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Straight up highway robbery, the corruption, the robbery that occurs for most people around the

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world and what they deal with just because the money is so broke in most parts of the world

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is changing and no government can stop that. I would say Trump's putting them in there for a

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reason and the reason is probably to win midterms. Bitcoin has such a massive upside, call it a 30 to

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40% annualized return, dollar cost average in the Bitcoin over time. That volatility is actually

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advantageous to you. He's effectively a bank that is over collateralized to a point that

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offsets the volatility risk of Bitcoin. You can store the private key in your head, in your brain,

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and you can go anywhere you want in the world and you can still access that. Quantitative

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tightening, everybody knows is the opposite of quantitative easing, is now over. If we end

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2026 up significantly, I'm not surprised.

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The Bitcoin Podcast

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of their mining hardware in a single year. So earn Bitcoin daily while saving big come tax season.

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Get started at mining.blockwarsolutions.com slash titcoin. Use the code titcoin to get $100

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off your first miner when using the Blockware marketplace. This is not tax advice, so go speak

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00:01:45,380 --> 00:01:51,420
to the team at Blockware to learn more. That's mining.blockwarsolutions.com slash titcoin.

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Head to the show notes for links to find the show on centralized social media platforms and

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on Noster or just go directly to BitcoinPodcast.net. You'll find it all there. And kind reminder

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that you can support this show by becoming a paid subscriber on Fountain. Or don't,

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Bitcoin doesn't care, but I sure do appreciate it. Without further ado, let's get into this Bitcoin

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talk. Preston Pish, welcome back. It's, it's, I think, I'm trying to think the last time you were

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on this show. It might've been with American hodl hodl. I think it was, it's been a little while.

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It's been a little while. We've seen each other in person since then. Uh, but you know, now we're

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separated by, by long distances and these, these darn screens, but here we are. It's good to see

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you, my friend. Good to see you too. Yeah. It's been too long, man. You know, in, in, in the interim,

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you have, uh, you have somewhat transitioned your podcast. You've had a Peter McCormick moment,

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let's say not quite so extreme uh you still obviously talk about bitcoin uh on your show

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bitcoin fundamentals on the investors podcast network but you also have uh uh technology uh

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a tech infinity uh right that's the the new kind of new angle i i like it so far just you know as

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a long time as a long time listener of bitcoin fundamentals like as it it's one of the shows

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that's in my core rotation of bitcoin podcast to get my 40 hours per week i think this is a nice

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angle that makes sense because like it all touches back to bitcoin but sometimes you need a more like

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dedicated focus on some of these other emerging things that are happening. So I'm glad you're

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covering it because you do an excellent job. Thank you, sir. Yeah, no, it was a little bit

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selfish in that I just wanted to cover other things because I'm just naturally curious and

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I find some of it fascinating. That's stuff that's happening in tech is just mind blowing.

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And to your point, it is, it's, it's also a Bitcoin story. And as we get more tech abundance

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and these humanoid robots.

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We could talk about humanoid robots, driverless cars,

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like all this kind of stuff that Elon is having a huge impact

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on a lot where this is all going.

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But there's many others.

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It's a huge race.

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And it is.

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It's a story about how technology is taking over

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and governments are going to have to offset all of that loss in employment

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that's naturally going to occur over the coming decade.

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And as they do that, it becomes a Bitcoin story.

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And so all of this is kind of converging.

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And, you know, it works out for me because I just, like I said, I'm super curious and I love covering interesting things.

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And, you know, so I'm doing both.

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I'm still covering Bitcoin quite a bit on the show.

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So this is the hack of podcasting.

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Podcasting is really just an excuse to be able to talk to fascinating people and, you know, and call it working.

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Right. It's kind of it's the best hack ever.

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Don't let anyone in on the secret, but this is why everyone should start a Bitcoin podcast or a podcast of some kind.

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You know, it's a it's a great way to do it.

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Yeah. Yeah. You definitely get to meet some fascinating people and just have fascinating conversations for sure.

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And speaking of fascinating conversations, I have a feeling we may be about to have one.

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I always end up having a fascinating conversation with you, Preston.

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And it felt like a great time to have you on because we were talking just before we went.

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We went live here and shout out to everybody who was already streaming this live on Noster and sending zaps already.

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What a beautiful thing to be able to receive value just effortlessly with no middleman in between.

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That's wonderful.

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But we were talking about the vibes and the vibes are weird, Preston.

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Yeah, vibes are weird.

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You've seen more cycles than I have.

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You've been around around longer than I have.

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You're also much more tapped into, I would say, the macro side of this.

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You're also tapped in to just, let's say, the industry side of this deeper than most people are just through the work you do at EgoDeath.

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And I'm just curious what your current vibes are.

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What is your read of all this right now?

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How are you feeling?

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Is it similar to what the sentiment is out there?

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Because the broad sentiment I see, even from hardcore Bitcoin bulls, has shifted a bit bearish.

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And I'm just curious where you're sitting.

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Are you kind of hunkering down for the long Bitcoin winter?

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Are you thinking that there's a huge dislocation between reality and price and sentiment?

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Where are you at?

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I'm confused.

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I mean, I'll just be honest with people.

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Having been through quite a few cycles, what you've seen historically is when Bitcoin's

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down hard. It's liquidity. It's the plumbing. It's the overall monetary units in the system,

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which is completely based on promises for measuring in fiat. And in the past cycles,

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it was very correlated to risk on versus risk off and just liquidity flows. And what has me

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most confused right now is I'm looking at the S&P 500 index and it's 1.5% off of the high.

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right and normally if bitcoin's down i mean bitcoin's down about 30 percent from the high

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typically if bitcoin was down that much you know the indices would be down 15 percent or something

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they would be have sold off way more than nothing that they've sold off because we're

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we're at all-time highs pretty much everywhere you look um in addition to that i would just say that

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the fixed income market um at least in the u.s and japan's a whole nother story but in the u.s

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fixed income is pretty flat for the most part over the same period of time.

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And so you're not really seeing the liquidity flows. They're kind of demonstrating that,

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you know, monetary units are being sucked out of the system that would warrant Bitcoin being down

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30%. So there's something weird happening. I can't really define it more than that,

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other than it's got me confused. But this is what I would tell the listener who's hearing that,

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and be like, okay, well, what the hell do I do with that? What you do with that and what I've

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seen historically with Bitcoin is anytime it offers you a decent price or a sell-off volatility,

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just keep dollar cost averaging it. Don't overthink it. And it does exactly what you

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least expect is what I've learned through the years. And that volatility is your friend. It

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really is your friend. When it's bouncing around, if you're not trying to overthink it and over time

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and you're just kind of saying, okay, well, this is my craft. This is what I'm doing. This is what

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I'm doing to add value in the world. And I'm going to take whatever free cash flows I get out of that.

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And I just dollar cost average in the Bitcoin over time, that volatility is actually advantageous to

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you. And it helps you even perform better than if you just had a smooth line of Bitcoin going,

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you know, up into the right, that volatility is actually advantageous to you. So I just tell

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people to not overthink it. And if you're confused, sometimes, you know, that makes it easier for you

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because you can just kind of let your dollar cost average just do the work for you.

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Yeah, I'm certainly not stopping dollar cost averaging anytime soon or probably ever. Like

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that's the beauty of dips, right? Your dollars go just a little bit farther. They get you just a few

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more sats. But I think that one of the reasons that people are share your confusion is just because

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it's just a weird, it just feels like a weird year. Like we're, we're lower now, I think than

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even when like the beginning of the year, when, when Trump took office, basically, if you know,

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if you invested in just about anything, if you took your infinitely printable us dollars and

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put them in just about anything else, especially if you put them in gold, the gold bugs are,

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you know, dancing on Bitcoin's early grave. If you, you know, S and P even is, I think is

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obviously outperformed as you said. And I think people are just kind of feeling like, well, what

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the heck you know i i was i was promised valhalla and here i am just you know bleeding out on the

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battlefield i don't even have my my axe in my hand like how am i going to get into valhalla without

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this i don't know what the axe represents in this in this you know metaphor but i'll figure that out

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later but i mean where i want to go with this is a lot of people look at these four-year cycle

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charts and say well if if we go by the prior cycles we should be here right now and we're so

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much lower than that. What's going on? Where, where, what's your opinion on four year cycles

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generally? Are, is this something that's been overstated in terms of its importance? Does this

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hold some bearing? What are the other factors at play that people maybe aren't seeing that are kind

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of leading to some of this overall confusion and just feeling of like, what the heck is going on?

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Before I, before I answer that, I just want to say one more thing on my previous comment on the

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dollar cost averaging piece. Because a person that hears that and be like, okay, so we just

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blindly just keep buying something and don't think about it. And that's not what I'm saying either.

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If I thought that the fundamentals of like what Bitcoin is providing from a value prop had changed

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or that there was something technologically flawed in the code or the incentives or any of that,

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I wouldn't be saying dollar cost average it. But I haven't seen anything there that warrants

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concern or additional risk from anything that I've seen historically. In fact, I would argue that

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as just like a strange data point, you have Harvard that tripled their Bitcoin holdings,

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and it's the largest public position that they have, Harvard University. And I'm not one to just

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buy something because somebody else buys it either, but these are knowledge points of elite

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institutions that obviously are seeing something of value here or else they wouldn't be buying it.

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You have little knowledge points like this kind of popping up all over the place of incumbents and

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legacy elite institutions and people that are buying despite what many in the market would say

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is the price is down. I'm looking at those types of things in conjunction with the fact that nothing

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has fundamentally changed or been increased risk. And so I'm saying, okay, I'm just going to continue

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to dollar cost averages thing that I think is going to change the monetary order around the

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world. So I want to preface the recommendation with dollar cost averaging with these other

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points that I think are also important for a person to continue to go back to and to continue

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to always be asking themselves, all right, has anything changed? Is my thinking flawed? Is there

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something that I should be considering that I'm not considering. Okay. If not, well, then I'm just

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going to keep doing this thing, which is dollar cost average. Okay. So your question on the four

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year cycle, what I would say is very early on when you had very few people engaged in this Bitcoin

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protocol, I think that the metronome of what was happening from a four year cycle standpoint

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with the halving happening every four years and the two-week difficulty adjustment and just the

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way that the algorithm that was programmatically adjusting itself was much more driven by the

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program and the algorithm and the protocol itself than what was happening with business cycles and

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the broader. I think that was what was driving the train. And then I think as it matures and

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And as it gets bigger, and there's some writing,

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the book of Satoshi is a great book

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where it just kind of goes and it outlines all of,

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and it curates all of Satoshi's writing.

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Satoshi even talks about this in the early days.

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He's saying, so much of this is gonna be cost,

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based around the cost or the energy that it takes to mine this as to like what the market value is going to be It protocol driven And then he says that as it becomes more widely adopted it going to have

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less to do with that. And it's going to have way more to do with other external factors and macro

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factors of the environment that it's operating inside of. And so what I would say is this might

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be kind of a, you know, this, this, maybe two years back, three years back might've been kind

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of a real turning point where the environmental factor in which the protocol is operating is

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starting to be more of a determining factor. And so what you saw early on in these four-year cycles,

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and I'm not even, I'm not even saying that it is the four-year cycle. I just think it was more

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protocol driven. And I would say now it's less so. And so if, if, you know, we end 2026

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up significantly, like I'm not surprised. And that would be in complete contrast to this four

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year cycle theory that everybody would say, Oh, well now for the next year, it's going to go down

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because every four years, that's what it, I think we're kind of moving beyond that. And I think that

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just the overall liquidity in the, you know, the fiat system and how it's getting, how it enters

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into the system is also a huge factor. So now, nowadays, so I guess that'd be my take. And I

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know that's kind of a squishy, like easy way out answer. It's a little squishy, Preston, but I'll

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let it slide. Well, no, okay. I want to talk about liquidity because I think it's like,

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as Bitcoiners were like, you know, yeah, you know, and the Fed, we don't need them. They don't matter,

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But they do right now, sadly.

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You know, a cabal of unelected banker bureaucrats sadly controls the price of money.

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For now, there's nothing we can do except opt out and buy Bitcoin or earn Bitcoin or mine Bitcoin.

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But the point being that what they do actively affects us at this point in time.

