WEBVTT - The Hidden Bitcoin Bubble No One's Talking About | Jeff Park 0:00:00.160 --> 0:00:02.800 The game of investing has changed ever since my career 0:00:02.840 --> 0:00:05.640 started in two thousand and eight posted global financial crisis. 0:00:05.840 --> 0:00:10.680 The world has changed where fundamental principles are becoming less important. 0:00:10.840 --> 0:00:13.560 Many people kind of joke about whether bitcoin will ever 0:00:13.600 --> 0:00:14.920 be not correlated to equities. 0:00:14.960 --> 0:00:15.960 I put it the other way around. 0:00:16.079 --> 0:00:18.919 I think, actually it's equities that's becoming more correlated with 0:00:18.960 --> 0:00:22.279 bitcoin because equities is also becoming this place to store 0:00:22.280 --> 0:00:26.080 your wealth to find the fastest escape velocity to the 0:00:26.079 --> 0:00:27.320 fiscal dominance that we. 0:00:27.280 --> 0:00:28.760 Are experiencing across the world. 0:00:28.880 --> 0:00:31.560 People are immensely focused on bitcoin treasury companies right now 0:00:31.600 --> 0:00:33.720 at the equity level. But the other big trend that 0:00:33.760 --> 0:00:36.879 I'm seeing and Canter I believe, also recently announced that 0:00:36.960 --> 0:00:40.120 they are going big in a way to provide institutional 0:00:40.159 --> 0:00:41.519 lending that is backed by bitcoin. 0:00:41.800 --> 0:00:44.320 So then what you're saying is that investor sort of 0:00:44.360 --> 0:00:49.560 needs to believe in the long term vision of Bitcoin's. 0:00:49.720 --> 0:00:51.400 All right, Jeff, thanks so much for joining me today. 0:00:51.880 --> 0:00:53.520 Let's talk about the hottest. 0:00:53.120 --> 0:00:55.680 Thing going in the bitcoin space right now, which is 0:00:55.720 --> 0:00:59.640 the bitcoin treasury strategy companies. At least it seems like it. 0:00:59.640 --> 0:01:02.080 It's like all the excitement in the air right now. 0:01:02.160 --> 0:01:03.840 Yeah, Yeah, I can't get enough of it. There's one 0:01:03.880 --> 0:01:04.759 popping up every day. 0:01:05.959 --> 0:01:07.200 Let's just break it down first. 0:01:07.200 --> 0:01:09.640 So is there a difference or how would you say 0:01:09.640 --> 0:01:13.560 the difference is between a bitcoin treasury strategy company versus 0:01:13.560 --> 0:01:15.400 a company putting bitcoin on the balance sheet. 0:01:15.959 --> 0:01:19.960 Yeah, I think there are some philosophical differences as to 0:01:20.040 --> 0:01:22.600 at least how the market is interpreting today. One might 0:01:22.600 --> 0:01:25.080 say coin Based, for example, is a bitcoin treasury company 0:01:25.080 --> 0:01:28.080 because they own bitcoin as part of their business, and 0:01:28.240 --> 0:01:30.800 we have bitwise also as a private company, have a 0:01:30.840 --> 0:01:33.880 bitcoin on our balance sheet. But what I think the 0:01:33.920 --> 0:01:37.000 market has at this point defined to be an authentic 0:01:37.000 --> 0:01:42.839 bitcoin treasury company is building a business around financializing bitcoin 0:01:42.959 --> 0:01:48.040 specifically for an opportunity set that takes an arbitrage for 0:01:48.080 --> 0:01:51.440 what corporates can do that individuals like you and I cannot. 0:01:51.160 --> 0:01:55.680 Access, okay, which is what like the financial markets bringing 0:01:55.680 --> 0:01:56.080 that in. 0:01:56.560 --> 0:01:59.000 Yeah, the capital markets is deep, as you know in 0:01:59.040 --> 0:02:01.280 the US. It is the dominant future of what I 0:02:01.280 --> 0:02:04.560 think makes us exceptional. And the reality is if you 0:02:04.640 --> 0:02:09.200 can access different components of the capital markets, including credit derivatives, 0:02:09.400 --> 0:02:12.680 other forms of leverage, there's different capital efficient ways to 0:02:12.720 --> 0:02:15.440 have bitcoin exposure and risk that you and I simply 0:02:15.480 --> 0:02:16.560 can't really replicate. 