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Boy!

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Boy!

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Now in the street there is violence

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And now not lots of work to be done

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No place to hang a low washing

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And then I can't name all on the sun

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Oh no

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We're gonna rock down to Electric Avenue

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And then we'll take it higher

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Oh we're gonna rock down to Electric Avenue

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And then we'll take it higher

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Woo!

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Woo! Episode 45, True North. We are back. That was the best woo I could manage with these prices.

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I thought, you know what, I had to practice my Ric Flair woo a little bit before the show.

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That clip, or excuse me, the music was supposed to be a connection to the London Stock Exchange,

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because I initially thought that Stream was going to be out of the London Stock Exchange.

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And then I was like, ah, crap, it's Luxembourg.

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But it still fits.

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And, you know, 10 points for Gryffindor if anybody can figure out the connections.

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But with that being said, we're going to have a great show for you tonight.

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Jeff is here with no sleep.

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We got Dan.

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We got Mike Granisault.

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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.

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And so this guy named Professor Jang, and he went over all revolutions.

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And I'm assuming that anybody that's here watching is here for the revolution, right?

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We're thinking that Bitcoin is taking over the world.

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And what he said was that every revolution has three principal characters in them.

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They are the poet, the prophet, and the prince.

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The prince is also kind of like the warrior general, but then you don't get the triple P alliteration.

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So we're going to go with PPP here.

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and I'm going to talk about the French Revolution as a pretty good example.

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And in that scenario, the poet was Rousseau.

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He wrote the social contract and popularized the idea of the will of the people.

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And the prophet in this scenario was Robespierre.

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He led the population through the next phase.

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Unfortunately, this little particular part of the revolution was called the reign of terror

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because of its liberal use of the guillotine.

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and the prince of the French Revolution was Napoleon.

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He basically channeled the revolution, declared himself the emperor,

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created an empire, and dominated most of Europe.

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Now, if Bitcoin is an economic revolution that's imposing the global free market on the world,

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then the poet is clearly Satoshi.

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I think that's just a pretty logical assumption.

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The prophet, and this one is just my opinion,

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You know, you could probably go with Saifedean or find another half a dozen OGs that you think is meaningful.

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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.

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And luckily, we've got proof of work and digital power now, so we don't really need heads to roll this time around.

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And that leaves the prints.

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and I've been thinking about this for a few weeks, but then during the earnings call when I heard

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Saylor's response to Ben's question, and I quote, we want to eat the world, end quote.

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That was confirmation for me that the prince of the revolution is Michael Saylor.

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And right now we've got the number of economic nodes in the form of companies stacking Bitcoin

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will only ever increase from this moment.

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So with that being said,

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despite my bullish long-term outlook,

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we've got blood in the streets

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and Bitcoin and strategy are back to like early 2024 levels,

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sentiment circling the drain.

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So what are your gentlemen's thoughts

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on the current price action and or my delusions?

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I like your delusions.

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Price action is horrible, right?

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I mean, the price of strategy is going through a rough patch.

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So this has been pretty brutal.

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But easy thing is to say, zoom out and you look at the broader picture here.

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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.

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And if you like the company then, and I think you'd like the company even better now.

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And I think somebody posted this.

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It was either Mark Harvey or Lee.

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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.

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You'd be hooting and hollering.

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And yet in the stock market, if a stock down 50%, everybody's running for the exits and

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something like the stock must be telling me something.

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That's what he said.

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The stock must be telling me something.

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And it's a marketplace, right?

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And there are multiple factors at play in all different directions.

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And really the thesis is unchanged.

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So if you like the company when it was trading at $500, you should like the company when it's

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trading at $193. It's on discount. Yeah, my thesis hasn't changed a bit. It's always been

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from the very beginning, strategies disrupting, and it's the clear winner. And yeah, I think that

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the prefs actually have them in a better position than the convertible bonds. So nothing about my

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thesis has changed, and no part of my thesis is short-term price action. That's not part of it.

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in four or five years, if we're still trading at these levels, then I will have to revise it.

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But it's a long-term thing for me. The tough part is, you're talking

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incredibly long conviction in an increasingly shorter attention span world. I can get anything

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delivered to my house in less than an hour from Amazon. Attention spans are getting shorter and

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shorter and shorter. Nobody's watching movies anymore because they're two hours long. You can

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see it everywhere. And then you ask somebody to, hey, you should hold onto this for eight years

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because it's super volatile. And if you hold onto it for a long time frame, you're going to be okay.

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That's really hard for people to focus on one thing and just have a dead guy portfolio and

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sit on their hands for eight years. I mean, bravo to all of the Bitcoiners that have been holding on

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for four plus years, because that takes a ton of conviction in order to do that. Or it's a high

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volatility asset. You've got to be able to withstand multiple 30% drawdowns, 80% drawdowns,

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and ride it back up the other direction. That takes supreme conviction. Can you trade it?

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Sure. Are you going to nail it? Probably not. 99% chance you're not going to nail.

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like sell the top and buy the bottom you can shoulda coulda would your shoulda coulda woulda

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your way out of the whole thing that like it's a very difficult to trade these high volatility

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instruments without uh having you know incredibly complex ai algorithms competing against jane street

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and hft and all these other um trading companies so yeah there's there's so many things going on

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here, right? Just as you have reflexivity to the upside with all these passive flows on index funds

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and ETFs and all of those things as well, QQQ, S&P 500, Russell, as the stock gets larger and

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larger, you get a larger and larger allocation from these index ETFs. And as the stock turns

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around and goes the other way, you get the inverse action. You're getting a smaller and smaller

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allocation. So those index ETFs that are holding MSDR stock are selling into weakness. So you're

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going to have reflexivity going both directions. And if it's on the back of the most volatile asset

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on the planet with Bitcoin, you're going to get double volatility on both sides. So you've got

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this amplified volatility with Bitcoin, but you know it's accumulating over time. You know it's

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growing over time. And you can see that with how much Bitcoin they started with, how much Bitcoin

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they've got today, how much Bitcoin they continue to accrete, the design of the leverage that

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they're taking on, all of these other things.

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So, I mean, there's so many things going on, but like, I, I, I like these prices here.

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Like I, my, my conviction hasn't changed at all.

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In fact, I think it's significantly like significantly stronger today than it was a year and a half

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ago because I can see like the, the path forward. Like what are the products that they're going to

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offer? It's going to be digital credit products in the future. A year ago, we didn't know that,

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right? We saw the convertible debt. The convertible debt was appealing. We're like,

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okay, people are going to want to buy these, but the problem is you can't be like, people can't

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buy these. Retail can't buy the convertible debt. All right. It's OTC 144A. It trades between 30

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dudes, uh, you know, sitting behind the scenes, trading it, trading back and forth to each other.

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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.

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And you've got a company like sitting on an enormous pile and high credit quality to go issue these things to the market.

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Like, if anything, I'm significantly more bullish about the future with this structure than anything I knew previously.

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So I haven't learned anything bearish about the company personally.

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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.

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And like, I know there's people who want to forever hold certain stocks, but you still have to watch the management team, right?

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So the management, you know, one management team rolls out and the new one rolls in.

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If they change how they do things and you don't like it, you might have to revisit, you know, that forever hold status.

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But if they continue to execute well, then yeah, it could be a forever hold.

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But you still have to watch it, I think.

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But you don't have to really watch Bitcoin.

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You just know that it's going to be good to go.

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Yeah.

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Also, pause real quick.

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This is True North, the investment grade Bitcoin podcast.

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Everything we say here, none of this is financial advice.

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It's for entertainment and educational purposes only.

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Yeah, I forgot that part.

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And if you're new here, we talk about Bitcoin securities.

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We talk about digital credit.

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We talk about everything under the sun related to the financialization and the future of Bitcoin

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securities.

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And everyone but you is an independent voice.

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Right.

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Right.

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Yeah.

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Yeah, exactly.

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So I get to run my mouth and say a bunch of regular marol.

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You just got to sit there and take it, right?

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That's exactly right.

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That's exactly right.

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Well, I mean, Dan, Mike, what are you guys' opinions?

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Obviously, I mean, this is tough price action.

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You hate to see it, right?

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Like this is, it's not going the right way.

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Everybody loves green candles here.

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And then on top of that, one other statistic is JP Morgan has increased margin requirements from 50% up to 95%.

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On?

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On MSTR.

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Oh, shit.

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Just in the last week.

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So not only did they go from, hey, Bitcoin is good.

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We think it's good collateral.

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We're going to start lending against it.

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To taking this perspective.

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and now we're actually going to increase the margin requirements from 50 to 95 percent.

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So they might have forced a bunch of people into margin calls.

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Yeah, sounds like what it is. And I mean, that's a diabolical move, but I don't think it's a

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reflection on Bitcoin. It's a reflection like the stock's gapping down 10 percent in the day

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regularly. You're going to up the margin requirements. There's probably an algo that

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just indicates to them whether or not the margin requirements have changed on the equity or they

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of a risk management department.

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And yeah.

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So yeah, let me chime in on the margin thing.

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And so I don't have an account at JP Morgan.

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I'm not giving financial advice.

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But when you go in and you look at your stocks,

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I use Fidelity.

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If you buy stock on margin,

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the default setting sometimes will,

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it depends upon how your account is set up.

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If your account is set up for option trading,

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depending upon what tier level you are.

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What happens is when you go to buy a stock,

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the default setting will trigger you buying the stock,

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even if you have cash in your account on margin,

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because then it allows you to clear out a trade faster,

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even when you buy it on spot.

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So what happens is you buy it,

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it shows up that it's on margin, right?

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And really you call them up and you find out,

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no, it bought it for cash.

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And so what you need to do is you need to go figure out

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which brokerage house you're using. If you're not an option trader, even if you have no options,

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you have to see if it automatically purchases your spot shares on a margin basis. And that's

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important to understand. And so what I did was, again, this is not financial advice. When I was

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trading, when I did the first change to option status, they automatically defaulted it to

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everything was purchased on margin and i even if i had cash and so then what i did is i said

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you need to give me a toggle so i could turn this off and so the default setting is to buy on margin

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but then i turn that off and make sure i buy for cash so that's just a useful tip to make sure you

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might unbeknownst buying something on margin even though you did not intend to do that so again i

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don't yeah i don't have jp morgan but if if you just never had that enabled it should not be a

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problem for you, but you should check. And just like you'll see a little circle and it says an

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M in it, and that means margin. So look, this price action, this RSI on the daily level is

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even lower than it was in April. So RSI is the relative strength indicator. And so if you go all

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the way back to February 24th, the RSI dropped down to 28. Now, when you get under 30, that's

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oversold, right? That means so many people have sold that the indicator is showing that.

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That's on the daily chart. But in this particular run yesterday, sorry, on Monday,

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we got down all the way on the RSI down to 20, down to 25. And that's a really, really low number

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because you have to go back two years to when you see an RSI number get that low.

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And so from that perspective, this sell-off is worse than what it was in February and April.

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But I think, you know, I did a poll on tariffs and February, April.

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That was like the big tariff scare.

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Is Trump going to drag the economy through the mud for the next eight, 12 months?

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Like we don't know.

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Right.

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And so so so where are we today?

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It appears that, you know, I did a poll on the debasement trade.

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Look, there's two big debasement trades going on right now.

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One of them is in the U.S. dollar.

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Do you believe we have a $2 trillion per year fiscal deficit?

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Not going to get fixed.

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We have $1 trillion in interest payments.

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It's the number three line item in the budget.

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So that means we spend a trillion dollars every year that just goes to paying off the

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debt of $38 trillion.

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The big, beautiful bill allows it to go to $41 trillion.

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So that has not changed, right?

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So now we have this liquidity held up.

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What does that mean?

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Well, there's two debasement trades.

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One of them is a dollar and the other debasement trade is the white collar worker being being displaced by AI.

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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.

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That's just my view of this.

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So, you know, the price action, horrible.

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I just want to be straight up.

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Price action is horrible on MSDR.

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and I think that from that perspective,

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you know, to quote Ben Workman,

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I didn't come up with this idea.

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He said, can't rent your conviction.

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You have to have your own conviction,

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do your own research.

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Why are you in this?

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And I've been in this now.

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It'll be three years in January.

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I don't consider this a trade.

249
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I consider investment.

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When I buy options, that's a trade

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because there's always a term on those.

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But with that said,

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I just want to acknowledge

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that everybody that's on this call right now

255
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is that the price action in MSTR common shares,

256
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is terrible. Absolutely terrible. Do I think it's going to get better? Absolutely. Otherwise,

257
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I wouldn't be on this call. Yeah. So I was watching Lynn Alden and Luke Groman on a couple

258
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of different podcasts, and they seem to be hitting on some liquidity issues, like globally.

259
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And I don't know. You guys think there's anything to that? Or is the bullpen

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market just over and the bears coming bull after yeah it's a it's a tough it's a tough question you

261
00:18:53,040 --> 00:18:56,800
think about like just general liquidity and kind of how the economy works like where where does

262
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liquidity get zapped like if there's a liquidity crunch probably the most liquid instruments on the

263
00:19:03,040 --> 00:19:11,100
planet right like if you need liquidity like you go to liquidity which is like all of the big mag

264
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seven stocks. It's Bitcoin, which is kind of this, I see it as like the blood of the ecosystem,

265
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right? Like the liquidity, the liquid of the entire like economic ecosystem. And then you've

266
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got MSTR, which is a function of that. So that's how I see it. And I don't have as much concrete

267
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data as like Luke or Lynn who are following this very closely, but like thinking broadly about

268
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leverage in the ecosystem as well, like the Bitcoin ecosystem. Why did last bear markets,

269
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why did bear markets of the past happen? They happened because of significant leverage within

270
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the system, right? You've got FTX that had loans outstanding, significantly greater than the amount

271
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of assets that they had. You had these companies that were like, credit was building

272
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in all of these different systems on not enough assets.

273
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And you look at Bitcoin in this ecosystem right now,

274
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and I don't have a ton of the on-chain analytics

275
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and the data sitting behind like Binance and Coinbase,

276
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but from everything that I've seen

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is like leverage from the ecosystem is pretty much wiped.

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And you look at the companies that are trading on leverage,

279
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you look at strategy,

280
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and maybe it'd be helpful to go to the leverage table

281
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that we look at every week.

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here i'll share my screen so wait a second jeff i want to back up for a second so so you were just

283
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in prague correct yeah i was in prague amsterdam and london okay when you were in europe was it

284
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beautiful oh it was absolutely gorgeous prague is one of the most beautiful cities i've ever seen

285
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right and the people that were happy right people they're well-dressed happy right so same in

286
00:21:00,380 --> 00:21:08,320
amsterdam right it felt fake like it felt like a fake place right so i i was there previously for

287
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um another bitcoin event previously and i was there whatever i don't remember i was there dan

288
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when i was there with dan and i was there whatever three four months ago in the summertime absolutely

289
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beautiful people are beautiful everything is great so while i'm there uh i was there tad was there

290
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tad smith he's been on been on with us before he was there and he said he said sometimes he calls

291
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me grain. Sometimes he calls me Mike. He's grain. You don't get it. I go, what don't I get? Because

292
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I said, oh my God, the people are beautiful. The food is great. Right. And you're going to see why

293
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this is relevant in a second. He goes in the European countries, if they were states in the

294
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US based upon per capita GDP, they would all rate on the 45th state and below. And I'm like, what?

295
00:21:51,420 --> 00:21:56,940
So I looked that all up and I did a whole podcast on this. So the impression is when you go to

296
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Europe that everything is awesome there, right? But then the takeaway is when you do research,

297
00:22:02,180 --> 00:22:08,800
you find the per capita GDP compared to US states is some of them are less than Mississippi,

298
00:22:08,800 --> 00:22:13,100
which is the worst state in the US. Sorry for the people that are Mississippi that I'm picking on

299
00:22:13,100 --> 00:22:17,960
them. So what does this have to do with anything? The US has the greatest economy in the world,

300
00:22:18,520 --> 00:22:24,920
right? We have the mag seven stocks, we have Nvidia, right? And so we have the best capital

301
00:22:24,920 --> 00:22:30,260
markets, right? And so that takeaway is I look at it that we're in the best of the worst. And when

302
00:22:30,260 --> 00:22:36,920
I just said, nothing changes the numbers I just said. So if we look at this, how's this related

303
00:22:36,920 --> 00:22:43,400
to MSTR? They've got almost 650,000 Bitcoins, right? If we think that Bitcoin is the best

304
00:22:43,400 --> 00:22:50,000
collateral in the world, my view is for me, I bet on the company that has the most amount of Bitcoin.

305
00:22:50,000 --> 00:22:58,780
They have a monopoly on the digital capital monopoly.

306
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I like how Saylor framed it.

307
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He had this recent podcast with Cardone and like Cardone's horrible interviewer.

308
00:23:05,420 --> 00:23:08,120
So it's like you're going to have to fast forward it if you want to watch it.

309
00:23:09,220 --> 00:23:15,260
But, you know, he talks multiple times about Bitcoin being the monopoly.

310
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And it is right.

311
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The crypto economy is three trillion dollars large.

312
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Bitcoin is $2 trillion, part of that $3 trillion.

313
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The next closest is Ethereum.

314
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It's like $300 billion.

315
00:23:25,640 --> 00:23:29,440
So you've got a monopoly in digital capital.

316
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It's trading at one times revenue.

317
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And it's this commodity.

318
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And now you've got a company that holds more than 12x of that commodity than any other company on the planet.

319
00:23:43,300 --> 00:23:45,600
Any other publicly traded company on the planet, sorry.

320
00:23:45,900 --> 00:23:48,540
There are other large private companies, I guess.

321
00:23:49,720 --> 00:23:55,520
And they're offering, you know, digital credit instruments to the market.

322
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And they're the only company really that can do that at like really significant scale at the moment.

323
00:24:02,520 --> 00:24:02,760
Okay.

324
00:24:03,320 --> 00:24:06,500
What other company has a balance sheet that's growing faster than that?

