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Is Bitcoin stupid cheap yet?

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Based on my experience, no, it's not stupid cheap yet.

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If you have no Bitcoin, like, should you be buying?

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Yeah, you should be buying.

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If you're under allocated, should you be buying?

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Yeah, probably.

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I mean, DCA works.

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I'm still of the mind that it is a bear market.

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Bear markets are about both price and time.

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So we've had quite a bit of pain on price.

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we haven't had that much time yet.

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Like if Bitcoin nuked to, yeah,

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to forehandle something in the 40s now,

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would I want to be buying that in size?

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Yeah, probably I would.

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Andy Edstrom, the guy who called the top,

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said that this time wasn't different.

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And it looks like you were right, man.

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Well, Danny, it's always a pleasure to see you.

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I don't think I quite called the top.

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I did call the bear market with 60% probability at a time when price was much higher than where it is today where we're recording.

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So, you know, I hope I saved some Bitcoiners some pain and we can talk more about that.

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I'm still long-term bullish, right?

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I haven't changed my 10-year price target.

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But when I published Why Buy Bitcoin in 2019, I think price was, when I went to press, I think price was eight and a half and the target was 400.

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And, you know, it was a 10-year price target.

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So we're six years in.

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We've come a good part of the way.

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And haven't changed the target.

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400 by 2029 seems totally reasonable.

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You know, neither Total Boltard nor Andy Wysso Barish, although I've definitely gotten a lot of Andy Wysso Barish comments over the years.

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So, yeah, you know, pain of cycles, the four-year cycle, or is it the 3.8-year cycle?

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We could bust that myth.

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Remains intact.

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And there were many, many people in this space who spoke with great confidence and certainty that the four-year cycle had ended.

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Or better yet, there's some people who said it never existed.

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That I really won't understand.

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You're talking about me here.

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Oh, no, that's you, Danny?

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This is stuff that I want to get into this because, yes, I definitely said those things.

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I think this time being different was something that I totally got caught up in.

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I still don't know if it still might be in my opinion.

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I'd be interested to know your take on this.

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But like, why did you not get caught up in that?

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I guess painful experience, I suppose, is the first answer.

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So I'm class of 2017, like late 2017.

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I bought my first coin the day after the Bcash hard fork.

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okay august 2nd i think it was and not not because i was waiting that's a weird time to buy yeah no

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it's a great time to buy and it's not because i was waiting for the hard force because there were

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some people out there who were like oh no the hard fork's coming is this gonna you know is this

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gonna kill bitcoin no i had just discovered it and i like i couldn't fund my coinbase account

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fast enough right so i was desperately trying to buy uh so did not get any free coins uh in that

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little event, unfortunately. But yeah, man, so I've lived through two painful bear markets. And

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there was a time when I was almost all in, right, substantially all in,

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definitely all in crypto and then all in Bitcoin, because I sort of, you know, figured out that

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crypto was not the thing and Bitcoin was the thing. But I've also lived through two savage

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bear markets and I'm only human and I feel pain. I felt pain in those bear markets. And even though

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I've sold coins along the way, the pain of loss for me exceeded the opportunity cost of, you know,

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not having ended up with more coins, I guess, if I would have ended up with more coins. But

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yeah, so that's how it's gone for me. And, you know, I did, part of it was based on analysis

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this. Well, okay. Let's go back to the, I'll go back to the why. So I'll try to keep this short

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because people know the story. Like, okay, why four-year cycle? What was the premise originally?

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Well, the first time it hadn't happened yet. So people were like, oh, are the miners like really

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going to do this? Are they really going to cut the supply to them, you know, by half to themselves?

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And they did it. Okay. So that uncertainty was removed and perhaps that caused the, you know,

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the rally after the first cycle. You know, after the second cycle, obviously it was still a major

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supply shock. And there might have been some doubt, I think, especially under or among those

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who were newer to Bitcoin at the time. This was still before my time. So I'm sort of speculating

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here. OK, eventually you get a few cycles in and you say, OK, it should be irrelevant.

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But there's still the fact that if anyone's going to attack the network, the optimal time to do it,

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honestly, is right after having because that's when the most mining equipment, the most ASICs

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are sort of marginally profitable.

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So if a government or consortium of governments

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or whoever were going to try to tip the thing over,

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the time to do it would be right after a halving.

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So that's still a fundamental characteristic.

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And that'll never go away,

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although as the issuance falls more and more,

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it becomes less and less relevant.

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But then, of course, you still have the fact

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that whales have a lot of coins.

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If Galaxy Digital is telling the truth

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And it was one guy that sold 80,000 coins that fateful day last year.

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Right.

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That means there are still whales that have a ton of coins.

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By the way, you have to ask yourself if he sold 80,000, like how many did he have?

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Because he probably didn't sell them all.

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So so, yeah.

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So now whales always could cause the end of the cycle because they could dump on all of our heads if they chose to.

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And then it happened again last year.

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And so I think that was definitely a factor in my thinking in terms of, oh, yeah, how concentrated is the ownership?

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OK, it's still pretty concentrated.

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And then, you know, the whole bear market, bull market thing, it's also empirical in terms of how price behaves relative to information.

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So it's almost definitional that in a bull market, when you get good news, price pumps.

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And when you get bad news, it doesn't matter.

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And then, of course, the opposite in the bear market.

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And I started to see signs of that, you know, as the year wore on last year when good news wasn't helping price and bad news, you know, was basically causing causing downdraft.

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And so kind of reading the tea leaves and then obviously looking at the liquidity element.

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Like I follow Michael Howell a bit and others who are in the liquidity space watching that closely.

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And the words coming out of their mouths were getting more hedged and sort of more wishy-washy and mealy-mouthed.

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And they were saying things like, yeah, we don't think the liquidity cycle is over yet, but it's looking kind of weak.

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and it's looking short-term week and maybe kind of we think it's not over yet,

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but we're not as sure as we used to be.

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And so, yeah, it was a number of factors that came together to cause me to conclude

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that it was more likely than not that a bear was upon us.

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And, you know, someday I'll be wrong.

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Someday you'll be right, Danny.

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Maybe it's this year.

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Maybe this will be the year where we get to new all-time high in a short period of time.

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And the cycles will end. And by the way, it won't matter because all the damage is already done and the pain has been felt.

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And the Bitcoiners who are using leverage got liquidated and all the Bitcoiners that went heavy into the treasury companies got completely wrecked, which is a shame because I know a lot of those people.

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And yeah, it's just a shame. It's an unmitigated disaster. Anyway, I digress.

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yeah so the michael howe thing's interesting because like i i like this idea of like liquidity

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cycles and i think he said this one's rolling over basically now i think he said the first

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quarter of 2026 um which obviously like historically has not been good for bitcoin

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and so when you look at the four-year cycles like american hodl's green green green red meme

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i mean that one broke this cycle because we had green green red um okay sorry sorry i'm gonna i'm

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going to interject and cut you off there. So, and this is one of the myths I want to bust.

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Four-year cycle. Okay. Yes. But people say four-year cycle, what they really mean is,

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you know, epoch, having epoch. And we know those actually aren't quite four years, you know,

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it's 3.8 years or something. And if you look, this was another factor too. I didn't mention,

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I should have, I'm glad you brought it up because I didn't mention it was the literal top, right?

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Was the same number of days past the having to the day in this cycle that it was in the prior

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cycle. So if you're so, yes, I understand the calendar year thing. But if you're talking about

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like days past the halving, yeah, no, then the cycle's unbroken. But what do you think that is?

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Do you think that's it being a self-fulfilling prophecy or something else? Because excuse me,

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because the actual like supply issuance is becoming less and less relevant.

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Yeah. No, no, no argument there. I definitely think, yes, it's a partly self-fulfilling thing

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when I say that the whales can dump on all our heads. They can and they do. By the way,

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it might not be a terrible thing in the long run It depends on your view right Okay If you want cheap corn great Number go down fantastic Bring it on take us lower show me 50K show me 40K show me lower numbers

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So that's definitely one perspective. Another perspective is if we actually ever want this

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thing to be money, then maybe 50% drawdowns happening on the regular isn't optimal. And so

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the thing about the whales is some of them sell the top and then help set the floor, right? They

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rebuy the bottom. Granted, there are others who are new to Bitcoin who come in and scoop up coins.