0:02:17.240 --> 0:02:20.320 Okay, so that's the financial engineering side of it, if 0:02:20.320 --> 0:02:21.560 you will. So the other side of where they're just 0:02:21.560 --> 0:02:24.480 putting bitcoin on their treasury or the balance sheet, that's 0:02:24.480 --> 0:02:27.400 not really talking about and just real quickly though, so 0:02:27.800 --> 0:02:30.480 you would say, I mean, obviously, big companies like an 0:02:30.480 --> 0:02:33.240 Apple for example, that's in on billion, hundreds of billions 0:02:33.240 --> 0:02:35.120 of cash, if they were to put ten percent of 0:02:35.120 --> 0:02:37.440 that into bitcoin, it's good for bitcoin, but it doesn't 0:02:37.480 --> 0:02:38.840 really change their business model. 0:02:39.560 --> 0:02:42.960 Yeah, this is kind of the dilemma, if you will, 0:02:43.080 --> 0:02:47.400 which is so many of our big enterprises are really 0:02:48.760 --> 0:02:52.120 built specifically to avoid volatility in many ways. If you 0:02:52.160 --> 0:02:54.600 think about what the CFOs and the board of directors 0:02:54.600 --> 0:02:58.360 that these companies would preach, they're talking about wanting to 0:02:58.360 --> 0:03:01.359 expand multiples in ways the volatile as a component can 0:03:01.360 --> 0:03:02.000 be minimized. 0:03:02.040 --> 0:03:02.160 Right. 0:03:02.200 --> 0:03:06.120 It's very rare for Wall Street CFOs to embrace volatility 0:03:06.280 --> 0:03:08.680 as a feature of something they're trying to engineer as 0:03:08.720 --> 0:03:10.960 part of the stock of anything. They're trying to repress it. 0:03:11.480 --> 0:03:14.440 And so the challenge is if you bring bitcoin onto 0:03:14.480 --> 0:03:17.480 your balance sheet, it does bring volatility as we've now 0:03:17.560 --> 0:03:21.280 seen it with micro Strategy and others, and most corporate 0:03:21.360 --> 0:03:25.440 CFOs are not trained to embrace that as an opportunity. 0:03:25.600 --> 0:03:27.799 They think of that more as a cost of capital 0:03:28.639 --> 0:03:32.800 decay that otherwise their own investors may not appreciate, which is, 0:03:32.840 --> 0:03:35.760 you know, the fundamental challenge with companies like Microsoft, where 0:03:36.200 --> 0:03:38.720 there's a clear underwriting framework for how to think about 0:03:38.760 --> 0:03:42.320 that valuation metric, and you don't really want to rock 0:03:42.400 --> 0:03:45.640 that boat too hard by bringing some exogenous factors, especially 0:03:45.680 --> 0:03:48.280 if that exogerenest factor is something that Microsoft can't control, 0:03:48.480 --> 0:03:50.640 and of course Microsoft cannot control bitcoins price. 0:03:51.760 --> 0:03:54.040 Is it also because you know, the market cap of 0:03:54.080 --> 0:03:56.960 their company trillion dollars, two trillion dollars is so big 0:03:57.000 --> 0:03:58.720 that even if they were to put ten twenty percent 0:03:58.720 --> 0:04:00.920 of their balance sheet into bitcoin, maybe it doesn't move 0:04:00.960 --> 0:04:01.400 it enough. 0:04:02.320 --> 0:04:06.680 It's a little bit of, I think, both economic and 0:04:06.840 --> 0:04:07.840 a cultural gap. 0:04:08.000 --> 0:04:09.720 The cultural gap, I think is actually. 0:04:09.400 --> 0:04:12.480 More important, which is that there's a little bit of 0:04:12.520 --> 0:04:16.480 what I call the asymmetric downside to adoption for companies 0:04:16.560 --> 0:04:20.920 like the Mac seven right, which is, there aren't many 0:04:20.960 --> 0:04:23.520 companies who are willing to tolerate that risk as an 0:04:23.600 --> 0:04:26.400 upside capture when they're underwriting the whole business to be 0:04:26.560 --> 0:04:29.680 tangibly valued in a different format. And so you actually 0:04:29.760 --> 0:04:32.279 in that fashion is what I call typically short to put, 0:04:32.600 --> 0:04:35.800 you have a lot of downside, potentially unlimited downside, and 0:04:36.000 --> 0:04:39.640 very little upside capture, right and so I think that 0:04:39.680 --> 0:04:43.080 cultural gap is a big part of it. The other thing, though, 0:04:43.160 --> 0:04:45.800 that will change over time, and I do think companies 0:04:45.839 --> 0:04:48.000 will wake up to this as other bitcoin treasure companies 0:04:48.040 --> 0:04:51.760 