Latest / The Income Show / Why the Bitcoin Bears Are Wrong | The Income Show | Ep. 10

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Why the Bitcoin Bears Are Wrong | The Income Show | Ep. 10 · The Income Show

0:00
If you're bearish on strategy, to be intellectually honest, you have to be like Peter Schiff, which is fine.
0:04
Like you can be super bearish on Bitcoin, but like you can't be bullish on Bitcoin and super bearish on strategy.
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Like that's just the math doesn't work.
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My dad likes to say the market does whatever it needs to do to make the most people look like dummies.
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I don't know. Like if everyone's saying October's the bottom and it's going to tick, you know, 49, that's the one thing it's not going to do.
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Strategy selling a few hundred million dollars worth of Bitcoin.
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200 million over the course of a week like literally doesn't like doesn't move the needle at all on the price of bitcoin like it might as well have been zero like it just doesn't matter to be like completely clear here.
0:47
Hey everybody welcome back to the Income Show this week I have on Parker from Apex. Parker welcome.
0:54
Thanks for having me.
0:54
So, Parker, I kind of want to start off with a very high-level question, maybe like more of a like you personally type question.
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Like, what's your general investment philosophy?
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Like, how do you think about capital allocation from, you know, a growth perspective, from an income perspective?
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How do you think about that?
1:15
That's a broad question.
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So, there's an old saying.
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actually I'm going to butcher it, but that you shouldn't, as a doctor, you shouldn't be your own
1:30
doctor. And back in my TradFi days when I was managing money, there was basically the same
1:41
thing applied. You shouldn't be your own financial advisor. So I will give advice or not advice,
1:48
but like some thoughts but my personal allocation is just like 110% long effectively Bitcoin and
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Solana and then like derivatives of the same so whether that's MSTR, DFDV, some Apex allocation,
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you know the governance token like otherwise I'm just all in. Now putting on my CFA hat
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And I think generally speaking, the healthy way to approach portfolio management is really
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figure out where you can allocate or what type of risk you can take and still sleep at night.
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And I think for everybody, generally younger people can stomach more risk.
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But I think for everybody, that number is a little bit different.
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And maybe you even have to feel it out a little bit where you have a portfolio that's maybe
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more allocated to risk assets, to equities, to Bitcoin, that kind of thing.
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And then like bear market comes and like you are stressed and it's impacting your like
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personal health.
2:56
It's probably time to dial it back a little bit and, you know, wait for the rebounds.
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You're not booking a loss, but like, um, you know, I think it's generally a good approach.
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um so but you know typically i like to take um you know a bit of a barbell approach
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so on the risk asset front um you know as far out on the risk curve as you know i can effectively go
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without um going straight to zero so like i'm not out here like aping the ansem meme coin or
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something because like i think it's probably going to zero at some point but um you know i think
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Bitcoin obviously is going to come back every cycle.
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I think Solana is probably going to come back every cycle.
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So that's like as far out in the risk curve as I feel like I can go where like I can confidently feel like it's going to come back the next cycle.
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And then on the other end of the spectrum, you know, just hold like some emergency fund, you know, some cash.
3:53
I've actually been rotating a little bit of emergency fund stuff into stretch and, you know, into APY USD.
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but like I don't really have a whole lot in between, you know,
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and I think from a fundamental perspective,
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it's best to invest where you know.
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So if you are, you know, in tech,
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you should probably invest in like, you know, tech stocks.
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If you're in construction,
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you should probably invest in like real estate or construction properties or
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whatever, like invest in places that you feel like you have an edge.
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Otherwise just own the market.
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like don't be a pilot and then be dabbling in like semi stocks and like trying to play micron
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or something like you don't have any edge doing that so um you know if you're not full-time in
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bitcoin like yeah probably don't go 110 bitcoin have bitcoin as part of your allocation but um
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you know don't have so much that you're like needing to read it every day because like you're
4:54
trying to trade it and you're it's keeping you up at night anyways maybe longer answer than you'd
4:59
hope for but no no i think that was good it's it's an interesting topic that i've thought about
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a good bit because it's like okay if you have a very long time horizon and you like you kind of
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like you kind of mentioned you kind of want to take maximum risk if you can tolerate the volatility
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which like to some extent there's probably too much volatility you can really tolerate
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right like some some things are just you know i've seen bitcoin cycles plenty of times like
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people sell at the bottom because the volatility is extreme.
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And when you have amplified Bitcoin, it gets even more extreme and more painful at the bottom.
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And that really freaks people out, especially if you don't have conviction or you're massively over allocated.
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But also you made an interesting point of like, if you go too far out in the risk curve,
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then some of those things actually end up just going to zero and they don't really work out long term, unfortunately.
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So like, I guess with that context, do you think this concept of income, whether it's like digital credit or Apex or other things like that, does that make it easier to stomach like the day-to-day volatility?
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Even though like there might be volatility in digital credit, is like just the concept of income like a little bit more satisfying in your mind?
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yeah you know i think the super interesting thing about um income products is that you get paid to
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wait and so there's this psychological like oh if i just hold on to this thing i'm gonna get my money
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back right and so you know you could take stretch for example down at you know see 85 67 right now
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and you hang on to it for if the dividend doesn't change at all um hang on to it for
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you know a year maybe like five quarters i haven't you know done the exact math
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you know price doesn't actually have to return to par um you just will kind of dig yourself out of
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the hole and so then you just have to assume that strategy can pay the dividends for that amount of
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time, but like they've got more than that in cash just sitting there. Only Alec, like board set
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aside for the only purpose of paying those dividends. You're like, all right, well, we're
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probably going to pay it. And as long as the price doesn't like go down further and dig the hole
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deeper than. And so I think psychologically, the income really helps. And back from my trad fi days,
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we would do this a lot. We would build bond portfolios for clients. And the lower cost
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approach would have just been to buy a single ETF that had a similar duration to the overall
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portfolio. But what would happen is, of course, rates would change, credit spreads would change
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a little bit. And like the bond portfolio, you know, the bond ETF would be down. Retirees are
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like, oh my God, like I've lost 5%.
