The message here from JP Morgan is that Bitcoin is way too big to ignore.
JP Morgan, again, which is the world's largest globally systemic bank, has now adopted the
Saylor playbook.
Like not only has Jamie Dimon now said that Bitcoin is digital gold, but also his bank
is offering a structured note using IBIT.
Saylor's come out and said that's going to be the biggest development he sees in 26.
Michael Saylor went up on stage and he said something that I think everybody should hear,
And it's that a lot of major US banks and financial institutions have approached him about creating Bitcoin products.
That's huge, right?
Remember, Saylor's sitting on 660,000 plus Bitcoin.
And it shows that JP Morgan has bent the knee, if you will.
Vanguard has bent the knee by offering Bitcoin to their clients.
And now Bank of America has bent the knee.
It's definitely an admission that they're wrong.
If Bitcoin manages to soak up just 1% of the global bond market, then Bitcoin would be
about $159,000 at a 3% penetration.
So 3% of the global bond market.
I'm not even talking about the global money markets here, the global equities market or
the real estate market for that matter.
I'm just talking about the bond market, which Saylor is really hitting on quite aggressively.
At 3%, you're talking about like half a million dollars per coin.
And at 7%, you're talking about well over $1 million per Bitcoin.
I think $1.2 million per BTC.
And so you have the largest banks and financial institutions in the country
going from avowed Bitcoin detractors to Bitcoin respecters, if you will,
people who like the orange coin, and they want to offer to their clients, right?
What's up, guys?
70,000 of you guys keep coming back every single month, but 71% are not subscribed.
So you're going to miss out on some of the great Green Candle content.
So make sure that you're hitting that subscribe button with the bell notification so you get notified every time I drop a video.
All right, now let's get back into this great interview.
Bing bong, I am back with another edition of the State of Bitcoin podcast where I've got the man, the myth, the legend, Joe Consorti in the house.
But Joe, I've been seeing you talk a lot recently about the banks coming in with Vanguard, JP Morgan, seemingly the biggest backflips we've seen in Bitcoin.
up until this time. So tell me, what do you think of all of these banks now starting to come in and
TradFi starting to wake up to Bitcoin? Yeah, so it's a hugely positive development. Thank you so
much for having me on, by the way. You have a great show and we've been meaning to do this for
a while. So it's great to finally be on here. Look, I mean, JP Morgan, Vanguard, Bank of America,
like these financial institutions and banks finally coming around to Bitcoin. It's no surprise,
but really these are some of the major developments, the biggest developments that Bitcoin has had
in years, if not decades, right? Notably, Vanguard has been a huge detractor of Bitcoin forever.
Its CEO, its prior CEO said that as long as I'm at Vanguard, we won't have any Bitcoin products.
We won't offer any Bitcoin products. And lo and behold, he's no longer the CEO and they're
offering a Bitcoin ETF, a suite of Bitcoin ETFs rather, to their clients. Notably, they're the
world's second largest asset manager. So that's a huge development. JP Morgan is offering a Bitcoin
structured note. So is Morgan Stanley, by the way, which is major. That opens up Bitcoin access to
a huge cohort of folks who didn't have access to it previously. And Bank of America has advised,
has opened up the floodgate for its wealth managers to begin advising Bitcoin to their
clients, which previously they were not allowed to actively do. If a client came to them and said
they wanted to invest in Bitcoin. The wealth manager was allowed to talk to them about it,
but they couldn't actively pitch it to their clients. And now they can with a suggested one
to 3% allocation. So that's basically the high level update here. And the message is that Bitcoin
is finally coming into the fold with the major banks in the United States and globally, but
obviously the US being the leader. And that's huge news, right? I tend to think that the primary way
in which people interact with Bitcoin, this has been proven out by the ETFs and how successful
they have been since they launched, will be through their banks or their financial institutions,
whether it's through their checking account or sometime next year or the year after that,
people can go into the bank and purchase Bitcoin the same way that they could purchase a CD or
move money into a high yield savings account or through their 401k or their pension plan or
whatever in whatever brokerage they have that at. So it's really just this evolution of Bitcoin
playing out in real time. It's massively bullish, right? These are huge pools of capital we're
talking about. Bank of America, one of the largest banks in the US. Vanguard, the second largest
institutional asset or the second largest asset manager in the world. JP Morgan, obviously being
the largest, most globally systemic, important bank in the US. So yeah, a bit of a ramble there,
but those are the major developments on my mind and all of them are extremely bullish.
Yeah. And I'm curious what you think of now the bank starting to come in and potentially custody
Bitcoin and work towards that because I mean, sailors come out and said that's going to be
the biggest development he sees for season 26.
Outside of obviously being a proponent of self-custody
and I think being your own bank
is one of the true powers of Bitcoin.
But it seems like a lot of, I guess,
people in general would really appreciate
having somebody, I guess, hold their hand through it
and maybe potentially custody for them.
So how big of a development do you just see?
Like banks, not only like recommending it
for asset managers,
But the custody aspect of it, I think, is kind of unique here.
So how do you see that, I guess, unlocking to potentially, you know, I guess, trillions of dollars at this point?
Yeah, it's interesting.
Michael Saylor went up on stage at Bitcoin Mina yesterday, and he said something that I think everybody should hear.
And it's that a lot of major U.S. banks and financial institutions have approached him about creating Bitcoin products.
That's huge, right?
Remember, Saylor's sitting on 660,000 plus Bitcoin at the time of this recording.
And so I tend to think that the primary way in which people engage with Bitcoin will be through their bank.
Because think about it, right?
Self-custody in and of itself is already a huge sell on top of it.
It's a massively effortful thing that people have to learn how to do on top of something that's already so niche and relatively difficult to grasp, which is Bitcoin.
And so if you bring somebody around to the idea of Bitcoin and then you tell them about needing to custody it on their own, that's a bridge too far for most people. The reality is that most people are comfortable with Bitcoin as an asset, as one asset that exists within their portfolio. Again, that's been proven out by the success of the ETFs, but they're not comfortable self-custodying it.
I'm a self-custody advocate, but I believe that it's a step in your journey toward Bitcoin. I don't believe that it is a be-all, end-all. I'm not necessarily a purist. I think that the ETFs are a net positive for Bitcoin. They drive adoption. These are issued by highly regulated financial institutions. The likelihood of that Bitcoin not actually being there is extremely low, if not zero. So it's not something I necessarily worry about. If anything, the ETFs have been massive for driving adoption.
And so I think that all that is to say, I do believe that banks will begin offering Bitcoin financial products at some stage next year, whether that's custodying spot Bitcoin at the bank itself, whether that's being able to potentially borrow against your Bitcoin at a bank.
I think we're much further away from that.
But I do believe that most people will interact with Bitcoin at their bank, and it's a huge development.
And the fact that Saylor went out on stage at MENA and said that he had gotten calls from a horde of US banks asking him about this tells us that we're a lot further along in this than we expect.
Also today with the IPO of 21, obviously backed by Cantor Fitzgerald, Tether, you have Paulo Arduino in there, you have Jack Mallers in there.
You know, Cantor Fitzgerald, you're one step away from the United States government, right?
And so I believe that Bitcoin's integration within the banking system at large has never
been closer than it is today.
And I think over the next three years, as this administration remains in office, we're
only going to see more developments on that front.
And I believe next year, if not by the end of this presidential term, you're going to
see a handful of banks across the United States offering Bitcoin to their clients.
Now, do you think that this is a sign that either MicroStrategy, what they've been doing
and Michael Saylor are either winning or have won or that Bitcoin is winning just in the general
term as seeing JP Morgan, Vanguard, essentially kind of go from some of Bitcoin's biggest haters
for the past few years to now flipping it as you described earlier. And then also JP Morgan
potentially releasing some preferred notes and doing, I guess, the strategy strategy at this
point. So do you see that as a sign of, I guess, like them admitting that they've been wrong in
that Bitcoin's been winning this entire time? Yeah, no, I think that it's definitely an admission
that they're wrong, that JP Morgan, again, which is the world's largest globally systemic bank,
has now kind of adopted the sailor playbook. Like not only has Jamie Dimon now said that there is
merit to Bitcoin, which is a huge shift from what he said a couple of years ago, and he's been saying
for several years, which is that Bitcoin is worthless, to now not only saying Bitcoin is
digital gold, but also his bank is offering, potentially exploring the use of Bitcoin as
collateral for one. And then it's just created a structured note using IBIT. Now, granted,
this is a very small structured note in terms of its market cap and its initial offering size.