adopt these standards, is there is a generational trend that 0:04:51.839 --> 0:04:54.400 is happening with young people growing up and young people 0:04:54.520 --> 0:04:58.280 voting with their capital to buy stocks they like right 0:04:58.360 --> 0:05:00.520 Game Step being a great example of that evolution that 0:05:00.560 --> 0:05:03.920 we saw in twenty twenty and beyond. So I think 0:05:03.960 --> 0:05:06.279 there will come a moment when these companies realize that 0:05:06.360 --> 0:05:09.719 having bitcoin on their balance sheet, despite maybe the little 0:05:09.760 --> 0:05:13.240 bit of the loss with the incumbent investors today, the 0:05:13.400 --> 0:05:16.400 upside of new investors that are excited by saying, oh, 0:05:16.520 --> 0:05:19.000 I'm aligned with this company's eat those in values because 0:05:19.040 --> 0:05:21.360 they believe what I believe, which is bitcoin is the future. 0:05:21.839 --> 0:05:26.280 That can also I think be a huge tailwind and 0:05:26.320 --> 0:05:28.640 we're kind of living I think moments of these inflections, 0:05:28.640 --> 0:05:31.680 because right now it's the very nacent companies that are 0:05:31.680 --> 0:05:34.320 adopting it. But once they show the path, then I 0:05:34.360 --> 0:05:36.480 think you'll start to see kind of the level ups 0:05:36.480 --> 0:05:38.560 of other companies that are more mid tier going into it. 0:05:38.600 --> 0:05:41.440 And of course the very last will be the most 0:05:41.520 --> 0:05:42.880 to lose the incumbent types. 0:05:44.680 --> 0:05:46.640 Not that this really applies to the treasure strategies, but 0:05:46.640 --> 0:05:48.279 maybe a little bit. But here we're at the Bickcoin 0:05:48.279 --> 0:05:50.200 conference and just this morning, the i think it was 0:05:50.240 --> 0:05:51.919 the president of the Steak and Shake was up up 0:05:51.920 --> 0:05:54.039 there talking on the stage and you were talking about 0:05:54.040 --> 0:05:57.960 how they started accepting bitcoin and the uptick in business 0:05:58.080 --> 0:06:02.440 they've got from that. Right to your point, people being 0:06:02.440 --> 0:06:04.719 aligned ideologically with where they want to spend their money 0:06:04.880 --> 0:06:07.400 sort of makes sense. Maybe a company like Apple, maybe 0:06:07.400 --> 0:06:09.359 it repels as many people as the tracks or something 0:06:09.400 --> 0:06:09.640 like that. 0:06:10.080 --> 0:06:11.000 It's it's a little bit different. 0:06:11.000 --> 0:06:14.000 But so then those businesses have their own finance, their 0:06:14.040 --> 0:06:16.640 own business model. But then it seems like we see 0:06:16.640 --> 0:06:18.760 other companies you mentioned game Stop who sort of have 0:06:18.880 --> 0:06:21.599 like a dead business, a failing business. Maybe it's still 0:06:21.640 --> 0:06:24.640 some revenue, some money on the balance sheet and they're 0:06:24.640 --> 0:06:27.520 not sure what's next for them, and maybe this is 0:06:27.520 --> 0:06:29.160 like a pretty good option for them. Are those the 0:06:29.200 --> 0:06:30.840 companies you see that are sort of like righte for. 0:06:30.800 --> 0:06:33.200 This, Yeah, I think so. I think that's right. 0:06:35.360 --> 0:06:39.839 What we're seeing is a slow evolution of what people 0:06:40.080 --> 0:06:43.040 will imagine the dynam is in behind this bitcoin treasury 0:06:43.080 --> 0:06:45.520 companies to be right in the sense at the very beginning, 0:06:45.520 --> 0:06:48.240 we started with strategy, which essentially is nothing but at 0:06:48.279 --> 0:06:52.400 this point a bitcoin holding company with some financialization features. 0:06:52.920 --> 0:06:54.480 And then I think what you're now going to see 0:06:54.640 --> 0:06:58.440 is game stop. Even though it is a secularly challenged business, 0:06:58.560 --> 0:07:01.240 it is a real business, is real cash flow, and 0:07:02.000 --> 0:07:05.200 it's a consumer facing business actually unlike micro strategy, which 0:07:05.240 --> 0:07:08.360 is B to B and so the wave of companies 0:07:08.480 --> 0:07:11.320 that have a consumer facing aspect to which they can 0:07:11.360 --> 0:07:14.840 onboard new customers by leveraging bitcoin as part of their 0:07:15.320 --> 0:07:17.239 value alignment, I think. 