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Like, oh.
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So what we would do is we'd build a bond ladder
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and same duration as say like a AGG type,
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you know, bond ETF.
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And then we would just say, hey, look,
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don't look at the bond price.
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The price is going to go up and down.
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You just hold this thing to maturity.
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And in four years, five years, six years,
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seven years, whatever it was,
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you get your money back.
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And the interest rate and the credit spread
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literally doesn't matter unless the thing goes bankrupt.
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And so we would diversify and we would have, you know,
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only investment grade stuff in there And we say look decently low risk that any one of these names goes bankrupt But even if they do each one only a couple percent of the portfolio
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And so you can just like close your eyes, hold this thing to maturity and boom, you get your
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money back. And so that sat really well with a lot of folks, even though it was really just an
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optics thing, because with the ETF, you also just hold that for the same duration. And even if the
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price had gone down, like you actually just get your money back because of the yield that
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paid along the way. And so I think like sometimes just the mental framing, you know, people love
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dividend stocks and overgrowth stocks, even though it's like, well, whether it's paid out in cash or
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paid in total return or in growth, like it does shouldn't actually matter. In fact, the paid out
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and cash is actually less tax efficient,
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but like people just psychologically like that.
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And so I think where the income really fits well
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into a portfolio is kind of playing with the mind,
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whether with your own mind
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or like if you're an advisor, somebody else's mind
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to help them get comfortable
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and get over that psychological hump.
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Because all of us should just be fully allocated to Bitcoin
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if your time horizon is like, you know, five to 10 years.
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That's what we should just all do
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because like you're going to outperform everything else.
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But most of us can't stomach that.
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And so you mix in some of the income,
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you have a diversified portfolio
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that helps you sleep at night
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without, you know, giving up too much for the return.
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I mean, you know, SEDA paying 13%,
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a little more with the discount,
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like that's a lot better than going and buying a bond ETF
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or something paying four or 5%.
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So you still get a lot more return,
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but it's still income and so you can kind of like trick your mind into being more comfortable
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with some of the volatility. Anyways, some thoughts. Yeah, no, it's fascinating because
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it's like you compare, let's say like you take like a private income-based asset that has like
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no public price. If you're just watching the, you know, monthly, you know, check that you're
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receiving in your account, you wouldn't be thinking about like, well, what's my actual
10:55
you know asset or you know those future cash flows worth at the moment on like a public market
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you're like just looking at the consistent income you're receiving if you're looking at you know
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stretch or or sata for for instance like you know you've been receiving the dividends uh which is
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kind of interesting if you were just looking at the the dollars flowing into your brokerage account
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they would actually be increasing right because you know stretch just or has and both have
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have increased the dividend rate over time.
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And like, I don't, I don't see like stretch, you know,
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I don't see strategy suspending the stretch dividend anytime soon,
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especially them building up the cash reserve and everything like, like that.
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But yeah, no, it's, it's, it's kind of fascinating.
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I guess like maybe we can shift gears real quick and see how you're thinking
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about the market overall, right?
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It kind of at this moment, like, how are you thinking about Bitcoin?
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How are you thinking about the volatility in digital credit, you know,
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high level what's going on in your mind?
11:52
Yeah, so you made a great point about the price.
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Like the daily liquidity or, you know, instant secondly liquidity is both a feature and a bug.
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Like it's great.
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You can come in, you can come out whenever you want.
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But people's emotions are tied to a price.
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And so a whole bunch of people are now bearish on stretch because the price is down.
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It's like, wait a second.
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Nothing really has changed.
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I guess Bitcoin's down some, you know, from the 70s or whatever when people were buying.
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But like when you were buying and Stretch and Bitcoin was at 75, did you not think that Bitcoin could go down to the 60s?
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Like this is well within the realm of possibility.
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Okay, fine.
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Maybe Stretch should be trading a little bit down from par, you could argue, because Bitcoin's down some.
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But like the fundamentals haven't changed, especially now with like the cash reserve is back to where it was.
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So like the fundamentals are all the same, except Bitcoin maybe being down, let's say 10%.
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But all of a sudden it's just like the price has just changed perception.
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And so I think this is, I'm not directly answering your question right now, but I think this is one of the features of something like private credit where it's like, hey, there's no market price for this stuff.
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And so people are just happy.
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And then they see like, oh, well, there's a 5% redemption gate.
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You can only get out 5% a quarter.
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yeah, whatever, like price is what it is.
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And even now where all these people are trying to redeem
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out of their private credit funds
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and the funds are just like, sorry, you're gated.
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We are going to protect the price.
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We're not going to fire sell these assets.
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And you're just stuck.
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And people are like, all right, well, like you just deal with it.
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And so in many ways, the price actually is a bug
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because it sucks you in.
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And so like, I don't know, maybe MetaPlanet has done it right by having like a private pref that like doesn't trade, you know, like, I don't know.
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I think the liquidity is a feature and ultimately the features outweigh the bug.
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But point being like, if you're an investor, you really got to like not look at the price and stick with your time horizon.
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And we back in my financial advisor days, we would tell people this all the time.
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It was like, they'd call up, oh my God, you know, like my portfolio is down 10%.
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The stock market's down 20.
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Like, should we sell?
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And I was like, okay, well, we set this as a, you know, your time horizon here is 10 years.
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You're not retiring for 10 years.
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Like, has anything changed other than the price moving?
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Uh, no.
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Okay.