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They have dry powder in the down cycle. But as we know, if you're a noob to Bitcoin and you're

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still kind of getting your footing and building your conviction, it's really hard to buy those

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bear markets, those winters. It's really hard to buy those bottoms. Some people do. My hat is off

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to them. And that's great. But yeah, I mean, I think the good news, bad news about the self-fulfilling

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element and the fact that whales can cause a peak is that also they'll have dry powder to

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help set a floor, you know, so that those DGens who are using leverage in Bitcoin don't all get

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taken to the cleaners, don't all get rinsed in the downturn, and only some of them do.

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things like the ETF, obviously Michael Saylor buying as much Bitcoin as ever, do you not think

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that's changing the dynamic of how the market works? Like Saylor buys all the time. So four-year

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cycle is kind of irrelevant to him. ETFs seemingly will be the same. They've actually been really good

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in this bear market so far, at least, I believe. The outflows haven't really been that high.

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I think they've been better holders than just Bitcoin holders. So do you think that will change

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the market dynamic going forward at some point? Yeah. But also you said it,

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sailor buys at any price. Wouldn't it be nice if he just bought at low prices?

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i mean that might help the cycle i guess what you're saying is you know he's a buyer at any

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price so that also says he's irrelevant to the cycle right um he's buying the bottom he's buying

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the top i think actually he buys tops i think empirically he buys tops more than he buys bottoms

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um i'm sure someone smarter than me has studied the details on that but that makes sense because

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that's when money is more readily available for him right it's when he's stocks likely trading at

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hire MNAV, like he can dilute shareholders, he can hit the ATM, he can go and raise money in

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other ways. So he'll always be a buyer at the top. But that on its own will surely change the

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market dynamic a little bit, meaning that if it's not running out, if buyers aren't getting

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exhausted at the top because sale is just continuing to buy, will that not change how

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these sort of four-year cycles work? Yeah, I wonder. I mean, I'm thinking through it as

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you're saying it. I think what I'm thinking is the opposite, which is if he's a net buyer

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on average at the top, then he is incremental demand that's pro-cyclical as opposed to

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anti-cyclical. So that implies he's pushing peak higher at the margin, but he's not there

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as a buyer of last resort in the downturn. So then you might say, okay, yeah, but at some point,

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Andy, won't it be different? Like, won't there just be sort of adoption upcycle, omega candles,

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governments buying, you know, federal government buying, central banks, you know, Bitcoin becoming

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money, the Bitcoin rapture, hyper Bitcoinization. Did I miss any of the of our favorite terms in

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there. You know, will it happen someday? Yeah, it might. It might. And I look forward to being

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there when it is and when it is happening. By the way, I kind of hope it doesn't actually happen

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all that soon because I'm not sure that the world is ready for it. I'm not sure most Bitcoiners are

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ready for it. But yes, I am still struggling to see whether the new players in the market

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are net counter cyclical as opposed to just pro cyclical. Now, the ETFs so far seem to be

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holding in there, right? It seems like people are not panic selling ETFs. And part of that

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is probably wealth managers like me, right?

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Who, although I trimmed exposure for my clients

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when I saw what I thought was kind of the writing

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on the wall of this cycle,

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you know, we still have a position

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because it's like any other investment.

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Okay, here's some more heresy.

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Bitcoin is a lot of things.

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Obviously, it's uncensorable money

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that you can carry across a border when you need to.

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Okay, that's unique.

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And that's an amazing characteristic of Bitcoin.

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But it's also a financial asset.

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And when I say it's a financial asset, really, I mean, it's an investment, which for me is not the same as savings.

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We can get to that sacred cow in a second.

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I'll say it first.

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Bitcoin is not savings.

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Bitcoin is an investment.

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And if Bitcoin is an investment, it's a really attractive investment in my estimation.

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You know, if my price target remains unchanged at 400K for 2029, that's, I don't know, more than a 5X in three years.

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Do I want to hold an investment that my price target is 5X in three years?

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Yeah, you betcha.

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On the other hand, if I am still a believer in the cycle, like, did I want to trim my position, you know, in an appropriate time?

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Yes, also.

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Also, yes, I did.

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And, you know, and by the way, last year, last year was the first year in a long time when I looked around and I saw a number of other investments that interested me on a risk adjusted basis.

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You know, Bitcoin was like, was the true North Star and it's still an important, you know, still plays an important role.

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But there are other ways, you know, there's other ways to to make money also in other financial assets.

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Okay let get to the sacred cow then Bitcoin is not savings I mean Pierre Richard will be livid at that statement Why don you think it savings Because can savings and investment do they have to be mutually exclusive Yeah so and look reasonable people can disagree on exact definitions So words are important here obviously but to me savings is the thing where you have it in case

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something bad happens and you need cash and you need purchasing power on short notice.

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And so that thing is not supposed to regularly lose half its purchasing power, right?

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So let's say wealth managers or financial advisors talk about the savings component.

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They're talking about, you know, you want to have six months of savings, you know, and that's basically generally fiat because if you lose your job or you crash your car, you got to replace it or someone has an unforeseen medical expense, you know, that cash is there and available.

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Now, saving is another thing. Saving is the thing that happens when your income exceeds your living expenses and you have that surplus. And what you do with the amount that you save, you can put it in savings or you can invest it.

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And for investing, you have a longer term time horizon. Probably most people who are in Bitcoin will agree that you want to think about the Bitcoin you hold with a multi-year time horizon. And that is kind of the definition of investment.

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Oh, and by the way, you're expecting your purchasing power in this investment to go up over time, right? We wouldn't be calling it an investment if we expected number to go down and keep going down or number to not go up ever.

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so you know these are these are some of the factors to consider so yeah so to me saving

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or savings are the things that always hold purchasing power over shorter periods of time

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they do erode their purchasing power over longer periods of time as we know that's a problem with

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fiat um but yeah it's hard to see how bitcoin can be savings for people in the world today

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Now, I'll caveat, you know, you talk to Gladstein and Gladstein may say, oh, yeah, but in hyperinflating countries like Bitcoin is rock solid in terms of purchasing power.

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And that's true usually.

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But also those people can now get stable coins, right?

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They can get probably they can get dollar stable coins if they want.

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So is any of this to say that you should not hold Bitcoin or not own Bitcoin?

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No, none of this is to say don't own Bitcoin.

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All this is just to say, let's be reasonable and level-headed about Bitcoin in the context of our lives and our overall portfolios of assets.

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So when do you expect Bitcoin to become savings then?

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Do you think that it will get to a point where the volatility is minimal?

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So the answer is, I don't know. And then the answer is, I don't know, but optimistic. So when it comes to Bitcoin, like hyper Bitcoinization or Bitcoin becoming common transactional money because the purchasing power is less volatile, that would be fantastic. That would be a better world. I'm here for it. Okay.

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also we're probably a long way from that so when i think about will bitcoin reach its potential

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its ultimate potential yeah i think it has a good shot at it i don't know what probability i put on

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that but that would be fantastic if and when it happens someday and then with respect to

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displacing gold or taking significant market share from gold yeah now there my confidence level

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is much higher. I mean, the key pillar of the thesis I put forth in 2019 in the book

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was around taking market share from gold. I had already in that analysis scored Bitcoin versus

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gold and Bitcoin versus the dollar. And Bitcoin already outscored gold on my criteria

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at that time.

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And if anything, it's more so now, right?

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It's more stable even than it was then.

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Like, okay, is it that stable in terms of purchasing power yet?

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No, as we've seen from the recent downturn.

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But it's more stable.

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It's less volatile.

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And it's, you know, basically its characteristics have either held steady

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or improved for the most part.

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And gold, you know, gold's characteristics haven't changed

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in probably a couple of millennia.

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And although there are new, you know, liquid paper forms of gold, I guess, like tether gold, you know, that can be that can be transacted.

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I don't know if you want to get into that.

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But yeah, so so look, taking market share from gold, much higher probability.

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In fact, at the margin, I'll say that's 100 percent probability right now.

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So I'm quite certain that in my clients' portfolios, because I'm the one buying the assets for them, okay, Bitcoin has taken market share from gold. My clients own Bitcoin, my clients own gold, they own monetary metals. And in a world in which Bitcoin did not exist, their gold allocation would be higher.

