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Welcome back. Episode 58 of True North, the investment grade Bitcoin podcast. We are back.

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We are on the road. It's myself, Ben Workman, Mike, grain of salt. And we are here to talk

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about everything Bitcoin, talk about securitized finance and hit it again for another week. I think

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it'll be a little bit of a short week. We've been burning the candle on both ends here,

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trying to digital creditize the entire world.

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And I think we're making some progress.

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So, all right, we've got a fun little agenda for you guys today.

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We are going to walk through the recent MSTR purchase,

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the $1 billion purchase, dissect it a little bit.

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How large can this ecosystem get?

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Let's kind of brainstorm and think through it a little bit.

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What would have to be true?

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What is Big Capital thinking about?

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how is this ecosystem changing and shifting?

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How do we start to think about these instruments?

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Who are these instruments good for?

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Big question that a lot of people are thinking about right now.

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Is this the bottom?

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Have we seen the bottom?

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Is the bottom behind us?

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Starting to feel like it a little bit.

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We'll talk about that.

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And maybe we'll have some conversation on private credit

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because it is one of the hottest topics

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outside of the perpetual preferred equities at the moment.

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And obviously, AI is continuing to one-shot companies left and right, but private credit

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is a hot topic.

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So let's just jump into it.

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Maybe I'll pass it over to you guys.

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Mike, Ben, how are you guys feeling?

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Obviously, a lot of buzz on STRC.

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We helped create some of the buzz on STRC.

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Volumes are popping off.

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I think this week, STRC has traded over a billion dollars of volume, 1.2 billion dollars

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of volume through three days.

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So massive, massive liquidity growing in this instrument.

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Will be really fascinating to see how this trades over the next couple of days.

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You've got the record date tomorrow, Thursday the 12th, and then coming up on the ex-dividend

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date.

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So we'll see how capital rotates.

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If it does rotate, how does it shift?

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How do ARB models work and interact with the product on Friday?

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And then how quickly does it go back to par?

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Does it even fall off of par?

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And it'll be a great data point to see how that continues to operate.

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Because as you've seen, the strategy is continuing to hit on this low volatility of this instrument,

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pushing sharp ratios.

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Sharp ratio hit three of STRC today, which outperforms pretty much everything in the

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entire market.

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When you're thinking about portfolio allocation, sharp ratios are important because assets

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with different risk return metrics,

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improves the return and reduce the risk

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of your entire portfolio.

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And when you see something with a sharp ratio of three,

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you kind of have to squint your eyes

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and look a little bit harder

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and it probably gets passed off

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as too good to be true right away.

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So fun stuff, fun times.

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Maybe I'll kick it over to you guys.

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How are you feeling?

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Feeling good.

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I mean, same as you.

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I'm tired now.

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We've been crisscrossing here

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We're trying to spread the good word around digital credit, which has actually been a ton of fun.

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And it's been incredibly eye opening.

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We say it all the time.

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I'm sure it seems like it gets old, but you start to realize just how early we are on all of this stuff still.

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Right.

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The awareness is just not out there.

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You're trying to go and target institutions that are incredibly resistant to change, that don't see the risk that they're taking on, which was kind of a fascinating concept that we saw today.

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And Jeff, you know, you made several posts about what you saw with private credit in some of our conversations and, you know, how that was giving you that tingling sense that it seemed like they were hearing about in the big short.

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And so it's just been fascinating to watch this unfold.

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And at the same time, you're watching Stretch pick up all this strength.

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You're seeing a relentless bid on there.

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You know, today we were even joking because we pulled it up and it was at, you know, $100.16.

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cents. And we're going, Sailor must be furious. The volatility is getting out of control on this

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thing. It went from $100 to $100.16. He's got to get it back down. And so that was fascinating.

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But then you could also start to watch how it trades in the aftermarket. And I think that's

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also going to be very fascinating. We're never going to get a break when these things start

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trading 24 hours a day because we're going to be watching this. And even with the purchase that we

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made when we bought $50 million worth of stretch, it was kind of funny because you put the

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trade on, you see the trade hit the tape. And then we're immediately wondering how long it's

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going to take people to spot it. And it was seconds. I bet within 30 seconds, there were

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posts out there on X about the buy. And obviously it shows up because it's a big volume spike event.

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But it shows you how in tune people are with this. It's fascinating. It's captivating everyone's

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imaginations. They're starting to see this relentless building bid that's coming underneath

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Bitcoin now, you're starting to see the price hold up. It keeps bouncing above 70. It feels like it's

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a matter of time before we finally get to move the other direction. But we've got so much macro

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uncertainty out there that I think things are just still in a position where people aren't ready to

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go full risk on again yet. There's still just too much uncertainty wavering around out there.

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So but all in all, I mean, it's been we've had so much happen this week.

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You just had MetaPlanet kind of announce a pivot in their business model, which is fascinating to see, you know, the space is evolving and how people are going to utilize these balance sheets is going to evolve.

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And I'm pumped. I think we've got a really exciting year here ahead of us.

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And if Bitcoin gives even a little help, I don't think there's going to be a bigger story or anything being talked about more in the financial markets than what's going on in the space right now.

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Completely agree.

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Completely agree.

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And real quick, while this information may be amazing, none of this is financial advice.

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And this information is for entertainment purposes only.

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And we're on different machines and everything today.

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Otherwise, Tim would be up here passing it back to me.

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And now it's over to you, Mike.

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What's on your mind?

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You've been ripping up the spaces recently.

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How are you thinking about things?

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Yeah, so I did a space last night for two hours, hosted it myself, ran it.

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I've been on multiple spaces.

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I was on Scott Melker's space the first thing this morning.

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There was 3,000 people on that space.

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And I keep on saying the same thing.

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A bear market typically is when an index is down by 20% from its all-time high.

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For Bitcoin, if you're down 50% from its all-time high, I think you're in a bear market.

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If it's 60% or 70%, it's just a worse bear market.

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So do I think that we're in a bear market right now?

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Sure.

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But the fact that strategy was able to raise $1.2 billion in a bear market last week, and

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it was almost 18,000 Bitcoins, that answers that question to people.

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Oh, what's going to happen with Saylor if we enter a bear market?

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it's like really i think that he he just got stress tested that's the correct word he was

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stress tested bitcoin is off 45 from its all-time high and he's able to raise 1.2 billion dollars

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and the naysayers and then i say to them this i go this is counterintuitive in a bull market

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with higher mnavs it's easier for any company that has a higher mnav to acquire more bitcoin

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because you're arbing that difference.

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If your MNAV is 1.5 and your stock is $1,

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that extra 50% is immediately accretive

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or if you sell it to MNAV.

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So in a bull market,

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it's easier to acquire capital than right now.

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And I don't think people are understanding that.

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And I've had to say this multiple times

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and people are like, we still hear the same thing.

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Is he going to get liquidated?

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I'm like, I don't think so.

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He's bought 18,000 Bitcoins in one.

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And you know what's crazy?

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They pulled up that tweet from two years ago where he said, imagine that there's a buyer,

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Saylor said this, that has unlimited amounts of money that buys 450 Bitcoins a day.

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Well, it turns out that it's him and he's buying 1,000 Bitcoins a day or 2,000, four

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times that amount.

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And it's two years later.

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So, I mean, people are catching on.

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I don't know how long it's going to take for people to understand this.

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Yeah, that commentary or the, you know, what if the access to capital markets changes in a bear market?

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It's completely blown that argument out of the water.

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And we even got that question today.

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What happens when the music stops?

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That was the question.

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What's the music?

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What's the music?

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Is the music fiat debasement?

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I mean, since 1970, fiat, the U.S. monetary supply has increased 6.7 percent, compounded annually for 56 years in a row.

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Right?

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Yeah.

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I want to talk about that.

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Right, right, right.

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And by the way, if our budget was truly budget neutral, just not balanced by Fed printing, we have a 1.7.

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I know we've hounded on this.

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I've hounded on this for a year.

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Even if that got fixed magically overnight,

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you still have a $39 trillion deficit that you still have to pay interest on.

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So that doesn't magically go away.

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So everybody's like, oh, we could just fix this.

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No, that's not going away.

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But, you know, I think, I don't know why, you know,

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what happens if the, you know, the music stops?

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You know, somebody said, somebody posted today,

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well, strategy does not guarantee the payments.

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I'm like, okay.

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I didn't want to even engage with this person.

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Could you tell me who guarantees any payments?

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I'm not aware of any guarantees.

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Right?

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He needs a guarantee.

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And by the way, the reason why FDIC insurance exists is because the banks have to hold zero.

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That bill was changed.

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I found the SEC notice of that.

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I posted that.

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And they said, oh, well, you know, the crypto guys need FDIC insurance.

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No, they back it 100%, right?

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We're talking about stable coins.

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But with strategy, they have 10% leverage.

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That means they're 90% backed.

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And banks are the reverse.

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They're somewhere below 10%.

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Otherwise, 90% does not exist.

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That's why FDIC insurance exists.

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Yeah, this, I want to hit on this liquidity component here for a moment, too,

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because this is what I've been thinking about quite a bit is a lot of this business model

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is a function of the liquidity environment of Bitcoin and the securities that are created

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around Bitcoin. So what has the creation of these securities done? It's created new expressions of

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Bitcoin exposure. Just like standard oil, right? You took this raw crude commodity out of the

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ground, you turn it into kerosene, you turn it into gasoline, you turn it into asphalt.

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Those different expressions of that primary commodity are interesting to different people,

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right? They're different industries, basically. And it's the same concept here, right? You're

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taking this raw commodity out of the ground or like this raw commodity out of the protocol that's

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getting mined by all of the electricity, all the miners that are mining all this Bitcoin,

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and you're converting it into different expressions that are interesting. And they're interesting

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for different reasons. And you think about, okay, well, how does anybody value the equity,

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like the common stock equity? It is a function of the price of Bitcoin moving up or down, right?

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It is a function of that.

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What is the function?

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I don't know.

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There are thousands of computers that are calculating some sort of function, and they're using different hedging tools and mechanisms to go in both directions.

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They want to short it.

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They want to long it.

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They get leverage.

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It's a relatively pure expression of Bitcoin, and the underlying value will always be a function of this instrument.

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Now, what do we know about Bitcoin?

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It's moving every day.

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You could sit and watch the chart every day.

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It's moving.

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So, strategies price is likely going to move as well if there's a tie, if there's some

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relationship to this underlying product that's kind of always moving.

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Now what makes that interesting about the credit instruments is the same thing, like

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the liquidity profile and the fact that this thing is always moving.

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You now have an understanding of like a risk profile of these instruments all the time.

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I think that's fascinating.

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And you can compare it to everything else in the market.

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That's interesting.

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And I think a lot of people don't quite recognize the fact, just like the subtle, it's not even subtle.

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Bitcoin is super liquid.

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It trades $40 to $60 billion a day.

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Sometimes it trades $100 billion a day.

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So you think about just strategies balancing, for example.

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They have $50 billion of capital that's liquid to pay an $850 million annual interest obligation.

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So what is that divided by 12?

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$850 million, $70 million monthly obligation.

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and they have $50 billion of liquid capital to pay that obligation?

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$52, $54 billion of liquid capital to pay that obligation?

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What other corporation on the planet has that much capital

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to pay their monthly obligation into perpetuity at any point in time?

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I think it's very, very small.

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Infantastically small.

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Yeah, I think of these models, you know, to the question we got that you were talking about when we were asked what happens when the music stops, I think there's a fundamental disconnect about what the products are that are being offered.

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You know, when you start talking about Bitcoin right away, you can get a lot of people that just kind of glaze over and they tune out because they hear Bitcoin, they hear risky.

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But if you look at the two products, they're very different and that serves you in different market conditions.

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So, for instance, when you look at the common equities, you might say, well, what are you selling with the common equity?

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What are people buying with the common equity?

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Well, you're buying enhanced volatility is effectively the product that you're buying with the common equities.

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They're structured in such a way that their volatility is going to be greater than what Bitcoin is going to provide.

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Now, they're confusing instruments for a lot of people because they can both be looked at as a long-term investment vehicle for working to outperform Bitcoin.

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But they're also highly liquid, high volatility instruments that enable trading activities.

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And it's the same thing that we saw with why the convertible bonds were so popular, right?

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Why there was so much demand for those products.

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and it was because that underlying equity moved.

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And so there was that gamma trading that you could do between, you know, the bond paper

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and the equity.

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Well, the same thing is happening with the common.

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So people say, well, what happens if the price goes down and all the demand dries up for

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the common?

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You go, well, that's not how volatility's value works out there for a lot of these trading

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firms, for these hedge funds, for these guys that are putting on these different trades

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and they're looking for these different expressions of the trade that they want to put on.

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And it's the reason why you see such high volatility, such high liquidity in these products.

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If you look at MSTR, it's one of the most liquid stocks on the entire stock market.

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They trade three to three and a half billion dollars a day of stock on there.

258
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And even when you look at us, you know, at the size that we are and we'll trade, you

259
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know, 30 to 50 million dollars in a day relative to our size is a huge amount.

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Right. If you break it down on a volatility per Bitcoin basis, we're effectively at the

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same level of strategy as far as size, which is fascinating to look at.

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So that's one product, right?

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You've got the high octane expression of volatility.

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And to a lot of these traders, that's all they need to know.

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They just need to know that this vehicle moves a lot, right?

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They're not looking at the Bitcoin side of it.

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They're looking at the fact that the equity moves.

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And then you look at the other product, it's live.

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And then you look at the other product, and the other product is cash flow.

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It's high yield.

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Now who wants high yield?

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Who wants high cash flow?

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Well, the short answer is everybody.

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That's why when Saylor had that moment where he was at Strategy World and he goes, I ultimately

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realized that for this phase, digital credit is Bitcoin for corporations.

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Corporations aren't quite there yet on the risk profile of Bitcoin itself.

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It's hard to stomach that volatility if you're managing a treasury.

278
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You know, if that comes to a point where all of a sudden I've put a significant portion

279
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of my treasury into Bitcoin and that volatility strikes during a time period where my corporation

280
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needs liquidity, that's a risk, right?

281
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And it's not one that a lot of corporations are willing to take yet.

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I think over time they'll start wanting to have some allocations.

283
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But what's very easy for them to do is plug in a low volatility, high yield instrument

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as a part of their standard treasury management practices.

285
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That's very non-threatening as a corporation

286
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or as a corporate treasurer.

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And because of that,

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it brings on a different level of adoption.

289
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And so you've got these two,

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you could look at them as polar opposite products

291
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that are being offered in the market now.

292
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And that helps build resiliency

293
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across the entire market cycle.

294
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When things are ripping,

295
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you've got this high demand for the high octane,

296
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high volatility flavors of these assets. When things are kind of going sideways or even during

297
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the bear markets, you've got more of a risk off type of an expression, but it's still linked to

298
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Bitcoin, but you're going to that cash flow. So I think that there's actually a way to talk about

299
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these products more where you don't have to lead with Bitcoin as the headline. Bitcoin is what

300
00:19:08,900 --> 00:19:14,880
makes all this possible. But what they want is enhanced volatility and cash flow. And those are

301
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the two products that are being offered now in the market and they're incredibly powerful

302
00:19:18,380 --> 00:19:22,800
products when you start to realize how this capital moves and what their incentive structure

303
00:19:22,800 --> 00:19:26,760
is for how they're going to create their own returns.

304
00:19:26,760 --> 00:19:39,520
Totally. Corporations have they view capital. I think this is something that a lot of people

305
00:19:39,520 --> 00:19:44,960
that haven't worked in finance, maybe not recognized is like corporations when they are

306
00:19:44,960 --> 00:19:51,120
managing capital, they're managing a liability profile, right? If you have an operating business,

307
00:19:51,120 --> 00:19:56,800
you have an understanding of at what point in time you're going to have expenses come up.

308
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If you're an insurance company, you have an actuarial understanding of at what point in time

309
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our liability is going to come up. And so then what you do is you manage your assets relative to

310
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those liabilities that you have in the future. So if you want to manage to 24 months of 18 or 24

311
00:20:20,600 --> 00:20:28,560
months of liquidity, you may make different decisions for different tranches of that exposure

312
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that you have over time.

313
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So maybe the first six months is in something like literally just cash.

314
00:20:35,700 --> 00:20:38,140
It's like in a money market savings account.

315
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You might have six months in T which is very short duration very liquid basically connected to the Federal Reserve You can get that money no matter what And then for some of that moderate duration you might hold it in a little bit of a higher yielding instrument which is how how we view STRC on our balance sheet right

316
00:21:00,298 --> 00:21:05,898
We view this as kind of a moderate term instrument with the ability to increase the

317
00:21:05,898 --> 00:21:10,158
return relative to the other assets that we would hold for a moderate duration instrument.

318
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Like if you were to hold T-bills paying 3.4% or 3.1%, whatever the rate is, there's a significant

319
00:21:17,178 --> 00:21:21,978
delta in those two instruments for the relative risk profile.

320
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And there's significant alpha for that duration of that capital being used for that point in time.

321
00:21:28,278 --> 00:21:35,298
So, you know, we see this as a credit enhancing decision-making process for duration capital

322
00:21:35,298 --> 00:21:36,678
on our balance sheet.

