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I don't think we'll have these blow-off tops anymore, but that goes hand-in-hand with I don't

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think we're going to get a 75% drawdown. I would give myself like 95% confidence that the bottom

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is in, in terms of price. I do think we could stay at this range for another three to six months

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potentially, but I seriously doubt we get a 75% drop. I track 55 high-flying AI-related stocks.

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When I look at that in the last month, most of them are in the red.

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Year to date, though, they're still in the black big time.

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So like they're still up a lot.

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So if more start to pull back in Q4 and then at the same time, Bitcoin chart looks favorable

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for calendar reasons, and then Bitcoin starting to go from 65 to 70 to 80, I think that could

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cause the capital rotation back.

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That's that's kind of my base case.

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Does it have to happen in Q4?

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Doesn't have to.

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Maybe it takes till Q1 or something, but that's that's what I think is going to happen.

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Mitchell and John, how are you doing, guys?

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Doing good, man. Happy to be here.

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Excellent.

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Good stuff. First time you've been on the show.

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First time. First time, long time, as they say.

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I'm excited. I think three things have happened in the last few days

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that make me think the bottom might be in.

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Satsuma, do you see what happened with them?

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They've sold all their Bitcoin.

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Yeah.

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See, SmartWeb has started selling Bitcoin.

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BitMEX has closed down.

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Like, these all feel like bottom signals.

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Yeah.

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What do you reckon?

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Yeah, I think in terms of like their impact on the Bitcoin price,

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it's going to be probably pretty negligible, right?

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They've got like 600 Bitcoin.

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Yeah.

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But these are, like you said, are the things you would expect to see at a bottom.

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And it makes sense because they're trading at, I don't know the exact number,

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but pretty big discount to the actual value of their Bitcoin holdings.

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Yeah.

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And I don't think they have any other business.

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So it's like, why not just sell the Bitcoin and give that capital to the shareholders?

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Yeah, I think it's a good thing for Bitcoin.

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Yeah.

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We need this capitulation.

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Then we can move forward.

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Like, we need to kind of weed out

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the companies that aren't really

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strong enough to be here.

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Yeah.

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I think it's good.

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So by not strong enough,

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would you say that like

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any public Bitcoin company,

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they need to have a core business?

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They need to have cash flow?

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I don't know if it's...

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I don't know if I'd go that far.

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Like, I'm yet to see on that one.

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It depends.

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Like, do you think strategy

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has a core business?

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I don't think selling STRC

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and like giving yourself liabilities

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is a core business.

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They still have the legacy software business.

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So I would say yes.

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Because people frame STRCL, this is a product.

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It's just taking on incremental liability.

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And I also think people overstate the actual potential of it.

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They frame it as this vehicle that's going to be the plumbing that brings capital from the bond market to Bitcoin.

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Do you guys know the actual market cap of all the preferred equities in the world?

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No idea. Not big. It's smaller than Bitcoin. It's like 1.2, 1.3 trillion. And so you can call

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STRC digital credit, but it is in this very narrow niche of preferred stock. So I think even if STRC

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gets back to $100 a share and it makes sense for them to sell more, there's a finite amount of

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capital they could actually pull into Bitcoin through that vehicle. And so I think the true

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rendition of like digital credit or Bitcoin backed bonds is going to look a lot different

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than what we see with STRC. So I don't really think it's like a core business or product per se.

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The reason I asked that question, like, do you think they have a core business is like,

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obviously they have the software company, but it seems irrelevant to me at least. I'm going to left

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curve it and say it seems irrelevant and they don't have like necessarily the core business.

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And I think they're going to be totally fine. I think Bitcoin will get them out of this hole

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are in. I think I'm sure stretch will go back to par. I think maybe it's been a good wake up for

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the market to see what can happen. But I don't think strategy are in any kind of danger.

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No, no, I don't think so. But I do think the common shareholders, there's some red flags that

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have been raised with basically they're trying to serve two masters at once. When they created

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STRC a year ago, it's like, oh, this will give us a vehicle to raise capital when the MNAV is low

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and when we're in a bear market.

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But now you're seeing the opposite.

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You're seeing them issue common stock to support STRC.

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They're trying to kind of serve two different agendas.

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Yeah, they're fiat maxing right now.

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Yeah.

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I think they're figuring out things as time goes on.

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I'm also in the left curve camp on this one.

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Like, they'll be fine in the long term.

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I think when times are good,

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people are like bowing down to Saylor

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like he's a mega genius.

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And then when times are bad,

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some people are like, he's a scammer.

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He should be in prison.

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and it's like both of those takes are too extreme.

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I also believe that they're playing the long game.

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I agreed that preferred stock,

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you can't really make the case of like,

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we're going to have preferred stock,

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even if they get it investment grade rated.

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You can't be like, oh, that's tapping into like

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trillions and trillions and trillions.

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You can't make that case of capital.

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But I think they're playing the long game.

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I think they trying to check the boxes for S which is one of the biggest rating agencies then they can potentially get an investment grade rating Then I think years down the road they might try to issue not

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preferred stock, but just regular investment grade unsecured debt. And then that market

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is actually massive. That may seem like a pipe dream right now for just a Bitcoin treasury company

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to issue unsecured debt. Like the biggest companies you can think of, they issue unsecured debt.

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but MicroStrategy might try to get there at some point.

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And then that would actually be a huge pool of capital.

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But yeah, I think the take is like,

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things are not going to get back to 2x MNAV, 3x MNAV.

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I think those days are over.

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Totally agree.

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Could they have a 1.1, 1.2 MNAV,

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maybe gets like approaches 1.5

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if like Bitcoin is just going ridiculously higher

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in a raging bull market?

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I could see that happening.

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but sustained super high MNabs probably over the days of like,

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we're going to have 50 treasury companies over.

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I know you've had guests on your show who pointed that out

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and they were correct early on.

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They were like, look, I just don't think anyone cares

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about the 18th biggest treasury company.

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And I think that's been proven correct.

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So I get a load of people shouting at me in the comments

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who obviously are still big fans of the treasury company stuff

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who think that MNAS can go above like 2 again.

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I can't see that happening.

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Like it doesn't seem like it's on the cards,

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but what is the exact reason

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you don't think it'll go really above 1.5

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even in a bull market?

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I feel like people,

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it was a novelty a couple of years ago.

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And it was like,

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it's almost like two novelties combined.

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It's like Bitcoin's kind of a novelty,

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even though obviously it's been around 17 years,

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but like in the grand scheme of things,

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it's still a novelty.

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and then to have a Bitcoin treasury company wrapper was a novelty.

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And people didn't really know what's the right comp.

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And people also thought that Bitcoin was just going way higher.

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And I think markets can be irrational in a short period of time,

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measured in like 3 to 12 months.

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So maybe, I mean, just imagine the most bullish Bitcoin announcement possible.

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It's like the government says Bitcoin is on par with the dollar.

155
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and the government owns 500,000 Bitcoin

156
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and they're going to stack another 500,000 Bitcoin.

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They announced that all at once, right?

158
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Could MNav go to some ridiculous number?

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Sure, why not?

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But I still wouldn't think that would be sustained

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over a multi-year timeframe.

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Yeah, I think one of the things

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that completely wrecked people the last cycle

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is I know quite a few people

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that were taking out Bitcoin-backed loans

166
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to go and buy treasury companies

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because they thought they were going to be

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a leverage play on Bitcoin.

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And Bitcoin-backed loans are great,

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But you have to be really careful what you do with them.

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I think that's going to have hit a lot of people.

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Yeah.

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I think there's more effective ways to get that leveraged Bitcoin exposure now

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without taking on the corporate treasury counterparty risk.

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Because if you wanted to amplify your Bitcoin returns now,

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probably no financial advice,

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but this would be a good time to take out a Bitcoin-backed loan,

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buy some more Bitcoin or buy Ibit options.

179
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and then you don't have the risk of excessive dilution

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just to try to outperform Bitcoin on a short term.

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Yeah. So, I mean, I agree.

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Taking out a Bitcoin back loan at $65K or whatever we're at

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is much better than $125K.

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Do you think we're at the bottom?

185
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Yeah, I think it's highly likely.

186
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I think $60K was a double bottom.

187
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We got a bunch of charts we put together we can look at

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that kind of show if this isn't the bottom, we're close.

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Yeah.

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And we had two rounds of major FUD

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and sentiment isn't like a perfect indicator.

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But in February, when we hit 60K,

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it was like Epstein Pedocoin.

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And then in June, July, when we hit 60K again,

195
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it was like Michael Saylor's going to capitulate

196
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and sell all his Bitcoin.

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Neither of which are true,

198
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but just off of those vibes,

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they give strong bottom vibes to me.

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If you hold Bitcoin long enough,

201
00:09:17,163 --> 00:09:18,843
there's going to come a time when you need some dollars.

202
00:09:19,103 --> 00:09:20,983
It might be a tax bill, a business expense,

203
00:09:21,243 --> 00:09:22,083
life getting in the way,

204
00:09:22,083 --> 00:09:23,203
but whatever it is,

205
00:09:23,203 --> 00:09:27,083
it might come at a time when you don't want to sell your Bitcoin. That's where Ledin comes in.

206
00:09:27,443 --> 00:09:31,843
Ledin lets you borrow against your Bitcoin instead with tiered rates that go as low as 9.25%.

207
00:09:31,843 --> 00:09:36,683
So you don't have to sell your stack if you don't want to. Ledin have operated through every market

208
00:09:36,683 --> 00:09:41,803
cycle since 2018 and have originated over $11 billion in loans. But the important part for me

209
00:09:41,803 --> 00:09:45,443
is the way Ledin handles these loans. Your collateral is held in custody and never lent

210
00:09:45,443 --> 00:09:51,003
out to generate interest. And Ledin's more than just loans. Tether Gold is now live alongside

211
00:09:51,003 --> 00:09:55,243
your Bitcoin with instant trading across 10 pairs. And later this year, you'll be able to

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00:09:55,243 --> 00:09:59,863
borrow against gold in the same way that you do with Bitcoin. Ledin really is an awesome company.

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00:10:00,043 --> 00:10:03,983
I've used them multiple times. The applications have taken you less than 15 minutes and you have

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00:10:03,983 --> 00:10:09,903
the dollars in your account within hours. If you want to check out Ledin, go to ledn.io and use the

215
00:10:09,903 --> 00:10:17,383
code WBD for 0.25% off your first loan. That's ledn.io and use the code WBD. If you own a Bitcoin

216
00:10:17,383 --> 00:10:36,306
ETF especially if it GBTC you need to listen up Spot Bitcoin ETFs provide price exposure to Bitcoin not direct ownership You can withdraw it you can self it and they charge you a management fee every year to hold it well swan recently announced swan real bitcoin exchange and it ready to use right now rbx is

217
00:10:36,306 --> 00:10:41,406
a structured in-kind exchange that converts your spot bitcoin etf shares into real on-chain bitcoin

218
00:10:41,406 --> 00:10:45,506
it does that without selling on the open market and it's designed to support a tax efficient

219
00:10:45,506 --> 00:10:51,086
outcome. So for example, if you hold GBTC, you're paying 1.5% a year in management fees for Bitcoin

220
00:10:51,086 --> 00:10:56,546
price exposure. But by swapping GBTC for real Bitcoin with RBX, you can drop that figure as

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00:10:56,546 --> 00:11:01,926
low as 0% by just holding it in self-custody. This is designed in a way that maintains your

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00:11:01,926 --> 00:11:06,566
cost basis and in a manner that supports the deferral of capital gains tax. So if you own a

223
00:11:06,566 --> 00:11:13,086
Bitcoin ETF, especially if it's GBTC, you need to talk to Swan Private about RBX today. Head over

224
00:11:13,086 --> 00:11:16,726
Go to swan.com forward slash WBD and booking a call with one of their team.

225
00:11:17,166 --> 00:11:20,366
That's swan.com forward slash WBD.

226
00:11:20,766 --> 00:11:23,746
If you're already self-custody Bitcoin, you know the deal with hardware wallets,

227
00:11:23,986 --> 00:11:28,366
complex setups, clumsy interfaces, and a seed phrase that can be lost, stolen, or forgotten.

228
00:11:29,086 --> 00:11:29,986
BitKey fixes that.

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00:11:30,626 --> 00:11:32,546
BitKey's self-custody built for real life.

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00:11:32,546 --> 00:11:36,286
It gives you an intuitive, easy-to-use wallet with no seed phrase to sweat over.

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00:11:36,566 --> 00:11:40,266
And it has a strong recovery system and built-in inheritance for long-term peace of mind.

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00:11:40,986 --> 00:11:42,406
And BitKey's just had a massive upgrade.

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00:11:42,406 --> 00:11:44,086
The new device now has a screen.

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00:11:44,346 --> 00:11:47,246
So before you approve something, you can check it on the BitKey itself.

235
00:11:47,726 --> 00:11:50,146
The transaction, the address, or any account changes.

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00:11:50,626 --> 00:11:51,486
It's a big difference.

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You're not just trusting what's on your phone.

238
00:11:53,226 --> 00:11:54,986
You're seeing it for yourself on the device.

239
00:11:55,546 --> 00:11:58,306
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240
00:11:58,946 --> 00:12:03,286
Go to bitkey.world today and use the code WBD to get 10% off the new BitKey.

241
00:12:03,726 --> 00:12:06,886
That's bitkey.world and use the code WBD.

242
00:12:07,786 --> 00:12:11,006
Yeah, so we kind of start the first chart.

243
00:12:11,006 --> 00:12:14,086
I think it's obviously a meme like Global M2 and Bitcoin.

244
00:12:14,406 --> 00:12:18,006
But there is extreme disconnect over the past 12 months.

245
00:12:18,006 --> 00:12:23,386
And I think it's important context that explains a lot of why Bitcoin actually went down.

246
00:12:23,526 --> 00:12:28,926
Because historically, it was like Lynn Alden calls it, kind of the sponge of global liquidity.

247
00:12:29,886 --> 00:12:31,446
It was that for a long time.

248
00:12:31,506 --> 00:12:33,146
The correlation was tit for tat.

249
00:12:33,486 --> 00:12:36,846
And then over the past 12 months, there's been this extreme disconnect.

250
00:12:37,066 --> 00:12:38,686
Global M2 is making all-time highs.

251
00:12:39,226 --> 00:12:40,106
Bitcoin's down 50%.

252
00:12:40,106 --> 00:12:43,906
And, you know, we can elaborate on these next few charts.

253
00:12:44,106 --> 00:12:49,386
But the simple matter of the fact is AI stuck all the risk on liquidity out of the market.

254
00:12:49,566 --> 00:12:53,606
So there's an abundance of evidence that shows all that liquidity just went into AI.

255
00:12:53,746 --> 00:12:58,646
But I think at some point that liquidity is going to have to find something to rotate back into.

256
00:12:59,086 --> 00:13:02,426
I think Bitcoin's kind of sitting in a prime position to absorb all that.

257
00:13:02,606 --> 00:13:03,146
I totally agree.

258
00:13:03,206 --> 00:13:06,486
The interesting thing here is, so before 2013, like we were way below.

259
00:13:06,486 --> 00:13:09,866
But I think you can discount that because Bitcoin wasn't, we didn't really know what Bitcoin was then.

260
00:13:10,106 --> 00:13:16,466
And since then, the only times it's really deviated from that trend is the peak in 2017, which again makes sense.

261
00:13:16,526 --> 00:13:17,686
That was like pure euphoria.

262
00:13:18,406 --> 00:13:20,426
And it's been very close apart from that.

263
00:13:20,986 --> 00:13:23,886
And this is the first time it's really deviated to the downside.

264
00:13:24,366 --> 00:13:25,586
I think you're so right, though.

265
00:13:25,606 --> 00:13:32,606
I think when this AI trade rolls over to some degree, I think if you have a lot of money in that AI trade, where else are you looking?

266
00:13:32,606 --> 00:13:36,926
Like the rest of the equity market is not exactly doing great outside of the AI stocks.

267
00:13:37,566 --> 00:13:39,046
Bonds not going to be the spot.

268
00:13:39,166 --> 00:13:39,986
Like where else do you go?

269
00:13:39,986 --> 00:13:42,546
So like gold and Bitcoin, I think, are going to really benefit from that.

270
00:13:42,626 --> 00:13:45,286
Yeah, and gold already kind of had a frothy run earlier this year.

271
00:13:45,426 --> 00:13:47,586
So even more so pointing towards Bitcoin.

272
00:13:47,946 --> 00:13:49,946
So you think the tide's about to turn here?

273
00:13:50,326 --> 00:13:53,486
I think before the end of the year, we'll start to see a shift.

274
00:13:53,646 --> 00:13:57,886
And I think Bitcoin will be potentially back over 100K this time next year.

275
00:13:58,126 --> 00:14:00,086
Because that's just so much liquidity.

276
00:14:00,326 --> 00:14:05,006
I mean, it's over, I think Global M2 is over like $110 trillion, something ridiculous.

277
00:14:05,246 --> 00:14:07,466
I mean, that's a lot of capital in the market.

278
00:14:07,466 --> 00:14:10,426
John, for anyone who doesn't even know what M2 is, do you want to explain it a little bit?

279
00:14:10,826 --> 00:14:18,266
Yeah, M2, you could think of it as like a broad measure of money supply. I don't recall exactly

280
00:14:18,266 --> 00:14:22,986
what's in it offhand, but it's like, it's going to look at many different measures of money.

281
00:14:23,366 --> 00:14:29,686
As the name implies, there's M1, M2, there's like different levels. But M2, and this is global M2,

282
00:14:29,786 --> 00:14:35,766
so this is meant to look at like liquidity, really. And this affects all different types

283
00:14:35,766 --> 00:14:40,966
of assets. This typically affects inflation. There's some linkage between M2 and inflation.

284
00:14:41,426 --> 00:14:47,386
What the Fed is doing affects M2. What banks are doing affects M2. Banks meaning commercial banks,

285
00:14:47,826 --> 00:14:52,346
central banks, commercial banks, and treasuries, meaning like governments, fiscal authorities,

286
00:14:52,526 --> 00:14:58,366
that's all going to feed into M2. Agreed that it's kind of shocking to see that it's the first

287
00:14:58,366 --> 00:15:04,446
time it disconnected a downside. And what I find is interesting is that even in prior bear markets

288
00:15:04,446 --> 00:15:05,146
for Bitcoin.

289
00:15:05,626 --> 00:15:06,926
There wasn't like,

290
00:15:06,926 --> 00:15:07,206
like,

291
00:15:07,326 --> 00:15:08,646
let's just look at 2022.

292
00:15:09,506 --> 00:15:11,246
And this underscores the point

293
00:15:11,246 --> 00:15:12,466
that I think 2022

294
00:15:12,466 --> 00:15:14,486
was way more explainable.

