Boy!
Now in the street there is violence
And now not lots of work to be done
No place to hang a low washing
And then I can't name all on the sun
Oh no
We're gonna rock down to Electric Avenue
And then we'll take it higher
Oh we're gonna rock down to Electric Avenue
And then we'll take it higher
Woo!
Woo! Episode 45, True North. We are back. That was the best woo I could manage with these prices.
I thought, you know what, I had to practice my Ric Flair woo a little bit before the show.
That clip, or excuse me, the music was supposed to be a connection to the London Stock Exchange,
because I initially thought that Stream was going to be out of the London Stock Exchange.
And then I was like, ah, crap, it's Luxembourg.
But it still fits.
And, you know, 10 points for Gryffindor if anybody can figure out the connections.
But with that being said, we're going to have a great show for you tonight.
Jeff is here with no sleep.
We got Dan.
We got Mike Granisault.
And I'm going to kick this off with a little bit of a history lesson and something that I've been binging like history podcasts.
And so this guy named Professor Jang, and he went over all revolutions.
And I'm assuming that anybody that's here watching is here for the revolution, right?
We're thinking that Bitcoin is taking over the world.
And what he said was that every revolution has three principal characters in them.
They are the poet, the prophet, and the prince.
The prince is also kind of like the warrior general, but then you don't get the triple P alliteration.
So we're going to go with PPP here.
and I'm going to talk about the French Revolution as a pretty good example.
And in that scenario, the poet was Rousseau.
He wrote the social contract and popularized the idea of the will of the people.
And the prophet in this scenario was Robespierre.
He led the population through the next phase.
Unfortunately, this little particular part of the revolution was called the reign of terror
because of its liberal use of the guillotine.
and the prince of the French Revolution was Napoleon.
He basically channeled the revolution, declared himself the emperor,
created an empire, and dominated most of Europe.
Now, if Bitcoin is an economic revolution that's imposing the global free market on the world,
then the poet is clearly Satoshi.
I think that's just a pretty logical assumption.
The prophet, and this one is just my opinion,
You know, you could probably go with Saifedean or find another half a dozen OGs that you think is meaningful.
But for me, it's Jeff Booth, the author of Price of Tomorrow, the thought leader, and seems to be like clearly see the future as it will become.
And luckily, we've got proof of work and digital power now, so we don't really need heads to roll this time around.
And that leaves the prints.
and I've been thinking about this for a few weeks, but then during the earnings call when I heard
Saylor's response to Ben's question, and I quote, we want to eat the world, end quote.
That was confirmation for me that the prince of the revolution is Michael Saylor.
And right now we've got the number of economic nodes in the form of companies stacking Bitcoin
will only ever increase from this moment.
So with that being said,
despite my bullish long-term outlook,
we've got blood in the streets
and Bitcoin and strategy are back to like early 2024 levels,
sentiment circling the drain.
So what are your gentlemen's thoughts
on the current price action and or my delusions?
I like your delusions.
Price action is horrible, right?
I mean, the price of strategy is going through a rough patch.
So this has been pretty brutal.
But easy thing is to say, zoom out and you look at the broader picture here.
You had the opportunity to buy MSTR at these prices in March of 2024 when they had 200,000 Bitcoin on their balance sheet, maybe less, maybe like 160,000 Bitcoin on their balance sheet.
And if you like the company then, and I think you'd like the company even better now.
And I think somebody posted this.
It was either Mark Harvey or Lee.
It was a video from Warren Buffett mentioning, if you walk into the grocery store and your groceries were 50% off for the day, you'd be jumping around.
You'd be hooting and hollering.
And yet in the stock market, if a stock down 50%, everybody's running for the exits and
something like the stock must be telling me something.
That's what he said.
The stock must be telling me something.
And it's a marketplace, right?
And there are multiple factors at play in all different directions.
And really the thesis is unchanged.
So if you like the company when it was trading at $500, you should like the company when it's
trading at $193. It's on discount. Yeah, my thesis hasn't changed a bit. It's always been
from the very beginning, strategies disrupting, and it's the clear winner. And yeah, I think that
the prefs actually have them in a better position than the convertible bonds. So nothing about my
thesis has changed, and no part of my thesis is short-term price action. That's not part of it.
in four or five years, if we're still trading at these levels, then I will have to revise it.
But it's a long-term thing for me. The tough part is, you're talking
incredibly long conviction in an increasingly shorter attention span world. I can get anything
delivered to my house in less than an hour from Amazon. Attention spans are getting shorter and
shorter and shorter. Nobody's watching movies anymore because they're two hours long. You can
see it everywhere. And then you ask somebody to, hey, you should hold onto this for eight years
because it's super volatile. And if you hold onto it for a long time frame, you're going to be okay.
That's really hard for people to focus on one thing and just have a dead guy portfolio and
sit on their hands for eight years. I mean, bravo to all of the Bitcoiners that have been holding on
for four plus years, because that takes a ton of conviction in order to do that. Or it's a high
volatility asset. You've got to be able to withstand multiple 30% drawdowns, 80% drawdowns,
and ride it back up the other direction. That takes supreme conviction. Can you trade it?
Sure. Are you going to nail it? Probably not. 99% chance you're not going to nail.
like sell the top and buy the bottom you can shoulda coulda would your shoulda coulda woulda
your way out of the whole thing that like it's a very difficult to trade these high volatility
instruments without uh having you know incredibly complex ai algorithms competing against jane street
and hft and all these other um trading companies so yeah there's there's so many things going on
here, right? Just as you have reflexivity to the upside with all these passive flows on index funds
and ETFs and all of those things as well, QQQ, S&P 500, Russell, as the stock gets larger and
larger, you get a larger and larger allocation from these index ETFs. And as the stock turns
around and goes the other way, you get the inverse action. You're getting a smaller and smaller
allocation. So those index ETFs that are holding MSDR stock are selling into weakness. So you're
going to have reflexivity going both directions. And if it's on the back of the most volatile asset
on the planet with Bitcoin, you're going to get double volatility on both sides. So you've got
this amplified volatility with Bitcoin, but you know it's accumulating over time. You know it's
growing over time. And you can see that with how much Bitcoin they started with, how much Bitcoin
they've got today, how much Bitcoin they continue to accrete, the design of the leverage that
they're taking on, all of these other things.
So, I mean, there's so many things going on, but like, I, I, I like these prices here.
Like I, my, my conviction hasn't changed at all.
In fact, I think it's significantly like significantly stronger today than it was a year and a half
ago because I can see like the, the path forward. Like what are the products that they're going to
offer? It's going to be digital credit products in the future. A year ago, we didn't know that,
right? We saw the convertible debt. The convertible debt was appealing. We're like,
okay, people are going to want to buy these, but the problem is you can't be like, people can't
buy these. Retail can't buy the convertible debt. All right. It's OTC 144A. It trades between 30
dudes, uh, you know, sitting behind the scenes, trading it, trading back and forth to each other.
And now you've got these new instruments where you've got people that are long the credit quality of Bitcoin, not necessarily long the volatility.
And you've got a company like sitting on an enormous pile and high credit quality to go issue these things to the market.
Like, if anything, I'm significantly more bullish about the future with this structure than anything I knew previously.
So I haven't learned anything bearish about the company personally.
The only thing I learned in the last year is, you know, a little bit more bearish on my ability to trade it. But to be fair to the traders, to a certain extent, like Bitcoin is a forever hold because it's sovereign. And so kind of on a technicality, anything that has, you know, third party risk is technically a trade.
And like, I know there's people who want to forever hold certain stocks, but you still have to watch the management team, right?
So the management, you know, one management team rolls out and the new one rolls in.
If they change how they do things and you don't like it, you might have to revisit, you know, that forever hold status.
But if they continue to execute well, then yeah, it could be a forever hold.
But you still have to watch it, I think.
But you don't have to really watch Bitcoin.
You just know that it's going to be good to go.
Yeah.
Also, pause real quick.
This is True North, the investment grade Bitcoin podcast.
Everything we say here, none of this is financial advice.
It's for entertainment and educational purposes only.
Yeah, I forgot that part.
And if you're new here, we talk about Bitcoin securities.
We talk about digital credit.
We talk about everything under the sun related to the financialization and the future of Bitcoin
securities.
And everyone but you is an independent voice.
Right.
Yeah.
Yeah, exactly.
So I get to run my mouth and say a bunch of regular marol.
You just got to sit there and take it, right?
That's exactly right.
Well, I mean, Dan, Mike, what are you guys' opinions?
Obviously, I mean, this is tough price action.
You hate to see it, right?
Like this is, it's not going the right way.
Everybody loves green candles here.
And then on top of that, one other statistic is JP Morgan has increased margin requirements from 50% up to 95%.
On?
On MSTR.
Oh, shit.
Just in the last week.
So not only did they go from, hey, Bitcoin is good.
We think it's good collateral.
We're going to start lending against it.
To taking this perspective.
and now we're actually going to increase the margin requirements from 50 to 95 percent.
So they might have forced a bunch of people into margin calls.
Yeah, sounds like what it is. And I mean, that's a diabolical move, but I don't think it's a
reflection on Bitcoin. It's a reflection like the stock's gapping down 10 percent in the day
regularly. You're going to up the margin requirements. There's probably an algo that
just indicates to them whether or not the margin requirements have changed on the equity or they
of a risk management department.
And yeah.
So yeah, let me chime in on the margin thing.
And so I don't have an account at JP Morgan.
I'm not giving financial advice.
But when you go in and you look at your stocks,
I use Fidelity.
If you buy stock on margin,
the default setting sometimes will,
it depends upon how your account is set up.
If your account is set up for option trading,
depending upon what tier level you are.
What happens is when you go to buy a stock,
the default setting will trigger you buying the stock,
even if you have cash in your account on margin,
because then it allows you to clear out a trade faster,
even when you buy it on spot.
So what happens is you buy it,
it shows up that it's on margin, right?
And really you call them up and you find out,
no, it bought it for cash.
And so what you need to do is you need to go figure out
which brokerage house you're using. If you're not an option trader, even if you have no options,
you have to see if it automatically purchases your spot shares on a margin basis. And that's
important to understand. And so what I did was, again, this is not financial advice. When I was
trading, when I did the first change to option status, they automatically defaulted it to
everything was purchased on margin and i even if i had cash and so then what i did is i said
you need to give me a toggle so i could turn this off and so the default setting is to buy on margin
but then i turn that off and make sure i buy for cash so that's just a useful tip to make sure you
might unbeknownst buying something on margin even though you did not intend to do that so again i
don't yeah i don't have jp morgan but if if you just never had that enabled it should not be a
problem for you, but you should check. And just like you'll see a little circle and it says an
M in it, and that means margin. So look, this price action, this RSI on the daily level is
even lower than it was in April. So RSI is the relative strength indicator. And so if you go all
the way back to February 24th, the RSI dropped down to 28. Now, when you get under 30, that's
oversold, right? That means so many people have sold that the indicator is showing that.
