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Built on a confidence game.

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It's built on people believing that these people have control over the economic apparatus,

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that they have control over the system.

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And when you expose the wizard behind the curtain, the myth falls apart.

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Nobody knows really what happens then.

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Whenever you disrupt the status quo, it can be very painful and unanticipated consequences

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can arise.

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I don't recall a period where there has been this much of a bearish sentiment.

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It is bizarre to me.

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People are afraid right now if they FOMO back into the marketplace that they're going to get dumped on.

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When you start to see mounting evidence of this time actually is different,

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then you say, oh, it's not different this time.

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We're going to sell off 80%.

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I think Bitcoin can make a new all-time high in 2026, and I think we can do it convincingly.

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That would probably be one of the most bullish developments, I think, in the history of Bitcoin.

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Joe Calisari, man.

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Great to see you.

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Um, since we first spoke in Vegas this year, you have been one of my favorite people to

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have on the show.

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Um, you, you have a very balanced take on markets, a balanced take on Bitcoin.

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I think more often than not, you stay away from like the hyperbole.

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And I think you're probably right a lot of the time.

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Um, and so I thought a really cool idea would be to go over what's happened in 2025.

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Um, which has been like, I think we, I mean, we were just talking before the show.

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It's been an extremely disappointing year in Bitcoin from my perspective, at least.

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I don't know how you think about that.

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Like, I would never have guessed that at the end of the year, we'd be trading lower than

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at the start of the year.

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That was not on my cards.

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And the markets in general have been kind of all over the place.

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Like, Trump has truly been like a bull in the China shop when it comes to like tariffs

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and things like that.

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So I want to get into everything.

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But just general take, like overview.

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Do you think, how have you taken in 2025?

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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.

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relentlessly. It trolled. People were making fun of me in June because we're almost at, you know,

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125 and your target's 130. What are you thinking about? And I always expected, okay, I always

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expected most of the year to be choppy. I tweeted this out, particularly the beginning part of the

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year. I had like my list of 10 predictions I put out, which I will be putting out later this

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month, you know, next week when I sit down and do the work. But I always expected to be choppy

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and more volatile than the prior year. And I, for one, thought, you know, we would get,

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you know, closer to 130, 140 range at the end of the year. Obviously, that's wrong, right? Which is

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the nature of predictions are always going to get some of them wrong. But we got to 126, right? That

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was a big move. I think even from the beginning of the year, you know, we're starting out, you know,

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in the low 90s, we bounced up higher, we made a new all time high on inauguration day. And then we

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were due for a considerable volatility event for most of the first half of the year, really the

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tariffs and, you know, the dynamo with Trump. But the economy hung in there. Markets generally

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overall were strong after, you know, April. You had, you know, what, six, seven months straight

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up only across the equity market. So nothing really dire, no, you know, huge calamities,

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nothing that's going to derail the economy as a whole. Now, Bitcoin, Bitcoin was dealing with a

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few, I think, idiosyncratic features that we have to talk about. And I'll just give you the top three

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in my mind. Number one, you really have to talk about what happened on October 10th. That is sort

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of the heart because I think of where I think the Bitcoin market is now. I think that it's still

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sort of in this state of malaise and almost depression given that event. I mean, that

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really took people to the woodshed. I personally am involved in about a dozen cases now with

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exchanges and issues where people got really hurt bad by that liquidation event. That's a huge,

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idiosyncratic Bitcoin feature. As big, although not as sort of particularized in a single data

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point, is this sort of malaise over the cycle theory, right? This idea that Bitcoin has to pump

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and then bust into the following year, that if it doesn't do well this year, that it's going to

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somehow, you know, have a really bad, brutal 2026. I think that's a bunch of baloney and we can get

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into why. I think it's like the analogy I always use is like a rubber band, right? If you stretch

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the rubber band really hard, right, it's going to snap back. And that's what I think you saw in a lot

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of prior cycles, particularly the 2017 cycle, where we went from like a thousand to 19.6 by the end of

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the year, that was a rubber band stretch. And we worked off that excess for, you know, 12, you know,

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16 months. But then the final thing, right, that we need to talk about the cycle, then you have the

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1010. But I just think that there's this issue with the treasury companies that people didn't

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really know what to make of them. There was a lot of people putting on speculative bets on the

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treasury companies. And once those entities were taken to the woodshed, that caused, I think,

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broader problems in the Bitcoin space. So those three major headwinds this year, I think, kept

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the lid on the price action. Right now, though, although I would agree with you, I am slightly

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disappointed about sitting in the high 80s. Again, lower than where I thought we would end the year,

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but not, you know, not significantly. I mean, we're 40%. I mean, we went to 126. To me, I'm

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very bullish here because I think that the economy is overall is hanging in there. I think you had a

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GDP print that was really solid. I think Atlanta Fed GDP now is showing like towards 3% for Q4.

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I think that there are pockets of weakness, but there have been pockets of weakness for several

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years now. And I think you can make a case that there are green shoots and what Morgan Stanley

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calls the rolling recovery. So that's fascinating because, you know, Bitcoin, I think, is going to

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respond to a broader equity market rally that is not concentrated in mega cap. And you're seeing

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that you're seeing that in small caps, you're seeing that in the metals, which we can talk

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about in the broader story. So a lot of stuff going on. But I will I will push back hard in

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this whole interview because I don't believe in the the very negative sentiment. I mean, I tweeted

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out today, we're recording this on the 23rd of December. I helped Bitcoin since 2015. I don't

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recall a period where there has been this much of a bearish sentiment. It is bizarre to me.

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I think it was more optimistic when the FDF collapse went down, which is saying something

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because people were pretty distraught at that point. They thought it was dead. But this one is

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really bad. I talked to a guy who has been holding Bitcoin since 2017. He's a seven-figure position

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and he was considering, you know, just dumping his whole position going into stocks.

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And, you know, his whole reasoning is that I don't have four years to sit and wait for this

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all to sort out. I need to make roads towards my retirement now. I need to do this, you know,

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hosting and electricity with each hosted miner purchased. So I think the sentiment is really bad.

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Like when I say this year has been disappointing, it's not at all what I expected. And I actually

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just recorded a show um a couple of hours ago with hodl and odell and they were also saying like

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sentiment it feels as bad as i've ever felt it and and they've been a bit quite longer than me

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and they were the same the same thing and the thing that i think is interesting comparing it

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to the ftx time is when that happened it was so extreme but well it was relatively extreme to the

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upside then very extreme to the downside that cycle and so you get this sort of payoff you get

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the euphoria you get like the buzz from the dopamine hit from bitcoin doing well and then

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because it was such extreme on the downside you also get the dopamine rush from that and i think

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you kind of band together be like you feel like we know something that someone else doesn't bitcoin

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still going to recover we're still right whereas this cycle there's been no dopamine rush really

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and it's down and while bitcoin's not really done very well gold's performed incredibly well ai

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stocks have been booming so i think people feel like they've missed the boat they've not really

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had the uptime and now it looks like there's people who still believe in the four-year cycle

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that think now i've got to wait another two years of bear market or whatever until we can go again

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um so i think the sentiment kind of makes sense although i mean i don't agree with it and i'm

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actually quite bullish going into 2026 but i'll be interested to hear why you are um but i do want

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to go through a few of those things you said just then one is why did you pick 130k because i've

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said a couple of times recently, I don't think anyone called this year. Although I would say

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130K is a very good call. Like that is close enough to be right. I would say we hit 126.

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We're down a bit from there, but I would say you, you nailed it. So like, why did you think

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130 when everyone else was saying much higher figures or even like price predictions aside,

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just expecting a better market? Yeah. So we were, keep in mind, we had already went to the 100K

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mark in 2024. Okay. And at that point, I represent a lot of people that have been in Bitcoin for a

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long time, some of the OGs. And I was tweeting this out. And again, it's amazing when you get

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like a violent reaction on Twitter. Honestly, just as an aside, I kind of love when people get really

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upset and mad at you're saying something, because that tells me that there's sort of a cognitive

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bias there that is like, you have to attack that. You have to figure out. It might be just,

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and maybe it's just something that like people have blocked out. They don't want to think bad

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things. They want to sort of push you aside because they because it puts a little seed of

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doubt in their mind. But when I started talking about in late 2024, I was hearing from quite a bit

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of people that have been in Bitcoin for a very long time who had psychologically this target of

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100. They had 100K Bitcoin, this idea of 100K Bitcoin. So the reason I bring that up is that

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I think that there were a lot of people that said, look, I have been holding Bitcoin for many years.

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I had always said I was going to lighten up at 100K.

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I was going to buy that house or that yacht or whatever.

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And I started this here anecdotally, numerous examples of this.

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So why do I start there?

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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.

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Now, when you look at markets, right, it's not just the next marginal seller, it's the

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next marginal buyer.

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So I expect, okay, it's going to be an exciting year.

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You're going to have a positive catalyst in the administration.

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You're going to have a positive catalyst in these treasury companies.

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You're going to have the ETFs continuing to gobble up coins.

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So which one of those wins out in the end?

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And my belief was that I thought the 130, 140 target was really like, okay, what would

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make sense as a reasonable target with the marginal buyers and the marginal sellers would

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be 150.

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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.

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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.

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So it's really that it's really just the psychology of the marketplace between the marginal buyers and the marginal sellers.

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And technically, you know, I have some things I've built over the years, Bitcoin proprietary.

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I think I talked about one of them on a prior episode, but it was telling me 136.

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136 was like the top for the year based on the technical proprietary indicator I built.

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so like i had this confluence of factors where you have marginal sellers marginal buyers meeting

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you've got a time frame you've got the four-year cycle headwind you know that there's only a

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limited time frame you know there's going to be uptick in volatility in the equity market

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you're balancing all those things together and to me 130 to 150 40 seem excuse me 130 to 140

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seem like a sensible range it's um i mean that's a good call we basically hit it i'll be interested

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to hear your call for next year but before we get on that you said october 10th is one of the big

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catalyst for this. That was an event that I kind of ignored just because it seemed to be a much more

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crypto problem than a Bitcoin problem. I know that like Wintermute, one of the big market makers,

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had a big kerfuffle with Binance about that and like potentially they're suing Binance. I'm not

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exactly sure what's going on there. But why was October 10th, that big like crypto liquidation

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event so impactful to Bitcoin? So, you know, their public statements allude, Binance allude to this

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platform issue exposure, right?

