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I think this is a really great entry point for asset prices.

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It's a mathematical necessity for the Fed to continue cutting interest rates

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and to continue expanding its balance sheet.

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Ultimately, Bitcoin right now is trading at a massive discount to where it should be

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because the market doesn't understand what it is yet.

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It's completely wild.

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I mean, in dollar terms and percentage terms,

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I haven't seen anything like this in a really long time, and it's great to be back.

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The pain in equities is about to be here.

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It's already sort of begun.

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but Bitcoin as it historically has done it's going to find its bottom first and then begin

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moving higher first it might seem scary but ultimately you're going to look back on this time

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10 years down the line five years down the line next cycle and say man I wish I had bought around

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that $60,000 down Joe Consorti good to see you man um what the fuck is happening Danny this has

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been volatility is back in Bitcoin it truly is like this is the single most volatile day for

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Bitcoin, I think since the 2022 bear market, I have a chart, I'll pull it up and kind of show

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people what we're looking at. But one of the hallmarks of the post ETF era for Bitcoin has

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been this markedly low volatility. You know, James Check has talked about this before, like this idea

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that Bitcoin, like the path of least resistance for Bitcoin in the post ETF era is what he calls

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chop solidation, where basically nothing happens for a really long period of time. And then we take

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next leg we take the next leg higher and so on and so forth you can see here this is the 10-day

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rolling volatility on bitcoin and this is the highest it's been since the bottom of the 2022

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bear now i want we'll talk about like market timing and what we think is going to happen

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as far as the the remainder of this and as we hammer out a bottom but this is just completely

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insane and for the post etf crowd like the boomers the pensions the hedge funds everybody who's gotten

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in since january of 2024 and these things launched this is not something that they've ever had to

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deal with. So for us, OG Bitcoin, well, OG is being a relative term for us who've been around

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the gambit for a pretty long period of time. This is business as usual. It's certainly, you know,

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dusting off the shoes. We haven't felt it in a while. But I'm amazed at how well the ETF cohort

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is holding up despite this volatility. We dropped $10,000 in a day yesterday, which is the first

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time that's ever happened. So we got Samson Mao's Omega Candle, but in the wrong direction.

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And then today we also had a plus $10,000 day. So it's completely wild. I mean, in dollar terms and percentage terms, I haven't seen anything like this in a really long time. And it's great to be back. I think the move yesterday and today has single handedly revived Bitcoin Twitter. So that's one thing we could be happy about here.

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totally i mean i i know people get mad at me for saying this but i love these i love the down days

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i love the up days like just give me something like i think that i got the dopamine hit like

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twitter was on fire like it's fun this is where you just gotta sit back and watch and be kind of

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humbled by bitcoin but why do you think this happened like that's always a question i get

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frustrated about so i'm sorry to ask it because there's not there's never just one reason why

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this happened but like do you think there was something in the market that kind of forced this

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move? For sure. I mean, it's a couple of things, right? A lot of folks have been thinking this is

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a Bitcoin native sell-off, and I'm here to dispel that. I want to make it abundantly clear that this

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isn't like an idiosyncratic Bitcoin thing where something happens, some leverage unwind occurs.

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Granted, there was a lot of leverage that got purged from the market. In the last 24 hours,

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we saw $400 million worth of long positions liquidated, and then today, $400 million worth

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of shorts liquidated. So certainly a lot of folks got liquidated. What actually drove the move was

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just this decline in risk appetite.

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And it's been happening over the course

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of the last couple of months.

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I have a couple of charts to show here.

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The first one being a broader indicator of risk sentiment.

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This is Bitcoin and US credit spreads.

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So now for those who are listening on audio,

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basically what this chart is showing

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is that as credit spreads widen,

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Bitcoin tends to decline.

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You could see that all the way back

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during the sell-off we had in the spring of last year

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when we went from that,

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the first time we went above $100,000

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all the way back down to below $80,000.

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as they narrowed or tightened.

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Bitcoin rose from about 80K all the way to 126K.

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And we've been in this regime of elevated and rising

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or widening credit spreads since October.

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So this is the first chart that sort of indicates

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this isn't necessarily a Bitcoin native sell-off.

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Like there aren't, you know,

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there's no three arrows capital blowing up.

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There's no FTX blowing up.

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It's just pure good old Bitcoin

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being a really great indicator for risk sentiment.

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Just before we get on to the next one,

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I just have a question on it

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Because I don't exactly know what that means when you're saying the credit spread's widening.

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Yeah, you got it.

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So basically, a credit spread is the difference between the benchmark rate in the United States,

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so the 10-year U.S. Treasury yield typically, and corporate bonds.

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So basically, the difference between the rate that corporations can issue their debt

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and the prevailing benchmark rate.

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And so what you see here, these numbers on the right-hand side, those are in basis points.

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So for instance, people can focus more on the white line.

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That's high-yield credit spreads.

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So think junk borrowers, right? Zombie companies, people who it's really hard to raise capital for, very capital intensive firms. They're trading at 2.75% or 275 basis points above U.S. Treasury rates. So it's very, very hard for them to borrow. When it's very hard for them to borrow, capital expenditure tends to decline and risk appetite in the market more broadly reigns in.

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that's one of the reasons there are a couple of other reasons, but one of the major reasons you

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saw such a huge rally in gold and silver and why Bitcoin and other names, like particularly software

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names, quantum stocks, all of those have sold off over the last couple of months. It's a direct

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result of what you see here, credit spreads widening, it becoming more difficult for U.S.

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corporations to finance their debt. And so why is that spread happening?

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Yeah, well, it's happening for a couple of reasons. I mean, chief among them,

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we've started seeing a little bit of strength in the U.S. dollar, particularly since Kevin Warsh

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was nominated as Fed chair. We've had a pretty big bout of weakness in the U.S. dollar over the

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last year, year and a half. And up until recently, that's been the case. More recently, you saw a

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rally in the U.S. dollar with Kevin Warsh being nominated as Fed chair. But more broadly, it just

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boils down to cycles, right? You could see here that we are at like over the last couple of years,

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And if I was able to zoom out this chart even more, I would show it. But we're at like multi, not multi-decade, but the tightest levels that we've seen in U.S. credit spreads in quite a while. And so when that happens is really only one way for them to go. You pair that with the reality, the market is pricing in the Fed's rate cutting cycle is about to come to an end toward the end of this year. If I look at my chart here, we've only got a couple of rate cuts priced in between now and the end of the year.

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looks like only three rate cuts priced in between now and the end of the year so

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with the feds cutting regime coming to an end it's really no surprise this is happening basically

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it's just a market saying that hey look we expect monetary conditions to move from outright easing

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to this on hold period and so as a result credit spreads are moving a little bit higher

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interesting that the dollar is strengthened since kevin walsh because um scott percent has always

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had the intention of weakening the dollar but with walsh coming in is that is that strengthening

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because they think he's going to be a hawkish Fed chair.

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It is.

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And for me, I think that's a big mispricing.

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And so that's why I think this is a really great entry point.

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Not to say that this is the bottom again,

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but I think this is a really great entry point for asset prices

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because regardless of what people think about Kevin Warsh,

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people think he may be a hawk.

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He's come out and spoken against quantitative easing numerous times.

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He doesn't want it to be a policy tool anymore.

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And so that sort of hawkish sentiment gets priced in the market

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in the form of the odds of more rate cuts declining,

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the dollar strengthening.

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I think that's a mistake

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because regardless of who you put in there,

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the math doesn't change, right?

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It's a mathematical necessity for the Fed

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to continue cutting interest rates

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and to continue expanding its balance sheet,

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at least at the rate of GDP growth, right?

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So 3% year over year.

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So for me, it's a big misprice

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and that people think Kevin Warsh will be a hawk.

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You also have to consider Donald Trump

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does not want to put anybody in the Fed chair position

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who won't agree with Scott Bessent and his goal for a weaker dollar.

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Obviously, Trump wants these tariffs to last.

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He wants them to be a longstanding source of U.S. revenue.

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And in order for that to happen, a weak dollar is a necessity.

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And so whoever Trump would have chosen, whether it's Kevin Warsh or Hassett or any of the

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other folks who were in the running, it was going to be someone who would listen to Scott

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Bessent and listen to Trump and his aims for a weaker U.S. dollar.

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So to me, it's a major mispricing.

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I think the dollar goes weaker over the next several months.

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I think as we approach Warsh actually becoming Fed chair, you're going to start to see some

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of that weakness.

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And I think you're going to start to see a bottoming out process in all risk assets that

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have done poorly, software stocks, Bitcoin included, as we approach that date, because

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it's just a mathematical necessity that the dollar has to be weaker, not just for the

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tariffs, right, to actually work and be a really big source of U.S. revenue, but for

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our debt situation more broadly here in the United States.

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yeah i think that second point's really important though in that trump is a lot of things but he's

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not an idiot like he's not going to be nominating someone that he's not had long conversations with

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and knows is kind of on team trump i don't think with all the stuff that's happened with powell

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over the last couple years like there's no way he's going to nominate someone who he thinks is

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going to work entirely independently from him and not take orders from scott percent in my opinion i

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don't know if you agree with that no i certainly agree with it because ultimately like for a really

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long time we've had this false notion or this like fabricated idea that the fed and the u.s treasury

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are somehow separate but every single time push comes to shove they're more than willing to work

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together back in 2020 the fed was more than willing to print a bunch of money and buy u.s

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treasuries from banks to make sure that uh you know we could uh maintain manageable levels of

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u.s debt back in 2023 the fed was more than happy to spin up this facility out of thin air in order

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to purchase distressed U.S. Treasuries

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or lend against them at par value.

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So every time push comes to shove,

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the Fed has been more than willing

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to work directly with the U.S. Treasury.

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So it's not an independent organization.

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I think it would be a great development

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to finally have a clear and tacit recognition of that.

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And I think, you know,

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with Trump being able to nominate the Fed chair now,

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he learned his lesson when he nominated Powell.

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It was his first time in office.

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He made a lot of wrong picks.

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This time he's being much more shrewd

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and prudent about who he brings in.

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So I completely agree.

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Like he has made this decision under the assumption

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that the person he nominates is gonna listen to him,

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is gonna push for a weaker dollar.

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And so like asset prices in that environment,

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there's really only one direction for them.

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So I think there's a pretty big mispricing

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in markets right now.

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and in a few hours I had the dollars in my account.

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It was really smooth.

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So if you need cash but you don't want to sell Bitcoin,

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00:13:13,120 --> 00:13:16,140
head over to ledin.io forward slash WBD

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That's ledin.io forward slash WBD.

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If you haven't tried out Club Orange yet,

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then now is the time.

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It's my go-to place to find Bitcoiners

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whenever I'm traveling.

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00:13:28,780 --> 00:13:30,800
Club Orange is a social app built for Bitcoiners

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00:13:30,800 --> 00:13:33,260
where you can find local meetups and events in your area

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00:13:33,260 --> 00:13:35,280
and find merchants that are accepting Bitcoin.

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00:13:36,000 --> 00:13:38,080
There are over 19,000 Bitcoiners on there

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00:13:38,080 --> 00:13:39,400
and whether you're at home or traveling

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00:13:39,400 --> 00:13:41,600
is a great place to keep in touch with Bitcoiners

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from all over the world.

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I've been using Club Orange since it was Orange Pill app

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and it really is awesome.

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So if you're on there, drop me a DM and say hi.

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And if you want to find out more and download the app,

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just search for Club Orange on your app store

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00:13:53,240 --> 00:13:55,200
or go to cluborange.org.

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um okay i cut you off before you pulled up your second charge you want to grab that one yeah yeah

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you got it so the other chart that i want to show that kind of uh indicates why this isn't a

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idiosyncratic sell-off for bitcoin is bitcoin and igv so this is the iShares software etf

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um and you can see that they were directly moving in the exact same way uh and this goes back to

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before 2024 but i zoomed in here just to really highlight this you can see that like this this

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shows pretty clearly that this isn't a Bitcoin native sell-off. You can see right around October

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when Bitcoin began selling off, so too did IGV. Now, IGV has a bunch of holdings, Oracle, Salesforce,

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Microsoft. So I think like number one, the reason for this sell-off is because of the waning risk

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appetite. But number two, especially with software stocks, you have to consider the rise of AI and

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tools like Claude kind of hurts the value proposition of names like Salesforce and Adobe

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and even a lot of tools from Microsoft. Like if your team internally can buy a Claude Pro

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subscription, can spin up Claude code, and you can make your own CRM that's as good, if not better

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and more tailored to your needs than Salesforce, why on earth would Salesforce stock do well? So

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I tend to think it's a little bit of that, but more so it's the risk appetite thing. So it's

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kind of those two things in tandem that are affecting software, but is also affecting

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Bitcoin. So this is the second chart that showcases this isn't an isolated Bitcoin event.

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It's not a result of some exchange blowing up, some overseas shop blowing up. It's purely risk

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sentiment. And Bitcoin tends to be the leading indicator, if you will, or one of the great

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barometers for risk sentiment. And so that's why it's so sensitive to these changes. And it's down

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52% from the high. Well, actually a little bit less today because we rallied. So I think it's

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like 44% from the high, but even still, that's kind of your explanation here.

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Yeah, that makes sense. I think one of the things that's frustrated a lot of people is that

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obviously gold had an insane last 18 months or so. Silver has even, I don't actually know what

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silver's at right now, but it had a really good run before it kind of came back down.

