“I don’t have cash.” — Dan Tapiero explains his portfolio for 2022 | Interview

Hi, I'm Jackson with Cointelegraph and I'm here with Dan Tapiero, founder of DTAP Capital and 10T Holdings. How are you doing today, Dan?

I'm doing great. Great to be here in Paris.

Fantastic. So let's talk about crypto. What's going on in the macroeconomic environment right now? Tell me about it.

Okay, let's get right into it. Separate macro and crypto, they're connected. But let's go the macro. I think, look, I think we're at an extreme in terms of this panic and fear about the rates backing up. I think I showed you just before there was a chart that showed the devastation, the bond is as serious as it was in 1994, which was just a terrible year for anyone who remembers it. Again, that was the worst year for Bond since 1929 and eventually led to the collapse of Mexico as they were leveraged. That was in early 95. And so I'm thinking now someone is feeling a lot of pain. I mean, we know that China, their growth numbers have dropped quite a lot of the central bank came out yesterday and said that they're open to easing measures, et cetera. So maybe China's feeling a lot of pain there. But my point is that I just don't think the Fed is going to do as many rate hikes as is priced into the market. And so I would suspect, at least in the sort of medium term, that the rate backup is kind of, you know, has taken its course. And that's not to say that rates can't go higher over the next several years for whatever reason. But I just think for now we've reached an extreme that is just too much. And what that would suggest is really that, I mean, as I said bitcoin and I think cryptocurrency generally, but also the equity market have held in relatively well given this backup. And so if the rates start to fall again as inflation falls in the next six months, I think we could have a nice run actually in both in equity and in the bitcoin ethereum cryptocurrency. But I hate to equate those two, but it's being driven that way a little bit now.

Yeah, we have seen a fair amount of correlation, I think, between the equity markets and crypto. So maybe it's safe to assume that they will continue while we have this crazy environment right now. Would you say that?

Yeah, I mean, I think so. But I also think it's important in a way to ignore because over the medium term there's Absolutely no correlation between the stock market and crypto. I mean, like, I mean, this is obvious. If you look at the last 10 years, the S&P 500 is actually down 99% against Bitcoin. People don't realize this, but same thing against Ethereum and actually against quite a few of the assets in this digital asset ecosystem. So everything in the fiat world has depreciated roughly 99%. So I wouldn't call that a correlation, at least in the long term or insanely negatively correlated.

Yeah, yeah, yeah, I was, I was mostly speaking about short term.

I know, it's so annoying. You have the CNBC and all of these little punty guys talking about every little price squiggle. But in the long term, yeah, there's a massive negative correlation.

That's why we're here. We're here for the long term.

Yeah.

Which ties into your, the name of your holdings, actually. 10T holdings.

Right, right.

10 trillion. Tell us about that. Okay.

All right, well, so that's a, in a way a funny story. When I was launching 10T, which as you know, is a private equity fund, we invest only in the mid to late stage companies in the digital asset ecosystem and that's all we do. When I was launching that in the middle of 19, the value of the DAE at the time, and that's the value of Bitcoin, Ethereum, all the cryptocurrencies and all the equity in the space was at about 300 billion. And I thought at least at the time I was doing something that was sort of more bold than at least any fund manager I've known to do. And that is to put my view, which was quite an extreme view, into the name of the fund. And so 300 billion. At the time I thought, okay, the space can 30x in 10 years, and so it's a private equity fund. 10t in 10 years was kind of our mantra. And you know, at the time, I mean, a 30x, you know, we were thinking, okay, well maybe, maybe not. Okay, well the joke of the matter is that I'm going to be wrong about it because we're at 3T today and there's almost no chance we're going to hit 10T in the next eight years. I mean, we're likely heading more to 20, 30, 40 trillion. So unbelievably, I was too bearish.

That's how crypto is, right?

I know that's crypto. I know that is crypto.

The bears getting slaughtered always. So tell me about your portfolio. What are we Looking at how much is Bitcoin, how much is Ethereum personally.

That'S different than in the fund. I mean I have, I want to hear both. Well, originally in the beginning of 19 I did 8020 Bitcoin, Ethereum personally. Yeah. And this is in cold storage, locked away. I don't think about it. It's not in my head. 10 notes. Yeah. And no, no, I don't trade it. It's the. Is pointless. Yeah, I'm a serious Hodler in that sense. And of course, as you know, since then the percentage has changed dramatically. I mean they've both done great, but Ethereum's outperformed in that portfolio. My focus though, I mean 100% of my focus now is on 10T which is building a portfolio of these mid to late stage companies. And now we, we have over a billion dollars in assets under management. We've invested in 17 companies, companies that you would know, including Kraken, Huabi, Bitfury, Darabit, Figure Figment, Yuga Labs is one we did recently. Animoca again, it's on our website. You just punch 10t fund and we've listed all the companies. And I have quite a diverse group of investors now and I would say we're one of the first funds that really has, I would say, you know, super high quality institutional investors as well. The Michigan pension fund merce, they invested $40 million with us. In their second fund, we have a Texas, Texas state institution that's also invested. So you know, we've had very good demand and interest. And I think these are, you know, we're kind of a gateway a little bit for the dae broadly. I, and I say that because many of my investors have, don't own any Bitcoin or Ethereum, don't own anything. And private equity is something they broadly understand and have exposure to. And you know, even though they may not understand crypto, they have a tech allocation as well. And so, you know, we're their toe dip and they get to learn about the space through us and we explain things pretty clearly. I mean, I've said this often, I feel like I'm a translator. Like my real job is just translating what's going on in the crypto world to the people in the legacy world. Right. So yeah, that's been very exciting and we're growing and just like everyone in the space, it's like everything's about speed. Always drinking from a fire hose every day, all day.

