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The Fed cannot stop printing money.

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Global central banks cannot stop printing money out of thin air.

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And not just printing money, but printing money at an accelerating pace.

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That is why Bitcoin exists.

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It is an absolutely scarce monetary asset that has absorbed and will continue to absorb

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the excess liquidity, the excess money printing that global central banks just can't stop printing.

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As long as central banks keep printing money, Bitcoin's value prop remains unchanged.

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And a 50% drawdown isn't something that should scare you.

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It should be viewed as an opportunity and nothing more.

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Global M2, the global money supply, actually is expanding at its fastest rate since 2021 right now

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for the asset owners, right? So the asset owners benefit massively as a result of inflation. It's

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why the Federal Reserve exists to enrich those who own assets and to control the money to control you,

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whereas those who don't own assets don't benefit. Despite the economy seemingly from the outside

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looking in doing okay, and the moment we reach a tipping point where because of these delinquencies,

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the consumer cannot afford to borrow their way into living anymore, then that's the point at

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would you get a recession? Dude, we have got a lot to talk about today. I don't even know where

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we start. Do we start with everything that's happened with Saylor and Stretch? Do we start

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with Bitcoin price sat under 60K, breaking through the power law? Where do you want to start?

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My goodness. I think we start with the Bitcoin price and then we lead into Saylor. I think

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Saylor is probably what everybody's here for. I know you had Adam Livingston on your show recently.

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he's fantastic when it comes to this stuff um you know look what i'll do first is i'll call back to

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in january um when i was last in the show and i said bitcoin was going to go to 40k when i said

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that i didn't leave it myself um yeah for the most part i believed it but you know part of me

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didn't want to believe it that that bitcoin could go that low but every sort of sign was pointing in

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that direction um just from a percentage perspective purely the last cycle we had about

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a 78% drawdown. This cycle is 75% drawdown would mean about $40,000 Bitcoin, if not a little bit

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lower. And since we recorded, we're down from, I think, like the 70s, high 70s to 58K. And as you

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mentioned, we just broke through the floor. I believe we have officially closed under it as

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of recording. If not, we definitely will close under it by the time the show goes live.

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underneath the power law floor,

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which is a floor that is held

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for Bitcoin's entire price history.

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Now, Giovanni Santistassi,

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the astrophysicist who originally discovered

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that Bitcoin had a strong power law relationship,

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actually went out and said that the floor model

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doesn't really matter all that much.

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It's mostly the ceiling model

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and the median to look out for.

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But regardless-

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Stock to floor vibes.

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Psychological, exactly, yeah.

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And for me, from a psychological perspective,

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you gotta wonder,

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like people looking at that, they're going to say, wow, yet another Bitcoin model broken,

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yet another sacred cow slain, if you will. We sort of get these every single cycle.

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Last cycle, it was Bitcoin can't dip below the prior cycles all time high. We killed that one.

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This cycle, it was, oh, the four year cycle is dead because we, you know, we made a new low in

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February. We killed that one or we're on the way to killing that one as Bitcoin tries to carve out

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new lows here. And the latest one seems to be this power law floor, this absolute floor that

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cannot be broken underneath. Now, before people click off the video because they say, well, you

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nope, again, technically, it's about the ceiling, not the floor. You got to think about the

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psychological component of this, right? That is the second major model slash idea that has been

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broken this cycle. And as a result, it's probably going to lead to even more downward price action,

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right? This reflexive feedback loop of Bitcoin models being broken, retail investors hearing

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about it or institutional investors hearing about it and deciding to sell their bags and potentially

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rotate even more into the AI trade. So it's an interesting time for Bitcoin. You know,

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there are a lot of models underneath us and a lot of things suggesting that the bottom is probably

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closer than people think. I'd like to revise up my estimate from the last video. I think we're

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probably going to bottom in the low 50s, high 40s, rather than visiting all the way down to 40k.

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But we'll see what happens. I think it's another couple of weeks here, maybe a few more months of

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chopping around a couple legs down and demoralize everybody. And then we bottom out. Because what

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I'll say, Danny, is there are too many people saying that the bottom is close for the bottom

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to be as close as we think. Yeah, that's probably true. But like, I didn't think we were going to

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get 58K again, which is, I mean, I'm here for the memes. That's awesome. But it does feel like

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Bitcoin just feels cheap and Bitcoin never feels cheap for long. That's kind of my just gut check

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on it. Like when I look and you think, you know, a million sats for $500, like that's very cheap.

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I'm going to be buying that all day long. Like how long do you think we can sit in this sort of

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50 to 60k price range for sure yeah i'd say longer than many people think um like 58k is literally

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for me back up the truck level mortgage the house level sell a kidney level to buy bitcoin um you

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know historically speaking bitcoin spends about three to six months in this bottoming zone if not

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higher it spends um uh before breaking back above the 200 week moving average after losing it

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in 2022, Bitcoin spent nine months in its bottoming zone. Now, we don't have an FTX of this cycle. We

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don't have a Celsius block, five, three areas capital, and others who are forced liquidators

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as a result of bad leverage. So we might not spend that much time around a bottoming zone.

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It might be one wick down and then a massive bid to move higher than it. But I tend to think that

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we will spend some time chopping around in this range purely because the uncertain geopolitical

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backdrop, which we'll get into the Iran war, which is still sort of overhanging markets,

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which we'll get into and the AI trade, which I think we'll talk about as well.

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I tend to think that Bitcoin is just going to spend a lot of time hanging out in this area,

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maybe move into the lower 50s, high 40s, as I mentioned, and then just spend so much time here

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that people get demoralized. They're fully convinced it's dead. And then when that happens,

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it begins moving higher, right, as we've always experienced. So the TLDR of it, reading the tape

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and sort of trying to make sense of these things,

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I tend to think that Bitcoin will probably

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find its final low around October or November.

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It's also sort of what the four-year cycle is pointing to.

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And then begin ascending higher

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through the end of the year into January

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and Q1 of next year is really going to be

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the first breakout quarter, in my mind,

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for the next Bitcoin bull market.

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Why are you putting it at that time zone?

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Like, is that because it kind of interacts

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with the midterms, things like that?

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Like, why October?

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For sure.

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So a couple of different things that are all seemingly coming into confluence with one

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another at the same time.

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The midterms is one of the things that you had mentioned, but there are two others.

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So the first being the midterms, the second being the inflation backdrop, and the third

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being the ultimate rotation out of the AI trade for risk capital and back into Bitcoin,

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which is the most speculative of all of them, but I'll sort of try to explain my case.

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And then the fourth being the end of the four-year cycle.

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So attacking those in order, the midterm is Bitcoin tends to underperform during midterm years.

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It tends to do very poorly during midterm years.

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This is purely because of an uncertainty perspective, right?

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Yeah, markets hate uncertainty.

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Exactly.

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Mark is absolutely despised uncertainty.

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Here in the States, we have this beautiful two-party system where one side hates you and one side hates you a little bit less.

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And we get to elect them every two years into office.

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It's really wonderful.

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And so one of those periods is coming up this year.

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Typically during midterm years,

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Bitcoin tends to be a little bit shaky

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as midterm season approaches.

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But most importantly, midterm years

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when Bitcoin is in a bear market,

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also happens to be roughly every four years.

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And so effectively what we are approaching now,

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what we're experiencing right now

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is the uncertainty of the midterms approaching

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layered on top of Bitcoin underperforming

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because it's a bear market.

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And so obviously Bitcoin isn't gonna do well

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until the midterms pass.

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Midterms are early November, right?

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So that's event number one of four.

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Event number two of four is the Iran war.

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So the Iran war I've spoken about on my channel numerous times before.

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Essentially what you've got is in the early innings of the war when it seemed like it was only going to be, excuse me, potentially only a few weeks, Bitcoin is actually the best performing asset since the start of the war.

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if you measured it from February 28th to about the end of April when this dynamic ended,

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Bitcoin actually performed better than literally everything else, better than gold, better

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than the NASDAQ, better than the S&P 500 by more than double.

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And then it began breaking down Can we sprinkle a little bit of salt on that though Because like it had just crashed like 50 in the two months prior The one caveat So you can read too much into it That said Bitcoin been totally hammered by the war

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but everything else seems to be doing fine.

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Why is that?

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Well, I'm of the opinion that

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it's not because Bitcoin is dead.

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It's because Bitcoin is the only asset

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that's accurately pricing in reality right now, right?

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You have a major geopolitical conflict

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over in the Middle East.

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The Strait of Hormuz has been closed.

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Largely, it just recently opened up last week,

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but we'll really see how long that lasts.

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The street of Hormuz is a very critical shipping lane

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for 20% of the world's oil supply.

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Not just 20% of the world's oil supply,

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and I'll get to why that's critical in just a moment,

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but 20% of the world's oil supply,

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that's done extremely cheaply, right?

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Let's just say that Iran doesn't have

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the best labor laws in the world, right?

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So, you know, it's much cheaper than getting oil

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from anywhere else in the country.

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So anywhere else in the world, rather.

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So it doesn't just have a 20% impact on price.

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It has more like a 50, 70, 80, 100% impact on the price when that straight was closed for literally four months, five months, almost five months.

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And so basically what I had been saying for several months is that if the straight remained closed until mid-June, because everybody was saying mid-June was sort of the benchmark for if the straight isn't opened, then we are going to have a worldwide recession.

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Then you would have a worldwide recession.

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Why is that?

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Well, basically, I mentioned that it's responsible for 20% of the world's oil supply.

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You may be thinking, okay, oil goes in my car.

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Why else is it important?

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Well, I think everybody at home knows that basically every product in the modern world

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is a petroleum product, right?

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Petroleum byproduct to some degree.

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The paint on the wall behind me, the couch behind me, that's probably not real leather,

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so probably the entire couch behind me, the microphone I'm speaking into, the camera that

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I'm looking at, all of them have petroleum in them in one way or another.

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And so having 20% of the world's oil supply shut off, the world's cheap oil supply, and

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causing that massive uptick in the price of oil that has downstream impacts and not just the price

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at the gas pump, but the price of every downstream product. More importantly, the price of food,

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right? How do diesel engines work? How is fertilizer going to get transported? How is

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fertilizer going to get created? All of these things threaten to lead to a massive inflationary

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spike throughout the year, and they already are. So inflation just printed above 4% for the first

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time since 2022. Because the trade has been closed for four months, you're going to see

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a lagged effect, sort of this drip through, this pass through over the next few prints.

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I think inflation is going to take higher. I think it's going to go to five, maybe even six percent

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before turning the corner and beginning to decline now that the Strait of Hormuz is back open. And

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guess what? As I'd been saying in all of my videos for the last three months, the Strait of Hormuz

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opened literally middle of June, one day after mid-June. So right when all the experts, and I

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was saying it has to open. Otherwise we get a worldwide recession. And the reason for that is

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quite simple, right? Um, if we induce a recession during a midterm year, then like the Republicans

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are done, they're toast. And so even though the United States is fighting this war, not for itself,

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but for another country, um, at the end of the day, the Republicans care about keeping their jobs.

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They want to remain in office. And so that is why they said, okay, we're not going to end the war.

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We can end the war. We got to keep fighting this for our buddies over there. But what we can do is

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we can reach an agreement with Iran to open the strait, and that's what they've done,

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and tankers are beginning to come out. So that's reason number two. Now, in addition to that reason,

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many people have pointed out the fact that the S&P 500, the NASDAQ, the Russell, all of them are

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doing exceptionally well. Bitcoin seems to be the only asset that is declining, that is in a bear

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market. The reason for that is quite simple. As I mentioned, not just the four-year cycle, which

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I'll get into, but Bitcoin is the only asset that's accurately pricing in this terrible geopolitical

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backdrop that I just laid out. Obviously, when you have massive inflation, rate hike odds increase,

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that leads to a huge de-risking across capital markets. And it also threatens an inflationary

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recession because inflation is at 4%. It could go to 5%, could go to 6%. You'll remember, Danny,

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the last time we had inflation, that was like 9% back in 2022. We technically had a recession. We

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had two consecutive quarters of negative GDP. And so should the straight remain closed, that's what

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we would have gotten. So why are other assets not reflecting that reality? Why is Bitcoin the only

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one that sold off, well, you have the AI trade, right? We've seen all of the headlines, like the

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most capital expenditure ever, as far as any new technological advancement in history, right?

