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Hey everyone, thanks for joining. This is True North episode. I think it's, well, it's called

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High Power Digital Money. I forget the name. But it's super exciting to be here. The rest

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of the crew is off in Abu Dhabi. We are all at home holding down the fort doing data analysis

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for you while there's a lot going on in the market. So super excited to be here. Really

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excited to talk. We have a nice slide deck. We have got some really thoughtful topics to

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try to weather this mini bear market. Let's do the presentation from Tim, the quick 30 seconds,

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and then we'll take it back over here. Ladies and gentlemen, what you're about to hear

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may be amazing, but it is not financial advice. It's for informational and...

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Oh, Jeff's not here. Purpose is only. Back to you, Dan.

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So guys, what are we going to talk about today? High Power Digital Money is the name of the

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episode. As of right now, I think there's been really, really big developments in the Bitcoin

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credit market. Obviously, the macro landscape is changing every week, it feels like. And then on

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top of that, we've got new Bitcoin treasury companies floundering, trying to catch their

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breath as to their stocks are getting hammered because they have so many shares outstanding.

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So what do you guys think? Sounds great. Let's get rolling.

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Heck yeah. Yeah. We'll jump right into the presentation. Maybe we give-

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Let's jump in the presentation. No time to waste.

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No time to waste. Let's just go into it. Let's see what happens.

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All right. Guys, I first want to remind everyone that True North World's coming up.

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We have a discount code that is True North.

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Hey, Dan, can you go to full screen or slide mode?

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Thank you. I get so excited whenever we get the presentation open.

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So True North, capital T, North for Strategy World discount code.

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That is in Las Vegas this year.

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And the exact dates are, I think, Tuesday, February 24th through –

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do you guys know the exact dates?

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I think it's through the 26th.

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So it's a two- or three-day conference.

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That's Strategy World.

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Our event is held before that, which you can sign up for here on this Luma link.

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Right now there's already plenty of people subscribed and going,

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and we're really excited to have people show up and support

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and just talk after what has been kind of an eventful year, I think.

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Yeah, last year was amazing.

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I loved hanging out with everybody,

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and it was such a close personal experience.

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Yeah, I think this year is what really separates the people

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that have the conviction and the people that don't.

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Last year in Orlando, the MSCR True North,

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I think we had about 150 people signed up for it, including the sponsors.

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so there was about somewhere around 130 people that showed up it was a great event and then we

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went straight into strategy world with this if look if you don't want to go to strategy world

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because it's too expensive then this is the event to go to because this is much less expensive so

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the first 50 tickets are 210 and if you're driving distance to vegas this is the event to go to to

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talk to people and then you'll you'll you'll probably see a lot of other people out there for

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for true north if you don't sorry for mstr world if you don't want to go to that then you could

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you know just have a nice nice few days and then head back home i think that's really the way to do

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it um simply because you know you get to see not only us but i don't think we're really big like

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there are people that come to this event to network to talk to the other people that come

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to these events right so i think like we learn as much from you guys and people who join us

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as as they do from us so i'm super excited it's going to be more of a flat format more conference

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layouts. It's going to be kind of structured after Bitcoin first in the way that it's more of

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an open discussion as opposed to a stage and sort of listening format. It's more interactive. So I

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think it's going to be really, really good this year. And it's at the Wynn Hotel. I mean, it's

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a pretty nice place. So I would recommend showing up. Weather's kind of cool in Vegas and probably

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relatively lower priced and doing it at the high season. So look forward to seeing everybody there.

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Awesome, guys.

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So today the agenda is we're going to go over the two-year cycle, which is Grains' new theory.

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We get the macro, are we in a structural bull market?

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Then we're going to talk about strategy mechanics, USD reserve, common MSTR, and some of the

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PREF-specific metrics because these things are really starting to build their own liquidity

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profiles each and every single PREF.

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And they're very different, right?

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You look at the volume on strike relative to MSTR, relative to stride.

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It's all over the map.

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And I think it's only going to be an expanding landscape as people start trading these things all over the place.

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So, Grant, I'll let you take it from here.

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Thanks.

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So, hey, I want to do a little bit of a trend analysis.

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And this is not about drawing lines on a chart.

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All the lines that are on the chart on the left-hand side are drawn by the chart itself.

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The red line and yellow lines there are just explaining to what we're talking about.

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So on the left chart, we have Bitcoin.

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It's a one-day chart.

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And you can tell by the upper left-hand corner, it says BTC USD, a plus signal, and then it

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says D. And so the D symbolizes it's a one-day chart.

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So each candle, a candle's in the lower right-hand corner, and the candle shows you whether it's

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red or green.

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The difference in a candle is if the candle is green, that means from the open price and

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the close price, the price went up. Therefore, it's green. If it went down, the open was high

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and the close is lower. On the top and bottom, those are called wicks. So that's just think of

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it literally as a candle and figuratively. And the wick is that difference between the close

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and the high. So when you look at the chart on the left, if you go back to April 7, 2025,

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which was this year, the 50-day and the 200-moving-day average crossed over. That's the light

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blue line crosses over the yellow line. That's what we call is a death cross. And people are like,

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oh my God, that sounds horrible. Well, the opposite of a death cross is a golden cross.

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And that took place on May 22nd. So basically five weeks later, we were out of that death cross

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in a golden cross. But the interesting part is if you look down at the bottom,

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you could see you have RSI in the very bottom. And the RSI is a relative strength indicator.

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And that turned over and began to go back up. And the same thing with MACD right above it.

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Dan, you're real close in March.

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So now if we look where we are today, so we did have a death cross and that death cross

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was on November 18th.

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And you could tell it was a death cross because the 50 day moving average in the upper left

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hand corner is 109, 653 and 110, a little bit over to the right, to the left hand corner,

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left, right there.

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It's in yellow text.

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Keep on going.

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Yellow text, got it.

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Yellow text.

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So the, because the blue number is lower than the yellow number, that means we entered

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into a death cross. Now you're like, oh my God, that's terrible. Death crosses sound terrible.

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And this is my two-year theory. If you look what's happened on the bottom, it shows there

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that we're having higher lows. And the other part is the MACD and the RSI have both bottomed out.

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And those are both beginning to trend back up. So those indicators, because the 50-day moving

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average is over 50 days and MACD is over 12 days. So it's more responsive. That's the 12 and the 26

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and the RSI is over 14 days. So it's a much shorter average that, and these are the default

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settings. I don't change any of these settings. And so what it's showing you is that the market

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is recovering on Bitcoin. Now this just assumes that, you know, everything goes well. Does this

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make sense? Any questions on this? Grant, I think it's a really, really good kind of technical

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overview of where we are. I know we sold off today after the FOMOC. If we bottom here above,

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you know, 85, that's still in keeping with a higher low. So. Yeah. And so, and so this is how

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I look at it. So this is a daily chart. We go to the next one to a weekly chart. So I, you don't

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change any of the other metrics. Now on the weekly chart, you have higher lows and higher highs on

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the weekly. So we had this big sell off after the past four or five weeks. And basically that light

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blue line now is the 50-week moving average and the 200-week moving average. And it dipped down

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very, very little. So this is showing the weekly chart. And again, this dip, while it is below the

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50-week, you'd rather see that as a floor or a resistance where it doesn't go below that.

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Obviously, it dropped below it for a variety of reasons, which we've talked about on previous

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episodes. The whole Binance thing that happened, just the sell-off, the FUD around MSCI and

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so forth. So there's a lot of things that hit Bitcoin that caused it to drop. Now, if we go to

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the next one more chart, next one. Okay. So this becomes interesting. And this is where we talk

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about having conviction. So we can look at daily candles. We can look at one minute candles,

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five minute candles, 10 minute candles, whatever you want. You can look at any timeframe you want

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from one minute, and this is up to yearly. So now we're looking at monthly and yearly. So if you

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look at the monthly chart on the left, the December is green. And what happens is the month

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of November was horrible. It's like, oh my God, almost all of the dip happened in one month.

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And is it a big dip? Sure. Did we have a death cross on the daily? Yeah. But when you look at

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the shorter timeframes, it's recovering. Now, if you look at it on the yearly chart,

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but let me say, sorry, on the monthly,

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the MACD is still bearish

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and the RSI is hopeful and trying to trend up.

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But on the weekly and daily charts,

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those have already gone up

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because this is looking at each one in a monthly increment.

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On the yearly chart,

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I think this tells everything that's going on.

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And if you look what happened,

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2022 was this red candle.

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It was terrible, right?

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The whole year was just red.

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It was miserable for a full year.

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And then you have 2023, it was green and it almost retook what happened in 2023.

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What happened in January of 2024?

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Spot Bitcoin ETFs were approved, right?

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And then what happened later in the year, there was a red sweep and it changed the president

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and the administration and everybody was looking forward to this mega year of 2025.

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So that's why you can see that 2024 is this huge green year for Bitcoin.

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If you look now in 2025, you have these two giant wicks.

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There's almost no body.

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So typically in a candle, when the body is real big, right, versus the wicks, the little piece on the top, the body means that you have, it's solid trend.

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When you have a big wick, that means it's indecision.

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I think that we've hit the bottom.

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I think that our cycles now are the two-year cycle.

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And what's the two-year cycle?

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by a strange coincidence,

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the halving happened to align up

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with U.S. presidential elections.

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I do not think it was by design.

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There's nobody that was controlling it.

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For whatever reason, it worked out that way.

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And so from that perspective,

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I think that the cycle,

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we had this four-year cycle.

