Get Rich From Inflation: $120M Digital Asset Strategies

Welcome to another episode of Making Billions, I'm your host Ryan Miller and today I have my dear friend Anthony Fernandez.

Anthony is the Head of Business Development at a crypto firm known as ICONOMI. He and his team manage over 120 million AUM. With a rich background in asset management, foreign exchange and cryptocurrency, mining and trading, Anthony has become a leading authority in blockchain technology, including defi derivatives trading and cross chain solutions.

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[THE GUEST]: Anthony is the Head of Business Development at a crypto firm known as ICONOMI. He and his team manage over 120 million AUM with a rich background in asset management, foreign exchange and cryptocurrency, mining and trading,

[THE HOST]: Ryan is a Venture Capital & Angel investor in technology and energy. He achieved market-beating placement growth in his first 5 years.

Transcript

Ryan Miller  0:00  

My name is Ryan Miller and for the past 15 years I've helped hundreds of people to raise millions of dollars for their funds, and for their startups. If you're serious about raising money, launching your business or taking your life to the next level, this show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it. 

Ryan Miller  0:22  

I could get in trouble for telling you this, but I'm going to do it anyway. What's the cause of inflation and how do you profit from it? Well, my next guest is about to teach you how to protect and profit from inflation using the right combination of digital assets. All this and more coming right now. Here we go. 

Ryan Miller  0:38  

Hey, welcome to another episode of Making Billions, I'm your host Ryan Miller and today I have my dear friend Anthony Fernandez. Anthony is the Head of Business Development at a crypto firm known as ICONOMI. He and his team manage over 120 million AUM. With a rich background in asset management, foreign exchange and cryptocurrency, mining and trading, Anthony has become a leading authority in blockchain technology, including defy derivatives trading and cross chain solutions. So what this means is that Anthony understands how to make money in the crypto space and he's about to teach you and I how to do the same. So Anthony, welcome to the show, man. 

Anthony Fernandez  1:11  

Ryan, really appreciate you having me on the show. I've listened to a number of your podcasts, you know, the, recently the one with Kevin DeMeritt with, you know, talking about gold and inflation, it really resonated well with me. Coming from the Bitcoin industry, a lot of similarities between Bitcoin and gold, feel a bit of impostor syndrome. You've had such high caliber guests on the show, so hopefully, I'll provide some value at a level of their content.

Ryan Miller  1:33  

You know what, you're very kind and we've been fortunate enough to be right in the top 2% in the world of all podcasts and it's all because of amazing guests like you, Anthony. So we really appreciate you being here, we're excited to crack this open and really learn more about making money in the crypto space and billionaire cheat codes and everything that you and your team have put together. Now, before I do, before we get into that maybe you can just open up what is ICONOMI and tell us a little bit about what you do there and then we'll get on to beginner's advice. 

Anthony Fernandez  1:57  

Yeah, good question, so you know, at ICONOMI we are classed as a cryptocurrency exchange, but the, what we actually really do is we help investors access a range of digital asset portfolios that have consistently outperformed the market over the past five to six years. So whether you know, they're beginner investors or more high net worth sophisticated investors, we have a range of portfolios from index, quant, algorithmic, discretionary managed portfolios for investors to potentially utilize across the market.

Ryan Miller  2:22  

Yeah, I love that. So now as we move on, and we're talking about crypto, and we're looking into all these things, maybe we can just talk to the beginners who are looking at crypto, making trades, just understanding this market. Two questions for you, Anthony. Number one, how does a beginner who's starting out, how do they win? How do they get early points on the board? And then maybe we will follow up with, how do they not lose and make those silly mistakes that beginners make? So how does a beginner win? 

