Speaker 1: This is the time which bitcoin would typically peak. We're
Speaker 1: in the latest stages of the bullmarket. This is not
Speaker 1: where easy gains are made anymore. Momentum destruction underneath the
Speaker 1: surface of the price has been the marginal buyers, being
Speaker 1: Bitcoin treasury companies and the ETFs. We will see massive
Speaker 1: volatility expansion at certain times. You'll start to continue to
Speaker 1: see our performance from some of the other crypto asset
Speaker 1: for the bitcoin treasury companies well managed one, they'll be
Speaker 1: like a delineation and you'll start to see sort of
Speaker 1: a divergence.
Speaker 2: Bitcoin is commodity with no common issue or a pre mine,
Speaker 2: but also with a fixed supply. And then you have
Speaker 2: these assets like ethereum that doesn't really have a known supply.
Speaker 2: From the treasury standpoint, how does it make sense to
Speaker 2: buy an asset that's not clearly defined has no fixed supply.
Speaker 1: Yes, sir, I mean.
Speaker 2: We're going to jump right in with my friend Jimmie
Speaker 2: Cowty is the chief crypto analyst over at Real Vision.
Speaker 2: They do amazing work and especially what I love is
Speaker 2: the work on global liquidity on macro. We're going to
Speaker 2: dive into the four global equity cycle. Is the bitcoin
Speaker 2: four year cycle intact, are we gonna peak at the
Speaker 2: end of this year, what will the price of bitcoin be,
Speaker 2: what's gonna happen with bitcoin treasury, companies with digital asset
Speaker 2: treasuries like Ethereum, the crypto market, and so much more.
Speaker 2: It's an amazing interview. Let's go ahead and jump right in,
Speaker 2: and don't forget to hit subscribe on that channel so
Speaker 2: you don't miss more of these. All right, let's go, Jamie,
Speaker 2: Thanks for joining me. I have been looking forward to
Speaker 2: this conversation and we just spent so much time talking
Speaker 2: off offline, but let's just jump right into it. I
Speaker 2: have a bunch of topics and questions for you, but anyway,
Speaker 2: thanks for coming on. Appreciate it.
Speaker 1: Yeah, thanks Mak. I'm glad we finally got to do this.
Speaker 1: It's been a couple of months in the miking.
Speaker 2: Yeah. Well we tried to hook up in Australia last
Speaker 2: year and then yeah, we're trying to connect here. But
Speaker 2: you know, I love the research that you do. I
Speaker 2: love the research that you do and real vision does
Speaker 2: I know in the bitcoin space a lot of people
Speaker 2: just don't like raw Paul, and they don't like real vision.
Speaker 2: But I think I think you guys do great work there.
Speaker 2: I'm not gonna buy your NFTs, but I appreciate that.
Speaker 2: I appreciate the macro research.
Speaker 1: I don't know ye all right, I know rale of
Speaker 1: those NFTs.
Speaker 2: But let's just let's jump right at the top and
Speaker 2: try to understand where we're at in the cycle where
Speaker 2: we're going macro for your cycles, Global equidy, bitcoin, crypto, bitcoin,
Speaker 2: treasury companies, dats all that. So let's let's start at
Speaker 2: the top though. So you know, I love the macro
Speaker 2: research that you guys do. Why don't we just start off?
Speaker 2: Can you just frame out where we're at right now?
Speaker 2: This is nine fifteen, We're about a couple of days
Speaker 2: away from Jerome Powell to FED making some of a
Speaker 2: big announcement. Where are we at in this macro cycle
Speaker 2: right now? Frame it up?
Speaker 1: Yes, sir, I mean we if people are following sort
Speaker 1: of the stationary models for crypto, then we're at pika
Speaker 1: cycle right. This is the time which bitcoin would typically
Speaker 1: pake and we'd be sliding into a bear market sort
Speaker 1: of by next year. Now, this cycle has been very,
Speaker 1: very different. We can talk about what a cycle actually
Speaker 1: means in crypto because it does mean different things to
Speaker 1: different people, but also people are now hyper sensitized to
Speaker 1: the word cycle, and therefore everyone talks about it. This
Speaker 1: where I think we are, though, is at the We're
Speaker 1: in the latest stages of the bullmarket, Like this is
Speaker 1: not where easy gains are made anymore. Bitcoin is six
Speaker 1: x from the lows in twenty twenty two, but I
Speaker 1: still think there is more upside. And the reason why
Speaker 1: I think there is more upside for bitcoin and for
Speaker 1: other crypto assets is that, you know, we've had a
Speaker 1: extraordinary or a very different period coming out of the
Speaker 1: coming out of the last bullmarket, which was really just
Speaker 1: a hangover from the excess liquidity that was pumped into
Speaker 1: the system because of the COVID madness. So the fallout
Speaker 1: obviously has been higher consumer price inflation, but also a
Speaker 1: deficit in the US and in most West and governments
Speaker 1: that has exceeded the growth in economic growth. And therefore,
Speaker 1: you know, you've got a problem with too much debt,
Speaker 1: not enough liquidity. A business cycle, which is incredibly important
Speaker 1: and ties into the cryptocycle that has been more or
Speaker 1: less been in sort of has flatlined, hasn't really been
Speaker 1: an expansion phase. It's the longest period where the business
Speaker 1: cycle has remained all the ism has remained under fifty,
Speaker 1: but that has changed the I guess the duration of
Speaker 1: the cycle. And therefore we're at a point now where
Speaker 1: it's clear that the business cycle is starting to improve.
Speaker 1: Corporate earnings are you know, dramatically improving. Positioning in risk
Speaker 1: assets if you look at equities is not ephoric. And
Speaker 1: you've got this problem that the central banks are patently
Speaker 1: aware of that they have a system which is incredibly
Speaker 1: indebted within amount of debt has increased way more, and
Speaker 1: then the liquidity they've allowed back into the system through
Speaker 1: interest rate policies or through central bank balance sheet activities,
Speaker 1: and I think that gives us a liquidity impulse in
Speaker 1: upsurch towards the end of this year and into next year.
Speaker 1: So my view is that we this you know, this
Speaker 1: market extends into sort of the first half of next year,
Speaker 1: and then it's sort of anyone scares as to where
Speaker 1: the peak might be. But we at real Vision have
Speaker 1: the frameworks basically to outline probabilistically when things are going
Speaker 1: to turn right.
Speaker 2: Would you say that things would you say that global
Speaker 2: macro markets fundamentally changed in two thousand and eight, so
Speaker 2: we got the introduction of QE, we got all the
Speaker 2: central bank balance sheets have been overly extended, levered up
Speaker 2: at this point, and it looks like, in my opinion,
Speaker 2: you know, previous to two thousand and eight, they sort
Speaker 2: of allowed the markets to sort of deleverage, which they
Speaker 2: tried to do in two thousand and eight and things
Speaker 2: fell apart too fast, and they said, oh, we can't
Speaker 2: do that, right, we levered the system back up, and
Speaker 2: since then twenty nineteen, obviously twenty twenty, the banking collapse
Speaker 2: in twenty twenty three, any time there's been even the
Speaker 2: slightest hint of some sort of deleveraging. The bank's collapse
Speaker 2: in twenty twenty three, it took six days to get
Speaker 2: a bell out, and it just seems that now the
Speaker 2: system has become so levered up. But not just that,
Speaker 2: the appetite, the willingness to allow any deleveraging has also changed.