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And which, if you look at the broader crypto market,

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and this is not something I say with delight as a Bitcoiner,

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but you have the whole DGEN space,

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which holds a fair amount of Bitcoin as their underlying collateral.

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A lot of these folks that are smart in the DGEN space,

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they are trading to try to acquire more Bitcoin to catch up,

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you know, the catch up trade.

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So if the broader crypto market suffers a, you know,

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category five hurricane and everything is pulled down in that space and the market makers pull

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bids and there are entities that I know of personally and ones that are rumored at having

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solvency issues. You have them trying to degross and shore up their balance sheet for a period of

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weeks to months thereafter. So, you know, it's not like a bullet to the head where it's just

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dead. Okay. It's basically that people have impaired balance sheets thereafter and they

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need to get those balance sheets clear. They need to get them in the right solvency position.

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Sometimes they're selling slowly and gradually at a loss assets. Like, you know, when you're

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handling massive positions, I think retail struggles sometimes to understand that you can't

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just market sell. There's no liquidity there. So you have to sort of slowly, you know, put the ask

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out there. You slowly build up a sell and do it over weeks. And I think you saw major market makers

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and hedge funds and other big actors in the space slowly degrossed their portfolio over the

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subsequent weeks. And that was a liquidity headwind. So that really, I think, culminated

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in the November 21st bottom that we saw that we put in around 80K on Bitcoin. My view is that

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they've largely repaired most of the damage in their balance sheet. So what happens there?

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Once we made it to November 21st, once we're sitting there,

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you're in this weird situation where I think half of the marketplace thinks the cycle is over,

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that there's no movement forward, there's no obvious catalyst. But then you've got the die

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hards that are just saying, well, fine, even if that's true, I'm not selling. So you kind of

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range. And it feels like that's what we've done. We did. We had the 80K bottom bounced up to 94,

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hovering in the 80s bounce. You know, we tried to reclaim 90 a couple different times, just kind

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of sitting here, no obvious, you know, will person willing to step in. And I think the reason for

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that, obviously, at this point is because people believe in the cycle theory, even if it has no

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analytical reason, because Bitcoin is sentimental, because Bitcoin is, you know, it doesn't have

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earnings, it doesn't have cash flow, there's not going to be a new report about, you know,

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here's the latest, greatest sales that they're doing this quarter. It really is a sentimental

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driven market in these ideas about Bitcoin that are sentimental drive the price action.

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So people are afraid right now, if they FOMO back into the marketplace, that they're going to get

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dumped on and they'll be ending up regretting it. You know, if there are a bunch of people right now

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who they didn't sell the top, they sold in the high 90s. And you're going to have to really

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incentivize them to come back into the marketplace, or you're going to have to create FOMO to get them

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back in the marketplace. What is the incentive? The incentive is if Bitcoin dumps to 50k or 60k

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or is much lower. That's a reasonable range, I think, where people are going to say, yes, we're

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going to step back in and buy those coins because they're significantly lower than the high 90s

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where we sold, even if we didn't sell the top. Then there's a whole nother group of people. I

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think that they, if Bitcoin starts running above a hundred K, they will start to sweat and they

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will start to move back into the marketplace. So anyone's guess, I mean, my view is that it's

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probably the latter because that's unexpected at this point. I think that we were likely to take

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out that a hundred K mark in the new year. And once you do, I think we can move very quickly

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to a new all-time high, but the problem, you know, just overall and making these predictions that are

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Bitcoin specific is that you have to sort of digest the greater macro story. You know, I always say,

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like, as much as a bull I am on Bitcoin, if your belief is that the stock market's going to decline

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30, 40 percent in, you know, 2026, which is not my view, but if that's your view, I don't see how

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you could simultaneously have a bullish Bitcoin stance. I don't. I believe at some point in the

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future, give it 20 years, Bitcoin might be able to perform like more like a risk off and a risk

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on asset um but right now i don't see that at all like if the stock market's going down bitcoin

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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

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well um and he was basically saying he thinks we've been in a sort of recession depression types

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um environment for the last year i know that's something you've kind of faded quite a lot and he

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puts that down to like manufacturing struggling and things like that so going into the new year

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How do you think the economy will perform?

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I think the economy is about to reaccelerate, and I'll give you some clean examples of why.

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Number one, let's just go back to what the concerted policy objective for the Federal

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Reserve has been for the last several years.

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There are articles, Danny, you could link them probably in the comments.

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I could give you some if you want.

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But back in 2022 and 2023, Jerome Powell said repeatedly that the labor market was out of

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balance.

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What does he mean by that?

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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.

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Unemployment rate was hovering in the fours and we're getting four, six or four, seven.

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Why? Why were they trying to raise the unemployment rate?

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It is so obvious because the Fed can only control the demand lever of the economy.

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They can only destroy demand.

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How do you destroy demand? Well, they won't admit this, but the honest answer is they have to make it

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harder for people to obtain jobs. And the people that have jobs, they need to have some decreased

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negotiating power for wages. So if you can put a lid on the wages, you can control the inflation

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picture. And if you can control the inflation picture, it makes it easier for our debt servicing.

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It makes it easier for us to keep lower rates. It makes the treasury market shore up. The whole

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system breaks when you have runaway inflation. And we saw that in 2022. Now, you know, the question

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was always, was that going to be a transitory event like the Fed thinks it is? Or was it going

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to be, you know, persistently higher inflation that compounds on itself and builds the price

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level? People are pissed off right now because the price level overall is higher, right? Like you go,

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everything is higher. But the reality is the year over year increases in a lot of these things

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is relatively tame outside of some services.

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It's that bulk of that inflationary pressure

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was in fact transitory.

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It really happened in 2022, 2021,

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those supply chain overhangs,

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that's where you saw this burst higher prices.

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And since then you've had modest increases

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that are closer to the target.

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So why is that relevant here?

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Because if they can raise unemployment,

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they can slow down the labor market,

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that will give the effect, I think,

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of having a clampdown on inflation overall,

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which gives them room to navigate,

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which you've already seen with their cuts this year

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in September, October, and December, right?

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The reason they're moving is because labor market

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is finally cooling off

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and they wanna get out in front of it.

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They're talking about it in terms of like risk management cut.

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That's the language that Powell uses.

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He says, I want a risk management cut.

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Okay, what he's really saying is that

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we know of the long and variable labs of monetary policy

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that we have to act now

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because it won't really be felt until next year,

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until the middle of next year.

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And what is my evidence for why you think

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you are gonna see this reacceleration?

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Look at the industrial metals, okay?

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Look at some of, look at things like,

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you know, I was talking about palladium, okay?

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Not necessarily gold, right?

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Gold can rally and do very well in periods

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when I think that there's sort of the fear trade

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that's going on, but look at silver, look at palladium,

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look at platinum, look at even tungsten, okay?

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Look at those charts and how they're rallying hard.

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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.

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You're going to get stimulus from the big, beautiful bill.

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You're going to have an election year where they're going to be very reluctant to issue a lot of treasury coupons.

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You're going to have a whole stimulus package that's coming from the administration.

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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.

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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

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individuals, investors, it's sort of, they perceive it, not necessarily it should be,

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but they perceive it as being further out in the risk curve. And where's the capital being directed?

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Capital has been directed at the sure bets, the solid things like the AI stocks and the tech

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companies and the mega caps, which are all the same names, right? They're all just trading amongst

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each other. But IWM, the small caps, the companies that are completely under pressure from higher

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interest rates, they're rallying. They're breaking out to new all-time highs. So to me, like, I can't,

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I don't understand the argument from those who are negative on 2026 as to why those things are

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rallying. Why would the companies that are not AI plays, they're not, you know, just built on hype,

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they're not built on, you know, the massive capex. These are mom and pop shops in a lot of respects,

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you know, industrial companies that are rallying really hard. And they're, I think, rallying all

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in response to the fact that the inflation rate coming down and the unemployment rate coming up

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is going to give the Fed and other central planners

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a lot more room to navigate with lower interest rates.

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So that's going to change a lot of things going into the next year.

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And Bitcoiners are focused on the four-year cycle.

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And to me, that seems my option.

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Yeah, I mean, I want to be fair to Dr. Jeff.

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He said that he thinks we may have been in some kind of recession,

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but he is also very bullish going into 2026

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for a lot of the reasons that you just said.

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He mentioned the big, beautiful bill stimulus package

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that that was one of the key things that he's looking at.

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You can't call it recession because there are periods.

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So like, let's talk about how difficult this is and let's just acknowledge both sides.

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Okay.

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So the reason I find it somewhat cringeworthy about a recession call is because I can look

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at any economy, literally any economy in the world, and I can show you there are sectors

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and pockets of weakness.

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Right now, you name a country we can go through and you can say, oh, the airlines are struggling

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here or manufacturing struggling here or services are struggling in this country or they're weak

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on tourism.

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Okay.

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That's not what the NBER, the National Bureau of Economic Research, is trying to do with a recession.

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They're trying to find a broad spread decrease in economic activity that is coincident with a spike in unemployment.

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That's how they're trying to find it.

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You could say that's a BS definition.

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It's detached from Main Street, as detached as CPI is.

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That's fine.

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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.

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because I can show you entire decades where manufacturing in the United States was struggling.

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And I can tell you periods for multiple years where services were struggling and unemployment

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was much. I mean, you had a period in the 2000s where unemployment was well above 5% consistently.

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We're not even at 5%. So like, it's almost like we argue over these semantic discussions about

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what is and what is not a recession. And by the way, if you're navigating markets,

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What do you care about whether there's a recession?

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I mean, if you have a small technical recession, there are periods where stocks have done fine.

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You know, they've held up in United States history where, you know, you have a technical

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recession.

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You had a technical recession with, you know, although the NBR didn't clear it with these

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two quarters of negative growth in 2022.

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Assets really fell out, the bottom fell out really the summer into the fall of 2022.

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after we technically started to see growth again in the economy,

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just on the quarter over quarter basis.

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So I don't find it very useful to talk about, is this a recession?

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What I think you can say is that manufacturing has been in a slow growth phase

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or contraction for the better part of three to four years.