Anthony Fernandez  2:46  

It sounds like such a simple, simple question and to be honest, it has a relatively simple answer attached to it as well, but it becomes overcomplicated. You're where I've had a lot of success and where a lot of investors I work with have a lot of success is building a foundational portfolio, focusing on the top 10 tokens in the market to start with. You know, the cryptocurrency market is highly volatile, you don't necessarily need to be going down to the top 50 tokens, top 100 tokens to generate a return on investment. So you know, my number one piece of advice would be to build a core holding in the top 10 tokens, so like Bitcoin, Ethereum, Solana, and so on and so forth. And using $1 cost averaging strategy to actually invest into those tokens and $1 cost averaging strategy is almost like an automated strategy to invest a set amount into a particular asset on a consistent basis. So what you're essentially doing is you could be purchasing Bitcoin, weekly, daily, monthly or quarterly, no matter what the price point is. So if the market is higher or lower, that's really irrelevant, you're still going to buy the same amount that time and if you know, if you look out over a year or over two years, what you've essentially done is you smoothed out your investments into a particular asset. You know, rather than chasing the highs and chasing the lows and thinking whether you should invest at any set time in the market, you're also making your investment strategy, similar to what you know miners do. Think of a cryptocurrency miner they're accumulating cryptocurrency every single day no matter what the price is, and they become very successful over the longer term because they hold on to their assets and accumulate daily. If you can take more of an automated approach to your investing, over a year and two years, that really compounds your investment and makes you become a lot more successful.

Ryan Miller  4:28  

Yeah, brilliant in with that how do they not lose? How do they avoid, so we got dollar cost averaging? Just really it's a disciplined approach to say if your quarterly daily whatever that is, stick with it and price will fluctuate but over time that pricing will work out well in your favor, and they look at those in stocks too. So dollar cost averaging is pretty well known strategy and quite effective. Now, you can make mistakes in the early days, how does a beginner who's starting out looking to make some money or hedge against inflation, any of that stuff, how do they avoid making silly mistakes? What would you say?

Anthony Fernandez  5:00  

Yeah, from my time trading the markets, I've done FX, all kinds of different asset classes through to crypto. You know, the number one reason why beginner investors lose is because they move on to derivatives, futures where leverage is involved. And if you put the cryptocurrency market, which is highly volatile, and pair that with leverage trading, it does become a recipe for disaster for beginner investors. You know, for, for example, if you're investing your $1,000, and you're using leverage, you're leveraged up 10 times or 100 times and the market moves against you a fraction that's you out of the market, and the number one rule is don't lose money and that's you kind of out the market already in one position. Just this week, Bitcoin dropped $10,000 in one day and then move straight back up the following day. Essentially, it was taking out all of the leveraged players in the market and the buyers in the market. So number one rule, I would say with crypto specifically, it definitely is a space for leverage trading, but not necessarily with crypto. You're 90% of retail investors lose 90% of their money in 90 days and that's predominantly through leverage trading in the cryptocurrency market. 

Ryan Miller  6:00  

So stay away, I think it was, was it Warren Buffett or Charlie Munger, it's the three things that kill business are ladies, liquor and leverage. I don't know if that was a real thing, but you're absolutely right on the third L, leverage can really tank a great motivated investor, you can have a great strategy, but if that strategy includes leveraged or things that you don't understand, I think what Anthony's saying is just stick to the basics and allow those to give you that steady dollar cost averaging profits. Would you agree?

Anthony Fernandez  6:27  

It sounds so simple, but it's really the most successful strategy I've implemented over the past, you know, five to six years in the cryptocurrency market and it's worked well for me. And the clients I manage it also worked well for them as well. So sounds simple, but it's the most effective strategy so far.

Ryan Miller  6:41  

I love it. So now, let's move on to the market. What are you seeing out there? How's the market doing? And maybe we'll get on to where you think it's going. So what are you seeing out there? 

Ryan Miller  6:54  

Thank you for watching. If you've made it this far, we must be friends. So don't forget to like, subscribe and click that notification button. Now, let's get back to the show. 

Ryan Miller  7:01  

So what are you seeing out there?

