Built on a confidence game.
It's built on people believing that these people have control over the economic apparatus,
that they have control over the system.
And when you expose the wizard behind the curtain, the myth falls apart.
Nobody knows really what happens then.
Whenever you disrupt the status quo, it can be very painful and unanticipated consequences
can arise.
I don't recall a period where there has been this much of a bearish sentiment.
It is bizarre to me.
People are afraid right now if they FOMO back into the marketplace that they're going to get dumped on.
When you start to see mounting evidence of this time actually is different,
then you say, oh, it's not different this time.
We're going to sell off 80%.
I think Bitcoin can make a new all-time high in 2026, and I think we can do it convincingly.
That would probably be one of the most bullish developments, I think, in the history of Bitcoin.
Joe Calisari, man.
Great to see you.
Um, since we first spoke in Vegas this year, you have been one of my favorite people to
have on the show.
Um, you, you have a very balanced take on markets, a balanced take on Bitcoin.
I think more often than not, you stay away from like the hyperbole.
And I think you're probably right a lot of the time.
Um, and so I thought a really cool idea would be to go over what's happened in 2025.
Um, which has been like, I think we, I mean, we were just talking before the show.
It's been an extremely disappointing year in Bitcoin from my perspective, at least.
I don't know how you think about that.
Like, I would never have guessed that at the end of the year, we'd be trading lower than
at the start of the year.
That was not on my cards.
And the markets in general have been kind of all over the place.
Like, Trump has truly been like a bull in the China shop when it comes to like tariffs
and things like that.
So I want to get into everything.
But just general take, like overview.
Do you think, how have you taken in 2025?
Okay. So if you start 2025, and it was funny because at the beginning of the year, I have all these tweets I put out. I had a target for the end of the year. My target was 130, which I think we talked about on our last episode. And when I put that out there, I was attacked relentlessly.
relentlessly. It trolled. People were making fun of me in June because we're almost at, you know,
125 and your target's 130. What are you thinking about? And I always expected, okay, I always
expected most of the year to be choppy. I tweeted this out, particularly the beginning part of the
year. I had like my list of 10 predictions I put out, which I will be putting out later this
month, you know, next week when I sit down and do the work. But I always expected to be choppy
and more volatile than the prior year. And I, for one, thought, you know, we would get,
you know, closer to 130, 140 range at the end of the year. Obviously, that's wrong, right? Which is
the nature of predictions are always going to get some of them wrong. But we got to 126, right? That
was a big move. I think even from the beginning of the year, you know, we're starting out, you know,
in the low 90s, we bounced up higher, we made a new all time high on inauguration day. And then we
were due for a considerable volatility event for most of the first half of the year, really the
tariffs and, you know, the dynamo with Trump. But the economy hung in there. Markets generally
overall were strong after, you know, April. You had, you know, what, six, seven months straight
up only across the equity market. So nothing really dire, no, you know, huge calamities,
nothing that's going to derail the economy as a whole. Now, Bitcoin, Bitcoin was dealing with a
few, I think, idiosyncratic features that we have to talk about. And I'll just give you the top three
in my mind. Number one, you really have to talk about what happened on October 10th. That is sort
of the heart because I think of where I think the Bitcoin market is now. I think that it's still
sort of in this state of malaise and almost depression given that event. I mean, that
really took people to the woodshed. I personally am involved in about a dozen cases now with
exchanges and issues where people got really hurt bad by that liquidation event. That's a huge,
idiosyncratic Bitcoin feature. As big, although not as sort of particularized in a single data
point, is this sort of malaise over the cycle theory, right? This idea that Bitcoin has to pump
and then bust into the following year, that if it doesn't do well this year, that it's going to
somehow, you know, have a really bad, brutal 2026. I think that's a bunch of baloney and we can get
into why. I think it's like the analogy I always use is like a rubber band, right? If you stretch
the rubber band really hard, right, it's going to snap back. And that's what I think you saw in a lot
of prior cycles, particularly the 2017 cycle, where we went from like a thousand to 19.6 by the end of
the year, that was a rubber band stretch. And we worked off that excess for, you know, 12, you know,
16 months. But then the final thing, right, that we need to talk about the cycle, then you have the
1010. But I just think that there's this issue with the treasury companies that people didn't
really know what to make of them. There was a lot of people putting on speculative bets on the
treasury companies. And once those entities were taken to the woodshed, that caused, I think,
broader problems in the Bitcoin space. So those three major headwinds this year, I think, kept
the lid on the price action. Right now, though, although I would agree with you, I am slightly
disappointed about sitting in the high 80s. Again, lower than where I thought we would end the year,
but not, you know, not significantly. I mean, we're 40%. I mean, we went to 126. To me, I'm
very bullish here because I think that the economy is overall is hanging in there. I think you had a
GDP print that was really solid. I think Atlanta Fed GDP now is showing like towards 3% for Q4.
I think that there are pockets of weakness, but there have been pockets of weakness for several
years now. And I think you can make a case that there are green shoots and what Morgan Stanley
calls the rolling recovery. So that's fascinating because, you know, Bitcoin, I think, is going to
respond to a broader equity market rally that is not concentrated in mega cap. And you're seeing
that you're seeing that in small caps, you're seeing that in the metals, which we can talk
about in the broader story. So a lot of stuff going on. But I will I will push back hard in
this whole interview because I don't believe in the the very negative sentiment. I mean, I tweeted
out today, we're recording this on the 23rd of December. I helped Bitcoin since 2015. I don't
recall a period where there has been this much of a bearish sentiment. It is bizarre to me.
I think it was more optimistic when the FDF collapse went down, which is saying something
because people were pretty distraught at that point. They thought it was dead. But this one is
really bad. I talked to a guy who has been holding Bitcoin since 2017. He's a seven-figure position
and he was considering, you know, just dumping his whole position going into stocks.
And, you know, his whole reasoning is that I don't have four years to sit and wait for this
all to sort out. I need to make roads towards my retirement now. I need to do this, you know,
now. I can't just sit through this again. What Bitcoin did is brought to you by the
massive legends, IRON, the largest NASDAQ listed Bitcoin miner using 100% renewable energy.
IRON are not just powering the Bitcoin network, they're also providing cutting edge computing
resources for AI all backed by renewable energy. We've been working with their founders Dan and
Will for quite some time now and have been really impressed with their values, especially their
commitment to local communities and sustainable computing power. So whether you're interested in
mining Bitcoin or harnessing AI compute power, IREN is setting the standard. Visit iren.com to
learn more, which is I-R-E-N.com. With fiat money constantly debasing, wealth preservation isn't
optional. That's why I recommend Swamp Bitcoin, a team of dedicated Bitcoiners who work with
families and businesses to build and secure generational wealth with Bitcoin. Strong
relationships with clients are at the center of everything SWAN does. A dedicated SWAN private
wealth representative, which is a real person that you can text and call, will help you build a
Bitcoin wealth strategy using SWAN's comprehensive platform of Bitcoin services, including tax
advantage retirement accounts, advanced Bitcoin cold storage using collaborative self-custody,
inheritance planning with both trust and entity accounts, tax loss harvesting, asset-backed loans,
and more. SWAN have helped over 100,000 clients since 2020 and if you're serious about acquiring
and securing Bitcoin, I recommend SWAN. Meet the team at swan.com forward slash wbd which is swan.com
forward slash wbd. What if you could lower your tax bill and stack Bitcoin at the same time?
Well, by mining Bitcoin with blockware you can. New tax guidelines from the Big Beautiful Bill
allow American miners to write off 100% of the cost of their mining hardware in a single tax year.
That's right, 100% write-off.
So if you have $100,000 in capital gains or income, you can purchase $100,000 of miners
and offset it entirely.
Blockware's mining as a service enables you to start mining Bitcoin right now without lifting
a finger.
Blockware handles everything from securing the miners, to sourcing low-cost power, to
configuring the pool, they do it all.