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And the whole time Bitcoin was just sideways. And then as soon as everything turned over,

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Bitcoin got the volatility to the downside. Why do you think it didn't catch any of that bid with

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the like debasement trade gold and silver stuff yeah so it's just a function of the market not

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understanding what bitcoin is yet uh for a very long time and i'll pull up the chart if i could

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find it um for a very long time bitcoin and gold were trading with about a one month lag um so you

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know all the way back to i think 2019 it was pretty clear that moves that were made in bitcoin

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or gold rather uh tended to be followed by uh bitcoin with about a 100 day to 120 day lag you

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could see on this chart right here, they were following one another at least directionally

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pretty closely for quite some time. This is a chart that Lawrence Lippard created over at the

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Bitcoin Opportunity Fund. And you could see, and if I adjust this a little bit more so that you can

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kind of see the better fitted to one another, this really started breaking down in October.

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And so what this tells me is that, you know, debasement fear has been persistent. That hasn't

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necessarily gone away. That's what drove the rally in gold, but, or Bitcoin, yeah, gold. But

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What drove the rally in Bitcoin in tandem with that, and we're talking since like the 2023 bottom, is the fact that the Fed funds rate was coming down, that even though we were experiencing QT, the balance sheet was on its way to normalizing.

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So QT was on its way to ending. And so both of these trades were kind of happening at the same time as one another. And only one of those trades has continued.

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We had this decline in risk appetite, but gold and silver stole the show as far as investment capital is concerned because of the fears around monetary debasement.

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And also you have to think like the speculative mania that happens when events like this occur cannot be understated.

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So obviously gold is a dinosaur of an asset.

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It is 30 plus trillion dollars in size for it to be making moves that are adding multiple trillions of dollars of market cap within days and weeks.

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Same thing goes for silver.

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that's something that catches a lot more headlines than you know one might think and so it was it was

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both the fears of the debasement trade but also this reflexive loop of people just trying to get

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in by this thing you saw all of the twitter posts of people waiting outside gold dealers trying to

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purchase gold and that happened multiple times and so really you know the reason for the breakdown

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here in my mind is that we had a decline in risk appetite if bitcoin traded the way that its

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monetary properties allow it to, then it would have followed gold and would currently be well

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above $200,000 or even higher. But because it's more tightly correlated to things like software

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stocks, QQQ, other really high beta risk names in the equity market, then that's what's caused

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the sell-off here. So I think, you know, looking at this chart, there are two schools of thought,

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and then I'll shut up because I've been rambling for a little bit. But school of thought number one

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is that Bitcoin will never be a debasement hedge.

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It's clearly failed.

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And school of thought number two

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is that Bitcoin is just severely mispriced

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relative to how it should trade.

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So if you look at this chart,

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this is a real,

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even if it's not like an actionable chart

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in terms of making trades,

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one thing that it does do

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is it illustrates how wide this informational gap is.

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You and I both know,

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and chances are the listeners of this show understand

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that Bitcoin performs all of gold's functions,

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but better.

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And so the only thing this chart illustrates

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to me is that we still have so much work to do in terms of narrowing that gap, in terms of educating

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people and the market finally coming around to the reality that Bitcoin truly is digital gold and

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should trade like it. Yeah. I mean, that's a, that's quite an insane chart. Do you think part

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of this is the sort of self prophecy of the four cycle narrative Like I to be fair I have been on the hype train that the four cycle either never never existed or is definitely over Um I I still feel that way I think but I don know how

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how you kind of take that in, especially with what's happened over the last few days in Bitcoin.

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Right. So it's interesting. Um, the four year cycle itself, I have some thoughts on this.

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It's basically this idea for people who might not be aware. I think anybody listening to what

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Bitcoin did knows what the four year cycle is, but, um, it's generally this idea that we have

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a 17 or 18 month bull run after the halving. And then after that, we have about a 10 to 11 month

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bear market. And so that would have put Bitcoin's top right around early October. And many people,

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including myself, are saying, OK, in the post ETF era, flows from trad fire dominating,

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Bitcoin native flows don't really matter. The four year cycle is dead. However, and I'll pull

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this chart up right now, this is a chart of all of the Bitcoin halvings. And as you can clearly see

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here, the first line you can see here on the left is the Bitcoin halving. And then over here is the

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subsequent top that Bitcoin made 17 months back in 2016 and 2017, 18 months in 2022 and 2021.

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And then again, 17 months post-halving, we topped out. So it's kind of hard to argue with a chart

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like this. However, so the four-year cycle does remain intact. But what I will say, the way people

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should think about this is that it's not an absolute rule to live by. So the first reason

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being Bitcoin is now very tightly correlated with the broader market, which is evidenced by the

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correlation to software that I just showed. Previously, Bitcoin was sort of an asset that

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marched to the beat of its own drum because it wasn't being traded by the same folks who were

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trading all this other stuff. Now it is. So it's not something you should live by because of that

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reason. And the second reason is that the prior bull market began over a year before the last

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halving. So it's not an absolute rule to live by. It's not this rule for timing. Like you can see

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here that, you know, in the prior sort of halving cycle, if you will, this four-year cycle idea,

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Bitcoin was just chopping around between the all-time high and the subsequent start of the

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next bear market. It took a really long time. But here, right, Bitcoin's bull market began well in

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advance of the next having occurring. So it isn't necessarily a rule to live by. But what I will say

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is that at some point, as you mentioned, it does become a self-fulfilling prophecy. So even though

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it didn't necessarily, it shouldn't have necessarily driven the sell-off, I do believe that there were

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a lot of folks who were looking at this and placing sell orders beyond a certain point

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because they expected this to occur. So I think at some point we lose this. I think at some point,

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You know, right now there's only 3.125 Bitcoin being issued in every block.

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At the next halving, it'll be a little bit over one.

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And then the halving after that, it'll be less than one.

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So, you know, we're coming up on the point where 20 million Bitcoin will have been mined

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and there will only be 1 million Bitcoin to be mined over the next 114 years.

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So I tend to think that it's going to have a minimized impact.

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But at the very least, like you can't really argue with this chart.

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I think it's just become a self-fulfilling prophecy at this point.

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Yeah, I mean, it'll be interesting what happens this year, because if Bitcoin,

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you know rallies from here has a good year maybe gets close to all-time highs on new all-time

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highs in 26 then that that does break this this cycle idea i think um i would still put that at

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00:22:58,084 --> 00:23:02,804
a pretty high probability but i guess the last few days have kind of humbled all of my takes that

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00:23:02,804 --> 00:23:07,984
i've had over the last few months um but we will see i'm interested what's happened with the etfs

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because the obviously the inflows during you know 2025 were pretty insane how bad have the outflows

364
00:23:14,664 --> 00:23:20,824
been over the last sort of few weeks? So honestly, I'm amazed like the ETF holders have held pretty

365
00:23:20,824 --> 00:23:24,984
tough and I have some data on this. So the first chart that I'm going to show here is Ibit volume.

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On the top, you could see the dollar amount that was traded and at the bottom you could see

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the shares that were traded. So you could see, and this goes all the way back to the launch of

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ETFs back in early January of 2024. So you can see here like this is the largest volume day for

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00:23:41,564 --> 00:23:45,524
iBit ever, which makes a lot of sense, right? It was an insane day for Bitcoin. Obviously,

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00:23:45,524 --> 00:23:51,644
it was going to be an insane day for the spot Bitcoin ETFs. But what I want to make note of

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here is that it wasn't necessarily driven by ETF capitulation. What we can do to gauge that is we

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could take the volume traded, which is on the top pane, as a percentage of iBit's market cap,

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and then we can extrapolate that out to the other ETFs. So there's only about $10.2 billion in volume

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00:24:08,304 --> 00:24:13,344
here as you can see that's only six percent of ibid's market cap comparing that to bitcoin we

375
00:24:13,344 --> 00:24:18,704
had 140 billion dollars in spot bitcoin volume yesterday it's 11 of bitcoin's market cap so

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it tells me that the etf holders are actually more diamond handed if you will than the spot

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00:24:23,744 --> 00:24:29,424
bitcoin holders even during this absolutely historic sell-off um so it's not necessarily

378
00:24:29,424 --> 00:24:34,224
like etf holder capitulation the selling is coming primarily from spot bitcoin which is

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00:24:34,224 --> 00:24:39,084
is really, really unique to see. And the other chart that I'll show is actually the ETF average

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00:24:39,084 --> 00:24:44,644
cost basis. And this sort of illustrates how remarkable it is that so much of the ETF assets

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00:24:44,644 --> 00:24:49,664
under management have held tight. What you can see here, and this dates again, all the way back

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to when the ETFs first launched. And this isn't just Ibit anymore. This is every single US-based

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00:24:54,024 --> 00:25:00,424
spot Bitcoin ETF. So this is the average cost basis translated to Bitcoin's price for the ETF

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00:25:00,424 --> 00:25:08,324
holders. You could see here that we are 17.5% at the time of recording below the average ETF cost

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00:25:08,324 --> 00:25:13,044
basis. And they're still holding strong, right? The day hasn't closed just yet. It remains to be

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00:25:13,044 --> 00:25:17,584
seen how tough they held, but it's pretty remarkable how well they've held up. So this

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00:25:17,584 --> 00:25:22,404
narrative of like ETFs introducing more stability into the market, that's true, but only for the

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00:25:22,404 --> 00:25:27,684
coins held by ETFs. The coins that are held by say OG Bitcoin holders, people who've been here

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00:25:27,684 --> 00:25:30,724
for a very long time, those are still highly volatile.

390
00:25:31,764 --> 00:25:37,344
And so what this indicates to me is that as more of the market is dominated by ETF buying,

391
00:25:37,424 --> 00:25:42,404
people who have this tendency that we've seen to buy these coins, to sit on them,

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00:25:42,404 --> 00:25:46,504
to not be as flighty as Bitcoin investors in cycles prior have been,

393
00:25:46,784 --> 00:25:51,064
then Bitcoin will only get less volatile, which is good, right?

394
00:25:51,144 --> 00:25:56,464
It's a very interesting stat to pull up, and it kind of validates this narrative of ETFs

395
00:25:56,464 --> 00:25:59,684
bringing more stability to the market, just not in the way that we expected, right?

396
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Typical Bitcoin holder behavior, we just saw it, it's still intact.

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But at the very least, during this insane sell-off, the ETF holders have held pretty strong.

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So do you think that's a function of the place that these ETFs are being held?

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Are they being held in retirement accounts and therefore it's not very easy or you can't

400
00:26:19,264 --> 00:26:20,704
necessarily trade them on a downswing?

401
00:26:20,784 --> 00:26:24,484
Whereas if people are holding Bitcoin, especially if they're holding on an exchange, which obviously

402
00:26:24,484 --> 00:26:25,964
we don't think people should do,

403
00:26:26,044 --> 00:26:28,784
then they're very easy just to click a sell button and get out.

404
00:26:29,204 --> 00:26:29,744
That's one reason.

405
00:26:29,864 --> 00:26:31,424
And the other reason is access to leverage.

406
00:26:31,664 --> 00:26:33,744
Like you're spot on the money, Danny, with the first part,

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which is that, you know, when we talk about retirees,

408
00:26:36,504 --> 00:26:40,544
like the people who IBIT is being advised toward,

409
00:26:40,804 --> 00:26:43,144
those folks are buy and hold players, right?

410
00:26:43,164 --> 00:26:44,804
When we're talking about the typical American,

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they're passively allocating every two weeks

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and they have no idea what they're investing in.

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If at all, right?

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Chances are most of the time they don't know,

415
00:26:52,264 --> 00:26:56,264
uh chances are they don't have any control over what they're investing in either um so they're

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inherently a long-term player the second thing is that you have harvard you have brown university

417
00:27:02,664 --> 00:27:07,304
of a bunch of other endowments who are purchasing bitcoin through ibid or these other spot bitcoin

418
00:27:07,304 --> 00:27:12,264
etfs when they make those sorts of purchases again they don't necessarily trade in and out

419
00:27:12,264 --> 00:27:16,264
it's not because they can't but it's because they're holding them as long-term plays and so

420
00:27:16,264 --> 00:27:20,904
the people who made those allocation decisions are putting bitcoin price targets well above where they

421
00:27:20,904 --> 00:27:25,944
they purchased it at, right? The average cost basis here is at $85,000. All of the investment

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managers, all of the fund managers who work for these university endowments have placed much higher

423
00:27:30,484 --> 00:27:34,244
price targets than $85,000. And so that's probably one of the other reasons they're holding tough.

424
00:27:34,564 --> 00:27:39,004
But on the flip side of the equation, in Bitcoin, you have, in spot Bitcoin, not only do you have

425
00:27:39,004 --> 00:27:44,004
much easier access to just click sell, like market sell your Bitcoin that you're holding

426
00:27:44,004 --> 00:27:48,084
onto the exchange, but you also have much deeper access to leverage. And so the likelihood that

427
00:27:48,084 --> 00:27:52,304
you'll get liquidated is far higher, right? There's no way to add leverage to these spot

428
00:27:52,304 --> 00:27:56,504
Bitcoin ETFs in a retirement portfolio, at least not in the size that you can with spot Bitcoin.

429
00:27:56,684 --> 00:28:02,584
So that's sort of the reason that they've held tough. And again, it's really encouraging. Like

430
00:28:02,584 --> 00:28:08,724
as the market structure is composed more of these ETFs, then you'll tend to see a decline in

431
00:28:08,724 --> 00:28:14,904
volatility or a lower amount of instances like today over time. Yeah, it's super interesting.

432
00:28:14,904 --> 00:28:21,424
Like in previous bear markets, especially the last one in 2022, there was a very easy

433
00:28:21,424 --> 00:28:23,044
narrative as to why something was happening.

434
00:28:23,324 --> 00:28:28,184
Like FTX was blowing up, Three Arrows Capital, Luna, we had a ton of people getting washed

435
00:28:28,184 --> 00:28:28,524
out.

436
00:28:28,744 --> 00:28:32,104
Whereas this time, we don't have anything like that that I'm aware of yet.

437
00:28:32,744 --> 00:28:36,044
But there are people saying they think there's going to be some bodies come to the surface

438
00:28:36,044 --> 00:28:37,604
at some point over the next week or two.