So I wouldn't read too much into this and say that, oh, it's going to siphon away trillions
of dollars from the global fixed income market or what have you. However, I do think it's a step in
that direction. Morgan Stanley also filed for a very similar thing and launched it, I believe,
last month or the month prior. JP Morgan filed for this last month. And so the high-level story
is that institutions want access to Bitcoin's upside, but they are prohibited for doing it
for any number of reasons, namely their mandates away from being able to hold the actual spot
Bitcoin being a commodity. Their mandates to hold fixed income instruments and equity instruments.
But the message here from JP Morgan is that Bitcoin is way too big to ignore. And so rather
than allowing you to purchase Bitcoin directly through them, IBIT obviously figured it through
BlackRock, obviously figured out a way to monetize that demand for Bitcoin through the management fee
of its ETF. BlackRock has since come out and said that the IBIT Bitcoin ETF is the most profitable
ETF for them, driving hundreds of millions of dollars in revenue. I believe $250 million worth
of revenue this year or last year, I can't recall. And so basically these financial institutions want
to monetize this demand for Bitcoin. BlackRock is doing it through the management fees associated
with IBIT. And now JP Morgan is doing it by rather than allowing you to purchase Bitcoin and then
getting a spread from that, creating this structured note in order to offer it to an
entirely different cohort of investors, intermediate your exposure, and capture some fees in that
spread. So for me, this is a massive development, right? And it shows that JP Morgan has bent the
knee, if you will. Vanguard has bent the knee by offering Bitcoin to their clients. And now Bank
of America has bent the knee. And so you have the largest banks and financial institutions in the
country going from avowed Bitcoin detractors to Bitcoin respecters, if you will, people who like
the orange coin, and they want to offer it to their clients, right? It's something that's too
profitable to ignore. And the last thing that I'll say here before we jump to the next question
is that ultimately people come to Bitcoin for different reasons. The banks were never going
to come to Bitcoin because they believed in the ethos of the mission. They were inevitably going
to come to Bitcoin because of the fat fees that they could farm by offering Bitcoin products.
So while the incentives may be skewed, the outcome is the same, which is that more people
have access to Bitcoin than ever before. This pristine savings technology, this absolutely
scarce monetary vehicle, and that's a net positive, regardless of how they're holding it or the way
that these banks structure these instruments. Yeah, I mean, I definitely agree. I mean,
at the end of the day, these banks, they're profit maxis, right? They want to be able to
make some money off of it. So it was no doubt that as long as Bitcoin kept winning, that they
were going to come into this market. But something that a sailor here said, I believe it was either
yesterday or the day before in Abu Dhabi is he's talked about the fixed income and the bond market,
$300 trillion bond market, $145 trillion fixed income market. But he mentioned the $200 trillion
credit market is something that could be next on the list to target. And I mean, just getting a
small percentage of these giant pools of capital to move on over to Bitcoin would be absolutely
massive. So with the revolution that you're seeing, I guess, kind of financial revolution
towards the Bitcoin space. What do you make of, you know, Saylor, I guess, targeting these giant
pools of capital that essentially have been needed some sort of, I guess, you know, a modernization
of sorts in order to get into the 21st century, to say the very least. What do you take of,
you know, these three big giant pools of capital that I just lined out here?
Yeah, it's a really good question. So you have the equity market that strategy is hitting with
it's common stock, MSTR, you have the money markets that strategy is hitting with stretch,
it's preferred stock, it's perpetual cumulative variable 9%, I think they're offering now,
paid out monthly, functions very similar to a money market account, that's been massively
successful. And then you have them hitting the bond market with strife, stride, and strike,
as well as the real estate market to some degree with strike. And so ultimately, these are huge
pools of capital. When we talk about the commodities market in and of itself, you're
talking about a market that's sub $30 trillion, probably sub $50 trillion in total, if I'm not
mistaken. Very, very tiny, right? Gold in and of itself is, I think, $25 to $30 trillion,
something like that. And Bitcoin in and of itself is only $2 trillion. And so we talk about Bitcoin
reaching gold parity quite often, and we talk about it as this kind of hallowed event. And when
it happens, Bitcoin will be about a million and a half dollars if Bitcoin were to reach gold parity
today, assuming gold's current market cap. And we talk about it as some sort of hallowed event.
But the reality is that a lot of gold bugs are just going to hold gold. That's assuming
that the capital that's going to flow into Bitcoin will come entirely out of gold. And that's just
not the reality, right? A lot of people crave Bitcoin exposure, but they have mandates that
preclude them from being able to hold Bitcoin in a spot fashion. And so strategy has effectively
created these pumps, these capital pumps in order to bring capital from these different areas
of the asset market globally into Bitcoin, right? In some sort of proxy form and different proxy
forms through its preferred equities and its common stock in the ways that I just explained.
And so to me, this is quite revolutionary, right? And the price implications for Bitcoin are pretty
enormous. If you assume that Bitcoin manages to soak up just 1% of the global bond market,
and again the global bond market being about trillion then Bitcoin would be about And that just 1 penetration And that assuming that the only capital invested in BTC
is coming from the bond market,
a straight one-to-one translation.
Obviously, that's not the way things work,
but this lets us gauge the size
of what that sort of transfer will look like.
At a 3% penetration, so 3% of the global bond market,
I'm not even talking about the global money markets here,
including credit or the global equities market
or the real estate market for that matter, which we're working on in Horizon. I'm just talking about
the bond market, which Saylor is really hitting on quite aggressively. At 3%, you're talking about
like half a million dollars per coin. And at 7%, you're talking about well over $1 million per
Bitcoin. I think $1.2 million per BTC. And that's just for one market, right? That's just for the
bond market. Not to mention the money market, not to mention the equities market, both of which
have different instruments for people to invest in Bitcoin through. Obviously, the equity market,
you have the spot Bitcoin ETFs through the money market. You have Stretch. Obviously, of course,
Stretch does exist in the equities market. It caters to those who would otherwise buy money
market funds. But in a very real sense, it exists in the equities market because it's a preferred
stock. But it's targeting that same pool of capital that would be in a money market fund.
And you have a whole suite of other instruments that are investing in these other preferred
stocks that are more so hitting the bond market. So look, it's a huge revolution. As far as fixed
income engineering is concerned, it really is the first step in Bitcoin becoming pristine collateral,
the best asset that lenders want to use in order to extend loans against. And it's really just day
one in that process. You only have one major player globally that's doing this, and you really
have no logical second player on the horizon. What if I told you you never had to sell your
Bitcoin. Instead, you can borrow against it with SALT lending. Why give up your hard-earned
Bitcoin when you can unlock its value without letting it go? With SALT you get secure Bitcoin
collateralized loans with no credit checks, no prepayment fees, and best of all, no rehypopulation.
SALT has had zero customer collateral losses since it launched. SALT was the first platform
to offer Bitcoin collateralized loans starting way back in 2016.
Today they offer tailored options for both individuals and businesses.
And now introducing Salt Shield, the no liquidation solution.
No forced liquidations during the lifetime of your loan when you're enrolled with Salt
Shield.
This just launched at the Bitcoin conference in Las Vegas and it is next level peace of
mind.
For Green Candle listeners only, head to saltlending.com
slash green dash candle for this exclusive offer
for your Bitcoin collateralized loan.
You can get cash for your Bitcoin today.
Salt Lending, secure, trusted, proven.
And it's really just day one in that process.
You only have one major player globally that's doing this
and you really have no logical second player on the horizon
or player in second place in the horizon.
And I believe that what you're seeing with banks is just them trying to catch up to this reality that there's this insatiable demand for Bitcoin adjacent or Bitcoin back fixed income.
And they're doing their best to catch up.
Now, what do you make of the situation with JP Morgan?
Because I think, you know, the way that they've been approaching all of this has been very interesting to say the very least.