325
00:24:07,760 --> 00:24:09,200
There isn't one.

326
00:24:09,580 --> 00:24:17,220
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.

327
00:24:17,220 --> 00:24:32,000
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.

328
00:24:32,960 --> 00:24:37,940
And that's coming from somebody that works at a company doing the same thing.

329
00:24:38,900 --> 00:24:42,960
We have acknowledged that they are the absolute whale and it's the best idea.

330
00:24:43,240 --> 00:24:44,500
That's why we're doing it as well.

331
00:24:44,500 --> 00:24:55,120
and yeah like i'm i'm i'm long i'm on the entire ecosystem here and things things look good and

332
00:24:55,120 --> 00:25:00,740
i guess from from a leverage perspective like you you look around in the industry

333
00:25:00,740 --> 00:25:07,700
and you don't see there's not egregious leverage everywhere like that the capital structure that

334
00:25:07,700 --> 00:25:13,640
strategy has put in place is set to withstand significant drawdown in the price of bitcoin

335
00:25:13,640 --> 00:25:19,220
like it could go down to ten thousand dollars and even stay there for a year they're going to be

336
00:25:19,220 --> 00:25:23,760
fine everybody's going to be shaken out of positions we're going to have to rethink what

337
00:25:23,760 --> 00:25:30,980
bitcoin looks like in the future but uh that's like the balance sheet is built to withstand

338
00:25:30,980 --> 00:25:36,020
those types of things and now that they've shifted over to this uh perpetual preferred equity that

339
00:25:36,020 --> 00:25:41,000
like there is no there is no margin call there is no liquidation and all the capital that they've

340
00:25:41,000 --> 00:25:42,120
is permanent capital.

341
00:25:43,740 --> 00:25:44,640
And then I'll get back.

342
00:25:44,760 --> 00:25:45,220
There's no maturity.

343
00:25:45,840 --> 00:25:46,040
Right.

344
00:25:46,160 --> 00:25:48,300
So let me tie this back to what I was saying before,

345
00:25:48,800 --> 00:25:51,220
just about why I was talking about Europe.

346
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If in Europe,

347
00:25:53,640 --> 00:25:56,880
if because Stream was launched there,

348
00:25:57,040 --> 00:25:58,420
it's in Euro denominated,

349
00:25:59,020 --> 00:26:00,420
it's denominated in Euros.

350
00:26:00,720 --> 00:26:04,700
That is a gift to the people of Europe.

351
00:26:04,840 --> 00:26:06,600
Now, obviously, if you're in the European Union,

352
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it's denominated your local currency

353
00:26:08,060 --> 00:26:10,980
and it gives you whatever the current rate is on it

354
00:26:10,980 --> 00:26:16,640
10%. So I think that that is awesome for the people there. Like you said, they have a monopoly

355
00:26:16,640 --> 00:26:24,000
on the amount of Bitcoin they have in these digital credit products. So what I think what's

356
00:26:24,000 --> 00:26:30,620
going on is that once they amass that massive headstart, and we've seen this, I've talked about

357
00:26:30,620 --> 00:26:37,580
this before. Microsoft thought it was a great idea to come out with the Zune player the day after

358
00:26:37,580 --> 00:26:40,520
Apple announced they'd shipped 100 million iPods.

359
00:26:41,220 --> 00:26:42,360
Like, what?

360
00:26:42,900 --> 00:26:44,220
And it was the same price.

361
00:26:44,300 --> 00:26:46,000
It's like, why would I leave something

362
00:26:46,000 --> 00:26:48,860
that's the same price that's four years late?

363
00:26:49,100 --> 00:26:50,940
And that's the same thing that's happening here

364
00:26:50,940 --> 00:26:51,640
with strategy.

365
00:26:52,300 --> 00:26:53,940
They have a five-year head start.

366
00:26:54,420 --> 00:26:56,720
They have 20 times, well, compared to Mara,

367
00:26:56,780 --> 00:26:59,360
they've got whatever, 12 or 12 and a half,

368
00:26:59,720 --> 00:27:02,600
12X the holdings of Mara's Bitcoin.

369
00:27:03,400 --> 00:27:06,460
And that's the position that they're in.

370
00:27:06,460 --> 00:27:10,120
And they have Michael Sayle with four and a half million followers that's talking about this.

371
00:27:10,640 --> 00:27:12,420
So I think that that's where we are.

372
00:27:12,640 --> 00:27:19,340
And so the other thing that we say is, you know, the narrative defined the price last year.

373
00:27:19,460 --> 00:27:21,040
What was the narrative last year?

374
00:27:21,160 --> 00:27:22,540
Well, we don't know who's going to be president.

375
00:27:22,740 --> 00:27:23,980
Things could potentially change.

376
00:27:24,060 --> 00:27:25,100
Things are looking up.

377
00:27:25,100 --> 00:27:27,980
The yen carry trade blew up in August of last.

378
00:27:28,080 --> 00:27:28,960
Everybody remember that?

379
00:27:29,240 --> 00:27:31,120
That was a disaster, right?

380
00:27:31,260 --> 00:27:33,600
Everybody became an expert in the yen carry trade.

381
00:27:34,000 --> 00:27:34,500
Guess what?

382
00:27:34,500 --> 00:27:37,960
The yen carry trade just blew up two days ago again, right?

383
00:27:38,060 --> 00:27:39,720
So now we're back to where we are.

384
00:27:39,840 --> 00:27:44,820
It's amazing how it kind of repeated almost, whatever, 14 months or 15 months apart.

385
00:27:45,000 --> 00:27:47,140
And we're back to the same place again.

386
00:27:47,360 --> 00:27:49,900
And I think, and we have all the goodness that happened.

387
00:27:50,000 --> 00:27:50,820
Do I have to repeat them?

388
00:27:50,860 --> 00:27:52,560
But maybe I should, right?

389
00:27:53,020 --> 00:27:53,680
So what happened?

390
00:27:53,760 --> 00:28:00,820
We repealed SAB121, or we got SAB21, Operation Chokepoint 2.0, FASB Fair Value Accounting

391
00:28:00,820 --> 00:28:02,120
kicked in this year.

392
00:28:02,120 --> 00:28:09,460
so you can do mark to market on bitcoin obviously that works both ways um you got ross freed you got

393
00:28:09,460 --> 00:28:14,500
the genius act the clarity act will probably happen sometimes next year right so you get all

394
00:28:14,500 --> 00:28:20,880
this goodness all this good news but as of right now the price is terrible so i i think that

395
00:28:20,880 --> 00:28:27,500
right it's like it's narrative is following price now or it's like it's it's flipped and

396
00:28:27,500 --> 00:28:33,360
And like, especially for something about earnings, like if you have a commodity, then yeah.

397
00:28:33,420 --> 00:28:33,880
Last year.

398
00:28:34,040 --> 00:28:34,260
Yeah.

399
00:28:34,340 --> 00:28:35,740
So last year it was all price.

400
00:28:35,860 --> 00:28:39,120
Price ran up and the narrative was like, oh, who's going to win?

401
00:28:39,200 --> 00:28:42,860
Are they going to repeal all this nasty stuff I just talked about and do that?

402
00:28:42,920 --> 00:28:44,360
So the price ran ahead of it.

403
00:28:44,640 --> 00:28:47,220
This time the narrative is miserable.

404
00:28:47,540 --> 00:28:48,940
Let's just acknowledge that.

405
00:28:48,940 --> 00:28:52,320
And the price is, you know, and then the price follows suit.

406
00:28:52,920 --> 00:28:59,640
So I just want to be clear for the people that are listening that we are witnessing this ourselves.

407
00:28:59,940 --> 00:29:10,844
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

408
00:29:11,224 --> 00:29:13,344
That's the easiest one for people to see.

409
00:29:14,404 --> 00:29:16,944
They have to ARB that back.

410
00:29:17,104 --> 00:29:21,664
There's no way that they can leave that low, leave it below the peg price.

411
00:29:22,124 --> 00:29:23,524
They have to bring that back up.

412
00:29:23,604 --> 00:29:24,844
That's the whole idea for that.

413
00:29:25,684 --> 00:29:27,444
And so it's a very new product.

414
00:29:27,564 --> 00:29:29,504
What is it, 115 days old?

415
00:29:29,504 --> 00:29:34,244
yeah it's like 100 step in the market will step in once the dividends keep getting paid like right

416
00:29:34,244 --> 00:29:39,444
now since msdr is cratering to one mnav the the market's super worried like are the dividends

417
00:29:39,444 --> 00:29:44,964
going to get paid below one mnav and once the the market sees that the dividends get paid

418
00:29:44,964 --> 00:29:51,824
even if msdr trades in a discount uh i think those products will revert back up yeah i was thinking

419
00:29:51,824 --> 00:29:58,764
about that today as well like i think there might be some tourists who were you know it was it was

420
00:29:58,764 --> 00:30:05,484
below par. So it's like, okay, I can jump in and sell it when it gets to par, but I might as well

421
00:30:05,484 --> 00:30:11,164
hold on for that div too. You know what I mean? And then with everything else dropping, you need

422
00:30:11,164 --> 00:30:15,024
some dry powder if you want to get some cheap Bitcoin or some cheap strategy or whatever.

423
00:30:15,284 --> 00:30:20,244
So it's like, okay, I've been holding some stuff in stretch. I got my pump from 95 to a hundred.

424
00:30:20,244 --> 00:30:25,644
I got my dividend. So let me go, you know, redeploy some capital. So I think you're right.

425
00:30:25,644 --> 00:30:27,684
So the liquidity is going to build over a few months.

426
00:30:27,764 --> 00:30:32,404
People are going to see that the dividends continue to get paid and the tourists will

427
00:30:32,404 --> 00:30:34,404
probably move on.

428
00:30:34,924 --> 00:30:36,864
And then it's just going to be hodlers.

429
00:30:37,504 --> 00:30:41,344
I think there's this big drops, I think will will fizzle out eventually.

430
00:30:42,284 --> 00:30:48,344
So I personally think that the liquidity in this STRC instrument is going to build tremendously.

431
00:30:48,584 --> 00:30:49,924
It's going to take a ton of time, right?

432
00:30:49,984 --> 00:30:50,944
Like nobody.

433
00:30:51,324 --> 00:30:55,084
There's so many traders out there that don't even know this product even exists.

434
00:30:55,644 --> 00:31:00,164
right? Like if you knew, if you're a trader and you're looking to get, you know,

435
00:31:00,844 --> 00:31:06,084
four or 5% a month, you buy it on the day after the ex-div date, after people sell it,

436
00:31:06,824 --> 00:31:11,264
right? Because they know that they're going to get their dividend. And then you know that the

437
00:31:11,264 --> 00:31:14,644
company is going to be working to get it back up to a hundred. You're going to have ARBs that are

438
00:31:14,644 --> 00:31:21,124
going to come in and constantly start to trade this. And it's going to be algorithmic and it's

439
00:31:21,124 --> 00:31:24,864
just going to be built into the infrastructure. And because you know that there's going to be

440
00:31:24,864 --> 00:31:31,424
pressure being to push it back up to a hundred. And so the, the pool of liquidity just needs to

441
00:31:31,424 --> 00:31:39,904
get larger, right? It's trading a hundred million dollars a day, sometimes more, but the common

442
00:31:39,904 --> 00:31:47,704
equity is trading what, like $4 billion a day, like more than that, like $15 billion a day. I

443
00:31:47,704 --> 00:31:51,344
don't know off the top of my head, but it's like billions and billions and billions of dollars a

444
00:31:51,344 --> 00:31:58,084
it's like super liquid. Most fixed income instruments are not very liquid. This is a,

445
00:31:58,204 --> 00:32:01,804
it's like a, you're taking this fixed income instrument from a market that's not traditionally

446
00:32:01,804 --> 00:32:06,804
liquid and you're putting in an equity wrapper. Now it's tradable as an equity and people have

447
00:32:06,804 --> 00:32:11,904
to wrap their head around it. Okay. It's supposed to be stable, but it's paying me 12%. So how much

448
00:32:11,904 --> 00:32:17,404
risk am I taking on? And like, they're using the equity to pay the dividends. Like it's going to

449
00:32:17,404 --> 00:32:21,684
take time for people to understand how this thing works. And that's where the alpha is,

450
00:32:21,684 --> 00:32:27,864
right? If you're willing to hold this thing for, you know, two months, three months, there's a,

451
00:32:27,924 --> 00:32:33,244
there's a really high likelihood it's going to get back to a hundred. So yeah, I think this

452
00:32:33,244 --> 00:32:38,464
checking account narrative is going to develop and evolve over time. Like feeling comfortable

453
00:32:38,464 --> 00:32:47,004
having the liquidity to be able to go in and out super quickly and just maintain a peg of a hundred.

454
00:32:47,004 --> 00:32:53,584
I think is going to be, it's going to take some time, but while you wait for that to happen,

455
00:32:53,584 --> 00:32:59,644
if you've been sitting here watching what's going on, you get to collect, what is it?

456
00:32:59,664 --> 00:33:04,124
10 and a half, 10 and a half percent interest plus any appreciation on the principal.

457
00:33:04,504 --> 00:33:08,004
If you're buying it below a hundred, like that's a good deal.

458
00:33:08,304 --> 00:33:09,504
That's a really good deal.

459
00:33:09,904 --> 00:33:10,944
Like where else are you going to go?

460
00:33:10,944 --> 00:33:18,404
So I just threw a link in the chat and it's for hodlbase.io.

461
00:33:18,824 --> 00:33:20,884
Excuse me, I forgot the guy that put this together.

462
00:33:21,424 --> 00:33:23,524
But we don't get paid for this.

463
00:33:24,104 --> 00:33:29,884
And if you go there, it's over $100 million is the average volume on stretch.

464
00:33:29,964 --> 00:33:31,204
You can click into the dashboard.

465
00:33:31,804 --> 00:33:34,244
And then it's over $7 billion in volume.

466
00:33:34,864 --> 00:33:39,204
So what I find that's awesome about this, this is the good and bad that goes both ways.

467
00:33:39,204 --> 00:33:48,144
you have these because we have a 24 hour price on Bitcoin and we know the amount of outs and

468
00:33:48,144 --> 00:33:53,824
all the metrics for these companies. Strategy has their own dashboard and it's updated daily.

469
00:33:53,824 --> 00:34:00,284
But if you were to ask me exactly how many NVIDIA GPUs were shipped on a daily basis or hourly

470
00:34:00,284 --> 00:34:06,244
basis, I can't tell you that. If you want to figure out how many Tesla cars are shipped on

471
00:34:06,244 --> 00:34:12,424
an hourly basis. Can't tell you that. Somebody may be flying a drone over the factory to count

472
00:34:12,424 --> 00:34:17,804
all the cars that come out. Maybe that does exist. But this is both the good and the bad.

473
00:34:18,364 --> 00:34:20,624
And you were talking about this at the very beginning of the call, Jeff, saying that

474
00:34:20,624 --> 00:34:26,564
we live in a very short timeframe, low patient society. And we have these dashboards. And these

475
00:34:26,564 --> 00:34:32,484
guys make these awesome websites, these awesome dashboards that show us basically near real-time

476
00:34:32,484 --> 00:34:37,204
information. Why is that great? You have near real-time information. Why is that bad? You have

477
00:34:37,204 --> 00:34:42,404
near real-time information. I mean, it kind of works. When the price is up, you want real-time

478
00:34:42,404 --> 00:34:47,764
information. When the price is going down, you're like, can you put a two-day lag into it?

479
00:34:48,364 --> 00:34:53,344
So I think this is the awesome part of where we are today. And this information is verifiable.

480
00:34:53,844 --> 00:34:59,504
It's not like it's made up. And I think that this is great. So when we talk about the ARB stepping in,

481
00:34:59,504 --> 00:35:04,064
that we can see there's enough volume to do this, right?

482
00:35:04,504 --> 00:35:06,464
And why do the ARB traders do this?

483
00:35:06,584 --> 00:35:09,484
Because they're trading it and they make money on it.

484
00:35:09,544 --> 00:35:10,704
That's why they do it.

485
00:35:11,184 --> 00:35:14,204
They know that he has a mandate to get the stock back,

486
00:35:14,464 --> 00:35:16,344
sorry, to get stretched back up to $100.

487
00:35:16,864 --> 00:35:18,724
If he doesn't do it,

488
00:35:18,864 --> 00:35:21,784
then he's gonna have to raise the interest rate on it,

489
00:35:22,104 --> 00:35:22,724
you know, to get it.

490
00:35:22,784 --> 00:35:23,744
It's at 10.5.

491
00:35:23,824 --> 00:35:26,384
He'll have to bring it to 10.75, right?

492
00:35:26,384 --> 00:35:27,324
It's the last week.

493
00:35:27,324 --> 00:35:29,544
It's the VWAP of the last week of the month, correct?

494
00:35:31,664 --> 00:35:32,144
Right?

495
00:35:32,544 --> 00:35:32,664
Yeah.

496
00:35:32,784 --> 00:35:33,004
So.

497
00:35:35,064 --> 00:35:39,824
So somebody asked if, where is it?

498
00:35:39,884 --> 00:35:46,024
So somebody asked, can institutional capital just sit on it to get them to increase the

499
00:35:46,024 --> 00:35:46,244
dividend?

500
00:35:47,044 --> 00:35:47,944
Theoretically, yes.

501
00:35:48,484 --> 00:35:51,684
But the incentive, there's like very little incentive to do that.

502
00:35:51,684 --> 00:35:57,924
You'd be like shorting stretch, which you know everybody is going to push to 100.

503
00:35:58,204 --> 00:36:06,564
As you short it, the effective yield goes up and you're shorting it to get a quarter basis point more a month.

504
00:36:06,784 --> 00:36:12,564
That would be a very – it's not a great trade.

505
00:36:12,764 --> 00:36:13,944
There are so many other ways to make money.

506
00:36:13,984 --> 00:36:16,924
There's something I realize that seems obvious in hindsight.