323
00:21:37,058 --> 00:21:37,978
And it's fascinating.

324
00:21:37,978 --> 00:21:44,778
We think this is a great use case for other corporations, right? And not just publicly

325
00:21:44,778 --> 00:21:50,138
traded companies, small, medium enterprises. I heard an anecdote chatting with a friend a little

326
00:21:50,138 --> 00:22:01,818
bit earlier today. And he was saying that basically he orange-pilled them on stretch.

327
00:22:02,458 --> 00:22:07,418
And they said, all of our money right now is in money market funds. If we move it over to stretch,

328
00:22:07,418 --> 00:22:11,858
we can make payroll. All of our concerns about our operating business are gone, literally

329
00:22:11,858 --> 00:22:16,858
gone. And he hung up the phone, it's like, okay, I got to go. I got to go talk to my

330
00:22:16,858 --> 00:22:27,378
board. And I think those conversations need to happen. And I think they're interesting

331
00:22:27,378 --> 00:22:32,778
conversations around risk profile of these instruments and how to think about how it

332
00:22:32,778 --> 00:22:35,838
can help enhance your business operating into the future.

333
00:22:36,278 --> 00:22:43,218
Just as you would manage your cash flow for your life, I think of my family as a business,

334
00:22:44,098 --> 00:22:46,238
my wife, my dogs, and everything.

335
00:22:46,398 --> 00:22:49,638
I manage our capital as a business.

336
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And you can take that same framework and manage that for an actual real business that is managing

337
00:22:54,458 --> 00:22:57,458
different scales of different capital.

338
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And that will evolve.

339
00:23:01,118 --> 00:23:01,618
That will change.

340
00:23:01,618 --> 00:23:04,058
as these things start to build a track record,

341
00:23:04,058 --> 00:23:05,598
as people start to wrap their heads around them,

342
00:23:05,638 --> 00:23:07,418
as the dividends continue to get paid

343
00:23:07,418 --> 00:23:10,618
over and over and over and over again,

344
00:23:11,018 --> 00:23:13,698
and the volume continues to be higher and higher

345
00:23:13,698 --> 00:23:15,418
and the liquidity builds in these things.

346
00:23:16,138 --> 00:23:18,538
This is the biggest story in all finance, right here.

347
00:23:19,838 --> 00:23:21,398
Exactly what's happening in digital credit.

348
00:23:22,138 --> 00:23:22,898
It is.

349
00:23:23,038 --> 00:23:25,018
And I actually think that it's going to get built up

350
00:23:25,018 --> 00:23:26,538
at more of a grassroots level.

351
00:23:26,998 --> 00:23:29,158
You know, obviously we're, you know,

352
00:23:29,178 --> 00:23:30,558
going around and swinging big

353
00:23:30,558 --> 00:23:33,058
and trying to start to nudge.

354
00:23:33,578 --> 00:23:35,758
If you're trying to turn a freighter out there,

355
00:23:35,818 --> 00:23:38,978
we're trying to nudge it and get it to change course a little bit

356
00:23:38,978 --> 00:23:41,578
with all of these large traditional finance institutions.

357
00:23:42,418 --> 00:23:47,098
But this is incredibly applicable for small and medium-sized businesses.

358
00:23:47,718 --> 00:23:50,858
One of the things that fascinated me while we were at Strategy World

359
00:23:50,858 --> 00:23:55,118
was the number of small business owners that came up to me.

360
00:23:55,198 --> 00:23:57,498
And it's people that are running medical practices

361
00:23:57,498 --> 00:23:59,318
and then all these other small businesses

362
00:23:59,318 --> 00:24:04,758
where they were very quick adopters of this as a treasury instrument for those businesses.

363
00:24:05,858 --> 00:24:09,878
And I even look at other industries that people don't tend to think about a lot, but you've

364
00:24:09,878 --> 00:24:15,518
got something like the trucking industry, where there's a significant amount of self-insurance

365
00:24:15,518 --> 00:24:19,038
that has to happen, which means you have to hold a significant amount of capital back

366
00:24:19,038 --> 00:24:21,238
so that you're covered for any claims that may come up.

367
00:24:21,618 --> 00:24:27,258
And being able to deploy that into a higher yield instrument is massively favorable to

368
00:24:27,258 --> 00:24:27,798
that industry.

369
00:24:27,798 --> 00:24:33,238
And so I think that this probably actually starts more in like the private business sector.

370
00:24:33,458 --> 00:24:35,738
I would guess that you actually get quite a bit of uptake.

371
00:24:36,118 --> 00:24:40,298
It's just not going to be the flashy uptake, you know, that we're used to seeing on the

372
00:24:40,298 --> 00:24:44,318
internet when, you know, some big corporation gets involved or some big institution starts

373
00:24:44,318 --> 00:24:44,978
getting involved.

374
00:24:45,818 --> 00:24:51,118
But the conversation around digital credit has really changed a lot and very quickly.

375
00:24:51,318 --> 00:24:56,178
I mean, it's only been just over a year, but you look at strategy world and you look at

376
00:24:56,178 --> 00:25:00,938
the names of the institutions that are now lending their reputation to the space.

377
00:25:01,718 --> 00:25:05,598
I thought that was as eye-opening for me as anything else that's ever been done.

378
00:25:05,778 --> 00:25:07,338
Who's going up on that stage?

379
00:25:07,598 --> 00:25:12,618
Who's willing to walk out there with strategy and start talking about digital credit and

380
00:25:12,618 --> 00:25:15,298
how it's going to get pushed out there in the market and how it's going to evolve and

381
00:25:15,298 --> 00:25:17,578
how the new products are going to get placed?

382
00:25:17,678 --> 00:25:20,738
And you start hearing from firms like Morgan Stanley.

383
00:25:21,138 --> 00:25:23,178
You start hearing from the TD Ameritrade.

384
00:25:23,178 --> 00:25:34,878
You start hearing from all of these highly recognizable, highly respected financial institutions that are telling you these are the products that are going to be able to get this uptake.

385
00:25:35,138 --> 00:25:37,978
You can build industries around these products.

386
00:25:39,098 --> 00:25:43,158
And that sends a significant message out to the rest of the world.

387
00:25:43,678 --> 00:25:48,678
You know, for a company like Morgan Stanley to be pursuing a Bitcoin ETF.

388
00:25:49,298 --> 00:25:51,278
You know, yeah, you can say, well, they're late to the game.

389
00:25:51,278 --> 00:25:59,258
You know, BlackRock was out there first, and yes, they were, but Morgan Stanley has a very large private wealth management practice.

390
00:25:59,678 --> 00:26:01,498
And which product do you think they want to sell?

391
00:26:02,198 --> 00:26:08,098
Do they want to sell BlackRock's product, or do they want to use their sales funnel to go and sell Morgan Stanley's ETF?

392
00:26:09,418 --> 00:26:14,198
And so these are all massive developments, but all these developments take time to develop.

393
00:26:14,198 --> 00:26:27,198
And, you know, there's a patience factor here and a persistence factor here where you just have to constantly keep pushing the messaging out wide that there's a better solution than you're used to.

394
00:26:27,698 --> 00:26:32,638
Right. You've got new options for how to do this. You've got a better option for how to manage your treasury.

395
00:26:32,638 --> 00:26:35,058
You can increase your cash flow.

396
00:26:35,178 --> 00:26:38,918
If you're a retiree, you can average up the returns you're getting out of the fixed income

397
00:26:38,918 --> 00:26:43,798
portion of your portfolio, which could make a very meaningful impact to the quality of

398
00:26:43,798 --> 00:26:44,398
your retirement.

399
00:26:44,978 --> 00:26:48,478
These are all things that are impacting people's real lives.

400
00:26:49,498 --> 00:26:54,118
And as soon as you can start getting that message out that you have an option now that

401
00:26:54,118 --> 00:26:58,958
can really improve the quality of everything you're doing, it's a matter of time before

402
00:26:58,958 --> 00:26:59,858
the update comes.

403
00:26:59,858 --> 00:27:09,818
And for everyone wondering, you know, all the all the scrambling we're having today, you know, there's some this one's effectively a YouTube special because X is having some issues.

404
00:27:10,098 --> 00:27:14,478
The team was trying to troubleshoot that. It's why we didn't have music coming on.

405
00:27:14,558 --> 00:27:16,478
We thought Jeff was going to sing, but, you know, he.

406
00:27:20,638 --> 00:27:25,218
Yeah, a lot of scrambling here. Episode 58. We're rolling with the punches.

407
00:27:25,218 --> 00:27:30,198
just that's just the way we're going to do it. Another fascinating thing that happened in this

408
00:27:30,198 --> 00:27:36,618
last week, and I'm sure we'll see it here this next week as well. So 377-ish million raised on

409
00:27:36,618 --> 00:27:42,798
STRC last week. Okay. Week prior to the record date, which was new, novel. I think they raised

410
00:27:42,798 --> 00:27:49,078
every single day last week. Impressive. But the total capital raise is 1.2 billion. So they raised

411
00:27:49,078 --> 00:27:56,458
on MSTR as well. I think it was two to one, two and a half to one. So effectively, after the end

412
00:27:56,458 --> 00:28:02,958
of the week, they raised $377 million on STRC and $1.2 billion in total, so whatever that delta is.

413
00:28:03,798 --> 00:28:12,438
And they kept the credit quality the same. So at the end of the week, it was actually pretty much

414
00:28:12,438 --> 00:28:21,878
like nothing had changed because the amplification stayed flat. I guess the cash coverage probably

415
00:28:21,878 --> 00:28:28,638
dwindled slightly, but the relative risk profile of the instrument remained unchanged, which is

416
00:28:28,638 --> 00:28:36,258
incredible. This company raised $377 million of a fixed income credit instrument,

417
00:28:36,258 --> 00:28:40,518
and the credit remained unchanged in a week.

418
00:28:40,638 --> 00:28:41,458
They did that in a week.

419
00:28:42,078 --> 00:28:43,018
We'll see what this week is,

420
00:28:43,058 --> 00:28:44,278
but I would assume it's probably larger.

421
00:28:44,918 --> 00:28:46,258
That's incredible.

422
00:28:47,158 --> 00:28:48,118
That is totally incredible.

423
00:28:48,278 --> 00:28:50,698
Again, access to capital markets, liquidity,

424
00:28:51,418 --> 00:28:54,778
the entire corporate structure.

425
00:28:57,798 --> 00:28:59,678
And it can scale.

426
00:28:59,938 --> 00:29:01,158
That's the other crazy part.

427
00:29:01,158 --> 00:29:04,758
We were trying to conceptualize this a little bit earlier

428
00:29:04,758 --> 00:29:06,218
in some of our conversations.

429
00:29:06,258 --> 00:29:09,638
This is pretty much infinitely scalable.

430
00:29:10,138 --> 00:29:17,638
And I think somebody asked me today as a response to one of my tweets, like, what happens if Berkshire Cathaway came with their cash?

431
00:29:18,198 --> 00:29:26,878
Like, could strategy support $373 billion of cash dumped into STRC at 11.5%?

432
00:29:27,698 --> 00:29:30,858
And I'm bummed I'm not on my computer because I have the math right here.

433
00:29:30,938 --> 00:29:31,878
So maybe I'll share it afterwards.

434
00:29:31,878 --> 00:29:43,698
But I ran into, I did an as if on if they put $373 billion worth of demand into STRC,

435
00:29:43,918 --> 00:29:50,578
and they raised MSTR at a one-to-one multiplier. So raised $373 billion with MSTR at the same time.

436
00:29:50,918 --> 00:29:55,298
Assumed an average price of accumulation of $750,000 for the price of Bitcoin,

437
00:29:55,538 --> 00:29:59,758
and that pushes the price of Bitcoin to a million. So these are pretty conservative assumptions.

438
00:29:59,758 --> 00:30:07,998
In that scenario, the amplification today is 33%. The amplification afterwards would be 23%.

439
00:30:08,638 --> 00:30:16,878
And that's if they raised one-to-one MSTR to the one-to-one STRC coming in the door.

440
00:30:17,298 --> 00:30:23,238
The years of Bitcoin coverage before goes from 27 to years of Bitcoin coverage afterwards goes to 37.

441
00:30:23,238 --> 00:30:27,078
I'm assuming all of the debt is equitized.

442
00:30:27,238 --> 00:30:29,938
So those numbers are a little different than what's on Strategies' website.

443
00:30:30,678 --> 00:30:31,718
But the math is incredible.

444
00:30:32,718 --> 00:30:34,638
And you start to think about scale.

445
00:30:34,818 --> 00:30:36,878
I started trying to wrap my head around this.

446
00:30:36,958 --> 00:30:38,158
I'm like, does this even make sense?

447
00:30:38,598 --> 00:30:39,838
What is the relativity here?

448
00:30:41,338 --> 00:30:45,758
Because we're starting to talk very large capital numbers.

449
00:30:45,958 --> 00:30:48,018
How much capital can you move into this?

450
00:30:48,598 --> 00:30:50,598
What would the dividend obligation be?

451
00:30:50,598 --> 00:30:55,978
in this circumstance, the dividend and the annual dividend obligation would be $44 billion a year,

452
00:30:56,138 --> 00:31:00,558
which again, we're talking about bewilderment, right? Like we just wait until this thing 10Xs,

453
00:31:01,098 --> 00:31:06,678
the bewilderment in the market is going to be insane when the even lower IQ people start to

454
00:31:06,678 --> 00:31:15,018
enter the space. So Jeff, go back for one second. What did you say? So assuming the price of Bitcoin

455
00:31:15,018 --> 00:31:21,818
right now is 70 000 and 340 billion dollars comes into it as a market buy what did you model the

456
00:31:21,818 --> 00:31:30,618
price of bitcoin jumping to i assumed 746 billion coming in the door so so one to one 373 billion

457
00:31:30,618 --> 00:31:36,058
coming in from berkshire and 373 billion coming in from msdr raising in the common at the same time

458
00:31:36,058 --> 00:31:42,298
oh okay 746 in total and what did that do to the price of bitcoin i just took a conservative

459
00:31:42,298 --> 00:31:51,898
assumption assuming that the average price of bitcoin purchased was 750 000 750 000

460
00:31:51,898 --> 00:31:57,338
750 000 yeah i get it and and and that moved the price to a million

461
00:31:59,578 --> 00:32:04,618
okay so i assumed average price is 750 000 and that moved to the price to a million

462
00:32:04,618 --> 00:32:08,858
and uh the amount of bitcoin purchased would be one point or the amount of bitcoin held at

463
00:32:08,858 --> 00:32:16,298
the end would be 1.73 million and the amplification before would be 33 the amplification afterwards

464
00:32:16,298 --> 00:32:23,818
would be 23 and they would have material you know 30 30 plus years of dividend coverage with the

465
00:32:23,818 --> 00:32:33,658
capital held on their balance sheet which okay so i gotta i guess go ahead go i i gotta i gotta

466
00:32:33,658 --> 00:32:42,818
of would you rather okay so um would would you rather so um so the historical and the historical

467
00:32:42,818 --> 00:32:51,038
bitcoin quarter over quarter growth for for strategy is 16 and is 15.98 percent it's 16

468
00:32:51,038 --> 00:33:00,998
and it ranges anywhere from less than one percent all the way to a high of 77 in the fourth quarter

469
00:33:00,998 --> 00:33:03,458
of 2024.

470
00:33:04,718 --> 00:33:06,098
This is just Bitcoin growth.

471
00:33:06,238 --> 00:33:07,218
This is just Bitcoin growth.

472
00:33:07,398 --> 00:33:08,238
Just Bitcoin growth.

473
00:33:08,758 --> 00:33:11,118
But if you add up everything

474
00:33:11,118 --> 00:33:13,358
starting from Q3 2020 to now,

475
00:33:13,738 --> 00:33:15,778
the average is 15.98%.

476
00:33:15,778 --> 00:33:17,718
Just assume it's 16%.

477
00:33:17,718 --> 00:33:20,338
If you continue,

478
00:33:21,018 --> 00:33:22,878
so if you say,

479
00:33:23,198 --> 00:33:23,858
you know what,

480
00:33:25,358 --> 00:33:26,438
it's at that percentage.

481
00:33:26,438 --> 00:33:27,898
I did an analysis saying,

482
00:33:27,898 --> 00:33:31,058
What happens if it just grows at 11% a year?

483
00:33:31,358 --> 00:33:33,138
Sorry, 11% quarter over quarter growth.

484
00:33:33,498 --> 00:33:34,758
16% is historical.

485
00:33:34,938 --> 00:33:36,038
Assume it drops down.

486
00:33:36,538 --> 00:33:42,518
At 11%, and I got to that number because we hit 1 million Bitcoins in Q4 of 2026.

487
00:33:43,238 --> 00:33:43,958
That's how I figured.

488
00:33:44,118 --> 00:33:46,558
I just kept on typing in numbers until I hit a million.

489
00:33:47,338 --> 00:33:49,078
And it was reducing it.

490
00:33:49,218 --> 00:33:54,898
So the historical is 16%, 11%, quarter over quarter growth gets us to 1 million Bitcoins

491
00:33:54,898 --> 00:33:56,458
in Q4 of 2026.

