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Hey, welcome back to the Bitcoin Matrix. I'm your host, Cedric Youngelman.

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Quick thing before we dive in. This show runs independently. If you get value from it,

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Links in the show notes. Nobody could explain how we actually get from today to a Bitcoin standard.

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Maryland HODL 21 and Chris Reed just mapped it out.

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And now, let's enter the Bitcoin Matrix, episode 268.

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Bitcoin's iPhone moment, stretch, and the conversion of the financial system with Maryland HODL and Chris Reed.

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What is real?

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How do you define real?

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You can't jump into cash.

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Cash is trash.

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What do you do?

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You get out.

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Maryland HODL and Chris Reid have been putting out some very interesting pieces on the conversion of the financial system.

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Stablecoins, Bitcoin, understanding the MNAV cycle, the apex carry trade, BitBonds,

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and how Michael Saylor's company strategy and capital markets are discovering the Bitcoin capital curve

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and potentially creating a sovereign flywheel very few see coming.

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Marilyn Hoddle and Chris Reid, welcome to the Bitcoin Matrix podcast.

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How are you guys?

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Good, sir.

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Thanks for the input.

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Appreciate this talk.

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Yeah, man.

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Gentlemen, I'm super excited to get into this.

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We're just going to go right into this.

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I'm not even going to ask you about your inspiration because I think it's obvious.

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So what is going on with STRC or stretch, right?

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Put out by strategy and the conversion of the financial system.

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Most people are looking at stretch as just a yield instrument.

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And so I'll kick it to Marilyn Hato.

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What are we collectively missing?

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What's the point that we're missing here?

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So I think it's important to take a step back.

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Everybody, he has safety and they came out and had the Bitcoin standard.

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and but nobody can describe how we get from today to the bitcoin standard and i think that there's a

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i think not a lot of people attack it because it's overly complicated people can barely understand

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what's going on in the existing system so you know i've asked at random times throughout the

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last couple years and whether it's lawrence lapart or um shooting other you know thought

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leaders in the space, you know, DMs and messages to say, Hey, what does it look like? How do we get

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from here to there? And after a while, nobody was really answering the question. Um, I was like,

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well, I'm going to take a stab at it. And that's kind of when I started the journey last year

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of really putting thought and time into what does that transition look like? And for me,

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everything, you have so many distortions happening in the existing system.

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and the vibrations are continuously getting more and more violent,

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whether that's financial or societal breakdowns or geopolitical breakdowns.

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And it's not just in the U.S. It's spreading across the world.

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A lot of the historical norms that have been around for decades,

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generations are starting to break down.

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Financial, bond market, gold, dollar, right?

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Those are starting to become disconnected from their historical trend lines.

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And when that starts to happen, you know, negative, you know, real rates and so forth with bond markets dynamics, it's like, yeah, everything's driven by incentive.

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Right.

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And the question is, if we're going to be able to do a successful transition from this system to the next, then it has to be incentive driven.

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And we have to realign incentives throughout the transition period.

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And that's where I spend a lot of my time thinking is how do we realign those incentives by reading the tea leaves of what's happening in the industry and what product sailors are putting out or what articles.

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um bitcoin policy institutes putting out and just trying to understand the general underlying

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dynamics and how that could fit into essentially what a transition would look like so and i think

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there's some really interesting product lines that are being discussed you know last year it was bit

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bonds um bpi put out an article last february and when strc came on the page almost on the landscape

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last July, August.

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It took a little while for me to fully understand

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the complete impact of what it meant.

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But I think Saylor was right when he came out

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and said, you know, this is MSTR's iPhone moment.

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And I can actually make the argument

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that it was Bitcoin's iPhone moment,

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at least for an adoption perspective,

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like an acceleration perspective.

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So I'll pause there.

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Chris, you have any thoughts?

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yeah um you know we as bitcoiners whenever it clicked for us whether it's a year ago five years

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ten years you know we realized that bitcoin is the best money for human beings for our civilization

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and so we as you're i'm alluding to you know what you said earlier there's two financial systems

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happening at the same time and most people don't see it that way um they're kind of mixing

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thing together, but we truly have two separate financial systems that one is built on inflation

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and one is deflationary. And we can go on and on how opposite they truly are. But in the end,

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humans are going to converge on the best money. You can look back thousands of years. That's what

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humans do. Once they understand what protocol to store their wealth and their time and their energy

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in, they move over to that system. And you can call it an asset if you want. And they're going

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They put their time and their effort into that And so just to your point this bridge obviously has been built from one financial system the fiat system to Bitcoin And they two separate protocols

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And in the end, it might be a duration thing.

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Eventually, a lot of us, that's what we believe, that eventually the global reserve currency, baseline money for human civilization, will be Bitcoin.

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But then to your point, how do we get there?

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What does the bridge look like?

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Because you have two separate landmasses with this gaping, huge hole between.

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There's this in-between.

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And what happens between the gap?

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And STRC truly, you know, once STRC in July, and you go through just the mechanics of it,

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and it was like, this is part of the bridge.

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This is part of the bridge that gets capital from one system to the next.

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whether they truly realize that's what's going on as far as transfiguration units from one going to

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the next yeah yeah cedric i think it's it's also important you can't look at this transition

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independently of the productivity boom that's going right there's a transition happening

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the industrial air has been built on debt and human productivity or industrial productivity,

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right? We need to have perpetual growth, perpetual debt, money expansion, perpetual debt.

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AI changes all that, right? We are an industrial air society on a jet plane heading into a

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deflationary mount side that is AI and they do not operate well together, right? They actually,

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they're antithetical to each other. The dollar-based system will not function

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when AI starts to demonetize kind of the economic calculation, more specifically

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the productivity portion, which is labor, right? Right now it's doing it to white-collar jobs

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and software type of industries.

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You could see the early signs last summer

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when college graduates who were kind of the marginal hires

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of the old system couldn't find jobs.

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I mean, I think the number is 46% of college graduates

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over the last five years are either underemployed

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or not employed at all.

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That was a warning sign.

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Now we're starting to see it in all of our industries

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it's having some level of impact, especially if it's white collar, right?

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Well, fast forward another five, seven years,

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and we have intelligence, AI, much more advanced than where we are today,

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pushed in with robotics,

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and they're getting close to having that functionality

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where a robot can function fully like a human.

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And you embed AI into that, now you're taking out the blue collar.

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and your entire economy starts to change overnight.

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For instance, a house, okay?

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I had a huge issue when they came out

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with the idea of the 50-year mortgage, okay?

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My thought around that was, all right,

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maybe it's exit liquidity for kind of the aging,

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you know, boomer generation, fine.

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um but my issue is the average housing stock and you have to fact check me on this but the

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average housing stock is like 40 years or something like that across the country

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and you know it only you know i think it's 19 years but then you have an average life of like

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60 years or something like that so when you add the two together you're basically looking to have

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a house that's going to be have to almost be completely rebuilt by the end of the term of

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that loan. And that's not a huge issue to me. I'm like, all right, we can get around that.

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We're perpetually kicking the can down the curb anyway. But the big issue for me was what happens

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in five years when they drop two robots across the street, drop all the materials there, and then

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they build a house in a tenth of the time and for a tenth of the cost, and it has much better

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features and functionalities. What happens to the house across the street that you own, that you have

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a 50-year mortgage on. It demonetizes and you lose all that equity, right? So that's the type

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of things we have to start thinking. The two systems, again, are antithetical. And I do believe

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AI, you have to look at both paradigms happening at the same time. Like we're having two paradigm

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shifts, which is very unique across kind of history in general.

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so what i'm i mean i really like the way chris talked about sort of like we need to bridge

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between these two uh land masses that are very far apart and one of them is obviously having

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structural issues and i like this idea and i think this was maybe the way sailor talked about this

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pre sort of the preferred but of sort of strategy being a refinery a bitcoin refinery

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So I want to talk more about the bridge, maybe what problems need to be fixed, right?

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Where we're leaving.

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I guess we're leaving on one, we're trying to leave one landmass, cross a bridge, and then we're trying to figure out.

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So I want to talk a little more about the bridge and maybe what, or how, why is fixed income broken?

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Or what does it mean to monetize Bitcoin's long-term growth on a balance sheet?

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And how does that monetization anchor a financial system?

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Yeah, so I'll talk about an input number. And right now in the fiat system, we have the risk-free rate, if you will. And so the risk-free rate is roughly 4% range.

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when we actually, well, we know that if you add monetary debasement and the cost of goods,

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so that combination of monetary debasement, inflation, however you want to package it,

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it's not 2%. It's not 4%. It's probably more like 7% to 8%. So what that's telling you is

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you have all this trapped capital, all this trapped fiat, all those units that are getting

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the risk-free 4%, but what if the input's not 4? What if the input is 8? So you have a negative

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4% delta between 4 and 8. And so there's a negative carry with the risk-free rate in the

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system that's inflationary. And so you have to be sold, you have to believe that 4% is the risk-free

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rate. And if it's not, if it really is 8%, what that means, if it's really 8% and that number's

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correct, think about all the debt and all the instruments that kick off 1% in betting accounts,

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4% in T-bills, 6% or 5% investment grade, maybe 6% in jump bonds. And at that point,

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All of those are negative yielding.

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They do not hit that 8%.

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And so what that means to me and should mean to other people is that all of those instruments that are laid out, they're defective.

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And you are losing wealth in all of those instruments.

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You add up all the units in those instruments.

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What is that?

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Hundreds of trillions that are negative yielding.

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But we don't say it that way because we're told 2% is really the input, CPI is inflation.

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anything above to your positive carry.

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So I think about it like that.

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So when we say the system's broken,

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there's a lot of layers,

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but that from a fixed income,

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getting dividends, all of that concept,

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and getting interest rates,

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if the input's anything less,

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it's dilutive to your wealth.

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And so that's why people,

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and also they feel like they can't get ahead

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if they in the rat race all the time in the fiat world And so input number is really important because then when you bid the bridge as STRC then what do you do Because if it really eight I getting four

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what do I do? I'm losing 4%. I'm on a fixed income. I'm on social security and I can't get

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above the hurdle rate. What instrument is out there that will help me protect my wealth,

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but actually get above that 8%? And that's when the preferrers have come into point.

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over the past 15 months.

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And that's why they're so interesting

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because it does create that bridge conflict.

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Yeah, and Cedric, what Chris is highlighting

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is a real rate of return.

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The Fed has suppressed rates for such a long time

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in order to continuously fund the debt service

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related to the ever-growing exponential kind of debt load

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that we have acquired, especially since 2008.

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And it's not showing any signs of slowing down.

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And I can actually make the argument that you have two issues.

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There's fiscal dominance in Washington.

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They're going to continue to spend.

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They're not going to get fiscal conservative, right?

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And then on the other side,

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countries around the world are starting to not buy our debt, right?

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We're having VCs and hedge funds doing carry trades out of the Caymans,

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you know to buy our debt you know tether has moved up to in the top 20 as the top holder of u.s

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uh treasuries um so we have these new entrants coming in but we have along with the geopolitical

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risk and potentially bricks um the world is not looking at u.s debt anymore as a a neutral kind

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a reserve asset or the pinnacle financial collateral.

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I mean, when it comes down to it, the system's trying to recolateralize.

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I think that's why gold's been going up.

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But that leaves, okay, so looking back at what we have in front of us is, if I'm correct

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about AI, and it certainly looks like we're heading in that direction, we're going to

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have to go through.

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And I believe, you know, the world is starting to fall back to different hemispheres.

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Like we're going to focus on the Western hemisphere.

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And I think that's by design.

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I think we're also going to have to win that productivity race I was discussing with China and other areas around the world.

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In order to do that, we have an aging power grid and we have to produce more power.

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We have to, you know, revamp the grid entirely.

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And we have to build all these data centers, right?

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And I think that's what we're ultimately heading towards

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is setting up a wartime economy

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to start building out the infrastructure

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around the United States and the Western Hemisphere

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in order to win the AI race,

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which is ultimately having robots

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from a productivity perspective.

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And to do that,

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they're going to have to spend so much money.

240
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Okay, so that's where we get to

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what I believe is coming

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from a treasury perspective,

243
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we just crossed over $38 trillion.

244
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Or was it 39?

245
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I think it's 38.

246
00:20:02,569 --> 00:20:03,049
Okay.

247
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A year ago, it was $2 trillion less.

248
00:20:07,369 --> 00:20:08,329
What's a trillion, right?

249
00:20:09,488 --> 00:20:10,069
Oh, man.

250
00:20:10,629 --> 00:20:12,109
People don't really owe this money.

251
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Every 90 days.

252
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You know who it falls on?

253
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It falls on our kids.

254
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That's one of the reasons I'm doing this,

255
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is to try to figure out this mess

256
00:20:20,429 --> 00:20:22,748
or at least provide some thought-provoking ideas

257
00:20:22,748 --> 00:20:24,449
that maybe somebody that's in charge could.

258
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But with that said,

259
00:20:28,269 --> 00:20:33,709
is the Fed is trapped.

260
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Now, I believe that there's a war going on

261
00:20:35,689 --> 00:20:37,089
for monetary control

262
00:20:37,089 --> 00:20:40,289
between the Fed and the Treasury.

263
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I think the Treasury's ultimately going to win

264
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like they did in World War II,

265
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where the two powers were consolidated

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underneath the Treasury.

267
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And I think the Treasury,

268
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is going to push us into yield curve control.

269
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So the 10-year right now is sitting around 3, 4.

270
00:20:57,429 --> 00:21:01,109
It's been hovering here for a year in this range, right?

271
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So what happens when the treasury,

272
00:21:05,508 --> 00:21:07,929
the risk-free rate defined by the market,

273
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gets controlled and set at 2%?

274
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And then inflation starts picking back up

275
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because we start spending as much money as we possibly can.

276
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in order to fix distortions that are breaking the system,

277
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but also try to revamp the electrical grids,

278
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the power infrastructure, and fund everything we need to,

279
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because whether we like it or not, AI is coming,

280
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so why not lead it, right?

281
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And if that's the case, where does that leave the consumer?

282
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The individual, the American.

283
00:21:44,029 --> 00:21:45,689
And that's why I have all theses around,

284
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like, Bitcoin is going to happen just as much as AI is going to happen.

285
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And the pivot, there are no other options.

286
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The U.S. has to make the pivot.

287
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Can't tell you when, but I can tell you that's coming.

288
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And it's going to be a top-down approach.

289
00:22:01,789 --> 00:22:03,988
And I think the administration's kind of positioning for it.

290
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Now, that goes back to what Saylor's doing here from a bridge perspective.

291
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Because he's using Bitcoin as collateral,

292
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he's trying to find out what the real cost of money is

293
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in the free economy.

294
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And I believe that's ultimately,

295
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we've had a lot of discussions.

296
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Chris hosts a great space on Fridays and I partake,

297
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as well as a couple other people and Chad Hoddle's one.

298
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And basically we've been talking a lot lately.

299
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It's focused around STRC,

300
00:22:41,329 --> 00:22:44,728
but it's also focused a lot around what STRC

301
00:22:44,728 --> 00:22:46,809
kind of the significance of it is.

302
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And if we are heading towards yield curve control, and what Chris has indicated is inflation plus debasement ultimately, say on average, is 8%.

303
00:22:58,789 --> 00:23:04,809
Well, the Fed drops the risk-free rate down to 2%.

304
00:23:05,349 --> 00:23:12,349
People have a negative room rate of return at that point of 6%, right?

305
00:23:12,349 --> 00:23:15,769
Two off of six or two off of eight is six.

306
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and Saylor has figured out how to game the system

307
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using a different type of collateral.

308
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And what he's doing is he's essentially bringing value for.

309
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And that rate of return that he's able to offer,

310
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which we think ultimately is going to go to 12,

311
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that right there, as inflation starts to spike back up,

312
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is going to drive people in masses,

313
00:23:41,769 --> 00:23:45,728
especially if the underlying collateral value of the Bitcoin securing it

314
00:23:45,728 --> 00:23:51,869
doubles or triples or quadruples in value in relatively quick order, which is completely

315
00:23:51,869 --> 00:24:00,109
possible. Yeah, I want to break this down more. You know, you talk about sort of the rat race,

316
00:24:00,228 --> 00:24:05,109
Chris, and it sort of really struck personal now with me because this portion of the show

317
00:24:05,109 --> 00:24:08,809
is brought to you by Stamp Seed. And I want to be real with you about this one.