295
00:15:14,646 --> 00:15:15,006
Yeah.

296
00:15:15,026 --> 00:15:16,006
When we're looking at each other

297
00:15:16,006 --> 00:15:17,746
and Bitcoin's down 75%,

298
00:15:17,746 --> 00:15:18,466
peak to trough.

299
00:15:18,646 --> 00:15:19,426
We're like,

300
00:15:19,786 --> 00:15:20,046
okay,

301
00:15:20,146 --> 00:15:20,866
M2 is,

302
00:15:20,946 --> 00:15:21,646
is down,

303
00:15:21,846 --> 00:15:23,186
which is very rare for M2

304
00:15:23,186 --> 00:15:25,406
to actually be nominally down.

305
00:15:26,006 --> 00:15:26,306
You know,

306
00:15:26,386 --> 00:15:26,806
it's like,

307
00:15:27,106 --> 00:15:28,546
basically goes up and to the right.

308
00:15:29,306 --> 00:15:31,706
2022 was M2 coming nominally down.

309
00:15:32,606 --> 00:15:42,589
The treasury was like pulling back all the COVID era stimulus was being reversed There still deficit spending but they had a massive deficit during COVID

310
00:15:42,749 --> 00:15:43,709
They pulled that back.

311
00:15:44,189 --> 00:15:47,129
Equities were down like 20% at the index level.

312
00:15:47,609 --> 00:15:52,048
The high flying tech stocks were down like 50, like Nvidia was down 50% in 2022.

313
00:15:52,729 --> 00:15:54,349
Inflation was a 40 year high.

314
00:15:54,709 --> 00:15:57,709
The Fed is hiking rates at like the fastest pace ever.

315
00:15:58,229 --> 00:15:58,849
FTX collapses.

316
00:15:58,849 --> 00:16:06,069
FTX. Oh, yeah. All the crypto contagion. The Fed switched from QE to QT. You just looked at that.

317
00:16:06,289 --> 00:16:10,689
And if someone told you in 2021, hey, that list of things we just went through is going to happen

318
00:16:10,689 --> 00:16:16,209
in 2022, we all would have said, oh, Bitcoin is going to get clobbered. And I think this time

319
00:16:16,209 --> 00:16:22,548
around, we could come up with a list. I have like four main things that I think cause this 50% price

320
00:16:22,548 --> 00:16:26,949
decline. But if you would have told me ahead of time that those four things are going to happen,

321
00:16:26,949 --> 00:16:29,949
I would have been like, I'm not sure how Bitcoin is going to do.

322
00:16:30,609 --> 00:16:34,048
So I think this, and granted, it's only a 50% price decline.

323
00:16:34,129 --> 00:16:36,189
So maybe we should be happy about that.

324
00:16:36,829 --> 00:16:39,769
But I think big picture, we're still kind of scratching our heads

325
00:16:39,769 --> 00:16:41,909
because it doesn't feel as explainable.

326
00:16:42,189 --> 00:16:46,048
100%. I've said this on the show before that I think this is why sentiment is so bad

327
00:16:46,048 --> 00:16:47,969
because there's nothing to point to to blame it on.

328
00:16:48,389 --> 00:16:49,489
What are those four things?

329
00:16:50,109 --> 00:16:55,548
So I would say the first one is OG whales, long-term holders selling Bitcoin.

330
00:16:55,548 --> 00:16:57,809
that definitely did happen.

331
00:16:58,548 --> 00:17:00,849
The most clear example of it,

332
00:17:01,269 --> 00:17:02,889
and I'll ask, I know I asked you this,

333
00:17:02,969 --> 00:17:03,428
so I'll ask Danny,

334
00:17:03,509 --> 00:17:06,208
do you remember the Galaxy announcement,

335
00:17:06,429 --> 00:17:07,609
the Galaxy press release?

336
00:17:07,728 --> 00:17:07,909
Yeah.

337
00:17:08,129 --> 00:17:10,208
What month do you think that was offhand?

338
00:17:11,129 --> 00:17:12,689
I genuinely can't remember.

339
00:17:12,769 --> 00:17:13,909
I guess around a year ago.

340
00:17:14,488 --> 00:17:15,409
Okay, very good guess.

341
00:17:15,448 --> 00:17:17,448
It was almost exactly a year ago to the day.

342
00:17:18,789 --> 00:17:21,149
I was like testing myself on that

343
00:17:21,149 --> 00:17:21,968
and I looked back

344
00:17:21,968 --> 00:17:23,789
and I thought it would have been like September,

345
00:17:24,029 --> 00:17:24,869
closer to the peak.

346
00:17:25,549 --> 00:17:27,728
But I looked back and it was July 25th.

347
00:17:27,748 --> 00:17:29,448
So like almost to the day that we're recording.

348
00:17:29,448 --> 00:17:30,549
Because I think we dropped after that

349
00:17:30,549 --> 00:17:32,448
and then pumped again a little bit to 126.

350
00:17:32,549 --> 00:17:32,988
We did.

351
00:17:33,129 --> 00:17:35,829
And the drop was only like a few percent in price.

352
00:17:36,089 --> 00:17:37,708
I remember we was talking about how bullish that was.

353
00:17:37,929 --> 00:17:38,208
Exactly.

354
00:17:38,629 --> 00:17:39,029
Exactly.

355
00:17:39,149 --> 00:17:41,629
We were all like, look, this guy sold 80,000 Bitcoin,

356
00:17:41,988 --> 00:17:43,269
did a press release on it.

357
00:17:43,569 --> 00:17:46,069
And Bitcoin dropped like 3% or something around there.

358
00:17:46,208 --> 00:17:49,208
And we were all like, the liquidity is there.

359
00:17:49,448 --> 00:17:50,689
You know, the buyers are there.

360
00:17:51,208 --> 00:17:52,988
And on-chain metrics were showing

361
00:17:52,988 --> 00:17:54,869
that other large holders were selling.

362
00:17:55,549 --> 00:17:57,169
So that obviously happened.

363
00:17:57,849 --> 00:17:58,809
And you can explain it.

364
00:17:58,849 --> 00:18:00,488
It's like they held for many years.

365
00:18:00,589 --> 00:18:01,629
100K was a milestone.

366
00:18:02,369 --> 00:18:03,708
In the Galaxy case,

367
00:18:03,728 --> 00:18:05,909
they just said it was for estate planning purposes.

368
00:18:06,389 --> 00:18:07,488
Maybe some guy died.

369
00:18:07,728 --> 00:18:09,829
And it was like, the estate's going to sell it.

370
00:18:09,988 --> 00:18:11,948
You know, maybe it wasn't even his own decision.

371
00:18:12,069 --> 00:18:13,129
I'm just speculating there.

372
00:18:13,809 --> 00:18:14,988
So that would be number one.

373
00:18:15,609 --> 00:18:16,988
Kind of number two, but it's related,

374
00:18:17,228 --> 00:18:18,748
is the miners pivoting.

375
00:18:19,228 --> 00:18:22,089
Which this is a trend Mitch has been obviously following

376
00:18:22,089 --> 00:18:22,748
for a long time.

377
00:18:22,748 --> 00:18:24,428
but their large holders,

378
00:18:25,488 --> 00:18:28,029
they've sold a bunch of Bitcoin to pivot into AI.

379
00:18:28,369 --> 00:18:29,649
And I don't think they're coming back

380
00:18:29,649 --> 00:18:32,569
because they're getting paid more for AI, HPC.

381
00:18:33,728 --> 00:18:36,669
Then I think you have to say the four-year cycle,

382
00:18:37,448 --> 00:18:40,049
whether it's real, I put that in quotes,

383
00:18:40,409 --> 00:18:42,589
or if it's just self-fulfilling.

384
00:18:43,109 --> 00:18:45,008
I think people started to look at the calendar and said,

385
00:18:45,428 --> 00:18:48,169
this is when Bitcoin is supposed to go down in October.

386
00:18:48,549 --> 00:18:50,369
I don't like that that's the case.

387
00:18:50,569 --> 00:18:51,789
Yeah, it breaks my brain.

388
00:18:51,789 --> 00:18:52,569
I can't have it.

389
00:18:52,748 --> 00:18:53,928
It doesn't make sense to me.

390
00:18:54,188 --> 00:18:54,389
Yeah.

391
00:18:54,748 --> 00:18:57,248
It depends how you define it, right?

392
00:18:57,309 --> 00:19:01,349
Because Bitcoin made an all-time high prior to the last halving.

393
00:19:01,349 --> 00:19:07,549
To me, that defeats this idea that the halving sparked some major catalyst followed by a pullback.

394
00:19:08,188 --> 00:19:15,029
And then to me, another indicator of the four-year cycle or defining feature is the 75% pullback.

395
00:19:15,309 --> 00:19:21,649
But I think all these treasury companies kind of ate that on the chin, kind of absorbed a lot of that volatility.

396
00:19:21,649 --> 00:19:24,208
And I don't think Bitcoin's going down 75%.

397
00:19:24,208 --> 00:19:28,649
But I do think definitely some kind of self-fulfilling nature to that.

398
00:19:28,929 --> 00:19:33,589
And when you look on chain, you can see basically all the Bitcoin that were held for many years

399
00:19:33,589 --> 00:19:36,029
sold off in Q3, Q4 last year.

400
00:19:36,169 --> 00:19:41,269
So maybe they're anticipating the cycle or maybe that sell pressure causes the cycle.

401
00:19:41,429 --> 00:19:43,708
But the end result is the same.

402
00:19:44,049 --> 00:19:44,149
Yeah.

403
00:19:44,569 --> 00:19:47,169
The bullish selling that we had last year.

404
00:19:47,269 --> 00:19:48,309
That's what we kept calling it.

405
00:19:48,829 --> 00:19:50,968
So what was number four on this list?

406
00:19:50,968 --> 00:20:18,309
So then you have to point to AI. It's like just taking so much investor attention and flows. So I think we're going to look back and we're going to say, it's actually kind of crazy that the four-year cycle believers, and I think there's an interesting thing. There's the people who always believed in the four-year cycle, and they were going to position for that accordingly. And then there's people like myself who I actually did believe that the four-year cycle would be no more.

407
00:20:18,309 --> 00:20:23,849
um mitch has interesting points i think i think you have to say that it's not like every cycle

408
00:20:23,849 --> 00:20:28,389
is exactly the same yeah we should point and say yes this one was a little different in this way

409
00:20:28,389 --> 00:20:35,809
but in terms of just calendar timing like it's it's kind of uncanny how ridiculous it was time

410
00:20:35,809 --> 00:20:40,629
between havings when we peaked in october so there's people who always believe that again i

411
00:20:40,629 --> 00:20:45,549
was not in that camp but having seen the price action since october even i'm like kind of throwing

412
00:20:45,549 --> 00:20:48,849
my hands up and being like, okay, this is a thing to some extent.

413
00:20:49,448 --> 00:20:49,869
Um,

414
00:20:50,011 --> 00:20:55,271
And then that becomes a little self-fulfilling because the people who didn't believe in it are like, oh, wait, it is a thing.

415
00:20:56,011 --> 00:21:03,371
And then they're going to kind of sit on their hands because they're like, oh, if it's a thing, that means I have to wait until Q4 of this year.

416
00:21:03,371 --> 00:21:05,431
And that's when the chart starts to look good.

417
00:21:05,551 --> 00:21:07,091
And that's when things turn around.

418
00:21:07,591 --> 00:21:14,351
So I think we're going to look back in Bitcoin history and be like, those were actually two very negative catalysts.

419
00:21:14,351 --> 00:21:17,831
It was at the same time that the calendar turned negative for Bitcoin.

420
00:21:18,531 --> 00:21:24,811
AI was like, everyone started to love AI and pick your favorite AI stock.

421
00:21:24,871 --> 00:21:29,031
But some of these are up like 3x, 5x, 10x, even more.

422
00:21:29,631 --> 00:21:31,111
So it's like that.

423
00:21:31,411 --> 00:21:33,411
And I do think that's not just all hype.

424
00:21:33,491 --> 00:21:34,971
There's like a real trend there.

425
00:21:35,271 --> 00:21:39,171
So those two things combined have just put Bitcoin on the sidelines.

426
00:21:39,171 --> 00:21:41,471
And then you get a war thrown in the middle of all that too.

427
00:21:41,471 --> 00:21:45,571
I mean, I'm going to be one of the first ones to say this time is different again,

428
00:21:45,671 --> 00:21:48,031
because I just don't believe that the four-year cycle is going to exist forever.

429
00:21:48,251 --> 00:21:50,911
Like, every cycle, I've got more chance of being right.

430
00:21:51,871 --> 00:21:55,031
I think there's, you know, investors are forward-looking, right?

431
00:21:55,351 --> 00:21:57,831
So you had this run-up prior to the halving,

432
00:21:58,011 --> 00:22:00,771
investors kind of anticipating that as a catalyst.

433
00:22:01,131 --> 00:22:03,951
And then we peaked in October instead of November.

434
00:22:04,231 --> 00:22:06,871
So it kind of leads me to believe that, all right,

435
00:22:06,871 --> 00:22:11,291
maybe this summer was the bottom instead of making the Pico bottom in Q4.

436
00:22:11,471 --> 00:22:13,851
Yeah. Well, I did have Michael Howell on the show recently.

437
00:22:13,911 --> 00:22:14,631
I don't know if you know him.

438
00:22:14,771 --> 00:22:16,091
He tracks the global liquidity.

439
00:22:16,351 --> 00:22:18,291
And he was talking about the cycles in liquidity

440
00:22:18,291 --> 00:22:21,111
being probably the bigger driver of the Bitcoin cycle.

441
00:22:21,291 --> 00:22:22,811
And that's more believable to me.

442
00:22:22,811 --> 00:22:25,011
Like the day Bitcoin having to sell off

443
00:22:25,011 --> 00:22:26,571
on a certain quarter of a certain year,

444
00:22:26,631 --> 00:22:27,531
like makes no sense to me.

445
00:22:27,571 --> 00:22:29,271
But if it is global liquidity rolling over,

446
00:22:29,391 --> 00:22:30,651
that one I can kind of believe.

447
00:22:30,931 --> 00:22:31,111
Right.

448
00:22:31,511 --> 00:22:32,551
But I don't know.

449
00:22:33,231 --> 00:22:33,591
I don't know.

450
00:22:33,671 --> 00:22:34,531
I feel like at some point,

451
00:22:34,591 --> 00:22:36,071
Bitcoin is just going to break out of all trends.

452
00:22:36,371 --> 00:22:36,511
Right.

453
00:22:36,631 --> 00:22:38,191
And miners right now,

454
00:22:38,631 --> 00:22:40,011
all the miners in the world

455
00:22:40,011 --> 00:22:43,551
make like a combined 20 to 30 million a day

456
00:22:43,551 --> 00:22:45,911
and Bitcoin's doing tens of billions of volume.

457
00:22:46,191 --> 00:22:47,411
So that getting cut in half

458
00:22:47,411 --> 00:22:49,471
is pretty negligible on daily volume.

459
00:22:50,051 --> 00:22:50,151
Yeah.

460
00:22:50,531 --> 00:22:52,811
Yeah, I've been a believer in that for a while.

461
00:22:52,931 --> 00:22:54,951
That if, like you said,

462
00:22:55,011 --> 00:22:56,791
how you define four-year cycle matters.

463
00:22:57,111 --> 00:23:00,331
If people are telling me that it's a mechanical process

464
00:23:00,331 --> 00:23:01,711
based on the halving,

465
00:23:02,251 --> 00:23:03,411
I don't really believe that.

466
00:23:03,411 --> 00:23:06,511
And I would argue that even the past cycles

467
00:23:06,511 --> 00:23:08,611
were not a result of the halving.

468
00:23:08,611 --> 00:23:14,731
I think it's more like, is there a four-year cycle due to various factors?

469
00:23:15,811 --> 00:23:22,411
I've even seen people point out that a four-year cycle is just common in other assets, like stocks.

470
00:23:24,551 --> 00:23:30,431
Even though I now believe that there is a four-year cycle, or I think you just have to admit it,

471
00:23:30,711 --> 00:23:33,871
I still don't believe it's a mechanical halving-driven thing.

472
00:23:34,031 --> 00:23:34,891
Yeah, I agree with that.

473
00:23:35,451 --> 00:23:37,311
All right, can we go on to the next one? What have we got next?

474
00:23:37,311 --> 00:23:42,311
Yeah, that's just the correlation between Bitcoin and GlobalM2.

475
00:23:42,531 --> 00:23:45,091
So it's not like a temporary disconnect.

476
00:23:45,391 --> 00:23:47,711
I mean, this is a statistical anomaly.

477
00:23:47,911 --> 00:23:52,851
It's almost always been at one, except for like in the very bottom of the 2022 bear market,

478
00:23:53,371 --> 00:23:55,391
COVID in the bottom of the 2018 market.

479
00:23:55,511 --> 00:23:57,831
But now this is a prolonged disconnect.

480
00:23:57,991 --> 00:24:00,651
At some point, you have to expect it to revert to the mean.

481
00:24:00,771 --> 00:24:04,011
Yeah, this is almost like the peaks and troughs of Bitcoin and where it disconnects.

482
00:24:04,011 --> 00:24:08,171
Like 2017 top, 2018, 2019 bottom.

483
00:24:08,451 --> 00:24:10,991
Like it's the most volatile times is when it is next,

484
00:24:11,071 --> 00:24:12,351
but this one's different for sure.

485
00:24:13,451 --> 00:24:13,851
Interesting.

486
00:24:14,411 --> 00:24:14,811
All right.

487
00:24:15,051 --> 00:24:16,391
Yeah, we can hop to the next one, I think.

488
00:24:16,531 --> 00:24:19,611
Yeah, so this is just, again, on USM2.

489
00:24:20,471 --> 00:24:23,311
I think that's either April or May there.

490
00:24:23,311 --> 00:24:25,731
The fastest growth rate since COVID.

491
00:24:26,411 --> 00:24:26,851
Interesting.

492
00:24:27,071 --> 00:24:31,091
Yeah, the growth of the money supply is accelerating.

493
00:24:31,251 --> 00:24:32,091
It is picking up.

494
00:24:32,171 --> 00:24:32,851
What's causing that?

495
00:24:34,011 --> 00:24:37,391
I would have to point at the fiscal spending.

496
00:24:37,651 --> 00:24:39,251
I mean, the deficits are ridiculous.

497
00:24:39,751 --> 00:24:41,631
Elon and Doge did what they could.

498
00:24:41,991 --> 00:24:43,711
Didn't work, like Lynn Alden says.

499
00:24:43,711 --> 00:24:45,511
The train just does not stop.