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Well, like, I don't know.
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Go, go have a drink or something and like chill out and go think about something else.
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and don't look at the price and allow the price
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to determine your investment decision-making.
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Unfortunately, I think that's what's going on a lot here
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is people are just allowing the price
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to all of a sudden determine their investment decision-making.
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To answer your actual question, though,
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on what's going on the market side,
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I think price makes narrative
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or I said the other day, price makes drama.
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And it's like people were super bullish on digital credit
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when it was trading at par and there were big volume numbers
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and the companies were buying lots of Bitcoin.
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And now people are bearish on it literally just because the price is down.
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And so I think price goes back up and all of a sudden people will be bullish again.
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and they'll come up with a reason to be bullish you know oh it was the cash reserve or oh it was
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this feature change or oh it's the you know the move to daily dividends or whatever but like
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you just when price moves people look for an explanation but price is actually
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the driver not the explanation like the price makes the narrative not the other way around
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So I think generally in markets like Bitcoin specifically, you know, Bitcoin is a liquidity sensitive asset. It's the primary liquidity sensitive asset on a global macro scale.
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and so you know we've got the uh the war kind of ebbing and flowing hopefully more um ebbing but
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um it's causing energy prices to be super elevated until very recently and then you know
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today or yesterday saw a spike um so that's obviously driving inflation and then that's
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driving rate height outlooks and liquidity tightening outlooks.
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And obviously Bitcoin is going to respond worse to that than any other asset.
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So I think that's a driver.
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I think also, I just, I literally don't understand this.
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Would love your take, but like the four-year cycle just seems to be alive and well.
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And it's like, it's so dumb, but it's just like sell, you know, four years from now and
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then buy right around this time period.
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Like, I don't know.
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So the OGs have it down and it's so simple, but, um, you know, that seems to also be alive
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and well.
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So I don know you know we reaching the levels below the 200 week um below the you know the realized um price band We starting to get to those levels where you you where the whales start to accumulate and you starting to see that
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The coin days are growing,
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and the whales seem to be accumulating.
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So I don't know.
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Maybe there's another leg to drop
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or another shoe to drop, but maybe not.
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Anyways, I'll stop there.
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Yeah, no, I mean,
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the four-year cycle is the craziest and funniest
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uh you know thing in bitcoin because yeah it doesn't really make sense and it's so
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it's funny because i feel like every cycle people think it's going away especially this last cycle
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i don't i don't really know of anyone that was like there's a very clear logical case as to like
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why we should kind of peak around the same time we've always peaked you know after the halving and
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And then, you know, you know, bare bottom should be the same time after the, you know, after that previous all time high.
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I mean, I don't know. I mean, like it's yeah, I tend to believe, you know, it's a very small sample size.
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Right. I mean, Bitcoin's 17 years old at this point.
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You know, the first four, eight years really like even I would argue, honestly, I'm curious to get your take on this,
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that like Bitcoin wasn't really treated as a serious thing at all until 2020 when like Michael
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Saylor, you know, chairman of a real publicly traded company bought like a few hundred million
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dollars worth of it. Like before that, even the 2017 cycle, it still felt like a kind of a joke
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toy that almost no one was really serious about. And so it's like, okay, well, Bitcoin didn't really
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kind of start until like 2020 like that was like the where real capital actually like started to
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take a serious position and buy it from like older og holders we've just had like i don't know it's
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just so new and such a small sample size that maybe it's just a coincidence that it's a four
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year cycle and it's nothing more than that but i don't know like what do you do you do you agree
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that take that like bitcoin wasn't really a serious thing at all until around 2020 or do
19:30
You think it was pretty serious still before that?
19:33
No, I, yeah, I completely agree.
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Um, and I've given like this four year cycle, a lot of thought and what I've
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kind of settled on is that it's just a reflection of human emotion, essentially.
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And there's something in our psyche where it effectively takes like four
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years for the human brain to be rewired.
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So it's like, let's just start from, you know, the bottom of last cycle, you know,
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FTX blows up, it's, you know, December, November of 22 and everyone's like,
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this shit is over and like, I'm never coming back to crypto and you're just like done.
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And then, you know, we've, we had some stuff, we had, you know, some of the
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banks start to blow up and they put in the, um, I very distinctly remember the, um, uh, what was
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it? The B, um, BTFP or whatever, like the bank term financing program where they were like taking
20:39
treasuries as collateral at par, regardless of the market price and then lending. And that was
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their way to like fix the, uh, banking system. Um, and so like, you know, Bitcoin started to
20:53
that rebound. And it was like, you know, probably wasn't until late 23, maybe sometime in 24,
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where the people that had sworn crypto off, like saw it go up enough. And there had been enough
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time for their brain to basically heal over that scar tissue of losing money and convince them to
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come back in. And so then they start coming in and that's a process, right? It takes people,
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the different people a roughly different amount of time but as they start to come back in then
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they start to push it above its like long-term um fair value some made-up metric and so that's
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when you start to really get things moving and then people are like oh shit like i've missed
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the run i didn't buy it at 16 or 20 or 25 and it's at 60 or 70 now like i need to add some
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leverage to like catch back up and so then people start to add leverage and then it just starts to
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move and then like then it starts over the cycle starts over and so that's the only thing that i
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can think that would explain the four-year cycle um and that there's still just so much retail money
22:05
here um that the four-year cycle is just actually some like evolutionary mental um psychology thing
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And maybe like some behavioral finance person will like do a study and it's like, hey, like it takes your brain roughly four years to like heal from some like deeply traumatic scar and, you know, whatever.
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I don't know.
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But that's the only thing I can think.
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Otherwise, like, I don't know.
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Like, why does it seem to just line up perfectly like within a month every time?
22:36
Yeah.
