Latest / What Bitcoin Did / Bitcoin Crashed. What Comes Next? | Joe Consorti

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Bitcoin Crashed. What Comes Next? | Joe Consorti · What Bitcoin Did

• 0:00
  I think this is a really great entry point for asset prices.
• 0:05
  It's a mathematical necessity for the Fed to continue cutting interest rates
• 0:08
  and to continue expanding its balance sheet.
• 0:10
  Ultimately, Bitcoin right now is trading at a massive discount to where it should be
• 0:15
  because the market doesn't understand what it is yet.
• 0:17
  It's completely wild.
• 0:18
  I mean, in dollar terms and percentage terms,
• 0:21
  I haven't seen anything like this in a really long time, and it's great to be back.
• 0:25
  The pain in equities is about to be here.
• 0:27
  It's already sort of begun.
• 0:28
  but Bitcoin as it historically has done it's going to find its bottom first and then begin
• 0:33
  moving higher first it might seem scary but ultimately you're going to look back on this time
• 0:37
  10 years down the line five years down the line next cycle and say man I wish I had bought around
• 0:41
  that $60,000 down Joe Consorti good to see you man um what the fuck is happening Danny this has
• 0:51
  been volatility is back in Bitcoin it truly is like this is the single most volatile day for
• 0:57
  Bitcoin, I think since the 2022 bear market, I have a chart, I'll pull it up and kind of show
• 1:02
  people what we're looking at. But one of the hallmarks of the post ETF era for Bitcoin has
• 1:07
  been this markedly low volatility. You know, James Check has talked about this before, like this idea
• 1:12
  that Bitcoin, like the path of least resistance for Bitcoin in the post ETF era is what he calls
• 1:18
  chop solidation, where basically nothing happens for a really long period of time. And then we take
• 1:23
  next leg we take the next leg higher and so on and so forth you can see here this is the 10-day
• 1:28
  rolling volatility on bitcoin and this is the highest it's been since the bottom of the 2022
• 1:33
  bear now i want we'll talk about like market timing and what we think is going to happen
• 1:37
  as far as the the remainder of this and as we hammer out a bottom but this is just completely
• 1:42
  insane and for the post etf crowd like the boomers the pensions the hedge funds everybody who's gotten
• 1:48
  in since january of 2024 and these things launched this is not something that they've ever had to
• 1:53
  deal with. So for us, OG Bitcoin, well, OG is being a relative term for us who've been around
• 1:59
  the gambit for a pretty long period of time. This is business as usual. It's certainly, you know,
• 2:03
  dusting off the shoes. We haven't felt it in a while. But I'm amazed at how well the ETF cohort
• 2:09
  is holding up despite this volatility. We dropped $10,000 in a day yesterday, which is the first
• 2:16
  time that's ever happened. So we got Samson Mao's Omega Candle, but in the wrong direction.
• 2:20
  And then today we also had a plus $10,000 day. So it's completely wild. I mean, in dollar terms and percentage terms, I haven't seen anything like this in a really long time. And it's great to be back. I think the move yesterday and today has single handedly revived Bitcoin Twitter. So that's one thing we could be happy about here.
• 2:39
  totally i mean i i know people get mad at me for saying this but i love these i love the down days
• 2:45
  i love the up days like just give me something like i think that i got the dopamine hit like
• 2:49
  twitter was on fire like it's fun this is where you just gotta sit back and watch and be kind of
• 2:55
  humbled by bitcoin but why do you think this happened like that's always a question i get
• 3:00
  frustrated about so i'm sorry to ask it because there's not there's never just one reason why
• 3:03
  this happened but like do you think there was something in the market that kind of forced this
• 3:08
  move? For sure. I mean, it's a couple of things, right? A lot of folks have been thinking this is
• 3:13
  a Bitcoin native sell-off, and I'm here to dispel that. I want to make it abundantly clear that this
• 3:18
  isn't like an idiosyncratic Bitcoin thing where something happens, some leverage unwind occurs.
• 3:23
  Granted, there was a lot of leverage that got purged from the market. In the last 24 hours,
• 3:27
  we saw $400 million worth of long positions liquidated, and then today, $400 million worth
• 3:32
  of shorts liquidated. So certainly a lot of folks got liquidated. What actually drove the move was
• 3:37
  just this decline in risk appetite.
• 3:40
  And it's been happening over the course
• 3:41
  of the last couple of months.
• 3:42
  I have a couple of charts to show here.
• 3:44
  The first one being a broader indicator of risk sentiment.
• 3:48
  This is Bitcoin and US credit spreads.
• 3:50
  So now for those who are listening on audio,
• 3:52
  basically what this chart is showing
• 3:53
  is that as credit spreads widen,
• 3:56
  Bitcoin tends to decline.
• 3:57
  You could see that all the way back
• 3:59
  during the sell-off we had in the spring of last year
• 4:01
  when we went from that,
• 4:03
  the first time we went above $100,000
• 4:05
  all the way back down to below $80,000.
• 4:07
  as they narrowed or tightened.
• 4:10
  Bitcoin rose from about 80K all the way to 126K.
• 4:13
  And we've been in this regime of elevated and rising
• 4:16
  or widening credit spreads since October.
• 4:19
  So this is the first chart that sort of indicates
• 4:21
  this isn't necessarily a Bitcoin native sell-off.
• 4:24
  Like there aren't, you know,
• 4:25
  there's no three arrows capital blowing up.
• 4:27
  There's no FTX blowing up.
• 4:29
  It's just pure good old Bitcoin
• 4:30
  being a really great indicator for risk sentiment.
• 4:34
  Just before we get on to the next one,
• 4:35
  I just have a question on it
• 4:36
  Because I don't exactly know what that means when you're saying the credit spread's widening.
• 4:40
  Yeah, you got it.
• 4:41
  So basically, a credit spread is the difference between the benchmark rate in the United States,
• 4:45
  so the 10-year U.S. Treasury yield typically, and corporate bonds.
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  So basically, the difference between the rate that corporations can issue their debt
• 4:53
  and the prevailing benchmark rate.
• 4:55
  And so what you see here, these numbers on the right-hand side, those are in basis points.
• 5:00
  So for instance, people can focus more on the white line.
• 5:04
  That's high-yield credit spreads.
• 5:05
  So think junk borrowers, right? Zombie companies, people who it's really hard to raise capital for, very capital intensive firms. They're trading at 2.75% or 275 basis points above U.S. Treasury rates. So it's very, very hard for them to borrow. When it's very hard for them to borrow, capital expenditure tends to decline and risk appetite in the market more broadly reigns in.
• 5:28
  that's one of the reasons there are a couple of other reasons, but one of the major reasons you
• 5:32
  saw such a huge rally in gold and silver and why Bitcoin and other names, like particularly software
• 5:38
  names, quantum stocks, all of those have sold off over the last couple of months. It's a direct
• 5:43
  result of what you see here, credit spreads widening, it becoming more difficult for U.S.
• 5:48
  corporations to finance their debt. And so why is that spread happening?
• 5:53
  Yeah, well, it's happening for a couple of reasons. I mean, chief among them,
• 5:55
  we've started seeing a little bit of strength in the U.S. dollar, particularly since Kevin Warsh
• 6:00
  was nominated as Fed chair. We've had a pretty big bout of weakness in the U.S. dollar over the
• 6:06
  last year, year and a half. And up until recently, that's been the case. More recently, you saw a
• 6:12
  rally in the U.S. dollar with Kevin Warsh being nominated as Fed chair. But more broadly, it just
• 6:17
  boils down to cycles, right? You could see here that we are at like over the last couple of years,
• 6:23
  And if I was able to zoom out this chart even more, I would show it. But we're at like multi, not multi-decade, but the tightest levels that we've seen in U.S. credit spreads in quite a while. And so when that happens is really only one way for them to go. You pair that with the reality, the market is pricing in the Fed's rate cutting cycle is about to come to an end toward the end of this year. If I look at my chart here, we've only got a couple of rate cuts priced in between now and the end of the year.
• 6:49
  looks like only three rate cuts priced in between now and the end of the year so
• 6:53
  with the feds cutting regime coming to an end it's really no surprise this is happening basically
• 6:58
  it's just a market saying that hey look we expect monetary conditions to move from outright easing
• 7:03
  to this on hold period and so as a result credit spreads are moving a little bit higher
• 7:07
  interesting that the dollar is strengthened since kevin walsh because um scott percent has always
• 7:13
  had the intention of weakening the dollar but with walsh coming in is that is that strengthening
• 7:18
  because they think he's going to be a hawkish Fed chair.
• 7:22
  It is.
• 7:23
  And for me, I think that's a big mispricing.
• 7:25
  And so that's why I think this is a really great entry point.
• 7:28
  Not to say that this is the bottom again,
• 7:30
  but I think this is a really great entry point for asset prices
• 7:32
  because regardless of what people think about Kevin Warsh,
• 7:35
  people think he may be a hawk.
• 7:37
  He's come out and spoken against quantitative easing numerous times.
• 7:41
  He doesn't want it to be a policy tool anymore.
• 7:42
  And so that sort of hawkish sentiment gets priced in the market
• 7:46
  in the form of the odds of more rate cuts declining,
• 7:50
  the dollar strengthening.
• 7:51
  I think that's a mistake
• 7:52
  because regardless of who you put in there,
• 7:54
  the math doesn't change, right?
• 7:56
  It's a mathematical necessity for the Fed
• 7:58
  to continue cutting interest rates
• 7:59
  and to continue expanding its balance sheet,
• 8:02
  at least at the rate of GDP growth, right?
• 8:05
  So 3% year over year.
• 8:07
  So for me, it's a big misprice
• 8:09
  and that people think Kevin Warsh will be a hawk.
• 8:11
  You also have to consider Donald Trump
• 8:12
  does not want to put anybody in the Fed chair position
• 8:15
  who won't agree with Scott Bessent and his goal for a weaker dollar.
• 8:19
  Obviously, Trump wants these tariffs to last.
• 8:21
  He wants them to be a longstanding source of U.S. revenue.
• 8:24
  And in order for that to happen, a weak dollar is a necessity.
• 8:27
  And so whoever Trump would have chosen, whether it's Kevin Warsh or Hassett or any of the
• 8:32
  other folks who were in the running, it was going to be someone who would listen to Scott
• 8:36
  Bessent and listen to Trump and his aims for a weaker U.S. dollar.
• 8:41
  So to me, it's a major mispricing.
• 8:43
  I think the dollar goes weaker over the next several months.
• 8:46
  I think as we approach Warsh actually becoming Fed chair, you're going to start to see some
• 8:51
  of that weakness.