318
00:24:09,089 --> 00:24:13,909
I cannot live with a single point of failure. That's just how I'm wired when it comes to my

319
00:24:13,909 --> 00:24:20,309
Bitcoin. Hardware wallet, multi-sig, the whole setup. I take custody very seriously. But for a

320
00:24:20,309 --> 00:24:25,529
long time, the weakest link in my entire security setup was a piece of paper. My seed phrase,

321
00:24:25,649 --> 00:24:31,149
written down, sitting there, vulnerable to anything. Stamp seed fixed that. I hammered my

322
00:24:31,149 --> 00:24:38,309
seed words into medical grade titanium myself. Fireproof, waterproof, crushproof. It will survive

323
00:24:38,309 --> 00:24:43,669
anything that paper won't, and paper won't survive much. If you've built a serious custody

324
00:24:43,669 --> 00:24:46,869
set up and you're still trusting paper, you're not done yet.

325
00:24:47,529 --> 00:24:48,689
Stampsie.com.

326
00:24:48,929 --> 00:24:50,909
Code Matrix for 15% off.

327
00:24:51,248 --> 00:24:52,109
Finish the job.

328
00:24:52,988 --> 00:25:09,563
Think about maybe the Red Queens race you know you running fast and you not really getting ahead of your peers or you just not gaining any ground or you kind of I have those dreams you know like where you you going from like first to second on a baseball diamond and like you you just

329
00:25:09,563 --> 00:25:13,503
kicking sands and you can't go any further, but no matter how fast you move your legs.

330
00:25:13,943 --> 00:25:17,483
And I think there's like, you talked about the negative carry trade there, which sort

331
00:25:17,483 --> 00:25:21,103
of the real rate of return and sort of first whatever assets you're able to get on the

332
00:25:21,103 --> 00:25:27,683
market. And I think you have like sort of two negative carry trades there or that you're

333
00:25:27,683 --> 00:25:32,263
fighting. You think about your salary, maybe if you're a W-2 employee and you only get a two or

334
00:25:32,263 --> 00:25:37,903
three or 4% raise. So you kind of negative carry against your increasing expenses, right?

335
00:25:38,663 --> 00:25:43,503
Then there's maybe the assets you own and the assets you want to buy, right? So you're hoping

336
00:25:43,503 --> 00:25:48,123
assets you own kind of increase your purchasing powers so you could buy these. And so maybe you're

337
00:25:48,123 --> 00:25:54,843
thinking, you know, camp went up 8%, my salary went up 4%, toothpaste went up 6%. These things

338
00:25:54,843 --> 00:25:59,163
aren't really that material. You could probably get by with a credit card, maybe even to just kind

339
00:25:59,163 --> 00:26:03,963
of kite your way through it. But it's really like what Michael Saylor talked about, it really feels

340
00:26:03,963 --> 00:26:07,883
like real inflation on these bigger things that are more capital intensive and sort of more

341
00:26:07,883 --> 00:26:15,123
important to living on a longer term basis, like healthcare, housing, education is going at like

342
00:26:15,123 --> 00:26:21,863
10 or 20% a year. But you really only talked about a negative carry trade. What is a carry trade?

343
00:26:22,643 --> 00:26:27,283
And maybe we'll talk about what happened with LTCM, a long-term capital management,

344
00:26:27,283 --> 00:26:31,903
and get into the yen carry trade to explain like, what is a positive carry trade? What are people

345
00:26:31,903 --> 00:26:36,463
trying to do out there? How are the pros like getting around the negative carry trade? What

346
00:26:36,463 --> 00:26:42,723
happened with LTCM? And then we'll get into the yen trade, yen carry. Yeah. So the LTCM,

347
00:26:42,723 --> 00:26:49,563
They were basically the de facto hedge fund back in 94 to 1998.

348
00:26:50,723 --> 00:26:58,383
And the short, ironically, is they were short volatility.

349
00:26:59,463 --> 00:27:04,703
They bet on things in the fiat world, which is interesting.

350
00:27:05,363 --> 00:27:07,683
They bet on things converging.

351
00:27:08,283 --> 00:27:10,823
They bet on things being calm.

352
00:27:10,823 --> 00:27:18,783
they bet on things being steady which sounds so antithetical to us bitcoiners when you look at

353
00:27:18,783 --> 00:27:28,143
the fiat world in fiat instruments uh it you know in debt in sovereign debt all of those all of

354
00:27:28,143 --> 00:27:33,163
those variables that go into markets and how volatile they can be ultimately they were shorting

355
00:27:33,163 --> 00:27:43,083
volatility and they were doing it with 10 20 25x leverage and in the end russia defaulted

356
00:27:43,083 --> 00:27:50,623
it created contagion within their fund itself and they they had only had about 5 billion in assets

357
00:27:50,623 --> 00:27:55,643
i mean this is no yay which is a lot back then but still 5 billion but the problem was

358
00:27:55,643 --> 00:27:59,603
notionally, they had $120 billion.

359
00:28:01,103 --> 00:28:04,003
We're talking more than 20x leverage

360
00:28:04,003 --> 00:28:07,523
on their positions because the spread

361
00:28:07,523 --> 00:28:11,443
or profitability of the trades in and of itself

362
00:28:11,443 --> 00:28:14,403
from a one-to-one basis, there wasn't much there.

363
00:28:14,523 --> 00:28:15,343
There wasn't much juice.

364
00:28:16,083 --> 00:28:17,983
Just a couple of basis points, I would say.

365
00:28:18,463 --> 00:28:20,403
But when you put on 25x leverage,

366
00:28:21,403 --> 00:28:23,903
then you can make some money, right?

367
00:28:23,903 --> 00:28:32,743
And so just as long as everything converged and everything, the water was calm, you're on the sailboat, you're in the boat, there's no waves, you're good.

368
00:28:33,083 --> 00:28:38,323
But as soon as something out of the ordinary happens, everything blows up.

369
00:28:38,623 --> 00:28:46,683
Their models basically said it was like multiple lifetimes, no chances would ever happen for the Russia to fall.

370
00:28:47,243 --> 00:28:48,943
But as we know, God's volatile.

371
00:28:49,943 --> 00:28:53,343
So that's ultimately how I explain what happened back then.

372
00:28:53,903 --> 00:28:57,283
Then if you compare that to, we can go into this a little bit deeper.

373
00:28:57,863 --> 00:29:08,923
Actually, when you look at it, when I look at it just deeply, what Saylor is doing and what strategy is doing is actually the opposite of shorting volatility.

374
00:29:09,403 --> 00:29:12,563
Their long fall, their long Bitcoin fall.

375
00:29:13,743 --> 00:29:16,963
And so I've done like a side by side comparison of the two.

376
00:29:17,343 --> 00:29:23,463
And it is so fascinating that, you know, there's no liquidation risk with MSTR.

377
00:29:23,463 --> 00:29:30,703
There's all the things that happen to LTCM that mechanically, you know, more than likely that it can't have.

378
00:29:30,843 --> 00:29:35,543
There's some things that can't happen on the MSTR side.

379
00:29:35,743 --> 00:29:38,063
And that's when it's so fast about it.

380
00:29:38,103 --> 00:29:41,423
And it's very almost exact opposite concept.

381
00:29:42,423 --> 00:29:50,823
But what's interesting is people overlay what happened to funds and talk about liquidation risk and leverage and all of that.

382
00:29:50,823 --> 00:29:54,943
but you have to flip it upside down when it comes to coverage for the preferreds.

383
00:29:55,363 --> 00:29:58,943
You know, what's the runway for coverage to pay the dividend and things like that.

384
00:29:59,163 --> 00:29:59,903
So it's very fascinating.

385
00:30:01,203 --> 00:30:05,323
Yeah, I think I was a junior in college or maybe a senior in college when LTCM happened.

386
00:30:06,083 --> 00:30:07,043
I remember we were talking about it.

387
00:30:07,063 --> 00:30:09,183
I remember the Russia thing.

388
00:30:09,243 --> 00:30:14,043
I didn't really realize it was short volatility and the Russia thing caused massive contagion.

389
00:30:14,903 --> 00:30:16,783
That's a really interesting connection there.

390
00:30:17,563 --> 00:30:19,403
What about the yen carry trade?

391
00:30:19,403 --> 00:30:26,883
Can we just kind of, because I want to get into maybe just Maryland, maybe just real high level, what that is and how much money was involved in that.

392
00:30:28,403 --> 00:30:31,743
That one I'm going to let Chris run with because he's closer to that one than I am.

393
00:30:32,563 --> 00:30:32,803
Yeah.

394
00:30:33,043 --> 00:30:33,503
Oh yeah.

395
00:30:33,583 --> 00:30:34,943
Well, it's the same concept really.

396
00:30:35,343 --> 00:30:39,143
You borrow, like for example, you borrow, you're borrowing cheap yen.

397
00:30:40,203 --> 00:30:41,343
You redeploy that.

398
00:30:41,403 --> 00:30:42,223
Let's call it 0%.

399
00:30:42,223 --> 00:30:46,843
You borrow 0% in yen and you redeploy the capital in the U.S. more.

400
00:30:48,283 --> 00:30:49,043
Asset or something.

401
00:30:49,043 --> 00:30:52,343
entity there, some vertical, and then you, and then you capture the sprint

402
00:30:52,343 --> 00:30:55,703
between zero and four or zero and five or whatever it is.

403
00:30:55,943 --> 00:30:59,643
And then you ramp up the leverage or pull the leverage back down based on

404
00:30:59,963 --> 00:31:01,343
button profile, things like that.

405
00:31:01,963 --> 00:31:02,843
And that's basic.

406
00:31:03,043 --> 00:31:03,343
Yeah.

407
00:31:03,423 --> 00:31:03,743
Go ahead.

408
00:31:04,423 --> 00:31:09,863
Now in Peruvian bull, I think he goes by Roberto now, um, has done a really

409
00:31:09,863 --> 00:31:15,443
good job, uh, mapping that over the last couple of years.

410
00:31:15,443 --> 00:31:19,003
Um, and it's, it's fascinating.

411
00:31:19,183 --> 00:31:25,063
You know, one of the things I heard was that direct trade that Chris was discussing right

412
00:31:25,063 --> 00:31:33,743
there, basically funded majority of like our software investments from the 2000s, late

413
00:31:33,743 --> 00:31:34,763
nineties, two thousands.

414
00:31:35,123 --> 00:31:40,843
And that's how the U S was able to kind of build out its entire tech industry.

415
00:31:40,843 --> 00:31:47,983
so it's just interesting how you have these self-financing mechanisms that have worked out

416
00:31:47,983 --> 00:31:53,823
so well both on the upside and the but we haven't seen really the downside yet but

417
00:31:53,823 --> 00:31:59,183
i do believe that's coming at some point because to your point chris it's volatile

418
00:31:59,183 --> 00:32:04,963
it's bound to happen at some point and so if i could add yeah you basically just as an allocator

419
00:32:04,963 --> 00:32:12,323
you look for a mark like you look for inefficiency or you look for spreads you look for you know if

420
00:32:12,323 --> 00:32:15,923
you know what i'm talking about you know what i'm talking about it's like you're just looking for

421
00:32:15,923 --> 00:32:20,803
those spots if anybody plays poker like years ago whatever you know back when it was really hot you

422
00:32:20,803 --> 00:32:27,043
look for spots you go to the table that puts you a plus ev's position like you want to be plus ev

423
00:32:27,043 --> 00:32:32,803
at all times and so ultimately there's carry traits happening all over the market and you're just

424
00:32:32,803 --> 00:32:39,443
looking for the best asymmetric situation and the best spread with the least amount of volatility

425
00:32:39,443 --> 00:32:44,403
like you don't want you know and i think the most important part of what you're trying to

426
00:32:44,403 --> 00:32:52,243
to represent here is if it plays into the conversion of the system too right if the

427
00:32:52,243 --> 00:32:57,163
conversion happens faster and bitcoin becomes the black hole which is ultimately what say

428
00:32:57,163 --> 00:33:04,483
once strc hits par he is scraping every last bit of that volume off and buying bitcoin with it which

429
00:33:04,483 --> 00:33:11,023
is you know i i can make the argument that there's been a lot of monkey business by market makers

430
00:33:11,023 --> 00:33:17,303
um in the bitcoin markets and they've used paper bitcoin and i know that there's many

431
00:33:17,303 --> 00:33:21,683
out there that disagree with that premise but i believe that they have basically

432
00:33:21,737 --> 00:33:29,817
inflated the Bitcoin supply through paper Bitcoin over the last year or two, definitely

433
00:33:29,817 --> 00:33:35,177
within the last eight or nine months, and have suppressed the price.

434
00:33:36,237 --> 00:33:40,257
Well, yeah, I'm going to jump in because a lot to unpack here.

435
00:33:40,257 --> 00:33:42,297
So Peruvian Bull, a.k.

436
00:33:42,377 --> 00:33:47,397
Roberto Rios, last guest on the show, I recommend people go back to that.

437
00:33:47,397 --> 00:33:51,857
We did get into sort of this promotion collapse of Japan's bond market.

438
00:33:51,997 --> 00:33:55,437
Now silver is finally breaking free from decades of paper price depression.

439
00:33:55,577 --> 00:34:00,277
And we cover, I mean, he's just sort of like, oh man, so much signal, very quick.

440
00:34:00,337 --> 00:34:01,717
And we talked for two hours.

441
00:34:03,317 --> 00:34:08,677
You know, famous carry trade or infamous, and I don't think it's true.

442
00:34:08,677 --> 00:34:15,137
SPF was known for the Korean kimchi trade, where he was able to buy.

443
00:34:15,257 --> 00:34:23,437
Somehow he was able to get access to the Korean Bitcoin market and zap it over here and sell it for more.

444
00:34:24,197 --> 00:34:27,957
And somehow he was able to build this sort of flywheel that he was able to protect.

445
00:34:28,097 --> 00:34:33,697
Because any sort of carry trade that's in the fiat world will be attacked by competitors.

446
00:34:34,137 --> 00:34:35,217
No one's going to get a free launch.

447
00:34:35,377 --> 00:34:36,677
It's going to collapse eventually.

448
00:34:36,677 --> 00:34:41,457
It's going to be, you know, even Japan couldn't defend the yen carry trade forever.

449
00:34:42,377 --> 00:34:43,617
It's a tough thing to do.

450
00:34:43,897 --> 00:34:45,797
And I'm sort of Bitcoin.

451
00:34:46,097 --> 00:34:51,797
I would say in price suppression and paper, Bitcoin, I speculate all that stuff is happening.

452
00:34:52,157 --> 00:34:58,217
I'm kind of certain of it, but I will say just even flatly, just not your keys, not your market price.

453
00:34:59,457 --> 00:35:01,897
So, you know, ETFs can have pros and cons.

454
00:35:02,037 --> 00:35:03,537
I don't think it's self-custody.

455
00:35:03,537 --> 00:35:06,657
doesn't have any sort of the benefits of pure Bitcoin, but you get price exposure.

456
00:35:07,137 --> 00:35:12,957
But some of the cons with that is that gives a lot of other entities influence over a price.

457
00:35:13,157 --> 00:35:18,197
I just, you know, and they, you know, their markets, ladies price, they set the scoreboard.

458
00:35:18,277 --> 00:35:19,737
They literally write the scoreboard.

459
00:35:19,837 --> 00:35:20,937
They know the order flow.

460
00:35:21,317 --> 00:35:24,157
They can kind of manage the ins and outs.

461
00:35:24,157 --> 00:35:27,597
And there's non-cash, there's non-Bitcoin settled instruments being used.

462
00:35:28,397 --> 00:35:29,637
Maybe less and less, whatever.

463
00:35:29,857 --> 00:35:32,537
But, you know, I want to talk about stretch, though.

464
00:35:32,537 --> 00:35:49,177
So one of the things, Cedric, real fast, is what happens when the Fed moves interest rates down to 2% and then the cost of money in the TradFi system decreases from where it's at today?

465
00:35:49,177 --> 00:35:55,377
And say you or I could go and borrow at 6%, right?

466
00:35:55,377 --> 00:36:05,277
once the market understands that strc stable that's the carry trade right and it's it's not

467
00:36:05,277 --> 00:36:11,177
going to start with consumers and it actually might be arbed out before consumers can even

468
00:36:11,177 --> 00:36:17,677
really pick up on it in mass but ultimately institutions are going to start running that

469
00:36:17,677 --> 00:36:23,717
i think that's one of the points that chris has been getting to is that is the institutional carry

470
00:36:23,717 --> 00:36:30,557
trade once they fully understand and grasp what strc is and that it's stable and that it is not

471
00:36:30,557 --> 00:36:35,857
going to essentially be attacked by you know market makers or over trogers because there's

472
00:36:35,857 --> 00:36:44,037
still some theories out there that ultimately you can long str and short um or long strc and short

473
00:36:44,037 --> 00:36:49,977
mstr and play nab differentials and so forth like there's a lot of theories about how that could play

474
00:36:49,977 --> 00:36:58,217
out and it could very well play out this cycle or the next. But if STRC is proven as a solid

475
00:36:58,217 --> 00:37:04,817
mechanism that works, and really the proof of that is going to be how Bitcoin reacts to the volume

476
00:37:04,817 --> 00:37:12,657
that's coming in from STRC to buy more Bitcoin. And if Bitcoin's price scarcity actually returns

477
00:37:12,657 --> 00:37:17,577
back to Bitcoin, then the machine's on stuff.