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And that's a true statement.

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Manufacturing has been very weak.

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And if your view is, as Dr. Jeff, I think, has espoused,

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that manufacturing really picking up is key for Bitcoin's price to really appreciate.

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I don't believe that.

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I think Bitcoin can appreciate in any environment.

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But if that's your view, as is his, then I can see why his argument would be that, you

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know, next year might be more optimistic.

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Well, I hope I'm not putting words in his mouth there.

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But you say that these kind of get into semantic debates.

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And just to have another semantic debate, I want to pull you up on something else you

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said there which is that like the bulk of or a bigger majority of inflation was actually transitory

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do you think that's true because like it depends i think what you're measuring against like is this

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just the cpi quoted numbers because it doesn't feel like inflation's inflation's been transitory

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for just normal street people on main street like things have got expensive like i don't think three

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percent inflation is probably accurate um in terms of what people are actually experiencing this is

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because if you come from a classical training in economics, when you talk about inflation,

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you're not, people like me, and I'll just define it. When I talk about inflation, I'm not talking

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about the absolute price level of goods and services. Let's just be very clear. What do I

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mean by that? The fact that a $300,000 house now costs $700,000, okay, is in my, that absolute

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price level has risen. It's more than double, okay? We can all agree on that. The absolute

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price level of going out to eat has more than double. Okay. But what is the increase in the

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price level from 2024 to 2025? Because if I look at the Zillow and Redfin ratings near me,

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and I see houses that have either been flat or trickled down in the last year, I see countless

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examples, even in my own subdivisions here of the, it's either flat or mildly come down. So

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in an economist language, right, the economist will say there's no inflation there. The prices

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have made stable or trickled down. However, if you look at the absolute price level over the last

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several years, people, I think the more precise term is if you're cumulative inflation, the

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cumulative inflation is, you know, up 50% or 60%. So, you know, in terms of like, let's communicate

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the same thing. I think what I'm saying is that the cumulative inflation since the pandemic

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has been extreme. It's been very difficult for people to navigate. It has been backbreaking for

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some of the working poor. They literally are struggling to survive. And that is not in any

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way to be discounted. But what I'm talking about is now on a going forward basis, okay,

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after that we've digested that, where does inflation go from here? Now, you may say,

405
00:30:04,842 --> 00:30:08,463
you know, I know there are people out there in the Bitcoin community, Larry Lippard,

406
00:30:08,623 --> 00:30:12,963
and we're headed for runaway inflation from here. Okay. I don't see any evidence of that. I literally

407
00:30:12,963 --> 00:30:17,563
can't find any evidence of runaway inflation. I think you see, you know, some elements of services

408
00:30:17,563 --> 00:30:22,602
being sticky high, you know, say closer to three than 2%, which is what I think we were talking

409
00:30:22,602 --> 00:30:28,383
about back in May when we had our last podcast. But the notion that like we're going to head to

410
00:30:28,383 --> 00:30:32,623
10% or Zimbabwe style inflation in the United States, I think there's zero evidence of that.

411
00:30:33,163 --> 00:30:38,182
So, you know, when we say inflation was transitory, it was a community, in my view,

412
00:30:38,182 --> 00:30:43,982
it was a clear misread on how you need to communicate with the public. You need to explain

413
00:30:43,982 --> 00:30:48,862
to the public that there's going to be a massive price shift across the curve. Everything is going

414
00:30:48,862 --> 00:30:53,862
to go up significantly, but then it's going to peter out in terms of the year over year increases

415
00:30:53,862 --> 00:30:59,643
going forward. Does that make sense? That does make sense. But so with the Fed cutting rates now,

416
00:30:59,723 --> 00:31:05,223
while inflation is still above target and QT coming to an end and there's this like not QE,

417
00:31:05,223 --> 00:31:11,682
QE happening now. Do you not think inflation could come back in the next year? No, I don't,

418
00:31:11,783 --> 00:31:16,602
because I think to trigger the inflation, we, first of all, there's always inflation, right?

419
00:31:16,602 --> 00:31:21,403
We're always going to have, I think, some periods of inflation, 2%, 3%. When you say come back,

420
00:31:21,862 --> 00:31:27,682
what I mean, significantly above 2%. Yeah. Yeah. So, so like closer to the post pandemic style

421
00:31:27,682 --> 00:31:35,203
and inflation, right? Is that fair? Well, really like anything that's like 4% plus seems like,

422
00:31:35,223 --> 00:31:39,703
too high. Like, I mean, any of it can, you can be argued that it's too high, but when it's above

423
00:31:39,703 --> 00:31:45,803
4%, it feels slightly not in control unless you think that's wrong. I think it is really wrong

424
00:31:45,803 --> 00:31:50,422
because there are some people that they could easily digest 4% inflation. I mean, there are

425
00:31:50,422 --> 00:31:55,123
union workers near me who are getting cost of living increases of 7% year over year. So they're

426
00:31:55,123 --> 00:32:01,102
seeing real increases in their jobs. So this is the problem with this because inflation is uniquely

427
00:32:01,102 --> 00:32:06,563
personal. Like, you know, we try to make these models, which are just BS, right? Like, what is

428
00:32:06,563 --> 00:32:12,263
the median worker across the whole United States? And like the inflationary pressures of someone in

429
00:32:12,263 --> 00:32:17,182
California or in New York, I think are worlds apart from the inflationary pressures of someone in,

430
00:32:17,242 --> 00:32:23,403
you know, in Idaho, right? Like, like it's to draw these cross samples and data and analysis. And

431
00:32:23,403 --> 00:32:28,883
I mean, even the Fed acknowledges there's problems with these models and all they're doing is trying

432
00:32:28,883 --> 00:32:33,943
to get a just a bellwether, trying to like a gauge on what the inflation and area pressures are out

433
00:32:33,943 --> 00:32:40,502
there. But, you know, when you talk about the QE, not QE issue, and I want to go back to like,

434
00:32:40,582 --> 00:32:49,982
I think people forget this before 20, really 2019, there was QE1, QE2, and Yellen and her cohort,

435
00:32:50,102 --> 00:32:54,102
and many people stood around and they said, well, we can't figure out how to generate inflation,

436
00:32:54,102 --> 00:33:01,463
Like the inflation's under our target. We're running CPI at 1.6%. There are meeting minute

437
00:33:01,463 --> 00:33:06,742
notes where they, and there's a famous even, I think it was an economist article about how is

438
00:33:06,742 --> 00:33:11,303
inflation dead? Will it ever come back? Like, you know, that was the front cover of the magazine.

439
00:33:11,903 --> 00:33:18,463
And the reason I start there is because like the QE programs, I don't think have a strong record

440
00:33:18,463 --> 00:33:27,482
alone of causing inflation. What causes inflation, I think, is a growth in circulating money supply

441
00:33:27,482 --> 00:33:32,102
in government spending that's being directed into the economy, into the hands of people that sell,

442
00:33:32,283 --> 00:33:37,842
that actually spend it very quickly. So obviously what did happen with the pandemic? We sent out

443
00:33:37,842 --> 00:33:42,943
stimmy checks and we gave PPP loans and we gave all sorts of incentives to businesses and entities

444
00:33:42,943 --> 00:33:48,403
to spend real dollars into the real economy. And those people needed to spend it because they

445
00:33:48,403 --> 00:33:53,582
wanted to survive, many of them, but others, they had, you know, they never missed a day of work,

446
00:33:53,602 --> 00:33:57,763
and they got PPP loans, right? So like, what am I going to do with all this cash? I'm going to have

447
00:33:57,763 --> 00:34:01,203
to spend it in the real economy because I want to go on a trip, or I want to go on, you know,

448
00:34:01,263 --> 00:34:06,443
redo my house, or do any number of things. That money filtering the real economy, causing demand

449
00:34:06,443 --> 00:34:11,482
for goods and services, that's going to cause an inflationary burst, okay? And also the relocation

450
00:34:11,482 --> 00:34:15,602
dynamics after the pandemic with remote work, I think that totally messed up the real estate,

451
00:34:15,602 --> 00:34:18,323
and you know shelter is one of the biggest components of CPI.

452
00:34:18,843 --> 00:34:24,462
So now with the not QEQE and these duration management programs

453
00:34:24,462 --> 00:34:27,602
from the treasury market, I'm skeptical whether that alone

454
00:34:27,602 --> 00:34:30,462
is going to cause any sort of new burst of inflation.

455
00:34:30,643 --> 00:34:34,663
I think the far more likely scenario is that if there are stimmy checks,

456
00:34:34,903 --> 00:34:38,602
that would cause probably a short-term burst of inflation

457
00:34:38,602 --> 00:34:40,143
that's spending in the real economy.

458
00:34:40,482 --> 00:34:43,602
But the easiest way to think about this, which I think sticks with people,

459
00:34:43,602 --> 00:34:50,302
Danny is like if I were to go and I'm the Federal Reserve and let's say tomorrow I put I print a

460
00:34:50,302 --> 00:34:55,762
quadrillion dollars like the most absurd amount you can imagine I put I print a quadrillion dollars

461
00:34:55,762 --> 00:35:01,203
I take that quadrillion dollars which is not really physical but let's assume it's physical

462
00:35:01,203 --> 00:35:09,163
and I bury it in the desert what is the impact on inflation zero zero right like like you could you

463
00:35:09,163 --> 00:35:18,343
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.

464
00:35:18,442 --> 00:35:19,602
So why does that relate to QE?

465
00:35:19,962 --> 00:35:36,262
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.

466
00:35:36,262 --> 00:35:40,462
Now contrast that with we're going to send every man, woman and child a check.

467
00:35:40,942 --> 00:35:47,143
OK, or we're going to give every business that applies and doesn't lay off workers millions of dollars in PPP loans.

468
00:35:47,223 --> 00:35:49,982
That's going to have much more of a pronounced inflationary effect.

469
00:35:50,163 --> 00:35:54,442
And by the way, you're doing that in an environment where you're shutting down the global economy.

470
00:35:54,543 --> 00:35:57,723
You're telling people like your supply chains are going to be screwed up for 18 months.

471
00:35:57,723 --> 00:36:07,942
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.

472
00:36:08,082 --> 00:36:11,402
But you also have a demand catalyst in the form of more dollars, right?