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This is one of the interesting things to me is this dynamic that we have.

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I'm in Bitcoin for the long haul, right?

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Like I'm thinking in five, 10, 20, 100 year increments for this.

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Like I'm thinking about what happens long after I'm gone because I know what I hold.

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But that being said, I also care about what happens in the short term because I'm trying

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to figure out how to deploy the scant fiat that I that I do still have that is not already

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deployed to Bitcoin.

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And I'm looking at this next kind of this next year and just thinking about, well, we've

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got midterms, you know, and politicians, you know, Trump loves to pump bags, especially

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when they're his own.

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He's got heavy Bitcoin bags.

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Trump wants to pump everyone's bags.

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We know this.

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He wants to juice the system full of liquidity.

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He's got a Fed right now that has been,

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we know that Trump and Powell are not exactly the best of buddies.

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Powell is going away in April or May.

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If he doesn't, he'll step back sooner.

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I think he'll probably want to finish out his term at least,

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just to have ended it on that note, say I made it to the finish line.

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But what are you watching for the Fed?

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Now, I know that there's talk that basically as of December now, they're no longer going to be doing their balance sheet runoff, right?

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That's not to say what exactly they're going to be.

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Are they going to be adding their balance sheet?

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I don't know, but they're going to stop running it off, right?

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What are you looking at?

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What are you tracking?

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Are there certain things that you're saying, okay, if X, Y, Z happens, then this kind of accelerates my bullish thesis, or then I think things get pretty wild?

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What are you looking at from that perspective in terms of this cabal of central bankers and what they decide to do with our money?

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I mean, quantitative tightening, which everybody knows is the opposite of quantitative easing, is now over on the 1st of December.

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They've stopped quantitative tightening.

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And so you're at a transition period where instead of quantitative easing is buying bonds and putting liquidity into the market and then them holding those bonds to basically juice the markets, quantitative tidying is the opposite of that.

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So you're removing through quantitative tidying, you're removing the liquidity out of the system.

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So they've stopped that.

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And so you're at a transition point where they're going to start easing.

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And then you see that they're going to be potentially cutting 25 bips in December, which is a loosening activity.

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And so you're just kind of going through the wave.

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You're kind of at the bottom of this tightening wave, and it might be a couple quarters.

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It could be who knows.

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I think for them, they're just looking at how much contagion occurs in the market.

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And if there's no contagion in the market, they're just going to go about all of this loosening probably on a much slower timeline.

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So, you know, at the end of the day, they've got to keep juicing the markets.

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They've got to keep putting monetary units into the system, whether they're doing it at a COVID pace or they're doing it at a much slower, everything's kind of functioning pace.

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That's yet to be determined.

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You know, I know everybody wants somebody that can come in here and look into a crystal ball and tell them what's going to happen.

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But, you know, I can't do that.

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And anybody who tells you that they can is just making it up.

248
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But the way I would just simplify it is there's times when it's very aggressive and there's times when it's not.

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I would just say right now you're at one of these periods where it just feels like you're at a transition.

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It doesn't seem to be progressing very quickly.

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Um, and I think that, uh, the new, uh, Kevin Hassett seems to be the guy that's being named,

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that's going to come in and replace Powell. I think that's in like April or May that that's

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going to occur. Is he going to, you know, move the markets faster than Powell? Probably. Uh,

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I would say Trump's putting them in there for a reason. And the reason is probably to win midterms.

255
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Uh, and because Powell's just done and he wants somebody else in there that's,

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that's more politically aligned with the party. So until then, you know, we'll just continue to

257
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stand by and dollar cost average, I guess. Do you think that there's a, an appetite from Trump to,

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let's say, root, reduce some of the feds, uh, supposed separation from, you know, from the

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treasury, from the federal government, you know, they're a, they're a public private corporation.

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We know that's a tenuous link there. I've seen some speculation that basically, you know,

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Trump wants to kind of break that, you know, whatever distinction there,

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there actually is there, break that down a little bit to try and basically,

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you know, be able to apply more pressure, let's say by, you know,

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by putting in somebody that's going to be a, you know, a Trump,

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Trump loyalist, let's say. And, and, you know, when he says print,

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they say, you know, how high basically.

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Yeah. I think he, he,

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he wants to do that now because they're the collectively on the board,

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it's not politically aligned with what he wants. Right.

270
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so that's why he wants the change but if they were politically aligned he he wouldn't want the

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change it's just it's a function of control he wants control of it and he doesn't have it and

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if he can get it let's say has it goes in there and it kind of changes the composition of the

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board and then they're just kind of doing what he's wanting well then he's not going to want

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removed so it's just it's it's a political arm uh they say that they're not um and i guess when

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you have a split between parties of like the, the, let's just assume that the, that the fed board

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is politically aligned with the Democrats. Okay. That might be a controversial thing for people

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listening to the show. I don't care. Let's just say that that's what it is. And you have a

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Republican in there when it's at a, when it's at odds or it's a clash, it doesn't matter which

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parties, which, you know, we could flip flop that and they're not going to be happy because

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they don't have control. It's a political thing. So, um, I don't know what that, you know,

281
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Well, and the Fed is a very convenient scapegoat as well from a political standpoint.

282
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Like if you can say, well, look, everything would be okay if only the Fed would juice the economy.

283
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I mean, usually it's if only they would print more.

284
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That's the funny thing is like the Fed's almost the adult in the room in these cases, which I don't know what that says.

285
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But, you know, that's the reality.

286
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so okay uh leaving aside like our our crystal ball i think over the long term one thing is clear which

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is we know that they must print right we know that this like nothing stops this train lynn alden has

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created the economic meme of the decade maybe that maybe the century maybe the millennia i don't know

289
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time will tell but we know that fiscal dominance is real there's no we saw what happened with doge

290
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right um yeah they made some small cuts but it wasn't anything it wasn't on the order of magnitude

291
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that that Elon and I think that's really kind of disillusioned Elon a little bit like thought

292
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maybe oh look if we just go in there and we're just we just apply efficient you know business

293
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practices to this and we cut out the waste then they'll get rid of it and kind of came out like

294
00:25:00,834 --> 00:25:05,594
you know chain smoking cigarettes being like my god it's so much worse than I thought but I mean

295
00:25:05,594 --> 00:25:12,574
the thing I'll say about Elon on that particular topic is Elon's a fast learner right he's a fast

296
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learn. He went in there delusional in thinking that he could actually create change and efficiency

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in something that is incentivized to not be efficient at all. It's incentivized to burn and

298
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spend the money and get it out into the economy as the first receiver of all the freshly printed

299
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and clacked on keys monetary units. And so he learned within, what was it, three months,

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he figured it out and he and he was like i'm out of here this is a waste of my time because he

301
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figured it out um you know let me go back to building rockets and sending people you know

302
00:25:50,294 --> 00:26:00,274
things yeah yeah no it's yeah my my and my point there was just essentially i think there's this

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uh a kind of a tacit realization on both sides of the aisle like no government republican or

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Democrat controlled is going to slow down spending.

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I mean, maybe they would slow down spending, but they're not going to meaningfully reduce

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spending, probably not going to implement any austerity measures because those are going

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to be wildly unpopular, especially when you'd have, you know, everybody now is at the point

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00:26:24,614 --> 00:26:26,494
where the money printer meme is so strong.

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People would say, well, why are you increasing our taxes when you can just print the money?

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00:26:29,674 --> 00:26:34,334
You know, the MMT years have invaded everybody's psyche and they at least have a point in that

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regard.

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The end result is not what they think it will be.

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But do you think we just continue to see this massive expansion of the federal public debt?

314
00:26:45,794 --> 00:26:51,914
Do you think there is actually, like, if nothing stops this train, like, how far can this can be kicked down the road?

315
00:26:51,914 --> 00:26:53,834
Or can it be kicked down the road essentially infinitely?

316
00:26:53,834 --> 00:26:59,774
Because we're still the dollar, we're still the reserve currency, but we're now in a multipolar world where people don't trust treasuries as much.

317
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Like we've seen that since, you know, the sanctions on Russia, I think was kind of like a breaking point where a lot of people went, oh, huh.

318
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I guess maybe that's not so, you know, like that to me was a huge, huge shift.

319
00:27:13,094 --> 00:27:27,474
And then, you know, everybody was obviously so preoccupied with the war itself that like that part, the monetary part kind of got just like pushed to the side, except for some people who were kind of ringing the bell saying, hey, this is a changing, you know, a changing moment here.

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Where are you at with this?

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Now, back to the show.

338
00:28:50,868 --> 00:28:59,308
I would just say that any politician that is trying to implement austerity doesn't understand the global game that's being played.

339
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And this is the whole reason why Elon, once he figured it out, he's just like, well, I'm out of here.

340
00:29:04,308 --> 00:29:08,548
This is impossible to change the global incentives, right?

341
00:29:08,648 --> 00:29:13,468
So if you go in there and you say, oh, I'm going to play by the rules because that's what

342
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austerity is.

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I'm going to play by the rules.

344
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We're not going to debase the money.

345
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We're going to get this thing under control.

346
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You have to convince all the other players in the game, all the other countries, to do

347
00:29:26,108 --> 00:29:29,968
the exact same thing and to all of a sudden want to play by the rules.

348
00:29:29,968 --> 00:29:48,628
Because as soon as you start playing by the rules and then China's over there debasing all their money and having all this buying power that they're then going and buying the scarce desirable equity off the U.S. board, you can see the incentives are forcing everybody to debase.

349
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The incentives are forcing everybody to want to print real fast, put that money into the hands of their elite, and then go buy the profitable cash flow generating things on everybody else's board or game.

350
00:30:05,548 --> 00:30:09,208
I'm using the monopoly example of multiple monopoly boards.

351
00:30:09,868 --> 00:30:13,148
So that's the game that's being played.

352
00:30:13,148 --> 00:30:28,348
And like, you're just not going to get away from that incentive structure unless something comes in and forces everybody to play a game of these are the monetary units you collect that nobody can control and nobody can debase.

353
00:30:28,928 --> 00:30:40,008
Right. I think that right now, if I was going to maybe pontificate a little bit on why it's so confusing, I think you have a lot of capital that's chasing the AI stuff, too.

354
00:30:40,008 --> 00:30:46,508
And when you look at the sheer size of like what that is, we're talking trillions upon trillions.

355
00:30:46,868 --> 00:30:48,068
It's a new shiny object.

356
00:30:48,068 --> 00:30:51,048
And it's the thing that's just attracting a lot of attention.

357
00:30:51,828 --> 00:31:04,168
And could that possibly be why the sentiment in Bitcoin was lost in the second half of the year or maybe even like for a lot of 2025 for the most part?

358
00:31:04,588 --> 00:31:06,848
And I think that that might be the case.

359
00:31:07,068 --> 00:31:09,648
It's definitely a contributing factor.

360
00:31:10,008 --> 00:31:23,948
Whether it's the dominant factor, I don't know. But I think that when you look at the size of that capital that is being funneled into just all the AI stuff, I think that it's a giant liquidity suck on other places where it could go.

361
00:31:24,888 --> 00:31:26,028
Let me ask you.

362
00:31:26,108 --> 00:31:30,408
I mean, I think that AI broadly is obviously like not going away.

363
00:31:30,508 --> 00:31:33,568
I don't think that this is somehow like a fraudulent technology, anything like that.

364
00:31:33,608 --> 00:31:40,428
But from a short-term perspective, the money that's being pumped into some of these things is just like outrageous.

365
00:31:41,008 --> 00:31:41,288
Outrageous.

366
00:31:41,288 --> 00:31:48,408
I mean, do you think there's the possibility of kind of a short-term bubble in a lot of these AI investments?

367
00:31:48,408 --> 00:31:52,828
Like, is that something you're tracking or is this, is it just going to catch up?

368
00:31:52,848 --> 00:31:54,368
And like, this is what's required right now.

369
00:31:54,368 --> 00:31:57,688
And it actually maybe makes some sense for there to be so much money pumped in because

370
00:31:57,688 --> 00:31:58,808
you got to do all this build out.

371
00:31:58,808 --> 00:32:01,868
But like, also we don't necessarily have the energy infrastructure to even support that

372
00:32:01,868 --> 00:32:03,448
build out here on shore.