492
00:33:56,458 --> 00:34:07,838
If you keep that same rate in Q427, you have one and a half million Bitcoins, which is kind of odd that, you know, it just continues growing at that rate.

493
00:34:08,178 --> 00:34:12,598
So what you were saying for your numbers is that's assuming the price jumps up.

494
00:34:13,138 --> 00:34:21,138
You know, if Bitcoin stays kind of low right now, what I don't think the market is pricing in is everybody talks about the S curve.

495
00:34:21,138 --> 00:34:31,798
So if it stays relatively flat and then we get an inflection point, then MSTR, MNAV explodes higher because they acquired so much more Bitcoin.

496
00:34:32,478 --> 00:34:37,618
So what you're saying is I think what you're saying is completely plausible as an outside case.

497
00:34:37,838 --> 00:34:43,218
For me, you know, that that gets us to, you know, a million by the end of this year.

498
00:34:43,218 --> 00:34:55,578
If you go at 16%, you would get to 2 million Bitcoins for strategy by the end of Q4 of 2027.

499
00:34:56,018 --> 00:34:57,658
If it would just match the historical.

500
00:34:57,898 --> 00:35:00,158
16% per quarter?

501
00:35:00,158 --> 00:35:00,338
Quarter over quarter.

502
00:35:01,118 --> 00:35:01,398
Right.

503
00:35:01,538 --> 00:35:02,538
And that's the historical.

504
00:35:03,318 --> 00:35:04,218
And so you would get that now.

505
00:35:04,218 --> 00:35:09,138
But it assumes no other company is coming in to issue any credit products.

506
00:35:10,198 --> 00:35:10,978
Put a little pressure on.

507
00:35:10,978 --> 00:35:12,118
Yeah, that assumes no other company.

508
00:35:12,118 --> 00:35:16,598
Now, at the same time, you've got Ibit trying to get also to a million Bitcoins.

509
00:35:17,138 --> 00:35:21,678
And if they were growing at the same rate, then you'd have two Bit-

510
00:35:21,678 --> 00:35:22,858
This is not the Hunt Brothers.

511
00:35:22,978 --> 00:35:27,138
Somebody said to me, this is like the Hunt Brothers of 1979 covering the silver market.

512
00:35:27,898 --> 00:35:27,998
No.

513
00:35:27,998 --> 00:35:28,718
What is that?

514
00:35:28,818 --> 00:35:29,418
What are we in?

515
00:35:29,418 --> 00:35:30,398
2022 fund?

516
00:35:30,578 --> 00:35:31,098
Come on.

517
00:35:31,498 --> 00:35:31,798
Right.

518
00:35:31,858 --> 00:35:32,118
Come on.

519
00:35:32,378 --> 00:35:32,958
The Hunt Brothers?

520
00:35:33,658 --> 00:35:35,998
I said that doesn't make any sense at all.

521
00:35:36,278 --> 00:35:39,338
One's a publicly traded company with a Bitcoin treasury.

522
00:35:39,338 --> 00:35:44,558
The other one is IBIT, which is a collection of investors that's in a fund.

523
00:35:44,918 --> 00:35:47,658
And the Hunt brothers were a bunch of investors doing it on comic.

524
00:35:47,758 --> 00:35:49,078
They didn't have multiple exchanges.

525
00:35:49,518 --> 00:35:51,258
This trades 24 by 7.

526
00:35:51,918 --> 00:35:56,738
Obviously, we know that the dollar, we know the physical supply out there.

527
00:35:57,298 --> 00:36:06,318
So with that said, my models, I don't think in retrospect, looking at what they've been able to do for strategy, I don't think my models are that aggressive.

528
00:36:06,318 --> 00:36:12,438
and and then and then the hard part that i had to figure out was and this is the part i want to

529
00:36:12,438 --> 00:36:20,238
talk to you guys about is that the the share growth in in my model the historical share growth

530
00:36:20,238 --> 00:36:27,918
quarter over quarter it's about anywhere from you know year over year it was about 30 percent and

531
00:36:27,918 --> 00:36:33,698
then it runs it kind of varies from quarter to quarter but anywhere from two to eight percent

532
00:36:33,698 --> 00:36:38,438
And you have to have lower share growth given the Bitcoin to keep it accretive.

533
00:36:38,538 --> 00:36:41,338
The Bitcoin's growing at a higher percentage than the shares.

534
00:36:42,158 --> 00:36:44,398
So basically the model works out.

535
00:36:44,578 --> 00:36:46,678
You kind of make the share growth half of that.

536
00:36:47,578 --> 00:36:50,758
But what that doesn't take into account is stretch.

537
00:36:51,158 --> 00:36:51,958
Yeah, the press.

538
00:36:52,118 --> 00:36:52,838
It doesn't take into account.

539
00:36:53,898 --> 00:36:57,798
So then I just modeled it and said, what happens if you cut it in half again?

540
00:36:58,138 --> 00:37:02,478
And that's where I came up with my model in order to figure out the stock price and so forth.

541
00:37:02,478 --> 00:37:05,198
So that's not taking into account MNAP.

542
00:37:05,338 --> 00:37:09,918
That's just saying is if we continue at the historical level, 16% quarter over quarter,

543
00:37:10,118 --> 00:37:18,158
and then if you looked at 5%, which is about the average for the share growth, but with

544
00:37:18,158 --> 00:37:20,198
the prefs, it's probably half of that.

545
00:37:20,638 --> 00:37:23,098
And that's where you start getting some really weird numbers.

546
00:37:23,398 --> 00:37:29,438
I kind of don't want to publish it because there's not enough data points right now on

547
00:37:29,438 --> 00:37:35,518
stretch or on the preps to have it hold up to screw it i want to wait until tuesday once once

548
00:37:35,518 --> 00:37:41,278
we see how much if strategy look last last week they buy they bought almost 18 000 bitcoins

549
00:37:42,078 --> 00:37:50,238
this week i think the weird part is do they buy 30 000 40 000 and i want to see that number two

550
00:37:50,238 --> 00:37:54,958
weeks in a row before i publish this because i don't really have a good number for that i mean

551
00:37:54,958 --> 00:37:56,878
you guys have any ideas of what you think they're going to buy

552
00:37:59,438 --> 00:38:03,998
I don't have any ideas specifically. I mean, Stretches traded 1.2 billion of volume.

553
00:38:04,638 --> 00:38:09,198
If they took half of that, which maybe they did, they're now trading in extended hours,

554
00:38:09,198 --> 00:38:13,518
making an ATM in extended hours. We've seen pretty high elevated volume in extended hours,

555
00:38:14,398 --> 00:38:19,918
maybe anywhere upwards of $600 billion of volume on STRC alone. So if they're going one to one,

556
00:38:19,918 --> 00:38:25,358
that'd be 1.2 billion. If they're going two to one, that'd be 1.8 billion. So yeah, the scale

557
00:38:25,358 --> 00:38:31,598
scale, 30, 40% larger than this last week, and the price is relatively the same. So I

558
00:38:31,598 --> 00:38:39,858
wouldn't be surprised if it's another large double digit figure, even upwards of 20,000

559
00:38:39,858 --> 00:38:45,818
plus. Again, thinking of scale, I've been doing a lot of analysis thinking about the

560
00:38:45,818 --> 00:38:50,918
marketplace in general as a whole, right? Thinking about just this Berkshire example

561
00:38:50,918 --> 00:38:57,078
made me consider like is this realistic like is this crazy what's the scale this is something ben

562
00:38:57,078 --> 00:39:00,118
and i have been talking about quite a bit as well like just thinking about the cracks in the private

563
00:39:00,118 --> 00:39:06,198
credit market i mean we just saw what is this um morgan stanley has put the gate up on private

564
00:39:06,198 --> 00:39:11,478
credit uh aries put the gate up on private credit several fun blackrock now has put the gate up on

565
00:39:11,478 --> 00:39:19,078
private credit a lot of people are going to the exits to try to get their capital out and these

566
00:39:19,078 --> 00:39:23,158
companies that are facilitating these private credit vehicles are saying, whoa, whoa, whoa,

567
00:39:23,958 --> 00:39:29,718
you have covenants, you can't pull out more than 5%, 10%, 20%, whatever the number is per quarter,

568
00:39:29,718 --> 00:39:35,398
or whatever the covenant is in the private credit instrument. And so there's almost like this pseudo

569
00:39:35,398 --> 00:39:40,758
private credit bank run happening right now. And it'll be fascinating to see how this just

570
00:39:40,758 --> 00:39:44,598
continues to play out. But it seems like there are some cracks that are showing up and eroding there.

571
00:39:44,598 --> 00:39:54,238
I think there's roughly $3 trillion of private credit out in the market at the moment.

572
00:39:54,758 --> 00:40:01,098
You think about insurance companies' balance sheets, they have roughly $250 billion to $500

573
00:40:01,098 --> 00:40:04,638
billion of this private credit stuff on their balance sheets. That's interesting.

574
00:40:05,558 --> 00:40:12,218
So again, that's two things, right? You've got, Berkshire's got $373 billion in cash.

575
00:40:12,218 --> 00:40:19,478
insurance companies have $250 billion in private credit. Okay, that's just two pools of large-scale

576
00:40:19,478 --> 00:40:25,038
capital where something is cracked or something's changing. You've got a change in trust environment

577
00:40:25,038 --> 00:40:29,778
or you've got a change in the risk environment. And I think with what we're seeing, this is what

578
00:40:29,778 --> 00:40:35,838
I've been pounding the table on, is the risk environment for private credit with the advancement

579
00:40:35,838 --> 00:40:41,678
of AI and the advancement of just the world right now. I think that risk profile of those things,

580
00:40:41,678 --> 00:40:46,158
the uncertainty probabilities in the tail are starting to get much larger.

581
00:40:49,518 --> 00:40:54,478
So thinking about how that capital moves, this is excluding sovereign wealth funds,

582
00:40:55,598 --> 00:41:03,038
pension funds, different nations reallocating capital, investment managers, or any of the other

583
00:41:04,478 --> 00:41:10,078
200, 300 trillion dollars of capital that's tied up in fixed income instruments. I can come over

584
00:41:10,078 --> 00:41:18,558
to this. So I think we've got a long way to go. I think Stretch has nearly $4 billion of

585
00:41:19,598 --> 00:41:26,718
notional outstanding, it's trading $500 million a day. I think it could get significantly larger

586
00:41:26,718 --> 00:41:31,038
than this. I think Saylor's right when he says, I can do a billion dollars in a day. I think he's

587
00:41:31,038 --> 00:41:46,576
going to have a billion dollar day in the near future where they pulling in a billion dollars on Stretch maybe a billion dollars on both Stretch and MSTR and smash buying Bitcoin I think we almost at this tipping point where the demand is elevating the interest

588
00:41:46,576 --> 00:41:51,856
is elevating, the question marks on how to value the equity is elevating, the volumes

589
00:41:51,856 --> 00:41:56,136
are elevating all these things.

590
00:41:56,136 --> 00:41:59,816
And it's a very interesting time.

591
00:41:59,816 --> 00:42:04,356
Seems like we're kind of playing whack-a-mole with where the weaknesses are out there broadly

592
00:42:04,356 --> 00:42:10,596
the economy financial system right i mean with bitcoin it started around monetary debasement

593
00:42:10,596 --> 00:42:15,316
right that was kind of the foundation of everything it was the reckless money printing you needed

594
00:42:15,316 --> 00:42:21,956
something that was decentralized with you know no central issuer around it and then as we keep going

595
00:42:21,956 --> 00:42:28,436
you know we keep finding different places where bitcoin can offer a solution and now it's coming

596
00:42:28,436 --> 00:42:33,956
through the structured finance vehicles but you know what you started to see was well people were

597
00:42:33,956 --> 00:42:38,676
saying if your money's getting debased your banks aren't paying you anything you know you should be

598
00:42:38,676 --> 00:42:44,756
saving in bitcoin okay that was one evolution of this but you've got the volatility issue out there

599
00:42:44,756 --> 00:42:48,756
and i think a lot of people find out that they're not ready for the volatility right you've seen a

600
00:42:48,756 --> 00:42:53,956
lot of that during a bear market so then you said well here's a credit product and as from an

601
00:42:53,956 --> 00:42:58,676
individual level this is a better way for you to save capital and get a higher return on the capital

602
00:42:58,676 --> 00:43:02,916
that you're parking if you've got you know midterm capital call it you know four months or greater i

603
00:43:02,916 --> 00:43:06,976
I think is kind of what Saylor says that these are great products for you to park capital in.

604
00:43:07,696 --> 00:43:11,956
But now we're seeing a different thing showing up, which is illiquidity.

605
00:43:12,916 --> 00:43:18,096
And that's being shown in the private credit market. But the private credit market is so

606
00:43:18,096 --> 00:43:25,336
structural to these financial institutions that it's probably a much bigger deal than what people

607
00:43:25,336 --> 00:43:29,196
would ever give it credit for. You're just starting to see those headlines out there where

608
00:43:29,196 --> 00:43:33,476
that weakness is coming in, it's starting to get highlighted that, hey, all of this paper that

609
00:43:33,476 --> 00:43:38,156
you're holding behind the scenes that's backing all of these policies and everything else

610
00:43:38,156 --> 00:43:43,936
is incredibly illiquid. And oh, the value is somewhere between 100 cents on the dollar and

611
00:43:43,936 --> 00:43:48,596
zero. But you're not going to know which until we tell you. That's what you had with BlackRock

612
00:43:48,596 --> 00:43:52,816
recently when they came out and they marked it down from 100 cents on the dollar to zero.

613
00:43:52,816 --> 00:43:59,536
like that's a really tricky place to be in if you're one of these traditional financial

614
00:43:59,536 --> 00:44:06,176
institutions because on the one side this is kind of a foundational component to your entire business

615
00:44:06,176 --> 00:44:13,856
but to the point of what your post said jeff not only are they holding all of this opaque illiquid

616
00:44:13,856 --> 00:44:20,416
paper they're levered to it and that's an entirely different problem they're levered long to this

617
00:44:20,416 --> 00:44:24,896
opaque illiquid paper that's valued somewhere between 100 cents on the dollar and zero.

618
00:44:25,936 --> 00:44:32,816
Right. That is a structural issue that's out there. And so whether they want to,

619
00:44:32,816 --> 00:44:38,496
right, whether this is a willingness debate or whether they're going to have to,

620
00:44:39,616 --> 00:44:45,696
I think that looking at these instruments and realizing, one, how well backed it is by an asset,

621
00:44:45,696 --> 00:44:51,376
right these balance sheets are incredibly robust these balance sheets are being managed at an

622
00:44:51,376 --> 00:44:55,856
institutional level to make sure that you know the risk frameworks are really tightly managed

623
00:44:55,856 --> 00:45:02,176
and controlled and they're incredibly liquid which i think is becoming one of the primary

624
00:45:03,296 --> 00:45:08,256
focus areas for a lot of these institutions they need liquidity in these products if the private

625
00:45:08,256 --> 00:45:11,616
credit market if you do get one of these bank runs and everyone's trying to get out and everyone's

626
00:45:11,616 --> 00:45:17,256
trying to redeem, you know, their 5% a quarter, whatever it is, you have a significant problem

627
00:45:17,256 --> 00:45:23,116
on your hands. And so I think it's a matter of time before you start to be, these institutions

628
00:45:23,116 --> 00:45:29,876
start to be willing to explore the risk profile of these products. Because I think when they do,

629
00:45:30,016 --> 00:45:33,616
and a lot of the conversations that we had this week lead me to believe this,

630
00:45:34,376 --> 00:45:38,676
there were a lot of aha moments that were happening around those rooms.

631
00:45:38,676 --> 00:45:41,056
They haven't even been looking into them at all.

632
00:45:41,716 --> 00:45:44,216
The vast majority haven't even heard they exist.

633
00:45:45,236 --> 00:45:50,956
But they're looking for ways that they can plug these types of products into their business.

634
00:45:51,876 --> 00:45:53,076
And it's going to take time.

635
00:45:53,236 --> 00:45:54,636
You know, ratings are a big problem.

636
00:45:55,376 --> 00:46:00,136
You know, if these were able to be instruments that were rated, these would be home run instruments.

637
00:46:00,296 --> 00:46:01,036
They'd be everywhere.

638
00:46:01,956 --> 00:46:02,096
Right.

639
00:46:02,136 --> 00:46:06,456
The demand for these would explode overnight if one of these rating agencies came out and

640
00:46:06,456 --> 00:46:07,596
was willing to give them a rating.

641
00:46:07,596 --> 00:46:13,736
but as we've learned you know they also have a lot of unrated instruments it's just a different

642
00:46:13,736 --> 00:46:19,056
approach to how they're going to utilize those so it doesn't mean that the answer is no the answer

643
00:46:19,056 --> 00:46:23,556
is we have to explore this and get our heads around what this means because it sounds intriguing

644
00:46:23,556 --> 00:46:31,136
they understand balance sheet companies in a way almost nobody else does crazy part that we also

645
00:46:31,136 --> 00:46:40,296
here today. If you wrapped up the digital credit instruments into a debt structure

646
00:46:40,296 --> 00:46:45,416
and put a term on it, you could probably get it rated.

647
00:46:46,736 --> 00:46:47,456
Yeah, but it's fine.