Speaker 2: The amount of tools that they've implemented to prevent that
Speaker 2: de leveraging have been radically changed, especially since COVID and
Speaker 2: you mentioned the amount of deficit spending and debt spending
Speaker 2: that's really driving the market. So do you think that
Speaker 2: you know, this four year cycle could be changed based
Speaker 2: off of the government's ability to stop adding liquidity or
Speaker 2: wanting to stop adding liquidity, or willingness to Is it
Speaker 2: like almost like a policy thing.
Speaker 1: Well, I mean I always talk about investing as really
Speaker 1: playing like this game of chicken with central banks, Like
Speaker 1: we know that, we know what the game plan is,
Speaker 1: and so I think that they're always going to step in.
Speaker 1: And now you've got the government, you know this, We're
Speaker 1: in a sort of fiscal dominance regime. That's been a
Speaker 1: that's been the shift. I think that's probably most important
Speaker 1: to understand in terms of cycle work, because if you
Speaker 1: think about cycles being driven by liquidity, yes, the bitcoint
Speaker 1: harving definitely drove cycles, but it's become less and less important.
Speaker 1: But it also just happened to coincide with this cycle,
Speaker 1: which the liquidity cycle, which tends to operate in a
Speaker 1: three to five year time frame. Yeah, everyone says it's
Speaker 1: like four years, but really, why is it on a
Speaker 1: three to five year time range. It's because it's based
Speaker 1: on the duration of the debt at the sovereign level.
Speaker 1: Now sovereigns will take out will fund themselves through an
Speaker 1: array of different maturities, but were sort of the average
Speaker 1: has been around this sort of three to five period.
Speaker 1: That's just what has looked like a four year cycle,
Speaker 1: which was attributed to the bitcoin harving cycle. I think
Speaker 1: it look I think it was always there. If you
Speaker 1: go back to nineteen ninety eight. There was a recent
Speaker 1: report which I think you that you got as well,
Speaker 1: which I published, was looking at sort of what happened
Speaker 1: in ninety ninety eight around LTCM. The central banks have
Speaker 1: always been willing to step in, but they the events
Speaker 1: were so infrequent or relatively infrequent as compared to it today,
Speaker 1: that they were generally slower. But they show they always
Speaker 1: showed their true colors. I mean, they've got this dual mandate,
Speaker 1: which I think is a facade. The actual mandate is
Speaker 1: to ensure that there is no default of the system
Speaker 1: yep right, because they are in the case of the US,
Speaker 1: there definitely a private entity. It's different setups around the
Speaker 1: world for other central banks, but essentially they're they're just
Speaker 1: to prop up the banks, the commercial banking sector. So
Speaker 1: the cycle itself now is because of fiscal dominance, is
Speaker 1: morphing again. And this is a This is work that
Speaker 1: you know, we're looking at Rale's definitely looking at it.
Speaker 1: You know, Ral and I do independent researcher but it's
Speaker 1: all on the real Vision platform. But we have sort
Speaker 1: of the same frameworks that he's informed me so much
Speaker 1: in my process over the years. But I was having
Speaker 1: this conversation with him just the other day. It's like,
Speaker 1: you know, now, that's so much of the liquidity is
Speaker 1: now being driven out of the Treasury by issuing short
Speaker 1: term debt. What does that mean for the liquidity cycle?
Speaker 1: The traditional liquidity cycle where you know, they used to
Speaker 1: operate on a fairly standard maturity sort of program and
Speaker 1: we could sort of time it within sort of three
Speaker 1: to five years, and it's changed. And so I think
Speaker 1: that not only was the excessive reaction to COVID the
Speaker 1: reason why we've got an elongated cycle this time around,
Speaker 1: but also now the US since twenty twenty two, with
Speaker 1: the Treasury doing what it's been doing, you know, maybe
Speaker 1: these cycles get shortened. Maybe there's more volatility because once
Speaker 1: you start stuffing in all the debt of the short
Speaker 1: term at the short end, Yeah, stable coins are great.
Speaker 1: That's going to find a whole new bunch of buyers
Speaker 1: for the toxic debt of the US. But anything that
Speaker 1: goes wrong, you know, is much more it's susceptible to
Speaker 1: cause flash points in the in the financial system because
Speaker 1: they'll need to be very very quick to step in,
Speaker 1: even more so and even more unorthodox than before. So
Speaker 1: the Fed's just basically tied to the US debt wagon
Speaker 1: at this point.
Speaker 2: So they are you seen something changed in two thousand
Speaker 2: and eight and it's.
Speaker 1: A and eight when basically the US government took on
Speaker 1: the debt of the private of the banks.
Speaker 2: So with the short term debt that we have building up,
Speaker 2: and there the leverage has been built up that can't
Speaker 2: unlever their willingness to act potentially anything, any disruption that comes,
Speaker 2: they're going to step in right away, just like we've
Speaker 2: seen in the past, and that could disrupt these cycles
Speaker 2: as we've as we've known them.
Speaker 1: Yeah, I mean, I just think that what the Treasury
Speaker 1: has done is new and that needs to be incorporated
Speaker 1: in sort of forward thinking about what cycles will look like.
Speaker 1: But like the trajectory doesn't change.
Speaker 2: Because it's not just the it's not just the US Treasury,
Speaker 2: right because like in London, for example, the BOE has
Speaker 2: been cutting rates but like the long end is blowing out, right,
Speaker 2: So we see other other central banks that are like
Speaker 2: getting maybe losing control of their bond market. Japan's having
Speaker 2: a problem with theirs, and so what happens then they
Speaker 2: have to start printing to control that long end of
Speaker 2: the curve. And and anyways, that's kind of some of
Speaker 2: the some of the things that I'm thinking about, Like,
Speaker 2: I feel like the cycle is an effect until it's
Speaker 2: proven to be otherwise. But there's a lot of things
Speaker 2: that are happening that seems like maybe it just won't
Speaker 2: play out exactly click we thought it did before.
Speaker 1: Yeah, well it's already that's already proven to be the case.
Speaker 1: If you held the view going into this year or
Speaker 1: this circle was that it was going to be a
Speaker 1: standard four year cycle.
Speaker 2: Right, So as you said, I think when you first
Speaker 2: kind of opened up, you said, I forget the word
Speaker 2: that you use. But if you looked at these things
Speaker 2: kind of frozen in time, we should be peeking right
Speaker 2: around here somewhere in the next month or two. But
Speaker 2: these are moving targets, right, And so it's like, well,
Speaker 2: let's just see what happens in Q one and we'll
Speaker 2: let you know in q one sort of what the
Speaker 2: policy is at that point. Every day we see headlines
Speaker 2: about inflation and dead and diminishing control over our own money.
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Speaker 1: Yeah, I mean, look, I don't think that's you know,
Speaker 1: the same like the risk models that I have built
Speaker 1: around bitcoin. You know Dydite's screen euphoria. We had euphoria
Speaker 1: in sort of Q four of twenty twenty four. So look,
Speaker 1: if the cycle ends, we'll all look back and say
Speaker 1: Q four was really the top in the un chain
Speaker 1: data and all the risk metrics in the same way
Speaker 1: as May of twenty twenty one was really that was
Speaker 1: the real top of that cycle because it took out
Speaker 1: all the momentum and so yes, we went higher. But
Speaker 1: you know, there isn't really in this the most recent
Speaker 1: run up to one hundred and twenty five thousand in bitcoin,
Speaker 1: there wasn't really a there wasn't screaming euphoria.