373
00:32:03,548 --> 00:32:05,288
So like, where are you at with this?

374
00:32:05,308 --> 00:32:08,408
Are you thinking that there's the possibility that some of this stuff comes crashing on

375
00:32:08,408 --> 00:32:08,968
the short term?

376
00:32:09,288 --> 00:32:13,188
Obviously it's not going away long-term, not saying that, but like in terms of just current

377
00:32:13,188 --> 00:32:16,848
kind of valuations, fundraising that's happening, investment, you know, money that's flowing

378
00:32:16,848 --> 00:32:22,008
in here. How are you looking at this? Yeah. I mean, when you look at this, the players that

379
00:32:22,008 --> 00:32:27,768
are involved, you know, you could say open AI is like an anomaly, but really they're,

380
00:32:27,848 --> 00:32:33,948
they're backed by Microsoft. You got Google, who it's an extremely profitable company. You got

381
00:32:33,948 --> 00:32:41,648
Facebook. They're extremely probably got Tesla, not Tesla, sorry. You got Elon with XAI and,

382
00:32:41,648 --> 00:32:48,128
And just the players that are in this game have very, very deep pockets.

383
00:32:48,688 --> 00:32:55,528
And more importantly, they have the ability to tap financial markets through financial

384
00:32:55,528 --> 00:33:02,308
alchemy and can fund the crazy amount of capex that's required in this space.

385
00:33:02,308 --> 00:33:07,508
And what I mean by tap financial markets through financial alchemy, what I mean by that is,

386
00:33:07,508 --> 00:33:12,528
you know, look at micro strategy and their ability to kind of issue common stock.

387
00:33:12,728 --> 00:33:17,848
It's almost like having your own printing press when you're a public company to raise capital.

388
00:33:18,988 --> 00:33:24,148
These companies that the ones that I named, they can do the exact same thing and they can allocate

389
00:33:24,148 --> 00:33:30,308
that capital into whatever they want. And so like their pockets are way deeper than

390
00:33:30,308 --> 00:33:37,468
somebody who's just used to personal accounting and just, you know, living off of a paycheck and

391
00:33:37,468 --> 00:33:39,488
And that's pretty much what they have at their disposal.

392
00:33:39,488 --> 00:33:43,208
They might be able to go to the bank and take out a small loan to do whatever.

393
00:33:43,208 --> 00:33:54,888
Like the rules that these big companies in these that we named are playing by and how they raise capital is way different than what the individual might understand or think about.

394
00:33:55,348 --> 00:33:58,328
So I think that's part of it.

395
00:33:58,328 --> 00:34:12,088
I mean, you saw this with the Oracle NVIDIA announcement where just the announcement alone pumped the market cap of the companies, which then they were able to transmute into cash to go buy more infrastructure just off of the announcement.

396
00:34:12,288 --> 00:34:26,648
So you have games like that being played to say that it's a bubble or what I mean, it feels like a bubble, but that doesn't necessarily mean that it is because I think we're in some really weird times, to be honest with you, Walker.

397
00:34:26,648 --> 00:34:27,868
I don't know.

398
00:34:28,228 --> 00:34:34,208
But yeah, I'm going to keep asking you to have a crystal ball here, but feel free to keep shutting it down.

399
00:34:34,528 --> 00:34:42,808
Well, you mentioned MicroStrategy, and I think that's a good opportunity to transition to that a little bit because Saylor and MicroStrategy have been taking a lot of heat recently.

400
00:34:42,928 --> 00:34:52,568
They just had the announcement as of yesterday, I guess, that they bought Bitcoin, I think 100 and some, up to get that perfectly round 650,000 Bitcoin number.

401
00:34:52,568 --> 00:34:56,908
astonishingly large number of Bitcoin, like hard to wrap one's mind around,

402
00:34:57,588 --> 00:35:01,528
but they're at that nice round number now. And they've also started, I guess, stacking some fiat.

403
00:35:01,708 --> 00:35:05,868
They started putting a good amount of fiat reserves. It was like a billion four or something

404
00:35:05,868 --> 00:35:10,988
like that on their balance sheet. What's your read of this? Because there was a lot of mixed

405
00:35:10,988 --> 00:35:15,568
sentiment that I saw. A lot of people's kind of saying like, what the heck's going on here?

406
00:35:15,568 --> 00:35:21,648
I thought you told us not to hold dollars and sell our kidneys for Bitcoin. How are you looking

407
00:35:21,648 --> 00:35:27,848
at this? How are you reading it? What's your perspective? Yeah, I think there's, as usual,

408
00:35:27,848 --> 00:35:34,548
there's a ton of confusion around micro strategy and the fact that he's holding that much cash to

409
00:35:34,548 --> 00:35:41,608
service the dividends and the coupons that he owes. My understanding is that gets him almost

410
00:35:41,608 --> 00:35:51,328
two years worth of coupon and dividend payments. So 1.4 billion relative to the 56 billion that

411
00:35:51,328 --> 00:35:56,988
is Bitcoin's worth today. He has 650,000 Bitcoin on his balance sheet, which is worth about $56

412
00:35:56,988 --> 00:36:03,688
billion. So when you look at these numbers and you look at what he's got to pay out the door 1.4,

413
00:36:03,988 --> 00:36:12,488
roughly two years, and he's sitting on a pile of 56 billion, he's got a lot of capital and he's got

414
00:36:12,488 --> 00:36:19,728
a lot of time to be right about this arbitrage that he's trying to pull off. And the arbitrage

415
00:36:19,728 --> 00:36:26,348
He thinks that the Bitcoin return rate on an annualized basis is way higher than the coupons and the dividends that he's paying.

416
00:36:27,208 --> 00:36:30,508
And if he's right, he's going to be able to continue to do this.

417
00:36:31,628 --> 00:36:39,728
And I think that that's a it's a controversial thing because I think people just can't wrap their head around the numbers.

418
00:36:39,808 --> 00:36:42,248
I think the numbers when people hear them are just so big.

419
00:36:42,568 --> 00:36:44,688
I guess I'm talking more about retail.

420
00:36:44,688 --> 00:36:50,748
um and then uh the other thing that i would say is it seems to be a little bit of a concerted attack

421
00:36:50,748 --> 00:36:58,168
on the company recently i i buy into this i think jp morgan changing their their uh borrowing uh

422
00:36:58,168 --> 00:37:03,748
ltv ratios i guess they went from like 50 to 95 percent so if people were borrowing against their

423
00:37:03,748 --> 00:37:10,048
shares they they increased that like basically doubled that uh which you know changes you know

424
00:37:10,048 --> 00:37:12,568
That is a major contributing factor.

425
00:37:13,348 --> 00:37:18,868
The fact that you have all these news articles coming out, there was one in the FT I just

426
00:37:18,868 --> 00:37:28,048
saw today, basically making it look like that they can't service their obligations through

427
00:37:28,048 --> 00:37:29,188
dividends and coupons.

428
00:37:29,188 --> 00:37:32,828
It's just straight up laughable, totally laughable.

429
00:37:34,488 --> 00:37:39,028
In general, I think that what he's doing is actually going to be successful in the long

430
00:37:39,028 --> 00:37:39,368
term.

431
00:37:39,368 --> 00:37:44,068
I think he's going about it in a responsible way as far as the leverage ratios that he's using.

432
00:37:44,288 --> 00:37:49,208
I don't think that he's putting himself in any type of financial stress whatsoever.

433
00:37:51,468 --> 00:37:55,368
And the other thing that I would say on MicroStrategy is it's levered Bitcoin.

434
00:37:55,808 --> 00:38:00,728
So if Bitcoin goes sideways, it's probably going to underperform it quite a bit.

435
00:38:00,828 --> 00:38:03,348
And if it goes down, it's definitely going to underperform it.

436
00:38:03,768 --> 00:38:06,148
And when it goes up, it should outperform it.

437
00:38:06,148 --> 00:38:20,768
And so whatever your, you know, take is on Bitcoin, you know, having been in it for a few years, I would tell you, if you can't handle intense volatility, you like, it's probably going to be a place where you have sleepless nights.

438
00:38:21,068 --> 00:38:31,308
So when you look at MicroStrategy and it's levered Bitcoin, whatever that understanding is that you have a vault of the of the volatility, it's just that and more.

439
00:38:31,308 --> 00:38:39,428
so um i can see why you know maybe he he deals with a lot of haters online and a lot of it is

440
00:38:39,428 --> 00:38:43,808
because you know buyer beware a lot of people that are that are buying it just really don't

441
00:38:43,808 --> 00:38:48,568
even understand what they own in the first place and they just don't understand that uh whatever

442
00:38:48,568 --> 00:38:55,328
bitcoin's doing he's probably going to do that with extra whether it's good or bad it also it

443
00:38:55,328 --> 00:39:05,248
It feels like right now people either purposefully or accidentally forget what Saylor was doing in the depths of the 2022 bear market.

444
00:39:05,248 --> 00:39:09,748
When everybody was screaming from the mountaintops that Saylor is going to get liquidated.

445
00:39:10,148 --> 00:39:10,248
Yeah.

446
00:39:10,388 --> 00:39:19,028
You know, Bitcoin is going to 10K, maybe 5K, maybe negative zero if you're Peter Zahan or whatever he said Bitcoin was going to, you know, at the time.

447
00:39:19,608 --> 00:39:21,668
But everybody is saying, you know, the Saylor is getting liquidated.

448
00:39:21,748 --> 00:39:22,828
Saylor is going to get liquidated.

449
00:39:22,968 --> 00:39:23,348
It's over.

450
00:39:23,408 --> 00:39:24,948
He's going to be a forced seller of all of his Bitcoin.

451
00:39:25,328 --> 00:39:26,388
And what does he do?

452
00:39:26,608 --> 00:39:33,468
I mean, he backs up the truck, so to speak, and does everything he can to load up on as much cheap corn as he can possibly get.

453
00:39:33,908 --> 00:39:36,348
And that served him extremely well.

454
00:39:36,808 --> 00:39:48,128
And I think sometimes he plays a lot of fiat games in terms of the financialized products that he's creating in terms of the way he's playing with the system.

455
00:39:48,128 --> 00:39:55,208
But I think people forget that the guy is as hardcore of a hodler as you can possibly be.

456
00:39:55,328 --> 00:39:56,788
So like, you know what I mean?

457
00:39:56,808 --> 00:39:58,568
It just feels like that's getting that gets lost.

458
00:39:59,668 --> 00:40:01,148
Yeah, no, I think it is lost.

459
00:40:01,728 --> 00:40:07,208
The other thing that I think it's hard for him to do is when the price is down really

460
00:40:07,208 --> 00:40:12,528
hard because he, you know, let's say at 100, he was there levering the company.

461
00:40:12,528 --> 00:40:18,148
Let's just say five to one with the Bitcoin that he has versus what he's issuing.

462
00:40:18,948 --> 00:40:24,688
And if the Bitcoin price goes down, it's difficult for him to basically put on that

463
00:40:24,688 --> 00:40:31,868
same type of trade when the price is down, which is hard to buy the dips because your leverage

464
00:40:31,868 --> 00:40:35,728
ratio went higher. If you're trying to keep it at a five to one ratio, if Bitcoin goes down,

465
00:40:35,808 --> 00:40:40,528
like now you might be at a six or a seven or an eight to one ratio. And what you don't want to do

466
00:40:40,528 --> 00:40:46,468
is double down. And at that time, if you've already told yourself, this is a safe and healthy

467
00:40:46,468 --> 00:40:53,128
ratio to have, call it five to one. So that's where the strategy is a little bit tricky is

468
00:40:53,128 --> 00:40:59,448
when the price gets punished, it is a little harder for him, especially if he did lever himself

469
00:40:59,448 --> 00:41:07,748
five to one and call it normal market conditions. It's a little tricky to buy the dip. Based on what

470
00:41:07,748 --> 00:41:13,748
he's doing, it's a little easier to buy the tops because you become less levered as the price runs.

471
00:41:14,488 --> 00:41:22,128
And so how you figure that out from a discipline standpoint, I would argue maybe he's figuring

472
00:41:22,128 --> 00:41:27,208
that out himself as they're building the ship and it's flying at the same time.

473
00:41:27,368 --> 00:41:28,028
I don't know.

