The Episode That Turned Tracy Into A Bitcoin Bull

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

So Tracy, Bitcoin.

Tracy Alloway (0:23)

I think we could just leave it there. Let's just bring on the guest.

Enough of the intro.

Joe Weisenthal (0:27)

No, we actually could, let's just do it. Okay, today we are going to be talking about Bitcoin, cryptocurrency, having another big year.

As Tracy says, no need for intro, no need for banter here. Let's just jump right into it. I love that. All right, so we are going to be speaking with a veteran of the industry to the extent that such a thing can even be described these days. We're going to be speaking to Meltem Demirors. She's the Chief Strategy Officer at CoinShares.

Very visible, very big follow on, someone great to follow on Twitter, media, et cetera. Meltem, thank you very much for joining us.

Meltem Demirors (1:04)

Hey, great to be here. Thanks for having me.

Joe Weisenthal (1:07)

So you're a veteran, right? It's okay, it's accurate at this point, right?

Meltem Demirors (1:11)

I mean, what you said is correct. I've been in this industry for six years now.

If six years makes one a veteran, I think it just speaks to how young this industry is.

Joe Weisenthal (1:21)

Yeah, I mean, I think I read this weekend that it was just the 12th anniversary of the Bitcoin white paper. So I guess that means literally half of the time that the industry has been in existence, you've been involved in it.

Meltem Demirors (1:34)

I mean, and arguably, in 2012, when personally, I started interacting with Bitcoin, the way you bought or you didn't buy Bitcoin, you would go to a website to Bitcoin Fawcett, buy Bitcoin on Craigslist, you would send money to Japan to buy Bitcoin on Gox. So arguably, the industry didn't really exist until 2013 or so.

Tracy Alloway (1:58)

So I know we skipped the intro and I think that's an Odd Lots first, but it kind of speaks to, I guess, the craziness of the year that Bitcoin has actually had. So I'm looking at the chart right now. Bitcoin is hovering around 13,000. And the amazing thing about Bitcoin, I guess, is just how many times it seems to have come back from the dead in some way or the other. And I will admit, as a journalist who's been covering the space for a long time, I think at this point, I've written at least three obituaries for Bitcoin in one way or another. I think I did one in 2012 and maybe another one in 2017 or 2018

Why has it come back this year?

Meltem Demirors (2:43)

Yeah, look, Bitcoin as an asset, right, behaves in a cyclical manner.

There are shorter sort of cycles that occur, and then there's a larger secular trend, which has sort of been up and to the right because in each successive high, Bitcoin hits a higher high and the lows are not quite as low as the prior lows. So I think what you're seeing here is Bitcoin operates typically, we've seen so far is roughly two year cycles, although it seems like that pace is now increasing.

And as a result, there's sort of short term interim cyclical behavior, but a larger term secular trend that obviously myself and many other people in the industry building firms are looking for and tracking against.

Joe Weisenthal (3:33)

What is CoinShares? What do you do there?

Meltem Demirors (3:36)

Yeah, so CoinShares is a great question, Joe. We are a financial services firm. We are best known as an asset manager. We manage 1.1 billion in assets in the form of publicly listed exchange traded products. They're traded throughout Europe under the XBT provider brand.

So we've been in that business for about five years. We're also in the trading business, the venture capital business, and a variety of other financial services products.

That's what we do.

Tracy Alloway (4:04)

So one thing I'm curious about, given the role that you just described, I keep seeing Bitcoin described as a diversification strategy this year, especially for corporate treasurers. Is that something that you're actually seeing in the marketplace at the moment?

Meltem Demirors (4:22)

Yeah, so we've actually done a lot of research on Bitcoin as a portfolio diversifier. I think it's certainly true that in March, investment committees, corporate treasurers around the world looked at the makeup of their portfolio and realized something probably needs to change. Now that we're entering into November and coming close to the end of the year, we're in a really interesting sort of environment. First, I used to work in corporate treasury before I got into Bitcoin. So part of me feels an affinity for corporate treasurers around the world who are looking at the universe of investible assets. And at the end of the day, when I was in corporate treasury in 2014, I was at Exxon Mobil. And I recall at that point in time, our cost of capital was effectively zero, meaning we could borrow at very, very low rates. And that environment, I think, continues to persist for many corporates, particularly in the US.