Speaker 2: One of the.
Speaker 1: Reasons maybe we can get into as to why there's
Speaker 1: been sort of I guess momentum destruction underneath the surface
Speaker 1: of the price has been the marginal buyers being bitcoin
Speaker 1: treasury companies and the ETFs peeking into that cycle and
Speaker 1: then then basically you know, declining quite rapidly since then.
Speaker 1: So that is that is the critical swing factor for bitcoin.
Speaker 1: But that will follow the liquidity cycles, SORR. If liquidity
Speaker 1: picks up, the ETF buys will return, the bitcoin treasury
Speaker 1: companies will see maybe not fooling m nabs, maybe expansion,
Speaker 1: who knows, but their capacity to buy and become, you know,
Speaker 1: and get more involved in buying bitcoin will increase.
Speaker 2: I want to definitely get back into that topic a
Speaker 2: little bit more, but before we do, I'm curious what
Speaker 2: you think about bitcoin's KAGAR. So depending on what time
Speaker 2: period you take a look at, right, maybe it's a
Speaker 2: fifty to sixty percent annual compound and annual growth rate
Speaker 2: over the last three years, three to five years, maybe
Speaker 2: eighty five percent if you go back five years plus.
Speaker 2: The general rule of thumb seems to be that the
Speaker 2: law of large numbers says that that number continues to decelerate,
Speaker 2: and we go from eighty to sixty to fifty to
Speaker 2: forty to thirty, et cetera. What do you think about
Speaker 2: or have you thought about the potential for Kagar to
Speaker 2: actually start to reaccelerate again. And the reason why I
Speaker 2: asked that is if you think about like traditional assets
Speaker 2: that would be probably started from venture capital round and
Speaker 2: they've got all the private equity money in before they
Speaker 2: go public, and then you start having retail, which is
Speaker 2: small incremental money that kind of comes in, and so
Speaker 2: as the asset gets bigger, it's big checks first, small
Speaker 2: checks later, whereas like Bitcoin seem to work the other
Speaker 2: way around, where it was little checks in the beginning.
Speaker 2: And today to your point that you just brought up
Speaker 2: about the bitcoin treasury companies, now we have billions of
Speaker 2: dollars of buyas coming in at a time, and so
Speaker 2: now with the treasury companies, with the institutions, as you mentioned,
Speaker 2: the detfs, with even sovereigns coming in, could we be
Speaker 2: sort of, you know, looking at technology with an S
Speaker 2: curve type format. Could we sort of be in that
Speaker 2: pair of ball at phase with the big checks coming
Speaker 2: in that could potentially invert bitcoin and see that Kaggar
Speaker 2: start to accelerate it again a little bit.
Speaker 1: I think what's offsetting that hypolthsis mac is that you've
Speaker 1: got now you know, in the early stages ying spot
Speaker 1: buying only and you had sort of the uniqueness of
Speaker 1: the hardcap as well with the declining inflation rate, that
Speaker 1: was perfect for parabolic rises, especially when it was just
Speaker 1: the plubs us buying it. Then as more as the
Speaker 1: as the network evolved and I guess more sophisticated players.
Speaker 2: The futures, the options, et cetera.
Speaker 1: Suppressing the volatility. So you know, I even look at
Speaker 1: the the research that I do. I look at the
Speaker 1: elasticity of bitcoin to changes in liquidity, which is, you know,
Speaker 1: anyone who says there's a perfect metric or perfect correlation
Speaker 1: in financial markets doesn't nate certain financial markets because markets
Speaker 1: are nonstationary. But at least historically and still today, the
Speaker 1: relationship with liquidity is statistically extremely significant, but it is
Speaker 1: moderating over time, and so looking at sort of just
Speaker 1: the last couple of years, bitcoins elasticity to the changes
Speaker 1: in liquidity is less this cycle than in the last cycle,
Speaker 1: but not by a massive amount. And just where we
Speaker 1: are in the liquidity cycle is typically when you start
Speaker 1: to see a real uptick, and therefore the elasticity generally
Speaker 1: expands also during this period, but more so in the
Speaker 1: same sort of scenario from previous cycles. So I just
Speaker 1: look at that and I think, Okay, you've got suppression
Speaker 1: of volatility, and you've got just the maturation of the
Speaker 1: market and the sensitivity of the asset to the drivers
Speaker 1: of the price starting to decline. So I am in
Speaker 1: the camp that we start to see k gars moderate
Speaker 1: over time. But it's going to be interesting because there
Speaker 1: will be explosions of volatility in and along the way.
Speaker 1: And if you look at like, you know why you
Speaker 1: invest in the S and P five hundred from a
Speaker 1: traditional portfolio management standpoint is that you stay allocated because
Speaker 1: if you try to time that market, generally like nine
Speaker 1: percent of the returns come from like ten trading days
Speaker 1: in the year. Same applies for bitcoin, and we will
Speaker 1: see like massive volatility expansion at certain times, like we
Speaker 1: saw in twenty twenty three with the bank bailout, and
Speaker 1: the first time that bitcoin basically gave the signal that
Speaker 1: this is a systemically integrated asset with real risk of
Speaker 1: characteristics because the interbank market exploded. Bitcoin always fell in
Speaker 1: those scenarios, it didn't that time, So it was another
Speaker 1: sort of proving point, and I think we'll see a
Speaker 1: lot more tests like that where Bitcoin will show that
Speaker 1: it is truly a risk of affort asset and sort
Speaker 1: of shrud the criticism that it's just a you know,
Speaker 1: it's a risk asset correlator to the Nasdaq, which is
Speaker 1: not true.
Speaker 2: Yeah. I mean, certainly, in the last five years, the
Speaker 2: sharp ra show has been much better than US treasuries,
Speaker 2: and we can see how since the introduction of the ETFs,
Speaker 2: the volatility has really come way down, so as it's
Speaker 2: like we could just continue just sort of being boring
Speaker 2: and just continue creeping.
Speaker 1: Higher and higher and higher.
Speaker 2: You know, maybe you mentioned the global liquidity and some
Speaker 2: of the elasticity that sort of diminished their real vision.
Speaker 2: Ral talks a lot about global equity flows and sort
Speaker 2: of this potentially whatever eight to twelve week lag that
Speaker 2: Bitcoin might have to that global equity move. And so
Speaker 2: when you look at this global equity move right now
Speaker 2: and then adjust for this lag, I mean, it looks
Speaker 2: like there should still be a pretty another big leg
Speaker 2: up in front of us.
Speaker 1: Yeah. Yeah, I mean the problem with using the lags
Speaker 1: is that markets on nonstationary, so change of its time,
Speaker 1: but directionally it should play out unless there's something fundamentally
Speaker 1: different about this asset that we're not aware of, and
Speaker 1: that it's not tied to, you know, the increase in
Speaker 1: marginal new units of currency in the in the financial system,
Speaker 1: which I don't believe to be true. Sorry, that the
Speaker 1: problem is that twitters as attached itself to this chart.
Speaker 1: I think it's been in the most shared chart of
Speaker 1: twenty twenty five, and it's fixated on the on the lags.