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I think now we're going to have a two-year cycle

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around the midterms in the U.S.

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And we're going to talk about macro,

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why the U.S. is important.

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And so from this perspective,

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I think that every two years, you're going to have six months bull cycle, six months sideways,

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or another six months sideways, which ends up being 2025. And then we go back into another

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bull cycle. If you're positive about 2026, then I think that when you look at the WIC that you see

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on the right, I think it's going to be a positive year. Well, let's go to macro. Let's go to the

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key indicators in the next couple of slides. That was a great overview, Grant. I agree.

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let's hop in here Grant

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yeah so what was missing

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so originally this group started out as

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MSTR True North now it's Bitcoin True North

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so this slide was put out over here

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the revised assumptions and corresponding results for 2025

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what was missing from this slide was the over under

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this slide said what happens if Bitcoin's at 85,000

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or 110,000

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and what I wanted to calculate was

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what's the price of Bitcoin have to be for strategy for the full year to have positive EPS,

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earnings per share. So that's at 97K. If Bitcoin's at 97K, the full year, meaning that the

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positive months of Q2 and Q3 will outweigh negative in Q4 and negative in Q1. So for the

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full year, EPS will be positive. Now, if Bitcoin's above 110K, Q4 is positive. And let's just say

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it's 111K. Then you'd have $19 per share for the full year of EPS. So the over under is 97,000.

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If we can all cross our fingers and buy Bitcoin, not giving any financial advice, not telling

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anybody to buy anything, but if Bitcoin's above 97,000, then strategy for the full year, we'll

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have positive EPS numbers. And I think that's really great for the industry as a whole.

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I talked about the Santa Claus rally. Why is there a Santa Claus rally? Typically,

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people do tax loss harvesting. They'll start in that in Thanksgiving. They'll be done with it by

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the second two weeks in December. In California, most major areas, I haven't verified this for all

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of California, property taxes are due today, December 10th. So if you needed to sell stocks

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to go pay your property taxes, you had to do that a couple of days ago. So that selling is now over,

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right? Because you have to pay for your property taxes today. Some people have incorporated into

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their payments, but if you didn't, you had to pay your property taxes. So I think the year-end

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selling is done. And this is the so-called Santa Claus rally, which tends to happen quite frequently,

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about 75% of the time. So I'm bullish. Let's go to the next slide. I'll take any questions as you

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guys are going through this. So I did two surveys and I love doing surveys because when people talk

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about something, you know, you have qualitative responses. Is this person believable? Do you know

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how many followers that they have? Do they have no followers? Do they know what they're talking

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about? But a survey is quantitative. So I said, basically, how many Bitcoin all-time highs will

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happen in 2026. Well, since the number is 16% saying none, that means 84% of the people say

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there'll be some form of all-time high of Bitcoin in 2026, right? And the amount of numbers of them

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is what you see there because you can only have one high per day, right? If it retakes the all-time

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high multiple times in one day, you only count it once. So anyway, so that's the way that I look at

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it, that the people that are in this space think that Bitcoin will hit an all-time high in 2026,

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84% of the people.

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The other part comes back is,

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and we're going to talk about macro in a few minutes,

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is it going to be a big all-time high?

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And that's when we talk about macro.

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So I asked the question, Lynn Alden is awesome.

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Everybody that's into Bitcoin should know about Lynn Alden.

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She's fantastic.

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And she wrote her macro newsletter.

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You could read it.

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It's free.

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And she basically said it's more gradual.

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Larry Lepard's awesome.

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He's a great guy.

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I've met him before.

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Really nice guy.

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He follows me.

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And he wrote the book, The Big Print.

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So basically, I did a survey and said, in 2026, Bitcoin, gold, and hard assets, is it

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going to be a gradual print, which Lynn Alden said, or is it going to be a big print?

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And basically, 44% of the people said it's a gradual print, had 163 votes.

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Big print for Larry was about 18%.

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In the middle, somewhere between those two ranges was another 11%.

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27% and then 27% said both and the timing matters.

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And what I think that means when we go through the macro you see why I think some people say that I think the year could start off slower and then go faster What will cause it to go faster Powell being replaced and confirmed in June

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So it could start off slow and then it could go faster.

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You guys have any input on this?

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We're ready to go to the other sections, but any comments?

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Yeah, I mean, I don't know if we're going to do two-year cycles, four-year cycles,

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whether a four-year cycle is even like a legit thing or not or a coincidence.

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but I think it's pretty certain that if volatility, you know, should be increasing just with the way

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that they're going to have to print, whether it's gradual or, or big. And so, you know,

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it could also be that people were assuming the four-year cycle and then front running some exits.

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and so we got the bear sooner and then we'll just get the next bull sooner so this is totally

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plausible just that the fact that bitcoin can do whatever the hell it wants to do

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and um and with you know up and down volatility we can also get more frequent volatility

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there's no reason why we have to stick to four-year cycles great point so i i completely agree

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and the zerp environment was much different than the current interest rate environment we're in

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And that's something people need to remember.

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I'd argue if we didn't go, there wasn't this, you know, infinite QE during 2020 and 2021,

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plus a push to ZERP, you know, in a five-month period of time,

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we wouldn't have seen a Bitcoin price expansion the way we did.

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And similarly, the correction wouldn't have been as significant.

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And some people were calling that the cycle was over last December.

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And whether they were right or wrong or, you know, accidentally right remains to be seen.

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But, you know, you know, maybe we just diamond hands through the bear market already.

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And 2026 will be an up year.

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That'll be nice.

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Yeah.

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I mean, the way I look at this, look, the Bitcoin, the spot Bitcoin ETFs will be out for two full years in January.

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I don't see how you could have two and a half million Bitcoin inside the Bitcoin treasuries and the Bitcoin ETFs.

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Right.

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I think that if both of those things didn't happen, Bitcoin treasuries and the spot Bitcoin ETFs being approved, I don't know if we would have had a lot of demand to really push higher than what happened in the last cycle.

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I think we would have hit like 100,000 and then we'd be trading at 40,000.

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But since the Bitcoin, spot Bitcoin ETF got approved two years ago, been live for two years, and obviously strategy has just acquired 660,000 Bitcoins on their own.

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And they seem to be buying about a billion per month, right?

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If they're going to add another 12 billion next year, I'm just making that number up.

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But it seems like it's totally plausible that they can add anywhere from eight to $12 billion

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worth of Bitcoin next year.

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How many coins that equals depends upon the price.

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But I think that's the part where I don't see how the price can stay low forever.

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Eventually, there's going to be a supply crunch.

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And I think we're going to see that play out.

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I agree.

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I agree.

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Yeah.

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So if you want to be with us, go ahead.

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Here, we're plugging our event again.

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If you guys missed the link, we don't make money on this.

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This is just to cover operational expenses.

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This is right before Strategy World.

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You can choose to either go to Strategy World and our event or just our event.

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It may be more applicable as there's less kind of BI component and it's more close-knit.

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You'll be part of the discussion.

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Every single person that's there will be part of the discussion.

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It will be a very flat format.

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So looking forward to that again.

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Now we're going to jump into the macro. So again, the format is we looked at the general kind of

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Bitcoin market technicals. We're going into the macro now and we'll talk about the FOMOC meeting.

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And then finally, we'll talk about strategy mechanics. So again, after the meeting today,

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the Fed meeting, we saw that the target rate was lowered 25 basis points. Again,

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it was almost expected going into the meeting. No surprises there. However, some of the dovish

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rhetoric was quite reassuring. So growth projections for real GDP will revise upward

294
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to a median of 2.3% from 1.9 in September. Unemployment, job revisions were negative

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over the last six months. And the peak unemployment rate is expected in late 25 and an improvement

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into 26, citing an expectation of around a 4.3, 4.4% unemployment. Again, right now,

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this is kind of the stagflation narrative, which is really just the flow through of productivity

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from AI. That is a kind of a teetering labor market plus kind of sustained high inflation rates.

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PC forecasts were lowered, right? So the general outlook is more favorable with a 2% target by

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2027. Where they're getting this deflation, they're citing increased productivity as Powell

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said, a result of computers being used more since COVID, which is kind of a nonsensical term,

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in my opinion. Obviously, a lot of that deflation is going to be in the form of AI. And they believe

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that tariff inflation is, in fact, transitory and a one-time pass-through to the consumer.

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So it's a bunch of nonsense and gobbledygook all kind of mixed together. But they're essentially

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giving out dovish guidance into 26 and setting the stage, although there's only two expectations

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of rate cuts through 26 right now. I think with HACCP coming in, we'll talk more about that later,

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there could be significant lowering of the Fed funds rate over the next 12 months.

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Before you go to the next slide. So the one that I'm the most interested in here is inflation.

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And I did it on my channel. The title was deflation is coming. Inflation is coming. And

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And the reason why I say that is because there are going to be some insane advancements.

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You know, Grains talked about AI and all of these things.

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And it's going to deliver tons of productivity, which is going to drive deflation.

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But, you know, Bitcoin mining is an infinite bid on lower energy prices.

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So those are coming down.

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You know, we got frickin Elon is going to build us a couple of billion robots.

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There's going to be like robot farms on Mars and shit.

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So there's just tons of innovations.

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We're going to be like making food with yeast fermentation.

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There's just going to be tons and tons of deflationary technologies.

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And the system has to hide it.

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It cannot allow deflation, you know, the inflation rate to go negative.

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So if we get 10% to 15% deflation rates, they're going to have to print a metric ton of dollars in order to drive inflation to mask the deflation.

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So this 2%, I mean, everybody knows they cook the books.