473
00:36:11,523 --> 00:36:15,203
And people that, you know, wanted to spend money after they were locked into their homes.

474
00:36:15,402 --> 00:36:21,082
So that unique dynamic, I think, caused that once in 40 year, you know, burst of inflation.

475
00:36:21,383 --> 00:36:25,143
Now, does that mean we can't stick around 3% inflation for the foreseeable future?

476
00:36:25,203 --> 00:36:26,523
I think we absolutely can't.

477
00:36:26,523 --> 00:36:31,643
I don't see the reason is because our housing market is completely out of whack for a lot of

478
00:36:31,643 --> 00:36:36,843
different reasons. And housing is very challenging to get it to fall. A lot of times it can just sort

479
00:36:36,843 --> 00:36:41,442
of stagnate. But if you're sitting at a 2% mortgage, why are you going to sell that? Unless

480
00:36:41,442 --> 00:36:47,502
you absolutely need to and you go into a serious downturn, broad spread recession type event.

481
00:36:49,023 --> 00:36:55,123
So if 2%, 3%, 4% inflation is all like in your wheelhouse as being okay,

482
00:36:55,123 --> 00:37:01,163
like when does it get too much what kind of i wish i wish inflation were were i wish inflation

483
00:37:01,163 --> 00:37:07,183
were lower okay i i wish it was around the two percent target it's not okay i i view it more as

484
00:37:07,183 --> 00:37:12,002
sustainable i think it's sustainable and people don't want to hear that when does it get unsustainable

485
00:37:12,002 --> 00:37:18,782
i think it gets unsustainable when it's it's reaching levels where the shelter costs i think

486
00:37:18,782 --> 00:37:25,402
and I want to be careful on this, the shelter costs, because shelter always, shelter, people,

487
00:37:25,602 --> 00:37:29,462
they have to live somewhere, right? Like they're going to basically pay whatever the need is.

488
00:37:30,063 --> 00:37:34,823
When the shelter servicing costs for many people become just simply untenable that they have to

489
00:37:34,823 --> 00:37:39,843
sell the houses. And the problem is that the data I was looking at from Revolt and some of these

490
00:37:39,843 --> 00:37:46,163
entities, they're saying like, you know, there are people just breaking even. A lot of Airbnb

491
00:37:46,163 --> 00:37:50,743
B&B owners, they're not really losing significant amounts of money. They're breaking even on a lot

492
00:37:50,743 --> 00:37:55,143
of these deals. And even the ones that are selling at a steep haircut, you know, those are a lot of

493
00:37:55,143 --> 00:38:01,023
investment firms. They're people taking write downs and capital losses, but it's not in such a

494
00:38:01,023 --> 00:38:06,383
sense that they have to do fire sales. I think during periods in the great financial crisis,

495
00:38:06,383 --> 00:38:11,782
when you had a huge unemployment wave, that caused a cascade of supply to come to the market.

496
00:38:11,782 --> 00:38:23,145
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

497
00:38:23,145 --> 00:38:28,685
extremely rare. The more likely scenarios, it just stays like flat and loses ground in real terms.

498
00:38:29,385 --> 00:38:34,385
There's no competitive pricing. You can't raise your prices because no tenants can afford them.

499
00:38:34,945 --> 00:38:39,085
And homeowners are going to sit on those and investors are going to sit on those houses for

500
00:38:39,085 --> 00:38:42,865
10, 20 years, they might not make any money on them. They might lose in real term, but you're

501
00:38:42,865 --> 00:38:47,925
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anchorwatch.com. So you think that the current situation we're in with the Fed cutting rates

529
00:41:10,805 --> 00:41:16,465
while inflation's above target and doing this new not QE thing is not really going to have a big

530
00:41:16,465 --> 00:41:20,285
impact on inflation? You think this will be positive for the economy? I think it will be

531
00:41:20,285 --> 00:41:26,525
positive and the impact on inflation is maybe you push it above three maybe you go three one three

532
00:41:26,525 --> 00:41:32,165
two you know maybe you have cpi sitting at three two and at that point you know the question really

533
00:41:32,165 --> 00:41:37,885
becomes why are you having rates lower in the environment you're going to have to get answers

534
00:41:37,885 --> 00:41:43,585
from the new fedsure on this why are rates uh negative in real terms you know because of

535
00:41:43,585 --> 00:41:49,685
inflation you've gotten the three cuts this year right you've got september october um and you've

536
00:41:49,685 --> 00:41:54,885
got in November, right? So I want to make sure I'm not misquoting this. The current effective Fed

537
00:41:54,885 --> 00:42:02,805
funds rate is 3.65, okay? So you've got a new Fed chair coming in, and the obvious mandate will be

538
00:42:02,805 --> 00:42:07,285
we want lower interest rates, right? Like everybody in their son, everybody in their son thinks that

539
00:42:07,285 --> 00:42:10,945
we're going to get lower interest rates from the new Fed chair, the new Fed chair will be beholden

540
00:42:10,945 --> 00:42:16,105
to the administration, the administration said overtly, we want lower rates. Okay, fine. So you've

541
00:42:16,105 --> 00:42:22,705
got inflation at three points or yet, uh, excuse me, the fed funds at 3.65. And if inflation takes

542
00:42:22,705 --> 00:42:29,065
up above three or at three, how, how much more can you cut? I mean, that's really going to be

543
00:42:29,065 --> 00:42:33,825
the question I think we're talking about, uh, middle next year, because if, if the new fed

544
00:42:33,825 --> 00:42:38,265
chair comes in and wants to send a signal that he is in line with the president, the president said

545
00:42:38,265 --> 00:42:45,105
that even at 3.65, they're too high. Um, are you going to cut rates into the twos with inflation

546
00:42:45,105 --> 00:42:51,605
potentially still in the other threes because that's negative real rates and negative real rates

547
00:42:51,605 --> 00:42:57,545
I think are a disaster for an economy far more far worse I think than you know keeping the interest

548
00:42:57,545 --> 00:43:02,545
rates where they're at so when either before we started the show at the very start depending on

549
00:43:02,545 --> 00:43:08,545
how I cut it you were saying that you can kind of see a case for both a bull and a bear economy in

550
00:43:08,545 --> 00:43:14,765
the next year and is that what would be the bear case i think that bear the bear case the the single

551
00:43:14,765 --> 00:43:23,125
biggest issue for me is if you have a issue with fed independence next year where you have

552
00:43:23,125 --> 00:43:29,845
revolt in the bond market that that is that is probably the biggest um boogeyman under the bad

553
00:43:29,845 --> 00:43:34,325
night again i i discount that because i think ultimately it's it's going to be politically

554
00:43:34,325 --> 00:43:39,885
manage. And I think once the new Fed chair gets in there, he's going to go out of his way to appear

555
00:43:39,885 --> 00:43:45,525
independent while behind the scenes really taking marching orders. I think it would be a disaster

556
00:43:45,525 --> 00:43:50,305
for him to say, well, you know, in front of a, just imagine there's an FOMC presser and he's,

557
00:43:50,305 --> 00:43:55,805
instead of debating the data and why they should cut or shouldn't cut, they're just saying, well,

558
00:43:55,905 --> 00:43:58,885
what does the president want? And I'm going to, I'm going to do whatever the president wants.

559
00:43:58,885 --> 00:44:08,705
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.

560
00:44:08,845 --> 00:44:15,805
It's built on people believing that these people have control over the economic apparatus, that they have control over the system.

561
00:44:15,985 --> 00:44:21,245
And when you expose the wizard behind the curtain, the myth falls apart.

562
00:44:21,445 --> 00:44:22,945
And that's very dangerous.

563
00:44:22,945 --> 00:44:25,345
Like, you know, nobody knows really what happens then.

564
00:44:25,345 --> 00:44:30,945
Like if there's total loss of confidence in the Fed chair and you really it really is completely subsumed.

565
00:44:31,525 --> 00:44:43,705
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.

566
00:44:43,785 --> 00:44:49,325
Right. That's true in a sense. But like, you know, we've never experimented with that in the modern economy.

567
00:44:49,325 --> 00:44:56,105
And capital flows today are very different than they were in the 1930s and prior periods.

568
00:44:56,225 --> 00:45:03,045
So I'm always hesitant for people to say, oh, there's this historical analogy where it's worked pretty well in prior dynamics.

569
00:45:03,125 --> 00:45:04,205
So why do you question it now?

570
00:45:04,425 --> 00:45:12,465
And the question is because whenever you disrupt the status quo, it can be very painful and unanticipated consequences can arise.

571
00:45:12,465 --> 00:45:30,385
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.

572
00:45:30,385 --> 00:45:32,545
Now, again, maybe it works out great.

573
00:45:32,985 --> 00:45:35,445
You know, maybe we're being overly pessimistic.

574
00:45:35,565 --> 00:45:38,885
I'm just answering your question, like what would give me pause?

575
00:45:39,125 --> 00:45:43,105
I think a 10-year above 5% gives me pause, okay?

576
00:45:43,465 --> 00:45:47,045
If that were to occur, I don't believe that's going to occur,

577
00:45:47,145 --> 00:45:51,525
but if the bond market in the early part of next year starts selling off

578
00:45:51,525 --> 00:45:55,405
and you get the new Fed chair and the new Fed chair is rocking the boat,

579
00:45:55,765 --> 00:45:58,365
that is perhaps the biggest concern I have.

580
00:45:58,365 --> 00:46:16,265
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.

581
00:46:17,105 --> 00:46:26,185
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.