0:07:17.080 --> 0:07:18.200 Is what we're going to start seeing. 0:07:18.240 --> 0:07:22.280 I would almost echo that the excitement people have seen 0:07:22.320 --> 0:07:26.040 around Nakamoto, the other bitcoin treasury company that was announced recently, 0:07:26.360 --> 0:07:29.720 is similar, which is that that's actually a real operating business. 0:07:29.720 --> 0:07:33.400 That's why we're here. The Bitcoin conference generates revenue. Imagine 0:07:33.400 --> 0:07:37.920 aligning the revenue opportunity of a bitcoin centric and adjacent 0:07:38.040 --> 0:07:41.120 company with the ability to add leverage to the bitcoin 0:07:41.160 --> 0:07:45.360 treasury strategy. That's a one plus one dynamic for which 0:07:45.760 --> 0:07:48.520 I think it's potentially greater than two, and we have 0:07:48.600 --> 0:07:50.320 not yet seen it. So I think what we're going 0:07:50.360 --> 0:07:54.160 to see is different kinds of consumer facing bitcoin centric 0:07:54.200 --> 0:07:58.240 companies also adopt the treasury strategy because that then diagram 0:07:58.320 --> 0:08:00.600 is actually pretty pretty powerful and overlap. 0:08:01.320 --> 0:08:05.320 So then when I look at Strategy formerly micro Strategy, 0:08:05.520 --> 0:08:08.920 their stock, the mstr sort of seems to be the product, right, 0:08:09.040 --> 0:08:11.080 their stock is the product. Now they have Strike and Stripe, 0:08:11.120 --> 0:08:13.240 so now they have like three financial products out there, 0:08:13.920 --> 0:08:15.760 and so when I look at these, it's like, well, 0:08:15.800 --> 0:08:18.640 I guess they're financial engineering a new product with a 0:08:18.640 --> 0:08:22.240 new asset. But I guess maybe what you're saying is 0:08:22.480 --> 0:08:26.400 there is probably even more synergy when you can actually 0:08:26.400 --> 0:08:29.760 combine an actual business with that strategy, so not just 0:08:29.920 --> 0:08:32.480 releasing the financial product, but then having some underlying business 0:08:32.520 --> 0:08:34.959 that creates cash FLOWSTA and continue to multiply that. 0:08:35.160 --> 0:08:36.360 Yeah, yeah, that's right. 0:08:36.480 --> 0:08:40.000 I think strategy is so unique because the product, as 0:08:40.040 --> 0:08:43.560 you said up perfectly is the stock and what is 0:08:43.600 --> 0:08:46.240 the stock. It's the most liquid trading stock in the 0:08:46.280 --> 0:08:49.920 capital markets, it has the deepest options market. It has 0:08:49.960 --> 0:08:53.200 a lot of other financially engineered products that have come 0:08:53.240 --> 0:08:57.160 online in the back of the stock yield strategies that 0:08:57.440 --> 0:09:00.520 are engaged in cover cost selling, including bitwise having launched 0:09:00.520 --> 0:09:03.360 them recently, as well as these two X celebrity tfs 0:09:03.360 --> 0:09:07.480 and vice versa. So strategy for sure is the underlying 0:09:08.320 --> 0:09:11.000 engine for a lot of the opportunities that are coming 0:09:11.000 --> 0:09:15.120 a line in the capital markets through bitcoin. But that 0:09:15.320 --> 0:09:19.240 is in itself a pretty unique advantage for being early 0:09:19.360 --> 0:09:22.040 for saleor to have a mass that critical scale. The 0:09:22.080 --> 0:09:24.920 next companies that come online, if you're going to compete 0:09:25.080 --> 0:09:27.440 within the same jurisdiction, we'll have to think a little 0:09:27.440 --> 0:09:30.160 bit differently. I do think there will be a strategy 0:09:30.200 --> 0:09:34.280 clone per global jurisdictions everywhere in the world where there 0:09:34.360 --> 0:09:37.680 is a deep capital markets of investors looking for bitcoin 0:09:37.760 --> 0:09:41.800 exposure in a regulated way that they understand through securities law. 0:09:42.280 --> 0:09:44.640 But within the US markets, for example, you're going to 0:09:44.720 --> 0:09:47.400 have different kinds of companies come to the opportunity set 0:09:48.120 --> 0:09:51.400 and they're going to approach it a little bit differently. 