Speaker 1: All right, welcome back to another episode of the Markmas
Speaker 1: Show where we are talking about bitcoin, We're talking about cryptocurrencies,
Speaker 1: we are talking about the decentralized revolution, each and every
Speaker 1: week bringing you the latest news, the education and some
Speaker 1: of the biggest, brightest guests in the space, so you
Speaker 1: can have all the information that you need in order
Speaker 1: to be prepared. Now, Uh, things happen fast. Sometimes things
Speaker 1: happen fast, sometimes things happens slow. But uh, right now,
Speaker 1: we have seen a lot of things, and unfortunately the
Speaker 1: price of bitcoin is a little bit down. Um, it's
Speaker 1: off its peak. It was as high as sixty nine
Speaker 1: thou dollars and sitting and sitting now trying to kind
Speaker 1: of recoil and grab some energy in the fifty thousand
Speaker 1: ish range as we speak right now. But don't fret,
Speaker 1: don't fret, just a little break. I mean, we were
Speaker 1: literally a year ago at thirty thousand, and today we're
Speaker 1: consolidating around fifty thousand, which seems like a pretty good
Speaker 1: increase to me. To go from thirties thousand to fifty
Speaker 1: thousand in a year, I'll take it. It's better than
Speaker 1: any other markets have done. Now did go up aside
Speaker 1: sixty nine thousand, and it's down own. But you're focusing
Speaker 1: on the wrong thing. Are you a are you a
Speaker 1: glass half full or a glass half empty kind of person? Right?
Speaker 1: So think about that. Um. Now, if you need any
Speaker 1: bid hope, let me just give you a piece of
Speaker 1: news that broke this week and then we're going to
Speaker 1: dive into something that I'm gonna have one of my
Speaker 1: good friends, Nick bodia On, he's a USC adjunct professor,
Speaker 1: and he wrote something that says, the price is truth,
Speaker 1: the price is always the truth. Now, well, if you
Speaker 1: don't like the price where it's at today, maybe you
Speaker 1: don't like the truth, but let's talk about where the
Speaker 1: price could potentially go. So, um, If you, you know,
Speaker 1: pay attention to money at all, chances are you probably
Speaker 1: heard of Goldman Sacks, Golden raise your hand. If you
Speaker 1: heard of Golden sac well, I can't see you raising
Speaker 1: your hands though, never mind, but Goldman Sacks. Unless you've
Speaker 1: been living under rock, you know who Goldman Sacks are.
Speaker 1: They are the UH financial affirment in the United States
Speaker 1: and really in the world. You've either worked at Goldman
Speaker 1: Sachs and then the government and the government and the
Speaker 1: Golden Sacks in your base of the same and uh,
Speaker 1: you basically kind of run the world at this point.
Speaker 1: Let's just kind of saying like that. Goldman Sacks came
Speaker 1: out with an article this week just the other day
Speaker 1: that said, despite bitcoin's ebbs and flows, they believe bitcoin
Speaker 1: could reach a hundred thousand dollars Wow. As it's as
Speaker 1: they say, it's steadily pushing out gold's place in the
Speaker 1: store of value market. Mm hmm. They said. After topping
Speaker 1: out nearly at seventy November, then bitcoin decided to decline.
Speaker 1: As we talked about that, but bitcoin's Goldman Sacks puts
Speaker 1: bitcoins float adjusted market capitalization at just below seven hundred
Speaker 1: billion store of value market assets that gain or stay
Speaker 1: stable over time. Gold is presently at two point six trillions.
Speaker 1: So what they're saying is that, um, the gold market
Speaker 1: is really it's it's a lot more than that. Um.
Speaker 1: But but they're talking about the percentage of gold that
Speaker 1: people use. And typically people would move to gold to
Speaker 1: what I call a chaos hedge. So whenever there's chaos
Speaker 1: in the markets, whether there's massive inflation, deflation, or whatever
Speaker 1: type of chaos is going on, then people would turn
Speaker 1: to gold. Historically. What they're saying is Goldman Sachs, not me,
Speaker 1: although I agree what Goldman Sachs is saying that they
Speaker 1: are seeing bitcoin taking up that store of value market
Speaker 1: that retail would typically go to UM and now it's
Speaker 1: going into bitcoin. UM. They say that it's about you know,
Speaker 1: the percentage of people, the percents of of the market
Speaker 1: gap that people would go to for the store value
Speaker 1: markets about two point six trillion and uh. They said
Speaker 1: that in the next five years bitcoin making up as
Speaker 1: much as fifty percent of the entire store of value market.
Speaker 1: So right now, UM, the amount of bitcoin or the
Speaker 1: bitcoin is being used as a store value. What does
Speaker 1: that mean store of value? Well, when I earned my money,
Speaker 1: I'm storing my energy to be used at another point
Speaker 1: in time. So, for example, to break this down to
Speaker 1: kind of the first principles level, if I was saying
Speaker 1: digging a hole and I'm expending so I I consume calories,
Speaker 1: I eat food, that's calories. Those calories are energy in
Speaker 1: my body. I expend those calories that energy by digging
Speaker 1: a hole. Let's say I have to dig a hole
Speaker 1: for four hours in a day to earn enough to
Speaker 1: give me my food and shelter that I need to survive.