• 8:52
  And I think you're going to start to see a bottoming out process in all risk assets that
• 8:56
  have done poorly, software stocks, Bitcoin included, as we approach that date, because
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  it's just a mathematical necessity that the dollar has to be weaker, not just for the
• 9:04
  tariffs, right, to actually work and be a really big source of U.S. revenue, but for
• 9:08
  our debt situation more broadly here in the United States.
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  yeah i think that second point's really important though in that trump is a lot of things but he's
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  not an idiot like he's not going to be nominating someone that he's not had long conversations with
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  and knows is kind of on team trump i don't think with all the stuff that's happened with powell
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  over the last couple years like there's no way he's going to nominate someone who he thinks is
• 9:29
  going to work entirely independently from him and not take orders from scott percent in my opinion i
• 9:34
  don't know if you agree with that no i certainly agree with it because ultimately like for a really
• 9:38
  long time we've had this false notion or this like fabricated idea that the fed and the u.s treasury
• 9:44
  are somehow separate but every single time push comes to shove they're more than willing to work
• 9:48
  together back in 2020 the fed was more than willing to print a bunch of money and buy u.s
• 9:52
  treasuries from banks to make sure that uh you know we could uh maintain manageable levels of
• 9:57
  u.s debt back in 2023 the fed was more than happy to spin up this facility out of thin air in order
• 10:02
  to purchase distressed U.S. Treasuries
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  or lend against them at par value.
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  So every time push comes to shove,
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  the Fed has been more than willing
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  to work directly with the U.S. Treasury.
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  So it's not an independent organization.
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  I think it would be a great development
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  to finally have a clear and tacit recognition of that.
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  And I think, you know,
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  with Trump being able to nominate the Fed chair now,
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  he learned his lesson when he nominated Powell.
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  It was his first time in office.
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  He made a lot of wrong picks.
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  This time he's being much more shrewd
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  and prudent about who he brings in.
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  So I completely agree.
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  Like he has made this decision under the assumption
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  that the person he nominates is gonna listen to him,
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  is gonna push for a weaker dollar.
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  And so like asset prices in that environment,
• 10:45
  there's really only one direction for them.
• 10:47
  So I think there's a pretty big mispricing
• 10:49
  in markets right now.
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• 13:55
  um okay i cut you off before you pulled up your second charge you want to grab that one yeah yeah
• 13:59
  you got it so the other chart that i want to show that kind of uh indicates why this isn't a
• 14:04
  idiosyncratic sell-off for bitcoin is bitcoin and igv so this is the iShares software etf
• 14:10
  um and you can see that they were directly moving in the exact same way uh and this goes back to
• 14:17
  before 2024 but i zoomed in here just to really highlight this you can see that like this this
• 14:22
  shows pretty clearly that this isn't a Bitcoin native sell-off. You can see right around October
• 14:27
  when Bitcoin began selling off, so too did IGV. Now, IGV has a bunch of holdings, Oracle, Salesforce,
• 14:35
  Microsoft. So I think like number one, the reason for this sell-off is because of the waning risk
• 14:41
  appetite. But number two, especially with software stocks, you have to consider the rise of AI and
• 14:47
  tools like Claude kind of hurts the value proposition of names like Salesforce and Adobe
• 14:52
  and even a lot of tools from Microsoft. Like if your team internally can buy a Claude Pro
• 14:57
  subscription, can spin up Claude code, and you can make your own CRM that's as good, if not better
• 15:03
  and more tailored to your needs than Salesforce, why on earth would Salesforce stock do well? So
• 15:08
  I tend to think it's a little bit of that, but more so it's the risk appetite thing. So it's
• 15:13
  kind of those two things in tandem that are affecting software, but is also affecting
• 15:18
  Bitcoin. So this is the second chart that showcases this isn't an isolated Bitcoin event.
• 15:23
  It's not a result of some exchange blowing up, some overseas shop blowing up. It's purely risk
• 15:29
  sentiment. And Bitcoin tends to be the leading indicator, if you will, or one of the great
• 15:34
  barometers for risk sentiment. And so that's why it's so sensitive to these changes. And it's down
• 15:38
  52% from the high. Well, actually a little bit less today because we rallied. So I think it's
• 15:42
  like 44% from the high, but even still, that's kind of your explanation here.
• 15:46
  Yeah, that makes sense. I think one of the things that's frustrated a lot of people is that
• 15:49
  obviously gold had an insane last 18 months or so. Silver has even, I don't actually know what
• 15:55
  silver's at right now, but it had a really good run before it kind of came back down.
• 15:58
  And the whole time Bitcoin was just sideways. And then as soon as everything turned over,
• 16:02
  Bitcoin got the volatility to the downside. Why do you think it didn't catch any of that bid with
• 16:07
  the like debasement trade gold and silver stuff yeah so it's just a function of the market not
• 16:12
  understanding what bitcoin is yet uh for a very long time and i'll pull up the chart if i could
• 16:16
  find it um for a very long time bitcoin and gold were trading with about a one month lag um so you
• 16:23
  know all the way back to i think 2019 it was pretty clear that moves that were made in bitcoin
• 16:28
  or gold rather uh tended to be followed by uh bitcoin with about a 100 day to 120 day lag you
• 16:35
  could see on this chart right here, they were following one another at least directionally
• 16:38
  pretty closely for quite some time. This is a chart that Lawrence Lippard created over at the
• 16:42
  Bitcoin Opportunity Fund. And you could see, and if I adjust this a little bit more so that you can
• 16:47
  kind of see the better fitted to one another, this really started breaking down in October.
• 16:51
  And so what this tells me is that, you know, debasement fear has been persistent. That hasn't
• 16:56
  necessarily gone away. That's what drove the rally in gold, but, or Bitcoin, yeah, gold. But
• 17:01
  What drove the rally in Bitcoin in tandem with that, and we're talking since like the 2023 bottom, is the fact that the Fed funds rate was coming down, that even though we were experiencing QT, the balance sheet was on its way to normalizing.
• 17:14
  So QT was on its way to ending. And so both of these trades were kind of happening at the same time as one another. And only one of those trades has continued.
• 17:23
  We had this decline in risk appetite, but gold and silver stole the show as far as investment capital is concerned because of the fears around monetary debasement.
• 17:31
  And also you have to think like the speculative mania that happens when events like this occur cannot be understated.
• 17:38
  So obviously gold is a dinosaur of an asset.
• 17:41
  It is 30 plus trillion dollars in size for it to be making moves that are adding multiple trillions of dollars of market cap within days and weeks.
• 17:49
  Same thing goes for silver.
• 17:51
  that's something that catches a lot more headlines than you know one might think and so it was it was
• 17:57
  both the fears of the debasement trade but also this reflexive loop of people just trying to get
• 18:02
  in by this thing you saw all of the twitter posts of people waiting outside gold dealers trying to
• 18:07
  purchase gold and that happened multiple times and so really you know the reason for the breakdown
• 18:13
  here in my mind is that we had a decline in risk appetite if bitcoin traded the way that its
• 18:19
  monetary properties allow it to, then it would have followed gold and would currently be well
• 18:25
  above $200,000 or even higher. But because it's more tightly correlated to things like software
• 18:30
  stocks, QQQ, other really high beta risk names in the equity market, then that's what's caused
• 18:36
  the sell-off here. So I think, you know, looking at this chart, there are two schools of thought,
• 18:41
  and then I'll shut up because I've been rambling for a little bit. But school of thought number one
• 18:46
  is that Bitcoin will never be a debasement hedge.
• 18:48
  It's clearly failed.
• 18:50
  And school of thought number two
• 18:51
  is that Bitcoin is just severely mispriced
• 18:54
  relative to how it should trade.
• 18:56
  So if you look at this chart,
• 18:57
  this is a real,
• 18:57
  even if it's not like an actionable chart
• 18:59
  in terms of making trades,
• 19:02
  one thing that it does do
• 19:03
  is it illustrates how wide this informational gap is.
• 19:06
  You and I both know,
• 19:08
  and chances are the listeners of this show understand
• 19:09
  that Bitcoin performs all of gold's functions,
• 19:12
  but better.
• 19:13
  And so the only thing this chart illustrates
• 19:16
  to me is that we still have so much work to do in terms of narrowing that gap, in terms of educating
• 19:22
  people and the market finally coming around to the reality that Bitcoin truly is digital gold and
• 19:27
  should trade like it. Yeah. I mean, that's a, that's quite an insane chart. Do you think part
• 19:32
  of this is the sort of self prophecy of the four cycle narrative Like I to be fair I have been on the hype train that the four cycle either never never existed or is definitely over Um I I still feel that way I think but I don know how
• 19:47
  how you kind of take that in, especially with what's happened over the last few days in Bitcoin.
• 19:51
  Right. So it's interesting. Um, the four year cycle itself, I have some thoughts on this.
• 19:57
  It's basically this idea for people who might not be aware. I think anybody listening to what
• 20:00
  Bitcoin did knows what the four year cycle is, but, um, it's generally this idea that we have
• 20:04
  a 17 or 18 month bull run after the halving. And then after that, we have about a 10 to 11 month
• 20:10
  bear market. And so that would have put Bitcoin's top right around early October. And many people,
• 20:17
  including myself, are saying, OK, in the post ETF era, flows from trad fire dominating,
• 20:22
  Bitcoin native flows don't really matter. The four year cycle is dead. However, and I'll pull
• 20:28
  this chart up right now, this is a chart of all of the Bitcoin halvings. And as you can clearly see
• 20:32
  here, the first line you can see here on the left is the Bitcoin halving. And then over here is the
• 20:39
  subsequent top that Bitcoin made 17 months back in 2016 and 2017, 18 months in 2022 and 2021.
• 20:48
  And then again, 17 months post-halving, we topped out. So it's kind of hard to argue with a chart
• 20:53
  like this. However, so the four-year cycle does remain intact. But what I will say, the way people
• 20:59
  should think about this is that it's not an absolute rule to live by. So the first reason
• 21:03
  being Bitcoin is now very tightly correlated with the broader market, which is evidenced by the
• 21:10
  correlation to software that I just showed. Previously, Bitcoin was sort of an asset that
• 21:14
  marched to the beat of its own drum because it wasn't being traded by the same folks who were
• 21:19
  trading all this other stuff. Now it is. So it's not something you should live by because of that
• 21:24
  reason. And the second reason is that the prior bull market began over a year before the last
• 21:29
  halving. So it's not an absolute rule to live by. It's not this rule for timing. Like you can see
• 21:33
  here that, you know, in the prior sort of halving cycle, if you will, this four-year cycle idea,
• 21:41
  Bitcoin was just chopping around between the all-time high and the subsequent start of the
• 21:46
  next bear market. It took a really long time. But here, right, Bitcoin's bull market began well in
• 21:52
  advance of the next having occurring. So it isn't necessarily a rule to live by. But what I will say
• 21:58
  is that at some point, as you mentioned, it does become a self-fulfilling prophecy. So even though
• 22:03
  it didn't necessarily, it shouldn't have necessarily driven the sell-off, I do believe that there were
• 22:08
  a lot of folks who were looking at this and placing sell orders beyond a certain point
• 22:12
  because they expected this to occur. So I think at some point we lose this. I think at some point,
• 22:18
  You know, right now there's only 3.125 Bitcoin being issued in every block.