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So there's just tons of money printing that has to happen in order to mask this.

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Debasement, right?

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Debasement.

327
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Exactly.

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M2 money supply continuing on its upward trajectory.

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That's a 7% CAGR since 1970.

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Don't forget it.

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I think it's one of the main driving factors of S&P growth and the fact that investing sometimes is more just financial protection.

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Labor market deterioration.

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Obviously, we don't have government data, and it's coming out next week.

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As Green will go into a little bit more detail, government shutdown may occur January 30th, 2026.

335
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Green, you want to quickly touch on that real quick?

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Yeah, so we keep on getting these continuing resolutions.

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So they have to agree on a budget.

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They don't agree on a budget.

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It just continues what's already in there.

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So we could have another government shutdown start after January 30th.

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They keep on assigning these stopgap spending bills and people are like, oh, well, everything

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is fixed.

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No, it's not fixed.

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The other part, which we'll talk about is a big, beautiful bill, which was signed off,

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allows the U.S. federal debt to go to $41 trillion.

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And we'll talk about that in a minute.

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But there could be another government shutdown as soon as February of next year.

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And then we'll be back in the same space again,

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Dems and Republicans fighting over this.

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And there's nothing they have to sign off on this

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because they have to pay the bills.

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There's no way around it.

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Yeah, employment sitting at 4.4% in September.

354
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private data showed a sector-wide employment decline of 32,000 first night of a month since

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spring of 2023. So jobs data looks weak. Again, jobless claims remain near three-year lows,

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yet layoffs reach 1.17 million through November. So actual employment's declining, and the Act 60

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mandates make such that mass layoffs, which we'll see here, won't flow through into employment

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until spring of 2026. So there is a real scenario in which the employment picture is even worse

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than expected. You can see across the mag seven companies and really software companies, 14,000

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corporate roles cut explicitly due to AI process automation at Amazon, Intel, 22% of the workforce

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slash because of AI, Salesforce, obviously having trouble in terms of their stock price,

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Really, it's something Visser says a lot. Code no longer has a moat. 4,000 rolls slashed, and again, Accenture, multiple tranches of layoffs.

363
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K-shaped economy, we can see the Kobe IC letter. The picture is very bleak for software and for legacy software and for the average entry-level employee.

364
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Consumer credit's surging. People are paying their debt with more debt. The K-shaped economy continues.

365
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It's a debt expansionary cycle.

366
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This is something we're seeing from the government all the way to the credit card consumer.

367
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You guys want to jump in here real quick?

368
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Yeah, I mean, these numbers aren't looking good.

369
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And this is one of the things that you see with bad news means that two things.

370
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They have to print money because they can't tax more.

371
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The U.S. government has two choices.

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Congress has a choice.

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They can raise taxes.

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That's not going to happen, right?

375
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in order to, if they raise taxes, they'd be able to balance the budget, right? But nobody wants to

376
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raise taxes. You won't get reelected. Okay. You could cut spending. They tried doing that and

377
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that's incredibly difficult. And the problem that we'll get to is the interest on the outstanding

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debt is the second, let's go back for one second and we'll go to the next slide. So that's the

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other problem. So the people that have asset holders, whether it's hard assets, Bitcoin,

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mag seven stocks falls into there. You want to say precious metals? Sure. It's basically a hard

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asset that you can also view it as, as anything that's growing faster than the debasement rate

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and the inflation rate. So if inflation is three and a half percent and debasement six and a half

383
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percent, you know, if you make in 10% a year, you're breaking even based with a degradation

384
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of money. That's a term that I use. If you're making 20% a year and you're on your returns of

385
00:27:34,794 --> 00:27:41,214
your investments, then you're really only making 10% a year covering up the M2 printing

386
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and the inflation rate. So this is the case-shaped economy, the people that own assets. And the only

387
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way you can own assets is living way below your means, being cashflow positive, and then buying

388
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those assets. And that's what we've been down here talking about for 47 episodes. Let's go to the

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next slide. Real quick. That slide is kind of the only one that really scares me because it looks

390
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like we're creating a credit bubble here. And it does make sense. Like when inflation is just

391
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growing, it's totally logical. And you don't even have to be like high time preference. You can be

392
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low time preference. It's just totally logical to borrow and pay it back with deflated dollars later.

393
00:28:23,554 --> 00:28:28,494
But if you were, it wouldn't make me feel so bad if people were buying Bitcoin on their credit

394
00:28:28,494 --> 00:28:34,694
cards right but if you're buying groceries on your credit cards and you're just getting poorer

395
00:28:34,694 --> 00:28:40,534
because you're not you know you don't own bitcoin i this this just scares me for most people i mean

396
00:28:40,534 --> 00:28:46,214
i know everybody here's a bitcoiner but um this just kind of reinforces why it's absolutely

397
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necessary it leads into this idea is like is the consumer going to stop spending when these

398
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credit levels hit like some sort of terminal rate and what we've seen is the consumer hasn't

399
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been weakening over time, even with increased debt balances. So I think it's going to end in

400
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some form of transfer payments if people want to get reelected, forgiveness of student loans,

401
00:29:06,034 --> 00:29:12,594
50-year mortgages, you name it. That's how I think the government is, the in-power incumbents

402
00:29:12,594 --> 00:29:18,554
are going to continue to get reelected. MAG7 tells the same story. MAG7's entire market cap,

403
00:29:18,654 --> 00:29:24,314
so that being the top tech companies in the US, between 20 and 22 trillion. This is a quote from

404
00:29:24,314 --> 00:29:30,454
grain of salt and I'll let him elaborate. If the US didn't have the MAG7, we would be Europe,

405
00:29:30,754 --> 00:29:36,034
says grain of salt. But look at these numbers, right? The portion of the total US stock market

406
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that is the MAG7, these seven winners, which have generated the entirety of the investment returns

407
00:29:40,774 --> 00:29:44,994
over the past 10 years. And then that compared to the entire worldwide equity market, like

408
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there is a bubble in big tech or it's not a bubble, it's a concentration of value.

409
00:29:51,354 --> 00:29:57,594
Yeah. So, um, I look, I know that people are from Europe and they're watching this and, and,

410
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and when I was in Europe and I was there with Dan, um, it was awesome. We went to, uh, uh,

411
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Bitcoin Prague. And what we realized was when I was there, I was like, wow, the people are

412
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beautiful. The food was great. They're dressed great. And we stayed at nice downtown in Prague.

413
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It was absolutely beautiful city. Uh, and then Tad Smith was with us and he, and, and he basically

414
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made the comments like it's not what it seems. And I'm like, what does that mean? And so basically,

415
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if Germany was a US state, it would be 45th in the US in per capita GDP. And I was like,

416
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oh my God, I did a whole pod on this talking about it. The top countries in Europe would end up being

417
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45 and lower in the US. And most of them are below Mississippi. And so what happens is I was like,

418
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I knew this going back, and that was way back.

419
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Was that September, October we were there, Dan, in Prague?

420
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So then this got posted recently on the right-hand side.

421
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And I know that I'm taking a crack here at the EU,

422
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but the EU makes more from finding the U.S. tech stocks

423
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than it does from taxing all of their public European tech companies.

424
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Think about that.

425
00:31:14,234 --> 00:31:20,334
I ran this through perplexity to verify, is this correct?

426
00:31:20,594 --> 00:31:23,834
And it came back that it verified that this is a correct statistic.

427
00:31:24,614 --> 00:31:29,674
So the fining, they fine these companies, and the fines are more than the taxes.

428
00:31:30,534 --> 00:31:32,474
I'm like, that's crazy.

429
00:31:33,414 --> 00:31:33,914
That's crazy.

430
00:31:34,094 --> 00:31:34,954
Absolutely insanity.

431
00:31:34,954 --> 00:31:38,834
And by the way, and look, I live in the US.

432
00:31:38,974 --> 00:31:40,334
I'll crap on the US for a minute.

433
00:31:40,334 --> 00:31:45,574
If the U.S. didn't have the MAG-7, if we didn't have it, we would be screwed.

434
00:31:46,454 --> 00:31:51,074
And that would reverberate through our economy that we would not be the reserve currency.

435
00:31:51,614 --> 00:31:53,674
So the MAG-7s make up a third.

436
00:31:54,274 --> 00:31:55,674
It's $20 to $22 trillion.

437
00:31:56,034 --> 00:31:57,794
The U.S. equity mark cap's about $60.

438
00:31:57,874 --> 00:31:59,654
The worldwide equity is about $100 trillion.

439
00:32:00,334 --> 00:32:07,314
So if those were in different countries, the U.S. would not be the superpower that it is,

440
00:32:07,354 --> 00:32:08,594
or maybe that's a dated term.

441
00:32:08,594 --> 00:32:14,474
and that's where we would be. So in the US, we have Silicon Valley. That's where I based my

442
00:32:14,474 --> 00:32:20,314
career on to start these companies. And for every company that makes it, there's more like a thousand

443
00:32:20,314 --> 00:32:26,154
companies that fail miserably, right? And people work there for years. So that's why people come

444
00:32:26,154 --> 00:32:30,834
to Silicon Valley for that shot, the one in a thousand shot that you work at the right company,

445
00:32:30,834 --> 00:32:35,614
you get there at the right time, you get enough shares, you don't get diluted, and then things

446
00:32:35,614 --> 00:32:52,549
are awesome But that this K economy that even exists here in Silicon Valley Keep on going And we talked about a little bit continuing on this AI power projections for data centers I don want to get into this too much

447
00:32:52,549 --> 00:32:56,029
You can see margin compression across hyperscalers is a real risk.