648
00:46:48,096 --> 00:46:52,536
You're like, whoa, okay, hold on. So if I go the opposite direction, if I make this thing

649
00:46:52,536 --> 00:46:58,236
more illiquid and take the attributes that make it amazing, if I take those out of it,

650
00:46:58,236 --> 00:47:05,676
I can probably get it rated. Wow, that's interesting. And it just kind of shows a little bit how

651
00:47:05,676 --> 00:47:10,096
backwards some of the rating agency and the rating framework is. Just to give some perspective,

652
00:47:10,096 --> 00:47:17,896
believe it or not, I worked in reinsurance. Thanks, Ben. And the rating agencies are fascinating,

653
00:47:18,036 --> 00:47:21,036
right? There's a couple of rating agencies out in the insurance market. One of them is called

654
00:47:21,036 --> 00:47:30,216
AMBEST. AMBEST is fascinating. The company itself, the only reason AMBEST exists is because when

655
00:47:30,216 --> 00:47:38,036
insurance companies started, you know, percolating in the early 1900s, they started, they said,

656
00:47:38,136 --> 00:47:42,316
you know, somebody needs to put a rating framework around this. AMBEST, the company is like over a

657
00:47:42,316 --> 00:47:47,056
hundred years old. They've been doing this forever. There's something like 16,000 insurance

658
00:47:47,056 --> 00:47:51,336
companies in the insurance market and they rate almost every single one of them.

659
00:47:51,336 --> 00:47:54,376
So they provide capital framework for every single one of them.

660
00:47:54,376 --> 00:47:59,556
And every single one of those insurance companies pays AMBEST money every single year to give

661
00:47:59,556 --> 00:48:00,556
them a rating.

662
00:48:00,556 --> 00:48:03,436
Talk about skewed incentives, right?

663
00:48:03,436 --> 00:48:05,496
Like totally skewed incentives.

664
00:48:05,496 --> 00:48:10,616
And the rating agency isn't regulated.

665
00:48:10,616 --> 00:48:14,236
So like there's rating agencies and there's regulators, they're different.

666
00:48:14,236 --> 00:48:18,756
And so if you want access to like large pools of capital in the reinsurance market, you

667
00:48:18,756 --> 00:48:19,756
need to get rated.

668
00:48:19,756 --> 00:48:22,696
So it's kind of this incestuous little model.

669
00:48:22,696 --> 00:48:24,276
So that's kind of strange.

670
00:48:24,276 --> 00:48:31,736
And then thinking about the rating agencies, each individual state has different risk RBC

671
00:48:31,736 --> 00:48:36,036
constraints, so risk based capital constraints in the insurance market.

672
00:48:36,036 --> 00:48:45,416
So that means depending on your portfolio of liabilities, there's different risk weightings

673
00:48:45,416 --> 00:48:47,356
that you can have for different asset classes.

674
00:48:47,356 --> 00:48:49,496
I just published this on my X account.

675
00:48:49,496 --> 00:48:58,116
And what was fascinating, I was doing some research from the regulatory lens.

676
00:48:58,116 --> 00:49:05,276
If you held non-investment grade private credit on an insurance company balance sheet, you

677
00:49:05,276 --> 00:49:12,556
You can, you have to have between 7% and 20% capital coverage for that asset on your balance

678
00:49:12,556 --> 00:49:13,556
sheet.

679
00:49:13,556 --> 00:49:14,556
Mike, you're going to love this.

680
00:49:14,556 --> 00:49:16,216
Mike, you're going to love this.

681
00:49:16,216 --> 00:49:22,136
So if you have $100 of sub investment grade private credit on your balance sheet, you

682
00:49:22,136 --> 00:49:27,596
have to hold seven to $20 worth of capital backing it.

683
00:49:27,596 --> 00:49:28,596
Okay.

684
00:49:28,596 --> 00:49:38,736
That means you could be anywhere between 5X levered long to 14X levered long sub-investment grade illiquid private credit.

685
00:49:40,556 --> 00:49:42,136
So, Jeff, yeah.

686
00:49:43,716 --> 00:49:46,736
Let me tell you what I think is going on.

687
00:49:47,476 --> 00:49:48,876
This is what I think is going on.

688
00:49:50,356 --> 00:49:53,576
I go, I don't think people just understand the math.

689
00:49:53,576 --> 00:49:55,876
I'm trying to be really, really nice about this.

690
00:49:56,376 --> 00:49:58,216
I understand what you just said.

691
00:49:58,596 --> 00:50:02,036
7 to 14x lever, right?

692
00:50:02,396 --> 00:50:04,916
Because we can all do this in our head.

693
00:50:05,016 --> 00:50:06,756
7 times 14 is 98, right?

694
00:50:07,116 --> 00:50:08,516
And I get people who are like, what?

695
00:50:08,856 --> 00:50:09,856
I'm like, come on, dude.

696
00:50:09,996 --> 00:50:11,396
This isn't that hard.

697
00:50:12,196 --> 00:50:16,616
And so when you think about that, I don't think people understand the math.

698
00:50:16,976 --> 00:50:18,176
It's like, let me get a calculator.

699
00:50:18,396 --> 00:50:19,996
Can we go any freaking slower?

700
00:50:21,216 --> 00:50:23,176
And I just don't think they get it.

701
00:50:23,276 --> 00:50:26,876
I think what we're seeing is people look at numbers on a paper.

702
00:50:26,876 --> 00:50:29,756
and they just don't get it.

703
00:50:29,756 --> 00:50:31,916
No matter how many times you explain it,

704
00:50:32,116 --> 00:50:34,256
until they internalize it,

705
00:50:34,456 --> 00:50:36,556
until it marinades into their brain,

706
00:50:36,776 --> 00:50:37,976
that's if they care.

707
00:50:38,736 --> 00:50:40,496
I got a question for you two guys.

708
00:50:42,456 --> 00:50:43,896
What's the over-under?

709
00:50:44,936 --> 00:50:47,336
What's the dollar amount on stretch

710
00:50:47,336 --> 00:50:48,536
when it gets rated?

711
00:50:49,496 --> 00:50:52,936
10 billion, 20 billion, 30 billion dollars?

712
00:50:54,536 --> 00:50:55,316
What dollar amount?

713
00:50:55,316 --> 00:50:59,976
I think it's larger, way larger, way higher, like way, way, way, way higher.

714
00:51:00,176 --> 00:51:05,596
I mean, grain, the people that work at these companies, the rating, it's like the big short.

715
00:51:05,736 --> 00:51:07,796
You know, you walked in and the lady's got the glasses on.

716
00:51:07,816 --> 00:51:08,796
I've seen the movie 20 times.

717
00:51:09,036 --> 00:51:10,956
You know, it's that.

718
00:51:11,676 --> 00:51:16,756
It's anybody who's not worth their salt that, like in finance, works at the rating agencies.

719
00:51:18,116 --> 00:51:19,196
I get it.

720
00:51:19,196 --> 00:51:31,436
What I'm trying to tell you is if Stretch gets to $50 billion, right, and they're not rated at that point, and Bitcoin is at $300,000, do we care?

721
00:51:32,256 --> 00:51:33,896
I mean, it'll be nice to have it.

722
00:51:33,896 --> 00:51:45,936
But I mean, at that point, let's assume two years from now, Bitcoin's at $250,000, and Stretch, easy number, is at $30 billion.

723
00:51:46,736 --> 00:51:47,976
Do I care?

724
00:51:48,736 --> 00:51:50,596
My answer to that is I probably don't.

725
00:51:50,776 --> 00:51:52,556
I just want to be clear with you guys.

726
00:51:52,636 --> 00:51:54,776
I love being on these spaces and doing this.

727
00:51:55,456 --> 00:51:58,216
But two years from now, if Bitcoin's at two hours.

728
00:51:59,656 --> 00:52:07,856
This August will mark my, sorry, this May will mark my ninth year basically living on a Bitcoin standard.

729
00:52:07,856 --> 00:52:10,176
Mostly through derivatives, right?

730
00:52:10,376 --> 00:52:16,516
Through Grayscale Bitcoin Trust and through MSTR and options and so forth.

731
00:52:16,516 --> 00:52:25,156
but two years from now, I will be basically my 11th year. I kind of won't care anymore. I just

732
00:52:25,156 --> 00:52:30,836
want to be, I'll be like, oh, you finally raided it? Yeah. Welcome to the party. I mean.

733
00:52:31,676 --> 00:52:37,836
So hold on. Let's think about this, right? 3 billion stretch outstanding right now. If it 10x's,

734
00:52:37,836 --> 00:52:44,156
it goes to 30 billion. If it 100x's, it goes to 300 billion. If it 1,000x's, it goes to 3 trillion.

735
00:52:44,156 --> 00:52:55,916
If it 1,000 Xs and the monetary supply doesn't move, it would be 1% of the fixed income market.

736
00:52:56,976 --> 00:52:57,136
Yeah.

737
00:52:57,276 --> 00:53:00,736
And by the way, the private credit market came in at $1.7 trillion.

738
00:53:01,116 --> 00:53:03,016
So 1% is $17 billion.

739
00:53:03,716 --> 00:53:10,636
So why do I think, look, I talked to Saylor multiple times in public settings in Las Vegas.

740
00:53:10,976 --> 00:53:12,396
And there was other people there.

741
00:53:12,396 --> 00:53:13,176
Rohan was there.

742
00:53:13,256 --> 00:53:14,016
Adrian was there.

743
00:53:14,156 --> 00:53:15,876
I talked to a couple in the hallway.

744
00:53:16,036 --> 00:53:19,216
So these were not private conversations, a bunch of other people around.

745
00:53:19,916 --> 00:53:23,156
I thought one thing when I was talking to him live.

746
00:53:23,856 --> 00:53:31,096
Now, two weeks later, seeing what STRC has done, my view is, look, I always think he

747
00:53:31,096 --> 00:53:33,976
knows way more than we know because he's obviously on the inside.

748
00:53:34,116 --> 00:53:35,256
It's his company, of course.

749
00:53:35,676 --> 00:53:37,656
And there's nothing nefarious about this.

750
00:53:37,856 --> 00:53:43,316
I think that his confidence level was so high while we were there was because I think that

751
00:53:43,316 --> 00:53:46,176
He knew that there were cracks in the private credit market like we knew.

752
00:53:46,176 --> 00:54:07,296
And for some reason, if 1% of the $1.7 trillion, which is $17 billion, just make it even one-tenth of that, it's still $1.7 billion that would bleed into STRC, which is almost half its value.

753
00:54:08,236 --> 00:54:09,756
I'm trying to make these numbers really, really.

754
00:54:09,756 --> 00:54:14,756
So I think that he knew this and he was just very confident.

755
00:54:15,236 --> 00:54:18,456
And now we're waking up, you know, and they talked, you guys were there.

756
00:54:18,736 --> 00:54:20,676
They talked about STRC nonstop.

757
00:54:21,436 --> 00:54:22,216
That was the number one.

758
00:54:22,216 --> 00:54:24,116
It was STRC world.

759
00:54:24,956 --> 00:54:25,696
It was.

760
00:54:25,816 --> 00:54:30,976
So now when you think about what he said to us and two weeks later, are you guys more bullish?

761
00:54:31,416 --> 00:54:32,216
A lot more bullish?

762
00:54:32,216 --> 00:54:39,156
I mean, I'm 2x more bullish after the conversations that I saw what he said publicly there and what I said, you know, talked to him.

763
00:54:39,156 --> 00:54:46,196
And he said to me, and I told this on other space, I was there with Rohan, who did BitcoinQuant.co, and Adrian.

764
00:54:46,656 --> 00:54:51,976
And he looks at the guys, and he goes, I am not selling STRC below $100.

765
00:54:52,656 --> 00:54:55,256
Not even one penny, 99.9.

766
00:54:55,436 --> 00:54:57,636
And I'm standing next to him, and he goes like this.

767
00:54:58,876 --> 00:55:00,616
And he's like, green.

768
00:55:00,796 --> 00:55:02,236
He goes, you think I should sell it under $100?

769
00:55:02,496 --> 00:55:04,596
I'm like, no, I don't think you should sell it under $100.

770
00:55:05,396 --> 00:55:06,236
I'm not going to.

771
00:55:06,836 --> 00:55:08,816
Why sell it at a discount if you don't have to?

772
00:55:09,156 --> 00:55:09,996
I didn't say that.

773
00:55:10,076 --> 00:55:10,936
He just pokes me.

774
00:55:11,076 --> 00:55:12,456
He goes, I'm not selling it.

775
00:55:12,496 --> 00:55:14,536
I'm like, okay, dude, you're fine with me.

776
00:55:14,996 --> 00:55:15,316
Right?

777
00:55:15,476 --> 00:55:17,136
I mean, that was the interaction.

778
00:55:17,476 --> 00:55:21,556
But now when I look back on this, I'm like, oh, he probably has-

779
00:55:21,556 --> 00:55:22,176
It's super important.

780
00:55:23,416 --> 00:55:26,536
The not selling under 100 is so incredibly important.

781
00:55:26,536 --> 00:55:33,436
And I think that it's expectations, right?

782
00:55:33,516 --> 00:55:36,956
Like you think about trust, you think about trust and credit quality.

783
00:55:36,956 --> 00:55:39,496
So he talks about this with MSTR a lot as well.

784
00:55:39,676 --> 00:55:41,796
He's like, if people want to short my stock, great.

785
00:55:41,976 --> 00:55:43,536
If people want to long my stock, great.

786
00:55:43,776 --> 00:55:47,396
Like I'm transparent in what I'm doing and I'm telling you.

787
00:55:47,536 --> 00:55:52,736
So it's funny that he's like, I'm not selling STRC below 100.

788
00:55:52,916 --> 00:55:53,956
For one penny.

789
00:55:53,956 --> 00:55:54,876
For one penny.

790
00:55:55,016 --> 00:55:55,656
He was very clear.

791
00:55:55,876 --> 00:55:59,416
He goes, I will not sell STRC at $99.99.

792
00:56:00,036 --> 00:56:01,396
He goes, not one penny.

793
00:56:01,496 --> 00:56:03,196
And he's like, green, you agree with me?

794
00:56:03,296 --> 00:56:03,576
Boom.

795
00:56:03,636 --> 00:56:05,896
And he hit, I'm like, dude, we're good.

796
00:56:05,896 --> 00:56:06,156
Yeah.

797
00:56:06,156 --> 00:56:07,776
No, don't sell at a discount.

798
00:56:07,976 --> 00:56:09,096
He doesn't need my approval.

799
00:56:09,836 --> 00:56:11,596
But I was like, go ahead.

800
00:56:12,156 --> 00:56:14,016
There's another point with that as well.

801
00:56:14,196 --> 00:56:17,996
It's back to what he's talked about, like not taking the opportunity away from somebody else, right?

802
00:56:18,036 --> 00:56:25,236
I mean, if the price drops down below to $99.99, there's incentive for somebody to buy it there.

803
00:56:27,736 --> 00:56:30,356
And so you think about like ARBs, right?

804
00:56:30,396 --> 00:56:33,916
Like how does an ARB work if they see a mispricing or something like that?

805
00:56:33,916 --> 00:56:41,436
they jump in and they eat it up. So if it goes from $99.99 up to $100. And so then you think

806
00:56:41,436 --> 00:56:45,716
about the incentive of the ARB, right? Like if you buy it at $99.99 and it keeps falling,

807
00:56:45,956 --> 00:56:51,736
what's the downside risk? The downside risk is you're holding an instrument that pays you 11.5%

808
00:56:51,736 --> 00:57:01,556
annualized paid monthly. Oh darn. So it's like the perfect incentive structure. And that's why

809
00:57:01,556 --> 00:57:06,276
we have updated our guidance to be aligned with that we are not selling

810
00:57:06,276 --> 00:57:10,356
sata below a hundred dollars and zero cents

811
00:57:10,356 --> 00:57:20,516
look i i fully support i support i'm gonna tell you guys do not sell things at a discount if you

812
00:57:20,516 --> 00:57:27,316
don't have to if people are like look i i've got a buddy right and he wants to buy a porsche 911

813
00:57:27,316 --> 00:57:31,816
but the dealership, there's no discounts on them. If you want an electric Porsche,

814
00:57:32,336 --> 00:57:38,976
plenty of discounts, right? They depreciate horribly. Unfortunately, they are terrible.

815
00:57:39,316 --> 00:57:44,396
You want a new 911, there's the sticker price and you got to pay over. And everybody, well,

816
00:57:44,456 --> 00:57:49,756
that's not fair. No, because there's a limited supply and there's a higher demand for it.

817
00:57:49,756 --> 00:57:54,736
And that's a very desirable car. So you got to pay above sticker. There is no discount,

818
00:57:54,736 --> 00:57:57,996
but on the ones that aren't in demand, there's a discount.

819
00:57:58,196 --> 00:58:00,416
So if you have something that you don't have to give a discount on,

820
00:58:00,576 --> 00:58:02,136
why would you do it? You wouldn't do it.

821
00:58:02,296 --> 00:58:04,656
If you own the dealership, you would be the same way.

822
00:58:05,156 --> 00:58:09,036
And I think that that's what's going on. And, and again,

823
00:58:09,036 --> 00:58:11,716
now that I think about what Saylor said, I'm like, Oh,

824
00:58:11,876 --> 00:58:14,376
I think this is going to go on longer than people think.