I mean, of course, we have Jamie Dimon, who was, you know, just one of Bitcoin's biggest detractors for a while.
I mean, I think his comments even date back to maybe a full decade ago since he started talking about Bitcoin.
But now, you know, they're allowing you to borrow against your IBIT Bitcoin ETF.
But they also, you know, on the other side of things with MSTR and some of these Bitcoin treasury companies, they've made it difficult.
I don't know how closely you're following the increase in the margin supply or the margin for the loans that is required.
and the MSCI ruling and just kind of the hairiness going on around there.
But with JP Morgan's new approach with this,
do you think that they're losing potentially some market share?
And that's why they're essentially, they do have a big moat at this point,
but they're playing, I guess, a little bit of these fiat games
in order to try to maintain and keep some of their market share
by getting these Bitcoin products and trying to incentivize those
that they have already in their grasp to utilize their own Bitcoinized products, I guess,
for lack of a better term. Yeah, the incentives make sense, right? If you're going to launch
effectively products that are sort of aiming at that exact same market as strategy, you would want
to push back on allowing people to easily sell strategy or buy strategy or create artificial
short pressure on strategy. So look, it makes sense. I don't think we have enough evidence to
conclusively assert that those things are happening. As far as I know, it was just one
individual who was unable to sell all of the microstrategy that he wanted to sell, or I think
he was moving it. I'm not exactly sure. But either way, we just don't have enough data or evidence
to be able to conclusively fit those pieces together. So I would say that that's mostly
speculation. As far as the MSCI ruling, look, it doesn't make sense to me that you have a company
that's creating financial instruments
and they're trying to treat it
as an investment fund and nothing more.
It's not a closed end trust.
It's not someone that's buying and holding Bitcoin
and doing nothing with it.
It's actively mobilizing the Bitcoin on its balance sheet
to transmute its properties
into different types of financial vehicles
spread across the fixed income market.
It has four different preferred stocks in the United States.
It is one preferred stock in Europe.
It's doing all of these things
because of the amount of Bitcoin on its balance sheet.
That's why it's able to sell into the market.
That's why it's able to issue shares
and raise so much money, specifically because of the Bitcoin on its balance sheet, even if the
dividends themselves aren't necessarily being paid at this moment in time by selling that Bitcoin.
But it's a huge stretch of the imagination to say that, oh, strategy, because most of its balance
sheet is composed of Bitcoin, is an investment trust, because that's not what they're doing.
They're mobilizing their balance sheet in order to transmute that digital property into digital
credit, as Michael Saylor puts it. So it's completely absurd. It's arbitrary. It doesn't
make an ounce of sense. And this is more of a blanket ruling in my mind to mitigate the amount
of passive flows that would move into a strategy should they remain in MSCI's indexes. And so I do
think that all of this is kind of not necessarily a direct attack on micro strategy, but the powers
at large are creating conditions where it's unfavorable for micro strategy to be included
in these indices, which would make it easier to run their business, i.e. getting a higher market
cap, being able to raise more money, being able to purchase more Bitcoin. It seems that they're
trying to prevent that from happening. Recently, you've had Strive put out a letter to MSCI to
scrap their proposal that would exclude any entity. And this is the rule that we're talking
about. It would exclude any entity holding 50% or more of its balance sheet in what's called
digital assets. Obviously, Bitcoin being the main one kind of in that list. And so Strive pushed
back against that. The Bitcoin for corporations company pushed back against that as well.
I think it's completely arbitrary. I do think that you see strategy recently putting in measures to
increase its likelihood of inclusion, namely it adding a cash buffer. I think $1.4 billion was
the number, a US dollar reserve, if you will. A lot of Bitcoiners will look at that and they won't
read the tea leaves. They won't read into that. And they'll say, oh, why isn't Saylor buying
Bitcoin using those proceeds. Well, that was an announcement he made last week. And yesterday,
he just announced another major Bitcoin buy. So that should put all of those fears to rest
about Michael Saylor not buying Bitcoin anymore. The reason he did that was to appease the TradFi
folks and to increase the likelihood that he would get included in the S&P 500, despite qualifying.
Obviously, unfortunately, it is up to a committee that gives the final vote as to whether or not
he'll actually be included or any company will be included. And they said no to strategy.
And one of the reasons they said no was number one, well, actually three reasons they said no.
The first being that they wanted proof that strategy would be able to raise money during Bitcoin downturns.
And they proved that yesterday and last week by raising $1.4 billion for its US dollar reserve and then raising enough money as of yesterday to purchase 10,000 more BTC.
So they quelled that. And they also wanted to see strategy have a bigger US dollar reserve,
like a reserve of actual US dollar liquidity. And strategy did that, right? So two of the three
major reasons that they were excluded from the S&P 500 or two of the three things that the S&P
500 committee said strategy should do if they wanted to reevaluate their decision to include
them in the index have been done, right? So these are just measures in order to increase the
likelihood that strategy gets included in the S&P 500 and ideally the NASDAQ. Obviously,
they're currently included in the NASDAQ. And so for me, it's a step in the right direction.
You have all of these forces that are actively trying to push against strategies, inclusion,
and other Bitcoin treasury companies inclusion in these indices. And it just so happens that
those same forces, the largest banks in the United States are not necessarily the same forces,
but the largest, most powerful banks in the United States are on the other side of that,
creating certain instruments and also making it less desirable, less easy for those who own
MicroStrategy to be able to use it on their platform. It's all a really interesting web.
I don't necessarily believe a lot of it's connected, but at the very least, the incentives
do make sense. Is it super common to, once you meet the qualifications, to get into the S&P 500
on the first go? Because I mean, Saylor came out in September and was like, hey, I'm not surprised
that we didn't make it in the first go around.
But, you know, obviously we've got the second go around here in December.
They weren't included again.
So I'm curious, how common is it?
And, you know, how long is it usually before, you know, some of these companies?
Obviously, it could be like a case to case basis.
But, you know, from your experience, do you think that this is something that is, I guess,
you know, unique in a sense where they aren't being included in the S&P 500 kind of from the jump?
No, so it's actually not all that common that companies join the S&P 500 immediately once they meet basic criteria.
Because as I mentioned, it's this discretionary decision that has to go through the committee.
So one of the things that has to be looked at is consistent profitability.
Until the accounting rule change earlier this year, strategy technically was not profitable.
They were allowed to book the Bitcoin losses as unrealized losses, or their unrealized losses on their Bitcoin as losses.
Those were marked out as losses, but they weren't allowed to book unrealized gains as profits until very recently.
And now they're allowed to, obviously, over the last two quarters, they've been allowed to book their unrealized gains as profits, which has been huge for strategy.
That is something that they have going for them in their corner.
but it's not all that common that the first time a company qualifies for S&P 500 inclusion,
they actually get in. James Safard actually put out a great tweet about this. I don't have it in
front of me, but there was a list of like a hundred different companies that were up for S&P 500
inclusion. Ultimately, the decision rests with a committee. That committee has its own internal
biases. It can create any reason under the sun for not including companies, even if they do qualify.
And in the case of strategy, at this point in time, the zeitgeist is such that it's too risky of a company to include in the indices. Despite their insane balance sheet strength, the fact that they hold 660,000 Bitcoin doesn't matter to the S&P committee. Ideally, that changes in time. And thankfully, we have a lot of people who are actively working to change the perception over on Wall Street and make it so that strategy can be included in the S&P 500.
All right. So, I mean, we talked a little bit about, you know, the potential credit bond and fixed income markets that strategy and, you know, Bitcoin in general is going to to swallow up.
But, you know, outside of that, it seems not only the banks, it's starting to attract a lot of these sovereign wealth funds.
You know, so Saylor has been spotted with, you know, the Saudi Arabians, you know, potentially talking to their sovereign wealth funds.
Larry Finks mentioned that he's talking to sovereign wealth funds as well.
So with these giant pools of capital coming in, one, is it bullish or is there potentially a bearish argument of the centralization, so to speak, of coins?
And then two, with these big giant pools of capital, there's always been the narrative of diminishing returns over time.