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There is real money behind this, and there is real capital that wants to get in and get exposure,

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not just to the AI names that are already out there that are doing exceedingly well,

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the NVIDIAs, the AMDs of the world, the Metas, the Microsofts, what have you,

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but also the IPOs that are yet to come. You have OpenAI that just rescheduled this IPO for early

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next year. Same thing with Anthropic, I believe. They're still aiming for Q4, but probably looking

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at Q1. You have SpaceX was just IPO'd. This is a massive drain on capital from every other corner

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of the market, right? These are once in a generation initial public offerings. Granted,

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they may be overvalued, whatever. I think we can all agree that they are overvalued.

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Transformational technology, but overvalued nonetheless. I don't think they're a bubble,

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but that said, if anything, they're a massive capital suck from other areas of the market,

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Bitcoin included. And so that is why equities are ripping despite a deteriorating macro backdrop.

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Everyone wants exposure to this once in a generation IPO event. And the fourth reason,

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this other major reason is the Bitcoin four-year cycle, right? Bitcoin, I had believed that it had

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broken the four-year cycle because at this point in my mind, with 20 million Bitcoin already in

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existence, the remaining 999,000 some odd Bitcoin to be mined over the next 114 years, I figured

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that cutting the supply schedule in half

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wouldn't have a major impact on Bitcoin's price

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and it would no longer follow this four-year cyclicality.

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But here we are, right?

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Bitcoin topped literally to the day

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when the four-year cycle said it would.

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And so chances are it's also gonna bottom

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when the four-year cycle says it will.

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Now, this is the last thing I'll say.

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Why on earth does it still have influence over Bitcoin?

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Is it a real supply shock mining dynamic

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or is it just retail investor reflexive behavior

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where they believe Bitcoin's gonna top on a day

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because of this Bitcoin model?

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So they sell in advance of it.

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and then they plan to buy the following year.

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I think it's a blend of both,

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leaning more towards the latter, right?

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If enough people, particularly the new market entrants

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who came around during the ETF era,

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believe that this cycle, this model,

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has a lot of influence over Bitcoin,

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particularly if you're a new market participant,

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if you look at a model that's as predictable

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as the four-year cycle,

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you're gonna trade around it, right?

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Like, even though Bitcoin's hugely volatile,

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if you look at the four-year cycle,

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it's actually quite predictable, you know?

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From a price perspective, it's volatile,

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but from where it's going,

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whether it's an Ebola or a bear, it's actually one of the most predictable assets on the planet.

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And so like new market entrants, look at that and trade in advance of it. OG market participants,

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look at that and trade in advance of it. And so that's basically why I believe the four-year

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cycle still has influence over Bitcoin and why I think we're going to be bottoming out around

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October. Oh, and the reason October holds for the AI point and the war point is that with the

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rate of Hormuz opened. The lagged effects of inflation, in my mind, are going to peak around

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early October and then begin declining, removing rate hikes from the table. And then for the AI

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point, with the SpaceX IPO already past us and the Anthropic IPO slated for Q4, the only remaining

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IPO will be open AI. And that was originally scheduled for Q4, but now it's Q1. And so most

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of the capital sink from these AI investments will be off the table. Ideally, that risk capital will

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rotate back into Bitcoin. Those are the four things in my mind that point to a Bitcoin bottom

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around Q4, ideally October, November, but we'll see. This could age like milk.

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264
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271
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let's start with the things that are external to bitcoin because you mentioned you think inflation

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is going to come back you don't think they're going to hike rates this year like if inflation

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comes back will they wait until october november before they actually do an initial rate hike

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yeah so uh i tend to think potentially not well here's the reason i don't think they're going to

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hike rates at all and this is like my most contrarian opinion um so many people calling

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me a Mormon for saying this, but here's my thinking. You have two kinds of inflation.

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You have push inflation, which is driven by cost inputs like oil, right? The price of oil reprice

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is massively higher from 70 bucks pre-war all the way up to $120, almost doubling.

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That's driving inflation as a result of an input cost increasing. You cannot fix that type of

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inflation with rate hikes, right? The other kind of inflation is pull inflation, right? And we're

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talking about price inflation here, you and I both know, Danny, that the chief reason for inflation

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generally is money printing, right? But from a consumer perspective, from a price perspective,

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you also have pull inflation, which is where consumers are able to borrow a lot of money

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really cheaply. Too much money gets lent into existence, i.e. printed. And then by raising rates

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and not printing a ton of money, you can rein in inflation. So a lot of the pundits who are saying,

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well, the Fed is going to hike rates in order to rein in inflation. Well, the reality is you

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cannot fix an input cost driven inflationary spike by raising interest rates. All that's going to do

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because it's not driven by a consumer that is borrowing too much money and spending it into

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existence. It's driven by input costs that are high. So all you're going to do by raising rates

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is put even more pressure onto the consumer. And so that's why for me, rate hikes were always

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misguided, at least as of right now. We'll have to see what happens. I don't think Warsh is dumb

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enough to deliberately induce a recession. And so for that reason, I don't think we're going to

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see rate hikes at all. But if we do, I think it's going to be catastrophic for the consumer. And I

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think it will fast track a recession because consumers will then not only be facing five

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and a half percent interest rates, then six, then six and a half and seven. And that's just policy

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rates. That's the benchmark rate. Then everything is priced on top of that. So get ready for 30%

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credit cards, 10% mortgages, all of that. Like enjoy in addition to your 7% inflation. That's

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why I don't think it's going to happen. The other thing, and this is why I think rate at the very

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least holding rates is more likely for this year, if not rate cuts. Well, what's the scenario in

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which we see rate cuts? I don't think we see inflation normalized this year. I think you see

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the next couple of prints continue to etch higher. But I think next year you see rate cuts. The

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scenario you see that once inflation normalizes, the scenario where you see rate cuts sooner than

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that is if inflation becomes such a large issue for the consumer that it induces a recession in

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and of itself. We haven't had a true inflationary recession since the 70s. Lynn Alden has talked

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about this, where it's literally entirely driven by inflation. The recession isn't driven by

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deflation, like a credit-based recession where you have a 2008 or a 2023 type event, but it's

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driven by prices literally becoming too high that consumers can't spend anymore. We haven't had that

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since the 70s. And it will be very interesting to see how the Fed responds in the event that we get

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that massive rate cuts. That's a world where I see 0% interest rates again. I'm not calling for that.

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But in the event that inflation becomes too much of an issue, I think that will be the response,

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cutting interest rates. So this year, at the very least, I think they're on hold.

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Once inflation comes back down to earth, they cut. And if inflation comes back down to earth

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as a result of a massive recession, you're going to see a lot of cutting and a lot of money printing

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too. Yeah. I mean, it'll be also interesting. I know Walsh in his first press conference said

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that he's going to create an inflation task force to figure out what inflation is. And I wonder what

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comes back from that and how they kind of move the goalposts and how that plays into potential rate

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hikes or rate cuts in the future. Right. It's just remarkable. It kind of reminds me, not to be too

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crass on the show, but it reminds me of like the Jeffrey Epstein task force that they made.

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All right, guys, we're going to assemble this crack team to figure out who was on Jeffrey Epstein's

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island. And then they realized during the investigation, they were like, wait a second,

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and it was us. We can't release these findings. Sorry for making you spit up your water. So I

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think it's going to be the same thing here. They're going to be like, oh, wait, inflation

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is actually caused by money for it. And so it's going to be a nothing burger.

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Yeah. And so, okay. And then the other part that was external that I thought was interesting is

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you're saying that the US economy is running pretty hot right now. Outside of just the AI

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sector, is that true? Because obviously AI stocks do incredible. Anything that's touching data

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centers or chips or these frontier models, but is anything else doing well?

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Yeah, so you've got the Purchasing Managers Index, which is a great gauge for whether or not the economy is expanding or contracting.

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So basically what it is, for those who might not know, is people who run companies in the manufacturing and the services sectors in the United States broadly get surveyed every month.

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A handful of them get surveyed every month, and they're asked across three different vectors, are conditions better or worse than last month?

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Across prices paid, across employment, and then across new orders.

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So are your prices paid better or worse than last month? Are your new orders higher or lower? Is your employment situation better or worse? Are you hiring more people or firing more people? And that is ticked up pretty considerably into what's considered expansion territory. It's an index that oscillates around 50. So expansion is above 50. So at the very least, the manufacturing and services economy are great. What about the consumer? How are the consumers doing?

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Well, the consumers aren't doing great.

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Consumer sentiment is obviously at a 53-year low,

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which is crazy, literally the lowest it's been

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since that survey has gone out.

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This is the University of Michigan Consumer Sentiment Survey.

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And obviously, when I made a video about this,

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a lot of people were very quick to remind me

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that there is quite a bit of political bias

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in the University of Michigan Sentiment Survey.

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It still does reflect reality, in my opinion.

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If you actually look at the way that it is measured,

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there isn't a lot of, I mean, it's an opinion survey, right?

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So obviously, there's gonna be some bias in there.

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So you can't trust it completely.

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But I tend to agree with their reasoning

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for why they say that the economy is worse

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than it has been in years,

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because we've had now, this is the second bout,

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excuse me, of crazy elevated inflation during the 2020s.

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We had inflation tick all the way up to 9.1% during 2022

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and obviously came back down,

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but prices never come back down.

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So price inflation never dips negative into deflation.

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So while people may say, okay,

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but inflation is down from 2022,

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Prices remained elevated, right?

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And so that's a really pernicious thing.

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And so it doesn't surprise me at all

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that the consumer is really feeling the weight of this,

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despite the actual people who produce a ton of stuff

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in the economy saying yeah things are like totally fine It really doesn shock me The other component that tell and so we kind of had this bifurcation right And I touch more on that in a second The other thing that suggests the economy is doing quite well you had the labor report that

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came out, non-farm payrolls added, I think like 800,000 jobs more than expected, which is kind of

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wild. And so from that perspective, economy is doing great. How are the consumers doing?

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probably not that hot, right?

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You have a record high credit card debt,

385
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but that's also a headline you see every month

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because it's only ever rising,

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so it doesn't really matter.

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But look at credit card delinquencies.

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Those are the highest in 17 years.

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Auto loan delinquencies,

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those are the highest of all time.

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So this inflation is beginning to weigh on the consumer

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despite the economy seemingly

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from the outside looking in doing okay.

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And the moment we reach a tipping point

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where because of these delinquencies,

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the consumer cannot afford to borrow their way

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into living anymore,

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then that's the point at which you get a recession. That's the point at which spending does collapse

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and you do have rate cuts back on the table along with money printed and potentially stimulus checks.

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So I tend to take the total opposite side of the argument where people are calling for rate hikes.