Anthony Fernandez  7:02  

Really, I mean, this podcast has come at a very interesting point in time. We've just had the Bitcoin SWAT ETFs go live in January, so we've had a month and a half's worth of trading. We have the Bitcoin halving event coming up in April in roughly 40 days and that's where the rewards that Bitcoin miners received get cut in half. Now this is going to be the first halving event, you know, the hard things take place every four years. This is the first halving event where Bitcoin is already trading at record highs, so this week, just now bitcoins reached 68-69,000 US dollars, we're at record highs. And this has been driven mainly by the Bitcoin spot ETFs, so I have a really some powerful slides to share with you right and your audience. 

Ryan Miller  7:02  

Ya, please. 

Anthony Fernandez  7:03  

You know, when we look at the Bitcoin ETFs why are they such a big deal and if we go back in history, and just understand what a spot ETF actually does. A spot ETF, they actually have to go out and purchase the underlying asset from the open market and if we take a look at what happened to gold back in 2003, 2004, the first Goldspot ETF went live. When that went live, gold actually did a 4x in its price, and it added 9 trillion in the market gap. Now if we actually take a look at Bitcoin, in particular, Bitcoin has a halving event in April and because Bitcoin is also a scarce asset, there's only ever going to be 21 million Bitcoin, as a finite supply. Bitcoin is actually going to have a stock to flow ratio of 120, making this particular asset twice as scarce as gold. You can see the chart there looks very extreme, we've had a huge run, where investors are now looking to invest in a gold ETF and we're starting to see this play out with the Bitcoin spot ETF as well. We were speaking earlier in the week, right, and there was around 7 billion north of 7 billion that's flowed into the Bitcoin ETFs already, I checked today and that number is now north of 10 billion US dollars. So we're seeing in just under two months, already $10 billion has flowed into the Bitcoin spot ETFs, and bitcoins gone from roughly 35-36,000 when they went live, is now trading double their nearly 69,000. 

Anthony Fernandez  9:05  

So you know, the price action is running higher, and it's because the demand is so high with these ETFs. And whilst the inflows remain strong, we're seeing roughly 5-6000 new Bitcoin being purchased daily by these ETFs, I can't necessarily see the price action slowing down just yet. So in terms of where we're going to be going, it's going to be a very interesting one, but it also depends on how the market acts after the next Bitcoin halving event and this really kind of puts into context the Bitcoin halving event. So we've had three halving events previously, where the block rewards are cut in half. We're gonna see in 2012, where it went down, where the block rewards were reduced from 50 Bitcoin per block down to 25. We had a major bull market going into 2014, another halving in 2016 where the block rewards went down from 25 to 12.5. Another major bull market into 2018, the third halving in 2020, where the block rewards reduced from 12.5 down to 6.25, another major bull market into 21 and 2022. We're now about to have the fourth halving event, and the halving event has historically marked the start of a new bull market. So you know, we're already at record highs, you know, a month before the next bull market cycle. So it's very interesting how it's gonna play out, it's, it's kind of different to the previous bull market cycles because we're already at record highs. 

Anthony Fernandez  10:20  

And to put things into context, Ryan, this really kind of displays how early we are in Bitcoins cycle. So there's going to be a total of 32 halving events, the last halving event won't occur until the year 2136, unfortunately, out of our lifetime. So you know, we're coming up to the fourth halving event, there's going to be a total of 32's ah 32. We're also paired with the fact that we have these ETFs now purchasing roughly 5000 to 6000 new Bitcoin per day in the ETFs and there's only 900 Bitcoin going into the market per day at the moment. So there's a major supply and demand issue taking place in the digital asset market, specifically with Bitcoin and this is probably my favorite shot. This is a spiral chart, so instead of looking at Bitcoin in terms of time, against price, we're looking at Bitcoin in terms of blocks mined against price. 