0:09:52.080 --> 0:09:54.240 So then we have like Metaplant in Japan, so they're 0:09:54.440 --> 0:09:56.079 sort of following just a micro strategy. 0:09:55.840 --> 0:09:57.480 Playbook put in a different capital market. 0:09:57.720 --> 0:09:59.760 Yeah, and so we could probably run that, and I 0:09:59.800 --> 0:10:03.000 think actually Nakamoto has been publicly vocal about wanting to 0:10:03.040 --> 0:10:04.760 do that in niche market. So we know there's some 0:10:05.000 --> 0:10:07.600 popping up down in Brazil. We'll be hearing some about 0:10:07.640 --> 0:10:10.720 India here pretty soon, and so different capital markets, but 0:10:10.800 --> 0:10:12.880 in sort of the North American market, then they need 0:10:12.880 --> 0:10:14.920 to have different spins on them, sort of to what 0:10:15.000 --> 0:10:18.400 Knacomoto is doing by wrapping this business in or maybe 0:10:18.559 --> 0:10:21.880 can't or cantor was the equity partners sort of probably 0:10:21.920 --> 0:10:24.079 looks like some maybe financial products in there. 0:10:24.240 --> 0:10:26.240 Yeah, something like that. Yeah, yeah, yeah, that's right. 0:10:26.280 --> 0:10:29.360 And I think ultimately the line will start blurring where 0:10:29.440 --> 0:10:32.520 people are going to think of bitcoin as an asset 0:10:32.720 --> 0:10:35.000 that is beating the cost of capital that they could 0:10:35.000 --> 0:10:37.760 potentially reinvest into the ROE. So what I mean by 0:10:37.800 --> 0:10:41.600 this is if you have a real business and you 0:10:41.760 --> 0:10:44.480 have the opportunity to say, hey, actually if I sell 0:10:44.520 --> 0:10:49.360 my bitcoin to take those cash proceeds reinvest in my business, 0:10:49.400 --> 0:10:52.880 that's going to drive a higher ROE, then potentially the 0:10:52.920 --> 0:10:56.720 price of bitcoin in itself. You could imagine people making 0:10:56.760 --> 0:11:00.280 those capital allocation strategies on a pretty dynamic level. Some 0:11:00.320 --> 0:11:02.360 would argue it'd be hard to op perform bitcoin anyway, 0:11:02.400 --> 0:11:06.679 so that Roe calculation would have to be pretty pretty 0:11:06.720 --> 0:11:11.600 specific for that value proposition. But I think if the 0:11:11.720 --> 0:11:14.800 companies are built on the backbone of bitcoin, where their 0:11:14.840 --> 0:11:17.840 revenue is directly related to bitcoin price, you could imagine 0:11:17.840 --> 0:11:21.520 that being actually fairly correlated, and you could imagine there 0:11:21.559 --> 0:11:23.559 is a higher ROE to invest in the equity of 0:11:23.600 --> 0:11:27.000 the business by actually selling some bitcoin, which actually historically 0:11:27.040 --> 0:11:28.920 has never been done before, right strategy never. 0:11:29.120 --> 0:11:31.199 Is selling the bitcoin to buy the stock back. 0:11:32.600 --> 0:11:35.520 Not even necessarily to buy the stockback because that's a 0:11:35.640 --> 0:11:38.480 kind of a dividend to existing investors, but I mean 0:11:38.520 --> 0:11:42.239 even to the idea of like using that to reinvest 0:11:42.320 --> 0:11:45.200 in the business itself in an operating level to drive 0:11:45.280 --> 0:11:47.040 higher ROE. Got it. 0:11:47.120 --> 0:11:49.960 Yeah, yeah, selln the bitcoin to invest in the business 0:11:49.960 --> 0:11:51.800 and the business creates more income which than buy is 0:11:51.880 --> 0:11:54.440 market Yeah, yeah, yeah, exactly. I think that's maybe what 0:11:54.679 --> 0:11:57.920 sort of CP's been talking about. So now we have 0:11:58.720 --> 0:12:00.880 it seems like, I mean, doesn't seem like there are 0:12:00.880 --> 0:12:03.120 all these new terms and terminologies and waste and measure 0:12:03.160 --> 0:12:09.040 these You mentioned financial metrics before, so the BPS, the torque, the. 0:12:10.760 --> 0:12:11.480 M now, etc. 0:12:11.800 --> 0:12:15.480 Right, So, like, what is the problem that traditional investors 0:12:15.520 --> 0:12:18.400 have looking at these new companies and trying to understand them. 0:12:18.559 --> 0:12:19.840 Yeah, great question. 