439
00:28:37,904 --> 00:28:38,904
Do you think that's true?

440
00:28:38,964 --> 00:28:40,984
Or do you think people are positioned much better now?

441
00:28:40,984 --> 00:29:02,424
I tend to think Bitcoin, you know, people are positioned much better now to weather these storms in Bitcoin. There could be a couple of players offsides. Some market makers in particular, like a lot of folks were saying that, you know, on October 10th, market makers were caught offside and Wintermute chief among them has been a forced seller into the market over the last several weeks, over the last couple of months.

442
00:29:02,424 --> 00:29:21,724
You know, that remains to be seen. Like, we'll have to hear the news of that for confirmation. But it's not unprecedented necessarily for Bitcoin to make massive declines with no clear exogenous catalyst. I mentioned that, you know, this is one of the worst crashes for Bitcoin since three hours capital.

443
00:29:22,344 --> 00:29:30,524
But prior to that, if you look at November 2018, when we dumped from $6,000 all the way to $3,000, that didn't have any catalyst.

444
00:29:30,664 --> 00:29:33,464
It was just a function of there being a lot of froth in the market.

445
00:29:33,644 --> 00:29:36,924
There being this massive rally with a lot of euphoria.

446
00:29:37,464 --> 00:29:40,024
And naturally, there was profit taking and selling afterward.

447
00:29:40,644 --> 00:29:43,284
So it's not necessarily unprecedented for this to happen.

448
00:29:43,604 --> 00:29:45,264
It's just unprecedented in the modern era.

449
00:29:45,744 --> 00:29:49,824
So I do think people are much, much better positioned than they historically have been.

450
00:29:49,824 --> 00:30:04,084
You also have to think, like, with the developments in Washington that we've seen, it behooves players, particularly in the United States, who want to be looked upon favorably by the administration to make it so that they're not playing these crazy leveraged games.

451
00:30:04,084 --> 00:30:19,404
And so I just think by the very nature of where we sit now in the United States, these companies want to be in the good graces of the politicians in Washington, D.C., and not play any crazy games to increase the likelihood that these market structure bills pass.

452
00:30:19,404 --> 00:30:24,364
So I don't think we'll see any bodies float to the surface over the coming weeks, but I could be wrong.

453
00:30:24,784 --> 00:30:31,544
Ultimately, moves like this are, they do tend to take folks out, especially because of how unexpected it was.

454
00:30:32,324 --> 00:30:37,964
You know, two weekends ago, or last weekend, actually, and as we're recording this, we're talking about the last weekend in January,

455
00:30:38,504 --> 00:30:42,184
Bitcoin cratered from the high 80s to the high 70s very quickly.

456
00:30:43,084 --> 00:30:45,224
And many people thought that that was the very end.

457
00:30:45,224 --> 00:31:07,864
But then Bitcoin proceeded on a random Thursday to dump by 14%, which is one of the largest percentage drawdowns over the last couple of years. It's the largest percentage drawdown since the 2022 bear market. In absolute terms, it's the largest drawdown in Bitcoin's history, which just makes sense. The first ever time that we've had a $10,000 candle in Bitcoin's history.

458
00:31:08,264 --> 00:31:10,904
So if people weren't positioned properly,

459
00:31:10,904 --> 00:31:13,284
then absolutely some bodies will float to the surface.

460
00:31:13,444 --> 00:31:14,504
There'll be some forced selling.

461
00:31:14,644 --> 00:31:16,164
We'll see news about different exchanges

462
00:31:16,164 --> 00:31:17,344
having to close their doors.

463
00:31:17,704 --> 00:31:20,204
But that's something that you learn after the fact.

464
00:31:20,544 --> 00:31:21,184
So we'll see.

465
00:31:21,924 --> 00:31:23,204
There's always a load of sort of rumors

466
00:31:23,204 --> 00:31:24,044
flying around on Twitter

467
00:31:24,044 --> 00:31:25,664
or speculation flying around on Twitter,

468
00:31:25,664 --> 00:31:26,424
I probably should say,

469
00:31:26,704 --> 00:31:28,804
about like the treasury companies and things.

470
00:31:29,524 --> 00:31:31,344
Do you think they're all going to weather this storm?

471
00:31:31,444 --> 00:31:33,144
Okay, because really the only company

472
00:31:33,144 --> 00:31:34,444
that's been through anything like this,

473
00:31:34,544 --> 00:31:35,824
I believe is strategy.

474
00:31:35,924 --> 00:31:37,724
I don't remember exactly when MetaPlanet spun up.

475
00:31:37,864 --> 00:31:42,004
But most of the treasury companies, this is the first real drawdown they've seen.

476
00:31:42,284 --> 00:31:45,244
Do you think they're all going to be positioned okay and survive?

477
00:31:45,844 --> 00:31:46,844
That's a really good question.

478
00:31:46,984 --> 00:31:48,844
It all boils down to capital structure, right?

479
00:31:49,004 --> 00:31:54,164
If they were able to acquire their leverage in such a way where they could weather an 80% drawdown on Bitcoin,

480
00:31:54,284 --> 00:31:56,784
I think that's the stress test, then they'll be okay.

481
00:31:57,164 --> 00:32:02,344
Like strategy, for example, it's managed to pay off all of, if not most of its convertibles, I'm pretty sure,

482
00:32:02,444 --> 00:32:05,804
and they just have the preferreds as their form of financing for their Bitcoin purchases.

483
00:32:05,804 --> 00:32:08,844
and that has a duration of infinity, right?

484
00:32:08,884 --> 00:32:11,564
There's no fixed date at which that becomes due

485
00:32:11,564 --> 00:32:12,484
because it doesn't come due.

486
00:32:13,264 --> 00:32:15,224
So strategy will be okay, right?

487
00:32:15,264 --> 00:32:16,084
They've been here before.

488
00:32:16,244 --> 00:32:17,304
They started buying in 2020.

489
00:32:17,524 --> 00:32:19,524
They weathered the drop from, you know,

490
00:32:19,544 --> 00:32:21,244
$69,000 all the way to 16.

491
00:32:21,324 --> 00:32:22,184
So I think they'll be okay.

492
00:32:23,024 --> 00:32:24,264
Metaplanet, I'm pretty sure they started

493
00:32:24,264 --> 00:32:26,164
their Bitcoin strategy in early 2024

494
00:32:26,164 --> 00:32:27,784
and then they brought Dylan on

495
00:32:27,784 --> 00:32:29,504
in like April or May of that year.

496
00:32:30,104 --> 00:32:31,964
And so it remains to be seen, right?

497
00:32:32,024 --> 00:32:32,544
Time will tell.

498
00:32:33,264 --> 00:32:35,864
I know they had been buying pretty persistently

499
00:32:35,864 --> 00:32:36,964
all the way up to the top.

500
00:32:37,264 --> 00:32:39,564
Now, of course, we're about 50% down from the top.

501
00:32:39,904 --> 00:32:41,044
So it remains to be seen.

502
00:32:41,144 --> 00:32:43,284
I know we saw sequins, for instance,

503
00:32:43,404 --> 00:32:44,624
sell a great deal of their Bitcoin.

504
00:32:45,384 --> 00:32:49,344
So you're starting, and that was back in earlier last year,

505
00:32:49,344 --> 00:32:53,184
not earlier last year, but late Q2, early Q3 of last year.

506
00:32:53,584 --> 00:32:54,824
So you're already seeing some selling.

507
00:32:55,104 --> 00:32:58,524
I think the ones that hold tough will be the ones

508
00:32:58,524 --> 00:33:00,144
that have good capital structure, right?

509
00:33:00,144 --> 00:33:06,044
Those who have liquidation levels that are far lower than where Bitcoin's price is currently.

510
00:33:06,564 --> 00:33:08,224
Saifedean had a pretty good quote on this.

511
00:33:08,304 --> 00:33:12,284
He said, if your business model can't withstand an 80% drawdown in Bitcoin's price, you need

512
00:33:12,284 --> 00:33:13,524
to reassess your business model.

513
00:33:13,964 --> 00:33:18,284
And I fully agree, particularly with an asset as volatile as Bitcoin and a business model

514
00:33:18,284 --> 00:33:26,004
as, we'll call it different, as simply accumulating Bitcoin by leveraging access to public capital

515
00:33:26,004 --> 00:33:29,024
markets, risk management becomes very important.

516
00:33:29,024 --> 00:33:35,204
So I have a feeling that Strive and some of the more intelligent players very well capitalized

517
00:33:35,204 --> 00:33:35,784
will be okay.

518
00:33:36,344 --> 00:33:39,744
But some of the smaller treasury companies potentially may be at risk here.

519
00:33:39,924 --> 00:33:40,144
We'll see.

520
00:33:40,944 --> 00:33:44,604
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529
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530
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537
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538
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539
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540
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541
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542
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543
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547
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550
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551
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559
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560
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561
00:36:24,544 --> 00:36:27,444
I'm not the right person to try and call tops or bottoms.

562
00:36:27,744 --> 00:36:30,264
Like no one should ever listen to my price calls because I'm just like a permable.

563
00:36:30,704 --> 00:36:36,124
But when I saw Bitcoin at like $62,000 or whatever, that is insane value to me.

564
00:36:36,344 --> 00:36:38,884
And so I was stacking pretty hard yesterday.

565
00:36:39,364 --> 00:36:42,424
But do you think the bottom is in at this level?

566
00:36:42,424 --> 00:36:44,744
or what do you think is likely to happen from here?

567
00:36:45,444 --> 00:36:46,064
I love this question.

568
00:36:46,224 --> 00:36:47,784
And I have so much prepared for this question.

569
00:36:47,944 --> 00:36:51,424
So the first thing I want to show is this chart right here.

570
00:36:51,484 --> 00:36:52,584
This is the Coinbase premium.

571
00:36:53,264 --> 00:36:54,604
So for folks who may not be aware,

572
00:36:54,684 --> 00:36:57,204
basically the Coinbase premium is the percentage difference

573
00:36:57,204 --> 00:37:00,224
between the price of Bitcoin USD you can get on Coinbase

574
00:37:00,224 --> 00:37:02,324
and the percentage difference that you can get on Binance.

575
00:37:02,504 --> 00:37:05,244
And this illustrates whether or not sell pressure

576
00:37:05,244 --> 00:37:06,884
is coming from the United States

577
00:37:06,884 --> 00:37:08,384
or it's coming from elsewhere, right?

578
00:37:08,684 --> 00:37:10,624
So it's basically like US buyer dominance.

579
00:37:10,824 --> 00:37:11,424
Why does that matter?

580
00:37:11,424 --> 00:37:20,104
Well, it matters because it's helpful to know the size of the players involved and where the selling is coming from.

581
00:37:20,544 --> 00:37:26,464
And also for people who can and have the ability to arbitrage between exchanges, this is helpful for them.

582
00:37:26,604 --> 00:37:30,464
So let's say you have an account that's overseas, you have an account that's here.

583
00:37:30,904 --> 00:37:35,804
If you can purchase Bitcoin at a discount, say on Binance or some other overseas exchange,

584
00:37:35,884 --> 00:37:39,644
and you could purchase it and then you could sell it at a premium in the United States,

585
00:37:39,644 --> 00:37:41,564
that's something that people do.

586
00:37:41,964 --> 00:37:44,044
So, you know, hedge funds, market makers worldwide,

587
00:37:44,584 --> 00:37:46,084
this is a tool that they can leverage.

588
00:37:46,184 --> 00:37:47,684
It's less important for retail traders,

589
00:37:48,184 --> 00:37:50,484
but that's kind of the importance of this index.

590
00:37:50,944 --> 00:37:53,384
I do remember, I don't know if it was 2016 or 2017,

591
00:37:54,044 --> 00:37:56,044
there was an insane premium, I think in South Korea,

592
00:37:56,264 --> 00:37:57,744
and loads of people were trying to add that.

593
00:37:57,764 --> 00:37:58,524
Yeah, the kimchi premium.

594
00:37:58,524 --> 00:38:01,164
I think it got to the point where it was like a $5,000 premium,

595
00:38:01,264 --> 00:38:01,864
maybe even higher.

596
00:38:01,964 --> 00:38:03,544
It was insane, like it was an insane premium.

597
00:38:03,764 --> 00:38:04,264
Yeah, yeah.

598
00:38:04,324 --> 00:38:05,484
So it can get pretty wild.

599
00:38:05,924 --> 00:38:06,944
The chart that I just showed,

600
00:38:06,944 --> 00:38:09,824
showed that a lot of the selling since the top

601
00:38:09,824 --> 00:38:10,984
has come from the United States.

602
00:38:10,984 --> 00:38:12,484
So it's been pretty US-dominated,

603
00:38:12,484 --> 00:38:14,164
which again, articulates this point

604
00:38:14,164 --> 00:38:16,084
that it's not a Bitcoin-native sell-off,

605
00:38:16,084 --> 00:38:18,864
it's just broader risk aversion in the United States,

606
00:38:18,864 --> 00:38:21,204
and that's why the selling is coming from in the house,

607
00:38:21,204 --> 00:38:23,744
as it were, or the call is coming from in the house.

608
00:38:25,004 --> 00:38:26,844
If you'll take a look here,

609
00:38:26,844 --> 00:38:29,124
there's another version of this chart that I have.

610
00:38:29,124 --> 00:38:32,184
This is the one-day Coinbase premium.

611
00:38:32,184 --> 00:38:34,384
And what this shows is that this is actually

612
00:38:34,384 --> 00:38:36,644
the minute-by-minute chart.

613
00:38:36,944 --> 00:38:40,784
And you can see here that once we ticked down to the bottom,

614
00:38:41,124 --> 00:38:43,104
or the local bottom of 60K,

615
00:38:43,264 --> 00:38:46,424
there was a massive spike in the Coinbase Premium Index.