500
00:24:45,751 --> 00:24:47,331
Did they even get a chance to do what they could?

501
00:24:48,151 --> 00:24:50,591
I don't think they did anything, really.

502
00:24:50,871 --> 00:24:54,471
I mean, the first six months of the Trump administration

503
00:24:54,471 --> 00:24:57,331
seemed like they were trying to throw the kitchen sink at everything.

504
00:24:57,551 --> 00:24:59,191
You had Besant.

505
00:24:59,311 --> 00:25:00,491
The first thing he said was like,

506
00:25:00,671 --> 00:25:03,171
first order of business, we got to get the 10-year rate down,

507
00:25:03,691 --> 00:25:05,891
get more mortgages, stimulate the economy.

508
00:25:06,371 --> 00:25:07,231
You had Doge.

509
00:25:07,531 --> 00:25:09,371
You had the tariffs to try to bring in revenue.

510
00:25:10,051 --> 00:25:11,911
You had Trump jawboning at Powell.

511
00:25:12,271 --> 00:25:14,931
Literally everything they could to try to get interest rates down,

512
00:25:14,991 --> 00:25:15,991
and just none of it worked.

513
00:25:16,131 --> 00:25:18,791
And now all the debt's rolling over at higher rates.

514
00:25:18,991 --> 00:25:20,191
They're financing a war.

515
00:25:20,291 --> 00:25:22,291
They spend over a trillion dollars a year on interest.

516
00:25:22,531 --> 00:25:24,431
That is definitely the driver.

517
00:25:24,431 --> 00:25:26,811
So we've had two big peaks in 2026.

518
00:25:27,051 --> 00:25:28,411
They'll be war-driven, right?

519
00:25:28,651 --> 00:25:28,911
Yeah.

520
00:25:28,991 --> 00:25:30,191
Yeah, almost certainly.

521
00:25:30,311 --> 00:25:30,931
By missiles.

522
00:25:31,651 --> 00:25:34,011
But this is just an up-only chart, isn't it?

523
00:25:34,231 --> 00:25:34,471
Yeah.

524
00:25:34,591 --> 00:25:37,371
So from 2022, that's when they're raising rates

525
00:25:37,371 --> 00:25:40,291
and dropping the, like, cutting the balance sheet.

526
00:25:40,371 --> 00:25:40,651
Yeah.

527
00:25:41,691 --> 00:25:42,131
Interesting.

528
00:25:42,551 --> 00:25:43,571
It's quite an anomaly.

529
00:25:43,711 --> 00:25:46,431
I wish I had the zoomed out 60-year view of this

530
00:25:46,431 --> 00:25:49,051
because that was literally the only time USM2

531
00:25:49,051 --> 00:25:53,491
has, like, ever contracted as far as the FRED data set goes back.

532
00:25:53,651 --> 00:25:53,911
Wow.

533
00:25:54,771 --> 00:25:55,211
Cool.

534
00:25:55,271 --> 00:25:56,211
Let's go on to the next one.

535
00:25:57,471 --> 00:26:10,248
Yeah So here you can really quantify how much of that capital is just going into AI which is the alternative risk on position It almost double in 2026 what it was in 2025

536
00:26:10,748 --> 00:26:16,728
at least the projections by the end of the year. And I listened to Jack Mahler's live stream on

537
00:26:16,728 --> 00:26:22,568
Monday. He made a fantastic point. It's like all of these AI companies, they're getting tech

538
00:26:22,568 --> 00:26:28,628
SaaS multiples, but they're really a real estate development business. It's extreme,

539
00:26:28,788 --> 00:26:34,188
like upfront capital expenditure. And then they make like a small spread on the power.

540
00:26:34,188 --> 00:26:39,108
It's just like almost like being a landlord and making rent. It's not like a SaaS company where

541
00:26:39,108 --> 00:26:45,748
you can scale 100x in 12 months. It's a very, very CapEx intensive business, but you're getting

542
00:26:45,748 --> 00:26:50,448
these SaaS like multiples on it. And it's all being financed by debt for the most part. So

543
00:26:50,448 --> 00:26:58,068
I don't think AI is a bubble in the sense that the, I think the impact on our economy and how we

544
00:26:58,068 --> 00:27:04,508
do business is very real and tangible. But at the current moment in time, some of the equities are

545
00:27:04,508 --> 00:27:09,008
probably overpriced. Yeah. So I had Alex Thorne on yesterday and I was talking to him about this

546
00:27:09,008 --> 00:27:13,268
and I made a point that he disagreed with, but I'd be interested in your take. I wondered if like

547
00:27:13,268 --> 00:27:17,548
the hyperscalers are getting such crazy valuations in the same way that Bitcoin miners used to,

548
00:27:17,548 --> 00:27:21,448
when there was no real vehicle to own Bitcoin in the equity market.

549
00:27:21,528 --> 00:27:23,408
So people just used the miners as a proxy.

550
00:27:23,968 --> 00:27:25,988
I wondered if people are doing that with the hyperscalers

551
00:27:25,988 --> 00:27:29,008
because Anthropic and OpenAI aren't public right now.

552
00:27:29,088 --> 00:27:29,908
Yeah, I actually agree.

553
00:27:29,968 --> 00:27:31,608
We were talking about this at dinner last night

554
00:27:31,608 --> 00:27:33,008
with some of our Blackware colleagues.

555
00:27:33,168 --> 00:27:35,688
It is effectively the same business model.

556
00:27:35,988 --> 00:27:37,468
Like 90% of it's fungible.

557
00:27:37,848 --> 00:27:41,468
You just need land and power and physical infrastructure.

558
00:27:42,468 --> 00:27:46,988
And what happened with public Bitcoin miners a few years ago

559
00:27:46,988 --> 00:27:49,488
is effectively what we're seeing now on the AI side.

560
00:27:49,668 --> 00:27:49,868
Yeah.

561
00:27:49,988 --> 00:27:52,448
So do you think that that's going to roll over at some point?

562
00:27:52,528 --> 00:27:53,608
Or do you think it'll keep going

563
00:27:53,608 --> 00:27:55,008
until we have these companies go public

564
00:27:55,008 --> 00:27:56,348
and then they'll just take the liquidity?

565
00:27:57,168 --> 00:27:59,968
I think they would like for it to extend

566
00:27:59,968 --> 00:28:01,008
until they go public.

567
00:28:01,368 --> 00:28:03,548
If I had to put a bet on,

568
00:28:03,608 --> 00:28:06,148
I would say it'll last until we get Anthropic

569
00:28:06,148 --> 00:28:07,348
and open AI in the markets.

570
00:28:07,388 --> 00:28:08,948
The thing that I don't know about is,

571
00:28:09,808 --> 00:28:11,228
obviously, like, really,

572
00:28:11,768 --> 00:28:13,528
AI companies are driving the entire market.

573
00:28:13,688 --> 00:28:15,328
Like, they're the only things that are absolutely pumping.

574
00:28:15,328 --> 00:28:16,908
Yeah, I think if you flip to the next chart,

575
00:28:16,908 --> 00:28:21,368
Yeah, that's the S&P 500 returns year to date by sector.

576
00:28:21,608 --> 00:28:24,148
And so can they actually let the bubble pop, as it were?

577
00:28:25,308 --> 00:28:26,108
Too big to fail.

578
00:28:27,428 --> 00:28:32,828
I think it's been proven that you can have short-term retracements.

579
00:28:34,368 --> 00:28:37,048
And 2022 was a pretty good example of this.

580
00:28:37,828 --> 00:28:41,848
It's not like the Fed's going to rush in if equities go down 20% or something.

581
00:28:42,108 --> 00:28:42,888
That could happen.

582
00:28:42,888 --> 00:28:47,908
but it can't go in reverse for too long.

583
00:28:48,748 --> 00:28:51,948
And this is something that Luke Groman talks about.

584
00:28:52,108 --> 00:28:54,788
It's like tax receipts are correlated to asset prices

585
00:28:54,788 --> 00:28:58,428
and it's just like spending across the economy

586
00:28:58,428 --> 00:29:00,448
is correlated to asset prices.

587
00:29:00,868 --> 00:29:03,868
And once that system starts going in reverse,

588
00:29:03,868 --> 00:29:05,768
it's just like everything gets worse

589
00:29:05,768 --> 00:29:08,788
from like a fiscal perspective at the government level,

590
00:29:08,988 --> 00:29:10,328
at like an individual level.

591
00:29:10,328 --> 00:29:13,228
and it's just not a pop deal.

592
00:29:13,328 --> 00:29:14,688
Even if you could make the argument

593
00:29:14,688 --> 00:29:16,528
that it's the right thing to do

594
00:29:16,528 --> 00:29:17,588
for whatever reasons,

595
00:29:18,068 --> 00:29:19,928
what politician wants to be like,

596
00:29:20,268 --> 00:29:21,048
we're going to go through

597
00:29:21,048 --> 00:29:22,788
this long, painful period

598
00:29:22,788 --> 00:29:25,608
where you, the individual,

599
00:29:25,928 --> 00:29:27,428
things are going to feel worse for you.

600
00:29:27,788 --> 00:29:28,928
Your small business

601
00:29:28,928 --> 00:29:30,048
or medium-sized business,

602
00:29:30,228 --> 00:29:31,828
everything's going to feel worse for you.

603
00:29:32,348 --> 00:29:34,388
Your 401k is going to go down.

604
00:29:35,688 --> 00:29:37,168
Bitcoiners obviously get this.

605
00:29:37,568 --> 00:29:38,468
The savings vehicles

606
00:29:38,468 --> 00:29:39,448
for all these people

607
00:29:39,448 --> 00:29:42,648
are 401ks, IRAs, pension plans.

608
00:29:42,968 --> 00:29:46,548
If those get cut by 20% or 30%,

609
00:29:46,548 --> 00:29:48,028
people are pissed.

610
00:29:48,268 --> 00:29:51,628
And you could try to give them an intellectual argument

611
00:29:51,628 --> 00:29:53,208
for why that's good for them

612
00:29:53,208 --> 00:29:56,348
because you only own this much in assets.

613
00:29:56,468 --> 00:29:57,268
And when assets pump,

614
00:29:57,348 --> 00:29:58,728
it actually helps the wealthy people.

615
00:29:58,988 --> 00:30:00,888
But I think that falls on deaf ears.

616
00:30:01,168 --> 00:30:03,388
I think people just don't want to see their wealth.

617
00:30:04,028 --> 00:30:06,008
And we should throw real estate in there too.

618
00:30:06,148 --> 00:30:08,228
You could deflate the real estate market.

619
00:30:08,228 --> 00:30:10,208
that might be good for certain reasons,

620
00:30:10,208 --> 00:30:11,708
but most people are just going to be like,

621
00:30:12,028 --> 00:30:14,548
no, my net worth went down by 30, 40%.

622
00:30:14,548 --> 00:30:16,188
This politician sucks.

623
00:30:16,748 --> 00:30:18,668
And no politician wants to explain that.

624
00:30:18,728 --> 00:30:21,248
You just kind of want to keep this whole system going.

625
00:30:21,468 --> 00:30:22,948
Yeah, and I would definitely be one of the people

626
00:30:22,948 --> 00:30:24,668
that would argue it probably isn't the right thing to do.

627
00:30:24,748 --> 00:30:26,288
Like you have to let markets do what markets do.

628
00:30:26,408 --> 00:30:28,248
But if you intervene and they print a load of money,

629
00:30:28,288 --> 00:30:29,468
if everything starts rolling over,

630
00:30:29,568 --> 00:30:32,648
like it shows the most insidious side of inflation

631
00:30:32,648 --> 00:30:35,048
in that it's probably what most people would even choose

632
00:30:35,048 --> 00:30:37,988
over like a deflationary bust in the markets.

633
00:30:38,228 --> 00:30:43,668
You just take the inflation, which is, I mean, it sucks, but it's probably the easiest one to take.

634
00:30:43,828 --> 00:30:44,008
Yeah.

635
00:30:44,128 --> 00:30:48,248
If we were starting from scratch, I would say allow these bubbles to pop.

636
00:30:48,708 --> 00:30:50,588
There's going to be a natural market cycle.

637
00:30:50,768 --> 00:30:53,568
And it's good if you're running an unprofitable enterprise.

638
00:30:53,968 --> 00:30:55,008
Prices are your signal.

639
00:30:55,288 --> 00:30:56,308
You're destroying capital.

640
00:30:56,448 --> 00:30:57,728
You should go out of business.

641
00:30:58,068 --> 00:31:07,048
But at this point, the knock-on effects of allowing that to happen would trickle down to Main Street and the everyman person.

642
00:31:07,048 --> 00:31:23,884
So it like probably do you just have to kind of gradually inflate your way out of this Yeah Do we miss one there Yeah go back to that So this is fascinating This is obviously Anthropic and OpenAI are still private So those are estimated market cap valuations But those three companies SpaceX

643
00:31:24,144 --> 00:31:31,384
OpenAI, Anthropic, about 3.7 trillion in market cap, 13 times greater than every company that

644
00:31:31,384 --> 00:31:32,524
IPO'd in 2021.

645
00:31:33,224 --> 00:31:34,044
That's insane.

646
00:31:34,564 --> 00:31:37,624
COVID stimulus, euphoria markets,

647
00:31:38,044 --> 00:31:39,404
you know, Chamath, SPACs,

648
00:31:39,564 --> 00:31:40,764
all of them combined,

649
00:31:41,124 --> 00:31:43,404
13 times smaller than just these

650
00:31:43,404 --> 00:31:44,024
three companies.

651
00:31:44,684 --> 00:31:47,464
It's wild. One of the crazy things is

652
00:31:47,464 --> 00:31:49,644
I don't remember the year, but I remember when

653
00:31:49,644 --> 00:31:51,344
was it Google was the first trillion

654
00:31:51,344 --> 00:31:52,504
dollar company? Was it Google?

655
00:31:53,204 --> 00:31:54,804
To IPO? No, no.

656
00:31:54,804 --> 00:31:56,244
To reach it?

657
00:31:56,324 --> 00:31:58,744
It had to be either them

658
00:31:58,744 --> 00:32:00,204
or Microsoft.

659
00:32:00,204 --> 00:32:05,884
There was a time maybe like three or four or five years ago where I think one of the companies hit a trillion, then a couple others followed.

660
00:32:06,264 --> 00:32:09,564
And now we're having companies IPO at $1.75 trillion.

661
00:32:09,944 --> 00:32:11,484
Like it's absolutely insane.

662
00:32:11,924 --> 00:32:15,224
I think there's like a dozen trillion dollar plus market cap companies now.

663
00:32:15,464 --> 00:32:17,244
And it was not that long ago where we got the first one.

664
00:32:17,344 --> 00:32:19,124
It's like the growth in these is absolutely wild.

665
00:32:19,464 --> 00:32:21,384
The trillion dollars ain't what it used to be.

666
00:32:21,464 --> 00:32:22,204
That's for sure.

667
00:32:22,864 --> 00:32:23,264
Crazy.

668
00:32:23,444 --> 00:32:25,924
And they're staying private longer too.

669
00:32:25,924 --> 00:32:35,064
I feel like it was more normal that SpaceX would have went public much earlier in their own

670
00:32:35,064 --> 00:32:39,264
path to maturity. But yeah, these are eye-popping numbers, no doubt.

671
00:32:39,284 --> 00:32:41,984
That's definitely true with SpaceX, but Anthropik's not been around very long.

672
00:32:42,344 --> 00:32:45,264
But they're on like Series J or something ridiculous.

673
00:32:45,284 --> 00:32:45,684
Is that right?

674
00:32:45,784 --> 00:32:48,924
Yeah. I'm losing count how many times they've raised privately.

675
00:32:48,924 --> 00:32:50,884
You're going to run out of alphabet. What happens when you get to Z?

676
00:32:52,064 --> 00:32:54,144
Series AA, I guess. You just restart.

677
00:32:54,144 --> 00:32:56,144
Yeah, that's absolutely wild.

678
00:32:56,444 --> 00:32:59,504
I thought it was cool that SpaceX had 20,000 Bitcoin on their balance sheet.

679
00:32:59,604 --> 00:32:59,724
Yeah.

680
00:32:59,844 --> 00:33:06,204
Just, you know, you wouldn't know that until they go public, but just quietly stacking 20,000 Bitcoin.

681
00:33:06,804 --> 00:33:09,464
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682
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683
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684
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685
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686
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687
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688
00:33:29,024 --> 00:33:30,884
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689
00:33:30,884 --> 00:33:33,564
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690
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691
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692
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693
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694
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695
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696
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697
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698
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699
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700
00:34:01,544 --> 00:34:03,444
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701
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702
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703
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705
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707
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708
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709
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710
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711
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712
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713
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714
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715
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716
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717
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718
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719
00:35:15,484 --> 00:35:16,704
no social security number,

720
00:35:16,824 --> 00:35:18,564
and there's no profile to build on you.

721
00:35:18,984 --> 00:35:20,424
If you're a Bitcoiner in America,

722
00:35:20,584 --> 00:35:22,744
I honestly don't know why you'd use any other network.

723
00:35:23,044 --> 00:35:25,904
You can head over to cape.co forward slash WBD

724
00:35:25,904 --> 00:35:29,624
and use the code WBD for 33% off your first six months.

725
00:35:30,064 --> 00:35:34,024
That's C-A-P-E dot co forward slash WBD.

726
00:35:34,684 --> 00:35:37,524
I think Elon talked about stacking Bitcoin for SpaceX

727
00:35:37,524 --> 00:35:39,424
when he bought the Tesla Bitcoin as well, right?

728
00:35:40,104 --> 00:35:41,664
And I mean, Tesla still own Bitcoin.

729
00:35:41,984 --> 00:35:42,184
Yeah.

730
00:35:42,404 --> 00:35:43,404
He knows.

731
00:35:43,564 --> 00:35:44,084
The guy knows.

732
00:35:44,164 --> 00:35:44,804
Yeah, he definitely does.

733
00:35:44,804 --> 00:35:45,544
He tested the quiddity,

734
00:35:45,684 --> 00:35:46,464
but he knows what to hold.

735
00:35:47,024 --> 00:35:48,344
All right, let's go on to the next one.

736
00:35:49,484 --> 00:35:51,284
Yeah, and so this is how much

737
00:35:51,284 --> 00:35:53,104
they're financing it with debt.

738
00:35:53,104 --> 00:35:56,464
So Meta, $57 billion.

739
00:35:56,964 --> 00:35:58,144
Google, $56 billion.

740
00:35:58,304 --> 00:35:59,224
Amazon, $40 billion.

741
00:35:59,364 --> 00:36:01,564
It's not like these are unprofitable companies.