Speaker 1: You know, Rawl said this many times and I would
Speaker 1: certainly say it as well as like, if you're trying
Speaker 1: to invest on one chart with one correlation fixed with
Speaker 1: a fixed timeline that's been working for the last two years,
Speaker 1: then you're gonna you're gonna come on stuck. Yeah, but yeah,
Speaker 1: you're right like that that the divergence between the two
Speaker 1: is as expanded, and it's not just M two, which
Speaker 1: I think is the most shared sort of version of that.
Speaker 1: It's total global liquidity. So you know, you're looking at
Speaker 1: central bank balance sheets, you're looking at the impact in
Speaker 1: the shadow banking market and everything else.
Speaker 2: So when you look at that, and to your point,
Speaker 2: certainly don't don't just focus on one indicator, But if
Speaker 2: you look at that plus a handful of other indicators
Speaker 2: that are commonly used, like MVRV scores for example, or
Speaker 2: even if you want to look at Fibonacci lines, which
Speaker 2: I don't really put a lot of credit towards those things,
Speaker 2: but you look at some of these Neurpal scores or whatever,
Speaker 2: it does sort of look like Bitcoin is maybe halfway
Speaker 2: through its cycle. Like from a is it expensive? Is
Speaker 2: it cheap? You look at the M two lag. If
Speaker 2: you look at again these types of indicators you mentioned that,
Speaker 2: you know, from a static time frame like October November
Speaker 2: sort of peak from a timeframe, but from a like
Speaker 2: I said, all these on chain indicators, et cetera, it
Speaker 2: looks like maybe we're like halfway through. And so again
Speaker 2: that's from a static view. Now we could see Bitcoin
Speaker 2: go on a thirty forty thousand dollars rip, which would
Speaker 2: then put it to the very top of the top
Speaker 2: of the peak real quickly, which then maybe does make
Speaker 2: me think, well, maybe it does hit that M two lag.
Speaker 2: We do pop up, We do end up magically right
Speaker 2: in November here at the at the top of the
Speaker 2: at the top of cycle.
Speaker 3: Right.
Speaker 1: Yeah, I think the best thing for bigcoin, if you're
Speaker 1: in it for the long hole is that you get
Speaker 1: sort of a moderate increase, because it's when Bitcoin goys
Speaker 1: parabolic that you generally find the crescendo top because that's
Speaker 1: what encourages over positioning, increased leverage, which always gets unwound.
Speaker 1: And if it's unwound at a time and global liquidity
Speaker 1: is starting to slow or decelerate, it doesn't have to top.
Speaker 1: Global equidity can expand well beyond a Bitcoin peak, and
Speaker 1: it has in the past. It's really about that subtle
Speaker 1: change or that rate of change. But if you have
Speaker 1: the ingredients of a parabolic rise with a massive explosion
Speaker 1: and open interest and mvrve goes up, which is all
Speaker 1: the unrealized profit in the network, then you have the
Speaker 1: ingredients to form a top. This peak has been you know,
Speaker 1: we saw you for it tops in intermediate or mid
Speaker 1: cycle tops in Q one to twenty twenty four, and
Speaker 1: I was calling it out then in Q four of
Speaker 1: twenty twenty four again, which I was calling out again,
Speaker 1: which no one was willing to listen because the timing
Speaker 1: of financial contnitions to the US dollar and liquidity was
Speaker 1: just not supporting it. But you know where global liquidity
Speaker 1: is today and where it kind of needs to get
Speaker 1: to to stop anything from happening. Is still a fair
Speaker 1: way away. So it's I think that the trend itself
Speaker 1: is looking you know, it's tired because it does rely
Speaker 1: on liquidity. But we haven't seen a far ad powerbolic
Speaker 1: rise that would just take the wind out of the
Speaker 1: sales for the rest of the cycle.
Speaker 2: One more question about this and then we're going to
Speaker 2: move to a different subject. But Trump is the force
Speaker 2: to be reckoned with. He has been very aggressive towards
Speaker 2: Jerome Powell at the FED, lower rates, lower rates. He
Speaker 2: calls him names like too late, et cetera. Right, He's
Speaker 2: been extremely vocal. He wants rates, I don't know, three
Speaker 2: and a half points lower than where they're at today.
Speaker 2: It looks like potentially Power is going to cave. Maybe
Speaker 2: we get a couple of rates cuts this year, but
Speaker 2: it seems like one way or another, Trump's are you
Speaker 2: going to get his way? We know Power will be
Speaker 2: out next year. He'll replace him with a dove and
Speaker 2: he'll probably get his way, and maybe this time next
Speaker 2: year rates are three points lower in that scenario hypothetical,
Speaker 2: would that be enough the US acting alone to influence
Speaker 2: the direction of that global liquidy.
Speaker 1: Oh massively, because if the dollar continues to decline, and
Speaker 1: so it's already had a pretty historic move in twenty
Speaker 1: twenty five from sort of one oh seven and I
Speaker 1: think it got even high. It's down down ninety seven.
Speaker 1: That's a big move, and the dollar it doesn't look
Speaker 1: like that move is over. But if the US were
Speaker 1: to aggressively cut and I think the more important than
Speaker 1: the interest rate moves is the balance sheet moves like
Speaker 1: they're they're still doing QT now that the margins it's
Speaker 1: fairly small relative to where it was in the past,
Speaker 1: but it's still tightening the balance sheet, which is putting
Speaker 1: pressure on the financial system, and so that if there's
Speaker 1: a pivot there, it would be very meaningful for total
Speaker 1: global liquidity. It's driven by the dollar, it's driven by
Speaker 1: balance sheets, is driven by volatility in the in the
Speaker 1: treasury market. So all those things would be very very supportive.
Speaker 1: But it would also give other central banks to cover
Speaker 1: to do more. So China wants a you know, basically
Speaker 1: the US to continue to do so that gives them
Speaker 1: cover and takes the pressure off off their currency as well.
Speaker 1: They already have been aggressive, they need to be a
Speaker 1: lot more aggressive, arguably, and I think the US move
Speaker 1: would just provide the cover and it would be it'd
Speaker 1: be open season again and would get a pretty big impulse.
Speaker 2: So again we'll pivot from here. But I just I
Speaker 2: think Trump seems to get his way. He's a forest
Speaker 2: and I'm guessing he's going to get a fed chair
Speaker 2: and that he wants seeing as he gets to elect them,
Speaker 2: and we could see a sustained draw down all the
Speaker 2: way through next year. The Dixie is is low, as
Speaker 2: you said, but it's still historically pretty high, so I
Speaker 2: mean we have quite a bit of room to come down.
Speaker 2: That's what he wants. We'll see. So these are move
Speaker 2: I'm going to just put a pin in this for everybody.