• 22:22
  At the next halving, it'll be a little bit over one.
• 22:24
  And then the halving after that, it'll be less than one.
• 22:27
  So, you know, we're coming up on the point where 20 million Bitcoin will have been mined
• 22:31
  and there will only be 1 million Bitcoin to be mined over the next 114 years.
• 22:36
  So I tend to think that it's going to have a minimized impact.
• 22:39
  But at the very least, like you can't really argue with this chart.
• 22:42
  I think it's just become a self-fulfilling prophecy at this point.
• 22:45
  Yeah, I mean, it'll be interesting what happens this year, because if Bitcoin,
• 22:47
  you know rallies from here has a good year maybe gets close to all-time highs on new all-time
• 22:52
  highs in 26 then that that does break this this cycle idea i think um i would still put that at
• 22:58
  a pretty high probability but i guess the last few days have kind of humbled all of my takes that
• 23:02
  i've had over the last few months um but we will see i'm interested what's happened with the etfs
• 23:07
  because the obviously the inflows during you know 2025 were pretty insane how bad have the outflows
• 23:14
  been over the last sort of few weeks? So honestly, I'm amazed like the ETF holders have held pretty
• 23:20
  tough and I have some data on this. So the first chart that I'm going to show here is Ibit volume.
• 23:25
  On the top, you could see the dollar amount that was traded and at the bottom you could see
• 23:29
  the shares that were traded. So you could see, and this goes all the way back to the launch of
• 23:35
  ETFs back in early January of 2024. So you can see here like this is the largest volume day for
• 23:41
  iBit ever, which makes a lot of sense, right? It was an insane day for Bitcoin. Obviously,
• 23:45
  it was going to be an insane day for the spot Bitcoin ETFs. But what I want to make note of
• 23:51
  here is that it wasn't necessarily driven by ETF capitulation. What we can do to gauge that is we
• 23:57
  could take the volume traded, which is on the top pane, as a percentage of iBit's market cap,
• 24:03
  and then we can extrapolate that out to the other ETFs. So there's only about $10.2 billion in volume
• 24:08
  here as you can see that's only six percent of ibid's market cap comparing that to bitcoin we
• 24:13
  had 140 billion dollars in spot bitcoin volume yesterday it's 11 of bitcoin's market cap so
• 24:18
  it tells me that the etf holders are actually more diamond handed if you will than the spot
• 24:23
  bitcoin holders even during this absolutely historic sell-off um so it's not necessarily
• 24:29
  like etf holder capitulation the selling is coming primarily from spot bitcoin which is
• 24:34
  is really, really unique to see. And the other chart that I'll show is actually the ETF average
• 24:39
  cost basis. And this sort of illustrates how remarkable it is that so much of the ETF assets
• 24:44
  under management have held tight. What you can see here, and this dates again, all the way back
• 24:49
  to when the ETFs first launched. And this isn't just Ibit anymore. This is every single US-based
• 24:54
  spot Bitcoin ETF. So this is the average cost basis translated to Bitcoin's price for the ETF
• 25:00
  holders. You could see here that we are 17.5% at the time of recording below the average ETF cost
• 25:08
  basis. And they're still holding strong, right? The day hasn't closed just yet. It remains to be
• 25:13
  seen how tough they held, but it's pretty remarkable how well they've held up. So this
• 25:17
  narrative of like ETFs introducing more stability into the market, that's true, but only for the
• 25:22
  coins held by ETFs. The coins that are held by say OG Bitcoin holders, people who've been here
• 25:27
  for a very long time, those are still highly volatile.
• 25:31
  And so what this indicates to me is that as more of the market is dominated by ETF buying,
• 25:37
  people who have this tendency that we've seen to buy these coins, to sit on them,
• 25:42
  to not be as flighty as Bitcoin investors in cycles prior have been,
• 25:46
  then Bitcoin will only get less volatile, which is good, right?
• 25:51
  It's a very interesting stat to pull up, and it kind of validates this narrative of ETFs
• 25:56
  bringing more stability to the market, just not in the way that we expected, right?
• 26:00
  Typical Bitcoin holder behavior, we just saw it, it's still intact.
• 26:04
  But at the very least, during this insane sell-off, the ETF holders have held pretty strong.
• 26:09
  So do you think that's a function of the place that these ETFs are being held?
• 26:14
  Are they being held in retirement accounts and therefore it's not very easy or you can't
• 26:19
  necessarily trade them on a downswing?
• 26:20
  Whereas if people are holding Bitcoin, especially if they're holding on an exchange, which obviously
• 26:24
  we don't think people should do,
• 26:26
  then they're very easy just to click a sell button and get out.
• 26:29
  That's one reason.
• 26:29
  And the other reason is access to leverage.
• 26:31
  Like you're spot on the money, Danny, with the first part,
• 26:33
  which is that, you know, when we talk about retirees,
• 26:36
  like the people who IBIT is being advised toward,
• 26:40
  those folks are buy and hold players, right?
• 26:43
  When we're talking about the typical American,
• 26:45
  they're passively allocating every two weeks
• 26:47
  and they have no idea what they're investing in.
• 26:48
  If at all, right?
• 26:50
  Chances are most of the time they don't know,
• 26:52
  uh chances are they don't have any control over what they're investing in either um so they're
• 26:56
  inherently a long-term player the second thing is that you have harvard you have brown university
• 27:02
  of a bunch of other endowments who are purchasing bitcoin through ibid or these other spot bitcoin
• 27:07
  etfs when they make those sorts of purchases again they don't necessarily trade in and out
• 27:12
  it's not because they can't but it's because they're holding them as long-term plays and so
• 27:16
  the people who made those allocation decisions are putting bitcoin price targets well above where they
• 27:20
  they purchased it at, right? The average cost basis here is at $85,000. All of the investment
• 27:25
  managers, all of the fund managers who work for these university endowments have placed much higher
• 27:30
  price targets than $85,000. And so that's probably one of the other reasons they're holding tough.
• 27:34
  But on the flip side of the equation, in Bitcoin, you have, in spot Bitcoin, not only do you have
• 27:39
  much easier access to just click sell, like market sell your Bitcoin that you're holding
• 27:44
  onto the exchange, but you also have much deeper access to leverage. And so the likelihood that
• 27:48
  you'll get liquidated is far higher, right? There's no way to add leverage to these spot
• 27:52
  Bitcoin ETFs in a retirement portfolio, at least not in the size that you can with spot Bitcoin.
• 27:56
  So that's sort of the reason that they've held tough. And again, it's really encouraging. Like
• 28:02
  as the market structure is composed more of these ETFs, then you'll tend to see a decline in
• 28:08
  volatility or a lower amount of instances like today over time. Yeah, it's super interesting.
• 28:14
  Like in previous bear markets, especially the last one in 2022, there was a very easy
• 28:21
  narrative as to why something was happening.
• 28:23
  Like FTX was blowing up, Three Arrows Capital, Luna, we had a ton of people getting washed
• 28:28
  out.
• 28:28
  Whereas this time, we don't have anything like that that I'm aware of yet.
• 28:32
  But there are people saying they think there's going to be some bodies come to the surface
• 28:36
  at some point over the next week or two.
• 28:37
  Do you think that's true?
• 28:38
  Or do you think people are positioned much better now?
• 28:40
  I tend to think Bitcoin, you know, people are positioned much better now to weather these storms in Bitcoin. There could be a couple of players offsides. Some market makers in particular, like a lot of folks were saying that, you know, on October 10th, market makers were caught offside and Wintermute chief among them has been a forced seller into the market over the last several weeks, over the last couple of months.
• 29:02
  You know, that remains to be seen. Like, we'll have to hear the news of that for confirmation. But it's not unprecedented necessarily for Bitcoin to make massive declines with no clear exogenous catalyst. I mentioned that, you know, this is one of the worst crashes for Bitcoin since three hours capital.
• 29:22
  But prior to that, if you look at November 2018, when we dumped from $6,000 all the way to $3,000, that didn't have any catalyst.
• 29:30
  It was just a function of there being a lot of froth in the market.
• 29:33
  There being this massive rally with a lot of euphoria.
• 29:37
  And naturally, there was profit taking and selling afterward.
• 29:40
  So it's not necessarily unprecedented for this to happen.
• 29:43
  It's just unprecedented in the modern era.
• 29:45
  So I do think people are much, much better positioned than they historically have been.
• 29:49
  You also have to think, like, with the developments in Washington that we've seen, it behooves players, particularly in the United States, who want to be looked upon favorably by the administration to make it so that they're not playing these crazy leveraged games.
• 30:04
  And so I just think by the very nature of where we sit now in the United States, these companies want to be in the good graces of the politicians in Washington, D.C., and not play any crazy games to increase the likelihood that these market structure bills pass.
• 30:19
  So I don't think we'll see any bodies float to the surface over the coming weeks, but I could be wrong.
• 30:24
  Ultimately, moves like this are, they do tend to take folks out, especially because of how unexpected it was.
• 30:32
  You know, two weekends ago, or last weekend, actually, and as we're recording this, we're talking about the last weekend in January,
• 30:38
  Bitcoin cratered from the high 80s to the high 70s very quickly.
• 30:43
  And many people thought that that was the very end.
• 30:45
  But then Bitcoin proceeded on a random Thursday to dump by 14%, which is one of the largest percentage drawdowns over the last couple of years. It's the largest percentage drawdown since the 2022 bear market. In absolute terms, it's the largest drawdown in Bitcoin's history, which just makes sense. The first ever time that we've had a $10,000 candle in Bitcoin's history.
• 31:08
  So if people weren't positioned properly,
• 31:10
  then absolutely some bodies will float to the surface.
• 31:13
  There'll be some forced selling.
• 31:14
  We'll see news about different exchanges
• 31:16
  having to close their doors.
• 31:17
  But that's something that you learn after the fact.
• 31:20
  So we'll see.
• 31:21
  There's always a load of sort of rumors
• 31:23
  flying around on Twitter
• 31:24
  or speculation flying around on Twitter,
• 31:25
  I probably should say,
• 31:26
  about like the treasury companies and things.