0:12:22.000 --> 0:12:26.439 The most significant trouble that traditional investors have is they 0:12:26.440 --> 0:12:32.200 have never understood financial accounting with the denomination of accounting 0:12:32.640 --> 0:12:36.640 being bitcoin based. So a lot of these metrics are 0:12:36.840 --> 0:12:43.120 being reported in ways to retrain investors' minds to consider 0:12:43.160 --> 0:12:46.640 the foundation of the base layer for your economic calculation 0:12:46.720 --> 0:12:50.120 to be bitcoin itself. So everything you mentioned bitcoin for sure, bitcoin. 0:12:50.160 --> 0:12:53.520 You know, this is this idea of accruing more bitcoin 0:12:53.679 --> 0:12:56.760 at a level in which that rate of acceleration is 0:12:56.800 --> 0:12:59.280 additive regardless of what the price of bitcoin itself is, 0:12:59.280 --> 0:13:01.160 because your unit account is bitcoin. 0:13:01.960 --> 0:13:03.319 That's a pretty challenging. 0:13:02.960 --> 0:13:06.480 Thing because most companies are actually still traded on the 0:13:06.520 --> 0:13:09.400 dollar basis, and investors think about their returns on a 0:13:09.440 --> 0:13:10.240 dollar basis. 0:13:10.600 --> 0:13:13.440 So that's the first part. The second part is before 0:13:13.440 --> 0:13:14.320 you move to the second part. 0:13:14.360 --> 0:13:17.920 So then what you're saying is that investor sort of 0:13:18.000 --> 0:13:21.440 needs to believe in the long term vision of bitcoin. Yeah, 0:13:21.440 --> 0:13:24.120 because if they're going to be on a bitcoin unit 0:13:24.160 --> 0:13:27.000 account as opposed to a dollar then sort of regardless 0:13:27.000 --> 0:13:29.120 of what the US dollar valuation of the stock is, 0:13:29.160 --> 0:13:31.840 as long as the bitcoin is accumulating, then they should 0:13:31.880 --> 0:13:33.760 be okay with that, right, And so if they don't 0:13:33.760 --> 0:13:35.200 believe in that long term vision. 0:13:35.000 --> 0:13:36.800 Then it's hard to get by in that. 0:13:36.800 --> 0:13:39.480 That's right, especially if you're a long only investor and 0:13:39.520 --> 0:13:41.720 not running a market neutral strategy. In the back of it, 0:13:41.720 --> 0:13:44.240 it's actually critical that investors understand this is a bet. 0:13:44.080 --> 0:13:46.319 On bitcoin ultimately. Yes. Yes. 0:13:47.240 --> 0:13:49.360 And the second part that I think traditional investors struggle 0:13:49.440 --> 0:13:53.800 with is that there is a classical training of how 0:13:53.840 --> 0:13:56.559 to imagine what the capital structure should look like of 0:13:56.640 --> 0:14:00.640 a normal operating company, which is that at the top 0:14:00.679 --> 0:14:03.560 there as senior secured creditors. Maybe then you'll have senior 0:14:03.640 --> 0:14:07.600 unsecured creditors, then you'll have junior, you'll have converts, you'll 0:14:07.640 --> 0:14:10.719 have preferred equity, you'll have stock, and actually, very at 0:14:10.720 --> 0:14:12.640 the very top, you might even have you know, customer 0:14:12.800 --> 0:14:15.120 vendor claims things like that, which actually are the first 0:14:15.200 --> 0:14:16.840 to be paid in the event of a bankruptcy. So 0:14:16.840 --> 0:14:21.240 there's actually a way that traditional investors think about the 0:14:21.480 --> 0:14:26.000 distribution of value in which different liabilities attached to the 0:14:26.080 --> 0:14:30.080 assets with a priority waterfall. Okay, what we're seeing with 0:14:30.120 --> 0:14:33.360 these bitcoin treasury companies is flipping that model upside down. 0:14:34.120 --> 0:14:36.040 And that's actually what I think Sailor has been doing 0:14:36.080 --> 0:14:38.480 in a way that has never been done before, which 0:14:38.520 --> 0:14:43.720 is introducing these ideas of having different kinds of leans 0:14:43.960 --> 0:14:48.840 towards that waterfall, but not necessarily having a packaged. 0:14:48.440 --> 0:14:49.960 In the way traditional investors would expect. 