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So already, you know, for the tiny amount of money in the grand scheme of global assets that represents my clients, I could tell you that Bitcoin is taking market share from gold and I expect it to take more in the future.

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And I hope Bitcoin reaches its ultimate potential.

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But I have no idea what the probability of that is.

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And I don't have much idea how long it's going to take either.

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And corollary to that is the dollar, which is, yeah, I think the death of the dollar has been much exaggerated. And yeah, there's so many ways for fiat to keep limping along, especially for the dollar to keep limping along.

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for a very long time.

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I'm not sure that's such a bad thing overall

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for the United States,

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for me personally as a citizen,

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you know, for the world.

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I'm of two minds.

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I'm conflicted, right?

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Like Andreas, like Andreas always used to say,

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you know, if we can,

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basically if we can bring forward the death of fiat,

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you know, one day sooner,

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then Bitcoin will have been worth it.

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I think he said that, something to that effect.

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And I kind of agree with him overall with the caveat that, yeah, I don't want it to be totally Mad Max and complete mayhem in the transition. So yes, I want it to happen on a reasonable timescale. I want it to happen faster because fewer people will suffer in the long run, except for I'm selfish for me and my family and I don't want to live through a total disaster type of scenario in which it happens too fast.

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one of the funny things whenever anyone mentions andreas i do think of all the bitcoiners that got

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in sort of from 2021 onwards who might not know who he is and and if you don't know who andreas

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antonopoulos is go back and watch all of his videos he was like so instrumental in my whole

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bitcoin thing incredible guy um so as like a wealth manager you said something a little earlier

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in this which is interesting you said like this for the first time in years is it's the only time

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you've seen other interesting investment opportunities. What else have you been looking at?

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So last year was a very active trading time for me personally, and it was mostly about commodities.

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And that now is becoming, I would say, much more consensus. So it's definitely not that much alpha,

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you know, arguably, at least at the moment. And the timescale matters too, of course. So

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obviously, you know, sorry, Bitcoin lovers, I'm still a Bitcoin lover too. But, you know,

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I bought gold last year, I bought silver, I bought, you know, I was a degen trader,

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playing in that stuff. I even, you know, gold is a core holding for clients too. But, you know,

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I even bought silver for clients and sold it well. And so that was a good trade. But then also

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industrial metals, you know, also the whole energy complex. And I'm talking about stocks,

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really. I'm not talking about like, like I don't trade spot oil price or anything like that. I'm

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talking about, you know, Exxon and the majors and the, you know, basically companies that pull stuff

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out of the ground have been a great trade that was so undercapitalized and so under-owned for so

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long that it just got ridiculous. And then you kind of caught the momentum aspect of it too,

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which is not different from Bitcoin in a lot of ways, right? So I have a thesis on what Bitcoin

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should be worth. You have a thesis on what Bitcoin should be worth. Everyone listening,

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most people listening, let's say, probably think fair value of Bitcoin is much, much higher than

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it is right now. Okay. I agree with you. But then of course, you also get these momentum factors at

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play in Bitcoin. A lot of that is also at play in much of the commodities complex. Plus you had the

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sort of fundamental underinvestment for so long that now, yeah, basically too many people got on

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one side of the boat they got on the on the software is eating the world side of the boat

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which wasn't wrong fundamentally but there's also the esg narrative putting people off owning the

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oil stocks and things like that 100 100 i was sitting at lunch with a with a guy i've known

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for years who works at a kind of a value focused mutual fund and they are heavy commodities and

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they been banging the drum for for a while and they were arguably early but that was one of the things we talked about Yeah it was evil to own companies that produced carbon right Carbon energy So yeah

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so that reshuffling has been happening in a big way. Now, going forward, I'm of two minds on it.

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It's moved so far so fast that it sort of looks overbought at the moment.

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So I'm not the guy pounding the table like, you know, go buy oil stocks right now or go buy commodity assets right now.

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But then you have the broader super cycle or call it 20-year cycle that tends to play out in commodities.

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Speaking of historical patterns that someday might not be the case, but remain, you know, the track record remains unbroken. You have these longer cycles in commodities whereby there's some big demand. Okay. Last time it was China. Basically, China was hoovering up all the metal and all the cement and all the materials as they built their economy. And then eventually they got sufficiently built or overbuilt and then supply responded. Right.

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This, of course, is different than Bitcoin, but with most commodities, more supply comes online as the price goes up.

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So then you get overinvestment and then you get a crash in the price of the commodity being produced.

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And then it's a long bear market and then underinvestment.

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And then there's some there's some catalyst from the demand side that restarts the whole thing.

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It seems like right now the catalyst from the demand side is both AI, right, in a major way, obviously the build out, plus the geopolitics, which is rearmament, you know, reindustrialization.

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And this is across the world, right?

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I mean, it's the U.S., of course, but it's also Japan is, you know, the sleeping giant.

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Godzilla's waking up as we speak.

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And there's all these areas around the world where societies and their governments are figuring out that they need to allocate capital differently. And one of the places they need to allocate that capital is to industry. And that's probably got legs.

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So I look at the short term and I say, you know, am I rushing? Would I be rushing to buy commodities assets like right now today? Maybe not necessarily. But do I think it has legs over at least several year time horizon? I think probably. And then, Danny, there's another there's another factor here, which is scenario analysis.

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So, OK, sorry, I own more than one asset. I don't just own Bitcoin, right? I have a portfolio. Why do I have a portfolio? Well, one of the reasons I have a portfolio is because I want to own stuff that does well in certain scenarios that might not be high probability. But those scenarios are scenarios in which other assets I might own get whacked. So I think about war, basically. And obviously, you know, we've already got the Ukraine situation. We've already got stuff going on in the Middle East.

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But I'm talking about a major escalation or, you know, a standoff in Taiwan or actual hot war between the U.S. and China, something along those lines. And in that scenario, many assets get taken to the cleaners. But you better believe that oil and gas and other commodities are going to be in demand.

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And, you know, we haven't electrified the U.S. military just yet.

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And so, yeah, industrial inputs are a major factor in that type of a scenario.

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And that's the type of scenario where a lot of other assets could lose purchasing power.

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And by the way, that's a scenario where I don't know what happens with Bitcoin, at least in the short term.

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You know, some would argue, OK, demand goes up, you know, because more people will be fleeing whatever jurisdiction they're in. They pile into Bitcoin so they can move assets or they pile into Bitcoin because, you know, other things are going down. Maybe that could happen that way or could happen.

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a different way, right? It could be that demand goes down. It could be that for reasons of national

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security, the buy button on Coinbase has been disabled temporarily. Things of that nature.

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I mean, we know that the Nijia quick reaction will be Bitcoin crashes. It happens every time

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as a major geopolitical event. When the US bombed Iran, Bitcoin price crashed. The same thing would

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happen, I'm sure. I mean, longer term, if it was something that played out over weeks and months,

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I don't know. But I know on the announcement, Bitcoin will be crashing, probably pre-announcement

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because it's a prediction market. I think that's a good bet. Good bet, Danny.

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But I want to know, like you said you were in the precious metal trade, got out of silver at

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decent price. Like when do you start rolling money back into Bitcoin as a wealth manager? Because

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we are now down pretty significantly. Like how do you think this bear market plays out?

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Yeah, that's a great question. And I struggle with it daily. Okay. So, yes, Bitcoin is for me and for clients, one of those assets that's a strategic core holding. Okay. Gold is too, by the way.

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In other words, the world would have to change a lot fundamentally for me to not want to hold Bitcoin, to not want to hold gold.

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And then most other major asset classes are also fundamental core holdings in some amount.

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Talking about U.S. stocks as an example.

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Like, am I ever going to own zero U.S. stocks?

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Probably not.

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I'll probably get more selective about which ones I own.

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And I'm probably less likely to go market cap weighted because although that's worked really well for more than a decade, we might be in the later innings. We might have already passed the peak on that situation.