448
00:32:56,208 --> 00:33:06,228
CapEx reallocation and regional economic divergence with the creation of data centers in these sort of rural communities, all part of the AI story.

449
00:33:06,688 --> 00:33:10,049
And it makes it such that the investment picture for AI is very uncertain moving forward.

450
00:33:10,049 --> 00:33:14,329
I mean, I heard on a podcast today, you can't invest directly in electricity.

451
00:33:14,529 --> 00:33:17,748
You can't just go buy a bunch of electricity, but you can invest in data centers.

452
00:33:17,849 --> 00:33:19,409
But will it be in the right location?

453
00:33:19,728 --> 00:33:22,349
Will it be servicing the correct GPUs?

454
00:33:22,389 --> 00:33:33,228
Will the GPUs be retired or obsolete once, you know, local devices and local models with more and more parameters, fewer and fewer parameters and they're more efficient can run locally on your device?

455
00:33:33,309 --> 00:33:34,428
Like there are a lot of factors.

456
00:33:34,428 --> 00:33:44,129
So I think a monetary debasement hedge and native internet currency, high powered money is a really solid sort of benchmark and protection mechanism moving forward.

457
00:33:44,629 --> 00:33:57,829
Now we'll get into the monetary policy side of things and why both the AI, the deflationary force is at odds with the actual incentives of politicians to continue moving government and monetary policy forward.

458
00:33:58,769 --> 00:34:01,669
Yeah, so I was working with Dan on this slide.

459
00:34:01,669 --> 00:34:04,448
This is really important here for monetary policy.

460
00:34:04,569 --> 00:34:09,988
If you look basically through about year 2000, there's a dotted line on the top.

461
00:34:10,468 --> 00:34:16,508
And that basically shows that the federal surplus or deficit was basically zero.

462
00:34:16,729 --> 00:34:22,269
And we had a surplus right before 2000, probably due to the internet bubble.

463
00:34:22,829 --> 00:34:24,029
And Clinton was in office.

464
00:34:24,749 --> 00:34:36,648
And then since then, you could see that we've had a deficit during COVID of almost negative $3 trillion in the lower right-hand corner of the top one, a little bit higher right there in 2020.

465
00:34:36,648 --> 00:34:40,368
And that's where you had this negative.

466
00:34:41,008 --> 00:34:47,769
Now, the problem that's happened here is the federal government current expenditures of interest payments, that's not going away.

467
00:34:47,769 --> 00:34:53,488
And the reason why those interest payments are not going away is because of M2.

468
00:34:54,269 --> 00:34:55,988
And I think it's on the next slide.

469
00:34:56,468 --> 00:34:59,309
The problem is the U.S. debt that we have.

470
00:34:59,749 --> 00:35:01,468
And it's over here on the left-hand side.

471
00:35:01,569 --> 00:35:04,968
The total federal debt just continues to rise.

472
00:35:05,428 --> 00:35:08,888
So as of right now, there's $38 trillion in federal debt.

473
00:35:09,589 --> 00:35:13,968
And the interest payments on that's our number two expense.

474
00:35:13,968 --> 00:35:18,729
So people love to vilify Jerome Powell, the money printer, Jerome Powell.

475
00:35:18,849 --> 00:35:22,968
He's the fake and the Fed and the Fed and Congress.

476
00:35:24,049 --> 00:35:33,908
If you have a deficit and you've acquired $38 trillion in debt, Powell has to print, right?

477
00:35:34,468 --> 00:35:39,948
You have to print because you have to make up, you have to pay those interest payments.

478
00:35:39,948 --> 00:35:44,029
The problem here is the debt ceiling is allowed to go to $41 trillion.

479
00:35:44,888 --> 00:35:48,229
And Charlie Biello, he calculated this based upon the Treasury notes.

480
00:35:48,928 --> 00:35:54,289
Basically, we're up $2.2 trillion since July 3rd of this year.

481
00:35:55,569 --> 00:36:01,589
So when I had calculated this, I thought we'd go to June of 2027 on $41 trillion.

482
00:36:01,589 --> 00:36:18,049
But if this, if you're, if 2.2 trillion, basically in six months, if you multiply it by two, we hit 41 trillion by September of next year, not 2027.

483
00:36:18,549 --> 00:36:20,849
That's the big print, right?

484
00:36:21,209 --> 00:36:27,008
So look, these are the numbers and people vilify Jerome Powell all the time.

485
00:36:27,468 --> 00:36:28,948
The money printer go burr.

486
00:36:28,948 --> 00:36:34,809
The problem is, is that we don't collect enough in taxes to cover our expenditures.

487
00:36:34,809 --> 00:36:38,468
And our choice is either raise taxes or cut the expenditures.

488
00:36:38,888 --> 00:36:42,908
And neither of those are being done for whatever reasons you want to think of.

489
00:36:43,428 --> 00:36:48,628
So what that said is the only thing people want to know, does that money, does that printing

490
00:36:48,628 --> 00:36:49,608
flow into Bitcoin?

491
00:36:50,229 --> 00:36:55,468
And my view is, like I said, beginning, 84% of the people that follow me, you know, based

492
00:36:55,468 --> 00:36:58,988
upon statistics were saying that they think Bitcoin hits an all-time high next year.

493
00:36:59,488 --> 00:37:04,388
I think they're right. I think Bitcoin hits an all-time high next year. I don't think we'd go

494
00:37:04,388 --> 00:37:10,608
into an 18-month crypto winter. I think we're living the crypto winter right now, and I think

495
00:37:10,608 --> 00:37:17,928
it'll be over by December 31st. That's my view. Yeah, this is just another reason why rates have

496
00:37:17,928 --> 00:37:22,789
to come down, because they can't pay the interest payments on these. It just has to go down.

497
00:37:22,789 --> 00:37:35,569
Right. And they switched from long term to short term and the refinancing. I mean, the numbers are, I think it's in your next slide. It's absurd what they refinance weekly. And we'll see those numbers starting to show up next week. Powell talked about it.

498
00:37:35,569 --> 00:37:57,809
Yeah. Just a little bit of info on Kevin Hassett, who has an 80, I think here is 74% chance on Polymarket that he'll be the next Fed chair nominee by Trump. And again, I agree with this is Besson's vision for Fed reform. I agree with his vision, mission creep and institutional blow threaten the central bank's independence.

499
00:37:57,809 --> 00:38:02,089
I look forward to the president deciding who's going to be the next federal reserve chair.

500
00:38:02,169 --> 00:38:04,608
I think that he and Secretary Besant will do that ably.

501
00:38:04,608 --> 00:38:20,008
So, you know, Kevin Hassett is a large opponent of digital assets, of Bitcoin, and of being Trump's right-hand ban in taking interest rates lower, much, much lower, even the long end of the curve via some sort of quantitative easing function.

502
00:38:20,508 --> 00:38:23,488
I mean, Trump made his money with cheap debt in the real estate markets.

503
00:38:23,488 --> 00:38:27,988
There's no reason he doesn't want that continued for all Americans or for all wealthy Americans.

504
00:38:31,169 --> 00:38:41,388
We saw new CFTC guidelines around using Bitcoin and Ethereum and USDC as collateral for customers.

505
00:38:42,128 --> 00:38:52,089
So prior to this new regulation, you couldn't use these sorts of collaterals to trade on derivatives exchanges in the US.

506
00:38:52,089 --> 00:38:57,388
Now you're able to post Bitcoin, Ethereum as USDC, and it's treated as sufficient collateral.

507
00:38:57,549 --> 00:39:14,569
So this is just another theme in what is really a whole series of positive developments across the board for Bitcoin and USDC stable coins as collateral, which is pretty much the largest unlock for these markets.

508
00:39:14,569 --> 00:39:20,948
If these are in fact digital assets, digital capital, durable, hard money, then they need to be treated as such.

509
00:39:20,948 --> 00:39:34,689
And so as these regulations start to come online, more and more capital will flow into these assets as the lending abilities and just financial services that are developing around them become more and more mature.

510
00:39:34,829 --> 00:39:41,008
So I think this, again, is just foundation for a long term favorable kind of Bitcoin environment.

511
00:39:41,908 --> 00:39:43,988
This alleviates some sell pressure, right?

512
00:39:44,029 --> 00:39:46,869
Like people don't have to move off their Bitcoin stack.

513
00:39:48,669 --> 00:39:49,508
Yeah, exactly.

514
00:39:49,508 --> 00:39:50,829
They don't have to move off their Bitcoin stack.

515
00:39:50,829 --> 00:39:55,148
they can the bitcoin essentially becomes more of a settlement layer like the bitcoin's worth

516
00:39:55,148 --> 00:40:00,428
something you can't use bitcoin as a tobacco derivatives trading it's not worth anything

517
00:40:01,628 --> 00:40:07,628
yeah yeah so so let me chime in on here on something that changed from the old days till now

518
00:40:07,628 --> 00:40:13,309
so originally back in the old days prior to prior to tether you would post this collateral

519
00:40:13,309 --> 00:40:18,189
bitcoin or ethereum whatever for what you're trading in so what you used to have was these

520
00:40:18,189 --> 00:40:23,448
massive short squeezes that would go up and it would be awesome. For freaking four days,

521
00:40:23,809 --> 00:40:30,049
I'd be Superman because the price would shoot up due to a short squeeze. And then you'd have long

522
00:40:30,049 --> 00:40:36,769
liquidations. And the reason why this happened is that if you post Bitcoin as collateral and the

523
00:40:36,769 --> 00:40:42,928
market goes up, you have more collateral because the price goes up and therefore your Bitcoin goes

524
00:40:42,928 --> 00:40:48,948
up and you could take more leverage, right? More nominal leverage because your Bitcoin went up in

525
00:40:48,948 --> 00:40:54,408
price, right? So you have more equity, but it also worked in the flip side. All of a sudden,

526
00:40:54,448 --> 00:40:59,488
if the market was shifting, goes down. Now your Bitcoin has smaller and smaller equity value

527
00:40:59,488 --> 00:41:03,888
and you get more and more liquidated. So you see here, you have three different choices,

528
00:41:04,069 --> 00:41:11,948
Bitcoin, Ether, and USDC. What changed was about in 2021 and so forth was that many exchanges

529
00:41:11,948 --> 00:41:16,128
started accepting stablecoin as your collateral.

