‘Powerful, 10-Year’ Bull Market Ahead (Uncut) 04-26-2025

‘Powerful, 10-Year’ Bull Market Ahead: Why It’s Time To Get ‘Aggressive’ | Eric Peters

What this industry has been waiting for has been waiting for the regulatory changes that are going to happen this year. So, you know, the Genius Act looks like that’s going to get through. FIT21, I would expect that to be done before the August recess of Congress.

And then all the traditional financial players will have clarity around the whole structure of crypto assets. What does the SEC do? What’s the role of the CFTC? What’s the security? What’s a commodity? What’s collectible, for instance? We’re joined by Eric Peters right now at the Digital Asset Summit in New York. He’s the CEO of One River Asset Management and the CEO of Coinbase Asset Management.

We’ll be talking about his views on the crypto landscape. Welcome to the show. Thank you, David.

Nice to see you. I’m David and… Bonnie. Eric, good to see you.

Let’s talk about your weekly newsletter that you have on One River Asset Management, if you could check that out. Last week, where I believe the last issue that you had, you talked about the potential geopolitical risks of Trump’s kind of taking a step back from Ukraine and what that implies for Europe. So if Europe were to be militarized, specifically Germany, what does that do to the fiscal position? What does that do for the markets? It’s a really interesting situation.

I mean, in my career, so I’ve been doing this for over 35 years, and the Germans have been the most fiscally austere country in Europe, the largest economy. And so kind of what Germany does, the rest of Europe is more or less forced to do. So for the first time in my career, I’ve seen them really lift what they call the debt break.

So it will allow for a very substantial deficit spending, and I think they need to do it. It’ll be interesting to hit the world at a point where I think global growth is pretty decent right now. And Europe’s to spend money and build big deficits will just mean, I think, higher inflation, all else equal.

Does that imply that the debt break is going to be broken? Yeah, they’ll lift it. I mean, it should happen this week in terms of being approved by the legislators, but that’s going to happen. But you’re not worried about a hyperinflationary scenario like the Weimar Republic, right? No, no, no.

That’s what they’ve been worried about for so long. I mean, they’ve been scared by their ghosts of however many 80 plus years passed, which is the source of their fiscal austerity. But I think the combination of the US pulling back from NATO and from Europe and what’s happening in Ukraine has been the catalyst that’s pushed them into this position.

So once they have this larger levels of debt, and once we have potentially higher levels of inflation, I mean, that’s more of a longer term, medium term trend. Does this have any market impact whatsoever? I think so. I mean, you’re seeing European equities substantially outperform the US over the past three, four months.

I think all else equal, we’ll see higher rates out of Europe. We should see a stronger euro. And I think those are trends that fly in the face of how the market has been positioned for a long period of time.

So pretty dramatic market moves. Do you expect the US economy to continue growing at a faster rate than Europe? I think not immediately. Just because I think that some of the changes that are happening under the Trump administration are all else equal going to slow the US economy down in the near term.

I think the goal is to put it on a more sustainable position to continue to outperform over the longer term. But we’ll have to see. We’ve got to get through the first stage of this readjustment first.

OK, cool. Well, crypto community, we like to talk about generational wealth, right? But young people, they don’t have a lot saved up. Let’s say somebody has 50k, 100k on the sideline.

What would you suggest they invest in? And is the question to be focused exclusively on crypto? It doesn’t have to. Yeah. Look, I think for younger people, it’s important to make investments across assets, really.

Not to be entirely focused on crypto. I think crypto is super exciting. There are a lot of young people who’ve made an awful lot of money in crypto.

There are also a lot of young people who’ve lost money. So I think with any, like with my kids, for instance. So my kids are probably the generation of the folks that are your audience.

They’re invested in crypto. They’re invested in traditional financial assets, equity indices, and things like that. I think the most important thing is to just start investing, start saving some money, putting it into a combination of assets, some of which you think have a lot of upside and others which you think you can reliably depend on as being around in the next 10 years.

There are certain crypto assets where you can’t say that. There are others where, like I think, for instance, Bitcoin will certainly be around in 10 years. I think it’ll be worth an awful lot more money than it is right now.