So do you think that this is actually a possibility of the diminishing returns or are these pools of capital so big that that's just a moot point and we'll see Bitcoin reach Valhalla one of these days?
Well, it's a little bit of both, right?
Ultimately, it's much harder to move a $2 trillion asset than it is to move a $50 billion asset, right?
When Bitcoin was sort of like a micro cap stock, when it was 30 times smaller than it is today,
when it was $3,000, you were looking at an asset that wasn't even hundreds of billions of dollars
in size. It was tens of billions of dollars in size. And so all you needed to move the needle
was very little. And now that's no longer the case, right? You need quite a lot of capital in
order to move Bitcoin by the exact same percentage point that it would have taken much less capital
to move in years prior. And so that part is somewhat true, that you will have diminishing
marginal returns. However, you also have to juxtapose that with Bitcoin's absolute scarcity.
The float of this thing will never increase beyond 21 million. We now have 95% of the
terminal circulating supply out in circulation. 19.95 million coins, I believe, have been issued.
And the remaining, however many, the remaining 1 million and some change will be mined over the
next 115 years, right? So you do have Bitcoin's absolute scarcity, but that is juxtaposed with
the fact that it is a much larger asset now. So that is a reality. However, at the same time,
you got to talk about the size of these sovereign wealth funds that you mentioned
and the amount of money that they just have sitting there. So Abu Dhabi, one of the
largest sovereign wealth funds globally. It's interesting. Last year, I was at Bitcoin Mina,
and they announced that they were purchasing Bitcoin while I was up on stage. And that was
interesting. So I got to react to that in real time. But they hold a bunch of IBIT. I believe
as of recently, as of their most recent filings, they hold, I think, 16 million shares or 17 million
shares And it tripled its stake earlier this year The Sovereign Wealth Fund manager in Abu Dhabi has said that it very similar gold Uh you also have Luxembourg They have about 1 of their portfolio in Bitcoin ETFs You have the
kingdom of Bhutan, obviously notoriously holding, uh, I think over 13,000 Bitcoin. It's a very,
you know, that's that the kingdom of Bhutan set that aside. It's not necessarily a large,
uh, systemically important country or a story that will move the needle as far as Bitcoin is
concerned. But more recently, you also have Norway, um, with their, uh, their global pension fund,
purchasing Bitcoin, I believe through indirect exposure like microstrategy, but either way,
I think an equivalent of like 7,000 or 8,000 BTC. So it's a story that's been happening more often
over these last couple of years, sovereign wealth funds purchasing Bitcoin. And it's no surprise
that it's happening with higher frequency, right? They experienced the exact same problem that you
and I experienced, Brandon, which is perpetual fiat debasement. And as capital allocators,
it's their job to make sure that they're hedging themselves against that the most effectively.
as effectively as they can. And so it's no surprise that you see these major players
allocating to Bitcoin in size because they feel the exact same problem that you and I feel,
albeit they might not feel it as acutely. But as capital allocators, they want to front run this
thing. They want to get out in front of it and they want to allocate to it. And so it's no
surprise that we're seeing it. Look, when we're talking about sovereign wealth funds,
we're talking about entities with tens of billions, if not hundreds of billions of dollars,
if we're talking about the largest sovereign wealth funds in purchasing power. And so even
a small percentage allocation to Bitcoin really moves the needle as far as price is concerned.
And you also have to remember that these are entities that don't usually sell things very
quickly. They're not high-frequency traders. They're buying and holding. And I know this is
not what we're talking about, but it also plays into the Bitcoin ETFs and that cohort of holders
because they, as well, are buyers and holders of Bitcoin. They don't purchase Bitcoin and then sell
it rapidly. They're not traders. They're not looking for a quick 100x. They're buying and
holding for the long term. And the reason that we know this is on this major drawdown where Bitcoin
fell 34%, the ETF AUM, the asset center management within the spot Bitcoin ETFs only fell by 5%.
And so Bitcoin's price fell by six times more, actually almost seven times more than the AUM
and the Bitcoin ETFs fell. And so that tells you that the ETF holders were holding tight while the
spot Bitcoin holders were panicking and selling. The exact same dynamic, albeit to a lesser degree,
is the exact same with the sovereign wealth funds. They are purchasing these things for years,
if not decades. And so while we do see diminishing marginal returns in Bitcoin in terms of the amount
of capital that's required to move Bitcoin by the same percentage as years prior, these are entities
that are going to be holding Bitcoin for the long run, and they're not going to be selling it. And
that's a massively bullish development. Yeah, no, that's what I have to say as far as sovereign
wealth funds are concerned. Reading new news about that every single week, that makes me more
bullish than anything that could happen to Bitcoin's price. Wow. All right. There we go.
I like it. And I mean, I agree with you, right? These players that are coming in are very different
to say the very least, right? I mean, like you said, they're buying and holding.
Last bull run, we had exchanges blow up. You saw FTX, Celsius, BlockFi, you name it. But the true
power of Bitcoin is getting it off an exchange into cold storage. This bull run, I'm trusting
Trezor, the company that's been around for over a decade and they just had a brand new release
of the best hardware wallet in the game, the Trezor Safe 7. It's got the first audible secure
element. No other hardware wallet has this. On top of it, I travel a lot, so I need an easy way
to connect my Bitcoin hardware wallet to my laptop, phone, what have you. Therefore, it is the easiest
way and has the best connectivity to access your bitcoin this is truly how you become your own bank
and the best way to do that is with a treasure safe seven so you can go to the affiliate link
down below and get yourself one right now and do it quickly because they are flying off the shelves
folks so do it with the easiest and best way to get your bitcoin off exchanges so go to the
affiliate link down below get yourself a treasure save seven and get your bitcoin off exchanges in
the easiest way possible all right enough from me let's get back to the show all right there we go i
like it um and and i mean i agree with you right these players that are coming in are very different
to say the very least right i mean they're like you said they're buying and holding um so do you
think i mean outside of the potential diminishing return just because it is a larger asset uh i'm
kind of of the belief that it might be diminished to the downside but because of bitcoin's fixed
supply we don't really have an asset like this of course you can maybe compare it to gold but for
some reason they always find more gold uh that is unmined or something like that and more gold just
magically appears um so because bitcoin has that true finality and that true scarcity uh do you
think that this there is that potential where you know we we start to see maybe a supply shock or a
short squeeze of sorts because, you know, I mean, if you look at the numbers, there's just over 2
million left on exchanges. I think last I saw there was maybe 150,000 left on OTC desks. I mean,
we got sailor and these treasury companies buying up over the year supply in nearly just a quarter.
So, you know, from all the Bitcoin miners. So, I mean, I think at the end of the day,
it's just math. But do you foresee this potentially happening where, you know,
we could get something, I guess, better to the upside just because of the type of buyers that
we're having coming in. Yeah, there's potential for it. I mean, ultimately, what dominates the
U.S. stock market today more than ever is passive flows, right? People who are passively allocating
to their 401k or their pension or their Roth, whatever, every single two weeks, or pensions
allocating on behalf of the people who are in the pension, allocating just passively every single
two weeks, that's increasing in its relevancy in the stock market over the last several years,
over this past decade, has been totally dominated by an increasing amount of passive flows.
And so that's a trend that you can't really ignore. And as Bitcoin bubbles to the surface,
if you will, in terms of its viability as an asset, in terms of its popularity,
you're only going to see more passive flow investing over time. And so I believe that
is going to make up a larger and larger share of the pie as far as total passive investing is
concerned on a dollar-for-dollar basis. Bitcoin is going to make up more of that, particularly as
more young people enter the workforce, as more people that are the age of you and me, Brandon,
or even slightly younger than us, entering the workforce, getting their benefits, allocating to
their 401k or their IRA or what have you every two weeks. They're going to be buying Bitcoin,
right? Because there's this recognition among Gen Z. There's this shared sense of financial nihilism
or financial optimism, Bitcoin is owned by both people, both cohorts of people,
that the only real way to get ahead is get an investment that can outperform the real rate of
inflation, which is 7% to 10% annually. And Bitcoin is the only asset that's proven to do
that through time. So I think that Bitcoin will make up even more of those passive flows as a
result of who's entering the market now. And I think it's going to make for a much more stable
base of Bitcoin going forward. Now, to the question of whether or not the new folks that
are buying could create this material, this outsized impact on Bitcoin, where instead of
seeing these diminishing marginal returns over time, and we're observing Bitcoin in log scale,
and during the 2012 cycle, during the first halving cycle, we got like 10,000% gains.