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I think there's actually a world where you get tons of rate cuts and stimulus checks this year

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in advance of midterms if we get an inflationary recession. But all of this boils down. All of this

404
00:26:30,535 --> 00:26:36,015
comes back to the K-shaped economy, right? This notion that as a result of money printing, as a

405
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result of massive inflationary pressures. And GlobalM2, the global money supply, actually is

406
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expanding at its fastest rate since 2021 right now. Fun fact, that's really cool for the asset

407
00:26:45,835 --> 00:26:50,335
owners, right? So the asset owners benefit massively as a result of inflation. It's why

408
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the Federal Reserve exists to enrich those who own assets and to control the money to control you,

409
00:26:55,255 --> 00:26:58,955
whereas those who don't own assets don't benefit, right? Think about it this way. For those who

410
00:26:58,955 --> 00:27:04,555
might not be familiar with this, imagine that there is one pen in the entire world, and I'm

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owner of that pen and there are 50 other people i own the pen nobody else owns the pen this pen is

412
00:27:09,915 --> 00:27:15,755
worth one dollar right everybody else has ten dollars in their checking accounts whatever so

413
00:27:15,755 --> 00:27:19,755
you have 50 people with ten dollars in their checking accounts i'm the only only asset owner

414
00:27:19,755 --> 00:27:24,315
in this economy i've got one pen it's worth one dollar all of a sudden if i decide to inflate the

415
00:27:24,315 --> 00:27:31,355
money supply by a thousand percent let's say um my pen suddenly is worth a hundred dollars right so

416
00:27:31,355 --> 00:27:33,935
So my pen is worth $100 or something like that.

417
00:27:34,475 --> 00:27:37,155
And everybody else's money in their checking account

418
00:27:37,155 --> 00:27:39,515
is still the same dollar amount,

419
00:27:39,635 --> 00:27:41,535
but it's not worth as much, right?

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So I have more wealth than they do

421
00:27:43,535 --> 00:27:45,075
because they didn't have assets

422
00:27:45,075 --> 00:27:46,455
that were denominated in the thing

423
00:27:46,455 --> 00:27:47,655
that I just printed a ton of.

424
00:27:48,095 --> 00:27:49,855
So that's how money works.

425
00:27:50,095 --> 00:27:52,115
And that's why it's so important to own assets.

426
00:27:52,115 --> 00:27:54,695
And that's why you see this massive bifurcation

427
00:27:54,695 --> 00:27:55,455
in the economy,

428
00:27:55,455 --> 00:27:57,015
where it seems like some people

429
00:27:57,015 --> 00:27:58,495
are doing absolutely exceptionally.

430
00:27:58,655 --> 00:28:00,575
You have headline data that's coming in really strong,

431
00:28:00,575 --> 00:28:04,695
but then under the surface cracks are forming consumer sentiment is the worst than it's ever

432
00:28:04,695 --> 00:28:11,895
been it's a money problem so in turn in that scenario um rate cuts money printing before the

433
00:28:11,895 --> 00:28:15,795
end of this year before maybe even midterms how much like what percentage likelihood would you put

434
00:28:15,795 --> 00:28:20,535
on that i would say uh as of right now because the straight is open i would say no more than 20

435
00:28:20,535 --> 00:28:25,715
percent um before the straight was open it was like ticking up day by day so i was close to 50

436
00:28:25,715 --> 00:28:30,595
likelihood that that was occurring, but ultimately cooler heads prevailed. I hope cooler heads

437
00:28:30,595 --> 00:28:35,415
prevail with the war itself. Hopefully, God willing, I don't want any more people to die,

438
00:28:35,935 --> 00:28:41,735
but I don't think it's going to happen. I think we reached a sort of a happy middle ground where

439
00:28:41,735 --> 00:28:45,935
we're still fighting this war, but the strait is open, so the economy will do fine. But unfortunately,

440
00:28:46,215 --> 00:28:51,755
we're also going to deficit spend a crap ton of money to fund this war. So yeah, I'd say relatively

441
00:28:51,755 --> 00:28:55,695
low likelihood now that we get that recession. But in my mind, because the straight is open,

442
00:28:56,375 --> 00:29:01,095
high likelihood that we sort of get that middle ground scenario where inflation doesn't do too

443
00:29:01,095 --> 00:29:06,595
terribly because now oil is beginning to flow through the straight of Hormuz again. Crude oil

444
00:29:06,595 --> 00:29:11,255
prices have dropped down to their pre-war levels, which is fantastic. You are going to see the next

445
00:29:11,255 --> 00:29:16,095
couple of inflation prints tick higher as a result of the lagged impact of this oil shock

446
00:29:16,095 --> 00:29:20,475
over the next couple of months. But by the end of the year, price inflation is going to be right

447
00:29:20,475 --> 00:29:25,715
back down where it normally is or within a percentage point or two. Okay. So that's like

448
00:29:25,715 --> 00:29:29,375
the macro outlook. I want to bring it back a little bit to Bitcoin because you obviously

449
00:29:29,375 --> 00:29:33,975
saying you think the bottom will be sometime around October, not too much lower, maybe sort

450
00:29:33,975 --> 00:29:39,335
of low 50s, high 40s. What are the key metrics you're looking at there? Like what's giving you

451
00:29:39,335 --> 00:29:44,535
that indication? For sure. So there are a number of them. Three big ones that I really, really like.

452
00:29:44,715 --> 00:29:49,335
The first one being the 200 week moving average, which unfortunately we just broke through,

453
00:29:49,335 --> 00:29:55,615
which was in the low 60s, high 50s, that is a massive indicator because typically speaking,

454
00:29:55,915 --> 00:30:00,515
the bottom for Bitcoin bear markets is right around the 200-week moving average. Excluding

455
00:30:00,515 --> 00:30:05,295
2022, where as I mentioned at the top of the hour, we had a lot of exogenous shocks that caused

456
00:30:05,295 --> 00:30:09,875
Bitcoin to fall much lower than it probably otherwise would have. Bitcoin tends to bottom

457
00:30:09,875 --> 00:30:15,375
right around the 200-week moving average. So what I mean to say by highlighting that before I talk

458
00:30:15,375 --> 00:30:21,555
about the downside levels is that chances are, excluding a massive exogenous shock native to

459
00:30:21,555 --> 00:30:26,295
Bitcoin, we are already within the realm of the bottom. Now, that brings up the next logical

460
00:30:26,295 --> 00:30:30,735
question, like what are the downside levels to watch for? Well, the first one that I really,

461
00:30:30,915 --> 00:30:36,255
really like, and this is sort of in my mind, bottom of the barrel basement price, would be

462
00:30:36,255 --> 00:30:41,075
the long-term holder cost basis. So this is the level at which the average price at which

463
00:30:41,075 --> 00:30:46,475
those on the network who have held Bitcoin for more than 155 days purchase their Bitcoin.

464
00:30:46,675 --> 00:30:50,095
Technically, it's the price at which they last moved their Bitcoin. But for all intents and

465
00:30:50,095 --> 00:30:54,115
purposes, nobody usually, apart from Bitcoin maximalists like myself and you and everyone

466
00:30:54,115 --> 00:30:57,415
watching the show, they typically only move Bitcoin when they sell it, right? So it's a

467
00:30:57,415 --> 00:31:02,875
pretty good indicator of Bitcoin's cost basis for this cohort of people who very rarely sell.

468
00:31:03,195 --> 00:31:09,755
Currently, that level is at $49,500. So if Bitcoin were to drift extremely low,

469
00:31:09,755 --> 00:31:13,635
Like that would be the bottom of the barrel price for Bitcoin to go.

470
00:31:14,595 --> 00:31:21,015
The other level is actually just the normal network wide cost basis, otherwise known as the realized price.

471
00:31:21,135 --> 00:31:25,075
This doesn't delineate between long term holders and short term holders.

472
00:31:25,315 --> 00:31:29,535
This is just the average price at which all of the coins on the network were last moved.

473
00:31:29,715 --> 00:31:32,515
This doesn't factor in coins that haven't moved in decades.

474
00:31:32,515 --> 00:31:35,575
And so it ultimately does drag the price down a little bit.

475
00:31:35,575 --> 00:31:43,475
But that said, it still tends to be a relatively accurate reflection of Bitcoin floors or like a fair Bitcoin value for the market.

476
00:31:43,835 --> 00:31:46,415
And that is currently at $53,000.

477
00:31:46,855 --> 00:31:54,955
So if you take those two in confluence with one another, then that sort of points to the low 50s, high 40s as being the bottoming range.

478
00:31:55,135 --> 00:31:58,015
Why do I think we probably won't even visit the 40s?

479
00:31:58,455 --> 00:32:03,975
So this is something that might age terribly depending on how the next couple of weeks go in markets.

480
00:32:03,975 --> 00:32:09,615
um bitcoin has never bottomed without touching the long-term holder cost basis however the long-term

481
00:32:09,615 --> 00:32:15,175
holder cost basis obviously rises over time right now you have to imagine people who've been holding

482
00:32:15,175 --> 00:32:20,895
bitcoin for over half a year chances are they're like wow this is well below my cost basis i'm

483
00:32:20,895 --> 00:32:25,115
going to average down these are bottom of the barrel prices we just closed below the 200 week

484
00:32:25,115 --> 00:32:29,275
moving average we just closed below the power law floor for the first time ever we might not have i

485
00:32:29,275 --> 00:32:33,915
didn't check that but i think we're close anyone in the show please don't come after me um this is

486
00:32:33,915 --> 00:32:38,695
a cheap level for Bitcoin. I'm going to stack that. And then guess what? It raises the overall

487
00:32:38,695 --> 00:32:43,595
long-term holder cost basis. And so the floor will ultimately, in my mind, actually come out

488
00:32:43,595 --> 00:32:49,495
of the high 40s into the 50s, maybe even 51 or 52K. Reason number two being the fact that

489
00:32:49,495 --> 00:32:54,615
the structure of Bitcoin's market today is fundamentally different than it ever has been

490
00:32:54,615 --> 00:32:59,175
in prior cycles. I think I had mentioned this on the last show as sort of the reason why I don't

491
00:32:59,175 --> 00:33:03,295
think Bitcoin's going to go into the 30s or something crazy like that. And that's because

492
00:33:03,295 --> 00:33:09,375
the ETFs, right? We harp on this all day long, but the ETFs are ultimately so diamond handed

493
00:33:09,375 --> 00:33:14,595
relative to normal Bitcoin holders, it's not even funny. They're over two times as likely to hold

494
00:33:14,595 --> 00:33:18,635
their Bitcoin during a massive drawdown, according to the data, than normal Bitcoin holders. So all

495
00:33:18,635 --> 00:33:23,075
of the boomers that we like to make fun of, you know, who've been denigrating Bitcoin for years

496
00:33:23,075 --> 00:33:27,095
and only just started buying, like they're more diamond handed than many of you guys watching the

497
00:33:27,095 --> 00:33:31,795
show, unless we have boomers who own the ETFs, in which case good on you. But the reality is-

498
00:33:31,795 --> 00:33:32,635
Is that still the case?

499
00:33:32,635 --> 00:33:34,135
Because I know there have been outflows,

500
00:33:34,135 --> 00:33:36,535
like quite significant outflows over the last few weeks.

501
00:33:36,535 --> 00:33:38,835
Yes, so now we've seen outflows tick up.