825
00:58:14,376 --> 00:58:18,336
And that, that tweet or the post from two years ago,

826
00:58:18,756 --> 00:58:23,476
I really think that this is going to go on. I think the bottom is in,

827
00:58:23,476 --> 00:58:25,236
Look, you guys can quote me.

828
00:58:25,296 --> 00:58:26,336
I think the bottom is in.

829
00:58:26,836 --> 00:58:28,076
I think we're in crypto winter.

830
00:58:28,516 --> 00:58:30,076
I think we maybe trade sideways.

831
00:58:30,336 --> 00:58:36,996
You may get a little selling around the beginning of April for people that have to pay taxes, be short-lived, right?

832
00:58:37,416 --> 00:58:43,636
Because you have to sell, wait, T plus one, move your money to your account, then send it in to pay taxes due April 15th in America.

833
00:58:44,116 --> 00:58:48,016
Even if you ask for an extension, you still have to pay your taxes.

834
00:58:48,596 --> 00:58:50,516
So maybe you get a little dip around that.

835
00:58:50,576 --> 00:58:52,376
But you got Kevin Warsh, right?

836
00:58:52,376 --> 00:58:53,996
They're going to start the confirmation hearings.

837
00:58:54,256 --> 00:58:55,436
I don't know the date on that.

838
00:58:55,976 --> 00:58:57,776
We're in a war with Iran.

839
00:58:57,976 --> 00:59:02,576
I would have expected Bitcoin to be at 40,000 by now, but that didn't happen.

840
00:59:03,296 --> 00:59:08,156
So, you know, in light of the bad news, I think Bitcoin's holding up really well.

841
00:59:08,556 --> 00:59:11,396
And Strategy buys 18,000 Bitcoins last week.

842
00:59:11,676 --> 00:59:13,716
This week, I'm going to throw it out there.

843
00:59:13,796 --> 00:59:17,756
I think they buy 30,000, 50% more.

844
00:59:19,056 --> 00:59:20,976
It was a shade under 18,000.

845
00:59:21,936 --> 00:59:24,416
I'll say right around 30,000 Bitcoins.

846
00:59:24,596 --> 00:59:26,576
That's my projection for Monday.

847
00:59:27,396 --> 00:59:28,556
Yeah, I'm thinking 25.

848
00:59:28,956 --> 00:59:30,136
So we'll see where we land.

849
00:59:30,136 --> 00:59:30,496
We're thinking 25?

850
00:59:30,896 --> 00:59:31,596
Jeff, what do you do?

851
00:59:31,596 --> 00:59:31,956
Come on.

852
00:59:33,136 --> 00:59:34,076
Throw out another thing.

853
00:59:34,796 --> 00:59:35,756
29,000.

854
00:59:36,336 --> 00:59:36,776
All right.

855
00:59:37,476 --> 00:59:39,496
Well, what's been interesting is every once in a while,

856
00:59:39,556 --> 00:59:43,396
it's fun to put these, you know, just test bids out there to see what happens.

857
00:59:43,536 --> 00:59:47,596
So I've had a bid out on stretch at $99.99 for five days.

858
00:59:48,396 --> 00:59:49,156
Hasn't gotten filled.

859
00:59:49,156 --> 00:59:52,996
So you go back, you look at the chart here over the last while.

860
00:59:53,116 --> 00:59:56,016
Today, the low of the day was $100 and a penny.

861
00:59:56,436 --> 00:59:58,456
The day before, it was $100 flat.

862
00:59:58,796 --> 01:00:00,696
Day before, $100 flat.

863
01:00:01,016 --> 01:00:02,836
Day before, $100 flat.

864
01:00:03,236 --> 01:00:04,996
Day before, $100 flat.

865
01:00:05,656 --> 01:00:09,856
But Friday is actually the test day here, right?

866
01:00:09,916 --> 01:00:14,496
You kind of expect, you don't expect the scale of the demand that they saw this week.

867
01:00:14,556 --> 01:00:17,516
This has been incredibly impressive running up into it.

868
01:00:17,516 --> 01:00:21,816
But you've got to buy the stock tomorrow to get the dividend, right?

869
01:00:21,876 --> 01:00:25,516
Because the next day it'll be Friday because you've got a T plus one settlement.

870
01:00:25,756 --> 01:00:27,336
So you've got to buy it one day before that.

871
01:00:27,496 --> 01:00:31,276
So tomorrow's the last day for people to buy stretch to get the dividend.

872
01:00:32,136 --> 01:00:37,616
And so seeing how stretch reacts on Friday is going to be really interesting to watch.

873
01:00:38,116 --> 01:00:38,556
Right.

874
01:00:38,596 --> 01:00:43,936
The first day where it's trading, where now you've got to wait a month to get to the next record date.

875
01:00:43,936 --> 01:00:51,996
And so if that demand sustains, if it stays pegged to 100 or even if it just dips slightly,

876
01:00:52,136 --> 01:00:55,896
like every time they've had one of these, the dip has become shallower and shallower.

877
01:00:56,616 --> 01:01:02,036
But that's going to tell you how much new organic demand is coming into this.

878
01:01:02,356 --> 01:01:04,656
And I think it's pretty significant.

879
01:01:05,216 --> 01:01:07,296
And people are willing to wait a month, right?

880
01:01:07,316 --> 01:01:11,156
It's a different thing mentally if you're buying and you've got to wait for a quarter

881
01:01:11,156 --> 01:01:12,736
to get a dividend, right?

882
01:01:12,736 --> 01:01:13,576
That feels differently.

883
01:01:13,936 --> 01:01:17,256
But people are willing to park capital if they know that they've got to wait 30 days.

884
01:01:17,476 --> 01:01:18,416
You know, that's fine with them.

885
01:01:18,536 --> 01:01:23,136
You see, I think this is why, I don't think it's, I agree with everything you just said,

886
01:01:23,136 --> 01:01:27,936
but I think that retail is 1% to 5% of this.

887
01:01:28,296 --> 01:01:29,196
And that's being generous.

888
01:01:29,196 --> 01:01:29,416
Totally.

889
01:01:30,116 --> 01:01:32,576
I mean, totally, totally generous with that.

890
01:01:32,876 --> 01:01:38,356
I think that if you're like, if you're in private credit and you're like, you have redemption

891
01:01:38,356 --> 01:01:44,336
periods and there are lockup periods. And typically you go into private, any private placement is

892
01:01:44,336 --> 01:01:49,216
typically going to be, in my experience, it's always been a five-year term. I guess it could

893
01:01:49,216 --> 01:01:54,016
be shorter, three-year. Some have, where you have redemption periods, like there's no redemptions

894
01:01:54,016 --> 01:02:00,356
in the first year. And then after that, it could be like 10 or 25%, you know, per year done quarterly.

895
01:02:00,896 --> 01:02:06,116
So, I mean, you've also been in the private placement market and private. I don't, I mean,

896
01:02:06,116 --> 01:02:08,936
I don't know if I call it private credit, just private placements.

897
01:02:09,436 --> 01:02:11,436
But for this, I think people look at it like,

898
01:02:12,616 --> 01:02:14,496
well, there's there is no redemption.

899
01:02:14,496 --> 01:02:16,556
You just sit by and sell whenever you want.

900
01:02:16,796 --> 01:02:20,696
And I think that that's what's getting people really interested

901
01:02:20,936 --> 01:02:22,636
in this because it pays monthly.

902
01:02:23,736 --> 01:02:24,836
It blows their minds.

903
01:02:24,836 --> 01:02:38,454
I mean Jeff and I were at the Money Show Conference in Vegas which you guys may have talked about this on here already But you know that conference is like a very old school fixed income age in the rooms

904
01:02:38,634 --> 01:02:40,874
you know, 50 to 90, right?

905
01:02:40,934 --> 01:02:44,254
It's one of these very traditional style conferences.

906
01:02:44,774 --> 01:02:47,554
And so Jeff and I went in there to talk about digital credit.

907
01:02:49,034 --> 01:02:49,794
Wait a second.

908
01:02:49,914 --> 01:02:51,634
You just said 50 to 90.

909
01:02:51,854 --> 01:02:51,994
Okay.

910
01:02:52,134 --> 01:02:53,174
So I'm like...

911
01:02:53,174 --> 01:02:54,394
Rolled up in wheelchairs, Graeme.

912
01:02:54,994 --> 01:02:56,234
Thank you.

913
01:02:57,034 --> 01:02:58,294
People are kings.

914
01:02:59,094 --> 01:02:59,554
It's crazy.

915
01:03:00,494 --> 01:03:03,794
I think your adrenaline chasing keeps you really young, Green.

916
01:03:03,994 --> 01:03:06,634
You're constantly out there testing your limits all the time.

917
01:03:06,774 --> 01:03:07,634
I see you always doing something wild.

918
01:03:07,634 --> 01:03:08,654
Go ahead.

919
01:03:09,454 --> 01:03:15,954
But what was fascinating was what they've been conditioned to accept from the products that they hold.

920
01:03:17,114 --> 01:03:22,614
So there's an assumption anytime you talk to them about one of these products that there must be a front-loaded fee on it.

921
01:03:22,614 --> 01:03:26,174
or there must be some type of a lockup period on it.

922
01:03:26,614 --> 01:03:28,254
You know, how much can I redeem in a quarter?

923
01:03:28,834 --> 01:03:30,414
Like these are things they've been conditioned

924
01:03:30,414 --> 01:03:33,114
to just be okay with in their portfolios,

925
01:03:33,114 --> 01:03:35,774
which is robbing them of total returns over time.

926
01:03:36,974 --> 01:03:39,834
And so having them come up to us afterwards,

927
01:03:39,834 --> 01:03:42,214
and it was almost like a, I don't believe you,

928
01:03:42,754 --> 01:03:44,814
but it wasn't about any of the good point stuff.

929
01:03:45,394 --> 01:03:46,894
It wasn't about the balance sheets.

930
01:03:47,214 --> 01:03:48,734
It wasn't about any of that.

931
01:03:48,834 --> 01:03:50,814
It was about the structure of the products.

932
01:03:50,814 --> 01:03:55,474
They're going, so I can just call my guy and buy it like a normal stock.

933
01:03:55,594 --> 01:03:56,414
They're like, yeah.

934
01:03:56,654 --> 01:03:57,854
And they're like, and there's no fee.

935
01:03:58,114 --> 01:03:59,094
Like, there's no fee.

936
01:03:59,294 --> 01:04:03,834
Like, and I can sell it whenever I want to, any day you want to.

937
01:04:04,754 --> 01:04:08,594
And it was, it was mind blowing to them, particularly because of the yields, right?

938
01:04:08,594 --> 01:04:12,374
These are people that are really excited to get something that's got a 6% yield on it,

939
01:04:12,374 --> 01:04:12,534
right?

940
01:04:12,534 --> 01:04:13,014
That's great.

941
01:04:13,074 --> 01:04:14,454
And then they've got the fee that they got to pay.

942
01:04:14,494 --> 01:04:15,254
There's all this stuff.

943
01:04:16,034 --> 01:04:20,394
And so, you know, we live in a very small echo chamber, right?

944
01:04:20,394 --> 01:04:22,714
Like incredibly small echo chamber.

945
01:04:23,054 --> 01:04:28,274
You go wander around and just start talking to anyone else who's not, you know, in the Bitcoin ecosystem.

946
01:04:28,274 --> 01:04:36,634
And they are completely unaware that these products even exist, which is part of, you know, the job that Jeff and I have and what you've been doing, Grain.

947
01:04:36,734 --> 01:04:40,714
I mean, you've been on a tear going out there talking to everybody about about this space.

948
01:04:40,794 --> 01:04:43,174
I mean, you've been as active as anyone I've seen in a long time.

949
01:04:43,774 --> 01:04:46,314
And so there's an education component to that.

950
01:04:46,794 --> 01:04:49,334
And scale actually helps with education.

951
01:04:49,334 --> 01:04:49,734
Right.

952
01:04:49,734 --> 01:04:59,834
When you can go and talk about the fact that, you know, there's billions and billions of dollars of these products out there in the market, and they've now been around for a year, the dividends continue to get paid.

953
01:05:00,034 --> 01:05:05,954
You've now got to see it in a stress test situation where Bitcoin didn't perform and the value of the assets drew down.

954
01:05:06,814 --> 01:05:08,374
The dividends continue to get paid.

955
01:05:08,374 --> 01:05:13,354
Right. You're starting to build that story that makes it more comfortable to people.

956
01:05:14,334 --> 01:05:17,594
It doesn't feel like a fringe risk asset that they're buying.

957
01:05:17,594 --> 01:05:22,434
it feels like a fixed income product that's being managed like a fixed income product with

958
01:05:22,434 --> 01:05:27,534
responsible risk frameworks around how you manage the balance sheet. And that's different than what

959
01:05:27,534 --> 01:05:33,334
they used to hear around anything in the digital asset space. It was always just the Wild West. It

960
01:05:33,334 --> 01:05:38,534
was being run by cowboys. And that's not happening anymore. Now you've got people that are coming

961
01:05:38,534 --> 01:05:42,534
from all these traditional finance institutions that are getting involved in the space that are

962
01:05:42,534 --> 01:05:47,494
taking the rigor and the discipline of how they manage portfolios, how they manage products,

963
01:05:47,494 --> 01:05:52,514
that's coming into the Bitcoin space, which is what is going to make Bitcoin the premier

964
01:05:52,514 --> 01:05:56,594
institutional asset in the space. Not another one is going to come even close.

965
01:06:01,634 --> 01:06:09,874
Wait. Yeah. I had too many windows open. You know, what I wanted to say is,

966
01:06:09,874 --> 01:06:18,594
you know, one of the things that fundamentally changed was putting, having the dashboards on,

967
01:06:18,594 --> 01:06:23,794
on strategies page. And I was just looking up as you were talking to get the exact date for that.

968
01:06:24,114 --> 01:06:30,054
And, and that date was, give me one second and I'll tell you, cause it's a lot, it's a lot

969
01:06:30,054 --> 01:06:41,134
sooner than, okay. So the new strategy website went live in Q4 2024. Think about that. So it went

970
01:06:41,134 --> 01:06:48,654
live in Q4 of 2024. And so basically you have all 2025. So it's been out there for one and a half

971
01:06:48,654 --> 01:06:54,274
years at the most, but instead of somebody, if you, what's the rate that it currently gets paid?

972
01:06:54,274 --> 01:06:59,254
11 and a half percent. And strive has the same thing or Nakamoto has their page, all these other

973
01:06:59,254 --> 01:07:04,294
pages that exist. You go to that page. You don't even need to look at a statement. Like if your

974
01:07:04,294 --> 01:07:09,334
friend's like, oh, would you buy? Oh, I bought this. Okay. Well, show me your statement. No,

975
01:07:09,354 --> 01:07:13,694
I don't want to show it to you. Okay. Go to this website. And on there, it says it gets paid 11

976
01:07:13,694 --> 01:07:18,474
and a half percent. This is the ex-dividend date. You got to buy it for that. And it pays it

977
01:07:18,474 --> 01:07:24,474
monthly. It's simple. It's not like you're reading a whole prospectus. You don't have to go read a

978
01:07:24,474 --> 01:07:30,834
PDF. You just go to the website and you look at it. And the average investor maybe then asks some

979
01:07:30,834 --> 01:07:35,934
questions, or if you want to read the prospectus, you do that. But they have made this so simplistic.

980
01:07:36,634 --> 01:07:42,254
And you think, and this is not being critical of strategy at all. It's like, why did they have

981
01:07:42,254 --> 01:07:49,834
that website in 2023 or 2022? And so when you think about how fast the market has moved, because

982
01:07:49,834 --> 01:07:57,374
Q4 2024 people like oh that's been there for years not really and so you get we kind of get used to

983
01:07:57,374 --> 01:08:04,974
this because we've been talking about we're on episode what 56 58 sorry so with that we get used

984
01:08:04,974 --> 01:08:09,014
to this but other people are like just go to the website there it is and you can see that you can

985
01:08:09,014 --> 01:08:13,694
see you can see this happen and I think that's that's part about this and people like oh I'm just

986
01:08:13,694 --> 01:08:18,274
gonna get paid every month well great and I think that all the stuff has come together

987
01:08:18,274 --> 01:08:28,034
If you're worried about it, over the weekend, Bitcoin drops 20%. You can go to the website,

988
01:08:28,034 --> 01:08:32,994
you can look at the website, and you can go see how much Bitcoin coverage that they have,

989
01:08:33,634 --> 01:08:42,194
how much USD cash they have, and go see how long is this thing going to get paid out,

990
01:08:42,194 --> 01:08:44,754
even if they had to sell Bitcoin to pay this instrument.