Speaker 1: But let's say that then I decided to work an
Speaker 1: extra four hours. Well, i've worked an extra four hours,
Speaker 1: expend an extra four hours of energy. Now I need
Speaker 1: to be able to store that energy in a way
Speaker 1: that I could use at a later in time. So
Speaker 1: now I could use that energy for tomorrow and I
Speaker 1: don't have to work all right, So I'm storing my wealth,
Speaker 1: storing my energy, storing my value to be used at
Speaker 1: a later in time. Now, typically people do that with money.
Speaker 1: So you earn money, you don't spend all your money.
Speaker 1: You store some of it. But money currency dollars are
Speaker 1: the worst. Are a horrible store of It's a horrible
Speaker 1: place to store your value because that that value leaks,
Speaker 1: It loses value very quickly. And so most people realize this,
Speaker 1: which is why they're scrambling to buy anything they can
Speaker 1: as fast as they can, including homes, including cars, including stocks,
Speaker 1: including bitcoin, or mountain bikes or kayaks or whatever it
Speaker 1: else is that you want to buy. Toilet paper, Some
Speaker 1: people are stocking up on toilet paper. So what they're
Speaker 1: saying is the store of value market typically historically has
Speaker 1: been gold, but now bitcoin is overtaking that, and they
Speaker 1: believe that over the next five years that store of
Speaker 1: value market that gold is you know, pretty much dominated,
Speaker 1: is going to be UM. More people are moving to bitcoin,
Speaker 1: and they think over the next five years, as much
Speaker 1: as fifty percent of the store of value market would
Speaker 1: go into that, and they would put the value of
Speaker 1: bitcoin at around a hundred thousand dollars on an annual
Speaker 1: return of about that's pretty damn good. I'll take a return,
Speaker 1: especially when you have averaged out over over that time,
Speaker 1: especially when you look at gold, which has dropped three
Speaker 1: point six percent in UM as part of the biggest
Speaker 1: annual decline since heen. So while gold has dropped three
Speaker 1: point six p during one of the most chaotic periods
Speaker 1: in history, UM one of the highest. As a matter
Speaker 1: of fact, we hit the highest inflation level that we've
Speaker 1: seen in forty years, in four decades the most inflation,
Speaker 1: and gold lost value. So it's not hard to understand
Speaker 1: why people would rather store their value in something else.
Speaker 1: They want to say that golden crypto. When you start
Speaker 1: to think about them, there's a lot of the same attributes. UM.
Speaker 1: You said that there's a finite supply, there's only twenty
Speaker 1: one million, they say in this article crypto coins. Uh,
Speaker 1: the only twenty one million crypto coins can be made,
Speaker 1: So you've got this finite supply, just like you do
Speaker 1: with gold. That is not accurate. I'm going to call
Speaker 1: them out. There's a lot more than twenty one million
Speaker 1: crypto coins. There's only twenty one million bit coins. So,
Speaker 1: as I like to say, bitcoin not crypto h I
Speaker 1: said in a previous set, meant that just like gold
Speaker 1: has certain attributes and properties, and there's lots of other
Speaker 1: metals palladium and platinum and silver and rhodium and grow
Speaker 1: molley and steel and aluminum, blah blah blah, um, only
Speaker 1: one has the attributes that gold has. And just like bitcoin, Um,
Speaker 1: there's about, I don't know, fifteen thousand cryptocurrencies, but only
Speaker 1: one has the attributes Open border list permission listens as
Speaker 1: a resistant, immutable, et cetera. And so to his point,
Speaker 1: his finite supply, bitcoin only has twenty one million. Other
Speaker 1: cryptos have more. But that's the same as gold. Right.
Speaker 1: In order for something to hold value, it has to
Speaker 1: be scarce. All the all the basics of economics all
Speaker 1: is based off of scarcity, which, of course we all
Speaker 1: only have twenty four hours in the day, and so
Speaker 1: our time is based off of scarcity, and everything that
Speaker 1: we do in order to push our lives forward is
Speaker 1: based off of that scarcity of time. And there's more
Speaker 1: people than there are resources. Resources are finite, which means
Speaker 1: we have scared city and resources which means that we're
Speaker 1: all competing for more resources. UM. And so when you
Speaker 1: have an unlimited money supply, when they can literally push
Speaker 1: a button on a keyboard and print up trillions of
Speaker 1: more dollars, it messes up this whole system. But that's
Speaker 1: why gold has worked good for five thousand years because
Speaker 1: of a finite supply. Now there is new gold coming
Speaker 1: out of the ground on a regular basis. But Bitcoin
Speaker 1: is programmed to never have more than twenty one million coins. Now,
Speaker 1: some people say, yeah, but can't that be changed UM Theoretically,
Speaker 1: I suppose it could. Theoretically, realistically probably not UM. In
Speaker 1: order to get that changed, it would it would take
Speaker 1: UM basically an attack on the network. It would go
Speaker 1: through probably a year of battle, and if that happened,
Speaker 1: it would probably destroy the network. But we would know
Speaker 1: well in advance if that was ever going to happen Uh,
Speaker 1: and we'd have plenty of time to figure that out.