616
00:38:46,944 --> 00:38:50,224
So what this shows us is that there is massive buying pressure

617
00:38:50,224 --> 00:38:52,364
in the United States at 60K.

618
00:38:52,544 --> 00:38:54,704
And we know that most of the institutional capital

619
00:38:54,704 --> 00:38:56,724
that's flowing into Bitcoin is from the United States.

620
00:38:56,724 --> 00:38:59,764
So clearly, there's a lot of support at that level.

621
00:39:01,324 --> 00:39:04,984
And plumbing the lows, as it were, 60K is a huge zone of support.

622
00:39:04,984 --> 00:39:11,024
So then the question becomes, what are the next logical areas that Bitcoin can fall to?

623
00:39:11,024 --> 00:39:29,408
So one of the big ones in my mind is the 200 week moving average at Now I was of the opinion that and I tweeted this out last week 58k for the memes that right exactly 58k you know it funny um that been going around for three four years i

624
00:39:29,408 --> 00:39:33,828
never thought we would see these prices again but here we are i'm i'm very much like you in the sense

625
00:39:33,828 --> 00:39:39,068
that when bitcoin's rising i'm a permable um and then when it falls you know i i have every

626
00:39:39,068 --> 00:39:42,888
explanation in the world for why it fell but i can't see it and uh you know as far as foresight

627
00:39:42,888 --> 00:39:44,328
I'm not the greatest in the world.

628
00:39:44,328 --> 00:39:46,328
In hindsight, I got plenty of explanations,

629
00:39:46,328 --> 00:39:51,328
but it's poetic irony that the 200-week moving average

630
00:39:51,328 --> 00:39:52,728
is at 58K.

631
00:39:52,728 --> 00:39:54,908
So the reason I bring this up is because

632
00:39:54,908 --> 00:39:56,528
if you zoom back even further from here,

633
00:39:56,528 --> 00:39:58,408
the 200-week moving average has served

634
00:39:58,408 --> 00:40:02,008
as a pretty reliable bear market floor.

635
00:40:02,008 --> 00:40:05,248
So you could see back in 2022,

636
00:40:05,248 --> 00:40:07,488
that's the level where we were consolidating around

637
00:40:07,488 --> 00:40:09,508
before ascending higher,

638
00:40:09,508 --> 00:40:12,188
and that's where we bounced really cleanly off of,

639
00:40:12,188 --> 00:40:18,028
of and it just so happens to rest right above 60k which is where we saw that massive line in the sand

640
00:40:18,028 --> 00:40:24,588
zone of support uh you could see how crazy this one week candle is look at the size of that wick

641
00:40:24,588 --> 00:40:28,908
bitcoin managed to go all the way down to 60k now we're all the way back up to 70k so that suggests

642
00:40:28,908 --> 00:40:34,028
really strong support at 60k which also happens to be just two thousand dollars above this 200 week

643
00:40:34,028 --> 00:40:38,348
moving average this has historically been like a line in the sand level for bear markets now it's

644
00:40:38,348 --> 00:40:45,428
worth noting that in the 2022 bear market, as you can see here, Bitcoin did fall $30,000

645
00:40:45,428 --> 00:40:53,768
underneath the 30% rather underneath the 200 week moving average. And so for me, the first line in

646
00:40:53,768 --> 00:40:58,748
the sand zone of support level would be right around 58K. Reason being not just because it's

647
00:40:58,748 --> 00:41:02,548
a 200 week moving average, and that's historically been a pretty good four for bear markets, but also

648
00:41:02,548 --> 00:41:07,788
it's because it lines up with the average on-chain cost basis for coins, which is just so happens to

649
00:41:07,788 --> 00:41:14,888
be right at 58k and bitcoin holders tend to want to buy right around their cost basis right right

650
00:41:14,888 --> 00:41:19,128
around the level at which most of their coins were purchased uh and historically again it's been a

651
00:41:19,128 --> 00:41:24,708
pretty good line in the sand for bitcoin's price the other the other price level that i'm looking

652
00:41:24,708 --> 00:41:29,688
at which could be a potential bear market low for bitcoin is forty thousand dollars now it's

653
00:41:29,688 --> 00:41:34,688
sounds crazy it sounds insane but the reason i say that is because in 2022 as i mentioned

654
00:41:34,688 --> 00:41:40,008
And Bitcoin fell 30% underneath this line that we see here, the 200-week moving average.

655
00:41:40,808 --> 00:41:43,788
And so if that were to happen again, that would be a $40,000 price.

656
00:41:44,128 --> 00:41:48,368
That $40,000 level also lines up with the long-term holder realized price.

657
00:41:48,488 --> 00:41:53,488
So those who have held their Bitcoin for 155 days or more, right now that line in the sand

658
00:41:53,488 --> 00:41:54,508
is at $40,000.

659
00:41:54,948 --> 00:42:00,028
So if we can hold $58,000, consolidate around there over the course of the next couple of

660
00:42:00,028 --> 00:42:02,668
months, then chances are that's the bottom.

661
00:42:03,168 --> 00:42:05,868
But if we see a break underneath that,

662
00:42:06,048 --> 00:42:07,928
the next logical target would be 40K

663
00:42:07,928 --> 00:42:09,668
just because of the confluence of those levels.

664
00:42:09,988 --> 00:42:11,608
So that's where we are currently.

665
00:42:11,828 --> 00:42:13,168
There's a lot of support at 60K

666
00:42:13,168 --> 00:42:15,708
and we'll see how the next couple of days shakes out.

667
00:42:15,888 --> 00:42:17,808
This is a pretty crazy bear market rally here.

668
00:42:18,448 --> 00:42:23,148
But I would wanna see a little bit more consolidation

669
00:42:23,148 --> 00:42:25,408
around some of these key targets that I mentioned

670
00:42:25,408 --> 00:42:28,368
before saying, we're back in a bull market.

671
00:42:28,488 --> 00:42:30,808
We're a long ways from the resumption of the bull market.

672
00:42:30,808 --> 00:42:36,848
now it's just a function of figuring out when this thing ends i mean when you say things like 40k

673
00:42:36,848 --> 00:42:42,828
i i never would have guessed we'd hit 60k but saying 40k also seems like pretty wild to me i

674
00:42:42,828 --> 00:42:48,328
mean we may see it i have no idea but um this kind of also is one of the things that plays into the

675
00:42:48,328 --> 00:42:52,248
end of the at least the sort of traditional four-year cycle that we used to think of because

676
00:42:52,248 --> 00:42:56,388
one of the key sort of caveats there was that we never went below previous all-time highs

677
00:42:56,388 --> 00:43:03,328
we did that last time we've done that again here um do you think if we do you know like when we

678
00:43:03,328 --> 00:43:07,868
hammer out a bottom it will be like a long consolidation period around there or do you

679
00:43:07,868 --> 00:43:14,608
think it's like v-shaped recovery we get back up to you know 80 90k quite quickly right there's a

680
00:43:14,608 --> 00:43:20,268
chance for a v-shaped recovery but i ascribe a lower likelihood to it and here's why the v-shaped

681
00:43:20,268 --> 00:43:25,328
recovery if we do get it it would be much less sustainable than an extended period of consolidation

682
00:43:25,328 --> 00:43:31,208
uh if you take a look at the amount of time that bitcoin has spent between different areas and you

683
00:43:31,208 --> 00:43:36,608
can actually see it pretty clearly on this chart um there's a massive gap in volume between

684
00:43:36,608 --> 00:43:41,028
sixty thousand dollars and seventy thousand dollars and if you if you take a look back in time

685
00:43:41,028 --> 00:43:46,828
that checks out um the amount of time spent uh within this zone right here and even all the way

686
00:43:46,828 --> 00:43:52,688
up to 80k uh is very very low so what you can call like an a pocket an air pocket where coins

687
00:43:52,688 --> 00:43:53,988
just haven't changed hands.

688
00:43:54,508 --> 00:43:57,428
Bitcoin tends to spend a lot of time in those zones.

689
00:43:57,528 --> 00:43:59,388
First of all, it tends to revisit those zones,

690
00:43:59,448 --> 00:44:01,208
and then it tends to spend a lot of time in those zones.

691
00:44:01,808 --> 00:44:04,868
And going back, you know, over the last decade

692
00:44:04,868 --> 00:44:05,928
or the last 15 years,

693
00:44:06,328 --> 00:44:09,788
there really hasn't been an area in Bitcoin's price

694
00:44:09,788 --> 00:44:12,108
where there's been this sort of air pocket and volume

695
00:44:12,108 --> 00:44:13,668
that Bitcoin hasn't revisited.

696
00:44:14,548 --> 00:44:16,308
And all the way up to $80,000,

697
00:44:16,848 --> 00:44:19,168
you'll recall when Trump won,

698
00:44:19,588 --> 00:44:22,628
Bitcoin basically skipped directly past the $70,000

699
00:44:22,628 --> 00:44:29,368
range and hit $80,000 extremely fast. You could see right here between 70 and 80K,

700
00:44:29,808 --> 00:44:36,288
we've spent maybe three weeks, maybe four at most. And so very few coins have changed hands here.

701
00:44:36,808 --> 00:44:41,168
We've jumped above it. We've gone back down below it. And so I tend to think that Bitcoin

702
00:44:41,168 --> 00:44:46,868
is going to hang out in this zone. I don't think we see a V-shaped recovery. If we do,

703
00:44:46,868 --> 00:44:52,208
I would fade it because those tend to not be very sustainable. Bitcoin tends to always

704
00:44:52,208 --> 00:44:56,788
consolidate in these regions before moving higher. Makes sense. So people are going to have a lot of

705
00:44:56,788 --> 00:45:03,108
time to stack here, you think. What percentage chance would you put on 60K that we hit yesterday

706
00:45:03,108 --> 00:45:08,188
actually being the bottom of this? I would put a 20% chance on it. I think it's a really low

707
00:45:08,188 --> 00:45:14,028
likelihood. I believe that we revisit $60,000 and oscillate around it for quite some time

708
00:45:14,028 --> 00:45:19,968
before ascending higher. As far as timelines are concerned, I think this can last over the next

709
00:45:19,968 --> 00:45:23,208
couple of months. You know, your question was like, are we going to have a V-shaped recovery

710
00:45:23,208 --> 00:45:28,588
or are we going to recover really? Or are we going to spend a lot of time here? Look, like the bull

711
00:45:28,588 --> 00:45:33,628
tends to mirror the bear that follows. And so the bull market that we had for Bitcoin, a lot of

712
00:45:33,628 --> 00:45:38,108
people were saying we didn't have a bull market for Bitcoin. But the bull market that we had for

713
00:45:38,108 --> 00:45:44,108
Bitcoin was three years in length. So we bottomed in November of 2022, and then we wound up topping

714
00:45:44,108 --> 00:45:45,968
in October of 2025.

715
00:45:46,308 --> 00:45:46,968
So three years.

716
00:45:47,948 --> 00:45:50,348
And so if we are to believe that that's the case,

717
00:45:50,728 --> 00:45:53,188
then I would say that chances are this bear market

718
00:45:53,188 --> 00:45:55,328
may be a little bit more protracted than not.

719
00:45:55,708 --> 00:45:58,088
So I wouldn't put my money on a V-shaped recovery.

720
00:45:58,088 --> 00:45:59,948
I would put my money on Bitcoin spending

721
00:45:59,948 --> 00:46:03,268
and hanging out down here.

722
00:46:03,668 --> 00:46:06,308
And so the reason I assigned a 20% probability

723
00:46:06,308 --> 00:46:08,328
to $60,000 being the bottom

724
00:46:08,328 --> 00:46:12,728
is purely because every single Bitcoin bear market

725
00:46:12,728 --> 00:46:13,588
that we have had,

726
00:46:13,588 --> 00:46:18,848
we have always revisited that 200-week moving average that I showed, and we've always spent

727
00:46:18,848 --> 00:46:24,288
a pretty decent amount of time there. If you go all the way back to the first halving epoch,

728
00:46:24,348 --> 00:46:28,068
the second halving epoch, the third, it's just something that's been consistent throughout all

729
00:46:28,068 --> 00:46:33,888
of Bitcoin's life. So, you know, I'm not saying we couldn't have an unprecedented. Bitcoin doesn't

730
00:46:33,888 --> 00:46:39,308
touch the 200-week moving average, and it ascends higher. But then again, right, you know, because

731
00:46:39,308 --> 00:46:45,228
obviously you just mentioned breaking precedent with bitcoin uh moving lower uh below the prior

732
00:46:45,228 --> 00:46:50,108
cycles all-time high we've done that twice now but uh you know generally speaking i would say

733
00:46:50,108 --> 00:46:55,868
that there's a much higher likelihood that we go back down beneath it and hang out there uh it's we

734
00:46:55,868 --> 00:47:01,468
we had a really really really good run on bitcoin and now it's kind of this cooling off period

735
00:47:01,468 --> 00:47:05,708
um we've seen it time and again and so that's that's just generally what i think bitcoin's going

736
00:47:05,708 --> 00:47:12,188
to do um you also have to consider like bitcoin is at a really oversold level and a lot of folks

737
00:47:12,188 --> 00:47:18,348
have been saying because bitcoin is so oversold uh that tells us we're nearing the bottom all the

738
00:47:18,348 --> 00:47:24,028
oversold metric tells you is momentum right whether or not uh bearish momentum is dominant

739
00:47:24,028 --> 00:47:29,708
whether or not bullish momentum is dominant you can see here this is bitcoin's 30-day rsi and this

740
00:47:29,708 --> 00:47:34,588
is the third most oversold day in history as of yesterday um so you can see here we wicked all

741
00:47:34,588 --> 00:47:38,628
all the way down to, I think, 25 on this RSI,

742
00:47:38,728 --> 00:47:40,348
which shows overbought conditions

743
00:47:40,348 --> 00:47:41,628
versus oversold conditions.