991
01:08:44,754 --> 01:08:53,874
and that's fascinating like you you can't do that like if um i don't know that like uh let's

992
01:08:53,874 --> 01:09:01,654
think about this for the earthquake that happened in japan okay and there was a tsunami and it wiped

993
01:09:01,654 --> 01:09:12,054
out toyota dealerships like what you would have no idea how to calculate the risk profile of the

994
01:09:12,054 --> 01:09:19,374
debt that you held, like the paper that you held for Toyota. Like that's, you know, physical world,

995
01:09:19,494 --> 01:09:25,634
digital world. Digital world, like you can calculate that risk at any point in time and

996
01:09:25,634 --> 01:09:29,874
you can have an understanding of what that is. You wake up on Sunday morning, four o'clock in

997
01:09:29,874 --> 01:09:33,034
the morning, you're like, oh my God, Bitcoin's down 20% and you can go look at the website and

998
01:09:33,034 --> 01:09:39,394
be like, oh, you know, I've still got 25 years of coverage. Like why am I sweating? Or whatever

999
01:09:39,394 --> 01:09:46,994
that is and that that's that's just a different mindset too for for people that are or corporations

1000
01:09:46,994 --> 01:09:53,954
right if uh if you if you were if you're a corporation and you put this instrument on

1001
01:09:53,954 --> 01:09:59,174
your balance sheet and a board member calls you on sunday morning you know you're drinking your

1002
01:09:59,174 --> 01:10:03,454
coffee and he says hey bitcoin's down 20 what about that instrument that we put on our balance

1003
01:10:03,454 --> 01:10:09,134
sheet like is that okay you can say go look at the website and look at it yeah and i think that

1004
01:10:09,134 --> 01:10:13,834
people just, they look at these numbers and they just don't get it. And, and, and I just want to

1005
01:10:13,834 --> 01:10:18,934
cover a couple of FUD things that came up on all the, the, the, the, um, calls that I've been on

1006
01:10:18,934 --> 01:10:26,974
strategy has 10% or 11% debt. Right. And that's their leverage amount that they say. That means

1007
01:10:26,974 --> 01:10:33,554
that 90% they have is not debt. And so that that's a huge number. Um, and people confuse this all the

1008
01:10:33,554 --> 01:10:38,294
time. Oh, they're leveraged. I go, the number is so reversed that people don't get. Then they say,

1009
01:10:38,294 --> 01:10:44,454
is it guaranteed i'm like you know what pretty much nothing is guaranteed by the way fdic insurance

1010
01:10:44,454 --> 01:10:51,814
only covers you up to 250 000 so what happens after that good luck so so another funny thing

1011
01:10:51,814 --> 01:10:54,934
about the conversation we're like what happens when the music stops and it's like okay

1012
01:10:56,534 --> 01:11:00,694
what's the point of holding any of these instruments right like if you're holding a

1013
01:11:00,694 --> 01:11:10,374
a fixed income instrument, what's the point of holding it? Historically, if you wanted to go buy

1014
01:11:10,374 --> 01:11:15,594
a piece of debt, they're so illiquid. I think we've talked about it the last couple of weeks.

1015
01:11:16,254 --> 01:11:21,654
JP Morgan, if you wanted to go buy the JP Morgan preferred instrument and you go buy $100 million

1016
01:11:21,654 --> 01:11:28,834
of it in the IPO, it pays you 6.5%. In order for you to get your money back out of that instrument,

1017
01:11:28,834 --> 01:11:34,474
you have to hold the instrument through the macaulay duration of the instrument

1018
01:11:34,474 --> 01:11:40,494
right that's just the math right like you're going to get paid that fact let's just say six

1019
01:11:40,494 --> 01:11:46,574
percent it's uh effectively a hundred divided by six is the math like that's the duration of the

1020
01:11:46,574 --> 01:11:51,414
instrument so you'd have to hold it for that number of years in order to get your money back

1021
01:11:51,414 --> 01:11:57,674
out that you originally put in now if you want to get your principal back out that's even a

1022
01:11:57,674 --> 01:12:00,454
a more difficult story because most of these are perpetual.

1023
01:12:00,734 --> 01:12:04,714
They're non-callable and you have to effectively be selling little chunks of

1024
01:12:04,714 --> 01:12:07,314
that over time because they're just so incredibly illiquid.

1025
01:12:09,454 --> 01:12:12,854
And I got a better way to look at this.

1026
01:12:13,114 --> 01:12:15,134
You know, there's a company, Adobe,

1027
01:12:15,554 --> 01:12:17,694
and Adobe is used for a lot of things.

1028
01:12:18,694 --> 01:12:24,634
Obviously they're the professional grade for digital graphics, right?

1029
01:12:24,694 --> 01:12:27,494
So you have that whole suite and then you have Adobe.

1030
01:12:27,494 --> 01:12:29,514
and then you digitally sign PDFs.

1031
01:12:29,614 --> 01:12:32,814
This has been around for, whatever, 30 years.

1032
01:12:33,774 --> 01:12:37,354
That company is basically now trading at its,

1033
01:12:38,554 --> 01:12:42,714
it basically hit its 2020 COVID low.

1034
01:12:43,754 --> 01:12:45,154
And people would be like,

1035
01:12:45,294 --> 01:12:47,614
oh, well, this is just another downturn like COVID.

1036
01:12:48,414 --> 01:12:51,354
No, the narrative, whether it's true or not,

1037
01:12:51,374 --> 01:12:53,234
is that AI is affecting Adobe.

1038
01:12:53,914 --> 01:12:55,874
Now, whether or not that's fair or not,

1039
01:12:55,874 --> 01:12:57,934
that's where the stock has gone down.

1040
01:12:58,054 --> 01:12:59,914
So it's traded down to the COVID low.

1041
01:13:01,034 --> 01:13:05,054
And being in a software as a service company right now,

1042
01:13:05,914 --> 01:13:07,214
there's two ways to look at it.

1043
01:13:07,294 --> 01:13:09,634
Either AI is going to make you much more profitable

1044
01:13:09,634 --> 01:13:12,054
and therefore your stock price should reflect that

1045
01:13:12,054 --> 01:13:13,994
or it's going to be a massive headwind.

1046
01:13:14,474 --> 01:13:15,854
So these software companies are saying,

1047
01:13:15,974 --> 01:13:17,334
oh, we're now an AI company.

1048
01:13:17,334 --> 01:13:20,474
If your stock doesn't rocket higher because of that,

1049
01:13:21,154 --> 01:13:24,154
that's a great narrative, but it doesn't match the idea.

1050
01:13:24,154 --> 01:13:38,654
And I think what we're seeing with strategy is if you believe in Bitcoin, like if you believe in AI, if you believe in Bitcoin, the company that holds a large amount of it, they're going to do well and have a clean balance sheet.

1051
01:13:39,174 --> 01:13:40,454
You know, what am I going to say about Stripe?

1052
01:13:40,494 --> 01:13:41,514
I don't work at Stripe.

1053
01:13:41,634 --> 01:13:43,014
I could say what I want about Stripe.

1054
01:13:44,274 --> 01:13:49,414
You know, Stripe has a pref out and Metaplan is trying to get theirs out.

1055
01:13:49,794 --> 01:13:52,594
And what I'm saying is there's not a lot of other companies that have done.

1056
01:13:52,974 --> 01:13:53,914
It's a very short list.

1057
01:13:53,914 --> 01:14:04,594
I just said the list. And so from that perspective, the bar to get that, you know, you talk about it is, do you have the, what's that called, the momentum?

1058
01:14:04,974 --> 01:14:10,034
Do you have a critical mass? The critical mass to get it done is very hard to do that.

1059
01:14:10,354 --> 01:14:18,414
And from that perspective, once you have that, then things get a little bit easier because you hit that critical mass and now it's going well.

1060
01:14:18,734 --> 01:14:22,754
The other Bitcoin treasury companies will have some trouble with that. That's an understatement.

1061
01:14:22,754 --> 01:14:31,854
But what I'm seeing here is that for strategy is that they just have a huge, you know, this huge amount of Bitcoin, if you believe it.

1062
01:14:32,034 --> 01:14:35,314
So when somebody says to you, what happens if Bitcoin fails?

1063
01:14:35,374 --> 01:14:40,154
It's like, well, what happens if Florida just drops into the ocean?

1064
01:14:40,434 --> 01:14:46,234
What happens if California has a massive earthquake?

1065
01:14:46,434 --> 01:14:48,034
Or what happens if there's a war in the middle?

1066
01:14:48,374 --> 01:14:48,974
What happens?

1067
01:14:49,094 --> 01:14:50,334
Oh, you remember the old days, guys?

1068
01:14:50,334 --> 01:14:56,614
what happens if a cargo ship gets caught sideways in the suez canal because like that doesn't ever

1069
01:14:56,614 --> 01:15:02,734
happen what happens then if two weeks later a ship hits the the bridge in baltimore and takes

1070
01:15:02,734 --> 01:15:07,114
that out well that doesn't happen either you know what happens if there's a worldwide pandemic

1071
01:15:07,114 --> 01:15:14,854
oh there was one of those also it's like you know yeah you gotta you gotta be long ammo right ben

1072
01:15:14,854 --> 01:15:20,734
and I were talking about this earlier, like, you know, like global EMP or whatever, you're like,

1073
01:15:20,814 --> 01:15:27,834
okay, I'm long ammo and whiskey and cigarettes, right? Like, that's my currency. And AM radios,

1074
01:15:27,934 --> 01:15:35,334
maybe I've got a couple crank AM radios. Yeah, it's the ordering of probabilities that I think

1075
01:15:35,334 --> 01:15:42,494
like that inherent natural ordering of probabilities that most people miss, and they just miscalculate

1076
01:15:42,494 --> 01:15:50,214
And they misorder the probabilistic outcomes because there's just a fear element of volatility, I think, naturally.

1077
01:15:51,314 --> 01:15:56,434
So, yeah, the other thing that people say is, you know, and I've been hearing this just by Bitcoin.

1078
01:15:56,714 --> 01:15:58,814
You know, Bitcoin is one to one Bitcoin.

1079
01:15:58,814 --> 01:16:00,334
One Bitcoin equals one Bitcoin.

1080
01:16:00,874 --> 01:16:01,194
OK.

1081
01:16:01,454 --> 01:16:02,994
And there's nothing wrong with that.

1082
01:16:03,034 --> 01:16:04,854
And you're going to go buy Bitcoin, put a cold storage.

1083
01:16:04,994 --> 01:16:05,474
Go do that.

1084
01:16:05,514 --> 01:16:06,354
I think that's fabulous.

1085
01:16:06,874 --> 01:16:07,574
Go right on.

1086
01:16:07,654 --> 01:16:08,534
I think that's awesome.

1087
01:16:08,674 --> 01:16:09,614
You want to be nonce?

1088
01:16:09,874 --> 01:16:11,434
We're big advocates of that, by the way.

1089
01:16:11,434 --> 01:16:13,414
I think that's totally great.

1090
01:16:13,814 --> 01:16:16,034
But then people are like, well, I don't want to pay taxes,

1091
01:16:16,154 --> 01:16:18,734
so I guess I better move to Dubai or Puerto Rico.

1092
01:16:19,494 --> 01:16:24,454
And I'm like, okay, I don't have any, well, maybe I'll go hang out with British HODL.

1093
01:16:24,494 --> 01:16:25,594
I've never met him in person.

1094
01:16:26,114 --> 01:16:29,154
But to get out of taxes, I'm not going to go move to Dubai.

1095
01:16:29,774 --> 01:16:32,334
Maybe I should buy something in an IRA account,

1096
01:16:32,514 --> 01:16:36,154
and then I could defer those taxes, or if it's a Roth IRA, I don't have to pay any taxes.

1097
01:16:36,154 --> 01:16:39,294
So I wish the instrument was available in the stock market.

1098
01:16:39,294 --> 01:16:44,914
and therefore I don't have to move to Puerto Rico or Florida to get out state income taxes.

1099
01:16:45,194 --> 01:16:48,374
I could just buy this and I have that benefit.

1100
01:16:48,834 --> 01:16:50,614
And people are like, no, you should move to Dubai.

1101
01:16:50,834 --> 01:16:52,134
I'm like, I'm not moving to Dubai.

1102
01:16:52,634 --> 01:16:54,134
Not that there's anything wrong with Dubai.

1103
01:16:54,294 --> 01:16:55,634
Or Puerto Rico or whatever.

1104
01:16:56,054 --> 01:16:57,114
It's a low tax state.

1105
01:16:57,494 --> 01:17:00,514
So I'm like, there's reasons why you buy these derivatives.

1106
01:17:00,514 --> 01:17:02,834
And I'm aware that you could buy Bitcoin in an IRA.

1107
01:17:03,254 --> 01:17:08,094
But for some of these other assets, I think that that's the place,

1108
01:17:08,094 --> 01:17:14,734
you know you know to look at and on these spaces i mean what do you think you know when we're on

1109
01:17:14,734 --> 01:17:19,294
these spaces i mean do you guys listen to a lot of them or you just hear rumblings back and forth

1110
01:17:20,654 --> 01:17:23,694
no i've jumped into quite a few of them while you were on there oh okay

1111
01:17:25,854 --> 01:17:29,694
just to listen oh it's fun to hear what the conversation yeah yeah it's fun to hear what

1112
01:17:29,694 --> 01:17:37,694
the conversations are out there all right the bitcoin ecosystem for so for a long time has been

1113
01:17:37,694 --> 01:17:42,814
very tribal right and i think we had to be in the early days right there was this fight for the

1114
01:17:42,814 --> 01:17:47,374
survival which as it was going to get out there you had to you know really educate around the

1115
01:17:47,374 --> 01:17:53,054
thesis that was out there but as it starts to grow and gain exposure i think that there's a

1116
01:17:53,054 --> 01:17:57,294
realization that comes with the fact that you have to understand that you don't get to control

1117
01:17:58,574 --> 01:18:04,734
the desires other people have the tolerances other people have and the qualities other people need

1118
01:18:04,734 --> 01:18:13,654
And so what we're trying to do is take the asset. Everybody agrees in this space that it's the best asset.

1119
01:18:14,094 --> 01:18:24,354
Like this is going to be the most desirable asset on earth. The problem that you have when you're tribal about that asset is you can say, well, it's the best asset on earth, but only individuals should ever own it.

1120
01:18:25,274 --> 01:18:28,814
Well, if it's the most desirable asset on earth, that ain't going to be the outcome.

1121
01:18:28,814 --> 01:18:32,834
right? It's not because everyone's going to want it. Corporations are going to want it.

1122
01:18:33,174 --> 01:18:37,274
Countries are going to want it. Individuals are going to want it. Everybody's going to want it.

1123
01:18:38,234 --> 01:18:44,634
And what we're trying to do is create the different flavors of that asset that meet people where

1124
01:18:44,634 --> 01:18:50,034
they're at on their journey. You know, we're creating all these different on ramps that I

1125
01:18:50,034 --> 01:18:56,154
actually believe ultimately does bring people to Bitcoin. You know, when you start to see these

1126
01:18:56,154 --> 01:19:00,074
credit products, you know, and you've got this cash flow product that's providing you with these

1127
01:19:00,074 --> 01:19:04,274
great yields that's better than anything else. You know, a couple of months after getting that,

1128
01:19:04,314 --> 01:19:08,954
you start to ask yourself, well, what is it that's making this possible? Right. And that's a question

1129
01:19:08,954 --> 01:19:15,274
a lot of people ask all the time. And it ultimately leads to Bitcoin. And originally, we thought that

1130
01:19:15,274 --> 01:19:21,354
it was probably just the standard common equities that might be the on ramp to Bitcoin. But that

1131
01:19:21,354 --> 01:19:25,974
turned out to very much not be true, right? Because if people can't handle the volatility

1132
01:19:25,974 --> 01:19:30,774
of Bitcoin itself, you certainly can't handle the volatility that comes with an amplified version

1133
01:19:30,774 --> 01:19:36,694
of that volatility, right? That is a real stress test for your tolerances. You learn a lot when

1134
01:19:36,694 --> 01:19:40,174
you take that right. It's like I keep saying, right? The only thing that had a full cycle,

1135
01:19:40,854 --> 01:19:43,994
what, oh, we're getting closer now, so maybe Bitcoin's getting its cycle, but,

1136
01:19:44,394 --> 01:19:48,434
you know, the only thing that had a full cycle was the treasury space, you know, last year.

1137
01:19:48,434 --> 01:20:09,094
And so, Pete, you learn a lot around there and you learn a lot about what tolerances you actually have. And what you realize is even a lot of people that were really deep in the space that seemed like they were real believers in this and they understood that this is long term and you have to take, you know, a decade long outlook on these types of products.

1138
01:20:09,094 --> 01:20:14,854
you found that when the volatility really showed up, they weren't ready for it.

1139
01:20:15,574 --> 01:20:20,174
And so that just means that's not a bad thing. What it means is that's probably not the flavor

1140
01:20:20,174 --> 01:20:25,134
of the asset that you need. But now you've got different versions of it, right? So now you've

1141
01:20:25,134 --> 01:20:29,594
got something like Stretch that they're pinning at par and you're getting a high yield on it.

1142
01:20:29,594 --> 01:20:34,834
And that's a very comfortable product for people to sit on. Some people I've heard really enjoy

1143
01:20:34,834 --> 01:20:38,334
holding those products because then they take those dividends and that's the money they keep

1144
01:20:38,334 --> 01:20:42,174
buying Bitcoin with on the other side of that, right? So they're building their personal holdings

1145
01:20:42,174 --> 01:20:47,394
there. You know, it's a realization that the world doesn't move to where we want it to go,

1146
01:20:48,314 --> 01:20:54,294
right? You have to create the ramps for that to happen. And if all we did is go back and never

1147
01:20:54,294 --> 01:20:58,334
look at the structure that's out there in the financial markets and go, look, these financial

1148
01:20:58,334 --> 01:21:03,974
markets are broken. We're seeing that all over the place now, and it's becoming incredibly apparent.