That's on the daily chart. But in this particular run yesterday, sorry, on Monday,
we got down all the way on the RSI down to 20, down to 25. And that's a really, really low number
because you have to go back two years to when you see an RSI number get that low.
And so from that perspective, this sell-off is worse than what it was in February and April.
But I think, you know, I did a poll on tariffs and February, April.
That was like the big tariff scare.
Is Trump going to drag the economy through the mud for the next eight, 12 months?
Like we don't know.
Right.
And so so so where are we today?
It appears that, you know, I did a poll on the debasement trade.
Look, there's two big debasement trades going on right now.
One of them is in the U.S. dollar.
Do you believe we have a $2 trillion per year fiscal deficit?
Not going to get fixed.
We have $1 trillion in interest payments.
It's the number three line item in the budget.
So that means we spend a trillion dollars every year that just goes to paying off the
debt of $38 trillion.
The big, beautiful bill allows it to go to $41 trillion.
So that has not changed, right?
So now we have this liquidity held up.
What does that mean?
Well, there's two debasement trades.
One of them is a dollar and the other debasement trade is the white collar worker being being displaced by AI.
Now, if you're being displaced by AI, you know, it seems like you better get some of the artificial money to combat the artificial intelligence.
That's just my view of this.
So, you know, the price action, horrible.
I just want to be straight up.
Price action is horrible on MSDR.
and I think that from that perspective,
you know, to quote Ben Workman,
I didn't come up with this idea.
He said, can't rent your conviction.
You have to have your own conviction,
do your own research.
Why are you in this?
And I've been in this now.
It'll be three years in January.
I don't consider this a trade.
I consider investment.
When I buy options, that's a trade
because there's always a term on those.
But with that said,
I just want to acknowledge
that everybody that's on this call right now
is that the price action in MSTR common shares,
is terrible. Absolutely terrible. Do I think it's going to get better? Absolutely. Otherwise,
I wouldn't be on this call. Yeah. So I was watching Lynn Alden and Luke Groman on a couple
of different podcasts, and they seem to be hitting on some liquidity issues, like globally.
And I don't know. You guys think there's anything to that? Or is the bullpen
market just over and the bears coming bull after yeah it's a it's a tough it's a tough question you
think about like just general liquidity and kind of how the economy works like where where does
liquidity get zapped like if there's a liquidity crunch probably the most liquid instruments on the
planet right like if you need liquidity like you go to liquidity which is like all of the big mag
seven stocks. It's Bitcoin, which is kind of this, I see it as like the blood of the ecosystem,
right? Like the liquidity, the liquid of the entire like economic ecosystem. And then you've
got MSTR, which is a function of that. So that's how I see it. And I don't have as much concrete
data as like Luke or Lynn who are following this very closely, but like thinking broadly about
leverage in the ecosystem as well, like the Bitcoin ecosystem. Why did last bear markets,
why did bear markets of the past happen? They happened because of significant leverage within
the system, right? You've got FTX that had loans outstanding, significantly greater than the amount
of assets that they had. You had these companies that were like, credit was building
in all of these different systems on not enough assets.
And you look at Bitcoin in this ecosystem right now,
and I don't have a ton of the on-chain analytics
and the data sitting behind like Binance and Coinbase,
but from everything that I've seen
is like leverage from the ecosystem is pretty much wiped.
And you look at the companies that are trading on leverage,
you look at strategy,
and maybe it'd be helpful to go to the leverage table
that we look at every week.
here i'll share my screen so wait a second jeff i want to back up for a second so so you were just
in prague correct yeah i was in prague amsterdam and london okay when you were in europe was it
beautiful oh it was absolutely gorgeous prague is one of the most beautiful cities i've ever seen
right and the people that were happy right people they're well-dressed happy right so same in
amsterdam right it felt fake like it felt like a fake place right so i i was there previously for
um another bitcoin event previously and i was there whatever i don't remember i was there dan
when i was there with dan and i was there whatever three four months ago in the summertime absolutely
beautiful people are beautiful everything is great so while i'm there uh i was there tad was there
tad smith he's been on been on with us before he was there and he said he said sometimes he calls
me grain. Sometimes he calls me Mike. He's grain. You don't get it. I go, what don't I get? Because
I said, oh my God, the people are beautiful. The food is great. Right. And you're going to see why
this is relevant in a second. He goes in the European countries, if they were states in the
US based upon per capita GDP, they would all rate on the 45th state and below. And I'm like, what?
So I looked that all up and I did a whole podcast on this. So the impression is when you go to
Europe that everything is awesome there, right? But then the takeaway is when you do research,
you find the per capita GDP compared to US states is some of them are less than Mississippi,
which is the worst state in the US. Sorry for the people that are Mississippi that I'm picking on
them. So what does this have to do with anything? The US has the greatest economy in the world,
right? We have the mag seven stocks, we have Nvidia, right? And so we have the best capital
markets, right? And so that takeaway is I look at it that we're in the best of the worst. And when
I just said, nothing changes the numbers I just said. So if we look at this, how's this related
to MSTR? They've got almost 650,000 Bitcoins, right? If we think that Bitcoin is the best
collateral in the world, my view is for me, I bet on the company that has the most amount of Bitcoin.
They have a monopoly on the digital capital monopoly.
I like how Saylor framed it.
He had this recent podcast with Cardone and like Cardone's horrible interviewer.
So it's like you're going to have to fast forward it if you want to watch it.
But, you know, he talks multiple times about Bitcoin being the monopoly.
And it is right.
The crypto economy is three trillion dollars large.
Bitcoin is $2 trillion, part of that $3 trillion.
The next closest is Ethereum.
It's like $300 billion.
So you've got a monopoly in digital capital.
It's trading at one times revenue.
And it's this commodity.
And now you've got a company that holds more than 12x of that commodity than any other company on the planet.
Any other publicly traded company on the planet, sorry.
There are other large private companies, I guess.
And they're offering, you know, digital credit instruments to the market.
And they're the only company really that can do that at like really significant scale at the moment.
Okay.
What other company has a balance sheet that's growing faster than that?
There isn't one.
There isn't a company on the planet that has a net income or a balance sheet that is growing faster than strategy has grown in the last five years.
And if you are long Bitcoin and you think Bitcoin is going to $200,000, $500,000, a million dollars, there is no other company on the planet that is going to have a balance sheet that is growing faster than strategies.
And that's coming from somebody that works at a company doing the same thing.
We have acknowledged that they are the absolute whale and it's the best idea.
That's why we're doing it as well.
and yeah like i'm i'm i'm long i'm on the entire ecosystem here and things things look good and
i guess from from a leverage perspective like you you look around in the industry
and you don't see there's not egregious leverage everywhere like that the capital structure that
strategy has put in place is set to withstand significant drawdown in the price of bitcoin
like it could go down to ten thousand dollars and even stay there for a year they're going to be
fine everybody's going to be shaken out of positions we're going to have to rethink what
bitcoin looks like in the future but uh that's like the balance sheet is built to withstand
those types of things and now that they've shifted over to this uh perpetual preferred equity that
like there is no there is no margin call there is no liquidation and all the capital that they've
is permanent capital.
And then I'll get back.
There's no maturity.
Right.
So let me tie this back to what I was saying before,
just about why I was talking about Europe.
If in Europe,
if because Stream was launched there,
it's in Euro denominated,
it's denominated in Euros.
That is a gift to the people of Europe.
Now, obviously, if you're in the European Union,
it's denominated your local currency
and it gives you whatever the current rate is on it
10%. So I think that that is awesome for the people there. Like you said, they have a monopoly
on the amount of Bitcoin they have in these digital credit products. So what I think what's
going on is that once they amass that massive headstart, and we've seen this, I've talked about
this before. Microsoft thought it was a great idea to come out with the Zune player the day after
Apple announced they'd shipped 100 million iPods.
Like, what?
And it was the same price.
It's like, why would I leave something
that's the same price that's four years late?
And that's the same thing that's happening here
with strategy.
They have a five-year head start.
They have 20 times, well, compared to Mara,
they've got whatever, 12 or 12 and a half,
12X the holdings of Mara's Bitcoin.
And that's the position that they're in.
And they have Michael Sayle with four and a half million followers that's talking about this.
So I think that that's where we are.
And so the other thing that we say is, you know, the narrative defined the price last year.
What was the narrative last year?
Well, we don't know who's going to be president.
Things could potentially change.
Things are looking up.
The yen carry trade blew up in August of last.
Everybody remember that?
That was a disaster, right?
Everybody became an expert in the yen carry trade.
Guess what?
The yen carry trade just blew up two days ago again, right?
So now we're back to where we are.
It's amazing how it kind of repeated almost, whatever, 14 months or 15 months apart.
And we're back to the same place again.
And I think, and we have all the goodness that happened.
Do I have to repeat them?
But maybe I should, right?
So what happened?
We repealed SAB121, or we got SAB21, Operation Chokepoint 2.0, FASB Fair Value Accounting
kicked in this year.
so you can do mark to market on bitcoin obviously that works both ways um you got ross freed you got
the genius act the clarity act will probably happen sometimes next year right so you get all
this goodness all this good news but as of right now the price is terrible so i i think that
right it's like it's narrative is following price now or it's like it's it's flipped and
And like, especially for something about earnings, like if you have a commodity, then yeah.
Last year.
Yeah.
So last year it was all price.
Price ran up and the narrative was like, oh, who's going to win?
Are they going to repeal all this nasty stuff I just talked about and do that?
So the price ran ahead of it.
This time the narrative is miserable.
Let's just acknowledge that.
And the price is, you know, and then the price follows suit.
So I just want to be clear for the people that are listening that we are witnessing this ourselves.
And I still have a really large position in MSTR I do also own a large position in stretch So I do think that they will get that peg back up
That's the easiest one for people to see.
They have to ARB that back.
There's no way that they can leave that low, leave it below the peg price.
They have to bring that back up.
That's the whole idea for that.
And so it's a very new product.