Anthony Fernandez  11:14  

So, Bitcoin actually has a four year cycle. So when you said, you know, where do we see Bitcoin going, and the digital asset market going. I don't like to be emotional about investing in the cryptocurrency market, I like to use previous bull and bear market data to form market averages. And we'll be glad to see if we break down the previous cycles, the white dots actually represent each carving event that bitcoins had. The green dots represent the bull market peaks, and the red dots represent the bear market lows and what we can actually understand is that all of the three previous bull market peaks have occurred in the second year, post a halving event. So if we use this as an average to form an investment strategy, it would indicate that you know, the middle to end of 2025 will potentially be the next bull market peak, based on a previous market cycles. Following on from that the bear market low will, you know, generally comes one year after a bull market peak. So, you know, 2026 might be a negative year for digital assets. But based on the previous history, we're expecting a strong performance throughout 24 and early 2025 at least. 

Ryan Miller  12:18  

All right, well, brilliant, man. So within two years of your halving event in Bitcoin, that's place where we start to make nice cycles. So you have a nice two year run, so it sounds like because I'm listening to you, I was like, well, I need to buy Bitcoin, right after that halving event we can have a nice run on that. Is that kind of what your opinion is? 

Anthony Fernandez  12:37  

Yeah, I mean, based on the previous cycles, it would say that we should have at least a year and a half worth of positive run over, you know, 24, early 25. Of course, every cycle is going to be different based on liquidity coming into the market and based on the macro economics, you know, Central Bank, liquidity and so on and so forth. So, yeah, expecting a positive run over the next year to year and a half, we are at record highs already, which hasn't happened before halving event. So that dollar cost averaging strategy is really going to come into effect over the next year or so, because buying frequently should help you kind of accumulate a different price points over the next year. 

Ryan Miller 13:10  

Okay, and what have you seen out there with Ethereum? That's another popular currency. I know a lot of people like that in the early days, that was also impressive. Those are kind of the Gold & Silver, sometimes of the digital asset space, curious, what are you seeing with Ethereum?

Anthony Fernandez  13:26  

Yeah, that's a great question. You know, this year, in particular, Ethereum has performed very well. Now, if we just go back a year and look at 2023, Ethereum only actually received 15 million dollars worth of inflows throughout the whole of 2023. Which is miniscule considering Ethereum is the second largest digital asset in the market. Now, if we actually fast forward to today, Ethereum has actually received this year. So from the start of the year to you know, early March is already received $137 million worth of inflows. So it's nearly 10x, the entire 2023 in terms of inflows, and why are we seeing this?  We're seeing this because investors are now anticipating that there's going to be an Ethereum spot ETF. So there's applications in with the SEC, and investors that are looking to front run that particular application. So the deadline for the SEC is actually in May, so we're starting now to see institutional investors at the high level starting to rotate into Ethereum and over the last month alone, Ethereum is up roughly 35 to 40%. So it's very, it's very interesting that we see Ethereum coming, catching up to Bitcoin, it really liked throughout 2023. But now in 24, we're starting to see a catch up with the rest of the market, so this is actually one of our biggest plays at the moment. Last year it was Solana, Solana was up over 1,000% and it received over 150 million of inflows at the institutional level. We're now starting to see some profit taking coming out of Solana and that money or appears that liquidity appears to be moving into Ethereum now.

Ryan Miller 14:51  

Brilliant and what does that do for liquidity?

Anthony Fernandez  14:54  

In terms of the, the liquidity coming into the market is great for price action. So, you know, if, when you're looking at where to potentially invest your money, you know, you can do all the technical analysis you want. But if you don't have liquidity going into a particular asset, it simply may not go anywhere. So for myself, what I do, I follow liquidity every week, I'm on the CoinShares website, looking at the institutional inflows into different assets across the top 10, top 15 tokens.  I'm generally basing my investment philosophy around where the smart money appears to be going, so I'm generally following the liquidity at the moment is going into assets predominantly Bitcoin and Ethereum at the moment. There's a few, you know, shoots of liquidity going into Chain Link, XRP, Cardano, but nothing at the level of Ethereum and Bitcoin just yet.