478
00:37:18,197 --> 00:37:20,797
And that carry trade, whether it's the individual

479
00:37:20,797 --> 00:37:24,537
or the institution, that's how you convert the entire system

480
00:37:24,537 --> 00:37:25,997
because that becomes a black hole

481
00:37:25,997 --> 00:37:29,257
and it sucks all the value of everything into it.

482
00:37:29,617 --> 00:37:31,417
And that's how you start realigning incentives

483
00:37:31,417 --> 00:37:32,557
and transitioning.

484
00:37:35,097 --> 00:37:38,657
So I think Chris kind of touched on this before.

485
00:37:38,657 --> 00:37:40,457
Obviously, Marilyn, you, well,

486
00:37:40,457 --> 00:37:46,397
But it seems like stretch breaks this sort of carry trade pattern at a molecular level.

487
00:37:46,737 --> 00:37:51,577
I think that's Marilyn's words from this piece.

488
00:37:52,877 --> 00:37:55,637
Let's get the name of this correct here.

489
00:37:57,177 --> 00:37:59,957
Stretch and the conversion of the financial system.

490
00:38:00,877 --> 00:38:05,577
So it seems like, you know, we're with Bitcoin and stretch your long volatility.

491
00:38:05,577 --> 00:38:12,697
and nobody can really mess with the positive nature of the carry trade

492
00:38:12,697 --> 00:38:21,737
as long as Bitcoin's cager stays higher than the interest rate you're borrowing at

493
00:38:21,737 --> 00:38:26,457
or providing through the preferreds.

494
00:38:27,297 --> 00:38:29,337
Yeah, I don't think we're...

495
00:38:29,337 --> 00:38:30,357
Chris, correct me if I'm wrong.

496
00:38:30,437 --> 00:38:33,837
I don't think that's the actual mechanism of the carry trade that we're discussing.

497
00:38:33,837 --> 00:38:40,477
is it it's the it's the it's i think it's the other side so okay there's like two concepts

498
00:38:41,757 --> 00:38:48,157
the concept is you can borrow at a rate like at five percent or four i think this itself or goes

499
00:38:48,157 --> 00:38:56,397
down to three or two and then you can redeploy at 12 or 11 at strc so you might have a nine eight

500
00:38:56,397 --> 00:39:03,037
seven hundred basis point delta but capture like i was from strategies point of view where they could

501
00:39:03,037 --> 00:39:10,237
They're carrying the Bitcoin at a higher rate than they're providing and distilling the risk and the rate too.

502
00:39:10,497 --> 00:39:12,137
But yeah, there's both sides of that, right?

503
00:39:12,337 --> 00:39:15,777
There are being Bitcoin's growth rate with what they're paying down.

504
00:39:15,777 --> 00:39:16,077
Correct.

505
00:39:16,837 --> 00:39:24,597
But it breaks all traditional, it's like a paradigm break because normally you're on the negative side,

506
00:39:24,617 --> 00:39:29,057
or even if you're on a positive part of this fiat carry trade, you can't maintain it,

507
00:39:29,177 --> 00:39:32,697
or other individual actors can interfere with the trade.

508
00:39:33,037 --> 00:39:41,317
With Bitcoin, no one's going to be able to debase it, print more of it, get a better location than you, these kinds of things.

509
00:39:41,357 --> 00:39:44,717
Maybe there'll be regulatory benefits depending on your country, I guess.

510
00:39:44,897 --> 00:39:57,037
But it's sort of a defensible, it's permanently defensible as long as Bitcoin's cager is higher than what strategy is delivering to their customers who they prefer.

511
00:39:57,217 --> 00:39:58,477
Am I thinking about that correctly?

512
00:39:58,477 --> 00:40:02,617
And to your point, I'll put a couple of puzzles, pieces together we've done already.

513
00:40:02,617 --> 00:40:05,757
because we believe, we talked about the beginning,

514
00:40:06,097 --> 00:40:06,657
near the beginning,

515
00:40:07,837 --> 00:40:09,637
Bitcoin's the best money.

516
00:40:10,037 --> 00:40:12,037
If Bitcoin's the best monetary protocol,

517
00:40:12,197 --> 00:40:13,817
then human beings will figure it out.

518
00:40:15,177 --> 00:40:16,517
We don't know the duration.

519
00:40:16,937 --> 00:40:18,657
So that's where the fiat price of Bitcoin,

520
00:40:18,857 --> 00:40:19,377
we don't know.

521
00:40:19,437 --> 00:40:20,997
We have no idea the next year or whatever.

522
00:40:21,497 --> 00:40:23,177
But over, I'd say, a decade,

523
00:40:24,357 --> 00:40:26,817
adoption is going to be a heck of a lot higher

524
00:40:26,817 --> 00:40:29,397
if people think like we do

525
00:40:29,397 --> 00:40:32,517
that Bitcoin is the best monetary protocol.

526
00:40:32,617 --> 00:40:38,137
right i mean the fiat units will keep being printed they will keep going up and those units

527
00:40:38,137 --> 00:40:45,437
will shift over to the most efficient protocol so then so that's failure's delta that's what he

528
00:40:45,437 --> 00:40:50,257
believes that's what us as bitcoiners believe that's what he believes and so then he has to

529
00:40:50,257 --> 00:40:56,637
put a number on it so he's put out the number let's say 29 year as the as the caker like people

530
00:40:56,637 --> 00:41:02,597
can argue is it going to be 25 is it going to be 30 over the next decade nobody knows of course but

531
00:41:02,597 --> 00:41:04,857
You've got to have some type of input number.

532
00:41:04,937 --> 00:41:06,557
We talked about the 8% input.

533
00:41:06,857 --> 00:41:08,857
Well, his input's 29 for Bitcoin.

534
00:41:09,777 --> 00:41:17,317
And so if that is true, then if he can have a vehicle like STRC where it pays out, which

535
00:41:17,317 --> 00:41:22,417
it started at 9%, it's increased now every month, 50 bips, 25.

536
00:41:22,777 --> 00:41:24,397
Now it's up to 11.5.

537
00:41:24,717 --> 00:41:28,497
You have 11.5 versus 29 is what he thinks.

538
00:41:28,617 --> 00:41:31,277
So rounded to 12, 29 minus 12 is 17.

539
00:41:31,277 --> 00:41:35,617
He has a 17% positive carry, to your point, Cedric.

540
00:41:35,617 --> 00:41:50,625
That the other side of the carry trade So you have actors doing the other side of the carry trade of getting cheap fiat for four percent buying strc collecting the 800 basis points from that carry trade then sailor

541
00:41:50,625 --> 00:41:59,145
carry trades that with bitcoin's catering 29 and he pays out 12 so he collects 17 that's what's going

542
00:41:59,145 --> 00:42:09,385
on you know i was thinking about this um earlier today and we're still looking at it through a

543
00:42:09,385 --> 00:42:16,585
trad fi lens right like everything about these returns we're still looking at it in economic

544
00:42:16,585 --> 00:42:26,425
returns related to fad so if in you know um jeff booth has spoken it's it's very difficult to

545
00:42:26,425 --> 00:42:31,505
to peer through a paradigm shift and see what it looks like on the other side.

546
00:42:32,765 --> 00:42:36,725
So my argument is, and everybody's like,

547
00:42:36,805 --> 00:42:39,765
oh, how's this seller going to become a Bitcoin bank?

548
00:42:40,285 --> 00:42:41,625
How is he going to monetize this?

549
00:42:41,685 --> 00:42:44,385
How is he going to come up with a cash flow mechanism?

550
00:42:44,565 --> 00:42:47,665
And I'm like, that's fat thought processes, right?

551
00:42:47,665 --> 00:42:49,305
That's this side of the paradigm.

552
00:42:50,385 --> 00:42:54,465
And if the system is breaking down and people don't trust each other,

553
00:42:54,465 --> 00:43:02,265
the only thing that matters is collateral right i mean back in the 50s and 60s the balance sheet of

554
00:43:02,265 --> 00:43:08,405
financial statements actually really mattered a lot more than they do today and the way i look at it is

555
00:43:08,405 --> 00:43:14,185
what sailor is doing is he's figured out how to trojan horse the incentive structure

556
00:43:14,185 --> 00:43:20,165
in order to take advantage of the distortions that are happening on the side of the failing system

557
00:43:20,165 --> 00:43:27,285
and funnel as much money that he possibly can or value, not money, value out of this system.

558
00:43:27,785 --> 00:43:28,925
Because it's pulling from everything.

559
00:43:29,505 --> 00:43:33,345
Like it's going to pull from real estate, you know, wherever credit cap rates are.

560
00:43:34,245 --> 00:43:37,745
STRC is going to be higher than, you know, most standard cap rates out there.

561
00:43:39,005 --> 00:43:43,765
It's going to pull from the sovereign debt market when they go to yield curve control

562
00:43:43,765 --> 00:43:48,105
and, you know, grandma's only getting 2% on her bond portfolio.

563
00:43:48,105 --> 00:43:54,525
and as her kids start and her financial advisor gets more comfortable with an strc profile

564
00:43:54,525 --> 00:44:02,445
then all of a sudden she starts moving her money like it's going to be this mad rush of capital

565
00:44:02,445 --> 00:44:08,725
that is going to be starving for this real rate of return and from my perspective

566
00:44:08,725 --> 00:44:16,845
saylor's never going to monetize at least in fayette terms the bitcoin he's never going to

567
00:44:16,845 --> 00:44:22,805
come up with a system that makes sense to this side of the paradigm shift.

568
00:44:23,365 --> 00:44:30,265
He is just going to secure as much collateral as possible as we go through the paradigm.

569
00:44:30,265 --> 00:44:35,465
And then on the other side, systems, processes, how we evaluate things.

570
00:44:35,945 --> 00:44:39,085
Maybe it has to do with Bitcoin per share, right?

571
00:44:39,085 --> 00:45:00,945
And maybe that's ultimately a derivative of how you're evaluating value creation against his ultimate equity dilution that he's doing in order to help kind of fund this side of the system's leverage ratios between preferred interest rate expenses as well as a collateral base, right?

572
00:45:00,945 --> 00:45:11,425
Because as right now, I don't know what it was after the last couple of weeks, but two weeks ago, he was like a six-time coverage ratio on the STRC outstandings, right?

573
00:45:11,445 --> 00:45:15,925
With a 30-month run rate on the interest reserves.

574
00:45:16,485 --> 00:45:17,225
That's great.

575
00:45:17,385 --> 00:45:26,645
But as STRC starts sucking in more value and he just reloaded the ATM, those values are going to start to come in again, right?

576
00:45:26,685 --> 00:45:27,745
So what's his mechanism?

577
00:45:27,925 --> 00:45:29,605
Because he has to make everybody happy.

578
00:45:29,605 --> 00:45:35,765
like wall street still looks at his products as they're trying to understand it from a trad fi

579
00:45:35,765 --> 00:45:39,965
lens and they still want to hit the metrics right so he still has to manage to that i think that's

580
00:45:39,965 --> 00:45:44,145
why he came out with the whole idea of digital credit and you know i make the counter argument

581
00:45:44,145 --> 00:45:49,605
that's just a conversion mechanism just nobody can see it or understand it because the true value

582
00:45:49,605 --> 00:45:54,645
lies on the other side or once momentum starts building that's when everybody will understand

583
00:45:54,645 --> 00:45:59,325
what's going on. This portion of the show is brought to you by Firefish. And I want to be

584
00:45:59,325 --> 00:46:04,425
straight with you about where I'm at with this one. I just set up my Firefish account because

585
00:46:04,425 --> 00:46:10,285
I'm in exactly the situation they're built for. I have Bitcoin. I need liquidity. And I'm not

586
00:46:10,285 --> 00:46:16,925
selling. Firefish solves that with non-custodial Bitcoin-backed loans. Your Bitcoin stays in

587
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588
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Just liquidity against your stack.

589
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590
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591
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592
00:46:41,505 --> 00:46:41,765
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593
00:46:42,285 --> 00:46:43,465
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594
00:46:44,245 --> 00:46:45,305
Live off it instead.

595
00:46:45,885 --> 00:46:48,205
Firefish.io code MATRIX.

596
00:46:48,205 --> 00:46:57,085
In college, one thing to that, because we talked about volatility, and if you compare this to the S&P 500, you go side-by-side comparison.

597
00:46:57,425 --> 00:47:01,205
And I know it's a triadified lens, but to your point, Marilyn, this is how they see it.

598
00:47:02,185 --> 00:47:06,705
We've got hundreds of trillions of dollars in the legacy system.

599
00:47:06,905 --> 00:47:10,565
There's those units still there, and they're looking for a home.

600
00:47:10,565 --> 00:47:20,545
and if sulfur goes to 2 and strc is paying 12 or 11 or 10 that's 800 to a thousand bips

601
00:47:20,545 --> 00:47:26,745
of delta they're going to figure this out eventually and that's just too wide of a

602
00:47:26,745 --> 00:47:30,365
so what so when they when they do that that's why the sharp ratio is so high

603
00:47:30,365 --> 00:47:36,545
yeah and the vol yeah and the vol is already down to five four three and the return profiles

604
00:47:36,545 --> 00:47:42,745
call it 12% it gets raised two more times so you have a three 30-day realized vol a three vol

605
00:47:42,745 --> 00:47:51,265
and a 12% return the S&P 500 is like a 12-12 so people that run models and that they're you know

606
00:47:51,265 --> 00:47:55,605
have a CFA level three and you know blah blah blah they're at this level and fine they've been

607
00:47:55,605 --> 00:48:03,105
20 years these are the numbers that they should know a 12-3 versus 12-12 it's not even a comparison

608
00:48:03,105 --> 00:48:11,005
Because that thing, as far as the Sharpe ratio, the risk you have to take to the 12%, there's no comparison.

609
00:48:11,705 --> 00:48:15,385
And it's only a matter of time before the smart analysts wake up.

610
00:48:15,625 --> 00:48:18,145
We just need more track record and history here.

611
00:48:18,805 --> 00:48:22,445
But when they do, two things are going to happen.

612
00:48:22,445 --> 00:48:29,145
They're going to get smacked in the face because everything they've built their entire understanding and careers on is basically virtually a lie.

613
00:48:29,365 --> 00:48:32,405
And they have to go through the wake-up call that most Bitcoiners have to go through.

614
00:48:33,105 --> 00:48:35,185
when you truly understand the asset.

615
00:48:35,925 --> 00:48:38,965
And what, because, you know, I position it as a Bitcoin lens.

616
00:48:39,565 --> 00:48:43,085
Once you have Bitcoin in your life and you start really understanding what the asset is,

617
00:48:43,425 --> 00:48:46,985
it changes how you view the rest of the world.

618
00:48:47,445 --> 00:48:51,085
It's almost like you can finally see what the incentive structures look like

619
00:48:51,085 --> 00:48:57,025
with everything that you're involved with, whether it's politics or economics or family life.

620
00:48:57,025 --> 00:49:01,885
Like, it's an interesting concept that I fully believe in.

621
00:49:01,885 --> 00:49:05,585
And I've seen it and discussed it with a lot of Bitcoin, Bitcoin maxis.

622
00:49:06,525 --> 00:49:22,065
But with that said, when Wall Street, there's going to come a point where they cannot argue against the numbers that are being pumped out, like the Sharpe ratio and so forth.

623
00:49:22,065 --> 00:49:28,125
And when they finally wake up, that's when the spark happens.

624
00:49:28,125 --> 00:49:33,765
That's when we kind of pass, in my perspective, we'll pass the reflexive equilibrium.

625
00:49:34,565 --> 00:49:38,105
And that's the point where Bitcoin starts to go in perpetual upswing.

626
00:49:38,625 --> 00:49:43,625
Because the buyer of last resort, or the buyer of the floor, is STRC.

627
00:49:43,945 --> 00:49:46,225
And it's perpetually pushing Bitcoin's price up.

628
00:49:47,345 --> 00:49:52,265
And just a more point on the STRC is, it's a tool.

629
00:49:53,025 --> 00:49:55,665
And look, as Bitcoiners, Bitcoin's the apex asset.