0:14:49.960 --> 0:14:53.440 For example, if you're a fixed and come investor, generally, 0:14:53.520 --> 0:14:55.560 what you want to think is you want to turn 0:14:55.600 --> 0:14:56.920 out your yields, so you want to know how much 0:14:56.920 --> 0:14:58.840 you get paid over a duration, so you want a 0:14:58.880 --> 0:15:02.280 maturity date. And then two, you want the ability to 0:15:02.320 --> 0:15:04.840 have some kind of covenant or collateral to be able 0:15:04.840 --> 0:15:06.840 to attach to the acid in the event that you 0:15:06.920 --> 0:15:10.400 feel that gives you more protection than the juniorized equity. Right, 0:15:11.040 --> 0:15:13.680 preferred equity as sale has issued have almost none of 0:15:13.680 --> 0:15:15.560 those features. Right, it doesn't have an exploration date. They 0:15:15.560 --> 0:15:18.840 are actually perpetual instruments that pay cash coupon. And then 0:15:18.880 --> 0:15:22.440 it doesn't even have actually the ability to collateralize the 0:15:22.440 --> 0:15:26.320 asset directly, even though you're slightly more senior than the equity. 0:15:26.760 --> 0:15:30.320 And these are considered at this level fixed income instruments, 0:15:30.400 --> 0:15:33.640 unconventional as it may be, and that is actually something 0:15:33.680 --> 0:15:36.080 traditional investors have a very hard time wrapping the head around. 0:15:36.640 --> 0:15:37.600 Is it rated by Moodies? 0:15:37.680 --> 0:15:39.800 No? Oh, then how do I assess it? You know, 0:15:39.880 --> 0:15:40.720 does it have a term? 0:15:41.320 --> 0:15:43.880 You know, what's the actual corporate credits spread looking like 0:15:44.000 --> 0:15:47.080 versus Gouvey's And you can't do those calculations easily with 0:15:47.160 --> 0:15:48.960 these bitcoin backed bonds and companies. 0:15:50.120 --> 0:15:51.960 What about also when you think about the growth of 0:15:52.000 --> 0:15:53.600 these companies to your point sort of being on a 0:15:53.600 --> 0:15:55.640 bitcoin standard, you have to believe in sort of that 0:15:55.680 --> 0:15:57.800 long term vision. But when you're trying to think of 0:15:58.000 --> 0:16:00.360 you know, I have a venture fund, and so we 0:16:00.400 --> 0:16:02.680 think about what will the market size be. 0:16:02.680 --> 0:16:04.240 In five or ten years and what percentage of that 0:16:04.280 --> 0:16:05.080 market can we capture. 0:16:05.080 --> 0:16:06.960 So then we have to sort of think like, Okay, 0:16:06.960 --> 0:16:09.640 if this company's going to grow its revenue, its profits, 0:16:09.680 --> 0:16:11.760 what markets are going into and then how big will 0:16:11.880 --> 0:16:14.120 the bitcoin valuation of the balance sheet but also the 0:16:14.600 --> 0:16:16.640 size of that market be in the future. To try 0:16:16.680 --> 0:16:19.240 to think about it somehow like that, trying to sort 0:16:19.280 --> 0:16:21.080 of future cast the price. 0:16:21.200 --> 0:16:23.520 Yeah, yeah, I think that's a great question. It goes 0:16:23.520 --> 0:16:25.880 back to something we started our conversation with, which is 0:16:26.160 --> 0:16:28.520 what is the endgame for these bitcoin treasury companies? 0:16:28.560 --> 0:16:28.760 Right? 0:16:28.800 --> 0:16:32.600 And so for company again like Sailor and twenty one Capital, 0:16:32.720 --> 0:16:36.400 the financialization, right, the hyper bitcoinization. 0:16:35.640 --> 0:16:37.440 If you will, is in itself the theme. 0:16:38.080 --> 0:16:40.760 But not everyone can do it, and there is going 0:16:40.800 --> 0:16:43.280 to be a long tail of other companies that are 0:16:43.320 --> 0:16:46.000 adopting the bitcoin standard, but their value propositions is going 0:16:46.040 --> 0:16:47.840 to look different. And I think ultimately this is what 0:16:47.840 --> 0:16:50.880 it's going to come down to. I think, as I 0:16:50.920 --> 0:16:52.960 have seen the universe of companies who have bought piccorn 0:16:53.000 --> 0:16:54.680 the balance sheet at a global level, there are some 0:16:54.720 --> 0:16:58.360 common traits that