And so far this cycle, we've seen a few 100% gains. We'll have to wait and see. It really all
depends on the macro backdrop and where we're headed and how important people view Bitcoin.
I tend to think that as it grows larger in size, it's just going to flatten out in terms of its
yearly average return profile, just like any other asset. Instead of seeing these crazy 40%, 50%,
60, 70% average CAGRs over three, four years, you're probably going to see something more modest,
right? 20%, 25%, 30%, which is still great if we're talking about a multi-year timeframe.
And with that, you'll also see a decreased volatility. That's another hallmark of Bitcoin
that you'll see as its ownership base shifts from OGs and a lot of people who are in the futures
market and trading derivatives and things like that to people who are participating by ETFs or
sovereign wealth funds. You're going to see a lot less volatility, not only because it's less
leverage in the system, but because these people aren't actively trading in and out of the asset.
You're going to see lower volatility. And because of that, you're going to see more muted return
profile, but you're also not going to have the crazy drawdowns, right? It's been a saying that's
gone around a little bit over these last couple of months that Bitcoin didn't have a blow off top
this cycle. And so it's reasonable to assume that Bitcoin won't have this extreme crash, 80%. It
didn't rally 90%, 100% over the course of like 40 days, 50 days. And so chances are it's not
going to crash by that amount either. I think that's the MO for Bitcoin going forward. It'll
behave much more like a traditional asset. But with that said, I still think it has this reflexivity
to the upside because of its absolute scarcity. Yeah. And I mean, I hear you on that. And I mean,
I always think just because of the way Bitcoin is being this scarce asset,
But it's kind of hard to look at it comparatively because I don't think we've ever seen an asset like this in our entire lifetimes.
Or even people much older than us as well, just because of the uniqueness of this and the adoption cycle that we're starting to see.
So I think over time, people are going to start to figure this out.
But I want to get back to some of the potential Bitcoin products taking over some of these markets.
You mentioned the real estate market already.
And I want to talk about what you guys are seeing with the macro picture right now.
Because I think it's very, depending on who you ask, it's either we're very bullish, everything's looking good, or the world is burning.
So I'm sure the answer is somewhere in between.
But I'd like you to hear your kind of just general macro outlook and kind of what you're seeing from the housing market as well, if you're following that pretty closely.
Yeah, for sure. So affordability is at a near all-time low. If we're talking about the economy,
it really is an unfortunate thing to see, particularly home affordability. If you take
a look at home affordability between record high prices and mortgage rates where they are,
it's driven home affordability to an all-time low, unfortunately. And so obviously mortgage rates are
nationwide, 6.5%, I believe right now, which is still extremely high, particularly compared to the
near zero rates that we saw just three to four years ago, right? In 2022, 2021, most homeowners
that you'll talk today, they're now in a pair of what they call golden handcuffs. But back then,
it was them reflying into an extremely low rate, right? A lot of people who live nearby,
live near me, my neighbors, they caught the bottom. They caught 2.1, 2.25, 2.09 is the lowest
that I heard. They reflied to a 2.09% interest rate. That's a rate that we're never going to
see again. And so you have this combination of people who do not want to sell their homes.
And because of the massive amount of money that was printed in 2020, home prices are now more
elevated than ever before. So you have extremely high rates, you have extremely elevated home
prices. And because rates are so high relative to the average outstanding mortgage rate,
nobody wants to sell. And so that's the situation that we find ourselves in, unfortunately.
And what it's caused is this record low in home affordability. You see more people in Gen Z are
saying that they'll never own a home than ever before. And it's really, really devastating.
So the ways to fix this that have been proposed by the administration, they don't necessarily
breed a lot of confidence in me. The first one is they've talked about a 50-year mortgage,
which is, of course, renting from the government until you die. If you think about it this way,
the money required to pay for a 30-year mortgage may save you on a similarly sized mortgage,
$300 to $400 per month, which is pretty huge. That's going to put a lot of people into homes
that couldn't previously afford it. But the caveat is that over those first 10 years,
you're basically paying off only interest and you're not paying down any of your principal.
So that's the unfortunate caveat. It's selling you the stream of home ownership,
but for those first 10, 15 years, you're not actually going to be working toward ownership
whatsoever. You're going to be working through your interest. And by the time you reach your
principal, chances are you'll have already moved out because the average time that somebody owns
the home is seven years. So we have this home affordability crisis, and we don't have necessarily
a lot of great solutions to fix it. And that's kind of where we are. A couple of interesting
stats for you. US home equity is at an all-time high, $35.7 trillion. The value of the total US
residential real estate market is $55.1 trillion. And so these markets are more overvalued than ever.
But at the same time, returns are also disappointing more people than ever before.
If you take a look at the Case-Shiller national average, which is the across 20 cities in the
country, the average price of homes. And then from that, we can gauge whether homes are rising or
falling or whatever. And this year, when adjusted for inflation, right now, as of the latest numbers,
home prices are actually declining 1.72% when you adjust for inflation, which is over 3% again.
And so in reality, most homeowners, they're not moving, right? They're sitting on their,
They've got their golden handcuffs per se. They're locked in with their low rate. They don't want to sell because then that would mean they have to buy a new home and that would mean getting into a higher rate.
But at the same time, their home isn't returning them really anything. When adjusting for inflation, it's actually declining in value.
And so this is a massive problem. And it's a problem not a lot of people talk about because most of the question around housing revolves around new homeowners.
right? I'm of the belief that unless we see a massive correction in housing prices, which
the Fed will not allow, the Treasury will not allow, we've seen that in 2008, we saw it in 2019,
in 2020, in 2022, or excuse me, 2023, they're not going to allow a crash in home prices,
which for me would be the single most important thing to actually get young people into homes.
They're going to make sure home prices go up forever. And so I'm of the belief that the American
dream of homeownership is very much out of reach until they allow that to happen. They can do one
of two things. They can allow home prices to crash, which obviously in doing so, they would
have to induce a recession in order for that to happen. Or they could build an insane amount of
homes in order to bring prices down or do both in tandem. That would be the most impactful thing.
But those are things I don believe that they going to do And so as far as the solution is concerned who knows But going back to existing homeowners the home tends to be people largest asset It makes up 60 of the average American portfolio But because of that
stat that I just read off to you, which is that homes are actually declining in inflation-adjusted
terms, it's actually their worst-performing asset, more often than not, unless they're holding cash.
Cash is their worst-performing asset. Their home is their second-worst-performing asset. But it
makes up such a large part of their portfolio. And so the question becomes, and this is why we
build Horizon, the question becomes, okay, what can we do here? How can we solve for this problem?
Record high home equity, it's actually almost doubled in the last five years. So prior to 2020,
it was $20 trillion. Now it's $35.7 trillion. So it's doubled. This massive pile of money that's
just burning in value has doubled. What do we do about this? Well, Horizon, we let people swap
their home equity for Bitcoin. So you're moving out of this asset that in inflation-adjusted terms
fell by almost 2% to an asset that has risen over the last five years, 70% every single year,
or over the last three years, 70% on average over those last three years.
So it's really a no-brainer. We've serviced dozens of homeowners at this point, but we're a solution
that exists for existing homeowners. As far as new homeowners, I really don't know what can happen
other than allowing the housing market to crash, which would induce a recession. But we've seen
time and again that the Fed will do whatever they can to avoid a recession. So it remains to be seen.
I think there's a massive class of renters who are increasingly gambling and they're doing sports
betting and they're going on poly market because they can't afford homes. And unfortunately, I don't
think that's going to change anytime soon. So the onus is on everybody that's listening, if you're a
young person, to buy and hold Bitcoin. Yeah. I mean, it seems like that's the only, I guess,
way out at this point to go and get some various assets, especially Bitcoin being one of them.