630
00:49:56,505 --> 00:50:07,773
If you had to pick between Bitcoin and STRC a 10 outlook Bitcoin it not as close This isn even a conversation as to what you want to hold for a decade

631
00:50:08,473 --> 00:50:10,353
I think Bitcoin, we all agree with that

632
00:50:10,353 --> 00:50:13,453
because we believe that this transition is happening

633
00:50:13,453 --> 00:50:16,173
from once the units are going from the legacy system

634
00:50:16,173 --> 00:50:17,173
to the Bitcoin system.

635
00:50:17,593 --> 00:50:18,833
So Bitcoin's the best money.

636
00:50:18,973 --> 00:50:20,973
It's going to go up faster in fiat terms

637
00:50:20,973 --> 00:50:23,433
than an instrument like STRC.

638
00:50:23,433 --> 00:50:25,373
But the point is,

639
00:50:25,373 --> 00:50:28,853
there's capital crap that can't buy Bitcoin.

640
00:50:29,053 --> 00:50:31,033
This is the biggest thing in my opinion.

641
00:50:31,373 --> 00:50:32,433
There's just capital that they,

642
00:50:32,613 --> 00:50:33,753
even if they love Bitcoin,

643
00:50:33,953 --> 00:50:35,273
even if they're like Bitcoiners,

644
00:50:35,673 --> 00:50:37,193
boards, these investors,

645
00:50:37,993 --> 00:50:41,513
they can't, those entities can't buy Bitcoin.

646
00:50:41,773 --> 00:50:42,933
They can't even buy the ETF.

647
00:50:43,313 --> 00:50:44,693
They can't buy a strategy.

648
00:50:44,933 --> 00:50:46,153
They can't buy those instruments.

649
00:50:46,333 --> 00:50:47,213
They can only buy correct.

650
00:50:48,633 --> 00:50:51,273
So that, and it's hundreds of trillions of dollars.

651
00:50:51,753 --> 00:50:53,533
And so this is what that engine is.

652
00:50:53,533 --> 00:50:54,953
That's what STRC is.

653
00:50:54,953 --> 00:50:55,873
It's an instrument.

654
00:50:56,073 --> 00:51:01,833
It's a tool that allows the capital to actually participate in basically

655
00:51:01,833 --> 00:51:04,553
say we're stripping the vol off the 29%.

656
00:51:04,553 --> 00:51:06,253
You know, it's 29% K-Taker.

657
00:51:06,453 --> 00:51:08,273
It's a 40 vol, 45 vol.

658
00:51:08,313 --> 00:51:14,813
He strips the 45 vol down to three and gives you 12% if the instrument does

659
00:51:14,813 --> 00:51:17,133
what it's supposed to do over the next several years.

660
00:51:17,133 --> 00:51:21,873
And so the capital is allowed to participate, you know, albeit in a,

661
00:51:21,993 --> 00:51:24,073
you know, what is that, a third Bitcoin's performance?

662
00:51:24,073 --> 00:51:27,913
but it's 12% of the S&P 500 performance

663
00:51:27,913 --> 00:51:30,353
with about a fourth of the volatility.

664
00:51:32,753 --> 00:51:33,973
Yeah, and there's...

665
00:51:33,973 --> 00:51:34,433
Wow, so...

666
00:51:34,433 --> 00:51:34,653
Yeah.

667
00:51:35,133 --> 00:51:36,973
There's also another source,

668
00:51:37,673 --> 00:51:39,033
multiple sources of capital,

669
00:51:39,813 --> 00:51:41,793
like insurance companies, right?

670
00:51:41,813 --> 00:51:42,673
They have huge gaps.

671
00:51:43,333 --> 00:51:44,933
State pension funds, you know,

672
00:51:44,953 --> 00:51:46,373
they have huge gaps.

673
00:51:47,293 --> 00:51:53,033
You know, all of these old system vehicles

674
00:51:53,033 --> 00:52:00,513
that are no longer solvent, 12% can do a lot to help close those gaps, right?

675
00:52:00,613 --> 00:52:05,173
So again, once the comfort level comes into place,

676
00:52:05,173 --> 00:52:08,273
and we're going through that kind of proof of concept stage right now,

677
00:52:08,733 --> 00:52:11,133
but it's looking extremely promising, you know,

678
00:52:12,413 --> 00:52:16,873
popping off a par, coming back to par, the discount, you know,

679
00:52:16,933 --> 00:52:22,633
the delineations from par on a monthly basis are getting less and less.

680
00:52:23,033 --> 00:52:27,193
um we're getting back to par faster and i think right now if we get back to it tomorrow we're

681
00:52:27,193 --> 00:52:35,513
basically on par with last uh last month with health after the x dividend date how fast we

682
00:52:35,513 --> 00:52:42,713
basically moved from um sell off back to par so we get a couple more months of that and we go through

683
00:52:42,713 --> 00:52:47,113
a summer and then bitcoin's price starts reacting and the confidence level starts increasing around

684
00:52:47,113 --> 00:52:54,073
the collateral that's supporting this product like we could we could go into the fall or early

685
00:52:54,073 --> 00:53:01,433
next year and people could start writing in this into investment mandates as potential opportunity

686
00:53:01,433 --> 00:53:07,193
at least for a portion of their you know investment income portfolios for some of these

687
00:53:07,193 --> 00:53:15,673
large pension funds it's possible and that'll get you know i chad's chad's brought this up chad auto

688
00:53:15,673 --> 00:53:23,393
as well as Chris, you know, STRCs, it's going to be really telling on May 15th when

689
00:53:23,393 --> 00:53:29,173
the F13s come out for STRC and we get to see what pension funds have been playing,

690
00:53:29,533 --> 00:53:34,133
not pension funds, but what like large tier investors have been playing with STRC or making

691
00:53:34,133 --> 00:53:39,413
investments. I think that's going to be a really good early tell. I don't think we had

692
00:53:39,413 --> 00:53:44,773
too many significant ones the last go around of reporting.

693
00:53:44,993 --> 00:53:49,013
But I think this one, especially with this volume that we've been seeing,

694
00:53:49,293 --> 00:53:54,313
could end up hitting some records and really raising some eyebrows.

695
00:53:56,493 --> 00:53:59,053
Yeah, I mean, what was interesting there,

696
00:53:59,113 --> 00:54:00,853
I mean, you talked about balance sheet strength

697
00:54:00,853 --> 00:54:03,473
and how important that was in the 50s and 60s

698
00:54:03,473 --> 00:54:06,273
and how that's kind of, I do agree, it's really gone away.

699
00:54:06,273 --> 00:54:15,153
and I think that you know bitcoin is like the holy grail of balance sheet strength um it's

700
00:54:15,153 --> 00:54:20,173
really like almost indestructible on your balance sheet it's probably the best thing you can have and

701
00:54:20,173 --> 00:54:30,273
so but thinking about maybe banks I mean you guys think banks here could pivot to stretch strc to

702
00:54:30,273 --> 00:54:35,933
kind of like I mean banks right now fighting with stable coins and crypto and the clarity act to

703
00:54:35,933 --> 00:54:39,013
kind of provide yield and they're having a hard time getting yield.

704
00:54:39,713 --> 00:54:44,853
I mean, that would be a lot of capital or strength coming into the Bitcoin ecosystem

705
00:54:44,853 --> 00:54:45,693
through strategy.

706
00:54:48,393 --> 00:54:49,353
I think so.

707
00:54:49,773 --> 00:54:56,413
I mean, I don't know what the regulatory environment would be, but I think if I'm correct about

708
00:54:56,413 --> 00:55:02,873
establishing a capital curve, it's ultimately establishing new cost, you know, capital or

709
00:55:02,873 --> 00:55:10,333
cost of funds and strc is kind of establishing that real rate of return for the market then

710
00:55:10,333 --> 00:55:16,153
i could see banks starting to structure things like this i think it's probably more likely that

711
00:55:16,153 --> 00:55:24,333
they they'll be pulling catch up but start trying to develop these products on their own as well um

712
00:55:24,333 --> 00:55:28,853
i think that that ultimately but they're going to try to i think they're going to try to do it

713
00:55:28,853 --> 00:55:35,473
derivatives which probably won't work as well and ultimately if there's a blowout at some point

714
00:55:35,473 --> 00:55:41,793
going back to like dark side it has big long concepts um you know that entire derivative

715
00:55:41,793 --> 00:55:48,653
complex falls apart um and bitcoin goes to 10 million bucks um that would bring down a lot of

716
00:55:48,653 --> 00:55:56,313
banks so i i think yeah i mean i think strc is going to be for everybody ultimately um i think

717
00:55:56,313 --> 00:56:01,893
the next layer that comes above that is going to be bit bonds which is when you embed volatility

718
00:56:01,893 --> 00:56:08,133
harvesting mechanisms inside of a sovereign debt structure um it's essentially going to do

719
00:56:08,133 --> 00:56:17,173
some of the same things as strc um it'll just sit at the sovereign level and have principal

720
00:56:17,173 --> 00:56:22,653
guarantee and protection at least from a fayette perspective as well as you know tax exempt status

721
00:56:22,653 --> 00:56:25,413
But Saylor's a genius.

722
00:56:25,413 --> 00:56:31,953
He's figured out how to do return of capital and provide tax beneficial ways for people

723
00:56:31,953 --> 00:56:37,433
to invest and withdraw their interest from STRC.

724
00:56:37,433 --> 00:56:41,033
I think, Chris, you can probably speak better to that than I can.

725
00:56:41,033 --> 00:56:43,453
I just know from a superficial perspective.

726
00:56:43,453 --> 00:56:44,453
Yeah.

727
00:56:44,453 --> 00:56:47,153
I mean, and Saylor talks about this.

728
00:56:47,153 --> 00:57:02,733
Really, in December, it was the first time I heard him talk about the kind of the third step of the progression of what he saw them do in their operational level, like digital capital, digital credit, and digital money.

729
00:57:03,313 --> 00:57:06,853
I think he was at the Miami Economic Forum talking about that in December.

730
00:57:06,853 --> 00:57:23,513
And essentially, those entities, those banks, they can direct that 11.5%, pay their clients 7% or 8%, and then collect the delta based on what they've paid out versus what STRC is kicking off.

731
00:57:24,333 --> 00:57:27,453
And again, this is another quasi-carry trade.

732
00:57:27,753 --> 00:57:30,653
Once you understand a carry trade, they're all over the place.

733
00:57:30,653 --> 00:57:36,973
like do you cedric do you know where i think it's probably going to be more

734
00:57:36,973 --> 00:57:46,153
chris you have some is it roxon that's starting to sell strc to its platform yes um and they're

735
00:57:46,153 --> 00:57:51,973
doing it internationally correct it's chris can do you have any insight into who they are

736
00:57:51,973 --> 00:57:57,593
what their platform looks like yeah i'm not speaking on behalf of roxon um and i'm not sure

737
00:57:57,593 --> 00:58:01,373
who they, their platform per se, like it's for,

738
00:58:01,873 --> 00:58:04,633
but they had it to where you can create

739
00:58:04,633 --> 00:58:07,773
a specific security that's based in Bitcoin.

740
00:58:08,993 --> 00:58:12,153
I think it's like a DeFi platform of some sort

741
00:58:12,153 --> 00:58:15,353
that can be traded around the world.

742
00:58:16,053 --> 00:58:28,860
But the and I not supporting it it just a concept that I saw They been putting out stuff about we bought a thousand more SDRC today right And then it showing all the different countries that those capital actually came from to buy that

743
00:58:30,380 --> 00:58:40,081
This is where I was trying to go with this comment was, ultimately, the kingmaker would be Tether.

744
00:58:40,081 --> 00:58:48,201
if tether wanted to take some of its and it has some um latitude and what to invest in

745
00:58:48,201 --> 00:58:56,520
right if tether wanted to take either a portion or carve off and do like an interest bearing type

746
00:58:56,520 --> 00:59:03,801
of account they could offer side by side with its tether um usdt product and basically take

747
00:59:03,801 --> 00:59:11,780
and invest in STRC and then offer 6% and keep 6% or some variation.

748
00:59:12,780 --> 00:59:17,460
Because last week when we saw some things that were going on with X

749
00:59:17,460 --> 00:59:22,220
and Elon turning it into kind of a money center,

750
00:59:24,040 --> 00:59:25,240
it was an interesting idea.

751
00:59:25,240 --> 00:59:30,701
Let's take X and you can use stable coins on it.

752
00:59:30,701 --> 00:59:50,301
You can set up a savings account, just invest part of the proceeds in STRC and Elon keep papers, you know, give out 8% and keep three, right? Like a lot of this stuff, as we start to move interest bearing accounts outside of the banking system. And I know the banking system is really fighting hard.

753
00:59:50,301 --> 00:59:53,100
I don't think they're ultimately going to win.

754
00:59:53,260 --> 00:59:56,100
Maybe they win this round of the process.

755
00:59:56,100 --> 01:00:06,860
But I think when you have an entity like Tether outside of the system that's going to be offering interest, ultimately that's going to drive the internal system to start offering interest at some point.

756
01:00:07,220 --> 01:00:08,961
And it's not just going to be the banks.

757
01:00:08,961 --> 01:00:25,681
And once the banks lose that competitive advantage of a moot, then their primary, and they do a lot of other things, but their primary source of capital outside of creating money themselves dries up, right?

758
01:00:25,740 --> 01:00:26,701
Gets demonetized.

759
01:00:27,360 --> 01:00:36,321
So, but I think there's something to, if Tether decides to start to pivot and buy STRC, that's when things could really start getting interesting.

760
01:00:36,321 --> 01:00:40,900
because that's also driving us international demand and that's TRC.

761
01:00:41,760 --> 01:00:43,301
Just piggyback on that just real quick.

762
01:00:43,461 --> 01:00:45,020
It's, you know, gang theoretical.

763
01:00:45,480 --> 01:00:47,260
It's pure gang theory at that point.

764
01:00:48,760 --> 01:00:52,480
Once someone does it and the mandates fall in place

765
01:00:52,480 --> 01:00:54,380
and the instrument is used

766
01:00:54,380 --> 01:00:57,420
and they start pulling in more clients

767
01:00:57,420 --> 01:01:00,461
or, you know, attention starts coming to them, you know,

768
01:01:00,801 --> 01:01:03,100
and you're some of the only players doing it,

769
01:01:03,201 --> 01:01:04,701
what do you think people are going to do?

770
01:01:04,701 --> 01:01:11,740
or do you want first set or do you want to people are going to eat people are always going to follow

771
01:01:11,740 --> 01:01:18,400
the incentive the stronger incentive yeah and sailor a sailor has figured out how to do that

772
01:01:18,400 --> 01:01:28,020
um now again looking at it from this side of the paradigm shift through today's lens

773
01:01:28,020 --> 01:01:38,380
it very much resembles a potentially a ponzi-esque type of structure because he's ultimately having

774
01:01:38,380 --> 01:01:46,220
to dilute for the interest expense right um equity shareholders or he could carve off a

775
01:01:46,220 --> 01:01:51,080
portion of the proceeds that he brings in from strc and basically put that in a cash reserve to pay

776
01:01:51,080 --> 01:01:52,461
future interest payments.

777
01:01:54,120 --> 01:01:57,240
But, you know, if you take a step back

778
01:01:57,240 --> 01:01:58,400
and ultimately what's happening

779
01:01:58,400 --> 01:01:59,681
with the failures in the current system

780
01:01:59,681 --> 01:02:00,900
to where we might be going

781
01:02:00,900 --> 01:02:03,240
from a recolodilization perspective,

782
01:02:04,061 --> 01:02:06,920
it's the perfect incentive, church and horse.

783
01:02:10,260 --> 01:02:10,701
Yeah.

784
01:02:11,600 --> 01:02:12,740
Well, you know, Tether,

785
01:02:13,380 --> 01:02:14,860
none of this is financial advice.

786
01:02:14,961 --> 01:02:16,420
I think all this that we're dissecting here

787
01:02:16,420 --> 01:02:18,160
is not to encourage people to buy Stretch

788
01:02:18,160 --> 01:02:19,420
and I'm not against it.

789
01:02:19,561 --> 01:02:20,400
I think it's a great product.

790
01:02:20,400 --> 01:02:23,660
This is where they kind of examine the financial system and this bridge.

791
01:02:24,801 --> 01:02:28,480
Tether, though, you know, is, I guess, trying to help people sleep at night

792
01:02:28,480 --> 01:02:32,360
because they did buy Sleep8, the mattress company.

793
01:02:32,860 --> 01:02:34,080
Oh, they did? I didn't know that.

794
01:02:34,600 --> 01:02:35,941
And maybe they'll roll out yield.