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um and so yeah so then the question is you're getting at is well yeah at the margin you know

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maybe around the core holding when are you when are you getting greedy right um not yet i guess

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is my short answer um you know i think that uh you had joe i think you had joe consorti on recently

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i think he was yeah i can't remember was he calling for a three handle or something or maybe

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he said he thinks we might hit 40 yeah yeah and that's entirely possible like that would not

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surprise me at all but equally i'm not gonna bet like i probably don't put greater fit than 50

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chance on that that's probably a less than 50 chance scenario for me by the way another yeah

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just a reminder always think in terms of percentages and uncertainties right nothing

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is certain uh nothing is certain in this world not even uh not even death anymore i uh i reckon

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but we'll see how that goes um taxes uh possibly possibly um so yeah so so like is bitcoin stupid

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cheap yet in my experience based on my experience no it's not stupid cheap yet um if you have no

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Bitcoin, like, should you be buying? Yeah, you should be buying. If you're under allocated,

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should you be buying? Yeah, probably. I mean, DCA works as a general principle,

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by definition, because you buy more coins when prices down and you buy fewer coins when prices

387
00:37:37,591 --> 00:37:45,251
up. I'm talking about DCA in dollar terms and fiat terms. And so, you know, that's kind of

388
00:37:45,251 --> 00:37:46,131
Always a good idea.

389
00:37:47,551 --> 00:37:54,291
But yeah, I'm still of the mind that it is a bear market, most likely.

390
00:37:54,611 --> 00:37:55,131
It feels that way.

391
00:37:55,611 --> 00:38:00,011
I'm still of the mind that bear markets are about both price and time.

392
00:38:00,731 --> 00:38:03,211
So we've had quite a bit of pain on price.

393
00:38:03,731 --> 00:38:06,951
We haven't had that much time yet.

394
00:38:08,351 --> 00:38:13,011
And we haven't really had ultimate pain on price either.

395
00:38:13,011 --> 00:38:17,691
um i sort of think you have to believe that this time is different which it might be

396
00:38:17,691 --> 00:38:22,291
to think that the bottom or to have confidence around the bottom being in

397
00:38:22,291 --> 00:38:29,131
so my guess is no probably the bottom is not yet in but i don't have confidence in that

398
00:38:29,131 --> 00:38:39,091
uh and you know like a bitcoin nuked to yeah to forehandle something in the 40s now would i want

399
00:38:39,091 --> 00:38:46,411
to be buying that in size yeah probably I would. What if you could lower your tax bill and stack

400
00:38:46,411 --> 00:38:52,651
bitcoin at the same time? Well by mining bitcoin with Blockware you can. New tax guidelines from

401
00:38:52,651 --> 00:38:57,051
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402
00:38:57,051 --> 00:39:03,851
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403
00:39:03,851 --> 00:39:07,291
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404
00:39:08,091 --> 00:39:12,611
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405
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406
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407
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408
00:39:29,751 --> 00:39:35,491
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409
00:39:35,991 --> 00:39:44,491
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410
00:39:44,831 --> 00:39:47,331
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411
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412
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413
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414
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415
00:40:15,095 --> 00:40:17,315
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416
00:40:17,735 --> 00:40:21,135
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417
00:40:21,555 --> 00:40:27,015
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418
00:40:27,015 --> 00:40:35,855
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419
00:40:36,375 --> 00:40:39,075
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420
00:40:39,375 --> 00:40:42,155
If you haven't tried out Club Orange yet, then now is the time.

421
00:40:42,395 --> 00:40:44,915
It's my go-to place to find Bitcoiners whenever I'm traveling.

422
00:40:45,635 --> 00:40:52,135
Club Orange is a social app built for Bitcoiners where you can find local meetups and events in your area and find merchants that are accepting Bitcoin.

423
00:40:52,875 --> 00:40:54,955
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424
00:40:55,135 --> 00:40:56,275
And whether you're at home or traveling,

425
00:40:56,475 --> 00:40:58,475
it's a great place to keep in touch with Bitcoiners

426
00:40:58,475 --> 00:40:59,575
from all over the world.

427
00:41:00,115 --> 00:41:02,415
I've been using Club Orange since it was Orange Pill app

428
00:41:02,415 --> 00:41:03,415
and it really is awesome.

429
00:41:03,635 --> 00:41:05,735
So if you're on there, drop me a DM and say hi.

430
00:41:06,075 --> 00:41:08,155
And if you want to find out more and download the app,

431
00:41:08,275 --> 00:41:10,095
just search for Club Orange on your app store

432
00:41:10,095 --> 00:41:12,055
or go to cluborange.org.

433
00:41:13,155 --> 00:41:14,935
Like I always tell people to ignore anything

434
00:41:14,935 --> 00:41:15,895
I ever say about the price

435
00:41:15,895 --> 00:41:18,895
because like really I've got no skin in the game

436
00:41:18,895 --> 00:41:20,975
in some ways because I'm not selling Bitcoin.

437
00:41:20,975 --> 00:41:26,235
like even if like you'd have told me the problem like in november when you started saying we're

438
00:41:26,235 --> 00:41:30,255
getting close to the top i still wasn't thinking about selling because like i just don't i just

439
00:41:30,255 --> 00:41:36,655
buy and hold bitcoin and and like when we hit 62 i think i put a bit of money back in like the

440
00:41:36,655 --> 00:41:40,375
because i'm obviously i have cash flow so i have money coming in all the time so like

441
00:41:40,375 --> 00:41:47,255
i am buying at these prices i've seriously upped my dca um and i wouldn't be shocked if 60k was

442
00:41:47,255 --> 00:41:50,735
a bottom but i also would be shocked if it goes lower like this is bitcoin weird things happen

443
00:41:50,735 --> 00:41:56,815
But like the one thing I am still convinced about is that we are seriously undervalued at these levels, in my opinion.

444
00:41:57,475 --> 00:42:04,115
And like I have just this like maybe maybe this is pure coke, but I think this time might be different.

445
00:42:04,215 --> 00:42:11,035
Like I wouldn't be surprised if the economy runs really hot in 2026 and we do see Bitcoin go back up to like near all time highs.

446
00:42:12,015 --> 00:42:15,395
It wouldn't shock me either if that happens.

447
00:42:15,575 --> 00:42:16,695
And that'll be great.

448
00:42:17,155 --> 00:42:17,895
I own Bitcoin.

449
00:42:18,075 --> 00:42:18,655
That'll be great.

450
00:42:18,655 --> 00:42:27,855
And, yeah, you know, this is the fundamental question is, well, first of all, I like your statement about, you know, stacking harder, DCing harder.

451
00:42:28,135 --> 00:42:29,595
I think that's a rational approach.

452
00:42:29,935 --> 00:42:31,255
You're never going to catch the bottom.

453
00:42:31,555 --> 00:42:32,655
That's pretty much impossible.

454
00:42:32,975 --> 00:42:34,615
You're never going to catch the top either.

455
00:42:34,795 --> 00:42:35,975
I mean, I didn't catch the top.

456
00:42:36,055 --> 00:42:36,855
I never caught the top.

457
00:42:38,515 --> 00:42:47,335
And so, yeah, you have to kind of, I think Checkmatey on your show recently framed it well.

458
00:42:47,335 --> 00:42:55,375
Yeah, stacking harder, kind of being in really harder accumulation mode, having some dry powder.

459
00:42:55,815 --> 00:42:58,555
The amount of dry powder is different for different people.

460
00:42:59,195 --> 00:43:10,935
And if you're comfortable having no dry powder and literally putting every incremental fiat dollar or Aussie dollar or whatever that you earn into this thing, more power to you.

461
00:43:11,035 --> 00:43:12,575
You're built differently than I am.

462
00:43:13,135 --> 00:43:14,495
Maybe you're a better human.

463
00:43:14,495 --> 00:43:19,815
there i know i know some of you uh out there you know some of my friends are are literally

464
00:43:19,815 --> 00:43:26,335
every dollar they make they they put into btc and they just don't think about it um it's not for me

465
00:43:26,335 --> 00:43:34,395
uh and each of us has different life circumstances but um but yeah stacking harder at stacking harder

466
00:43:34,395 --> 00:43:40,415
as a general principle when price is down by half in the long run that's likely to work that's likely

467
00:43:40,415 --> 00:43:41,215
to work very well.