But they’re far more speculative assets in crypto as well that I couldn’t say the same thing about. They might be worth a lot more next month or next year, next quarter, but they might be worth a lot less in five years or 10 years as well. So if your kid comes to you and be like, dad, I want to invest in meme coin, what would you say? Generally, I’m generally not.

But I hate to micromanage anyone. So I wouldn’t just say, don’t do that. I would say explain why you think it’s going to appreciate.

You’re buying it not because you think it’s going down. You think it’s going to go up, hopefully. I think my kids are smart enough to figure that out.

And so I’d like to hear the case. And oftentimes, if someone makes a case for an investment, and they listen to themselves make it, they’ll either become more confident or they’ll lose their conviction. So I try to not tell people what to do.

Well, we do want to ask you about your Bitcoin price prediction, if you’re comfortable talking about that. Maybe the price prediction of 2025 and 2026, what has to happen for this price target to hit? Yeah. Digital assets have been awfully weak recently, actually, which I think what happened, more of an explanation than just a specific target.

But I think there was such an abundance of extremely positive news that came out post-election that for the time being, these assets, they ran out of new buyers. There was so much good news priced into the market. And I think what we’ve experienced over the last few months is that we’ve had a continuation of reasonably good news, and the prices have fallen.

So my experience over a few decades has been the markets that you really want to be long aggressively are markets that are starting to behave well when the news is poor. And we’re not quite there yet in digital assets. I think I have long term positions, and I’m substantially bullish over the next five, 10 years, two years, for that matter.

But I think there’s probably still some selling that has to happen right now. But I think we got to a point where people were too bullish. I think right now, sentiment is swinging so negatively that we’re probably close to levels where you want to be pretty aggressive.

And then I think, OK, I think there’s great legislation that’s coming out. The regulatory developments in the US are really positive. I think that we’re going to see a crypto reserve out of the US.

I think we’re starting to see more signs of how that gets funded, which is very creative and actually quite powerful. So I think some of the building blocks are happening for this next wave. We’re not quite there yet.

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And for institutional investors, Coinbase Prime delivers deep liquidity, smart order routing and dedicated client support. So if you’re ready to take control of your financial future with digital assets today, sign up now with the link down below or scan the QR code here to get started. Is the negative sentiment you’re talking about exclusive to cryptos or is it risk assets overall? In other words, are we talking about a divergence of Bitcoin versus stocks or a continuation of correlation here? I think that the negative sentiment is across all risk assets.

And I think what’s happened over the past year or so is as crypto has been integrated into the traditional financial markets through ETFs and whatnot, it’s starting to behave, at least for the time being, more like a traditional risk asset. And so as you’ve seen, crypto actually led this equity move down. Crypto is the first one.

Crypto tends to bottom before other markets, tends to top before other markets. So I think it has for this correction as well. But sentiment is significantly negative.

I think the US could have a recession right now. You’re starting to see Scott Besson suggest that maybe there is one. He doesn’t want to predict it.

Trump’s unwilling to suggest that there won’t be one. No one can ever tell you that there will never be a recession or there won’t be a recession. But I think the way that they’re talking about it suggests to me that they’re prepared to have what they would hope to be a relatively shallow recession for one or two quarters to set themselves up for a pretty robust economy heading into midterms.

Sure. I also want to ask you about Ethereum, because as I was doing the research, there was this one interview that you said you think the global financial system will be built on Ethereum. But the sentiment in the community is people are pretty disappointed with the performance.

Now, I want to ask you how you think now, because that interview was like a couple of months ago. Yeah, I think that that’s absolutely the case. So I think that the global financial system in large part will be built on top of Ethereum.

I think what Ethereum is suffering from, in addition to just general risk sentiment, is that we haven’t seen that building at scale yet. And so while over the past couple of years, Ethereum has become a lot cheaper to use, it has become far faster, all things that will accommodate its use as that base layer for global finance. A lot of the layer twos are taking a lot of the economics that would have otherwise accrued to Ethereum.