502
00:33:38,835 --> 00:33:39,435
I don't know if I have

503
00:33:39,480 --> 00:33:44,080
data in front of me. I'll try to pull it up while I'm yapping. Here it is. Okay. Eighth straight

504
00:33:44,080 --> 00:33:51,680
outflow, $231 million. June has seen a total of $4.3 billion leave the Bitcoin ETFs,

505
00:33:51,680 --> 00:33:57,540
the largest monthly outflow this year. So yeah, we're starting to see massive outflows. However,

506
00:33:57,980 --> 00:34:03,960
it is still the case. And also they did hold extremely tough all the way until Bitcoin was

507
00:34:03,960 --> 00:34:11,860
about high 60s, right? Mid to high 60s, that's when they started selling earnestly. But if you

508
00:34:11,860 --> 00:34:17,660
take it just from the top of the market to where we are now, the data still tracks, I believe,

509
00:34:17,740 --> 00:34:21,740
I'll have to rerun the numbers, that the ETF holders are about two times as likely to hold

510
00:34:21,740 --> 00:34:26,600
their Bitcoin during a massive drawdown than the normal spot Bitcoin holders. And thinking logically,

511
00:34:27,120 --> 00:34:31,000
it sort of makes sense, right? Think about it this way. If you were a retiree who is allocating

512
00:34:31,000 --> 00:34:39,040
passively every two weeks to one of the Bitcoin ETFs, right? Or an index fund that holds some of

513
00:34:39,040 --> 00:34:43,600
the Bitcoin ETFs or tracks them, whatever your work allows you to do. Are you going to be trading

514
00:34:43,600 --> 00:34:49,560
in and out of those things actively? Probably not, right? Some people do use IRAs and 401ks

515
00:34:49,560 --> 00:34:53,520
in order to trade in and out of for tax advantages, but we're talking about like

516
00:34:53,520 --> 00:34:58,680
half a percent of the market, right? The lion's share of the market that is using retirement

517
00:34:58,680 --> 00:35:03,560
accounts and buying the etfs are just buying every two weeks and then not doing anything with it so

518
00:35:03,560 --> 00:35:07,960
there is some selling that comes from that cohort of course like we literally are seeing it right now

519
00:35:08,760 --> 00:35:13,320
however for the most part it's kind of a corner of the market that just holds tough and doesn't

520
00:35:13,320 --> 00:35:17,240
do much of anything which is really cool like that's what you want for bitcoin to mature as

521
00:35:17,240 --> 00:35:22,200
an asset from a price perspective uh having lower volatility and so that's one of the reasons uh one

522
00:35:22,200 --> 00:35:27,400
of the chief reasons other than the fact that the floor is so close the historical floor being the

523
00:35:27,400 --> 00:35:31,820
the long-term holder cost basis is so close compared to where we are now, but also the fact

524
00:35:31,820 --> 00:35:38,400
that the makeup of the market, if you will, is just so mature relative to what it has been

525
00:35:38,400 --> 00:35:43,840
previously that I don't think you're going to see a 70% drawdown this time around. I think we

526
00:35:43,840 --> 00:35:51,000
probably max out around 65%. We see a bottom around 45K to 50K, and that's that. People,

527
00:35:51,000 --> 00:35:55,760
again, will say, as they did in 2022, Bitcoin's going much lower, Bitcoin's going much lower,

528
00:35:55,760 --> 00:36:00,620
Bitcoin's going much less and then it won't. So that's what I'm happy, comfortable planting my

529
00:36:00,620 --> 00:36:04,260
flag in. I'm happy to lose a little bit of credibility if I'm wrong, but that's how I

530
00:36:04,260 --> 00:36:08,820
think the cycle plays out. The interesting thing about that number as well around the 50K mark is

531
00:36:08,820 --> 00:36:14,500
that in the 2021-22 bull market, it was all about trying to figure out if Bitcoin can sustain being

532
00:36:14,500 --> 00:36:19,180
a trillion dollar market. And it obviously was battling against that level for a long time,

533
00:36:19,440 --> 00:36:23,260
went way above it up to a $2 trillion market. But this is it testing a trillion dollars again.

534
00:36:23,260 --> 00:36:27,640
Is there something important about that or is that just sort of a coincidence?

535
00:36:29,960 --> 00:36:33,800
It's part coincidence, but I'll actually steel man the case for it being important.

536
00:36:34,320 --> 00:36:39,000
I think Bitcoin being in the top 20 largest assets in the world is something that is only

537
00:36:39,000 --> 00:36:40,800
going to improve its credibility over time.

538
00:36:40,880 --> 00:36:41,460
Why do I say that?

539
00:36:41,520 --> 00:36:46,500
Well, I'm sure we've all seen the clip at this point of that billionaire, something Paul

540
00:36:46,500 --> 00:36:51,240
Grantham, something Grantham screaming about Bitcoin to Joe Kiernan on CNBC, who's our

541
00:36:51,240 --> 00:36:51,420
boy.

542
00:36:51,580 --> 00:36:52,420
We love that guy.

543
00:36:52,940 --> 00:36:54,320
Hopefully he can come on the show.

544
00:36:54,400 --> 00:36:55,560
That'd be an excellent episode.

545
00:36:55,960 --> 00:36:57,060
Who was defending Bitcoin.

546
00:36:57,180 --> 00:36:58,560
He was saying, Bitcoin's worthless.

547
00:36:58,820 --> 00:37:02,280
It's worth no more than a chain letter, yada, yada, yada.

548
00:37:02,520 --> 00:37:03,640
All the stuff you've seen before.

549
00:37:03,680 --> 00:37:06,240
All the stuff you were hearing about Bitcoin when it was $1,000, right?

550
00:37:06,360 --> 00:37:07,160
Lo and behold, here we are.

551
00:37:08,000 --> 00:37:14,680
For every Bitcoin denier who acts like that, there are hundreds of Bitcoin skeptics who

552
00:37:14,680 --> 00:37:15,980
don't think like that, right?

553
00:37:16,180 --> 00:37:21,680
They've simply been told or seen or heard or believed that Bitcoin is largely worthless

554
00:37:21,680 --> 00:37:26,420
through their grapevine. It's a strong opinion they may have, but it's loosely held, right?

555
00:37:26,660 --> 00:37:29,800
Versus the Paul Granthams of the world, the Warren Buffetts of the world. I think that's his name,

556
00:37:29,880 --> 00:37:35,120
by the way, Paul Grantham. Anyone correct me in the comments. Versus all of those guys who have

557
00:37:35,120 --> 00:37:39,440
strong opinions, strongly held. They are so confident that Bitcoin's absolutely worthless.

558
00:37:39,540 --> 00:37:44,920
For every one of those guys, you have hundreds of people who just think Bitcoin isn't worth much.

559
00:37:45,220 --> 00:37:50,080
But the more often that Bitcoin is in that top 20 largest assets in the world category,

560
00:37:50,080 --> 00:37:55,720
the more often that Bitcoin outperforms all of the other crypto in the market, the more often

561
00:37:55,720 --> 00:38:00,680
that Bitcoin outperforms everything else during these major bull market rallies, which I believe

562
00:38:00,680 --> 00:38:04,400
we're about to enter into, Bitcoin's about to enter into its next bull market at some point

563
00:38:04,400 --> 00:38:08,920
later this year, early next year, then the more of those people get converted. So I suppose in

564
00:38:08,920 --> 00:38:13,000
real time, I just still made the case for why I think Bitcoin above a trillion dollars, or at the

565
00:38:13,000 --> 00:38:18,260
very least, like the largest individual assets in the world, is actually quite important. Because

566
00:38:18,260 --> 00:38:20,920
from a credibility perspective that matters quite a bit.

567
00:38:21,520 --> 00:38:23,280
You wouldn't reuse a Bitcoin address,

568
00:38:23,440 --> 00:38:26,240
so why does your phone broadcast the same identifier for life?

569
00:38:26,880 --> 00:38:29,840
Every SIM has a static ID and carriers, ad networks,

570
00:38:29,940 --> 00:38:31,880
and bad actors all use it to track you.

571
00:38:32,340 --> 00:38:35,320
The big carriers have been caught selling that data over and over again.

572
00:38:36,220 --> 00:38:38,380
CAPE is America's privacy-first mobile carrier.

573
00:38:38,740 --> 00:38:42,300
Their identifier rotation feature changes your ID every 24 hours

574
00:38:42,300 --> 00:38:44,820
so you look like a different subscriber every single day.

575
00:38:45,460 --> 00:38:46,720
And SIM swaps are off the table.

576
00:38:46,720 --> 00:38:50,260
Your number can't move without a 24-word phrase that only you hold.

577
00:38:50,640 --> 00:38:53,640
There's also no name at sign up, no social security number,

578
00:38:53,800 --> 00:38:55,480
and there's no profile to build on you.

579
00:38:55,920 --> 00:38:59,560
If you're a Bitcoiner in America, I honestly don't know why you'd use any other network.

580
00:39:00,060 --> 00:39:02,820
You can head over to cape.co forward slash WBD

581
00:39:02,820 --> 00:39:06,540
and use the code WBD for 33% off your first six months.

582
00:39:06,980 --> 00:39:10,940
That's C-A-P-E dot co forward slash WBD.

583
00:39:11,180 --> 00:39:12,600
If you hold Bitcoin for long enough,

584
00:39:12,720 --> 00:39:14,580
there's probably going to come a time when you need some dollars.

585
00:39:14,960 --> 00:39:18,120
Maybe it's for a business expense, a tax bill, a property purchase,

586
00:39:18,220 --> 00:39:20,560
but whatever it is, you might not want to sell your Bitcoin.

587
00:39:21,160 --> 00:39:22,360
That's where Ledin comes in.

588
00:39:22,800 --> 00:39:26,620
Ledin lets you borrow against your Bitcoin so you can access cash without selling your stack.

589
00:39:27,160 --> 00:39:29,820
They've originated over $10 billion of loans since 2018,

590
00:39:30,160 --> 00:39:32,080
and they've operated through multiple Bitcoin cycles.

591
00:39:32,820 --> 00:39:34,760
And Ledin has now introduced new tiered rates,

592
00:39:34,880 --> 00:39:36,880
so there's no negotiation, no guesswork.

593
00:39:36,880 --> 00:39:38,940
It's just the larger the loan, the lower the rate,

594
00:39:39,080 --> 00:39:41,360
and you can see all the rates up front before you apply.

595
00:39:41,860 --> 00:39:43,640
The important part for me, though, is the custody.

596
00:39:44,080 --> 00:39:45,340
With Ledin's custodied loans,

597
00:39:45,460 --> 00:39:48,040
your Bitcoin collateral is never lent out to generate interest.

598
00:39:48,460 --> 00:39:50,640
You also get all the tools to properly manage the loan,

599
00:39:50,900 --> 00:39:53,180
including LTV alerts, auto top-ups,

600
00:39:53,180 --> 00:39:55,940
and the ability to repay whenever you want with no penalties.

601
00:39:56,700 --> 00:39:57,620
I've used Ledin myself.

602
00:39:57,820 --> 00:40:00,040
The application has taken me less than 15 minutes

603
00:40:00,040 --> 00:40:02,040
and you get dollars in your account within hours.

604
00:40:02,480 --> 00:40:04,500
So you don't need to choose between getting liquidity

605
00:40:04,500 --> 00:40:06,380
and sticking to your long-term Bitcoin plan.

606
00:40:06,740 --> 00:40:07,940
With Ledin, you can do both.

607
00:40:08,440 --> 00:40:11,380
Check your rate using the loan calculator at ledin.io

608
00:40:11,380 --> 00:40:15,020
and use the code WBD for 0.25% off your first loan.

609
00:40:15,540 --> 00:40:19,020
That's L-E-D-N dot I-O and use the code WBD.

610
00:40:19,160 --> 00:40:21,340
Do you want to pay less in taxes and stack more Bitcoin?

611
00:40:21,740 --> 00:40:22,500
Of course you do.

612
00:40:22,860 --> 00:40:24,820
Well, by mining Bitcoin with Blockware, you can.

613
00:40:25,360 --> 00:40:27,640
Under section 168K of the US tax code,

614
00:40:27,860 --> 00:40:30,900
Bitcoin mining servers qualify for 100% bonus depreciation.

615
00:40:31,340 --> 00:40:33,220
This means every dollar you spend on miners

616
00:40:33,220 --> 00:40:35,460
can directly offset your income in a single year.

617
00:40:35,880 --> 00:40:38,200
And it's true for both business owners and W-2 earners.

618
00:40:38,540 --> 00:40:40,720
So if you have $100,000 in ordinary income,

619
00:40:40,720 --> 00:40:45,520
you can purchase $100,000 in miners and potentially offset your tax liability entirely.