exist within the corporate capital structure and 0:16:58.440 --> 0:17:01.880 the executive team behind these f words. One is they 0:17:01.960 --> 0:17:05.920 tend to be founder led companies because you actually can't 0:17:06.040 --> 0:17:10.080 do this very easily without the social capital of having 0:17:10.080 --> 0:17:12.120 been the founder of the entity to which you can 0:17:12.119 --> 0:17:15.400 convince your board. And the second thing is these are 0:17:15.720 --> 0:17:19.840 pretty radical individuals that are visionaries at some level about 0:17:19.880 --> 0:17:22.719 wanting to see what the future might look different, and 0:17:22.760 --> 0:17:26.560 so I think ultimate trend people will see is just 0:17:26.600 --> 0:17:30.000 the same way that internet companies was not a thing 0:17:30.359 --> 0:17:33.600 in nineteen ninety nine and beyond those who were able 0:17:33.640 --> 0:17:37.240 to kind of still sniff around that opportunity in that moment, 0:17:37.440 --> 0:17:39.919 despite the drawdown, we're the ones that would emerge and 0:17:40.000 --> 0:17:42.840 be incredibly successful in the future. Right, So it's not 0:17:42.880 --> 0:17:45.640 even about the bitcoin price anymore. At that point, you're 0:17:45.720 --> 0:17:48.200 kind of betting on the human capital of people who 0:17:48.280 --> 0:17:52.120 understand something very deeply about a technological breakthrough that's going 0:17:52.160 --> 0:17:55.959 to create value for the equity in almost entirely different ways. 0:17:56.480 --> 0:17:59.399 And so the thing that we're really excited about a 0:17:59.520 --> 0:18:02.399 bit why, which is why we launched O and B, 0:18:02.680 --> 0:18:05.879 which is our ETF that tracks on a rules based 0:18:05.960 --> 0:18:08.040 companies that have more than one thousand bitcoin on their 0:18:08.080 --> 0:18:10.439 balance sheet, is because it gives you a chance to 0:18:10.520 --> 0:18:15.120 invest on a diversified basis a variety of these leaders. 0:18:15.640 --> 0:18:17.639 So for companies that have more than a thousand big 0:18:17.680 --> 0:18:19.440 one on their balance sheet, then they get included into 0:18:19.480 --> 0:18:20.840 this the ATF fasket. 0:18:21.000 --> 0:18:21.240 Yeah. 0:18:21.400 --> 0:18:24.040 Yeah, So we have an index and it is the 0:18:24.240 --> 0:18:29.960 bit Wise Bitcoin Corporate Standard Index, for which the methodology 0:18:30.080 --> 0:18:34.240 is that we actually market kept weight their exposure based 0:18:34.240 --> 0:18:36.320 on bitcoin holdings at a certain level. 0:18:36.880 --> 0:18:39.400 Whether it's on the balance sheet or it's a treasury strategy, either. 0:18:39.240 --> 0:18:44.359 Way, either way, Yeah, yeah, that must be crushing it 0:18:44.440 --> 0:18:44.879 right now. 0:18:45.119 --> 0:18:46.040 It's very popular. 0:18:46.200 --> 0:18:48.639 It's very popular because I think for the theme of 0:18:48.680 --> 0:18:51.919 what we're living in today, it is absolutely sensical that 0:18:52.000 --> 0:18:53.800 you might want to have that kind of exposure. But 0:18:53.840 --> 0:18:55.680 the other reason is, look, you and I we spend 0:18:55.720 --> 0:18:58.000 our time professionally looking at these crypto markets twenty four 0:18:58.040 --> 0:19:01.960 to seven, but a vast majority, vast majority of financial 0:19:01.960 --> 0:19:06.879 advisors and high networks and retail investors they don't spend 0:19:07.440 --> 0:19:10.240 that much time looking at crypto and so when you 0:19:10.280 --> 0:19:12.520 look at the long tail of the thirty plus companies 0:19:12.520 --> 0:19:14.880 that could exist in this index, they don't know ninety 0:19:14.920 --> 0:19:18.320 percent of it, right, And you actually want exposure in 0:19:18.359 --> 0:19:21.119 these smaller companies because it is the smaller companies that 0:19:21.200 --> 0:19:23.960 actually have the chance to outperform the most based on 0:19:24.000 --> 0:19:25.800 the capital denomination of the microcaps. 0:19:25.840 --> 0:19:28.480 Yeah, so you know, we're seeing. 0:19:30.080 --> 0:19:31.640