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I mean, like big picture, when you think of the monetization of Bitcoin and how it theoretically would happen, like it would be something that's growing really, really fast, which in the last 17 years, I would say objectively it has.
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But anything growing really, really fast, you're going to have speculators come in and just borrow as much money as they possibly can, buy as much as they possibly can at the wrong time.
23:00
You know, price gets way too ahead of itself. And like maybe at this point, miners don't matter that much. But in the past, I would argue that they definitely certainly did. And like when the price gets bid to absurd levels, now all of a sudden we're building all of these, you know, Bitcoin ASICs, Bitcoin mining infrastructure, all of these things come back online.
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all of them have energy expenses you know and all of them are probably selling bitcoin to cover
23:30
their energy expenses to cover their ASIC purchases and all you know that's put you know
23:35
in 2021 that was billions of dollars of capital that was you know being raised to do that and then
23:41
as price starts coming back down those people are still selling bitcoin to cover their expenses
23:45
and they've kind of become a permanent seller speculators get washed out so I definitely like
23:50
the volatility makes a lot of sense to me in the sense that like it should always it's probably
23:56
unavoidable for something that's going to grow really really fast that almost no one really
24:01
understands and it hasn't reached like a significant uh portion of its potential total
24:07
tam which is i would say definitely that's that's definitely bitcoin but yeah it's like
24:11
why exactly four years you know it's it's it's hard to really know yeah and the only thing i can
24:19
you know, to further ram home, the behavioral point is like every cycle is something different.
24:26
It's the miners. It's like the lenders. It's, you know, this cycle, I think it was, um, the options
24:32
market. So I bit, um, and you know, people being able to go short in a big way with, um, puts.
24:41
And then obviously a lot of the call overriding, you know, the call selling that really puts some
24:44
downward pressure on there but like all of this like it's different every time the cause but the
24:52
fundamental common thread is just humans like the miners just humans traders just humans bitcoin ogs
25:02
just humans and we like all share the monkey brain that like we're all 99.99 percent the same
25:10
and so I think at some point it's just like it's got to be something just in our collective brain
25:18
and you know maybe other markets like you know the Nasdaq or equity markets or something are so
25:27
um covered by algos and then also you know with like effectively the Fed stepping in that it's
25:38
kind of broken, but maybe like if you stripped away all of that and you really just had humans
25:46
trading all markets, maybe all markets would just flow in four-year cycles.
25:52
And we just never had a market that been this dominated by like retail and just like fundamentally just human beings clicking the buttons with like no government intervention like just free and fair
26:07
all 8 billion apes on the planet clicking the buttons.
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Maybe like that's just what you would get
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and Bitcoin's just the freest, fairest, truest market on the planet
26:16
and four-year cycles are like just what a free market looks like.
26:21
And, you know, the Austrians would talk about this a lot,
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like the business cycle and this is healthy
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and you would expect this and stopping this just delays the inevitable.
26:29
Like they theorized about this a lot.
26:32
I'm sure there's been some behavioral research done around this topic,
26:35
but, you know, tough to measure because for statistical significance,
26:39
you know, you'd need like hundreds of years to measure
26:41
multiple four-year cycles over and over again.
26:43
But I don't know.
26:46
Maybe there's something here.
26:47
Maybe not.
26:48
Yeah.
26:49
Yeah, no, it's definitely fascinating.
26:52
I mean, like from like an Austrian perspective,
26:53
I feel like you would think that credit creation, you know, funding additional Bitcoin acquisitions would obviously ignite a boom.
27:01
And then with no lender of last resort, that credit creation would ultimately like fall back to reality.
27:07
And that's when you'd see the bottom of the bear market.
27:09
And yeah, it could just, you know, alternate in cycles.
27:12
I guess with this talk, do you think that there will be yet another four-year cycle?
27:17
Like, is this going to line up perfectly to where we bottom, you know, I don't know, fall of this year or whenever the, you know, it should align perfectly.
27:26
And then we'll be off to the races for another four year cycle.
27:30
I've, my entire time in crypto, I've always said the four year cycle is dead and it's never dead.
27:36
So I should probably stop saying that it's dead and just be like, yep, it's just so dumb and easy.
27:44
it's literally that.
27:47
Now, I think when enough people,
27:51
like once everyone says,
27:53
yeah, the four-year cycle is not dead
27:55
and it's definitely here to stay,
27:58
then like the market never does
28:02
what the majority think it's going to do.
28:06
My dad likes to say the market does whatever it needs to do
28:10
to make the most people look like dummies.
28:14
Um, so the fact that everyone's saying, all right, October is going to be the bottom and we have another leg lower.
28:21
That leads me to believe that either we have like two more legs lower and like shit's going to get really bad or probably more likely.
28:31
Like we're done.
28:32
The bottom is in or maybe like, I don't know, you could see it go back to 58, 58K gang is pretty strong.
28:39
but I don't know
28:43
like if everyone's saying October's the bottom
28:45
and it's going to tick 49
28:46
like that's the one thing it's not going to do
28:49
so but you know
28:53
even if this was the bottom
28:55
and Bitcoin just kind of hung out in the 60s here
28:57
and then started to rip in August
29:00
or January of next year
29:03
like I mean that's within a rounding error
29:05
of four year cycle being alive and well
29:07
So maybe next time around it doesn't peak in October.
29:10
Maybe it peaks in July or maybe it peaks in like January or February of the following year.
29:17
But I don't know.
29:19
I kind of think it's probably just here to stay and it's just like wiggle around a couple months either direction.
29:26
That would be my view.
29:27
Mm hmm. Another hot topic that a lot of people have kind of gravitated toward, whether that's right or wrong or meaningful or meaningless is strategy selling a few hundred million dollars worth of Bitcoin.