I think that in the near term, that’s negative for the price of Ethereum, and people are pretty pessimistic as a result of that. But having speeds increase to this degree and having prices come down for its usage is fantastic for adoption. So now I think what happens this year is we get the regulations that allow that development to actually start happening.

And then my guess is in 2026, we’ll start seeing a lot more real TradFi developments on Ethereum. I don’t know how far the market has to look out in order to price that in. But I think once the market starts seeing that real TradFi stuff is being built on Ethereum, I think it’ll be extremely positive.

And it’ll come from a place where prices are really quite low, and sentiment is horrific in Ethereum. How does that translate to the Ethereum price? The usage, yes, to TradFi are built on top of Ethereum, but as you said, layer two is taking all the benefits. It is right now, but Ethereum can evolve.

I think they’re pretty focused on making sure that all of the economics don’t accrue to the layer twos. There are a number of things that they’ll be able to do, I think, and will probably happen over the next year to make sure that the balance between where the fees are paid is more equitable. I’m sure that that will happen.

Going back to markets for just a minute now, One River Asset Management has a, well, they have a number of reports, but from last October, you wrote in this particular report that investors should brace for uncertainty. Specifically, the hesitance of investors to fully embrace uncertainty creates opportunities for those who do. Volatility being a measurement of uncertainty is arguably the most direct way to improve the uncertainty premium into a portfolio.

I’m curious as to how you build this premium into this portfolio and have a follow up to that. We trade a lot in volatility markets. Volatility is really a measure of uncertainty.

I think, number one, one of the principles I’m speaking about there is, if you’re ever really going to produce substantial returns, you need to be willing to invest in uncertain environments. We’re talking right now about Ethereum. You asked a very good question.

Even if global finance is built on Ethereum, why will the price necessarily go up if all the value accrues to layer twos? That’s a good question. The answer is, if it never does, then Ethereum price probably won’t go up. I think there’s a lot of uncertainty around, well, how will that get worked out? The statement I made is, I think there are a number of mechanisms that could happen over the next year or two, where they figure out how to split those fees in a more equitable way, but that’s uncertain.

That’s the type of uncertainty that I think, as an investor, you need to look at and you need to go, okay, well, how do I think the world is going to play out here? I think everything’s going to be built on Ethereum. It’s been around the longest. It’s the most stable.

It’s gone through all these different upgrade cycles. It’s very secure. Therefore, I think this will be the foundation, but you don’t make any money from it right now, and the price keeps falling.

You need to look for situations like that and say, well, how that resolves is uncertain at this stage. When I look at the players involved, and I think about what that future looks like, I think that there’s a much higher probability than the market currently does, that Ethereum is not only that base layer, but also accrues a lot more fees. That’s the formation of any investment thesis, more or less looks like that.

I think in order to actually really make some significant money, there needs to be, or at least the market’s view needs to be that there’s a lot of uncertainty. You might not have that much uncertainty. I have quite high conviction that what I just said is going to be true, but I think the market views that as being very uncertain still, which is why the prices are so depressed.

Do you believe in four-year cycle, where Bitcoin rallies first, and then big cap, small cap, and then all the meme coins, but this cycle looks a little different. I want to know your thoughts. I think the cycles, I don’t believe in the four-year cycle, which is not to say that it hasn’t happened.

It’s just I think there may have been a cycle and a good reason for that cycle. I think with the amount of new supply that comes out of miners right now, probably a pretty reasonable explanation or why that cycle would be a bit different, but I also think that the types of players that are investing in this space at this stage are so different from looking back four years ago, eight years ago, 12 years ago, that I just think it’s unlikely that it’s going to play out with that same type of four-year cycle. I think the more institutions that come and invest in this space, the less we’ll see those same types of cycles, and even correlations.

You were asking the question, David, about is sentiment depressed just for this asset class, or also is it connected to equities and other risk assets? Those types of correlations, I think, are likely to change over the coming four, eight, 12 years relative to the last four, eight, 12, just because the types of players are different, the size of the market, the market cap is very different. A lot of traders though, they chase this rotation, right? It goes from Bitcoin and then they go Ethereum. So now that you said there is no four-year cycle, what do you believe in? I look at, I mean, to me, when I first got involved in a serious way into digital assets, I’d punted Bitcoin around personally for quite a while, but we made our first big investments in 2020, just after the election.