Ryan Miller  15:40  

Okay, brilliant, as we round third base, maybe let's talk a little bit about, through all of your experience and everything that you've done, let's talk about some of the deep competitive advantages. So let's cut through the noise, go right to the signal, what are some competitive advantages that you can provide for our listeners in this space?

Anthony Fernandez  15:57  

I think it's mainly understanding what Bitcoin actually is, you know. Some people, you know, have heard a number of different terms being used, is it a hedge against inflation, is it a hedge against economic uncertainty, a hedge against government overreach? And I guess, is it store of value? I guess it's all of the above, potentially and the kind of main driving point of Bitcoin is, it's a hedge against FIAT currency devaluation. And when you understand that central banks are consistently devaluing their currency and debasing their currency, you understand Bitcoin's position in the world. And there is a really interesting chart of Bitcoin plotted against the world M2 growth rate. So the M2 growth rate of the Fed, the ECB, the PBOC, the Bank of Japan and the Bank of England. And essentially, what this indicates is the percentage of increase or decrease of the M2 money supply around the world, and what we can actually see here is all of the Bitcoin bear market lows, inside with the lows of the M2 growth rate of the central banks. 

Anthony Fernandez  16:58  

Now, why does the central bank print money, to stimulate the economy, to provide financial support, but essentially what that does is later on down the line, it creates inflation, and it devalues the local currency. You look what's happening in Argentina, in Turkey, in places kind of slightly outside the West, bit further away from home. But even if you look at Europe, the UK, in the US as well, FIAT currencies historically over time devalue based on new liquidity going into the market and printing money out of thin air. 

Anthony Fernandez  17:27  

Now Bitcoin actually acts as a hedge against a devaluing currency, so the bull market peaks of Bitcoin, also coincide when the central banks are looking to reduce liquidity, so that's strengthening the local currency. And vice versa, a bear market low on Bitcoin also coincides with the lows of the growth rate and when central banks are looking to increase liquidity into the system as well. So if you're sitting on a stockpile of cash in the bank, which becomes, you know, gradually worthless over time, Bitcoin acts as a hedge against that FIAT currency devaluation. And I, you know, I know the adoption rate is growing at the moment, I've been in the market for a number of years. I also think it's kind of crazy for a person not to have any exposure to this particular asset, especially if they own assets like Gold, which acts as a store of value as well, we're now starting to see some liquidity flow out of the Gold market and into the Bitcoin market. 

Ryan Miller  18:16  

Wow, so governments print money, inflation is the result and which reduces the purchasing power. So it takes more dollars to buy the same thing and you, what I think you're saying is, based on that activity which is economics one to one, right, inflation happens when governments print money. You could say, however, to hedge against that to protect your purchasing power, Bitcoin has quantifiable data that shows that it moves directly in line with that. And so the M2 money supply, you can look that up folks, if you don't know what that is, you can look up, what is used to calculate the M2 money supply, whatever that is, you'll find out that Bitcoin is a good protector against the damaging inflation to your purchasing power. Would you agree? 

Anthony Fernandez  18:58  

You summed it up very well, Ryan? So yes, exactly. Right, you know, Bitcoin protects your capital, rather than it being 100% allocated to cash, which traditionally devalues Bitcoin provides that hedge against the devaluation and potentially provide some upside in the market as well. 

Ryan Miller  19:12  

Ya brilliant, what other competitive advantage can you provide? So I know there's like, for example, there's a lot, there's a lot of people with a lot of opinions on a lot of things in the crypto space. How have you managed to deal with that and what can our friends around the world learn? 