744
00:47:42,028 --> 00:47:45,228
I mentioned the Three Arrows collapsed in 2022

745
00:47:45,228 --> 00:47:46,208
for good reason.

746
00:47:46,988 --> 00:47:49,248
That was the only other day that was like yesterday

747
00:47:49,248 --> 00:47:50,828
in recent memory.

748
00:47:51,008 --> 00:47:51,908
And then prior to that,

749
00:47:51,948 --> 00:47:54,088
the crash from 6K to 3K back in 2018.

750
00:47:54,848 --> 00:47:58,348
And so what you want to see on this,

751
00:47:58,348 --> 00:48:01,908
on RSI, in order to confirm that we're not,

752
00:48:01,908 --> 00:48:04,728
that the move in Bitcoin isn't a dead cap bounce,

753
00:48:04,748 --> 00:48:05,968
but it's actually a sustained rally,

754
00:48:06,488 --> 00:48:11,088
is a lower low in price followed by a higher low in RSI.

755
00:48:11,588 --> 00:48:12,728
So for instance, you know,

756
00:48:12,788 --> 00:48:15,708
if Bitcoin were to move down to $60,000,

757
00:48:16,128 --> 00:48:19,768
but RSI didn't move as low as it did yesterday,

758
00:48:19,868 --> 00:48:20,528
down to 25,

759
00:48:21,088 --> 00:48:23,788
and that would tell you that like selling momentum is exhausting.

760
00:48:24,228 --> 00:48:26,288
Chances are we're closer to hammering at a bottom.

761
00:48:26,288 --> 00:48:27,968
But because we haven't done that yet,

762
00:48:28,408 --> 00:48:31,688
I tend to wager that Bitcoin's going to revisit that level again.

763
00:48:31,908 --> 00:48:52,588
The last thing I'll say here is another really good analog for what's happening now in Bitcoin is the prior cycle, you know, and for good reason. If you take a look over here, you can sort of see this bear flag where we were kind of ascending in this channel here. Bitcoin broke down beneath it. And then we had another period of consolidation and then Bitcoin broke underneath it again.

764
00:48:53,228 --> 00:48:54,988
If I were a betting man, and I'm not,

765
00:48:55,348 --> 00:48:59,108
I would say that Bitcoin hangs out in this 70 to 80K range,

766
00:48:59,148 --> 00:49:02,528
as I mentioned, for a decent chunk of time

767
00:49:02,528 --> 00:49:05,608
before breaking back down below that 60K level

768
00:49:05,608 --> 00:49:09,608
and then consolidating between 45 and 55K for some time.

769
00:49:10,608 --> 00:49:12,728
That would be my base case, right?

770
00:49:12,748 --> 00:49:16,108
If we had this choppy stair-stepping price action on the way up,

771
00:49:16,548 --> 00:49:18,448
chances are we're going to have it on the way down too.

772
00:49:20,108 --> 00:49:21,828
I mean, I would take that.

773
00:49:21,828 --> 00:49:28,148
As much as I love seeing Bitcoin pumping, like the chance to accumulate more Bitcoin at those levels, like I didn't think we were going to get this opportunity.

774
00:49:28,388 --> 00:49:30,928
And if that happens, I'm definitely going to make the most of it.

775
00:49:32,128 --> 00:49:40,628
The one thing that I'm really interested in here is if you think Bitcoin is going to have, you know, potentially more downside, a long period of consolidation here.

776
00:49:40,628 --> 00:49:43,948
What do you think is going to happen in this broader markets macro world?

777
00:49:44,128 --> 00:49:49,388
Because like you showed the chart before where Bitcoin is incredibly correlated to especially tech stocks.

778
00:49:49,908 --> 00:49:53,208
Do you think they're going to go through a period of pain over the next few months and

779
00:49:53,208 --> 00:49:54,648
maybe throughout 2026 as well?

780
00:49:55,328 --> 00:49:56,268
Yeah, it's a really good point.

781
00:49:56,488 --> 00:49:57,968
You know, I do think so.

782
00:49:58,088 --> 00:49:59,088
And it's long overdue.

783
00:50:00,188 --> 00:50:04,368
Bitcoin topped before the S&P 500, before the NASDAQ.

784
00:50:04,428 --> 00:50:07,748
And we continue to see pretty good performance in both of those.

785
00:50:07,808 --> 00:50:08,768
I'm just looking over here.

786
00:50:09,048 --> 00:50:11,148
The S&P 500 is flat over the last month.

787
00:50:11,248 --> 00:50:13,048
The NASDAQ is just slightly down.

788
00:50:13,048 --> 00:50:18,828
So it seems like they're just starting their sell-off, whereas Bitcoin has already had

789
00:50:18,828 --> 00:50:18,968
it.

790
00:50:19,388 --> 00:50:25,708
If you'll recall all the way back to 2022, Bitcoin was one of the first assets to bottom.

791
00:50:25,828 --> 00:50:30,668
It certainly was the first asset to top, but the benefit of that is that it's also one of the first assets to bottom.

792
00:50:31,208 --> 00:50:35,188
I think we are just getting into the weakness in equities.

793
00:50:35,948 --> 00:50:41,408
You take a look at, and the reason I say that is because we had a Microsoft earnings miss,

794
00:50:41,568 --> 00:50:44,008
and then yesterday we had an Amazon earnings miss.

795
00:50:44,428 --> 00:50:46,628
Both of those are massively down after that.

796
00:50:46,628 --> 00:51:05,648
And so we're just now seeing the spillover effect from Bitcoin being one of the first to sell off to equities selling off after it. So I tend to think that more pain is in store for equities, more downside is in store for the S&P, for the NASDAQ. I think those will mirror what has happened to software over the last couple of months.

797
00:51:06,488 --> 00:51:12,068
And even though Bitcoin is going to have further downside, I think it's going to be one of the

798
00:51:12,068 --> 00:51:16,888
first to find its bottom and then consolidate and then begin ascending higher. You know,

799
00:51:16,888 --> 00:51:21,788
this is a function of Bitcoin being a 24-7, 365 global asset. Luke Roman has talked about this.

800
00:51:21,828 --> 00:51:26,908
He's called Bitcoin the last functioning alarm bell for global liquidity. And so I tend to think

801
00:51:26,908 --> 00:51:31,068
that, you know, even though Bitcoin has been really, really tightly correlated to software

802
00:51:31,068 --> 00:51:37,308
stocks, it seems like it's going to, similar to how it did in 2022, find its bottom first,

803
00:51:38,088 --> 00:51:42,348
even as equities are just getting into their underperformance. And then when risk appetite

804
00:51:42,348 --> 00:51:46,868
turns, Bitcoin is going to be one of the first movers again. So that's where we are. You know,

805
00:51:46,888 --> 00:51:50,828
I think that there are going to be some more earnings misses over the next couple of weeks.

806
00:51:50,988 --> 00:51:54,068
You're going to start to see the NASDAQ trend down even more. You're going to start to see

807
00:51:54,068 --> 00:51:59,988
the S&P 500 follow. And then well before those two, those two indices find their bottom,

808
00:51:59,988 --> 00:52:03,568
Bitcoin will have found its bottom.

809
00:52:04,188 --> 00:52:10,188
And if we look at prior cycles and try to think about when this could occur,

810
00:52:11,648 --> 00:52:17,648
Bitcoin takes about three and a half years on average to go from cycle low to cycle low.

811
00:52:18,168 --> 00:52:22,968
And this is the case throughout every single time Bitcoin has bottoms to when it's topped

812
00:52:22,968 --> 00:52:24,688
when it's bottomed throughout history.

813
00:52:25,568 --> 00:52:29,488
Currently, it's been three years and three months since the 2022 low.

814
00:52:29,488 --> 00:52:35,208
So we bottomed in November of 2022, obviously three years and three months ago.

815
00:52:35,708 --> 00:52:38,688
And so that would imply bottom formation.

816
00:52:38,928 --> 00:52:42,428
Like we find the absolute bottom of Bitcoin's price within the next three to six months.

817
00:52:43,248 --> 00:52:47,768
Now, speaking probabilistically, that could mean we already found the bottom for Bitcoin.

818
00:52:47,888 --> 00:52:50,888
It could mean the bottom was that one day wick down to $60,000.

819
00:52:51,408 --> 00:52:53,268
We spend some more time hanging out there.

820
00:52:53,308 --> 00:52:57,148
We may even trend back toward the lower 60s, but we never touch that price again.

821
00:52:57,148 --> 00:53:03,408
That could be the case, or it could mean that Bitcoin's bottom will be found sometime as far out as August of this year.

822
00:53:03,588 --> 00:53:11,148
It's a pretty wide range, but at the very least, we're sort of through this worst part of the bear market where everybody's sort of in denial.

823
00:53:11,568 --> 00:53:13,268
People think that it's just a bull market correction.

824
00:53:13,788 --> 00:53:15,788
So now we're all in agreeance that this is a bear market.

825
00:53:15,988 --> 00:53:24,508
And now we're into a similarly painful part of the bear market, but not nearly as painful, which is trying to figure out when the market's going to bottom.

826
00:53:25,368 --> 00:53:27,008
So that's sort of where we are.

827
00:53:27,088 --> 00:53:30,208
As far as like the rotation from stocks into Bitcoin

828
00:53:30,208 --> 00:53:31,688
and Bitcoin into stocks and vice versa,

829
00:53:32,168 --> 00:53:34,748
the pain in equities is about to be here.

830
00:53:34,828 --> 00:53:35,648
It's already sort of begun.

831
00:53:36,068 --> 00:53:38,508
But Bitcoin, as it historically has done,

832
00:53:38,568 --> 00:53:39,728
it's going to find its bottom first

833
00:53:39,728 --> 00:53:41,088
and then begin moving higher first.

834
00:53:41,948 --> 00:53:43,288
It's funny that you brought up Luke Groman.

835
00:53:43,408 --> 00:53:44,928
I was actually emailing him yesterday

836
00:53:44,928 --> 00:53:47,728
because when he made his call that he's selling Bitcoin,

837
00:53:47,868 --> 00:53:49,028
I think it was, I don't know,

838
00:53:49,268 --> 00:53:52,208
either in the 90,000s or maybe even low hundreds.

839
00:53:52,728 --> 00:53:54,408
I thought that was a very bold move.

840
00:53:54,508 --> 00:54:00,448
Who knew an investor for 25 years, one of the best macro analysts in the world would know more than a podcaster.

841
00:54:00,628 --> 00:54:01,368
But here we are.

842
00:54:02,708 --> 00:54:08,108
So he obviously talks about this being, as you say, the last functioning smoke alarm for global liquidity.

843
00:54:08,668 --> 00:54:12,108
I also had James Lavish on the show recently who talks a lot about the global liquidity.

844
00:54:12,608 --> 00:54:15,548
And James's take is that it's rolling over.

845
00:54:15,628 --> 00:54:17,568
We might be in a downtrend there.

846
00:54:17,568 --> 00:54:24,448
Do you think that's going to have a huge impact on, is that what's driving these sort of broader markets to go lower?

847
00:54:24,508 --> 00:54:52,688
Yeah, it certainly is. And it's definitely impacting Bitcoin more acutely. You know, we talk about Bitcoin being a really great fire alarm for global liquidity and really being able to sniff out these moves well in advance. It's for a couple of reasons. Like, number one, it's a globally distributed asset. Anybody can have access to it. The second thing is that it's it's highly liquid. Right. And we're talking about liquidity. We're not just talking about size, but we're talking about breadth of the market. It's available to trade 24-7, 365.

848
00:54:52,688 --> 00:54:58,548
five and you have instant settlement. So even though gold tends to sniff out these moves quite

849
00:54:58,548 --> 00:55:03,448
well, Bitcoin is far more sensitive to it. You know, there's far less price manipulation,

850
00:55:03,448 --> 00:55:07,708
but also because it's global, it can be traded 24 seven and there's final settlement.

851
00:55:08,588 --> 00:55:13,768
And so that's why Bitcoin tends to move in advance of things like global liquidity declining.

852
00:55:14,028 --> 00:55:18,948
And the exact same is true for the uptrend. So when global liquidity inflects, Bitcoin tends to

853
00:55:18,948 --> 00:55:25,628
move, move, move, move higher in advance of that. So I would certainly expect that it's one of the

854
00:55:25,628 --> 00:55:28,628
many reasons that we're going to see Bitcoin underperformance, I believe, over the next couple

855
00:55:28,628 --> 00:55:35,048
of months. But when global liquidity eventually turns up again, then Bitcoin will be one of the

856
00:55:35,048 --> 00:55:38,888
first to reflect it. Right. And, you know, James talks about this all the time. That's it. You know,

857
00:55:38,888 --> 00:55:43,208
it's of absolute necessity that we keep printing money, that we keep creating new money out of thin

858
00:55:43,208 --> 00:55:47,848
air. We live in this credit based global economy where in order for the banks to stay solvent,

859
00:55:48,408 --> 00:55:51,588
They have to continue extending new credit, printing money into existence.

860
00:55:52,008 --> 00:55:56,068
Prices continue to have to rise by 2% annually.

861
00:55:56,508 --> 00:55:59,728
We have to keep debasing the money by 5% to 7% every single year.

862
00:56:00,488 --> 00:56:05,448
And so in order for that to happen, the absolute amount of money supply in the system has to expand.

863
00:56:05,988 --> 00:56:10,828
And so even though some assets perform this function a little bit better than Bitcoin right now,

864
00:56:11,048 --> 00:56:15,348
over a long enough time horizon, Bitcoin will perform this function the best,

865
00:56:15,348 --> 00:56:19,008
which is to be this apex hedge against global monetary debasement.

866
00:56:19,388 --> 00:56:21,968
Right now, Bitcoin is really tightly correlated.

867
00:56:22,088 --> 00:56:25,768
We spent most of this show talking about why this sell-off is in Bitcoin native.