620
00:40:46,520 --> 00:40:49,960
Blockware's mining as a service does all the heavy lifting. They secure the rigs,

621
00:40:50,060 --> 00:40:52,760
they source the low-cost power, and they handle all the day-to-day maintenance.

622
00:40:53,240 --> 00:40:57,140
So you get to stack Bitcoin every single day while drastically shrinking your tax bill.

623
00:40:57,280 --> 00:41:03,000
Get started today at blockwaresolutions.com forward slash WBD and use code WBD for $100

624
00:41:03,000 --> 00:41:07,960
off your first miner. That's blockwaresolutions.com forward slash WBD.

625
00:41:07,960 --> 00:41:14,600
okay can we get into the uh the elephant in the room so like who are the buyers who the sellers

626
00:41:14,600 --> 00:41:19,140
right now and obviously the all the pressure has been on sailor over the last few weeks

627
00:41:19,140 --> 00:41:26,460
all kind of started when he sold his 32 bitcoin bitcoin price tanked and uh the narrative started

628
00:41:26,460 --> 00:41:30,560
building around the sort of sustainability of stretch and micro strategy do you want to kind

629
00:41:30,560 --> 00:41:35,640
of fill us in as to everything that's happened since then yeah so it's wild so i actually went

630
00:41:35,640 --> 00:41:43,600
on a debate. Last Saturday, we filmed it. And I spoke to one of the most outspoken bears against

631
00:41:43,600 --> 00:41:48,780
strategy, Vinny Lingham. And his argument boiled down to this against strategy. His argument boiled

632
00:41:48,780 --> 00:41:53,860
down to, I don't like Saylor because he's a narcissist. And I think he's going to be terrible

633
00:41:53,860 --> 00:41:57,740
for Bitcoin because he's going to be forced to sell Bitcoin, even though he doesn't have a lot

634
00:41:57,740 --> 00:42:09,585
of leverage on his balance sheet That what his argument boiled down to And that what the bear I not even being facetious here like rude I have tried to steel man their bear case so so much And I literally sat in front of this guy

635
00:42:09,585 --> 00:42:10,625
and talked to him about it.

636
00:42:10,845 --> 00:42:12,205
And that's what his argument boiled down to.

637
00:42:12,245 --> 00:42:14,145
But to step back for people who might not be aware,

638
00:42:14,225 --> 00:42:15,185
for people who've been in a coma

639
00:42:15,185 --> 00:42:17,505
or off Bitcoin Twitter for the last month,

640
00:42:18,105 --> 00:42:19,385
Saylor sold 32 Bitcoin.

641
00:42:19,745 --> 00:42:21,425
Now, this isn't the first time he's sold Bitcoin.

642
00:42:21,565 --> 00:42:23,025
He sold a few hundred Bitcoin

643
00:42:23,025 --> 00:42:25,445
back at the bottom of the bear market during 2022,

644
00:42:25,725 --> 00:42:27,645
but it didn't get as many headlines back then.

645
00:42:27,705 --> 00:42:28,385
Actually it did,

646
00:42:28,385 --> 00:42:35,605
But because they're a much larger company now, and Michael Saylor is obviously much more famous of an individual, it got more press this time around.

647
00:42:36,805 --> 00:42:48,945
Selling 32 Bitcoin or selling Bitcoin in general is something that Strategy, Saylor, Fong Lee, they've all spoken about at length numerous times for the last several months leading up to actually selling that 32 Bitcoin.

648
00:42:49,505 --> 00:42:51,505
So they've been forecasting they intend to sell.

649
00:42:51,645 --> 00:42:55,805
Why did they wind up selling if they can still raise money in capital markets?

650
00:42:56,145 --> 00:42:57,305
Well, it's for a very simple reason.

651
00:42:57,305 --> 00:43:08,505
And that reason is it's one of the three reasons that the S&P Global Committee that not only gives them their credit rating, but determines whether or not they're included in the S&P 500 gave them as to why they're not included in the S&P 500.

652
00:43:08,745 --> 00:43:15,285
The other two reasons were an over-reliance on capital markets and too much reliance on convertible debt.

653
00:43:15,285 --> 00:43:21,305
And so what did strategy or and also not rely on capital markets, but not a large dollar reserve.

654
00:43:21,425 --> 00:43:30,825
So what were the three moves that strategy made over the next few weeks once S&P Global said, hey, we're not going to rate you properly and we're not going to include you in S&P 500 because of these three reasons?

655
00:43:30,925 --> 00:43:32,445
Well, they addressed all of them.

656
00:43:32,705 --> 00:43:34,165
First, they built a U.S. dollar reserve.

657
00:43:34,685 --> 00:43:37,945
Then they retired several billion dollars worth of their convertible debt.

658
00:43:38,005 --> 00:43:39,985
Now they only have six point seven billion dollars worth.

659
00:43:40,405 --> 00:43:42,085
All of it is near zero percent.

660
00:43:42,085 --> 00:43:46,085
The first of it is due at the very end of next year, I believe, actually 2028.

661
00:43:46,305 --> 00:43:47,565
So 27 months from now.

662
00:43:48,205 --> 00:43:51,245
And then the third thing they did is they sold their Bitcoin.

663
00:43:51,445 --> 00:43:55,785
They literally said, you know, we're not going to include you in the S&P 500, but multi,

664
00:43:55,905 --> 00:44:02,085
multi, multi trillion, 30, 40, 50, 60 trillion dollar market passive inflows up the wazoo

665
00:44:02,085 --> 00:44:06,165
because you are reluctant to sell Bitcoin in order to fund a dividend.

666
00:44:06,365 --> 00:44:09,765
So strategy said, OK, we're going to sell Bitcoin to fund a dividend just to prove that

667
00:44:09,765 --> 00:44:10,105
we can.

668
00:44:10,305 --> 00:44:10,985
They did.

669
00:44:10,985 --> 00:44:16,285
the market went insane. I don't believe the seller and Bitcoin sold off massively. I believe those

670
00:44:16,285 --> 00:44:21,485
two events are disconnected, but at least now you know why sailors sold 32 Bitcoin in case you might

671
00:44:21,485 --> 00:44:26,945
be unaware. A lot of people, the bear case has been, well, they're selling because they're forced

672
00:44:26,945 --> 00:44:32,125
to sell like so many people. And this boils my blood. And I've said outwardly on every show that

673
00:44:32,125 --> 00:44:36,605
I've talked about this, I don't have a material position in micro strategy or strategy, right?

674
00:44:36,605 --> 00:44:41,525
functionally it's under a thousand dollars like point less than point five percent of my portfolio

675
00:44:41,525 --> 00:44:47,385
i don't own any stretch why am i being so outspoken about this company being fine and

676
00:44:47,385 --> 00:44:52,405
not being a systemic risk to bitcoin well because i just it it boils my blood when i see people just

677
00:44:52,405 --> 00:44:57,345
lying through their teeth like words actually have meaning what do i mean by that well a lot of the

678
00:44:57,345 --> 00:45:02,585
people who've been uh bear posting about strategy and sailor have been using the word death spiral

679
00:45:02,585 --> 00:45:06,705
Peter Schiff coined it. He did a podcast about a month ago saying that strategy is about to enter

680
00:45:06,705 --> 00:45:12,285
into a death spiral. I love James Lavish, great friend of the show, both you and I, Danny.

681
00:45:13,585 --> 00:45:18,745
Good on him for not coining death spiral, but bringing it into the mainstream lexicon as far

682
00:45:18,745 --> 00:45:23,705
as this corner of the internet is concerned, but so many people are misusing it. A death spiral

683
00:45:23,705 --> 00:45:28,585
means you have way too much debt on one side of your balance sheet in order to service it.

684
00:45:28,585 --> 00:45:31,085
So to service it, you issue even more debt.

685
00:45:31,385 --> 00:45:32,565
The rate on that debt goes up

686
00:45:32,565 --> 00:45:33,965
because your credit worthiness declines.

687
00:45:34,285 --> 00:45:35,965
And so you need to issue more debt for that.

688
00:45:36,205 --> 00:45:38,965
And it's a never-ending spiral of increasing debt issuance

689
00:45:38,965 --> 00:45:40,625
because of the ever higher interest rate

690
00:45:40,625 --> 00:45:41,465
that you have to pay on it

691
00:45:41,465 --> 00:45:43,285
and no other way of funding your obligations.

692
00:45:43,905 --> 00:45:46,505
Strategy definitionally cannot be in a debt spiral.

693
00:45:47,185 --> 00:45:49,025
Number one, because the remaining convertible debt

694
00:45:49,025 --> 00:45:51,085
they have not only isn't due until 2028,

695
00:45:51,645 --> 00:45:54,205
but is also only 11% of their balance sheet

696
00:45:54,205 --> 00:45:55,645
and has a 0% interest rate.

697
00:45:56,305 --> 00:45:59,185
So in order for strategy to be in a position

698
00:45:59,185 --> 00:46:00,985
where they were forced to sell Bitcoin,

699
00:46:01,285 --> 00:46:02,865
several things would have to happen at once.

700
00:46:03,025 --> 00:46:05,445
I promise I'll get to what's happening now with strategy,

701
00:46:05,865 --> 00:46:07,705
but several things would have to happen at once.

702
00:46:08,045 --> 00:46:11,265
Number one, Bitcoin would have to crash by about 89%

703
00:46:11,265 --> 00:46:13,685
and stay there for the next two and a half years

704
00:46:13,685 --> 00:46:15,005
or the next 27 months.

705
00:46:15,665 --> 00:46:18,125
So that way the debt on their balance sheet

706
00:46:18,125 --> 00:46:21,305
matched their obligations, match their assets,

707
00:46:21,425 --> 00:46:23,165
the Bitcoin they hold perfectly, one-to-one.

708
00:46:23,645 --> 00:46:29,025
Then they would also need to not sell a single dollar from their US dollar reserve, which now

709
00:46:29,025 --> 00:46:35,085
has 17 months worth of dividend coverage in it, right? As of yesterday. And then on top of that,

710
00:46:35,365 --> 00:46:39,105
they would need to not be able to tap the capital markets for one single dollar,

711
00:46:39,365 --> 00:46:43,585
despite proving the fact that they've been able to tap the capital markets for over $60 billion

712
00:46:43,585 --> 00:46:50,285
over the last four years. Oh, and to top all of that off, they would not only is their convertible

713
00:46:50,285 --> 00:46:56,685
debt not due until 2028, 27 months from now, but it's due in five separate tranches or six separate

714
00:46:56,685 --> 00:47:03,605
tranches over the next four years after that. So Bitcoin would have to crash by 89% and stay there

715
00:47:03,605 --> 00:47:07,745
and strategy would have to not sell a single dollar from its US dollar reserve and they would

716
00:47:07,745 --> 00:47:12,525
not be able to attack capital markets at all. So like when you put it that way, it sounds really

717
00:47:12,525 --> 00:47:17,645
ridiculous. All of the strategy. So the last thing I'll say here, and then I'll get to the latest

718
00:47:17,645 --> 00:47:24,665
updates, is that a lot of people think that the preferred equities, such as STRC, are

719
00:47:24,665 --> 00:47:24,865
dead.

720
00:47:25,405 --> 00:47:26,445
They're not, right?

721
00:47:26,585 --> 00:47:29,545
And obviously, Saylor isn't going to suspend the dividend.

722
00:47:29,945 --> 00:47:34,365
He's not going to cut the dividend to 4%, 3%, something more manageable for him.

723
00:47:35,065 --> 00:47:36,405
He's even raising it, right?

724
00:47:36,425 --> 00:47:37,445
Which is good, right?

725
00:47:37,445 --> 00:47:40,325
Because when fixed income instruments sell off, it's literally just the market telling

726
00:47:40,325 --> 00:47:41,205
you they want a higher yield.