582
00:46:26,185 --> 00:46:30,965
like he is not just at the rim of trump you're gonna get completely rinsed in the comments for

583
00:46:30,965 --> 00:46:37,165
saying that he's independent because well relatively oh he he was helping kamala harris

584
00:46:37,165 --> 00:46:42,005
and uh you know he was trying to be he was cutting and that's fair you know there are people that

585
00:46:42,005 --> 00:46:46,145
will rinse you for that one but uh well that's fair but he's remained relatively independent

586
00:46:46,145 --> 00:46:53,845
from trump at least um and like assuming the next um fed chair that comes in is like the puppet to

587
00:46:53,845 --> 00:47:00,625
trump um even in fact let's just say he managed to keep up that charade and people still view the

588
00:47:00,625 --> 00:47:04,865
fed as an independent institution that can do whatever they want but if we still have negative

589
00:47:04,865 --> 00:47:10,185
real rates in that environment what do you think would actually happen to the bond market what would

590
00:47:10,185 --> 00:47:19,325
the how would the bond market react i mean there are periods where i think loss of confidence in the

591
00:47:19,325 --> 00:47:25,725
in the Federal Reserve, I think could potentially cause a massive sell of the long bond, you know,

592
00:47:25,725 --> 00:47:31,965
30 year plus. I think that the 10 year could, again, it could trade north of 5%. And if you

593
00:47:31,965 --> 00:47:39,045
look at 2022, the story of 2022 is that when rates were getting unwieldy and bonds were selling off,

594
00:47:39,045 --> 00:47:46,425
that has a reflexive effect with the mechanics of the current portfolio construction that causes

595
00:47:46,425 --> 00:47:47,565
is a selling in equities.

596
00:47:47,565 --> 00:47:49,585
And if there's a selling in equities,

597
00:47:49,585 --> 00:47:51,625
that's gonna cause Bitcoin to tank

598
00:47:51,625 --> 00:47:54,185
and because there are funds that hold it all, right?

599
00:47:54,185 --> 00:47:56,485
So just think about this mechanically, okay?

600
00:47:56,485 --> 00:47:58,785
I know that we in Bitcoin,

601
00:47:58,785 --> 00:48:01,405
we are very skeptical of the 60-40 portfolio.

602
00:48:01,405 --> 00:48:03,205
I'm sure you're up to speed on that,

603
00:48:03,205 --> 00:48:05,905
why that the 60-40 is,

604
00:48:05,905 --> 00:48:09,705
there's a lot of concern about why people have allocated

605
00:48:09,705 --> 00:48:11,805
their retirement nest egg in that allocation.

606
00:48:11,805 --> 00:48:19,265
Well, if you're in a 60-40 and your bond position gets cut in half, right?

607
00:48:19,365 --> 00:48:26,045
Like, so say, like, you're in bond funds, rates go higher, and the value of those bonds,

608
00:48:26,045 --> 00:48:30,205
although they're all money good, you get paid your principal, but, you know, look at an

609
00:48:30,205 --> 00:48:34,505
example like a fund like a TLT, it gets cut in half or 30%.

610
00:48:34,505 --> 00:48:37,385
What happens at the end of the quarter rebalance, you know?

611
00:48:38,925 --> 00:48:39,545
Tell me.

612
00:48:39,725 --> 00:48:39,865
Okay.

613
00:48:39,865 --> 00:48:57,625
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.

614
00:48:58,185 --> 00:49:00,065
So that you do the same thing again next quarter.

615
00:49:00,065 --> 00:49:07,805
Yes. So if people are allocated in this spread where they're trying to rebalance in a 60-40

616
00:49:07,805 --> 00:49:16,265
allocation, there's mechanical selling that takes place out of equities into bonds. And I think one

617
00:49:16,265 --> 00:49:23,745
of the interpretations of 2022, where we had a real nasty year in the bond market and in the

618
00:49:23,745 --> 00:49:30,785
equity market was that as yields rose, there was mechanical selling of equities that wasn't

619
00:49:30,785 --> 00:49:37,065
about a big recession or economic collapse or unemployment about the skyrocket. There was an

620
00:49:37,065 --> 00:49:41,485
interpretation that literally like all these people have this passive indexation, passive

621
00:49:41,485 --> 00:49:48,305
investment vehicle of 60, 40 target date funds, all these things. And as their bond funds got

622
00:49:48,305 --> 00:49:54,585
killed in one of the worst bond bear markets in modern history in 2022, they had to sell their

623
00:49:54,585 --> 00:49:59,285
equities to rebalance into the bonds. And I think people don't think, they don't think

624
00:49:59,285 --> 00:50:04,525
mechanically how that works in a allocation theory. And there are FAs that will do this

625
00:50:04,525 --> 00:50:07,345
really without even thinking, without even questioning it. They were selling equities

626
00:50:07,345 --> 00:50:11,745
because, well, you have to have 40% of your bonds because you're, you know, particularly with a big

627
00:50:11,745 --> 00:50:18,005
boomer class, right? There are a lot of elderly people in the United States that have huge

628
00:50:18,005 --> 00:50:23,605
fixed income exposure. And when those allocations get, you know, slacked, they're selling equities

629
00:50:23,605 --> 00:50:28,805
to rebalance. So they're just selling their winners to buy more losers just because that's

630
00:50:28,805 --> 00:50:33,725
the way they've always done it, essentially. Yeah. It's not even like a thought process.

631
00:50:33,945 --> 00:50:41,405
It's mechanical. If I say as your FA, I'm going to put you 60% in fixed income and, or sorry,

632
00:50:41,405 --> 00:50:48,325
60% in equities and 40% fixed income and your fixed income falls 20%, you're going to be selling

633
00:50:48,325 --> 00:50:54,265
your equities to rebalance, to keep that allocation. Have you been watching the Japanese

634
00:50:54,265 --> 00:50:59,565
bond market recently? I mean, I'm sure you have, but like, what's your take on that? Cause you hear

635
00:50:59,565 --> 00:51:04,465
a lot of sort of Duma takes, um, from probably two sides. Like one is that inflation seems to

636
00:51:04,465 --> 00:51:09,045
be coming back in Japan. Um, and it was always like this strange economy that could have really

637
00:51:09,045 --> 00:51:14,065
high debt to GDP without really having inflation? And then secondly, like the carry trade blowing up

638
00:51:14,065 --> 00:51:21,825
and what impact that may have on other markets. Yeah. I mean, I think that the Japanese, so my

639
00:51:21,825 --> 00:51:28,805
overall take on this is that folks mostly in our markets care about it because of the yen carry

640
00:51:28,805 --> 00:51:36,345
trade, right? And I think the framing on the yen carry trade is usually incorrect because people

641
00:51:36,345 --> 00:51:42,285
think of it as a static thing that will blow up and that's the end of it, right? Like at some point

642
00:51:42,285 --> 00:51:47,725
that the yields are going to get too high on the JGBs and that puts an end. The reality is like,

643
00:51:47,785 --> 00:51:54,805
this is a sum of numerous individual actors who are borrowing, you know, in, in, in that currency

644
00:51:54,805 --> 00:51:59,585
and taking advantage of it in U S markets. And yes, you will have people squeeze, you have

645
00:51:59,585 --> 00:52:05,085
liquidation events. You'll have people have pressure on them as, as the yen rises, as the,

646
00:52:05,085 --> 00:52:07,745
as the JGB yield rises, whatever it be.

647
00:52:07,985 --> 00:52:09,585
But it's a dynamic process.

648
00:52:09,665 --> 00:52:12,505
In other words, we saw the blow up in 2024

649
00:52:12,505 --> 00:52:15,145
and some people a month later

650
00:52:15,145 --> 00:52:17,145
are putting on those exact same trades, right?

651
00:52:17,165 --> 00:52:18,485
They got squeezed out of the position.

652
00:52:18,805 --> 00:52:20,125
They had to degross their portfolio.

653
00:52:20,125 --> 00:52:22,305
So it will always be a feature

654
00:52:22,305 --> 00:52:25,385
when you have this currency arbitrage

655
00:52:25,385 --> 00:52:26,265
that you can play in.

656
00:52:26,585 --> 00:52:30,605
So I don't view it as a systemic issue

657
00:52:30,605 --> 00:52:34,325
unless some entity or actor

658
00:52:34,325 --> 00:52:39,965
gets taken to the woodshed and it is so significant that it causes sort of this cascade of effects.

659
00:52:40,985 --> 00:52:47,205
Any, you know, any marketplace, a hedge fund has, you know, obviously a hedge fund can lose money

660
00:52:47,205 --> 00:52:52,245
or, you know, a big actor can lose money or a market maker could potentially take, you know,

661
00:52:52,305 --> 00:52:59,345
huge losses. But, you know, the system is constructed in many ways to anticipate that,

662
00:52:59,345 --> 00:53:03,365
to try to put safeguards in that place, to have forced degrossing of positions.

663
00:53:03,365 --> 00:53:05,145
and then it's done, right?

664
00:53:05,265 --> 00:53:08,885
To me, I don't ever understand the argument from folks

665
00:53:08,885 --> 00:53:11,225
that this somehow causes some permanent impairment

666
00:53:11,225 --> 00:53:14,845
or is gonna be big enough to cause some sort of cascade

667
00:53:14,845 --> 00:53:16,865
that would take down all US markets

668
00:53:16,865 --> 00:53:21,485
in a longstanding way or in an immediate term way.

669
00:53:21,825 --> 00:53:24,105
To me, I think it's gonna continue to be an issue.

670
00:53:24,545 --> 00:53:27,285
I think the bond route could persist further.

671
00:53:27,745 --> 00:53:29,125
The yen could further decline

672
00:53:29,125 --> 00:53:30,665
and have a further rise in yields.

673
00:53:30,665 --> 00:53:37,625
but you know that's sort of a long run issue we've been talking about this in Japan for for

674
00:53:37,625 --> 00:53:43,625
decades and I guess I failed to see the urgency of why this would this time is different right as

675
00:53:43,625 --> 00:53:48,325
opposed to something they will structurally be dealing with for the next decade or more so this

676
00:53:48,325 --> 00:53:53,925
isn't the start of Japan blowing up yeah I mean look like the interest rate differential is not

677
00:53:53,925 --> 00:53:59,285
going to go away I mean I don't I think it's going to narrow it's going to widen it's going

678
00:53:59,285 --> 00:54:04,245
narrow, it's going to widen. I mean, there's different aspects of, you know, the rate policy

679
00:54:04,245 --> 00:54:08,185
in the countries, there's different inflationary dynamics, there's different demographic dynamics,

680
00:54:08,505 --> 00:54:12,645
those should keep a differential on interest rates probably for the entire foreseeable future.

681
00:54:13,185 --> 00:54:19,185
So whenever, let me just tell you my shorthand, whenever there is a period where people are saying,

682
00:54:19,365 --> 00:54:23,685
this is going to blow up and everything's going to be different tomorrow, okay, I generally fade

683
00:54:23,685 --> 00:54:32,545
that because in the real world, change tends to be slow, incremental, messy. There are tail events.