530
00:41:16,648 --> 00:41:21,849
And what happened is because it's pegged basically at a dollar, as the price goes up, your collateral

531
00:41:21,849 --> 00:41:24,108
really doesn't go up along with it, right?

532
00:41:24,189 --> 00:41:25,648
It stays about the same.

533
00:41:26,249 --> 00:41:29,108
So I think that this is great new regulations.

534
00:41:29,349 --> 00:41:31,908
I think this is great for the industry that's being treated as collateral.

535
00:41:32,468 --> 00:41:37,729
We saw the same thing with banks being able to use Bitcoin as collateral also.

536
00:41:37,729 --> 00:41:41,428
So I think that this is good news for the industry.

537
00:41:41,948 --> 00:42:04,289
I agree. I totally agree, Grain. All great points. Again, if anyone missed the links for our event or for Strategy World, please attend. Talk to us, hang out with us, and hang out with each other. More importantly, a lot of high-profile people or low-profile, high-important people come to these events, and I think you'll benefit more from who you meet there than meeting us, per se.

538
00:42:04,289 --> 00:42:07,789
So now we're going to pivot this convo directly into strategy.

539
00:42:08,148 --> 00:42:27,928
We're going to focus on some of the mechanics, some of the prefs, and how all this macro plays into what we believe is to be an extremely exciting and relevant equity in the emerging kind of digital assets economy, the bank of the future, the financial services provider, really what can be the leader in digital credit over the next 10 years, let's say.

540
00:42:27,928 --> 00:42:33,689
Yeah, I'm excited for this one because I had to run my mouth in the chats last week where you guys had all the fun talking about the reserve.

541
00:42:34,289 --> 00:43:02,988
Yeah. I mean, the reserve is a big deal. And who's it for? It's for two sets of people, right? One, it's for the ratings agencies. And two, it's for the institutional investors who are trying to figure out how are they going to pay these dividends, right? Which we know they can just borrow money against their Bitcoin stacks to pay the dividends. They can raise capital via ATM. They can raise capital via other preferreds. You know, Graham, like, doesn't Apple use borrowed money to pay their dividends and their interest?

542
00:43:02,988 --> 00:43:04,988
Yeah, it's with most of the Mag7.

543
00:43:05,269 --> 00:43:08,148
They borrow money because it's cheaper for them to borrow money.

544
00:43:08,148 --> 00:43:14,249
They can keep the cash dividends on the cash in their account, borrow money, and they can

545
00:43:14,249 --> 00:43:16,209
use it to pay dividends and to buy back stock.

546
00:43:16,349 --> 00:43:17,588
So it's financial engineering.

547
00:43:17,968 --> 00:43:19,128
There's nothing wrong with it.

548
00:43:19,329 --> 00:43:23,209
They've been doing it for a better part of 10, 15 years.

549
00:43:23,608 --> 00:43:24,749
And that's how this goes.

550
00:43:25,329 --> 00:43:32,829
So from my view, I think that this was awesome that Strategy did this, that they have a BTC

551
00:43:32,829 --> 00:43:41,428
reserve and then they have the BTC reserve dwarfs the dividends. And then they obviously have $1.44

552
00:43:41,428 --> 00:43:46,689
billion in dividends. I think we're missing that slide, but this slide just shows the BTC reserves.

553
00:43:47,229 --> 00:43:53,069
So I think this is awesome. Exactly. I totally agree. Next slide. Yeah. Next slide. Totally agree.

554
00:43:53,169 --> 00:43:58,369
$1.44 billion USD reserve. It's essentially, it answers people's questions as to how this is

555
00:43:58,369 --> 00:44:02,049
going to get paid. Not even, and then, so it's really interesting the term of events, right?

556
00:44:02,049 --> 00:44:04,809
This was raised by ATM two weeks ago.

557
00:44:04,988 --> 00:44:10,529
Last week, they raised a similar amount, just shy of a billion, in MSDR common ATM used to buy Bitcoin.

558
00:44:10,749 --> 00:44:14,908
So the liquidity in their stock is still extremely, extremely high.

559
00:44:15,088 --> 00:44:19,088
It's used the hedging mechanism for spot Bitcoin, as Tom Lee's touting.

560
00:44:19,408 --> 00:44:23,069
But for all those reasons, there isn't a real systemic problem.

561
00:44:23,289 --> 00:44:29,648
But we just know as the pressure coming out of line and as they were sold the discount, fortunately, the gravity was towards 1MNAV.

562
00:44:29,648 --> 00:44:33,608
But the stock is extremely healthy, its liquidity profile, that being.

563
00:44:34,588 --> 00:44:38,948
Right here. This is just an absolute flex, the perspective on this.

564
00:44:39,628 --> 00:44:44,088
So before they bought Bitcoin, it took strategy 20 years to come up with half a billion.

565
00:44:45,209 --> 00:44:53,769
And the other week, they pressed the easy button and generated 1.44 billion in cash over a trading holiday.

566
00:44:54,448 --> 00:44:56,008
That's the power of permanent capital.

567
00:44:56,008 --> 00:45:03,729
absolutely absolutely and albeit via dilution uh but nevertheless it would still you know

568
00:45:03,729 --> 00:45:09,648
effective and accretive so long as that underlying digital capital is appreciating faster than the usd

569
00:45:09,648 --> 00:45:14,889
is decaying yeah i'm gonna get to it but it is important that they did it now i think when it

570
00:45:14,889 --> 00:45:23,309
is above one m nav because now they don't have to resort to paying the preferred dividends if they

571
00:45:23,309 --> 00:45:28,549
go below 1MNAV because they've already generated the cash and they can just go ahead and pay

572
00:45:28,549 --> 00:45:32,689
the dividends, you know, with the cash that they generated above 1MNAV.

573
00:45:32,769 --> 00:45:36,269
So it's just kind of like a no brainer that they did.

574
00:45:36,349 --> 00:45:37,549
I mean, initially I hated it.

575
00:45:37,569 --> 00:45:41,008
I'm like, okay, you know, melting ice cube, you're never supposed to hold cash.

576
00:45:41,569 --> 00:45:43,508
But it solved so many problems.

577
00:45:43,588 --> 00:45:44,408
It solved this problem.

578
00:45:44,488 --> 00:45:48,549
It solved the problem of, you know, the rating agencies telling them that they can't generate

579
00:45:48,549 --> 00:45:48,988
cash.

580
00:45:49,069 --> 00:45:53,289
It's like, okay, you know, the rating agencies were like, I double dogged Dairy

581
00:45:53,289 --> 00:45:58,128
you to generate some cash. And the strategy was like, okay, be right back, hold my Bitcoin.

582
00:45:58,408 --> 00:46:05,229
They just immediately just materialized it out of thin air. So they demonstrated that they can

583
00:46:05,229 --> 00:46:12,549
get cash anytime they want. Yeah, I wanted to chime in. Alec made a comment in the comment

584
00:46:12,549 --> 00:46:18,108
section that when a traditional company, and Saylor has talked about this many times,

585
00:46:18,108 --> 00:46:23,749
when they buy back the shares, that's surrendering the capital back to the shareholders.

586
00:46:24,789 --> 00:46:32,189
And this is the part about financial engineering that as soon as you say this back to somebody,

587
00:46:32,529 --> 00:46:37,309
they think they're sharp and you say, well, wait a second, a company's got 60, 80,

588
00:46:37,408 --> 00:46:41,309
$100 billion in cash. And what they're going to do is they're going to buy back their own shares.

589
00:46:41,488 --> 00:46:45,329
Now, why do they do that? Immediately, it's accretive. Why is it accretive? It reduces

590
00:46:45,329 --> 00:46:52,648
is the flow to shares. Oh my God, that sounds like Bitcoin. We have a fixed supply. And what

591
00:46:52,648 --> 00:46:59,189
they're trying to do with your typical Mag7 company is let's buy back shares. And what they're trying

592
00:46:59,189 --> 00:47:03,948
to do is constrict that supply in order to force the price to go up. Oh my God, that's exactly what

593
00:47:03,948 --> 00:47:09,148
we keep on saying with Bitcoin. Let's buy Bitcoin, put it into long-term holders that are not going

594
00:47:09,148 --> 00:47:14,369
to trade it. Therefore, the effective supply is smaller. The trading supply is smaller. Therefore,

595
00:47:14,369 --> 00:47:20,349
the price goes up. Now, the interesting part about buying back your own shares, it's immediately

596
00:47:20,349 --> 00:47:27,709
accretive because it reduces the shares outstanding, right? And so what happens with this is that

597
00:47:27,709 --> 00:47:32,669
they're okay with this, but the fact that strategy is not sitting on that cash, sitting there waiting

598
00:47:32,669 --> 00:47:36,889
to do this, right? And they're not borrowing money to do it. As soon as you say it to a really smart

599
00:47:36,889 --> 00:47:42,229
person, oh, well, they borrowed money to buy back their own shares. And that cash is not being used

600
00:47:42,229 --> 00:47:47,128
to buy other businesses. It's not being used to invent new technologies or hire new people.