What is it, 115 days old?
yeah it's like 100 step in the market will step in once the dividends keep getting paid like right
now since msdr is cratering to one mnav the the market's super worried like are the dividends
going to get paid below one mnav and once the the market sees that the dividends get paid
even if msdr trades in a discount uh i think those products will revert back up yeah i was thinking
about that today as well like i think there might be some tourists who were you know it was it was
below par. So it's like, okay, I can jump in and sell it when it gets to par, but I might as well
hold on for that div too. You know what I mean? And then with everything else dropping, you need
some dry powder if you want to get some cheap Bitcoin or some cheap strategy or whatever.
So it's like, okay, I've been holding some stuff in stretch. I got my pump from 95 to a hundred.
I got my dividend. So let me go, you know, redeploy some capital. So I think you're right.
So the liquidity is going to build over a few months.
People are going to see that the dividends continue to get paid and the tourists will
probably move on.
And then it's just going to be hodlers.
I think there's this big drops, I think will will fizzle out eventually.
So I personally think that the liquidity in this STRC instrument is going to build tremendously.
It's going to take a ton of time, right?
Like nobody.
There's so many traders out there that don't even know this product even exists.
right? Like if you knew, if you're a trader and you're looking to get, you know,
four or 5% a month, you buy it on the day after the ex-div date, after people sell it,
right? Because they know that they're going to get their dividend. And then you know that the
company is going to be working to get it back up to a hundred. You're going to have ARBs that are
going to come in and constantly start to trade this. And it's going to be algorithmic and it's
just going to be built into the infrastructure. And because you know that there's going to be
pressure being to push it back up to a hundred. And so the, the pool of liquidity just needs to
get larger, right? It's trading a hundred million dollars a day, sometimes more, but the common
equity is trading what, like $4 billion a day, like more than that, like $15 billion a day. I
don't know off the top of my head, but it's like billions and billions and billions of dollars a
it's like super liquid. Most fixed income instruments are not very liquid. This is a,
it's like a, you're taking this fixed income instrument from a market that's not traditionally
liquid and you're putting in an equity wrapper. Now it's tradable as an equity and people have
to wrap their head around it. Okay. It's supposed to be stable, but it's paying me 12%. So how much
risk am I taking on? And like, they're using the equity to pay the dividends. Like it's going to
take time for people to understand how this thing works. And that's where the alpha is,
right? If you're willing to hold this thing for, you know, two months, three months, there's a,
there's a really high likelihood it's going to get back to a hundred. So yeah, I think this
checking account narrative is going to develop and evolve over time. Like feeling comfortable
having the liquidity to be able to go in and out super quickly and just maintain a peg of a hundred.
I think is going to be, it's going to take some time, but while you wait for that to happen,
if you've been sitting here watching what's going on, you get to collect, what is it?
10 and a half, 10 and a half percent interest plus any appreciation on the principal.
If you're buying it below a hundred, like that's a good deal.
That's a really good deal.
Like where else are you going to go?
So I just threw a link in the chat and it's for hodlbase.io.
Excuse me, I forgot the guy that put this together.
But we don't get paid for this.
And if you go there, it's over $100 million is the average volume on stretch.
You can click into the dashboard.
And then it's over $7 billion in volume.
So what I find that's awesome about this, this is the good and bad that goes both ways.
you have these because we have a 24 hour price on Bitcoin and we know the amount of outs and
all the metrics for these companies. Strategy has their own dashboard and it's updated daily.
But if you were to ask me exactly how many NVIDIA GPUs were shipped on a daily basis or hourly
basis, I can't tell you that. If you want to figure out how many Tesla cars are shipped on
an hourly basis. Can't tell you that. Somebody may be flying a drone over the factory to count
all the cars that come out. Maybe that does exist. But this is both the good and the bad.
And you were talking about this at the very beginning of the call, Jeff, saying that
we live in a very short timeframe, low patient society. And we have these dashboards. And these
guys make these awesome websites, these awesome dashboards that show us basically near real-time
information. Why is that great? You have near real-time information. Why is that bad? You have
near real-time information. I mean, it kind of works. When the price is up, you want real-time
information. When the price is going down, you're like, can you put a two-day lag into it?
So I think this is the awesome part of where we are today. And this information is verifiable.
It's not like it's made up. And I think that this is great. So when we talk about the ARB stepping in,
that we can see there's enough volume to do this, right?
And why do the ARB traders do this?
Because they're trading it and they make money on it.
That's why they do it.
They know that he has a mandate to get the stock back,
sorry, to get stretched back up to $100.
If he doesn't do it,
then he's gonna have to raise the interest rate on it,
you know, to get it.
It's at 10.5.
He'll have to bring it to 10.75, right?
It's the last week.
It's the VWAP of the last week of the month, correct?
Right?
Yeah.
So.
So somebody asked if, where is it?
So somebody asked, can institutional capital just sit on it to get them to increase the
dividend?
Theoretically, yes.
But the incentive, there's like very little incentive to do that.
You'd be like shorting stretch, which you know everybody is going to push to 100.
As you short it, the effective yield goes up and you're shorting it to get a quarter basis point more a month.
That would be a very – it's not a great trade.
There are so many other ways to make money.
There's something I realize that seems obvious in hindsight.
But when you short something like stretch, you have to pay – you owe the dividend.
because you're borrowing the shares and you're selling them.
And so you owe those dividends to the person from whom you borrow the shares.
Right.
There's two problems.
You owe those dividends.
So if you borrow those shares on the ex-dividend date, then you have to pay it.
The other thing, people are like, I just want to short a stock.
If you short any stock, you have to pay an annual percentage rate
that is decided by whichever brokerage house you're in
in order to borrow those shares to short it. It's not free. And so you have to figure out the
percentage that you're paying to borrow the shares. Is it going to go down enough in order
to justify that trade? Just like you buy options, you have to pay the premium on it, right? Or,
you know, for it to make sense, if you think it's going to go up, you have to pay the premium to see
if that's going to happen. It's not like these things are free and people think, oh, they can,
Could an institution short stretch?
Yes.
Does it make financial sense?
Probably not.
Yeah, it doesn't make sense.
Now, do I think that they want to trade it and capture the spread?
That is a juicy thing to do.
That's the part where they'll trade it back and forth,
algorithmic trading to make the spread as it goes from whatever price it was today,
94 as it gets pushed back up to $100.
For them, that's a very tight trading range.
it's a perpetual pref that functions like a bond, functions like, not exact.
Yeah.
The incentives are aligned really well.
Like the engineering of these products is,
it aligns incentives to be along the credit quality of the instrument,
as opposed to the trading that occurred with the convertible bonds.
It's like, it's the alignment of incentives.
Right. So somebody just asked the question about Misty. So I was thinking about buying Misty last
year and I got a phone call from somebody and with the, basically the person, I won't leave
the person's name out. I got a phone call. The person just said, grain, just read the prospectus.
And I was like, oh, so I read the prospectus. Now the first 35, 40 pages of the prospectus
was just boilerplate. I get to like page 40 something. And I was like, oh, this looks terrible.
I and and and I did not plug it into AI I was doing the old-fashioned reading it
and then when I read through how it was set up I'm like this is not good
and so from my perspective I had bought shares and then I sold it basically like a day later
after I should have done my due diligence in advance but I did it and so with that once you
read that you know and so when I heard I knew that Misty was return of capital
and the yield, I want to talk about this for a second.
The SEC allows the yield to include return of capital in the yield
and the trading that it does in order to generate that income.
According to the SEC, both of those could be listed as yield.
I don't know what the current yield is in YieldMax.
I can look it up right now, but it doesn't matter.
Back then, they were saying it was 89% a year.
But 80% of it was your own money coming back.
And once I read this all, I was like, oh, I don't like this at all.
So then when I heard that we thought that the prefs were going to be returned on yield, but we did not know in October, I wrote a post on that.
And I was like, oh, this sounds like Misty all over again.
And so I wrote a post on it.
And then some people commented a few weeks later when we found out it was return of capital.
And when that happened, I was like, initially when I saw this, I wasn't happy about it.
But then I thought about Stretch and Stretch is designed to maintain a peg, which Misty doesn't.
And that was the question that popped up here.
So Misty, M-S-T-Y, is not pegged to anything.
And we've seen this price erosion happen.
It's basically dropped to one-fourth, I believe, of what it used to be.
and it's completely different than stretch but stretch is only talking about a 10 and a half
percent return right that's the rate that we see they're not offering an 89 return and that's the
big difference between stretch and and misty so those were two different things and i think that
you know yield max you know those products were designed i guess for you to be in it for
maybe a month or two, but it kind of defeats the purpose.
So Misty...
I think for like a year. Yeah. If you just want to hold something and you know it's...
Yeah. Misty was actually, there's been several credible studies because the battle cry for
the Misty Bulls is that it's for income, right? But there have been several credible studies
that show that even for income, just hodling strategy shares outperforms Misty.
Um, British actually tried to disprove that theory and he misread his own spreadsheet. So he actually proved that, that case as well, that just, uh, you know, holding strategy shares. Yeah. He, uh, yeah. Anyway, I did a whole video on that, but yeah. So he, um, yeah, just holding strategy and peeling off shares over a long period of time actually outperformed Misty.
So, yeah.
Yeah.
Let me chime in real fast on the Misty piece.
I just went to the website to look at it.
So if you go to the Misty website, look, they designed the product.
And this is right on their website.
I'm not making this up.
The distribution rate is 92.55%.
The 30-day SEC yield, you got to love how they call it SEC yield.
And on distribution rate, there's an asterisk.
And it says right here, the first asterisk on the 92.55%.
The most recent distribution on November 19th contains 24.76% return of capital and 75.24% of income.
Right?
And then it talks about the 30-day SEC yield and then the return of capital.
Now, the problem is, is that the price has dropped so much that it does not offset the loss in your principal by giving you these yields.
That's in my view.
If people love this, then, you know, whatever, do your own research and buy it.
For me, I don't think the math works.
The AUM has fallen, I think, at its peak.
It was somewhere around like five and a half, maybe six billion of AUM.
and now it's down at like two and a quarter,
which I think is like bullish
for when this does turn back around the other way,
that you have much less people
that are selling covered calls,
chopping off the upside systemically with it,
which is interesting.
Should we talk four-year cycles?
Somebody brought that up.
Did you guys talk about this last week?