Speaker 1: Of course, like I said, that's theoretically realistically probably not um,
Speaker 1: but that's the price. Now. Like I said, we're gonna
Speaker 1: have Nick Body coming on as USC professor and he's
Speaker 1: going to talk to us about the price being truth.
Speaker 1: And then we're gonna talk about um something that I'm
Speaker 1: super interested in, which is is the bitcoin e t
Speaker 1: F and the paper supply of bitcoin going to artificially
Speaker 1: suppress the price of bitcoin something I'm worried about. I'm
Speaker 1: gonna be right back with Nick in just a second, uh,
Speaker 1: talking about prices, truth and what's happening with the bitcoin
Speaker 1: e t F. So don't go away, all right, Welcome back.
Speaker 1: You are listening to the Mark Mo Show, and we
Speaker 1: are talking about bitcoin, and we're talking about this decentralized revolution.
Speaker 1: And I am joined in the studio now by one
Speaker 1: of my good friends, Nick Botia. You can find him
Speaker 1: on Twitter at time Value of BTC that stands for
Speaker 1: Bitcoin time value of BTC and um. Nick is um
Speaker 1: On the author of a book called The Layered Money,
Speaker 1: which is an amazing read. I think, uh was I
Speaker 1: think Preston pistaid it was like one of his top
Speaker 1: books of the year. I think that was. That's pretty amazing.
Speaker 1: He reads like hundreds of books a year, So a
Speaker 1: good job on that, Nick. Um. And Nick, you're also
Speaker 1: a adjunct professor I think of economics at US see
Speaker 1: is that right? That's right at USC Marshall School of Business. Yeah,
Speaker 1: so you are somebody very credential to talk about this.
Speaker 1: So thanks for joining me today. Nick. Of course, good
Speaker 1: to be with you. Mark. So, Um, something I want
Speaker 1: to talk about, I know you talk about price is truth.
Speaker 1: There's all the price takes into consideration, all of the
Speaker 1: data that's out there. And something that I've been concerned
Speaker 1: with for a couple of years is these et f
Speaker 1: s coming into the market. Um. Caitlyn Long has been
Speaker 1: talking about this, and Um, you have a little bit
Speaker 1: of a country and view to this. Now. My fear
Speaker 1: with this with this bitcoin market is I believe that
Speaker 1: maybe it's too simple, but price moves off supply and demand.
Speaker 1: So uh, if there's more some you know whatever, more
Speaker 1: demand and lets than supply, then the price goes up.
Speaker 1: And so if I was an institution or hedge fund
Speaker 1: and I want to put a billion dollars into bitcoin,
Speaker 1: I have to buy a billion dollars, take a billion
Speaker 1: dollars off the market. I take supply off the market.
Speaker 1: I'm putting demand into the market. The prices should rise.
Speaker 1: But if there's a paper market for e t f
Speaker 1: s like we have now, there's no it's all it's
Speaker 1: all uh spot right, there's or there's no it's there's
Speaker 1: no cash settled. I'm sorry, it's cash not physically settled.
Speaker 1: So all I'm doing is betting on the price of bitcoin.
Speaker 1: I'm not actually buying bitcoin the way I understand it.
Speaker 1: And so that means instead of putting my billion dollars
Speaker 1: and taking a billion dollars a bitcoin off the market
Speaker 1: and and messing with the supplied tomand metrics, now I
Speaker 1: can just put a billion dollars betting on that and
Speaker 1: it artificially, um, it gives them artificial bitcoin. It doesn't
Speaker 1: affect the supplied demand metrics. But you don't necessarily agree
Speaker 1: with that. Give us your take on that. So yeah,
Speaker 1: I think that bitcoin is very unique in that it
Speaker 1: trades across all these exchanges around the world. Now, we
Speaker 1: we do have paper products, derivative products, et F products
Speaker 1: call it, you know, let's call them all paper products. Okay, uh,
Speaker 1: these are bitcoin substitutes, not bitcoin, right. Bitcoin itself trades
Speaker 1: on coin based pro bitfin x, cracking, all these exchanges
Speaker 1: around the world, and these exchanges, these large, reputable exchanges,
Speaker 1: have longstanding reputations of being able to satisfy withdrawals no
Speaker 1: matter what the sizes, and for that reason, the price
Speaker 1: that we see on those exchanges is the real bitcoin price.
Speaker 1: The fact that ETFs and futures all trade, and even
Speaker 1: bitcoin futures on exchanges like Finance, all those prices trade
Speaker 1: along with let's say, the coin base and cracking price.