795
01:02:35,941 --> 01:02:36,280
I love it.

796
01:02:36,280 --> 01:02:40,360
And, you know, yield and your mattress being digital,

797
01:02:40,461 --> 01:02:43,801
maybe, and the AI they're investing in will all help you sleep at night.

798
01:02:44,760 --> 01:02:47,500
This portion of the show is brought to you by OnChain,

799
01:02:47,640 --> 01:02:48,900
and this one's personal.

800
01:02:48,900 --> 01:02:54,221
A while back, I made a decision that changed everything about how I think about my Bitcoin.

801
01:02:54,880 --> 01:02:59,380
I moved off exchanges entirely and into Unchained's multi-sig custody.

802
01:02:59,880 --> 01:03:05,920
Not because someone told me to, because I finally got serious about what it actually means to own Bitcoin.

803
01:03:06,561 --> 01:03:09,201
And leaving it on an exchange isn't owning it.

804
01:03:09,780 --> 01:03:12,061
With Unchained, my keys stay mine.

805
01:03:12,461 --> 01:03:13,681
Collaborative multi-sig.

806
01:03:13,900 --> 01:03:15,480
No single point of failure.

807
01:03:15,820 --> 01:03:16,900
No counterparty risk.

808
01:03:16,900 --> 01:03:20,340
No crossing my fingers that a platform doesn't blow up.

809
01:03:20,640 --> 01:03:22,840
We all watched what happened in 2022.

810
01:03:23,461 --> 01:03:25,980
I wasn't caught in it because I'd already made the move.

811
01:03:26,340 --> 01:03:29,301
If you're still on an exchange, this is your sign.

812
01:03:29,880 --> 01:03:32,380
Onchain.com, code MATRIX10.

813
01:03:32,860 --> 01:03:35,380
Take your Bitcoin off someone else's balance sheet.

814
01:03:36,061 --> 01:03:38,080
You know, but Marilyn, you put out a piece,

815
01:03:38,201 --> 01:03:41,620
because, you know, stretch is really, you know,

816
01:03:41,701 --> 01:03:45,880
one piece of the, let's call it the transmission,

817
01:03:45,880 --> 01:03:49,760
or one of the products that's spitting out of this Bitcoin refinery over at strategy.

818
01:03:50,760 --> 01:03:53,480
And there's different parts of sort of the capital stack there.

819
01:03:54,320 --> 01:03:59,760
And it seems like the underlying theme or subtext of our conversation is,

820
01:03:59,760 --> 01:04:04,120
is stretch going to become sort of the benchmark rate or the risk-free rate?

821
01:04:04,520 --> 01:04:11,620
Or, you know, where Bitcoin goes with this and where strategy goes with this and the Bitcoin refinery.

822
01:04:12,620 --> 01:04:14,721
So kind of looking at their ecosystem,

823
01:04:15,561 --> 01:04:17,040
Merrill, you put out a piece called

824
01:04:17,040 --> 01:04:18,600
Understanding the MNAV Cycle

825
01:04:18,600 --> 01:04:20,740
Inside Strategies Capital Flywheel.

826
01:04:21,100 --> 01:04:25,340
So, I mean, the MNAV is a big, you know,

827
01:04:25,380 --> 01:04:27,500
because like, do you look at strategy as price to earnings?

828
01:04:27,801 --> 01:04:29,961
Or, you know, a lot of people will focus on the MNAV

829
01:04:29,961 --> 01:04:31,160
and try to compare it to an ETF.

830
01:04:31,561 --> 01:04:33,400
And some say, you know,

831
01:04:33,540 --> 01:04:36,640
maybe it should be worth less than one

832
01:04:36,640 --> 01:04:39,160
because it's not as clean as an ETF

833
01:04:39,160 --> 01:04:41,320
and you have salaries and you have risk

834
01:04:41,320 --> 01:04:43,620
and you've got lawyers and you've got bigger compliance or whatever,

835
01:04:43,801 --> 01:04:46,320
but maybe everyone's not seeing the big picture.

836
01:04:46,941 --> 01:04:51,801
So let's talk a little bit about like an MNAV regime, right?

837
01:04:51,840 --> 01:04:54,260
Like how maybe at a high level,

838
01:04:54,340 --> 01:04:55,780
how strategy thinks about going through,

839
01:04:55,780 --> 01:04:59,221
like how they do things based on where their MNAV is.

840
01:05:00,240 --> 01:05:03,681
And we could talk about whether we think MNAV will ever expand again.

841
01:05:05,660 --> 01:05:07,461
Yeah, from my perspective,

842
01:05:07,461 --> 01:05:16,120
um yeah this isn't financial advice but the that's my thought process if i'm looking at this is

843
01:05:16,120 --> 01:05:25,280
sailor believes he he's buying bitcoin like a madman okay and he's using stretches finally

844
01:05:25,280 --> 01:05:33,721
starting to kick in but he's been going pretty intense and hard at the atm all fall right as

845
01:05:33,721 --> 01:05:40,760
Bitcoin's perpetually been kind of in a downward trend now for six, eight months.

846
01:05:42,500 --> 01:05:46,120
I think he looks at, I feel like he's working towards something.

847
01:05:46,681 --> 01:05:48,061
And I don't think the rest of us know.

848
01:05:48,140 --> 01:05:50,280
I think he has asymmetric information of some sort.

849
01:05:50,961 --> 01:05:52,240
Again, that's just my theory.

850
01:05:52,240 --> 01:06:06,120
understanding that he's allowed the MNAV to basically adjust from I don't know I think it

851
01:06:06,120 --> 01:06:11,380
was around three or four down to hovering around one depending upon the calculation you could say

852
01:06:11,380 --> 01:06:17,701
it's actually below it or slightly above it I think Saylor is completely fine with doing that

853
01:06:17,701 --> 01:06:22,301
Because from his perspective, if you're looking into the future, Bitcoin's the

854
01:06:22,301 --> 01:06:24,840
cheapest it's ever going to be to, right?

855
01:06:25,441 --> 01:06:28,840
Or if it goes down another 10, 15%, it's the cheapest it's going to be

856
01:06:28,980 --> 01:06:30,080
from a future perspective.

857
01:06:30,580 --> 01:06:34,301
So for him, he's trying to de-leverage the future balance sheet.

858
01:06:35,000 --> 01:06:38,920
And it's all about acquiring as much collateral any way you can.

859
01:06:39,420 --> 01:06:43,420
And he now knows that he has a product such as S2.

860
01:06:43,448 --> 01:06:52,928
STRC that will ultimately, if scarcity truly exists, or even if it's being suppressed,

861
01:06:53,488 --> 01:06:59,748
is going to return because there's going to be so much buying demand from a product like STRC

862
01:06:59,748 --> 01:07:07,468
that he knows at some point he's going to basically have to have perpetually more collateral

863
01:07:07,468 --> 01:07:11,188
or as much as he can get. And if he believes the prices are suppressed right now, he's going to

864
01:07:11,188 --> 01:07:16,768
buy as much as he possibly can and drive the MNAV down. He could even take it down to, you know,

865
01:07:17,148 --> 01:07:24,188
0.8 MNAV. And to him over the long enough timeframe, that makes sense. So let's play it out.

866
01:07:24,848 --> 01:07:35,208
Because if, say, a CRC starts putting in a couple billion dollars, you know, a week at some point,

867
01:07:35,208 --> 01:07:37,068
or a $10 billion a month.

868
01:07:38,348 --> 01:07:41,228
And at some point, Bitcoin's price is going to react.

869
01:07:42,868 --> 01:07:44,508
The rest of the market's going to wake up

870
01:07:44,508 --> 01:07:45,728
and realize what's going on.

871
01:07:46,328 --> 01:07:47,728
They're going to start buying Bitcoin.

872
01:07:48,008 --> 01:07:49,548
Bitcoin's going to perpetually start rising.

873
01:07:50,188 --> 01:07:51,448
And it's probably going to be violent.

874
01:07:51,768 --> 01:07:53,928
It might be a one turn.

875
01:07:54,088 --> 01:07:55,088
It might be a two turn.

876
01:07:55,188 --> 01:07:56,048
It might be a three turn.

877
01:07:56,508 --> 01:07:58,548
I mean, it's sure there's characteristics in the past.

878
01:07:59,248 --> 01:08:03,068
At that point, the market starts waking up

879
01:08:03,068 --> 01:08:08,048
to what power of SCRC is from an accumulation perspective.

880
01:08:09,768 --> 01:08:13,008
And then it realizes that ultimately that value

881
01:08:13,008 --> 01:08:15,828
falls back to the MSCR shareholder.

882
01:08:17,568 --> 01:08:21,428
And the price should start to, the MNAV should start to expand.

883
01:08:21,888 --> 01:08:24,268
It expands because Saylor allows it to expand.

884
01:08:24,628 --> 01:08:26,088
He stops diluting as much.

885
01:08:27,108 --> 01:08:29,708
I believe that's going to be a decision that's made by him and his team

886
01:08:29,708 --> 01:08:36,808
to stop diluting because they don't need to deleverage because they just did a bunch of

887
01:08:36,808 --> 01:08:42,828
really cheap buying of Bitcoin by hitting the ATM so hard over the last couple months

888
01:08:42,828 --> 01:08:49,728
that they can let it expand a little bit. Now, the benefit of that is the ATM is the primary

889
01:08:49,728 --> 01:08:55,668
mechanism for paying those preferreds, the interest on those preferreds in the future.

890
01:08:55,668 --> 01:09:13,268
Well, it's much more effective and cost efficient for equity, you know, MSTR shareholders, if he allows the MNAV to expand and then dilutes at a much higher MNAV.

891
01:09:13,568 --> 01:09:20,928
It takes less equity issuance in order to pay, you know, the same amount of interest payments and so forth.

892
01:09:20,928 --> 01:09:36,888
So I think ultimately he goes into managing future interest expense on the preferreds as well as deleveraging because he's still going to have to deleverage as SCRC grows by an MNAV regime, management regime.

893
01:09:38,248 --> 01:09:46,548
Similar to what he kind of launched or tried to launch back in August last year where he gave us some direction, but two weeks later he kind of reversed on that.

894
01:09:46,548 --> 01:09:49,128
I think there's reasons as to why he did that.

895
01:09:49,408 --> 01:09:54,988
But I think ultimately we're heading into an MNAV management regime.

896
01:09:55,708 --> 01:10:01,148
And that's basically how he is going to capture the true value.

897
01:10:02,028 --> 01:10:07,088
The ARB that Chris was just discussing is basically by deleting in higher MNAVs.

898
01:10:08,548 --> 01:10:16,528
And I think the market allow it to move that high to higher MNAVs because they're going to be looking at the future value of his collateral.

899
01:10:16,548 --> 01:10:22,228
of what it could be if Bitcoin was five, ten times where it is today.

900
01:10:22,608 --> 01:10:26,068
Stampseed. My seed phrase is hammered into solid titanium

901
01:10:26,068 --> 01:10:30,288
because I cannot live with paper being the weakest link in my Bitcoin security.

902
01:10:30,908 --> 01:10:33,468
Fireproof, waterproof, indestructible.

903
01:10:33,808 --> 01:10:37,448
If you're still on paper, you're one ounce fire away from losing everything.

904
01:10:38,188 --> 01:10:41,568
Stampseed.com. Code matrix for 15% off.

905
01:10:41,948 --> 01:10:43,768
Finish your custody setup the right way.

906
01:10:43,768 --> 01:10:45,848
Yeah, and it's a city plan.

907
01:10:46,548 --> 01:10:49,468
look, it's a bear market

908
01:10:49,468 --> 01:10:52,028
never too low to begin selling

909
01:10:52,028 --> 01:10:53,448
and never too high to begin buying

910
01:10:53,448 --> 01:10:55,548
at the reminiscence of a stock operator

911
01:10:55,548 --> 01:10:56,088
quote

912
01:10:56,088 --> 01:10:59,408
probably the greatest financial market book ever

913
01:10:59,408 --> 01:11:01,028
it's a hundred years old

914
01:11:01,028 --> 01:11:03,028
but it's a must read for anyone

915
01:11:03,028 --> 01:11:04,408
and

916
01:11:04,408 --> 01:11:07,428
motions run high to the upside

917
01:11:07,428 --> 01:11:09,448
they run high, run down to the

918
01:11:09,448 --> 01:11:11,088
downside for bear market than bull market

919
01:11:11,088 --> 01:11:12,608
and bull markets will come back

920
01:11:12,608 --> 01:11:15,108
convexity will come back and all that

921
01:11:15,108 --> 01:11:19,928
All that means is people will start playing the bull market game.

922
01:11:20,048 --> 01:11:23,188
There's going to be blood in the water and shucks go after the blood.

923
01:11:23,808 --> 01:11:41,868
And so if players think market makers are offside and they sold a bunch of calls and they have to get delta neutral and having to get into the market and buy shares and all that reflexive things happen, then those people then buy because they think they're buying because they're offsides and they're having to get neutral.

924
01:11:41,868 --> 01:11:44,168
And the same thing happens to the downside too.

925
01:11:44,168 --> 01:11:50,068
You know, equity went down $1190 to $104 in like a couple of weeks.

926
01:11:51,188 --> 01:11:53,088
That reflexivity happened to the downside.

927
01:11:53,468 --> 01:11:55,468
So it happened in markets for decades.

928
01:11:55,788 --> 01:11:56,468
You know what this is.

929
01:11:56,608 --> 01:11:58,088
So that's nothing new.

930
01:11:58,388 --> 01:12:01,368
So convexity will come back to the equity at some point.

931
01:12:01,428 --> 01:12:06,168
Nobody knows when, but to your point, then that's going to be on their decision.

932
01:12:06,288 --> 01:12:10,648
That's their decision point of how to, what levers to pull at what time.

933
01:12:10,648 --> 01:12:24,868
They are constantly pulling a lever of pushing, and it's a push-pull mechanism with both of the ATMs on top of the equity itself and also on STRC and how they manage that.

934
01:12:24,868 --> 01:12:46,648
But it's going to be really fascinating to see when that price discovery to the upside comes back to Bitcoin, but also to the equity and then how they manage from utilizing the ATM perspective based on, to your point, how much collateral they already have and then what leverage ratio they want to go at.

935
01:12:47,208 --> 01:12:50,728
And ultimately, it's their market.

936
01:12:51,408 --> 01:12:53,028
That's kind of something I've said for a long time.

937
01:12:53,668 --> 01:12:54,908
It's not a great term.

938
01:12:54,988 --> 01:12:56,448
You don't really like this, to be honest with you,

939
01:12:56,488 --> 01:12:58,628
but they're kind of a quasi-market maker.

940
01:12:58,848 --> 01:12:59,868
They made the market.

941
01:13:00,868 --> 01:13:01,728
They made this.

942
01:13:02,148 --> 01:13:03,268
And they didn't know.

943
01:13:03,408 --> 01:13:06,328
So many things that Saylor talks about over the years,

944
01:13:06,828 --> 01:13:10,148
they didn't know about STR.

945
01:13:10,148 --> 01:13:11,188
They didn't know about STR.

946
01:13:11,348 --> 01:13:13,268
He came right out and has said this stuff.

947
01:13:13,468 --> 01:13:15,848
We didn't know what we had until the market told us.

948
01:13:16,948 --> 01:13:18,468
But that's like with anything, though, right?

949
01:13:18,468 --> 01:13:19,868
With a product or a startup,

950
01:13:19,868 --> 01:13:26,028
you really don't know what you have until you get the feedback from your users or from the market

951
01:13:26,028 --> 01:13:29,228
right it's kind of the same thing people are like oh they didn't know what they were doing well who

952
01:13:29,228 --> 01:13:35,148
really knows what they're doing until they get feedback from people or your users and so it's

953
01:13:35,148 --> 01:13:39,708
kind of the same with these products and if someone asked me like should you came out with strc first

954
01:13:39,708 --> 01:13:45,868
he goes well we don't really know like we came out with strike then strike and stride you know we were

955
01:13:45,868 --> 01:13:51,468
creating the yield curve and then we came across you know this constant of you know a floating

956
01:13:51,468 --> 01:13:56,988
variable rate um which in and of itself is a dynamic that you know they didn't have on the

957
01:13:56,988 --> 01:14:04,268
others and and three weeks ago they really didn't mention any other preferreds in the whole conference

958
01:14:04,268 --> 01:14:10,668
that they did yeah xcrc i think it's an iterative process sailor has discussed how it's a journey

959
01:14:10,668 --> 01:14:15,628
that he's gone through and he's been open about how he's worked with ai to kind of develop these

960
01:14:15,628 --> 01:14:17,768
He's an engineer. He's doing financial engineering.