474
00:41:28,088 --> 00:41:32,288
Maybe they have a strategy for how they go about that in a responsible way or not.

475
00:41:32,348 --> 00:41:32,728
I don't know.

476
00:41:32,808 --> 00:41:34,788
That's obviously not been disclosed to me.

477
00:41:36,528 --> 00:41:49,002
But I think that one of the challenges that he has with the strategy is just the market timing and how you get levered But is is he in any type of financial stress Like God no

478
00:41:49,182 --> 00:41:53,742
not that I can see, you know, based on looking at the 10 K and the 10 Q's.

479
00:41:54,462 --> 00:41:58,622
Yeah. It's, it's really interesting. I think again, he's,

480
00:41:59,042 --> 00:42:01,322
and what does he said just when you talked about buying the top, like he,

481
00:42:01,402 --> 00:42:04,022
I think he himself has said, like, I'll be buying the top forever. You know,

482
00:42:04,022 --> 00:42:06,762
Everybody always gives him grief because he shows the buy.

483
00:42:07,382 --> 00:42:13,382
And whatever his buy price was is almost, not always, but almost always higher than whatever the price is on the day they announced.

484
00:42:13,462 --> 00:42:15,542
And everybody, you know, well, why didn't you just buy it lower?

485
00:42:15,642 --> 00:42:19,122
And it's like, I don't know, because he didn't buy it all just this second.

486
00:42:19,382 --> 00:42:22,242
But regardless, I think we're Bitcoin either.

487
00:42:22,342 --> 00:42:25,122
He's buying a lot of Bitcoin, which also is a factor.

488
00:42:25,622 --> 00:42:25,822
Yeah.

489
00:42:26,242 --> 00:42:26,442
Yeah.

490
00:42:26,542 --> 00:42:28,602
Well, it's a lot of corn.

491
00:42:28,782 --> 00:42:33,742
And I think one of the things that people are maybe a little freaked out about now is they start looking at this and they say,

492
00:42:33,742 --> 00:42:38,922
well now you know uh you know if if and when and i think maybe mnav did go below uh go below one

493
00:42:38,922 --> 00:42:44,302
and this has been kind of this barometer for uh for let's say that the the health or how much the

494
00:42:44,302 --> 00:42:48,062
you know these companies not just microstrategy but they're the ones that obviously they're the

495
00:42:48,062 --> 00:42:51,982
they're the 800 pound gorilla in the room full of you know like little mice running around

496
00:42:51,982 --> 00:42:57,462
that's been that metric that people look at to say okay how's this doing how are people valuing

497
00:42:57,462 --> 00:43:02,002
this is this something you put a lot of stock in and do you think that microstrategy i mean they've

498
00:43:02,002 --> 00:43:08,422
said that they have the ability to sell Bitcoin if they need to. Do you think that's actually

499
00:43:08,422 --> 00:43:13,322
something they do? Or do you think that's just something that they say to keep, let's say,

500
00:43:14,042 --> 00:43:16,842
so that they're still saying the right things. They're not being looked at and saying, well,

501
00:43:16,922 --> 00:43:20,742
you would need to sell Bitcoin in this case. Otherwise, it's a breach of fiduciary duty,

502
00:43:20,742 --> 00:43:28,842
da-da-da-da-da. Yeah. I think that if they end up selling Bitcoin, it's because the price is down

503
00:43:28,842 --> 00:43:36,082
super hard and they're in somewhat of a dire scenario. Like if Bitcoin was down 80%,

504
00:43:36,762 --> 00:43:41,002
like maybe they would, from the high, they, they might be in a situation where they'd have to start

505
00:43:41,002 --> 00:43:46,102
servicing it with, with, you know, the sale of Bitcoin. But I think it would have to be some,

506
00:43:46,102 --> 00:43:53,242
some very deep, deep selling in the Bitcoin price and the, in the Bitcoin price action for them to

507
00:43:53,242 --> 00:43:57,722
be in that scenario. And I mean, at the end of the day, they have to file, they have to file

508
00:43:57,722 --> 00:44:02,522
find public financial disclosures and they have to list out all the things that could happen.

509
00:44:02,682 --> 00:44:08,022
And that's one of the things that could happen. I don't see that happening, but yeah.

510
00:44:09,022 --> 00:44:14,182
Yeah. So, I mean, one of the other areas where I think, again, I'm just, I'm, I'm, you know,

511
00:44:14,182 --> 00:44:19,882
got my, my finger on the, the, the, the pulse a little bit and trying to figure out the vibe.

512
00:44:19,882 --> 00:44:25,102
And one of the other areas that I think there's very bad vibes is around, around tether. And it

513
00:44:25,102 --> 00:44:30,942
seems that like like whenever bitcoin is taking a uh you know a big old dump or a dip or whatever

514
00:44:30,942 --> 00:44:34,222
we want to call it or in a protracted bear market as some would have you believe right now

515
00:44:34,222 --> 00:44:38,822
everybody comes out of the woodwork to dance on bitcoin's grave everybody comes out to say that

516
00:44:38,822 --> 00:44:42,242
tether to remind you that tether is in fact a ponzi and they're about to blow up and that the

517
00:44:42,242 --> 00:44:46,762
only reason you know the ones i love are the people that are like the only reasons bitcoin's

518
00:44:46,762 --> 00:44:52,242
price goes up is because tether is printing uh you know tether you know usdt out of thin air and

519
00:44:52,242 --> 00:44:56,482
buying Bitcoin with it. And it's like, it's funny because a lot of people have managed to buy

520
00:44:56,482 --> 00:45:01,582
Bitcoin without ever touching Tether. But okay, whatever you say, that everybody comes out of the

521
00:45:01,582 --> 00:45:06,122
woodwork. And now you're seeing all like these rating agencies basically say that the amount of

522
00:45:06,122 --> 00:45:11,182
Bitcoin and gold that Tether is holding is, you know, kind of dangerous. Tether also, I mean,

523
00:45:11,262 --> 00:45:16,382
I think they just recently in their last, I think in Q3, they attested that they'd purchased basically

524
00:45:16,382 --> 00:45:21,242
more gold than Sam Callahan put this out basically than like any central bank, which is kind of

525
00:45:21,242 --> 00:45:27,642
mind-blowing. I mean, I think they already hold more Bitcoin on their balance sheet than most,

526
00:45:27,642 --> 00:45:34,542
you know, most countries in the world. They hold more US treasuries than, well, now most countries

527
00:45:34,542 --> 00:45:43,102
in the world. Is this TetherFUD anything? Or is it not FUD? Is this actually very real? Is Tether,

528
00:45:43,362 --> 00:45:48,162
which looks to me like one of the most profitable companies in the history of humanity,

529
00:45:48,162 --> 00:45:53,102
are they actually going to be going down, going under?

530
00:45:54,042 --> 00:45:58,062
Or is this just, to me, this just feels like a local bottom signal.

531
00:45:58,062 --> 00:46:00,382
When everybody's saying Michael Saylor's going to get liquidated,

532
00:46:00,442 --> 00:46:01,722
when everybody's calling Tyler a Ponzi,

533
00:46:01,802 --> 00:46:04,302
when everybody's saying Bitcoin's going to 58K,

534
00:46:04,442 --> 00:46:06,242
maybe I've said it myself in a joking way.

535
00:46:06,362 --> 00:46:06,722
I don't know.

536
00:46:06,802 --> 00:46:08,242
Would I like to buy sats at 58K?

537
00:46:08,322 --> 00:46:08,462
Sure.

538
00:46:09,282 --> 00:46:10,622
How are you viewing this?

539
00:46:10,662 --> 00:46:11,982
Is there any meat on these bones?

540
00:46:12,982 --> 00:46:17,042
So let's start here by just explaining kind of where they sit

541
00:46:17,042 --> 00:46:19,002
in the global world of finance.

542
00:46:20,142 --> 00:46:23,102
So JP Morgan, which everybody's familiar with JP Morgan,

543
00:46:23,442 --> 00:46:25,902
is one of the biggest banks on the planet.

544
00:46:26,202 --> 00:46:28,862
Their market cap, if you value the whole business,

545
00:46:28,962 --> 00:46:31,282
is $841 billion, okay?

546
00:46:32,182 --> 00:46:33,062
$841 billion.

547
00:46:33,662 --> 00:46:37,882
This summer, Tether had a private equity offering

548
00:46:37,882 --> 00:46:42,782
and it valued the company at $500 billion, okay?

549
00:46:43,522 --> 00:46:46,322
So I'm just trying, the reason I'm throwing out there

550
00:46:46,322 --> 00:46:52,182
is just people, there's a lot of people that have never even heard of Tether. I know when you were

551
00:46:52,182 --> 00:46:57,062
home for Thanksgiving, if you sat down with all your family and friends and said, Hey, uh, who's

552
00:46:57,062 --> 00:47:02,242
ever heard of this company Tether? You might have, you know, 20% of the people raise their hands.

553
00:47:02,562 --> 00:47:07,902
And then if you told the people, you know, it's valued kind of close to where JP Morgan is,

554
00:47:07,902 --> 00:47:15,222
you know, again, JP Morgan, 841 billion Tether was recently valued at $500 billion. Okay.

555
00:47:15,222 --> 00:47:21,802
people would be like, what? Like, what do you, who, who is this tether? What do they do? Okay.

556
00:47:22,462 --> 00:47:27,402
So I want to start there and I want to frame it that we're not talking about like some backwoods,

557
00:47:27,402 --> 00:47:35,682
like no, no name business. We're talking about one of the biggest financial firms on the planet

558
00:47:35,682 --> 00:47:42,762
right now with tether. So what else I've learned, uh, cause the first time I experienced tether

559
00:47:42,762 --> 00:47:50,642
FUD was in 2017. I think it was 2017. There was tethered truthers that came out and were like,

560
00:47:50,722 --> 00:47:56,542
they're not backed. They're just making up these units and it's not actually being backed by

561
00:47:56,542 --> 00:48:04,242
treasuries. And then we went through a bear market, which I think it went down the 2018 bear market

562
00:48:04,242 --> 00:48:12,742
was down 70% from the high. And let me tell you, when something that is tightly correlated or

563
00:48:12,742 --> 00:48:17,162
Or it's not that it's correlated, it's tied into the Bitcoin ecosystem.

564
00:48:18,042 --> 00:48:25,382
And as closely as it is with all these other crypto scams that are out there and all these things went down, Bitcoin was down 70 percent.

565
00:48:25,502 --> 00:48:28,922
Everything else was down 99 percent or, you know, to zero.

566
00:48:29,442 --> 00:48:30,962
And Tether didn't blow up.

567
00:48:31,342 --> 00:48:33,962
So then we go through the SBF.

568
00:48:34,482 --> 00:48:35,402
When was this?

569
00:48:35,522 --> 00:48:42,542
2022, 2023, you know, bear market, which Bitcoin's down again a crazy amount.

570
00:48:42,742 --> 00:48:55,382
There's a massive, massive liquidity draw on the Tether tokens that were issued as far as the redemptions, and there's no issue yet again.

571
00:48:55,382 --> 00:49:13,242
And so having gone through two of these deep bear markets where the liquidity draws and the redemptions on the tokens have been very high, I find the argument to be smirk worthy at this point.

572
00:49:13,242 --> 00:49:28,262
Where I find it, if I was even going to go deeper, is those were periods in time when the coupons on the treasuries that they were holding were very low.

573
00:49:28,262 --> 00:49:43,222
And what you've had since COVID is that the coupon on these treasuries have been very elevated, especially for an organization that has, for all intents and purposes, 100 to 200 people employed.

574
00:49:44,102 --> 00:49:46,042
How many employees work for JP Morgan?

575
00:49:46,402 --> 00:49:49,202
Hundreds of thousands, right?

576
00:49:49,342 --> 00:49:56,682
And again, we're talking about a company that has a similar market cap, and they've got like maybe 200 employees at Tether.

577
00:49:56,682 --> 00:50:06,962
So from an expense structure standpoint, I think that they're operating pretty efficiently and they're sweeping.

578
00:50:07,162 --> 00:50:07,882
And here's the other thing.

579
00:50:08,082 --> 00:50:09,862
What are they doing with the coupons?

580
00:50:10,202 --> 00:50:12,542
Are they paying them out to all the token holders?