684
00:54:32,925 --> 00:54:36,225
There are these things where we wake up and there are, you know, there is a fundamental difference,

685
00:54:36,225 --> 00:54:41,205
but that's not the majority of events. Majority are sort of the slow train wreck that you see

686
00:54:41,205 --> 00:54:47,805
coming for a long, long time. And it gets worse and worse, right? That's, that's kind of how,

687
00:54:47,805 --> 00:54:53,125
how I think most economic issues arise. Yeah, I think you're probably right. Um,

688
00:54:53,125 --> 00:54:58,205
So we've done 50 minutes basically touching on one of the three things you're looking at with Bitcoin.

689
00:54:58,745 --> 00:55:05,845
The other two was the cycle narrative, like the self-fulfilling prophecy of the cycle narrative and treasury companies.

690
00:55:06,205 --> 00:55:07,685
Which one do you want to get into next?

691
00:55:07,725 --> 00:55:10,245
Should we talk about the cycles first and finish on the treasury companies?

692
00:55:10,265 --> 00:55:10,965
Yeah, let's talk about the cycles.

693
00:55:10,965 --> 00:55:12,405
So, okay.

694
00:55:14,165 --> 00:55:22,485
One of the things I want to start with on that is that we have had limited, depending on how you measure it.

695
00:55:22,485 --> 00:55:25,505
You know, some people said they've been, you know, four epochs and whatnot.

696
00:55:27,605 --> 00:55:29,145
We've had limited sample size.

697
00:55:30,065 --> 00:55:33,165
It's still a young asset in Bitcoin.

698
00:55:33,165 --> 00:55:33,765
Okay.

699
00:55:34,065 --> 00:55:40,905
So for people to draw conclusions about how Bitcoin has to trade with a sample size of

700
00:55:40,905 --> 00:55:43,705
four is not statistically significant.

701
00:55:44,305 --> 00:55:44,525
Okay.

702
00:55:44,685 --> 00:55:52,245
No serious data scientists or technician would be able to tell you that because the thing

703
00:55:52,245 --> 00:55:57,765
happened three or four times in the past, that that alone is going to be compelling evidence for

704
00:55:57,765 --> 00:56:02,985
anything to happen in the future. Moreover, some of those early examples, as you know,

705
00:56:03,565 --> 00:56:09,405
Bitcoin was effectively a science project. You had very limited exchanges, you had no regulated

706
00:56:09,405 --> 00:56:17,565
exchanges, no hedging tools, limited derivatives market, no futures market. How you can compare

707
00:56:17,565 --> 00:56:23,685
a nascent asset that was really infantile to something that the Bitcoin current marketplace

708
00:56:23,685 --> 00:56:28,785
where basically anybody, even if you hold spot Bitcoin, you could fire up a Robinhood account

709
00:56:28,785 --> 00:56:34,945
and hedge your position with Ibit options, your entire position very quickly. I just don't

710
00:56:34,945 --> 00:56:41,785
understand it. It's beyond me why people would suggest that the Bitcoin market of today bears

711
00:56:41,785 --> 00:56:47,185
in any significant material comparison to the prior Bitcoin markets. And as Bitcoin matures,

712
00:56:47,565 --> 00:57:01,245
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.

713
00:57:01,765 --> 00:57:15,445
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.

714
00:57:15,445 --> 00:57:17,445
Well, we didn't.

715
00:57:17,445 --> 00:57:20,445
We basically chopped around the entire year.

716
00:57:20,445 --> 00:57:31,867
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

717
00:57:31,867 --> 00:57:37,468
something like investor preference like you know there's been this massive interest in ai which

718
00:57:38,107 --> 00:57:43,627
to me had that not occurred right i think more dollars would have flowed into bitcoin 100 right

719
00:57:43,627 --> 00:57:47,948
like i don't i don't know why you see all these data points of like things that are different this

720
00:57:47,948 --> 00:57:52,448
time. And then you say, oh, it's not different this time. We're going to sell off 80%. I mean,

721
00:57:52,508 --> 00:57:58,127
even 2021, okay, which most people say, oh, that was the quote unquote cycle top.

722
00:57:58,528 --> 00:58:04,768
Look what we just talked about in 2021. In 2021, Bitcoin peaked the same month as the Nasdaq peak

723
00:58:04,768 --> 00:58:09,328
in November of 2021. Many other risk assets were peaking in the summer into the fall.

724
00:58:09,508 --> 00:58:13,927
What happened in November and December of 2021? We got clear guidance from the Federal Reserve that

725
00:58:13,927 --> 00:58:17,188
they were behind the curve and they were going to have to engage in the fastest rate hiking cycle

726
00:58:17,188 --> 00:58:19,308
in 40 years, right?

727
00:58:19,387 --> 00:58:23,328
And then the S&P peaked, I think, January 3rd, 2022,

728
00:58:23,328 --> 00:58:26,468
and we consistently rolled over the entire year

729
00:58:26,468 --> 00:58:28,127
alongside the broader equity market.

730
00:58:28,568 --> 00:58:30,528
So, Danny, for someone to say,

731
00:58:30,627 --> 00:58:33,168
oh, that was a cycle, a Bitcoin cycle

732
00:58:33,168 --> 00:58:34,548
that was driven by the halving

733
00:58:34,548 --> 00:58:35,808
and it was destined to fall,

734
00:58:36,367 --> 00:58:39,887
was it destined that FTX would commit a massive fraud?

735
00:58:40,207 --> 00:58:41,968
Was it destined that you'd have all these entities

736
00:58:41,968 --> 00:58:43,528
like Three Arrows and Alameda

737
00:58:43,528 --> 00:58:47,528
that were, you know, experience a contagion level event?

738
00:58:48,387 --> 00:58:52,607
Was that all just programmed into the block reward?

739
00:58:52,847 --> 00:58:54,948
And every four years that has to repeat?

740
00:58:55,407 --> 00:58:58,328
I mean, we see, it's almost like, to me,

741
00:58:58,427 --> 00:59:02,528
it's almost like this after the fact narrative construction

742
00:59:02,528 --> 00:59:05,508
where there's so many examples

743
00:59:05,508 --> 00:59:07,407
of what was driving the Bitcoin price section

744
00:59:07,407 --> 00:59:09,028
that had nothing to do with Bitcoin itself,

745
00:59:09,407 --> 00:59:12,707
had broader economic factors, just like now, right?

746
00:59:12,707 --> 00:59:19,107
This year, in what you and others think is disappointing, I would say it's mildly disappointing, the performance this year.

747
00:59:19,548 --> 00:59:29,008
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.

748
00:59:29,568 --> 00:59:31,727
And I talked about this earlier in the interview.

749
00:59:31,828 --> 00:59:36,988
I think the economic environment has been challenging, but it hasn't been dire.

750
00:59:37,127 --> 00:59:38,568
It hasn't been disastrous.

751
00:59:39,068 --> 00:59:42,107
There are certainly segments and sectors that have done very well.

752
00:59:42,107 --> 00:59:43,727
There's ones that have done really poorly.

753
00:59:44,248 --> 00:59:48,688
So wouldn't you expect a deep liquid instrument like Bitcoin to respond to that dynamic?

754
00:59:48,927 --> 00:59:49,707
I sure do.

755
00:59:50,168 --> 00:59:54,087
And if the economy starts to take off next year and you get a manufacturing revival and

756
00:59:54,087 --> 00:59:59,627
you have a broad growth impulse in the economy, why wouldn't you expect Bitcoin to participate?

757
01:00:00,068 --> 01:00:03,328
Why would you take new all-time highs off the table?

758
01:00:04,207 --> 01:00:11,008
I mean, personally, I view most of 2025 as a long, bearish consolidation.

759
01:00:11,008 --> 01:00:18,668
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.

760
01:00:19,288 --> 01:00:24,248
You know, we made a new all-time inauguration day in January of 108 or 109.

761
01:00:24,407 --> 01:00:29,528
And then we bounced around that range the entire year, you know, and now we're under it.

762
01:00:29,848 --> 01:00:32,068
To me, markets correct in two ways.

763
01:00:32,568 --> 01:00:34,607
They correct in price and they correct in time.

764
01:00:34,607 --> 01:00:39,788
I think the entire story of 2025 was largely, in addition to some of the things we mentioned,

765
01:00:39,927 --> 01:00:45,587
was working off the bullish moves that we had 2023 and 2024 after the ETF launch.

766
01:00:46,068 --> 01:00:51,968
I mean, you had the most successful launches of an ETF in history and Bitcoin spending,

767
01:00:52,148 --> 01:00:54,387
you know, weeks and months above 100K.

768
01:00:55,207 --> 01:00:56,587
That's a monumental year.

769
01:00:57,087 --> 01:01:03,068
I know it's not, you know, Lambo money type years for some people, but I think it's huge.

770
01:01:03,068 --> 01:01:04,387
I think it's positive.

771
01:01:04,648 --> 01:01:09,227
And, you know, obviously, if Bitcoin sells off down to 50, 60K, you can hold me.

772
01:01:09,288 --> 01:01:11,688
That's extremely disappointing in 2026.

773
01:01:12,008 --> 01:01:25,127
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.

774
01:01:25,648 --> 01:01:28,968
I mean, I think Bitcoin can make a new all time high in 2026.

775
01:01:29,107 --> 01:01:32,848
And I think we can do it convincingly, you know, far above the 126 mark.

776
01:01:33,068 --> 01:01:34,367
And what happens then?

777
01:01:34,627 --> 01:01:35,748
I mean, this is one of the things,

778
01:01:35,848 --> 01:01:38,587
if there's one thing a listener who's beat up

779
01:01:38,587 --> 01:01:41,988
and downtrodden about Bitcoin or disappointed,

780
01:01:42,168 --> 01:01:42,828
however you want to put it.

781
01:01:43,468 --> 01:01:44,488
One thing I wish you'd take away

782
01:01:44,488 --> 01:01:46,727
is this just picture for a second here.

783
01:01:47,068 --> 01:01:50,748
If a new all-time high is made in 2026,

784
01:01:50,988 --> 01:01:53,808
if, that would probably be one of the most bullish developments,

785
01:01:53,808 --> 01:01:54,808
I think, in the history of Bitcoin.