29:41
You know, what's your general take about that? And how does your take also like how do you think about this in the context of STRC and digital credit?
29:50
But yeah, I think, first off, fantastic that Bitcoin happened to be up last week while they were selling.
30:01
$200 million over the course of a week literally doesn't move the needle at all on the price of Bitcoin.
30:07
It might as well have been zero.
30:10
It just doesn't matter to be completely clear here.
30:15
But the fact that it was up and they sold just silences all the dummies that are like,
30:20
this is going to create a death spiral.
30:22
It's like, all right, they raised enough cash to cover all of their liabilities for a month.
30:31
And you could round it up because some of them are quarterly pay.
30:33
So I don't know, a little over a month in one week, just selling Bitcoin, not selling any common either.
30:40
and so it's like they've proven over and over with all their methods that they can raise more
30:46
than enough cash to meet all of their liabilities and the dividends aren't any liability but let's
30:52
just assume they are like let's assume they're never ever going to cut them and i would assume
30:56
that's how they're thinking about it um like they raised a billion on the common in one week with
31:02
the common still above 1x nav okay they covered dividends for like eight months with one um or
31:12
seven months or whatever it is with one week of activity and people like okay well yeah they can
31:16
do the common but once they start selling bitcoin it's going to nuke bitcoin it's like okay we'll
31:20
sell some bitcoin too and prove to you that that doesn't nuke bitcoin and so i think they've just
31:24
been like basically like they've got a they've got a toolbox they've got a hammer screwdriver
31:29
um they've got you know um what other types of tools are there some um like a nail gun whatever
31:37
and so they know like they can use all these things to build their house
31:41
and the market's just like oh my god like they have no tools like it's over and so they've just
31:47
been like all right this week we'll put some screws in and this week we'll pound some nails
31:52
in and then this week we'll use the nail gun and then like this week we'll use the paintbrush and
31:56
they're just going to like walk through all the tools they have at their disposal to show the
32:00
market that like the bear case for strategy is a very bleak case for bitcoin this is like sub 20k
32:09
bitcoin for the next few years potentially the next five or six years assuming they can't like
32:16
refinance and everything like this is really bad if you're bearish on strategy you really like
32:22
to be intellectually honest you have to be like peter schiff uh which is fine like you can be
32:27
super bearish on bitcoin but like you can't be bullish on bitcoin um and super bearish on strategy
32:33
like that's just the math doesn't work yeah i did a post the other day it was it was something along
32:40
the lines of like unpopular opinion if strategy misses a dividend on one of their uh you know
32:46
preferred equity products it probably means like my bit like bitcoin is broken or like my bitcoin
32:53
thesis is probably wrong like at a certain point if bitcoin's at twenty thousand dollars and it's
32:58
like 2031 i mean i i you know i may have moved on to bigger and better things i i certainly don't
33:07
think that that would have happened but like you know at a certain point it's like all right you
33:11
Like you said, like you've got to be a Peter Schiff type person to think that, you know, for them to miss a dividend payment on one of their preferred equity products, Bitcoin's in a pretty bad place.
33:24
Like Bitcoin's down now.
33:25
Imagine if Bitcoin is 20K and 2030.
33:29
Like people, Twitter would just be dead.
33:32
I mean, at that point.
33:33
Yeah, absolutely.
33:34
So, I mean, you know, the other bear case for strategy is like the black swans.
33:39
Like, um, sailor, you know, I don't know, like they just, like the management team gets like, um, taken out by like some Iranian terror cells or like Coinbase gets hacked or whatever.
33:54
Like you could be against strategy because of the centralization risk.
33:57
That's totally fair and totally fine.
33:59
But like, that's the same risk of from IBIT and BlackRock, the same risk for Coinbase, Binance, like, um, then you're complaining about big institution risks.
34:09
which I think is a fair concern, but that has nothing to do with the price of Bitcoin.
34:15
Yep.
34:15
You know.
34:16
Yeah, I completely agree, man.
34:17
That's certainly a risk, but it's like, you know,
34:20
you should evaluate that risk in the context of everything.
34:22
Yeah, it has nothing really to do with the price of Bitcoin.
34:25
The other thing I think is funny is like when we say like,
34:28
okay, well, for them to like miss a dividend, for example,
34:32
Bitcoin's in like a very, very bad spot, most likely,
34:35
ignoring a potential black swan risk.
34:38
people some people took that or it can take that as like oh wow
34:42
wow
34:42
like Bitcoin success is dependent on strategy.
34:46
Whereas like that's not really what I'm trying to say.
34:49
Like I'm just trying to say like in the scenario where strategy fails
34:52
because of a Bitcoin price going down,
34:55
it's because Bitcoin probably is not doing very well at all.
35:00
And in that case, you know, Bitcoin's, the thesis might be incorrect.
35:05
Which obviously I don't think that that's going to be the case.
35:07
But it has not like, Bitcoin can succeed without strategy.
35:10
Strategy structure is just pretty resilient that it's hard to see how Bitcoin could succeed with strategy failing.
35:20
Yeah, absolutely.
35:21
And I think this like savior complex or key man complex that people put onto Saylor is just like totally wrong.
35:31
Like the dude is running around amplifying all of these other treasury companies.
35:35
He literally has a conference and it's Bitcoin for corporations.
35:39
He's like, hey, come copy me.
35:41
Here's a playbook.
35:42
And then he's done more for Bitcoin education.
35:48
I'm going to piss some people off here.
35:49
But he's done more for Bitcoin education than any single human being on the planet in history.
35:57
Full stop.
35:58
When we were raising and continuing to do investor education for DFDV on the Salonis side, we'd go to investors, hedge funds, big money.
36:08
I mean, collectively, these guys control hundreds and hundreds of billions.