Speaker 2: These are moving targets. You can't ask anybody to predict
Speaker 2: where this comes out. These are moving targets. We look
Speaker 2: at it, you know, as these indicators roll out, I
Speaker 2: want to jump into the next thing. Obviously staying on
Speaker 2: bitcoin for a minute. But one indicator that I think
Speaker 2: is sort of ridiculous, but it seems to work is
Speaker 2: bitcoin dominance. And I say it's ridiculous just because like
Speaker 2: today on coin Mark in twenty seventeen, if I can remember,
Speaker 2: it was like two thousand cryptocurrencies. Today on coin market
Speaker 2: cap is like nineteen million, So it's like every time
Speaker 2: one new gets created, it brings bitcoin dominance down. So
Speaker 2: it seems like kind of like an irrelevant metric in
Speaker 2: my opinion. But that being said, in June, around what
Speaker 2: June thirteenth, June fifteenth, we saw bitcoin dominance drop ethereum,
Speaker 2: and really maybe a better indicator is ethereum. Bitcoin ethereum
Speaker 2: seemed to take off with the right of ethereum dat
Speaker 2: and then all the bitcoin proxies as they call them,
Speaker 2: all the bitcoin treasury companies all sold off at the
Speaker 2: same time. So while I like to think the indicator
Speaker 2: somewhat irrelevant, it sure seemed to indicate quite a lot
Speaker 2: here what's going on with that.
Speaker 1: So bitcoin dominant is really like to the point that
Speaker 1: you're making about sort of the explosion in supply are
Speaker 1: in the sort of the old coin crypto universe. Yes,
Speaker 1: all of that takes attention away and distributes attention, which
Speaker 1: I guess you know, makes it harder like if it
Speaker 1: was a more concentrated space, But like that's just the
Speaker 1: better or for worse, it's just a reflection of the
Speaker 1: growing adoption and expanding footprint that crypto has in the
Speaker 1: economy and in the lives of individuals, especially younger generation.
Speaker 1: The bitcoin dominance chart is really a I wouldn't think about.
Speaker 1: I wouldn't think in terms of like the explosion in
Speaker 1: supply of all the the you know, the worthless mean
Speaker 1: coins and all that sure crap. But it's really a
Speaker 1: reflection of large caps in crypto versus bitcoin. So it
Speaker 1: what it shows is is Ethereum and the other large
Speaker 1: caps starting to outperform. And the pattern plays out almost
Speaker 1: every cycle once you get once you get to the
Speaker 1: point where you know the business cycle, the economy is growing,
Speaker 1: corporate profits are expanding and they're beating expectations. Margins are improving,
Speaker 1: cap x is improving. Generally, you have a broadening out
Speaker 1: of risk. It's just human nature. And so whether you
Speaker 1: sort of see value in some of these other large caps,
Speaker 1: you do find at this point in the cycle is
Speaker 1: when they start to outperform. And that's what we started
Speaker 1: to see in sort of July, and you could see
Speaker 1: it in the ETF flows. There's basically a flip that happened,
Speaker 1: and I think, you know, it was it was clear
Speaker 1: that ethereum relative to bitcoin had also become undervalued, and
Speaker 1: so whether that continues over time, it usually starts to
Speaker 1: It usually signals the last part of a bull market
Speaker 1: because as that risk gets broadened out, and then you
Speaker 1: know the increase in sort of a tension that it
Speaker 1: goes across the crypto ecosystem. It brings sort of reflexivity
Speaker 1: that brings us closer to a top, and then everything
Speaker 1: underperforms in the next bear market. Now, maybe these assets
Speaker 1: don't underperform as much in the next bear market because
Speaker 1: there is legitimate adoption taking place as much as there
Speaker 1: is fuck ay going on in the activity and data.
Speaker 1: It's unquestionable from my standpoint that adoption of blockchains is
Speaker 1: proliferating at a real clip, and therefore, you know what
Speaker 1: happens in the next bear market. I don't know, but
Speaker 1: like the volatility is so much high, you have to
Speaker 1: make sure that you're thoughtful around your position sizes if
Speaker 1: you do want to go into that spies.
Speaker 2: It seemed back back to your point about this end
Speaker 2: of the business cycle and the money sort of moving
Speaker 2: out on the risk curve, which of course makes sense.
Speaker 2: It seemed like you know, a couple things. So like
Speaker 2: number one, like when you're an institution that wants to
Speaker 2: place a billion dollars, I don't think you can put
Speaker 2: a billion dollars into Sibi NU. Right, So it's like
Speaker 2: it seemed like the bitcoin treasury companies were sort of
Speaker 2: like that next speculative play, right, a more volatile play
Speaker 2: than bitcoin. So bitcoin's a one x there are three
Speaker 2: or five x kind of a play, right, So it's
Speaker 2: sort of like the same potential volatility crypto returns, but
Speaker 2: in a regulated body. And it seemed like a lot
Speaker 2: of those crypto digons, the bitcoin degens latched onto all
Speaker 2: of these bigwoin treasury companies that were up, I mean
Speaker 2: half a dozen of them more up were up you know,
Speaker 2: three thousand percent, five thousand percent, eight thousand percent. Right.
Speaker 2: Metaplanet was the very best performing stock in the world
Speaker 2: last year. Equity. Yeah, but then when you see bitcoin
Speaker 2: dominance roll over, like they all just fell flat on
Speaker 2: their face. And so to the point that you're making
Speaker 2: about it moved further out the risk curve. I don't
Speaker 2: know if that's necessarily accurate, because, like I would say
Speaker 2: that those companies were pretty far out the risk curve.
Speaker 1: Yeah, well, I mean that so there was I think
Speaker 1: that mini, that mini bubble that took place inside the
Speaker 1: bigcoin ecosystem that drew in maybe capital that would have
Speaker 1: found its way into the wider crypto economy and some
Speaker 1: of these other smart contract platforms and applications, but actually
Speaker 1: found themselves in the bigcoin treasury companies. But that also
Speaker 1: let you know, that's also reflexive as well, So there
Speaker 1: was an increase in supply of these companies and attention
Speaker 1: and all is good once the demand is there, and
Speaker 1: that becomes the new marginal buyer and driver of the
Speaker 1: bigcoin price, even more so than the ETF flows at
Speaker 1: least there was in Q two and parts of Q
Speaker 1: three this year. But if there's amount of compression, it
Speaker 1: just becomes harder to maintain the buying velocity, and then
Speaker 1: you sort of get that reflexive move where you've got
Speaker 1: less at the margin buying from that segment, and that
Speaker 1: slows down the price. Appreciation markets are a funny thing.
Speaker 1: They're like they're you know, they allocate capital, you know,
Speaker 1: in ways that you perhaps can't sort of foresee.
Speaker 2: They're not rational.
Speaker 1: It's sort of like a mini it's a mini. It's
Speaker 1: a microcosm of like what's happening in previous cycles.
Speaker 2: Yeah, you know, while while your point makes a sound,
Speaker 2: I mean, obviously those bigcoins social companies were buying an
Speaker 2: enormous amount of bitcoins specifically, I mean micro strategy most
Speaker 2: of all and Metal Planet were buying a lot as well,
Speaker 2: and the atfs were also buying a lot. But no
Speaker 2: matter how much they were buying, the price didn't seem
Speaker 2: to be going up. In combination with that, it seemed
Speaker 2: like there was enough sellers for as much additional buying
Speaker 2: as there was, right so, but we did see the buying.
Speaker 2: We saw a couple of times, was it eighty thousand
Speaker 2: bitcoin in a single day got dumped in and absorbed,
Speaker 2: you know, with only a couple of points being moved
Speaker 2: here and there. But you know, my main thing.