Yeah, I focused on it mostly with like macro overlay
and then we talked perhaps too,
that so funny i mean just in europe a lot of people were just bringing up four-year cycle
they're like up four-year four-year cycle pack it up i'm selling december like if uh and it's it's
just so crazy or it's just like they're thinking about just a number of days like it's just a
number of days it's just i'm gonna sell every four years and i'm not like conceptualizing or
contextualizing anything about like the architecture of the market or, or the, like the infrastructure
or the regulatory environment or, or any macro or anything like that. It's just, it was crazy.
Like probably 50% of the people I talked to were like four, like four year cycle people. And, uh,
yeah, I guess that's a market, right? If 50% of the people think it's one way and 50% of people
think it's the other way where we're like right it's really attracted to the four-year cycle
thing um i think because i like patterns uh like actually i'm old enough to have played video games
in an arcade where i literally had to put quarters into them and some of my favorite games were like
galaga um pac-man stuff like that and you could actually you could just get into this rhythm
where it was like you knew you were gonna have to you know you know left a little bit right you
know, just jogging back and forth. And so when I saw plan B with the four-year, you know, stock to
flow model, and then I was kind of attracted to the power law a little bit. I just wanted
predictability. Like I wanted to be able to make this make sense. And I couldn't really,
I couldn't really stay on, on task because it was like, well, nothing can be guaranteed.
But then I thought, well, maybe if this is just in the protocol and the halvings are affecting
this, like maybe this is for real, but it just, it just can't be as predictable as myself. And I
think a bunch of other people want it to be. So yeah, I think there's gotta be a lot of people
getting okie doke thinking, yeah, just sell by the end of the year and wait a year and a half,
catch the bottom and jump back in. I think there's, there's gotta be some surprises in store.
well the typical four-year the typical business cycle is four years like which kind of makes sense
you think about the political regimes they're generally four years then you get turnover and
all these things but it the data is pointing to an extended business cycle like maybe a five or
six year business cycle so we might see uh particularly with tariffs and like how the
economy shifted and like how it's designed and structured the red sweep etc and so we might see
this extended cycle where you know the net maybe 26 is is bold like the entire market like the
entire year who who knows but again i come back to like leverage in the system and thinking about
there's like what would be the huge catalyst for a really dramatic bear market when
like everything everything is a tailwind from here like from here really
yes i um i do have one weird conspiracy theory um so i was at the bitcoin veteran summit last week
and I was pretty stoked because there was a fifth generation warfare segment and there was like some
retired intel guys and some special forces guys and fifth generation warfare has evolved to the
point where every single person on the planet is at war 24-7. We are all under attack. It's
everything from the sentiment on social media to, you know, every other thing that can kind of make
you pliable and depressed. And you just have to kind of like be on guard for that. And where that
kind of led me though, is that if we're all under attack all the time, because the fiat system is
not trying to let Bitcoin win, then Bitcoin also must be under attack. And it made me think about,
is Bitcoin's price suffering from some kind of attack that the fiat system is trying to
not go down without a fight? And of course, I'm a little bit biased on this particular front,
because I've been talking about Bitcoin core and knots for quite a while. But if I have to imagine
what a credible attack on Bitcoin would look like,
I would try to infiltrate the people
who are developing the code.
And back in, was it 2017?
We were supposed to get 100K and we only made it to 67.
That was right around the time that SegWit,
we thought we won the block size wars.
But in reality, I'm not really sure that that's the case.
And I think maybe that the network has kind of
somewhat detected this attack that's been kind of being implemented over many years.
The taproot upgrade made it even worse.
And Luke Dasher actually identified that inscriptions hack.
but they kind of 1984 Newspeak
redefined the terms to make it
you know, to make it not a bug
this is a feature not a bug kind of thing
and so this seems like it's culminating with the V30 drama
that we've had recently
and so I'm wondering if that's maybe why we didn't get 100k two cycles ago
and why we're not getting 444 a million this cycle.
And the silver lining to that is that we've got a proposal.
It was originally called BIP444.
I think the official term for it now is the reduced data temporary soft fork.
And if this goes through, I think this will be a self-healing event for Bitcoin.
and we might get that fix by like February.
So maybe the business cycle turns around in 2026.
All the people who are planning to sell
for the four-year cycle are gone.
And if the network gets this fix in place,
every single time we've overcome a black swan event,
we've always pumped, right?
Bitcoin comes back better, faster, stronger.
and I'm just hopeful that
that this
spam drama gets resolved
and Bitcoin
demonstrates its resilience
and I think it is, I think we're
demonstrating that we are anti-fragile
and this
reaction
has caused a lot of
passive Bitcoiners
to run nodes, start mining
and really kind of pay attention
because I used to think all I had to do was stack sats
but I think there's a little bit more
that we're going to have to do
I don't think it's as big of a conspiracy theory
as like
flat earth or
lizard people controlling the world
from an underground
under Antarctic or anything
but what do you guys
think about my other delusions?
I think it's
interesting to hear your perspective on
the state of the network because that's something we
definitely don't talk about is the infrastructure
and the code base, the developers,
and everything that has to do with Bitcoin.
So I appreciate that perspective.
And it seems like it makes sense.
I mean, pressure on the network from external forces
would be detrimental to price and sentiment
for all the above reasons.
I also think there's something to that too,
is this idea that if everyone's selling
in a four-year cycle,
it is self-perpetuating for a little bit.
If everyone's selling, that is sell pressure.
You can say, everyone's perished.
It's a Druckenmiller quote.
It's like, everyone wants to be a contrarian investor, but the crowd makes money 80% of the time.
They just lose it all the other 20%.
So he's like, it actually pays to go with the crowd 80% of the time.
You have to be very careful during situations in which there's something bad, much like the AI trade, the NVIDIA trade, even Bitcoin, right?
Like the narrative, like all these are pretty structural kind of good, long asset trades.
You want to be with the crowd there.
But then there are times when you don't want to be too euphoric or on the wrong side of it.
So, yeah.
So I want to be more precise here on the cycles.
The four-year cycles for Bitcoin seem to coincide with U.S. presidential elections.
So you had the 2012 halving, 2016, 2020, 2024 halvings.
And by a stroke of luck, it just corresponded with U.S. presidential elections.
And then the going thought process was in 2017.
And I didn't realize at the time when I got into 2017 that 18 months after the halving,
Bitcoin tends to hit its all-time high and then you go into a crypto winter.
Now, in the previous cycles, it was kind of weird because you had Mt. Gox in 2014 and
you had a big run-up in 2012.
And then that was a major problem for what happened to Mt. Gox in Japan.
So I think that each cycle is different.
I'm not saying there's a four-year cycle. What I think is different now that I would say,
why I think this time is different, and whenever you say that, somebody's like, oh, no, it's not.
Now, are there self-fulfilling prophecies? Sure. But back in 2020, if you look back to the olden
days, 2020, right now, the total federal deficit is $38 trillion with approval to go to $41 trillion.
2020, it was $23.5 trillion. We currently have a trillion dollars in interest payments each year.
2020, it was $345 billion. So that's almost tripled. If you're just paying the interest
on the $38 trillion in debt, it never gets any lower. That's not changing. And then debt to GDP
was 102%, and currently it's 125%. None of that is going to get fixed. And the tariffs,
If you have $200 billion coming in tariffs and you're going to give back $2,000 to whatever, 100 million people, then that ended up wiping out all the money that came in from the tariffs.
So why do I think that this cycle is different?
It's because structurally and macroeconomically, the amount of debt is different in the U.S.
You cannot refute those numbers.
And so 2017, we weren't talking about these numbers being that high.
So what I think is going on is that we also, in January, it's going to be the two-year anniversary of the Spot Bitcoin ETFs.
And they have, you guys could all look it up.
There's 2.5 million Bitcoins inside the Spot Bitcoin ETFs and the Bitcoin treasury companies, right?
That's a million more than that are on the exchanges.
So I just think that we have, do we have some whales selling because the price is close
to a hundred grand?
Probably.
Do we have in-kind that's happening that you could not do?
The in-kind transfers into spot Bitcoin ETFs was not possible until like maybe like three
months ago.
And so now they could do this in-kind transfer for their Bitcoin into a spot Bitcoin ETF.
Why would they do that?
Because then they could borrow against it.
it's easier to borrow. Why is it easier to borrow against a spot Bitcoin ETF? And the reason why is
because in November of last year, there became an option market on iBit that launched sometime
around the third week in November. That did not exist, right? So what do they do? They do a put
call collar on it and they allow you to borrow against it, right? The people that are listening
probably unaware that that's possible to happen. But if you have large sums of money, you could do
that with a brokerage to put that in place. That did not exist in the previous cycles.
The other thing, I want to give some hopium to people, what's going on here, right? You had 2021
Bitcoin peaks, right? It happens right around Thanksgiving. Then what proceeds to happen,
why I think in that cycle, we didn't hit $100,000. People are buying bored ape NFTs.
That money bleeds out of buying Bitcoin and there was no spot Bitcoin ETF.
MSTR was only basically into this for a year, right?
Think about it.
People are buying board ape NFTs for this huge amounts of money.
The Beeple NFT that came out, all these large ETH purchases.
And people are like, oh my God, ETH ran up higher as a percentage in that cycle.
So that bled off the buying pressure on Bitcoin.
Then what happened after it?
You have two things that happened.
FTX blows up with SBF, Sam Bankman-Fried, right?
And you have the Terra Luna collapse combined with 3AC, right?
That hypothecated all the Bitcoins for BlockFi, Celsius, all the lending.
And then basically the Winklevoss twins got duped with lending the 3AC.
Kyle Davies and his other buddy disappears.
And we have that whole mess that happens.
What's different now?
You have spot Bitcoin ETFs, like I just said.
all the goodness that I said before.
And so I think this time is different.
And Bitcoin's a $2 trillion asset class.
So do I think now it kind of,
sometimes it trades like a tech stock?
Yeah.
Yeah, just what you mentioned where people are,
you know, we're pouring money into NFTs.
People are making that same argument now
and blaming treasury companies and saying,
oh, that was money that should have went straight to Bitcoin.
And, you know,
they're tap dancing and like,
Sure.
Is that true that that's what happened?
Yes.