Speaker 1: That means that the market of bitcoin is efficient across
Speaker 1: multitude of platforms. You can have small arbitrage and people
Speaker 1: and they're all there are strategies that are dedicated to
Speaker 1: arbitraging the price just between exchanges, because you can, you know,
Speaker 1: find ten dollar differences and go long and short and
Speaker 1: arbitrage that trade. But the fact that these large bitcoin
Speaker 1: exchanges have satisfied withdrawals for years and years means that
Speaker 1: those prices are the real bitcoin price. And whatever. You know,
Speaker 1: and I respect Caitlin a lot, and she's a friend.
Speaker 1: What what she's saying is that they are all these
Speaker 1: paper products, and you can have you know, unlimited, theoretically
Speaker 1: unlimited leverage to short bitcoin through these paper products. While
Speaker 1: I believe that, you know, that is in theory possible,
Speaker 1: it doesn't mean that what the price that we observe
Speaker 1: is not the real price. And that's what we're saying
Speaker 1: when price is truth here. The price does actor in
Speaker 1: everything that we know about bitcoin, including that there are
Speaker 1: paper products and people can go naked short through derivatives
Speaker 1: that aren't you know, backed by any real bitcoin. But
Speaker 1: you know, on the exchanges, if people withdraw and the
Speaker 1: bitcoin is there at the price that's given to them
Speaker 1: on the screen, then that's what the bitcoin prices. Okay,
Speaker 1: So it sounds like maybe there's two different conversations going
Speaker 1: on here. So you're saying that whatever, whatever is happening
Speaker 1: through all these exchanges and paper markets, etcetera, etcetera, etcetera,
Speaker 1: the price is the truth. The price summarizes everything that's
Speaker 1: going on out there, which which obviously is obvious. Yes,
Speaker 1: that is the truth. And I get that. I think
Speaker 1: what she's saying, and not to put words in her
Speaker 1: mouth where I guess I'll say what what I have
Speaker 1: a concern of is, while the price maybe truth and
Speaker 1: actually I say the price is truth, I agree with
Speaker 1: you on that, that doesn't mean that the price isn't
Speaker 1: suppressed being the truth. So the price is the truth,
Speaker 1: but but the but the price could be manipulated because
Speaker 1: now we've inflated the supply through fake paper market. So
Speaker 1: even though the price is the truth, couldn't it still
Speaker 1: be artificially suppressed? Of course, And you know that's the
Speaker 1: other side of it is I'm not even arguing that
Speaker 1: it can't be suppressed or that you know, it could
Speaker 1: be higher if it wasn't wasn't absent for these instruments.
Speaker 1: But that's not something that we can do anything about.
Speaker 1: It's not something that we can change. Um, the financial
Speaker 1: powers that be if that's their strategy to suppress the
Speaker 1: price of bitcoin, or some you know, large whale trader
Speaker 1: that's their strategy to suppress the price of bitcoin over
Speaker 1: the long term, it's not something that we can change.
Speaker 1: And um, it's not I think, you know, we get
Speaker 1: a lot of background in contact from this from the
Speaker 1: gold price suppression scheme and the London bullion trade and
Speaker 1: and how that's worked over the last several decades and
Speaker 1: that does energize some of this conversation. So I do
Speaker 1: want to acknowledge the work done by data and the
Speaker 1: discoveries that were made in how paper markets are used
Speaker 1: to suppress the gold price and have been for years, um,
Speaker 1: but gold has also risen in price despite that, Gold
Speaker 1: has taken a geopolitical you know, importance in the last
Speaker 1: fifteen years since the oh seven or eight financial prices
Speaker 1: because of that. Russia China are you know, making huge
Speaker 1: geopolitical moves because of gold still despite whatever London price
Speaker 1: suppression scheme is going on, and so bitcoin will also
Speaker 1: charge on in the face. I just my point is
Speaker 1: that I'm not really concerned about whether or not the
Speaker 1: bitcoin prices being suppressed to these instruments, because it is
Speaker 1: a market that has a transparent settlement mechanism, very transparent,
Speaker 1: the most transparent of all time. So we should celebrate that,
Speaker 1: and um, you know, it's it's just not a concern
Speaker 1: to me. Okay, I want to I want to dig
Speaker 1: into a couple of those things that you talked about
Speaker 1: there that I think are a couple of good points.
Speaker 1: The questions that I have while talking about that you're
Speaker 1: listening to the Mark MOA show. We're talking about bitcoin
Speaker 1: and the decentralized revolution. I'm in the studio with Nick
Speaker 1: body up Um. You can find them on Twitter at
Speaker 1: time Value of btc. We're talking about bitcoin, the prices truth.
Speaker 1: We're talking about this this new E t F paper
Speaker 1: market and the possibility of its suppressing the price. We're
Speaker 1: gonna dig into more about that and some of the risks, UM.
Speaker 1: So don't go away. We were back, all right, welcome back.