742
00:36:01,744 --> 00:36:04,844
These are the Mag7 that are basically cash cows,

743
00:36:05,024 --> 00:36:06,524
but the cash they do have,

744
00:36:06,624 --> 00:36:07,784
they want more debt.

745
00:36:07,864 --> 00:36:11,264
They want to finance it incredibly fast and aggressively.

746
00:36:11,264 --> 00:36:12,624
Do you see that as being an issue?

747
00:36:14,184 --> 00:36:14,584
Potentially.

748
00:36:15,464 --> 00:36:18,824
Debt always seems to find a way to kind of unwind itself at some point.

749
00:36:19,344 --> 00:36:22,064
I don't hold any of these stocks, so I'm not worried about it.

750
00:36:22,184 --> 00:36:34,700
But I mean if I was a meta I would be doing it with debt Yeah yeah Like usually uh shortly inflation Yeah I don know if that maybe their hypothesis but I I agree directionally

751
00:36:34,780 --> 00:36:36,460
I would probably do the same thing.

752
00:36:36,780 --> 00:36:40,260
Everybody is speculatively attacking the dollar in some way.

753
00:36:40,380 --> 00:36:40,580
Yeah.

754
00:36:40,700 --> 00:36:40,860
Yeah.

755
00:36:40,860 --> 00:36:51,500
I take a big, like big picture takeaway for me here is I think a lot of us have like the old school mentality, either consciously or unconsciously of like you get out of debt.

756
00:36:51,500 --> 00:36:55,680
when you have like a good quarter for yourself or your business, whatever, pay down your debt.

757
00:36:56,000 --> 00:36:59,680
And like, maybe there are cases where you should do that. I'm not saying it's a bad idea all the

758
00:36:59,680 --> 00:37:05,140
time. But clearly, these companies are not Amazon's not like we had a good quarter, let's get rid of

759
00:37:05,140 --> 00:37:10,660
that debt. This is a permanent part of their capital structure. I have to tell this quick

760
00:37:10,660 --> 00:37:17,960
story because it's about Amazon debt. So my in a prior life, I was a portfolio manager at Goldman

761
00:37:17,960 --> 00:37:25,480
Sachs here in New York. And Amazon issued debt for the first time in their company history in 2014.

762
00:37:26,320 --> 00:37:30,900
And the reason I remember it so well is I had just started as a portfolio manager.

763
00:37:31,260 --> 00:37:35,840
And they're in our universe. So they bring the deal in the morning and you have to decide as

764
00:37:35,840 --> 00:37:41,640
a portfolio manager if you're going to buy or not for your client accounts. I was like 20. I must

765
00:37:41,640 --> 00:37:48,120
have been like mid 20s in age. I just started. So I was not a lead portfolio manager. I was like

766
00:37:48,120 --> 00:37:53,220
an assistant portfolio manager. But the guy who I reported to went on vacation.

767
00:37:53,840 --> 00:37:57,180
And when you go when he goes on vacation, it kind of comes down to the next guy in line.

768
00:37:57,600 --> 00:38:03,120
So I had to do a call with a large client who gave us billions of dollars to manage.

769
00:38:03,260 --> 00:38:07,200
And I had to explain to them that we bought that this is what we did in your portfolio.

770
00:38:07,200 --> 00:38:12,480
you like the management of the client's portfolio is like you're you're the manager but it's kind of

771
00:38:12,480 --> 00:38:17,360
hand in hand you give them weekly updates on what you do and they can tell you if they like it or

772
00:38:17,360 --> 00:38:24,660
don't like it and when amazon first issued debt in 2014 uh their balance sheet and their income

773
00:38:24,660 --> 00:38:30,020
statement didn't look so great um you guys probably weren't following this at the time but they were

774
00:38:30,020 --> 00:38:36,840
like in grow grow grow mode and they weren't really optimizing for like an attractive bottom line

775
00:38:36,840 --> 00:38:42,240
earnings. So and they had weird ratings. One of the rating agencies rated them like double A,

776
00:38:42,380 --> 00:38:47,340
another agency rated them triple B, which is a huge spread. So like the market clearly didn't

777
00:38:47,340 --> 00:38:52,720
know how to value Amazon. And I'll never forget it. You can imagine why this stuck with me because I

778
00:38:52,720 --> 00:38:59,180
was like a young kid. Mitch has a lot more confidence in his 20s. And I was like, you know,

779
00:38:59,400 --> 00:39:03,220
crapping my pants on this call. It's like, I have to explain to this client why we bought like 40

780
00:39:03,220 --> 00:39:08,500
million of Amazon bonds for them. And the client rips me a new one and is like, we don't like this

781
00:39:08,500 --> 00:39:13,280
company. Their balance sheet is like junk. This is like you guys bought a junk bond. You bought

782
00:39:13,280 --> 00:39:18,760
too much. Don't buy anymore. So number one, I had to tell that because this is a slide about Amazon

783
00:39:18,760 --> 00:39:23,760
debt, but also just amazing because the guy on the other side of that phone call was a professional

784
00:39:23,760 --> 00:39:30,620
investor. He was probably in his 40s. I've been doing the job for like 20 years. And he thought

785
00:39:30,620 --> 00:39:37,400
Amazon was like a bad company to hold the debt of in 2014. And like, obviously, that was one of the

786
00:39:37,400 --> 00:39:44,560
best debt holdings you could have on planet Earth. But just I give that story because people like

787
00:39:44,560 --> 00:39:49,040
the narrative at the time was this company doesn't make money. And it wasn't clear that they had a

788
00:39:49,040 --> 00:39:53,220
path to make money. Now they're looking at them now. Yeah, look at them now. And that was that

789
00:39:53,220 --> 00:39:57,020
wasn't some guy I just put a microphone to on the street. That was like the CIO of an insurance

790
00:39:57,020 --> 00:40:03,500
company wow have you spoken to him since uh not about that specific situation i uh i don't want

791
00:40:03,500 --> 00:40:08,460
to poke him too hard no you need to rub that in his face you're clearly very right not like it was

792
00:40:08,460 --> 00:40:14,460
2004 right it's 2014 you already had instagram the whole world was on the internet by then anyways

793
00:40:14,460 --> 00:40:19,660
exactly but and that like makes the point even stronger i think is that in 2014 people were still

794
00:40:19,660 --> 00:40:24,940
like uh amazon how successful are they going to be yeah and people are saying like similar things

795
00:40:24,940 --> 00:40:29,520
about Bitcoin now, even though the government has given it their stamp of approval, BlackRock,

796
00:40:29,660 --> 00:40:34,100
Fidelity, even Vanguard now, it's like, we're definitely in a similar situation.

797
00:40:34,540 --> 00:40:36,280
What more evidence do you need?

798
00:40:36,380 --> 00:40:38,200
Probably even more so a strategy than any of those.

799
00:40:39,020 --> 00:40:43,740
Do you think, this is complete tangent, but do you think strategy will outperform Bitcoin?

800
00:40:44,880 --> 00:40:48,000
I think it can on an interim timeframe.

801
00:40:48,340 --> 00:40:48,980
During a bull market?

802
00:40:49,180 --> 00:40:52,720
Yeah, during a bull market, I wouldn't bet against it.

803
00:40:52,720 --> 00:40:52,880
Yeah.

804
00:40:52,880 --> 00:40:55,680
A bit more of a tangent.

805
00:40:56,000 --> 00:40:58,940
I'm more interested in MetaPlanet right now.

806
00:40:59,120 --> 00:40:59,320
Okay.

807
00:40:59,500 --> 00:41:06,200
I think if there's any Bitcoin treasury company that actually justifies an MNAF premium, it's them.

808
00:41:06,420 --> 00:41:06,640
Why?

809
00:41:07,260 --> 00:41:09,100
Well, for one, the market they're in.

810
00:41:09,100 --> 00:41:12,320
So the interest rates are obviously much lower in Japan.

811
00:41:12,560 --> 00:41:15,620
Their currency inflates at a faster rate.

812
00:41:16,100 --> 00:41:21,020
So their preferreds, which I don't believe you can buy publicly, they're only sold privately,

813
00:41:21,020 --> 00:41:23,060
are in the four to 6% range.

814
00:41:23,060 --> 00:41:24,800
So they have much cheaper borrowing costs.

815
00:41:24,800 --> 00:41:26,200
I actually didn't know they did.

816
00:41:26,200 --> 00:41:28,400
Yeah, it's called Mars.

817
00:41:28,400 --> 00:41:30,600
But it's like, you can only buy it in private,

818
00:41:30,600 --> 00:41:32,240
like over the counter tranches, you know,

819
00:41:32,240 --> 00:41:34,700
$40 million clips, like what John was slinging back

820
00:41:34,700 --> 00:41:36,260
in the day when I was, you know,

821
00:41:36,260 --> 00:41:37,540
14 year old middle schooler.

822
00:41:39,380 --> 00:41:39,960
So they've got,

823
00:41:39,997 --> 00:41:43,417
that they're in like a better market for it. They don't really have much competition.

824
00:41:44,037 --> 00:41:49,517
There's still a 50% long term capital gains tax on Bitcoin in Japan. So it actually makes sense

825
00:41:49,517 --> 00:41:55,377
to hold a securitized version. But then this is the biggest reason in my opinion, they just acquired

826
00:41:55,377 --> 00:42:00,577
a securities broker called like Cybo Securities is basically kind of like a penny stock,

827
00:42:00,757 --> 00:42:07,377
whatever it was very small market cap. But it has a license that now it's meta planet securities.

828
00:42:07,377 --> 00:42:14,657
they have this license to issue real bonds, like real financial products beyond preferred stock.

829
00:42:15,457 --> 00:42:20,777
So Bitcoin backed bonds and like actual instruments that are credit by legal definition,

830
00:42:20,957 --> 00:42:25,757
not digital credit in name only, but it's preferred equity. So that can actually tap

831
00:42:25,757 --> 00:42:32,757
into that $300 trillion fixed income market. So I think they've got a much wider pool to tap into

832
00:42:32,757 --> 00:42:35,777
in a market that's more desperate for any kind of yield.

833
00:42:35,777 --> 00:42:36,937
Wow, that's interesting.

834
00:42:37,017 --> 00:42:38,097
And what are they trading at right now?

835
00:42:38,517 --> 00:42:40,277
They're trading below 1x MNAF.

836
00:42:40,377 --> 00:42:42,157
And at their peak, they were like 10.

837
00:42:42,257 --> 00:42:43,597
Yeah, I mean, that was crazy.

838
00:42:43,857 --> 00:42:44,097
Yeah.

839
00:42:44,237 --> 00:42:44,417
Yeah.

840
00:42:45,097 --> 00:42:46,897
Because, I mean, that is interesting.

841
00:42:47,057 --> 00:42:48,677
I don't know enough about MetaPlanet.

842
00:42:48,777 --> 00:42:49,997
I do think with strategy,

843
00:42:50,237 --> 00:42:52,637
like I'm sure they will outperform Bitcoin in the bull market,

844
00:42:52,777 --> 00:42:54,937
but I'll be really interested to see over like,

845
00:42:54,977 --> 00:42:56,677
say the next four year period, how it looks.

846
00:42:56,857 --> 00:42:58,237
I think outperforming Bitcoin,

847
00:42:58,477 --> 00:42:59,877
even for like the strategies of the world,

848
00:42:59,897 --> 00:43:01,277
is going to get increasingly hard.

849
00:43:01,617 --> 00:43:02,577
Yeah, it is difficult.

850
00:43:02,957 --> 00:43:04,897
And you mentioned it earlier.

851
00:43:04,897 --> 00:43:09,277
I want to really hone in on this point. They are kind of figuring things out as they go.

852
00:43:09,597 --> 00:43:14,737
Like kudos to Saylor and Fong Lee. They are trailblazing what I think is a potentially

853
00:43:14,737 --> 00:43:20,677
legitimate path. But because they're figuring it out as they go, you can't assume every action is

854
00:43:20,677 --> 00:43:24,957
perfect because they've already unwound certain, you know, a year ago, they're like, we're not

855
00:43:24,957 --> 00:43:29,057
diluting under two and a half XMNAV. And then like a week later, they changed it. And now they're

856
00:43:29,057 --> 00:43:34,877
diluting under one XMNAV. So I'm generally a fan. I don't like when they say they turn Bitcoin

857
00:43:34,877 --> 00:43:40,397
into money, but that's a side point. But you just, you can't like praise everything they do as if

858
00:43:40,397 --> 00:43:44,257
they can never do any wrong. And I see a lot of that. Yeah, I totally agree. And I'm with you

859
00:43:44,257 --> 00:43:47,457
with the saying you make Bitcoin better money. That's the thing that really rubbed me up.

860
00:43:47,477 --> 00:43:50,217
Yeah, major red flag. Yeah. Yeah. All right, let's do the next one.

861
00:43:51,257 --> 00:43:57,037
So this is what John was talking about earlier. OGs and long-term holders selling. And I do think

862
00:43:57,037 --> 00:44:03,957
the psychological impact of $100,000 was underestimated, certainly by myself.

863
00:44:04,597 --> 00:44:10,817
So this is the Bitcoin price in black. And then in orange is the percent of the supply

864
00:44:10,817 --> 00:44:18,197
that hasn't moved in at least two years. So it peaked right before we made new all-time highs

865
00:44:18,197 --> 00:44:24,397
in Q1 of 2024. It's about 57% of the supply had not moved in at least two years. So those are

866
00:44:24,397 --> 00:44:30,237
People, you know, they bought at a minimum in the 2022 bear market or before, held through all of that.

867
00:44:30,577 --> 00:44:35,857
Of course, they're going to start selling, you know, when Bitcoin reaches 70K and when it reaches 100K and 120.

868
00:44:36,577 --> 00:44:40,637
But it dropped to a low of about 47%.

869
00:44:40,637 --> 00:44:42,737
So that's 10% of the Bitcoin supply.

870
00:44:42,857 --> 00:44:47,017
About 2 million Bitcoin have been sold into the market over the last two years.

871
00:44:47,477 --> 00:44:49,057
Of course, that's going to make the price go down.

872
00:44:49,057 --> 00:44:53,597
But what we've seen over the past really six months is that metric has tapered off.

873
00:44:53,597 --> 00:44:55,537
So you're not seeing these long-term holders selling.

874
00:44:55,697 --> 00:44:59,837
And they're just, you know, slowly but surely starting to build back a new base.

875
00:44:59,937 --> 00:45:01,917
And eventually, it's supply and demand.

876
00:45:02,057 --> 00:45:02,997
Supply is constraining.

877
00:45:03,237 --> 00:45:06,637
You've got all the potential demand from the liquidity that went to AI.

878
00:45:07,117 --> 00:45:09,417
I think we're going to get fireworks in the next 12 to 18 months.

879
00:45:09,557 --> 00:45:11,597
Yeah, it is the question, like, who is left to sell?

880
00:45:11,817 --> 00:45:13,377
Like, at this point, who's going to be selling?

881
00:45:13,537 --> 00:45:18,577
Like, the one thing I'm not sure of is, I know ETFs, you know, at the start of this bear market, were really good.

882
00:45:18,717 --> 00:45:20,977
Like, they held stronger than, like, the average Bitcoiner.

883
00:45:21,517 --> 00:45:24,237
Have you had any idea of what's happened in the last few months?

884
00:45:24,317 --> 00:45:25,517
Q2 was capitulation.

885
00:45:25,737 --> 00:45:29,897
So it was like the most amount of coins the ETFs have sold ever in a quarter.

886
00:45:30,037 --> 00:45:32,857
I think net net, it was around like 80,000 Bitcoin,

887
00:45:33,557 --> 00:45:36,937
which, I mean, there's a lot of capital, but it's not.

888
00:45:37,057 --> 00:45:37,557
It's one whale.

889
00:45:37,817 --> 00:45:38,037
Yeah.

890
00:45:39,417 --> 00:45:40,937
It's the one galaxy guy.

891
00:45:41,017 --> 00:45:41,217
Yeah.

892
00:45:41,657 --> 00:45:42,057
Interesting.

893
00:45:42,857 --> 00:45:46,937
I think like just on vibes alone, I feel like we're making it.

894
00:45:46,977 --> 00:45:48,117
Like we must be near the bottom here.

895
00:45:48,117 --> 00:45:49,517
If we're not already hit it,

896
00:45:49,597 --> 00:45:51,077
I just, I can't see it going much lower.

897
00:45:51,317 --> 00:45:51,497
Yeah.

898
00:45:51,697 --> 00:45:54,177
I'll just say back to that 2022 comparison

899
00:45:54,177 --> 00:45:55,197
we were making earlier.

900
00:45:55,617 --> 00:45:57,677
If we go down 75%

901
00:45:57,677 --> 00:46:00,337
and there's not like some ridiculous event

902
00:46:00,337 --> 00:46:01,277
that we can point to,

903
00:46:02,037 --> 00:46:03,197
that's like,

904
00:46:03,297 --> 00:46:05,517
it's just going to frustrate us a ton more.

905
00:46:05,717 --> 00:46:05,857
Yeah.

906
00:46:05,957 --> 00:46:06,697
Because it's like,

907
00:46:07,217 --> 00:46:08,617
I don't see why,

908
00:46:08,777 --> 00:46:11,457
I do see a lot of people making comparisons to 2022

909
00:46:11,457 --> 00:46:12,737
and they say,

910
00:46:12,877 --> 00:46:14,057
well, this is what happened in 2022.

911
00:46:14,457 --> 00:46:16,397
So the price is going to,

912
00:46:16,397 --> 00:46:21,477
you know, follow that same trend now. And I just, I just can't get my head around that because

913
00:46:21,477 --> 00:46:26,097
if that happens, but we don't have some event that we can point to that caused it,

914
00:46:26,597 --> 00:46:30,177
then to me, that kind of implies that all the things that happened in 2022

915
00:46:30,177 --> 00:46:34,837
wasn't the cause of the price going down. It was like just the time on the calendar. And

916
00:46:34,837 --> 00:46:41,097
like, I don't think we're going to have a FTX type crescendo. And, you know, you mentioned FTX,

917
00:46:41,097 --> 00:46:42,817
but there was five things before that.

918
00:46:43,037 --> 00:46:46,277
There was Luna, Celsius, Voyager, BlockFi,

919
00:46:46,597 --> 00:46:47,357
three hours capital.

920
00:46:48,457 --> 00:47:00,273
Like we had like BlockFills I think was the big one of this cycle You guys might not have even heard of this one I never even heard of it What is that Blockfills was like an institutional they did other thing

921
00:47:00,353 --> 00:47:01,673
Were they the one based out of Chicago?

922
00:47:01,953 --> 00:47:02,613
I think so.

923
00:47:02,793 --> 00:47:02,993
Yeah.

924
00:47:03,153 --> 00:47:04,213
And so they went under.