36:13
I mean, we talked to Jane Street, so I don't know.
36:15
These guys probably control like trillions collectively.
36:17
And they would all say, maybe excluding Jane Street,
36:21
they would all say, I understand Bitcoin.
36:24
It's digital gold, a fixed supply because of Michael Saylor.
36:27
Now explain to me, Solana.
36:30
All of these people learned about Bitcoin because of Saylor.
36:34
These are Wall Street guys.
36:36
They all wear suits to work.
36:37
You know, they're all pretty much all in New York. And so he is not out here saying, look, I'm the guy. I'm the savior. I need to like Bitcoin is only alive because of me. Like I make the rules, whatever. He's actively evangelizing Bitcoin.
36:54
And when people are buying, whoever's buying out there buying right now, you know, buying
37:00
the dip here in size, they're very likely doing it in part or entirely because of the
37:08
education that they received from Saylor.
37:11
And they might be buying some MSTR as well, but they're certainly buying physical Bitcoin.
37:16
And so to say that like Saylor is the hope for Bitcoin, like
37:24
or like the savior of Bitcoin or Bitcoin Jesus 2.0 or whatever,
37:29
he's been actively trying to minimize his role in the space
37:34
and diffuse the knowledge, diffuse the control
37:37
throughout all the financial markets.
37:42
So I don't know.
37:45
I think it's just people saying that Bitcoin depends on him
37:49
is very disingenuous and just not looking at even basic facts.
37:54
effectively. Yeah, I agree with that. It's like, it's important to like draw the line. I completely
38:00
agree that Saylor has probably done more than any other, you know, person, especially like in the
38:05
last six years, of course, for, for, you know, actual Bitcoin education. While at the same time,
38:11
you can, I could say that if Saylor disappeared, never did another podcast again, never did another
38:17
tweet again, never did anything ever again. I think Bitcoin was still, still, still wins. Like
38:22
It's, you know, Bitcoin is certainly not dependent on him.
38:25
Now, I hope he doesn't just disappear.
38:27
And I hope he continues to be very public and shares his thoughts.
38:31
But at the end of the day, like, he doesn't need to necessarily do that for Bitcoin to win at all.
38:37
Like, Bitcoin should, if Bitcoin is what it is, it would just organically win because it's a better form of money.
38:44
Well, and it's kind of, I love the debate, was Bitcoin created or discovered?
38:54
And going back to the four-year cycle thing and like the human emotion and, you know, the monkey brain, I actually lean towards Bitcoin was discovered.
39:05
and you know Galileo educating people on the earth not being at the center of the universe
39:16
like when he died and stopped educating people it didn't mean that like all of a sudden the earth
39:25
started being at the center of the universe again and the sun stopped being the center of our
39:29
universe it was like or of our solar system it was like well no like this is just a fact like a
39:35
fact of nature and so sailor can go um anyone else can go i think bitcoin is this inevitable thing
39:46
it's this evolutionary progress machine for human coordination and take away any characters take away
39:57
all the characters i think it still wins you maybe change the time horizon on what it wins on but like
40:02
it's an unstoppable force and so um you know sailor can still certainly advance bitcoin and
40:11
if he goes away maybe it doesn't go up as much in a short amount of time but like it doesn't all
40:16
sudden crater like the knowledge that he's put out there you can't put that back in the bottle
40:21
you can all of a sudden you know have everyone unsee the fact that the earth is not the center of the universe anymore Like that just a fact It just there It out there Like you know he can continue to move the ball forward but the ball can roll backwards
40:35
Yeah.
40:36
Yeah, I agree with that.
40:37
Like, it's almost like the meme with the subway guy where he's like, the subway stops and then he, like, starts pushing the subway as if, like, he's doing all the work.
40:47
Yeah.
40:47
And again, like, I think a lot of people, like, can help and advance Bitcoin education.
40:51
Like I think Sailor like to some extent does, but it's also like it's probably just working because it's better technology that we discovered.
41:00
And someone, Satoshi, happened to put all these pieces together to create this perfectly scarce money.
41:05
And humans, for whatever reason, want perfectly scarce money for good cause, for better economic coordination.
41:13
And it's like it's just a natural organic phenomenon.
41:17
Like it's just going to happen.
41:19
Yeah, it's an interesting conversation.
41:21
yep agreed um what do you think so like i guess tying this back to digital credit
41:29
what do you think needs to be done or does nothing need to be done for digital credit to go back to
41:37
par and have every you know everyone refreshing uh strc.live and true tnorth.com are you know
41:45
our strc trackers well like what is it what's it going to take for all of these products to go back
41:50
to par and the ATMs to come back on and the Bitcoin acquisition machine to churn again?
41:57
Yeah, I think it's twofold. Well, actually, no, I think it's threefold. Three legs of the stool.
42:04
The first one is, I think, some structural changes. So you guys on the Strive side,
42:10
I think, have done a fantastic job of being really nimble, whereas strategies may be,
42:16
you know, the battleship, you guys are the, uh, the, the destroyer or the PT boat. And, um, so I
42:23
think you guys have done a fantastic job of leading the way on things like daily, daily dividends,
42:28
um, on the call company call structure. So having that much higher than one-on-one on announcing,
42:34
hey, we, you know, may not run the ATM right at a hundred to kind of catch the shorts off sides.
42:40
Like, I think there's a bunch of structural changes that can be done. Uh, maybe them building
42:45
the cash reserve a little bit more as well.
42:48
So that's like, I guess, leg number one of the stool.
42:55
I think leg number two is just time.
43:01
So it just kind of needs to work its way out of the new cycle.
43:08
And the shorts waiting for the thing to, you know, collapse further.