Speaker 1: You're listening to the Markma Show. We're talking about bitcoin,
Speaker 1: and we're talking about this decentralized revolution, and today we're
Speaker 1: digging into a little bit deeper into the inner workings
Speaker 1: of this financial system. I'm in the studio with Nick Bodia.
Speaker 1: You can find them on Twitter at time Value of
Speaker 1: btc um. He also writes a newsletter. He's an adjunct
Speaker 1: professor at usc UM and he also writes a newsletter
Speaker 1: that I've been reading and if you're interested in these topics,
Speaker 1: you should subscribe Nick. What's the name of that newsletter.
Speaker 1: It's called the Bitcoin Layer on sub Stack, The Bitcoin
Speaker 1: Layer on sub Stack. I recommend each of you to
Speaker 1: go out and subscribe to that. It's so much information Uh,
Speaker 1: it's too cheap. Nick. I'm talking to you about that later.
Speaker 1: But anyway, UM, back to what we were talking about,
Speaker 1: which is, um, you know, the price being truth and
Speaker 1: the e t F market. Now to your point, Um,
Speaker 1: you you went in and kind of talked about the
Speaker 1: gold market, and you know, in the gold market, Uh,
Speaker 1: you know, estimates are there's potentially five hundred paper ounces
Speaker 1: for everyone physical ounce that's being traded. Um. You know,
Speaker 1: massive manipulation with naked spoofing and naked shorting and things
Speaker 1: like that. You know, we've seen JP Morgan to pay
Speaker 1: out massive fines for things like that. Um, And so
Speaker 1: you know there's no doubt that that's that's being done. Now,
Speaker 1: I get that with bitcoin that even if you manipulate
Speaker 1: the price, it doesn't affect the network. It's still borderless,
Speaker 1: permission list, censorship, resisting, immutable, blah blah blah. Um. But
Speaker 1: I would, in my opinion, maybe one of the greatest
Speaker 1: risks to bitcoin isn't that Probably the two biggest risk
Speaker 1: in my opinion are one that the nodes will become
Speaker 1: centralized if people don't run nodes, and then you know,
Speaker 1: coin bases and exchanges get too much power that's that's
Speaker 1: probably one. But the second one is that the price
Speaker 1: could be so artificially manipulated that people would lose interest
Speaker 1: and then countries, let like take take action like Al
Speaker 1: Savador for example, If the price gets dropped in half
Speaker 1: when they've put their whole money into it, other countries
Speaker 1: gonna follow suit. So I think there is a risk
Speaker 1: there in my opinion. And so I see this possibility
Speaker 1: to manipulate the supply demand, manipulate the price could have
Speaker 1: of an effect. And I know you said it kind
Speaker 1: of is what it is, um, but I guess it
Speaker 1: is what is. But do you see that as being
Speaker 1: a risk? I mean, do you see that if they
Speaker 1: build up this paper market enough that they could that
Speaker 1: they could use that to artificially suppress the price over
Speaker 1: long term. So another aspect of the whole prices truth
Speaker 1: thing is that, uh, the price tells a story through time.
Speaker 1: So I look at I used price charts to tell
Speaker 1: me what's happening through time, and I look at Bitcoin's
Speaker 1: price chart, and I'd like to use realized value as
Speaker 1: realized market cap as one of my metrics that anchors
Speaker 1: how I'm looking at the price and the realized you know,
Speaker 1: realized value of bitcoin is um in the thirties, right,
Speaker 1: that's what that's the the m v r V. Yeah,
Speaker 1: so that's the ratio between the market value and the
Speaker 1: realized value. So right now we're you know, at about
Speaker 1: one and a half. And what that means means is
Speaker 1: that word about you know, premium to what the realized
Speaker 1: value is. The realized value is a snapshot of where
Speaker 1: the bitcoin price was when bitcoin transaction transacted on the
Speaker 1: chain itself, not necessarily on exchanges, and so it is
Speaker 1: a slower moving um target of what bitcoins let's say
Speaker 1: fair value. I don't explicitly want to call it a
Speaker 1: fairy value, but it is a valuation metric. Realized price
Speaker 1: is a valuation metric that we can use to think
Speaker 1: about bitcoin over a longer time horizon. Just like we
Speaker 1: use two hundred day or fifty week moving averages to
Speaker 1: smooth price through time, realized values a way to do that.
Speaker 1: So weird about one and a half times realized value today.
Speaker 1: So and for much of two thousand and twenty one,
Speaker 1: we've been approaching or touching up against these levels that
Speaker 1: are three plus, so a very extended valuation. When you
Speaker 1: start to get to you know, quote unquote bubble territory
Speaker 1: for for for bitcoin. So in the last twelve months,
Speaker 1: what can we observe from the price we've we we
Speaker 1: observed that the price has gotten very hot at times
Speaker 1: and has cooled off to a point where it's still
Speaker 1: above this long term fundamental metric. So where's the price suppression?
Speaker 1: Let's be honest, it's not. To me, I don't observe it.
Speaker 1: You could say if the ratio of market value to
Speaker 1: realize value was less than one for a sustained period
Speaker 1: of time and was exhibiting some random behavior, but it's not.