925
00:47:04,513 --> 00:47:05,533
They were a market maker.

926
00:47:06,053 --> 00:47:11,613
I think they had multiple business lines, probably market making, some lending, brokerage.

927
00:47:12,513 --> 00:47:16,573
And did they get blown up in that like crypto crash, the Binance thing?

928
00:47:16,573 --> 00:47:17,813
Potentially.

929
00:47:18,373 --> 00:47:22,193
Yeah, it got uncovered, I want to say, in February.

930
00:47:22,453 --> 00:47:23,413
It's a few months back.

931
00:47:23,553 --> 00:47:23,713
Yeah.

932
00:47:23,993 --> 00:47:25,613
The only reason I remember is because, like,

933
00:47:25,673 --> 00:47:28,913
I think the Chicago Blackhawks hockey team

934
00:47:28,913 --> 00:47:30,953
had, like, Bitcoin on that platform,

935
00:47:31,053 --> 00:47:32,333
and they were in the bankruptcy claim.

936
00:47:32,453 --> 00:47:35,753
I was like, so a professional sports team now holds Bitcoin.

937
00:47:35,853 --> 00:47:36,373
That's pretty cool.

938
00:47:36,733 --> 00:47:39,413
I mean, that is, like, to take a bullish perspective on that,

939
00:47:39,753 --> 00:47:42,613
one of the bullish things is that we've not really had a big blow-up.

940
00:47:42,893 --> 00:47:46,173
This is the first bear market where we've not had a huge company go under, I think.

941
00:47:46,173 --> 00:47:50,573
Yeah. Since I've been in Bitcoin at least. Agreed. I think it would be block fills,

942
00:47:50,573 --> 00:47:56,573
which again, most people haven't even heard of. And then the capitulation might be what we've seen

943
00:47:56,573 --> 00:48:01,533
with strategy. That they had to sell some Bitcoin, that they had to pull out a few wild cards that

944
00:48:01,533 --> 00:48:07,133
they probably didn't expect to pull out. If we look back and we say 50% drawdown and those were

945
00:48:07,133 --> 00:48:12,413
the big items, I think that's a sign of Bitcoin maturing. Like that's night and day different

946
00:48:12,413 --> 00:48:13,793
versus what happened in 2022.

947
00:48:14,073 --> 00:48:14,733
I totally agree.

948
00:48:15,353 --> 00:48:17,713
You know, you talk about the 100K psychological level.

949
00:48:17,953 --> 00:48:19,693
Do you think that will exist when we go back there?

950
00:48:21,253 --> 00:48:21,653
Potentially.

951
00:48:22,253 --> 00:48:24,333
I think previous all-time highs

952
00:48:24,333 --> 00:48:26,193
are always going to be a psychological level

953
00:48:26,193 --> 00:48:29,233
because you get the FOMO newcomer

954
00:48:29,233 --> 00:48:32,693
that's chasing price action finally at their break-even,

955
00:48:32,833 --> 00:48:34,553
and they can kind of wipe the sweat off and be like,

956
00:48:34,613 --> 00:48:36,613
I'm out of this thing now that I'm back in the money.

957
00:48:36,813 --> 00:48:36,953
Yeah.

958
00:48:37,053 --> 00:48:40,553
So I think more so like the $120,000 level

959
00:48:40,553 --> 00:48:43,253
would be probably a new psychological barrier.

960
00:48:43,693 --> 00:48:44,793
And do you think, obviously,

961
00:48:45,033 --> 00:48:47,073
there was a very muted top this time.

962
00:48:47,193 --> 00:48:48,493
Like, it wasn't like what we've had before.

963
00:48:48,673 --> 00:48:50,613
Do you think that's a permanent fixture now?

964
00:48:50,673 --> 00:48:53,613
Or do you think we'll have kind of blow-off top euphoria again?

965
00:48:54,533 --> 00:48:57,113
I left side of the bell curving this.

966
00:48:57,193 --> 00:48:58,033
Don't think so.

967
00:48:58,473 --> 00:48:59,133
But-

968
00:48:59,133 --> 00:49:00,193
You don't think which one, sorry?

969
00:49:00,233 --> 00:49:02,373
I don't think we'll have these blow-off tops anymore.

970
00:49:02,633 --> 00:49:03,993
But that goes hand in hand with,

971
00:49:04,053 --> 00:49:06,013
I don't think we're going to get a 75% drawdown.

972
00:49:06,013 --> 00:49:09,873
I would give myself like 95% confidence

973
00:49:09,873 --> 00:49:12,513
that the bottom is in, in terms of price.

974
00:49:13,213 --> 00:49:15,493
I do think we could stay at this range

975
00:49:15,493 --> 00:49:18,053
for another three to six months potentially,

976
00:49:18,233 --> 00:49:21,693
but I seriously doubt we get a 75% drop.

977
00:49:21,993 --> 00:49:23,793
That would be another 50% drop.

978
00:49:23,893 --> 00:49:25,773
Think about all the pain we've endured

979
00:49:25,773 --> 00:49:28,133
over the last 12 months, do it all over again.

980
00:49:28,613 --> 00:49:30,673
Yeah, the only thing that makes me think

981
00:49:30,673 --> 00:49:33,593
it has a potential is the market likes to play games.

982
00:49:34,013 --> 00:49:36,133
And doesn't NACA have like a liquidation level

983
00:49:36,133 --> 00:49:38,453
at like 48K or something around there?

984
00:49:38,453 --> 00:49:43,033
They do have encumbered Bitcoin. So there's some liquidation level. I don't know what that is,

985
00:49:43,073 --> 00:49:45,533
though. The market might want to try and sniff that out.

986
00:49:46,973 --> 00:49:49,153
Potentially. All right. What have we got next?

987
00:49:50,153 --> 00:49:54,833
So this and a few of the other charts in here just kind of show evidence of when there is

988
00:49:54,833 --> 00:50:03,393
capitulation. So this is the transfer volume from whales to exchanges. So any address or cluster of

989
00:50:03,393 --> 00:50:08,793
addresses with 10,000 or more Bitcoin. You can see there's a few distinct moments when they send

990
00:50:08,793 --> 00:50:15,553
those coins to exchanges during euphoric bull market tops and all time highs. They're going to

991
00:50:15,553 --> 00:50:21,473
take some capital out. They make the tops. They make the tops precisely. And then during

992
00:50:21,473 --> 00:50:28,533
capitulation. So you kind of see smaller but still visibly present spikes at moments where

993
00:50:28,533 --> 00:50:33,593
the price drops. So you can see this in Q1 of this year. And then more recently, you see another

994
00:50:33,593 --> 00:50:38,553
little spike there. And it kind of, you know, causes the price to go down all these whales

995
00:50:38,553 --> 00:50:42,353
sending coins to the exchanges. But- That is interesting. Like they,

996
00:50:42,993 --> 00:50:47,213
a lot of the time, and they're much smaller spikes, obviously, but they're kind of selling

997
00:50:47,213 --> 00:50:51,753
the bottom a lot. Well, them selling makes the bottom. Yeah. They make the tops, they make the

998
00:50:51,753 --> 00:50:56,093
bottoms. Yeah. We're seeing kind of lower highs here. So they are, you know, it would appear

999
00:50:56,093 --> 00:50:58,153
they're running out of coins to dump on us.

1000
00:50:58,233 --> 00:50:58,973
That's what we need to see.

1001
00:50:59,053 --> 00:50:59,213
Yeah.

1002
00:51:00,053 --> 00:51:01,633
All right, let's see what we've got next.

1003
00:51:02,313 --> 00:51:05,173
So this is kind of just like short-term focus.

1004
00:51:05,513 --> 00:51:10,273
I think this has served as pretty much the key indicator

1005
00:51:10,273 --> 00:51:12,413
of whether or not Bitcoin's in a bull or bear market.

1006
00:51:12,573 --> 00:51:15,093
And it's the cost basis of anyone who's bought Bitcoin

1007
00:51:15,093 --> 00:51:16,133
in the past six months.

1008
00:51:16,273 --> 00:51:16,973
This is the newbies.

1009
00:51:17,373 --> 00:51:18,713
This is the newbies, correct.

1010
00:51:19,153 --> 00:51:21,393
And it's that psychological effect

1011
00:51:21,393 --> 00:51:22,253
I was talking about earlier.

1012
00:51:22,293 --> 00:51:24,733
When they're back at break-even in a bear market,

1013
00:51:24,733 --> 00:51:25,533
they're probably like,

1014
00:51:25,533 --> 00:51:27,833
all right, let me get out of this thing. They might not have the conviction.

1015
00:51:28,073 --> 00:51:32,613
Yeah. In a bull market, it's kind of support because, all right, Bitcoin pulled back. I'm at

1016
00:51:32,613 --> 00:51:37,793
my cost basis. Let's DCA in again. So it functions as a support during bull markets.

1017
00:51:38,313 --> 00:51:44,993
It's already been rejected here twice in 2026. Looks like another three or four weeks,

1018
00:51:44,993 --> 00:51:49,453
we're going to see the price have to face this level again. So my base case would be,

1019
00:51:49,773 --> 00:51:53,693
I don't know when this podcast is going to come out, but sideways for the next probably four weeks

1020
00:51:53,693 --> 00:51:57,293
until maybe late August, early September.

1021
00:51:57,293 --> 00:51:59,813
And then I think Bitcoin's gonna make its next move

1022
00:51:59,813 --> 00:52:11,909
and we get clarity on where we go from there Are you in agreement on that My base case predicting the next four weeks is always tough You could do it My base case for

1023
00:52:11,909 --> 00:52:17,189
a little bit longer than that is coming back to this four-year cycle thesis. Even the people who

1024
00:52:17,189 --> 00:52:22,549
don't like the four-year cycle, I think have to admit now that calendar-wise it's playing out.

1025
00:52:22,549 --> 00:52:28,629
And that would imply something between September and December is when things start to get more

1026
00:52:28,629 --> 00:52:33,149
favorable. Obviously, that could be off by a quarter or something could happen in Q1. But I

1027
00:52:33,149 --> 00:52:40,589
think Q4 is when things start to get more favorable. And if you couple that with AI starts to cool off

1028
00:52:40,589 --> 00:52:45,609
a little bit, I really mean just like cool off. I'm not one of these people who thinks we're in

1029
00:52:45,609 --> 00:52:51,049
a year 2000 moment and Amazon's going to fall 93%. And I don't think that's what's happening.

1030
00:52:51,549 --> 00:52:56,589
But these stocks that have gone up 3x, 10x, whatever, they could easily pull back 30, 40,

1031
00:52:56,589 --> 00:53:03,309
50%. That wouldn't be crazy. And that could be on so many different headlines that could happen.

1032
00:53:03,309 --> 00:53:07,549
I think a lot of the data centers have had those pullbacks already in the last couple of months.

1033
00:53:07,549 --> 00:53:14,669
It started to in the past month or two. But I tracked 55 high-flying AI-related stocks.

1034
00:53:14,669 --> 00:53:17,629
And they're the ones that high-flying, I mean they've done really well.

1035
00:53:18,989 --> 00:53:22,589
When I look at that in the last month, most of them are in the red.

1036
00:53:22,589 --> 00:53:26,529
In the last three months, it's like half and half.

1037
00:53:26,909 --> 00:53:29,549
Year to date, though, they're still in the black big time.

1038
00:53:29,809 --> 00:53:31,509
So they're still up a lot.

1039
00:53:32,729 --> 00:53:36,409
So if more start to pull back in Q4,

1040
00:53:36,669 --> 00:53:37,969
and then at the same time,

1041
00:53:38,389 --> 00:53:41,649
Bitcoin chart looks favorable for calendar reasons,

1042
00:53:42,029 --> 00:53:45,269
and then Bitcoin's starting to go from 65 to 70 to 80,

1043
00:53:45,829 --> 00:53:48,469
I think that could cause the capital rotation back.

1044
00:53:48,909 --> 00:53:50,469
That's kind of my base case.

1045
00:53:50,469 --> 00:53:52,129
Does it have to happen in Q4?

1046
00:53:52,529 --> 00:53:53,169
Doesn't have to.

1047
00:53:53,289 --> 00:53:54,789
Maybe it takes till Q1 or something.

1048
00:53:54,929 --> 00:53:56,909
But that's what I think is going to happen.

1049
00:53:57,229 --> 00:53:59,169
So you used to work with like real investors.

1050
00:54:00,389 --> 00:54:01,089
Real investors.

1051
00:54:01,689 --> 00:54:03,849
But like, so one of the things that doesn't make sense to me

1052
00:54:03,849 --> 00:54:04,709
is the four-year cycle.

1053
00:54:04,829 --> 00:54:05,969
No idea why that should exist.

1054
00:54:06,049 --> 00:54:07,809
I don't think the subsidy is enough now.

1055
00:54:08,229 --> 00:54:10,529
But the other thing is selling may and go away

1056
00:54:10,529 --> 00:54:11,849
always seems to be true.

1057
00:54:12,089 --> 00:54:12,769
Why is that?

1058
00:54:13,869 --> 00:54:16,109
So I've worked in the fixed income markets,

1059
00:54:16,109 --> 00:54:18,189
I think, which just means bonds

1060
00:54:18,189 --> 00:54:20,209
for anybody who's totally unaware of that.

1061
00:54:20,209 --> 00:54:23,289
I think selling May and Go Away

1062
00:54:23,289 --> 00:54:26,049
has been more of an equity story.

1063
00:54:26,729 --> 00:54:27,849
And I'm sure someone out there

1064
00:54:27,849 --> 00:54:29,049
has done the research.

1065
00:54:29,689 --> 00:54:31,749
Maybe it works more than half the time,

1066
00:54:31,809 --> 00:54:33,449
but I'm sure there's years you can point to

1067
00:54:33,449 --> 00:54:34,649
when it didn't work.

1068
00:54:35,549 --> 00:54:37,089
If I was going to point to anything,

1069
00:54:37,329 --> 00:54:40,229
it's like summer is a real thing in the world.

1070
00:54:40,629 --> 00:54:41,629
People want to go to the Hamptons.

1071
00:54:41,689 --> 00:54:42,429
People want to go.

1072
00:54:42,969 --> 00:54:44,929
And I mean like, you know,

1073
00:54:45,249 --> 00:54:46,309
politicians want to go,

1074
00:54:46,489 --> 00:54:47,729
central bankers want to go,

1075
00:54:48,209 --> 00:54:49,949
CEOs of companies want to go.

1076
00:54:50,209 --> 00:54:57,789
enjoy the summer. So I think fewer things happen in terms of headlines. Fewer people are around to

1077
00:54:57,789 --> 00:55:01,609
trade. These are very broad comments, right? You could still have a crazy thing happen in July.

1078
00:55:01,609 --> 00:55:06,609
But generally speaking, it's going to be less active. And then September comes around and people

1079
00:55:06,609 --> 00:55:11,129
are like, I'm back at work. The kids are back in school. Let's pump it. Congress is back in session.

1080
00:55:11,409 --> 00:55:15,709
Let's have something crazy happen. Yeah. It's the summer doldrums. Yeah. I think it's a real

1081
00:55:15,709 --> 00:55:22,269
thing to some extent. All right. What have we got next? Yeah. So there's a few charts in here that

1082
00:55:22,269 --> 00:55:27,449
all, you know, you don't want to take any one chart as gospel, but when you look at them in

1083
00:55:27,449 --> 00:55:32,209
the aggregate, they tell the same story that if we're not at the bottom, we're darn near close

1084
00:55:32,209 --> 00:55:35,769
and you should be aggressively accumulating. Tell me on this. How does this work? This is

1085
00:55:35,769 --> 00:55:43,669
all UTXOs. All UTXOs. And how many of them were moved at a price higher than where the Bitcoin

1086
00:55:43,669 --> 00:55:48,649
prices today, over half of them are underwater. So they're at a loss.

1087
00:55:48,789 --> 00:55:52,749
I've asked this question to Checkmate a million times, but I want your perspective on it.

1088
00:55:53,409 --> 00:55:58,129
How do you trade off that obviously every time someone moves to UTXO is not a sale?

1089
00:55:59,049 --> 00:56:04,609
Right. You just kind of run with the assumption that it is, because for the most part,

1090
00:56:05,369 --> 00:56:10,749
in terms of quantity, it is. Like if you're paying for a beer at PubKey with Bitcoin,

1091
00:56:10,749 --> 00:56:19,249
That's, you know, even if you do that on-chain layer one, that's like a $5 transaction, which is pretty insignificant to all 21 million Bitcoin.

1092
00:56:19,989 --> 00:56:30,389
So I think just by the law of large numbers, like someone moving a thousand Bitcoin, they're probably exchanging the capital for cash.

1093
00:56:30,549 --> 00:56:33,289
So it's just that enough probably our sales that it makes the data useful.

1094
00:56:33,509 --> 00:56:33,849
Correct.

1095
00:56:34,029 --> 00:56:34,249
Okay.

1096
00:56:34,389 --> 00:56:35,829
I've had the same thought, Danny.

1097
00:56:35,829 --> 00:56:43,469
like, and it's particularly in a bull market, on the upside, you could definitely make the case that

1098
00:56:43,469 --> 00:56:49,349
a raging bull market could cause someone to be like, oh, I should upgrade my custody solution.

1099
00:56:49,949 --> 00:56:55,229
And that would cause them to move Bitcoin onto like, I'm going to do multi-sig now or whatever.

1100
00:56:55,429 --> 00:56:59,869
They're moving from one thing to another for better security, better estate planning. That

1101
00:56:59,869 --> 00:57:03,869
would show up in these types of analyses as like, oh, that's a sale.

1102
00:57:03,869 --> 00:57:04,869
Yeah.

1103
00:57:04,869 --> 00:57:09,169
But I think if you look at it in aggregate, most of them probably are still sales.

1104
00:57:09,169 --> 00:57:10,169
Yeah, that makes sense.

1105
00:57:10,169 --> 00:57:24,466
But it interesting that we very very rarely get to these levels and we never go very far below Yeah and it only happens at like the exact bottoms I do wonder how useful on data will be going forward if we get more and more paper

1106
00:57:24,466 --> 00:57:27,166
Bitcoin, if that's where a lot of the market is.

1107
00:57:27,746 --> 00:57:33,106
But inversely, imagine how useful this data set would be if the entire economy ran on

1108
00:57:33,106 --> 00:57:34,046
a Bitcoin standard.

1109
00:57:34,306 --> 00:57:34,446
Yeah.

1110
00:57:34,506 --> 00:57:40,566
Like if you could see the precise movement of treasury bonds, who they were sent to at

1111
00:57:40,566 --> 00:57:45,366
what time and how much quantity, how long they held for, that would be a very valuable data set.