961
01:14:18,368 --> 01:14:22,408
And he's been using advanced LLMs basically to design these products.

962
01:14:24,248 --> 01:14:31,508
He's force-fed it to try to find lawyers and investment bankers that have brought this product to the market.

963
01:14:32,048 --> 01:14:35,088
And he's faced resistance at every step, right?

964
01:14:35,148 --> 01:14:37,168
But he's just continued to push through.

965
01:14:37,348 --> 01:14:44,308
And some of the preferreds structurally have issues, right?

966
01:14:44,308 --> 01:14:51,628
and I think he's come out with the next iteration to kind of improve or better or make up for

967
01:14:51,628 --> 01:14:54,968
whatever the last preferred kind of downside was.

968
01:14:56,268 --> 01:15:10,676
And I think as he gotten smarter him and his team have gotten smarter as they advanced through this process and now he knew what he had when he came out with sdrc like you could see it on his face

969
01:15:10,676 --> 01:15:17,576
he was excited because he understood and he's probably game theory this thing out um over

970
01:15:17,576 --> 01:15:24,656
months before they actually brought it to market so he is fully aware in my opinion of what this

971
01:15:24,656 --> 01:15:30,136
product is and what it represents and what it's capable of doing.

972
01:15:31,096 --> 01:15:32,136
And in my opinion,

973
01:15:34,636 --> 01:15:35,676
say I was playing for keeps.

974
01:15:36,316 --> 01:15:38,016
He wants to change the entire system.

975
01:15:38,296 --> 01:15:41,136
He's going to convert the entire system over into a Bitcoin standard.

976
01:15:41,736 --> 01:15:46,736
And whether it's STRC or STRC is a gateway to the next product.

977
01:15:47,416 --> 01:15:49,336
Like I don't even,

978
01:15:49,436 --> 01:15:53,156
I can't even make the argument that the last couple of preferreds are ultimately

979
01:15:53,156 --> 01:15:55,396
being a part of a yield curve.

980
01:15:55,536 --> 01:15:56,696
I thought that originally,

981
01:15:57,116 --> 01:15:59,176
but I think what he's doing now

982
01:15:59,176 --> 01:16:03,856
is this is the base layer vehicle.

983
01:16:04,276 --> 01:16:05,336
And from here,

984
01:16:05,456 --> 01:16:06,796
he's going to build other products

985
01:16:06,796 --> 01:16:07,856
and maybe some of the other ones

986
01:16:07,856 --> 01:16:09,056
he revives and brings back.

987
01:16:09,196 --> 01:16:11,056
But his focus has definitely shifted away

988
01:16:11,056 --> 01:16:14,376
from the other preferreds

989
01:16:14,376 --> 01:16:16,116
that were created earlier on in the journey

990
01:16:16,116 --> 01:16:19,976
to STRC and what it represents now.

991
01:16:20,716 --> 01:16:21,376
Yeah, just to add to,

992
01:16:21,456 --> 01:16:22,156
yeah, he even mentioned,

993
01:16:22,156 --> 01:16:25,296
Like there's the duration risk aspect with the Stripe.

994
01:16:25,356 --> 01:16:30,216
Like, for example, you're a retiree and you put $10 million in Stripe,

995
01:16:30,536 --> 01:16:33,896
but the Fed decides to, you know, raise interest rates.

996
01:16:34,096 --> 01:16:35,636
Well, what's going to happen to Stripe?

997
01:16:35,736 --> 01:16:38,976
Stripe's instrument is going to go down if interest rates go up,

998
01:16:39,236 --> 01:16:40,156
the inverse relationship.

999
01:16:40,636 --> 01:16:45,696
So a retiree doesn't want to see their principal go down 10%, right?

1000
01:16:46,036 --> 01:16:51,556
So the duration, he stripped the duration risk off of the others, you know,

1001
01:16:51,556 --> 01:16:54,576
and then create an STRC with a stealth healing mechanism

1002
01:16:54,576 --> 01:16:58,256
being able to increase or decrease, you know,

1003
01:16:58,316 --> 01:17:01,656
25 or 50 basis points each month for the interest rate.

1004
01:17:02,476 --> 01:17:04,916
Do you think, Cedric, do you want to know what's going to melt basis?

1005
01:17:05,256 --> 01:17:05,816
Two things.

1006
01:17:07,296 --> 01:17:08,856
The Fed lowers rates

1007
01:17:08,856 --> 01:17:13,056
or the Treasury goes into yield curve control

1008
01:17:13,056 --> 01:17:17,836
and Saylor continues to increase his rate of return.

1009
01:17:19,776 --> 01:17:20,256
Okay.

1010
01:17:20,256 --> 01:17:21,756
You mean on stretch, the offer?

1011
01:17:21,956 --> 01:17:22,216
On stretch.

1012
01:17:22,596 --> 01:17:22,836
Yep.

1013
01:17:22,996 --> 01:17:23,196
Yeah.

1014
01:17:23,296 --> 01:17:24,136
On STRC.

1015
01:17:25,136 --> 01:17:26,636
And he continues to do it.

1016
01:17:27,316 --> 01:17:27,576
Okay.

1017
01:17:27,636 --> 01:17:37,196
And then the other one that's going to really melt faces is if MSTR, they come out, their rating companies come out and increase MSTR's rating.

1018
01:17:37,756 --> 01:17:41,816
And that'll probably happen after Bitcoin two or three times, right?

1019
01:17:41,816 --> 01:17:53,336
The collateral base grows and the coverage gets up into like the 10, 15, 20 times potentially, depending upon how SDRC grows.

1020
01:17:54,616 --> 01:17:59,736
And so the rating agencies come out and assign them a higher rating.

1021
01:18:00,156 --> 01:18:03,776
Well, you would assume that his rate should go down.

1022
01:18:04,736 --> 01:18:09,476
But what if Saylor keeps on raising the interest rate, the rate of return, right?

1023
01:18:09,476 --> 01:18:22,716
And I think that is ultimately the night's move is when Saylor says, hey, TradFi is going to continue to suppress the rates.

1024
01:18:22,796 --> 01:18:24,216
I'm going to give you a real rate of return.

1025
01:18:24,596 --> 01:18:35,016
Now I'm going to start tracking my interest rate to a defined CPI that me and my team define as to what the real inflation rate is in the market.

1026
01:18:35,416 --> 01:18:38,656
And I'm going to target a real rate of return above that.

1027
01:18:38,656 --> 01:18:43,016
And that, I think, is what changes the game across.

1028
01:18:46,556 --> 01:18:51,596
Yeah, I mean, in a way, we'd have freely floating priced money.

1029
01:18:54,656 --> 01:19:00,876
And we might even see an environment where the Fed's lowering rates and banks are not lowering rates either.

1030
01:19:00,876 --> 01:19:05,756
and the spread grows not just for Stretch,

1031
01:19:05,836 --> 01:19:09,056
but some of the underlying or parallel type products.

1032
01:19:11,276 --> 01:19:16,916
I think that Sailor is a financial engineering genius.

1033
01:19:17,416 --> 01:19:19,016
I agree with you that it's a journey.

1034
01:19:19,836 --> 01:19:21,216
I've spoken to him about it.

1035
01:19:21,296 --> 01:19:23,256
I think he's been iterating as he goes.

1036
01:19:23,356 --> 01:19:24,716
I think there's nothing wrong with that.

1037
01:19:25,596 --> 01:19:27,536
I think it's also both a personal

1038
01:19:27,536 --> 01:19:30,636
and sort of a global journey for him.

1039
01:19:30,636 --> 01:19:36,456
my speculating. I think there's the personal part, which is you want to be the richest,

1040
01:19:36,656 --> 01:19:42,796
smartest man in the world. You feel you might be, and you want a proof of work, right? It's,

1041
01:19:43,836 --> 01:19:47,996
you know, I can only relate in the sense that when I was 22 years old or 24 years old,

1042
01:19:48,036 --> 01:19:53,816
I saw Facebook come out. I was like, this is where it's going to go. It's not like I had capital to

1043
01:19:53,816 --> 01:20:01,016
deploy to, you know, these kinds of things as a young person, 10 years go by and you're like,

1044
01:20:01,116 --> 01:20:06,836
I, Hey guys, I was right. Hey, you know, I called it and yeah, where's your portfolio?

1045
01:20:07,516 --> 01:20:13,836
Young man who was right. If you were right, like, you know, I could, I don't know if you're right.

1046
01:20:13,896 --> 01:20:20,076
You say that now, you know, it's great story, but, and so I think there's sort of like 500

1047
01:20:20,076 --> 01:20:25,456
million dollar melting ice cube and getting blown up here i think somebody needs graph paper in the

1048
01:20:25,456 --> 01:20:31,196
house um you know this is the personal part of the story and the journey where you know you're

1049
01:20:31,196 --> 01:20:36,496
trying to save your company and live another day you got the 500 million dollar melting ice cube and

1050
01:20:36,496 --> 01:20:41,476
then you start thinking well you know on the personal slash global journey here with the

1051
01:20:41,476 --> 01:20:47,196
company we could not just save the company maybe we can go beyond just sort of building out our

1052
01:20:47,196 --> 01:20:52,656
reserves, but maybe we could do something in this arena that's different than just the regular

1053
01:20:52,656 --> 01:20:56,896
operating company we already have in software, and we can pivot and become a Bitcoin refinery.

1054
01:20:57,576 --> 01:21:02,856
I think that's a huge aha moment. And then, you know, Chris, you mentioned sort of before, you

1055
01:21:02,856 --> 01:21:09,576
know, the analogy I'm thinking here, though, to talk about what my take is that, you know,

1056
01:21:09,596 --> 01:21:12,116
you can be the best quarterback in the world, but you don't know when the other team is going to

1057
01:21:12,116 --> 01:21:18,036
call blitz you you know you you know you could be a great playmaker you could be babe ruth and call

1058
01:21:18,036 --> 01:21:21,596
your shop but you don't know if they're gonna throw it over the plate even for you and i think

1059
01:21:21,596 --> 01:21:28,796
stretch is sort of he he called it right away he's like this is our iphone moment and so i want to

1060
01:21:28,796 --> 01:21:34,656
run through a little bit of this mnav regime thoughts here because to go past it um so there's

1061
01:21:34,656 --> 01:21:39,856
two mnav regimes there's sort of the compressed mnav regime around 1x and the company is still

1062
01:21:39,856 --> 01:21:44,696
sort of trying to add to the balance sheet and sort of you describe Maryland in your piece,

1063
01:21:44,776 --> 01:21:50,536
it's like equity ATM, buy the Bitcoin, you prefer to issue instantly buy more Bitcoin versus the

1064
01:21:50,536 --> 01:21:57,556
regime too, which is expanded MNAV, it's around three or four. And you have more, the flywheel

1065
01:21:57,556 --> 01:22:03,976
there is more preferred securities, buy Bitcoin, equity ATM, service to preferred dividends.

1066
01:22:03,976 --> 01:22:14,616
um and but what i you know um the critical question remains though what causes them to

1067
01:22:14,616 --> 01:22:20,956
expand again and i want to talk about this more so historically the answer's been simple like

1068
01:22:20,956 --> 01:22:26,556
bitcoin rallies and people get excited and they want to maybe leverage it not leverage they see

1069
01:22:26,556 --> 01:22:33,156
bitcoin um strategies a levered play on bitcoin but what you're getting at here is with the iphone

1070
01:22:33,156 --> 01:22:38,616
moment is maybe they're moving more towards Goldman Sachs and being a market maker and just

1071
01:22:38,616 --> 01:22:43,556
being the most pivotal part of the Bitcoin ecosystem, not in the sense that they

1072
01:22:43,556 --> 01:22:52,916
control price, but the capital structure evolves into something else, a different driver of value,

1073
01:22:53,416 --> 01:22:57,056
just who they are and what they become. Marilyn, maybe you can expand on that.

1074
01:22:58,196 --> 01:23:01,696
And to be honest with you, we can't see it yet. Ultimately, what they become.

1075
01:23:01,696 --> 01:23:04,796
Quick word from Firefish, and I'll be honest.

1076
01:23:05,096 --> 01:23:07,116
I'm going through this myself right now.

1077
01:23:07,656 --> 01:23:10,136
I need liquidity without selling my Bitcoin.

1078
01:23:10,756 --> 01:23:12,316
That's the whole reason I'm here.

1079
01:23:12,756 --> 01:23:14,876
Non-custodial Bitcoin-backed loans.

1080
01:23:15,416 --> 01:23:17,136
Your keys stay in multi-sig.

1081
01:23:17,536 --> 01:23:19,236
You borrow against your stack.

1082
01:23:19,336 --> 01:23:30,304
You never hand your coins to anyone After everything that happened in 2022 that non model isn a nice It the only model I trust

1083
01:23:31,004 --> 01:23:34,524
First loan, you save 30% on fees with CodeMatrix.

1084
01:23:34,924 --> 01:23:38,004
And through April 30th, it's actually 0%.

1085
01:23:38,004 --> 01:23:39,724
Come learn with me.

1086
01:23:40,284 --> 01:23:42,304
Firefish.io CodeMatrix.

1087
01:23:42,704 --> 01:23:44,004
Never sell your Bitcoin.

1088
01:23:44,544 --> 01:23:46,004
Live off of it instead.

1089
01:23:46,604 --> 01:23:47,124
Sure.

1090
01:23:47,124 --> 01:23:55,924
Sure. They could go out and one of the things I had around XXI was that they could go out and do help structure big bonds for sovereign governments.

1091
01:23:56,404 --> 01:23:57,204
Strategy could do that.

1092
01:23:57,904 --> 01:24:03,044
Strategy could help do with the Bitcoin balance sheet, ultimately help to structure products for the banking system.

1093
01:24:03,664 --> 01:24:10,924
You know, to help right size kind of their cost of funds or sources, their use, their sources of capital.

1094
01:24:11,384 --> 01:24:16,904
Like they could help structure that with Bitcoin and ultimately provide a lower cost of funds for them.

1095
01:24:17,124 --> 01:24:19,284
Similar to how I presented the idea around bit bonds.

1096
01:24:20,964 --> 01:24:25,464
He who controls the collateral, controls the world, basically, is ultimately the regime we're heading towards.

1097
01:24:26,164 --> 01:24:32,064
And Saylor's going to have the biggest stack, unless the U.S. government actually gets its act together.

1098
01:24:34,044 --> 01:24:38,544
There's even theories out there that strategy is the U.S. government's reserve.

1099
01:24:38,864 --> 01:24:41,164
I don't know if I fully believe that, but you can't rule it out.

1100
01:24:43,284 --> 01:24:45,964
Yeah, I don't know what that looks like.

1101
01:24:47,124 --> 01:24:57,504
What I do know is the mechanics from the standpoint that if the collateral increases three or four times, the MNAV is going to expand.

1102
01:24:58,504 --> 01:25:11,444
I can't see or understand the mechanism how it won it or why it won it, especially if Sailor isn't hitting the ATM.

1103
01:25:12,024 --> 01:25:13,824
That's his lever, right?

1104
01:25:13,824 --> 01:25:26,144
He's ultimately, by hitting the ATM and diluting shareholders, he's providing unnecessary pressure, or he's providing pressure in order to keep the stock price down.

1105
01:25:26,984 --> 01:25:33,624
But at some point, if you, if Bitcoin goes into a bull market, and I think it's partial, right?

1106
01:25:33,644 --> 01:25:43,004
Because I think with a product like STRC, when we go into that bull market, it could potentially not stop for quite some time.

1107
01:25:43,004 --> 01:25:47,544
like it could go up to a million and a half or two million bucks and then it could

1108
01:25:47,544 --> 01:25:54,904
maybe reset down to like 1.2 and then start its climb back up again like everything changes if

1109
01:25:54,904 --> 01:26:01,304
we go to 200,000 or 300,000 then we keep going the MNAV is going to expand especially if Saylor

1110
01:26:01,304 --> 01:26:07,704
is not constantly relentlessly hitting the ATM because he has a product like STRC that's adding

1111
01:26:07,704 --> 01:26:08,664
Bitcoin to the balance sheet.

1112
01:26:10,304 --> 01:26:16,204
Yeah, it's kind of a going down through, almost kind of hard to get the words, but it's almost

1113
01:26:16,204 --> 01:26:24,184
like he's hitting ATF, front running the run STRC is going to produce in a bull market.

1114
01:26:25,864 --> 01:26:27,704
He's deleveraging the future balance sheet.

1115
01:26:28,144 --> 01:26:28,664
There you go.

1116
01:26:28,764 --> 01:26:29,744
By buying collateral now.