868
00:56:25,928 --> 00:56:29,308
It's just a decline in risk appetite and what's going to happen from here.

869
00:56:29,788 --> 00:56:34,728
But ultimately, Bitcoin right now is trading at a massive discount to where it should be

870
00:56:34,728 --> 00:56:36,508
because the market doesn't understand what it is yet.

871
00:56:36,948 --> 00:56:42,428
And so the longer that that persists, the more you can get Bitcoin below its fair market value.

872
00:56:42,428 --> 00:56:44,608
and, you know, opportunities like this

873
00:56:44,608 --> 00:56:46,988
are a moment for reflection, right?

874
00:56:47,428 --> 00:56:50,308
If you're experiencing hot flashes

875
00:56:50,308 --> 00:56:51,188
in the middle of the night,

876
00:56:51,208 --> 00:56:53,768
if you're really anxious about why Bitcoin's price is falling,

877
00:56:54,328 --> 00:56:56,028
then I think it's time to reassess

878
00:56:56,028 --> 00:56:57,708
and try to understand the asset a little bit better.

879
00:56:58,528 --> 00:57:01,088
If you are very comfortable with your position

880
00:57:01,088 --> 00:57:02,848
and you're looking at dips like this

881
00:57:02,848 --> 00:57:03,828
as moments of excitement,

882
00:57:04,268 --> 00:57:06,288
then chances are you have a really firm understanding of it

883
00:57:06,288 --> 00:57:08,088
and you're in the global minority, right?

884
00:57:08,108 --> 00:57:09,868
As far as Bitcoin holders are concerned,

885
00:57:09,868 --> 00:57:11,388
you are in the 1% that understands

886
00:57:11,388 --> 00:57:13,068
what this asset actually is.

887
00:57:14,008 --> 00:57:14,448
Totally.

888
00:57:14,948 --> 00:57:16,148
Everything you say there

889
00:57:16,148 --> 00:57:18,408
kind of breaks this little hobby horse idea

890
00:57:18,408 --> 00:57:19,669
that I've had for the last,

891
00:57:19,748 --> 00:57:21,368
I don't know, six months or so.

892
00:57:22,128 --> 00:57:24,448
I have been under the assumption

893
00:57:24,448 --> 00:57:26,148
that Trump is going to try

894
00:57:26,148 --> 00:57:27,828
and run things insanely hot,

895
00:57:27,908 --> 00:57:29,588
get the economy absolutely flying

896
00:57:29,588 --> 00:57:30,428
going into midterms.

897
00:57:30,728 --> 00:57:32,148
Personally, I think he's probably cooked

898
00:57:32,148 --> 00:57:32,948
in the midterms anyway,

899
00:57:33,008 --> 00:57:34,188
no matter what happens at this point.

900
00:57:34,608 --> 00:57:37,068
But getting the economy really going

901
00:57:37,068 --> 00:57:40,708
is one of the best levers that he can pull.

902
00:57:41,188 --> 00:57:45,028
So if that happened, I can't see how that would be in any way bearish for Bitcoin.

903
00:57:45,148 --> 00:57:46,368
I think that would be incredibly bullish.

904
00:57:47,008 --> 00:57:50,208
But that means that we're not going to have like in that.

905
00:57:50,328 --> 00:57:55,748
If you think that theory is true, we're not going to have, you know, eight, nine, ten months of consolidation like Bitcoin has to rip at some point.

906
00:57:56,588 --> 00:57:58,888
How do you sort of trade those two things off?

907
00:57:59,628 --> 00:57:59,828
For sure.

908
00:57:59,828 --> 00:58:04,169
So Trump has very few things going for him right now, which is unfortunate, right?

909
00:58:04,248 --> 00:58:05,868
You know, he was the Bitcoin president.

910
00:58:06,008 --> 00:58:07,988
He was going to bring law and order back to the United States.

911
00:58:07,988 --> 00:58:13,848
but his you know that's a platform that he ran on but unfortunately his success at that

912
00:58:13,848 --> 00:58:19,488
particularly toward his constituents has been mixed to poor you know one of the main things

913
00:58:19,488 --> 00:58:24,508
that he ran on was this idea of mass deportations and many folks who voted for him are upset at the

914
00:58:24,508 --> 00:58:29,488
number of mass deportations and people who are on the fence and may have grit their teeth and

915
00:58:29,488 --> 00:58:35,048
voted for trump despite a lot of things they may have disliked chances are they're definitely not

916
00:58:35,048 --> 00:58:39,669
voting for Republicans in the midterms. And so the only thing Trump has going for him now

917
00:58:39,669 --> 00:58:44,688
is asset prices. And so that's one of the main reasons he picked Kevin Warsh, right? Or any of

918
00:58:44,688 --> 00:58:49,708
the three people that he was talking about is that basically, you know, sort of this under the

919
00:58:49,708 --> 00:58:54,348
table agreement that they would run it hot no matter what, right? That there would be many more

920
00:58:54,348 --> 00:58:58,048
rate cuts priced in. And right now, I think rate cuts are underpriced. I think that, you know,

921
00:58:58,128 --> 00:59:14,052
Kevin Warsh coming online he talked about how he wants to lower Fed funds by 100 basis points lower than it is today There are only two cuts priced in or three cuts priced in between now and the end of the year And so I think cuts are underpriced Kevin Warsh is going to have a Are cuts underpriced

922
00:59:14,052 --> 00:59:19,652
or are the markets saying, just calling bullshit on that claim? No, I think cuts are underpriced

923
00:59:19,652 --> 00:59:27,012
here. And also one of the reasons I can say that pretty confidently is that we're still a couple

924
00:59:27,012 --> 00:59:31,752
of months out from the Warsh nomination, and we're a few months out from the next meeting.

925
00:59:31,872 --> 00:59:35,912
So we have the next meeting, middle of March, and there's no cut expected.

926
00:59:36,412 --> 00:59:39,112
The next rate cut that's expected is after June.

927
00:59:40,392 --> 00:59:41,552
And so-

928
00:59:41,552 --> 00:59:41,952
Makes sense.

929
00:59:41,992 --> 00:59:42,772
Once Powell's out.

930
00:59:42,852 --> 00:59:43,252
Exactly.

931
00:59:43,412 --> 00:59:43,692
Exactly.

932
00:59:43,792 --> 00:59:47,432
Once Warsh is in, there are only two cuts priced in between now and next year.

933
00:59:47,432 --> 00:59:50,112
And 25 basis point increments.

934
00:59:50,492 --> 00:59:54,212
So if you've got a guy who's going to go in as Fed chair who has said he wants 100 basis

935
00:59:54,212 --> 00:59:57,912
points worth of cuts and the market is only pricing in 50. I think it's a pretty, pretty

936
00:59:57,912 --> 01:00:01,432
good assumption that he's, he's gonna, he's gonna cut more than the market is pricing and cuts are

937
01:00:01,432 --> 01:00:06,412
underpriced. So that's why I say that, um, you know, this is one of the last thing that Trump

938
01:00:06,412 --> 01:00:10,512
has things that Trump has going for him. And it goes, it's the same goes for every single politician

939
01:00:10,512 --> 01:00:15,452
that gets voted in, regardless of what happened, happens red or blue, they always want to juice

940
01:00:15,452 --> 01:00:20,312
asset prices. And it's particularly important in Trump's case where he doesn't have much going for

941
01:00:20,312 --> 01:00:26,272
him. And so the Warsh nomination is tactical. He knows that Warsh is going to listen to what he says.

942
01:00:26,452 --> 01:00:31,692
And so I think we're going to see 100 basis points worth of cuts between now and the end of the year.

943
01:00:31,852 --> 01:00:35,652
They're going to try to move very aggressively. Warsh has said that he wants to move away from

944
01:00:35,652 --> 01:00:40,692
tools like QE. I don't buy it. That's proven to be one of the most effective tools at increasing

945
01:00:40,692 --> 01:00:45,912
equity prices and bringing up risk appetite. And particularly now that we're starting to see

946
01:00:45,912 --> 01:00:48,092
a little bit of turnover in the labor market.

947
01:00:48,092 --> 01:00:50,952
If you look at ISM services, PMI,

948
01:00:51,012 --> 01:00:52,792
if you look at the employment component of that,

949
01:00:53,212 --> 01:00:56,352
that has been severely underperforming.

950
01:00:56,392 --> 01:00:58,672
And if you look at the manufacturing component of that

951
01:00:58,672 --> 01:01:00,252
or the manufacturing survey,

952
01:01:00,352 --> 01:01:01,452
the employment component of it,

953
01:01:01,632 --> 01:01:03,532
that's been negative for three and a half years,

954
01:01:03,592 --> 01:01:04,352
almost four years.

955
01:01:04,552 --> 01:01:06,132
So the employment picture in the United States

956
01:01:06,132 --> 01:01:07,112
isn't really great.

957
01:01:07,552 --> 01:01:09,752
Fed policy is very heavily dictated

958
01:01:09,752 --> 01:01:11,352
by what the labor market is doing.

959
01:01:11,652 --> 01:01:13,272
And now that we're starting to see some disappointment

960
01:01:13,272 --> 01:01:14,472
in the labor market,

961
01:01:14,732 --> 01:01:17,112
That's another thing in the Fed's corner that gives them reason to cut.

962
01:01:17,232 --> 01:01:22,012
So I think at some point, balance sheet expansion accelerates beyond the $40 billion a month

963
01:01:22,012 --> 01:01:22,692
that we have now.

964
01:01:23,072 --> 01:01:24,392
I think cuts are underpriced.

965
01:01:24,412 --> 01:01:29,652
And as a result of that, I think asset prices will do well heading into midterms in November.

966
01:01:29,652 --> 01:01:32,992
That said, where does that put us as far as Bitcoin is concerned?

967
01:01:33,192 --> 01:01:38,652
I mentioned relative to history, it typically takes about three and a half years from cycle

968
01:01:38,652 --> 01:01:39,832
bottom to cycle bottom.

969
01:01:40,492 --> 01:01:43,972
And so, again, that would put us sort of in the range of Bitcoin's bottom being found

970
01:01:43,972 --> 01:01:49,892
around May, if it's exactly three and a half years, or a little bit longer. So I added and

971
01:01:49,892 --> 01:01:56,452
subtracted three to five months from that estimate. And so, you know, the onus is sort of on,

972
01:01:56,732 --> 01:02:01,412
the onus is on the Fed chair in order to juice asset prices well in advance of November, not just

973
01:02:01,412 --> 01:02:06,672
in the months leading up to it. So that would sort of put a Bitcoin bottom, like the odds of a Bitcoin

974
01:02:06,672 --> 01:02:13,072
bottom, closer, much higher to sort of a May timeframe. Smack dab at three and a half years,

975
01:02:13,072 --> 01:02:14,592
right as Kevin Warsh gets in.

976
01:02:14,972 --> 01:02:17,612
And also you have to consider a lot of what the Fed does

977
01:02:17,612 --> 01:02:19,712
is forward guidance and speaking

978
01:02:19,712 --> 01:02:21,152
what they intend to do into the market.

979
01:02:21,532 --> 01:02:24,112
And so potentially even in advance of his nomination,

980
01:02:24,372 --> 01:02:26,512
Kevin Warsh is going to be doing a press tour.

981
01:02:26,612 --> 01:02:28,292
He's going to be doing a lot more pieces

982
01:02:28,292 --> 01:02:31,672
where he's talking about how Powell hasn't cut rates

983
01:02:31,672 --> 01:02:32,952
nearly as much as he should be.

984
01:02:33,492 --> 01:02:35,332
You know, the S&P 500.

985
01:02:35,492 --> 01:02:37,632
Well, he's not going to explicitly talk about asset prices.

986
01:02:38,032 --> 01:02:39,132
I know Trump certainly will.

987
01:02:39,512 --> 01:02:41,512
But in advance of his nomination,

988
01:02:41,512 --> 01:02:47,192
He doesn't necessarily have to be in that chair position in order to start juicing asset prices.

989
01:02:47,552 --> 01:02:49,372
Markets are forward discounting mechanisms, right?

990
01:02:49,592 --> 01:03:02,112
And so as his nomination approaches and he finally gets put in his Fed chair, simply saying what he's going to do or suggesting what he's going to do could be enough and will be enough to start moving asset prices higher.

991
01:03:02,112 --> 01:03:22,532
And so if we were to take those two things into consideration, right, this idea that Bitcoin is going to find its bottom sometime within the next six to eight months, and the fact that we have a new Fed chair who's going to be working for Trump and trying to juice asset prices heading into November, then that would make it so Bitcoin's proverbial potential bottom, rather, would be found sooner than later, potentially around May.

992
01:03:22,532 --> 01:03:25,072
So, you know, it's going to be interesting.

993
01:03:25,392 --> 01:03:28,352
You know, we talked about the price levels and we talked about when this could happen.

994
01:03:28,892 --> 01:03:35,252
And, you know, ultimately it all boils around those factors at this point.

995
01:03:36,072 --> 01:03:44,512
Do you think Walsh is going to come in and really try and make a statement in his first meeting and do like a 50 basis point cut or something more, slightly more bold?

996
01:03:45,252 --> 01:03:47,592
You know, drastic times call for drastic measures.

997
01:03:47,592 --> 01:03:52,072
and when we're talking about the Republicans maintaining their control in Washington, D.C.,

998
01:03:52,072 --> 01:03:53,292
I think anything's on the table.

999
01:03:54,032 --> 01:03:59,392
I think it would be a bit of a misfire out the gate for him to do something like that right away.

1000
01:03:59,652 --> 01:04:03,792
There are a few Fed meetings between when he gets nominated and the midterms.

1001
01:04:03,892 --> 01:04:06,852
So we have a meeting that's in June, July, and September.

1002
01:04:07,092 --> 01:04:10,472
So during the summer, you've got a lot of runway in order to work with.