507
00:36:16,924 --> 00:36:21,544
But when you short something like stretch, you have to pay – you owe the dividend.

508
00:36:21,684 --> 00:36:24,844
because you're borrowing the shares and you're selling them.

509
00:36:25,404 --> 00:36:30,524
And so you owe those dividends to the person from whom you borrow the shares.

510
00:36:31,144 --> 00:36:31,244
Right.

511
00:36:31,364 --> 00:36:32,764
There's two problems.

512
00:36:33,004 --> 00:36:34,064
You owe those dividends.

513
00:36:34,404 --> 00:36:37,724
So if you borrow those shares on the ex-dividend date, then you have to pay it.

514
00:36:37,824 --> 00:36:40,204
The other thing, people are like, I just want to short a stock.

515
00:36:41,484 --> 00:36:46,004
If you short any stock, you have to pay an annual percentage rate

516
00:36:46,004 --> 00:36:49,824
that is decided by whichever brokerage house you're in

517
00:36:49,824 --> 00:36:54,964
in order to borrow those shares to short it. It's not free. And so you have to figure out the

518
00:36:54,964 --> 00:36:59,224
percentage that you're paying to borrow the shares. Is it going to go down enough in order

519
00:36:59,224 --> 00:37:05,764
to justify that trade? Just like you buy options, you have to pay the premium on it, right? Or,

520
00:37:06,284 --> 00:37:10,024
you know, for it to make sense, if you think it's going to go up, you have to pay the premium to see

521
00:37:10,024 --> 00:37:14,364
if that's going to happen. It's not like these things are free and people think, oh, they can,

522
00:37:14,364 --> 00:37:16,444
Could an institution short stretch?

523
00:37:16,944 --> 00:37:17,264
Yes.

524
00:37:17,724 --> 00:37:19,204
Does it make financial sense?

525
00:37:19,564 --> 00:37:20,504
Probably not.

526
00:37:22,624 --> 00:37:24,324
Yeah, it doesn't make sense.

527
00:37:24,344 --> 00:37:26,804
Now, do I think that they want to trade it and capture the spread?

528
00:37:27,584 --> 00:37:29,564
That is a juicy thing to do.

529
00:37:30,004 --> 00:37:32,164
That's the part where they'll trade it back and forth,

530
00:37:32,644 --> 00:37:37,284
algorithmic trading to make the spread as it goes from whatever price it was today,

531
00:37:37,664 --> 00:37:40,224
94 as it gets pushed back up to $100.

532
00:37:40,784 --> 00:37:43,324
For them, that's a very tight trading range.

533
00:37:43,324 --> 00:37:50,124
it's a perpetual pref that functions like a bond, functions like, not exact.

534
00:37:50,564 --> 00:37:50,724
Yeah.

535
00:37:51,944 --> 00:37:54,684
The incentives are aligned really well.

536
00:37:54,904 --> 00:37:57,024
Like the engineering of these products is,

537
00:37:58,964 --> 00:38:02,224
it aligns incentives to be along the credit quality of the instrument,

538
00:38:02,224 --> 00:38:09,184
as opposed to the trading that occurred with the convertible bonds.

539
00:38:09,424 --> 00:38:12,004
It's like, it's the alignment of incentives.

540
00:38:12,004 --> 00:38:18,484
Right. So somebody just asked the question about Misty. So I was thinking about buying Misty last

541
00:38:18,484 --> 00:38:22,024
year and I got a phone call from somebody and with the, basically the person, I won't leave

542
00:38:22,024 --> 00:38:26,384
the person's name out. I got a phone call. The person just said, grain, just read the prospectus.

543
00:38:26,544 --> 00:38:32,624
And I was like, oh, so I read the prospectus. Now the first 35, 40 pages of the prospectus

544
00:38:32,624 --> 00:38:37,564
was just boilerplate. I get to like page 40 something. And I was like, oh, this looks terrible.

545
00:38:37,564 --> 00:38:43,164
I and and and I did not plug it into AI I was doing the old-fashioned reading it

546
00:38:43,164 --> 00:38:46,904
and then when I read through how it was set up I'm like this is not good

547
00:38:46,904 --> 00:38:54,084
and so from my perspective I had bought shares and then I sold it basically like a day later

548
00:38:54,084 --> 00:39:00,104
after I should have done my due diligence in advance but I did it and so with that once you

549
00:39:00,104 --> 00:39:04,664
read that you know and so when I heard I knew that Misty was return of capital

550
00:39:04,664 --> 00:39:08,964
and the yield, I want to talk about this for a second.

551
00:39:09,344 --> 00:39:13,264
The SEC allows the yield to include return of capital in the yield

552
00:39:13,264 --> 00:39:17,464
and the trading that it does in order to generate that income.

553
00:39:17,984 --> 00:39:21,144
According to the SEC, both of those could be listed as yield.

554
00:39:21,604 --> 00:39:23,524
I don't know what the current yield is in YieldMax.

555
00:39:23,604 --> 00:39:25,044
I can look it up right now, but it doesn't matter.

556
00:39:25,384 --> 00:39:27,624
Back then, they were saying it was 89% a year.

557
00:39:28,684 --> 00:39:32,484
But 80% of it was your own money coming back.

558
00:39:32,484 --> 00:39:35,044
And once I read this all, I was like, oh, I don't like this at all.

559
00:39:35,524 --> 00:39:45,124
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.

560
00:39:45,304 --> 00:39:48,764
And I was like, oh, this sounds like Misty all over again.

561
00:39:49,404 --> 00:39:51,044
And so I wrote a post on it.

562
00:39:51,324 --> 00:39:55,704
And then some people commented a few weeks later when we found out it was return of capital.

563
00:39:55,704 --> 00:40:05,324
And when that happened, I was like, initially when I saw this, I wasn't happy about it.

564
00:40:05,564 --> 00:40:10,844
But then I thought about Stretch and Stretch is designed to maintain a peg, which Misty doesn't.

565
00:40:10,924 --> 00:40:12,524
And that was the question that popped up here.

566
00:40:13,064 --> 00:40:16,364
So Misty, M-S-T-Y, is not pegged to anything.

567
00:40:16,584 --> 00:40:19,704
And we've seen this price erosion happen.

568
00:40:20,584 --> 00:40:24,024
It's basically dropped to one-fourth, I believe, of what it used to be.

569
00:40:24,024 --> 00:40:29,504
and it's completely different than stretch but stretch is only talking about a 10 and a half

570
00:40:29,504 --> 00:40:36,984
percent return right that's the rate that we see they're not offering an 89 return and that's the

571
00:40:36,984 --> 00:40:43,264
big difference between stretch and and misty so those were two different things and i think that

572
00:40:43,264 --> 00:40:49,144
you know yield max you know those products were designed i guess for you to be in it for

573
00:40:49,144 --> 00:40:51,864
maybe a month or two, but it kind of defeats the purpose.

574
00:40:53,484 --> 00:40:54,084
So Misty...

575
00:40:54,084 --> 00:40:59,364
I think for like a year. Yeah. If you just want to hold something and you know it's...

576
00:40:59,364 --> 00:41:05,644
Yeah. Misty was actually, there's been several credible studies because the battle cry for

577
00:41:05,644 --> 00:41:11,444
the Misty Bulls is that it's for income, right? But there have been several credible studies

578
00:41:11,444 --> 00:41:18,704
that show that even for income, just hodling strategy shares outperforms Misty.

579
00:41:19,144 --> 00:41:47,604
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.

580
00:41:47,604 --> 00:41:49,224
So, yeah.

581
00:41:50,244 --> 00:41:50,684
Yeah.

582
00:41:50,884 --> 00:41:53,404
Let me chime in real fast on the Misty piece.

583
00:41:53,504 --> 00:41:55,284
I just went to the website to look at it.

584
00:41:55,644 --> 00:41:59,384
So if you go to the Misty website, look, they designed the product.

585
00:42:00,024 --> 00:42:01,324
And this is right on their website.

586
00:42:01,404 --> 00:42:02,164
I'm not making this up.

587
00:42:02,624 --> 00:42:06,204
The distribution rate is 92.55%.

588
00:42:06,204 --> 00:42:11,484
The 30-day SEC yield, you got to love how they call it SEC yield.

589
00:42:12,024 --> 00:42:15,424
And on distribution rate, there's an asterisk.

590
00:42:15,424 --> 00:42:21,184
And it says right here, the first asterisk on the 92.55%.

591
00:42:21,744 --> 00:42:31,044
The most recent distribution on November 19th contains 24.76% return of capital and 75.24% of income.

592
00:42:31,744 --> 00:42:31,864
Right?

593
00:42:32,104 --> 00:42:36,984
And then it talks about the 30-day SEC yield and then the return of capital.

594
00:42:36,984 --> 00:42:46,524
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.

595
00:42:46,664 --> 00:42:47,644
That's in my view.

596
00:42:47,804 --> 00:42:52,484
If people love this, then, you know, whatever, do your own research and buy it.

597
00:42:52,724 --> 00:42:55,124
For me, I don't think the math works.

598
00:42:58,364 --> 00:43:01,044
The AUM has fallen, I think, at its peak.

599
00:43:01,104 --> 00:43:03,824
It was somewhere around like five and a half, maybe six billion of AUM.

600
00:43:03,824 --> 00:43:05,504
and now it's down at like two and a quarter,

601
00:43:06,144 --> 00:43:09,164
which I think is like bullish

602
00:43:09,164 --> 00:43:11,684
for when this does turn back around the other way,

603
00:43:11,764 --> 00:43:12,844
that you have much less people

604
00:43:12,844 --> 00:43:15,304
that are selling covered calls,

605
00:43:15,744 --> 00:43:19,084
chopping off the upside systemically with it,

606
00:43:19,504 --> 00:43:21,524
which is interesting.

607
00:43:22,604 --> 00:43:23,624
Should we talk four-year cycles?

608
00:43:23,804 --> 00:43:25,184
Somebody brought that up.

609
00:43:25,584 --> 00:43:26,724
Did you guys talk about this last week?

610
00:43:26,724 --> 00:43:31,444
Yeah, I focused on it mostly with like macro overlay

611
00:43:31,444 --> 00:43:32,644
and then we talked perhaps too,

612
00:43:32,644 --> 00:43:38,644
that so funny i mean just in europe a lot of people were just bringing up four-year cycle

613
00:43:38,644 --> 00:43:45,944
they're like up four-year four-year cycle pack it up i'm selling december like if uh and it's it's

614
00:43:45,944 --> 00:43:52,604
just so crazy or it's just like they're thinking about just a number of days like it's just a

615
00:43:52,604 --> 00:43:58,104
number of days it's just i'm gonna sell every four years and i'm not like conceptualizing or

616
00:43:58,104 --> 00:44:04,224
contextualizing anything about like the architecture of the market or, or the, like the infrastructure

617
00:44:04,224 --> 00:44:13,684
or the regulatory environment or, or any macro or anything like that. It's just, it was crazy.

618
00:44:13,684 --> 00:44:19,084
Like probably 50% of the people I talked to were like four, like four year cycle people. And, uh,

619
00:44:20,384 --> 00:44:25,724
yeah, I guess that's a market, right? If 50% of the people think it's one way and 50% of people

620
00:44:25,724 --> 00:44:30,304
think it's the other way where we're like right it's really attracted to the four-year cycle

621
00:44:30,304 --> 00:44:37,784
thing um i think because i like patterns uh like actually i'm old enough to have played video games

622
00:44:37,784 --> 00:44:42,904
in an arcade where i literally had to put quarters into them and some of my favorite games were like

623
00:44:42,904 --> 00:44:48,924
galaga um pac-man stuff like that and you could actually you could just get into this rhythm

624
00:44:48,924 --> 00:44:54,284
where it was like you knew you were gonna have to you know you know left a little bit right you

625
00:44:54,284 --> 00:44:58,824
know, just jogging back and forth. And so when I saw plan B with the four-year, you know, stock to

626
00:44:58,824 --> 00:45:05,264
flow model, and then I was kind of attracted to the power law a little bit. I just wanted

627
00:45:05,264 --> 00:45:11,344
predictability. Like I wanted to be able to make this make sense. And I couldn't really,

628
00:45:11,504 --> 00:45:17,864
I couldn't really stay on, on task because it was like, well, nothing can be guaranteed.

629
00:45:18,244 --> 00:45:22,884
But then I thought, well, maybe if this is just in the protocol and the halvings are affecting

630
00:45:22,884 --> 00:45:30,324
this, like maybe this is for real, but it just, it just can't be as predictable as myself. And I

631
00:45:30,324 --> 00:45:35,004
think a bunch of other people want it to be. So yeah, I think there's gotta be a lot of people

632
00:45:35,004 --> 00:45:40,484
getting okie doke thinking, yeah, just sell by the end of the year and wait a year and a half,

633
00:45:40,724 --> 00:45:45,464
catch the bottom and jump back in. I think there's, there's gotta be some surprises in store.

634
00:45:45,464 --> 00:45:55,044
well the typical four-year the typical business cycle is four years like which kind of makes sense

635
00:45:55,044 --> 00:45:59,904
you think about the political regimes they're generally four years then you get turnover and

636
00:45:59,904 --> 00:46:05,944
all these things but it the data is pointing to an extended business cycle like maybe a five or

637
00:46:05,944 --> 00:46:11,424
six year business cycle so we might see uh particularly with tariffs and like how the

638
00:46:11,424 --> 00:46:18,504
economy shifted and like how it's designed and structured the red sweep etc and so we might see

639
00:46:18,504 --> 00:46:27,364
this extended cycle where you know the net maybe 26 is is bold like the entire market like the

640
00:46:27,364 --> 00:46:33,724
entire year who who knows but again i come back to like leverage in the system and thinking about

641
00:46:33,724 --> 00:46:43,324
there's like what would be the huge catalyst for a really dramatic bear market when

642
00:46:43,324 --> 00:46:48,904
like everything everything is a tailwind from here like from here really

643
00:46:48,904 --> 00:46:59,324
yes i um i do have one weird conspiracy theory um so i was at the bitcoin veteran summit last week

644
00:46:59,324 --> 00:47:06,904
and I was pretty stoked because there was a fifth generation warfare segment and there was like some

645
00:47:06,904 --> 00:47:16,644
retired intel guys and some special forces guys and fifth generation warfare has evolved to the

646
00:47:16,644 --> 00:47:24,244
point where every single person on the planet is at war 24-7. We are all under attack. It's

647
00:47:24,244 --> 00:47:32,964
everything from the sentiment on social media to, you know, every other thing that can kind of make

648
00:47:32,964 --> 00:47:43,984
you pliable and depressed. And you just have to kind of like be on guard for that. And where that

649
00:47:43,984 --> 00:47:49,284
kind of led me though, is that if we're all under attack all the time, because the fiat system is

650
00:47:49,284 --> 00:47:57,124
not trying to let Bitcoin win, then Bitcoin also must be under attack. And it made me think about,

651
00:47:57,764 --> 00:48:05,604
is Bitcoin's price suffering from some kind of attack that the fiat system is trying to

652
00:48:05,604 --> 00:48:10,744
not go down without a fight? And of course, I'm a little bit biased on this particular front,

653
00:48:10,804 --> 00:48:17,504
because I've been talking about Bitcoin core and knots for quite a while. But if I have to imagine

654
00:48:17,504 --> 00:48:20,224
what a credible attack on Bitcoin would look like,

655
00:48:20,544 --> 00:48:22,724
I would try to infiltrate the people

656
00:48:22,724 --> 00:48:24,604
who are developing the code.

657
00:48:26,204 --> 00:48:29,604
And back in, was it 2017?

658
00:48:29,804 --> 00:48:31,884
We were supposed to get 100K and we only made it to 67.

659
00:48:33,324 --> 00:48:35,664
That was right around the time that SegWit,

660
00:48:35,804 --> 00:48:37,544
we thought we won the block size wars.

661
00:48:38,064 --> 00:48:41,844
But in reality, I'm not really sure that that's the case.

662
00:48:42,224 --> 00:48:44,884
And I think maybe that the network has kind of

663
00:48:44,884 --> 00:48:53,044
somewhat detected this attack that's been kind of being implemented over many years.

664
00:48:54,064 --> 00:48:57,724
The taproot upgrade made it even worse.

665
00:48:58,964 --> 00:49:03,884
And Luke Dasher actually identified that inscriptions hack.

666
00:49:03,884 --> 00:49:07,564
but they kind of 1984 Newspeak

667
00:49:07,564 --> 00:49:11,304
redefined the terms to make it

668
00:49:11,304 --> 00:49:15,304
you know, to make it not a bug

669
00:49:15,304 --> 00:49:17,904
this is a feature not a bug kind of thing

670
00:49:17,904 --> 00:49:22,784
and so this seems like it's culminating with the V30 drama

671
00:49:22,784 --> 00:49:24,944
that we've had recently

672
00:49:24,944 --> 00:49:30,764
and so I'm wondering if that's maybe why we didn't get 100k two cycles ago

673
00:49:30,764 --> 00:49:33,944
and why we're not getting 444 a million this cycle.

674
00:49:34,984 --> 00:49:40,904
And the silver lining to that is that we've got a proposal.

675
00:49:41,224 --> 00:49:43,384
It was originally called BIP444.

676
00:49:44,164 --> 00:49:52,904
I think the official term for it now is the reduced data temporary soft fork.

677
00:49:53,304 --> 00:49:59,044
And if this goes through, I think this will be a self-healing event for Bitcoin.

678
00:49:59,044 --> 00:50:04,884
and we might get that fix by like February.

679
00:50:05,924 --> 00:50:10,704
So maybe the business cycle turns around in 2026.

680
00:50:10,984 --> 00:50:12,484
All the people who are planning to sell

681
00:50:12,484 --> 00:50:14,884
for the four-year cycle are gone.

682
00:50:15,804 --> 00:50:20,124
And if the network gets this fix in place,

683
00:50:20,844 --> 00:50:23,284
every single time we've overcome a black swan event,

684
00:50:23,364 --> 00:50:24,564
we've always pumped, right?