Speaker 1: That peak in like Q one was off the charts. Yeah,
Speaker 1: I mean what macro strategy were in terms of the
Speaker 1: marginal buyer. And then really in a que too was
Speaker 1: the new treasury companies. I don't know if we can
Speaker 1: ever see that. You know, it's not so much how
Speaker 1: much they were buying, it's the rate of change or
Speaker 1: the acceleration of the buying at that point in time
Speaker 1: that it was like the most interesting and that peak
Speaker 1: if you look at it on a just a rate
Speaker 1: of change basis, was off the charts.
Speaker 2: Yeah. Although when you can look at like Bitcoin Treasuries
Speaker 2: dot net and see all the public traded companies with bitcoin,
Speaker 2: and if you take out the top couple, I mean
Speaker 2: really just take out micro Strategy and take up metaplanet.
Speaker 2: The buying. Sure, the rate of change was a lot,
Speaker 2: like companies were going from two to four to twenty
Speaker 2: four to one hundred, so the rate of change what
Speaker 2: they call the bitcoin yield, was dramatic, but it was
Speaker 2: like you bought twenty four Michael Strategy was buying you know,
Speaker 2: fifteen thousand at a time or whatever. It's a little
Speaker 2: bit different, but my interest is mostly there. So let
Speaker 2: me see if you can tell me the future. Where
Speaker 2: where does this go? I mean, do you think that
Speaker 2: you know, at the lead stage of the cycle bitcoin
Speaker 2: dominance returns, do you think money comes back to some
Speaker 2: of these proxies or was it sort of like this, Uh,
Speaker 2: you know, obviously with crypto we have these bubbles, these cycles.
Speaker 2: If you will, do you think this is like, you know,
Speaker 2: first part of the cycle, shake some of the players out,
Speaker 2: and then build up energy for the next one. What
Speaker 2: do you think happens when bitcoin dominance returns and what
Speaker 2: kind of time frame we're looking at.
Speaker 1: If liquidity is rising, bitcoin will rise. But I think
Speaker 1: we're in that stage of the cycle where your start
Speaker 1: just continue to continue to see outperformance from some of
Speaker 1: the other crypto assets. It's just the way it generally
Speaker 1: plays out. I think for the bitcoin treasury companies, the
Speaker 1: will managed one. There'll be like a delineation and you'll
Speaker 1: start to see sort of a divergence. If you look
Speaker 1: at all the bitcoin treasury companies in terms of percentiles
Speaker 1: of their m nabs, you'll see more of those companies
Speaker 1: start to drop into the bottom percentile. And that bottom
Speaker 1: percentile in terms of m NAV will go from like
Speaker 1: you know, one m NAB today or less down too
Speaker 1: point eight or less as they get sort of more
Speaker 1: and more distressed or out of favor, and so they'll
Speaker 1: just have to be a consolidation. And we'll look at
Speaker 1: this period in the next cycle and see much less
Speaker 1: companies that are pursuing this strategy, and you'll start to
Speaker 1: see the winners more clearly affirmed. I guess by the
Speaker 1: market because you know you're involved in this space and
Speaker 1: you know that well, I would imagine I'd like to
Speaker 1: actually find out from you what you think about this.
Speaker 1: But there's definitely going to be some acquisitions, scooping up,
Speaker 1: going into sort of the the next bear market, and
Speaker 1: consolidation in the space because you'll basically have the opportunity
Speaker 1: to buoy bitcoin at a discount. So I think that's yeah,
Speaker 1: that's how I see it playing out.
Speaker 2: I mean, certainly it's going to play out that way.
Speaker 2: But we're talking very broadly, right, So certainly there will
Speaker 2: be companies who find themselves at a point in the
Speaker 2: road where they can't raise any more capital, they're trading
Speaker 2: below that asset value, and someone's going to come along
Speaker 2: make them an offer to give them an equity deal
Speaker 2: buy out, and they're going to take it. So of
Speaker 2: course that's going to happen. Will that be the majority?
Speaker 2: Probably not, not this early in the game, of my opinion.
Speaker 2: So a couple things. So number one, these are equities.
Speaker 2: So just because the equity price drops, the market cap drops,
Speaker 2: and they're below one time zim nav not ass a
Speaker 2: value forverybody, so they're keeping up Why does that mean
Speaker 2: I have to sell my bitcoin?
Speaker 1: So what it? It's not buying Yeah, so what right?
Speaker 2: Like, I have my business, I'm generating revenue. I'm gonna
Speaker 2: keep buying bitcoin. I still have my bitcoin. So what
Speaker 2: Michael Saylor told me, he said, like, what's the worst
Speaker 2: that can happen? The worst that can happen is I
Speaker 2: can never raise money ever again. And I'm a one
Speaker 2: hundred billion dollar company growing at sixty percent. That's the worst, right.
Speaker 2: So with our company with Satsuma, right, we raised enough
Speaker 2: money to buy a two thousand bitcoin. I don't know
Speaker 2: what you put the long term price target of bitcoin,
Speaker 2: but in my opinion, that's about two billion dollars worth
Speaker 2: of bitcoin in five or six years of just NAV alone,
Speaker 2: even if we never raise another penny again. Two billion
Speaker 2: of NAV. Now in the US, we have a word
Speaker 2: for them, We call them unicorns. If they reach a
Speaker 2: billion dollar val less than I think it's zero point
Speaker 2: zero zero two percent of companies ever make it to
Speaker 2: a billion dollar valel So what's the worst that can happen?
Speaker 2: We're a two billion dollar company in a couple years, right,
Speaker 2: So what's the shakeout? Why do you have to sell right,
Speaker 2: So why are you distressed? So certainly, what's going to
Speaker 2: happen in the space. I don't see it, but it
Speaker 2: is going to happen. Is the nature of the game
Speaker 2: is I have to apply leverage, which is how I
Speaker 2: can earn that increase now. And some companies are too
Speaker 2: far behind, so they're going to use more leverage than
Speaker 2: they should be, and they're gonna take a bad deal.
Speaker 2: It's gonna be short term. It's gonna be a two
Speaker 2: year debt term obligation. They can't keep up with the debt.
Speaker 2: It comes due at the bottom of the bear market.
Speaker 2: They're forced to liquidate. Certainly, that will happen. I haven't
Speaker 2: seen that really built up yet, and I'm sort of
Speaker 2: in tune with a lot of the companies here. It
Speaker 2: will happen. But I just think about that, and certainly
Speaker 2: to your point, yes, we'll see those those acquisitions happen.
Speaker 2: I think it's a little bit early for that.
Speaker 1: Oh yeah, yeah, No, we're talking way down the line.
Speaker 1: I think this is a golden opportunity to get in
Speaker 1: and acquire bigcoin and put it on the balance sheet
Speaker 1: and maximize the opportunity while their conditions were good, and
Speaker 1: I just think that you know that even if this
Speaker 1: sort of gold rush is over, so to say, and
Speaker 1: that there's delineation, was the right thing to do. You
Speaker 1: were using the capital markets to acqui the most important
Speaker 1: global asset of generations.
Speaker 2: But I think I think Jamian just just to also
Speaker 2: expand this a little bit, just I mean, it's a
Speaker 2: fun conversation to have, but I think there's a lot
Speaker 2: of tools at your disposal. So you think about, like
Speaker 2: if the capital markets close off to you, right, for example,
Speaker 2: and certainly in a massive liquidity crunch, and the whole
Speaker 2: market sells off back to twenty twenty two or orse,
Speaker 2: you know, twenty twenty or something like that, certainly it
Speaker 2: could be hard to raise liquidity. But for the most part,
Speaker 2: like there's an I don't want to say unlimited. There's
Speaker 2: a lot of money available just in taking convertible debt.