468
00:43:42,075 --> 00:43:43,955
One of the things you sent across some notes

469
00:43:43,955 --> 00:43:44,615
before this show,

470
00:43:44,895 --> 00:43:46,215
and one of the things you put in there

471
00:43:46,215 --> 00:43:48,095
was that you don't think anyone

472
00:43:48,095 --> 00:43:48,995
should be all in Bitcoin.

473
00:43:50,315 --> 00:43:51,535
I am all in Bitcoin.

474
00:43:51,915 --> 00:43:53,135
Like this is basic,

475
00:43:53,275 --> 00:43:55,055
like apart from a very small amount of cash,

476
00:43:55,195 --> 00:43:56,295
like the business has cash.

477
00:43:57,415 --> 00:43:58,415
It also has Bitcoin,

478
00:43:58,515 --> 00:43:59,155
but it has some cash

479
00:43:59,155 --> 00:44:00,535
because I have expenses there.

480
00:44:00,835 --> 00:44:01,715
But like personally,

481
00:44:01,875 --> 00:44:03,095
I basically have no money in the bank.

482
00:44:03,175 --> 00:44:03,955
It's like all Bitcoin.

483
00:44:04,735 --> 00:44:06,955
Why do you think that's a bad decision?

484
00:44:07,155 --> 00:44:08,435
Because this actually gets back

485
00:44:08,435 --> 00:44:10,095
to the savings idea a little bit.

486
00:44:10,415 --> 00:44:14,155
because while Bitcoin is not great savings,

487
00:44:14,395 --> 00:44:15,315
if you buy it, you know,

488
00:44:15,355 --> 00:44:16,855
if you'd have bought 126K,

489
00:44:17,095 --> 00:44:19,235
like, and now we're at 65, whatever,

490
00:44:19,515 --> 00:44:21,615
like that's not been a great savings vehicle,

491
00:44:21,815 --> 00:44:23,515
but I've been buying Bitcoin since like 2016.

492
00:44:23,995 --> 00:44:26,695
So these price drops don't really,

493
00:44:26,775 --> 00:44:28,675
like it still kind of behaves as savings to me

494
00:44:28,675 --> 00:44:30,295
because we're still way above my cost basis.

495
00:44:30,715 --> 00:44:32,275
So given enough time,

496
00:44:32,315 --> 00:44:33,635
does Bitcoin become savings?

497
00:44:34,555 --> 00:44:35,935
Interesting, interesting framing.

498
00:44:36,095 --> 00:44:37,655
Okay, first I'm going to defend myself.

499
00:44:37,655 --> 00:44:42,235
I said it makes being all in makes no sense for almost anyone, almost anyone.

500
00:44:42,475 --> 00:44:42,535
Okay.

501
00:44:42,755 --> 00:44:48,115
I hedged my language as I usually do, Danny, because, you know, like nothing's 100%, right?

502
00:44:48,415 --> 00:44:54,815
There are rare superhumans in the world like you, and my hat is off to you, you know, if

503
00:44:54,815 --> 00:45:00,135
that makes sense for you, except for I think you also said you were stacking extra hard

504
00:45:00,135 --> 00:45:00,795
in the downturn.

505
00:45:00,895 --> 00:45:03,195
So I'm not sure those things can both be true.

506
00:45:03,295 --> 00:45:05,855
How can you stack extra hard if-

507
00:45:05,855 --> 00:45:07,395
Little dividends from the company.

508
00:45:07,395 --> 00:45:15,215
that's how okay okay all right all right all right well anyway um yeah it i think it's true

509
00:45:15,215 --> 00:45:23,695
that for some people who are early enough where their average cost basis is so much lower than

510
00:45:23,695 --> 00:45:31,695
the purchase price then yeah it uh it's gone great for you you've lived there's two things

511
00:45:31,695 --> 00:45:37,255
there first of all not only are you way above your cost basis your average cost basis but also

512
00:45:37,255 --> 00:45:42,915
So you've been forged in the you've been forged in the fire of Bitcoin bear markets, right?

513
00:45:42,935 --> 00:45:44,395
You've already lived through several.

514
00:45:44,515 --> 00:45:54,915
So if you've already made it through this many, then yeah, then then your conviction is ironclad and and you're probably going to be fine.

515
00:45:55,735 --> 00:46:02,535
And, you know, but also I know I know a number of people and I'm probably I mean, I'm definitely in this category, which is.

516
00:46:03,455 --> 00:46:04,775
I'm bullish on Bitcoin.

517
00:46:04,775 --> 00:46:12,915
I had pretty high conviction and success. Still, I feel pain in the bear market. And then also,

518
00:46:13,115 --> 00:46:18,475
you know, the magnitude of the numbers matters for me. So like when I first started stacking,

519
00:46:19,415 --> 00:46:26,595
you know, it was a large percent of my net worth, but like it wasn't in absolute dollars. It didn't,

520
00:46:26,815 --> 00:46:30,695
it wasn't all that much really at the time, relatively speaking. You go through a couple

521
00:46:30,695 --> 00:46:37,535
cycles. And if you stay all in, you know, pretty soon you're talking about real money, as they say.

522
00:46:38,275 --> 00:46:43,795
And so then the swings in purchasing power can be big, you know, then the up down is like,

523
00:46:43,795 --> 00:46:50,995
plus or minus a really nice house or, you know, whatever else. And so I think some people,

524
00:46:51,055 --> 00:46:57,215
I think different people respond differently. I think some people, when the nominal numbers go up,

525
00:46:57,215 --> 00:47:09,115
And even though one Bitcoin is one Bitcoin, they have to reckon with the fact that most of the real world in terms of living expenses is denominated in fiat.

526
00:47:09,115 --> 00:47:27,915
And so, yeah, losing a significant amount of purchasing power, like, you know, years of income, in some cases, decades of income, if you really, you know, if it's really gone up for you, you know, that can weigh on you psychologically, I think.

527
00:47:27,915 --> 00:47:51,762
I think that can weigh on a lot of people psychologically So you know obviously everyone different You know if you got diamond hands and you don feel pain and you got alligator blood what the I always think of the that movie Rounders and and the Russian Teddy KGB talking about how Matt Damon got alligator blood then you fine

528
00:47:52,022 --> 00:48:00,502
But if you're a mere mortal like me and some of the rest of us, then, you know, maybe maybe 100 percent isn't necessarily for you.

529
00:48:00,502 --> 00:48:01,342
And that's OK, too.

530
00:48:01,342 --> 00:48:08,382
that is okay too funnily though like i'm the opposite i even though the number like the dollar

531
00:48:08,382 --> 00:48:14,402
number that bitcoin drops for me is higher than it than it ever has been like i feel less emotionally

532
00:48:14,402 --> 00:48:18,082
attached to it than i ever have like the first bear market was way harder for me psychologically

533
00:48:18,082 --> 00:48:22,322
than than the one we're going through right now even though the numbers are greater which is i

534
00:48:22,322 --> 00:48:28,022
don't know maybe that i think the reason is like buying bitcoin is super easy selling bitcoin is

535
00:48:28,022 --> 00:48:33,062
really hard like i can because i have like so much conviction about what bitcoin will be in the future

536
00:48:33,062 --> 00:48:39,462
parting with bitcoin becomes a very hard thing like i just don't do it um and like the question

537
00:48:39,462 --> 00:48:44,662
is always like what are you selling it for like am i gonna sell bitcoin for more dollars like i don't

538
00:48:44,662 --> 00:48:49,082
i don't care like i'm okay holding this for longer like i have conviction that bitcoin price will be

539
00:48:49,082 --> 00:48:54,422
higher in the future so like i don't need dollars in my bank account right now it the the like

540
00:48:54,422 --> 00:48:58,682
equation changes because like at some point we're going to buy a nice house and that kind of thing

541
00:48:58,682 --> 00:49:03,862
and that at that point i will sell bitcoin but right now like sell it for what is always my

542
00:49:03,862 --> 00:49:10,542
question yep and that's where i say yep sorry bitcoiners uh last year i sold some coins and i

543
00:49:10,542 --> 00:49:17,282
bought a house well see that's awesome like the the thing like time is more scarce than bitcoin

544
00:49:17,282 --> 00:49:22,842
right you need to enjoy your life as well um i do find pressing the sell button impossible

545
00:49:22,842 --> 00:49:43,522
Yeah, you know, and there's different, it all depends on, you know, what your asset layout is, too. I mean, I, so speaking for myself, like, you know, taxable coins are hard to sell, but I did, I did sell some and, you know, took the pain. And I'm a California taxpayer. So let me tell you, it's, it, it is a lot of pain.