And at the time, I looked at it and I said, I have a feeling like based on everything that I see in terms of this market structure, that there’s going to be a very powerful, probably 10-year run for these assets. And so why did I pick, I mean, that’s an arbitrary number, okay? So I mean, certainly don’t hold me to it. But the thought was that at the time in 2020, we had had Bitcoin and other assets that had multiple cycles, they had survived that and actually still even thrived through it.

So it didn’t look like a traditional bubble of sorts. But there were so many things that continue to be misunderstood about these assets. And very few people could actually buy them.

I mean, it’s not they couldn’t, it was just difficult. The frictions to buy were very high. And so my view was, it’s probably going to take 10 years until everyone has a digital wallet on their phone and understands what these assets are.

Institutions will have adopted them in a significant way. And at that stage, they probably have achieved the type of price that’s just, it’s less convex to the upside, meaning in 10 years, you’re probably not going to say Bitcoin could go up another 20x or 50x. You might say it could go up, maybe like the stock market, it could go up 5% or 15% or 20% a year.

But I still feel like we’re on that track. There’s so few institutions that have really allocated this space. And there’s still so much that’s misunderstood about it.

But I think there’s still, there’s sufficient uncertainty about its future path that I think there’s still quite a bit of upside. That’s great news. That’s a good segue to Project Diamond, something that Coinbase Asset Management is working on.

So I believe currently 0.25% of global finance is on-chain. What is a reasonable percentage that makes sense for you in the future? And what is a road to that growth? So when we entered this space, when we built out a crypto asset manager, what we realized is that there are many different crypto assets to invest in, but most of them are very tiny. So from an institutional perspective, we felt, you know what, for this industry to ever become something really big, we need to bring traditional financial assets on-chain.

And so Project Diamond is something we worked on for three years. Coinbase now owns it. And it is a tool to help institutions bring bonds and equities and issue them in a digitally native form, and then exchange them with one another.

So buy and sell them. And so that’s the unlock. So everything that’s happened in crypto so far has happened in this crypto economy, this crypto universe, Bitcoin, ETH, and the trail of assets.

That’s, as you said, is 25 basis points of total global assets. The big unlock for crypto is taking the crypto technology and bringing the rest of that massive pile of assets into this crypto economy so that stocks and bonds and real estate and art can be traded in the same way that Bitcoin or ETH can be traded. So that’s what we built.

And in terms of how fast that will happen, I think what this industry has been waiting for has been waiting for the regulatory changes that are going to happen this year. So the Genius Act looks like that’s going to get through. FIT21, I would expect that to be done before the August recess of Congress.

And then all the traditional financial players will have clarity around the whole structure of crypto, crypto assets. What does the SEC do? What’s the role of the CFTC? What’s the security? What’s a commodity? What’s a collectible, for instance? There’ll be all sorts of clarity around that, along with stablecoin. And that is what’s going to allow all the big financial players to say, OK, you know what? These technologies are faster, better, cheaper, more secure.

Let’s start trading our equities on crypto rails. Let’s start trading the bond market on crypto rails. Let’s start trading credit on crypto rails.

Let’s start doing real estate. How fast will that happen? I think it will be slow and then really fast. In other words, I think there will be some adoption, probably starting with equities.

And there have been some announcements about firms that are looking to do something in that space, meaning issue equities as crypto securities. So I think that will be the beginning of it. And then depending on how fast some of the big financial institutions jump on board, what you’ll see is you’ll see the ones that are the early adopters achieve some economies of scale.

They’ll start saving money. They’ll be able to execute faster for their clients, all good things. And then the competitive pressures will bring other people in that market.

But I would say that it won’t be a massive amount over the next year. I think in five years, that 25 basis point number will be many multiples of what it is right now. And then after that, then the acceleration will really take place.

I’m very curious, how do you prove ownership of real estate on-chain? Meaning if I’m trading this tokenized real estate token, how do I know it’s actually that building? Well, it has to be connected to law. So I think that’s a very good question and one of many that have to get answered over the next few years. But essentially, with Bitcoin or ETH, it’s very easy right now.