Speaker 1: Bitcoin has seen huge rallies which are very characteristic of bitcoin,
Speaker 1: followed by huge liquidations due to leverage. And we can
Speaker 1: actually see an interest in the futures market. Collapse means
Speaker 1: contracts that were naked long go away when the price dumps,
Speaker 1: and all very normal and healthy market activity. So where's
Speaker 1: the price suppression? I don't think that it's an argument
Speaker 1: we have to get into when we're you know, looking
Speaker 1: about you know, and to Caitlin's point and credit, her
Speaker 1: job is as a banker to make sure she offers
Speaker 1: a product that can you know, she's a big advocate
Speaker 1: of proof of keys, which means I have a bitcoin product.
Speaker 1: I've signed this transaction to the Bitcoin Ledger where you
Speaker 1: can see I have the bitcoin for real, and so
Speaker 1: you can invest in my product with confidence. She's a banker,
Speaker 1: that's what she's trying to do and market. So that's
Speaker 1: her talking her book that we have to, you know,
Speaker 1: have these products that have proof of keys and not
Speaker 1: fake potentially fake bitcoin, and good on her for trying
Speaker 1: to do that. It's not my concern. I'm you know,
Speaker 1: hold your own keys. If you're really interested in protecting
Speaker 1: your own bitcoin, and if you're not going to hold
Speaker 1: your own keys, demand that your custodians have proof of keys.
Speaker 1: And if you're not going to do that, then understand
Speaker 1: the risks of potentially paper bitcoin being practionally reserved. Now, um,
Speaker 1: real quick, if you could give us the short version
Speaker 1: of what you mean by the real the market value
Speaker 1: versus the realized value. So the realized value is kind
Speaker 1: of the price point that people have received it at
Speaker 1: versus where the market value is today. So the majority
Speaker 1: of bitcoin holders are actually in profit is that something
Speaker 1: like you're talking about? Yeah, So the majority of bitcoin
Speaker 1: holders are in profit based on where what we observe
Speaker 1: from bitcoin's blockchain, so separate in your mind that people
Speaker 1: trade on exchanges, but then they actually transact using bitcoin
Speaker 1: when they, for example, withdraw from an exchange. So those
Speaker 1: on chain bitcoin transactions, when those happen, we strike the
Speaker 1: price and measure bitcoins market capitalization on a realized basis,
Speaker 1: meaning what the on chain activity reflects. And then we
Speaker 1: have a market price, which is where bitcoin trades on exchanges,
Speaker 1: and we can use the market price and the realized
Speaker 1: price in a ratio to give us context. It It
Speaker 1: doesn't mean that the ratio should be one. It doesn't
Speaker 1: mean that it can never get to five. That's it's
Speaker 1: just like we use price to earnings ratio in equities. Right,
Speaker 1: we have the price, which is what the market trades,
Speaker 1: We have the earnings, which is the real number that
Speaker 1: the company publishes, and we have a ratio between them,
Speaker 1: and we can use that ratio to give us context
Speaker 1: and to make investment decisions sometimes or to guide us
Speaker 1: or to give us some story or say all about
Speaker 1: what's happening. So I'd like to use and I've written
Speaker 1: about that at the Bitcoin Layer. The article was called
Speaker 1: the four year Cycle is dead, long live bitcoin, because UM,
Speaker 1: I think that the four year cycle is muting itself
Speaker 1: in a way, and we can observe that, observe that
Speaker 1: with ratios like m v r V. Yeah, I want
Speaker 1: to I want to dig into that article that you're
Speaker 1: at the four year cycle is dead. We'll talk about that, UM,
Speaker 1: because bitcoin moves on these four year having cycles. Every
Speaker 1: four years, the amount of bitcoin being produced on a
Speaker 1: daily basis by the miners gets cut in half. And
Speaker 1: typically people have looked at these four year having cycles
Speaker 1: and then said, well, approximately eighteen months after you know, having,
Speaker 1: the market peaks, But like, really, we don't have enough
Speaker 1: data to back that app. So I want to dig
Speaker 1: into that with you. UM. In a minute, you're listening
Speaker 1: to Mark Moss talking about bitcoin in the studio with
Speaker 1: Nick Bodia. You can find them on Twitter at time.
Speaker 1: Value of BTC is also the author of the book
Speaker 1: called Layered Money, which I've read and I love it. UM.
Speaker 1: I've referenced it quite a bit, So checked out that book.
Speaker 1: And he also writes a newsletter, the Bitcoin Layer dot
Speaker 1: sub stack dot com, so check those out as well.
Speaker 1: We've been talking about UM the price of bitcoin, UM,
Speaker 1: the market value of bitcoin versus the realized value of bitcoin,
Speaker 1: and then the potential for these paper bitcoins, these e
Speaker 1: t F to potentially suppress for manipulated price. We're gonna
Speaker 1: come back in a minute and talk about the end
Speaker 1: of the four year cycle. Don't go away, hey, welcome back.