546
00:49:43,522 --> 00:49:50,442
And, you know, and then I have retirement assets and those there's no cost to trade.

547
00:49:50,902 --> 00:49:56,242
And so like, I don't know, like, like a, not like a lemming.

548
00:49:56,402 --> 00:50:05,722
I'm searching for the, you know, for the metaphor, but I look around and I see the world of potential things that I could trade and I don't have to hold them for a long time.

549
00:50:05,782 --> 00:50:10,942
I can hold them for a week or a month or, or a year, or I can hold them for one day.

550
00:50:10,942 --> 00:50:23,922
And so, you know, when I have a sense, and by the way, this is not the way to operate for 99.9% of people. I've been trading markets for whatever, 25 years. So I really don't want to advocate this for people.

551
00:50:23,922 --> 00:50:35,742
but yes when bitcoin is in a bull market nothing keeps up with it it's severely undervalued

552
00:50:35,742 --> 00:50:42,762
you know as a long-term investment i think it makes sense to have a sizable allocation for most

553
00:50:42,762 --> 00:50:50,382
people and then yeah as far as the asymmetry and the variant perception i think you have to ask

554
00:50:50,382 --> 00:50:57,442
yourself. So like, for example, when I put out my thesis in 2019, my sense was there was a major

555
00:50:57,442 --> 00:51:04,162
variant perception. What does that mean? It means that the average person with money or the average

556
00:51:04,162 --> 00:51:10,702
investor or speculator in the world didn't think too much of Bitcoin. And I thought a lot about

557
00:51:10,702 --> 00:51:19,202
Bitcoin and my probability of success multiplied by the potential valuation was very different

558
00:51:19,202 --> 00:51:26,622
from the markets. Today, how much, you know, how variant is the perception? Well, it's definitely

559
00:51:26,622 --> 00:51:33,702
very variant for some Bitcoiners who think that, I guess, that Bitcoin's, you know, going to a

560
00:51:33,702 --> 00:51:41,742
million next year. That's an exaggeration, but, you know, you get the idea. I think the variants,

561
00:51:42,582 --> 00:51:46,882
let's put it this way, a lot more people in the world have done their homework on what Bitcoin's

562
00:51:46,882 --> 00:51:54,642
potential value is. So it's not a, it's probably not a secret or not as much of a secret anymore.

563
00:51:55,322 --> 00:52:01,422
Obviously we know there's all the naysayers, there's professor fax machine, uh, Paul Krugman,

564
00:52:01,422 --> 00:52:08,262
and you know, God knows how many who say it's either worthless or going to zero or never going

565
00:52:08,262 --> 00:52:14,962
to reach its potential, blah, blah, blah. Um, and so, yeah, so, so I guess what I'm saying is

566
00:52:14,962 --> 00:52:34,162
I feel like for the first time in a long time, I have a variant perception on more than one asset in a sizable way. And so for me, it makes sense to hold other things. But look, for many people, it probably doesn't make sense.

567
00:52:34,162 --> 00:52:40,422
Um, and also for many people, you know, they claim they're all in, but also they own a house,

568
00:52:40,742 --> 00:52:45,862
you know, really they have other assets, uh, that they, I guess, don't think of as investment

569
00:52:45,862 --> 00:52:52,962
assets. I do think of, of the housing stuff as investment assets because unfortunately housing

570
00:52:52,962 --> 00:52:57,862
has been monetized. And so, you know, there's so much capital there that you kind of have to think

571
00:52:57,862 --> 00:53:02,662
about it as an investment, even though you, you live in the thing and you consume it. So yeah,

572
00:53:02,662 --> 00:53:08,982
I don't know. I digress. I forgot your original question or comment, but those are a few thoughts.

573
00:53:09,822 --> 00:53:12,522
Yeah, it's interesting. One of the other things you put in your notes

574
00:53:12,522 --> 00:53:20,242
was around the treasury companies. Actually, I guess there's two questions here.

575
00:53:21,082 --> 00:53:25,742
One is, do you think they impacted the bull market in a negative way this time?

576
00:53:26,462 --> 00:53:30,822
And how many of them do you think you can survive this bear market?

577
00:53:32,662 --> 00:53:45,882
So yes, I think they impacted the market in a negative way because if the marginal purchasing power coming into Bitcoin is fiat denominated, right?

578
00:53:45,902 --> 00:53:46,682
Let's say it's dollars.

579
00:53:46,682 --> 00:53:57,282
And the question is, is the dollar flowing into Bitcoin or is it flowing into an entity trading at a premium to Bitcoin, right?

580
00:53:57,282 --> 00:54:06,742
then the entity is absorbing more fiat capital per dollar of bitcoin purchased than it otherwise

581
00:54:06,742 --> 00:54:13,842
would so yes like uh you know like throwing a punch just to left curve that it's like if

582
00:54:13,842 --> 00:54:18,742
something's trading at 2x m nav then you're getting actually half the bitcoin demand yeah

583
00:54:18,742 --> 00:54:23,982
right exactly well said you said it much more succinctly than i did no i was just trying to

584
00:54:23,982 --> 00:54:31,962
figure it out so i think yeah i think that happened um i think that happened uh so yeah so

585
00:54:31,962 --> 00:54:35,982
i need to ask a question there because i don't know if that's right why would if if something's

586
00:54:35,982 --> 00:54:41,422
trading at 2xm nav and you put a hundred dollars into that stock they're still buying a hundred

587
00:54:41,422 --> 00:54:48,062
dollars of bitcoin with it so why is that negative i think that if you're putting they're still

588
00:54:48,062 --> 00:54:49,582
buying $100 of Bitcoin.

589
00:54:52,142 --> 00:54:54,282
Well, I guess the capital flow,

590
00:54:55,462 --> 00:54:57,062
you're selling...

591
00:54:57,642 --> 00:54:59,242
I have to think about it, honestly.

592
00:55:00,002 --> 00:55:01,442
So let's say you're at the margin

593
00:55:01,442 --> 00:55:17,890
and you some Bitcoiner who owns coins and you saying okay I going to sell some coins because I going to buy some company that I like because I think it going to be a higher return on investment

594
00:55:18,370 --> 00:55:22,490
mostly because I think they're going to raise debt capital efficiently, right?

595
00:55:22,490 --> 00:55:24,670
They're going to borrow money from somewhere.

596
00:55:25,650 --> 00:55:27,070
That's another factor too.

597
00:55:27,070 --> 00:55:33,890
How much of the debt capital funded into these companies otherwise would have bought BTC?

598
00:55:33,890 --> 00:55:49,630
The argument is you're tapping new markets, is that there are investors out there who can only buy convertible debt and they can't buy outright coins or they can't buy the ETF.

599
00:55:50,370 --> 00:55:54,270
They can only buy preferreds or some kind of debt instrument.

600
00:55:54,270 --> 00:56:11,970
And then obviously, yeah, you had all these convertible issuances, which were, I think, some hedge incremental, there were definitely incremental hedge fund money who were just kind of hedging it out, right?

601
00:56:11,970 --> 00:56:20,670
They were saying, you know, I can essentially lock in a profit if I short the right instrument against what I'm long.

602
00:56:20,670 --> 00:56:28,210
but yeah I don't know you put me on the spot Danny I had to think about it honestly but I'll

603
00:56:28,210 --> 00:56:36,290
I'll follow up with you it seems like it seems like I mean a question is like how do you bid up

604
00:56:36,290 --> 00:56:42,170
the stock to a premium like where is that premium coming from at the margin I think maybe the answer

605
00:56:42,170 --> 00:56:48,550
is like how does MSTR trade from whatever one times MNAV to three and a half times MNAV

606
00:56:48,550 --> 00:56:54,050
I think it's because there's marginal buyers, there's marginal capital just buying the stock

607
00:56:54,050 --> 00:56:59,630
and bidding it up. Where did the capital come from? I think that marginal capital into the equity

608
00:56:59,630 --> 00:57:05,490
for a lot of people came out of coins. I mean, certainly people I know sold BTC basically to

609
00:57:05,490 --> 00:57:11,610
buy MSTR, but I'd have to think about the math. Yeah, I heard a lot of that as well.