You get to stack Bitcoin at a discount every single day while also saving big come tax
season.
started today by going to mining.blockwaresolutions.com forward slash WBD. Of course, none of this is tax
advice. Speak to your accountant or tax advisor to understand how these rules apply to you.
And then head over to mining.blockwaresolutions.com forward slash WBD and you'll get one week of free
hosting and electricity with each hosted miner purchased. So I think the sentiment is really bad.
Like when I say this year has been disappointing, it's not at all what I expected. And I actually
just recorded a show um a couple of hours ago with hodl and odell and they were also saying like
sentiment it feels as bad as i've ever felt it and and they've been a bit quite longer than me
and they were the same the same thing and the thing that i think is interesting comparing it
to the ftx time is when that happened it was so extreme but well it was relatively extreme to the
upside then very extreme to the downside that cycle and so you get this sort of payoff you get
the euphoria you get like the buzz from the dopamine hit from bitcoin doing well and then
because it was such extreme on the downside you also get the dopamine rush from that and i think
you kind of band together be like you feel like we know something that someone else doesn't bitcoin
still going to recover we're still right whereas this cycle there's been no dopamine rush really
and it's down and while bitcoin's not really done very well gold's performed incredibly well ai
stocks have been booming so i think people feel like they've missed the boat they've not really
had the uptime and now it looks like there's people who still believe in the four-year cycle
that think now i've got to wait another two years of bear market or whatever until we can go again
um so i think the sentiment kind of makes sense although i mean i don't agree with it and i'm
actually quite bullish going into 2026 but i'll be interested to hear why you are um but i do want
to go through a few of those things you said just then one is why did you pick 130k because i've
said a couple of times recently, I don't think anyone called this year. Although I would say
130K is a very good call. Like that is close enough to be right. I would say we hit 126.
We're down a bit from there, but I would say you, you nailed it. So like, why did you think
130 when everyone else was saying much higher figures or even like price predictions aside,
just expecting a better market? Yeah. So we were, keep in mind, we had already went to the 100K
mark in 2024. Okay. And at that point, I represent a lot of people that have been in Bitcoin for a
long time, some of the OGs. And I was tweeting this out. And again, it's amazing when you get
like a violent reaction on Twitter. Honestly, just as an aside, I kind of love when people get really
upset and mad at you're saying something, because that tells me that there's sort of a cognitive
bias there that is like, you have to attack that. You have to figure out. It might be just,
and maybe it's just something that like people have blocked out. They don't want to think bad
things. They want to sort of push you aside because they because it puts a little seed of
doubt in their mind. But when I started talking about in late 2024, I was hearing from quite a bit
of people that have been in Bitcoin for a very long time who had psychologically this target of
100. They had 100K Bitcoin, this idea of 100K Bitcoin. So the reason I bring that up is that
I think that there were a lot of people that said, look, I have been holding Bitcoin for many years.
I had always said I was going to lighten up at 100K.
I was going to buy that house or that yacht or whatever.
And I started this here anecdotally, numerous examples of this.
So why do I start there?
Because I recognize and I started to talk with Checkmate and others about there was some evidence even early in 2025 of on-chain data showing some of those OG holders were selling.
Now, when you look at markets, right, it's not just the next marginal seller, it's the
next marginal buyer.
So I expect, okay, it's going to be an exciting year.
You're going to have a positive catalyst in the administration.
You're going to have a positive catalyst in these treasury companies.
You're going to have the ETFs continuing to gobble up coins.
So which one of those wins out in the end?
And my belief was that I thought the 130, 140 target was really like, okay, what would
make sense as a reasonable target with the marginal buyers and the marginal sellers would
be 150.
But we know that people front run those markets. So the reason I and this is just basically there's not much more scientific of this. It was the idea that if you have people positioning for 150 and that seems like a sensible target, it's very likely will undershoot the target.
There will be people that will front run that move because they're putting on these leverage positions and they have to sort of close.
So it's really that it's really just the psychology of the marketplace between the marginal buyers and the marginal sellers.
And technically, you know, I have some things I've built over the years, Bitcoin proprietary.
I think I talked about one of them on a prior episode, but it was telling me 136.
136 was like the top for the year based on the technical proprietary indicator I built.
so like i had this confluence of factors where you have marginal sellers marginal buyers meeting
you've got a time frame you've got the four-year cycle headwind you know that there's only a
limited time frame you know there's going to be uptick in volatility in the equity market
you're balancing all those things together and to me 130 to 150 40 seem excuse me 130 to 140
seem like a sensible range it's um i mean that's a good call we basically hit it i'll be interested
to hear your call for next year but before we get on that you said october 10th is one of the big
catalyst for this. That was an event that I kind of ignored just because it seemed to be a much more
crypto problem than a Bitcoin problem. I know that like Wintermute, one of the big market makers,
had a big kerfuffle with Binance about that and like potentially they're suing Binance. I'm not
exactly sure what's going on there. But why was October 10th, that big like crypto liquidation
event so impactful to Bitcoin? So, you know, their public statements allude, Binance allude to this
platform issue exposure, right?
And which, if you look at the broader crypto market,
and this is not something I say with delight as a Bitcoiner,
but you have the whole DGEN space,
which holds a fair amount of Bitcoin as their underlying collateral.
A lot of these folks that are smart in the DGEN space,
they are trading to try to acquire more Bitcoin to catch up,
you know, the catch up trade.
So if the broader crypto market suffers a, you know,
category five hurricane and everything is pulled down in that space and the market makers pull
bids and there are entities that I know of personally and ones that are rumored at having
solvency issues. You have them trying to degross and shore up their balance sheet for a period of
weeks to months thereafter. So, you know, it's not like a bullet to the head where it's just
dead. Okay. It's basically that people have impaired balance sheets thereafter and they
need to get those balance sheets clear. They need to get them in the right solvency position.
Sometimes they're selling slowly and gradually at a loss assets. Like, you know, when you're
handling massive positions, I think retail struggles sometimes to understand that you can't
just market sell. There's no liquidity there. So you have to sort of slowly, you know, put the ask
out there. You slowly build up a sell and do it over weeks. And I think you saw major market makers
and hedge funds and other big actors in the space slowly degrossed their portfolio over the
subsequent weeks. And that was a liquidity headwind. So that really, I think, culminated
in the November 21st bottom that we saw that we put in around 80K on Bitcoin. My view is that
they've largely repaired most of the damage in their balance sheet. So what happens there?
Once we made it to November 21st, once we're sitting there,
you're in this weird situation where I think half of the marketplace thinks the cycle is over,
that there's no movement forward, there's no obvious catalyst. But then you've got the die
hards that are just saying, well, fine, even if that's true, I'm not selling. So you kind of
range. And it feels like that's what we've done. We did. We had the 80K bottom bounced up to 94,
hovering in the 80s bounce. You know, we tried to reclaim 90 a couple different times, just kind
of sitting here, no obvious, you know, will person willing to step in. And I think the reason for
that, obviously, at this point is because people believe in the cycle theory, even if it has no
analytical reason, because Bitcoin is sentimental, because Bitcoin is, you know, it doesn't have
earnings, it doesn't have cash flow, there's not going to be a new report about, you know,
here's the latest, greatest sales that they're doing this quarter. It really is a sentimental
driven market in these ideas about Bitcoin that are sentimental drive the price action.