1003
01:04:10,912 --> 01:04:15,972
But it's also important to remember that, like, the Fed chair isn't the only person who sets interest rates.

1004
01:04:16,472 --> 01:04:17,532
There's a committee, right?

1005
01:04:17,592 --> 01:04:19,452
You've got 12 people to contend with.

1006
01:04:19,512 --> 01:04:20,672
The Fed chair is only one of them.

1007
01:04:21,032 --> 01:04:25,672
So he's going to have some marginal impact on influencing the Fed's decision, but not

1008
01:04:25,672 --> 01:04:28,672
as much as a lot of people think.

1009
01:04:28,892 --> 01:04:30,212
He's not the sole decision maker.

1010
01:04:30,652 --> 01:04:35,232
So a lot of this also boils down to what the labor market does, the state of the U.S.

1011
01:04:35,292 --> 01:04:36,812
economy over the next couple of months.

1012
01:04:37,372 --> 01:04:40,112
And we've seen based on a couple of different things.

1013
01:04:40,112 --> 01:04:46,032
We've seen based on the Atlanta Fed GDP estimates that the economy actually may be accelerating.

1014
01:04:46,032 --> 01:04:50,752
um it it doesn't seem like that's sustainable at least in my eyes judging by what the labor

1015
01:04:50,752 --> 01:04:54,672
market has done over the last couple of days you also have to look at uh consumer sentiment

1016
01:04:54,672 --> 01:05:00,112
um which isn't doing very well particularly uh forward-looking inflation expectations those are

1017
01:05:00,112 --> 01:05:05,932
disappointing which could uh suggest that growth is a little bit lower than anticipated um so as

1018
01:05:05,932 --> 01:05:10,092
far as like him making a bold call i think it would be the right thing to do a 50 basis point

1019
01:05:10,092 --> 01:05:14,352
rate cut right out the gate that would certainly be great for asset prices and for trump but uh

1020
01:05:14,352 --> 01:05:20,332
the ball's not entirely in his court, if you will. Yeah, that makes sense. All right. Can we talk a

1021
01:05:20,332 --> 01:05:24,332
little bit about Bitcoin as collateral? Because one of the things that I've seen going around

1022
01:05:24,332 --> 01:05:28,272
Twitter, especially over the last few days, is people calling out the idea of doing Bitcoin-backed

1023
01:05:28,272 --> 01:05:33,952
loans, saying it's too high risk and people shouldn't be recommending this, all that kind

1024
01:05:33,952 --> 01:05:39,952
of stuff. I have Ledin as a sponsor. I use Ledin. I think Bitcoin is a brilliant form of collateral.

1025
01:05:39,952 --> 01:05:42,812
I think Bitcoin-backed loans are a very useful product.

1026
01:05:43,012 --> 01:05:46,032
I took out a loan around 100K.

1027
01:05:46,972 --> 01:05:48,732
When you go into these agreements,

1028
01:05:48,892 --> 01:05:51,052
you know that you have to do the position sizing right

1029
01:05:51,052 --> 01:05:53,012
because you may have to top up your collateral at some point.

1030
01:05:53,412 --> 01:05:58,672
I think there is very sensible ways of going into these Bitcoin-backed loans.

1031
01:05:58,812 --> 01:06:00,552
And there's people that make a massive mistake

1032
01:06:00,552 --> 01:06:02,452
by doing too large a portion of their stack

1033
01:06:02,452 --> 01:06:05,432
and not being able to actually top up when required.

1034
01:06:06,292 --> 01:06:09,112
How do you think of Bitcoin as collateral,

1035
01:06:09,112 --> 01:06:13,392
especially taking into account the volatility we've seen over the last few days for sure so i

1036
01:06:13,392 --> 01:06:18,152
it's something that people need to really put a lot of consideration into and learn about the

1037
01:06:18,152 --> 01:06:22,652
risks before doing it but that said all of these platforms right whether we're talking about let

1038
01:06:22,652 --> 01:06:26,992
in or other folks that offer bitcoin-backed loans they're very explicit about management

1039
01:06:26,992 --> 01:06:31,672
collateral management um you know their ltv ratios that they offer are very reasonable

1040
01:06:31,672 --> 01:06:37,652
um and their collateral requirements for ltv ratios that will put you at higher risk of liquidation

1041
01:06:37,652 --> 01:06:42,252
they tend to be very good about warning you about Bitcoin volatility.

1042
01:06:42,832 --> 01:06:45,552
So, you know, it's number one, it's like it's a function of risk management,

1043
01:06:45,552 --> 01:06:51,332
but also like people do need to understand that you need to take out your loan in such a way

1044
01:06:51,332 --> 01:06:53,332
where it's not your entire Bitcoin stack.

1045
01:06:53,332 --> 01:06:58,032
You can post collateral so that during these moments where we have these big drawdowns,

1046
01:06:58,172 --> 01:07:01,532
like we just saw yesterday, we're now 50% peak to trough.

1047
01:07:02,132 --> 01:07:04,852
Well, not necessarily the full cycle trough,

1048
01:07:04,852 --> 01:07:14,292
But the people who take out Bitcoin-backed loans, and many are listening to this show, you know, you do have liquidation risk, right?

1049
01:07:14,352 --> 01:07:18,072
It's something that a lot of people are seeing and hearing about and learning about for the first time.

1050
01:07:18,532 --> 01:07:21,732
Bitcoin has been a very stable asset over the last couple of years.

1051
01:07:21,832 --> 01:07:25,592
And so for many folks who may have taken out their first Bitcoin-backed loan, this is a bit of a shock.

1052
01:07:25,592 --> 01:07:33,032
um and so ultimately like what it boils down to is making sure that the amount of bitcoin you are

1053
01:07:33,032 --> 01:07:37,812
taking a loan out against is not your full stack and if it is most of your stack uh then you have

1054
01:07:37,812 --> 01:07:42,112
liquidity on the sidelines that you can use to purchase more bitcoin and top up your collateral

1055
01:07:42,112 --> 01:07:48,692
um it was really tough to see a couple of people over the last couple of days particularly yesterday

1056
01:07:48,692 --> 01:07:53,032
posting on twitter that they had been liquidated or that they had had to sell all of their stock

1057
01:07:53,032 --> 01:07:58,092
portfolio in order to post more collateral. Prudent risk management, particularly with an

1058
01:07:58,092 --> 01:08:04,512
asset like Bitcoin, is very important. Now, that said, I think over the next couple of years,

1059
01:08:05,172 --> 01:08:11,252
over the ensuing decade, we'll call it, I tend to think that Bitcoin's downside volatility will

1060
01:08:11,252 --> 01:08:16,632
decline for a few reasons. Number one, we talked about it already on the show. These ETFs who have

1061
01:08:16,632 --> 01:08:21,732
held really tough despite the massive drawdown that we've experienced. Naturally, they don't sell

1062
01:08:21,732 --> 01:08:23,972
as often, judging by their behavior

1063
01:08:23,972 --> 01:08:25,892
as typical spot Bitcoin holders.

1064
01:08:26,372 --> 01:08:27,572
So I think naturally it's going to introduce

1065
01:08:27,572 --> 01:08:30,872
a lot of much lower downside risk.

1066
01:08:30,912 --> 01:08:31,792
And as a result of that,

1067
01:08:31,992 --> 01:08:33,572
much lower liquidation potential.

1068
01:08:34,132 --> 01:08:34,972
And then number two,

1069
01:08:35,052 --> 01:08:36,272
obviously you have the treasury companies.

1070
01:08:36,432 --> 01:08:38,852
We mentioned that some of them

1071
01:08:38,852 --> 01:08:40,872
with poor capital structures

1072
01:08:40,872 --> 01:08:42,832
will be forced to sell their Bitcoin,

1073
01:08:43,212 --> 01:08:44,292
but the lion's share of them,

1074
01:08:44,332 --> 01:08:45,352
at least the ones that survive

1075
01:08:45,352 --> 01:08:46,552
through this bear market

1076
01:08:46,552 --> 01:08:47,552
and into the next bull market

1077
01:08:47,552 --> 01:08:49,312
are just going to become buyers forever.

1078
01:08:49,572 --> 01:08:50,872
And so that also eliminates

1079
01:08:50,872 --> 01:08:53,072
a great deal of downside risk for Bitcoin.

1080
01:08:53,192 --> 01:08:54,372
It eliminates a lot of the supply.

1081
01:08:54,912 --> 01:08:57,912
So I think Bitcoin-backed lending will become much safer

1082
01:08:57,912 --> 01:09:00,552
over the next couple of years from a price perspective.

1083
01:09:00,672 --> 01:09:02,172
At least liquidation risk will decline.

1084
01:09:02,912 --> 01:09:05,152
But all in all, I think it's a function of two things.

1085
01:09:05,752 --> 01:09:08,432
Number one, people need to understand what they're getting into

1086
01:09:08,432 --> 01:09:10,312
and make sure that they're not taking out a loan

1087
01:09:10,312 --> 01:09:11,592
against their entire stack,

1088
01:09:12,052 --> 01:09:14,652
so that they have plenty on hand to post this collateral

1089
01:09:14,652 --> 01:09:16,132
in the event that things like this happen.

1090
01:09:16,892 --> 01:09:18,832
But number two, and I think the companies already do

1091
01:09:18,832 --> 01:09:23,492
a really great job at this around educating on the risks of Bitcoin-backed loans, sending push

1092
01:09:23,492 --> 01:09:28,652
notifications when you need to top up your collateral or you're at risk of liquidation,

1093
01:09:29,072 --> 01:09:34,852
and also extending the window of time that you have to post more collateral before being

1094
01:09:34,852 --> 01:09:38,952
liquidated. I think Striker recently increased their window actually today after the events of

1095
01:09:38,952 --> 01:09:43,892
yesterday from 24 hours to 72 hours. And I think that's going to continue to become the norm across

1096
01:09:43,892 --> 01:09:47,832
the industry. So overall, like from a risk management perspective, Bitcoin-backed loans

1097
01:09:47,832 --> 01:09:51,052
definitely warrant a higher degree of involvement.

1098
01:09:51,592 --> 01:09:53,032
But, you know, I think they're well on their way

1099
01:09:53,032 --> 01:09:55,792
to becoming one of the most used forms

1100
01:09:55,792 --> 01:09:57,692
of accessing liquidity against your Bitcoin.

1101
01:09:58,592 --> 01:09:59,832
You know, Bitcoin at one point,

1102
01:09:59,872 --> 01:10:00,812
and it will get there again,

1103
01:10:00,852 --> 01:10:02,292
was the fifth largest asset in the world.

1104
01:10:02,952 --> 01:10:04,812
So one of the things that it struggles with right now

1105
01:10:04,812 --> 01:10:05,972
is these Bitcoin-backed loans

1106
01:10:05,972 --> 01:10:08,092
tend to have pretty high rates, right?

1107
01:10:08,132 --> 01:10:10,432
At least relative to other sorts of financing

1108
01:10:10,432 --> 01:10:11,092
that you can get.

1109
01:10:11,772 --> 01:10:14,292
I tend to think that as Bitcoin grows in size,

1110
01:10:14,352 --> 01:10:15,812
once it reclaims $2 trillion,

1111
01:10:16,232 --> 01:10:17,012
and then $5 trillion,

1112
01:10:17,012 --> 01:10:18,772
and then 10 trillion and then gold parity

1113
01:10:18,772 --> 01:10:21,492
and then eventually the entire monetary premium in the world,

1114
01:10:21,852 --> 01:10:24,112
the rates on Bitcoin-backed loans will come down.

1115
01:10:24,572 --> 01:10:30,792
But until then, until we add another trillion to our market cap

1116
01:10:30,792 --> 01:10:32,472
and then another $10 trillion after that,

1117
01:10:32,852 --> 01:10:35,272
prudent risk management becomes like the foremost concern

1118
01:10:35,272 --> 01:10:36,812
for anybody that's taken on one of these loans.

1119
01:10:37,372 --> 01:10:39,392
Yeah, I did a show with Mauricio from Ledin

1120
01:10:39,392 --> 01:10:40,952
probably close to a year ago now

1121
01:10:40,952 --> 01:10:42,612
where we talked about like the risks of these

1122
01:10:42,612 --> 01:10:44,332
and how you should think about position sizing.

1123
01:10:44,472 --> 01:10:46,492
And personally, like I wouldn't be putting more than,

1124
01:10:46,492 --> 01:10:50,852
you know, 10, 20% of my stack at most into like one of these Bitcoin back loans. But

1125
01:10:50,852 --> 01:10:55,112
there are times where like right now I'm really tempted to do another one and I probably will.

1126
01:10:56,072 --> 01:11:01,192
Because like at these levels, I think anyway, you buy more Bitcoin, obviously not financial

1127
01:11:01,192 --> 01:11:04,952
advice, do your own research. But like I'm seriously considering another one.

1128
01:11:06,632 --> 01:11:09,652
How does this play into your business? We've not even talked about Horizon. Do you want to

1129
01:11:09,652 --> 01:11:15,372
tell everyone what you do? Yeah, for sure. So Horizon is, it's this concept we came up with when,

1130
01:11:15,372 --> 01:11:19,612
And, you know, prior to this, and we obviously have another company called FAYETS, a self-custody solution.

1131
01:11:19,852 --> 01:11:25,492
A lot of our customers were coming to us and asking, can we do a Bitcoin-backed loan through you?

1132
01:11:25,872 --> 01:11:31,552
And, you know, we had discussions about this, but being a self-custody platform, that's inherently difficult to do.

1133
01:11:31,992 --> 01:11:37,652
Our decisions were to either hire the engineering talent and build it in-house or partner with another place.

1134
01:11:38,252 --> 01:11:42,892
We decided to do none of those things, but we decided to look at it from the flip side.