But you mentioned one of Saylor's products here earlier, I can't remember if it was stretch or
stride or one of those, but one of the perpetual notes that is essentially tapping into the real
estate market. Do you think that the way that this market is playing out, that the way of real estate
investing, so to speak, like owning multiple homes to try to get that cash flow in, do you think that
But that is going to end here soon just because of the craziness we're seeing from these housing prices and that these Bitcoinized products are going to start to tap into that or we're already starting to see it tap into some real estate, to the real estate market, excuse me.
Yeah, for sure.
So I was talking about Strike and Strike is interesting because every share of Strike is convertible into 0.1 shares of MicroStrategy.
Currently, a share of Strike is priced at $87 or $86.45 in the NASDAQ.
And so they get to participate in common equity upside.
They also get 8% dividends, and it's payable quarterly.
And so very similar to owning a rental property, for example, you have the option to sell it
to participate in the upside of that property's appreciation, but you're also receiving X amount
of dollars every month in order to cover your expenses.
And therefore, you're taking in this cash flow, but you have the option to sell it in
the future, very similar to a rental property.
That's the reason that strike hits on the real estate market so much.
But it also is far superior to owning a rental property because guess what?
When you own a rental property, chances are you're not clearing 8% a year.
And also it comes with a whole host of liabilities that you have to deal with.
It comes with a mortgage payment, of course.
And the difference between what your renter is paying and what your mortgage payment is,
that's your profit.
If you don't have a renter for any number of months, you're high and dry.
You have to cover that mortgage payment yourself. And then maybe depending on how long you don't
have a renter for, a couple of months worth of no renter can clear you of an entire year's worth
of profit. So that's thing number one. Thing number two, and this gentleman, Alex on Twitter,
who is a pro MLS soccer player who also used to own a bunch of rental properties, he's talked
about this. He has sold his rental properties for Bitcoin specifically because of the maintenance
and upkeep that are required in order to have those rental properties running. My generation,
the most popular job that people want to go into is actually landlord. More people than ever say
that they want to become a landlord, which of course, a rent seeker, a rent seeker is somebody
who does nothing or very little in order to get cash. They want to serve, they want to act as a
middleman, right? They've been sold this dream of passive income. And the reality is that being a
landlord, being someone who owns rental properties is not passive income, it's a job, right? And so
I feel as more people are realizing this, they're looking at Bitcoin, but more specifically,
these preferred equities that have a lot of the attributes that real estate has, right?
You're getting this cashflow and you also have the option to sell it down the line,
but it comes without all of the maintenance and the expenses and all of these other things,
having to deal with tenants, having to repair things, having to run after people for a security
deposit. You don't have to do any of that with Strike or with any of the other strategy preferred
stocks or with owning spot Bitcoin. And so really it's a revolution in the way that people think
about real estate investing. I tend to think that you're going to continue seeing a lot of people
dump their rental properties. One of my absolute favorite things about Bitcoin is meeting all of
you in person. So mark your calendars for February 28th and come down to where I've called home for
the past eight years, Tampa, Florida. The Bitcoin Bay Foundation is putting on the Sound Money Soiree.
It's the third annual.
It's a night of Bitcoin, poker, an open bar, and a silent auction.
All support will go to Bitcoin Bay, a nonprofit that is creating a circular economy down in
Tampa Bay, Florida.
They're doing absolutely great things, and it's the Bitcoin community that I've called
home for such a long time, and these guys are absolutely crushing it.
So please do anything you can to support.
Buy your tickets today.
You can use promo code GREENCANDLE to get 10% off your Sound Money Soiree.
tickets. So do you know anything about Bitcoin? No. You guys can come down and see this ugly mug,
come boogie on the dance floor, shake it. And now that Bitcoin's over 100K,
you can do it all with your girlfriends. All right, on that for me, let's get back to the show.
And so really it's a revolution in the way that people think about real estate investing.
I tend to think that you're going to continue to see a lot of people,
seeing a lot of people dump their rental properties. A lot of markets in particular,
Kissimmee, Florida, next to Orlando, which is this hotspot for American tourism.
A lot of Airbnbs are hitting the market down there. You can get a really cheap home if you
want to right now because a lot of the people who were sold on this idea of, I'm going to be a
landlord, I'm going to have an Airbnb. They're now realizing that, okay, this is very prone to,
I'm very vulnerable if we see a decline in tourism. And it's hard to compete when there
are thousands of other people who are doing the same thing as me. They're dumping their properties.
You're seeing the same thing around Houston, Texas, the general Austin, Texas area, or Dallas,
Fort Worth area, excuse me. A lot of these markets now, a lot of people are coming around
to the idea that a landlord isn't passive income, it's an actual job. So they're selling it,
they're buying Bitcoin instead. And for me, it's just this digital transformation and talking about
strategy here and their different preferred equities. It's a digital transformation of
physical capital, right? And so it's taking those properties of Bitcoin that we know and love,
this extremely high compound annual growth rate, and it's transmuting those properties into a
preferred stock that may be desirable to someone who is looking to invest in fixed income or a real
estate investor, right? In the same way that a lot of real estate investors are turning to Bitcoin
mining because they want that income, but they also want the optionality to sell the miner in
the future. In a way, strategy offers the exact same thing, but could be even more desirable,
right? Because you have to factor in Bitcoin miner depreciation, whereas with strike and
with these other preferred instruments, their issuance relies on revolving around a certain
strike price. And so ideally when you sell it, it'll be very close to the strike price that you
had. You don't necessarily have to worry about depreciation. So arguably it is superior to
Bitcoin mining in that front. And yeah, very long-winded answer, but you can see very clearly
that these Bitcoin adjacent products are much more desirable than owning real estate outright.
And so you're starting to see this trend anecdotally, but I believe it's going to be something that continues of folks selling their rental properties and buying Bitcoin instead or buying these strategy preferred instruments instead.
Yeah, will this be something too?
I mean, a lot of Bitcoiners talk about the great wealth transfer that's ahead of us, right?
I mean, you lined it out about how much equity is in homes right now.
And the boomer generation, I mean, I'm not trying to get grim too quickly here on the podcast, but let's be honest here, right?
They've got, you know, only, you know, maybe a couple of decades left on the lifespan here.
And because of that, you know, that boomer generation has never had more of a concentration
of wealth than any other generation in history.
And that's eventually going to get passed on to the millennial generation and below who
have this affinity towards Bitcoin and start to understand it, have this distrust to the
system because we've lived through 2008.
We've lived through, you know, the COVID crisis.
We've lived through a lot of these different things that make us distrust the current system just oh so slightly.
But with this transformation of wealth, I guess put your tinfoil hat on me for a little bit here, Joe.
What do you see this playing out?
Do you see it all shifting towards Bitcoin?
Do you see it kind of changing the way people look at wealth and how they're investing in markets, how Bitcoin can change all these different businesses?
How do you see this playing out here?
Yeah, I'll take a different approach entirely. I'm of the belief that this great wealth transfer
people are talking about isn't actually going to occur. And let me explain.
The reason is that the assumption is that, okay, when boomers pass away,
they are going to leave to their estate a massive pile of cash. And that pile of cash is going to
get invested directly in Bitcoin, everyone's going to party. A couple of flaws in that assumption.
Number one, that boomers will leave their children a massive pile of cash.
Survey data actually shows the majority of baby boomers don't plan on leaving anything to their
children. Or actually, the majority says that they plan on leaving very little to their children.
And so that's unfortunately flawed assumption number one. And the reason being is that they're
taking that cash instead, and they're going on these forever cruises, or they're paying for a
retirement home, or they're buying a second property. Most baby boomers would like to travel
the world more than they would like to help out their children. Of course, this is a general rule.
It's just a generality. It's not every case, of course. I don't want to paint baby boomers into
a corner. But if we're going by survey data, then that's the unfortunate reality. They're not going
to pass down their wealth to their children. That said, the younger generation purchasing
Bitcoin at an increasing rate is something to keep an eye on. Because at some stage,
these younger people are going to understand that the system is not coming to save them.
And I believe that most folks who are in Bitcoin understand that very acutely.