Instead of buying Bitcoin they put into Bitcoin treasury companies Do I think that you had more transparency to understand what going on in a Bitcoin treasury company Yes Do I think you know look I lost a bunch of money on
Metaplan. I'm the first, I did my tax loss harvesting two months ago on that trade. I don't
want to say how much I lost on it, but you know, you have to do your own research, make your
decision, live by those decisions. And then you decide what you want to do with it. Do you want
to hold it and wait till it comes up? And I was like, no, I'd rather deploy the capital that I
have left from that, what I thought was a great investment and put it into something else, which
I did. And so you have to make those decisions in life, right? Yeah, I think there's a clear
distinction. Some people just group all the treasury companies in as shit coins, but I think
clearly there are red flags for shit coins. Like, you know, if it's not proof of work,
if it's centralized if they had a pre-mine um i think there's one more um you know you're dealing
with a scam altcoin but with treasury companies i mean we've got freaking sec filings for god's sake
you know centralized yes yes there are a huge pain yeah there's not going to be any filings
with these altcoins right those are just rug pull pump and dump and if if you if you think
that the future doesn't have Bitcoin treasury companies in it, then you don't think companies
exist in the future. Like clearly companies will exist and every single person in every single
company will own Bitcoin. So it, I don't think it does any good to complain now that people bought
Bitcoin treasury companies and then those companies bought Bitcoin. Like that's just
living in the future. That's just what everyone's going to be doing 50 years from now.
Yeah. And by the way, look, gold did really well this year. Okay, great. I am unaware,
right, of any companies that have ever said or have a dashboard to say,
oh, look at how much gold we bought on our balance sheet. Right?
I'm a gold treasury company.
Right. Besides maybe a gold miner, I am not aware. And I don't, talking about this,
I don't know if there's a gold bug group that's like, oh, we've got a CEO with four and a half
million followers that thinks that buying gold on the balance sheet is great what do you have here
jeff yeah i i think this is a good time to whip this out we're talking about companies holding
holding bitcoin um so you mind bringing us back up uh on just changing the view so we're all here
um yep i gotcha but uh right so sailor had this quote um sailor had this quote this week
and it was on Fox Business.
He said, as long as Bitcoin keeps going up
one and a quarter percent a year,
the company can pay the dividend forever.
And I loved it.
I was like, oh my God, I want to do the math.
So I did the math.
And this is what the math looks like
over here on the left-hand side.
And this is just really rough or like basic.
I have no idea what Saylor is looking at
and exactly how he's calculating it.
But, um, and I figured we could go through some spreadsheet stuff because you could think
about how long this company is going to be around.
Even if you think the Bitcoin cag is 1.27%.
I'm excited for this because that just doesn't make any sense to me right from the beginning.
I'm like, wait, how is that possible?
Yeah.
Show us this math.
I got to see this.
Wait, but hold on a second, second here, Jeff, what you did on this chart on row 18,
you've got a line and then, and then it jumps to row 104.
And those are years.
Those are years.
Yeah.
Right. Yeah. So I've never seen this chart before, but what you're showing here is that the Bitcoin declines at what? You said one and a quarter percent in the formula?
uh 27 oh yeah it was up by 1.27 right and then he would sell there he would sell that 1.27 to pay it
and you're showing there that he still has 177 000 bit row 113 he still has 177 000 bitcoins
or right there yeah that's bitcoin held and then the net bitcoins your last column row i
And so, folks, look, if somebody creates an Excel spreadsheet and you've never seen it before, but you can then speak to what it says.
And Jeff, if I got it wrong, chime in.
You nailed it.
You're showing the loss between column D and I is the 1.27 percent.
Correct?
Not quite.
And I'll walk through it.
So you've got Bitcoin held at the beginning of the period, right?
So you've got almost 650,000 Bitcoin.
Bitcoin price at 92,500.
$6,500. That's about where we're at right now. So $60 billion worth of assets. And then I just
assumed the $750 million dividend payment just comes off the top. So that's just $750 million
just paid out once annually to make the math simple and just make it so I didn't have 10,000 rows.
And so the net assets is just, okay, what if I sold that amount of Bitcoin to pay the dividends?
And here's how much net BTC and fiat dollars you have afterwards. Let's call them H.
And then what is that in the value of Bitcoin column I?
That's just taking the assets divided by the Bitcoin price in column E.
So you get to 641,000 Bitcoin.
And so that number starts over at the next row.
So you start with 641,762 and you go through the same math.
But in each year, so starting in 2025, next year, 2026, the price of Bitcoin goes up 1.27%.
That's what I've got outlined here.
so next year 2026 the price of bitcoin goes to 93,675 27 94,864 and what you'll see is if you
run the math here and i'm just going to scroll down so actually hold on let's let's fix the
year column here so you can see uh view freeze panes cool okay so in and you can look at this
net BTC column to see if you run out of Bitcoin. So you can see you keep going down here, net BTC
column. You're never running out of Bitcoin. You're going down. And eventually the price of
Bitcoin gets so high that your dividend payment trends to zero. And that's, what are we, 950
years in the year 2,973? And you just gave up? I stopped because I guess I could just
just drag this down further if i wanted to but um what and i think the most fascinating thing is
even if you take maybe i'll just drop it to one and 1.25 what sailor said when he get down there
i think with the 1.25 i've got it running out in the year 2390 but that's probably just
we're talking uh very small very small delta there um but the really interesting
Payments get paid.
The dividends get paid.
Dividends get paid even if Bitcoin doesn't really compound.
That's effectively the over-collateralization, which is not present in any other financial institution.
During the 2008 financial crisis, Lehman Brothers had $280 billion worth of outstanding liabilities and $260 billion worth of outstanding liabilities and $280 billion worth of assets.
And so they had four.
So that's $20 billion worth of shareholder equity.
When those assets were repriced down just 4%, all of the assets technically owned by the shareholders and the debt holders were completely wiped out.
So in that scenario, the preferred stocks went to zero, both the cumulative and non-cumulative preferred stocks went to zero.
In this case, that's not the case for the shareholder equity and the debt liabilities, especially the prefs and the converts to have no claim over the Bitcoin.
Bitcoin needs to fall by 5x or roughly down to like 15k and stay there.
And then, yeah, and stay there. It's not a it's not an actual professional liability.
And then they'd have to face bankruptcy. So a bankruptcy proceeding.
So the 2008 financial crisis is much, much, much different for those cumulative preferred stocks.
And I think that's a lot of the fear in people's minds with these preferreds is because really the entire precedent for these stocks are from financial institutions and then also utilities companies.
But there was a huge, huge problem with these both cumulative and non-cumulative preferred stocks going belly up during the financial crisis.
We have to understand those companies were levered 21 to 1 as opposed to 1.2 to 1 on assets that weren't marked to market every day like Bitcoin.
Right.
And you can see the liquidity in Bitcoin.
You can see the risk.
You can calculate the risk 24-7, 365.
It's so incredibly transparent compared to anything that's ever existed before.
And just in this test, the Bitcoin CAGR of 1.25%, in the year 21-22, you're looking at a Bitcoin price of $300,000. We've got people calling for $444,000 in 2025. I know people are bulled up for a million in 2032. This is an incredibly bearish scenario, and they're still paying their dividends into perpetuity.
and if it if it okay and we talked about this on the hurdle rate earlier this week and i think this
is such a good point that matt brought up right let's say bitcoin breaks for like something we
have some tail event that breaks bitcoin it's not like institutional capital is immediately
going to go running for the next crypto right like they're not going to go run for ethereum
If something breaks Bitcoin, it likely is breaking most cryptographic currencies.
It's not like they're going to instantly go run to Zcash.
Because, oh, Bitcoin broke.
Let me go run to Zcash.
Not going to happen.
Right?
They're going to shift to a completely different system.
Maybe it's gold.
Maybe it's something so bad we want to shift to guns and whiskey and cigarettes.
Hey, Jeff, you were just there in Prague.
When that person made the comment that Bitcoin is a hedge against monetary inflation debasement, and then Zcash is a hedge for Bitcoin, were you in the audience when he said that?
I was. I was. I was like, I did a major double take. Yeah, it was. And then I walked away. I was like, this is a joke. This is a total joke.
Right. And, and, and, and look, I think that when you do these calculate, look, if somebody doesn't
like Jeff's calculations, okay, go make your own calculations and figure it out for your,
figure it out for your, do your own assumptions, plug it in there and do the math. And, and I think,
you know, thank you for doing this. And, and, and that's the part, you know, somebody said,
sailor's never selling. No, he's not. Do I think that he could borrow, you know, one, one to two
or 5% that he needs each year in order to pay these dividends?
Yeah, I think he can borrow pretty easily.
There's an investment bank that's going to give him the money in order for him to sell it.
And I get that.
The other part is that the big acquisition of Bitcoin is kind of done.
You know, I want to go back to something that this comes up all the time.
When he announced the $21 billion plan in Q4, it was a three-year plan.
And he executed most of it in five weeks, right?
That was a huge amount of shares that went out in basically a very short period of time.
It was a record.
It was like most equity issued ever.
Yeah, it was huge.
And he acquired what?
Approximately 150,000 Bitcoins, right?
Yeah.
So I think that that was a one-time event.
And in my view, unfortunately for the stock, the stock did recover pretty well.
But I think what we're all trying to believe here is that when, look, Bitcoin will go, if you don't believe in Bitcoin, right, then don't buy Bitcoin.
If you don't believe in Bitcoin, there's no reason to buy MSTR because why would you have the faith that the prefs are going to get paid?
You're going to be the person like, well, they'll go bankrupt and I'm not going to get paid.
So then you wouldn't buy it.
So my takeaway is, you know, all the macro indicators that I said, then just go take your whatever, two, three, four, 4%, right?
um so we keep on getting these different questions coming up do you guys want to take go through some
of these questions uh there was one more thing I wanted to hit on and Mike you kind of you kind
of hit on it there for a second um and I wanted to talk through like the uh the concept of trying
to convince somebody to lend dollars uh to people that hold Bitcoin relative to the pref
So when I left the reinsurance world, I jumped into Bitcoin headfirst and I told myself, I need some time to figure out what's the deal with the market.
And I was going to events. I saw you guys in February and April where I was going to all of the events. I was talking to as many people as humanly possible to figure out where's the opportunity in this market.
I know what strategy is doing. I know what strategy is doing really well, but like what's everybody else doing? And it became very apparent that a lot of people were trying to build these lending platforms.
That people can take their existing Bitcoin and go get loans on their existing Bitcoin using Bitcoin as collateral, which I think is a necessary part of like an economy and like how how this whole system is going to work.
but then then i started thinking about the other side of the trade like how do i go sell that to
somebody right if i need to go sell some like institutional capital and i need them to lend me
dollars backed by bitcoin i've got to go convince somebody with a lot of money that they need to
take their take their opportunity cost of capital and lend it to this person for 12 percent return
something that's like kind of lucrative enough for both sides to take the trade.
