make sense is what you're 00:50:25.059 --> 00:50:28.320 really trying to do is capitalize on the difference 00:50:28.320 --> 00:50:31.000 in yields. So you're not really even taking a 00:50:31.000 --> 00:50:35.239 view on the main fund. What you're looking for 00:50:35.239 --> 00:50:39.420 is essentially liquidity pools. And what benefits 00:50:39.420 --> 00:50:41.579 you is essentially the market moves around based 00:50:41.579 --> 00:50:44.010 on people's demand. on what they're going to 00:50:44.010 --> 00:50:45.869 borrow for, right? If there's increased demand 00:50:45.869 --> 00:50:47.309 and people think it's going to keep on running, 00:50:47.429 --> 00:50:49.429 those interest rates might go 10%, 11%, 12%, 00:50:49.429 --> 00:50:53.230 15%. You take advantage of that. And you're not 00:50:53.230 --> 00:50:54.889 doing it emotionally. You've got an algorithm 00:50:54.889 --> 00:50:57.369 essentially looking around globally in a very 00:50:57.369 --> 00:51:00.329 high liquid market and making those trades to 00:51:00.329 --> 00:51:03.710 pick up those numbers. Yeah, exactly. We're looking 00:51:03.710 --> 00:51:05.650 at the relationship between all of the exchanges, 00:51:06.030 --> 00:51:09.469 between all of the maturities, of the yields, 00:51:09.570 --> 00:51:13.039 and the algorithms just rebalancing. Which exchange 00:51:13.039 --> 00:51:16.659 do I have exposure to? Which maturity do I have 00:51:16.659 --> 00:51:20.139 exposure to? How do I balance this? How do we 00:51:20.139 --> 00:51:22.659 bias the position? What are the absolute levels 00:51:22.659 --> 00:51:25.559 of the yield? If the carry trade is yielding 00:51:25.559 --> 00:51:28.739 50%, we might as well put everything into that 00:51:28.739 --> 00:51:32.719 because that's amazing. It's just constantly 00:51:32.719 --> 00:51:36.559 doing this rebalance and then we have the team 00:51:36.559 --> 00:51:40.179 in the background analyzing the markets. Where 00:51:40.179 --> 00:51:42.860 are the opportunities? Which markets are hot? 00:51:43.980 --> 00:51:48.000 What are the new products? Where are the volumes 00:51:48.000 --> 00:51:51.639 shifting? Is there any smoke on a particular 00:51:51.639 --> 00:51:55.400 exchange? Should we be pulling assets from there? 00:51:55.780 --> 00:52:00.300 For example, are the volumes dying in a particular 00:52:00.300 --> 00:52:04.619 exchange? What's the reason for that? So it's 00:52:04.619 --> 00:52:07.159 always... The team's always iterating and improving 00:52:07.159 --> 00:52:09.400 and looking around whilst the algorithm's just 00:52:09.400 --> 00:52:11.159 constantly trading, trading, trading, looking 00:52:11.159 --> 00:52:14.639 for the opportunity. I'm just trying to explain 00:52:14.639 --> 00:52:16.599 it in case. You know, you talk like elevator 00:52:16.599 --> 00:52:18.460 talk. It's like, hey, you met a fund manager 00:52:18.460 --> 00:52:20.119 today. What do they do? It's like, what's the 00:52:20.119 --> 00:52:22.579 elevator pitch? And I think I'd say to someone 00:52:22.579 --> 00:52:24.239 now, it's like, do you remember, you know, essentially 00:52:24.239 --> 00:52:27.440 a while ago, you know, people ran that bond scalping 00:52:27.440 --> 00:52:29.940 strategy, like literally scalping yields? That's 00:52:29.940 --> 00:52:32.780 exactly what these guys are doing. They're using 00:52:32.780 --> 00:52:34.440 essentially an algorithm, so they don't have 00:52:34.440 --> 00:52:37.679 to do it manually, to essentially scalp interest 00:52:37.679 --> 00:52:43.239 -based yields via highly liquid digital assets, 00:52:43.340 --> 00:52:46.320 mainly Bitcoin and Ethereum. Is that probably 00:52:46.320 --> 00:52:49.639 the simplest way I can explain it? Yeah, absolutely. 