Speaker 1: You're listening to the Markma Show where we're talking about
Speaker 1: bitcoin and talking about the decentralized revolution each and every week,
Speaker 1: trying to bring you the most up to date information,
Speaker 1: the education and special guests to give you even more
Speaker 1: insight into the market. Understanding bitcoin isn't easy. There's a
Speaker 1: lot of things going on, but it's worth the time.
Speaker 1: It's worth your time, it's worth your attention to put
Speaker 1: into it. I'm in the studio with Nick body Up.
Speaker 1: You can find him on Twitter at time Value of BTC.
Speaker 1: He's the author of the book called Layered Money, and
Speaker 1: he writes a awesome newsletter called the Bitcoin Layer at
Speaker 1: sub Stack. Check out those options. Um now, Nick Um,
Speaker 1: you wrote an article recently. I subscribed to your newsletter
Speaker 1: and everybody else should as well if you care about
Speaker 1: these subjects, which you do. If you're listening, um, and
Speaker 1: you wrote one called the four Year cycle is dead
Speaker 1: and I and I said before the break, right, we
Speaker 1: know that bitcoin has these four year having cycles UM
Speaker 1: and people have been trying to guess where the top
Speaker 1: is in the market based off of where we are
Speaker 1: having cycle. You said the four year cycle is dead.
Speaker 1: What does that mean? Yeah, so bitcoin has uh in
Speaker 1: two thousand and thirteen and two thousand and seventeen had
Speaker 1: these massive run ups and parabolic increases in price, and
Speaker 1: they correlated perfectly with uh lag. After the havings, which
Speaker 1: are when you know, every four years or so when
Speaker 1: bitcoins supply increase has um and you know, stays that
Speaker 1: way for the next four years. And it does make
Speaker 1: sense that as bitcoin becomes more scarce UM and it's
Speaker 1: demand is still increasing on a on an exponential adoption curve,
Speaker 1: that we could have these supply shocks and massive run
Speaker 1: ups in price. And it's been the theory for a
Speaker 1: long time across bitcoin in general that havings lead to
Speaker 1: these parabolic increases in price. We would have another crash
Speaker 1: after that and you know, this big winter bear market.
Speaker 1: But what we saw in is Bitcoin's behavior change a
Speaker 1: little bit, and it didn't. It didn't resemble over Bitcoin
Speaker 1: had a nice increase. It was a less than increase UM,
Speaker 1: but it had this long mini bear market during the
Speaker 1: summer and um, it just it didn't follow that exact
Speaker 1: four year pattern that it had been showing. So for
Speaker 1: that reason, I think the four your cycle is dead
Speaker 1: doesn't mean bitcoin won't respond in price to havings anymore. Um.
Speaker 1: But the point of the article was to show that
Speaker 1: with much more sophisticated hedging tools, miners and market other
Speaker 1: market participants that respond to the supply shock of the
Speaker 1: having itself can spread out their risk over products and
Speaker 1: over time. The time aspect is really key here. It's
Speaker 1: not just that you can hedge using the options market
Speaker 1: or the futures market. It's that there's a whole risk curve,
Speaker 1: an option curve, and you know, six to eighteen months
Speaker 1: out options and futures products that you can engage in
Speaker 1: to mitigate your future price risk if you are a
Speaker 1: physical user of bitcoin itself. And that sophistication of the
Speaker 1: hedging market reduces volatility around the having events even if
Speaker 1: measured on a four year period, and so having still
Speaker 1: might have a huge effect on price. But this whole
Speaker 1: idea that every four years we're going to have a
Speaker 1: massive bubble and a massive crash might be over UM,
Speaker 1: but still expect you know, large volatility from bitcoin for
Speaker 1: the time being. Well, I think, um, you know, in
Speaker 1: the past, we've seen you know, huge draw downs, drawns,
Speaker 1: draw downs, and we've always expected I think most people
Speaker 1: have expected that as bitcoin continues to get bigger and bigger,
Speaker 1: that the volatility goes down, down, down, And so we've
Speaker 1: gone from draw downs, apes and draw downs. In this year,
Speaker 1: we've got a draw down. I mean, it wasn't small, right,
Speaker 1: and so maybe that was the maybe that was the
Speaker 1: big crash that we were expecting a draw down was
Speaker 1: you know, like I said, that that's that's nothing small.
Speaker 1: Another thing that I was thinking that when as you
Speaker 1: were talking and and you're talking about these these supply
Speaker 1: demand UM metrics kind of changing, and some of that
Speaker 1: based off of these products that are available for them
Speaker 1: to hedge their bets, which you know, a lot of
Speaker 1: these future markets actually got their start from farming, where
Speaker 1: they did have to hedge their bets, right, they didn't
Speaker 1: want to have a bad croppy or something like that. UM.