581
00:50:13,142 --> 00:50:13,582
Nope.

582
00:50:14,562 --> 00:50:18,662
No, they're actually retaining them as earnings inside of the company.

583
00:50:19,002 --> 00:50:22,902
And then what are they doing with those retained earnings?

584
00:50:23,002 --> 00:50:24,682
Are they just keeping it in cash?

585
00:50:24,682 --> 00:50:27,102
because these are the profits, right?

586
00:50:27,142 --> 00:50:28,782
The retained earnings are the profits.

587
00:50:29,162 --> 00:50:31,262
So not only are the tokens backed,

588
00:50:31,302 --> 00:50:33,082
but then they're kicking off profits.

589
00:50:33,082 --> 00:50:34,902
And then what are they doing with the profits?

590
00:50:35,042 --> 00:50:36,322
Oh, they're buying Bitcoin

591
00:50:36,322 --> 00:50:38,562
or they have been buying Bitcoin for years.

592
00:50:38,782 --> 00:50:42,162
They're owning gold, which is up tremendously, right?

593
00:50:42,162 --> 00:50:49,362
And so I think people that are trying to spread FUD on it now,

594
00:50:49,362 --> 00:50:59,882
it's just a concerted effort to to probably destroy whatever goodwill or branding is associated with

595
00:50:59,882 --> 00:51:04,642
the trust in the organization that's what it seems like to me because from a numbers standpoint

596
00:51:04,642 --> 00:51:09,782
i'm just looking at the sheer math and i'm saying this would have to be if they are fully backed

597
00:51:09,782 --> 00:51:14,322
which you know they come out with report after report because they're a private institution that

598
00:51:14,322 --> 00:51:19,262
they are fully backed, whether they are or aren't, I don't know. But I would think they'd be

599
00:51:19,262 --> 00:51:25,322
incentivized to be fully backed so that they can get their 5% coupon or 4% coupon of all these

600
00:51:25,322 --> 00:51:29,122
short duration treasuries that they're using to back. I would want that. I would want to be fully

601
00:51:29,122 --> 00:51:37,422
backed. So I'm just looking at the incentives of the organization. I'm looking at the math of the

602
00:51:37,422 --> 00:51:44,262
organization. And I've met Paula multiple times. I'm very impressed with the operator.

603
00:51:44,322 --> 00:51:48,842
Very impressed with the operator from just the technical competence standpoint.

604
00:51:50,142 --> 00:51:57,142
And so, you know, I'm looking at that and I'm saying it's an eye roll, but it's not.

605
00:51:57,302 --> 00:52:02,222
And I think this is the this is a point to emphasize that it's not a publicly traded company.

606
00:52:02,542 --> 00:52:14,302
So it's not like that, you know, when you have J.P. Morgan and you look at their balance sheet and their income statement and it's gone through countless auditing agencies in order to publish this public report.

607
00:52:14,322 --> 00:52:19,662
it's a lot easier to kind of look at that and say, well, this is, you know, healthy or this

608
00:52:19,662 --> 00:52:24,682
isn't healthy or whatever. With a private company, it's a lot harder to do that because they're just

609
00:52:24,682 --> 00:52:30,182
not, they don't have the same rigorous protocol that they have to go through. So, you know,

610
00:52:30,222 --> 00:52:36,442
I have these comments, I have these opinions, but I can't point to a 10K or a 10Q on the company and

611
00:52:36,442 --> 00:52:41,022
say, well, look right here, because this is very clearly not in financial stress and doesn't have

612
00:52:41,022 --> 00:52:46,162
issues and you know everybody out there on the internet has an opinion as to is because you don't

613
00:52:46,162 --> 00:52:53,542
have those types of reports but yeah i'm not concerned about it at all yeah and and you know

614
00:52:53,542 --> 00:53:00,082
even excuse me even with those types of reports uh you know things like for example a bank like

615
00:53:00,082 --> 00:53:07,362
jp morgan could be bernie madoff's banker for many years and uh you know and well that doesn't show up

616
00:53:07,362 --> 00:53:10,122
on all of those reports from all their auditors.

617
00:53:10,322 --> 00:53:11,562
Or, you know, I don't know.

618
00:53:11,802 --> 00:53:14,462
They could just imagine they could be Jeffrey Epstein's banker.

619
00:53:14,962 --> 00:53:17,722
And, you know, boy, that's not captured in those reports.

620
00:53:17,902 --> 00:53:21,582
So sometimes perhaps all those additional public reports

621
00:53:21,582 --> 00:53:23,462
don't actually capture the whole picture.

622
00:53:23,762 --> 00:53:25,962
But here's an interesting experiment.

623
00:53:26,262 --> 00:53:27,702
Here's an interesting thought experiment.

624
00:53:28,382 --> 00:53:30,322
And I'm not telling people what the right answer is,

625
00:53:30,362 --> 00:53:33,142
but I'm going to help you think critically about something.

626
00:53:33,462 --> 00:53:35,682
Remember when Silicon Valley Bank blew up?

627
00:53:35,682 --> 00:53:52,382
And if you had, let's say you had $5 million on deposit at Silicon Valley Bank the weekend before the Friday that it blew up versus 5 million USDT tokens, which supposedly are fully backed.

628
00:53:52,942 --> 00:53:54,842
And I suspect they are.

629
00:53:56,742 --> 00:54:00,522
Which one would you have rather held on the Friday before?

630
00:54:00,522 --> 00:54:05,322
Because Silicon Valley Bank has a Fed bank account, like all of it, right?

631
00:54:05,682 --> 00:54:14,402
Which one would you have rather held that before that weekend where Janet Yellen decided Sunday night that she was going to save all the all the deposits?

632
00:54:15,082 --> 00:54:23,742
Because it came down to one person's, you know, whether they were feeling charitable, charitable with your deposit.

633
00:54:23,742 --> 00:54:38,722
But, you know, it sure makes you think the difference between a fractional reserve bank that one person can make a determination on whether you actually get the $5 million deposit or not versus the other one that.

634
00:54:39,462 --> 00:54:40,542
And don't get me wrong.

635
00:54:41,402 --> 00:54:45,022
Could the government go in there and stop payments on whatever?

636
00:54:45,382 --> 00:54:46,882
Absolutely, they can.

637
00:54:46,982 --> 00:54:51,162
And they may with Tether, any stable coin.

638
00:54:51,722 --> 00:54:52,002
Right.

639
00:54:52,002 --> 00:54:53,962
I'm not arguing that.

640
00:54:54,262 --> 00:54:55,882
I know that they can do those kinds of things.

641
00:54:56,002 --> 00:55:01,302
In fact, you've even saw Apollo tweet about like, oh, yeah, this payment that was supposed

642
00:55:01,302 --> 00:55:04,322
to happen to whatever was stopped by us, right?

643
00:55:04,422 --> 00:55:09,162
So don't think for a second that the payments can't stop with the stable coins because they

644
00:55:09,162 --> 00:55:09,522
can.

645
00:55:10,022 --> 00:55:11,382
It's completely centralized.

646
00:55:11,782 --> 00:55:15,242
It's completely captured by governments, period.

647
00:55:16,262 --> 00:55:17,802
Bitcoin is not, by the way.

648
00:55:17,802 --> 00:55:22,462
you can store the private key in your head, in your brain, and you can go anywhere you want in

649
00:55:22,462 --> 00:55:26,642
the world and you can still access that. That's the difference, folks. If you want to know the

650
00:55:26,642 --> 00:55:33,062
difference, that's the difference. And no government can stop that. But as we're talking about state

651
00:55:33,096 --> 00:55:41,076
It's just a little fun little thought experiment for people to think about and why banking from a fractional reserve versus fully collateralized one is different.

652
00:55:41,576 --> 00:55:51,816
Well, that is kind of like the ridiculous irony of all this, right, is the people calling Tether, saying that they may be insolvent or all these things.

653
00:55:51,816 --> 00:56:03,796
It's like they've got no apparently no qualms about fractional reserve banks that are levered up to the to the hilt and have, you know, have no reserve meaningful amounts whatsoever.

654
00:56:03,796 --> 00:56:11,756
And I mean, I saw something I don't know if this was true, but the same it was the same agency that was declaring that Silicon Valley Bank was actually like fine.

655
00:56:11,816 --> 00:56:19,536
It was solvent like a couple of weeks before they were, you know, wiped out basically is the one that was was basically casting some of this the shade on tether.

656
00:56:19,536 --> 00:56:23,416
Is that correct? Or was this just some, uh, is this just some speculation?

657
00:56:23,956 --> 00:56:24,836
Say that again.

658
00:56:25,276 --> 00:56:28,876
I thought it was like what the, I'm forgetting the name of it.

659
00:56:28,936 --> 00:56:30,856
Like the same group that was, uh,

660
00:56:30,856 --> 00:56:33,316
attesting that Silicon Valley bank was solvent and fine and whatnot.

661
00:56:33,316 --> 00:56:38,316
Very close before things blew up is the one that is basically, uh, you know,

662
00:56:38,436 --> 00:56:40,816
putting, casting some of this doubt on tether or basically saying, look,

663
00:56:40,876 --> 00:56:42,116
this isn't, this is too risky.

664
00:56:42,296 --> 00:56:43,816
I don't know that.

665
00:56:44,156 --> 00:56:47,016
Okay. This, this may have, you can't believe everything you read on X.

666
00:56:47,016 --> 00:56:54,276
you know you can believe everything you read on Noster though that's a fact okay so so speaking of

667
00:56:54,276 --> 00:57:00,336
speaking of kind of tether adjacent things I know Jack Mallers just I think this morning

668
00:57:00,336 --> 00:57:05,716
put out an announcement that they are now going to be moving forward with with 21 I know this has

669
00:57:05,716 --> 00:57:10,236
been something that's very kind of hotly anticipated just given the size that they're

670
00:57:10,236 --> 00:57:13,916
going to be operating I mean I think they're coming on to the coming on to the market if

671
00:57:13,916 --> 00:57:21,316
If this goes through, assuming it goes through, coming onto the market with the number three spot of Bitcoin holdings, basically, right?

672
00:57:21,416 --> 00:57:23,856
Behind MicroStrategy, obviously, and then behind Mara.

673
00:57:24,356 --> 00:57:27,056
Something in the low 40s, 40,000s of Bitcoin.

674
00:57:28,276 --> 00:57:29,896
What's your read on this?

675
00:57:29,996 --> 00:57:32,536
Because in my mind, I look at these Bitcoin treasury companies.

676
00:57:32,676 --> 00:57:37,096
And first of all, you should just, when in doubt, if you're listening to this, you should just buy spot Bitcoin.

677
00:57:37,236 --> 00:57:38,216
You should dollar cost average.

678
00:57:38,576 --> 00:57:39,556
You should focus on your craft.

679
00:57:39,556 --> 00:57:43,196
You should save your time and energy in something that cannot be debased, which is Bitcoin.

680
00:57:43,916 --> 00:57:45,436
But I find all of this fascinating.

681
00:57:45,736 --> 00:57:50,516
And there's a lot of us that, you know, play around a little in these treasury companies as well.

682
00:57:50,916 --> 00:57:57,256
In my mind, I see MicroStrategy as obviously the clearly differentiated, again, 800-pound gorilla.

683
00:57:58,376 --> 00:57:59,696
Then there's all the other ones.

684
00:58:00,016 --> 00:58:03,876
Mara operates with a good amount of size, but also they're a Bitcoin miner.

685
00:58:03,996 --> 00:58:05,596
It's kind of a different paradigm there, right?

686
00:58:06,736 --> 00:58:09,616
21 is going to have quite a lot of size.

687
00:58:09,696 --> 00:58:12,916
There's some of these others that have, you know, at least tens of thousands of Bitcoin.

688
00:58:12,916 --> 00:58:16,156
And then there's this very long tail, very long tail.

689
00:58:16,836 --> 00:58:18,996
What's your read on overall?

690
00:58:19,336 --> 00:58:23,796
Is this a winner take most, a winner take all scenario with these treasury companies

691
00:58:23,796 --> 00:58:31,496
in terms of these sort of pure play or pseudo pure play ones where they're really, you know,

692
00:58:31,576 --> 00:58:35,256
we're not talking about just a company that's has Bitcoin on its balance sheet.