43:14
like they're just they're burning through cash right they're paying 13 percent right now to hold
43:21
a short position at some point you got to close that um at some point people will start to forget
43:28
you know um and i think a big part of the time component is just more education so the strategy
43:37
team just getting out there you guys just getting out there educating the market here's how the
43:42
stuff works. Here's why it's interesting. Here's more of the Bitcoin story. Here's why you might
43:48
want a credit-like instrument backed by Bitcoin. Just like pounding the pavement, the marketing
43:53
stuff over and over and over, doing the shows, doing the non-deal roadshow stuff and the
43:57
institutional investors just nonstop. So that's a real time component there. And then the last one,
44:04
it's just price. Like as soon as the price of Bitcoin starts going up again and MSDR starts
44:09
working again stretch is just gonna return to par you guys i would assume sata is gonna get there a
44:15
lot quicker y'all a lot closer um but it's just like price goes up and it just like all of a sudden
44:20
people forget and they're just like wow this thing is fantastic again and oh my god oh you were so
44:25
lucky buying this stuff at you know 80 or 85 or whatever um i think people are just going to
44:33
the price will be kind of the final catalyst.
44:39
The price on Bitcoin and then just candidly the price on stretch.
44:42
Like as the price of stretch goes back towards 100,
44:45
it becomes more likely to get to 100 because like people are excited.
44:48
It's closer.
44:49
And so, yeah, I think it's kind of the three-legged, you know, stool there.
44:55
It's the structural stuff, you know, some improvements.
44:59
It's the time-based and marketing-based component.
45:01
and then it's just like price itself.
45:06
So I think that's what it'll take for Stretch and for Seda to return to par.
45:14
At a broader level, though, I'm very bullish on the idea of digital credit
45:21
or, you know, maybe call it Bitcoin-backed credit
45:23
because there's far more money sitting in credit mandates,
45:29
insurance pensions sovereign wealths um then there are sitting in alternative asset mandates
45:38
or even equity mandates alternative asset mandates are small like gold and oil and stuff like most
45:44
um investment policy statements don't really have much of an alternative asset mandate um
45:50
equity is bigger but credit is by far the biggest fixed income is by far the biggest
45:55
And so I think that the pool of capital that going to be needed to really help Bitcoin reach its global collateral asset global monetary asset status We not just going to get like more people to sell their NVIDIA and buy Bitcoin to get us to million dollar Bitcoin
46:18
Like you need large billion dollar tickets from large credit investors
46:23
that are going to underwrite Bitcoin as collateral.
46:29
And so I think there may be some additional flavors of digital credit to come.
46:33
um preferreds are a fairly unique niche category and stretch is already by far the largest and most
46:40
liquid preferred instrument in history and i don't say it is probably like number two or
46:44
somewhere like close in the top five which is crazy for like new instruments um totally just
46:51
rewritten the category they rewrote the convert category strategy did but there's no reason they
46:57
can't rewrite the just straight bond category like S&P gives them an investment grade rating
47:03
at some point and they like issue the first ever 30-year investment grade bond backed by Bitcoin like
47:09
that's when things are really going to open up we're probably a little ways away from that but
47:14
I think there's going to be more iterations and innovations in this digital credit theme
47:21
that will continue to push the ball forward
47:25
and continue to unlock more and more fixed income capital.
47:32
And then the holy grail is the 30-year,
47:35
maybe it's like a British 100-year bond
47:37
backed by Bitcoin, right?
47:39
Like that's GG, Bitcoin's at $10 million a coin or something
47:44
and it's like the global sovereign reserve asset.
47:48
But we're, I don't know, decades away from that
47:51
or maybe not, but I think that's ultimately where we're headed.
47:54
And we are like inning one of game one of the series here.
47:58
And there's a long way to go.
47:59
So we just, you know, keep building and keep iterating
48:02
and we'll find the next thing and we'll help get
48:04
Stretch Back to Par and Seda Back to Par
48:08
and other entities issue these things
48:10
and get them out there more widely
48:12
and other companies around the world issuing these things.
48:15
And then there'll be another instrument.
48:16
We'll just kind of keep moving the ball forward
48:18
with this digital credit narrative.
48:19
I definitely agree that there's going to be, you know, from a number of companies and entities, a lot of innovation.
48:28
It seems like that's kind of inevitable.
48:32
How has your opinion evolved?
48:34
You know, Saylor has always talked about this idea of Bitcoin, digital credit, and then digital money,
48:40
each layer stripping a little bit of volatility and a little bit of return off of the previous one.
48:45
How are you now thinking about like all three and specifically like this concept of digital money?
48:51
Yeah, so from on the Apex side, we initially came at this with a kind of one size fits all approach.
49:03
And the idea was, hey, we'll offer one basket and we'll do like, you know, we kind of settled on an 80-20 mix of prefs to cash.
49:10
A little bit less vol, but like a little more yield heavy, more yield focused.
49:15
Um, but, you know, I don't want to give away too much, but we want to give investors, um, you know, crypto market participants, um, options effectively, because maybe 80, 20 isn't the right mix.
49:33
Maybe 60, 40 is the right mix or 40, 60 or 20, 80 or something.
49:38
And so we want to give investors some different options there.
49:40
And I think ultimately what you may actually see is a couple different flavors of digital money surviving.
49:49
Not just issuers, but like flavors in terms of risk reward profile.
49:55
And that would cater to different risk appetites and investor types effectively.
50:05
so um i think this is going to be an important evolution and we don't really know what the
50:14
market rate for bitcoin backed money is digital money um is it a four percent yield and a you know
50:22
zero percent vol because it's like almost all treasuries is it like a six percent yield and a
50:29
one or two vol or something.
50:30
Like, I don't know what the market will demand there.
50:38
But I do think as stress continues to build in the treasury market
50:44
and in the, you know, dollar market,
50:46
and I think things can go on for quite a while there,
50:49
but I think increasingly people are going to want money backed by Bitcoin.