786
01:01:55,367 --> 01:01:57,668
And the reason for that is you would absolutely shatter

787
01:01:57,668 --> 01:02:00,268
once and for all this four-year cycle myth.

788
01:02:00,568 --> 01:02:02,607
People would look at this as an institutional asset

789
01:02:02,607 --> 01:02:08,568
that can rise and fall with the broader macroeconomic environment, and they don't have to time it like

790
01:02:08,568 --> 01:02:13,508
people have gotten accustomed to trying to look for exits. I think that is massively bullish.

791
01:02:13,508 --> 01:02:19,207
The destruction of that narrative is probably what we need to send Bitcoin orders of magnitude higher.

792
01:02:20,028 --> 01:02:23,407
I totally agree with that. And one of my favorite narratives that's come out in the last year is

793
01:02:23,407 --> 01:02:27,488
like, not necessarily the super cycle thing, because who knows what anyone's definition of

794
01:02:27,488 --> 01:02:32,508
a super cycle is. But I like the idea that maybe cycles did never exist. And I can completely

795
01:02:32,508 --> 01:02:37,308
believe that. I think everything you're saying there is true. And so if we've been playing in

796
01:02:37,308 --> 01:02:43,028
this like economic environment, as you described as on like hard mode, are we going into easy mode

797
01:02:43,028 --> 01:02:49,727
going into 2026? I think so. Absolutely. I really do. The one, again, I'm trying to present most,

798
01:02:50,227 --> 01:02:56,268
I think the economy is going into easy mode. I think potentially we could be going into hard

799
01:02:56,268 --> 01:03:02,127
mode for geopolitical reasons. Obviously you're following what's going on in Venezuela. I think

800
01:03:02,127 --> 01:03:10,248
there are potential issues with the midterms that could be political challenges. I think those,

801
01:03:10,468 --> 01:03:14,988
the concerns that come to the top of my mind outside of the treasury market and the economy,

802
01:03:15,348 --> 01:03:20,968
I think largely focus on the political dynamics, because I think we live in a very tenuous

803
01:03:20,968 --> 01:03:26,227
political environment right now. And I think that going into an election year, it's always going to

804
01:03:26,227 --> 01:03:30,607
be challenging. You're going to have a lot of actors who are hell bent and determined to frustrate

805
01:03:30,607 --> 01:03:35,448
the Republicans from continuing their hold on the Congress in the United States.

806
01:03:36,168 --> 01:03:43,727
And to me, that's the bigger risk. Yeah, that makes sense. Okay, so on to the last of the three

807
01:03:43,727 --> 01:03:49,848
Treasury companies, they've had a brutal time in the back half of this year. Like everything is

808
01:03:49,848 --> 01:03:54,808
down close to 1XM now or below pretty much across the board. What do you think they look like in

809
01:03:54,808 --> 01:04:01,788
2026? I think some of them are not going to survive. I think the bigger ones will do well.

810
01:04:02,867 --> 01:04:08,727
Now, the attractiveness from an investor standpoint of a treasury company,

811
01:04:09,387 --> 01:04:12,948
let's be very clear and honest about it, is that it can outpace Bitcoin.

812
01:04:13,848 --> 01:04:15,387
Yep. Leverage play on Bitcoin.

813
01:04:16,168 --> 01:04:24,328
Yeah, it's a leverage play on Bitcoin. So the question is, how can you, from a shareholder,

814
01:04:24,328 --> 01:04:32,907
or a common share standpoint, how can you outpace Bitcoin if your sole, how do I phrase this? If

815
01:04:32,907 --> 01:04:41,268
your primary way of securing more Bitcoin is to dilute your common shares, okay? That is, to me,

816
01:04:41,268 --> 01:04:50,008
that's an irreconcilable issue. If you want people to invest in your company and the thesis is that

817
01:04:50,008 --> 01:04:54,867
your company is going to outperform Bitcoin. And that comes into question because you're doing a

818
01:04:54,867 --> 01:05:00,367
lot of dilution of the common. I think investors throw up their hand and say, I'm not going to be

819
01:05:00,367 --> 01:05:06,048
holding the bag while you dilute me year after year or month after month. So if you can figure

820
01:05:06,048 --> 01:05:13,448
out how to be able to secure more Bitcoin without diluting common, that's going to be a killer

821
01:05:13,448 --> 01:05:18,468
application. And to me, I think there are ways to do that. I think they're exploring, they're

822
01:05:18,468 --> 01:05:23,087
experimenting. I would not write any of them off at all at this point. But I do think the smaller

823
01:05:23,087 --> 01:05:27,367
ones, the ones that were on the hype train, they caught in sort of late, as you always do, you know,

824
01:05:27,387 --> 01:05:31,788
in these sort of frenzies. I think many of them will be folding up shop into 2026.

825
01:05:32,668 --> 01:05:36,528
So this is something I completely agree with. Like, I think the idea of just selling common

826
01:05:36,528 --> 01:05:41,607
stock to buy more Bitcoin is probably already over as a game plan for these treasury companies.

827
01:05:41,808 --> 01:05:45,948
I think strategy launching the preferreds was like the end of that. Suddenly there's something

828
01:05:45,948 --> 01:05:49,568
much more interesting in the market. And I don't understand how they can survive just doing that

829
01:05:49,568 --> 01:05:53,948
same thing. And issuing preferred isn't necessarily an easy thing to do. It's not something everyone's

830
01:05:53,948 --> 01:05:58,607
going to be able to do, especially at favorable terms to what strategy you can do being 10 times

831
01:05:58,607 --> 01:06:05,028
the size of more. So when you say they're going to shut up shop, what does that mean? Is this like

832
01:06:05,028 --> 01:06:09,148
acquisitions and mergers amongst these companies? Or do you think they're going to just sell Bitcoin?

833
01:06:09,848 --> 01:06:14,107
No, I think it's far more of the latter. I think there are going to be a cannibalization,

834
01:06:14,107 --> 01:06:19,988
consolidation um you know i i don't imagine they're just gonna you know dump the whole

835
01:06:19,988 --> 01:06:25,348
pile of bitcoin some of them may go private um i know one that is considering that um so

836
01:06:25,348 --> 01:06:29,768
that's generally it's not going to be any one size thing it's going to be case by case basis

837
01:06:29,768 --> 01:06:35,168
is there really a product fit and to me there was a flurry of them that launched and i think it's

838
01:06:35,168 --> 01:06:39,948
just got excessive yeah that's that'll be really interesting to watch because like the challenge

839
01:06:39,948 --> 01:06:45,768
for any of the very big treasury companies that aren't strategy is how do you catch strategy?

840
01:06:46,387 --> 01:06:50,067
And I guess like acquisitions when you can essentially buy Bitcoin at a discount if they're

841
01:06:50,067 --> 01:06:53,748
trading under 1XM NAV is potentially the easiest way to do that.

842
01:06:53,887 --> 01:06:56,328
Yes. Yep. That's exactly it.

843
01:06:56,528 --> 01:07:01,748
Like my take on that would be, I don't think regardless anyone's going to get close to

844
01:07:01,748 --> 01:07:06,188
strategy. Do you think that we may see one, you know, approach that kind of size?

845
01:07:06,188 --> 01:07:25,328
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.

846
01:07:25,328 --> 01:07:37,968
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.

847
01:07:38,207 --> 01:07:40,468
In some ways, it's kind of like an altcoin, right?

848
01:07:40,528 --> 01:07:49,207
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.

849
01:07:49,207 --> 01:07:57,587
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.

850
01:07:58,248 --> 01:08:01,207
You know, explain what is the differentiating factor?

851
01:08:01,848 --> 01:08:05,508
Buying Bitcoin alone doesn't make a whole lot of sense.

852
01:08:05,648 --> 01:08:11,387
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.

853
01:08:11,387 --> 01:08:15,768
Yeah. One thing that I will be willing to stick my neck on the line on in terms of predictions,

854
01:08:15,907 --> 01:08:20,607
2026 is I think we'll have less treasury companies this time next year than we do today.

855
01:08:21,167 --> 01:08:26,268
Yeah, I think that's right. But, but I also don't think all going, they're all going away. I mean,

856
01:08:26,328 --> 01:08:30,808
I think there'll be, there will be treasury companies. Some will survive, we'll get bigger,

857
01:08:31,007 --> 01:08:35,148
some will do well. And, you know, again, if you have a very, you got to remember, like

858
01:08:35,148 --> 01:08:42,468
when you have a bull market, people's reaction to everything changes. Like when Bitcoin is at

859
01:08:42,468 --> 01:08:47,848
150K by the middle of the year, just hypothetically with me, I could see companies coming out with

860
01:08:47,848 --> 01:08:53,248
treasury strategy and trying it again a different way in the middle part of next year. New treasury

861
01:08:53,248 --> 01:08:58,567
companies we haven't even thought of if Bitcoin is truly, you know, ripping higher. The Bitcoin

862
01:08:58,567 --> 01:09:04,547
bull market drives all this sort of fervor and leverage bets and everything else. It's sort of,

863
01:09:04,547 --> 01:09:10,248
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

864
01:09:10,248 --> 01:09:17,627
the bitcoin price going higher yeah i i totally agree with that um okay my next this is like the

865
01:09:17,627 --> 01:09:24,167
big question i have in my head at the moment which is this year i think and hodl actually said this

866
01:09:24,167 --> 01:09:28,027
to me on a previous show he was saying that bitcoin's not been volatile enough for people

867
01:09:28,027 --> 01:09:32,828
and so that's led people to buying treasury companies going into ai stocks instead of bitcoin

868
01:09:32,828 --> 01:09:37,768
um gold all these different things like there's money going elsewhere and bitcoin's not really

869
01:09:37,768 --> 01:09:43,607
had any kind of FOMO around it is there a reason that you think 2026 could be different and bitcoin

870
01:09:43,607 --> 01:09:48,627
can actually outperform things like ai stocks and gold and all these other markets that have done so

871
01:09:48,627 --> 01:09:54,487
well in 2025 i mean there's many reasons why i think that could occur but um i'll give you a few

872
01:09:54,487 --> 01:10:01,447
i mean the destruction of the halving cycle as a narrative i think is a is a prerequisite for us

873
01:10:01,447 --> 01:10:03,067
to have a very powerful bull market.