1117
01:26:30,184 --> 01:26:31,284
You say it that way.

1118
01:26:31,384 --> 01:26:31,624
Exactly.

1119
01:26:31,724 --> 01:26:32,764
You can say it those two ways.

1120
01:26:32,764 --> 01:26:37,004
and then you let off the pedal on the equity ATM.

1121
01:26:37,404 --> 01:26:42,184
And to all the point, if you tell the MSTR for one to five years,

1122
01:26:42,324 --> 01:26:46,784
you know what November 24 was like, you know what 2021 was like.

1123
01:26:47,384 --> 01:26:49,504
And when it goes, it goes.

1124
01:26:50,004 --> 01:26:53,124
You also know what pain is like, too.

1125
01:26:53,204 --> 01:26:54,184
You also know what pain is like.

1126
01:26:54,424 --> 01:26:55,284
Yeah, absolutely.

1127
01:26:55,284 --> 01:26:58,584
You know, both directions, convexity in both directions.

1128
01:26:58,584 --> 01:27:27,944
So, you know, it's going to be really because, yeah, because if Bitcoin goes to $200,000 in interest rate, again, back to the point with if sulfur goes to two, but STRC stays at 12, now you've got a 10% difference between sulfur and STRC and capital is going to be, I mean, I can't tell the future, but I would just think capital would be flooding into an instrument paying you 10% ROC.

1129
01:27:28,584 --> 01:27:30,224
especially as the collateral base is expanding,

1130
01:27:30,344 --> 01:27:31,244
becoming more valuable.

1131
01:27:31,504 --> 01:27:33,524
Like to Chris's point,

1132
01:27:33,624 --> 01:27:36,964
like it's very difficult to look at the ecosystem,

1133
01:27:36,964 --> 01:27:39,724
like with anything like STRC by itself,

1134
01:27:39,724 --> 01:27:41,224
without looking at the rest of the ecosystem

1135
01:27:41,224 --> 01:27:43,124
or what's going on within TradFi

1136
01:27:43,124 --> 01:27:45,364
and the markets in general or the economy.

1137
01:27:47,624 --> 01:27:49,444
And that's all we can do is pontificate

1138
01:27:49,444 --> 01:27:50,764
on what could possibly happen

1139
01:27:50,764 --> 01:27:52,644
based upon what we currently have said,

1140
01:27:52,724 --> 01:27:53,664
where we're coming from

1141
01:27:53,664 --> 01:27:55,384
and where we think we might be going

1142
01:27:55,384 --> 01:27:57,324
and try to game theory it out.

1143
01:27:57,324 --> 01:28:04,564
And I think we have a pretty good direction on it, but anything could happen between now and six months from now.

1144
01:28:04,964 --> 01:28:05,744
It's amazing.

1145
01:28:05,984 --> 01:28:10,224
If Bitcoin's running, he doesn't have to hit the equity ATM.

1146
01:28:11,344 --> 01:28:13,264
And I think people don't that.

1147
01:28:13,464 --> 01:28:15,224
I don't hear that rhetoric a lot.

1148
01:28:15,324 --> 01:28:16,704
It's like they think the other way around.

1149
01:28:16,704 --> 01:28:24,264
Like if it goes to 150, 200, you know, he doesn't have to the equity ATM, which almost sounds anathetical or something.

1150
01:28:24,264 --> 01:28:27,064
And he's going to hint it because it's going to be a wine.

1151
01:28:27,524 --> 01:28:28,064
He might.

1152
01:28:28,824 --> 01:28:31,804
He can be like a stop, go, stop, go situation.

1153
01:28:32,344 --> 01:28:33,604
He'll hit it to deleverage.

1154
01:28:34,384 --> 01:28:38,484
Like if he gets a couple billion-dollar months,

1155
01:28:39,704 --> 01:28:41,204
like tens of billions of dollars,

1156
01:28:41,204 --> 01:28:46,304
and say his collateral base has expanded to the Bitcoin and the balance sheet,

1157
01:28:46,384 --> 01:28:50,144
it's gone to $140 billion, right?

1158
01:28:50,284 --> 01:28:52,844
And STRC just added on $10 billion.

1159
01:28:53,744 --> 01:28:54,084
Okay.

1160
01:28:54,264 --> 01:29:02,644
Depending upon what his overall leverage ratio is, he might hit the equity ATM in order to kind of deleverage the overall business profile of the business.

1161
01:29:05,124 --> 01:29:21,424
Or if he's like, all right, well, we've issued so much STRC that our roadmap or runway of 30 months of preferred interest and reserves has decreased down to 16 months.

1162
01:29:21,424 --> 01:29:26,984
all right well let's hit the atm and kind of re-up that so our credit profile looks good

1163
01:29:26,984 --> 01:29:35,604
with the rating agencies let's let's hit the atm and bring that back up to 30 right um again it's

1164
01:29:35,604 --> 01:29:39,924
just a lever and he can hit it anytime he wants i think he's just going to become more strategic

1165
01:29:39,924 --> 01:29:44,784
with how he's doing it right now he's absolutely without a doubt looking at bitcoin being the

1166
01:29:44,784 --> 01:29:50,244
cheapest it's going to be in the future and he is just trying to accumulate as much as he can

1167
01:29:50,244 --> 01:29:51,504
and he doesn't care about the Mnet.

1168
01:29:52,124 --> 01:29:54,064
But at some point, he will start to care about the Mnet.

1169
01:29:54,504 --> 01:29:56,244
And the other layer is obvious.

1170
01:29:56,444 --> 01:29:57,924
This is a very general principle,

1171
01:29:57,924 --> 01:30:00,184
but we all know with interest rate come down,

1172
01:30:00,364 --> 01:30:01,544
risk on goes up.

1173
01:30:02,344 --> 01:30:04,604
And risk on will come back to Bitcoin,

1174
01:30:05,204 --> 01:30:08,764
which that's just acceleration on all we just talked about

1175
01:30:08,764 --> 01:30:12,004
with the dynamics of what they're doing and the instrument.

1176
01:30:12,904 --> 01:30:13,504
Onchained.

1177
01:30:13,604 --> 01:30:16,024
I personally moved my Bitcoin off exchanges

1178
01:30:16,024 --> 01:30:18,364
into onchained's multi-sig custody.

1179
01:30:18,364 --> 01:30:26,224
my keys my coins no middleman with my coins they also do bitcoin-backed loans and bitcoin iras

1180
01:30:26,224 --> 01:30:32,844
all built the right way all bitcoin only if you haven't made that move yet now's the time

1181
01:30:32,844 --> 01:30:39,204
onchain.com code matrix 10 oh it's i mean really interesting here i mean again i'll go back to

1182
01:30:39,204 --> 01:30:44,724
sort of i mean he gets to be the willy wonka or the genius right and he's he's pushing out these

1183
01:30:44,724 --> 01:30:48,124
products, he's iterating, he's finding what's work, he's reading the field, he's reading the

1184
01:30:48,124 --> 01:30:53,424
reaction, he's reading the room, giving the room what it wants. He's got a vision.

1185
01:30:54,824 --> 01:31:01,724
He also has to, I think he's done this amazing job of not making missteps that have been,

1186
01:31:01,724 --> 01:31:05,564
you know, on the level of an Achilles heel or something, right? I mean,

1187
01:31:06,244 --> 01:31:11,184
you have to manage probably greed throughout this, right? You want to sort of build your

1188
01:31:11,184 --> 01:31:15,984
collateral base as fast and as quickly as you want, but you got to manage all these levers

1189
01:31:15,984 --> 01:31:20,404
around debt and ratios and the credit agencies and all, you know, you get to make your move on

1190
01:31:20,404 --> 01:31:25,224
the field and the other team gets to play their hand, right? And you have short sellers and you

1191
01:31:25,224 --> 01:31:31,844
have all these different factors. I want to read a bit from one of these pieces. So one way to

1192
01:31:31,844 --> 01:31:36,604
interpret the company's equity insurance today is that it is not reacting to current balance

1193
01:31:36,604 --> 01:31:37,184
sheet stress.

1194
01:31:37,744 --> 01:31:51,211
Instead it may be preparing for future balance sheet expansion If the preferred layer continues to grow the company dividend obligations will also grow Issuing equity now can accomplish several things simultaneously Increase Bitcoin

1195
01:31:51,211 --> 01:31:57,292
holdings, strengthen liquidity reserves, reduce leverage against future obligations. In this sense,

1196
01:31:57,331 --> 01:32:02,111
the ATM can act as a forward deleveraging mechanism. Rather than waiting until dividend

1197
01:32:02,111 --> 01:32:06,491
obligations become large, the company can gradually expand the equity base in advance.

1198
01:32:06,491 --> 01:32:12,131
this improves coverage ratios and increases the resilience of the overall capital structure

1199
01:32:12,131 --> 01:32:17,551
what's also interesting on this journey is we started off with the uh the strategy journeys

1200
01:32:17,551 --> 01:32:24,311
we started off with the 500 million dollar uh melting ice cube and i think you know he's a

1201
01:32:24,311 --> 01:32:27,871
genius and he's in that position but i think sometimes you don't solve problems that you

1202
01:32:27,871 --> 01:32:32,831
don't have right and so he had the melting ice cube and it being really big he was fortunate

1203
01:32:32,831 --> 01:32:34,831
that he grew a business to have such large reserves.

1204
01:32:35,611 --> 01:32:36,631
If they had no reserves,

1205
01:32:36,792 --> 01:32:39,551
maybe he's not even trying to solve this problem, right?

1206
01:32:40,251 --> 01:32:41,751
So it's kind of a good problem to have,

1207
01:32:41,811 --> 01:32:42,711
but he figures it out.

1208
01:32:43,512 --> 01:32:46,392
But, you know, I don't think he's really made

1209
01:32:46,392 --> 01:32:48,032
any serious missteps,

1210
01:32:48,811 --> 01:32:50,611
except for maybe the communication

1211
01:32:50,611 --> 01:32:54,051
around the ATM issue back in November.

1212
01:32:55,392 --> 01:32:57,191
I'm going to move on to reading a little more from Pisa.

1213
01:32:57,351 --> 01:33:00,331
Hopefully I get my final part of that point back.

1214
01:33:00,532 --> 01:33:02,032
But you're going to write,

1215
01:33:02,032 --> 01:33:09,611
In other words, investors may begin pricing the financial engine itself from Bitcoin treasury to Bitcoin capital markets platform.

1216
01:33:10,311 --> 01:33:13,731
So different investor groups participate at different levels of the capital stack.

1217
01:33:14,191 --> 01:33:23,811
Income investors buy preferred security, growth investors buy equity, and the company uses those capital sources to accumulate Bitcoin and expand its financial operations.

1218
01:33:24,211 --> 01:33:28,191
The structure begins to resemble a Bitcoin-focused capital markets machine.

1219
01:33:28,191 --> 01:33:40,311
In that scenario, the company's valuation may reflect not only the Bitcoin it holds, but also its ability to continuously attract capital and deploy it into Bitcoin-backed financial products.

1220
01:33:40,751 --> 01:33:44,331
That dynamic could justify persistent MNAV premiums.

1221
01:33:44,371 --> 01:33:46,512
And that's where I kind of get like bolt-hearted.

1222
01:33:47,071 --> 01:33:49,131
And I'm like, MNAV, who cares?

1223
01:33:49,251 --> 01:33:51,751
Like this is more like P to E ratios.

1224
01:33:51,751 --> 01:33:57,931
And I can almost see like 5, 10, 15, 20, 30 multiples here on the stack, the Bitcoin stack.

1225
01:33:58,191 --> 01:34:01,791
Because of what that gives it the ability to do.

1226
01:34:02,371 --> 01:34:08,731
And when a company gets valued not on its assets the way Google, we don't care the assets of Google.

1227
01:34:09,591 --> 01:34:18,291
Google has competitors and you could say, oh, DeepSeek is going to destroy Google's capital, CapEx and all that.

1228
01:34:18,371 --> 01:34:24,871
But in terms of you don't value Google by the furniture and by the building it owns and all these things.

1229
01:34:24,871 --> 01:34:27,111
It's a multiple on sort of future value.

1230
01:34:28,191 --> 01:34:37,711
You know, at first when Taylor came out with the whole concept of Bitcoin per share, I just, I didn't get it.

1231
01:34:37,831 --> 01:34:39,691
It was kind of annoying to hear it.

1232
01:34:40,231 --> 01:34:42,231
And the True North guys kept on going on and on.

1233
01:34:43,371 --> 01:34:50,912
But that might be the only financial metrics that matter because what it's truly representing is value per share, right?

1234
01:34:50,931 --> 01:34:52,711
Like a store of value per share.

1235
01:34:52,711 --> 01:34:59,012
and i think that's ultimately and you take it from a capital markets perspective like it becomes

1236
01:34:59,012 --> 01:35:05,331
a capital market engine like he's structuring products in order to acquire more bitcoin which

1237
01:35:05,331 --> 01:35:10,091
is acquiring more value to put on the balance sheet right and ultimately that's probably why

1238
01:35:10,091 --> 01:35:18,211
m nav expands in the future because it's that value component um that he's basically actually

1239
01:35:18,211 --> 01:35:25,091
generating real value we care less about kind of the fair returns and you made you know one

1240
01:35:25,091 --> 01:35:35,892
one concept is your thought process is salo doesn't have kids right he he's very much a stoic

1241
01:35:35,892 --> 01:35:45,532
um he's a deep thinker and i think i think this journey to him is about legacy

1242
01:35:45,532 --> 01:35:53,731
if you look at the the stoics throughout history um it's it's always comes down to legacy right and

1243
01:35:53,731 --> 01:36:01,031
if you don't have kids his legacy is going to be the impact he leaves on humanity and i think he

1244
01:36:01,031 --> 01:36:07,652
wants to leave humanity he looks at all the distortions across you know the system as it is

1245
01:36:07,652 --> 01:36:12,751
and the breaking down from when he probably was younger to where he's at today and he's read

1246
01:36:12,751 --> 01:36:20,491
history um you know he talks about his library and reading chronicles of history there's a book

1247
01:36:20,491 --> 01:36:27,371
series that he's he's discussed multiple occasions but he understands the the constant cycles and

1248
01:36:27,371 --> 01:36:35,871
collapses and so forth and i think he truly sees what bitcoin is and understands i mean he he made

1249
01:36:35,871 --> 01:36:40,691
the the predictions around the mobile wave you know he wrote the book the mobile wave right which

1250
01:36:40,691 --> 01:36:48,392
ultimately became spot on, you know, you know, several years before it actually happened.

1251
01:36:49,172 --> 01:36:57,672
So he has this gift of seeing things from his lens using his kind of engineering perspective.

1252
01:36:58,311 --> 01:37:00,191
And he understands history.

1253
01:37:00,351 --> 01:37:02,051
And I think ultimately he doesn't have kids.

1254
01:37:02,491 --> 01:37:05,691
I think this is about leaving humanity a gift, right?

1255
01:37:05,691 --> 01:37:13,031
and helping it kind of transition to the next portion of our evolution, right,

1256
01:37:13,031 --> 01:37:19,831
whatever that might be, by helping us kind of re-collateralize on the best collateral in the world.

1257
01:37:20,652 --> 01:37:23,672
And I think it's about legacy.

1258
01:37:24,031 --> 01:37:25,012
I think that's what he's doing here.

1259
01:37:27,471 --> 01:37:29,392
Yeah, I mean, I agree.

1260
01:37:29,892 --> 01:37:33,571
I had Jeff Walton on the show in January of 2025,

1261
01:37:33,571 --> 01:37:36,291
and they've been talking about it since.

1262
01:37:36,432 --> 01:37:37,691
I mean, I agree with him.

1263
01:37:37,751 --> 01:37:40,471
I think risk is greatly mispriced in the world.

1264
01:37:42,211 --> 01:37:45,512
My point about Saylor with the $500 million melting ice cube,

1265
01:37:45,551 --> 01:37:46,191
I got it back.

1266
01:37:46,691 --> 01:37:51,031
So the irony here is he's got a $2.5 billion cash reserve now.

1267
01:37:52,291 --> 01:37:54,531
But everything's changed.

1268
01:37:54,531 --> 01:37:56,951
And so, you know, you could look at it one-to-one and say,

1269
01:37:57,351 --> 01:37:58,111
what a hypocrite.