• 31:29
  Do you think they're all going to weather this storm?
• 31:31
  Okay, because really the only company
• 31:33
  that's been through anything like this,
• 31:34
  I believe is strategy.
• 31:35
  I don't remember exactly when MetaPlanet spun up.
• 31:37
  But most of the treasury companies, this is the first real drawdown they've seen.
• 31:42
  Do you think they're all going to be positioned okay and survive?
• 31:45
  That's a really good question.
• 31:46
  It all boils down to capital structure, right?
• 31:49
  If they were able to acquire their leverage in such a way where they could weather an 80% drawdown on Bitcoin,
• 31:54
  I think that's the stress test, then they'll be okay.
• 31:57
  Like strategy, for example, it's managed to pay off all of, if not most of its convertibles, I'm pretty sure,
• 32:02
  and they just have the preferreds as their form of financing for their Bitcoin purchases.
• 32:05
  and that has a duration of infinity, right?
• 32:08
  There's no fixed date at which that becomes due
• 32:11
  because it doesn't come due.
• 32:13
  So strategy will be okay, right?
• 32:15
  They've been here before.
• 32:16
  They started buying in 2020.
• 32:17
  They weathered the drop from, you know,
• 32:19
  $69,000 all the way to 16.
• 32:21
  So I think they'll be okay.
• 32:23
  Metaplanet, I'm pretty sure they started
• 32:24
  their Bitcoin strategy in early 2024
• 32:26
  and then they brought Dylan on
• 32:27
  in like April or May of that year.
• 32:30
  And so it remains to be seen, right?
• 32:32
  Time will tell.
• 32:33
  I know they had been buying pretty persistently
• 32:35
  all the way up to the top.
• 32:37
  Now, of course, we're about 50% down from the top.
• 32:39
  So it remains to be seen.
• 32:41
  I know we saw sequins, for instance,
• 32:43
  sell a great deal of their Bitcoin.
• 32:45
  So you're starting, and that was back in earlier last year,
• 32:49
  not earlier last year, but late Q2, early Q3 of last year.
• 32:53
  So you're already seeing some selling.
• 32:55
  I think the ones that hold tough will be the ones
• 32:58
  that have good capital structure, right?
• 33:00
  Those who have liquidation levels that are far lower than where Bitcoin's price is currently.
• 33:06
  Saifedean had a pretty good quote on this.
• 33:08
  He said, if your business model can't withstand an 80% drawdown in Bitcoin's price, you need
• 33:12
  to reassess your business model.
• 33:13
  And I fully agree, particularly with an asset as volatile as Bitcoin and a business model
• 33:18
  as, we'll call it different, as simply accumulating Bitcoin by leveraging access to public capital
• 33:26
  markets, risk management becomes very important.
• 33:29
  So I have a feeling that Strive and some of the more intelligent players very well capitalized
• 33:35
  will be okay.
• 33:36
  But some of the smaller treasury companies potentially may be at risk here.
• 33:39
  We'll see.
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• 36:24
  I'm not the right person to try and call tops or bottoms.
• 36:27
  Like no one should ever listen to my price calls because I'm just like a permable.
• 36:30
  But when I saw Bitcoin at like $62,000 or whatever, that is insane value to me.
• 36:36
  And so I was stacking pretty hard yesterday.
• 36:39
  But do you think the bottom is in at this level?
• 36:42
  or what do you think is likely to happen from here?
• 36:45
  I love this question.
• 36:46
  And I have so much prepared for this question.
• 36:47
  So the first thing I want to show is this chart right here.
• 36:51
  This is the Coinbase premium.
• 36:53
  So for folks who may not be aware,
• 36:54
  basically the Coinbase premium is the percentage difference
• 36:57
  between the price of Bitcoin USD you can get on Coinbase
• 37:00
  and the percentage difference that you can get on Binance.
• 37:02
  And this illustrates whether or not sell pressure
• 37:05
  is coming from the United States
• 37:06
  or it's coming from elsewhere, right?
• 37:08
  So it's basically like US buyer dominance.
• 37:10
  Why does that matter?
• 37:11
  Well, it matters because it's helpful to know the size of the players involved and where the selling is coming from.
• 37:20
  And also for people who can and have the ability to arbitrage between exchanges, this is helpful for them.
• 37:26
  So let's say you have an account that's overseas, you have an account that's here.
• 37:30
  If you can purchase Bitcoin at a discount, say on Binance or some other overseas exchange,
• 37:35
  and you could purchase it and then you could sell it at a premium in the United States,
• 37:39
  that's something that people do.
• 37:41
  So, you know, hedge funds, market makers worldwide,
• 37:44
  this is a tool that they can leverage.
• 37:46
  It's less important for retail traders,
• 37:48
  but that's kind of the importance of this index.
• 37:50
  I do remember, I don't know if it was 2016 or 2017,
• 37:54
  there was an insane premium, I think in South Korea,
• 37:56
  and loads of people were trying to add that.
• 37:57
  Yeah, the kimchi premium.
• 37:58
  I think it got to the point where it was like a $5,000 premium,
• 38:01
  maybe even higher.
• 38:01
  It was insane, like it was an insane premium.
• 38:03
  Yeah, yeah.
• 38:04
  So it can get pretty wild.
• 38:05
  The chart that I just showed,
• 38:06
  showed that a lot of the selling since the top
• 38:09
  has come from the United States.
• 38:10
  So it's been pretty US-dominated,
• 38:12
  which again, articulates this point
• 38:14
  that it's not a Bitcoin-native sell-off,
• 38:16
  it's just broader risk aversion in the United States,
• 38:18
  and that's why the selling is coming from in the house,
• 38:21
  as it were, or the call is coming from in the house.
• 38:25
  If you'll take a look here,
• 38:26
  there's another version of this chart that I have.
• 38:29
  This is the one-day Coinbase premium.
• 38:32
  And what this shows is that this is actually
• 38:34
  the minute-by-minute chart.
• 38:36
  And you can see here that once we ticked down to the bottom,
• 38:41
  or the local bottom of 60K,
• 38:43
  there was a massive spike in the Coinbase Premium Index.
• 38:46
  So what this shows us is that there is massive buying pressure
• 38:50
  in the United States at 60K.
• 38:52
  And we know that most of the institutional capital
• 38:54
  that's flowing into Bitcoin is from the United States.
• 38:56
  So clearly, there's a lot of support at that level.
• 39:01
  And plumbing the lows, as it were, 60K is a huge zone of support.
• 39:04
  So then the question becomes, what are the next logical areas that Bitcoin can fall to?
• 39:11
  So one of the big ones in my mind is the 200 week moving average at Now I was of the opinion that and I tweeted this out last week 58k for the memes that right exactly 58k you know it funny um that been going around for three four years i
• 39:29
  never thought we would see these prices again but here we are i'm i'm very much like you in the sense
• 39:33
  that when bitcoin's rising i'm a permable um and then when it falls you know i i have every
• 39:39
  explanation in the world for why it fell but i can't see it and uh you know as far as foresight
• 39:42
  I'm not the greatest in the world.
• 39:44
  In hindsight, I got plenty of explanations,
• 39:46
  but it's poetic irony that the 200-week moving average
• 39:51
  is at 58K.
• 39:52
  So the reason I bring this up is because
• 39:54
  if you zoom back even further from here,
• 39:56
  the 200-week moving average has served
• 39:58
  as a pretty reliable bear market floor.
• 40:02
  So you could see back in 2022,
• 40:05
  that's the level where we were consolidating around
• 40:07
  before ascending higher,
• 40:09
  and that's where we bounced really cleanly off of,
• 40:12
  of and it just so happens to rest right above 60k which is where we saw that massive line in the sand
• 40:18
  zone of support uh you could see how crazy this one week candle is look at the size of that wick
• 40:24
  bitcoin managed to go all the way down to 60k now we're all the way back up to 70k so that suggests
• 40:28
  really strong support at 60k which also happens to be just two thousand dollars above this 200 week
• 40:34
  moving average this has historically been like a line in the sand level for bear markets now it's
• 40:38
  worth noting that in the 2022 bear market, as you can see here, Bitcoin did fall $30,000
• 40:45
  underneath the 30% rather underneath the 200 week moving average. And so for me, the first line in
• 40:53
  the sand zone of support level would be right around 58K. Reason being not just because it's
• 40:58
  a 200 week moving average, and that's historically been a pretty good four for bear markets, but also
• 41:02
  it's because it lines up with the average on-chain cost basis for coins, which is just so happens to
• 41:07
  be right at 58k and bitcoin holders tend to want to buy right around their cost basis right right
• 41:14
  around the level at which most of their coins were purchased uh and historically again it's been a
• 41:19
  pretty good line in the sand for bitcoin's price the other the other price level that i'm looking
• 41:24
  at which could be a potential bear market low for bitcoin is forty thousand dollars now it's
• 41:29
  sounds crazy it sounds insane but the reason i say that is because in 2022 as i mentioned
• 41:34
  And Bitcoin fell 30% underneath this line that we see here, the 200-week moving average.
• 41:40
  And so if that were to happen again, that would be a $40,000 price.
• 41:44
  That $40,000 level also lines up with the long-term holder realized price.
• 41:48
  So those who have held their Bitcoin for 155 days or more, right now that line in the sand
• 41:53
  is at $40,000.
• 41:54
  So if we can hold $58,000, consolidate around there over the course of the next couple of
• 42:00
  months, then chances are that's the bottom.
• 42:03
  But if we see a break underneath that,
• 42:06
  the next logical target would be 40K
• 42:07
  just because of the confluence of those levels.
• 42:09
  So that's where we are currently.
• 42:11
  There's a lot of support at 60K
• 42:13
  and we'll see how the next couple of days shakes out.
• 42:15
  This is a pretty crazy bear market rally here.
• 42:18
  But I would wanna see a little bit more consolidation
• 42:23
  around some of these key targets that I mentioned
• 42:25
  before saying, we're back in a bull market.
• 42:28
  We're a long ways from the resumption of the bull market.