601
00:47:47,128 --> 00:47:53,289
We just saw they're getting rid of people. So it sounds like to me that the typical MAG7 does a lot

602
00:47:53,289 --> 00:47:58,508
of financial engineering and people are okay with it. I'm okay with it. But with this, with Bitcoin,

603
00:47:58,628 --> 00:48:03,588
it shows a Bitcoin treasury company that they acquired cash. I think this was a great idea

604
00:48:03,588 --> 00:48:09,249
and it helps them to feel great. They put this up on the website, how many months they have of

605
00:48:09,249 --> 00:48:10,349
of dividends.

606
00:48:11,108 --> 00:48:13,549
Saylor retweeted a Fong interview that happened today.

607
00:48:14,628 --> 00:48:19,628
And, you know, so if Bitcoin was to drop down to 50%,

608
00:48:20,389 --> 00:48:22,689
50% where it is today,

609
00:48:22,749 --> 00:48:25,148
they would be able to pay the dividends until 2060.

610
00:48:26,928 --> 00:48:27,488
2060.

611
00:48:27,869 --> 00:48:29,889
If it stayed this flat,

612
00:48:30,008 --> 00:48:32,508
they could pay the dividends to 2100 the year.

613
00:48:32,988 --> 00:48:35,769
And then if Bitcoin goes up by one and a half percent,

614
00:48:35,769 --> 00:48:38,128
they could pay it, you know, in perpetuity.

615
00:48:38,128 --> 00:48:42,369
and people be like, well, these are perpetual, but it should be forever.

616
00:48:42,669 --> 00:48:45,729
As soon as you say to that person, whoever they are,

617
00:48:46,269 --> 00:48:49,049
well, tell me how long can a company pay their bonds?

618
00:48:49,189 --> 00:48:53,948
Do they ever tell you that they could pay their bonds for how many years in the future?

619
00:48:54,608 --> 00:48:55,529
No, they don't.

620
00:48:55,928 --> 00:48:59,069
And that's the part where people will call out strategy all the time.

621
00:48:59,229 --> 00:49:02,008
And you have these old analysts on there.

622
00:49:02,008 --> 00:49:16,803
And it like give me another company They tell you how much coverage do they have You have it right there This was the one I was talking about They have 21 months of dividend coverage right now And it took them one day to raise it took them sorry it took them three four days to raise it

623
00:49:17,363 --> 00:49:19,043
Exactly. No, you're totally right.

624
00:49:19,423 --> 00:49:21,323
For one year's worth of dividends.

625
00:49:21,583 --> 00:49:24,423
The transparency is off the charts. Exactly. It's insane.

626
00:49:24,423 --> 00:49:28,203
Right. Wait a second. They raised 21 months of dividends and they did that in,

627
00:49:28,523 --> 00:49:31,483
I think they did it in five or seven days. So for-

628
00:49:31,483 --> 00:49:32,443
It was in one trading week.

629
00:49:32,443 --> 00:49:40,403
Yeah, one trading week and 21 months is a shade over 630 days.

630
00:49:40,923 --> 00:49:41,383
Wow.

631
00:49:41,863 --> 00:49:43,983
I think that's pretty freaking amazing.

632
00:49:44,383 --> 00:49:44,983
It's amazing.

633
00:49:45,243 --> 00:49:46,103
It's absolutely amazing.

634
00:49:46,343 --> 00:49:52,443
And then you can see the 10Q here showing the exact capital raise, $928 million.

635
00:49:52,863 --> 00:49:53,583
Just shy of a billion.

636
00:49:53,743 --> 00:49:55,903
You can see the Stride stock ATM was used as well.

637
00:49:56,483 --> 00:49:58,683
So this is just a massive development.

638
00:49:58,683 --> 00:50:02,863
And Stride has been seeing some incredible volume or increases in volume.

639
00:50:02,963 --> 00:50:04,303
And we'll go over that in a little bit.

640
00:50:04,923 --> 00:50:07,263
Obviously, this is a strategy capital structure.

641
00:50:07,403 --> 00:50:14,703
So for anyone that's not familiar, this is sort of a size weighted construction of all their different products that sit senior in the capital stack.

642
00:50:14,703 --> 00:50:19,863
So right now, this represents about 30% of their total Bitcoin assets.

643
00:50:20,103 --> 00:50:26,843
The liquidation preference and the outstanding liabilities cover, again, about 27% of their total asset base.

644
00:50:27,003 --> 00:50:27,923
That is Bitcoin.

645
00:50:27,923 --> 00:50:40,723
And you can see these are the converts and blue and the preps and red strife, stretch, stream, strike, STRD, stride and stretches by far the largest and that will continue moving forward.

646
00:50:40,723 --> 00:50:46,123
So, again, that's the capital structure, very kind of even between preps and converts.

647
00:50:46,563 --> 00:50:49,103
And, you know, these converts will roll off, fingers crossed.

648
00:50:49,583 --> 00:50:53,623
They do so in an accretive manner with the price of Bitcoin and MSTR going up.

649
00:50:53,623 --> 00:51:04,263
And then we'll see the press kind of dominate the capital structure as they never have to be refinanced and they don't carry direct term risk that could, in fact, reduce Bitcoin per share in the short term.

650
00:51:05,763 --> 00:51:07,103
More so on stride.

651
00:51:07,203 --> 00:51:10,883
This is just a total analysis of stride specifically on other weeks.

652
00:51:10,943 --> 00:51:11,923
We'll go over different preps.

653
00:51:12,323 --> 00:51:13,823
The training volume is up significantly.

654
00:51:14,083 --> 00:51:15,883
This is just a snapshot from the other day.

655
00:51:16,203 --> 00:51:18,883
You can see its training volume was about double its average.

656
00:51:19,323 --> 00:51:22,143
Here's the volume on these little candlesticks below the price.

657
00:51:22,143 --> 00:51:27,583
So someone bought these extremely high dividend, effective dividend rates, right?

658
00:51:27,763 --> 00:51:28,963
Stride was trading about 65.

659
00:51:29,443 --> 00:51:30,783
Your effective dividend rate was over 15%.

660
00:51:31,483 --> 00:51:35,623
Someone was very excited and was an avid purchaser there.

661
00:51:35,763 --> 00:51:39,303
That coupled with the cash reserve means these dividends will get paid.

662
00:51:40,643 --> 00:51:44,203
Everything barring some sort of complete collapse in the price of Bitcoin.

663
00:51:44,443 --> 00:51:49,923
So the volume is starting to reflect that in this high yield kind of non-cumulative preferred equity.

664
00:51:49,923 --> 00:51:56,003
that's all we have for the presentation i'm going to close it down i think we're just going to

665
00:51:56,663 --> 00:51:59,443
talk a little bit more before we sign off here for the evening

666
00:51:59,443 --> 00:52:08,923
yeah i quickly took a um i guess we can pivot real quick so strategy did leave a rebuttal for the msci

667
00:52:08,923 --> 00:52:16,143
um fud i guess about you know maybe getting excluded and so i'll just i'll just run through

668
00:52:16,143 --> 00:52:17,923
and summarize it real quick.

669
00:52:18,223 --> 00:52:22,423
They basically said that digital asset treasuries

670
00:52:22,423 --> 00:52:23,583
are operating companies.

671
00:52:23,803 --> 00:52:24,743
They're not investment funds

672
00:52:24,743 --> 00:52:25,943
and should not be treated that way.

673
00:52:26,803 --> 00:52:29,423
The 50% rule is arbitrary and discriminatory.

674
00:52:29,583 --> 00:52:32,063
They don't do it for oil companies, gold miners, et cetera.

675
00:52:33,443 --> 00:52:37,923
Also, it would be basically very hard to manage.

676
00:52:38,643 --> 00:52:41,763
In IT, we always hated putting anything in

677
00:52:41,763 --> 00:52:43,563
because now we had to maintain it.

678
00:52:44,203 --> 00:52:45,303
And they would just have to,

679
00:52:45,303 --> 00:52:50,903
MSCI would have to monitor volatility, accounting changes, all kinds of different things.

680
00:52:51,763 --> 00:52:57,443
They said that it injects subjective policy judgments into the indexing.

681
00:52:58,303 --> 00:53:04,843
MSCI is supposed to be neutral, and this clearly screams favoritism.

682
00:53:06,063 --> 00:53:10,903
And then the last point is that it contradicts the U.S. policy and stifles innovation.

683
00:53:11,623 --> 00:53:15,143
Basically, the administration is moving in the complete opposite direction.

684
00:53:15,303 --> 00:53:20,083
So it's kind of like, look, get on board with where the economy is going.

685
00:53:23,203 --> 00:53:24,183
I agree with that.

686
00:53:24,483 --> 00:53:24,703
Yeah.

687
00:53:25,743 --> 00:53:34,503
Look, for MSCI to say this, you know, this is the type of thing where you work at a company and then let's say this did happen.

688
00:53:35,043 --> 00:53:39,883
You look forward to that, you look through to this, and then you see what happens years later and you're like, wow.

689
00:53:40,603 --> 00:53:43,123
And why would I say something like that?

690
00:53:43,123 --> 00:53:44,963
You know, why do people change their minds?