So people are afraid right now, if they FOMO back into the marketplace, that they're going to get
dumped on and they'll be ending up regretting it. You know, if there are a bunch of people right now
who they didn't sell the top, they sold in the high 90s. And you're going to have to really
incentivize them to come back into the marketplace, or you're going to have to create FOMO to get them
back in the marketplace. What is the incentive? The incentive is if Bitcoin dumps to 50k or 60k
or is much lower. That's a reasonable range, I think, where people are going to say, yes, we're
going to step back in and buy those coins because they're significantly lower than the high 90s
where we sold, even if we didn't sell the top. Then there's a whole nother group of people. I
think that they, if Bitcoin starts running above a hundred K, they will start to sweat and they
will start to move back into the marketplace. So anyone's guess, I mean, my view is that it's
probably the latter because that's unexpected at this point. I think that we were likely to take
out that a hundred K mark in the new year. And once you do, I think we can move very quickly
to a new all-time high, but the problem, you know, just overall and making these predictions that are
Bitcoin specific is that you have to sort of digest the greater macro story. You know, I always say,
like, as much as a bull I am on Bitcoin, if your belief is that the stock market's going to decline
30, 40 percent in, you know, 2026, which is not my view, but if that's your view, I don't see how
you could simultaneously have a bullish Bitcoin stance. I don't. I believe at some point in the
future, give it 20 years, Bitcoin might be able to perform like more like a risk off and a risk
on asset um but right now i don't see that at all like if the stock market's going down bitcoin
goes down with it and probably more volatile um but like so what do you i don know whether we should jump ahead here yeah let just jump ahead let jump into the macro stuff like what is your take then going into the next year because i just did a show with jeff ross um i know you friends with jeff but i think you probably disagree on a lot of stuff as
well um and he was basically saying he thinks we've been in a sort of recession depression types
um environment for the last year i know that's something you've kind of faded quite a lot and he
puts that down to like manufacturing struggling and things like that so going into the new year
How do you think the economy will perform?
I think the economy is about to reaccelerate, and I'll give you some clean examples of why.
Number one, let's just go back to what the concerted policy objective for the Federal
Reserve has been for the last several years.
There are articles, Danny, you could link them probably in the comments.
I could give you some if you want.
But back in 2022 and 2023, Jerome Powell said repeatedly that the labor market was out of
balance.
What does he mean by that?
He was citing examples before Congress how there were two openings for every one job applicant and how there was unnecessary power that labor had that literally we were fighting for just to see the most mild tick up in the unemployment rate.
Unemployment rate was hovering in the fours and we're getting four, six or four, seven.
Why? Why were they trying to raise the unemployment rate?
It is so obvious because the Fed can only control the demand lever of the economy.
They can only destroy demand.
How do you destroy demand? Well, they won't admit this, but the honest answer is they have to make it
harder for people to obtain jobs. And the people that have jobs, they need to have some decreased
negotiating power for wages. So if you can put a lid on the wages, you can control the inflation
picture. And if you can control the inflation picture, it makes it easier for our debt servicing.
It makes it easier for us to keep lower rates. It makes the treasury market shore up. The whole
system breaks when you have runaway inflation. And we saw that in 2022. Now, you know, the question
was always, was that going to be a transitory event like the Fed thinks it is? Or was it going
to be, you know, persistently higher inflation that compounds on itself and builds the price
level? People are pissed off right now because the price level overall is higher, right? Like you go,
everything is higher. But the reality is the year over year increases in a lot of these things
is relatively tame outside of some services.
It's that bulk of that inflationary pressure
was in fact transitory.
It really happened in 2022, 2021,
those supply chain overhangs,
that's where you saw this burst higher prices.
And since then you've had modest increases
that are closer to the target.
So why is that relevant here?
Because if they can raise unemployment,
they can slow down the labor market,
that will give the effect, I think,
of having a clampdown on inflation overall,
which gives them room to navigate,
which you've already seen with their cuts this year
in September, October, and December, right?
The reason they're moving is because labor market
is finally cooling off
and they wanna get out in front of it.
They're talking about it in terms of like risk management cut.
That's the language that Powell uses.
He says, I want a risk management cut.
Okay, what he's really saying is that
we know of the long and variable labs of monetary policy
that we have to act now
because it won't really be felt until next year,
until the middle of next year.
And what is my evidence for why you think
you are gonna see this reacceleration?
Look at the industrial metals, okay?
Look at some of, look at things like,
you know, I was talking about palladium, okay?
Not necessarily gold, right?
Gold can rally and do very well in periods
when I think that there's sort of the fear trade
that's going on, but look at silver, look at palladium,
look at platinum, look at even tungsten, okay?
Look at those charts and how they're rallying hard.
I mean, some of these metals are telling you there's a reindustrialization that could finally get ISM going again, finally get manufacturing going again.
You're going to get stimulus from the big, beautiful bill.
You're going to have an election year where they're going to be very reluctant to issue a lot of treasury coupons.
You're going to have a whole stimulus package that's coming from the administration.
They're talking about stimmy checks that they want to dole out to try to get these commodities and try to get this economy moving at a faster rate.
And by the way, Danny, it's already running, you know, let's say conservatively two and a half percent, two and a half percent is, you know, I think that's a fairly strong growth rate for a developed economy. So to me, I think you can see these green shoots out there. And if the broader economy starts rallying, Dr. Jeff is exactly right. The way I look at Bitcoin right now, for the last several years, we've been on hard mode. Okay, it is it has literally been on hard mode. We've not seen a broad based economy. And we know Bitcoin for many
individuals, investors, it's sort of, they perceive it, not necessarily it should be,
but they perceive it as being further out in the risk curve. And where's the capital being directed?
Capital has been directed at the sure bets, the solid things like the AI stocks and the tech
companies and the mega caps, which are all the same names, right? They're all just trading amongst
each other. But IWM, the small caps, the companies that are completely under pressure from higher
interest rates, they're rallying. They're breaking out to new all-time highs. So to me, like, I can't,
I don't understand the argument from those who are negative on 2026 as to why those things are
rallying. Why would the companies that are not AI plays, they're not, you know, just built on hype,
they're not built on, you know, the massive capex. These are mom and pop shops in a lot of respects,
you know, industrial companies that are rallying really hard. And they're, I think, rallying all
in response to the fact that the inflation rate coming down and the unemployment rate coming up
is going to give the Fed and other central planners
a lot more room to navigate with lower interest rates.
So that's going to change a lot of things going into the next year.
And Bitcoiners are focused on the four-year cycle.
And to me, that seems my option.
Yeah, I mean, I want to be fair to Dr. Jeff.
He said that he thinks we may have been in some kind of recession,
but he is also very bullish going into 2026
for a lot of the reasons that you just said.
He mentioned the big, beautiful bill stimulus package
that that was one of the key things that he's looking at.
You can't call it recession because there are periods.
So like, let's talk about how difficult this is and let's just acknowledge both sides.
Okay.
So the reason I find it somewhat cringeworthy about a recession call is because I can look
at any economy, literally any economy in the world, and I can show you there are sectors
and pockets of weakness.
Right now, you name a country we can go through and you can say, oh, the airlines are struggling
here or manufacturing struggling here or services are struggling in this country or they're weak
on tourism.
Okay.
That's not what the NBER, the National Bureau of Economic Research, is trying to do with a recession.
They're trying to find a broad spread decrease in economic activity that is coincident with a spike in unemployment.
That's how they're trying to find it.
You could say that's a BS definition.
It's detached from Main Street, as detached as CPI is.
That's fine.
But if your argument is going to be we're in a recession, then name a period in the last 100 years when we haven't been in a recession.
because I can show you entire decades where manufacturing in the United States was struggling.
And I can tell you periods for multiple years where services were struggling and unemployment
was much. I mean, you had a period in the 2000s where unemployment was well above 5% consistently.
We're not even at 5%. So like, it's almost like we argue over these semantic discussions about
what is and what is not a recession. And by the way, if you're navigating markets,
What do you care about whether there's a recession?
I mean, if you have a small technical recession, there are periods where stocks have done fine.
You know, they've held up in United States history where, you know, you have a technical
recession.
You had a technical recession with, you know, although the NBR didn't clear it with these
two quarters of negative growth in 2022.
Assets really fell out, the bottom fell out really the summer into the fall of 2022.
after we technically started to see growth again in the economy,
just on the quarter over quarter basis.
So I don't find it very useful to talk about, is this a recession?