I think those that don't get it will be forced to understand it. And yeah, that's what I have to
that's what I have to say as far as that goes. I don't necessarily believe in this great wealth
transfer. I think the amount, and you can correct me if I'm wrong if you have more recent data, but
the amount of wealth that baby boomers hold is over 50% of total household wealth. I think it's
like $86 million or trillion, excuse me, not million, $87 trillion. But that said, I don't
necessarily see a lot of that moving down to the younger generations. Not to be a doomer here,
but I really don't see it given current social trends. Yeah. I mean, hey, you probably know a
little bit more of the social trend aspect. I mean, I'm more of the, I guess, the optimist and
kind of thinking of it in theory. But I mean, when you line it all out as well, I mean,
majority of that wealth is in the home. And with housing where it is, I don't know too many people
that would at least be able to move their houses in a sense like relatively quickly where that
wealth would just all of a sudden unlock because, you know, I mean, what I'm observing from the
housing market is houses aren't flying off the shelves like they were a few years ago.
They're staying on the market, you know, for three to six to nine to maybe even a year.
And people are lowering prices all over. I mean, at least where I was in Tampa,
that was a pretty common occurrence where these houses just weren't moving very quickly. And,
you know, with the current macro environment, it seems like it's going to, I guess,
Well, we'll see how it plays out, you know, based on the situations that you lined out here earlier.
But I want to jump back into the macro with the job Drone Powell's doing.
We're recording this on the 9th.
So I believe that he's going to, I mean, all signs are pointing to him cutting interest rates here in the next week or so.
So within this week, actually.
So, you know, with that, with inflation still running around 3%, at least for what they're reporting.
This will be, I think, the first time I want to say in like 30 or 50 years.
I don't know.
I get my odd numbers mixed up sometimes here, especially towards the end of this podcast.
But it's the first time in a while that they're cutting interest rates when we have it above or we have the inflation rate above that 2% target.
So with all that being said, how do you see the potential of cutting interest rates affect the global macro environment?
environment? Do you see this potentially keeping inflation running hot? Or do you think that that
narrative is somewhat overblown? Yeah, I mean, look, the Fed isn't cutting rates right now
because of inflation. They're cutting rates as a result of the labor market. And so there is a risk
that it impacts inflation. But ultimately, think about it this way. If people don't have a job,
right, if people are thrown out of work, right, total job openings, the jolt's job openings has
been flat since 2021. Typically, as the economy grows, you'd expect more job openings crop up.
But unfortunately, there was this massive drop off in 2020, obviously. I'll actually share my
screen here so you can see what I'm talking about. So this is Jolt's job openings, and I have a
couple of other charts here to show. You can see here that total job openings have hovered between
seven and eight million jobs since 2021. Now, typically, if I'm going back here,
you can see that they actually rise over time, or at least they're supposed to rise.
It's very interesting.
With the business cycle, obviously it ebbs and flows,
it expands and it contracts.
You can see here, this kind of lines up
with the natural ebb and flow of the business cycle.
You have the years leading up into the dot-com bubble,
and then obviously the dot-com bubble burst,
job openings fell.
You have low interest rates leading into the housing bubble,
and then obviously the great financial crisis hits,
job openings fall.
Throughout the 2010s, job openings rise.
largely avert recession. 2019, it gets a little bit hairy as there's a cash shortage in the repo
market. COVID hits, boom, we're in recession. Job openings fall. Massive expansion. Job openings
explode. But for the last couple of years, job openings have been mostly flat. It's really,
really odd. And so all that is to say, the reason Powell is cutting now is because of a labor market
that is just on standstill. It is at an absolute standstill. In fact, unemployment is only rising.
So you take a look here. This is on a quarterly basis. This is as of September, which is the most
recent data that we have, unemployment has moved up from the cycle bottom in June of 2023 of 3.5%,
3.53% to 4.3%. Now I'll overlay recessions here because this isn't necessarily something to be
worried about just yet. If you take a look here, this is typically where you see recession.
The unemployment rate is much higher than it is now. In fact, this cycle, we had a secular low
in the unemployment rate that we haven't seen since the late 60s. But regardless, you can see
that every single time it rises off that cycle bottom by about less than 100 points. In that case,
it was 30 points. In this case, it was 50 points. In this case, it was 37 points. So we already have
risen materially off the bottom. At the exact same time, you're seeing a labor market on standstill.
These are Jolt's job openings. And so to me, this is exactly what Powell should be doing.
If anything, he should be cutting by 50 basis points. The unfortunate reality is that despite
having rates as elevated as they were, we were not able to get CPI inflation down below 3%.
If I overlay the Fed funds target rate on this, do I have it on this chart? No, I don't. If I
overlay the Fed funds target rate on this, you can see that even though rates were elevated at
5.5%, the entire time rates were at 5.5%, inflation only went from 3% to about 2.5%.
So it did manage to fall, but that was only after we started seeing acute financial stress and the
Fed was on hold at 5.5% for a little bit over a year. So we weren't able to crack 3% inflation
for a very long time. We're now back over 3% inflation, but it seems that the new norm
was like 2.5%, 2.4% was the lowest we were able to go without risking immediate financial crisis.
So all that is to say, I think 2.5% to 3% inflation is the new norm. I don't think we're
we're ever going to see 2% inflation again. The Fed's reaction time to any sort of slowdown in the
economy has been to immediately flood the markets with liquidity. So I think CPI, where it is right
now, is a new norm. And the Fed is cutting for employment rather than inflation. It's just the
unfortunate reality that elevated inflation is the new norm. Prices are going to go up.
The official rate of price inflation is going to be 2.5% to 3% per year. You and I both know it's
much higher than that in reality. And it's just, you know, it's a sign of the times. The labor
market is weakening. That's why the Fed is cutting. If anything, I think we should be cutting faster,
but I've repeated myself one too many times. That's my outlook on the economy as it stands now
and where we are in the cycle. I think the Fed needs to be more aggressive, but that remains to
be seen. We'll see. Yeah. I think a lot of Bitcoiners would like to see that. I think,
honestly, if we were to cut 50 basis points here in the next couple of days, we might see a market
rally just because I feel the market has priced in the three cuts already for this year. At least
that's been the narrative. And if we cut a little bit more, I think that would be a surprise and
we'd see a jolt up. But you already mentioned a little bit earlier about what you guys do over
Horizon, kind of unlocking that, you know, home equity towards Bitcoin. Why would you ever hold
generational wealth on a piece of paper It doesn make sense You need a foolproof solution and I got it for you You could get this as low as And if you use promo code green candle you can get 10 off being around for 12 years
They've engineered the perfect and most easy to use solution.
I've partnered with CryptoSteel to offer for you guys just that.
It is the cheapest and most secure way to store your C phrase.
I don't know about you guys, but I don't have too many things where I think one ton is going to fall on this.
but it can survive all of that and more.
So go to CryptoSteel.com.
You can use promo code GREENCANDLE.
You can get 10% off your entire order if you go there today.
So go ahead and protect your generational wealth
and do it with CryptoSteel.
All right, enough from me.
Back to the show.
I think that would be a surprise and we'd see it jolt up.
But you already mentioned a little bit earlier
about what you guys do over Horizon,
kind of unlocking that, you know, home equity towards Bitcoin.
And I want to hear about the developments that you guys have been, you know, implementing there and how that's going for you guys.
Because, you know, from my perspective, it seems like a lot of homeowners are still, I guess, tentative towards Bitcoin.
You know, homeownership was the American dream, and at least it was for quite some time.
And I feel like there's still, you know, as much as we get in the Bitcoin ecosystem, that there's still our echo chamber that there's still we're still very early.
So how is the development at Horizon going and the response to your guys products?
Because it makes a lot of sense. But are people jumping at it as quickly as you would initially think?
Oh, 100 percent. Yeah. So I'll actually pull up the website here and I can show you a little bit about how it works.
This is really cool. And I think the viewers will get a lot of value out of this.
So I'll go ahead and share my screen here.
But yeah, we've been very successful over the last couple of months.
I'll go to the webpage first.
This is our homepage.