• 42:30
  now it's just a function of figuring out when this thing ends i mean when you say things like 40k
• 42:36
  i i never would have guessed we'd hit 60k but saying 40k also seems like pretty wild to me i
• 42:42
  mean we may see it i have no idea but um this kind of also is one of the things that plays into the
• 42:48
  end of the at least the sort of traditional four-year cycle that we used to think of because
• 42:52
  one of the key sort of caveats there was that we never went below previous all-time highs
• 42:56
  we did that last time we've done that again here um do you think if we do you know like when we
• 43:03
  hammer out a bottom it will be like a long consolidation period around there or do you
• 43:07
  think it's like v-shaped recovery we get back up to you know 80 90k quite quickly right there's a
• 43:14
  chance for a v-shaped recovery but i ascribe a lower likelihood to it and here's why the v-shaped
• 43:20
  recovery if we do get it it would be much less sustainable than an extended period of consolidation
• 43:25
  uh if you take a look at the amount of time that bitcoin has spent between different areas and you
• 43:31
  can actually see it pretty clearly on this chart um there's a massive gap in volume between
• 43:36
  sixty thousand dollars and seventy thousand dollars and if you if you take a look back in time
• 43:41
  that checks out um the amount of time spent uh within this zone right here and even all the way
• 43:46
  up to 80k uh is very very low so what you can call like an a pocket an air pocket where coins
• 43:52
  just haven't changed hands.
• 43:54
  Bitcoin tends to spend a lot of time in those zones.
• 43:57
  First of all, it tends to revisit those zones,
• 43:59
  and then it tends to spend a lot of time in those zones.
• 44:01
  And going back, you know, over the last decade
• 44:04
  or the last 15 years,
• 44:06
  there really hasn't been an area in Bitcoin's price
• 44:09
  where there's been this sort of air pocket and volume
• 44:12
  that Bitcoin hasn't revisited.
• 44:14
  And all the way up to $80,000,
• 44:16
  you'll recall when Trump won,
• 44:19
  Bitcoin basically skipped directly past the $70,000
• 44:22
  range and hit $80,000 extremely fast. You could see right here between 70 and 80K,
• 44:29
  we've spent maybe three weeks, maybe four at most. And so very few coins have changed hands here.
• 44:36
  We've jumped above it. We've gone back down below it. And so I tend to think that Bitcoin
• 44:41
  is going to hang out in this zone. I don't think we see a V-shaped recovery. If we do,
• 44:46
  I would fade it because those tend to not be very sustainable. Bitcoin tends to always
• 44:52
  consolidate in these regions before moving higher. Makes sense. So people are going to have a lot of
• 44:56
  time to stack here, you think. What percentage chance would you put on 60K that we hit yesterday
• 45:03
  actually being the bottom of this? I would put a 20% chance on it. I think it's a really low
• 45:08
  likelihood. I believe that we revisit $60,000 and oscillate around it for quite some time
• 45:14
  before ascending higher. As far as timelines are concerned, I think this can last over the next
• 45:19
  couple of months. You know, your question was like, are we going to have a V-shaped recovery
• 45:23
  or are we going to recover really? Or are we going to spend a lot of time here? Look, like the bull
• 45:28
  tends to mirror the bear that follows. And so the bull market that we had for Bitcoin, a lot of
• 45:33
  people were saying we didn't have a bull market for Bitcoin. But the bull market that we had for
• 45:38
  Bitcoin was three years in length. So we bottomed in November of 2022, and then we wound up topping
• 45:44
  in October of 2025.
• 45:46
  So three years.
• 45:47
  And so if we are to believe that that's the case,
• 45:50
  then I would say that chances are this bear market
• 45:53
  may be a little bit more protracted than not.
• 45:55
  So I wouldn't put my money on a V-shaped recovery.
• 45:58
  I would put my money on Bitcoin spending
• 45:59
  and hanging out down here.
• 46:03
  And so the reason I assigned a 20% probability
• 46:06
  to $60,000 being the bottom
• 46:08
  is purely because every single Bitcoin bear market
• 46:12
  that we have had,
• 46:13
  we have always revisited that 200-week moving average that I showed, and we've always spent
• 46:18
  a pretty decent amount of time there. If you go all the way back to the first halving epoch,
• 46:24
  the second halving epoch, the third, it's just something that's been consistent throughout all
• 46:28
  of Bitcoin's life. So, you know, I'm not saying we couldn't have an unprecedented. Bitcoin doesn't
• 46:33
  touch the 200-week moving average, and it ascends higher. But then again, right, you know, because
• 46:39
  obviously you just mentioned breaking precedent with bitcoin uh moving lower uh below the prior
• 46:45
  cycles all-time high we've done that twice now but uh you know generally speaking i would say
• 46:50
  that there's a much higher likelihood that we go back down beneath it and hang out there uh it's we
• 46:55
  we had a really really really good run on bitcoin and now it's kind of this cooling off period
• 47:01
  um we've seen it time and again and so that's that's just generally what i think bitcoin's going
• 47:05
  to do um you also have to consider like bitcoin is at a really oversold level and a lot of folks
• 47:12
  have been saying because bitcoin is so oversold uh that tells us we're nearing the bottom all the
• 47:18
  oversold metric tells you is momentum right whether or not uh bearish momentum is dominant
• 47:24
  whether or not bullish momentum is dominant you can see here this is bitcoin's 30-day rsi and this
• 47:29
  is the third most oversold day in history as of yesterday um so you can see here we wicked all
• 47:34
  all the way down to, I think, 25 on this RSI,
• 47:38
  which shows overbought conditions
• 47:40
  versus oversold conditions.
• 47:42
  I mentioned the Three Arrows collapsed in 2022
• 47:45
  for good reason.
• 47:46
  That was the only other day that was like yesterday
• 47:49
  in recent memory.
• 47:51
  And then prior to that,
• 47:51
  the crash from 6K to 3K back in 2018.
• 47:54
  And so what you want to see on this,
• 47:58
  on RSI, in order to confirm that we're not,
• 48:01
  that the move in Bitcoin isn't a dead cap bounce,
• 48:04
  but it's actually a sustained rally,
• 48:06
  is a lower low in price followed by a higher low in RSI.
• 48:11
  So for instance, you know,
• 48:12
  if Bitcoin were to move down to $60,000,
• 48:16
  but RSI didn't move as low as it did yesterday,
• 48:19
  down to 25,
• 48:21
  and that would tell you that like selling momentum is exhausting.
• 48:24
  Chances are we're closer to hammering at a bottom.
• 48:26
  But because we haven't done that yet,
• 48:28
  I tend to wager that Bitcoin's going to revisit that level again.
• 48:31
  The last thing I'll say here is another really good analog for what's happening now in Bitcoin is the prior cycle, you know, and for good reason. If you take a look over here, you can sort of see this bear flag where we were kind of ascending in this channel here. Bitcoin broke down beneath it. And then we had another period of consolidation and then Bitcoin broke underneath it again.
• 48:53
  If I were a betting man, and I'm not,
• 48:55
  I would say that Bitcoin hangs out in this 70 to 80K range,
• 48:59
  as I mentioned, for a decent chunk of time
• 49:02
  before breaking back down below that 60K level
• 49:05
  and then consolidating between 45 and 55K for some time.
• 49:10
  That would be my base case, right?
• 49:12
  If we had this choppy stair-stepping price action on the way up,
• 49:16
  chances are we're going to have it on the way down too.
• 49:20
  I mean, I would take that.
• 49:21
  As much as I love seeing Bitcoin pumping, like the chance to accumulate more Bitcoin at those levels, like I didn't think we were going to get this opportunity.
• 49:28
  And if that happens, I'm definitely going to make the most of it.
• 49:32
  The one thing that I'm really interested in here is if you think Bitcoin is going to have, you know, potentially more downside, a long period of consolidation here.
• 49:40
  What do you think is going to happen in this broader markets macro world?
• 49:44
  Because like you showed the chart before where Bitcoin is incredibly correlated to especially tech stocks.
• 49:49
  Do you think they're going to go through a period of pain over the next few months and
• 49:53
  maybe throughout 2026 as well?
• 49:55
  Yeah, it's a really good point.
• 49:56
  You know, I do think so.
• 49:58
  And it's long overdue.
• 50:00
  Bitcoin topped before the S&P 500, before the NASDAQ.
• 50:04
  And we continue to see pretty good performance in both of those.
• 50:07
  I'm just looking over here.
• 50:09
  The S&P 500 is flat over the last month.
• 50:11
  The NASDAQ is just slightly down.
• 50:13
  So it seems like they're just starting their sell-off, whereas Bitcoin has already had
• 50:18
  it.
• 50:19
  If you'll recall all the way back to 2022, Bitcoin was one of the first assets to bottom.
• 50:25
  It certainly was the first asset to top, but the benefit of that is that it's also one of the first assets to bottom.
• 50:31
  I think we are just getting into the weakness in equities.
• 50:35
  You take a look at, and the reason I say that is because we had a Microsoft earnings miss,
• 50:41
  and then yesterday we had an Amazon earnings miss.
• 50:44
  Both of those are massively down after that.
• 50:46
  And so we're just now seeing the spillover effect from Bitcoin being one of the first to sell off to equities selling off after it. So I tend to think that more pain is in store for equities, more downside is in store for the S&P, for the NASDAQ. I think those will mirror what has happened to software over the last couple of months.
• 51:06
  And even though Bitcoin is going to have further downside, I think it's going to be one of the
• 51:12
  first to find its bottom and then consolidate and then begin ascending higher. You know,
• 51:16
  this is a function of Bitcoin being a 24-7, 365 global asset. Luke Roman has talked about this.
• 51:21
  He's called Bitcoin the last functioning alarm bell for global liquidity. And so I tend to think
• 51:26
  that, you know, even though Bitcoin has been really, really tightly correlated to software
• 51:31
  stocks, it seems like it's going to, similar to how it did in 2022, find its bottom first,
• 51:38
  even as equities are just getting into their underperformance. And then when risk appetite
• 51:42
  turns, Bitcoin is going to be one of the first movers again. So that's where we are. You know,
• 51:46
  I think that there are going to be some more earnings misses over the next couple of weeks.
• 51:50
  You're going to start to see the NASDAQ trend down even more. You're going to start to see
• 51:54
  the S&P 500 follow. And then well before those two, those two indices find their bottom,
• 51:59
  Bitcoin will have found its bottom.
• 52:04
  And if we look at prior cycles and try to think about when this could occur,
• 52:11
  Bitcoin takes about three and a half years on average to go from cycle low to cycle low.
• 52:18
  And this is the case throughout every single time Bitcoin has bottoms to when it's topped
• 52:22
  when it's bottomed throughout history.
• 52:25
  Currently, it's been three years and three months since the 2022 low.
• 52:29
  So we bottomed in November of 2022, obviously three years and three months ago.
• 52:35
  And so that would imply bottom formation.
• 52:38
  Like we find the absolute bottom of Bitcoin's price within the next three to six months.
• 52:43
  Now, speaking probabilistically, that could mean we already found the bottom for Bitcoin.
• 52:47
  It could mean the bottom was that one day wick down to $60,000.
• 52:51
  We spend some more time hanging out there.
• 52:53
  We may even trend back toward the lower 60s, but we never touch that price again.