What I think you can say is that manufacturing has been in a slow growth phase
or contraction for the better part of three to four years.
And that's a true statement.
Manufacturing has been very weak.
And if your view is, as Dr. Jeff, I think, has espoused,
that manufacturing really picking up is key for Bitcoin's price to really appreciate.
I don't believe that.
I think Bitcoin can appreciate in any environment.
But if that's your view, as is his, then I can see why his argument would be that, you
know, next year might be more optimistic.
Well, I hope I'm not putting words in his mouth there.
But you say that these kind of get into semantic debates.
And just to have another semantic debate, I want to pull you up on something else you
said there which is that like the bulk of or a bigger majority of inflation was actually transitory
do you think that's true because like it depends i think what you're measuring against like is this
just the cpi quoted numbers because it doesn't feel like inflation's inflation's been transitory
for just normal street people on main street like things have got expensive like i don't think three
percent inflation is probably accurate um in terms of what people are actually experiencing this is
because if you come from a classical training in economics, when you talk about inflation,
you're not, people like me, and I'll just define it. When I talk about inflation, I'm not talking
about the absolute price level of goods and services. Let's just be very clear. What do I
mean by that? The fact that a $300,000 house now costs $700,000, okay, is in my, that absolute
price level has risen. It's more than double, okay? We can all agree on that. The absolute
price level of going out to eat has more than double. Okay. But what is the increase in the
price level from 2024 to 2025? Because if I look at the Zillow and Redfin ratings near me,
and I see houses that have either been flat or trickled down in the last year, I see countless
examples, even in my own subdivisions here of the, it's either flat or mildly come down. So
in an economist language, right, the economist will say there's no inflation there. The prices
have made stable or trickled down. However, if you look at the absolute price level over the last
several years, people, I think the more precise term is if you're cumulative inflation, the
cumulative inflation is, you know, up 50% or 60%. So, you know, in terms of like, let's communicate
the same thing. I think what I'm saying is that the cumulative inflation since the pandemic
has been extreme. It's been very difficult for people to navigate. It has been backbreaking for
some of the working poor. They literally are struggling to survive. And that is not in any
way to be discounted. But what I'm talking about is now on a going forward basis, okay,
after that we've digested that, where does inflation go from here? Now, you may say,
you know, I know there are people out there in the Bitcoin community, Larry Lippard,
and we're headed for runaway inflation from here. Okay. I don't see any evidence of that. I literally
can't find any evidence of runaway inflation. I think you see, you know, some elements of services
being sticky high, you know, say closer to three than 2%, which is what I think we were talking
about back in May when we had our last podcast. But the notion that like we're going to head to
10% or Zimbabwe style inflation in the United States, I think there's zero evidence of that.
So, you know, when we say inflation was transitory, it was a community, in my view,
it was a clear misread on how you need to communicate with the public. You need to explain
to the public that there's going to be a massive price shift across the curve. Everything is going
to go up significantly, but then it's going to peter out in terms of the year over year increases
going forward. Does that make sense? That does make sense. But so with the Fed cutting rates now,
while inflation is still above target and QT coming to an end and there's this like not QE,
QE happening now. Do you not think inflation could come back in the next year? No, I don't,
because I think to trigger the inflation, we, first of all, there's always inflation, right?
We're always going to have, I think, some periods of inflation, 2%, 3%. When you say come back,
what I mean, significantly above 2%. Yeah. Yeah. So, so like closer to the post pandemic style
and inflation, right? Is that fair? Well, really like anything that's like 4% plus seems like,
too high. Like, I mean, any of it can, you can be argued that it's too high, but when it's above
4%, it feels slightly not in control unless you think that's wrong. I think it is really wrong
because there are some people that they could easily digest 4% inflation. I mean, there are
union workers near me who are getting cost of living increases of 7% year over year. So they're
seeing real increases in their jobs. So this is the problem with this because inflation is uniquely
personal. Like, you know, we try to make these models, which are just BS, right? Like, what is
the median worker across the whole United States? And like the inflationary pressures of someone in
California or in New York, I think are worlds apart from the inflationary pressures of someone in,
you know, in Idaho, right? Like, like it's to draw these cross samples and data and analysis. And
I mean, even the Fed acknowledges there's problems with these models and all they're doing is trying
to get a just a bellwether, trying to like a gauge on what the inflation and area pressures are out
there. But, you know, when you talk about the QE, not QE issue, and I want to go back to like,
I think people forget this before 20, really 2019, there was QE1, QE2, and Yellen and her cohort,
and many people stood around and they said, well, we can't figure out how to generate inflation,
Like the inflation's under our target. We're running CPI at 1.6%. There are meeting minute
notes where they, and there's a famous even, I think it was an economist article about how is
inflation dead? Will it ever come back? Like, you know, that was the front cover of the magazine.
And the reason I start there is because like the QE programs, I don't think have a strong record
alone of causing inflation. What causes inflation, I think, is a growth in circulating money supply
in government spending that's being directed into the economy, into the hands of people that sell,
that actually spend it very quickly. So obviously what did happen with the pandemic? We sent out
stimmy checks and we gave PPP loans and we gave all sorts of incentives to businesses and entities
to spend real dollars into the real economy. And those people needed to spend it because they
wanted to survive, many of them, but others, they had, you know, they never missed a day of work,
and they got PPP loans, right? So like, what am I going to do with all this cash? I'm going to have
to spend it in the real economy because I want to go on a trip, or I want to go on, you know,
redo my house, or do any number of things. That money filtering the real economy, causing demand
for goods and services, that's going to cause an inflationary burst, okay? And also the relocation
dynamics after the pandemic with remote work, I think that totally messed up the real estate,
and you know shelter is one of the biggest components of CPI.
So now with the not QEQE and these duration management programs
from the treasury market, I'm skeptical whether that alone
is going to cause any sort of new burst of inflation.
I think the far more likely scenario is that if there are stimmy checks,
that would cause probably a short-term burst of inflation
that's spending in the real economy.
But the easiest way to think about this, which I think sticks with people,
Danny is like if I were to go and I'm the Federal Reserve and let's say tomorrow I put I print a
quadrillion dollars like the most absurd amount you can imagine I put I print a quadrillion dollars
I take that quadrillion dollars which is not really physical but let's assume it's physical
and I bury it in the desert what is the impact on inflation zero zero right like like you could you
The fact that they're quote unquote printing or expanding the money supply, if it's not circulating into the real economy, it in some ways has a muted inflationary impact.
So why does that relate to QE?
It relates to QE in my mind, because if QE is pushing up asset prices and making very wealthy people wealthier, okay, unless that money filters through to regular everyday people, it's going to be very challenging to get inflationary dynamics similar to what we saw before.
Now contrast that with we're going to send every man, woman and child a check.
OK, or we're going to give every business that applies and doesn't lay off workers millions of dollars in PPP loans.
That's going to have much more of a pronounced inflationary effect.
And by the way, you're doing that in an environment where you're shutting down the global economy.
You're telling people like your supply chains are going to be screwed up for 18 months.
So you have this massive supply hit, but you have a supply hit in the sense that they can't produce goods fast enough to get in the market because the supply chains are all screwed up.
But you also have a demand catalyst in the form of more dollars, right?
And people that, you know, wanted to spend money after they were locked into their homes.
So that unique dynamic, I think, caused that once in 40 year, you know, burst of inflation.
Now, does that mean we can't stick around 3% inflation for the foreseeable future?
I think we absolutely can't.
I don't see the reason is because our housing market is completely out of whack for a lot of
different reasons. And housing is very challenging to get it to fall. A lot of times it can just sort
of stagnate. But if you're sitting at a 2% mortgage, why are you going to sell that? Unless
you absolutely need to and you go into a serious downturn, broad spread recession type event.