727
00:47:41,725 --> 00:47:43,285
So that's what Saylor is giving them.

728
00:47:43,325 --> 00:47:44,585
This is the opposite of a debt spiral.

729
00:47:44,585 --> 00:47:53,485
But anyway, because the preferred equities are not debt, they're not an obligation, so they will never be forced to sell Bitcoin to fund them.

730
00:47:53,765 --> 00:47:58,765
In a worst-case scenario, and I'm not saying this would happen, Saylor could suspend the dividend, right?

731
00:47:59,065 --> 00:48:00,205
He's not going to do that.

732
00:48:00,405 --> 00:48:07,385
He doesn't need to do that because it just laid out the case for why strategy would never need to do that based on their current capital structure.

733
00:48:07,385 --> 00:48:13,085
11% leverage ratio, $50 billion worth of Bitcoin on their balance sheet, 18 months worth of cash

734
00:48:13,085 --> 00:48:19,385
dividend coverage. And the other thing, I promise I'll wrap all this up in a bow, is STRC, this is

735
00:48:19,385 --> 00:48:25,745
the major thing I'm sure we'll chat more about it, is a lot of people have been likening STRC

736
00:48:25,745 --> 00:48:31,585
to TerraLuna. For those who are unaware, TerraLuna was an algorithmic stablecoin that was around

737
00:48:31,585 --> 00:48:37,665
during the bear market of 2022, it collapsed. During the summer of 2022, an algorithmic stable

738
00:48:37,665 --> 00:48:42,545
coin essentially means on one side, you have the stable coin. On another side, you have a crypto

739
00:48:42,545 --> 00:48:48,705
token that can be minted or burned out of thin air in order to make sure that the price of the

740
00:48:48,705 --> 00:48:55,105
stable coin stayed around $1. Well, a lot of people were levering up on one side in order to

741
00:48:55,105 --> 00:49:03,245
arb the difference between the price differential and $1. Once the price began moving very much

742
00:49:03,245 --> 00:49:08,825
against that asset, people got liquidated. They were forced to sell. The amount of this crypto

743
00:49:08,825 --> 00:49:14,085
token that needed to be minted into existence rose quite a lot, and that drove more for selling,

744
00:49:14,205 --> 00:49:18,965
so on and so forth. And so effectively, you had this useless crypto token inflated into infinity,

745
00:49:19,305 --> 00:49:22,925
and this algorithmic stablecoin, which was supposed to be pegged around $1,

746
00:49:22,925 --> 00:49:29,805
completely collapses a result. STRC is nothing like that. For one, it is a NASDAQ listed instrument.

747
00:49:30,625 --> 00:49:35,165
Granted, there's some junk listed on the NASDAQ. I won't lie. But strategy is a balance sheet that

748
00:49:35,165 --> 00:49:40,545
is $50 billion, like 28 years of runway from a Bitcoin perspective for all of their dividends.

749
00:49:41,065 --> 00:49:46,165
And that's if Bitcoin doesn't move at all. Not only that, but it's not an algorithmic stablecoin.

750
00:49:46,625 --> 00:49:51,045
It's not a stablecoin. It has no peg. That's one of the other things that a lot of people have been

751
00:49:51,045 --> 00:49:57,085
saying. They said, oh, STRC has de-pegged from $100. Well, here's the deal. It's supposed to

752
00:49:57,085 --> 00:50:01,145
float around $100. That's the truth. And that's why they're raising the yield in order to make it

753
00:50:01,145 --> 00:50:07,545
so that it drifts higher, closer to that $100 mark. But there's no peg. It's not pegged to $100.

754
00:50:07,885 --> 00:50:12,805
A lot of the death spiral folks, the financially illiterate people who need to buy Finance for

755
00:50:12,805 --> 00:50:17,105
Dummies, you can literally pirate it for free to search Finance for Dummies PDF online,

756
00:50:17,105 --> 00:50:20,865
have been saying that STRC de-pegged,

757
00:50:20,865 --> 00:50:24,105
strategies entering into a death spiral, all this stuff.

758
00:50:24,105 --> 00:50:34,430
It couldn be further from the truth Sorry if that was a bit of an off the rails defense of strategy and what happened but that why they sold 32 Bitcoin That what happening with STRC and strategy

759
00:50:35,510 --> 00:50:38,810
STRC falling from where it was poses no risk to strategy.

760
00:50:39,070 --> 00:50:40,770
It poses no risk to Bitcoin.

761
00:50:41,330 --> 00:50:41,930
Everything's fine.

762
00:50:42,190 --> 00:50:45,030
We're just close to the bottom of a bear market and people are searching for a villain and

763
00:50:45,030 --> 00:50:47,030
Michael Saylor tends to be a convenient one.

764
00:50:47,770 --> 00:50:49,470
I disagree with some of the stuff you said, though.

765
00:50:49,470 --> 00:50:53,910
I think when you said everything's fine, I don't think this shows that everything's

766
00:50:53,910 --> 00:50:58,890
fine like i think the market is clearly saying like you like you said earlier the the yield

767
00:50:58,890 --> 00:51:03,430
that they're offering is just nowhere near high enough um like i think again i agree it's obviously

768
00:51:03,430 --> 00:51:07,750
a hundred dollars is not a peg but it kind of gets into semantics like that is the par value of this

769
00:51:07,750 --> 00:51:13,070
preferred um it's where sailor wants it to be trading and it's currently trading at like 84

770
00:51:13,070 --> 00:51:19,110
dollars like that shows that our value is one cent but i do agree in in the prospectus but i do agree

771
00:51:19,110 --> 00:51:24,450
with you that yes it should be trading around 100 what is that do we need to get into that or is that

772
00:51:24,450 --> 00:51:30,170
not important no no it's not important not okay okay but so it does show that something's not

773
00:51:30,170 --> 00:51:35,630
quite right here and and i don't know exactly what that is i think maybe it's when there was

774
00:51:35,630 --> 00:51:40,250
kind of a race to see who could offer the dividend payments the most regularly everyone's kind of

775
00:51:40,250 --> 00:51:44,410
sided with sata because it was doing daily dividend payments and then like stretch broke

776
00:51:44,410 --> 00:51:48,590
down like why do you think this happened is it just over leverage or is there something deeper

777
00:51:48,590 --> 00:51:55,010
right so i think i mean you you started to see strc trade down a lot once sailor sold that 32

778
00:51:55,010 --> 00:52:00,170
bitcoin i don't think him selling 32 bitcoin is what caused that massive bitcoin sell off when he

779
00:52:00,170 --> 00:52:05,990
announced the sale at like 68k all the way down to like 62k um i think that that was more geopolitical

780
00:52:05,990 --> 00:52:09,530
stuff happening we were approaching a deal then we bombed them again and we were approaching another

781
00:52:09,530 --> 00:52:14,110
deal then we bombed them again combined with a leverage flush um i do think there was some selling

782
00:52:14,110 --> 00:52:19,010
at the margin. But regardless, what sailors selling 32 Bitcoin did do is it drove STRC to

783
00:52:19,010 --> 00:52:24,090
sell off massively. You pair that with all of the sensationalist headlines, it sells off even more.

784
00:52:24,350 --> 00:52:28,810
But I think the broader reason that it sold off is quite simple. I think people are just demanding

785
00:52:28,810 --> 00:52:34,390
a higher yield for this instrument. Now, the reason behind that, we can speculate. There are

786
00:52:34,390 --> 00:52:38,850
a couple of reasons. I think the most probable, obviously, there was some mania around the selling,

787
00:52:38,970 --> 00:52:43,230
right? People selling because they were panicked. But largely, over a long enough time horizon,

788
00:52:43,230 --> 00:52:47,750
markets are efficient. They might not be right, but they're somewhat efficient, right? Market

789
00:52:47,750 --> 00:52:51,310
inefficiencies are how we make money. If everybody knew about the Fed printing a ton of money,

790
00:52:51,390 --> 00:52:55,450
Bitcoin would be, you know, a billion dollars a coin, but it's not. And that's the opportunity.

791
00:52:55,930 --> 00:52:59,770
Similarly with STRC, I think the market was just saying they wanted a higher yield.

792
00:52:59,990 --> 00:53:06,230
In my mind, that's because Bitcoin is closer to its bottom and its forward returns over the next

793
00:53:06,230 --> 00:53:11,170
six months, 12 months, two years, five years are going to be higher on a year over year basis as a

794
00:53:11,170 --> 00:53:16,030
results of it being closer to the bottom than not. So just to illustrate an example, Bitcoin's

795
00:53:16,030 --> 00:53:21,490
compound annual growth rate from $70,000 a couple of months ago, all the way up to a potential cycle

796
00:53:21,490 --> 00:53:30,050
high of $40,000, or excuse me, $400,000, would be something like 31%, 32%, right? But from a cycle

797
00:53:30,050 --> 00:53:37,630
low of $58,000 where we are now, that's a forward compound annual growth rate of like 41%, 42%,

798
00:53:37,630 --> 00:53:44,270
45%. And so naturally, if strategy's business model is buying Bitcoin, buying this asset with

799
00:53:44,270 --> 00:53:48,750
a high CAGR on one side, issuing preferred equities and paying a yield on the other side,

800
00:53:48,770 --> 00:53:53,810
and then capturing the difference, basically, in my mind, this is simply investors, apart from the

801
00:53:53,810 --> 00:53:58,550
panic selling, of which there was a lot, it's simply investors writ large saying, hey, we project

802
00:53:58,550 --> 00:54:03,670
the forward returns of this thing to be larger. So we want to be compensated more fairly and get

803
00:54:03,670 --> 00:54:08,170
more of the return, if that makes sense. In my mind, that's obviously what it was, but who knows?

804
00:54:08,790 --> 00:54:12,030
Yeah, no, that does make sense. I do think the other thing that played into this, though,

805
00:54:12,050 --> 00:54:17,330
is when they retired the converts with the cash that was like from everything that I had seen,

806
00:54:17,330 --> 00:54:20,990
it seemed like that cash was being saved to pay dividend payments in the future.

807
00:54:21,550 --> 00:54:26,330
And so when they used a lot of that cash to retire preferreds, like I think the market was

808
00:54:26,330 --> 00:54:32,870
probably a bit shaken by that. I understand the idea of why he did that. He wants to be included

809
00:54:32,870 --> 00:54:37,670
in the S&P index, but it seemed like a misstep to me. I don't know if you agree with that.

810
00:54:38,510 --> 00:54:42,610
I tend to agree. I think it definitely, here's my thinking. It's tough to get into the head of a guy

811
00:54:42,610 --> 00:54:48,550
like Michael Saylor, but here's my thinking. All of their guidance, right? They're the Bitcoin

812
00:54:48,550 --> 00:54:52,610
central bank. They offer forward guidance, just like the Fed. I'm kidding, of course. Bitcoin has

813
00:54:52,610 --> 00:54:56,490
to know a central issuer. But for all intents and purposes, he was telling the market, hey, look,

814
00:54:56,530 --> 00:55:00,710
we're going to raise this US dollar reserve so that way we could pay down dividends. He even had

815
00:55:00,710 --> 00:55:04,010
that like spaceship graphic that a lot of people were saying, look, it's a pyramid scheme. Anyway,

816
00:55:04,190 --> 00:55:09,310
that was the intention of the US dollar reserve. But then like three or four weeks later, the S&P

817
00:55:09,310 --> 00:55:12,910
global committee comes out and says, yeah, we're not going to include you in the S&P 500. And you

818
00:55:12,910 --> 00:55:18,410
get a B minus credit rating despite being over collateralized because you have an over-alliance

819
00:55:18,410 --> 00:55:22,650
on convertible debt, right? And so sailor immediately went, no, we want to get in the

820
00:55:22,650 --> 00:55:26,870
S&P 500, retire it right now, right? And so the dollar reserve that was set aside for dividend

821
00:55:26,870 --> 00:55:32,630
payments, he decided to grab it, sell off more than half of it, and use it to pay down those,

822
00:55:32,970 --> 00:55:40,330
or buy back those converts rather. So from a guidance perspective, because he did something

823
00:55:40,330 --> 00:55:44,550
the market wasn't expecting, I definitely think that, I don't know if it was necessarily the wrong

824
00:55:44,550 --> 00:55:48,270
move, but what I'll say is that from a long-term capital structure perspective, I think it was good,

825
00:55:48,590 --> 00:55:53,210
particularly because those had like 6.5% interest rates compared to the zeros that they left on.