685
00:50:24,624 --> 00:50:26,804
Bitcoin comes back better, faster, stronger.

686
00:50:26,804 --> 00:50:29,604
and I'm just hopeful that

687
00:50:29,604 --> 00:50:30,964
that this

688
00:50:30,964 --> 00:50:33,504
spam drama gets resolved

689
00:50:33,504 --> 00:50:35,064
and Bitcoin

690
00:50:35,064 --> 00:50:37,284
demonstrates its resilience

691
00:50:37,284 --> 00:50:39,324
and I think it is, I think we're

692
00:50:39,324 --> 00:50:42,064
demonstrating that we are anti-fragile

693
00:50:42,064 --> 00:50:43,284
and this

694
00:50:43,284 --> 00:50:44,424
reaction

695
00:50:44,424 --> 00:50:46,924
has caused a lot of

696
00:50:46,924 --> 00:50:48,844
passive Bitcoiners

697
00:50:48,844 --> 00:50:51,244
to run nodes, start mining

698
00:50:51,244 --> 00:50:53,384
and really kind of pay attention

699
00:50:53,384 --> 00:50:55,484
because I used to think all I had to do was stack sats

700
00:50:55,484 --> 00:50:58,164
but I think there's a little bit more

701
00:50:58,164 --> 00:50:59,484
that we're going to have to do

702
00:50:59,484 --> 00:51:02,284
I don't think it's as big of a conspiracy theory

703
00:51:02,284 --> 00:51:02,984
as like

704
00:51:02,984 --> 00:51:05,004
flat earth or

705
00:51:05,004 --> 00:51:08,004
lizard people controlling the world

706
00:51:08,004 --> 00:51:09,244
from an underground

707
00:51:09,244 --> 00:51:11,644
under Antarctic or anything

708
00:51:11,644 --> 00:51:14,084
but what do you guys

709
00:51:14,084 --> 00:51:15,624
think about my other delusions?

710
00:51:17,604 --> 00:51:18,224
I think it's

711
00:51:18,224 --> 00:51:19,604
interesting to hear your perspective on

712
00:51:19,604 --> 00:51:22,004
the state of the network because that's something we

713
00:51:22,004 --> 00:51:23,464
definitely don't talk about is the infrastructure

714
00:51:23,464 --> 00:51:25,704
and the code base, the developers,

715
00:51:26,144 --> 00:51:28,504
and everything that has to do with Bitcoin.

716
00:51:28,724 --> 00:51:30,424
So I appreciate that perspective.

717
00:51:30,804 --> 00:51:31,804
And it seems like it makes sense.

718
00:51:31,944 --> 00:51:35,564
I mean, pressure on the network from external forces

719
00:51:35,564 --> 00:51:38,464
would be detrimental to price and sentiment

720
00:51:38,464 --> 00:51:40,004
for all the above reasons.

721
00:51:40,664 --> 00:51:42,104
I also think there's something to that too,

722
00:51:42,224 --> 00:51:43,344
is this idea that if everyone's selling

723
00:51:43,344 --> 00:51:44,044
in a four-year cycle,

724
00:51:44,124 --> 00:51:45,744
it is self-perpetuating for a little bit.

725
00:51:46,244 --> 00:51:48,544
If everyone's selling, that is sell pressure.

726
00:51:49,004 --> 00:51:51,004
You can say, everyone's perished.

727
00:51:51,164 --> 00:51:52,284
It's a Druckenmiller quote.

728
00:51:52,284 --> 00:51:59,104
It's like, everyone wants to be a contrarian investor, but the crowd makes money 80% of the time.

729
00:51:59,244 --> 00:52:01,884
They just lose it all the other 20%.

730
00:52:01,884 --> 00:52:05,664
So he's like, it actually pays to go with the crowd 80% of the time.

731
00:52:05,944 --> 00:52:11,644
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?

732
00:52:12,024 --> 00:52:19,404
Like the narrative, like all these are pretty structural kind of good, long asset trades.

733
00:52:19,464 --> 00:52:20,544
You want to be with the crowd there.

734
00:52:20,544 --> 00:52:24,944
But then there are times when you don't want to be too euphoric or on the wrong side of it.

735
00:52:25,244 --> 00:52:26,124
So, yeah.

736
00:52:26,264 --> 00:52:30,324
So I want to be more precise here on the cycles.

737
00:52:31,024 --> 00:52:35,884
The four-year cycles for Bitcoin seem to coincide with U.S. presidential elections.

738
00:52:36,384 --> 00:52:42,924
So you had the 2012 halving, 2016, 2020, 2024 halvings.

739
00:52:43,064 --> 00:52:46,624
And by a stroke of luck, it just corresponded with U.S. presidential elections.

740
00:52:47,264 --> 00:52:52,044
And then the going thought process was in 2017.

741
00:52:52,524 --> 00:52:57,284
And I didn't realize at the time when I got into 2017 that 18 months after the halving,

742
00:52:57,444 --> 00:53:01,844
Bitcoin tends to hit its all-time high and then you go into a crypto winter.

743
00:53:02,464 --> 00:53:06,944
Now, in the previous cycles, it was kind of weird because you had Mt. Gox in 2014 and

744
00:53:06,944 --> 00:53:08,164
you had a big run-up in 2012.

745
00:53:08,624 --> 00:53:12,584
And then that was a major problem for what happened to Mt. Gox in Japan.

746
00:53:13,064 --> 00:53:15,844
So I think that each cycle is different.

747
00:53:15,844 --> 00:53:21,144
I'm not saying there's a four-year cycle. What I think is different now that I would say,

748
00:53:21,244 --> 00:53:24,864
why I think this time is different, and whenever you say that, somebody's like, oh, no, it's not.

749
00:53:25,664 --> 00:53:33,484
Now, are there self-fulfilling prophecies? Sure. But back in 2020, if you look back to the olden

750
00:53:33,484 --> 00:53:42,024
days, 2020, right now, the total federal deficit is $38 trillion with approval to go to $41 trillion.

751
00:53:42,024 --> 00:53:49,264
2020, it was $23.5 trillion. We currently have a trillion dollars in interest payments each year.

752
00:53:49,704 --> 00:53:55,984
2020, it was $345 billion. So that's almost tripled. If you're just paying the interest

753
00:53:55,984 --> 00:54:03,204
on the $38 trillion in debt, it never gets any lower. That's not changing. And then debt to GDP

754
00:54:03,204 --> 00:54:11,184
was 102%, and currently it's 125%. None of that is going to get fixed. And the tariffs,

755
00:54:11,184 --> 00:54:23,624
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.

756
00:54:24,004 --> 00:54:26,204
So why do I think that this cycle is different?

757
00:54:26,784 --> 00:54:32,884
It's because structurally and macroeconomically, the amount of debt is different in the U.S.

758
00:54:33,364 --> 00:54:35,464
You cannot refute those numbers.

759
00:54:35,464 --> 00:54:41,904
And so 2017, we weren't talking about these numbers being that high.

760
00:54:42,604 --> 00:54:52,204
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.

761
00:54:52,844 --> 00:54:55,124
And they have, you guys could all look it up.

762
00:54:55,524 --> 00:55:04,044
There's 2.5 million Bitcoins inside the Spot Bitcoin ETFs and the Bitcoin treasury companies, right?

763
00:55:04,044 --> 00:55:08,184
That's a million more than that are on the exchanges.

764
00:55:08,184 --> 00:55:12,864
So I just think that we have, do we have some whales selling because the price is close

765
00:55:12,864 --> 00:55:14,284
to a hundred grand?

766
00:55:14,284 --> 00:55:15,284
Probably.

767
00:55:15,284 --> 00:55:18,244
Do we have in-kind that's happening that you could not do?

768
00:55:18,244 --> 00:55:23,644
The in-kind transfers into spot Bitcoin ETFs was not possible until like maybe like three

769
00:55:23,644 --> 00:55:25,064
months ago.

770
00:55:25,064 --> 00:55:29,964
And so now they could do this in-kind transfer for their Bitcoin into a spot Bitcoin ETF.

771
00:55:29,964 --> 00:55:31,664
Why would they do that?

772
00:55:31,664 --> 00:55:33,204
Because then they could borrow against it.

773
00:55:33,204 --> 00:55:40,464
it's easier to borrow. Why is it easier to borrow against a spot Bitcoin ETF? And the reason why is

774
00:55:40,464 --> 00:55:45,464
because in November of last year, there became an option market on iBit that launched sometime

775
00:55:45,464 --> 00:55:51,744
around the third week in November. That did not exist, right? So what do they do? They do a put

776
00:55:51,744 --> 00:55:57,404
call collar on it and they allow you to borrow against it, right? The people that are listening

777
00:55:57,404 --> 00:56:03,104
probably unaware that that's possible to happen. But if you have large sums of money, you could do

778
00:56:03,104 --> 00:56:10,704
that with a brokerage to put that in place. That did not exist in the previous cycles.

779
00:56:11,144 --> 00:56:17,064
The other thing, I want to give some hopium to people, what's going on here, right? You had 2021

780
00:56:17,064 --> 00:56:23,044
Bitcoin peaks, right? It happens right around Thanksgiving. Then what proceeds to happen,

781
00:56:23,044 --> 00:56:30,384
why I think in that cycle, we didn't hit $100,000. People are buying bored ape NFTs.

782
00:56:30,384 --> 00:56:35,384
That money bleeds out of buying Bitcoin and there was no spot Bitcoin ETF.

783
00:56:36,064 --> 00:56:39,324
MSTR was only basically into this for a year, right?

784
00:56:39,424 --> 00:56:40,044
Think about it.

785
00:56:40,244 --> 00:56:43,764
People are buying board ape NFTs for this huge amounts of money.

786
00:56:44,204 --> 00:56:48,724
The Beeple NFT that came out, all these large ETH purchases.

787
00:56:49,304 --> 00:56:53,604
And people are like, oh my God, ETH ran up higher as a percentage in that cycle.

788
00:56:54,024 --> 00:56:57,064
So that bled off the buying pressure on Bitcoin.

789
00:56:57,364 --> 00:56:58,544
Then what happened after it?

790
00:56:58,544 --> 00:56:59,744
You have two things that happened.

791
00:57:00,264 --> 00:57:03,924
FTX blows up with SBF, Sam Bankman-Fried, right?

792
00:57:04,064 --> 00:57:08,604
And you have the Terra Luna collapse combined with 3AC, right?

793
00:57:08,684 --> 00:57:13,384
That hypothecated all the Bitcoins for BlockFi, Celsius, all the lending.

794
00:57:13,784 --> 00:57:18,564
And then basically the Winklevoss twins got duped with lending the 3AC.

795
00:57:19,164 --> 00:57:21,564
Kyle Davies and his other buddy disappears.

796
00:57:21,864 --> 00:57:24,104
And we have that whole mess that happens.

797
00:57:24,664 --> 00:57:25,684
What's different now?

798
00:57:27,204 --> 00:57:29,184
You have spot Bitcoin ETFs, like I just said.

799
00:57:29,184 --> 00:57:30,724
all the goodness that I said before.

800
00:57:31,164 --> 00:57:32,824
And so I think this time is different.

801
00:57:33,064 --> 00:57:35,484
And Bitcoin's a $2 trillion asset class.

802
00:57:36,004 --> 00:57:37,284
So do I think now it kind of,

803
00:57:37,344 --> 00:57:39,064
sometimes it trades like a tech stock?

804
00:57:39,744 --> 00:57:39,984
Yeah.

805
00:57:41,064 --> 00:57:43,084
Yeah, just what you mentioned where people are,

806
00:57:43,204 --> 00:57:46,164
you know, we're pouring money into NFTs.

807
00:57:46,444 --> 00:57:48,344
People are making that same argument now

808
00:57:48,344 --> 00:57:50,204
and blaming treasury companies and saying,

809
00:57:50,324 --> 00:57:52,584
oh, that was money that should have went straight to Bitcoin.

810
00:57:53,844 --> 00:57:54,764
And, you know,

811
00:57:56,124 --> 00:57:58,824
they're tap dancing and like,

812
00:57:58,824 --> 00:57:59,824
Sure.

813
00:57:59,824 --> 00:58:02,584
Is that true that that's what happened?

814
00:58:02,584 --> 00:58:03,584
Yes.

815
00:58:03,584 --> 00:58:16,468
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

816
00:58:16,468 --> 00:58:22,528
Metaplan. I'm the first, I did my tax loss harvesting two months ago on that trade. I don't

817
00:58:22,528 --> 00:58:26,888
want to say how much I lost on it, but you know, you have to do your own research, make your

818
00:58:26,888 --> 00:58:31,148
decision, live by those decisions. And then you decide what you want to do with it. Do you want

819
00:58:31,148 --> 00:58:36,228
to hold it and wait till it comes up? And I was like, no, I'd rather deploy the capital that I

820
00:58:36,228 --> 00:58:40,388
have left from that, what I thought was a great investment and put it into something else, which

821
00:58:40,388 --> 00:58:46,148
I did. And so you have to make those decisions in life, right? Yeah, I think there's a clear

822
00:58:46,148 --> 00:58:52,108
distinction. Some people just group all the treasury companies in as shit coins, but I think

823
00:58:52,108 --> 00:58:57,588
clearly there are red flags for shit coins. Like, you know, if it's not proof of work,

824
00:58:57,588 --> 00:59:05,428
if it's centralized if they had a pre-mine um i think there's one more um you know you're dealing

825
00:59:05,428 --> 00:59:11,808
with a scam altcoin but with treasury companies i mean we've got freaking sec filings for god's sake

826
00:59:11,808 --> 00:59:18,928
you know centralized yes yes there are a huge pain yeah there's not going to be any filings

827
00:59:18,928 --> 00:59:25,148
with these altcoins right those are just rug pull pump and dump and if if you if you think

828
00:59:25,148 --> 00:59:31,708
that the future doesn't have Bitcoin treasury companies in it, then you don't think companies

829
00:59:31,708 --> 00:59:37,768
exist in the future. Like clearly companies will exist and every single person in every single

830
00:59:37,768 --> 00:59:44,568
company will own Bitcoin. So it, I don't think it does any good to complain now that people bought

831
00:59:44,568 --> 00:59:48,668
Bitcoin treasury companies and then those companies bought Bitcoin. Like that's just

832
00:59:48,668 --> 00:59:52,068
living in the future. That's just what everyone's going to be doing 50 years from now.

833
00:59:52,068 --> 00:59:58,328
Yeah. And by the way, look, gold did really well this year. Okay, great. I am unaware,

834
00:59:58,768 --> 01:00:02,808
right, of any companies that have ever said or have a dashboard to say,

835
01:00:03,088 --> 01:00:06,408
oh, look at how much gold we bought on our balance sheet. Right?

836
01:00:06,588 --> 01:00:07,668
I'm a gold treasury company.

837
01:00:07,948 --> 01:00:17,168
Right. Besides maybe a gold miner, I am not aware. And I don't, talking about this,

838
01:00:17,428 --> 01:00:21,528
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

839
01:00:21,528 --> 01:00:26,588
million followers that thinks that buying gold on the balance sheet is great what do you have here

840
01:00:26,588 --> 01:00:32,788
jeff yeah i i think this is a good time to whip this out we're talking about companies holding

841
01:00:32,788 --> 01:00:39,748
holding bitcoin um so you mind bringing us back up uh on just changing the view so we're all here

842
01:00:39,748 --> 01:00:47,568
um yep i gotcha but uh right so sailor had this quote um sailor had this quote this week

843
01:00:47,568 --> 01:00:50,248
and it was on Fox Business.

844
01:00:50,928 --> 01:00:53,148
He said, as long as Bitcoin keeps going up

845
01:00:53,148 --> 01:00:54,548
one and a quarter percent a year,

846
01:00:54,628 --> 01:00:56,128
the company can pay the dividend forever.

847
01:00:57,688 --> 01:00:59,188
And I loved it.

848
01:00:59,308 --> 01:01:01,008
I was like, oh my God, I want to do the math.

849
01:01:01,928 --> 01:01:03,768
So I did the math.

850
01:01:04,068 --> 01:01:06,888
And this is what the math looks like

851
01:01:06,888 --> 01:01:07,768
over here on the left-hand side.

852
01:01:07,808 --> 01:01:09,388
And this is just really rough or like basic.

853
01:01:09,388 --> 01:01:11,808
I have no idea what Saylor is looking at

854
01:01:11,808 --> 01:01:13,488
and exactly how he's calculating it.

855
01:01:13,488 --> 01:01:18,648
But, um, and I figured we could go through some spreadsheet stuff because you could think

856
01:01:18,648 --> 01:01:20,188
about how long this company is going to be around.

857
01:01:20,248 --> 01:01:22,768
Even if you think the Bitcoin cag is 1.27%.

858
01:01:22,768 --> 01:01:27,268
I'm excited for this because that just doesn't make any sense to me right from the beginning.

859
01:01:27,268 --> 01:01:28,588
I'm like, wait, how is that possible?

860
01:01:28,828 --> 01:01:29,088
Yeah.

861
01:01:29,648 --> 01:01:30,888
Show us this math.

862
01:01:30,988 --> 01:01:31,628
I got to see this.

863
01:01:32,008 --> 01:01:36,728
Wait, but hold on a second, second here, Jeff, what you did on this chart on row 18,

864
01:01:37,048 --> 01:01:40,568
you've got a line and then, and then it jumps to row 104.

865
01:01:40,848 --> 01:01:42,128
And those are years.

866
01:01:42,228 --> 01:01:42,808
Those are years.

867
01:01:42,808 --> 01:01:43,128
Yeah.

868
01:01:43,128 --> 01:01:53,168
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?

869
01:01:53,168 --> 01:02:02,148
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

870
01:02:02,148 --> 01:02:11,908
and you're showing there that he still has 177 000 bit row 113 he still has 177 000 bitcoins

871
01:02:11,908 --> 01:02:18,088
or right there yeah that's bitcoin held and then the net bitcoins your last column row i

872
01:02:18,088 --> 01:02:25,608
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.