1149
01:21:03,974 --> 01:21:10,394
there isn't an off-ramp that just immediately goes from the current structure that's in place

1150
01:21:10,394 --> 01:21:15,534
right now straight to Bitcoin. And I don't think the world would be ready if that did happen.

1151
01:21:16,494 --> 01:21:24,214
This is so ingrained in how our lives operate and function that for anything to transition to

1152
01:21:24,214 --> 01:21:30,074
a Bitcoin standard here, say we look out 50 years and Bitcoin does reach medium of exchange,

1153
01:21:30,074 --> 01:21:36,074
and unit of account and all these, you need an off ramp there. Nobody wants the unplugged version

1154
01:21:36,074 --> 01:21:41,834
of this. I promise you, it's not going to look good. It's going to be brutal if that were to

1155
01:21:41,834 --> 01:21:45,714
happen. If all the currencies were collapsing around the world and the world goes into chaos,

1156
01:21:46,014 --> 01:21:50,514
that is not a good outcome. But with these types of products, you can start offloading

1157
01:21:50,514 --> 01:21:54,534
those markets. And so like right now, we're focused on the credit markets, obviously,

1158
01:21:54,674 --> 01:21:58,054
but you look at the credit markets and you go, we've got an off ramp for that capital

1159
01:21:58,054 --> 01:22:04,634
where now it's actually backed by a balance sheet filled with a hard asset and a surplus of it

1160
01:22:04,634 --> 01:22:10,574
relative to the obligation, right? You're creating an off-ramp that's comfortable and smoother.

1161
01:22:11,314 --> 01:22:17,514
And in return, you're giving them a better product than what they have. You're giving them

1162
01:22:17,514 --> 01:22:22,854
a better yield profile. You're giving them a better risk profile. You're giving them a better

1163
01:22:22,854 --> 01:22:29,354
liquidity profile, right? So they're winning. But there's a realization that comes with the fact

1164
01:22:29,354 --> 01:22:35,234
that these industries have worked one way for so long when it comes to things like the rating

1165
01:22:35,234 --> 01:22:40,674
agencies. People have outsourced their trust in products. That's what rating agencies are.

1166
01:22:41,314 --> 01:22:45,714
It's a way for these institutions to not have to go do any diligence on their own.

1167
01:22:46,254 --> 01:22:50,134
They outsource that to the rating agencies and they go, well, the rating agencies must have looked

1168
01:22:50,134 --> 01:22:54,474
really deep at these and determined that these are investment grade vehicles and so we're

1169
01:22:54,474 --> 01:22:56,134
going to buy those.

1170
01:22:56,134 --> 01:22:57,134
That's what's happening.

1171
01:22:57,134 --> 01:23:00,434
But it's a push.

1172
01:23:00,434 --> 01:23:01,534
We're going to need a push.

1173
01:23:01,534 --> 01:23:05,174
And I think that's the reason why we're out having all these conversations is because

1174
01:23:05,174 --> 01:23:11,134
if we can create awareness around these products, if the people, Jeff was talking about how

1175
01:23:11,134 --> 01:23:16,094
the AMBEST model works, if the people that are writing those checks into AMBEST start

1176
01:23:16,094 --> 01:23:19,934
getting interested in these products and they start pushing it towards them.

1177
01:23:20,312 --> 01:23:26,312
saying we want a rating on these, we want to integrate these. That is more influential

1178
01:23:27,032 --> 01:23:31,512
than the issuers of digital credit products going to that rating agency and trying to say,

1179
01:23:31,512 --> 01:23:36,392
we'd like you to rate this. And they're just going to say no. But if their main customers that are

1180
01:23:36,392 --> 01:23:40,152
paying them millions of dollars a year come in and say, we're interested in these products,

1181
01:23:40,152 --> 01:23:45,032
but we need them to have a rating, we want you to look at these. That's when it starts to change.

1182
01:23:45,032 --> 01:23:55,792
And as soon as that happens, whether it's in three years or five years or 10 years, you know, it's probably going to actually align quite well with the track record that you need to have here.

1183
01:23:55,932 --> 01:24:02,092
Right. So Matt talks a lot about how you've got kind of a three year track record and then you get the hockey stick growth.

1184
01:24:02,092 --> 01:24:06,072
Right. Where you get three years of linear and it can be a steep linear.

1185
01:24:06,212 --> 01:24:07,652
And I think that's what we're going to see here.

1186
01:24:07,652 --> 01:24:30,592
But if that times out where you've built a track record, you've seen how these products and how these issuers operate in a bear market, and now all of a sudden they've been in the market long enough where you've seen a history of the dividends being met, balance sheets being managed effectively, and all of a sudden they've got scale and you get a rating agency to come out and say, we're willing to give this a rating.

1187
01:24:30,592 --> 01:24:36,672
Even if it's not a great rating, a rating, all of a sudden you see that high-stick curve growth.

1188
01:24:36,672 --> 01:24:42,032
right so you got to play the long game every conversation you know that jeff and matt and i

1189
01:24:42,032 --> 01:24:47,792
have around this is always looking out 10 years right it's not everything isn't going to happen

1190
01:24:47,792 --> 01:24:53,952
in one week or one month there's a foundation building under this and we have to do that with

1191
01:24:53,952 --> 01:25:00,192
our business strategy had the benefit of being able to scale at the same time they were evolving their

1192
01:25:00,192 --> 01:25:05,232
model right so that foundation was under them as soon as they launched these credit products and to

1193
01:25:05,232 --> 01:25:10,192
what you were saying earlier, Mike, about how many of these digital credit issuers are there

1194
01:25:10,192 --> 01:25:15,872
going to be in the near term. I think you're right. I think it's a very small list because I don't

1195
01:25:15,872 --> 01:25:23,932
think people have a full appreciation of what it means to create a good credit. There's a foundation.

1196
01:25:24,132 --> 01:25:28,852
There's a level of stability that you have to have underpinning that credit you're issuing out into

1197
01:25:28,852 --> 01:25:34,392
the market. And you don't build that by snapping your fingers, building these reserves and things

1198
01:25:34,392 --> 01:25:39,332
that are backing that credit product, you know, that takes a lot of time to get that

1199
01:25:39,332 --> 01:25:45,572
into place. But when it does, it's ultimately also what makes the equity so valuable, right?

1200
01:25:45,592 --> 01:25:49,712
You have to focus on maintaining good credit quality for your company so that the credit

1201
01:25:49,712 --> 01:25:53,492
products are very valued out there in the market, because the demand that comes into

1202
01:25:53,492 --> 01:25:58,172
the credit products is going to greatly enhance the value over the long term of that common

1203
01:25:58,172 --> 01:26:02,272
equity, right? There's a link between these two products, particularly in this model.

1204
01:26:02,272 --> 01:26:05,272
and it's a really important one to get right.

1205
01:26:05,852 --> 01:26:07,292
And so you have to take your time,

1206
01:26:07,392 --> 01:26:08,712
you have to do it the right way

1207
01:26:08,712 --> 01:26:10,972
and you can't try to rush things.

1208
01:26:12,552 --> 01:26:14,432
Yeah, so Ben, what you're saying is,

1209
01:26:15,112 --> 01:26:17,672
you know, we're all really good with spreadsheets.

1210
01:26:17,672 --> 01:26:20,232
For us, it's trivial for us to do it.

1211
01:26:20,812 --> 01:26:24,412
The catch is that modeling out

1212
01:26:24,412 --> 01:26:27,052
more than three or four years,

1213
01:26:28,232 --> 01:26:30,632
the projections just become really weird,

1214
01:26:30,632 --> 01:26:34,692
specifically with the prefs because of the amplification.

1215
01:26:34,972 --> 01:26:36,212
You're not increasing the shares.

1216
01:26:37,392 --> 01:26:40,212
The prefs are issued in shares, but because they're debt,

1217
01:26:40,372 --> 01:26:42,512
even though they're digital credit, they're debt,

1218
01:26:42,632 --> 01:26:46,412
it doesn't affect the share count for the common stock.

1219
01:26:47,032 --> 01:26:50,672
So how do you model that becomes a little bit weird.

1220
01:26:51,312 --> 01:26:53,772
And so the modeling that I did,

1221
01:26:53,772 --> 01:26:59,332
I had done a previous article going out 10 years on strategy.

1222
01:26:59,332 --> 01:27:03,192
And now that I look back on it, I did this back in January.

1223
01:27:03,512 --> 01:27:14,312
And now seeing what Stretch has been able to do by acquiring Bitcoins at this rate and how that affects the amplification of MSTR, I don't have a better way to model it.

1224
01:27:14,412 --> 01:27:22,272
You know, I feel uncomfortable doing a model more than two years because 10 years out, the numbers are really because.

1225
01:27:23,152 --> 01:27:25,572
And by the way, somebody had posted this.

1226
01:27:25,572 --> 01:27:30,732
So there's 1 million Bitcoins left to be mined over the next, whatever, 100 years.

1227
01:27:31,552 --> 01:27:39,652
Then somebody said, yeah, but in the next 10 years, 90% of those Bitcoins will be mined because it gets halved each cycle.

1228
01:27:40,172 --> 01:27:43,952
And I was like, oh, God, you know, what does that do to the price of this?

1229
01:27:44,992 --> 01:27:46,532
And, right?

1230
01:27:46,932 --> 01:27:48,012
Is that math right?

1231
01:27:48,132 --> 01:27:48,992
I mean, I saw that.

1232
01:27:48,992 --> 01:27:49,852
But, yeah.

1233
01:27:51,392 --> 01:27:55,172
So let me give another example.

1234
01:27:55,572 --> 01:28:03,752
in history, right? Tesla comes out with the Roadster, the first Tesla car. And you see

1235
01:28:03,752 --> 01:28:08,252
the thing do zero to 60 in like two and a half seconds. And you're like, holy shit, this

1236
01:28:08,252 --> 01:28:15,032
is faster than everything else I've ever seen. It's faster than all internal combustion engines

1237
01:28:15,032 --> 01:28:19,572
ever and it's electric. Okay. You're like, wow, that's incredible. That's going to change

1238
01:28:19,572 --> 01:28:24,212
the world. And then you start to see that they put all these cameras in it and they're

1239
01:28:24,212 --> 01:28:28,212
collecting all this data. You're like, wow, it's going to change the world. But you're

1240
01:28:28,212 --> 01:28:43,348
like how much I have no idea How fast I have no idea I just know it going to change the world I don know when So what do people do They buy the equity And you have to have a long view thinking about this because you don know how to model it

1241
01:28:43,448 --> 01:28:48,808
You can't, like, we don't know what the adoption curve exactly looks like. Is it going to be 1,000x?

1242
01:28:48,888 --> 01:28:56,208
Is it going to be, how long does 1,000x take? You know, like, four, eight years, like, the equity might take some time.

1243
01:28:56,588 --> 01:29:00,908
But again, you brought up modeling the common, very difficult.

1244
01:29:00,908 --> 01:29:01,468
Yeah.

1245
01:29:01,868 --> 01:29:05,188
But you know, it's also a function of Bitcoin.

1246
01:29:06,408 --> 01:29:11,028
But modeling the credit is actually relatively simple.

1247
01:29:11,928 --> 01:29:18,588
And there's risk models that exist today where you can understand the credit profile.

1248
01:29:18,708 --> 01:29:19,728
So you're like, that's the product.

1249
01:29:20,848 --> 01:29:22,828
It's just how fast does that product take off?

1250
01:29:23,088 --> 01:29:27,768
So I want to give you a really good example of what happened with Tesla, but not really about Tesla.

1251
01:29:27,768 --> 01:29:30,608
So I've been in Silicon Valley now for whatever, 26 years.

1252
01:29:30,908 --> 01:29:36,248
So what happened was when the Chevy Volt came out, right, which was their hybrid car.

1253
01:29:36,948 --> 01:29:42,928
So in California, you could get a sticker so you can go in the HOV lanes, right?

1254
01:29:43,548 --> 01:29:47,568
Well, the first, so the product man, so they came out to the Cisco campus.

1255
01:29:47,728 --> 01:29:51,488
I was working at a spin in and you could go test drive the Chevy Volt.

1256
01:29:52,008 --> 01:29:58,388
And they had these, they had a whole bunch of product managers from Michigan that were there babysitting the cars.

1257
01:29:58,388 --> 01:30:06,648
So I get into the car and I'm talking to this product manager guy and I said, you know, whatever the car it drove fine, whatever.

1258
01:30:06,908 --> 01:30:10,708
First of all, the battery was completely depleted and it was only running on the gas motor.

1259
01:30:10,948 --> 01:30:14,328
And I said, well, you guys really can't sell this car in California.

1260
01:30:14,768 --> 01:30:16,428
And he goes, what do you mean?

1261
01:30:16,828 --> 01:30:19,748
I go, it doesn't qualify for an HOV sticker.

1262
01:30:20,288 --> 01:30:22,328
He goes, what do you mean?

1263
01:30:22,328 --> 01:30:40,468
I go, well, these guys that work at Cisco that made a whole bunch of money in the internet bubble, if they have a choice between buying an S-Class Mercedes to drive to work or a Porsche or a BMW, they're like, no, I'll just go buy a Tesla, right?

1264
01:30:40,608 --> 01:30:44,768
They'll buy a $100,000 commuter car because it gets the sticker.

1265
01:30:45,768 --> 01:30:47,668
He goes, that's not why we built the car.

1266
01:30:47,848 --> 01:30:50,228
We built the car because it's good on fuel economy.

1267
01:30:50,228 --> 01:30:58,728
I go dude we're in California people are buying Tesla's the Tesla Model S because

1268
01:30:58,728 --> 01:31:02,768
it has this sticker so they go in the I never heard we might have that sticker

1269
01:31:02,768 --> 01:31:11,168
next year I go okay so our electric car is good our hybrid cars good yeah yeah

1270
01:31:11,168 --> 01:31:14,888
yeah but they missed that part the part that I'm trying to say to you is how did

1271
01:31:14,888 --> 01:31:19,608
they miss that right and it's like oh well Tesla's doing this or the Prius has

1272
01:31:19,608 --> 01:31:24,868
been around, right? So these were all known entities. But for some reason, nobody thought

1273
01:31:24,868 --> 01:31:30,008
of what in California is that would have the sixth biggest economy in the world or seventh,

1274
01:31:30,128 --> 01:31:34,168
whatever it is. But nobody ever thought to ask people, why are you buying these Teslas?

1275
01:31:34,388 --> 01:31:38,908
So they can use the $100,000 car to drive. And I know this sounds completely out of touch

1276
01:31:38,908 --> 01:31:42,548
with people that are in the rest of the country. I totally get that.

1277
01:31:42,988 --> 01:31:46,528
The other thing that was completely out of touch, somebody said recently, like,

1278
01:31:46,528 --> 01:32:09,408
Well, I've never seen any robots where I live. Now, where I live, I was driving. There were five Waymo's this morning. I had to go to a dentist. There were five Waymo's all being driven by themselves. There's 300,000 Waymo drives per month in San Francisco. That's a robot. Like, what do you mean it's a robot?

1279
01:32:09,408 --> 01:32:15,988
it's a car that's driven autonomously that's the definition of a robot and this guy was like well

1280
01:32:15,988 --> 01:32:21,268
i don't see any robots where i live i'm like that's true where you live there's no robots where

1281
01:32:21,268 --> 01:32:27,688
i live three times because i live at the top of a hill everybody rides the robot to the top of the

1282
01:32:27,688 --> 01:32:33,568
hill they get out so they don't have to walk up it right so anyway so it's it's like people and

1283
01:32:33,568 --> 01:32:37,928
this goes back to what you were saying ben when you went to the money store thing if people are

1284
01:32:37,928 --> 01:32:45,588
unaware that 11.5% or 12.5% even exists. And then they ask the same typical questions. When can I

1285
01:32:45,588 --> 01:32:50,468
get in? When can I get out of it? That's like saying, does your electric hybrid vehicle come

1286
01:32:50,468 --> 01:32:56,328
with the HOV sticker? No, I'm not buying it. It doesn't matter how good it's on gas. It doesn't

1287
01:32:56,328 --> 01:33:02,348
meet my needs. And that's where you tell them, they ask these very basic questions. How often

1288
01:33:02,348 --> 01:33:06,388
do I get paid? You get paid monthly. Oh, it's like, how often do you drive to work? Monday

1289
01:33:06,388 --> 01:33:12,848
through Friday. This is obviously 10 years before COVID or whatever it was. So I don't know why

1290
01:33:12,848 --> 01:33:17,028
people miss this. And I think, you know, you know, to wrap up with what we're saying, you know,

1291
01:33:17,348 --> 01:33:24,128
tonight is that I don't want to put out a projection for more than two years now,

1292
01:33:24,128 --> 01:33:32,008
because the range is so wide. It's just so, and then people are like, if, and when I, when I do,

1293
01:33:32,008 --> 01:33:34,348
there's always going to be an assumption.