And in order to convince them to do that, they need to feel comfortable about Bitcoin.
Right. Like just fundamentally, you need to feel comfortable about Bitcoin. It's not going to like
disappear tomorrow and it's not going to go to zero. OK, so if you've got to go convince
institutional capital to get comfortable about Bitcoin, why wouldn't they just go buy Bitcoin
instead of lending to some Yahoo for 12% collateralized by 2x the Bitcoin and take on
some like counterparty risk of some, you know, like leverage machine in the cog, right?
And so you've got, that's one side.
And now the really neat innovation here with this digital credit and where this is shifting
is instead of going to convince sophisticated institutional capital to get comfortable with
Bitcoin, in which they would rather just buy Bitcoin themselves, you can convince people
that are Bitcoin curious to not even have to believe in Bitcoin and buy a digital credit
instrument to get the benefits of Bitcoin.
that that pool of people that could potentially be bitcoin curious is significantly larger than
the number of people that are that would possibly potentially lend to bitcoin holders and not buy
bitcoin themselves if that makes sense like a marketing funnel yeah just like to bitcoin
i'm just thinking as a salesman right like let's just i'm a salesman
And like, which would I rather go sell?
Would I rather go sell a digital credit product?
Or would I rather go try to convince somebody to lend dollars to a Bitcoiner?
Right?
Like a lot easier to go sell the digital credit product to a bunch of people that may be Bitcoin
curious, as opposed to trying to go convince somebody about some like infrastructure, teach
them about the computer like code and like how it works and the liquidity and like once you convince
somebody to underwrite the entirety of bitcoin to feel comfortable giving that 12 loan
they would have already bought bitcoin themselves they're like why don't i just buy the bitcoin
like why am i going to do it like why i'm going to lend you dollars for 12 and take on all this
fucking weird risk when yeah if i feel comfortable with it why don't just buy just buy some bitcoin
yeah the amount of effort that it would take to orange pill them they'll just won't be interested
in loaning the damn thing at that point that's it that's it whereas the digital like you got to take
5 000 hours to convince somebody to take that uh take that loan right and then on the other side
like what's it take 10 hours maybe five hours of talking to somebody and you can't do it in 20
minutes in the sauna i know that from personal experience you probably yeah you probably need a
couple rounds in the sauna wait guys look look i i posted this i tell people somebody says you know
explain me about bitcoin i'm like sure i'll explain to you bitcoin you ready cpi consumer
price index federal the the u.s number is 3.0 the reaction usually is it's probably higher than that
I'm like, okay, just say it's 3.5.
It's way, I just say 3.5.
I'm like, the M2 money printer is 6.5% a year.
That's what it is over the past 25 years.
You all agree to that?
What's that?
Well, we have a $2 trillion budget shortfall.
So we have to print the money to balance the budget
because there's a deficit, $2 trillion a year.
It's 6.5% over the past 25 years.
I got a lot of kickback for this.
I add those two together.
And the reason why I add them together,
CPI measures supply chain problem, not the money printer.
What's the supply chain problem?
All the chickens get sick.
There's no eggs.
The price of eggs double overnight.
They didn't double this money supply overnight, but there was a supply chain problem.
So people are like, okay, I get what you're saying.
Okay, what does that mean?
At 10%, 3.5 plus 6.5 is 10%.
The rule of 72 says your buying power gets cut in half every 7.2 years.
I'm done.
Your house did not double in price.
It takes you twice as much money to buy the same house every 7.2 years.
You don't like 10%?
Make it 7.2%.
That means every 10 years, your buying power gets cut in half.
The young people that are watching this that are under the age of 30 know this implicitly.
They cannot save money fast enough to put down a down payment to buy a house.
That's it.
And if somebody tells me, who's Satoshi Nakamoto?
Don't care.
As long as the supply stays at 21 million and that it's fixed and 95% of it is mined already, that's all I need to know.
There's your Bitcoin pitch.
If they're like, oh, I never thought about constant dollars.
I'm like, you never heard about inflation?
That's it.
That's my whole pitch on Bitcoin.
You don't get it?
Why do I add those two numbers together?
One is monetary debasement and consumer price index.
Go look that up.
It's consumed goods.
yeah i i'm happy yeah so you got me convinced mike i'm yeah i'm gonna go buy some bitcoin
i i completely agree with you and i i did a i did a podcast in london this last week
and uh it was with is the reinsurance podcast i think it's going to come out in like a week
if if it gets over 5 000 views it will be the most watched reinsurance podcast in history
so uh i think i think we got a good chance of beating that there but anyway this this topic
came up basically i was talking to two reinsurance guys and they let me come in and talk about bitcoin
risk and reinsurance so i did talk a little bit about like what is what is bitcoin and try to like
get to an audience um and try to explain it quickly and i came up with this new way of
explaining it i think it's decent um and i think appeals to some of the boomers mike and maybe
this is worth a try. Right. Hold on a second. But just be clear. I'm Gen X.
Gen X. Gen X. I might have gray hair, but I'm Gen X.
Yeah. He meant when you're talking to boomers. When you're talking to the boomers. When you're
talking to your wealthy friends. All of your wealthy friends have bought homes.
Right. All of them have bought homes. And so I explain this on the podcast as Bitcoin is a
monetary ledger. Okay. When you buy a home, there's a monetary ledger that's held at the county.
When your house gets recorded, when you buy it, there's a Karen that's sitting behind there
getting paid minimum wage to go record your home. It takes like a week. It's stupid. You do the
whole negotiation process. It's crazy. And then it takes like a week to write your name down in
some documents and record them at the county. That's a monetary ledger. Imagine if you could
do that in 10 minutes with computers and have finality. No Karens, no anything. You've got
a computer ecosystem around the globe that's able to do that. And in communication with them,
it kind of worked. I know the guys that I was talking to have bought homes.
and like everybody can wrap their head around this like real estate concept like
monetary ledger concept and uh i hope it hits and so i'm gonna i'm gonna try to tease that one out a
little bit more uh with with people i know that have bought homes but are like you can't really
grab grab bitcoin really right i bought my house it was 200 bitcoin i think and now it's
like 80 or something yeah so so you know jeff that's a great example but i'm going to tie back
the house analogy back to the prefs. Once you own it, and look, there are people that are like,
oh, you should rent forever because whatever that down payment is, you can invest that and that'll
grow faster in the value of your house. The reason why you buy a house, if you get married,
maybe you're not married, you just have kids and the kids have to go to school.
You'd rather own a place because then the school district is a known event and to have stability
to raise a family. So that's a reason why people buy homes. Okay. If you're single and you're not
married, don't have kids, you know what heck, and you want to move around, don't buy a place.
But how is this related to prefs? Once your house is paid off, you don't have a refinance event.
The only thing you have to pay is maintenance, utilities, and your taxes on it. And taxes in
California, about 1% of the purchase price. And they can only go up, I think by like 2% a year.
So what happens is, is that you never have this refinance risk that happens.
And so that's the permanent capital that people talk about when you sell equity.
It's permanent capital.
What's a pref?
There's no refinance that ever happens, right?
Once your house is owned, once you own your house outright, somebody's like, oh, the interest
rates went to seven, eight percent.
You're like, don't care.
And then somebody would be like, you know, you fucking asshole boomer because you bought
your house you know for one tenth the price 30 years ago and everybody's like screw you because
the other generation because it was debased and they're like oh i don't know why it's harder for
you and i'm like i don't know why you're so fucking stupid sorry for swearing but no mike mike soleil
is getting rusted yeah because i can't math i said i said my house was worth 80 bitcoin it's eight
eight eight bitcoin
yeah so anyway so so with that said guys i mean look i have zero patience why do i have patience
why don't why don't i have patience what's going to happen is at some point in the future
right bitcoin's going to rip higher and when i mean rip higher it's not going to go it's not
going to retake the all-time high by a thousand bucks right go from 25 000 to 26 we're going to
see Bitcoin go to 125, 150, 200,000? Somebody said, is this in 30, 60, 90 days? I don't know
the timeframe of it. But somebody also asked, or somebody said, if Bitcoin retakes an all-time high
next year, which I think it will, that means the four-year cycle is dead. That means Bitcoin has
crossed over into a legitimate monetary instrument, which I believe is true. And when that happens
next year, as Jeff, you say, the bewilderment will happen and it rips higher and MSTR common
stock goes higher. It's not that I'm a fan boy. I think that's all going to happen. I think the
prefs are going to be successful. And if somebody is like, how did you know? And I'm like, you know
what? I had conviction. And I will have zero patience because I've been in this for eight
years. And it's like, if you had the conviction to do it and you could stomach the volatility,
then you would reap those rewards.
But if you don't have the stomach, the volatility,
then you don't reap the rewards.
Yeah.
I think one of the crazy things in thinking about that is like,
where's the rest of the market, right?
If we do think Bitcoin rips in 26, late 25,
I don't know, we still got a month and a half left.
What's the rest of the market doing?
and how do like how do you rationalize valuations greater than they are right now like what you got
to think about where where everything else is like and grain you even brought this up a little
bit earlier like white white collar white collar people are losing their jobs because of ai like
i'm seeing it happen all over linkedin my wife's seeing it in the recruiting world and like okay
the government debt is getting larger,
tax revenues are decreasing, right?
Because you've got all these like really high value people
that are no longer needed at the jobs
because AI just literally got rid of it.
So like that's an equation that is very difficult to unsee.
And what's everything else look like?
I think everything else is higher.
If you expect a Bitcoin bear market in 26, then historically you would be betting on the S&P being down in 2026.
Highly correlated.
Highly correlated, yeah.
But it looks like the way things, I mean, PMIs have been depressed.
So that's essentially purchasing managers index.
So it's a diffusion index of whether or not the manufacturing industry in the US is expanding or contracting.
It's been in contractionary territory for the past two years.
There's no reason why the AI CapEx won't flow over into just general small cap business,
plus the increasing profit margins as a result of the layoffs directly related to AI.
There's no reason, I think, why the S&P would be down next year, especially into a rate-cutting cycle.
So if you believe S&P is going to be up, then there's no reason Bitcoin won't have a positive year as well.
Yeah, let me try.
Look, next year is an election year for midterms.
If we believe, look, there's a couple of things.
People will love conspiracy theories that there's a group of people that control everything.
You talking to me?
I'm just talking just in general.
I'm just not you.
I mean, Dan, did you not only write a paper saying that the so when is Powell out of his job?
May?
Yeah, it's spring.