00:52:49.780 --> 00:52:51.159 It's like we don't care where the Aussie dollar 00:52:51.159 --> 00:52:52.880 is going. We don't care where the US dollar is 00:52:52.880 --> 00:52:54.280 going. We don't care where the yen is going. 00:52:54.400 --> 00:52:56.280 We're like, but what are the yields doing on 00:52:56.280 --> 00:52:57.840 the yen? What are the yields doing on the dollar? 00:52:57.960 --> 00:53:01.639 Can we arbitrage that and hedge it? That's all 00:53:01.639 --> 00:53:04.539 we're doing. That's the easiest way to explain 00:53:04.539 --> 00:53:07.880 it and understand it to your TradFi guy. They 00:53:07.880 --> 00:53:10.179 understand what a term deposit is. They understand 00:53:10.179 --> 00:53:13.079 what a yield is. We're doing that through derivative 00:53:13.079 --> 00:53:15.900 contracts in the crypto space. Simple as that. 00:53:15.900 --> 00:53:18.019 The only question I have right now, this is just, 00:53:18.079 --> 00:53:21.960 can you take what you're doing and then proceed 00:53:21.960 --> 00:53:25.039 to, because you said it's US dollar base, but 00:53:25.039 --> 00:53:27.579 the fund's Aussie dollars, right? But the Aussie 00:53:27.579 --> 00:53:29.340 dollar is just as volatile as any other currency. 00:53:29.789 --> 00:53:32.409 you know, in the old world, as we've seen, is 00:53:32.409 --> 00:53:37.429 there a means to marry the two? Typically, the 00:53:37.429 --> 00:53:40.409 contracts are denominated in either US dollars 00:53:40.409 --> 00:53:44.289 or digital asset currencies themselves. No, no, 00:53:44.289 --> 00:53:46.250 apologies. I understand that. But essentially, 00:53:46.309 --> 00:53:48.130 you're coming back and then essentially back 00:53:48.130 --> 00:53:50.150 to backing it, you know, when you receive the 00:53:50.150 --> 00:53:51.650 US dollars, you're back to backing it, you know, 00:53:51.650 --> 00:53:53.389 on the Aussie. So the clients are receiving Aussie 00:53:53.389 --> 00:53:55.570 dollars in their account, right? Do you have 00:53:55.570 --> 00:53:57.630 the capacity to essentially run an internal hedge? 00:53:58.730 --> 00:54:03.309 Even though you're benefiting on the main fund 00:54:03.309 --> 00:54:06.989 regarding the algo, ripping the yields out, we're 00:54:06.989 --> 00:54:08.889 still taking currency risk in the form of this 00:54:08.889 --> 00:54:11.210 being an Aussie dollar denominated fund, right? 00:54:11.349 --> 00:54:14.010 Do you have the capacity to theoretically use 00:54:14.010 --> 00:54:17.150 the same mechanics which you're doing to improve 00:54:17.150 --> 00:54:18.989 how things are going in digital world, essentially 00:54:18.989 --> 00:54:22.829 in foreign currency land to essentially, well, 00:54:22.909 --> 00:54:25.769 technically double up, double dip both old world 00:54:25.769 --> 00:54:28.570 and new world? You mean port the strategy into 00:54:28.570 --> 00:54:35.210 old world? Okay, so with the fund, are you paying 00:54:35.210 --> 00:54:39.570 out monthly? We'll pay out quarterly. So you're 00:54:39.570 --> 00:54:41.289 paying out quarterly, right? So in that quarter, 00:54:41.289 --> 00:54:42.829 you're holding Aussie dollars in the interim, 00:54:42.949 --> 00:54:47.050 correct? To get dispersed. All of our assets, 00:54:47.289 --> 00:54:50.389 