1112
00:57:45,446 --> 00:57:50,926
So if we do over a lifetime shift to a Bitcoin standard, I think a lot of like economic, you know,

1113
00:57:50,986 --> 00:57:54,826
research could be conducted based on on-chain activity. Everything's better on a Bitcoin

1114
00:57:54,826 --> 00:58:01,686
standard. It is. All right, what have we got? So this is similar. So of the coins that are being

1115
00:58:01,686 --> 00:58:07,446
moved on-chain, how much of that is at a profit versus a loss? And I've highlighted here the very

1116
00:58:07,446 --> 00:58:12,926
rare regimes in which more coins are being moved at a loss than at a profit. You could see kind of,

1117
00:58:13,046 --> 00:58:17,646
and that's that red line. So anytime the red is over the green, more transfer volume at a loss.

1118
00:58:17,946 --> 00:58:20,606
Again, it all lines up with bottoms. It does not happen a lot.

1119
00:58:20,806 --> 00:58:25,406
No, it doesn't. And we've actually been in one of these regimes basically all calendar year. So

1120
00:58:25,406 --> 00:58:28,746
they don't tend to last too much longer than what we've already endured.

1121
00:58:28,746 --> 00:58:30,546
So the data is totally on our side right now.

1122
00:58:30,786 --> 00:58:36,566
It is. It is. It is on the side of someone who should be not waiting for Bitcoin to go lower.

1123
00:58:36,566 --> 00:58:38,786
You should be deploying capital now.

1124
00:58:38,846 --> 00:58:40,906
And if it goes lower, deploy more capital then.

1125
00:58:41,046 --> 00:58:41,126
Yeah.

1126
00:58:41,266 --> 00:58:42,266
And that's the thing.

1127
00:58:42,326 --> 00:58:45,206
People, I think, get too caught up in trying to pick the absolute bottom.

1128
00:58:46,006 --> 00:58:47,166
Now is a good time to buy.

1129
00:58:47,406 --> 00:58:48,946
You might miss it by 10%.

1130
00:58:48,946 --> 00:58:50,886
You're going to be happy in the future.

1131
00:58:50,986 --> 00:58:53,686
So it's important to be a productive member of society.

1132
00:58:53,966 --> 00:58:57,686
If you have a job, if you make income, all right, you can buy it now.

1133
00:58:57,726 --> 00:58:59,366
And if it goes lower, buy more then.

1134
00:58:59,546 --> 00:59:03,586
As long as you have an income stream, you should just be dollar cost averaging always.

1135
00:59:03,586 --> 00:59:03,946
Yeah.

1136
00:59:04,646 --> 00:59:05,926
Dollar cost averaging always.

1137
00:59:05,926 --> 00:59:07,046
but more so.

1138
00:59:07,286 --> 00:59:08,226
Yeah, more so now.

1139
00:59:08,846 --> 00:59:10,586
Also, I'm going to be a broken record here

1140
00:59:10,586 --> 00:59:11,806
with 2022 comparisons,

1141
00:59:12,126 --> 00:59:16,046
but Bitcoin hit like 19K in June of 2022.

1142
00:59:16,546 --> 00:59:18,466
And the rest of that year happening

1143
00:59:18,466 --> 00:59:20,026
with like FTX happening,

1144
00:59:20,106 --> 00:59:21,546
which was the biggest blow up ever.

1145
00:59:21,886 --> 00:59:23,186
He's the SPF of crypto.

1146
00:59:23,686 --> 00:59:26,146
My great aunt, who's 80 years old, knew about it.

1147
00:59:26,226 --> 00:59:28,586
Like everybody knew about FTX and SPF.

1148
00:59:29,386 --> 00:59:32,326
That only took Bitcoin from like roughly 19

1149
00:59:32,326 --> 00:59:33,626
down to like 16.

1150
00:59:33,626 --> 00:59:36,506
so like if it took that

1151
00:59:36,506 --> 00:59:38,666
and you know that didn't cause

1152
00:59:38,666 --> 00:59:40,566
that much of an additional price decline

1153
00:59:40,566 --> 00:59:42,286
for someone to be thinking

1154
00:59:42,286 --> 00:59:44,226
Bitcoin has to go to 50k from here

1155
00:59:44,226 --> 00:59:45,726
I would just ask them like

1156
00:59:45,726 --> 00:59:47,186
what's going to be the catalyst for that

1157
00:59:47,186 --> 00:59:49,826
and I don't have a good list of potential catalysts

1158
00:59:49,826 --> 00:59:50,106
Is that right?

1159
00:59:50,146 --> 00:59:51,766
Was Bitcoin at 19k when it blew up

1160
00:59:51,766 --> 00:59:52,486
and it only went to 60k?

1161
00:59:52,486 --> 00:59:54,826
Yeah it was only like a 10-15% drop

1162
00:59:54,826 --> 00:59:55,326
Crazy

1163
00:59:55,326 --> 00:59:57,126
But it felt way worse

1164
00:59:57,126 --> 00:59:58,566
Yeah yeah because you never knew it yet

1165
00:59:58,566 --> 01:00:01,526
That one felt like not existential to Bitcoin

1166
01:00:01,526 --> 01:00:04,466
but in terms of the market's perception of Bitcoin,

1167
01:00:04,566 --> 01:00:05,466
it felt real bad.

1168
01:00:06,606 --> 01:00:09,866
Why is both these lines dropping?

1169
01:00:11,146 --> 01:00:13,206
Less on-chain activity.

1170
01:00:13,366 --> 01:00:14,466
I thought that's what you were going to say.

1171
01:00:14,706 --> 01:00:16,966
I see that as a bearish sign for Bitcoin.

1172
01:00:17,326 --> 01:00:17,826
You think so?

1173
01:00:18,066 --> 01:00:20,366
Why are we not transacting on-chain anymore?

1174
01:00:20,546 --> 01:00:21,826
I know, obviously, Lightning-

1175
01:00:21,826 --> 01:00:23,346
So it's actually interesting.

1176
01:00:23,446 --> 01:00:24,606
This would be volume.

1177
01:00:24,726 --> 01:00:27,586
So the actual total quantity of coins being sent.

1178
01:00:27,906 --> 01:00:29,426
I've got another chart in here.

1179
01:00:29,846 --> 01:00:33,166
the number of transactions is actually at an all-time high.

1180
01:00:33,246 --> 01:00:33,686
Oh, okay.

1181
01:00:33,726 --> 01:00:34,906
That's what I thought we were looking at here.

1182
01:00:34,946 --> 01:00:35,206
Yeah.

1183
01:00:35,246 --> 01:00:35,486
Okay.

1184
01:00:35,546 --> 01:00:37,646
So this would be amount of coins being sent.

1185
01:00:37,666 --> 01:00:37,886
Okay.

1186
01:00:37,946 --> 01:00:38,906
You can ignore what I said then.

1187
01:00:39,006 --> 01:00:39,246
All right.

1188
01:00:39,246 --> 01:00:39,966
Let's do the next one.

1189
01:00:41,146 --> 01:00:44,706
So this is, yet again, a signal that only flashes at the bottom.

1190
01:00:44,706 --> 01:00:50,946
So this is the cost basis of people that bought Bitcoin between 12 and 24 months ago.

1191
01:00:51,506 --> 01:00:55,506
So in bear markets, that would be the folks that FOMO'd in at the top.

1192
01:00:55,666 --> 01:00:56,806
And now they're underwater.

1193
01:00:56,806 --> 01:01:00,886
you've seen in 2015, 2018, 2022,

1194
01:01:01,266 --> 01:01:03,706
and then now those coins are at a loss.

1195
01:01:03,906 --> 01:01:05,746
See, the interesting thing on this one,

1196
01:01:06,046 --> 01:01:08,626
and perhaps this is to do with us not going as high,

1197
01:01:09,286 --> 01:01:11,086
we've not been under this for very long.

1198
01:01:11,746 --> 01:01:13,726
Like we were under that a lot longer in 2022.

1199
01:01:14,206 --> 01:01:15,966
Yeah, it's been five or six months.

1200
01:01:16,446 --> 01:01:19,366
But yeah, 2022, it was almost two years.

1201
01:01:19,486 --> 01:01:21,046
See, that one I could see as being like,

1202
01:01:21,106 --> 01:01:23,146
maybe we need a bit more time paying in this bear market.

1203
01:01:23,606 --> 01:01:25,426
Potentially, but also if you kind of like,

1204
01:01:25,426 --> 01:01:29,786
you know, I don't like to cherry pick, but let's cherry pick. If you grab the midpoint of that

1205
01:01:29,786 --> 01:01:37,486
2022 regime, it was the bottom. So it was, you know, it was a grind up between the midpoint there

1206
01:01:37,486 --> 01:01:41,566
and the end. That's going from 16K to like the mid 30s. That's a nice little recovery.

1207
01:01:41,886 --> 01:01:46,326
That's true. And like, if you took 2018, I think you can actually ignore when we went above it

1208
01:01:46,326 --> 01:01:50,426
there, because that was the plus token Ponzi. Is that what it was called? Plus, do you remember

1209
01:01:50,426 --> 01:01:54,786
the Chinese Ponzi? Predates my time in Bitcoin. Okay. So when Bitcoin was pumping then,

1210
01:01:54,786 --> 01:01:56,526
And everyone thought he was making a recovery,

1211
01:01:56,646 --> 01:01:58,566
but it was actually like a Pondy scheme running out of China.

1212
01:01:58,846 --> 01:01:59,266
Very nice.

1213
01:01:59,646 --> 01:02:01,186
And so I think without that,

1214
01:02:01,226 --> 01:02:03,146
we probably would have stayed below that line for a lot longer.

1215
01:02:03,686 --> 01:02:04,706
Yeah, yeah, probably.

1216
01:02:05,946 --> 01:02:06,306
Interesting.

1217
01:02:06,506 --> 01:02:07,606
I think maybe more time pain.

1218
01:02:07,866 --> 01:02:09,046
That's the only one that kind of-

1219
01:02:09,046 --> 01:02:10,446
Yeah, that's where I'm at right now.

1220
01:02:10,506 --> 01:02:11,666
I think we're going to get time pain.

1221
01:02:11,806 --> 01:02:14,326
I think, I don't know where it is in this deck,

1222
01:02:14,326 --> 01:02:15,086
but there's a chart.

1223
01:02:15,606 --> 01:02:19,406
The percentage of a rate hike in 2026,

1224
01:02:19,906 --> 01:02:22,686
those odds are always kind of dynamic.

1225
01:02:22,686 --> 01:02:25,466
But whenever I made this chart,

1226
01:02:25,466 --> 01:02:26,786
which is about like two, three weeks ago,

1227
01:02:26,786 --> 01:02:28,946
like right after the last Fed meeting,

1228
01:02:28,946 --> 01:02:29,946
it was still like an,

1229
01:02:29,982 --> 01:02:35,502
80% chance by the market that we get one rate hike this year.

1230
01:02:35,522 --> 01:02:36,582
I think I might have said cut before.

1231
01:02:36,702 --> 01:02:37,182
Rate hike.

1232
01:02:37,402 --> 01:02:42,002
The market's still pricing in that the new Fed chair is going to increase interest rates.

1233
01:02:42,082 --> 01:02:44,042
And I do not see that happening.

1234
01:02:44,142 --> 01:02:48,602
So I think as time goes on and it becomes more and more clear that maybe he doesn't cut,

1235
01:02:48,682 --> 01:02:52,242
but just pausing, I think that's going to be received bullishly by the market.

1236
01:02:52,542 --> 01:02:55,722
Yeah, I think Polymarket has it that a hike is the most likely right now.

1237
01:02:55,822 --> 01:02:57,822
Yeah, and that's not going to happen.

1238
01:02:57,822 --> 01:03:05,862
And I think my most interesting and insightful takeaway from the recent Fed meeting, I was talking to John about this.

1239
01:03:05,922 --> 01:03:11,842
Do you remember when Jerome Powell said, we are navigating by the stars under cloudy skies?

1240
01:03:12,742 --> 01:03:13,582
I don't remember that.

1241
01:03:13,622 --> 01:03:14,402
That's an awesome quote.

1242
01:03:14,402 --> 01:03:18,962
Yeah, it is an awesome quote, but maybe not from the guy who pulls the strings on the monetary system.

1243
01:03:18,962 --> 01:03:23,722
The idea is the data that the Fed uses to make policy is incredibly flawed.

1244
01:03:23,722 --> 01:03:30,602
But as we all know, it is a CPI is a handpicked basket of goods that they're constantly changing.

1245
01:03:30,802 --> 01:03:35,142
Literally apples to oranges, not to mention it's lagged, it's delayed.

1246
01:03:35,302 --> 01:03:36,222
And it's very analog.

1247
01:03:36,462 --> 01:03:42,062
It's literally like government employees going to a store and writing down the prices of things.

1248
01:03:42,722 --> 01:03:44,522
GDP is a little finicky.

1249
01:03:44,702 --> 01:03:51,742
Anyways, the data that they make their decisions by is lagged, it's outdated, and it's maybe

1250
01:03:51,742 --> 01:03:59,162
directionally accurate, but not perfect. Kevin Warsh is throwing all of that away. So he's got

1251
01:03:59,162 --> 01:04:05,582
these five task forces. He didn't even give his own forward guidance on where he thinks rates are

1252
01:04:05,582 --> 01:04:11,382
going to go. He did not fill in the dot plot. And if he was really trying to be a hawk,

1253
01:04:11,482 --> 01:04:17,122
he probably would have filled in a dot plot. I think him not doing that and him taking the view

1254
01:04:17,122 --> 01:04:23,542
that, hey, we are going to reassess the actual data that we look at could potentially give him

1255
01:04:23,542 --> 01:04:29,062
the justification to cut later because he couldn't just come in and just cut on day one. That wouldn't

1256
01:04:29,062 --> 01:04:32,222
have been received very well. Because he'd have just looked like a Trump stooge.

1257
01:04:32,302 --> 01:04:35,562
He would have looked like a Trump stooge, going to do anything the orange man tells him.

1258
01:04:36,122 --> 01:04:45,002
And he's actually being very precise so far in that the increase in CPI earlier this year,

1259
01:04:45,002 --> 01:04:49,102
We all know what cost it. It's the war in the Middle East making energy prices go up.

1260
01:04:49,482 --> 01:04:54,442
But the market is pricing that in. Oh, inflation is like getting back out of control. We should

1261
01:04:54,442 --> 01:05:02,182
hike rates. You shouldn't hike rates. You should just stop going to war and let the energy markets

1262
01:05:02,182 --> 01:05:08,522
function freely. And so I think he's taking the perspective with that. Hey, there's no need to

1263
01:05:08,522 --> 01:05:13,562
hike rates here. Core CPI is trending down. The trend is directionally accurate. If we

1264
01:05:13,562 --> 01:05:18,042
figure things out in the energy market. There's no need to preemptively hike rates. And so I think

1265
01:05:18,042 --> 01:05:22,362
he's kind of establishing that position, but the market's not pricing that in.

1266
01:05:22,482 --> 01:05:25,262
Yeah. I think to add to that, the other interesting thing he said is that he cares

1267
01:05:25,262 --> 01:05:29,862
about the left side of the decimal place, not the right, meaning like 2.9% inflation might still

1268
01:05:29,862 --> 01:05:33,782
count as 2% to him. So he's obviously like increasing the scope a little bit there.

1269
01:05:34,062 --> 01:05:34,402
Right.

1270
01:05:34,982 --> 01:05:36,702
Which I think is also inevitable.

1271
01:05:37,302 --> 01:05:41,962
Yeah. Yeah. At some point, they're going to have to lower rates and the market still

1272
01:05:41,962 --> 01:05:43,742
doesn't seem to have that figured out.

1273
01:05:43,902 --> 01:05:44,102
Yeah.

1274
01:05:45,082 --> 01:05:45,482
Bullish.

1275
01:05:45,722 --> 01:05:46,442
All right, very bullish.

1276
01:05:46,442 --> 01:05:46,962
What do we got next?

1277
01:05:47,422 --> 01:05:48,702
This is very interesting.

1278
01:05:48,982 --> 01:05:51,042
So it, sorry, it's a little cut off here,

1279
01:05:51,062 --> 01:05:52,742
but you've got the Bitcoin price in gray

1280
01:05:52,742 --> 01:05:55,142
and then the realized market cap in green.

1281
01:05:55,402 --> 01:05:57,342
But then in orange at the bottom,

1282
01:05:57,422 --> 01:05:59,442
you have the drawdown in a realized cap.

1283
01:05:59,982 --> 01:06:01,722
So in realized cap draws down,

1284
01:06:01,822 --> 01:06:02,522
those are effective.

1285
01:06:02,642 --> 01:06:04,382
The UTXO is being moved at a loss.

1286
01:06:04,842 --> 01:06:06,562
And you can functionally think of it

1287
01:06:06,562 --> 01:06:09,382
as capital leaving the Bitcoin network.

1288
01:06:09,382 --> 01:06:14,082
So realized cap is all the capital that's been entrusted to Bitcoin to be stored.

1289
01:06:14,242 --> 01:06:16,342
If it's pulling back, people are exiting.

1290
01:06:16,742 --> 01:06:18,202
There's an exodus from the market.

1291
01:06:18,582 --> 01:06:20,482
It's only down about 5%.

1292
01:06:20,482 --> 01:06:26,562
So it's not like this rapid outflow of demand per se.

1293
01:06:27,002 --> 01:06:30,362
It was just an influx of supply that made the price go down.

1294
01:06:30,642 --> 01:06:35,922
Realized cap's down 5% compared to 14, 16, and 19 in previous bear markets.

1295
01:06:35,922 --> 01:06:39,442
Wait, explain to me why that shows that it's not a lack of demand.

1296
01:06:40,582 --> 01:06:48,782
Because if I buy 100 Bitcoin at $100, that's $10,000 I'm putting into the market,

1297
01:06:49,082 --> 01:06:55,362
versus if I buy 100 Bitcoin at $100,000, that's, what, $10, $100 million worth of Bitcoin.

1298
01:06:56,142 --> 01:07:03,442
So when you multiply the amount of coins by the price, you can determine how much capital is put into the market.

1299
01:07:03,442 --> 01:07:10,902
And so if I take those 100 Bitcoin I bought at 100K and I move them again on chain, again, there's assumptions being made.

1300
01:07:10,962 --> 01:07:15,882
But if I move them on chain at 50K, I'm selling, we would assume that's a sale.

1301
01:07:16,162 --> 01:07:21,862
So instead of that 10 million or whatever being entrusted to the network, it is now 5 million.

1302
01:07:22,122 --> 01:07:24,222
And so it's a net decline in capital.