873
01:02:25,728 --> 01:02:27,348
And Jeff, if I got it wrong, chime in.

874
01:02:27,348 --> 01:02:27,848
You nailed it.

875
01:02:28,188 --> 01:02:34,248
You're showing the loss between column D and I is the 1.27 percent.

876
01:02:34,988 --> 01:02:35,288
Correct?

877
01:02:35,428 --> 01:02:36,388
Not quite.

878
01:02:36,828 --> 01:02:38,468
And I'll walk through it.

879
01:02:38,568 --> 01:02:41,208
So you've got Bitcoin held at the beginning of the period, right?

880
01:02:41,268 --> 01:02:43,948
So you've got almost 650,000 Bitcoin.

881
01:02:44,608 --> 01:02:46,088
Bitcoin price at 92,500.

882
01:02:46,088 --> 01:02:50,208
$6,500. That's about where we're at right now. So $60 billion worth of assets. And then I just

883
01:02:50,208 --> 01:02:57,528
assumed the $750 million dividend payment just comes off the top. So that's just $750 million

884
01:02:57,528 --> 01:03:04,708
just paid out once annually to make the math simple and just make it so I didn't have 10,000 rows.

885
01:03:06,568 --> 01:03:10,508
And so the net assets is just, okay, what if I sold that amount of Bitcoin to pay the dividends?

886
01:03:11,168 --> 01:03:15,828
And here's how much net BTC and fiat dollars you have afterwards. Let's call them H.

887
01:03:16,088 --> 01:03:18,728
And then what is that in the value of Bitcoin column I?

888
01:03:18,808 --> 01:03:21,868
That's just taking the assets divided by the Bitcoin price in column E.

889
01:03:22,188 --> 01:03:24,608
So you get to 641,000 Bitcoin.

890
01:03:25,568 --> 01:03:28,448
And so that number starts over at the next row.

891
01:03:28,708 --> 01:03:31,928
So you start with 641,762 and you go through the same math.

892
01:03:33,588 --> 01:03:41,288
But in each year, so starting in 2025, next year, 2026, the price of Bitcoin goes up 1.27%.

893
01:03:41,288 --> 01:03:42,468
That's what I've got outlined here.

894
01:03:42,468 --> 01:03:55,608
so next year 2026 the price of bitcoin goes to 93,675 27 94,864 and what you'll see is if you

895
01:03:55,608 --> 01:04:01,048
run the math here and i'm just going to scroll down so actually hold on let's let's fix the

896
01:04:01,048 --> 01:04:12,088
year column here so you can see uh view freeze panes cool okay so in and you can look at this

897
01:04:12,088 --> 01:04:17,848
net BTC column to see if you run out of Bitcoin. So you can see you keep going down here, net BTC

898
01:04:17,848 --> 01:04:24,788
column. You're never running out of Bitcoin. You're going down. And eventually the price of

899
01:04:24,788 --> 01:04:33,628
Bitcoin gets so high that your dividend payment trends to zero. And that's, what are we, 950

900
01:04:33,628 --> 01:04:42,068
years in the year 2,973? And you just gave up? I stopped because I guess I could just

901
01:04:42,068 --> 01:04:48,868
just drag this down further if i wanted to but um what and i think the most fascinating thing is

902
01:04:48,868 --> 01:04:55,368
even if you take maybe i'll just drop it to one and 1.25 what sailor said when he get down there

903
01:04:55,368 --> 01:05:02,108
i think with the 1.25 i've got it running out in the year 2390 but that's probably just

904
01:05:02,108 --> 01:05:11,428
we're talking uh very small very small delta there um but the really interesting

905
01:05:11,428 --> 01:05:12,188
Payments get paid.

906
01:05:13,008 --> 01:05:14,068
The dividends get paid.

907
01:05:14,428 --> 01:05:16,468
Dividends get paid even if Bitcoin doesn't really compound.

908
01:05:16,668 --> 01:05:22,628
That's effectively the over-collateralization, which is not present in any other financial institution.

909
01:05:22,628 --> 01:05:36,248
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.

910
01:05:36,948 --> 01:05:37,708
And so they had four.

911
01:05:38,148 --> 01:05:40,308
So that's $20 billion worth of shareholder equity.

912
01:05:40,308 --> 01:05:51,648
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.

913
01:05:52,108 --> 01:05:57,248
So in that scenario, the preferred stocks went to zero, both the cumulative and non-cumulative preferred stocks went to zero.

914
01:05:57,248 --> 01:06:07,268
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.

915
01:06:07,348 --> 01:06:12,548
Bitcoin needs to fall by 5x or roughly down to like 15k and stay there.

916
01:06:13,468 --> 01:06:17,188
And then, yeah, and stay there. It's not a it's not an actual professional liability.

917
01:06:17,188 --> 01:06:20,948
And then they'd have to face bankruptcy. So a bankruptcy proceeding.

918
01:06:21,248 --> 01:06:25,888
So the 2008 financial crisis is much, much, much different for those cumulative preferred stocks.

919
01:06:25,888 --> 01:06:37,268
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.

920
01:06:37,788 --> 01:06:45,288
But there was a huge, huge problem with these both cumulative and non-cumulative preferred stocks going belly up during the financial crisis.

921
01:06:45,288 --> 01:06:58,528
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.

922
01:06:59,308 --> 01:06:59,488
Right.

923
01:07:00,308 --> 01:07:03,408
And you can see the liquidity in Bitcoin.

924
01:07:03,648 --> 01:07:04,648
You can see the risk.

925
01:07:04,748 --> 01:07:06,608
You can calculate the risk 24-7, 365.

926
01:07:07,148 --> 01:07:10,588
It's so incredibly transparent compared to anything that's ever existed before.

927
01:07:10,588 --> 01:07:36,288
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.

928
01:07:36,288 --> 01:07:43,068
and if it if it okay and we talked about this on the hurdle rate earlier this week and i think this

929
01:07:43,068 --> 01:07:51,048
is such a good point that matt brought up right let's say bitcoin breaks for like something we

930
01:07:51,048 --> 01:07:58,068
have some tail event that breaks bitcoin it's not like institutional capital is immediately

931
01:07:58,068 --> 01:08:05,708
going to go running for the next crypto right like they're not going to go run for ethereum

932
01:08:05,708 --> 01:08:14,068
If something breaks Bitcoin, it likely is breaking most cryptographic currencies.

933
01:08:14,488 --> 01:08:16,928
It's not like they're going to instantly go run to Zcash.

934
01:08:17,888 --> 01:08:19,568
Because, oh, Bitcoin broke.

935
01:08:19,648 --> 01:08:20,548
Let me go run to Zcash.

936
01:08:20,588 --> 01:08:21,268
Not going to happen.

937
01:08:22,088 --> 01:08:22,268
Right?

938
01:08:22,388 --> 01:08:25,068
They're going to shift to a completely different system.

939
01:08:25,308 --> 01:08:26,188
Maybe it's gold.

940
01:08:26,708 --> 01:08:31,988
Maybe it's something so bad we want to shift to guns and whiskey and cigarettes.

941
01:08:32,188 --> 01:08:35,508
Hey, Jeff, you were just there in Prague.

942
01:08:35,708 --> 01:08:47,328
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?

943
01:08:47,328 --> 01:09:00,228
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.

944
01:09:00,228 --> 01:09:06,848
Right. And, and, and, and look, I think that when you do these calculate, look, if somebody doesn't

945
01:09:06,848 --> 01:09:10,948
like Jeff's calculations, okay, go make your own calculations and figure it out for your,

946
01:09:11,148 --> 01:09:16,368
figure it out for your, do your own assumptions, plug it in there and do the math. And, and I think,

947
01:09:16,488 --> 01:09:20,728
you know, thank you for doing this. And, and, and that's the part, you know, somebody said,

948
01:09:20,808 --> 01:09:26,208
sailor's never selling. No, he's not. Do I think that he could borrow, you know, one, one to two

949
01:09:26,208 --> 01:09:30,848
or 5% that he needs each year in order to pay these dividends?

950
01:09:31,568 --> 01:09:33,548
Yeah, I think he can borrow pretty easily.

951
01:09:33,888 --> 01:09:37,868
There's an investment bank that's going to give him the money in order for him to sell it.

952
01:09:37,868 --> 01:09:38,848
And I get that.

953
01:09:39,288 --> 01:09:44,388
The other part is that the big acquisition of Bitcoin is kind of done.

954
01:09:45,108 --> 01:09:48,448
You know, I want to go back to something that this comes up all the time.

955
01:09:48,988 --> 01:09:54,148
When he announced the $21 billion plan in Q4, it was a three-year plan.

956
01:09:54,148 --> 01:09:57,528
And he executed most of it in five weeks, right?

957
01:09:57,668 --> 01:10:02,248
That was a huge amount of shares that went out in basically a very short period of time.

958
01:10:02,648 --> 01:10:03,648
It was a record.

959
01:10:03,828 --> 01:10:04,448
It was a record.

960
01:10:04,988 --> 01:10:06,968
It was like most equity issued ever.

961
01:10:07,928 --> 01:10:09,088
Yeah, it was huge.

962
01:10:09,208 --> 01:10:10,228
And he acquired what?

963
01:10:10,388 --> 01:10:13,208
Approximately 150,000 Bitcoins, right?

964
01:10:13,628 --> 01:10:13,788
Yeah.

965
01:10:13,948 --> 01:10:18,428
So I think that that was a one-time event.

966
01:10:18,748 --> 01:10:23,248
And in my view, unfortunately for the stock, the stock did recover pretty well.

967
01:10:23,248 --> 01:10:32,448
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.

968
01:10:32,728 --> 01:10:39,228
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?

969
01:10:39,308 --> 01:10:41,768
You're going to be the person like, well, they'll go bankrupt and I'm not going to get paid.

970
01:10:41,928 --> 01:10:43,268
So then you wouldn't buy it.

971
01:10:43,388 --> 01:10:52,268
So my takeaway is, you know, all the macro indicators that I said, then just go take your whatever, two, three, four, 4%, right?

972
01:10:53,248 --> 01:10:57,808
um so we keep on getting these different questions coming up do you guys want to take go through some

973
01:10:57,808 --> 01:11:02,968
of these questions uh there was one more thing I wanted to hit on and Mike you kind of you kind

974
01:11:02,968 --> 01:11:12,088
of hit on it there for a second um and I wanted to talk through like the uh the concept of trying

975
01:11:12,088 --> 01:11:20,788
to convince somebody to lend dollars uh to people that hold Bitcoin relative to the pref

976
01:11:20,788 --> 01:11:34,348
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.

977
01:11:34,348 --> 01:11:45,848
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.

978
01:11:45,848 --> 01:11:58,548
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.

979
01:12:00,128 --> 01:12:14,908
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.

980
01:12:14,908 --> 01:12:19,908
but then then i started thinking about the other side of the trade like how do i go sell that to

981
01:12:19,908 --> 01:12:28,068
somebody right if i need to go sell some like institutional capital and i need them to lend me

982
01:12:28,068 --> 01:12:36,008
dollars backed by bitcoin i've got to go convince somebody with a lot of money that they need to

983
01:12:36,008 --> 01:12:44,728
take their take their opportunity cost of capital and lend it to this person for 12 percent return

984
01:12:44,728 --> 01:12:49,108
something that's like kind of lucrative enough for both sides to take the trade.

985
01:12:50,328 --> 01:12:56,828
And in order to convince them to do that, they need to feel comfortable about Bitcoin.

986
01:12:57,648 --> 01:13:01,728
Right. Like just fundamentally, you need to feel comfortable about Bitcoin. It's not going to like

987
01:13:01,728 --> 01:13:06,728
disappear tomorrow and it's not going to go to zero. OK, so if you've got to go convince

988
01:13:06,728 --> 01:13:12,488
institutional capital to get comfortable about Bitcoin, why wouldn't they just go buy Bitcoin

989
01:13:12,488 --> 01:13:18,248
instead of lending to some Yahoo for 12% collateralized by 2x the Bitcoin and take on

990
01:13:18,248 --> 01:13:26,648
some like counterparty risk of some, you know, like leverage machine in the cog, right?

991
01:13:27,428 --> 01:13:30,868
And so you've got, that's one side.

992
01:13:31,488 --> 01:13:36,388
And now the really neat innovation here with this digital credit and where this is shifting

993
01:13:36,388 --> 01:13:44,148
is instead of going to convince sophisticated institutional capital to get comfortable with

994
01:13:44,148 --> 01:13:49,328
Bitcoin, in which they would rather just buy Bitcoin themselves, you can convince people

995
01:13:49,328 --> 01:13:57,048
that are Bitcoin curious to not even have to believe in Bitcoin and buy a digital credit

996
01:13:57,048 --> 01:13:59,688
instrument to get the benefits of Bitcoin.

997
01:13:59,688 --> 01:14:09,868
that that pool of people that could potentially be bitcoin curious is significantly larger than

998
01:14:09,868 --> 01:14:18,768
the number of people that are that would possibly potentially lend to bitcoin holders and not buy

999
01:14:18,768 --> 01:14:24,948
bitcoin themselves if that makes sense like a marketing funnel yeah just like to bitcoin

1000
01:14:24,948 --> 01:14:29,288
i'm just thinking as a salesman right like let's just i'm a salesman

1001
01:14:29,688 --> 01:14:31,448
And like, which would I rather go sell?

1002
01:14:32,508 --> 01:14:34,808
Would I rather go sell a digital credit product?

1003
01:14:35,568 --> 01:14:41,828
Or would I rather go try to convince somebody to lend dollars to a Bitcoiner?

1004
01:14:44,208 --> 01:14:44,688
Right?

1005
01:14:45,068 --> 01:14:50,248
Like a lot easier to go sell the digital credit product to a bunch of people that may be Bitcoin

1006
01:14:50,248 --> 01:14:57,048
curious, as opposed to trying to go convince somebody about some like infrastructure, teach

1007
01:14:57,048 --> 01:15:03,308
them about the computer like code and like how it works and the liquidity and like once you convince

1008
01:15:03,308 --> 01:15:08,648
somebody to underwrite the entirety of bitcoin to feel comfortable giving that 12 loan

1009
01:15:08,648 --> 01:15:14,328
they would have already bought bitcoin themselves they're like why don't i just buy the bitcoin

1010
01:15:14,328 --> 01:15:19,288
like why am i going to do it like why i'm going to lend you dollars for 12 and take on all this

1011
01:15:19,288 --> 01:15:25,648
fucking weird risk when yeah if i feel comfortable with it why don't just buy just buy some bitcoin

1012
01:15:25,648 --> 01:15:30,668
yeah the amount of effort that it would take to orange pill them they'll just won't be interested

1013
01:15:30,668 --> 01:15:36,208
in loaning the damn thing at that point that's it that's it whereas the digital like you got to take

1014
01:15:36,208 --> 01:15:43,028
5 000 hours to convince somebody to take that uh take that loan right and then on the other side

1015
01:15:43,028 --> 01:15:52,008
like what's it take 10 hours maybe five hours of talking to somebody and you can't do it in 20

1016
01:15:52,008 --> 01:15:56,128
minutes in the sauna i know that from personal experience you probably yeah you probably need a

1017
01:15:56,128 --> 01:16:03,708
couple rounds in the sauna wait guys look look i i posted this i tell people somebody says you know

1018
01:16:03,708 --> 01:16:10,228
explain me about bitcoin i'm like sure i'll explain to you bitcoin you ready cpi consumer

1019
01:16:10,228 --> 01:16:16,908
price index federal the the u.s number is 3.0 the reaction usually is it's probably higher than that

1020
01:16:16,908 --> 01:16:18,968
I'm like, okay, just say it's 3.5.

1021
01:16:19,308 --> 01:16:20,528
It's way, I just say 3.5.

1022
01:16:20,928 --> 01:16:25,028
I'm like, the M2 money printer is 6.5% a year.

1023
01:16:25,148 --> 01:16:26,928
That's what it is over the past 25 years.

1024
01:16:26,988 --> 01:16:27,608
You all agree to that?

1025
01:16:27,688 --> 01:16:28,108
What's that?

1026
01:16:28,428 --> 01:16:30,828
Well, we have a $2 trillion budget shortfall.

1027
01:16:31,008 --> 01:16:33,508
So we have to print the money to balance the budget

1028
01:16:33,508 --> 01:16:36,028
because there's a deficit, $2 trillion a year.

1029
01:16:36,188 --> 01:16:38,828
It's 6.5% over the past 25 years.

1030
01:16:39,388 --> 01:16:41,028
I got a lot of kickback for this.

1031
01:16:41,028 --> 01:16:42,608
I add those two together.

1032
01:16:42,848 --> 01:16:44,248
And the reason why I add them together,

1033
01:16:44,808 --> 01:16:48,148
CPI measures supply chain problem, not the money printer.

1034
01:16:48,628 --> 01:16:49,928
What's the supply chain problem?

1035
01:16:50,148 --> 01:16:51,388
All the chickens get sick.

1036
01:16:51,488 --> 01:16:52,108
There's no eggs.

1037
01:16:52,168 --> 01:16:53,468
The price of eggs double overnight.

1038
01:16:53,848 --> 01:16:58,328
They didn't double this money supply overnight, but there was a supply chain problem.

1039
01:16:58,548 --> 01:17:00,788
So people are like, okay, I get what you're saying.

1040
01:17:00,868 --> 01:17:01,748
Okay, what does that mean?

1041
01:17:02,348 --> 01:17:05,828
At 10%, 3.5 plus 6.5 is 10%.

1042
01:17:06,388 --> 01:17:11,288
The rule of 72 says your buying power gets cut in half every 7.2 years.

1043
01:17:11,828 --> 01:17:12,648
I'm done.

1044
01:17:12,648 --> 01:17:14,888
Your house did not double in price.