1270
01:37:58,392 --> 01:38:01,912
We've got five times the amount of cash that he was solving before,

1271
01:38:01,912 --> 01:38:07,531
but he also has, you know, well, he went from zero to one from Bitcoin, but he's got

1272
01:38:07,531 --> 01:38:13,831
$50 billion in Bitcoin. And he's developing products that, you know, are really bridging

1273
01:38:13,831 --> 01:38:22,691
fiat and Bitcoin, refining Bitcoin, like Rockefeller, applying oil. And, you know,

1274
01:38:22,711 --> 01:38:26,892
you have a different capital structure. He's a much larger entity. So, and part of,

1275
01:38:26,892 --> 01:38:33,012
when he explains, you know, the thinking around reserves, I mean, you gotta, you have customers,

1276
01:38:33,392 --> 01:38:39,111
you gotta guarantee you're going to provide your service for decades for the customers,

1277
01:38:39,731 --> 01:38:43,932
grandchildren who are going to run the company one day, third generation. And you got to keep

1278
01:38:43,932 --> 01:38:47,512
the lights on. You have to pay bills. You can't just return all reserves to shareholders. You

1279
01:38:47,512 --> 01:38:52,751
have to manage reserves. You have to manage your balance sheet. And I think sort of like what

1280
01:38:52,751 --> 01:38:56,611
families are doing with Bitcoin or individuals strengthening their balance sheets.

1281
01:38:57,272 --> 01:38:59,191
One of the most interesting ways to think about Bitcoin.

1282
01:39:00,152 --> 01:39:01,672
So also you mentioned stoicism.

1283
01:39:01,892 --> 01:39:05,491
I'm going to have Connor Dolan from Unchained On to talk about Bitcoin and stoicism right

1284
01:39:05,491 --> 01:39:06,211
after you guys.

1285
01:39:09,051 --> 01:39:14,611
Yeah, it's really, and with Saylor, you know, I remember, I think he studied historical history.

1286
01:39:15,611 --> 01:39:17,191
I started scientific history.

1287
01:39:17,672 --> 01:39:17,951
It's getting late.

1288
01:39:18,152 --> 01:39:19,071
Scientific history.

1289
01:39:19,571 --> 01:39:21,331
History of science at MIT.

1290
01:39:21,331 --> 01:39:24,051
and one of the most interesting comments

1291
01:39:24,051 --> 01:39:25,871
I think I ever heard in life

1292
01:39:25,871 --> 01:39:28,071
I'm watching him on the Sailor Series

1293
01:39:28,071 --> 01:39:28,751
with Breedlove

1294
01:39:28,751 --> 01:39:30,432
like first nine minutes

1295
01:39:30,432 --> 01:39:32,711
and he's like nobody fights fair

1296
01:39:32,711 --> 01:39:35,071
like not even the mountain lion

1297
01:39:35,071 --> 01:39:37,672
he's looking for the weakest, youngest

1298
01:39:37,672 --> 01:39:40,591
most vulnerable animal in the herd

1299
01:39:40,591 --> 01:39:42,471
and then maybe he's diving

1300
01:39:42,471 --> 01:39:43,731
at that animal's ankle

1301
01:39:43,731 --> 01:39:45,152
and trying to like send that animal

1302
01:39:45,152 --> 01:39:46,471
to kill itself you know

1303
01:39:46,471 --> 01:39:48,331
tumbling down the mountainside

1304
01:39:48,331 --> 01:39:50,231
and he's not looking to fight fair at all

1305
01:39:50,231 --> 01:39:52,071
I moved to Florida

1306
01:39:52,071 --> 01:39:53,412
these alligators

1307
01:39:53,412 --> 01:39:55,811
they're looking for the dead fish

1308
01:39:55,811 --> 01:39:57,991
and the dead birds lakeside

1309
01:39:57,991 --> 01:39:58,571
they're lazy

1310
01:39:58,571 --> 01:40:00,991
they're not looking for a fair fight

1311
01:40:00,991 --> 01:40:05,031
so he's a brilliant man

1312
01:40:05,159 --> 01:40:11,899
to see what comes of this. Talking to you guys has been fascinating. It's been so dope. I'm going

1313
01:40:11,899 --> 01:40:16,919
to kind of leave it to you guys for any final thoughts here. We kind of see this emerging

1314
01:40:16,919 --> 01:40:24,959
flywheel. And if the model works, three reinforcing forces begin to emerge. Preferred market demand

1315
01:40:24,959 --> 01:40:30,719
funds Bitcoin purchases. Equity market demand prices the growth of the platform and Bitcoin

1316
01:40:30,719 --> 01:40:36,019
appreciation strengthens the balance sheet each component reinforces the other the result is a

1317
01:40:36,019 --> 01:40:42,079
financial structure capable of expanding alongside bitcoin adoption um this kind of brings us you

1318
01:40:42,079 --> 01:40:46,759
know you teed it off a bit and we'll probably bring you guys back but you know there's bit

1319
01:40:46,759 --> 01:40:53,659
bonds which is sort of like the sovereign evolution of this and it's it's not just an extension of

1320
01:40:53,659 --> 01:40:59,759
stretch though you know it's sort of bring sovereignty maybe the nation so uh i'll leave

1321
01:40:59,759 --> 01:41:04,559
you know each of you guys maybe some final words parting words and let us know where we find you

1322
01:41:04,559 --> 01:41:10,719
and your work maybe we'll start with chris i'm not you know it's funny i didn't sign in bitcoin but

1323
01:41:10,719 --> 01:41:18,079
in 2015 i read rich dad poor dad take away finally it figured out 11 years ago is you have to ask

1324
01:41:19,679 --> 01:41:28,719
you're not inflation slash debasing of the money of fiat and they ask what's the best ask

1325
01:41:29,759 --> 01:41:32,039
And then that's the Bitcoin radical.

1326
01:41:32,379 --> 01:41:36,199
Once you learn enough about Bitcoin and its monetary properties,

1327
01:41:36,779 --> 01:41:38,679
you can't unsee it.

1328
01:41:38,779 --> 01:41:42,399
You've taken the orange pill and it becomes your money

1329
01:41:42,399 --> 01:41:44,059
and your standard as an individual.

1330
01:41:44,919 --> 01:41:48,399
But then there's the next layer of like corporations

1331
01:41:48,399 --> 01:41:51,459
or entities that can't buy the Bitcoin,

1332
01:41:51,639 --> 01:41:52,999
even if they wanted to,

1333
01:41:53,119 --> 01:41:55,239
even if they have the votes of everyone,

1334
01:41:55,679 --> 01:41:57,519
all the shareholders or whatever.

1335
01:41:57,519 --> 01:41:59,339
And there's like one or two votes that said,

1336
01:41:59,339 --> 01:42:03,179
No, they can't get through the gatekeeping to buy the Bitcoin.

1337
01:42:03,299 --> 01:42:05,639
They can't buy Bitcoin in those entities.

1338
01:42:06,779 --> 01:42:08,399
Then this is what's happened.

1339
01:42:08,399 --> 01:42:18,379
What's going on right now is that a bridge is being built to create instruments to help those entities face monetary inflation and debasement.

1340
01:42:19,379 --> 01:42:21,919
That's the biggest picture of what's going on right now.

1341
01:42:22,139 --> 01:42:34,446
And it going to take time It is difficult depending on how you look at it conceptually It can be as simple or as difficult as you want But it something you know you put a duration on this

1342
01:42:34,906 --> 01:42:40,726
Eventually, people will see the delta between what the fiat risk-free rate is,

1343
01:42:41,106 --> 01:42:45,346
especially if that risk-free rate goes down and that delta increases.

1344
01:42:45,946 --> 01:42:49,246
And eventually, they're going to get on the bridge

1345
01:42:49,246 --> 01:42:52,686
because they can't make it on that landmass of fiat.

1346
01:42:53,026 --> 01:42:53,906
They can't make it.

1347
01:42:54,046 --> 01:42:56,586
They're being outran by the money printer.

1348
01:42:57,266 --> 01:42:58,706
And so we've done that as individuals,

1349
01:42:59,146 --> 01:43:00,326
corporations are going through,

1350
01:43:00,706 --> 01:43:02,266
and then sovereigns are going to do that as well.

1351
01:43:02,386 --> 01:43:04,486
So we're just seeing this happening in real time.

1352
01:43:06,226 --> 01:43:07,606
Marilyn, before you jump in,

1353
01:43:08,386 --> 01:43:09,886
Chris, you wrote a great piece,

1354
01:43:10,006 --> 01:43:11,766
Stretch the Apex Carry Trade.

1355
01:43:12,066 --> 01:43:13,746
So I just want to note some things here.

1356
01:43:13,746 --> 01:43:17,186
You know, I love the,

1357
01:43:17,186 --> 01:43:24,786
of. I personally love the refinery sort of analogy. I think these are pioneering and important

1358
01:43:24,786 --> 01:43:28,606
products, but none of this is financial advice, right? We've been talking more of the philosophical

1359
01:43:28,606 --> 01:43:35,986
or sort of imagining how this bridge is playing out and what the future will look like and so the

1360
01:43:35,986 --> 01:43:42,186
impacts here. If people are thinking about sort of investing in these things or allocating to them,

1361
01:43:42,186 --> 01:43:45,086
And, you know, I would go dig further, do your own research.

1362
01:43:45,406 --> 01:43:47,606
These are fascinating, groundbreaking products.

1363
01:43:47,746 --> 01:43:51,546
But Chris, you did kind of talk about a little bit about a risk framework here.

1364
01:43:51,546 --> 01:43:58,346
So just for people kind of thinking these things through a little bit to just see it off, there's Bitcoin price risk would stretch.

1365
01:43:58,806 --> 01:44:01,026
There's dividend suspension risk.

1366
01:44:01,146 --> 01:44:03,026
There's regulatory risk.

1367
01:44:03,386 --> 01:44:05,286
And there's concentration risk.

1368
01:44:05,426 --> 01:44:06,566
There's liquidity risk.

1369
01:44:06,566 --> 01:44:12,726
and you know chris's conclusion here is the carry trade is the oldest strategy in finance borrow

1370
01:44:12,726 --> 01:44:16,986
cheap collect the spread so that's really what we've been dissecting in a lot of ways here

1371
01:44:16,986 --> 01:44:25,206
that stretches becoming the ultimate carry trade outside of maybe bitcoin spot bitcoin in self

1372
01:44:25,206 --> 01:44:29,766
custody i don't think we're making you know these sort of layered arguments we're talking about the

1373
01:44:29,766 --> 01:44:34,686
carry trade in the traditional trad fi world and for centuries the architecture has remained on

1374
01:44:34,686 --> 01:44:36,386
This is Chris is writing.

1375
01:44:36,386 --> 01:44:38,486
For centuries, the architecture has remained unchanged

1376
01:44:38,486 --> 01:44:41,126
and the failure mode has remained unchanged.

1377
01:44:41,126 --> 01:44:43,866
Leverage amplifies returns

1378
01:44:43,866 --> 01:44:55,212
until volatility destroys the position Stretch is attempting to rewrite this architecture By substituting soft leverage for hard leverage the structure eliminates forced liquidation By backing the carry with

1379
01:44:55,212 --> 01:45:00,352
Bitcoin rather than traditional credit instruments, the structure replaces credit risk with monetary

1380
01:45:00,352 --> 01:45:07,952
conviction. By embedding a reflexive flywheel where issuance strengthens the very fundamentals

1381
01:45:07,952 --> 01:45:12,492
that enable further issuance, the structure creates compounding where traditional carry

1382
01:45:12,492 --> 01:45:18,032
trades create fragility. By positioning long vow rather than short vow, the structure converts

1383
01:45:18,032 --> 01:45:25,432
market dislocations from existential threats into fuel. Stretch is not merely a better carry trade.

1384
01:45:25,432 --> 01:45:31,772
It can be seen as the carry trade we imagined for a monetary error where the foundational asset is

1385
01:45:31,772 --> 01:45:38,612
Bitcoin rather than sovereign debt. If Bitcoin is the apex monetary protocol, we are living through

1386
01:45:38,612 --> 01:45:44,572
the transition as you read this article. There is no historical analog. Actually, we are living

1387
01:45:44,572 --> 01:45:51,052
through this transition as you listen to this podcast and interview. Marilyn Howell, you're up.

1388
01:45:52,552 --> 01:45:58,712
Yeah, Chris's great article. I read it this evening. So I'm going to give it one more pass

1389
01:45:58,712 --> 01:46:08,052
and then put some thoughts and send it out. This is, let's start here. Bitcoin in self-custody is

1390
01:46:08,052 --> 01:46:14,092
the way to go. Okay. Hands down, if you're a maxi, or if you're curious about Bitcoin and investing

1391
01:46:14,092 --> 01:46:21,532
in Bitcoin, understand what Bitcoin is and put Bitcoin in self-custom. Okay. We're not promoting

1392
01:46:21,532 --> 01:46:29,652
STRC or I'm not promoting it. From my perspective, I find STRC to be a very interesting vehicle,

1393
01:46:30,232 --> 01:46:35,532
right? And the implications of what it could represent. And we all have to live in the Fayette

1394
01:46:35,532 --> 01:46:40,772
world. And there's certainly opportunities where I think SCRC might make sense for me if I'm trying

1395
01:46:40,772 --> 01:46:46,352
to park short-term cash for a period of time. But everybody has a different profile. In the end,

1396
01:46:46,352 --> 01:46:53,752
make sure you have Bitcoin and have it in self-custody to ultimately provide yourself

1397
01:46:53,752 --> 01:46:57,052
with the protection for you and your family in case something in the system goes wrong.

1398
01:46:57,752 --> 01:47:02,872
Okay. With that said, I just want to say thank you to the community, to Chris, to you.

1399
01:47:02,872 --> 01:47:21,599
Cedric is you know we all part of the kind of the hive minds and we collectively on this journey together and we using critical thought and applying it here at a level that most of society isn right we we identified that potentially

1400
01:47:21,599 --> 01:47:27,119
something's wrong and we want to try to fix it now my part in this whole thing is and my incentive

1401
01:47:27,119 --> 01:47:35,059
structure is basically my family right and my son i want to try if i can make a you know at least

1402
01:47:35,059 --> 01:47:40,279
have one idea that might make a difference in providing him with a better future for society

1403
01:47:40,279 --> 01:47:45,939
in general, the society that he's going to live, then I left my mark. And that's my ultimate

1404
01:47:45,939 --> 01:47:54,459
objective here. You know, and I appreciate everybody that's looked at my work and enjoyed

1405
01:47:54,459 --> 01:48:00,539
my work and criticized my work and helped me, you know, iron sharpens iron and we all get stronger

1406
01:48:00,539 --> 01:48:04,999
and better together. But this has been a fun journey and I've really created a lot of great

1407
01:48:04,999 --> 01:48:09,619
friends so far and I look forward to the future friends I get to make and you

1408
01:48:09,619 --> 01:48:16,339
know you'll find my work on Maryland HODL on X and it's gonna continue to

1409
01:48:16,339 --> 01:48:20,839
evolve just like this industry in the trade-fi markets continue to evolve and

1410
01:48:20,839 --> 01:48:26,599
break down but I just want to say thank you to the community and to both of you

1411
01:48:26,599 --> 01:48:33,559
all right oh oh Maryland HODL Chris Reid it's been a pleasure

1412
01:48:33,559 --> 01:48:35,099
We'll roll out.

1413
01:48:35,779 --> 01:48:36,959
Maybe we'll hang on for a minute afterwards.

1414
01:48:37,479 --> 01:48:42,459
Hey, hey, that's a wrap on another episode of the Bitcoin Matrix.

1415
01:48:42,759 --> 01:48:49,379
If this rip added value to your life, the single best thing you can do is share it with one person who needs to hear it.

1416
01:48:49,499 --> 01:48:50,339
One person.

1417
01:48:50,779 --> 01:48:52,879
That's how the Bitcoin Matrix grows.

1418
01:48:53,259 --> 01:49:00,059
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1419
01:49:00,399 --> 01:49:01,699
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1420
01:49:01,699 --> 01:49:05,499
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1421
01:49:06,019 --> 01:49:07,079
Link in the show notes.

1422
01:49:07,679 --> 01:49:10,759
Leave me a review on Apple Podcasts or Spotify.

1423
01:49:11,239 --> 01:49:13,639
It takes two minutes and it means everything.

1424
01:49:14,479 --> 01:49:15,319
Follow me on X.

1425
01:49:15,399 --> 01:49:16,539
I'm at Cedric Youngelman.

1426
01:49:16,919 --> 01:49:18,979
The show is at Bitcoin Matrix.

1427
01:49:19,359 --> 01:49:21,859
We're in the conversation every day.

1428
01:49:22,519 --> 01:49:23,759
I'm Cedric Youngelman.

1429
01:49:23,899 --> 01:49:29,019
Stay humble, stack sat, and I'll see you next week inside the Bitcoin Matrix.

1430
01:49:31,699 --> 01:49:32,199
you