So if 2%, 3%, 4% inflation is all like in your wheelhouse as being okay,
like when does it get too much what kind of i wish i wish inflation were were i wish inflation
were lower okay i i wish it was around the two percent target it's not okay i i view it more as
sustainable i think it's sustainable and people don't want to hear that when does it get unsustainable
i think it gets unsustainable when it's it's reaching levels where the shelter costs i think
and I want to be careful on this, the shelter costs, because shelter always, shelter, people,
they have to live somewhere, right? Like they're going to basically pay whatever the need is.
When the shelter servicing costs for many people become just simply untenable that they have to
sell the houses. And the problem is that the data I was looking at from Revolt and some of these
entities, they're saying like, you know, there are people just breaking even. A lot of Airbnb
B&B owners, they're not really losing significant amounts of money. They're breaking even on a lot
of these deals. And even the ones that are selling at a steep haircut, you know, those are a lot of
investment firms. They're people taking write downs and capital losses, but it's not in such a
sense that they have to do fire sales. I think during periods in the great financial crisis,
when you had a huge unemployment wave, that caused a cascade of supply to come to the market.
I don see any sort of significant event like that that would cause a massive supply to come to the market that would leave home values to drop you know double digits nationwide Those events are
extremely rare. The more likely scenarios, it just stays like flat and loses ground in real terms.
There's no competitive pricing. You can't raise your prices because no tenants can afford them.
And homeowners are going to sit on those and investors are going to sit on those houses for
10, 20 years, they might not make any money on them. They might lose in real term, but you're
not going to have this exogenous shock where they have to be forced sellers. Do you wish you could
access cash without selling your Bitcoin? Well, Ledin makes that possible. They're the global
leader in Bitcoin-backed lending. And since 2018, they've issued over $9 billion in loans with a
perfect record of protecting client assets. With Ledin, you get full custody loans with no credit
checks or monthly repayments, just easy access to dollars without selling a single sat. As of
July 1st, Ledin is Bitcoin only, meaning they exclusively offer Bitcoin-backed loans with
all collateral held by Ledin directly or their funding partners. Your Bitcoin is never lent out
to generate interest. I recently took out a loan with Ledin. The whole process was super easy.
The application took me less than 15 minutes and in a few hours I had the dollars in my account.
It was really smooth. So if you need cash but you don't want to sell Bitcoin, head over to
leaden.io forward slash wbd and you'll get 0.25% off your first loan. That's leaden.io forward slash
wbd. If you already self-custody of Bitcoin, you know the deal with hardware wallets. Complex setups,
clumsy interfaces and a seed phrase that can be lost, stolen or forgotten. Well, BitKey fixes that.
BitKey is a multi-sig hardware wallet built by the team behind Square and Cash App.
It packs a cryptographic recovery system and built-in inheritance feature into an intuitive,
easy to use wallet with no seed phrase to sweat over. It's simple, secure self-custody without
the stress and time named Bitkey one of the best inventions of 2024. Get 20% off at bitkey.world
when you use the code WBD. That's B-I-T-K-E-Y dot world and use the code WBD. This episode is
brought to you by Anchor Watch. The thing that keeps me up at night is the idea of a critical
error with my Bitcoin cold storage. And this is where Anchor Watch comes in. With Anchor Watch,
your Bitcoin is insured with your own A-plus rated Lloyds of London insurance policy and all
Bitcoin is held in their time-locked multi-sig vaults. So you have the peace of mind knowing
your Bitcoin is insured while not giving up custody. So whether you're worried about inheritance
planning, wrench attacks, natural disasters or just your own silly mistakes, you're protected
by Anchor Watch. Rates for fully insured custody start as low as 0.55% and are available for
individual and commercial customers located in the US. Speak to Anchor Watch for a quote and for
more details about your security options and coverage. Visit anchorwatch.com today. That's
anchorwatch.com. So you think that the current situation we're in with the Fed cutting rates
while inflation's above target and doing this new not QE thing is not really going to have a big
impact on inflation? You think this will be positive for the economy? I think it will be
positive and the impact on inflation is maybe you push it above three maybe you go three one three
two you know maybe you have cpi sitting at three two and at that point you know the question really
becomes why are you having rates lower in the environment you're going to have to get answers
from the new fedsure on this why are rates uh negative in real terms you know because of
inflation you've gotten the three cuts this year right you've got september october um and you've
got in November, right? So I want to make sure I'm not misquoting this. The current effective Fed
funds rate is 3.65, okay? So you've got a new Fed chair coming in, and the obvious mandate will be
we want lower interest rates, right? Like everybody in their son, everybody in their son thinks that
we're going to get lower interest rates from the new Fed chair, the new Fed chair will be beholden
to the administration, the administration said overtly, we want lower rates. Okay, fine. So you've
got inflation at three points or yet, uh, excuse me, the fed funds at 3.65. And if inflation takes
up above three or at three, how, how much more can you cut? I mean, that's really going to be
the question I think we're talking about, uh, middle next year, because if, if the new fed
chair comes in and wants to send a signal that he is in line with the president, the president said
that even at 3.65, they're too high. Um, are you going to cut rates into the twos with inflation
potentially still in the other threes because that's negative real rates and negative real rates
I think are a disaster for an economy far more far worse I think than you know keeping the interest
rates where they're at so when either before we started the show at the very start depending on
how I cut it you were saying that you can kind of see a case for both a bull and a bear economy in
the next year and is that what would be the bear case i think that bear the bear case the the single
biggest issue for me is if you have a issue with fed independence next year where you have
revolt in the bond market that that is that is probably the biggest um boogeyman under the bad
night again i i discount that because i think ultimately it's it's going to be politically
manage. And I think once the new Fed chair gets in there, he's going to go out of his way to appear
independent while behind the scenes really taking marching orders. I think it would be a disaster
for him to say, well, you know, in front of a, just imagine there's an FOMC presser and he's,
instead of debating the data and why they should cut or shouldn't cut, they're just saying, well,
what does the president want? And I'm going to, I'm going to do whatever the president wants.
I mean, you lose face and credibility and the system is built on, I think, believe it, whether you want to admit this or not, it is built on a confidence game.
It's built on people believing that these people have control over the economic apparatus, that they have control over the system.
And when you expose the wizard behind the curtain, the myth falls apart.
And that's very dangerous.
Like, you know, nobody knows really what happens then.
Like if there's total loss of confidence in the Fed chair and you really it really is completely subsumed.
We don't really know. And, you know, there are people on Twitter that will say, well, there were periods where, you know, Fed lost independence and it was politically beholden and FDR said rates should be X and they were X.
Right. That's true in a sense. But like, you know, we've never experimented with that in the modern economy.
And capital flows today are very different than they were in the 1930s and prior periods.
So I'm always hesitant for people to say, oh, there's this historical analogy where it's worked pretty well in prior dynamics.
So why do you question it now?
And the question is because whenever you disrupt the status quo, it can be very painful and unanticipated consequences can arise.
So for me, like, I think that's, it's a fundamental thing that we've grown accustomed to, which is the Fed can act independently from the policymakers. And when you've, when you abandon that, and when you make effectively the Fed an arm of treasury, you know, it's going to be different.
Now, again, maybe it works out great.
You know, maybe we're being overly pessimistic.
I'm just answering your question, like what would give me pause?
I think a 10-year above 5% gives me pause, okay?
If that were to occur, I don't believe that's going to occur,
but if the bond market in the early part of next year starts selling off
and you get the new Fed chair and the new Fed chair is rocking the boat,
that is perhaps the biggest concern I have.
I'm not as concerned about the overall economy and the economic data because I think, if anything, the stimulative impact of the lower rates and the big, beautiful bill and other programs they're talking about to manage duration, I think you're going to provide a liquidity catalyst for manufacturing and other aspects that have been beaten down the economy to reaccelerate.