1045
01:17:15,468 --> 01:17:19,808
It takes you twice as much money to buy the same house every 7.2 years.

1046
01:17:20,148 --> 01:17:21,568
You don't like 10%?

1047
01:17:21,708 --> 01:17:23,328
Make it 7.2%.

1048
01:17:23,328 --> 01:17:26,668
That means every 10 years, your buying power gets cut in half.

1049
01:17:26,988 --> 01:17:32,048
The young people that are watching this that are under the age of 30 know this implicitly.

1050
01:17:32,428 --> 01:17:36,328
They cannot save money fast enough to put down a down payment to buy a house.

1051
01:17:36,608 --> 01:17:37,328
That's it.

1052
01:17:37,608 --> 01:17:39,988
And if somebody tells me, who's Satoshi Nakamoto?

1053
01:17:40,508 --> 01:17:41,148
Don't care.

1054
01:17:41,148 --> 01:17:49,108
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.

1055
01:17:49,748 --> 01:17:51,468
There's your Bitcoin pitch.

1056
01:17:51,768 --> 01:17:54,388
If they're like, oh, I never thought about constant dollars.

1057
01:17:54,488 --> 01:17:55,868
I'm like, you never heard about inflation?

1058
01:17:56,768 --> 01:17:57,188
That's it.

1059
01:17:57,808 --> 01:17:59,308
That's my whole pitch on Bitcoin.

1060
01:17:59,688 --> 01:18:00,668
You don't get it?

1061
01:18:00,868 --> 01:18:02,808
Why do I add those two numbers together?

1062
01:18:03,428 --> 01:18:07,608
One is monetary debasement and consumer price index.

1063
01:18:07,748 --> 01:18:08,548
Go look that up.

1064
01:18:08,808 --> 01:18:10,428
It's consumed goods.

1065
01:18:10,428 --> 01:18:16,268
yeah i i'm happy yeah so you got me convinced mike i'm yeah i'm gonna go buy some bitcoin

1066
01:18:16,268 --> 01:18:23,328
i i completely agree with you and i i did a i did a podcast in london this last week

1067
01:18:23,328 --> 01:18:28,488
and uh it was with is the reinsurance podcast i think it's going to come out in like a week

1068
01:18:28,488 --> 01:18:35,168
if if it gets over 5 000 views it will be the most watched reinsurance podcast in history

1069
01:18:35,168 --> 01:18:42,488
so uh i think i think we got a good chance of beating that there but anyway this this topic

1070
01:18:42,488 --> 01:18:46,788
came up basically i was talking to two reinsurance guys and they let me come in and talk about bitcoin

1071
01:18:46,788 --> 01:18:52,248
risk and reinsurance so i did talk a little bit about like what is what is bitcoin and try to like

1072
01:18:52,248 --> 01:18:59,088
get to an audience um and try to explain it quickly and i came up with this new way of

1073
01:18:59,088 --> 01:19:05,088
explaining it i think it's decent um and i think appeals to some of the boomers mike and maybe

1074
01:19:05,088 --> 01:19:09,448
this is worth a try. Right. Hold on a second. But just be clear. I'm Gen X.

1075
01:19:09,668 --> 01:19:13,268
Gen X. Gen X. I might have gray hair, but I'm Gen X.

1076
01:19:13,468 --> 01:19:17,048
Yeah. He meant when you're talking to boomers. When you're talking to the boomers. When you're

1077
01:19:17,048 --> 01:19:22,588
talking to your wealthy friends. All of your wealthy friends have bought homes.

1078
01:19:23,408 --> 01:19:30,108
Right. All of them have bought homes. And so I explain this on the podcast as Bitcoin is a

1079
01:19:30,108 --> 01:19:36,128
monetary ledger. Okay. When you buy a home, there's a monetary ledger that's held at the county.

1080
01:19:37,128 --> 01:19:44,768
When your house gets recorded, when you buy it, there's a Karen that's sitting behind there

1081
01:19:44,768 --> 01:19:50,588
getting paid minimum wage to go record your home. It takes like a week. It's stupid. You do the

1082
01:19:50,588 --> 01:19:56,628
whole negotiation process. It's crazy. And then it takes like a week to write your name down in

1083
01:19:56,628 --> 01:20:02,428
some documents and record them at the county. That's a monetary ledger. Imagine if you could

1084
01:20:02,428 --> 01:20:12,108
do that in 10 minutes with computers and have finality. No Karens, no anything. You've got

1085
01:20:12,108 --> 01:20:21,288
a computer ecosystem around the globe that's able to do that. And in communication with them,

1086
01:20:21,528 --> 01:20:25,328
it kind of worked. I know the guys that I was talking to have bought homes.

1087
01:20:25,328 --> 01:20:29,788
and like everybody can wrap their head around this like real estate concept like

1088
01:20:29,788 --> 01:20:36,388
monetary ledger concept and uh i hope it hits and so i'm gonna i'm gonna try to tease that one out a

1089
01:20:36,388 --> 01:20:42,688
little bit more uh with with people i know that have bought homes but are like you can't really

1090
01:20:42,688 --> 01:20:48,048
grab grab bitcoin really right i bought my house it was 200 bitcoin i think and now it's

1091
01:20:48,868 --> 01:20:55,028
like 80 or something yeah so so you know jeff that's a great example but i'm going to tie back

1092
01:20:55,028 --> 01:21:00,348
the house analogy back to the prefs. Once you own it, and look, there are people that are like,

1093
01:21:00,448 --> 01:21:05,148
oh, you should rent forever because whatever that down payment is, you can invest that and that'll

1094
01:21:05,148 --> 01:21:10,048
grow faster in the value of your house. The reason why you buy a house, if you get married,

1095
01:21:10,668 --> 01:21:14,048
maybe you're not married, you just have kids and the kids have to go to school.

1096
01:21:14,448 --> 01:21:20,668
You'd rather own a place because then the school district is a known event and to have stability

1097
01:21:20,668 --> 01:21:26,428
to raise a family. So that's a reason why people buy homes. Okay. If you're single and you're not

1098
01:21:26,428 --> 01:21:30,948
married, don't have kids, you know what heck, and you want to move around, don't buy a place.

1099
01:21:31,168 --> 01:21:36,968
But how is this related to prefs? Once your house is paid off, you don't have a refinance event.

1100
01:21:37,328 --> 01:21:42,668
The only thing you have to pay is maintenance, utilities, and your taxes on it. And taxes in

1101
01:21:42,668 --> 01:21:47,368
California, about 1% of the purchase price. And they can only go up, I think by like 2% a year.

1102
01:21:47,368 --> 01:21:52,148
So what happens is, is that you never have this refinance risk that happens.

1103
01:21:52,768 --> 01:21:56,868
And so that's the permanent capital that people talk about when you sell equity.

1104
01:21:57,008 --> 01:21:58,208
It's permanent capital.

1105
01:21:58,588 --> 01:21:59,168
What's a pref?

1106
01:21:59,348 --> 01:22:02,128
There's no refinance that ever happens, right?

1107
01:22:02,188 --> 01:22:06,088
Once your house is owned, once you own your house outright, somebody's like, oh, the interest

1108
01:22:06,088 --> 01:22:07,448
rates went to seven, eight percent.

1109
01:22:07,568 --> 01:22:08,588
You're like, don't care.

1110
01:22:08,888 --> 01:22:12,968
And then somebody would be like, you know, you fucking asshole boomer because you bought

1111
01:22:12,968 --> 01:22:19,568
your house you know for one tenth the price 30 years ago and everybody's like screw you because

1112
01:22:19,568 --> 01:22:24,108
the other generation because it was debased and they're like oh i don't know why it's harder for

1113
01:22:24,108 --> 01:22:30,388
you and i'm like i don't know why you're so fucking stupid sorry for swearing but no mike mike soleil

1114
01:22:30,388 --> 01:22:35,488
is getting rusted yeah because i can't math i said i said my house was worth 80 bitcoin it's eight

1115
01:22:35,488 --> 01:22:37,808
eight eight bitcoin

1116
01:22:37,808 --> 01:22:47,348
yeah so anyway so so with that said guys i mean look i have zero patience why do i have patience

1117
01:22:47,348 --> 01:22:52,148
why don't why don't i have patience what's going to happen is at some point in the future

1118
01:22:52,148 --> 01:22:57,428
right bitcoin's going to rip higher and when i mean rip higher it's not going to go it's not

1119
01:22:57,428 --> 01:23:03,128
going to retake the all-time high by a thousand bucks right go from 25 000 to 26 we're going to

1120
01:23:03,128 --> 01:23:11,348
see Bitcoin go to 125, 150, 200,000? Somebody said, is this in 30, 60, 90 days? I don't know

1121
01:23:11,348 --> 01:23:16,928
the timeframe of it. But somebody also asked, or somebody said, if Bitcoin retakes an all-time high

1122
01:23:16,928 --> 01:23:22,088
next year, which I think it will, that means the four-year cycle is dead. That means Bitcoin has

1123
01:23:22,088 --> 01:23:27,568
crossed over into a legitimate monetary instrument, which I believe is true. And when that happens

1124
01:23:27,568 --> 01:23:34,188
next year, as Jeff, you say, the bewilderment will happen and it rips higher and MSTR common

1125
01:23:34,188 --> 01:23:39,288
stock goes higher. It's not that I'm a fan boy. I think that's all going to happen. I think the

1126
01:23:39,288 --> 01:23:43,448
prefs are going to be successful. And if somebody is like, how did you know? And I'm like, you know

1127
01:23:43,448 --> 01:23:48,388
what? I had conviction. And I will have zero patience because I've been in this for eight

1128
01:23:48,388 --> 01:23:52,428
years. And it's like, if you had the conviction to do it and you could stomach the volatility,

1129
01:23:52,428 --> 01:23:54,608
then you would reap those rewards.

1130
01:23:54,928 --> 01:23:57,468
But if you don't have the stomach, the volatility,

1131
01:23:57,908 --> 01:23:59,548
then you don't reap the rewards.

1132
01:24:01,408 --> 01:24:01,608
Yeah.

1133
01:24:01,868 --> 01:24:06,908
I think one of the crazy things in thinking about that is like,

1134
01:24:07,828 --> 01:24:10,728
where's the rest of the market, right?

1135
01:24:11,088 --> 01:24:15,368
If we do think Bitcoin rips in 26, late 25,

1136
01:24:15,628 --> 01:24:17,388
I don't know, we still got a month and a half left.

1137
01:24:19,068 --> 01:24:20,668
What's the rest of the market doing?

1138
01:24:20,668 --> 01:24:26,808
and how do like how do you rationalize valuations greater than they are right now like what you got

1139
01:24:26,808 --> 01:24:33,488
to think about where where everything else is like and grain you even brought this up a little

1140
01:24:33,488 --> 01:24:38,128
bit earlier like white white collar white collar people are losing their jobs because of ai like

1141
01:24:38,128 --> 01:24:43,828
i'm seeing it happen all over linkedin my wife's seeing it in the recruiting world and like okay

1142
01:24:43,828 --> 01:24:48,148
the government debt is getting larger,

1143
01:24:49,508 --> 01:24:52,488
tax revenues are decreasing, right?

1144
01:24:52,588 --> 01:24:56,068
Because you've got all these like really high value people

1145
01:24:56,068 --> 01:24:57,368
that are no longer needed at the jobs

1146
01:24:57,368 --> 01:24:59,188
because AI just literally got rid of it.

1147
01:24:59,688 --> 01:25:04,788
So like that's an equation that is very difficult to unsee.

1148
01:25:06,268 --> 01:25:08,828
And what's everything else look like?

1149
01:25:10,048 --> 01:25:11,368
I think everything else is higher.

1150
01:25:11,368 --> 01:25:19,208
If you expect a Bitcoin bear market in 26, then historically you would be betting on the S&P being down in 2026.

1151
01:25:19,408 --> 01:25:20,028
Highly correlated.

1152
01:25:20,508 --> 01:25:21,328
Highly correlated, yeah.

1153
01:25:21,468 --> 01:25:24,508
But it looks like the way things, I mean, PMIs have been depressed.

1154
01:25:24,708 --> 01:25:27,808
So that's essentially purchasing managers index.

1155
01:25:27,988 --> 01:25:35,388
So it's a diffusion index of whether or not the manufacturing industry in the US is expanding or contracting.

1156
01:25:35,648 --> 01:25:38,088
It's been in contractionary territory for the past two years.

1157
01:25:38,708 --> 01:25:44,488
There's no reason why the AI CapEx won't flow over into just general small cap business,

1158
01:25:44,488 --> 01:25:51,048
plus the increasing profit margins as a result of the layoffs directly related to AI.

1159
01:25:51,288 --> 01:25:56,228
There's no reason, I think, why the S&P would be down next year, especially into a rate-cutting cycle.

1160
01:25:56,808 --> 01:26:00,748
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.

1161
01:26:02,128 --> 01:26:03,208
Yeah, let me try.

1162
01:26:03,368 --> 01:26:06,168
Look, next year is an election year for midterms.

1163
01:26:06,168 --> 01:26:08,308
If we believe, look, there's a couple of things.

1164
01:26:08,788 --> 01:26:12,808
People will love conspiracy theories that there's a group of people that control everything.

1165
01:26:13,348 --> 01:26:13,828
You talking to me?

1166
01:26:14,548 --> 01:26:15,768
I'm just talking just in general.

1167
01:26:15,968 --> 01:26:16,868
I'm just not you.

1168
01:26:17,268 --> 01:26:23,128
I mean, Dan, did you not only write a paper saying that the so when is Powell out of his job?

1169
01:26:23,968 --> 01:26:24,188
May?

1170
01:26:24,688 --> 01:26:25,988
Yeah, it's spring.

1171
01:26:26,788 --> 01:26:27,048
Right.

1172
01:26:27,168 --> 01:26:28,368
So he's out, right?

1173
01:26:28,448 --> 01:26:29,948
We have an election coming up.

1174
01:26:30,228 --> 01:26:31,448
What do we always believe?

1175
01:26:31,748 --> 01:26:33,508
Who's ever running the Fed?

1176
01:26:33,508 --> 01:26:38,308
If they do a rate cut, that's the conspiracy saying that the Fed wanted that guy to get,

1177
01:26:38,608 --> 01:26:42,768
because if there's a rate cut, it forces the market, it allows the market to run up because

1178
01:26:42,768 --> 01:26:46,848
it's cheaper to borrow money. So if you continue to have rate cuts next year, people are going to be

1179
01:26:46,848 --> 01:26:52,368
like, oh, Trump put his guy in, Mirren, into running the Fed in June. Let's say he gets

1180
01:26:52,368 --> 01:26:58,328
confirmed in June or July and they cut rates like, oh, you see, that's exactly what happened. His guy

1181
01:26:58,328 --> 01:27:03,188
got in, they cut the rates and then Trump rewins the election because the stock market ripped

1182
01:27:03,188 --> 01:27:09,188
higher and then you know you'll hear the narrative all these crypto bros got rich on bitcoin and and

1183
01:27:09,828 --> 01:27:28,752
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

1184
01:27:28,752 --> 01:27:34,592
stocks. It has a blended average return of 8%. And I don't know why I can't get ahead because

1185
01:27:34,592 --> 01:27:40,472
this guy grain of salt just said 10 minutes ago, you have to add M2 plus CPI at 10%. So if your

1186
01:27:40,472 --> 01:27:46,072
funds growing at 8% because there's 5,000 stocks in it, you're not beating the degradation of the

1187
01:27:46,072 --> 01:27:52,172
buying power of money. Did I go too fast? No, very good point. No, that's it. I'm actually

1188
01:27:52,172 --> 01:27:58,512
reading Kruger's book right now. What is it? Bitcoin 1 million. Fantastic read. And it synthesizes

1189
01:27:58,512 --> 01:28:03,732
this all very, very well talking about. And you look at, I know Grant and I've been doing a lot of

1190
01:28:03,732 --> 01:28:10,072
research on the equal weight S&P relative to the overall S&P index weighted with the MAG-7.

1191
01:28:10,472 --> 01:28:14,532
And, you know, and that once the strategy is in the S&P, this will help as well.

1192
01:28:14,612 --> 01:28:17,413
It'll be Bitcoin exposure injected into the S&P.

1193
01:28:17,632 --> 01:28:19,172
But it doesn't matter.

1194
01:28:19,453 --> 01:28:25,413
Like the S&P 493 are a drag on portfolios and they have been for 10 years or 15 years at this point.

1195
01:28:26,172 --> 01:28:27,972
So you're not making money.

1196
01:28:27,972 --> 01:28:28,172
And everybody knows.

1197
01:28:29,072 --> 01:28:29,852
You're just not.

1198
01:28:30,232 --> 01:28:33,632
And it's only going to get worse as those businesses get disrupted by AI.

1199
01:28:33,752 --> 01:28:35,252
There's going to be winners in the private markets.

1200
01:28:35,252 --> 01:28:40,252
I also think this idea that public markets is where all the money is going to be is also a fallacy.

1201
01:28:40,472 --> 01:28:48,373
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.

1202
01:28:48,373 --> 01:28:51,953
But then what happens to that money once it's generated in the private markets?

1203
01:28:52,092 --> 01:28:59,292
It gets floated around, but then those businesses get pushed like their margin arose, their competitive edge arose because of AI.

1204
01:29:01,172 --> 01:29:03,252
So I think there's going to be a lot of private market shenanigans.

1205
01:29:03,252 --> 01:29:07,333
public markets are going to be very, very much less appealing than they already are

1206
01:29:07,333 --> 01:29:10,972
if any sort of multiple compression happens on the Mag7.

1207
01:29:12,792 --> 01:29:18,572
The private market interaction, like where does it go public, is liquidity.

1208
01:29:20,212 --> 01:29:22,692
Do you want or need liquidity?

1209
01:29:23,833 --> 01:29:28,913
Because private markets are great as long as everything's cooking.