Speaker 2: For example, We're talking billions and billions of dollars sitting there.
Speaker 2: I mean, we had people begging us to take their
Speaker 2: convertible debt and we were like, nope, we're not taking it.
Speaker 2: So like in a bear market, we could use debt,
Speaker 2: we could get it turned out of three years or
Speaker 2: four years, right, I mean, we believe in the long term. Obviously,
Speaker 2: none of this works if you don't believe in the
Speaker 2: long term case of bitcoin. But sure, I'll take zero
Speaker 2: percent debt for four years. I'll roll the dice on that, right,
Speaker 2: So like we have that at our disposal. There's all
Speaker 2: types of options. There's bonds, there's bitcoin bonds that are
Speaker 2: being rolled out. Obviously, there's additional raises which get tough
Speaker 2: in a liquidity cycle. There's equity raises you know at
Speaker 2: the market offering, which are tough when your ymnats get compressed,
Speaker 2: you know. And there's there's prefs and all different types.
Speaker 2: Is there's a whole bunch of tools that are available
Speaker 2: for good companies for good companies, that's right, So it'll
Speaker 2: be it'll be interesting. I don't believe. I don't believe that.
Speaker 2: I think it's if you look at Metaplanet, which is
Speaker 2: the first company that was able to duplicate the strategy.
Speaker 2: They've had just in the last twelve months alone, they've
Speaker 2: had twelve draw downs or I'm sorry it was about
Speaker 2: eighteen months and last eighteen months, I've had twelve drawdowns
Speaker 2: of twenty percent or more. Seventy nine percent was their
Speaker 2: most profound draw down last year, their duration of lasted
Speaker 2: anywhere from twenty days up to four months. One hundred
Speaker 2: and nineteen day was the longest duration they've had. So
Speaker 2: instead of like one cycle every four years, they have
Speaker 2: like six cycles a year. And the m NAB isn't
Speaker 2: the most important metric. I think a lot of people
Speaker 2: put too much under that number. So for example, you
Speaker 2: could have bought Meta Planet last year at seven times
Speaker 2: and made a ton of money, and you could have
Speaker 2: bought it two months ago at three and lost your
Speaker 2: ass right, So it's like the MNAB doesn't mean everything.
Speaker 2: But you know, again, they had a seventy percent draw
Speaker 2: down last year and returned to thousand after that, so
Speaker 2: I think, you know, it's just part of the cycle.
Speaker 2: It's they're extra volatile. That's why people buy them for
Speaker 2: the extra volatility. So it'll be interesting. But what do
Speaker 2: you think about the dats and these are the digital
Speaker 2: asset treasuries, And let me let me frame up why
Speaker 2: my audience obviously knows. For four years I wrote cryptocurrency research,
Speaker 2: I decided to be bitcoin only. I don't spend a
Speaker 2: lot of time focusing on cryptocurrency anymore. It's all just bitcoin, right,
Speaker 2: So I can't debate nineteen different, nineteen million different cryptocurrencies.
Speaker 2: But I was in London two weeks ago and I
Speaker 2: met somebody that's launching a Salona treasury, and you know,
Speaker 2: I kind of told you before recording. He told me,
Speaker 2: you know, he doesn't even know the bowcase of what
Speaker 2: he's doing. But here's my thought on this. When I
Speaker 2: think about a Salona or or an Ethereum treasury, so
Speaker 2: you know, bitcoin is a commodity, right, It's there's no
Speaker 2: common issuer, there's nobody that pre mined it, nobody has
Speaker 2: that control of it, and it has as a has
Speaker 2: a fixed supply right twenty one million. So I could
Speaker 2: see how a company would put a commodity on its
Speaker 2: treasury that'd bud goal, I'd put oil something like that.
Speaker 2: But if you think about like Ethereum's bowl case, for example,
Speaker 2: it's like the World Computer, Right, we're gonna put everything
Speaker 2: on top of it, and we're gonna do all the
Speaker 2: smart contracts in this World computer, and Joseph Lubin and
Speaker 2: Metallic and Consensus, you know, they can control this algorithm
Speaker 2: and they're going to keep it working and blah blah
Speaker 2: blah whatever, right, the votes and all that. So it's
Speaker 2: like a tech company. So it's like it's like Apple,
Speaker 2: Like Apple's three trillion, so like their market caap potential
Speaker 2: is three trillion, like so like Bitcoin's going for money
Speaker 2: five hundred trillion. They're a tech company number one, number two.
Speaker 2: Like again, it makes sense to put like a commodity
Speaker 2: on my balance sheet, But why would I put a
Speaker 2: tech company, Like we don't see typically companies putting other
Speaker 2: equities on their balance they're not allowed to. But it
Speaker 2: wouldn't really make sense to put Apple under your You
Speaker 2: wouldn't create a treasury company around Apple maybe. And then
Speaker 2: and then the third point I'll ask, and then I'll
Speaker 2: let you kind of respond to these. The third point
Speaker 2: is then back to you know, again, bitcoin is commodity
Speaker 2: with no common issue or a pre mind, but also
Speaker 2: with a fixed supply. And then you have these assets
Speaker 2: like ethereum that that doesn't really have a known supply.
Speaker 2: And so I'm just curious, like, you know, I think
Speaker 2: you sort of believe in also those types of treasuries
Speaker 2: as well, but like maybe you can film me in
Speaker 2: on the bowl case and the other guy couldn't.
Speaker 1: Yeah, well, I think, you know, so the way hard
Speaker 1: frame Ethereum and these other smart contract platforms is that
Speaker 1: they are platforms, the application platforms, which is just essentially
Speaker 1: a derivation of a tech of a tech company or
Speaker 1: a new type of tech company. So it requires a
Speaker 1: different framing when you're looking at them as an investment.
Speaker 1: And I think that Bigcoin obviously has owns that commodity
Speaker 1: framing because of the supply schedule and because of the
Speaker 1: level of decentralization. Now with Ethereum and the Solanta and
Speaker 1: all these other platforms, you've got a case to be
Speaker 1: made that actually, you know, they are going through an
Speaker 1: adoption curve which is going to be pretty dramatic over
Speaker 1: the next couple of years. And I think that you know,
Speaker 1: with the amount of with the amount of adoption that
Speaker 1: they've already gained, and that's putting aside. I guess the
Speaker 1: activity metrics which we do trackers on train analysts in
Speaker 1: the space, which I think is a lot of it
Speaker 1: is gamed, and you're talking about the treating, yeah, wash trading,
Speaker 1: but also just you know, there's activity, there's cyble, you know, attacks,
Speaker 1: and like there's tons of stuff that inflate numbers. So
Speaker 1: you have to look at it sort of more holistically,
Speaker 1: but it's undeniable that you're seeing adoption and now you've
Speaker 1: got basically integration with the financial system with stable coins,
Speaker 1: and stable coins are going to move on blockchains. Blockchains
Speaker 1: have facilitated the need for the US government to find
Speaker 1: new buys of its debt, and so whether we like
Speaker 1: it or not, these platforms are going to facilitate a
Speaker 1: huge amount of global commerce.