693
00:58:35,256 --> 00:58:39,236
And because that's the prudent thing to do, which I think eventually all companies will do that.

694
00:58:39,376 --> 00:58:40,816
That's just going to be what you do.

695
00:58:40,816 --> 00:58:43,816
You keep money you can't afford to lose in Bitcoin.

696
00:58:44,216 --> 00:58:49,576
But what's your read on the state of the treasury company market right now as it relates to you got a long tail.

697
00:58:50,056 --> 00:58:56,276
And a lot of them seem like with a protracted drawdown in Bitcoin, they're just going to get even way more wrecked than MicroStrategy.

698
00:58:56,436 --> 00:58:57,856
We're already seeing that happening, right?

699
00:58:57,856 --> 00:59:08,576
Yeah. At the end of the day, I think that I look at what Michael's doing at strategy as probably being the most.

700
00:59:10,696 --> 00:59:12,496
How do I put this?

701
00:59:13,836 --> 00:59:24,676
Like he's he's securitizing Bitcoin and he's issuing credit instruments into the legacy financial system, equity markets and fixed income markets.

702
00:59:24,676 --> 00:59:29,276
and he's offering yield that you can't get anywhere else.

703
00:59:29,276 --> 00:59:33,876
And he's doing this by having an over collateralization value of Bitcoin

704
00:59:33,876 --> 00:59:35,296
on his balance sheet to do it.

705
00:59:36,456 --> 00:59:44,196
He's effectively a bank that is over collateralized

706
00:59:44,196 --> 00:59:49,716
to a point that offsets the volatility risk of Bitcoin.

707
00:59:49,716 --> 01:00:03,116
So if we just say Bitcoin can go down by 70, 80% on an annualized basis is what its drawdown amount is, you can see very quickly why he likes to be over collateralized five to one.

708
01:00:03,936 --> 01:00:11,616
So the over collateralization is a function of the expectation of how much it could draw down.

709
01:00:11,616 --> 01:00:21,556
And so if it goes down 70%, 80% and he's over collateralized 5 to 1, then he's still backed 1 to 1 with what he's issuing.

710
01:00:22,456 --> 01:00:35,036
So similar to Tether, which we just talked about, which is collateralizing and issuing tokens off of U.S. treasuries and then sweeping the profits into Bitcoin.

711
01:00:36,036 --> 01:00:42,756
Michael is, he's the same thing, but instead of using US treasuries to collateralize, he's

712
01:00:42,756 --> 01:00:43,796
collateralizing Bitcoin.

713
01:00:44,796 --> 01:00:50,996
And he has to do it in such an over collateralization way because of the volatility of what Bitcoin

714
01:00:50,996 --> 01:00:51,976
is inherently.

715
01:00:52,596 --> 01:00:58,316
If that volatility, let's say we had 10 more years of data and the biggest drawdown of

716
01:00:58,316 --> 01:01:04,056
Bitcoin was 50%, his over collateralization could change, call it three to one or two

717
01:01:04,056 --> 01:01:10,816
to one versus the five to one. And so he's offering because Bitcoin has such a

718
01:01:11,456 --> 01:01:18,056
massive upside or it's demonstrated this network effect that is achieving, call it a 30 to 40%

719
01:01:18,056 --> 01:01:24,496
annualized return. He's able to pay out quite a bit of yield for what he's collateralizing,

720
01:01:24,496 --> 01:01:32,676
which is the Bitcoin. And when you look at what Tether's doing, they're not paying any of it out.

721
01:01:32,676 --> 01:01:37,996
they're sweeping and keeping it. But what they are providing to the world is if you're in name

722
01:01:37,996 --> 01:01:44,836
it country where your local currency gets the based 20 to 50% annualized and you're giving that

723
01:01:44,836 --> 01:01:50,116
person the dollar, which means it's not getting to base by 20 or 50%. It's just holding its value

724
01:01:50,116 --> 01:01:56,716
in dollar terms for them. That's why they don't even need a yield. They just want it to outperform

725
01:01:56,716 --> 01:02:04,076
the local currency. And so what you're seeing is different products, different ways of going about

726
01:02:04,076 --> 01:02:10,396
things. And so what you could argue is that micro strategy is a product for an advanced economy.

727
01:02:11,196 --> 01:02:15,996
And some for somebody that's, you know, in one of the G sevens of the world that have,

728
01:02:16,716 --> 01:02:22,636
and I'm going to use air quotes here, strong local fiat currency, relatively speaking, right? Yeah,

729
01:02:22,636 --> 01:02:37,136
Relatively speaking, compared to Bitcoin, what he's doing is giving people that are participating in those markets something that will do better than the dollar, which is the 10% yield that you're seeing on some of the different preferred products that he's doing.

730
01:02:39,616 --> 01:02:51,936
So if you want to compete in this, I know this is a really long answer, but I'm trying to frame it up so people can kind of understand like from the global lens why these different things exist, why they have value, why people are using them and whatnot, right?

731
01:02:52,636 --> 01:03:09,032
If you going to compete as a and we throwing around this term treasury company I would define a pure treasury company as somebody that trying to compete with what Michael doing which is collateralizing the Bitcoin offering some type of

732
01:03:09,032 --> 01:03:18,292
yield against it. And to do that, it really comes down to the trust that you place in the operator

733
01:03:18,292 --> 01:03:23,612
to always remain over collateralized and to not blow up is what it really comes down to.

734
01:03:24,392 --> 01:03:28,492
So let's say you wanted to compete and you wanted to go up against Michael.

735
01:03:28,772 --> 01:03:31,632
So you can do it in, I guess, a couple of different ways.

736
01:03:31,632 --> 01:03:34,472
You could say, well, I'm not going to be over collateralized five to one.

737
01:03:34,992 --> 01:03:37,672
I'm going to be over collateralized 10 to one.

738
01:03:37,752 --> 01:03:40,392
Just using like a little bit of an extreme example.

739
01:03:40,392 --> 01:03:42,172
I'm going to be over collateralized 10 to one.

740
01:03:42,552 --> 01:03:44,552
I'm twice as safe as he is.

741
01:03:45,432 --> 01:03:45,912
Okay.

742
01:03:46,352 --> 01:03:51,432
And so therefore, I'm going to offer a product that instead of it giving you 10%, it gives

743
01:03:51,432 --> 01:03:52,292
you 7%.

744
01:03:52,292 --> 01:04:00,312
but it's twice as safe. Now you got the challenge of just marketing that. And part of the challenge

745
01:04:00,312 --> 01:04:05,512
in the marketing is just the financial education that you need to understand the value prop

746
01:04:05,512 --> 01:04:12,132
and whether you need that much of over collateralization to... Let's go back to the

747
01:04:12,132 --> 01:04:17,152
numbers on Michael. He's sitting on $1.4 billion of cash to service the dividends and the coupons

748
01:04:17,152 --> 01:04:21,872
for the next two years without ever having to sell the Bitcoin, the 650,000 Bitcoin that he's

749
01:04:21,872 --> 01:04:28,272
sitting on. Okay. So do you need 10 times over collateralization because you're concerned that

750
01:04:28,272 --> 01:04:35,232
he can't meet that obligation for a discounted yield? And I'm not even saying that you would have

751
01:04:35,232 --> 01:04:43,192
to, you know, you, you wouldn't have to, uh, you, you could maybe compete with him at the same yield

752
01:04:43,192 --> 01:04:49,192
of 10%, but you're, what you're sweeping or what you're making is probably going to be less than

753
01:04:49,192 --> 01:04:53,632
than what he's able to do. So his, so that company for, if you're buying the common stock,

754
01:04:53,632 --> 01:04:57,172
it's not going to compound probably as fast as his, because he's a little bit riskier.

755
01:04:57,572 --> 01:05:03,652
So like all of these things are like, so as we talk about treasury companies and your core

756
01:05:03,652 --> 01:05:07,732
question was, is like how many of these things can exist? How many of them could be out there?

757
01:05:07,732 --> 01:05:13,132
And I think the number is actually pretty small. I think that once the market starts getting,

758
01:05:13,212 --> 01:05:18,512
cause it really kind of comes down to the demand of the products of owning the preferred stock and

759
01:05:18,512 --> 01:05:25,752
who wants to buy that. You're not seeing any type of over demand for the products. And I say that

760
01:05:25,752 --> 01:05:31,752
because I see he keeps raising the interest rate on the STRC preferred, which tells me that the

761
01:05:31,752 --> 01:05:37,532
demand isn't taking it there. So like people are not being enticed by the high yield that they're

762
01:05:37,532 --> 01:05:46,892
getting enough that they're, that he can just keep the yield where it's at. So, you know, I would,

763
01:05:46,892 --> 01:05:56,792
That would be an argument, at least in the interim, like in the next six months, that there's, you know, one treasury company is enough.

764
01:05:57,552 --> 01:05:59,092
But that's really saying.

765
01:05:59,292 --> 01:06:12,972
Now, if we fast forward three years into the future, let's say these products start to become really popular, which, to be honest with you, Walker, I think in three to five years from now, these preferreds are going to actually become pretty popular.

766
01:06:13,372 --> 01:06:16,192
And I think that the market's going to, you know, demand these.

767
01:06:16,192 --> 01:06:24,392
And as there's more and more demand for the products, I think that that offers up the case for there to be more treasury companies.

768
01:06:24,972 --> 01:06:34,352
But he can just keep as long as the as long as he can keep that collateralized five to one ratio in place, because that's also a factor here.

769
01:06:34,692 --> 01:06:42,892
Right. Let's say there's tons of demand for these products and the yields on the products, the preferreds start pushing down.

770
01:06:42,892 --> 01:06:47,792
Let's say that there's so much demand that you're only getting a 6% yield on it.

771
01:06:47,892 --> 01:06:57,772
Well, now that is an indicator that he is probably saturated on his over collateralization because maybe the Bitcoin price is moving slower.

772
01:06:58,032 --> 01:07:03,512
That offers up the opportunity for more treasury companies to come into the market and service this at a higher yield.

773
01:07:04,052 --> 01:07:06,272
So it's a supply-demand thing.

774
01:07:06,272 --> 01:07:11,852
if I was going to answer your question very generically and not with like all this technical

775
01:07:11,852 --> 01:07:16,272
nuance, I would just say, I think that there's room for a few of them. I think there's room for

776
01:07:16,272 --> 01:07:23,272
a few of them, but not a lot of them, like not 10 in the U S market, probably three in the U S market.

777
01:07:24,052 --> 01:07:31,412
Now this is talking about a pure, basically Bitcoin bank is what I'm talking about.

778
01:07:31,412 --> 01:07:38,792
I think that there's also going to be a prevalence of just companies that are operating on a Bitcoin standard.

779
01:07:39,772 --> 01:07:46,072
So you got companies that are going to have Bitcoin on the balance sheet as they do their product or service.

780
01:07:46,072 --> 01:07:54,112
And maybe they could be conglomerates. Right. You could do a Berkshire style like, hey, the holding company owns 10 different companies.

781
01:07:54,252 --> 01:07:58,092
And those companies all have different products and services that they're offering the market.

782
01:07:58,092 --> 01:08:10,692
And then the company's taking those free cash flows and they're just sweeping them into Bitcoin because it's giving them the highest yield instead of chasing upstream or downstream product lines that are aligned with the business operational subsidiaries.

783
01:08:11,372 --> 01:08:12,632
So there's that.

784
01:08:13,012 --> 01:08:17,972
That's a whole different thing that I think today in the market, people would say, oh, that's a treasury company.

785
01:08:18,012 --> 01:08:18,672
It's not a treasury.

786
01:08:18,832 --> 01:08:21,252
It's just a company that's operating on a Bitcoin standard.

787
01:08:21,652 --> 01:08:26,492
And I think that you're going to have, I mean, 10 years from now, I think everybody's going to be doing that.