I like to say that a day in crypto is like a month in the stock market?

Yeah, yeah. I mean in actuality it's like 5 because of the hours. I always say crypto trades 8100 hours a year and the stock market is 1600, so it literally is 5. But then if you want to increase network effect, if you include network effect and the virality of that, you might maybe get to your number. Yeah, I know. Global all the time.

24 7.

24 7.

Love it.

Yeah.

I want to go back to your personal portfolio though, because we talked about Bitcoin, Ethereum, percentages. Are there any other things circulating in there? Like what's the, what's the big picture look like?

That's it.

That's it.

Yeah. And it's away. I don't think about it. It's not part of my daily, you know, I think, look, and I've said this many times in interviews, you know, starting even two years ago, I think bitcoin can get to somewhere between, you know, three, four, five hundred thousand without that much difficulty over the next sort of three, four, five years. And that's sort of my, my view and you know, I'd stick to that. I said it when it was 8,000, I set it at 20,000, it's now 40. The biggest danger I think for people, and again, many people don't have experience trading markets or portfolio management. It's extremely difficult. Right. Generally speaking. And in this world it's 10x. The difficulty, the volatility, the number of variables that you have to account for. I mean, I personally would not be trading the space unless I had, you know, a team of 10 to 15 guys working with me around the clock. Just like when I, you know, in the old days traded the macro markets, it's just too complex, too difficult, you know. That being said, if you have a proper trading outfit and you're, you know, you're, you're organized to trade, that's different. But for what I call civilians, you know, non market people, I think the best strategy is just to hold. It's a great savings technology. You often hear that discussed in the space. So I know I'm really sort of keep it simple, stupid. And yeah, I just, I've got that and then I've got, you know, 10T and the companies. But I, yeah, I just, you know, I always say you can't do everything right. Right. So I tend to stay very focused.

Yeah, yeah. People want the big gains right away, but patience.

Well, yeah, I mean if I were 23, maybe I would be, you know, winging Solana around and who knows what. But I, you know, that I don't see the return, the money, dollar return based on how much my energy input is, is much greater. Having a sort of five to ten year investment horizon. Like I, I know that what we're going to make on that for the energy output will be very high.

Yeah.

Right.

So how are you positioned for the rest of 2022? I mean, are you, are you, you know, I think. Are you chilling out or, you know.

I don't have cash. Yeah, no, I don't have cash. I think we're broadly in the, this is broadly the low area for Bitcoin and Ethereum and again, the space kind of trades off that. I consider everything outside of that as really venture projects. And I'm not a venture capitalist. I'm not picking apart the code and looking at the different chains and making assessments about where the greatest utility is. And there are a lot of brilliant guys, you know, who are doing that. All the names, you know, you know Andreessen and you know, Polly, you know, all of these guys. Right. So they're all, they're all focused on that. But broadly, the big macro wind at your back, structural change that's happening is still happening and it's happening at light speed. And it doesn't matter again, whether the Fed is at 0 or 1 or 2. It's almost, it's irrelevant as far as I can see. And the stock market, whether it's up 20% from here or down 20%, I don't think has much material impact. I think there's going to be a dramatic outperformance, as I said before, of assets in this new digital world versus the Fiat world. And I would just say the Fiat world is about $500 trillion of assets, value of assets, and that's stocks and real estate and bonds. And the DAE is now about two and a half trillion. So I, within five years, it's not going to be 500 to two and a half. I think it'll probably be, you know, 530 to 40 or something like that. You know, I, so I don't see much, I don't see it going down because of course they can stimulate and create infinite fiat and that of course boosts the stock and real estate markets. But the digital asset world, you know, as I've said, I mean, I'm going to be wrong about 10T. I got that wrong.

Lowballed. Yeah.

You know, I was saying before that I was on at the Blockworks panel, it was only maybe six, seven months ago I was on there with Dan Moorhead, Pantera and Mark Yusko, who were two old buddies I've known forever. And they asked that question, what's the value going to be? And Dan kicked it off with 50 trillion in, I think it was in five years. And I was like blown away a little bit because I thought like 10t was a big call. And then Mark said, I think it was 30 or 40t. So I had to bump up my, my call there, just not to be completely blown away by those guys. So I think I was 25 or 30. But yeah, there's nothing that can keep up with the growth that's going on in this space.

Yeah, it is explosive. Crypto does love to have these big predictions, but there's a reason why it's happened.

It's happening for sure.

Are there any final comments you'd like to make?

No, I would just say that it's interesting being here in Paris. Each of the different regions, I would say US, Europe, Europe, Asia, they have a slightly different take on what I would broadly call bitcoin crypto blockchain digital assets. You know, I think the space is still searching for how to define itself, but in each one of the different regions there are different focal points and interesting companies growing up, doing different things here. I think this is a little more NFT focused, I would say, generally here than let's say in the US maybe or in Asia also. You know, you have very strong creative industries here, and so I think that the uptake has been pretty quick in that, in that regard. So, yeah, I just, just. So I would say remind people that crypto is global. 90% of total cryptocurrency volume is outside of the US and so there are just, you know, many opportunities all over the world right now. So, anyway, I'll talk to you next in Seoul or wherever.

Right, sure. At the next one. I don't know exactly, but yeah, we'll be there. All right, fantastic. I'm Jackson Dumont and this has been a Cointelegraph interview with Dan Tapiero. Thank you.