so we get Aussie dollar investment. We'll turn 00:54:50.389 --> 00:54:54.500 that into either US dollars or Bitcoin. So all 00:54:54.500 --> 00:54:56.500 of our equity for the fund will be US dollars 00:54:56.500 --> 00:54:59.619 or Bitcoin. But we know how much that equity 00:54:59.619 --> 00:55:03.079 is worth in Aussie dollars. And so we will have 00:55:03.079 --> 00:55:08.159 a forward hedge on that in Tradfire World. So 00:55:08.159 --> 00:55:11.619 even though we'll have all of the fund's assets 00:55:11.619 --> 00:55:15.860 not in Aussie dollars, it is hedged back to Aussie 00:55:15.860 --> 00:55:17.400 dollars. So it doesn't matter where US goes. 00:55:17.519 --> 00:55:19.739 It doesn't matter where Bitcoin goes. Got it. 00:55:19.780 --> 00:55:24.300 It's hedged back to us. All of our returns, the 00:55:24.300 --> 00:55:28.599 question we sometimes ask, are you benefiting 00:55:28.599 --> 00:55:32.019 because it's been so weak against the US for 00:55:32.019 --> 00:55:34.739 years now? No, we're not. Our returns will be 00:55:34.739 --> 00:55:37.980 way higher if we hadn't hedged it. Again, we 00:55:37.980 --> 00:55:42.780 take as little risk as we can, and it's a very 00:55:42.780 --> 00:55:46.019 easy thing for us to hedge that Aussie -US exposure. 00:55:46.139 --> 00:55:48.480 Maybe that's a very simple way of doing it, since 00:55:48.480 --> 00:55:50.460 you've got the main fund, which essentially is 00:55:50.460 --> 00:55:53.039 hedged. and it comes back nice and tidy. Would 00:55:53.039 --> 00:55:56.039 you consider opening up a second fund that's 00:55:56.039 --> 00:55:58.059 unhedged if someone wants to take that currency 00:55:58.059 --> 00:56:01.260 risk? Yeah, we actually have that. We've got 00:56:01.260 --> 00:56:04.119 a Cayman fund that we just launched in November, 00:56:04.280 --> 00:56:07.860 which is exactly the same strategy without the 00:56:07.860 --> 00:56:12.219 hedge. Perfect. So it's a US dollar fund. Its 00:56:12.219 --> 00:56:14.360 performance is a little bit higher than the Aussie 00:56:14.360 --> 00:56:17.360 dollar one because we don't have to pay the cost 00:56:17.360 --> 00:56:20.219 of the hedge on that. What's the difference in 00:56:20.219 --> 00:56:26.579 returns? I think over, was it three months? Like 00:56:26.579 --> 00:56:29.800 1 % higher over the three months. Along those 00:56:29.800 --> 00:56:31.239 lines, don't quote me on that. I have to pull 00:56:31.239 --> 00:56:39.860 it up, but yeah, it's a bit higher. Yeah, this 00:56:39.860 --> 00:56:43.820 is very, very, very interesting. Is there anything 00:56:43.820 --> 00:56:47.000 that I've kind of missed? When you're having 00:56:47.000 --> 00:56:49.039 conversations with other people and they're digging 00:56:49.039 --> 00:56:51.659 into the granular and the fun stuff, is there 00:56:51.659 --> 00:56:54.039 anything else people ask that's very interesting 00:56:54.039 --> 00:56:58.119 that you didn't think about that way? I think 00:56:58.119 --> 00:57:04.039 the way we've set it up, we want to give people 00:57:04.039 --> 00:57:08.840 the confidence to invest in this. And one of 00:57:08.840 --> 00:57:13.119 those things that we've done is to pay out orderly 00:57:13.119 --> 00:57:15.599 all of the income. And because our returns are 00:57:15.599 --> 00:57:20.519 so high, or have been so high, that the investor 00:57:20.519 --> 00:57:24.420 can get back their money, a good chunk of it 00:57:24.420 --> 00:57:27.460 relatively quickly. So in the last 12 months, 00:57:27.599 --> 00:57:33.599 2024, we returned just over 30%. And if you take 00:57:33.599 --> 00:57:35.860 that distribution, you don't have to reinvest 00:57:35.860 --> 00:57:38.340 it. There's an option to reinvest, or you can 00:57:38.340 --> 00:57:40.539 take the distribution. But that's paid out quarterly. 