788
01:08:26,492 --> 01:08:35,572
so uh yeah no i i appreciate that was uh that was a very thorough answer preston there was no

789
01:08:35,572 --> 01:08:40,312
squishiness there there's no squishiness there at all so i i thank you for that and i think it's

790
01:08:40,312 --> 01:08:44,052
going to be really i mean perhaps a lot of uh a lot of people running these treasury companies

791
01:08:44,052 --> 01:08:49,992
in the u.s may not like to hear what you just said but i think that that's kind of uh a rational

792
01:08:49,992 --> 01:08:55,512
thing i'm excited that you know for example like a block is a great example of a like that's a

793
01:08:55,512 --> 01:09:01,172
that's a let's say that's a financial services company but that has bitcoin at its core what

794
01:09:01,172 --> 01:09:07,132
they've just done jack doris's block with square opening up bitcoin acceptance for four million

795
01:09:07,132 --> 01:09:11,652
plus small business merchants in the u.s is awesome what they're doing integrating bitcoin

796
01:09:11,652 --> 01:09:15,612
and cash app more so than it already is and kind of using bitcoin and lightning as the rails behind

797
01:09:15,612 --> 01:09:20,772
the scenes is is fascinating and like really like these these are the things present where i see

798
01:09:20,772 --> 01:09:27,612
stuff like this. And I imagine if this sort of announcement was made in like 2020, that this

799
01:09:27,612 --> 01:09:33,592
would be something that just like rocket ship the price. Right. And it's almost like counter

800
01:09:33,592 --> 01:09:39,552
intuitively, almost more bullish that that actually doesn't, that doesn't move the price at all. That

801
01:09:39,552 --> 01:09:45,492
has literally no impact on price. Nobody, nobody seemed, I don't want to say nobody seems to care.

802
01:09:46,152 --> 01:09:49,952
The majority of people, you and I care. I know a lot of Bitcoiners care. A lot of people care,

803
01:09:49,952 --> 01:09:52,672
A lot of small business owners care about these sorts of announcements.

804
01:09:53,252 --> 01:09:57,972
But like the quote, the market in terms of Bitcoin and saying like, wow, this is a huge

805
01:09:57,972 --> 01:09:58,252
thing.

806
01:09:58,792 --> 01:10:02,492
This doesn't move the needle at all now, which I think is kind of just a testament to Bitcoin's

807
01:10:02,492 --> 01:10:03,792
maturity a little bit too, right?

808
01:10:03,812 --> 01:10:04,792
It's like this sort of thing.

809
01:10:05,232 --> 01:10:09,972
I mean, even Vanguard yesterday or today coming out and saying, hey, by the way, I know we

810
01:10:09,972 --> 01:10:15,612
said we weren't going to allow our customers to interact with these Bitcoin ETF products,

811
01:10:15,712 --> 01:10:16,512
but you know what?

812
01:10:16,672 --> 01:10:17,492
We will now.

813
01:10:17,492 --> 01:10:34,928
Like these sorts of things these capitulation moments on the other side of this I think are just like massive bits of very bullish news And again this gets back to kind of like my original point about this massive disconnect between what I seeing from let say a news standpoint like fundamentals nothing

814
01:10:34,928 --> 01:10:35,408
has changed.

815
01:10:35,528 --> 01:10:36,328
Bitcoin is still Bitcoin.

816
01:10:36,988 --> 01:10:41,608
Hash rate is still extremely, extremely shockingly high.

817
01:10:42,028 --> 01:10:43,888
All these incredibly bullish things are happening.

818
01:10:43,968 --> 01:10:48,048
And there's a disconnect between what the market, how the market is pricing Bitcoin.

819
01:10:48,048 --> 01:10:51,748
I know you had a great recent episode with Luke Groman.

820
01:10:52,448 --> 01:10:54,248
Always love listening to you two talk together.

821
01:10:54,328 --> 01:10:58,148
because I think you're one of the best people at kind of teasing out some of these things with Luke.

822
01:10:59,288 --> 01:11:05,428
And listening to that conversation, it seems that Luke is quite short-term bearish.

823
01:11:05,608 --> 01:11:08,808
And he's somebody that I really follow closely in terms of what he says.

824
01:11:08,908 --> 01:11:11,728
He's got a lot of things figured out.

825
01:11:11,868 --> 01:11:13,628
He's pretty right on a lot.

826
01:11:14,708 --> 01:11:17,768
What was your biggest takeaway from that conversation?

827
01:11:17,848 --> 01:11:18,268
I'm curious.

828
01:11:18,268 --> 01:11:21,788
Are you on board with Luke in terms of where he's at?

829
01:11:21,788 --> 01:11:25,068
or do you diverge from him a little bit on some of these things?

830
01:11:25,568 --> 01:11:27,728
No, I often agree with Luke.

831
01:11:28,068 --> 01:11:30,808
There's very rarely that I disagree with Luke.

832
01:11:31,868 --> 01:11:34,828
I'm just, the thing that I guess I've learned

833
01:11:34,828 --> 01:11:38,788
from participating in markets for a few decades

834
01:11:38,788 --> 01:11:44,108
is just so much of it comes down to the whims

835
01:11:44,108 --> 01:11:45,568
of the central bankers

836
01:11:45,568 --> 01:11:48,108
and how much liquidity they're putting into the system.

837
01:11:48,108 --> 01:11:54,708
uh some of it also has to do with just uh market sentiment and where like the new shiny object is

838
01:11:54,708 --> 01:11:59,148
and i think that the shiny object object in the last year has really been ai

839
01:11:59,148 --> 01:12:04,048
and just uh there's been a huge suck of capital that's kind of gone over there

840
01:12:04,048 --> 01:12:12,568
um i think that that the whims and the flows of like how much liquidity they're adding in

841
01:12:12,568 --> 01:12:18,208
can just change so, so abruptly. Like you can go into like the Silicon Valley bank thing was,

842
01:12:18,368 --> 01:12:24,568
was a great example where there was a lot of liquidity flowing out of the system, like in

843
01:12:24,568 --> 01:12:29,968
like the span of a week or two weeks. And this speaks to the fragility of the legacy system is

844
01:12:29,968 --> 01:12:35,228
what it really speaks to. They come in and they just, you know, they create a new backstop facility

845
01:12:35,228 --> 01:12:41,228
like over the weekend. And Hey, if you're holding long duration bonds, that's okay. Just put them on

846
01:12:41,228 --> 01:12:50,088
deposit here. We'll give you the full face value of it. And, and voila, like the whole thing was

847
01:12:50,088 --> 01:13:01,208
solved a matter of like a week. Um, and what, what it's taught me is you can't afford to be bearish.

848
01:13:02,028 --> 01:13:10,728
Like you can't afford to be a raging pessimist. Um, you can't because they're just going to figure

849
01:13:10,728 --> 01:13:18,028
out a way to paper over it and dupe everybody that's participating. And then it just bounces

850
01:13:18,028 --> 01:13:24,908
right back. And that's why, I guess for me, I've just become really, hey, did something technically

851
01:13:24,908 --> 01:13:31,228
change with Bitcoin? Is there some type of flaw in the code? Is there some flaw in the logic?

852
01:13:31,368 --> 01:13:37,708
And if the answer is no to those things, I'm just going to keep buying more of it because I know

853
01:13:37,708 --> 01:13:40,788
they're going to have to print. I know they're going to have to paper over. I know they're going

854
01:13:40,788 --> 01:13:44,588
to have to stand up a new backstop facility and they'll call it something different. They've got

855
01:13:44,588 --> 01:13:48,528
to do more QE and they're going to call it something different. And they're just going to

856
01:13:48,528 --> 01:13:53,048
keep the charade going. And it goes back to, you know, Lynn, there's just like nothing truly stops

857
01:13:53,048 --> 01:13:58,728
this train and they can't afford, and they can't allow the impairment to get too out of control,

858
01:13:58,848 --> 01:14:02,408
the cascading impairment and contagion. They can't allow it to get too crazy.

859
01:14:02,408 --> 01:14:09,448
Uh, so that's what I've learned through the years. And anytime I've gotten super bearish,

860
01:14:09,448 --> 01:14:20,948
it's, it's usually involved me making a bad decision or just, uh, losing out on opportunity.

861
01:14:21,248 --> 01:14:28,228
And so I just remain positive, remain, uh, uh, you know, an optimist and all of it. And,

862
01:14:28,228 --> 01:14:38,988
And if the market goes chasing the shiny object and they're not really valuing this thing that I think has tremendous value, which is Bitcoin, it's just an opportunity.

863
01:14:39,508 --> 01:14:42,048
It truly is just an opportunity to go buy more.

864
01:14:42,168 --> 01:14:43,148
Don't overthink this.

865
01:14:43,608 --> 01:14:45,488
Figure out a way to add value to the world.

866
01:14:45,808 --> 01:14:55,268
If you are adding value to the world, you'll have excess free cash flows and then take those free cash flows and go buy something that the government can't ever take away from you.

867
01:14:55,328 --> 01:14:56,168
It's really that simple.

868
01:14:56,168 --> 01:15:03,568
I say amen to that. It's funny. I've not, uh, obviously not been, you know, uh, looking at

869
01:15:03,568 --> 01:15:08,228
markets for nearly as long as you have a old man. Uh, no, I'm kidding. Uh, you're, you're still,

870
01:15:08,308 --> 01:15:13,368
you're still a spring chicken in my book, Preston, but, but no, you know, I, I, what I have learned

871
01:15:13,368 --> 01:15:18,088
is that right at the moment where I start feeling like that little bit of a pit in my gut where it's

872
01:15:18,088 --> 01:15:25,308
like, Oh, maybe I was wrong. That's like, that means Nope. Nope. You need to flip the script

873
01:15:25,308 --> 01:15:31,068
and realize that that that capitulation you're feeling that verge of capitulation that's that's

874
01:15:31,068 --> 01:15:37,208
probably that's like very near whatever a bottom might be and so you know and the same that's on

875
01:15:37,208 --> 01:15:45,348
the top it's but it's hard right the same feeling on the top when you just when you're just itching

876
01:15:45,348 --> 01:15:53,368
to go out there and shit post and right it is the surefire like we're probably kind of getting a

877
01:15:53,368 --> 01:15:59,148
little toppy right now i'm not so good at spotting the tops yet that one i haven't got as good at

878
01:15:59,148 --> 01:16:04,328
and when you got like the mike greens of the world tap dancing on bitcoiners graves like that's

879
01:16:04,328 --> 01:16:11,788
there's a bottom close by it might not be the bottom but it's close by yeah lots of lots of

880
01:16:11,788 --> 01:16:18,248
gold bug celebration lots of uh fiat economist and analyst celebration right now it feels bottom

881
01:16:18,248 --> 01:16:19,728
Maybe we nuke to 58K.

882
01:16:20,168 --> 01:16:20,608
I don't know.

883
01:16:20,688 --> 01:16:25,768
If we do, I'm going to sell that other kidney of mine and back the truck up.

884
01:16:25,848 --> 01:16:27,248
Actually, I won't even have a truck to back up.

885
01:16:27,328 --> 01:16:29,968
I'll have sold my truck, gotten rid of that.

886
01:16:30,848 --> 01:16:32,468
But that's the thing.

887
01:16:32,548 --> 01:16:33,048
It's like we don't know.

888
01:16:33,148 --> 01:16:35,248
Things can happen in the short term, but it's long term.

889
01:16:35,368 --> 01:16:36,568
The thesis remains intact.

890
01:16:37,108 --> 01:16:38,388
Bitcoin is unchanged.

891
01:16:38,488 --> 01:16:39,848
Bitcoin is more resilient than ever.

892
01:16:40,568 --> 01:16:44,808
I remain exceptionally bullish, perhaps irrationally so.

893
01:16:44,808 --> 01:16:47,848
But I would say it's responsibly bullish.

894
01:16:48,248 --> 01:17:08,288
And that's because I know what I'm holding, right? And doing whatever I can to accumulate as much of it as I can and provide value to accumulate more and accumulating that for the purpose of providing for my family and the family that is to come and building a thousand year generational legacy so I can buy myself an island citadel at some point.

895
01:17:08,288 --> 01:17:10,248
But that's a long ways down the road.

896
01:17:10,828 --> 01:17:13,588
But, Perez, we're coming up on the end of time here.

897
01:17:14,308 --> 01:17:17,528
I just maybe wanted a very quick gear shift with a couple minutes left.

898
01:17:18,168 --> 01:17:21,808
If there's anything on – we've talked a lot about the price.

899
01:17:21,928 --> 01:17:25,908
We've talked a lot about liquidity and macro and microstrategy and everything.