Speaker 2: Let me ask you about that. So yes, I one
Speaker 2: hundred percent agree with you. The number one stable coin
Speaker 2: and not buy a little bit, but by a lot.
Speaker 2: Seventy five percent of the market share is Tether. Pollow
Speaker 2: from Tether is a bitcoiner and they announced just a
Speaker 2: few weeks ago they want to move it all over
Speaker 2: to the bitcoin blockchain. They're moving into RGB number one,
Speaker 2: number two. We've seen some of the other players and
Speaker 2: new entrants are building their own blockchains, so they're not
Speaker 2: going to use Salona or a theory or Bitcoin. They're
Speaker 2: going to build their own. So it seems like it
Speaker 2: seems like the exist that the dominant player wants to
Speaker 2: move to Bitcoin not ethereum, and then the new entrants
Speaker 2: want to move to their own platforms.
Speaker 1: Yeah, so is the argument, is the argument whether you
Speaker 1: should buy ethereum is one of these other platforms, or
Speaker 1: is the argument a blockchain is going to increase in
Speaker 1: terms of total usage.
Speaker 2: I was more thinking about just from the treasure you standpoint,
Speaker 2: where like, how does it make sense to buy an
Speaker 2: asset that's not clearly defined, has no fixed supply. That's
Speaker 2: what I was kind of trying to think. Understanding from
Speaker 2: a speculative standpoint is one thing, Creating a treasury company
Speaker 2: around it and raising money in public markets seem to
Speaker 2: be like a different animal for me.
Speaker 1: Yeah. Look, I mean it's I know where you're coming from, Like,
Speaker 1: it's I think it's a changing of investment philosophies all around.
Speaker 1: So let me give you an example of what I
Speaker 1: mean here. The Swiss National Bank, the same bank started
Speaker 1: buying Apple and tech stocks back in twenty sixteen. That
Speaker 1: was that seemed crazy, right, But they understood the debasement game,
Speaker 1: and so they thought the best thing they could do
Speaker 1: with their asset, with their with their reserves was to
Speaker 1: put that into tech stocs. And that proved to be
Speaker 1: an incredibly smart move worked from unfortunately not mirrored by
Speaker 1: a lot of other central banks. So I mean, where
Speaker 1: is the where is the growth happening in the global
Speaker 1: economy right now if you look at you know, the
Speaker 1: legacy financial system or the crypto economy, the crypto economy
Speaker 1: is exploding and putting all the gaming aspects aside. Settlement
Speaker 1: values on blockchains are growing at seventy eight percent compound
Speaker 1: for the last five years, and that was really before
Speaker 1: government said, hey, stable coins are okay. Now the question
Speaker 1: of like whether he wants to take a investment punt
Speaker 1: on Ethereum versus Solana or versus I guess any stripees,
Speaker 1: new platform or new tether blockchain. That's more like a
Speaker 1: a investment decision with which is a lot of risk
Speaker 1: and therefore it becomes very tricky for these digital asset companies.
Speaker 1: And there's a lot more risk there with a platform
Speaker 1: that's in a hyper competitive space where there's basically no
Speaker 1: barriers to entry. It's just opened his open software that
Speaker 1: anyone can fork or replicate. But there's also a thing
Speaker 1: called network effects, which are very hard to budge, and
Speaker 1: so there is there's definitely network effects exhibited through you know,
Speaker 1: the top smart contract platforms. But the you know, we'll
Speaker 1: see in five years time, what the right smart contract
Speaker 1: platform is or has been the best performer, if at all.
Speaker 1: I mean, I put bitcoin at the center of my
Speaker 1: entire investing world because it is in my eyes, and
Speaker 1: I think in the eyes of even sovereigns now it
Speaker 1: is the emergent global reserve asset, and it is the
Speaker 1: It is the clear leader and will continue to lead.
Speaker 1: But I do look at those other platforms as investment punts.
Speaker 1: But when you start looking at the digital asset companies
Speaker 1: in that space, you can argue that the high quality
Speaker 1: ones come first and then like it starts to tail off,
Speaker 1: and then you've got added risk that bitcoin doesn't have
Speaker 1: because it is not a fix. It doesn't have the
Speaker 1: characteristics of the monetary network of bitcoin. And the other
Speaker 1: thing that we don't mention, we haven't mentioned yet, is
Speaker 1: that the reason why bitcoin is not only because of
Speaker 1: its monetary properties is a sound investment with lower risk
Speaker 1: of sort of downside over the long term, is because
Speaker 1: of the energy aspect. It is gobbling up excess energy
Speaker 1: around the world. Is now strategically important for companies that
Speaker 1: actually understand how to drive value for their citizens that
Speaker 1: they bring bitcoin mining into their economy, and they subsidize
Speaker 1: it and promote it because not only will it monetize
Speaker 1: excess energy, it will drive investment in a space which
Speaker 1: is directly linked to AI and so like that, our
Speaker 1: whole aspect just supports that network growing even faster. So
Speaker 1: is this I guess, to come back to the original point,
Speaker 1: there is a lot more risk, a lot more uncertainty
Speaker 1: in putting any other digital asset on the balance sheet.
Speaker 1: But still there's an argument to be made that the
Speaker 1: underlying smart contract platform assets themselves, the ones with network effects,
Speaker 1: will continue to outperform or you know, outperform tech stocks
Speaker 1: for instance, maybe not Bitcoin, but should do well. And
Speaker 1: you know, you allocate with the right sort of position
Speaker 1: size to that because of the volatility and the uncertainty.
Speaker 2: Yep. Yeah, And that's a question that I kind of
Speaker 2: always come back to, you know, in regards to the
Speaker 2: equity side of these things. Is like, as a bitcointerer
Speaker 2: or is like, is this going to be a bitcoin?
Speaker 2: But most of the world doesn't think that way. They're
Speaker 2: just like, does it beat the S and P find under,
Speaker 2: does it beat inflation? And so they're sort of like
Speaker 2: building out their basket sort of a.
Speaker 3: Thing like that.
Speaker 2: Man, There's so many other things that we could dive into,
Speaker 2: but I think I think we're probably just going to
Speaker 2: wrap it up right there, Jamie. But I would like
Speaker 2: to do this again sooner, maybe on the next report
Speaker 2: that you have out, will come on and talk about
Speaker 2: the report, and I wanted to get in some other
Speaker 2: topics such as talking about location sovereignty, so maybe we'll
Speaker 2: table it for another talk again. Like I said, your
Speaker 2: research is amazing. Just tell everybody what kind of stuff
Speaker 2: you do and where they can find it.
Speaker 1: Yeh. So I'm the chief crypto analyst at Real Vision
Speaker 1: and we've got a platform which is basically pretty much
Speaker 1: focused on all the exponential technology plays, but primarily crypto
Speaker 1: and how that plays into the whole macro framework. The
Speaker 1: business cycle analysts analysis that Ral does and Julian does
Speaker 1: is by father the best but business cycle analysis out there.
Speaker 1: I focused, you know, strictly on macro and crypto. So
Speaker 1: if you're interested, check us out.
Speaker 3: Yep.
Speaker 2: We'll link to that down below, and he shares his
Speaker 2: reports with me. I've done some YouTube videos, so just
Speaker 2: look out for that. I always link back to that. Jamie.
Speaker 2: Thanks so much for taking the time, appreciate it.
Speaker 1: Thanks again, mat I love it.