00:57:40.719 --> 00:57:43.059 So we're looking to reward people for investing 00:57:43.059 --> 00:57:47.130 with us. We're very liquid. There's monthly subscriptions 00:57:47.130 --> 00:57:53.010 or redemptions. Because we're trading liquid 00:57:53.010 --> 00:57:58.050 instruments, we can process those very quickly 00:57:58.050 --> 00:58:02.530 without any harm to other investors. The markets 00:58:02.530 --> 00:58:04.210 are liquid and it's not going to affect our returns. 00:58:06.670 --> 00:58:08.750 This has actually been very interesting. I came 00:58:08.750 --> 00:58:10.510 into this conversation, hey gang, oh look, it's 00:58:10.510 --> 00:58:12.900 an interesting way to make money out of... you 00:58:12.900 --> 00:58:15.159 know, take an arbitrage on Bitcoin. But the more 00:58:15.159 --> 00:58:17.480 we have this conversation, what I'm starting 00:58:17.480 --> 00:58:19.559 to realize, like in Australia right now, there's 00:58:19.559 --> 00:58:23.119 a number of players that present themselves as 00:58:23.119 --> 00:58:25.320 an income -based fund, right? So essentially 00:58:25.320 --> 00:58:28.820 using high -frequency trading to make margins 00:58:28.820 --> 00:58:33.219 around like hybrid notes, you know, various bonds, 00:58:33.519 --> 00:58:35.519 right? And then they're presenting themselves 00:58:35.519 --> 00:58:37.619 as essentially an income strategy in Australian 00:58:37.619 --> 00:58:40.630 market, which is actually... you know, a conservative 00:58:40.630 --> 00:58:44.329 means of generating, you know, 7%, 8%, 9%, you 00:58:44.329 --> 00:58:46.869 know, as an income, you know, in a client's portfolio 00:58:46.869 --> 00:58:49.110 to generate income for a pensioner or something 00:58:49.110 --> 00:58:51.750 equivalent. I had actually placed you essentially 00:58:51.750 --> 00:58:53.809 as technically like offensive, but, you know, 00:58:53.829 --> 00:58:56.849 in an algo kind of perspective. But the more 00:58:56.849 --> 00:58:58.389 I'm chatting to you, what I'm trying to realize 00:58:58.389 --> 00:59:01.750 is, is it accurate in this conversation that 00:59:01.750 --> 00:59:03.829 you're actually more of an income strategy, using 00:59:03.829 --> 00:59:07.050 essentially an algorithm to trade yields to essentially 00:59:07.050 --> 00:59:09.980 generate an income? Very, very similar to what 00:59:09.980 --> 00:59:14.199 people have been doing for years. Have I understood 00:59:14.199 --> 00:59:16.599 this correctly? Because you're an income player. 00:59:17.360 --> 00:59:20.219 And that's why we call it a digital income fund 00:59:20.219 --> 00:59:23.119 because we're providing income. And I think what 00:59:23.119 --> 00:59:26.059 people do struggle to get their heads around 00:59:26.059 --> 00:59:30.019 is it is an income fund. I'd like to think our 00:59:30.019 --> 00:59:33.400 peers are those players and those funds operating 00:59:33.400 --> 00:59:37.389 in that space. It's just that our returns. are 00:59:37.389 --> 00:59:40.130 off the charts relative to those. Yeah, three 00:59:40.130 --> 00:59:42.769 times. Three, three and a half, four times the 00:59:42.769 --> 00:59:46.349 amount of what a normal income fund in the Australian 