900
01:17:26,708 --> 01:17:28,688
But you obviously follow all of that.

901
01:17:28,788 --> 01:17:31,508
But another huge part of your life is what you do at EgoDeath Capital,

902
01:17:31,648 --> 01:17:35,028
investing in Bitcoin businesses, in the Bitcoin ecosystem.

903
01:17:35,028 --> 01:17:38,028
Is there anything you're seeing there right now that is, you know,

904
01:17:38,028 --> 01:17:40,028
this is kind of the stuff that goes under the radar, right?

905
01:17:40,028 --> 01:17:43,028
Like there's not really bearishness there.

906
01:17:43,028 --> 01:17:45,028
It's like the builders are still building.

907
01:17:45,028 --> 01:17:48,028
Is there anything you're looking at that you can at least discuss publicly

908
01:17:48,028 --> 01:17:50,028
that you're super excited about, super passionate about,

909
01:17:50,028 --> 01:18:07,384
super bullish on from a technology perspective I think that the Lightning Network is actually way more powerful than what many would want you to believe I mean you said recently about Jack with Square and

910
01:18:07,384 --> 01:18:13,204
that you can basically go to any business in the US that has a Square terminal and pay with Bitcoin.

911
01:18:14,204 --> 01:18:20,324
And that's happening. And Lightning is what's enabling immediate payments to occur. And there's

912
01:18:20,324 --> 01:18:26,964
tons of building happening on top of that. You have ARK, which was something that I just saw

913
01:18:26,964 --> 01:18:33,944
this past, the end of the summer. I think it was in August. I was out in Riga and we used

914
01:18:33,944 --> 01:18:40,224
ARK on top of Lightning for immediate payments. And the reason this is such a big breakthrough is

915
01:18:40,224 --> 01:18:45,644
because you don't have to manage liquidity channels, which was a huge burden and something

916
01:18:45,644 --> 01:18:48,284
that technologically was a setback.

917
01:18:49,664 --> 01:18:50,664
And, you know,

918
01:18:50,784 --> 01:18:52,044
ARK is a new technology

919
01:18:52,044 --> 01:18:52,764
on top of Lightning

920
01:18:52,764 --> 01:18:53,804
that takes that away.

921
01:18:53,984 --> 01:18:55,124
And then you have businesses

922
01:18:55,124 --> 01:18:57,264
just kind of standing up payments.

923
01:18:57,424 --> 01:18:59,064
The issue I think that you,

924
01:18:59,224 --> 01:19:00,064
that you run into

925
01:19:00,064 --> 01:19:02,464
on the payment side is it's still,

926
01:19:03,124 --> 01:19:04,544
it all comes down

927
01:19:04,544 --> 01:19:05,624
to the education burden.

928
01:19:05,764 --> 01:19:08,684
People just don't even understand Bitcoin.

929
01:19:09,164 --> 01:19:10,484
Why they need Bitcoin.

930
01:19:10,664 --> 01:19:12,204
They still think that they need dollars.

931
01:19:12,724 --> 01:19:13,544
And, you know,

932
01:19:13,664 --> 01:19:15,184
I guess when you're looking at

933
01:19:15,184 --> 01:19:19,764
you know, let's say you're operating in whatever country and the current local currency is getting

934
01:19:19,764 --> 01:19:26,904
the base by 20 to 40% annualized. Looking at the dollar as the solution, it is a solution to that.

935
01:19:27,244 --> 01:19:35,504
It's just not the best solution, in my humble opinion. And but again, a lot of this comes down

936
01:19:35,504 --> 01:19:39,684
to what are their bills denominated? And well, they're probably denominated in that local currency.

937
01:19:39,684 --> 01:19:48,804
So if they can get something that's 20 to 30%, you know, better improvement than what they owe in their, in their liabilities, well, then that's a win.

938
01:19:48,804 --> 01:19:53,024
And so it's just kind of take time for people to see it.

939
01:19:54,204 --> 01:20:02,484
And I know I'm getting away from the ego death, but I, my, my general point would be, I think that there's a lot of building happening on top of payments.

940
01:20:02,484 --> 01:20:10,584
A lot of these businesses and a lot of these companies are early from the demand that is slowly picking up.

941
01:20:11,344 --> 01:20:25,484
I think that companies that are building and integrating stable coins in addition to Bitcoin are probably going to have an easier go at being viable in the market, which might be a controversial take for people that are hardcore Bitcoiners.

942
01:20:25,484 --> 01:20:33,704
Bitcoiners, but I also firmly believe in the market demand and signal will tell you kind of

943
01:20:33,704 --> 01:20:38,864
where you need to be and where you need to be building, even though we kind of know where I

944
01:20:38,864 --> 01:20:44,384
think the end game is going to take us. But yeah, those are some of the things that I'm seeing. I

945
01:20:44,384 --> 01:20:48,364
think it's really exciting because I think for everybody in the world, they're now going to have

946
01:20:48,364 --> 01:20:55,264
an opportunity to be transacting in something that's way better than these, since some of these

947
01:20:55,264 --> 01:20:59,864
local currencies, which are just, I mean, it's straight up highway robbery, the corruption,

948
01:21:00,124 --> 01:21:06,784
the robbery that occurs for most people around the world and what they deal with just because

949
01:21:06,784 --> 01:21:14,544
the money is so broke in most parts of the world is changing. And I think that that is going to

950
01:21:14,544 --> 01:21:21,184
have a profound impact on just global cooperation and global value creation for everybody around the

951
01:21:21,184 --> 01:21:26,004
world. Yeah. You, you, you think the dollar's bad. Wait till you see all the rest. Like it's the

952
01:21:26,004 --> 01:21:31,304
prettiest horse, the glue factory. It's the skinniest kid at fat camp. Uh, it's, but boy,

953
01:21:31,864 --> 01:21:36,284
the, like the rest, the rest are real bad. You know, it's, it's, it's all relative, right?

954
01:21:36,804 --> 01:21:41,644
Yes. Well, I have one last question, which is Preston. Have you read every book that's behind

955
01:21:41,644 --> 01:21:45,304
you on that shelf? It's such an impressive shelf. And have you read all of them?

956
01:21:45,784 --> 01:21:50,884
There's a few people send me books. And if it's one that I don't have the time to read, then I

957
01:21:50,884 --> 01:21:52,684
I'll throw it in over.

958
01:21:52,744 --> 01:21:54,764
You can't see over here, but I have the shelf continues.

959
01:21:54,844 --> 01:21:58,504
I throw some of them over there, but I would say of all the books up there.

960
01:21:58,564 --> 01:21:58,764
Yeah.

961
01:21:58,824 --> 01:22:00,364
95% of them I've read.

962
01:22:00,624 --> 01:22:00,764
Yeah.

963
01:22:00,944 --> 01:22:02,764
That's a better ratio than my bookshelf.

964
01:22:03,284 --> 01:22:06,624
So I've got, I've got some catching up to do the proof.

965
01:22:06,764 --> 01:22:12,104
The proof of, of all of these is I've probably recorded a podcast about most of them to believe

966
01:22:12,104 --> 01:22:12,544
it or not.

967
01:22:12,544 --> 01:22:14,004
I haven't recorded a podcast.

968
01:22:14,144 --> 01:22:19,024
I probably have an executive summary somewhere on our investors podcast website for almost

969
01:22:19,024 --> 01:22:19,744
all of these books.

970
01:22:20,004 --> 01:22:20,124
Yeah.

971
01:22:20,124 --> 01:22:23,024
Yeah, it's a lot of proof of work.

972
01:22:23,344 --> 01:22:24,644
It's a lot of proof of work, my friend.

973
01:22:26,844 --> 01:22:27,744
Sorry, say it again.

974
01:22:28,384 --> 01:22:32,704
All these book reviews and all the podcasts that we did, it was before AI.

975
01:22:32,704 --> 01:22:43,664
And what we were trying to do really was in Stig Brodersen, myself, back when we first started the podcast, what, 2013 or something like that.

976
01:22:43,904 --> 01:22:44,164
Wild.

977
01:22:44,164 --> 01:22:50,344
we were like, you know, like if we can't get the guest on the show, like, let's just read the book

978
01:22:50,344 --> 01:22:55,444
and we can just kind of summarize and just talk about the book. And like, that could be an episode.

979
01:22:55,444 --> 01:23:00,084
It was us kind of like hacking ways when in the early days when we couldn't get a guest,

980
01:23:00,164 --> 01:23:06,064
let's just read the book. So we went through like all of these lists of billionaires and what they

981
01:23:06,064 --> 01:23:11,004
said that their favorite books were. And we just started like just reading the books. Like we tried

982
01:23:11,004 --> 01:23:16,084
did knock one out. Like, I don't know, we were on the pace of like a book a week to every two weeks,

983
01:23:16,084 --> 01:23:21,344
we were like plowing through a book and then we would just immediately record a show as to like

984
01:23:21,344 --> 01:23:27,344
what we learned from the book. Um, yeah. And then we would, we would type up an executive summary

985
01:23:27,344 --> 01:23:32,784
before AI and we had all these executive summaries out there that, uh, and that would go out to the

986
01:23:32,784 --> 01:23:38,244
people on the, on the email list. And I mean, it was like this whole thing for a long time. Yes.

987
01:23:38,244 --> 01:23:43,324
yes you you guys were you know uh you were doing spark notes basically and people i don't even know

988
01:23:43,324 --> 01:23:47,104
kids today probably don't even know what spark notes is necessarily like it's just like because

989
01:23:47,104 --> 01:23:52,644
you just like rock yeah yeah exactly just yeah chat gbt grok whatever it is now that that's that's

990
01:23:52,644 --> 01:23:57,904
incredible man 2013 what a wild ride for you guys that's i mean now you have no problem getting

991
01:23:57,904 --> 01:24:01,724
anyone you want uh as an interview you don't you don't just have to read their book anymore that's

992
01:24:01,724 --> 01:24:07,604
not true on the tech on the tech side i think because i'm such an outsider on the tech side i'll

993
01:24:07,604 --> 01:24:14,164
reach out and people i think you know they're just busy or whatever and yeah no i when on the

994
01:24:14,164 --> 01:24:20,044
bitcoin side yeah sure but tech it's it's challenging i'm trying to get different guests

995
01:24:20,044 --> 01:24:25,164
hey if you know somebody and you want to you know let me know i'd be more than happy to entertain

996
01:24:25,164 --> 01:24:31,624
any guests on the tech front but yeah there you go well and uh on that note everybody should check

997
01:24:31,624 --> 01:24:36,964
out your show bitcoin fundamentals uh also tech tech infinity or technology infinity infinite tech

998
01:24:36,964 --> 01:24:40,044
Infinite tech. Dang it. I got it. I got it backwards. I'm sorry. Infinite tech.

999
01:24:40,404 --> 01:24:43,684
Also on the investors podcast network, the investors podcast network,

1000
01:24:43,684 --> 01:24:46,664
but thank you for coming on the Bitcoin podcast again, Preston,

1001
01:24:46,784 --> 01:24:50,424
anywhere else you want to send folks a link, I'll link that I'll link your

1002
01:24:50,424 --> 01:24:52,424
Noster. I'll link your X anywhere else.

1003
01:24:53,264 --> 01:24:57,684
If people have a business and they're looking to raise capital,

1004
01:24:57,824 --> 01:25:02,304
go to ego death.capital and just fill out the form there and we'll take a look

1005
01:25:02,304 --> 01:25:02,644
at it.

1006
01:25:03,324 --> 01:25:06,844
Awesome. Well, Preston, this was, this was a treat. Great catching up with you.

1007
01:25:06,964 --> 01:25:11,044
Thank you to everybody who joined in on Noster and watched this live.

1008
01:25:11,124 --> 01:25:15,464
And if you're not on Noster and you're listening to this now wondering what the heck is Noster, just Google it.

1009
01:25:15,824 --> 01:25:17,144
And you'll find out.

1010
01:25:17,204 --> 01:25:20,684
And you can come find us over there on Noster and watch these shows live in the future.

1011
01:25:20,764 --> 01:25:22,524
But really, Preston, thank you for sharing your time.

1012
01:25:22,584 --> 01:25:23,444
This was a pleasure.

1013
01:25:24,164 --> 01:25:24,784
Thank you, Walker.