Right.
So he's out, right?
We have an election coming up.
What do we always believe?
Who's ever running the Fed?
If they do a rate cut, that's the conspiracy saying that the Fed wanted that guy to get,
because if there's a rate cut, it forces the market, it allows the market to run up because
it's cheaper to borrow money. So if you continue to have rate cuts next year, people are going to be
like, oh, Trump put his guy in, Mirren, into running the Fed in June. Let's say he gets
confirmed in June or July and they cut rates like, oh, you see, that's exactly what happened. His guy
got in, they cut the rates and then Trump rewins the election because the stock market ripped
higher and then you know you'll hear the narrative all these crypto bros got rich on bitcoin and and
coins and they be like god this and i like well you can either go with the narrative or you could sit there and be like well AI just took my job These crypto guys are getting rich I just being speaking figuratively And I investing in a 2040 fund that made up of 4 different
stocks. It has a blended average return of 8%. And I don't know why I can't get ahead because
this guy grain of salt just said 10 minutes ago, you have to add M2 plus CPI at 10%. So if your
funds growing at 8% because there's 5,000 stocks in it, you're not beating the degradation of the
buying power of money. Did I go too fast? No, very good point. No, that's it. I'm actually
reading Kruger's book right now. What is it? Bitcoin 1 million. Fantastic read. And it synthesizes
this all very, very well talking about. And you look at, I know Grant and I've been doing a lot of
research on the equal weight S&P relative to the overall S&P index weighted with the MAG-7.
And, you know, and that once the strategy is in the S&P, this will help as well.
It'll be Bitcoin exposure injected into the S&P.
But it doesn't matter.
Like the S&P 493 are a drag on portfolios and they have been for 10 years or 15 years at this point.
So you're not making money.
And everybody knows.
You're just not.
And it's only going to get worse as those businesses get disrupted by AI.
There's going to be winners in the private markets.
I also think this idea that public markets is where all the money is going to be is also a fallacy.
I mean, tokenization, yeah, but like all the money we've been seeing generated in AI, a lot of it, aside from NVIDIA and Mag7, has been generated in the private markets.
But then what happens to that money once it's generated in the private markets?
It gets floated around, but then those businesses get pushed like their margin arose, their competitive edge arose because of AI.
So I think there's going to be a lot of private market shenanigans.
public markets are going to be very, very much less appealing than they already are
if any sort of multiple compression happens on the Mag7.
The private market interaction, like where does it go public, is liquidity.
Do you want or need liquidity?
Because private markets are great as long as everything's cooking.
but if you need liquidity
the best way to do that is in public
that makes sense
I think the tokenization of private markets is going to be
the next frontier
somewhat
you just kind of get rid of the SEC
maybe
it goes global
guys I'm going to jump off
thanks Dan
I'm going to jump off pretty quick also
look
But what I think is going to happen and what's different now in the public markets is that these companies stay private for really long.
They have much higher market caps when they go live.
And then what happens is they could have a really good IPO launch.
And then six months later, there's a lockup that happens.
It drifts lower and then it goes up eventually again.
And we've seen this happen with it happening.
I mean, you know, the poster child for this was the Facebook IPO.
There was lawsuits all about this.
They tried to do this price matching.
I don't believe it was a Dutch auction for Facebook when it went IPO.
But basically, a year later, it traded down really far.
But then Facebook, obviously, which is now called Meta, rips way higher.
And, you know, it's this massive part of the MAG7.
But I think what's happening now is these markets are different.
And what I would tell to everybody is that, and it goes back to what you said, Jeff, the
narrative changes now probably less than yearly.
Every nine months, you're like, oh, I thought it was like this.
You're like, well, if you're paying attention, things are different.
And I'm looking at the valuation on AI, and I think the valuation is super high, right?
I think it's, you know, but then when you look at NVIDIA, I believe it's trading at 35 or 40x forward PE.
That multiple is not that high.
And my view is I think that that could run a lot longer.
Not financial advice, not saying it, but I think that, you know, where that's going and what its track record is, that's pretty awesome.
But if you look back, NVIDIA has had some major pullbacks, including this year.
And so what are we going to wrap up with?
Cause I could talk about that if it's interesting.
Yeah.
The, well, this, this concept of multiple, I think is,
is always a good topic, but,
and I'm just going to share my screen one more time because I think this is
interesting context on like the one X M nav bears.
I'll try again.
Try to share again.
Oh yeah.
I missed the clicked.
There we go.
A screen share.
There it is.
Okay. As of 1230 2023, 1XMNAV for MSTR was $52, $52 a share. As of 10-7 2025, the 1XMNAV was $271.
As of today, 1XMNAV is around $208. This is just pure, not even taking any consideration of the
debt. This is just a multiple over the Bitcoin. If Bitcoin were to go back to its previous all-time
high at $126,000, the 1XMNAV is $285 for MSTR. If Bitcoin were to go to $150,000,
the 1XMNAV goes to $339. So just keep that in the back of your mind of how quickly some of
this stuff can shift. Like if Bitcoin starts moving the other direction and it moves 50% in
two, three weeks, like we've seen it do in the past, then you've, you've also got some of this
1XMNAV, you know, concept in play here where it's going to flip back and go the other direction.
But the real, the real thing is here, the 1XMNAV, let's just go back to where we're at today and
Let's just say 92,500.
Right.
Shares outstanding have increased 87% from 12, 30, 23.
They've gone from 153,000, 368.
So 153 million to 287 million.
Shares have increased 87%.
Yet the 1XM NAV has increased 302%.
And the BTC price has increased 119%.
Right.
So if you think it's always going to trend to 1x MNav, it's like, well, 1x MNav is moving forward with or without you.
Like 1x MNav is marching up and to the right.
Like that's what people don't get here.
This is collateral.
Like the strategy is leveraging their balance sheet as collateral and they're getting more Bitcoin to put on their balance sheet.
Yeah, they're doing it with preferred equity now as opposed to convertible debt.
this concept of double, this new FUD concept of double counting has come up as like, oh,
Bitcoin per share metric isn't right because you've got to, you know, you've got to count
the preferred equity. Well, it's like, okay, Bitcoin per common share. How about that?
Let's use Bitcoin per common share because in the event that there's a liquidation,
like the equity is worthless. Like in the event that Bitcoin crashes and goes to $10,000 and
stays there for five years, the equity is worthless. Bitcoin is probably worthless at that point.
And that would be a liquidation scenario for strategy.
They have no maturity.
This debt isn't callable.
The perpetual preferred equity is not callable.
So do I think there's double counting?
No.
I see Bitcoin per common share.
All of that excess, we're talking about excess return and excess risk.
All of that excess return and excess risk is delivered to the common stock equity shareholder.
and all of that that instrument the new perpetual preferred equity instrument that you're providing
the market is that lower volatility product like you're you're providing basically some
you're providing basically someone bitcoin exposure with volatility insurance on it
like that's what stretches stretches bitcoin exposure but you're paying for volatility
insurance. That's all it is, right? You've got no upside. You've got no downside. You've got
like the insurance policy, like that excess upside that you're giving up gives you that low volatility.
So all of that additional return and risk gets delivered to the common stock shareholder.
So do I think there's a double counting problem? No, I don't think that's a thing at all.
I think anybody thinking about or spending too much time focusing on liquidation preferences
is out of their mind. And I think it's pretty, pretty easy calculus, honestly.
The hilarious part to me, when people want to say that strategy or the Bitcoin treasury companies
that operate this way, they're, they're trending towards 1x MNAV. You know what else trades at 1x
MNAV? Fricking Bitcoin.
Bitcoin. You can just buy Bitcoin.
But the thing is, any
Bitcoiner understands that the way
that you beat Bitcoin is to
borrow money to buy
more Bitcoin.
So clearly, you are
amplifying your Bitcoin exposure
by leveraging.
So how do they forget
that when all of a sudden it's a
treasury company doing the exact same
thing?
i think these are fud narratives that are spread by people that are short to stock and they're
picked up by uh you know left probably mid-curve iq uh that know just enough to get them get
themselves in into danger here uh and confuse themselves in their game theory so wait wait so
Yeah. So let's go back to the simple math again. Anybody that you buy a house for simple math,
right? You buy the house, you put down 20%. That means you have five to one leverage on it.
When you go to buy that house, right? You don't have a, provided you put down 20%,
you don't have a margin call provision in your loan. And the reason why they can do that,
because housing was supposed to grow at whatever, one to 5% a year, right?
Can you imagine if there's margin calls on loans?
Could you imagine?
Right.
And the only way there is, is that if you don't pay on the loan, which happened in the
08 and 09 financial crisis was horrible because those adjustable rate loans reset and they
weren't able to refinance.
Cue the story back about the preferreds.
There is no refinance risk because of permanent capital.
So I hear that people talk about this and they're like, I don't think you understand the
terms.
And they're like, we've never heard this before from somebody.
And I'm like, I can't speak to you.
And so anybody that buys an arm, an adjustable rate mortgage understands that at some point
it's going, you know, it's a five in one loan.
After the first five years, it can reset every year or five into it resets every two years.
And so I don't think they understand the terms.
And so from that perspective, you take five to one leverage on a house, right?
Because you put down 20%.
So you put down a hundred thousand dollars on a $500,000 house.
That's your five to one leverage.
and you're hoping and you're believing that if the house, if the house goes up by 7.2%
per year, just to use easy numbers, rule of 72, that means the house doubles in 10 years.
Right. And if it goes up at 7.2%, it goes up 50%, right. In five years, right. That's kind of what
exactly happened from 2020 to now, many houses in great areas went up. Now, somebody is going to say,
well, my neighborhood, they all bought and they were going to do Airbnbs that wasn't allowed and
they lost. Well, that was a regulatory change, right? So I think the takeaway is know what you're
buying, know what the area is and buy for the right reasons. And I would never buy a stock
based upon, oh, I think it's going to go bankrupt. That's me. I don't know what anybody, I'm like,
oh, I'm thinking about buying the stock, but you know, they could go bankrupt in two years.
So I'm going to buy it now because I think it's a good, I would just never buy. Yeah,
that's crazy. I would just never buy the stock. Just like I wouldn't buy the house,
right? If I think that the house is not going to go up in value.