00:59:46.349 --> 00:59:49.289 market is essentially delivering. So there's 00:59:49.289 --> 00:59:52.269 naturally going to be doubt about what we're 00:59:52.269 --> 00:59:55.530 doing. There's no free lunch, right? No free 00:59:55.530 --> 01:00:00.550 lunch. We're a very actively traded fund in this 01:00:00.550 --> 01:00:03.309 very inefficient space, but we've been doing 01:00:03.309 --> 01:00:07.949 it for four years. Some of our best returns have 01:00:07.949 --> 01:00:10.849 come in the last 12 months as there's been this 01:00:10.849 --> 01:00:12.909 renewed interest in Bitcoin and this big run 01:00:12.909 --> 01:00:16.409 up with the tailwinds of ETFs, especially in 01:00:16.409 --> 01:00:19.929 the US, the tailwind of Trump talking about a 01:00:19.929 --> 01:00:23.530 strategic reserve of Bitcoin, Ethereum, Ripple, 01:00:23.929 --> 01:00:27.590 Cardano, a basket of assets. There's this huge 01:00:27.590 --> 01:00:30.449 interest. So we're playing in this inefficient 01:00:30.449 --> 01:00:33.449 space generating income without the returns. 01:00:34.250 --> 01:00:36.369 People think digital assets, look at the returns. 01:00:36.929 --> 01:00:41.010 It's too good to be true. Typically it is. Look, 01:00:41.210 --> 01:00:46.070 it's what I've done for 20 years. I've got a 01:00:46.070 --> 01:00:48.909 team of almost 30 people in the company working 01:00:48.909 --> 01:00:51.489 on it. There's a lot of work that goes into it. 01:00:51.530 --> 01:00:54.590 It's not two guys in a basement at their mum's 01:00:54.590 --> 01:00:57.110 place with a top plan. It's this professional 01:00:57.110 --> 01:00:59.269 team that have been trading the TradFi markets 01:00:59.269 --> 01:01:03.190 for decades that have turned their resources. 01:01:04.110 --> 01:01:06.690 towards the digital asset markets and you know 01:01:06.690 --> 01:01:09.730 it's not 30 people are they all in sydney or 01:01:09.730 --> 01:01:14.849 are these just 30 people across the world around 01:01:14.849 --> 01:01:16.769 and they're potentially working in their mom's 01:01:16.769 --> 01:01:18.789 basement with a plant hopefully like a game boy 01:01:18.789 --> 01:01:20.769 like uh you know an xbox or playing fortnight 01:01:20.769 --> 01:01:22.309 or something doing something entertaining but 01:01:22.309 --> 01:01:24.190 you know i'm just saying like is this like your 01:01:24.190 --> 01:01:25.849 work from anywhere type thing you just get in 01:01:25.849 --> 01:01:30.030 the smartest minds to operate this thing yeah 01:01:30.030 --> 01:01:33.239 to an extent Roughly two -thirds of the employees 01:01:33.239 --> 01:01:35.820 are in Sydney in the Sydney office. So we have 01:01:35.820 --> 01:01:39.539 satellite offices in New Zealand. I've got a 01:01:39.539 --> 01:01:41.860 bit of a larger office in Bordeaux in France, 01:01:42.019 --> 01:01:43.719 which is a really great office to visit. That's 01:01:43.719 --> 01:01:45.920 just an excuse to go to France and enjoy Grant 01:01:45.920 --> 01:01:49.619 Wires on the dime of the taxpayer. I love it. 01:01:51.219 --> 01:01:54.539 No comment, but it is a good business trip. Great 01:01:54.539 --> 01:01:59.500 business trip. We've recently hired a young guy 01:01:59.500 --> 01:02:03.519 out in Sao Paulo. looking after that time zone 01:02:03.519 --> 01:02:06.219 as well, which we used to cover out of brands. 