So. I think one of the you can criticize Jerome Powell for a lot of things, but one of the things that I think he has been good at is remaining as independent as possible.
like he is not just at the rim of trump you're gonna get completely rinsed in the comments for
saying that he's independent because well relatively oh he he was helping kamala harris
and uh you know he was trying to be he was cutting and that's fair you know there are people that
will rinse you for that one but uh well that's fair but he's remained relatively independent
from trump at least um and like assuming the next um fed chair that comes in is like the puppet to
trump um even in fact let's just say he managed to keep up that charade and people still view the
fed as an independent institution that can do whatever they want but if we still have negative
real rates in that environment what do you think would actually happen to the bond market what would
the how would the bond market react i mean there are periods where i think loss of confidence in the
in the Federal Reserve, I think could potentially cause a massive sell of the long bond, you know,
30 year plus. I think that the 10 year could, again, it could trade north of 5%. And if you
look at 2022, the story of 2022 is that when rates were getting unwieldy and bonds were selling off,
that has a reflexive effect with the mechanics of the current portfolio construction that causes
is a selling in equities.
And if there's a selling in equities,
that's gonna cause Bitcoin to tank
and because there are funds that hold it all, right?
So just think about this mechanically, okay?
I know that we in Bitcoin,
we are very skeptical of the 60-40 portfolio.
I'm sure you're up to speed on that,
why that the 60-40 is,
there's a lot of concern about why people have allocated
their retirement nest egg in that allocation.
Well, if you're in a 60-40 and your bond position gets cut in half, right?
Like, so say, like, you're in bond funds, rates go higher, and the value of those bonds,
although they're all money good, you get paid your principal, but, you know, look at an
example like a fund like a TLT, it gets cut in half or 30%.
What happens at the end of the quarter rebalance, you know?
Tell me.
Okay.
So at the end of the quarter, if your bond portion, that 40%, that income-based part of your portfolio gets cut in half, the rebalancing factor of the fund will sell your equities in a mechanical way and reallocate them to bonds.
So that you do the same thing again next quarter.
Yes. So if people are allocated in this spread where they're trying to rebalance in a 60-40
allocation, there's mechanical selling that takes place out of equities into bonds. And I think one
of the interpretations of 2022, where we had a real nasty year in the bond market and in the
equity market was that as yields rose, there was mechanical selling of equities that wasn't
about a big recession or economic collapse or unemployment about the skyrocket. There was an
interpretation that literally like all these people have this passive indexation, passive
investment vehicle of 60, 40 target date funds, all these things. And as their bond funds got
killed in one of the worst bond bear markets in modern history in 2022, they had to sell their
equities to rebalance into the bonds. And I think people don't think, they don't think
mechanically how that works in a allocation theory. And there are FAs that will do this
really without even thinking, without even questioning it. They were selling equities
because, well, you have to have 40% of your bonds because you're, you know, particularly with a big
boomer class, right? There are a lot of elderly people in the United States that have huge
fixed income exposure. And when those allocations get, you know, slacked, they're selling equities
to rebalance. So they're just selling their winners to buy more losers just because that's
the way they've always done it, essentially. Yeah. It's not even like a thought process.
It's mechanical. If I say as your FA, I'm going to put you 60% in fixed income and, or sorry,
60% in equities and 40% fixed income and your fixed income falls 20%, you're going to be selling
your equities to rebalance, to keep that allocation. Have you been watching the Japanese
bond market recently? I mean, I'm sure you have, but like, what's your take on that? Cause you hear
a lot of sort of Duma takes, um, from probably two sides. Like one is that inflation seems to
be coming back in Japan. Um, and it was always like this strange economy that could have really
high debt to GDP without really having inflation? And then secondly, like the carry trade blowing up
and what impact that may have on other markets. Yeah. I mean, I think that the Japanese, so my
overall take on this is that folks mostly in our markets care about it because of the yen carry
trade, right? And I think the framing on the yen carry trade is usually incorrect because people
think of it as a static thing that will blow up and that's the end of it, right? Like at some point
that the yields are going to get too high on the JGBs and that puts an end. The reality is like,
this is a sum of numerous individual actors who are borrowing, you know, in, in, in that currency
and taking advantage of it in U S markets. And yes, you will have people squeeze, you have
liquidation events. You'll have people have pressure on them as, as the yen rises, as the,
as the JGB yield rises, whatever it be.
But it's a dynamic process.
In other words, we saw the blow up in 2024
and some people a month later
are putting on those exact same trades, right?
They got squeezed out of the position.
They had to degross their portfolio.
So it will always be a feature
when you have this currency arbitrage
that you can play in.
So I don't view it as a systemic issue
unless some entity or actor
gets taken to the woodshed and it is so significant that it causes sort of this cascade of effects.
Any, you know, any marketplace, a hedge fund has, you know, obviously a hedge fund can lose money
or, you know, a big actor can lose money or a market maker could potentially take, you know,
huge losses. But, you know, the system is constructed in many ways to anticipate that,
to try to put safeguards in that place, to have forced degrossing of positions.
and then it's done, right?
To me, I don't ever understand the argument from folks
that this somehow causes some permanent impairment
or is gonna be big enough to cause some sort of cascade
that would take down all US markets
in a longstanding way or in an immediate term way.
To me, I think it's gonna continue to be an issue.
I think the bond route could persist further.
The yen could further decline
and have a further rise in yields.
but you know that's sort of a long run issue we've been talking about this in Japan for for
decades and I guess I failed to see the urgency of why this would this time is different right as
opposed to something they will structurally be dealing with for the next decade or more so this
isn't the start of Japan blowing up yeah I mean look like the interest rate differential is not
going to go away I mean I don't I think it's going to narrow it's going to widen it's going
narrow, it's going to widen. I mean, there's different aspects of, you know, the rate policy
in the countries, there's different inflationary dynamics, there's different demographic dynamics,
those should keep a differential on interest rates probably for the entire foreseeable future.
So whenever, let me just tell you my shorthand, whenever there is a period where people are saying,
this is going to blow up and everything's going to be different tomorrow, okay, I generally fade
that because in the real world, change tends to be slow, incremental, messy. There are tail events.
There are these things where we wake up and there are, you know, there is a fundamental difference,
but that's not the majority of events. Majority are sort of the slow train wreck that you see
coming for a long, long time. And it gets worse and worse, right? That's, that's kind of how,
how I think most economic issues arise. Yeah, I think you're probably right. Um,
So we've done 50 minutes basically touching on one of the three things you're looking at with Bitcoin.
The other two was the cycle narrative, like the self-fulfilling prophecy of the cycle narrative and treasury companies.
Which one do you want to get into next?
Should we talk about the cycles first and finish on the treasury companies?
Yeah, let's talk about the cycles.
So, okay.
One of the things I want to start with on that is that we have had limited, depending on how you measure it.
You know, some people said they've been, you know, four epochs and whatnot.
We've had limited sample size.
It's still a young asset in Bitcoin.
Okay.
So for people to draw conclusions about how Bitcoin has to trade with a sample size of
four is not statistically significant.
Okay.
No serious data scientists or technician would be able to tell you that because the thing
happened three or four times in the past, that that alone is going to be compelling evidence for
anything to happen in the future. Moreover, some of those early examples, as you know,
Bitcoin was effectively a science project. You had very limited exchanges, you had no regulated
exchanges, no hedging tools, limited derivatives market, no futures market. How you can compare
a nascent asset that was really infantile to something that the Bitcoin current marketplace
where basically anybody, even if you hold spot Bitcoin, you could fire up a Robinhood account
and hedge your position with Ibit options, your entire position very quickly. I just don't
understand it. It's beyond me why people would suggest that the Bitcoin market of today bears
in any significant material comparison to the prior Bitcoin markets. And as Bitcoin matures,
What have you seen happen? You've seen Bitcoin start to slay these, what American Holocaust calls these sacred cows of Bitcoin, things like, oh, we'll never go below the prior all time high, which we did in 2021.
Or we'll never make a new all time high before the halving, which we did. Right. Like we keep doing these things repeat or Bitcoin, for example, the most recent one, Bitcoin always pumps in the year after the halving that coincides.