1210
01:29:28,913 --> 01:29:31,792
but if you need liquidity

1211
01:29:31,792 --> 01:29:34,352
the best way to do that is in public

1212
01:29:34,352 --> 01:29:34,953
that makes sense

1213
01:29:34,953 --> 01:29:38,172
I think the tokenization of private markets is going to be

1214
01:29:38,172 --> 01:29:39,152
the next frontier

1215
01:29:39,152 --> 01:29:40,572
somewhat

1216
01:29:40,572 --> 01:29:44,732
you just kind of get rid of the SEC

1217
01:29:44,732 --> 01:29:45,273
maybe

1218
01:29:45,273 --> 01:29:49,273
it goes global

1219
01:29:49,273 --> 01:29:50,873
guys I'm going to jump off

1220
01:29:50,873 --> 01:29:52,873
thanks Dan

1221
01:29:52,873 --> 01:29:55,273
I'm going to jump off pretty quick also

1222
01:29:55,273 --> 01:29:56,352
look

1223
01:29:56,352 --> 01:30:04,352
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.

1224
01:30:04,813 --> 01:30:07,512
They have much higher market caps when they go live.

1225
01:30:08,012 --> 01:30:13,373
And then what happens is they could have a really good IPO launch.

1226
01:30:13,373 --> 01:30:16,212
And then six months later, there's a lockup that happens.

1227
01:30:16,313 --> 01:30:18,572
It drifts lower and then it goes up eventually again.

1228
01:30:18,972 --> 01:30:21,313
And we've seen this happen with it happening.

1229
01:30:21,313 --> 01:30:26,072
I mean, you know, the poster child for this was the Facebook IPO.

1230
01:30:26,632 --> 01:30:28,552
There was lawsuits all about this.

1231
01:30:28,712 --> 01:30:31,873
They tried to do this price matching.

1232
01:30:31,972 --> 01:30:35,552
I don't believe it was a Dutch auction for Facebook when it went IPO.

1233
01:30:35,972 --> 01:30:38,953
But basically, a year later, it traded down really far.

1234
01:30:38,953 --> 01:30:43,373
But then Facebook, obviously, which is now called Meta, rips way higher.

1235
01:30:44,112 --> 01:30:47,852
And, you know, it's this massive part of the MAG7.

1236
01:30:48,393 --> 01:30:51,172
But I think what's happening now is these markets are different.

1237
01:30:51,313 --> 01:30:57,232
And what I would tell to everybody is that, and it goes back to what you said, Jeff, the

1238
01:30:57,232 --> 01:31:01,052
narrative changes now probably less than yearly.

1239
01:31:01,212 --> 01:31:04,953
Every nine months, you're like, oh, I thought it was like this.

1240
01:31:04,992 --> 01:31:08,112
You're like, well, if you're paying attention, things are different.

1241
01:31:08,992 --> 01:31:17,672
And I'm looking at the valuation on AI, and I think the valuation is super high, right?

1242
01:31:17,672 --> 01:31:26,333
I think it's, you know, but then when you look at NVIDIA, I believe it's trading at 35 or 40x forward PE.

1243
01:31:26,552 --> 01:31:28,393
That multiple is not that high.

1244
01:31:28,592 --> 01:31:31,413
And my view is I think that that could run a lot longer.

1245
01:31:31,552 --> 01:31:39,952
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.

1246
01:31:40,292 --> 01:31:44,132
But if you look back, NVIDIA has had some major pullbacks, including this year.

1247
01:31:44,413 --> 01:31:47,313
And so what are we going to wrap up with?

1248
01:31:47,313 --> 01:31:49,413
Cause I could talk about that if it's interesting.

1249
01:31:50,252 --> 01:31:50,652
Yeah.

1250
01:31:50,833 --> 01:31:54,273
The, well, this, this concept of multiple, I think is,

1251
01:31:54,352 --> 01:31:55,813
is always a good topic, but,

1252
01:31:55,813 --> 01:31:59,973
and I'm just going to share my screen one more time because I think this is

1253
01:31:59,973 --> 01:32:04,532
interesting context on like the one X M nav bears.

1254
01:32:04,712 --> 01:32:05,433
I'll try again.

1255
01:32:06,072 --> 01:32:06,672
Try to share again.

1256
01:32:06,712 --> 01:32:07,072
Oh yeah.

1257
01:32:07,212 --> 01:32:08,452
I missed the clicked.

1258
01:32:09,373 --> 01:32:10,032
There we go.

1259
01:32:10,393 --> 01:32:11,393
A screen share.

1260
01:32:12,833 --> 01:32:13,572
There it is.

1261
01:32:17,313 --> 01:32:33,952
Okay. As of 1230 2023, 1XMNAV for MSTR was $52, $52 a share. As of 10-7 2025, the 1XMNAV was $271.

1262
01:32:34,393 --> 01:32:43,052
As of today, 1XMNAV is around $208. This is just pure, not even taking any consideration of the

1263
01:32:43,052 --> 01:32:49,552
debt. This is just a multiple over the Bitcoin. If Bitcoin were to go back to its previous all-time

1264
01:32:49,552 --> 01:33:01,152
high at $126,000, the 1XMNAV is $285 for MSTR. If Bitcoin were to go to $150,000,

1265
01:33:01,773 --> 01:33:09,512
the 1XMNAV goes to $339. So just keep that in the back of your mind of how quickly some of

1266
01:33:09,512 --> 01:33:14,612
this stuff can shift. Like if Bitcoin starts moving the other direction and it moves 50% in

1267
01:33:14,612 --> 01:33:20,012
two, three weeks, like we've seen it do in the past, then you've, you've also got some of this

1268
01:33:20,012 --> 01:33:26,313
1XMNAV, you know, concept in play here where it's going to flip back and go the other direction.

1269
01:33:26,313 --> 01:33:33,632
But the real, the real thing is here, the 1XMNAV, let's just go back to where we're at today and

1270
01:33:33,632 --> 01:33:35,012
Let's just say 92,500.

1271
01:33:36,893 --> 01:33:37,232
Right.

1272
01:33:38,352 --> 01:33:43,212
Shares outstanding have increased 87% from 12, 30, 23.

1273
01:33:43,492 --> 01:33:46,433
They've gone from 153,000, 368.

1274
01:33:46,572 --> 01:33:48,572
So 153 million to 287 million.

1275
01:33:48,992 --> 01:33:50,652
Shares have increased 87%.

1276
01:33:50,652 --> 01:33:54,413
Yet the 1XM NAV has increased 302%.

1277
01:33:54,413 --> 01:33:58,933
And the BTC price has increased 119%.

1278
01:33:58,933 --> 01:34:00,973
Right.

1279
01:34:00,973 --> 01:34:08,712
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.

1280
01:34:09,252 --> 01:34:12,552
Like 1x MNav is marching up and to the right.

1281
01:34:12,873 --> 01:34:14,032
Like that's what people don't get here.

1282
01:34:14,092 --> 01:34:14,913
This is collateral.

1283
01:34:15,252 --> 01:34:20,672
Like the strategy is leveraging their balance sheet as collateral and they're getting more Bitcoin to put on their balance sheet.

1284
01:34:21,192 --> 01:34:24,632
Yeah, they're doing it with preferred equity now as opposed to convertible debt.

1285
01:34:24,632 --> 01:34:29,072
this concept of double, this new FUD concept of double counting has come up as like, oh,

1286
01:34:29,433 --> 01:34:32,752
Bitcoin per share metric isn't right because you've got to, you know, you've got to count

1287
01:34:32,752 --> 01:34:36,692
the preferred equity. Well, it's like, okay, Bitcoin per common share. How about that?

1288
01:34:37,572 --> 01:34:42,773
Let's use Bitcoin per common share because in the event that there's a liquidation,

1289
01:34:42,873 --> 01:34:48,092
like the equity is worthless. Like in the event that Bitcoin crashes and goes to $10,000 and

1290
01:34:48,092 --> 01:34:53,152
stays there for five years, the equity is worthless. Bitcoin is probably worthless at that point.

1291
01:34:53,152 --> 01:34:57,012
And that would be a liquidation scenario for strategy.

1292
01:34:57,612 --> 01:34:59,012
They have no maturity.

1293
01:34:59,292 --> 01:35:00,652
This debt isn't callable.

1294
01:35:01,512 --> 01:35:03,572
The perpetual preferred equity is not callable.

1295
01:35:05,052 --> 01:35:07,072
So do I think there's double counting?

1296
01:35:07,192 --> 01:35:07,373
No.

1297
01:35:07,532 --> 01:35:09,252
I see Bitcoin per common share.

1298
01:35:09,433 --> 01:35:13,393
All of that excess, we're talking about excess return and excess risk.

1299
01:35:13,672 --> 01:35:17,592
All of that excess return and excess risk is delivered to the common stock equity shareholder.

1300
01:35:17,592 --> 01:35:23,532
and all of that that instrument the new perpetual preferred equity instrument that you're providing

1301
01:35:23,532 --> 01:35:30,393
the market is that lower volatility product like you're you're providing basically some

1302
01:35:30,393 --> 01:35:35,952
you're providing basically someone bitcoin exposure with volatility insurance on it

1303
01:35:35,952 --> 01:35:44,893
like that's what stretches stretches bitcoin exposure but you're paying for volatility

1304
01:35:44,893 --> 01:35:52,452
insurance. That's all it is, right? You've got no upside. You've got no downside. You've got

1305
01:35:52,452 --> 01:35:59,393
like the insurance policy, like that excess upside that you're giving up gives you that low volatility.

1306
01:35:59,933 --> 01:36:06,992
So all of that additional return and risk gets delivered to the common stock shareholder.

1307
01:36:07,752 --> 01:36:10,773
So do I think there's a double counting problem? No, I don't think that's a thing at all.

1308
01:36:10,773 --> 01:36:16,152
I think anybody thinking about or spending too much time focusing on liquidation preferences

1309
01:36:16,152 --> 01:36:23,913
is out of their mind. And I think it's pretty, pretty easy calculus, honestly.

1310
01:36:24,532 --> 01:36:30,933
The hilarious part to me, when people want to say that strategy or the Bitcoin treasury companies

1311
01:36:30,933 --> 01:36:38,172
that operate this way, they're, they're trending towards 1x MNAV. You know what else trades at 1x

1312
01:36:38,172 --> 01:36:40,333
MNAV? Fricking Bitcoin.

1313
01:36:41,132 --> 01:36:42,512
Bitcoin. You can just buy Bitcoin.

1314
01:36:42,672 --> 01:36:44,532
But the thing is, any

1315
01:36:44,532 --> 01:36:46,532
Bitcoiner understands that the way

1316
01:36:46,532 --> 01:36:48,512
that you beat Bitcoin is to

1317
01:36:48,512 --> 01:36:50,212
borrow money to buy

1318
01:36:50,212 --> 01:36:51,092
more Bitcoin.

1319
01:36:52,212 --> 01:36:54,433
So clearly, you are

1320
01:36:54,433 --> 01:36:56,452
amplifying your Bitcoin exposure

1321
01:36:56,452 --> 01:36:57,933
by leveraging.

1322
01:36:58,873 --> 01:37:00,672
So how do they forget

1323
01:37:00,672 --> 01:37:02,592
that when all of a sudden it's a

1324
01:37:02,592 --> 01:37:04,712
treasury company doing the exact same

1325
01:37:04,712 --> 01:37:05,072
thing?

1326
01:37:05,072 --> 01:37:13,212
i think these are fud narratives that are spread by people that are short to stock and they're

1327
01:37:13,212 --> 01:37:21,992
picked up by uh you know left probably mid-curve iq uh that know just enough to get them get

1328
01:37:21,992 --> 01:37:28,473
themselves in into danger here uh and confuse themselves in their game theory so wait wait so

1329
01:37:28,473 --> 01:37:35,813
Yeah. So let's go back to the simple math again. Anybody that you buy a house for simple math,

1330
01:37:35,893 --> 01:37:40,232
right? You buy the house, you put down 20%. That means you have five to one leverage on it.

1331
01:37:40,473 --> 01:37:45,132
When you go to buy that house, right? You don't have a, provided you put down 20%,

1332
01:37:45,132 --> 01:37:50,132
you don't have a margin call provision in your loan. And the reason why they can do that,

1333
01:37:50,192 --> 01:37:56,313
because housing was supposed to grow at whatever, one to 5% a year, right?

1334
01:37:56,313 --> 01:37:58,152
Can you imagine if there's margin calls on loans?

1335
01:37:58,152 --> 01:37:58,712
Could you imagine?

1336
01:37:59,172 --> 01:37:59,652
Right.

1337
01:37:59,852 --> 01:38:04,592
And the only way there is, is that if you don't pay on the loan, which happened in the

1338
01:38:04,592 --> 01:38:10,612
08 and 09 financial crisis was horrible because those adjustable rate loans reset and they

1339
01:38:10,612 --> 01:38:11,672
weren't able to refinance.

1340
01:38:12,172 --> 01:38:14,373
Cue the story back about the preferreds.

1341
01:38:14,692 --> 01:38:17,672
There is no refinance risk because of permanent capital.

1342
01:38:18,192 --> 01:38:21,492
So I hear that people talk about this and they're like, I don't think you understand the

1343
01:38:21,492 --> 01:38:21,893
terms.

1344
01:38:22,192 --> 01:38:24,893
And they're like, we've never heard this before from somebody.

1345
01:38:24,893 --> 01:38:26,512
And I'm like, I can't speak to you.

1346
01:38:26,973 --> 01:38:31,632
And so anybody that buys an arm, an adjustable rate mortgage understands that at some point

1347
01:38:31,632 --> 01:38:34,172
it's going, you know, it's a five in one loan.

1348
01:38:34,492 --> 01:38:38,873
After the first five years, it can reset every year or five into it resets every two years.

1349
01:38:39,072 --> 01:38:41,612
And so I don't think they understand the terms.

1350
01:38:42,032 --> 01:38:45,913
And so from that perspective, you take five to one leverage on a house, right?

1351
01:38:46,032 --> 01:38:47,532
Because you put down 20%.

1352
01:38:47,532 --> 01:38:52,692
So you put down a hundred thousand dollars on a $500,000 house.

1353
01:38:52,692 --> 01:38:53,952
That's your five to one leverage.

1354
01:38:53,952 --> 01:39:00,072
and you're hoping and you're believing that if the house, if the house goes up by 7.2%

1355
01:39:00,072 --> 01:39:05,773
per year, just to use easy numbers, rule of 72, that means the house doubles in 10 years.

1356
01:39:07,552 --> 01:39:14,333
Right. And if it goes up at 7.2%, it goes up 50%, right. In five years, right. That's kind of what

1357
01:39:14,333 --> 01:39:20,973
exactly happened from 2020 to now, many houses in great areas went up. Now, somebody is going to say,

1358
01:39:20,973 --> 01:39:25,413
well, my neighborhood, they all bought and they were going to do Airbnbs that wasn't allowed and

1359
01:39:25,413 --> 01:39:30,452
they lost. Well, that was a regulatory change, right? So I think the takeaway is know what you're

1360
01:39:30,452 --> 01:39:36,092
buying, know what the area is and buy for the right reasons. And I would never buy a stock

1361
01:39:36,092 --> 01:39:41,172
based upon, oh, I think it's going to go bankrupt. That's me. I don't know what anybody, I'm like,

1362
01:39:41,212 --> 01:39:46,232
oh, I'm thinking about buying the stock, but you know, they could go bankrupt in two years.

1363
01:39:46,393 --> 01:39:49,973
So I'm going to buy it now because I think it's a good, I would just never buy. Yeah,

1364
01:39:49,973 --> 01:39:53,333
that's crazy. I would just never buy the stock. Just like I wouldn't buy the house,

1365
01:39:53,333 --> 01:39:57,012
right? If I think that the house is not going to go up in value.

1366
01:39:58,012 --> 01:40:03,132
I think I responded to Josh with this. It's like, it's like, it's like not buying an insurance

1367
01:40:03,132 --> 01:40:09,773
company stock. And when like the, because you think that the Yellowstone Caldera is going to

1368
01:40:09,773 --> 01:40:16,352
explode and the people that have insurance policies have a senior claim on the balance sheet.

1369
01:40:16,352 --> 01:40:23,773
it's like well if the yellowstone caldera blows like half of the u.s is dead

1370
01:40:23,773 --> 01:40:31,813
like we have bigger issues and like then the stuff you know your equity of this insurance

1371
01:40:31,813 --> 01:40:38,852
company stock that you held right that's like the the probability the the there's a misalignment

1372
01:40:38,852 --> 01:40:45,112
of probabilistic scenarios and i think people are having a really hard time assigning probabilities

1373
01:40:45,112 --> 01:40:51,652
to these types of events and like, like seeing them in their head. Like I see the world through

1374
01:40:51,652 --> 01:40:57,732
probability. So it's, it's kind of easy for me to kind of like sort and like assign a framework,

1375
01:40:57,732 --> 01:41:05,952
at least for myself. But to me, this, the fear that people have, then it's perpetuating on X.

1376
01:41:06,852 --> 01:41:13,652
It seems like an incredibly low probability tail scenario that wipes out Bitcoin.

1377
01:41:15,112 --> 01:41:21,913
Which if it wipes out Bitcoin people, Bitcoin holders are also in a really bad spot.

1378
01:41:22,652 --> 01:41:24,852
Yeah, I'll wrap up with this.

1379
01:41:25,132 --> 01:41:25,393
Right.

1380
01:41:25,552 --> 01:41:27,632
So, Jeff, I agree with what you just said there.

1381
01:41:27,873 --> 01:41:33,172
Look, back in the back in the olden days of 2017, what happened with Bitcoin?

1382
01:41:33,413 --> 01:41:35,652
They were, you know, it was the block size wars.

1383
01:41:35,752 --> 01:41:37,132
They wanted to change that.

1384
01:41:37,452 --> 01:41:38,452
This was going on.