826
00:55:53,810 --> 00:55:58,230
But I think from a timing perspective and a communication perspective, it totally spooked

827
00:55:58,230 --> 00:55:58,590
the market.

828
00:55:58,770 --> 00:56:00,490
And I definitely think that it led to some of the sell off.

829
00:56:00,570 --> 00:56:06,330
And it's also, I think, one of the chief reasons that they decided to recapitalize the US dollar

830
00:56:06,330 --> 00:56:09,690
reserve up to about a year and a half worth of dividend coverage.

831
00:56:09,930 --> 00:56:12,550
So I think they recognize they made a mistake and tried to amend it.

832
00:56:12,910 --> 00:56:12,970
Yeah.

833
00:56:13,110 --> 00:56:18,350
So that's the thing they came out with a day or two ago, which is increasing the US dollar

834
00:56:18,350 --> 00:56:18,730
reserve.

835
00:56:19,070 --> 00:56:22,090
Is it 17 months of runway they've got at the moment in terms of paying the dividends?

836
00:56:23,210 --> 00:56:29,570
they've got a monet like a bitcoin monetization scheme like basically they're going to start

837
00:56:29,570 --> 00:56:34,370
selling bitcoin which i actually think is a good thing like i i think they should if they need if

838
00:56:34,370 --> 00:56:39,810
they need to sell bitcoin to get money to pay the um monthly dividends or bi-weekly dividends or

839
00:56:39,810 --> 00:56:44,490
whatever like they should do that like why do you think that's been looked at so unfavorably by the

840
00:56:44,490 --> 00:56:50,090
market yeah so i think that and i said this a couple of weeks ago i love this topic so much

841
00:56:50,090 --> 00:56:53,670
because it shows who is like a sensationalist

842
00:56:53,670 --> 00:56:54,810
and who is a little bit more rational.

843
00:56:55,070 --> 00:56:57,370
Even folks like Andy Constant on X,

844
00:56:57,790 --> 00:56:59,970
like the biggest strategy detractors out there

845
00:56:59,970 --> 00:57:00,790
have been saying like,

846
00:57:00,870 --> 00:57:02,190
I don't get what all the fuss is about

847
00:57:02,190 --> 00:57:03,270
for sailors selling Bitcoin.

848
00:57:03,470 --> 00:57:05,050
Like I don't, why are people, anyway,

849
00:57:05,530 --> 00:57:08,670
it shows who is being a sensationalist

850
00:57:08,670 --> 00:57:10,790
and trying to get views just for the sake of that

851
00:57:10,790 --> 00:57:12,410
versus who's looking at this rationally.

852
00:57:13,010 --> 00:57:14,270
The market was spooked.

853
00:57:14,330 --> 00:57:15,350
And I said this several weeks ago,

854
00:57:15,430 --> 00:57:18,550
the market was hugely spooked by sailors selling 32 BTC.

855
00:57:19,070 --> 00:57:20,150
They weren't expecting it.

856
00:57:20,230 --> 00:57:22,030
It came suddenly, even though he forecasted it,

857
00:57:22,050 --> 00:57:22,850
but it came suddenly,

858
00:57:23,270 --> 00:57:25,630
the first time he has done it in three and a half years.

859
00:57:26,450 --> 00:57:27,950
But then Saylor went and said,

860
00:57:27,990 --> 00:57:28,290
you know what?

861
00:57:28,790 --> 00:57:31,590
We're going to establish a Bitcoin monetization framework

862
00:57:31,590 --> 00:57:33,730
to just formalize this thing that we've been discussing.

863
00:57:34,650 --> 00:57:37,390
And we're going to make it so that we're authorizing ourselves

864
00:57:37,390 --> 00:57:40,210
to sell up to $1.25 billion to cover dividend interest.

865
00:57:40,690 --> 00:57:44,810
Whoa, that's a lot more than the like 10 million something

866
00:57:44,810 --> 00:57:46,730
from the 32 Bitcoin that he just sold.

867
00:57:47,210 --> 00:57:48,190
The market didn't move an inch.

868
00:57:48,190 --> 00:57:53,470
In fact, strategy went up, STRC went up, and Bitcoin went up yesterday. It's down now for

869
00:57:53,470 --> 00:57:58,170
other reasons. But Bitcoin went up, right? So clearly the market really likes the idea of

870
00:57:58,170 --> 00:58:02,770
selling Bitcoin. The 32 Bitcoin sale was ripping the bandaid off and priming the market for what's

871
00:58:02,770 --> 00:58:08,070
to come. What's to come isn't forced selling, right? I already went through why strategy will

872
00:58:08,070 --> 00:58:12,250
never be forced to sell Bitcoin. Well, not never, but the likelihood that they'll ever be forced to

873
00:58:12,250 --> 00:58:19,110
sell Bitcoin is extremely low. More like systematic selling, right? And this is sort of the end game,

874
00:58:19,210 --> 00:58:23,350
the end state of the machine I just described a moment ago and why I believe Strategy will always

875
00:58:23,350 --> 00:58:27,930
be a net buyer of Bitcoin. Effectively, and this is kind of the strategy thesis that we've been

876
00:58:27,930 --> 00:58:32,730
talking about ever since they launched the Preferreds. At first, when there were no Bitcoin ETFs,

877
00:58:32,890 --> 00:58:36,570
Strategy was sort of the de facto Bitcoin ETF. Hey, we're a public company. We have a relatively

878
00:58:36,570 --> 00:58:41,130
small software business, but most of what we do is buy Bitcoin. If you want Bitcoin exposure with

879
00:58:41,130 --> 00:58:42,890
a little bit of leverage by us.

880
00:58:43,470 --> 00:58:44,630
And then the ETFs came out.

881
00:58:44,950 --> 00:58:46,450
No reason to own strategy anymore.

882
00:58:47,310 --> 00:58:59,035
And so strategy was effectively bringing Bitcoin to the trillion equity market right Now they launched the preferreds right They began launching the preferreds two summers ago And here we are June 2026

883
00:58:59,455 --> 00:59:00,895
tapping into a much larger market,

884
00:59:00,975 --> 00:59:03,455
the $300 trillion plus global fixed income market,

885
00:59:03,455 --> 00:59:05,155
and even a little bit of the real estate market.

886
00:59:05,895 --> 00:59:07,515
Investors who either have mandates

887
00:59:07,515 --> 00:59:10,035
to not be able to buy Bitcoin,

888
00:59:10,155 --> 00:59:11,115
get direct Bitcoin exposure,

889
00:59:11,335 --> 00:59:13,095
and also people who might have

890
00:59:13,095 --> 00:59:14,395
a slightly lower risk profile

891
00:59:14,395 --> 00:59:15,615
and want Bitcoin exposure

892
00:59:15,615 --> 00:59:17,095
and a little bit of that upside,

893
00:59:17,395 --> 00:59:18,975
but without needing to hold this high growth.

894
00:59:18,975 --> 00:59:23,095
asset. Like fixed income is the largest market on earth for a reason. There's a huge demand for

895
00:59:23,095 --> 00:59:27,715
those things. And so strategy effectively, what they're doing with the preferreds by buying a ton

896
00:59:27,715 --> 00:59:33,995
of Bitcoin and then funding it by offering an asset that yields anywhere from 8% to 12% with

897
00:59:33,995 --> 00:59:40,435
STRC now after this latest dividend raise that's coming up, is they are tapping into a market that

898
00:59:40,435 --> 00:59:45,695
otherwise could not or would not purchase BTC. And they're using the demand from that market to

899
00:59:45,695 --> 00:59:49,495
fund Bitcoin purchases. Effectively, what you've got, and I just described this a moment ago,

900
00:59:49,575 --> 00:59:54,015
is a Bitcoin transmutation machine. On one side, you've got this high growth asset doing anywhere

901
00:59:54,015 --> 00:59:59,555
from $20 to $35 annually over multi-year timeframes. And then on the other side, you've got

902
00:59:59,555 --> 01:00:06,195
a funding mechanism, STRC and others, preferred stocks that are offering anywhere from 8% to 12%.

903
01:00:06,195 --> 01:00:11,555
And the spread between the two is strategy's business model. They're using this demand to

904
01:00:11,555 --> 01:00:15,455
fund purchases of this thing. And then, and this is the part that they haven't been doing yet,

905
01:00:15,455 --> 01:00:17,435
and it's the reason people have called them a Ponzi scheme,

906
01:00:17,795 --> 01:00:20,575
sell enough of this thing to fund this thing.

907
01:00:20,935 --> 01:00:22,475
That's what they haven't done to this point.

908
01:00:22,675 --> 01:00:25,135
But this finally closes the loop, right?

909
01:00:25,175 --> 01:00:25,935
Because to this point,

910
01:00:26,075 --> 01:00:28,055
they have funded new Bitcoin purchases

911
01:00:28,055 --> 01:00:29,755
by issuing more STRC,

912
01:00:29,835 --> 01:00:33,095
but they've also funded STRC dividend payments

913
01:00:33,095 --> 01:00:36,495
by issuing more STRC and MSTR, their common stock.

914
01:00:36,975 --> 01:00:39,555
By selling the necessary amount of Bitcoin

915
01:00:39,555 --> 01:00:41,415
to fund STRC dividends,

916
01:00:41,875 --> 01:00:43,875
the Ponzi allegations go away completely.

917
01:00:44,175 --> 01:00:45,255
Because on this side,

918
01:00:45,255 --> 01:00:49,275
they have a productive asset that is funding the dividend. All of a sudden, you can't call them a

919
01:00:49,275 --> 01:00:56,095
Ponzi scheme anymore. And the only issue people can logically take with strategy is believing that

920
01:00:56,095 --> 01:01:00,435
Bitcoin cannot go up indefinitely or it cannot maintain that really high compound annual growth

921
01:01:00,435 --> 01:01:05,075
rate, right? The Ponzi allegations go away entirely. Strategy sort of enters into its final

922
01:01:05,075 --> 01:01:10,075
form where it is a net buyer of Bitcoin over time. It's buying a ton of Bitcoin using the demand for

923
01:01:10,075 --> 01:01:15,235
this instrument. This is doing 30%. This is doing 12%. They sell enough to fund the 12%. They

924
01:01:15,235 --> 01:01:19,435
keep the rest and the machine keeps running. It's much more sustainable in the long run, in my mind.

925
01:01:19,895 --> 01:01:25,155
And the last thing I'll say here, it's very telling that the market did not sell off.