610
00:57:11,870 --> 00:57:17,430
That's one of the things that I'd be really curious on the truth in some of this. People

611
00:57:17,430 --> 00:57:21,170
always say that these treasury companies, it's like unlocking new pools of capital, like,

612
00:57:21,530 --> 00:57:26,610
especially outside of strategy. I don't know how true that is. I think this is just Bitcoiners

613
00:57:26,610 --> 00:57:31,710
looking to basically get leverage on their Bitcoin. I don't really believe, you know,

614
00:57:31,830 --> 00:57:36,510
the call, whatever the 20th biggest treasury company is getting, you know, real institutional

615
00:57:36,510 --> 00:57:41,510
capital coming in. I just don't believe that. A hundred percent. I agree with that take. That's

616
00:57:41,510 --> 00:57:46,310
how the market's shaken out. You know, MSTR is sort of a unique beast and the long tail of all

617
00:57:46,310 --> 00:57:53,490
these tiny cats and dogs are not size enough, not relevant enough basically to entice real money,

618
00:57:53,610 --> 00:57:59,510
institutional money for the most part. Yeah. Do you think next cycle we'll still have a big

619
00:57:59,510 --> 00:58:06,890
treasury company pump? Interesting question. So let's take, well, let's parse it out.

620
00:58:07,510 --> 00:58:14,110
Let's take MSTR as an example. How many coins can MSTR buy? How many coins can Saylor buy?

621
00:58:14,110 --> 00:58:30,770
I think at some point there might be a limit, and I don't just mean because number goes up and so for each fiat dollar that they can raise, it doesn't buy as many number of coins.

622
00:58:30,770 --> 00:58:50,830
I'm thinking in terms of how big a target gets painted on that pile of coins, you know, when it gets to be whatever, you know, 5% of the total outstanding, you know, 10%. It's probably not going to get to 10%, but you take the point.

623
00:58:50,830 --> 00:59:01,510
But I think that then as an investor, you have to say, well, if governments need to get their hands on a big pile of coins, where are they going to turn?

624
00:59:03,350 --> 00:59:09,030
And then you also get single counterparty risk in general.

625
00:59:09,030 --> 00:59:15,150
you know as an investor you say okay if there's a dominant player in an industry

626
00:59:15,150 --> 00:59:22,130
do I want to own that because dominance is sort of a reflection of a durable

627
00:59:22,130 --> 00:59:30,250
monopoly position or ability to over earn this was part of the you know the debate I don't know

628
00:59:30,250 --> 00:59:36,210
a year and change ago I remember having a debate I can't remember who it was which pot it was

629
00:59:36,210 --> 00:59:45,970
You know, and there were there was a lot of noise about, well, what imagine the things you could do, the mirror, the miraculous, wonderful things with the world's biggest pile of Bitcoin.

630
00:59:45,970 --> 01:00:08,710
And my response was, yes, I imagine. How about just tell me, like, give me an example. There was no concrete, there's like no concrete, you know, actionable ideas about what is actually the implementable business model that uniquely you can capture, you know, because you have more than half a million coins or a million coins or whatever.

631
01:00:08,710 --> 01:00:16,070
yeah are there economies to scale there it's not obvious to me at all that there are economies to

632
01:00:16,070 --> 01:00:22,390
scale um you know i use the model i think i talked about this on pressed on the on the bear market

633
01:00:22,390 --> 01:00:27,290
episode i did with press in which was most of these things are kind of like closed end funds

634
01:00:27,290 --> 01:00:34,210
you know they trade at sometimes they traded a premium to book value but oftentimes they

635
01:00:34,210 --> 01:00:39,510
trade a discount. If they're excellent capital allocators, then maybe they trade at some modest

636
01:00:39,510 --> 01:00:47,510
premium to book, you know, like Berkshire or Markel Corp or any of these conglomerates.

637
01:00:48,310 --> 01:00:52,970
And then if you look at the bank model, you know, really well-managed banks, like exceptionally

638
01:00:52,970 --> 01:00:59,050
well-managed banks, sometimes trade at two times book, which is like two times MNav. And if they

639
01:00:59,050 --> 01:01:05,450
trade higher than that, you know, that's a, that's a sell. Um, so will there, will a premium

640
01:01:05,450 --> 01:01:10,970
come back into the market? Maybe that's a better question. Like if you have, if the question is,

641
01:01:11,050 --> 01:01:16,930
will these things trade up if Bitcoin goes up? Well, if they still own Bitcoin, then yeah,

642
01:01:17,070 --> 01:01:21,270
hopefully they trade up. If they don't, then we got a real problem. I think the better question

643
01:01:21,270 --> 01:01:28,470
is, do they trade to, does the, does the discount go away or does the discount contract a lot

644
01:01:28,470 --> 01:01:36,650
or even does it flip to a premium i suspect it'll be i will suspect the discount will contract

645
01:01:36,650 --> 01:01:42,790
a lot so there'll be some point in this cycle where if you can buy these things that you know

646
01:01:42,790 --> 01:01:52,750
30 40 50 discounts uh or whatever 0.5 m nav or 0.6 or whatever that is you know it's probably

647
01:01:52,750 --> 01:02:00,310
going to go pretty well. The real tricky question is, yeah, is where do you where does spot go?

648
01:02:00,870 --> 01:02:06,110
And where does discount go? Like, that's another example. Like if I saw names that were trading at,

649
01:02:06,470 --> 01:02:11,930
you know, less than 50 percent or greater than 50 percent discounts or less than 0.5 MNAV,

650
01:02:12,490 --> 01:02:18,250
then even if I'm bearish on Bitcoin spot for a while or I don't have confidence,

651
01:02:19,170 --> 01:02:21,270
you know, that could still go pretty well.

652
01:02:21,390 --> 01:02:22,990
Like as long as the thing doesn't unwind,

653
01:02:23,370 --> 01:02:24,870
as long as it's not a fraud,

654
01:02:25,670 --> 01:02:31,090
you know, then actually you could make a nice trade there.

655
01:02:31,850 --> 01:02:34,230
And then the question is,

656
01:02:34,330 --> 01:02:35,950
well, is that a trade or is that an investment?

657
01:02:36,610 --> 01:02:44,878
And my sense is it probably a trade It like do you want to be a long hodler of XYZ treasury company I don Not really

658
01:02:46,518 --> 01:02:57,558
Yeah, exactly. You know, do I want to trade it with no tax effect with my Roth IRA? Am I a buyer at some level? Yeah. There's a trade there, probably.

659
01:02:57,558 --> 01:03:05,498
uh you know have i put the trade on yet no um yeah so that's probably the framework uh probably

660
01:03:05,498 --> 01:03:10,258
the framework for me yeah i think one of the really interesting questions that you brought

661
01:03:10,258 --> 01:03:15,738
up then is like how many coins can say their own and like it seems pretty inevitable that he'll

662
01:03:15,738 --> 01:03:19,718
probably get to a million coins at some point given enough time like he's really not that far

663
01:03:19,718 --> 01:03:26,378
away right now um but at some point it's going to get really hard for him to incrementally

664
01:03:26,378 --> 01:03:33,398
increase his stack but he has to constantly buy otherwise there is no like case for him to be

665
01:03:33,398 --> 01:03:38,978
trading at a premium and so like when like what what is the end game here like it can't like being

666
01:03:38,978 --> 01:03:43,858
an etf is not interesting like he has to continually try and acquire coins and like how many coins is

667
01:03:43,858 --> 01:03:48,738
too much like i don't know these are just all the questions i have in my head i don't know the answer

668
01:03:48,738 --> 01:03:56,698
to these questions, Danny, I think that what's really interesting about him and their situation,

669
01:03:56,878 --> 01:04:05,378
but also of lesser, let's call them lesser Bitcoin treasury companies, is that, yeah,

670
01:04:05,378 --> 01:04:11,578
the valuation models and the frameworks really depend a lot on the assumptions, rate of

671
01:04:11,578 --> 01:04:15,778
accumulation, you know, price of the underlying, how much and how fast can they raise debt

672
01:04:15,778 --> 01:04:22,898
capital or quasi dead capital, whether it's preferreds or anything else. And the confidence

673
01:04:22,898 --> 01:04:27,798
intervals or the bands, you know, around these potential outcomes for these variables are huge.