01:02:07.260 --> 01:02:11.760 So we've got a team around the clock. A lot of 01:02:11.760 --> 01:02:16.599 hard work goes into it and it's not easy to get 01:02:16.599 --> 01:02:19.980 those returns. Perhaps it would be easier to 01:02:19.980 --> 01:02:25.380 sell if the returns were 15%, not 23 % annualised. 01:02:25.440 --> 01:02:28.340 It would be more believable. We're still developing 01:02:28.340 --> 01:02:31.050 and we're still... trying to milk as much out 01:02:31.050 --> 01:02:33.630 of it as we can while the opportunity is there. 01:02:34.909 --> 01:02:38.530 There's plenty of things that have happened in 01:02:38.530 --> 01:02:41.789 the last 12 months to lead us to believe that 01:02:41.789 --> 01:02:44.389 there's still going to be opportunities in the 01:02:44.389 --> 01:02:46.369 future. Well, this is the reason why I have these 01:02:46.369 --> 01:02:48.349 conversations, right? I came into it thinking 01:02:48.349 --> 01:02:50.070 one thing. I thought I'd learned a lot and I've 01:02:50.070 --> 01:02:52.250 already spoken a number of hours and done a bunch 01:02:52.250 --> 01:02:54.650 of it myself and I've still misplaced it. So 01:02:54.650 --> 01:02:56.489 it's just good to have these conversations and 01:02:56.489 --> 01:02:58.780 just go on tangents and understanding. how it 01:02:58.780 --> 01:03:00.519 all works but one question i had in the back 01:03:00.519 --> 01:03:03.039 of my head is you know this this algorithm began 01:03:03.039 --> 01:03:05.360 old world and then now it's gone new world nicest 01:03:05.360 --> 01:03:08.320 way to say it how much does it cost how much 01:03:08.320 --> 01:03:11.760 time energy resources did it take to essentially 01:03:11.760 --> 01:03:14.699 get this algo right like how many years of development 01:03:14.699 --> 01:03:17.000 because this is you know and some people might 01:03:17.000 --> 01:03:18.840 go oh it's an algorithm someone cooked this up 01:03:18.840 --> 01:03:20.460 and like you know we go four years it cooked 01:03:20.460 --> 01:03:22.900 us up at four years but how long has it taken 01:03:22.900 --> 01:03:28.210 to the full cycle of getting this algorithm to 01:03:28.210 --> 01:03:32.409 where it is today? High -frequency training and 01:03:32.409 --> 01:03:35.590 algorithmic training, it's a constant game of 01:03:35.590 --> 01:03:40.789 iteration. So you look at every time we make 01:03:40.789 --> 01:03:44.789 a new change to the algorithm and tweak, we make 01:03:44.789 --> 01:03:47.429 a release, a new release of the software. And 01:03:47.429 --> 01:03:50.690 the software version is currently in the 460. 01:03:51.849 --> 01:03:56.099 460. Over how many years? Six years in iteration. 01:03:57.159 --> 01:04:01.340 So that tells you how frequently we're making 01:04:01.340 --> 01:04:04.860 changes to the strategy, how frequently we're 01:04:04.860 --> 01:04:09.559 making the improvements. But this algorithm was 01:04:09.559 --> 01:04:14.599 essentially born from the other firm, previous 01:04:14.599 --> 01:04:17.440 before it came to digital? Yeah, our Tradfire 01:04:17.440 --> 01:04:20.860 trading firm. And how long was it? Operating 01:04:20.860 --> 01:04:23.159 there and being developed before you moved into 01:04:23.159 --> 01:04:26.760 digital assets? About six years prior to that. 01:04:27.280 --> 01:04:30.579 So it's essentially been 12 years worth in development 01:04:30.579 --> 01:04:33.719 and fine -tuning. Yeah, a lot of lessons learned, 01:04:33.980 --> 01:04:38.880 a lot of risk processes built into it, tried 01:04:38.880 --> 01:04:41.500 and tested, and we've seen some huge volatilities 01:04:41.500 --> 01:04:46.260 and some crises over the years that it's traded 01:04:46.260 --> 01:04:50.000 through and it's very stable now. So, you know, 01:04:50.019 --> 01:04:52.159 like I said, I'd like to just be able to point 01:04:52.159 --> 01:04:56.880 to the results to give people confidence. Well, 01:04:56.900 --> 01:04:58.079 that's why we're having this conversation, right? 