1303
01:07:24,482 --> 01:07:26,742
And the interesting here is these seem to turn around very quickly.

1304
01:07:27,162 --> 01:07:27,642
They do.

1305
01:07:27,842 --> 01:07:28,002
Yeah.

1306
01:07:28,122 --> 01:07:33,822
As soon as you start to see realized cap going back up after it was going down, it almost

1307
01:07:33,822 --> 01:07:35,442
always confirms the bear market's over.

1308
01:07:36,122 --> 01:07:50,805
Isn another interpretation of this data that a lot of the sales that happened in 2025 were people selling at a profit Correct Rather than people saying I bought in Bitcoin at the wrong time I down 30 and now I

1309
01:07:50,805 --> 01:07:51,225
out of here.

1310
01:07:51,365 --> 01:07:51,485
Yeah.

1311
01:07:51,545 --> 01:07:54,985
More evidence of your thesis that it was long-term holders and OGs.

1312
01:07:55,105 --> 01:07:55,245
Yeah.

1313
01:07:55,445 --> 01:07:55,845
Interesting.

1314
01:07:56,025 --> 01:07:58,885
That also kind of shows that conviction across the board might be going up.

1315
01:07:59,445 --> 01:07:59,685
Yeah.

1316
01:07:59,825 --> 01:08:00,485
Yeah, I think so.

1317
01:08:00,585 --> 01:08:00,765
Yeah.

1318
01:08:00,905 --> 01:08:06,925
And I think much better for Bitcoin that people did choose 100K as like a generational

1319
01:08:06,925 --> 01:08:13,305
exit and then you get distribution of coins rather than 2022, which was like those sellers

1320
01:08:13,305 --> 01:08:18,465
who sold that down 20% and that's an aggregate number, obviously. But that was like a lot of

1321
01:08:18,465 --> 01:08:22,565
people thought, oh, Bitcoin's dead forever. I don't think this is a Bitcoin is dead forever

1322
01:08:22,565 --> 01:08:28,385
moment. Absolutely not. Okay. Well, if we got more capitulation, the title's cut off here,

1323
01:08:28,445 --> 01:08:35,585
but this is the Coin Days Destroyed chart. So one Bitcoin that was held for one day and then moved

1324
01:08:35,585 --> 01:08:39,605
as one coin day, one Bitcoin that was held for a thousand days and then moved as a thousand

1325
01:08:39,605 --> 01:08:43,705
coin days. So it's just- So they're showing that we had a lot of OG selling. A lot of OG selling.

1326
01:08:43,905 --> 01:08:51,725
It's transaction activity waited for the OGs. And you see spikes at tops and then capitulatory

1327
01:08:51,725 --> 01:08:58,465
moments. We had a major capitulation at the end of last year, all those OG coins being sent to

1328
01:08:58,465 --> 01:09:05,265
exchanges, presumably to be sold. But we've started to see it die down. And again, that's just more

1329
01:09:05,265 --> 01:09:12,385
evidence that you're not getting an influx of supply on the market, which means we're probably

1330
01:09:12,385 --> 01:09:16,645
going to, you know, time-based capitulation more so than price. This is cool. There's a lot of

1331
01:09:16,645 --> 01:09:20,785
different data that shows if we're not at the bottom, we're probably close. Yeah. Yeah. A lot

1332
01:09:20,785 --> 01:09:24,865
of it. And again, you can't take any one metric and cherry pick and say, I'm going to input my

1333
01:09:24,865 --> 01:09:28,845
entire life savings based on what this might indicate. But all of them, you know, we looked

1334
01:09:28,845 --> 01:09:32,945
at like 10 different charts here that kind of tell the same story. Yeah. Very cool. All right.

1335
01:09:32,945 --> 01:09:38,185
And this is the zoomed out, you know, low time preference chart.

1336
01:09:38,345 --> 01:09:44,965
So the amount of Bitcoin that hasn't moved in six months or longer, you know, it's subjective what a long-term holder is.

1337
01:09:45,065 --> 01:09:47,205
Glassnode categorizes it at six months.

1338
01:09:47,685 --> 01:09:51,545
They did a huge statistical analysis of this a few years ago.

1339
01:09:51,625 --> 01:09:57,965
Any coin that doesn't move for six months, the odds of it then moving any time in the near future decrease dramatically.

1340
01:09:57,965 --> 01:10:04,665
I just love that the 2017 top, like all the OGs did so well as all the retail got absolutely screwed.

1341
01:10:05,065 --> 01:10:06,345
You know, as they should.

1342
01:10:06,505 --> 01:10:09,885
I can't imagine holding through like the 2015-16 bear market.

1343
01:10:10,285 --> 01:10:13,345
Because today it's so obvious what Bitcoin is doing.

1344
01:10:13,465 --> 01:10:17,785
But I can imagine back then it was not quite as clear that Bitcoin would win.

1345
01:10:18,605 --> 01:10:19,765
That's a great point, Mitchell.

1346
01:10:19,845 --> 01:10:21,145
Just to underscore that real quick.

1347
01:10:21,145 --> 01:10:27,785
In 2017, there was not this narrative of like stack as much Bitcoin as you can.

1348
01:10:27,965 --> 01:10:32,005
Bitcoin's going up forever. Obviously, some people believe that. But I think people buying

1349
01:10:32,005 --> 01:10:37,565
Bitcoin, even in 2017, it felt more like you're buying a lottery ticket. It didn't feel like I'm

1350
01:10:37,565 --> 01:10:42,525
stacking generational wealth and sell my chairs. It's all up only. Yeah, I think for the people

1351
01:10:42,525 --> 01:10:48,305
that knew, they knew. When you read Pierre Richard's articles and Goldstein from 2013 and

1352
01:10:48,305 --> 01:10:53,645
stuff, they knew. But I think the interesting there is that was such a retail-driven market.

1353
01:10:53,645 --> 01:10:55,125
I came in in 2016.

1354
01:10:55,405 --> 01:10:57,045
That was my first experience of that.

1355
01:10:57,585 --> 01:10:59,725
And the sort of pie-in-the-sky crazy number

1356
01:10:59,725 --> 01:11:01,425
that I remember people talking about was 100K.

1357
01:11:01,725 --> 01:11:03,285
Like, will we ever get to 100K?

1358
01:11:03,425 --> 01:11:04,685
And now that number's a million,

1359
01:11:04,785 --> 01:11:05,885
and we're going to get to that as well.

1360
01:11:06,565 --> 01:11:07,785
It's just going to take time.

1361
01:11:08,105 --> 01:11:09,245
Yeah, two decades.

1362
01:11:10,385 --> 01:11:11,505
And yeah, this is the chart.

1363
01:11:11,625 --> 01:11:13,005
If you could jump back real quick,

1364
01:11:13,225 --> 01:11:15,625
I think the bigger picture idea here is

1365
01:11:15,625 --> 01:11:19,405
that is Bitcoin's finite supply visualized.

1366
01:11:19,945 --> 01:11:22,685
So you get supply available to the market

1367
01:11:22,685 --> 01:11:24,285
if the price gets bid high enough.

1368
01:11:24,725 --> 01:11:25,945
But bidding the price higher

1369
01:11:25,945 --> 01:11:27,845
is the only way to find new supply.

1370
01:11:28,185 --> 01:11:29,065
You can't mine more.

1371
01:11:29,165 --> 01:11:30,325
You have to bid the price higher.

1372
01:11:30,925 --> 01:11:33,005
Supply reacts, but over the long term,

1373
01:11:33,105 --> 01:11:36,145
it's just becoming more and more finite and scarce.

1374
01:11:36,325 --> 01:11:38,085
Every subsequent bull market,

1375
01:11:38,205 --> 01:11:41,145
you get fewer coins distributed into that price action.

1376
01:11:41,625 --> 01:11:42,205
Up and to the right.

1377
01:11:42,645 --> 01:11:43,545
Up and to the right.

1378
01:11:44,405 --> 01:11:45,485
It's a bumpy ride though.

1379
01:11:45,725 --> 01:11:46,825
Oh, it's what we just talked about here.

1380
01:11:46,825 --> 01:11:50,425
Yeah, so this is the odds of a rate hike by December.

1381
01:11:50,425 --> 01:11:51,885
So before the end of this year,

1382
01:11:51,885 --> 01:11:54,725
it's still like well over 50%.

1383
01:11:54,725 --> 01:11:55,985
Where are these odds coming from?

1384
01:11:56,465 --> 01:11:59,845
They are coming from the CME Fed Funds futures data.

1385
01:11:59,965 --> 01:12:00,205
Okay.

1386
01:12:00,985 --> 01:12:02,985
Yeah, and I think this is going to unwind

1387
01:12:02,985 --> 01:12:05,065
and I think Bitcoin is going to perform well

1388
01:12:05,065 --> 01:12:07,965
as these odds kind of get priced out.

1389
01:12:08,365 --> 01:12:11,465
I do wonder where rates will go.

1390
01:12:11,765 --> 01:12:12,945
Like even if they do drop,

1391
01:12:13,045 --> 01:12:15,025
like I can't see us getting back to 0%

1392
01:12:15,025 --> 01:12:15,885
or close to 0%.

1393
01:12:15,885 --> 01:12:16,205
Can you?

1394
01:12:16,885 --> 01:12:19,285
I think it would take a big time crisis,

1395
01:12:20,045 --> 01:12:21,665
which on a long enough timeframe,

1396
01:12:21,885 --> 01:12:27,565
our system is designed that there will be some sort of crisis. And when I say crisis, I mean like

1397
01:12:27,565 --> 01:12:34,445
the big ones, like 2008 was a financial crisis, obviously resulted in a big print, a big print,

1398
01:12:34,805 --> 01:12:41,265
COVID. Yeah. Another one. Um, so I think that will happen at some point and that gives the

1399
01:12:41,265 --> 01:12:46,765
authorities the cover to say, this is a once in a lifetime thing, you know, rates have to come down

1400
01:12:46,765 --> 01:12:48,605
and they'll give all the lingo.

1401
01:12:49,645 --> 01:13:01,748
But if you one of those people who like forever predicting that to happen three months from now you end up looking kind of silly So it more it like I do it a matter of when not if

1402
01:13:01,868 --> 01:13:06,288
but I'm not going to be the one who's always saying it's a quarter away. Yeah. And the bigger

1403
01:13:06,288 --> 01:13:12,508
point related to that, I would just say is you asked the question earlier, Danny, of like, do you

1404
01:13:12,508 --> 01:13:19,148
think we have these euphoric price run-ups in Bitcoin? I think generally speaking, no, as the

1405
01:13:19,148 --> 01:13:25,968
asset matures. But if there's another big print, like a 2008 or a COVID type of environment,

1406
01:13:26,488 --> 01:13:32,148
that I think could cause euphoria to the upside in Bitcoin. And I would couple that with,

1407
01:13:32,908 --> 01:13:39,228
that's when I think adoption follows a similar pattern. There's always going to be a gradual

1408
01:13:39,228 --> 01:13:45,188
trickling in of people that learn about Bitcoin through a book, a podcast, a friend, whatever.

1409
01:13:46,068 --> 01:13:49,648
But then I think adoption happens in waves as well.

1410
01:13:49,948 --> 01:13:50,288
Absolutely.

1411
01:13:50,408 --> 01:13:52,468
And COVID was like the biggest example of that.

1412
01:13:52,808 --> 01:13:54,348
So those waves will happen.

1413
01:13:54,488 --> 01:13:56,928
I'm not predicting it to happen in a quarter from now,

1414
01:13:57,008 --> 01:13:59,488
but like over a multi-year timeframe, they will happen.

1415
01:13:59,628 --> 01:14:01,448
A number go up is what brings in new people.

1416
01:14:01,748 --> 01:14:03,388
But I think because we didn't have the euphoria

1417
01:14:03,388 --> 01:14:06,308
is why we got less newcomers to Bitcoin in the last cycle.

1418
01:14:06,308 --> 01:14:06,668
Yeah.

1419
01:14:07,128 --> 01:14:10,488
I think it was on your show with Brandon Quidham recently.

1420
01:14:10,608 --> 01:14:11,188
Did you have him on?

1421
01:14:11,248 --> 01:14:11,308
Yeah.

1422
01:14:11,368 --> 01:14:14,468
And he was talking about like the different personality types

1423
01:14:14,468 --> 01:14:20,148
that adopt Bitcoin. And I don't know much about the Myers-Briggs stuff, but I guess like the INTP

1424
01:14:20,148 --> 01:14:26,308
or whatever, that's like us. That's like the schizos, like we don't trust anyone. No institution

1425
01:14:26,308 --> 01:14:32,588
can pull the wool over our eyes. We're already all here. The people of that archetype have found

1426
01:14:32,588 --> 01:14:39,328
Bitcoin. So I think the next wave of adoption, it's going to have to be force fed to some degree.

1427
01:14:39,328 --> 01:14:46,848
it's going to have to be like MSTR inclusion into the S&P or Bitcoin becoming part of like a state

1428
01:14:46,848 --> 01:14:54,268
pension fund. Like I'm not necessarily convinced we're going to get too many more like, let me set

1429
01:14:54,268 --> 01:14:59,168
up three geographically distributed cold cards and run a node type Bitcoiners. Yeah, no, I agree

1430
01:14:59,168 --> 01:15:04,868
with that. The only thing I would add is I think I agree with that. But I think there it's like if

1431
01:15:04,868 --> 01:15:09,308
you wait that for capital, it could be a little different. What I mean by that is the young

1432
01:15:09,308 --> 01:15:11,788
Younger people might be into Bitcoin now,

1433
01:15:12,008 --> 01:15:14,628
but they're not earning a bunch of money.

1434
01:15:14,928 --> 01:15:16,728
So the money that they're putting into Bitcoin,

1435
01:15:16,848 --> 01:15:17,868
it might be very small.

1436
01:15:18,308 --> 01:15:19,668
As they start to earn more,

1437
01:15:19,848 --> 01:15:21,648
as they get inheritance from their parents,

1438
01:15:22,148 --> 01:15:23,808
then they're already here,

1439
01:15:24,168 --> 01:15:26,208
but they're not here in terms of capital.

1440
01:15:26,508 --> 01:15:30,088
So that could be another catalyst, I guess.

1441
01:15:30,208 --> 01:15:30,868
That's a good point.

1442
01:15:31,328 --> 01:15:34,048
One of the hypocrisies that I have as a Bitcoiner

1443
01:15:34,048 --> 01:15:35,328
is I look at this and I'm like,

1444
01:15:35,788 --> 01:15:37,228
I want this to go down

1445
01:15:37,228 --> 01:15:38,788
because I know it makes Bitcoin go up.

1446
01:15:38,788 --> 01:15:41,448
But also, the cost of capital should never be 0%.

1447
01:15:41,448 --> 01:15:43,028
Like, that's absolutely insane.

1448
01:15:43,308 --> 01:15:43,548
Yeah.

1449
01:15:43,908 --> 01:15:46,108
I don't know what like a healthy level is,

1450
01:15:46,188 --> 01:15:47,608
but it's clearly not zero.

1451
01:15:47,808 --> 01:15:49,808
I wrestle with the same struggle

1452
01:15:49,808 --> 01:15:50,988
because it's like,

1453
01:15:51,228 --> 01:15:53,948
why am I rooting for them to debase the currency?

1454
01:15:54,128 --> 01:15:56,508
Well, it's because my personal, you know,

1455
01:15:56,668 --> 01:15:59,588
financial eggs are aligned with that thesis

1456
01:15:59,588 --> 01:16:00,728
that they will do it.

1457
01:16:00,728 --> 01:16:03,428
And so it does kind of distort, you know,

1458
01:16:03,528 --> 01:16:05,888
what money does distort.

1459
01:16:06,088 --> 01:16:07,828
But, you know, we're in Bitcoin

1460
01:16:07,828 --> 01:16:10,608
not because we're like rooting for them to cut rates,

1461
01:16:10,708 --> 01:16:12,508
but because we look at the data,

1462
01:16:12,608 --> 01:16:13,328
believe it's inevitable.

1463
01:16:13,328 --> 01:16:17,348
And so you should not try to row against the current,

1464
01:16:17,488 --> 01:16:19,308
just position yourself so that

1465
01:16:19,308 --> 01:16:21,788
when they follow the natural path,

1466
01:16:21,828 --> 01:16:24,768
which is to devalue every fiat currency to nothing,

1467
01:16:24,868 --> 01:16:25,948
you're not totally screwed.

1468
01:16:26,068 --> 01:16:27,108
You got to hold hard assets.

1469
01:16:27,428 --> 01:16:27,808
There you go.

1470
01:16:28,048 --> 01:16:28,988
All right, what have we got next?

1471
01:16:30,348 --> 01:16:33,348
Yeah, so this a bit of a 180,

1472
01:16:33,608 --> 01:16:36,308
but what you're looking at here in the gray line

1473
01:16:36,308 --> 01:16:43,388
is if someone makes $250,000 a year and they live in the States, so not particularly relevant to you

1474
01:16:43,388 --> 01:16:51,128
as an Aussie, but how much they pay in federal income tax over a 30-year career, it's 1.68

1475
01:16:51,128 --> 01:16:58,568
million. So making a quarter million a year for 30 years, you pay almost 1.7 million to Uncle Sam

1476
01:16:58,568 --> 01:17:04,668
so he can do whatever with that. The green line is if you could instead invest that capital in

1477
01:17:04,668 --> 01:17:10,368
something growing at a modest 8% per year. Obviously, Bitcoin's done much better than that.

1478
01:17:10,908 --> 01:17:15,948
And so if you weren't already aggravated by inflation, here's how much capital you're

1479
01:17:15,948 --> 01:17:21,348
likely forfeiting over to the government that doesn't generate you any kind of return. And then

1480
01:17:21,348 --> 01:17:26,188
it's juxtaposed with the opportunity cost. So if you could actually keep the capital that you're

1481
01:17:26,188 --> 01:17:32,288
giving to the government and instead invest it, that's almost a $6.5 million opportunity cost.

1482
01:17:32,288 --> 01:17:38,288
So this is where we can probably introduce you as a member of the Blockware team.

1483
01:17:38,428 --> 01:17:39,908
Thankfully, there is a solution.

1484
01:17:40,368 --> 01:17:46,228
There is an option where you can, instead of giving capital to the government, put it into an asset that appreciates.

1485
01:17:47,228 --> 01:17:52,288
My first thing I would say is I would only work at a company that sponsors the What Bitcoin Did podcast.

1486
01:17:52,428 --> 01:17:52,948
There you go.

1487
01:17:53,188 --> 01:17:54,748
That was my requirement too now.

1488
01:17:57,228 --> 01:18:02,268
Yeah, I would say, so yeah, I've joined the Blockware team, super pumped about it.