Speaker 1: But also something that I've been noticing specifically in the
Speaker 1: miners that are mostly affected by this this this supply
Speaker 1: demand is that um, you know, just in the last
Speaker 1: several months, we've seen six or eight different mining companies
Speaker 1: go public and raise hundreds of millions of not billions
Speaker 1: of dollars, and so they're raising basically almost free money,
Speaker 1: free debt um and they're going into mining and their
Speaker 1: goals are they don't they don't need to sell that
Speaker 1: bitcoin anymore. So they have the products to hedge on
Speaker 1: one side, but on the other side, they've also used
Speaker 1: the market and the low low rates to raise this
Speaker 1: debt where they don't have to sell the bitcoin either,
Speaker 1: and so that's got to dramatically change the markup. And
Speaker 1: then you have that that dynamic as well as the
Speaker 1: institutional players that have come in and you know, the
Speaker 1: Michael Sailor being the kind of main archetype there and
Speaker 1: he's like, I'm never selling. And when you have these
Speaker 1: institutional players, you know, Warren Buffett's own Coca Cola for
Speaker 1: like sixty years, right, Like, they don't come in to
Speaker 1: just buy and sell real quickly. So I guess the
Speaker 1: makeup of the buyers, the change in the mining, and
Speaker 1: the products being available, like you said, probably all play
Speaker 1: into just change in the dynamics of that completely. Yeah,
Speaker 1: we we have a new market structure in than we
Speaker 1: did in it's just different players. The size is unlike
Speaker 1: anything we saw five years ago. We have public companies.
Speaker 1: You mentioned Sailor. He did a great long interview with
Speaker 1: Peter McCormick, who I know that you just went on
Speaker 1: UM and they talked about the I p o s
Speaker 1: of mining companies and it really, um it shifted my
Speaker 1: thinking about it a little bit, where uh, basically the
Speaker 1: importance of these publicly traded mining companies the prospect that
Speaker 1: they may never sell and the prospect that as public
Speaker 1: companies they're also financial engines and therefore can turn debt.
Speaker 1: You know, they can print their own money in the
Speaker 1: form of stock, they can print dollars in the form
Speaker 1: of debt, and by mining equipment hoard bitcoin. It it
Speaker 1: does bring this whole new dynamic to the bitcoin market.
Speaker 1: UM where it's we're institutionalizing this idea of courting bitcoin
Speaker 1: and storing it as digital energy and um it's it's
Speaker 1: a very exciting time. And the four year cycle is
Speaker 1: that doesn't mean that we're not going to have bowl markets.
Speaker 1: It just means that the nature of bitcoins price is
Speaker 1: going to it's not going to be the same as
Speaker 1: ever again, it's going to be some thing different. It
Speaker 1: might have been accelerated from four to three years, like
Speaker 1: you said, like three and a quarter years, because we
Speaker 1: had that draw down pretty early on in and um,
Speaker 1: we'll see how it behaves, you know, in the next having.
Speaker 1: And uh, you know that's why we're here watching bitcoin
Speaker 1: every day. Yeah, Michael Sailor's I think it was Michael
Speaker 1: Taylor said all your models are broken, like every everything's changed, right,
Speaker 1: And uh, I love that. I constantly say that the
Speaker 1: world we're going into is not the same as the
Speaker 1: world that we're that that we've left behind. Um, you know,
Speaker 1: we're we're in a in a different market cycle. We
Speaker 1: have the FED you know, driving policy, and um, different
Speaker 1: different stores of value like bitcoin coming out, and so
Speaker 1: anybody who's using you know, fifty sixty eight year old
Speaker 1: history to try to kind of project where we're going
Speaker 1: it's different and same with bitcoin, right, I mean, it's
Speaker 1: too new and things are changing too fast to constantly say, well,
Speaker 1: it's going to happen exactly the same way. Um. I
Speaker 1: was just before the secondment, before you came on I
Speaker 1: was reading an article of Goldman Sachs him out and
Speaker 1: said that they expect gold to continue to steal the
Speaker 1: store of value portion from gold, and they think over
Speaker 1: the next five years you can capture fifty of the
Speaker 1: store value that gold has, and they put it up
Speaker 1: to a hundred thousand dollars in five years, which I
Speaker 1: think is very low in my opinion. But I don't
Speaker 1: have a crystal ball, so I'm not trying to put
Speaker 1: any predictions out there. Um, do you have any predictions?
Speaker 1: Real quick? Before we got to wrap it up. I
Speaker 1: think bitcoin is headed to a million dollars over a
Speaker 1: decade decade time horizon, and that that's the way that
Speaker 1: I think about it. So hundred thousand is in the cards.
Speaker 1: So is half a million, So is a million. It's
Speaker 1: just it's a matter of time, and it's just going
Speaker 1: to take a long time. Got it, Got it all right?
Speaker 1: I think a million in ten years is good too.
Speaker 1: I'm in the studio with Nick Bodia at time Value
Speaker 1: of BTC. Check out his newsletter Bitcoin The Bitcoin Layer
Speaker 1: on sub stack, his book Layered Money. Thanks for listening
Speaker 1: to the Mark Moss Show. Catch you next time.