• 52:57
  That could be the case, or it could mean that Bitcoin's bottom will be found sometime as far out as August of this year.
• 53:03
  It's a pretty wide range, but at the very least, we're sort of through this worst part of the bear market where everybody's sort of in denial.
• 53:11
  People think that it's just a bull market correction.
• 53:13
  So now we're all in agreeance that this is a bear market.
• 53:15
  And now we're into a similarly painful part of the bear market, but not nearly as painful, which is trying to figure out when the market's going to bottom.
• 53:25
  So that's sort of where we are.
• 53:27
  As far as like the rotation from stocks into Bitcoin
• 53:30
  and Bitcoin into stocks and vice versa,
• 53:32
  the pain in equities is about to be here.
• 53:34
  It's already sort of begun.
• 53:36
  But Bitcoin, as it historically has done,
• 53:38
  it's going to find its bottom first
• 53:39
  and then begin moving higher first.
• 53:41
  It's funny that you brought up Luke Groman.
• 53:43
  I was actually emailing him yesterday
• 53:44
  because when he made his call that he's selling Bitcoin,
• 53:47
  I think it was, I don't know,
• 53:49
  either in the 90,000s or maybe even low hundreds.
• 53:52
  I thought that was a very bold move.
• 53:54
  Who knew an investor for 25 years, one of the best macro analysts in the world would know more than a podcaster.
• 54:00
  But here we are.
• 54:02
  So he obviously talks about this being, as you say, the last functioning smoke alarm for global liquidity.
• 54:08
  I also had James Lavish on the show recently who talks a lot about the global liquidity.
• 54:12
  And James's take is that it's rolling over.
• 54:15
  We might be in a downtrend there.
• 54:17
  Do you think that's going to have a huge impact on, is that what's driving these sort of broader markets to go lower?
• 54:24
  Yeah, it certainly is. And it's definitely impacting Bitcoin more acutely. You know, we talk about Bitcoin being a really great fire alarm for global liquidity and really being able to sniff out these moves well in advance. It's for a couple of reasons. Like, number one, it's a globally distributed asset. Anybody can have access to it. The second thing is that it's it's highly liquid. Right. And we're talking about liquidity. We're not just talking about size, but we're talking about breadth of the market. It's available to trade 24-7, 365.
• 54:52
  five and you have instant settlement. So even though gold tends to sniff out these moves quite
• 54:58
  well, Bitcoin is far more sensitive to it. You know, there's far less price manipulation,
• 55:03
  but also because it's global, it can be traded 24 seven and there's final settlement.
• 55:08
  And so that's why Bitcoin tends to move in advance of things like global liquidity declining.
• 55:14
  And the exact same is true for the uptrend. So when global liquidity inflects, Bitcoin tends to
• 55:18
  move, move, move, move higher in advance of that. So I would certainly expect that it's one of the
• 55:25
  many reasons that we're going to see Bitcoin underperformance, I believe, over the next couple
• 55:28
  of months. But when global liquidity eventually turns up again, then Bitcoin will be one of the
• 55:35
  first to reflect it. Right. And, you know, James talks about this all the time. That's it. You know,
• 55:38
  it's of absolute necessity that we keep printing money, that we keep creating new money out of thin
• 55:43
  air. We live in this credit based global economy where in order for the banks to stay solvent,
• 55:48
  They have to continue extending new credit, printing money into existence.
• 55:52
  Prices continue to have to rise by 2% annually.
• 55:56
  We have to keep debasing the money by 5% to 7% every single year.
• 56:00
  And so in order for that to happen, the absolute amount of money supply in the system has to expand.
• 56:05
  And so even though some assets perform this function a little bit better than Bitcoin right now,
• 56:11
  over a long enough time horizon, Bitcoin will perform this function the best,
• 56:15
  which is to be this apex hedge against global monetary debasement.
• 56:19
  Right now, Bitcoin is really tightly correlated.
• 56:22
  We spent most of this show talking about why this sell-off is in Bitcoin native.
• 56:25
  It's just a decline in risk appetite and what's going to happen from here.
• 56:29
  But ultimately, Bitcoin right now is trading at a massive discount to where it should be
• 56:34
  because the market doesn't understand what it is yet.
• 56:36
  And so the longer that that persists, the more you can get Bitcoin below its fair market value.
• 56:42
  and, you know, opportunities like this
• 56:44
  are a moment for reflection, right?
• 56:47
  If you're experiencing hot flashes
• 56:50
  in the middle of the night,
• 56:51
  if you're really anxious about why Bitcoin's price is falling,
• 56:54
  then I think it's time to reassess
• 56:56
  and try to understand the asset a little bit better.
• 56:58
  If you are very comfortable with your position
• 57:01
  and you're looking at dips like this
• 57:02
  as moments of excitement,
• 57:04
  then chances are you have a really firm understanding of it
• 57:06
  and you're in the global minority, right?
• 57:08
  As far as Bitcoin holders are concerned,
• 57:09
  you are in the 1% that understands
• 57:11
  what this asset actually is.
• 57:14
  Totally.
• 57:14
  Everything you say there
• 57:16
  kind of breaks this little hobby horse idea
• 57:18
  that I've had for the last,
• 57:19
  I don't know, six months or so.
• 57:22
  I have been under the assumption
• 57:24
  that Trump is going to try
• 57:26
  and run things insanely hot,
• 57:27
  get the economy absolutely flying
• 57:29
  going into midterms.
• 57:30
  Personally, I think he's probably cooked
• 57:32
  in the midterms anyway,
• 57:33
  no matter what happens at this point.
• 57:34
  But getting the economy really going
• 57:37
  is one of the best levers that he can pull.
• 57:41
  So if that happened, I can't see how that would be in any way bearish for Bitcoin.
• 57:45
  I think that would be incredibly bullish.
• 57:47
  But that means that we're not going to have like in that.
• 57:50
  If you think that theory is true, we're not going to have, you know, eight, nine, ten months of consolidation like Bitcoin has to rip at some point.
• 57:56
  How do you sort of trade those two things off?
• 57:59
  For sure.
• 57:59
  So Trump has very few things going for him right now, which is unfortunate, right?
• 58:04
  You know, he was the Bitcoin president.
• 58:06
  He was going to bring law and order back to the United States.
• 58:07
  but his you know that's a platform that he ran on but unfortunately his success at that
• 58:13
  particularly toward his constituents has been mixed to poor you know one of the main things
• 58:19
  that he ran on was this idea of mass deportations and many folks who voted for him are upset at the
• 58:24
  number of mass deportations and people who are on the fence and may have grit their teeth and
• 58:29
  voted for trump despite a lot of things they may have disliked chances are they're definitely not
• 58:35
  voting for Republicans in the midterms. And so the only thing Trump has going for him now
• 58:39
  is asset prices. And so that's one of the main reasons he picked Kevin Warsh, right? Or any of
• 58:44
  the three people that he was talking about is that basically, you know, sort of this under the
• 58:49
  table agreement that they would run it hot no matter what, right? That there would be many more
• 58:54
  rate cuts priced in. And right now, I think rate cuts are underpriced. I think that, you know,
• 58:58
  Kevin Warsh coming online he talked about how he wants to lower Fed funds by 100 basis points lower than it is today There are only two cuts priced in or three cuts priced in between now and the end of the year And so I think cuts are underpriced Kevin Warsh is going to have a Are cuts underpriced
• 59:14
  or are the markets saying, just calling bullshit on that claim? No, I think cuts are underpriced
• 59:19
  here. And also one of the reasons I can say that pretty confidently is that we're still a couple
• 59:27
  of months out from the Warsh nomination, and we're a few months out from the next meeting.
• 59:31
  So we have the next meeting, middle of March, and there's no cut expected.
• 59:36
  The next rate cut that's expected is after June.
• 59:40
  And so-
• 59:41
  Makes sense.
• 59:41
  Once Powell's out.
• 59:42
  Exactly.
• 59:43
  Exactly.
• 59:43
  Once Warsh is in, there are only two cuts priced in between now and next year.
• 59:47
  And 25 basis point increments.
• 59:50
  So if you've got a guy who's going to go in as Fed chair who has said he wants 100 basis
• 59:54
  points worth of cuts and the market is only pricing in 50. I think it's a pretty, pretty
• 59:57
  good assumption that he's, he's gonna, he's gonna cut more than the market is pricing and cuts are
• 1:00:01
  underpriced. So that's why I say that, um, you know, this is one of the last thing that Trump
• 1:00:06
  has things that Trump has going for him. And it goes, it's the same goes for every single politician
• 1:00:10
  that gets voted in, regardless of what happened, happens red or blue, they always want to juice
• 1:00:15
  asset prices. And it's particularly important in Trump's case where he doesn't have much going for
• 1:00:20
  him. And so the Warsh nomination is tactical. He knows that Warsh is going to listen to what he says.
• 1:00:26
  And so I think we're going to see 100 basis points worth of cuts between now and the end of the year.
• 1:00:31
  They're going to try to move very aggressively. Warsh has said that he wants to move away from
• 1:00:35
  tools like QE. I don't buy it. That's proven to be one of the most effective tools at increasing
• 1:00:40
  equity prices and bringing up risk appetite. And particularly now that we're starting to see
• 1:00:45
  a little bit of turnover in the labor market.
• 1:00:48
  If you look at ISM services, PMI,
• 1:00:51
  if you look at the employment component of that,
• 1:00:53
  that has been severely underperforming.
• 1:00:56
  And if you look at the manufacturing component of that
• 1:00:58
  or the manufacturing survey,
• 1:01:00
  the employment component of it,
• 1:01:01
  that's been negative for three and a half years,
• 1:01:03
  almost four years.
• 1:01:04
  So the employment picture in the United States
• 1:01:06
  isn't really great.
• 1:01:07
  Fed policy is very heavily dictated
• 1:01:09
  by what the labor market is doing.
• 1:01:11
  And now that we're starting to see some disappointment
• 1:01:13
  in the labor market,
• 1:01:14
  That's another thing in the Fed's corner that gives them reason to cut.
• 1:01:17
  So I think at some point, balance sheet expansion accelerates beyond the $40 billion a month
• 1:01:22
  that we have now.
• 1:01:23
  I think cuts are underpriced.
• 1:01:24
  And as a result of that, I think asset prices will do well heading into midterms in November.
• 1:01:29
  That said, where does that put us as far as Bitcoin is concerned?
• 1:01:33
  I mentioned relative to history, it typically takes about three and a half years from cycle
• 1:01:38
  bottom to cycle bottom.