674
01:04:28,818 --> 01:04:33,598
Like one of the, there was a lot of discussion, I think, about around, I can't remember the term,

675
01:04:33,758 --> 01:04:38,618
but, you know, basically the rate of accumulation, I guess it's BTC yield. Is it BTC yield?

676
01:04:39,778 --> 01:04:45,158
And the question is, yeah, you can look historically and see the BTC yield, like that's

677
01:04:45,158 --> 01:04:53,298
historical fact. What's it going to be in the future? I have no idea. How much variance is

678
01:04:53,298 --> 01:05:03,158
there around the base case? Huge variance. Yeah, I really don't know. When you're trying to value

679
01:05:03,158 --> 01:05:08,838
a stock in general and you're thinking about earnings or cash flow, you're saying, I can see

680
01:05:08,838 --> 01:05:15,398
what the earnings and the cash flow were, or I had some model of how they'll evolve over time.

681
01:05:16,058 --> 01:05:20,078
And obviously, nobody knows the future. So, you know, you had scenario analysis,

682
01:05:20,218 --> 01:05:26,458
you have your downside, you have your upside case. But it seems to me that the, yeah, the

683
01:05:26,458 --> 01:05:33,858
width of that window is quite high. It's a very wide window. And so I think it's really hard

684
01:05:33,858 --> 01:05:39,518
to value these things or make projections about how it turns out.

685
01:05:39,658 --> 01:05:40,458
I don't know the answer.

686
01:05:40,578 --> 01:05:41,738
I wish I knew the answer, Danny.

687
01:05:42,198 --> 01:05:43,398
It's going to be interesting.

688
01:05:43,558 --> 01:05:47,498
I don't love the idea of a single entity owning 5% of the supply,

689
01:05:47,818 --> 01:05:51,678
certainly not 10%, but there's nothing we can do to stop this.

690
01:05:52,518 --> 01:05:56,158
Yeah, and I wonder from a valuation perspective,

691
01:05:56,158 --> 01:06:02,998
the funny thing is we know about MSTR is you got your hardcore Bitcoiners

692
01:06:02,998 --> 01:06:04,958
who just want leverage.

693
01:06:05,978 --> 01:06:07,018
So they're greedy.

694
01:06:07,218 --> 01:06:08,178
Let's call it what it is.

695
01:06:08,338 --> 01:06:09,138
Greedy Bitcoiners.

696
01:06:09,578 --> 01:06:11,558
Bitcoiners who are bullish on Bitcoin,

697
01:06:11,738 --> 01:06:13,618
but they say, ah, but I can make even more

698
01:06:13,618 --> 01:06:15,038
holding this thing with leverage.

699
01:06:16,998 --> 01:06:18,858
You know, and then you have,

700
01:06:19,038 --> 01:06:20,718
there's some institutions there, obviously.

701
01:06:21,438 --> 01:06:22,478
And then now, you know,

702
01:06:22,478 --> 01:06:24,998
there's some indexation inclusion, right?

703
01:06:25,598 --> 01:06:28,238
Some robots are buying this thing mindlessly.

704
01:06:29,118 --> 01:06:31,158
And each of those pools of capital

705
01:06:31,158 --> 01:06:31,858
is kind of different.

706
01:06:31,858 --> 01:06:44,858
I do wonder what a clear-eyed, you know, sort of not bull-tard Bitcoiner analyst says about how big that stack can be.

707
01:06:45,098 --> 01:06:49,498
I don't want to say allowed to get, but I kind of mean allowed to get, right?

708
01:06:49,498 --> 01:06:56,838
It's like, at what point do the powers that be start to worry about that?

709
01:06:56,998 --> 01:07:02,538
Or at what point do rational investors just say, yeah, that's too big a honeypot?

710
01:07:02,978 --> 01:07:10,918
Now, you could say, oh, well, Coinbase has already had, I forget the number now, but they have more than 10% of the coins physically.

711
01:07:11,118 --> 01:07:13,558
Maybe, I'm trying to remember, it's like between 10 and 20, we think.

712
01:07:14,018 --> 01:07:19,398
There's a difference between just custodian coins on behalf of someone else, though, and being the owner of those coins.

713
01:07:19,498 --> 01:07:23,698
And I guess you could maybe argue that you're still costing them on behalf of the shareholder, but it's different.

714
01:07:24,238 --> 01:07:27,498
Yeah. And then you get the I mean, obviously, you got the key man risk.

715
01:07:28,078 --> 01:07:31,458
You know, I want Michael Siller to live long and prosper.

716
01:07:32,338 --> 01:07:43,778
But, you know, to the extent that he has control, you have a rational investor has to ask, OK, well, if there's, I don't know, change in leadership or ownership for whatever reason.

717
01:07:44,578 --> 01:07:47,338
Yeah. Does the board keep sticking with the strategy?

718
01:07:47,338 --> 01:07:53,438
under what circumstances would or could the board capitulate if he's gone?

719
01:07:53,838 --> 01:07:54,338
I don't know.

720
01:07:55,118 --> 01:07:55,518
I don't know.

721
01:07:56,278 --> 01:07:57,498
So many questions, man.

722
01:07:58,398 --> 01:08:00,138
You know, this is what makes it fun, though, Danny,

723
01:08:00,258 --> 01:08:03,398
which gets back to one of the themes that we were talking about earlier,

724
01:08:03,478 --> 01:08:07,058
which is anyone that says anything with certainty about anything,

725
01:08:07,218 --> 01:08:09,498
Bitcoin or otherwise, run in the opposite direction.

726
01:08:10,658 --> 01:08:10,838
Totally.

727
01:08:10,838 --> 01:08:15,738
You know, ask questions, you know, have some doubt about things,

728
01:08:15,738 --> 01:08:23,498
and assume that the range of possibilities around your base case is wide, basically.

729
01:08:24,318 --> 01:08:26,838
That's my approach to life.

730
01:08:27,338 --> 01:08:28,458
Maybe I'll end up poorer.

731
01:08:28,958 --> 01:08:30,598
Maybe I'll end up with fewer coins.

732
01:08:31,558 --> 01:08:36,758
Maybe the all-in Bitcoiners, lifers who never sell coins

733
01:08:36,758 --> 01:08:40,458
will be laughing all the way to the digital bank of the future.

734
01:08:41,818 --> 01:08:43,758
And I'll be stuck in my...

735
01:08:43,758 --> 01:09:04,638
Yeah, I don't know. I'll be stuck eating the bugs because there's been so much inflation that all my other assets lose all their purchasing power. Even then, I have a suspicion that if Bitcoin gets anywhere close to reaching its potential, hopefully, fingers crossed, I and my family will have enough coins. But who knows what the future holds?

736
01:09:05,038 --> 01:09:13,518
I'm sure you will, man. This has been awesome, Andy. We'll have to do it again. When you think the bear market's over and we're back in a bull market, let's do another show.

737
01:09:13,758 --> 01:09:16,758
um where do you want to send anyone who wants to find out more about you

738
01:09:16,758 --> 01:09:24,978
yeah i guess i guess why buy bitcoin is the book and i guess on on x uh edstrom andrew

739
01:09:24,978 --> 01:09:30,518
i have the book here somewhere i just can't see where you're checking the shelf the thing is

740
01:09:30,518 --> 01:09:35,698
there's so many bitcoin books these days that if you if you actually if you keep a shelf of all the

741
01:09:35,698 --> 01:09:41,358
books there it is good man he's got his copy you knew it was there you knew it was there it was

742
01:09:41,358 --> 01:09:45,838
right in the middle. I should have seen it earlier. That's great. It's been a pleasure, Danny.

743
01:09:47,058 --> 01:09:51,158
Yes, it really has. Thank you, man. And I'm sure I'll see you again soon. We'll try and do one in

744
01:09:51,158 --> 01:09:55,058
person at some point. Thank you, Andy. Looking forward. Thanks, Danny.

745
01:10:11,358 --> 01:10:41,338
Thank you.