691
00:53:45,303 --> 00:53:46,923
Sometimes they just get rid of the CEO.

692
00:53:47,203 --> 00:53:49,063
I think the best example of this is Vanguard.

693
00:53:49,623 --> 00:53:53,443
Vanguard said they would never allow spot Bitcoin ETFs to be at Vanguard.

694
00:53:53,723 --> 00:53:59,003
And there was the videos, those were all circulating last week because they changed their mind.

695
00:53:59,223 --> 00:54:00,763
Now, did the CEO change his mind?

696
00:54:01,103 --> 00:54:02,603
No, they got a new CEO.

697
00:54:03,323 --> 00:54:04,943
That's what happened, right?

698
00:54:05,183 --> 00:54:07,383
It's like, did the company change their mind?

699
00:54:07,743 --> 00:54:09,363
Yeah, because they got a new CEO.

700
00:54:10,203 --> 00:54:14,083
What I can tell you is you don't want to, do I think CEOs make mistakes?

701
00:54:14,443 --> 00:54:14,923
Sure.

702
00:54:15,303 --> 00:54:18,963
Do I think that sometimes CEOs will double down on the wrong thing?

703
00:54:19,083 --> 00:54:20,663
Yeah, that happens all the time.

704
00:54:21,163 --> 00:54:29,123
But at some point, you have to determine is what you're doing in the best interest of your company or your policy or where the future is going.

705
00:54:29,703 --> 00:54:32,103
Somebody tells me that they don't see a robot.

706
00:54:33,003 --> 00:54:35,363
I've been talking about this for a year.

707
00:54:36,423 --> 00:54:43,303
Waymos, driverless, it's 250,000 rides per month in San Francisco.

708
00:54:43,783 --> 00:54:44,963
Nobody driving it.

709
00:54:44,963 --> 00:54:47,423
It is a robot car, right?

710
00:54:47,643 --> 00:54:52,003
Now, if somebody lives where they've never seen that, they have no idea what I'm talking

711
00:54:52,003 --> 00:54:53,243
about, right?

712
00:54:53,363 --> 00:54:56,283
But this has been going on for two and a half years now.

713
00:54:56,403 --> 00:54:57,903
It's not like this started yesterday.

714
00:54:58,983 --> 00:55:01,703
250,000 rides per month.

715
00:55:02,363 --> 00:55:05,963
And I want to tell you guys, the guys driving the Ubers and the Lyfts, they're pissed off.

716
00:55:06,063 --> 00:55:07,403
They're like, hey, I came here to America.

717
00:55:07,903 --> 00:55:11,203
Now, they would get rid of me in a second for a self-driving car.

718
00:55:11,583 --> 00:55:13,363
So what am I saying about this?

719
00:55:13,363 --> 00:55:17,263
is that the plan works until you realize that the world changed.

720
00:55:17,403 --> 00:55:19,163
And if you just don't see it, the world changed.

721
00:55:19,383 --> 00:55:21,283
You're a dinosaur or a Luddite.

722
00:55:22,043 --> 00:55:25,263
And so I don't want to call out MSCI,

723
00:55:25,703 --> 00:55:27,683
but they're not thinking about how the world changed.

724
00:55:27,863 --> 00:55:29,703
Why should we buy sovereign bonds?

725
00:55:30,463 --> 00:55:31,383
Nobody wanted...

726
00:55:31,383 --> 00:55:33,703
I am unaware of a gold treasury company.

727
00:55:34,943 --> 00:55:36,023
I guess maybe a gold...

728
00:55:36,023 --> 00:55:36,343
Right?

729
00:55:36,703 --> 00:55:37,823
But all of a sudden, right?

730
00:55:38,003 --> 00:55:39,043
They didn't buy it.

731
00:55:39,303 --> 00:55:41,583
But for Bitcoin, it makes sense, right?

732
00:55:41,583 --> 00:55:46,343
And so from that perspective, it was like, wow, I think that's the key takeaway.

733
00:55:46,863 --> 00:55:47,683
The world changed.

734
00:55:48,983 --> 00:55:49,823
Absolutely agree.

735
00:55:50,523 --> 00:55:52,263
I mean, I think that's pretty much the outlook.

736
00:55:52,783 --> 00:55:57,423
People, I think, are a little over-indexed on fear here with regards to Bitcoin.

737
00:55:57,643 --> 00:56:00,043
It's hard to imagine it ever going up again.

738
00:56:00,283 --> 00:56:02,123
I do feel that as well.

739
00:56:02,203 --> 00:56:02,803
I get it.

740
00:56:03,223 --> 00:56:11,523
But if anyone remembers the deep bear of 2022 and 2023, I mean, it was essentially a two-year period of time where you just sat there and be like, yep.

741
00:56:11,583 --> 00:56:17,343
I guess this thing's just never going to go up. But if you're a good disciplined investor,

742
00:56:17,343 --> 00:56:21,503
you just sat on your hands because you believed in the thesis and then you were rewarded by a

743
00:56:21,503 --> 00:56:27,743
triple in six months. And so that's how unfortunately or unfortunately this asset behaves.

744
00:56:29,103 --> 00:56:33,343
And you may just have to sit on your hands for another three months and watch a triple

745
00:56:33,343 --> 00:56:37,183
over a six month timeframe. And that's how you got to hold this thing.

746
00:56:38,063 --> 00:56:42,743
Yeah, and those USD reserves, I know it seems like an arbitrary, like, okay, 21 months for the memes.

747
00:56:43,743 --> 00:56:53,123
But that's not an accident, you know, because that basically spans probably the longest bear market that Bitcoin has ever had.

748
00:56:53,723 --> 00:57:03,563
So, you know, the USD reserve is enough, you know, had to have been tailored to span any kind of like extended bear market that they could foresee in the future.

749
00:57:04,323 --> 00:57:05,463
Yeah, the two-year cycle.

750
00:57:05,463 --> 00:57:12,523
yeah and i think this i think this now becomes a conversation um play when they go talk when when

751
00:57:12,523 --> 00:57:18,283
sailor or fong or andrew go and they go talk to large institutional investors and they're like

752
00:57:18,283 --> 00:57:26,163
you only have 1.44 billion dollars in cash they could just say okay if we increase it to 2 billion

753
00:57:26,163 --> 00:57:32,303
two and a quarter two and a half billion how much of our prefs will you buy right yeah it's a

754
00:57:32,303 --> 00:57:37,043
conversation starter. They just go out there and they just say, we've got one point. Great. Are you

755
00:57:37,043 --> 00:57:42,203
going to buy a billion dollars of our preps if we increase this? Okay, then we'll go do it.

756
00:57:42,343 --> 00:57:47,563
Because they know that that leads to that adoption. Will you buy 2 billion? And I think that's the

757
00:57:47,563 --> 00:57:52,503
part where they've opened this up to hold cash on the balance sheet. And this gives them that

758
00:57:52,503 --> 00:58:01,683
optionality. I think this was a big change that happened. I think Stretch was. And we'll see how

759
00:58:01,683 --> 00:58:07,463
this plays out. I'm bullish for next year. I believe that the Santa Claus rally has already

760
00:58:07,463 --> 00:58:15,263
started. And I think that we will find out the news tomorrow on Thursday. We'll see if the Fed

761
00:58:15,263 --> 00:58:20,783
starts buying tomorrow. Yeah, Green, you're exactly right on that point about, hey, how much are you

762
00:58:20,783 --> 00:58:25,963
going to buy? Because they already know that the ratings agency, if they get a bump there,

763
00:58:25,963 --> 00:58:31,643
that's going to expose them to more of the money. And it just reminds me a little bit of

764
00:58:31,643 --> 00:58:40,303
I saw Jeff Booth interview last week and he had actually just spoken with Bukele and he asked him

765
00:58:40,303 --> 00:58:44,543
about, you know, Hey, why did you take this money from the IMF? Cause that made a lot of Bitcoiners

766
00:58:44,543 --> 00:58:49,943
mad. Like, Hey, you're, you know, you're cooperating. And Bukele's thing, he said, look,

767
00:58:50,303 --> 00:58:55,263
I wanted the cheese. Like, I know it's a mousetrap. He's like, but I wanted, I had to get

768
00:58:55,263 --> 00:59:02,603
my hands on the cheese. And he said, as long as my citizens are, you know, stacking sats and

769
00:59:02,603 --> 00:59:08,043
self-custiding their Bitcoin, he's like, I know nothing else matters. And so I think that's kind

770
00:59:08,043 --> 00:59:12,763
of the same situation that the strategy's in right now. It's like, they want the cheese, right? They

771
00:59:12,763 --> 00:59:17,943
want people to buy more of these prefs, but they have to like jump through this hoop for the ratings

772
00:59:17,943 --> 00:59:24,343
agencies. They got to jump through these hoops for the, you know, to get into the indexes. And as

773
00:59:24,343 --> 00:59:29,803
long as they say Bitcoin focused, they can get the cheese and then, you know, Bitcoin just imposes

774
00:59:29,803 --> 00:59:34,243
its will on the world and, you know, they end up being the winners in the long run.

775
00:59:35,183 --> 00:59:37,363
Totally agree. Should we do final thoughts here, guys?

776
00:59:37,943 --> 00:59:38,303
Absolutely.

777
00:59:39,923 --> 00:59:41,363
Awesome. Green, you want to go first?