Anthony Fernandez  19:26  

Yeah, definitely,  ya there's so many different analysts, depending on who you talk to, you know, I think when you're investing in the cryptocurrency market, I try to eliminate as much noise as possible and just go back to what the charts are telling me. You know, what the Bitcoin spiral chart telling me, you know, based on a Bitcoin spiral chart, I potentially know when I should be reducing my exposure to digital assets and when I should be increasing my exposure to digital assets. But if you looked at the news, you know, the news would be telling you to buy bitcoin during the peaks and sell Bitcoin during the lows. So eliminating a lot of the media, the noise from your investment philosophy and your investment strategy, and being consistent over a few years, is really a way to become successful. 

Anthony Fernandez  20:07  

So, you know, going back to the spiral chart, that's my number one chart, it's also a really interesting chart based on the US Dollar Index and this is kind of one of my go to positions as well. So what is the US Dollar Index, the US Dollar Index, a DXY is a chart of the US Dollar as an index as a standalone, okay. Now what we can do, we can actually plot all of the Bitcoin bear market lows alongside the DXY bull market peaks. And on the other hand, you can also plot the Bitcoin bull market peaks, which coincided the DXY, so a US dollar bear market low. Now what moves the US dollar up, so the US dollar is a global reserve currency at the moment, Germany, when the dollar is strengthening, it's a risk off market sentiment. So that's where investors are looking to take less risk, they're moving into the global reserve currency, when the US dollar is weakening, it indicates that investors are moving out of sorry, out of the US dollar and back into risk assets like digital assets, equities and commodities. 

Anthony Fernandez  21:01  

So the dollar index is for me is a volatility index and when we're looking at the year, the macro side of things, understanding what the central bank, the Federal Reserve is going to do in the future. So the last year, you know, there's been calling interest, they've decided to, you know, hold interest rates, there's a lot of forecast, now they're going to be cutting interest rates in 2024, and providing some support to the financial markets. So the US dollar has eased from his peaks, and risk assets, like the S&P 500, like Bitcoin and gold, are now trading at record highs. So it's kind of a forward looking indicator and when you use the DXY technically, and if you understand whether it's gonna be strengthening or weakening, based on the macro side of things, that can help you form a philosophy in the digital asset market, or in the equity market, as well. So this is kind of one of my go to charts, looking at the DXY and trying to understand this next move in the market.

Ryan Miller  21:51  

Brilliant. So that would be your third one. So second, was avoid the noise. So follow the trend lines, not the headlines and the third one is follow the DXY to BTC to get some pricing action and use the technicals, is that right? 

Anthony Fernandez  22:05  

Yeah, I kind of ran two into one there. So yeah, that would be my two points most certainly. 

Ryan Miller  22:11  

Brilliant, yeah, we're just overflowing with value, thank you, Anthony. So, as we round third base, we wrap things up, we take it home, is there anything else you'd like our fans to know anything at all? Maybe how to reach out, how to contact you, anything at all? 

Anthony Fernandez  22:24  

Yeah, we run a free weekly, monthly newsletter on LinkedIn, so please follow the ICONOMI page on LinkedIn, where we go through a lot of the technical events that are taking place in the market. The macro side of things as well, completely free, we're just trying to provide as much education and value around the digital asset market and how to build an investment portfolio in the space as well. 

Ryan Miller  22:43  

And that's ICONOMI,  I C O N, M Y or MI? 

Anthony Fernandez  22:47  

Yeah, I C O N O M I.

Ryan Miller  22:50  

There you go, there it is. So go to LinkedIn, you can follow that newsletter and really help to drill in. So just to summarize everything folks, Bitcoin, remember, one competitive advantage you can have, is bitcoin is best observed as a hedge against M2 supply. The second thing that Anthony mentioned was the trend is your friend, follow trend lines, not headlines, make sure that you follow the data, be very disciplined in your approach. And then finally, follow the DXY to BTC technical chart. You do these things and you too will be well on your way in your pursuit of Making Billions.

Ryan Miller  23:28  

Wow, what a show, I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, once you head over to YouTube and see extra takes while you get to know our guest even better. And make sure to come back for our next episode where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.