01:04:58.159 --> 01:05:01.840 You know, it all does what it does. Well, Clint, 01:05:01.900 --> 01:05:04.480 this has been very, very interesting and I really 01:05:04.480 --> 01:05:07.380 appreciate you coming on. Is there anything else 01:05:07.380 --> 01:05:08.940 that we haven't covered that you want to leave 01:05:08.940 --> 01:05:12.519 listeners with about what you guys and girls 01:05:12.519 --> 01:05:18.280 do? I think at the moment, the current state 01:05:18.280 --> 01:05:21.659 the world's in and the uncertainty and the trajectory 01:05:21.659 --> 01:05:26.019 that digital assets are on, I think to think 01:05:26.019 --> 01:05:29.960 about where our portfolios will be and what the 01:05:29.960 --> 01:05:34.219 world will look like in five or 10 years, Bitcoin 01:05:34.219 --> 01:05:36.980 and digital assets, they're not going to be a 01:05:36.980 --> 01:05:40.079 fringe asset. It's been 15, 16 years. They're 01:05:40.079 --> 01:05:43.360 here to stay. And whilst your portfolio might 01:05:43.360 --> 01:05:47.039 not currently... entertain having Bitcoin or 01:05:47.039 --> 01:05:50.239 a market -neutral exposure. I think what about 01:05:50.239 --> 01:05:52.780 in one year or five years or ten years? It's 01:05:52.780 --> 01:05:55.400 hard to believe there's a world in which it's 01:05:55.400 --> 01:05:59.780 not a much greater part of your portfolio. We're 01:05:59.780 --> 01:06:02.400 here to educate and to be part of that journey 01:06:02.400 --> 01:06:07.500 and hopefully be one of the leaders in that space, 01:06:07.559 --> 01:06:11.659 at least in Sydney and Australia, and help people 01:06:11.659 --> 01:06:15.699 diversify. Hopefully people think of us when 01:06:15.699 --> 01:06:17.239 they're looking into that space, at least they 01:06:17.239 --> 01:06:21.480 have a chat, not be more involved. Brilliant. 01:06:21.500 --> 01:06:23.619 Well, Clint, thank you very much for coming on 01:06:23.619 --> 01:06:25.239 The Rate of Change with your quality management 01:06:25.239 --> 01:06:28.980 and look forward to catching up with you later 01:06:28.980 --> 01:06:31.619 on down the track. And I'm definitely going to 01:06:31.619 --> 01:06:33.699 dig into this in a lot more detail. So I really 01:06:33.699 --> 01:06:38.820 appreciate you coming on. All right. Have a good 01:06:38.820 --> 01:06:52.010 one. Thanks, Clint. Any use of this recording 01:06:52.010 --> 01:06:54.650 does not represent the view of any other third 01:06:54.650 --> 01:06:57.289 party and are the sole personal opinions of the 01:06:57.289 --> 01:06:59.570 speaker. Any reference to financial products 01:06:59.570 --> 01:07:01.690 does not constitute advice or recommendation 01:07:01.690 --> 01:07:04.309 and before any action you should seek proper 01:07:04.309 --> 01:07:07.969 advice from your financial professional. Australian 01:07:07.969 --> 01:07:11.650 listeners should head to www .moneysmart .gov 01:07:11.650 --> 01:07:14.429 .au to find more information on obtaining financial 01:07:14.429 --> 01:07:17.190 advice. To get in touch with York, head to our 01:07:17.190 --> 01:07:21.500 website www .yorkwealth .com dot com dot au