1135
01:11:43,452 --> 01:11:48,592
Obviously, Bitcoin-backed loans are a method of accessing U.S. dollar liquidity against your Bitcoin.

1136
01:11:49,512 --> 01:12:00,092
What we were more interested in is all of these different asset markets in the world that have a lot of monetary premium that people could use and leverage in order to acquire more Bitcoin.

1137
01:12:00,092 --> 01:12:18,292
And so we started doing some searching. And, you know, very quickly, we landed on the pretty crazy stat that U.S. home equity is now at $35.7 trillion, which is almost double what it was in 2019. And this was a stat from almost a year ago. So it's probably even higher now.

1138
01:12:18,292 --> 01:12:47,352
So that's a massive amount of capital that is now trapped within people's walls, right? And if you look at real estate globally, it's a $370 trillion market. So it's the single largest asset in the world. So it's larger than stocks, larger than bonds, larger than money market funds. But even though it's people's largest asset, it tends to be 55% of the typical American homeowner's portfolio. It's rising less than the rate of inflation. So it's rising less than 2% annually, which is CPI.

1139
01:12:47,352 --> 01:12:52,492
But if you look at it from the lens of monetary debasement, Global M2 is rising at like 7% a year.

1140
01:12:52,672 --> 01:12:57,952
So you're getting completely trounced when it comes to your home as a store of value.

1141
01:12:58,732 --> 01:13:06,652
So really, like, the high-level thesis is that homes have become stores of value because when the money is broken, capital flees toward what is scarce.

1142
01:13:06,832 --> 01:13:10,612
Naturally, capital flew toward gold when we departed the gold standard.

1143
01:13:11,132 --> 01:13:16,732
And housing, real estate more broadly, but housing is relatively supply inelastic.

1144
01:13:17,032 --> 01:13:18,472
So it's difficult to build new homes.

1145
01:13:18,572 --> 01:13:20,332
Therefore, it makes sense to purchase them

1146
01:13:20,332 --> 01:13:22,512
because they're going to go up faster than the rate of inflation.

1147
01:13:23,272 --> 01:13:24,672
Today, that is no longer the case.

1148
01:13:25,012 --> 01:13:28,132
And so now, as a result of all of this capital flight we've seen,

1149
01:13:28,472 --> 01:13:32,512
there's conservatively a $130 trillion monetary premium

1150
01:13:32,512 --> 01:13:34,152
embedded in global real estate.

1151
01:13:34,152 --> 01:13:37,452
So roughly 33% of all money in real estate,

1152
01:13:37,572 --> 01:13:39,092
not just globally, but here in the United States,

1153
01:13:39,512 --> 01:13:40,992
is pure hot air, right?

1154
01:13:41,212 --> 01:13:43,592
And so basically, the concept of Horizon,

1155
01:13:43,592 --> 01:13:46,992
and it's basically sort of the inverse of a Bitcoin-backed loan, right?

1156
01:13:47,032 --> 01:13:49,412
Where with a Bitcoin-backed loan, you're using your Bitcoin as collateral

1157
01:13:49,412 --> 01:13:52,572
in order to access US dollar liquidity to buy other things,

1158
01:13:52,652 --> 01:13:54,192
potentially to go and buy more Bitcoin.

1159
01:13:54,652 --> 01:13:58,312
With Horizon, what you're doing is you are utilizing a portion

1160
01:13:58,312 --> 01:14:01,712
of your existing home equity in order to convert it to Bitcoin, right?

1161
01:14:02,192 --> 01:14:04,792
So you are using this asset to buy more BTC,

1162
01:14:05,372 --> 01:14:08,152
effectively turning your largest asset into a better performing one.

1163
01:14:08,472 --> 01:14:10,872
So that's the high-level idea around Horizon.

1164
01:14:11,032 --> 01:14:13,512
We've been around for closing in on one year now,

1165
01:14:13,592 --> 01:14:16,512
And the success we've had, the feedback we've had has been tremendous.

1166
01:14:17,032 --> 01:14:21,492
And ultimately, we believe that in an era where homes are forced to be a store of value,

1167
01:14:22,652 --> 01:14:25,592
you know, the value proposition of Bitcoin becomes even more enticing.

1168
01:14:25,752 --> 01:14:29,672
And for homeowners who have families, they have children, they're in their forever home,

1169
01:14:30,032 --> 01:14:32,772
where selling your house to buy more Bitcoin may not be an option,

1170
01:14:32,772 --> 01:14:38,252
or taking out a home equity line of credit and adding another monthly payment alongside your mortgage may not be an option.

1171
01:14:38,812 --> 01:14:40,752
We feel we've introduced a pretty good option.

1172
01:14:40,752 --> 01:14:44,212
basically where you can convert your home equity to Bitcoin,

1173
01:14:44,972 --> 01:14:46,152
a percentage of it,

1174
01:14:46,352 --> 01:14:49,532
all the way up to 22.2% of your home's net equity,

1175
01:14:49,672 --> 01:14:50,452
which is what we have currently.

1176
01:14:51,392 --> 01:14:53,392
And then in exchange, you get Bitcoin.

1177
01:14:53,552 --> 01:14:55,472
And alongside that, there are no monthly payments,

1178
01:14:55,612 --> 01:14:56,552
there are no interest charges,

1179
01:14:56,632 --> 01:14:57,832
and there are also no term limits.

1180
01:14:58,012 --> 01:14:59,532
So effectively, for the length of time

1181
01:14:59,532 --> 01:15:00,572
that you're living in your home,

1182
01:15:00,912 --> 01:15:03,112
you can convert a portion of your idle equity,

1183
01:15:03,232 --> 01:15:05,712
which is rising 2% to 3% a year, into Bitcoin,

1184
01:15:06,032 --> 01:15:08,072
which becomes particularly enticing

1185
01:15:08,072 --> 01:15:10,912
when Bitcoin is down 50% from its all-time highs.

1186
01:15:11,072 --> 01:15:13,992
So that's the high-level info about Horizon

1187
01:15:13,992 --> 01:15:14,772
and kind of what we do.

1188
01:15:15,772 --> 01:15:16,892
That is, I think it's very cool.

1189
01:15:17,012 --> 01:15:22,652
And so when that agreement comes to an end,

1190
01:15:22,852 --> 01:15:24,352
how do you share the upside in Bitcoin?

1191
01:15:25,252 --> 01:15:25,812
For sure.

1192
01:15:25,892 --> 01:15:27,012
So in our current model,

1193
01:15:27,012 --> 01:15:29,032
we actually don't share in the Bitcoin upside whatsoever.

1194
01:15:29,412 --> 01:15:31,492
So Horizon and our capital partner,

1195
01:15:31,492 --> 01:15:35,612
we're solely interested in the financial growth of the home.

1196
01:15:35,612 --> 01:15:40,572
and the homeowner has total claim over the Bitcoin.

1197
01:15:40,932 --> 01:15:44,292
So the Bitcoin that they have can be custodied entirely by them

1198
01:15:44,292 --> 01:15:45,652
wherever they want to, right?

1199
01:15:45,672 --> 01:15:47,512
Whether they're most comfortable holding it on an exchange

1200
01:15:47,512 --> 01:15:50,592
or in self-custody, it's entirely theirs to keep.

1201
01:15:50,672 --> 01:15:52,652
Now, the reason we have that model currently is,

1202
01:15:53,272 --> 01:15:55,392
and this plays into the reason that Bitcoin-backed loans

1203
01:15:55,392 --> 01:15:56,412
have such high interest rates,

1204
01:15:56,712 --> 01:15:59,092
it's really hard to find capital providers

1205
01:15:59,092 --> 01:16:00,972
who are willing to take payment

1206
01:16:00,972 --> 01:16:02,912
and collateralize Bitcoin at scale.

1207
01:16:03,452 --> 01:16:08,832
And so in this sort of model that we have currently, there's no Bitcoin appreciation share.

1208
01:16:10,092 --> 01:16:15,432
As this business progresses, we believe that Bitcoin will become one of the cornerstones of capital markets.

1209
01:16:15,592 --> 01:16:17,792
We believe that Bitcoin is pristine collateral, right?

1210
01:16:18,012 --> 01:16:19,432
It's sort of a lender's dream, right?

1211
01:16:19,452 --> 01:16:22,232
Because it can be liquidated 24-7 through 65.

1212
01:16:22,492 --> 01:16:23,632
It's instantly verifiable.

1213
01:16:23,832 --> 01:16:25,372
It's very easy to hold in escrow.

1214
01:16:25,812 --> 01:16:31,273
And so ultimately, we believe that as our business evolves, there will be more demand from very large pools of capital

1215
01:16:31,273 --> 01:16:33,372
to collateralize a financial product like this.

1216
01:16:33,492 --> 01:16:34,872
And we'll be able to launch a model

1217
01:16:34,872 --> 01:16:36,172
where we take upside on the Bitcoin.

1218
01:16:36,312 --> 01:16:38,252
But for now, to the benefit of the homeowner,

1219
01:16:38,592 --> 01:16:40,472
the Bitcoin is entirely there as to self-custody

1220
01:16:40,472 --> 01:16:42,192
and we don't take any of the upside on it.

1221
01:16:42,832 --> 01:16:43,332
That's very cool.

1222
01:16:43,372 --> 01:16:44,472
And is this like working now?

1223
01:16:44,532 --> 01:16:45,452
Can people actually do this?

1224
01:16:45,672 --> 01:16:46,032
It is.

1225
01:16:46,172 --> 01:16:47,692
Yeah, you can go to joinhorizon.com.

1226
01:16:47,752 --> 01:16:48,192
You can apply.

1227
01:16:48,332 --> 01:16:49,752
We're available in 18 states,

1228
01:16:49,812 --> 01:16:51,172
including California and Florida,

1229
01:16:51,273 --> 01:16:52,512
as well as Washington, D.C.

1230
01:16:53,273 --> 01:16:55,712
The process takes 90 seconds to see if you qualify.

1231
01:16:56,132 --> 01:16:57,532
And the typical lead time for this

1232
01:16:57,532 --> 01:16:58,512
is about two to three weeks.

1233
01:16:58,512 --> 01:16:59,692
So faster than a mortgage,

1234
01:16:59,692 --> 01:17:01,352
faster than a home equity line of credit.

1235
01:17:01,872 --> 01:17:04,652
And we've helped a lot of homeowners at this point,

1236
01:17:05,212 --> 01:17:07,592
dozens of homeowners at this point facilitate this process.

1237
01:17:07,812 --> 01:17:09,112
And it's been very sweet.

1238
01:17:09,212 --> 01:17:10,672
Yeah, no, we're happy to be,

1239
01:17:10,752 --> 01:17:12,552
there are other products that are similar to this,

1240
01:17:12,612 --> 01:17:13,773
but not Bitcoin oriented.

1241
01:17:13,912 --> 01:17:15,832
And so we're very happy to be sort of the first movers

1242
01:17:15,832 --> 01:17:16,432
in this market.

1243
01:17:16,732 --> 01:17:18,652
And we're excited to see how the space develops.

1244
01:17:19,412 --> 01:17:19,932
That's awesome.

1245
01:17:20,372 --> 01:17:21,112
Very cool.

1246
01:17:21,273 --> 01:17:22,273
Joe, this has been fun.

1247
01:17:22,572 --> 01:17:25,152
Anything that we've not talked about that you wish we had?

1248
01:17:25,792 --> 01:17:27,492
No, I think we really covered everything.

1249
01:17:27,892 --> 01:17:29,372
Just looking back through my notes here,

1250
01:17:29,372 --> 01:17:30,532
We really did.

1251
01:17:30,612 --> 01:17:34,872
I think the big takeaway for folks is that this isn't an idiosyncratic Bitcoin sell-off.

1252
01:17:35,052 --> 01:17:36,332
Everything is selling off.

1253
01:17:36,792 --> 01:17:38,432
Eventually, it's going to make its way into stocks.

1254
01:17:38,532 --> 01:17:42,792
But the good news from that is that Bitcoin tends to fall before stocks, which is what we saw.

1255
01:17:43,092 --> 01:17:45,072
And it tends to bottom before stocks, too.

1256
01:17:45,472 --> 01:17:50,052
So it might seem scary, but ultimately, you're going to look back on this time 10 years down the line,

1257
01:17:50,172 --> 01:17:54,572
five years down the line, next cycle, and say, man, I wish I had bought around that $60,000 zone.

1258
01:17:54,773 --> 01:17:56,472
So it's been fun, Danny.

1259
01:17:56,532 --> 01:17:57,132
Thanks for having me on.

1260
01:17:57,132 --> 01:18:00,792
When we scheduled this, I didn't think Bitcoin was going to crater by the largest percentage

1261
01:18:00,792 --> 01:18:02,412
in history, but here we are.

1262
01:18:03,692 --> 01:18:07,232
I know now we've got the problem where we're recording this on Friday afternoon.

1263
01:18:07,232 --> 01:18:08,552
It's not going out till Monday.

1264
01:18:08,952 --> 01:18:10,292
Who knows what will happen over the weekend?

1265
01:18:10,572 --> 01:18:11,812
This could all be invalidated.

1266
01:18:12,012 --> 01:18:14,492
But no, I've really enjoyed this, Joe.

1267
01:18:14,612 --> 01:18:18,412
Like you say, this is one of those buying opportunities that don't come around all that

1268
01:18:18,412 --> 01:18:18,632
often.

1269
01:18:18,832 --> 01:18:20,612
So up your DCA if you can.

1270
01:18:21,752 --> 01:18:23,072
You'll thank yourself later.

1271
01:18:23,832 --> 01:18:24,952
Joe, thank you, man.

1272
01:18:25,052 --> 01:18:25,592
This has been awesome.

1273
01:18:25,832 --> 01:18:26,852
Danny, I appreciate it, man.

1274
01:18:26,852 --> 01:18:27,252
Thank you.