• 1:01:40
  And so, again, that would put us sort of in the range of Bitcoin's bottom being found
• 1:01:43
  around May, if it's exactly three and a half years, or a little bit longer. So I added and
• 1:01:49
  subtracted three to five months from that estimate. And so, you know, the onus is sort of on,
• 1:01:56
  the onus is on the Fed chair in order to juice asset prices well in advance of November, not just
• 1:02:01
  in the months leading up to it. So that would sort of put a Bitcoin bottom, like the odds of a Bitcoin
• 1:02:06
  bottom, closer, much higher to sort of a May timeframe. Smack dab at three and a half years,
• 1:02:13
  right as Kevin Warsh gets in.
• 1:02:14
  And also you have to consider a lot of what the Fed does
• 1:02:17
  is forward guidance and speaking
• 1:02:19
  what they intend to do into the market.
• 1:02:21
  And so potentially even in advance of his nomination,
• 1:02:24
  Kevin Warsh is going to be doing a press tour.
• 1:02:26
  He's going to be doing a lot more pieces
• 1:02:28
  where he's talking about how Powell hasn't cut rates
• 1:02:31
  nearly as much as he should be.
• 1:02:33
  You know, the S&P 500.
• 1:02:35
  Well, he's not going to explicitly talk about asset prices.
• 1:02:38
  I know Trump certainly will.
• 1:02:39
  But in advance of his nomination,
• 1:02:41
  He doesn't necessarily have to be in that chair position in order to start juicing asset prices.
• 1:02:47
  Markets are forward discounting mechanisms, right?
• 1:02:49
  And so as his nomination approaches and he finally gets put in his Fed chair, simply saying what he's going to do or suggesting what he's going to do could be enough and will be enough to start moving asset prices higher.
• 1:03:02
  And so if we were to take those two things into consideration, right, this idea that Bitcoin is going to find its bottom sometime within the next six to eight months, and the fact that we have a new Fed chair who's going to be working for Trump and trying to juice asset prices heading into November, then that would make it so Bitcoin's proverbial potential bottom, rather, would be found sooner than later, potentially around May.
• 1:03:22
  So, you know, it's going to be interesting.
• 1:03:25
  You know, we talked about the price levels and we talked about when this could happen.
• 1:03:28
  And, you know, ultimately it all boils around those factors at this point.
• 1:03:36
  Do you think Walsh is going to come in and really try and make a statement in his first meeting and do like a 50 basis point cut or something more, slightly more bold?
• 1:03:45
  You know, drastic times call for drastic measures.
• 1:03:47
  and when we're talking about the Republicans maintaining their control in Washington, D.C.,
• 1:03:52
  I think anything's on the table.
• 1:03:54
  I think it would be a bit of a misfire out the gate for him to do something like that right away.
• 1:03:59
  There are a few Fed meetings between when he gets nominated and the midterms.
• 1:04:03
  So we have a meeting that's in June, July, and September.
• 1:04:07
  So during the summer, you've got a lot of runway in order to work with.
• 1:04:10
  But it's also important to remember that, like, the Fed chair isn't the only person who sets interest rates.
• 1:04:16
  There's a committee, right?
• 1:04:17
  You've got 12 people to contend with.
• 1:04:19
  The Fed chair is only one of them.
• 1:04:21
  So he's going to have some marginal impact on influencing the Fed's decision, but not
• 1:04:25
  as much as a lot of people think.
• 1:04:28
  He's not the sole decision maker.
• 1:04:30
  So a lot of this also boils down to what the labor market does, the state of the U.S.
• 1:04:35
  economy over the next couple of months.
• 1:04:37
  And we've seen based on a couple of different things.
• 1:04:40
  We've seen based on the Atlanta Fed GDP estimates that the economy actually may be accelerating.
• 1:04:46
  um it it doesn't seem like that's sustainable at least in my eyes judging by what the labor
• 1:04:50
  market has done over the last couple of days you also have to look at uh consumer sentiment
• 1:04:54
  um which isn't doing very well particularly uh forward-looking inflation expectations those are
• 1:05:00
  disappointing which could uh suggest that growth is a little bit lower than anticipated um so as
• 1:05:05
  far as like him making a bold call i think it would be the right thing to do a 50 basis point
• 1:05:10
  rate cut right out the gate that would certainly be great for asset prices and for trump but uh
• 1:05:14
  the ball's not entirely in his court, if you will. Yeah, that makes sense. All right. Can we talk a
• 1:05:20
  little bit about Bitcoin as collateral? Because one of the things that I've seen going around
• 1:05:24
  Twitter, especially over the last few days, is people calling out the idea of doing Bitcoin-backed
• 1:05:28
  loans, saying it's too high risk and people shouldn't be recommending this, all that kind
• 1:05:33
  of stuff. I have Ledin as a sponsor. I use Ledin. I think Bitcoin is a brilliant form of collateral.
• 1:05:39
  I think Bitcoin-backed loans are a very useful product.
• 1:05:43
  I took out a loan around 100K.
• 1:05:46
  When you go into these agreements,
• 1:05:48
  you know that you have to do the position sizing right
• 1:05:51
  because you may have to top up your collateral at some point.
• 1:05:53
  I think there is very sensible ways of going into these Bitcoin-backed loans.
• 1:05:58
  And there's people that make a massive mistake
• 1:06:00
  by doing too large a portion of their stack
• 1:06:02
  and not being able to actually top up when required.
• 1:06:06
  How do you think of Bitcoin as collateral,
• 1:06:09
  especially taking into account the volatility we've seen over the last few days for sure so i
• 1:06:13
  it's something that people need to really put a lot of consideration into and learn about the
• 1:06:18
  risks before doing it but that said all of these platforms right whether we're talking about let
• 1:06:22
  in or other folks that offer bitcoin-backed loans they're very explicit about management
• 1:06:26
  collateral management um you know their ltv ratios that they offer are very reasonable
• 1:06:31
  um and their collateral requirements for ltv ratios that will put you at higher risk of liquidation
• 1:06:37
  they tend to be very good about warning you about Bitcoin volatility.
• 1:06:42
  So, you know, it's number one, it's like it's a function of risk management,
• 1:06:45
  but also like people do need to understand that you need to take out your loan in such a way
• 1:06:51
  where it's not your entire Bitcoin stack.
• 1:06:53
  You can post collateral so that during these moments where we have these big drawdowns,
• 1:06:58
  like we just saw yesterday, we're now 50% peak to trough.
• 1:07:02
  Well, not necessarily the full cycle trough,
• 1:07:04
  But the people who take out Bitcoin-backed loans, and many are listening to this show, you know, you do have liquidation risk, right?
• 1:07:14
  It's something that a lot of people are seeing and hearing about and learning about for the first time.
• 1:07:18
  Bitcoin has been a very stable asset over the last couple of years.
• 1:07:21
  And so for many folks who may have taken out their first Bitcoin-backed loan, this is a bit of a shock.
• 1:07:25
  um and so ultimately like what it boils down to is making sure that the amount of bitcoin you are
• 1:07:33
  taking a loan out against is not your full stack and if it is most of your stack uh then you have
• 1:07:37
  liquidity on the sidelines that you can use to purchase more bitcoin and top up your collateral
• 1:07:42
  um it was really tough to see a couple of people over the last couple of days particularly yesterday
• 1:07:48
  posting on twitter that they had been liquidated or that they had had to sell all of their stock
• 1:07:53
  portfolio in order to post more collateral. Prudent risk management, particularly with an
• 1:07:58
  asset like Bitcoin, is very important. Now, that said, I think over the next couple of years,
• 1:08:05
  over the ensuing decade, we'll call it, I tend to think that Bitcoin's downside volatility will
• 1:08:11
  decline for a few reasons. Number one, we talked about it already on the show. These ETFs who have
• 1:08:16
  held really tough despite the massive drawdown that we've experienced. Naturally, they don't sell
• 1:08:21
  as often, judging by their behavior
• 1:08:23
  as typical spot Bitcoin holders.
• 1:08:26
  So I think naturally it's going to introduce
• 1:08:27
  a lot of much lower downside risk.
• 1:08:30
  And as a result of that,
• 1:08:31
  much lower liquidation potential.
• 1:08:34
  And then number two,
• 1:08:35
  obviously you have the treasury companies.
• 1:08:36
  We mentioned that some of them
• 1:08:38
  with poor capital structures
• 1:08:40
  will be forced to sell their Bitcoin,
• 1:08:43
  but the lion's share of them,
• 1:08:44
  at least the ones that survive
• 1:08:45
  through this bear market
• 1:08:46
  and into the next bull market
• 1:08:47
  are just going to become buyers forever.
• 1:08:49
  And so that also eliminates
• 1:08:50
  a great deal of downside risk for Bitcoin.
• 1:08:53
  It eliminates a lot of the supply.
• 1:08:54
  So I think Bitcoin-backed lending will become much safer
• 1:08:57
  over the next couple of years from a price perspective.
• 1:09:00
  At least liquidation risk will decline.
• 1:09:02
  But all in all, I think it's a function of two things.
• 1:09:05
  Number one, people need to understand what they're getting into
• 1:09:08
  and make sure that they're not taking out a loan
• 1:09:10
  against their entire stack,
• 1:09:12
  so that they have plenty on hand to post this collateral
• 1:09:14
  in the event that things like this happen.
• 1:09:16
  But number two, and I think the companies already do
• 1:09:18
  a really great job at this around educating on the risks of Bitcoin-backed loans, sending push
• 1:09:23
  notifications when you need to top up your collateral or you're at risk of liquidation,
• 1:09:29
  and also extending the window of time that you have to post more collateral before being
• 1:09:34
  liquidated. I think Striker recently increased their window actually today after the events of
• 1:09:38
  yesterday from 24 hours to 72 hours. And I think that's going to continue to become the norm across
• 1:09:43
  the industry. So overall, like from a risk management perspective, Bitcoin-backed loans
• 1:09:47
  definitely warrant a higher degree of involvement.
• 1:09:51
  But, you know, I think they're well on their way
• 1:09:53
  to becoming one of the most used forms
• 1:09:55
  of accessing liquidity against your Bitcoin.
• 1:09:58
  You know, Bitcoin at one point,
• 1:09:59
  and it will get there again,
• 1:10:00
  was the fifth largest asset in the world.
• 1:10:02
  So one of the things that it struggles with right now
• 1:10:04
  is these Bitcoin-backed loans
• 1:10:05
  tend to have pretty high rates, right?
• 1:10:08
  At least relative to other sorts of financing
• 1:10:10
  that you can get.
• 1:10:11
  I tend to think that as Bitcoin grows in size,
• 1:10:14
  once it reclaims $2 trillion,
• 1:10:16
  and then $5 trillion,
• 1:10:17
  and then 10 trillion and then gold parity
• 1:10:18
  and then eventually the entire monetary premium in the world,
• 1:10:21
  the rates on Bitcoin-backed loans will come down.