778
00:59:42,323 --> 00:59:50,543
Sure. Look, the U.S. federal debt, it's not going away. In fact, based upon the numbers we showed

779
00:59:50,543 --> 00:59:55,863
you today, it's growing faster than the projections. If it grows at $2 trillion every six months,

780
00:59:56,043 --> 01:00:02,463
we will hit the federal debt limit right around election time. And they thought that that number

781
01:00:02,463 --> 01:00:09,863
would be six months after the elections. And if that happens, right, because they're just not,

782
01:00:10,063 --> 01:00:16,003
they're printing too fast, then that will become a problem. So the new guy that comes in

783
01:00:16,003 --> 01:00:19,183
will have to lower interest rates to slow it down

784
01:00:19,183 --> 01:00:20,743
because that's the expense that goes out

785
01:00:20,743 --> 01:00:23,543
to pay the monthly interest expense.

786
01:00:23,543 --> 01:00:25,263
So they got to lower interest rates.

787
01:00:25,583 --> 01:00:27,123
Nothing is going to change that.

788
01:00:27,623 --> 01:00:29,263
The only thing that's going to happen

789
01:00:29,263 --> 01:00:32,843
is whether this is gradual or it's gradual than sudden.

790
01:00:33,143 --> 01:00:34,883
And that's the difference between the gradual,

791
01:00:35,303 --> 01:00:37,023
Lynn Alden, and the big print, Larry.

792
01:00:37,423 --> 01:00:41,643
I think it starts off slow and then it's going to run away.

793
01:00:42,103 --> 01:00:43,623
And I think you're going to end up

794
01:00:43,623 --> 01:00:45,303
with two types of people in the world.

795
01:00:46,003 --> 01:00:51,763
People that bet on Bitcoin, strategy, a couple other Bitcoin treasury companies that rock

796
01:00:51,763 --> 01:00:55,643
it up in value, and that bet on AI and the MAG7 stocks.

797
01:00:55,963 --> 01:01:00,563
Those people will look towards everything and be like, oh, this was bound to happen.

798
01:01:00,923 --> 01:01:02,203
I had to protect myself.

799
01:01:02,843 --> 01:01:06,263
There'll be other people that saw this, but just didn't have the money to do it.

800
01:01:06,763 --> 01:01:07,783
And that's horrifying.

801
01:01:07,943 --> 01:01:08,743
That's really terrible.

802
01:01:09,203 --> 01:01:14,083
But my takeaway is if you know this is happening, you can do the best you can to prepare yourself.

803
01:01:14,083 --> 01:01:20,603
And for those people, that's why we do these spaces, because I want everybody to have a bright future.

804
01:01:20,903 --> 01:01:24,223
But if you don't know what's going on, it's really difficult to do that.

805
01:01:24,723 --> 01:01:25,943
So that's my takeaway.

806
01:01:26,903 --> 01:01:31,083
Quote Lynn Alden, nothing stops this train and they're going to print.

807
01:01:31,383 --> 01:01:34,543
And either you're going to have Bitcoin or AI related.

808
01:01:35,403 --> 01:01:39,823
If a robot's going to take your job, you better have Bitcoin to make up for it.

809
01:01:41,403 --> 01:01:41,883
Absolutely.

810
01:01:41,883 --> 01:01:44,563
I think that's well said, Grant.

811
01:01:44,683 --> 01:01:45,043
Soleil?

812
01:01:46,503 --> 01:01:50,703
Yeah, so I guess I want to talk to the 1XMNAV bears real quick.

813
01:01:51,623 --> 01:01:53,903
And, you know, they'll say,

814
01:01:53,983 --> 01:01:56,143
strategy is trending towards 1XMNAV.

815
01:01:56,283 --> 01:01:57,703
And I'm like, yeah, no shit.

816
01:01:57,803 --> 01:02:00,303
Like every company is trending towards 1XMNAV.

817
01:02:00,423 --> 01:02:03,203
And that includes all the companies that don't have any Bitcoin.

818
01:02:03,883 --> 01:02:05,383
So they're going to zero.

819
01:02:06,023 --> 01:02:08,723
The only companies that will exist in 50 years

820
01:02:08,723 --> 01:02:14,003
are companies that have gotten rid of their cash treasuries and are on a Bitcoin standard.

821
01:02:14,703 --> 01:02:18,983
So what's the game then at that point, if we take a time machine into the future?

822
01:02:19,463 --> 01:02:20,863
You have to have Bitcoin.

823
01:02:21,163 --> 01:02:24,163
So the only thing that matters is getting as much of it as you possibly can.

824
01:02:24,863 --> 01:02:30,303
So, you know, there's a small variable attached to that, which, you know, if you've got positive

825
01:02:30,303 --> 01:02:34,123
cash flow, you know, it's going to be 1xMNav plus positive cash flow.

826
01:02:34,123 --> 01:02:39,543
but just like anybody who you know puts five percent or ten percent of their portfolio into

827
01:02:39,543 --> 01:02:45,783
bitcoin a cycle later it's twenty percent or fifty percent or whatever and just by no fault

828
01:02:45,783 --> 01:02:50,443
of your own and the same thing is going to happen to these bitcoin treasury companies every single

829
01:02:50,443 --> 01:02:56,363
company that starts stacking sats is going to realize that the bitcoin is going to grow faster

830
01:02:56,363 --> 01:03:01,523
than their positive cash flow so get all the cheese you can that's that's just basically the

831
01:03:01,523 --> 01:03:08,603
endgame. I totally agree. I think well said. I mean, obviously, price action is underwhelming

832
01:03:08,603 --> 01:03:15,943
at times. But it's important to remember that this is more than a macro asset. It's a technological

833
01:03:15,943 --> 01:03:22,963
innovation when it comes to money. You've got the PayPal founder working on, what is it called,

834
01:03:23,063 --> 01:03:27,683
LightSpark, different Lightning payment applications. Stablecoins are absolutely

835
01:03:27,683 --> 01:03:32,943
exploding in third world markets and emerging markets. And then you have this new digital credit

836
01:03:32,943 --> 01:03:39,683
industry, you know, kind of moving and bringing broader adoption into the commodity that is

837
01:03:39,683 --> 01:03:43,943
Bitcoin. So as an internet native settlement layer, I think Bitcoin's in a really strong position.

838
01:03:44,683 --> 01:03:50,743
Don't expect, you know, crazy price growth as the assets market cap continues to expand,

839
01:03:51,163 --> 01:03:56,483
but expect really, really strong performance with much lower risk than we'd seen in the past.

840
01:03:56,483 --> 01:04:03,103
This thing is going to be structurally important to the new financial ecosystem, and it won't be going anywhere.

841
01:04:03,383 --> 01:04:11,303
If Tether has, you know, 5% of its reserves in Bitcoin, and then at some point 10%, 30% of its reserves in Bitcoin, things really change.

842
01:04:11,363 --> 01:04:14,123
It just becomes a structural financial layer.

843
01:04:14,343 --> 01:04:15,683
So I'm really excited for the future.

844
01:04:19,103 --> 01:04:19,863
Awesome, guys.

845
01:04:20,663 --> 01:04:23,083
Hey, Dan, one last thing.

846
01:04:23,203 --> 01:04:25,523
David Marcus last year was at Strategy World.

847
01:04:25,523 --> 01:04:29,283
I, he presented, he was awesome.

848
01:04:29,283 --> 01:04:31,603
I spoke to him afterwards.

849
01:04:31,603 --> 01:04:33,083
And so he was there.

850
01:04:33,083 --> 01:04:34,363
I don't know if he's there this year.

851
01:04:34,363 --> 01:04:39,303
I would tell people if you do go, if you, sorry, yes, he was at Strategy World.

852
01:04:39,303 --> 01:04:44,243
If you go to Bitcoin True or Inside event at Strategy World, or if you go to Strategy

853
01:04:44,243 --> 01:04:48,623
World, you obviously you'll meet all of us at our event.

854
01:04:48,623 --> 01:04:53,583
But for Strategy World, if you look at the speakers there, if you are a little bit persistent,

855
01:04:53,583 --> 01:04:55,563
can meet and talk to that person directly.

856
01:04:56,703 --> 01:04:57,543
They do not

857
01:04:57,543 --> 01:04:59,583
turn you away, in my case.

858
01:04:59,643 --> 01:05:01,523
You want to meet Michael Saylor, come to

859
01:05:01,523 --> 01:05:02,263
Strategy World.

860
01:05:03,663 --> 01:05:05,503
I'm sure if you're there for a couple days,

861
01:05:05,563 --> 01:05:07,563
you'll probably get to talk to him more than once or

862
01:05:07,563 --> 01:05:07,903
twice.

863
01:05:08,783 --> 01:05:11,003
You guys have been there with him, right?

864
01:05:11,243 --> 01:05:13,003
You guys have talked to him multiple times.

865
01:05:13,843 --> 01:05:15,643
I would say come to that event,

866
01:05:15,783 --> 01:05:16,403
Wynn Hotel,

867
01:05:17,063 --> 01:05:19,443
in February of next year. I look forward to seeing you.

868
01:05:20,043 --> 01:05:21,663
Awesome, guys. Until next

869
01:05:21,663 --> 01:05:23,223
week, everybody. Thanks again for watching.

870
01:05:23,223 --> 01:05:26,303
I know this was a lot of technical information.

871
01:05:27,083 --> 01:05:29,043
We'll be back on Sound of the Riffing next week.

872
01:05:29,183 --> 01:05:29,503
Talk soon.

873
01:05:29,703 --> 01:05:29,803
Bye.

874
01:05:30,243 --> 01:05:30,423
Bye.

875
01:05:31,023 --> 01:05:31,223
Bye.