Well, we didn't.
We basically chopped around the entire year.
So when you start to see mounting evidence of this time actually is different for structural reasons for dynamics of like the the vehicles that are in place for the hedging tools that are in place for you know even
something like investor preference like you know there's been this massive interest in ai which
to me had that not occurred right i think more dollars would have flowed into bitcoin 100 right
like i don't i don't know why you see all these data points of like things that are different this
time. And then you say, oh, it's not different this time. We're going to sell off 80%. I mean,
even 2021, okay, which most people say, oh, that was the quote unquote cycle top.
Look what we just talked about in 2021. In 2021, Bitcoin peaked the same month as the Nasdaq peak
in November of 2021. Many other risk assets were peaking in the summer into the fall.
What happened in November and December of 2021? We got clear guidance from the Federal Reserve that
they were behind the curve and they were going to have to engage in the fastest rate hiking cycle
in 40 years, right?
And then the S&P peaked, I think, January 3rd, 2022,
and we consistently rolled over the entire year
alongside the broader equity market.
So, Danny, for someone to say,
oh, that was a cycle, a Bitcoin cycle
that was driven by the halving
and it was destined to fall,
was it destined that FTX would commit a massive fraud?
Was it destined that you'd have all these entities
like Three Arrows and Alameda
that were, you know, experience a contagion level event?
Was that all just programmed into the block reward?
And every four years that has to repeat?
I mean, we see, it's almost like, to me,
it's almost like this after the fact narrative construction
where there's so many examples
of what was driving the Bitcoin price section
that had nothing to do with Bitcoin itself,
had broader economic factors, just like now, right?
This year, in what you and others think is disappointing, I would say it's mildly disappointing, the performance this year.
You have a dynamic where there are pockets of the economy that are strong, but there are pockets of the economy, as Dr. Jeff Ross points out, that have been struggling for three years.
And I talked about this earlier in the interview.
I think the economic environment has been challenging, but it hasn't been dire.
It hasn't been disastrous.
There are certainly segments and sectors that have done very well.
There's ones that have done really poorly.
So wouldn't you expect a deep liquid instrument like Bitcoin to respond to that dynamic?
I sure do.
And if the economy starts to take off next year and you get a manufacturing revival and
you have a broad growth impulse in the economy, why wouldn't you expect Bitcoin to participate?
Why would you take new all-time highs off the table?
I mean, personally, I view most of 2025 as a long, bearish consolidation.
I know we poked our head above 120 a couple times and we made these new little highs, but, you know, we began the year roughly around 90K.
You know, we made a new all-time inauguration day in January of 108 or 109.
And then we bounced around that range the entire year, you know, and now we're under it.
To me, markets correct in two ways.
They correct in price and they correct in time.
I think the entire story of 2025 was largely, in addition to some of the things we mentioned,
was working off the bullish moves that we had 2023 and 2024 after the ETF launch.
I mean, you had the most successful launches of an ETF in history and Bitcoin spending,
you know, weeks and months above 100K.
That's a monumental year.
I know it's not, you know, Lambo money type years for some people, but I think it's huge.
I think it's positive.
And, you know, obviously, if Bitcoin sells off down to 50, 60K, you can hold me.
That's extremely disappointing in 2026.
But if it rises here, if it reclaims 100, if people start to question whether they should just look at the calendar and that's all that matters, rather than all of this data and all these bullish catalysts that are out there.
I mean, I think Bitcoin can make a new all time high in 2026.
And I think we can do it convincingly, you know, far above the 126 mark.
And what happens then?
I mean, this is one of the things,
if there's one thing a listener who's beat up
and downtrodden about Bitcoin or disappointed,
however you want to put it.
One thing I wish you'd take away
is this just picture for a second here.
If a new all-time high is made in 2026,
if, that would probably be one of the most bullish developments,
I think, in the history of Bitcoin.
And the reason for that is you would absolutely shatter
once and for all this four-year cycle myth.
People would look at this as an institutional asset
that can rise and fall with the broader macroeconomic environment, and they don't have to time it like
people have gotten accustomed to trying to look for exits. I think that is massively bullish.
The destruction of that narrative is probably what we need to send Bitcoin orders of magnitude higher.
I totally agree with that. And one of my favorite narratives that's come out in the last year is
like, not necessarily the super cycle thing, because who knows what anyone's definition of
a super cycle is. But I like the idea that maybe cycles did never exist. And I can completely
believe that. I think everything you're saying there is true. And so if we've been playing in
this like economic environment, as you described as on like hard mode, are we going into easy mode
going into 2026? I think so. Absolutely. I really do. The one, again, I'm trying to present most,
I think the economy is going into easy mode. I think potentially we could be going into hard
mode for geopolitical reasons. Obviously you're following what's going on in Venezuela. I think
there are potential issues with the midterms that could be political challenges. I think those,
the concerns that come to the top of my mind outside of the treasury market and the economy,
I think largely focus on the political dynamics, because I think we live in a very tenuous
political environment right now. And I think that going into an election year, it's always going to
be challenging. You're going to have a lot of actors who are hell bent and determined to frustrate
the Republicans from continuing their hold on the Congress in the United States.
And to me, that's the bigger risk. Yeah, that makes sense. Okay, so on to the last of the three
Treasury companies, they've had a brutal time in the back half of this year. Like everything is
down close to 1XM now or below pretty much across the board. What do you think they look like in
2026? I think some of them are not going to survive. I think the bigger ones will do well.
Now, the attractiveness from an investor standpoint of a treasury company,
let's be very clear and honest about it, is that it can outpace Bitcoin.
Yep. Leverage play on Bitcoin.
Yeah, it's a leverage play on Bitcoin. So the question is, how can you, from a shareholder,
or a common share standpoint, how can you outpace Bitcoin if your sole, how do I phrase this? If
your primary way of securing more Bitcoin is to dilute your common shares, okay? That is, to me,
that's an irreconcilable issue. If you want people to invest in your company and the thesis is that
your company is going to outperform Bitcoin. And that comes into question because you're doing a
lot of dilution of the common. I think investors throw up their hand and say, I'm not going to be
holding the bag while you dilute me year after year or month after month. So if you can figure
out how to be able to secure more Bitcoin without diluting common, that's going to be a killer
application. And to me, I think there are ways to do that. I think they're exploring, they're
experimenting. I would not write any of them off at all at this point. But I do think the smaller
ones, the ones that were on the hype train, they caught in sort of late, as you always do, you know,
in these sort of frenzies. I think many of them will be folding up shop into 2026.
So this is something I completely agree with. Like, I think the idea of just selling common
stock to buy more Bitcoin is probably already over as a game plan for these treasury companies.
I think strategy launching the preferreds was like the end of that. Suddenly there's something
much more interesting in the market. And I don't understand how they can survive just doing that
same thing. And issuing preferred isn't necessarily an easy thing to do. It's not something everyone's
going to be able to do, especially at favorable terms to what strategy you can do being 10 times
the size of more. So when you say they're going to shut up shop, what does that mean? Is this like
acquisitions and mergers amongst these companies? Or do you think they're going to just sell Bitcoin?
No, I think it's far more of the latter. I think there are going to be a cannibalization,
consolidation um you know i i don't imagine they're just gonna you know dump the whole
pile of bitcoin some of them may go private um i know one that is considering that um so
that's generally it's not going to be any one size thing it's going to be case by case basis
is there really a product fit and to me there was a flurry of them that launched and i think it's
just got excessive yeah that's that'll be really interesting to watch because like the challenge
for any of the very big treasury companies that aren't strategy is how do you catch strategy?
And I guess like acquisitions when you can essentially buy Bitcoin at a discount if they're
trading under 1XM NAV is potentially the easiest way to do that.
Yes. Yep. That's exactly it.
Like my take on that would be, I don't think regardless anyone's going to get close to
strategy. Do you think that we may see one, you know, approach that kind of size?