I think I responded to Josh with this. It's like, it's like, it's like not buying an insurance
company stock. And when like the, because you think that the Yellowstone Caldera is going to
explode and the people that have insurance policies have a senior claim on the balance sheet.
it's like well if the yellowstone caldera blows like half of the u.s is dead
like we have bigger issues and like then the stuff you know your equity of this insurance
company stock that you held right that's like the the probability the the there's a misalignment
of probabilistic scenarios and i think people are having a really hard time assigning probabilities
to these types of events and like, like seeing them in their head. Like I see the world through
probability. So it's, it's kind of easy for me to kind of like sort and like assign a framework,
at least for myself. But to me, this, the fear that people have, then it's perpetuating on X.
It seems like an incredibly low probability tail scenario that wipes out Bitcoin.
Which if it wipes out Bitcoin people, Bitcoin holders are also in a really bad spot.
Yeah, I'll wrap up with this.
Right.
So, Jeff, I agree with what you just said there.
Look, back in the back in the olden days of 2017, what happened with Bitcoin?
They were, you know, it was the block size wars.
They wanted to change that.
This was going on.
And every time a new BIP format came out, it was like, if it didn't go the way the narrative
was going, Bitcoin would drop 10, 20, 30% in price. You had this massive volatility swings.
Then you had China banning Bitcoin, I don't know, three times, four times in the year.
They keep on banning Bitcoin. So this would all happen. The volatility was absolutely absurd.
And so now you're always going to have that same volatility get shaken out. And if you get shaken
out, then so be it. But at some point in the future, look, I've been in this now for eight
years. What I've rather would just be all smoothing straight up. Sure. But it just doesn't work like
that. And so the takeaway is, you know, you buy a house and, you know, hopefully everything goes
right. It doesn't matter where you buy the house. You got, there's always an issue in some part of
the country. You buy it in Florida, there's hurricanes. You buy it in California, there's
earthquakes. You buy it in the Northwest, it just rains all the time. I mean, right. And so
We got earthquakes.
You get earthquakes.
We're in California.
Right.
And anybody that lives in Minnesota, you get snow on the roof.
It then melts.
It takes out your rain gutters.
Then you got like $5,000 to fix your rain gutters or your roof.
Right?
So look, there's all these problems in the place.
And you just got to figure out, does the benefits outweigh the drawbacks?
And so my takeaway on this, and this is my last call.
You guys can stay on longer.
But I'll just wrap up here.
Look, I'm not happy with the MSTR common stock price.
I'm still a very large holder.
I have not sold any MSTR shares in my accounts since,
well, I did because I had options.
Back when I reported it in March, I had options.
I closed those all out back in March of this year
or February of this year.
I closed everything out
because that's when the tariff stuff started.
And I have a post there that I closed everything out.
But I haven't sold any MSTR shares the rest of the year.
And then I believe that Stretch will go back and hit its peg.
He has to maintain that.
They want the prefs to be successful.
And so my takeaway is I like those products.
If you like the products, do your own research, compare them against the Yieldmax products,
and then ask questions.
I mean, that's where I am.
I would much rather be that Bitcoin is at $130,000, but it just isn't.
yeah yeah great that was uh uh that was your final thoughts mike do jeff do you got any
anything we missed i can keep chatting there's there's uh there's a couple topics that uh
that i think are interesting but mike if you get if you want to run yep i'm jumping off thank you
guys i'm probably gonna be a few minutes that's fine take care cool yeah all right we're pulling
on all nighter you've only been awake for 24 hours we gotta we gotta take it to 36.
yeah okay so i had a nine hour flight with eight hour time change it feels like three o'clock in
the morning for me and uh we're just we're keeping it running i've just had a bunch of
coffee and diet coke and uh coke zero so we're cooking here the um but i was thinking about
credit systems like a lot just been over this last week um and how like stretch is working and
how it will like operate into the future and i think there's a there's a very real future where
like stretch is tokenized and i think that's like that that would be a very large
like a very large thing right if stretch is tokenized you can start to think as of stretches
like dollars i was gonna say explain that does that mean we get to spend them
like you can spend them peer to peer yeah and if it's if it's a stable coin
right if it's a if it's if we think it's going it's going to get to like
full stable coin like pegged at 100 or like 99 and a half to 100 and a half yeah which i think
it which is i think it what it will be in the long run might be 48 months from now
uh right it might be four years from now before we like see that like absolute 100 peg but there's
no reason it couldn't be tokenized and there's no reason that it wouldn't be accepted as a form of
currency right i take i take stretches or whether you know like um people are passing them back
peer-to-peer. And then additionally, seeing other companies start to use stretch as collateral.
So the Bitcoiners probably aren't going to like when I say this, but stretch is better collateral
than Bitcoin. Think about it. Stretch is better collateral than Bitcoin.
Okay. What's better than Bitcoin? 4X over collateralized senior claim on a balance sheet backed by Bitcoin.
hmm it's it's a hard statement but like if i if so thinking back to my institutional background
with uh reinsurance if i were to go if i were to go do or try to do a uh you know 100 million
dollar collateralized reinsurance transaction and i try to post bitcoin as collateral everybody
laughs it's not gonna happen like it's not gonna happen for probably a decade and it's funny
because there's a couple people in the market that are trying to do like some crypto backed
collateral and it's like it's not going to work but it's much easier to go sell 100 million dollars
stretch yeah if it's pegged at 100 and it's non-volatile and it's printing 10 yield a year
and it's rated b that's much better collateral it's much more widely accepted
like a majority of the world is going to accept stretches collateral over accepting bitcoin as
collateral yeah the rails are already in place to like make it happen with a snap of a finger
and if it's tokenized it gets even easier
wild so yeah so i like that's what i've been thinking about a lot is like okay
the credit system that that gets that gets built on this is going to be an enormous and it's going
to get hypothecated like that's a that's that's the insane thing right so one thing that i've
thought about a bit is like there the amount of credit bitcoin backed credit in the market can be
significantly greater than the than the market cap of bitcoin because it can be hypothecated
so like you think about how insurance companies take on risk right you've got
uh like insurance companies leverage their balance sheet four to one
and if your balance sheet is a stable coin if your balance sheet is made up of 100 stretch for
example let's just say you're a bermudian entity you're not publicly traded you don't have to worry
about 40s act whatever if you're 100 capitalized on strc okay now i can leverage i can leverage
that strc balance sheet by but four and i could go take on risk in the market all right i could go
buy i could go because it's because it's forex collateralized at the source not necessarily
because it's 4x collateralized because i'm taking on risk that doesn't have 100 probability of
happening yeah now so even with a very small chance of an occurrence given an infinite time
frame like any everything that's possible is inevitable so don't they get wrecked eventually
somebody does uh not in a system where you're uh where you store your energy and doesn't decay
Right. So it was funny. I was in London this week, right? I was in the birthplace of insurance and I was talking to some people about Bitcoin again, risk. And I sat down, I had lunch with a couple of people. And one of the funny stories was like the, the, the birthplace or the, the birth of insurance. Think about a bunch of really wealthy people with a big pile of gold.
and they go insure a couple of boats
with some shit on it to go sail across the Atlantic
and come back. If the boat makes it,
then they get the gold. If the boat doesn't make it,
they pay out the insurance claim and they pay out the gold.
They just measured it over the year. I started with this much gold and I
ended the year with this much gold.
That's a good transaction.
and like that's that's going to be the the future of this stuff too like let's just imagine
an insurance company that's 100% capitalized on stretch and any premium that they generate
uh from people that are buying the coverage goes to buy more bitcoin
but they're using their stretches collateral like if they if they need to pay out claims they just
they just sell stretch to pay out the claims or, you know, whatnot.
But I mean, you bring up, you bring up a good question.
Insurance industry has been around for 500 years.
I think it will continue to be around for, uh,
for a very long time because people like certainty in their life.
I don't know. We'll see.
These are just some of the things I'm thinking about.
So my final thoughts are a little bit, uh,
a little bit scattered from spending some time in Europe with, uh,
with some old insurance folks. Anyway.
You're jet lagged to hell. You got, you got more final thoughts.
No, that's it. That's it. I honestly,
NSTR looks like a screaming buy here. Um,
I have no idea where Bitcoin's going. I personally think it's,
it's got room to go significantly higher. I think all the macro,
we've got tailwinds behind us. I wouldn't, I wouldn't be buying any other,
cryptocurrency uh i want the one that's a monopoly owning the company that is that has a monopoly on
monopoly money yeah it's it's probably a good trade uh if you're holding for a for a long-term
horizon and a lot of people are screaming but like most like 90 95 of my mstr exposures in my
retirement accounts i'm like oh i don't like i can't touch this for 30 years anyway so like what
am i gonna do uh so yeah yeah i'm every dip's a buy i mean i don't know it could it can dip it
could always dip more and and cause you some more heartburn but uh yeah it's just your your
investment horizon is the only thing that matters i think as far as that's concerned yeah all right
So my final thoughts, we really didn't get a chance to talk about the earnings call too much, but there was a lot of good stuff there.
But the only thing that I really, really, really wanted to talk about was like, we have to talk about Ben's question at the end that triggered Sailor and he freaking launched into like the Braveheart speech.
I mean, the only thing was the only thing missing was him like yelling freedom at the end.
It was like crazy.
and it was just a normal earnings call up until that point um and then he he like caps it off and
he says he wants mstr to stand for monster and they want to eat the world and i was just like
they are gathering like a bitcoin treasury army and these these are these are economic nodes now
so i mean we got all the plebs you know we're gonna get these treasury companies now and
they are going to start
acting in Bitcoin's
interest and I think
that's going to be a necessary sway
I think we're going to get a few
treasury companies that over leverage and
come with their Bitcoin or
make some terrible decisions
like Mara they decided
to mine some Caspa
and they were I think they were
doing like
was it OFAT compliance or something
and the community
just revolted
They were like, that's not the Bitcoin ethos.
So you guys can piss off.
And they had to capitulate because their stock price was going down the toilet.
So I think the more toxic Bitcoin maxis that start to own treasury companies, I think that's going to be good for the network and the world.
because we're going to punish any Bitcoin treasury company
that is not abiding and doing what's right for Bitcoin.
So I think it's just a good thing for the network overall.
Yeah.
I think the reality is the Bitcoin treasury companies
are going to be the balance sheet of the world.
like the balance sheet of the world is going to be built on bitcoin yeah like that's crazy this
is a crazy statement but it's true and it's already it's already happening yeah so anyway
good stuff thanks jeff i'm gonna i'm gonna go to sleep yeah great job hosting soleil appreciate
the time so this is 45 baby 45 i love it okay let's do 46 maybe next week before thanksgiving
Thanks everybody for tuning in.
See y'all.
Catch you later.