What we've seen is that, and this kind of plays into the problem that I was talking about earlier,
U.S. home equity sits at an all-time high, but U.S. home growth is below 2%,
which is well below the rate of reported inflation.
and basically when they flooded the system with money back in 2020, a lot of it made its way into
housing. And so housing has become sort of this de facto savings account. It's become a savings
vehicle when nobody asked for it to become a savings vehicle. It's the largest asset in most
people's portfolios. It's the most important asset, but not in a monetary sense. And nobody
asked for it to become a savings account. Nobody asked for it to be their largest investment,
the largest thing in their portfolio. And yet here we are. In 2025, when most homes within a
reasonable distance to a major American city are a million dollars or more, a lot of people will
cite the median home price statistic of, oh, well, gee, the median home price is actually $480,000.
But what they fail to tell you is that obviously that's factoring in the enormous amount of homes
that are in the middle of nowhere. And they're trying to sell young families on this idea that
they'll be able to find a home for less than half a million dollars. But then you look into that and
you'll be two and a half hours away from the major airports and the major cities where people work.
And so it's not a viable way to live. So the reality is that homes have never been more
expensive. Existing homeowners are sitting on more equity than ever. And Horizon, we just offer a
really simple way for homeowners to take their equity and put it into Bitcoin, all without monthly
payments, without any term limits, no income requirements, and you could retain homeownership.
And we've facilitated several transactions for homes that are $6 million in size, $7
million in size like massive homes And we also helped folks who have homes that are And so basically everybody all across the spectrum we been able to help in one form or another
And the process is actually really quick. So for larger homes, the process is typically three to
four weeks for smaller homes. And this is all based on when people can get an appraisal and
the amount of paperwork that's required just two to three weeks. And so this is a hugely
transformative thing for many homeowners because whether you're cash poor and you just don't have
money to invest in something like Bitcoin or another high growth asset, or you have money,
but you understand the concept of intelligent leverage and you see your home is doing sub 3%,
you see Bitcoin rallying over here. And even though you may have the cash to buy Bitcoin,
it makes a lot of sense to swap out of your equity and put it into Bitcoin.
Basically, we've seen everybody across the spectrum and we've been able to service all of them.
And this is what the website looks like. So you can adjust your home value here on the front.
This is our more basic calculator. Let's say we've got a home that's worth a million bucks and we've got $1 million, got a mortgage of $150,000. We'll throw in an example address here. This is the one that I've been using for basically everything.
You throw in your address, it automatically pulls up who you are. And then you can type in your email
here. I'm not going to type in my email live just so people don't email me. But then if you go to
the calculator here, I'll just type in the exact same address again, then we can see how much
Bitcoin we can unlock assuming those values. Had I gone through the process, those values would
have carried over. But let's assume again, $1 million home, $150,000 mortgage balance.
you can swap about 150 grand from your house into Bitcoin in less than two weeks. And the best part
is that the Bitcoin is entirely the homeowners to keep. We don't custody it. You can custody it
however you want. And we have no claim on it at the very end of the process. So we don't want any
of the Bitcoin upside. The Bitcoin upside goes entirely to the homeowner. And this is a
revolutionary wealth building tool, right? Ultimately, we've never thought of our homes
as investment vehicles. And if you do want to deploy your equity into something like Bitcoin,
It has always come with monthly payments and interest charges and term limits and yearly
maintenance fees, and it counts as debt against your property. Horizon is none of those things.
And so really, we're changing the game as far as wealth building is concerned. We've
found an extremely successful six months since we've launched, and we're just so stoked about it.
How does it work with no payments? That's the crazy part to me. That's blowing my mind. I got
that question. And then, all right, if you've got multiple properties, say like instead of if you've
got a real estate investor and they wanted to unlock multiple, would you be able to do like,
or do you guys do like portfolio loans and stuff like that as well?
Yeah. So we're only doing primary and secondary residences for now, but we are working on rental
properties. That's the single biggest question we've got is when are you guys going to have
rental property support? Because a lot of folks want to do this in their primary residence. And
then they turn around and say, I want to do this on my four rental properties too. We don't have
support for that yet, but we're working on it. And then also we're working on commercial properties.
That's probably way further down the line because the underwriting for commercial properties is so
varied. It'd be much more difficult for us to get that up and running, but rental properties are
ideally on the way very soon. And then as far as the no monthly payments goes, basically the way
that this works is we have a financing provider that is not interested in Bitcoin whatsoever.
What they are interested in is getting long-term exposure to home prices. What they want is,
in the same way that you and I invest in Bitcoin
because we believe its price will be higher
five years from now, 10 years from now,
20 years from now when we plan on selling it,
this home equity investor, if you will,
on the other side of the equation
wants long exposure to residential real estate homes all across the country because they believe that the prices will be higher two years three years five years 10 years from now And so they willing to forego monthly payments and just get a slice of the home future value today
for a certain amount of money. It's quite innovative. And so it's a tool that fits
really neatly into people's lives, right? Because if you think about it, if you take out a HELOC,
and let's say you took out a HELOC to draw this exact same amount of Bitcoin, $151,291,
with current average HELOC rates of 8.5%,
you're gonna be paying well over $1,000 a month
just to access that capital and buy that Bitcoin.
And you're gonna be paying $1,100, $1,200 a month
for the entire duration that you hold that Bitcoin
until you sell the property
or you pay down the HELOC balance, right?
And so it's not a very great proposition
because basically what you're doing
is you're adding a second mortgage.
And most people can't afford to do that.
Or even if you can, you don't necessarily want to.
With Horizon, the way that this works
is because there are no monthly payments, because the home equity investor is willing to forego
those, you don't have to worry about adjusting your lifestyle at all. You can really just take
part in the horizon, buy the Bitcoin, set it and forget it. And it really is that simple.
And you can do whatever term limit you'd like. And so if we push this out to 15 years,
this is assuming 3% growth rate on the home, 25% growth rate on the Bitcoin.
The numbers can get quite crazy. Obviously, these are all projections. This is all illustrated. This
is not financial advice, but we've helped dozens of homeowners to this point facilitate this
transaction. We have great reviews from all of them. And it's a really, really exciting time
because you have a bunch of different companies that help you get a Bitcoin back loan, help you
acquire dollars using your Bitcoin as collateral. We're helping you acquire more Bitcoin using your
house as collateral, right? Without the risk of like a margin call, for example, without the risk
of home foreclosure. Those are the primary risks that people are worried about when they hear about
a product like this. A lot of folks will quote tweet us and they'll say like, oh my gosh, it's a
bubble, sell everything. This is the top, blah, blah, blah. But the reality is like with Horizon,
your Bitcoin isn't at risk because we're not holding it as collateral. So if Bitcoin drops
99%, we're not going to foreclose on you. And the second thing is that if the home drops by 50%,
70%, 80%, or our provider comes in at any time, we can't kick you out of your home. We can't force
you to sell your home. None of those things, right? So all of those risks that people think of when
they think of a loan back by my house, they're not present with Horizon. And yeah, it's a really
neat product. Yeah, that's amazing. So where can people find out more about this and more about
you? You've been very generous coming on here, Joe. So I really appreciate it, man. And this is
blowing my mind. I might have to be looking into this more here after we get off this call here,
to say the very least. But yeah, man, where can they find out more about Horizon and more about you?
For sure. Well, Brandon, you've been very generous with letting me use the last 10,
15 minutes as a plug for Horizon. So I appreciate that. But it was great chatting with you, man.
Thank you for giving me the mic. If you guys want to see more of what I'm doing and learn more about
Horizon, you can just go to Joe Consorti. Search up Joe Consorti if you're watching on Google,
not on Google, on YouTube, the exact same way that it's spelled right here.
Or find me on X at Joe Consorti. It's where I do most of my tweeting.
And to learn more about Horizon, you can go to joinhorizon.com and go from there.
You can see your home's Bitcoin potential in 90 seconds and see whether or not we could
help you stack some more stats.
That's amazing.
I'll put all that in the show notes as well.
And Joe, thanks so much.
Thanks, Brandon.
Thank you guys all for tuning in to another great episode of the State of Bitcoin podcast.
If you found some value in this one, please hit that subscribe button and that like button
to help send this one to the masses.
And I've got a surprise for you guys.
I've got two more episodes that you have the chance to watch here.
So go ahead and click one of them and I'll see you guys all at the next one.