No, I would fade that. I don't think there's anyone as determined to acquire more Bitcoin out there yet of the known treasury companies as Michael Saylor. So I think it's going to be challenging. There's also sort of that first mover advantage. You know, the big get bigger and the small get smaller in some respects.
So I think there are a lot of people that FOMOed into the Treasury company narrative, not as a long-term investment thesis, but as a short-term trade in a bull market, which happens every bull market.
In some ways, it's kind of like an altcoin, right?
Like you think that, oh, liquidity is rising, Bitcoin's rising, we're going to roll into XYZ coin and it's going to rise very quickly in a bull market.
And I think some of them, unfortunately, there's no reason that makes a compelling case for buying it versus just if you're bullish treasury companies, just buy strategy.
You know, explain what is the differentiating factor?
Buying Bitcoin alone doesn't make a whole lot of sense.
I think like as a treasury, like buying a treasury company just because it buys Bitcoin alone, that doesn't make a whole lot of sense in my mind.
Yeah. One thing that I will be willing to stick my neck on the line on in terms of predictions,
2026 is I think we'll have less treasury companies this time next year than we do today.
Yeah, I think that's right. But, but I also don't think all going, they're all going away. I mean,
I think there'll be, there will be treasury companies. Some will survive, we'll get bigger,
some will do well. And, you know, again, if you have a very, you got to remember, like
when you have a bull market, people's reaction to everything changes. Like when Bitcoin is at
150K by the middle of the year, just hypothetically with me, I could see companies coming out with
treasury strategy and trying it again a different way in the middle part of next year. New treasury
companies we haven't even thought of if Bitcoin is truly, you know, ripping higher. The Bitcoin
bull market drives all this sort of fervor and leverage bets and everything else. It's sort of,
uh as you can see he did it this year and i think he can do it again next year as long as you get
the bitcoin price going higher yeah i i totally agree with that um okay my next this is like the
big question i have in my head at the moment which is this year i think and hodl actually said this
to me on a previous show he was saying that bitcoin's not been volatile enough for people
and so that's led people to buying treasury companies going into ai stocks instead of bitcoin
um gold all these different things like there's money going elsewhere and bitcoin's not really
had any kind of FOMO around it is there a reason that you think 2026 could be different and bitcoin
can actually outperform things like ai stocks and gold and all these other markets that have done so
well in 2025 i mean there's many reasons why i think that could occur but um i'll give you a few
i mean the destruction of the halving cycle as a narrative i think is a is a prerequisite for us
to have a very powerful bull market.
And the reason for that is that if you believe
that all you need to do in this asset
is to sell it every four years,
like just think about this logically.
I know we cover this, but I just want to,
it makes no sense to hold Bitcoin for the longterm.
If you think we are determined to have four year repeatable,
just look at the calendar, circle November 15th
or October 6th and just sell it
X amount of days after the halving.
That's all you need to do.
because it's, I mean, I had a guy telling me it's programmed.
Satoshi programmed it for Bitcoin to rise and fall.
I think it's a bunch of nonsense,
but just imagine that it was only the case.
Why would anyone have a long-term investment in Bitcoin?
Just trade it.
It's a tradable asset.
But of course, we don't look at stocks like that.
People, I mean, I don't, I don't,
I'm not a huge fan of bonds or fixed income,
but you don't look at bonds or fixed income like that.
You look at for stability, predictability.
you buy it because it has liquidity and uh and you could sell it very easily if you need to
um same thing with stocks right they're they're liquid they've got cash flows you're not trying
to time economic cycles you're buying good solid companies or an index for the long run you just
buy and hold forever right as the the equity get people say they don't they don't say oh we're
going to time it so we sell the top but in bitcoin you have this this degen culture right
where what does it do? It levers up in certain years, and then it tries to time this whole
exercise in a big game of chicken with everybody else in the marketplace and trying to get it right.
That is, in my view, it's a headwind for institutional adoption. Institutions do not
want to buy an asset that's going to fall 80, 70 percent. They'll buy assets that have a very
violent upside, or they'll buy assets that just trend sideways and chop and consolidate, which,
by the way, I think that's the new norm for Bitcoin. Like I think my, my new norm is what
we saw in 2024. And we talked about this in the last podcast where you see Bitcoin trade in a range
for like six months, like post ETF launch. And then we rip higher to a new level and then you
trade in a range, you know, say 90, 80, you know, a hundred K for a range, then you rip higher,
you bake, you make that floor. And there are a lot of commodities that trade in similar ways.
They, they just sort of chop around and consolidate for a long time. Then they rip higher.
I mean, gold fell. It had a decline after the 2009 bull run, right? And then it chopped around
for years in a range. And now it's having this epic bull run, right? One of the best bull runs
in gold's history in the modern era. And at some point, what will happen is gold's not going to,
I don't think gold's going to crash back down to like 900 bucks an ounce or something. I think
likely happen is it's going to find a range where it's going to consolidate where suppliers and
demand meet. And it just, you know, stays there for two, three years and then takes another leg
higher. If Bitcoin were to do that, that would be extremely bullish for long-term investors. It
would be bullish for the institutions looking at it. So I think that volatility is going to pick up.
But other issues that I think could be volatility catalysts in the coming year is that if you see
a real dynamic economy start to hold and take hold and the Trump administration's policies
really start to help in middle America. If you were to see that, I think you make a case that
Bitcoin is going to respond to that and the equity market is going to respond to that and you're
going to have a very bullish move. I mean, there were periods in the 1950s, I just bring this up
in the equity market, somebody was saying, well, there's never been, you know, X amount of years
where we've had positive equity returns
three or four years in a row.
That's nonsense.
There were periods in the 1950s
where we had back to back to back to back
double digit gains on stocks, okay?
So like an economic cycle does not die of old age.
It usually takes some exogenous shock, Danny,
to the market that pulls it off the rails
and then everything goes to hell
and they have to reignite the bubble or whatever it is.
But it's not something where like we just,
because we've had three or four great years that suddenly all investments have to tank in 2026. I
don't believe that. I love it. So your base case, I think when we were speaking in Vegas back in
April, you said you think this is just like a stair-step grind to a million dollars. Is that
still your take? Yeah. And again, it may take longer than a lot of people like, okay? But
I think Bitcoin can still, on its current pace, reach a million dollars in the next five years.
I don't think that's crazy at all.
I think that that's probably not my base case.
I would probably expect, you know, just conservatively, if you want to go real long out, I'd say Bitcoin's two to three times higher in the next five years, which people will say, oh, that's depressing.
That's bearish.
I mean, two to three times higher than that.
It's a massive move, right?
Like, I don't know, like find something to channel your productive enterprise towards as, you know, not staring at a chart all day.
that would be an incredible move because I don't think equities are going to do to two to three X
in the next five years. I love it. You know, that's just my view. Well, Joe, this has been
awesome. Thank you for doing this. You really are one of my favorite people that I have on the show.
I don't know when I'll see you next, but I'll definitely be in Vegas again. Maybe we should
do another in-person one there. We should absolutely do another one. That's always fun.
It's a good dynamic. And I did enjoy the one we did with Matt Pines and Checkmate earlier
in the year. That was fun too. When you have back and forth, those are great as well.
Yeah. Maybe we need to set up another round table. I think Pines is on a hiatus from podcast,
but we can find someone to fill his seat. Yeah. Well, I hope everybody has a Merry Christmas.
You'll probably be hearing this after Christmas, but definitely excitement and don't let the bears
and the negativity grind you down. I mean, there's a lot to be excited about. And I think that if
you're in Bitcoin now, there's still plenty of things that I think are on the horizon that could
be really positive. And they generally are all adjacent to Bitcoin, but that doesn't mean they
don't affect Bitcoin in indirect ways. Yeah, I think this is the last show that I'm recording
now before Christmas. A great bullish way to finish it. Thank you, Joe. This is awesome.
Cheers.
Thank you.