50:53
and that's just, I don't know,
50:58
just the direction that we're headed in.
51:01
And so I think we're going to continue to iterate here.
51:05
There might be some others that continue to iterate here,
51:08
but I think collectively we will settle on
51:11
and our hope at Apex and our plan
51:13
is to be the market leader here,
51:15
but settle on creating digital money,
51:18
like yield-bearing money backed by Bitcoin.
51:21
And I say money,
51:22
it's really yield bearing dollars backed by Bitcoin.
51:26
Bitcoin's the money.
51:27
It's just most people want dollar denominated money.
51:30
So it's like, okay, well, we'll give you dollar denominated money
51:33
with a yield and this will be, you know, digital USD money.
51:39
You could also have like digital like JPY money as well.
51:45
But, you know, just like Tether took a while to figure out
51:48
the right approach to you know having a stablecoin I think it might take a little bit of time here a little bit of trying But once we settle on the you know the best model
52:01
we'll drive a truck through it, as they say,
52:03
go really fast and grow there.
52:06
So yeah, those are some of my thoughts.
52:09
And I think it's just early innings,
52:12
which is pretty exciting to be building, like,
52:14
this next big primitive in not just, like, crypto or Bitcoin,
52:18
but like building this next big primitive in money and in finance.
52:23
It's kind of what all this dream of getting to do, you know,
52:26
when you're in college and stuff.
52:28
But like here we are actually building it.
52:29
Actually pretty cool when you think about it.
52:32
Yeah, I definitely agree.
52:33
I mean, I think thinking about like Bitcoin is obviously an absolutely massive idea.
52:39
I'm personally most passionate about Bitcoin itself, obviously.
52:43
But the concept of digital credit and digital money
52:46
the ability to probably accelerate Bitcoin adoption with that
52:50
and kind of like reinventing the whole idea
52:53
of what the average person thinks of as money
52:57
is a fascinating idea.
52:58
And I agree that there's going to be a lot of innovation to come.
53:01
Any final closing thoughts that you want to leave the audience?
53:05
This has been a great conversation for sure.
53:08
Yeah, I think, you know, the other thing that,
53:11
especially for like, you know, Bitcoin only type folks,
53:14
that's, and I was, you know, kind of a maxi for a little while myself.
53:20
But it's easy to miss out on, you know, the other kind of big theme that's going on
53:27
in the overall crypto space, and that is real world assets on chain.
53:32
So stable coins are the first major real world asset.
53:35
But you're going to see more and more of these things.
53:38
And you may say, like, I don't like Sol, the asset.
53:42
I don't like ETH, the asset, whatever.
53:44
that's fine. But these networks are really powerful. And they are competing with centralized
53:51
systems like the NASDAQ, like the CME, like DTCC, like SWIFT. And I think what you're going to see
54:00
over the next couple years is tens of billions, hundreds of billions, maybe even trillions just
54:06
in the next couple years, but certainly over the next decade, trillions of assets moving on chain.
54:14
And the reason for that is transparency, composability.
54:18
So composability is like the Lego blockness of these things
54:21
where you can like very easily build other products on top.
54:24
It's very quick to do it.
54:25
Anyone can build it too, by the way.
54:28
And then access.
54:32
So especially folks in the U.S. just don't appreciate
54:36
the level of access that we have to financial products.
54:40
Like we, the U.S. is the financial product creator.
54:46
And so like naturally we have access to the most financial products.
54:50
But then we try to export as many of those as we can as a system.
54:53
Like that's our economic system.
54:54
We export finance.
54:57
Blockchains, and I'll use Solana as a primary example,
55:01
but Ethereum applies as well.
55:02
These are the best tool in human history for exporting financial products.
55:10
So we have the community collectively, the crypto ecosystem has collectively put dollars in the hands of more people than any other system in the history of humanity.
55:22
And we're going to put stocks and bonds and all sorts of other assets in the hands of more people than have ever had access to it.
55:34
And there are billions and billions of people in Africa, in Asia, in Latin America, people that just don't have access to financial products, American financial products.
55:47
And so I think this is going to be a golden age for American finance.
55:54
And, you know, finance at large, like anybody can create these things.
55:57
It just so happens that most of these things are created in the U.S.
55:59
But I think it's going to be a golden age of American financial innovation because the export rails are these blockchain networks.
56:08
And you can be bearish on the tokens.
56:10
That's totally fine.
56:11
But don't sleep on the networks being a vehicle to drive financial innovation, financial adoption.
56:20
And ultimately, that all flows back to Bitcoin because Bitcoin is going to be underpinning everything.
56:25
Then, you know, it's all helping Bitcoin.
56:27
So I think it's the last thing I'd say for kind of the Bitcoiner crowd that maybe doesn't appreciate these networks.
56:34
You don't have to be a shitcoiner, but like you can appreciate the export feature.
56:41
Just like you don't have to be bullish on like dry bulk shipping, but you can be excited that like you can click the button on Amazon and like stuff gets shipped over from China and shows up at your door really quickly and cheaply and well made.
56:54
It's like, that was pretty cool.
56:54
So anyways, that was a long rant for a final parting word, but that's what I'd say.
57:02
Yeah, no, it's definitely exciting times in Bitcoin and the whole space overall.
57:11
And I think change is coming really fast for a lot of things, whether that's like AI, whether that's like traditional finance itself, payments, where assets are held custody and obviously Bitcoin too.
57:23
So a lot of change probably coming up and may happen faster than many people think.
57:28
But, Parker, this has been a great conversation, as always.
57:32
We'll definitely have to do it again soon.
57:34
But thanks again. This was good.
57:36
Thanks for having me on, Joe. Appreciate it.