1385
01:41:38,452 --> 01:41:44,012
And every time a new BIP format came out, it was like, if it didn't go the way the narrative

1386
01:41:44,012 --> 01:41:49,813
was going, Bitcoin would drop 10, 20, 30% in price. You had this massive volatility swings.

1387
01:41:50,152 --> 01:41:55,612
Then you had China banning Bitcoin, I don't know, three times, four times in the year.

1388
01:41:55,773 --> 01:42:00,873
They keep on banning Bitcoin. So this would all happen. The volatility was absolutely absurd.

1389
01:42:02,072 --> 01:42:08,393
And so now you're always going to have that same volatility get shaken out. And if you get shaken

1390
01:42:08,393 --> 01:42:13,212
out, then so be it. But at some point in the future, look, I've been in this now for eight

1391
01:42:13,212 --> 01:42:18,532
years. What I've rather would just be all smoothing straight up. Sure. But it just doesn't work like

1392
01:42:18,532 --> 01:42:25,712
that. And so the takeaway is, you know, you buy a house and, you know, hopefully everything goes

1393
01:42:25,712 --> 01:42:29,612
right. It doesn't matter where you buy the house. You got, there's always an issue in some part of

1394
01:42:29,612 --> 01:42:34,052
the country. You buy it in Florida, there's hurricanes. You buy it in California, there's

1395
01:42:34,052 --> 01:42:41,072
earthquakes. You buy it in the Northwest, it just rains all the time. I mean, right. And so

1396
01:42:41,072 --> 01:42:41,952
We got earthquakes.

1397
01:42:41,952 --> 01:42:43,032
You get earthquakes.

1398
01:42:43,413 --> 01:42:44,652
We're in California.

1399
01:42:44,913 --> 01:42:45,172
Right.

1400
01:42:45,433 --> 01:42:50,313
And anybody that lives in Minnesota, you get snow on the roof.

1401
01:42:50,413 --> 01:42:51,132
It then melts.

1402
01:42:51,292 --> 01:42:52,572
It takes out your rain gutters.

1403
01:42:52,652 --> 01:42:56,212
Then you got like $5,000 to fix your rain gutters or your roof.

1404
01:42:56,692 --> 01:42:56,792
Right?

1405
01:42:56,933 --> 01:42:58,873
So look, there's all these problems in the place.

1406
01:42:58,952 --> 01:43:02,413
And you just got to figure out, does the benefits outweigh the drawbacks?

1407
01:43:03,012 --> 01:43:06,192
And so my takeaway on this, and this is my last call.

1408
01:43:06,313 --> 01:43:08,132
You guys can stay on longer.

1409
01:43:08,273 --> 01:43:09,652
But I'll just wrap up here.

1410
01:43:09,992 --> 01:43:12,813
Look, I'm not happy with the MSTR common stock price.

1411
01:43:12,952 --> 01:43:14,313
I'm still a very large holder.

1412
01:43:14,452 --> 01:43:19,152
I have not sold any MSTR shares in my accounts since,

1413
01:43:20,313 --> 01:43:21,852
well, I did because I had options.

1414
01:43:21,852 --> 01:43:25,433
Back when I reported it in March, I had options.

1415
01:43:25,572 --> 01:43:28,473
I closed those all out back in March of this year

1416
01:43:28,473 --> 01:43:29,592
or February of this year.

1417
01:43:29,712 --> 01:43:30,473
I closed everything out

1418
01:43:30,473 --> 01:43:32,313
because that's when the tariff stuff started.

1419
01:43:32,773 --> 01:43:35,473
And I have a post there that I closed everything out.

1420
01:43:35,692 --> 01:43:38,893
But I haven't sold any MSTR shares the rest of the year.

1421
01:43:39,652 --> 01:43:44,532
And then I believe that Stretch will go back and hit its peg.

1422
01:43:44,792 --> 01:43:46,273
He has to maintain that.

1423
01:43:46,732 --> 01:43:49,032
They want the prefs to be successful.

1424
01:43:49,833 --> 01:43:52,413
And so my takeaway is I like those products.

1425
01:43:52,592 --> 01:43:58,273
If you like the products, do your own research, compare them against the Yieldmax products,

1426
01:43:58,572 --> 01:44:00,973
and then ask questions.

1427
01:44:01,232 --> 01:44:04,252
I mean, that's where I am.

1428
01:44:04,252 --> 01:44:08,692
I would much rather be that Bitcoin is at $130,000, but it just isn't.

1429
01:44:09,652 --> 01:44:15,333
yeah yeah great that was uh uh that was your final thoughts mike do jeff do you got any

1430
01:44:16,612 --> 01:44:21,092
anything we missed i can keep chatting there's there's uh there's a couple topics that uh

1431
01:44:22,052 --> 01:44:26,532
that i think are interesting but mike if you get if you want to run yep i'm jumping off thank you

1432
01:44:26,532 --> 01:44:31,973
guys i'm probably gonna be a few minutes that's fine take care cool yeah all right we're pulling

1433
01:44:31,973 --> 01:44:35,813
on all nighter you've only been awake for 24 hours we gotta we gotta take it to 36.

1434
01:44:35,813 --> 01:44:43,013
yeah okay so i had a nine hour flight with eight hour time change it feels like three o'clock in

1435
01:44:43,013 --> 01:44:47,552
the morning for me and uh we're just we're keeping it running i've just had a bunch of

1436
01:44:47,552 --> 01:44:57,132
coffee and diet coke and uh coke zero so we're cooking here the um but i was thinking about

1437
01:44:57,132 --> 01:45:05,752
credit systems like a lot just been over this last week um and how like stretch is working and

1438
01:45:05,752 --> 01:45:11,752
how it will like operate into the future and i think there's a there's a very real future where

1439
01:45:11,752 --> 01:45:20,612
like stretch is tokenized and i think that's like that that would be a very large

1440
01:45:20,612 --> 01:45:29,452
like a very large thing right if stretch is tokenized you can start to think as of stretches

1441
01:45:29,452 --> 01:45:33,352
like dollars i was gonna say explain that does that mean we get to spend them

1442
01:45:33,352 --> 01:45:40,752
like you can spend them peer to peer yeah and if it's if it's a stable coin

1443
01:45:40,752 --> 01:45:48,313
right if it's a if it's if we think it's going it's going to get to like

1444
01:45:48,313 --> 01:45:57,473
full stable coin like pegged at 100 or like 99 and a half to 100 and a half yeah which i think

1445
01:45:57,473 --> 01:46:03,352
it which is i think it what it will be in the long run might be 48 months from now

1446
01:46:03,352 --> 01:46:13,212
uh right it might be four years from now before we like see that like absolute 100 peg but there's

1447
01:46:13,212 --> 01:46:18,352
no reason it couldn't be tokenized and there's no reason that it wouldn't be accepted as a form of

1448
01:46:18,352 --> 01:46:25,632
currency right i take i take stretches or whether you know like um people are passing them back

1449
01:46:25,632 --> 01:46:37,652
peer-to-peer. And then additionally, seeing other companies start to use stretch as collateral.

1450
01:46:39,032 --> 01:46:45,433
So the Bitcoiners probably aren't going to like when I say this, but stretch is better collateral

1451
01:46:45,433 --> 01:46:54,473
than Bitcoin. Think about it. Stretch is better collateral than Bitcoin.

1452
01:46:55,632 --> 01:47:06,813
Okay. What's better than Bitcoin? 4X over collateralized senior claim on a balance sheet backed by Bitcoin.

1453
01:47:06,813 --> 01:47:16,952
hmm it's it's a hard statement but like if i if so thinking back to my institutional background

1454
01:47:16,952 --> 01:47:24,373
with uh reinsurance if i were to go if i were to go do or try to do a uh you know 100 million

1455
01:47:24,373 --> 01:47:30,112
dollar collateralized reinsurance transaction and i try to post bitcoin as collateral everybody

1456
01:47:30,112 --> 01:47:35,492
laughs it's not gonna happen like it's not gonna happen for probably a decade and it's funny

1457
01:47:35,492 --> 01:47:39,433
because there's a couple people in the market that are trying to do like some crypto backed

1458
01:47:39,433 --> 01:47:46,232
collateral and it's like it's not going to work but it's much easier to go sell 100 million dollars

1459
01:47:46,232 --> 01:47:55,232
stretch yeah if it's pegged at 100 and it's non-volatile and it's printing 10 yield a year

1460
01:47:55,232 --> 01:48:05,433
and it's rated b that's much better collateral it's much more widely accepted

1461
01:48:05,433 --> 01:48:12,373
like a majority of the world is going to accept stretches collateral over accepting bitcoin as

1462
01:48:12,373 --> 01:48:18,732
collateral yeah the rails are already in place to like make it happen with a snap of a finger

1463
01:48:18,732 --> 01:48:22,273
and if it's tokenized it gets even easier

1464
01:48:22,273 --> 01:48:31,333
wild so yeah so i like that's what i've been thinking about a lot is like okay

1465
01:48:31,333 --> 01:48:40,833
the credit system that that gets that gets built on this is going to be an enormous and it's going

1466
01:48:40,833 --> 01:48:48,592
to get hypothecated like that's a that's that's the insane thing right so one thing that i've

1467
01:48:48,592 --> 01:48:55,712
thought about a bit is like there the amount of credit bitcoin backed credit in the market can be

1468
01:48:55,712 --> 01:49:05,092
significantly greater than the than the market cap of bitcoin because it can be hypothecated

1469
01:49:05,092 --> 01:49:13,313
so like you think about how insurance companies take on risk right you've got

1470
01:49:13,313 --> 01:49:19,132
uh like insurance companies leverage their balance sheet four to one

1471
01:49:19,132 --> 01:49:25,492
and if your balance sheet is a stable coin if your balance sheet is made up of 100 stretch for

1472
01:49:25,492 --> 01:49:29,412
example let's just say you're a bermudian entity you're not publicly traded you don't have to worry

1473
01:49:29,412 --> 01:49:38,252
about 40s act whatever if you're 100 capitalized on strc okay now i can leverage i can leverage

1474
01:49:38,252 --> 01:49:45,933
that strc balance sheet by but four and i could go take on risk in the market all right i could go

1475
01:49:45,933 --> 01:49:52,532
buy i could go because it's because it's forex collateralized at the source not necessarily

1476
01:49:52,532 --> 01:49:57,652
because it's 4x collateralized because i'm taking on risk that doesn't have 100 probability of

1477
01:49:57,652 --> 01:50:06,852
happening yeah now so even with a very small chance of an occurrence given an infinite time

1478
01:50:06,852 --> 01:50:12,532
frame like any everything that's possible is inevitable so don't they get wrecked eventually

1479
01:50:12,532 --> 01:50:20,052
somebody does uh not in a system where you're uh where you store your energy and doesn't decay

1480
01:50:22,532 --> 01:50:44,492
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.

1481
01:50:44,492 --> 01:50:48,013
and they go insure a couple of boats

1482
01:50:48,013 --> 01:50:52,132
with some shit on it to go sail across the Atlantic

1483
01:50:52,132 --> 01:50:55,632
and come back. If the boat makes it,

1484
01:50:56,292 --> 01:50:59,912
then they get the gold. If the boat doesn't make it,

1485
01:50:59,952 --> 01:51:03,232
they pay out the insurance claim and they pay out the gold.

1486
01:51:04,373 --> 01:51:07,873
They just measured it over the year. I started with this much gold and I

1487
01:51:07,873 --> 01:51:09,273
ended the year with this much gold.

1488
01:51:11,992 --> 01:51:14,192
That's a good transaction.

1489
01:51:14,492 --> 01:51:22,852
and like that's that's going to be the the future of this stuff too like let's just imagine

1490
01:51:22,852 --> 01:51:29,373
an insurance company that's 100% capitalized on stretch and any premium that they generate

1491
01:51:29,373 --> 01:51:35,393
uh from people that are buying the coverage goes to buy more bitcoin

1492
01:51:35,393 --> 01:51:41,773
but they're using their stretches collateral like if they if they need to pay out claims they just

1493
01:51:41,773 --> 01:51:45,473
they just sell stretch to pay out the claims or, you know, whatnot.

1494
01:51:46,852 --> 01:51:49,292
But I mean, you bring up, you bring up a good question.

1495
01:51:50,652 --> 01:51:52,933
Insurance industry has been around for 500 years.

1496
01:51:54,893 --> 01:51:58,833
I think it will continue to be around for, uh,

1497
01:51:58,833 --> 01:52:01,833
for a very long time because people like certainty in their life.

1498
01:52:03,973 --> 01:52:05,393
I don't know. We'll see.

1499
01:52:05,532 --> 01:52:07,013
These are just some of the things I'm thinking about.

1500
01:52:07,013 --> 01:52:10,013
So my final thoughts are a little bit, uh,

1501
01:52:10,013 --> 01:52:14,433
a little bit scattered from spending some time in Europe with, uh,

1502
01:52:14,672 --> 01:52:18,393
with some old insurance folks. Anyway.

1503
01:52:19,252 --> 01:52:21,852
You're jet lagged to hell. You got, you got more final thoughts.

1504
01:52:22,152 --> 01:52:25,132
No, that's it. That's it. I honestly,

1505
01:52:25,393 --> 01:52:28,792
NSTR looks like a screaming buy here. Um,

1506
01:52:28,792 --> 01:52:31,893
I have no idea where Bitcoin's going. I personally think it's,

1507
01:52:31,992 --> 01:52:35,373
it's got room to go significantly higher. I think all the macro,

1508
01:52:35,373 --> 01:52:39,672
we've got tailwinds behind us. I wouldn't, I wouldn't be buying any other,

1509
01:52:39,672 --> 01:52:48,833
cryptocurrency uh i want the one that's a monopoly owning the company that is that has a monopoly on

1510
01:52:48,833 --> 01:52:57,313
monopoly money yeah it's it's probably a good trade uh if you're holding for a for a long-term

1511
01:52:57,313 --> 01:53:05,773
horizon and a lot of people are screaming but like most like 90 95 of my mstr exposures in my

1512
01:53:05,773 --> 01:53:10,852
retirement accounts i'm like oh i don't like i can't touch this for 30 years anyway so like what

1513
01:53:10,852 --> 01:53:18,192
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

1514
01:53:18,192 --> 01:53:25,412
could always dip more and and cause you some more heartburn but uh yeah it's just your your

1515
01:53:25,412 --> 01:53:30,912
investment horizon is the only thing that matters i think as far as that's concerned yeah all right

1516
01:53:30,912 --> 01:53:38,192
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.

1517
01:53:38,192 --> 01:53:51,792
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.

1518
01:53:52,373 --> 01:53:56,373
I mean, the only thing was the only thing missing was him like yelling freedom at the end.

1519
01:53:56,433 --> 01:53:57,513
It was like crazy.

1520
01:53:57,513 --> 01:54:04,612
and it was just a normal earnings call up until that point um and then he he like caps it off and

1521
01:54:04,612 --> 01:54:10,552
he says he wants mstr to stand for monster and they want to eat the world and i was just like

1522
01:54:10,552 --> 01:54:20,632
they are gathering like a bitcoin treasury army and these these are these are economic nodes now

1523
01:54:20,632 --> 01:54:26,852
so i mean we got all the plebs you know we're gonna get these treasury companies now and

1524
01:54:26,852 --> 01:54:28,792
they are going to start

1525
01:54:28,792 --> 01:54:31,072
acting in Bitcoin's

1526
01:54:31,072 --> 01:54:33,352
interest and I think

1527
01:54:33,352 --> 01:54:35,313
that's going to be a necessary sway

1528
01:54:35,313 --> 01:54:36,672
I think we're going to get a few

1529
01:54:36,672 --> 01:54:39,212
treasury companies that over leverage and

1530
01:54:39,212 --> 01:54:41,092
come with their Bitcoin or

1531
01:54:41,092 --> 01:54:42,992
make some terrible decisions

1532
01:54:42,992 --> 01:54:45,373
like Mara they decided

1533
01:54:45,373 --> 01:54:46,452
to mine some Caspa

1534
01:54:46,452 --> 01:54:49,212
and they were I think they were

1535
01:54:49,212 --> 01:54:49,873
doing like

1536
01:54:49,873 --> 01:54:53,252
was it OFAT compliance or something

1537
01:54:53,252 --> 01:54:55,393
and the community

1538
01:54:55,393 --> 01:54:56,692
just revolted

1539
01:54:56,852 --> 01:55:00,212
They were like, that's not the Bitcoin ethos.

1540
01:55:00,532 --> 01:55:02,813
So you guys can piss off.

1541
01:55:02,813 --> 01:55:08,973
And they had to capitulate because their stock price was going down the toilet.

1542
01:55:09,732 --> 01:55:24,052
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.

1543
01:55:24,052 --> 01:55:27,393
because we're going to punish any Bitcoin treasury company

1544
01:55:27,393 --> 01:55:33,552
that is not abiding and doing what's right for Bitcoin.

1545
01:55:34,433 --> 01:55:42,092
So I think it's just a good thing for the network overall.

1546
01:55:43,712 --> 01:55:44,352
Yeah.

1547
01:55:44,952 --> 01:55:48,952
I think the reality is the Bitcoin treasury companies

1548
01:55:48,952 --> 01:55:51,013
are going to be the balance sheet of the world.

1549
01:55:51,013 --> 01:55:58,592
like the balance sheet of the world is going to be built on bitcoin yeah like that's crazy this

1550
01:55:58,592 --> 01:56:05,052
is a crazy statement but it's true and it's already it's already happening yeah so anyway

1551
01:56:05,052 --> 01:56:10,212
good stuff thanks jeff i'm gonna i'm gonna go to sleep yeah great job hosting soleil appreciate

1552
01:56:10,212 --> 01:56:18,032
the time so this is 45 baby 45 i love it okay let's do 46 maybe next week before thanksgiving

1553
01:56:18,032 --> 01:56:18,973
Thanks everybody for tuning in.

1554
01:56:19,712 --> 01:56:19,933
See y'all.

1555
01:56:20,032 --> 01:56:20,412
Catch you later.