1294
01:33:34,348 --> 01:33:36,608
What is the amount of Bitcoin that's going to grow?

1295
01:33:36,608 --> 01:33:40,348
What's the share growth and how much of that is made up of the prefs?

1296
01:33:40,748 --> 01:33:42,348
And you're like, OK, there's three variables.

1297
01:33:42,348 --> 01:33:46,788
OK, now what's going to be the price of Bitcoin each quarter going?

1298
01:33:47,088 --> 01:34:01,804
So now you have your variable Oh wait I not done What the MNAV So now you have five variables and somebody like why you pick an MNAV of only 1 or 1 I want to be conservative So then you got

1299
01:34:01,804 --> 01:34:05,684
five variables and everybody's like, can you just do the projection? Yeah, I can do it.

1300
01:34:06,084 --> 01:34:11,524
But I kind of, if I do everything conservative, your numbers are low. So that's where I'm at.

1301
01:34:11,624 --> 01:34:14,844
So I'm not going to, I'm telling you guys, I'm not going to post my projection

1302
01:34:14,844 --> 01:34:17,544
until Tuesday to see what happens on Monday.

1303
01:34:18,784 --> 01:34:23,184
I think those model projections are kind of futile.

1304
01:34:24,564 --> 01:34:36,204
Like, you know, my point I was getting at with Tesla is that the market cap went from $40 billion to $1.2 trillion in, like, 20 months.

1305
01:34:37,584 --> 01:34:40,064
Like, the business didn't really change.

1306
01:34:40,784 --> 01:34:48,164
So, like, all of those models, the people that were projecting the Tesla stock price, also broken, right?

1307
01:34:48,164 --> 01:34:51,824
But at some point, you've got a moat large enough.

1308
01:34:51,904 --> 01:34:53,244
You've got a capital large enough.

1309
01:34:53,364 --> 01:34:55,404
You've got a product with a huge moat.

1310
01:34:56,404 --> 01:34:58,564
It goes to the top of the leaderboard.

1311
01:34:58,584 --> 01:34:59,484
I'll tell you guys a secret.

1312
01:35:00,884 --> 01:35:07,884
So two of the guys that I'm still friends with today, and you met one of them, two of the guys, one of them is playing constant.

1313
01:35:08,904 --> 01:35:11,384
We were all working at the same spin-in.

1314
01:35:11,384 --> 01:35:14,024
It was a startup company, and we were talking about Tesla.

1315
01:35:14,024 --> 01:35:19,784
And we could not figure out how this, because the amount of cars that were shipping were so small.

1316
01:35:20,124 --> 01:35:21,904
It's a $100,000 commuter car.

1317
01:35:22,064 --> 01:35:22,784
We didn't see it.

1318
01:35:23,184 --> 01:35:23,964
We did it.

1319
01:35:24,064 --> 01:35:25,124
We knew all about it.

1320
01:35:25,204 --> 01:35:26,204
We knew about Elon Musk.

1321
01:35:26,644 --> 01:35:27,244
We knew all about it.

1322
01:35:27,384 --> 01:35:28,284
You know how many shares I bought?

1323
01:35:28,484 --> 01:35:28,884
Zero.

1324
01:35:30,684 --> 01:35:30,884
Okay.

1325
01:35:31,064 --> 01:35:38,224
Then I bought Apple when the iPhone came out and Baidu and a couple, and then Facebook a year after the IPO.

1326
01:35:38,224 --> 01:35:44,904
And I promised myself because I missed Tesla, I refused to ever have that happen to me again.

1327
01:35:45,104 --> 01:35:48,984
So I have to do enough research to understand what I'm not getting.

1328
01:35:49,624 --> 01:35:56,244
And that's why in Bitcoin in 2017, when Brian Kelly says on CNBC, as everybody knows, Bitcoin

1329
01:35:56,244 --> 01:35:58,844
hit its all time high last week of 2000.

1330
01:35:59,364 --> 01:36:03,424
I was like, oh, my God, another frickin Tesla just happened to me again.

1331
01:36:03,584 --> 01:36:05,164
And I refused to miss that.

1332
01:36:05,164 --> 01:36:08,724
And that's because I did not get what Tesla was doing.

1333
01:36:09,364 --> 01:36:10,564
I missed it.

1334
01:36:10,644 --> 01:36:12,424
And I'm able to admit that.

1335
01:36:12,744 --> 01:36:17,244
And that's why when the iPhone came out, I was like, oh, this is a big deal.

1336
01:36:17,724 --> 01:36:23,464
And that's why when Facebook, after their IPO, which was a disaster a year later, that's when I bought into that one.

1337
01:36:23,504 --> 01:36:24,684
And that was in 2014.

1338
01:36:25,464 --> 01:36:33,144
But you have to do enough research to understand, is this just going to shoot up and drop down?

1339
01:36:33,144 --> 01:36:35,364
or is this really going to change the industry?

1340
01:36:36,724 --> 01:36:38,984
And by the way, when the iPhone came out,

1341
01:36:39,344 --> 01:36:44,004
many people said, oh, this is for a 16-year-old kid in high school.

1342
01:36:44,344 --> 01:36:45,984
I don't know who's going to buy a $1,000 phone

1343
01:36:45,984 --> 01:36:48,524
for a 16-year-old kid in high school at that time.

1344
01:36:48,664 --> 01:36:51,544
It's not a real device because the email is not secure.

1345
01:36:52,424 --> 01:36:54,624
BlackBerry email servers are in Canada,

1346
01:36:54,984 --> 01:36:56,064
therefore they're more secure.

1347
01:36:56,704 --> 01:36:58,464
And it had a physical keyboard.

1348
01:36:59,004 --> 01:37:01,304
But when I saw the iPhone, I'm like, oh, God, this thing.

1349
01:37:01,304 --> 01:37:16,704
You know, I believe Steve Jobs. Now, in retrospect, of course, everybody saw this and BlackBerry's dead. Anyway, with that said, I think that these are very hard to see when they happen. But when they do, you're like, oh, I wish that I put more into it.

1350
01:37:16,704 --> 01:37:25,164
Yeah, mega trends. Mega trends are difficult to see. All right, I'm fading. It's late here,

1351
01:37:25,264 --> 01:37:29,764
East Coast time. I've been up for a while and I've got early flight, but let's pass it around.

1352
01:37:29,764 --> 01:37:32,884
Final thoughts. Maybe I'll go to you, Ben. We'll go first.

1353
01:37:33,564 --> 01:37:37,584
I think to Mike's point, all your models are broken. All our models are broken.

1354
01:37:38,964 --> 01:37:40,284
But some are useful.

1355
01:37:40,284 --> 01:38:05,964
Well, the sub are useful. Well, you know, the thing that's really encouraging in this space is that there's so many people that have now come in that are getting really passionate about this, that like the advocacy side and the education side of talking about Bitcoin and talking about all the different ways and the different products that Bitcoin enables people and companies and institutions to work into their models is going to be hugely helpful.

1356
01:38:05,964 --> 01:38:11,604
right the burden isn't just on strategy and sailor anymore this is evolving there's a lot

1357
01:38:11,604 --> 01:38:18,284
of people with skin in the game and so i think over the next you know 12 24 months the awareness

1358
01:38:18,284 --> 01:38:22,984
is going to increase and i think you're going to continue to see the demand for the products

1359
01:38:22,984 --> 01:38:30,344
i keep telling people don't you know take price always as the indicator of demand right look at

1360
01:38:30,344 --> 01:38:36,484
the liquidity, see what's trading. Trading is what shows you the demand. Price simply shows you the

1361
01:38:36,484 --> 01:38:41,624
price today. So, you know, it's going to be one of those spaces that's going to evolve so quickly

1362
01:38:41,624 --> 01:38:45,504
in front of us. You know, and we've been saying that some people might say, well, you guys have

1363
01:38:45,504 --> 01:38:49,284
been talking about this for two years. I'd point back and go, look at how much has happened in two

1364
01:38:49,284 --> 01:38:54,624
years. We are so numb to the rate of change that is happening around here because we talk about it

1365
01:38:54,624 --> 01:39:00,164
so often that it feels like it's happening in these tiny increments. We are in such a different

1366
01:39:00,164 --> 01:39:04,244
place than even I expected the industry to be two years ago.

1367
01:39:05,744 --> 01:39:17,840
Like I couldn have drawn this Yeah So what going to happen in the next two years now that we already got momentum and we got way more people here you got people within organizations

1368
01:39:17,840 --> 01:39:22,640
that are advocating for it that are trying to push the messaging forward like the rate of change over

1369
01:39:22,640 --> 01:39:26,480
the next two years i think is going to be astonishing in this space so i'm here for it

1370
01:39:26,480 --> 01:39:35,040
it's going to be a fun ride yeah i'll wrap it up you know you know something my friends asked me is

1371
01:39:35,040 --> 01:39:36,140
What's the next narrative?

1372
01:39:36,280 --> 01:39:37,660
What's going to drive the price higher?

1373
01:39:38,020 --> 01:39:43,620
And I think that narrative right now is the race between Ibit and strategy to get to a

1374
01:39:43,620 --> 01:39:44,340
million Bitcoin.

1375
01:39:44,940 --> 01:39:48,140
It's just an easy number that people put their heads around.

1376
01:39:48,560 --> 01:39:49,940
Oh, there's a race between these.

1377
01:39:50,060 --> 01:39:51,720
And there are two different types of entities.

1378
01:39:51,720 --> 01:39:52,680
We already discussed that.

1379
01:39:53,240 --> 01:39:57,240
And they're like, oh, there's like a rate because they're not off by much.

1380
01:39:57,240 --> 01:40:00,660
They're off by, I don't know, like 5% between the both of them.

1381
01:40:01,320 --> 01:40:04,920
And now the narrative is, oh, this is going to happen this year.

1382
01:40:05,040 --> 01:40:24,760
And does it happen sooner? Probably. And so the takeaway for that is it's an easy narrative for people to pitch. Well, you know, strategy had no Bitcoin in 2020, and now they're closing in on a million six years later. And I think that's a very easy narrative for people to get on to.

1383
01:40:24,760 --> 01:40:26,640
The other thing is I don't believe in Bitcoin.

1384
01:40:26,860 --> 01:40:28,1000
Okay, but inflation's killing me.

1385
01:40:29,340 --> 01:40:31,100
Great, there's a product called STRC.

1386
01:40:31,460 --> 01:40:33,400
And then some people are saying on Spaces,

1387
01:40:33,640 --> 01:40:35,900
well, you get no upside with it.

1388
01:40:36,360 --> 01:40:38,620
Okay, but you kind of get no downside also.

1389
01:40:38,740 --> 01:40:39,840
I'm not saying it's a guarantee.

1390
01:40:40,280 --> 01:40:42,240
It trades in a target range,

1391
01:40:42,860 --> 01:40:44,500
and they pay you monthly.

1392
01:40:44,700 --> 01:40:45,840
So people are like, oh,

1393
01:40:45,980 --> 01:40:49,320
so it's like the gateway instrument.

1394
01:40:49,840 --> 01:40:51,640
And the other thing that I noticed on Spaces

1395
01:40:51,640 --> 01:40:52,740
is that people are willing to listen.

1396
01:40:52,740 --> 01:40:59,540
I think that now that I've said this, one of the reasons why I do the space is if people aren't willing to listen, I drop off the space.

1397
01:41:00,120 --> 01:41:03,220
But people are like, I ask when I'm done, do you have any questions?

1398
01:41:03,520 --> 01:41:05,520
And I get some really good questions now.

1399
01:41:05,780 --> 01:41:13,460
I'm not getting this weird stuff really anymore because if you can articulate it, then people are kind of getting into this.

1400
01:41:13,520 --> 01:41:18,120
So like you don't want to buy Bitcoin or too volatile, you don't want to buy MSTR, okay, STRC.

1401
01:41:18,880 --> 01:41:20,900
And so thank you guys for building the products.

1402
01:41:20,900 --> 01:41:22,060
And congratulations.

1403
01:41:22,060 --> 01:41:24,600
I did read your posts today, Jeff.

1404
01:41:24,720 --> 01:41:27,080
So congratulations on making those changes.

1405
01:41:27,740 --> 01:41:28,700
I read that.

1406
01:41:28,940 --> 01:41:30,060
Congratulations on buying STRC.

1407
01:41:30,820 --> 01:41:37,040
I'm going to go read Matt Cole's post that he did a couple hours ago on the primer on balance sheet liquidity.

1408
01:41:38,100 --> 01:41:38,840
So thank you.

1409
01:41:38,920 --> 01:41:40,440
Send my thanks to Matt.

1410
01:41:40,660 --> 01:41:42,980
And you guys have a safe trip home from New York.

1411
01:41:44,560 --> 01:41:45,560
Yeah, thanks, Mike.

1412
01:41:45,640 --> 01:41:46,080
Appreciate it.

1413
01:41:46,140 --> 01:41:48,960
Yeah, Matt's article is great.

1414
01:41:48,960 --> 01:42:00,040
It just talks about how corporations historically across all industries will issue debt and hold other paper of other corporations in the same industry.

1415
01:42:00,700 --> 01:42:02,320
It's actually, it's like incredibly common.

1416
01:42:03,360 --> 01:42:06,520
So it's, there's been a lot of noise about that on X.

1417
01:42:06,600 --> 01:42:09,300
So Matt felt very passionate and I think it's a good read.

1418
01:42:09,300 --> 01:42:12,760
I have gotten through a little bit of it, but I'm going to read it on the plane tomorrow.

1419
01:42:14,100 --> 01:42:18,860
But my final thoughts, thank you to everybody that are building in the space.

1420
01:42:18,960 --> 01:42:25,200
honestly. Rohan, STRC Live, people that are building dashboards, people that are talking

1421
01:42:25,200 --> 01:42:29,960
in the space, people that are going on spaces and going on podcasts, building in different industries

1422
01:42:29,960 --> 01:42:36,580
and talking in different places. I'm just incredibly thankful. I mean, it's allowed us

1423
01:42:36,580 --> 01:42:41,960
to be in front of the people that we were in front of today. And, you know, it's like we're

1424
01:42:41,960 --> 01:42:46,960
almost passed off the torch a little bit to other folks that are taking and running with a lot of

1425
01:42:46,960 --> 01:42:49,840
the analytics and the capabilities that are happening in the space.

1426
01:42:49,840 --> 01:42:55,300
And it's just so awesome to see this entire space exploding and getting a lot of the credit

1427
01:42:55,300 --> 01:42:57,540
and attention and noise that it should be getting.

1428
01:42:58,200 --> 01:43:03,400
In terms of the market, I think these instruments are just, they're so fascinating.

1429
01:43:04,080 --> 01:43:09,260
And I think it can really clean up capital markets, like just credit capital markets.

1430
01:43:09,920 --> 01:43:15,140
For example, every dollar that goes into these instruments is likely a dollar that's not

1431
01:43:15,140 --> 01:43:16,640
going to go into another credit instrument.

1432
01:43:16,960 --> 01:43:22,340
So you think about some just really crappy business model that historically would have

1433
01:43:22,340 --> 01:43:25,140
gotten access to capital.

1434
01:43:25,140 --> 01:43:26,840
The incentive structure is gone, right?

1435
01:43:26,840 --> 01:43:29,800
Like that crappy business model, you're already seeing it.

1436
01:43:29,800 --> 01:43:35,160
Like, I think JP Morgan came out and said, we're not allocating to private credit anymore.

1437
01:43:35,160 --> 01:43:37,800
Like we're stopping our future allocations of private credit.

1438
01:43:37,800 --> 01:43:38,800
That's happening.

1439
01:43:38,800 --> 01:43:42,500
Like these instruments help clean up the credit markets.

1440
01:43:42,500 --> 01:43:43,780
And how long does that take?

1441
01:43:43,780 --> 01:43:46,340
I'm not 100% sure, but I'm here for it.

1442
01:43:46,340 --> 01:43:49,620
I'm ready for the industry to 1,000X and 10,000X.

1443
01:43:50,000 --> 01:43:51,720
And I look forward to building that future.

1444
01:43:52,360 --> 01:43:57,260
And the final thing I'll leave you with, Graeme, is we are not selling Seda below 100.

1445
01:43:58,700 --> 01:44:01,320
And you can poke me anytime you want to.

1446
01:44:01,320 --> 01:44:05,600
Do not sell something that people want at a discount.

1447
01:44:06,200 --> 01:44:06,460
Okay?

1448
01:44:06,560 --> 01:44:09,000
If they don't want it, why is something discounted?

1449
01:44:09,000 --> 01:44:09,440
It's like a Porsche.

1450
01:44:09,540 --> 01:44:10,320
Because people don't want it.

1451
01:44:13,200 --> 01:44:13,640
Yeah.

1452
01:44:13,920 --> 01:44:15,600
And that's it for episode 58.

1453
01:44:15,600 --> 01:44:19,520
Thank you everybody for joining True North, the investment-grade Bitcoin podcast.

1454
01:44:19,520 --> 01:44:21,360
We will catch you next week.

1455
01:44:21,360 --> 01:44:22,360
Cheers.

1456
01:44:22,360 --> 01:44:23,360
Thank you.