But when you have to take this token and you have to attach it to some asset that is in the real world, whether it could be gold, it could be real estate, it could be a piece of art, you need to attach that to law. It needs to be governed in a particular jurisdiction. And so those are the things that will get worked out over the next few years.

And they’re tricky to work out, but they’ll get worked out. Is the White House talking about it? Oh, I’m sure. Sure, sure.

I have one more question for you. Yeah, shoot. So you’re an asset manager.

You’ve been in the space for many, many years. What is your viewpoint on the efficient market hypothesis? I’ve interviewed Eugene Thoma, actually, and his view and many others in his space, academics, believe that you can’t really beat the markets long term unless you have asymmetric information. What’s your response to that? I think for most people, that’s probably the safe way to think about it.

But for practitioners, I think your job is to try to glean information that is asymmetric. And that’s not saying inside information. Obviously, there are people who would love to have inside information and would trade on it.

But that’s not what I’m talking about. And there are people in the past who have. What does it mean for you as an asset manager? I think you’re looking for, you’re trying to bring your experience to bear to look for different configurations of asymmetries in people’s understanding of markets relative to your understanding of the market.

So for instance, when I described our entry into Bitcoin, I did enough in 2020, I did enough work to look at that and say, most institutional investors right now think that you can’t store it securely, that it’s mostly used by drug dealers or whatever it may be, that there is a tremendous amount of financial crime that happens on these networks. And I looked at it, and they also thought, well, it’s just digital. You could make an infinite number of Bitcoin.

There were a lot of misconceptions about that. And I looked at that and said, actually, most of the concerns that these people have are unfounded at this stage. Actually, you can secure Bitcoin securely through Coinbase, for instance, which is who we used initially.

It is used for some financial crime, but so are dollars. And it’s actually far less. And there’s a very strong crypto paper trail to see what bad actors are doing.

So every argument that institutions had for not being involved were actually less valid or invalid. And so the asymmetry of understanding that is that it’s like, OK, in a world where I think there’s going to be more inflation, which is what we thought in 2020 because of the vast fiscal stimulus, investors are going to look around for things that are relatively scarce. And what are they going to buy? Probably going to buy some gold.

Maybe they’ll buy some housing. They might buy Bitcoin. And by the way, every single institutional investor that I’ve talked to misunderstands it.

So all they have to do is understand it just a little bit better, and there’s going to be incremental buying. What’s the major misunderstanding? I’ll end it here for me of Bitcoin. The major misunderstanding at that stage from an institution’s perspective is that it can’t be stored safely.

They just believe that, oh, my God, because there were so many stories about people who had their Bitcoin on their laptop, and they lost their laptop, or they lost their key. And institutions can’t afford that to happen. So that was probably the biggest one.

The second biggest one, maybe they were tied first place, is that you can just create a new Bitcoin network, right? And so why would there be any value that would accrue to this network? Those are two obvious misconceptions that, nevertheless, investors had. So when you can identify periods like that, you have a real advantage. So efficient market hypothesis, I think it’s often right, particularly in very efficient markets.

But as an investment manager, what you look for is you look for those unique configurations of opportunities where you go, I think I have a real edge here. I think what I’ve learned from all this and talking to a lot of people in this space is that the better you are as an asset manager, the better you are at finding information to your advantage. I’m not talking about insider information, I’m talking about identifying things that you could use as information.

No doubt. It comes from experience. Yeah.

I have a vast network. And the reason that networks of other smart investors are really helpful is that they’re all cultivating their own source of information, and they’re curating them. And by the time you have a conversation with another investor who’s really done a lot of homework, you’re gleaning something from them.

And if you can kind of triangulate that with a number of other folks, you can develop the type of view that I just described. And those can be very powerful. You don’t have to find them all the time either.

That’s the reason why the audience watch you, right? They’re trying to… Good point. You’re helping to give the common investor an edge by listening to you talk. Well, thank you.

It’s been a real pleasure. David, thank you. Bonnie, thank you so much.

Yeah, it’s great. Super.