926
01:01:25,495 --> 01:01:30,235
On the news that strategy intends to sell $1.25 billion of Bitcoin, it's very telling that the

927
01:01:30,235 --> 01:01:34,775
market did the opposite. It went higher, right? Because this is what the market wants. In the

928
01:01:34,775 --> 01:01:38,755
market's eyes, this is a much more sustainable business model. In my eyes, this is a much better

929
01:01:38,755 --> 01:01:42,375
business model. And I'm very happy that they're taking this step. Yeah, I think it's a better

930
01:01:42,375 --> 01:01:48,215
business model i think the market will panic as soon as they actually sell again um but but like

931
01:01:48,215 --> 01:01:53,435
i think as of right now the total payments that they need to make is just under two billion dollars

932
01:01:53,435 --> 01:01:58,215
a year like the bitcoin market can sustain two billion dollars being sold across 12 month period

933
01:01:58,215 --> 01:02:03,715
like that's easy that's nothing yeah um like i think it's a good idea too um i don't necessarily

934
01:02:03,715 --> 01:02:09,915
know why you would hold mstr anymore but like i have a bias in this because i just like holding

935
01:02:09,915 --> 01:02:14,635
Bitcoin. But it seems like the Bitcoin is going to get sold down from the reserve. Obviously,

936
01:02:14,635 --> 01:02:17,895
they're going to be stacking as more and more people come into the preferred. But then anytime

937
01:02:17,895 --> 01:02:21,495
that there's an opportunity for them to go in and hit the ATM and dilute shareholders,

938
01:02:21,855 --> 01:02:26,135
they're going to do that. It seems very clear. I think the idea of getting to a 3XM nav is

939
01:02:26,135 --> 01:02:32,075
history. I don't see how that ever happens again. And I mean, we're nearly at the flippening.

940
01:02:32,595 --> 01:02:37,975
The stretch is $84 and MicroStrategy is $86. That's the real flippening.

941
01:02:37,975 --> 01:02:41,835
I love it. Real flippening. Never happened with Ethereum, but it happened here.

942
01:02:42,755 --> 01:02:45,595
Yeah. Why do you think anyone would want to hold MSTR?

943
01:02:46,755 --> 01:02:51,855
Yeah. I mean, I think the bull case for MSTR is it's now less of a Bitcoin proxy and more of a

944
01:02:51,855 --> 01:02:57,375
true Bitcoin operating company. So Jack Mallers is getting what he wanted out of Saylor in that

945
01:02:57,375 --> 01:03:02,355
they're using Bitcoin's monetary properties and its growth to create a financial product that is

946
01:03:02,355 --> 01:03:07,815
tied to that. Right. So in the past, the reason you buy strategy is because they lever up Stackathon

947
01:03:07,815 --> 01:03:12,135
of Bitcoin, they outperform Bitcoin. Now, I believe there is a world where they can outperform

948
01:03:12,135 --> 01:03:17,095
Bitcoin. However, it's going to be not as a result of the leverage they have on their balance sheet,

949
01:03:17,235 --> 01:03:21,495
but as a result of the service they're providing, right? In the same way that you invest in Apple

950
01:03:21,495 --> 01:03:25,095
because the iPhone is a product that sells really well and you want exposure to that company,

951
01:03:25,475 --> 01:03:30,855
you buy strategy because all of these different fixed income products always sell very well,

952
01:03:30,855 --> 01:03:34,215
particularly SCRC, sells extremely well, they're offering a valuable service,

953
01:03:34,535 --> 01:03:37,595
and you want exposure to the company, not because of the levered Bitcoin exposure,

954
01:03:37,595 --> 01:03:41,115
Obviously, that's nice, but because of the service they provide, right?

955
01:03:41,215 --> 01:03:49,615
And I think in that universe, too, Bitcoin holders are also quite happy because, and I agree with you here, Danny, a lot of people view MSTR as a Bitcoin alternative.

956
01:03:49,735 --> 01:03:50,375
It's not, right?

957
01:03:50,375 --> 01:03:51,795
I want to be abundantly clear to anyone listening.

958
01:03:54,215 --> 01:03:59,495
MSTR effectively, at that stage, fully steps into becoming a Bitcoin company, right?

959
01:03:59,515 --> 01:04:00,315
It's core to what they are.

960
01:04:00,315 --> 01:04:06,975
You're not buying MSTR as a result because you want, you know, levered Bitcoin exposure or as an alternative to your Bitcoin.

961
01:04:06,975 --> 01:04:11,635
it's something to buy in addition to your bitcoin as a small portion of your stack if you believe

962
01:04:11,635 --> 01:04:15,175
that this company is providing a valuable service and you want exposure to that equity over time i

963
01:04:15,175 --> 01:04:22,175
think that's how the story flips and i think maybe that's what causes the the strategy haters to

964
01:04:22,175 --> 01:04:27,695
finally flip and but we'll see i think they're just just like peter schiff hates bitcoin completely

965
01:04:27,695 --> 01:04:31,055
irrationally i think there will always be some people who hate on this company completely

966
01:04:31,055 --> 01:04:37,615
irrationally, but we'll see. Just a quick question for you. So the dividend rate went to 12%.

967
01:04:37,615 --> 01:04:43,295
It's currently trading at like just over $84. How high do you think it'll have to go to get back to

968
01:04:43,295 --> 01:04:49,215
the $100 benchmark? That's a good question. Looking right now at the effective yield,

969
01:04:49,615 --> 01:04:56,595
when STRC is trading at $84, it bottomed out, I think, in the mid-70s, around $74, $75. Now it's

970
01:04:56,595 --> 01:05:05,055
back up to 84 on the dividend announcement for 12% up from 11.5%. The effective yield is at 14.14%.

971
01:05:05,555 --> 01:05:10,015
So those things are coming closer to each other. The effective yield and the dividend are coming

972
01:05:10,015 --> 01:05:14,715
closer to each other. What you want is for those to be as close as possible, meaning STRC is as

973
01:05:14,715 --> 01:05:21,255
close to 100 as possible. The effective yield was 15.5% three days ago. And so after strategy

974
01:05:21,255 --> 01:05:25,235
established their monetization framework and they announced the dividend increase, clearly the market

975
01:05:25,235 --> 01:05:30,155
is not only more comfortable with the corporate risk associated with strategy, but they also think

976
01:05:30,155 --> 01:05:35,995
12% sounds much more reasonable. And so I think chances are maybe one more rate increase and you

977
01:05:35,995 --> 01:05:40,155
see the convergence of those two things, but it could be even higher. It could be 13%, which

978
01:05:40,155 --> 01:05:44,655
sounds insane. But number one, Strive is doing it. They're totally fine. They have a lot of trading

979
01:05:44,655 --> 01:05:50,235
volume. And number two, again, the forward returns of Bitcoin, ostensibly because we are very close

980
01:05:50,235 --> 01:05:53,915
to the cycle bottom, are much higher than they would be if we were in the middle of the bear

981
01:05:53,915 --> 01:05:59,775
market, right? So investors are demanding a higher percentage. And from that, and as a result,

982
01:05:59,975 --> 01:06:04,455
in my mind, that'll be fully sustainable going forward. Obviously, if and when they do increase

983
01:06:04,455 --> 01:06:09,715
the dividend to like 12.5%, 13%, you will see headlines saying, oh, they're getting desperate

984
01:06:09,715 --> 01:06:14,515
now, folks. They're about to blow up. This is not the case. So I think, long story short,

985
01:06:14,615 --> 01:06:17,235
probably one or two rate increases, but we'll have to see what happens.

986
01:06:18,015 --> 01:06:23,815
All right, Joe, this has been awesome. Parting advice for anyone who's panicking through their

987
01:06:23,815 --> 01:06:27,135
their first Bitcoin bear market, what should people be doing right now?

988
01:06:27,995 --> 01:06:31,835
Well, first and foremost, welcome. And you're watching a great show for it. What Bitcoin did

989
01:06:31,835 --> 01:06:38,395
is the prime spot to be during a Bitcoin bear market. What I'll say is this, like ultimately,

990
01:06:38,395 --> 01:06:44,055
if you find yourself in a position where you need Bitcoin to go up before a certain date,

991
01:06:44,055 --> 01:06:49,155
or you cannot have Bitcoin fall to a certain level, otherwise you lose money,

992
01:06:49,155 --> 01:06:54,395
then I would say reconsider your strategy. Take off some of the leverage. Just buy spot Bitcoin

993
01:06:54,395 --> 01:06:58,795
and hold it. Like it's really simple, guys. It's simple, but it's not easy. Right. And for those

994
01:06:58,795 --> 01:07:03,295
of you who might be sitting in spot and still feeling the pain, I understand I've been there

995
01:07:03,295 --> 01:07:06,615
too. Danny's been there too. Everybody watching this show has been there too. It's a difficult

996
01:07:06,615 --> 01:07:11,875
thing. But the fact of the matter is, regardless of what's happening right now, nothing has changed

997
01:07:11,875 --> 01:07:15,255
about the underlying Bitcoin thesis or its performance relative to the rest of the market.

998
01:07:15,415 --> 01:07:18,915
Bitcoin is still the best performing major macro asset over the last,

999
01:07:18,960 --> 01:07:24,760
decade, even down 50%. It beats every other major macro asset that's within a mile of it,

1000
01:07:24,800 --> 01:07:29,400
right? From a yearly percentage perspective, it's still the 15th or 16th largest asset in the world,

1001
01:07:29,520 --> 01:07:33,420
storing $1.1 trillion worth of value, or like, you know, $1 trillion worth of value.

1002
01:07:34,100 --> 01:07:41,800
Over time, it has proven to be the best store of value, definitionally, in the market. And it just

1003
01:07:41,800 --> 01:07:47,180
tends to do this. So the final thing I'll say is that, obviously, people telling you to zoom out,

1004
01:07:47,180 --> 01:07:51,120
it gets old, right? Zoom out and understand where we are and why Bitcoin exists.

1005
01:07:51,920 --> 01:07:55,100
You can see the white paper behind me. My camera isn't high enough resolution for people to zoom

1006
01:07:55,100 --> 01:08:02,540
in. But the reason I have this behind me, in the Genesis block, the inscription from the article

1007
01:08:02,540 --> 01:08:06,300
in the Genesis block said, Chancellor, I'm bringing for second bailout for banks, of second

1008
01:08:06,300 --> 01:08:09,900
bailout for banks. That was in regards to the UK financial crisis happening around the same time

1009
01:08:09,900 --> 01:08:15,620
as the US financial crisis, obviously it was global. And the reason that headline was chosen

1010
01:08:15,620 --> 01:08:20,660
was very simple and that's because the fed cannot stop printing money global central banks cannot

1011
01:08:20,660 --> 01:08:33,590
stop printing money out of thin air and not just printing money but printing money at an accelerating pace that is why bitcoin exists it is an absolutely scarce monetary asset that has absorbed and will continue to absorb the excess liquidity the excess money

1012
01:08:33,590 --> 01:08:38,810
printing that global central banks just can't stop printing, right? So as long as that remains

1013
01:08:38,810 --> 01:08:43,110
the case, as long as central banks keep printing money, Bitcoin's value prop remains unchanged.

1014
01:08:43,270 --> 01:08:46,970
And a 50% drawdown isn't something that should scare you. It should be viewed as an opportunity

1015
01:08:46,970 --> 01:08:52,730
and nothing more. I love it, man. Joe, what a way to end the show. Tell everyone where they can go

1016
01:08:52,730 --> 01:08:56,370
and check out, you've got your YouTube channel's crushing. Where can they check out all the work

1017
01:08:56,370 --> 01:08:59,870
that you're doing? Absolutely. Well, Danny, thanks so much for having me on. If this is a

1018
01:08:59,870 --> 01:09:05,030
collaboration, you can just go down there, click my name, click subscribe, or before you do watch

1019
01:09:05,030 --> 01:09:08,930
some of the videos, or you can just search my name, Joe Consorti up there in the search bar.

1020
01:09:08,990 --> 01:09:13,170
If you're listening on audio, you can just go to Google, Google Joe Consorti. You can find me there.

1021
01:09:14,110 --> 01:09:17,950
Awesome. Thank you, man. I will speak to you soon. We've got to do this again. That was really cool.

1022
01:09:18,510 --> 01:09:20,550
Absolutely. Thanks, Danny. I appreciate it. Bye-bye.

1023
01:09:22,730 --> 01:09:23,230
you