1489
01:18:02,288 --> 01:18:12,011
I look at it really simplistically and I did this myself as an individual So obviously I think it attractive If someone owns Bitcoin

1490
01:18:12,531 --> 01:18:14,411
if someone has a high

1491
01:18:14,411 --> 01:18:16,711
or really any amount of ordinary income,

1492
01:18:16,791 --> 01:18:17,331
to be honest,

1493
01:18:17,771 --> 01:18:18,551
an ordinary income,

1494
01:18:18,651 --> 01:18:20,991
that's like W-2 employment income.

1495
01:18:21,391 --> 01:18:22,671
If that's true,

1496
01:18:22,831 --> 01:18:24,651
and if you find it attractive

1497
01:18:24,651 --> 01:18:26,951
to receive a Bitcoin dividend,

1498
01:18:27,531 --> 01:18:30,071
which is what owning Bitcoin miners gets you,

1499
01:18:30,071 --> 01:18:35,411
if those things are true then this strategy makes sense for you because you'll get a bitcoin dividend

1500
01:18:35,411 --> 01:18:41,411
you'll lower your taxes and like i could just leave it there but then icing on the cake would be

1501
01:18:41,411 --> 01:18:48,791
if you believe it's a local low point for the price of bitcoin and therefore the machines that

1502
01:18:48,791 --> 01:18:54,431
you would be buying then i think this strategy makes a ton of sense so that's like my own very

1503
01:18:54,431 --> 01:18:59,731
simplistic explanation of the strategy but it's also an explanation of why i thought moving to

1504
01:18:59,731 --> 01:19:05,031
block where it was attractive for myself to take advantage of that. And I think the message of

1505
01:19:05,031 --> 01:19:10,671
getting that out to the Bitcoin world, we're like only in the early innings of that. Because one of

1506
01:19:10,671 --> 01:19:17,051
these tax policy things just changed in legislation last year. And I think most people are literally

1507
01:19:17,051 --> 01:19:22,931
unaware that they could benefit themselves tremendously from this. So I'll leave it there.

1508
01:19:22,931 --> 01:19:25,591
Just to clarify for people who have no idea what we're talking about.

1509
01:19:25,731 --> 01:19:26,711
The ads probably already run.

1510
01:19:26,711 --> 01:19:32,971
Yeah, they watch the show all the time. If you switch to the next slide, it quantifies this a

1511
01:19:32,971 --> 01:19:38,831
little more. You can take a 100% deduction on Bitcoin mining servers in a single tax year.

1512
01:19:38,991 --> 01:19:45,091
So it's literally like dollar in to miners, dollar off your active income. So we've really

1513
01:19:45,091 --> 01:19:50,571
hit kind of a sweet spot with doctors, lawyers, attorneys, and business owners. Anybody who

1514
01:19:50,571 --> 01:19:56,311
makes a lot of guap and has to give a lot of it to Uncle Sam. So if your tax rate,

1515
01:19:56,311 --> 01:20:02,631
for example, is 37%, your marginal tax rate, and you spend $100,000 on Bitcoin mining servers,

1516
01:20:02,951 --> 01:20:09,171
you will get roughly, and check with your accountant, $37,000 back in tax savings.

1517
01:20:09,791 --> 01:20:14,371
And we were just talking about going with the current, don't row against it.

1518
01:20:15,111 --> 01:20:22,051
Tax law, as boring as it sounds, is just a blueprint of incentives. So the same way you

1519
01:20:22,051 --> 01:20:27,351
don't want to save in fiat currency because that is not the proper incentive. It's going to

1520
01:20:27,351 --> 01:20:34,491
depreciate. There are tax codes to incentivize certain types of behavior. The big, beautiful

1521
01:20:34,491 --> 01:20:41,471
bill incentivizes investing into physical capital to run a business. And we were talking earlier too

1522
01:20:41,471 --> 01:20:46,351
about they're throwing the kitchen sink at this debt problem. This was one of the resources in

1523
01:20:46,351 --> 01:20:51,571
that kitchen sink. They want the economy to grow. So they're creating an incentive to start a

1524
01:20:51,571 --> 01:20:56,551
business. So Bitcoin miners can be fully deducted in year one. Like if you bought a scissor lift

1525
01:20:56,551 --> 01:21:02,111
and you run a construction business, that can be fully deducted. So don't go against the grain,

1526
01:21:02,211 --> 01:21:07,451
just find whatever incentives are in the tax structure and then follow them. And that's a

1527
01:21:07,451 --> 01:21:11,911
significant amount of capital over a lifetime that could actually be working for you.

1528
01:21:11,911 --> 01:21:15,071
Yeah. Buying a Bitcoin miner rather than giving money to the government sounds like a pretty good

1529
01:21:15,071 --> 01:21:20,551
win. Yeah. They're subsidizing it for you. This is how high net worth individuals think.

1530
01:21:20,551 --> 01:21:22,691
Like this is like tax strategy

1531
01:21:22,691 --> 01:21:24,211
is part of your investment strategy.

1532
01:21:24,631 --> 01:21:26,151
So I think there's a lot of Bitcoiners

1533
01:21:26,151 --> 01:21:28,311
who are just stacking as much Bitcoin as they can.

1534
01:21:28,651 --> 01:21:29,971
They should continue to do that.

1535
01:21:30,311 --> 01:21:31,651
But you should also think,

1536
01:21:31,891 --> 01:21:33,171
how can I minimize my tax bill?

1537
01:21:33,411 --> 01:21:33,691
Absolutely.

1538
01:21:34,231 --> 01:21:36,931
And the other thing that's interesting about that is

1539
01:21:36,931 --> 01:21:39,231
like as all the Bitcoin miners move to AI,

1540
01:21:39,391 --> 01:21:40,431
move away from Bitcoin mining,

1541
01:21:40,511 --> 01:21:42,391
it also helps like decentralized hash rate.

1542
01:21:42,571 --> 01:21:42,891
Yes.

1543
01:21:42,991 --> 01:21:44,411
And that's what the next chart shows.

1544
01:21:44,411 --> 01:21:46,971
So what we're looking at here is the Bitcoin hash rate.

1545
01:21:47,071 --> 01:21:49,691
I think it's on either a 14 or 30 day moving average.

1546
01:21:49,691 --> 01:21:53,171
It has not made a new all-time high since November of last year.

1547
01:21:53,391 --> 01:21:55,691
That's the longest stretch in Bitcoin history.

1548
01:21:55,831 --> 01:21:58,111
It's like eight months with no new all-time high.

1549
01:21:58,791 --> 01:22:04,231
Like you said, all the large data centers that were mining Bitcoin are running AI servers instead.

1550
01:22:04,511 --> 01:22:13,891
So it's creating a more open playing field for the middle guy or the little guy who can actually now mine at a nice profit margin

1551
01:22:13,891 --> 01:22:19,631
because they're not competing with these billion-dollar institutions that can tap into debt and public capital markets.

1552
01:22:19,691 --> 01:22:22,391
and just endlessly finance, like mining at a loss.

1553
01:22:22,691 --> 01:22:26,671
Because a lot of the large public miners were mining Bitcoin at a loss.

1554
01:22:27,151 --> 01:22:32,371
And now they're all exiting the network and hash rates down about 16%,

1555
01:22:32,371 --> 01:22:38,071
which means blockware clients are earning 16% more Bitcoin now than they were at the hash rate peak.

1556
01:22:38,371 --> 01:22:43,311
Yeah, the interesting thing here is like that is literally an up-only chart until very recently.

1557
01:22:43,751 --> 01:22:43,811
Yeah.

1558
01:22:43,911 --> 01:22:48,851
I remember, I think Sam Waters at River did a report on Bitcoin mining.

1559
01:22:48,851 --> 01:22:50,131
the Bitcoin network

1560
01:22:50,131 --> 01:22:51,011
into a Zeta hash,

1561
01:22:51,051 --> 01:22:51,911
which it obviously did.

1562
01:22:52,011 --> 01:22:53,491
And when he did that in like 2022

1563
01:22:53,491 --> 01:22:54,771
or something like that,

1564
01:22:55,051 --> 01:22:56,851
and it seemed like the most far-flung,

1565
01:22:57,011 --> 01:22:57,951
like crazy projection,

1566
01:22:58,211 --> 01:22:59,411
we got there in four years.

1567
01:23:00,431 --> 01:23:02,371
Do you think this will continue to drop now?

1568
01:23:04,111 --> 01:23:06,751
I think in the near term, yes.

1569
01:23:06,891 --> 01:23:07,911
A lot of capital is,

1570
01:23:08,071 --> 01:23:09,451
like the marginal dollar

1571
01:23:09,451 --> 01:23:10,771
in the data center industry

1572
01:23:10,771 --> 01:23:13,091
is not going to Bitcoin mining servers.

1573
01:23:13,091 --> 01:23:14,451
And so there's kind of

1574
01:23:14,451 --> 01:23:16,091
three bottlenecks at the moment.

1575
01:23:16,511 --> 01:23:18,531
Number one is simply power.

1576
01:23:18,531 --> 01:23:19,951
You need power to

1577
01:23:19,993 --> 01:23:25,333
operate large scale Bitcoin miners to actually move the needle on this chart. So you've got power,

1578
01:23:25,433 --> 01:23:29,433
then you have the physical data center infrastructure. Even if you have access to

1579
01:23:29,433 --> 01:23:35,233
power, you have to get transformers, containers, all that. And then third is actually on the ASIC

1580
01:23:35,233 --> 01:23:43,173
level. So there has not been a new air-cooled Bitmain ASIC in almost two years. The Antminer

1581
01:23:43,173 --> 01:23:49,693
S21XP came out at the end of 2024. The S23, they do have the hydro equivalent, but the air-cooled

1582
01:23:49,693 --> 01:23:54,873
been delayed and delayed and delayed because the semiconductors in a Bitcoin miner are also

1583
01:23:54,873 --> 01:23:57,513
in artificial intelligence servers.

1584
01:23:58,193 --> 01:23:59,173
Just make more money selling it there.

1585
01:23:59,373 --> 01:23:59,993
Yeah, exactly.

1586
01:24:00,213 --> 01:24:05,213
So TSMC and Samsung are going to fill all the orders for the hyperscalers before they,

1587
01:24:05,253 --> 01:24:07,733
you know, go to Bitmain and help them make their ASICs.

1588
01:24:07,853 --> 01:24:07,993
Yeah.

1589
01:24:08,053 --> 01:24:11,653
Is that also because they're reaching like, not necessarily a peak, but they're kind of

1590
01:24:11,653 --> 01:24:14,613
plateauing in terms of how much incremental difference each model...

1591
01:24:14,613 --> 01:24:16,533
That's, yeah, that's another factor at play.

1592
01:24:16,533 --> 01:24:21,533
So the S21 XP now is about 10% better than its predecessor.

1593
01:24:21,873 --> 01:24:24,213
It used to be like if you bought an S19,

1594
01:24:24,213 --> 01:24:27,253
like all the S9s basically overnight became unprofitable.

1595
01:24:27,553 --> 01:24:42,403
So it longer for machines to hit the market And even when they do the impact on hashrate is pretty negligible Do you think there a bullish side of this which is taking hash rate away from just a few public Bitcoin mining companies into the hands of more and more regular people

1596
01:24:42,803 --> 01:24:47,703
Yeah, I think that an argument could be made that that's a good thing. I don't know. I generally

1597
01:24:47,703 --> 01:24:51,483
think it's kind of like a non-factor. Like some people would point at this and like, oh,

1598
01:24:51,483 --> 01:24:55,543
it's the minor doom loop. Like all the miners are turning off. I don't think that's necessarily

1599
01:24:55,543 --> 01:25:02,283
the case. I also don't think it's necessarily like bullish for the Bitcoin price, but it is bullish

1600
01:25:02,283 --> 01:25:06,983
if you are in the mining business and you no longer have to compete with your biggest competitors.

1601
01:25:07,423 --> 01:25:13,263
Yeah. And I think there's a good argument to make that I do think this on a long trend is still

1602
01:25:13,263 --> 01:25:17,983
going to go up into the right. But I think at least for like the next year or two, and Mitch,

1603
01:25:18,023 --> 01:25:24,683
you can tell me if you agree, but I think even if hash rate starts to go up a bit, I think there's

1604
01:25:24,683 --> 01:25:27,683
there's a good chance the Bitcoin price will go up faster.

1605
01:25:27,683 --> 01:25:31,523
And it's because of all these factors that Mitch is highlighting,

1606
01:25:31,523 --> 01:25:33,863
which is a lot of these players that moved,

1607
01:25:33,863 --> 01:25:37,163
they're not like waiting for Bitcoin to go back to 100k

1608
01:25:37,163 --> 01:25:39,663
and then they're like, oh, we're going to go back into Bitcoin mining.

1609
01:25:39,663 --> 01:25:43,163
So Bitcoin could go to 100k in the relatively short term.

1610
01:25:43,163 --> 01:25:54,232
And I think that increase will happen faster than hashrate will So it be more prof Even hash rate will be going up nominally it be more profitable for the people who stay and mine

1611
01:25:54,532 --> 01:25:55,792
Correct. Yeah, there's a lag.

1612
01:25:55,792 --> 01:25:58,172
At this point with Bitcoin at 60K,

1613
01:25:58,272 --> 01:26:00,392
any new capital is going into AI

1614
01:26:00,392 --> 01:26:02,952
and it's going to take a massive bull market

1615
01:26:02,952 --> 01:26:03,752
before they're like,

1616
01:26:03,812 --> 01:26:05,652
maybe we should mine a little more Bitcoin.

1617
01:26:05,972 --> 01:26:07,792
But even then, if you compare

1618
01:26:07,792 --> 01:26:11,432
some of the hosting deals in the AI space,

1619
01:26:11,432 --> 01:26:17,652
they make more money like running these AI servers than even mining Bitcoin when Bitcoin is 120k.

1620
01:26:17,792 --> 01:26:17,972
Yeah.

1621
01:26:18,072 --> 01:26:23,532
So I think it's going to take like a blow off top before you see significant amounts of capital put

1622
01:26:23,532 --> 01:26:24,992
back into the Bitcoin mining industry.

1623
01:26:24,992 --> 01:26:28,812
I'd actually be surprised if a lot of them come back ever. Like I think Iron have said that they're

1624
01:26:28,812 --> 01:26:31,812
not like they've they're kind of I don't know if they're still mining Bitcoin a little bit,

1625
01:26:31,872 --> 01:26:36,312
but I think the plan is to completely deprecate that entire business line and just entirely to AI.

1626
01:26:36,612 --> 01:26:38,032
But I guess all that's opportunity.

1627
01:26:38,032 --> 01:26:39,192
It is opportunity, yeah.

1628
01:26:39,332 --> 01:26:42,892
It's more slices of the pie available for everyone else.

1629
01:26:43,012 --> 01:26:43,172
Yeah.

1630
01:26:43,312 --> 01:26:45,672
And you get a full tax deduction on the machine.

1631
01:26:46,312 --> 01:26:46,892
Sounds like a win.

1632
01:26:47,072 --> 01:26:48,072
It is a win, big time.

1633
01:26:48,392 --> 01:26:49,372
All right, what have we got next?

1634
01:26:49,552 --> 01:26:50,372
I think that's it.

1635
01:26:50,432 --> 01:26:50,872
That's it.

1636
01:26:51,012 --> 01:26:51,492
Yes, sir.

1637
01:26:51,872 --> 01:26:53,092
Anything else you want to talk about then?

1638
01:26:53,992 --> 01:26:54,992
No, this was great.

1639
01:26:55,152 --> 01:26:56,532
I appreciate you having us

1640
01:26:56,532 --> 01:27:09,182
and I looking forward to your live show tonight Yeah I excited for that I just got a call from Junseth just before we recorded I was like shit he missed his flight But he on his way Perfect We got Hoddle and Eric Kaysen landing at 4 p So I just desperately hoping

1641
01:27:09,182 --> 01:27:10,022
their flights aren't delayed.

1642
01:27:10,222 --> 01:27:11,142
We can actually do this show,

1643
01:27:11,222 --> 01:27:11,842
but it's going to be good.

1644
01:27:12,002 --> 01:27:12,442
Yes, sir.

1645
01:27:12,882 --> 01:27:13,702
PubKey, let's go.

1646
01:27:13,882 --> 01:27:14,762
Gotta love PubKey.

1647
01:27:14,902 --> 01:27:15,362
Like I said,

1648
01:27:15,382 --> 01:27:16,162
it's the first time I've been here

1649
01:27:16,162 --> 01:27:16,662
in the morning

1650
01:27:16,662 --> 01:27:17,862
when it's not dark outside.

1651
01:27:18,122 --> 01:27:19,502
So it's a little odd,

1652
01:27:19,642 --> 01:27:20,562
disorienting for me,

1653
01:27:20,642 --> 01:27:21,782
but gotta love PubKey.

1654
01:27:22,982 --> 01:27:24,342
It's 11.30 a.m.

1655
01:27:24,342 --> 01:27:25,242
You're just going to sit downstairs

1656
01:27:25,242 --> 01:27:26,902
for seven hours now.

1657
01:27:27,682 --> 01:27:28,922
We're going to Wall Street

1658
01:27:28,922 --> 01:27:30,642
to ask Wall Street people

1659
01:27:30,642 --> 01:27:31,642
what they think about Bitcoin

1660
01:27:31,642 --> 01:27:33,282
and see if they've really taken over.

1661
01:27:33,822 --> 01:27:34,522
Let's go.

1662
01:27:34,702 --> 01:27:35,182
Come see the bull.

1663
01:27:35,182 --> 01:27:36,622
We'll come back with the data tonight.

1664
01:27:37,102 --> 01:27:37,542
Let's go.

1665
01:27:37,802 --> 01:27:38,502
Well, thank you, guys.

1666
01:27:38,682 --> 01:27:39,882
We've obviously spoken about Blockware,

1667
01:27:39,942 --> 01:27:41,202
but where can they go to find out about it?

1668
01:27:41,722 --> 01:27:42,762
Blockwarsolutions.com.

1669
01:27:43,182 --> 01:27:44,002
For slash WBD.

1670
01:27:44,462 --> 01:27:46,402
Yeah, slash WBD.

1671
01:27:46,622 --> 01:27:48,042
And fill out the form there.

1672
01:27:48,042 --> 01:27:50,342
And you can also DM myself

1673
01:27:50,342 --> 01:27:51,822
at MitchellAskYouOnX.

1674
01:27:51,942 --> 01:27:53,682
And you can also DM John,

1675
01:27:53,682 --> 01:27:59,602
who is now jhar blockware that's correct good memory thank you guys it's been awesome thanks

1676
01:27:59,602 --> 01:28:00,402
danny thanks danny