874
01:10:03,587 --> 01:10:06,408
And the reason for that is that if you believe

875
01:10:06,408 --> 01:10:08,468
that all you need to do in this asset

876
01:10:08,468 --> 01:10:10,067
is to sell it every four years,

877
01:10:10,547 --> 01:10:11,768
like just think about this logically.

878
01:10:12,007 --> 01:10:13,947
I know we cover this, but I just want to,

879
01:10:14,708 --> 01:10:17,768
it makes no sense to hold Bitcoin for the longterm.

880
01:10:18,148 --> 01:10:22,227
If you think we are determined to have four year repeatable,

881
01:10:22,227 --> 01:10:25,388
just look at the calendar, circle November 15th

882
01:10:25,388 --> 01:10:27,627
or October 6th and just sell it

883
01:10:27,627 --> 01:10:28,928
X amount of days after the halving.

884
01:10:29,007 --> 01:10:30,067
That's all you need to do.

885
01:10:30,067 --> 01:10:32,947
because it's, I mean, I had a guy telling me it's programmed.

886
01:10:33,087 --> 01:10:35,388
Satoshi programmed it for Bitcoin to rise and fall.

887
01:10:35,928 --> 01:10:38,368
I think it's a bunch of nonsense,

888
01:10:38,368 --> 01:10:40,227
but just imagine that it was only the case.

889
01:10:40,627 --> 01:10:42,487
Why would anyone have a long-term investment in Bitcoin?

890
01:10:43,188 --> 01:10:44,047
Just trade it.

891
01:10:44,788 --> 01:10:45,848
It's a tradable asset.

892
01:10:46,348 --> 01:10:48,788
But of course, we don't look at stocks like that.

893
01:10:49,428 --> 01:10:51,148
People, I mean, I don't, I don't,

894
01:10:51,248 --> 01:10:53,388
I'm not a huge fan of bonds or fixed income,

895
01:10:53,447 --> 01:10:55,348
but you don't look at bonds or fixed income like that.

896
01:10:55,388 --> 01:10:57,648
You look at for stability, predictability.

897
01:10:57,648 --> 01:11:02,587
you buy it because it has liquidity and uh and you could sell it very easily if you need to

898
01:11:02,587 --> 01:11:07,727
um same thing with stocks right they're they're liquid they've got cash flows you're not trying

899
01:11:07,727 --> 01:11:13,087
to time economic cycles you're buying good solid companies or an index for the long run you just

900
01:11:13,087 --> 01:11:17,388
buy and hold forever right as the the equity get people say they don't they don't say oh we're

901
01:11:17,388 --> 01:11:22,667
going to time it so we sell the top but in bitcoin you have this this degen culture right

902
01:11:22,667 --> 01:11:28,688
where what does it do? It levers up in certain years, and then it tries to time this whole

903
01:11:28,688 --> 01:11:32,908
exercise in a big game of chicken with everybody else in the marketplace and trying to get it right.

904
01:11:33,428 --> 01:11:39,268
That is, in my view, it's a headwind for institutional adoption. Institutions do not

905
01:11:39,268 --> 01:11:45,328
want to buy an asset that's going to fall 80, 70 percent. They'll buy assets that have a very

906
01:11:45,328 --> 01:11:50,607
violent upside, or they'll buy assets that just trend sideways and chop and consolidate, which,

907
01:11:50,607 --> 01:11:55,468
by the way, I think that's the new norm for Bitcoin. Like I think my, my new norm is what

908
01:11:55,468 --> 01:12:00,788
we saw in 2024. And we talked about this in the last podcast where you see Bitcoin trade in a range

909
01:12:00,788 --> 01:12:05,348
for like six months, like post ETF launch. And then we rip higher to a new level and then you

910
01:12:05,348 --> 01:12:11,587
trade in a range, you know, say 90, 80, you know, a hundred K for a range, then you rip higher,

911
01:12:11,727 --> 01:12:16,167
you bake, you make that floor. And there are a lot of commodities that trade in similar ways.

912
01:12:16,248 --> 01:12:19,468
They, they just sort of chop around and consolidate for a long time. Then they rip higher.

913
01:12:19,468 --> 01:12:30,868
I mean, gold fell. It had a decline after the 2009 bull run, right? And then it chopped around

914
01:12:30,868 --> 01:12:35,487
for years in a range. And now it's having this epic bull run, right? One of the best bull runs

915
01:12:35,487 --> 01:12:41,547
in gold's history in the modern era. And at some point, what will happen is gold's not going to,

916
01:12:41,648 --> 01:12:46,808
I don't think gold's going to crash back down to like 900 bucks an ounce or something. I think

917
01:12:46,808 --> 01:12:51,328
likely happen is it's going to find a range where it's going to consolidate where suppliers and

918
01:12:51,328 --> 01:12:55,828
demand meet. And it just, you know, stays there for two, three years and then takes another leg

919
01:12:55,828 --> 01:13:02,208
higher. If Bitcoin were to do that, that would be extremely bullish for long-term investors. It

920
01:13:02,208 --> 01:13:06,947
would be bullish for the institutions looking at it. So I think that volatility is going to pick up.

921
01:13:07,047 --> 01:13:11,828
But other issues that I think could be volatility catalysts in the coming year is that if you see

922
01:13:11,828 --> 01:13:18,188
a real dynamic economy start to hold and take hold and the Trump administration's policies

923
01:13:18,188 --> 01:13:23,688
really start to help in middle America. If you were to see that, I think you make a case that

924
01:13:23,688 --> 01:13:27,127
Bitcoin is going to respond to that and the equity market is going to respond to that and you're

925
01:13:27,127 --> 01:13:33,188
going to have a very bullish move. I mean, there were periods in the 1950s, I just bring this up

926
01:13:33,188 --> 01:13:37,848
in the equity market, somebody was saying, well, there's never been, you know, X amount of years

927
01:13:37,848 --> 01:13:39,968
where we've had positive equity returns

928
01:13:39,968 --> 01:13:41,288
three or four years in a row.

929
01:13:41,627 --> 01:13:42,468
That's nonsense.

930
01:13:42,627 --> 01:13:43,888
There were periods in the 1950s

931
01:13:43,888 --> 01:13:46,227
where we had back to back to back to back

932
01:13:46,227 --> 01:13:48,788
double digit gains on stocks, okay?

933
01:13:49,188 --> 01:13:53,007
So like an economic cycle does not die of old age.

934
01:13:53,487 --> 01:13:56,388
It usually takes some exogenous shock, Danny,

935
01:13:56,388 --> 01:13:59,567
to the market that pulls it off the rails

936
01:13:59,567 --> 01:14:01,067
and then everything goes to hell

937
01:14:01,067 --> 01:14:03,768
and they have to reignite the bubble or whatever it is.

938
01:14:04,388 --> 01:14:06,067
But it's not something where like we just,

939
01:14:06,067 --> 01:14:11,188
because we've had three or four great years that suddenly all investments have to tank in 2026. I

940
01:14:11,188 --> 01:14:15,808
don't believe that. I love it. So your base case, I think when we were speaking in Vegas back in

941
01:14:15,808 --> 01:14:19,987
April, you said you think this is just like a stair-step grind to a million dollars. Is that

942
01:14:19,987 --> 01:14:27,868
still your take? Yeah. And again, it may take longer than a lot of people like, okay? But

943
01:14:27,868 --> 01:14:32,947
I think Bitcoin can still, on its current pace, reach a million dollars in the next five years.

944
01:14:32,947 --> 01:14:34,268
I don't think that's crazy at all.

945
01:14:35,227 --> 01:14:38,607
I think that that's probably not my base case.

946
01:14:39,148 --> 01:14:49,348
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.

947
01:14:49,527 --> 01:14:50,188
That's bearish.

948
01:14:50,328 --> 01:14:52,648
I mean, two to three times higher than that.

949
01:14:53,087 --> 01:14:54,368
It's a massive move, right?

950
01:14:54,428 --> 01:15:01,368
Like, I don't know, like find something to channel your productive enterprise towards as, you know, not staring at a chart all day.

951
01:15:01,368 --> 01:15:06,288
that would be an incredible move because I don't think equities are going to do to two to three X

952
01:15:06,288 --> 01:15:13,027
in the next five years. I love it. You know, that's just my view. Well, Joe, this has been

953
01:15:13,027 --> 01:15:16,688
awesome. Thank you for doing this. You really are one of my favorite people that I have on the show.

954
01:15:16,688 --> 01:15:21,227
I don't know when I'll see you next, but I'll definitely be in Vegas again. Maybe we should

955
01:15:21,227 --> 01:15:24,008
do another in-person one there. We should absolutely do another one. That's always fun.

956
01:15:24,107 --> 01:15:31,328
It's a good dynamic. And I did enjoy the one we did with Matt Pines and Checkmate earlier

957
01:15:31,328 --> 01:15:35,067
in the year. That was fun too. When you have back and forth, those are great as well.

958
01:15:35,667 --> 01:15:40,288
Yeah. Maybe we need to set up another round table. I think Pines is on a hiatus from podcast,

959
01:15:40,428 --> 01:15:44,648
but we can find someone to fill his seat. Yeah. Well, I hope everybody has a Merry Christmas.

960
01:15:45,248 --> 01:15:51,087
You'll probably be hearing this after Christmas, but definitely excitement and don't let the bears

961
01:15:51,087 --> 01:15:56,567
and the negativity grind you down. I mean, there's a lot to be excited about. And I think that if

962
01:15:56,567 --> 01:16:01,268
you're in Bitcoin now, there's still plenty of things that I think are on the horizon that could

963
01:16:01,268 --> 01:16:05,888
be really positive. And they generally are all adjacent to Bitcoin, but that doesn't mean they

964
01:16:05,888 --> 01:16:11,607
don't affect Bitcoin in indirect ways. Yeah, I think this is the last show that I'm recording

965
01:16:11,607 --> 01:16:16,447
now before Christmas. A great bullish way to finish it. Thank you, Joe. This is awesome.

966
01:16:17,248 --> 01:16:17,527
Cheers.

967
01:16:31,268 --> 01:17:01,248
Thank you.