• 1:10:24
  But until then, until we add another trillion to our market cap
• 1:10:30
  and then another $10 trillion after that,
• 1:10:32
  prudent risk management becomes like the foremost concern
• 1:10:35
  for anybody that's taken on one of these loans.
• 1:10:37
  Yeah, I did a show with Mauricio from Ledin
• 1:10:39
  probably close to a year ago now
• 1:10:40
  where we talked about like the risks of these
• 1:10:42
  and how you should think about position sizing.
• 1:10:44
  And personally, like I wouldn't be putting more than,
• 1:10:46
  you know, 10, 20% of my stack at most into like one of these Bitcoin back loans. But
• 1:10:50
  there are times where like right now I'm really tempted to do another one and I probably will.
• 1:10:56
  Because like at these levels, I think anyway, you buy more Bitcoin, obviously not financial
• 1:11:01
  advice, do your own research. But like I'm seriously considering another one.
• 1:11:06
  How does this play into your business? We've not even talked about Horizon. Do you want to
• 1:11:09
  tell everyone what you do? Yeah, for sure. So Horizon is, it's this concept we came up with when,
• 1:11:15
  And, you know, prior to this, and we obviously have another company called FAYETS, a self-custody solution.
• 1:11:19
  A lot of our customers were coming to us and asking, can we do a Bitcoin-backed loan through you?
• 1:11:25
  And, you know, we had discussions about this, but being a self-custody platform, that's inherently difficult to do.
• 1:11:31
  Our decisions were to either hire the engineering talent and build it in-house or partner with another place.
• 1:11:38
  We decided to do none of those things, but we decided to look at it from the flip side.
• 1:11:43
  Obviously, Bitcoin-backed loans are a method of accessing U.S. dollar liquidity against your Bitcoin.
• 1:11:49
  What we were more interested in is all of these different asset markets in the world that have a lot of monetary premium that people could use and leverage in order to acquire more Bitcoin.
• 1:12:00
  And so we started doing some searching. And, you know, very quickly, we landed on the pretty crazy stat that U.S. home equity is now at $35.7 trillion, which is almost double what it was in 2019. And this was a stat from almost a year ago. So it's probably even higher now.
• 1:12:18
  So that's a massive amount of capital that is now trapped within people's walls, right? And if you look at real estate globally, it's a $370 trillion market. So it's the single largest asset in the world. So it's larger than stocks, larger than bonds, larger than money market funds. But even though it's people's largest asset, it tends to be 55% of the typical American homeowner's portfolio. It's rising less than the rate of inflation. So it's rising less than 2% annually, which is CPI.
• 1:12:47
  But if you look at it from the lens of monetary debasement, Global M2 is rising at like 7% a year.
• 1:12:52
  So you're getting completely trounced when it comes to your home as a store of value.
• 1:12:58
  So really, like, the high-level thesis is that homes have become stores of value because when the money is broken, capital flees toward what is scarce.
• 1:13:06
  Naturally, capital flew toward gold when we departed the gold standard.
• 1:13:11
  And housing, real estate more broadly, but housing is relatively supply inelastic.
• 1:13:17
  So it's difficult to build new homes.
• 1:13:18
  Therefore, it makes sense to purchase them
• 1:13:20
  because they're going to go up faster than the rate of inflation.
• 1:13:23
  Today, that is no longer the case.
• 1:13:25
  And so now, as a result of all of this capital flight we've seen,
• 1:13:28
  there's conservatively a $130 trillion monetary premium
• 1:13:32
  embedded in global real estate.
• 1:13:34
  So roughly 33% of all money in real estate,
• 1:13:37
  not just globally, but here in the United States,
• 1:13:39
  is pure hot air, right?
• 1:13:41
  And so basically, the concept of Horizon,
• 1:13:43
  and it's basically sort of the inverse of a Bitcoin-backed loan, right?
• 1:13:47
  Where with a Bitcoin-backed loan, you're using your Bitcoin as collateral
• 1:13:49
  in order to access US dollar liquidity to buy other things,
• 1:13:52
  potentially to go and buy more Bitcoin.
• 1:13:54
  With Horizon, what you're doing is you are utilizing a portion
• 1:13:58
  of your existing home equity in order to convert it to Bitcoin, right?
• 1:14:02
  So you are using this asset to buy more BTC,
• 1:14:05
  effectively turning your largest asset into a better performing one.
• 1:14:08
  So that's the high-level idea around Horizon.
• 1:14:11
  We've been around for closing in on one year now,
• 1:14:13
  And the success we've had, the feedback we've had has been tremendous.
• 1:14:17
  And ultimately, we believe that in an era where homes are forced to be a store of value,
• 1:14:22
  you know, the value proposition of Bitcoin becomes even more enticing.
• 1:14:25
  And for homeowners who have families, they have children, they're in their forever home,
• 1:14:30
  where selling your house to buy more Bitcoin may not be an option,
• 1:14:32
  or taking out a home equity line of credit and adding another monthly payment alongside your mortgage may not be an option.
• 1:14:38
  We feel we've introduced a pretty good option.
• 1:14:40
  basically where you can convert your home equity to Bitcoin,
• 1:14:44
  a percentage of it,
• 1:14:46
  all the way up to 22.2% of your home's net equity,
• 1:14:49
  which is what we have currently.
• 1:14:51
  And then in exchange, you get Bitcoin.
• 1:14:53
  And alongside that, there are no monthly payments,
• 1:14:55
  there are no interest charges,
• 1:14:56
  and there are also no term limits.
• 1:14:58
  So effectively, for the length of time
• 1:14:59
  that you're living in your home,
• 1:15:00
  you can convert a portion of your idle equity,
• 1:15:03
  which is rising 2% to 3% a year, into Bitcoin,
• 1:15:06
  which becomes particularly enticing
• 1:15:08
  when Bitcoin is down 50% from its all-time highs.
• 1:15:11
  So that's the high-level info about Horizon
• 1:15:13
  and kind of what we do.
• 1:15:15
  That is, I think it's very cool.
• 1:15:17
  And so when that agreement comes to an end,
• 1:15:22
  how do you share the upside in Bitcoin?
• 1:15:25
  For sure.
• 1:15:25
  So in our current model,
• 1:15:27
  we actually don't share in the Bitcoin upside whatsoever.
• 1:15:29
  So Horizon and our capital partner,
• 1:15:31
  we're solely interested in the financial growth of the home.
• 1:15:35
  and the homeowner has total claim over the Bitcoin.
• 1:15:40
  So the Bitcoin that they have can be custodied entirely by them
• 1:15:44
  wherever they want to, right?
• 1:15:45
  Whether they're most comfortable holding it on an exchange
• 1:15:47
  or in self-custody, it's entirely theirs to keep.
• 1:15:50
  Now, the reason we have that model currently is,
• 1:15:53
  and this plays into the reason that Bitcoin-backed loans
• 1:15:55
  have such high interest rates,
• 1:15:56
  it's really hard to find capital providers
• 1:15:59
  who are willing to take payment
• 1:16:00
  and collateralize Bitcoin at scale.
• 1:16:03
  And so in this sort of model that we have currently, there's no Bitcoin appreciation share.
• 1:16:10
  As this business progresses, we believe that Bitcoin will become one of the cornerstones of capital markets.
• 1:16:15
  We believe that Bitcoin is pristine collateral, right?
• 1:16:18
  It's sort of a lender's dream, right?
• 1:16:19
  Because it can be liquidated 24-7 through 65.
• 1:16:22
  It's instantly verifiable.
• 1:16:23
  It's very easy to hold in escrow.
• 1:16:25
  And so ultimately, we believe that as our business evolves, there will be more demand from very large pools of capital
• 1:16:31
  to collateralize a financial product like this.
• 1:16:33
  And we'll be able to launch a model
• 1:16:34
  where we take upside on the Bitcoin.
• 1:16:36
  But for now, to the benefit of the homeowner,
• 1:16:38
  the Bitcoin is entirely there as to self-custody
• 1:16:40
  and we don't take any of the upside on it.
• 1:16:42
  That's very cool.
• 1:16:43
  And is this like working now?
• 1:16:44
  Can people actually do this?
• 1:16:45
  It is.
• 1:16:46
  Yeah, you can go to joinhorizon.com.
• 1:16:47
  You can apply.
• 1:16:48
  We're available in 18 states,
• 1:16:49
  including California and Florida,
• 1:16:51
  as well as Washington, D.C.
• 1:16:53
  The process takes 90 seconds to see if you qualify.
• 1:16:56
  And the typical lead time for this
• 1:16:57
  is about two to three weeks.
• 1:16:58
  So faster than a mortgage,
• 1:16:59
  faster than a home equity line of credit.
• 1:17:01
  And we've helped a lot of homeowners at this point,
• 1:17:05
  dozens of homeowners at this point facilitate this process.
• 1:17:07
  And it's been very sweet.
• 1:17:09
  Yeah, no, we're happy to be,
• 1:17:10
  there are other products that are similar to this,
• 1:17:12
  but not Bitcoin oriented.
• 1:17:13
  And so we're very happy to be sort of the first movers
• 1:17:15
  in this market.
• 1:17:16
  And we're excited to see how the space develops.
• 1:17:19
  That's awesome.
• 1:17:20
  Very cool.
• 1:17:21
  Joe, this has been fun.
• 1:17:22
  Anything that we've not talked about that you wish we had?
• 1:17:25
  No, I think we really covered everything.
• 1:17:27
  Just looking back through my notes here,
• 1:17:29
  We really did.
• 1:17:30
  I think the big takeaway for folks is that this isn't an idiosyncratic Bitcoin sell-off.
• 1:17:35
  Everything is selling off.
• 1:17:36
  Eventually, it's going to make its way into stocks.
• 1:17:38
  But the good news from that is that Bitcoin tends to fall before stocks, which is what we saw.
• 1:17:43
  And it tends to bottom before stocks, too.
• 1:17:45
  So it might seem scary, but ultimately, you're going to look back on this time 10 years down the line,
• 1:17:50
  five years down the line, next cycle, and say, man, I wish I had bought around that $60,000 zone.
• 1:17:54
  So it's been fun, Danny.
• 1:17:56
  Thanks for having me on.
• 1:17:57
  When we scheduled this, I didn't think Bitcoin was going to crater by the largest percentage
• 1:18:00
  in history, but here we are.
• 1:18:03
  I know now we've got the problem where we're recording this on Friday afternoon.
• 1:18:07
  It's not going out till Monday.
• 1:18:08
  Who knows what will happen over the weekend?
• 1:18:10
  This could all be invalidated.
• 1:18:12
  But no, I've really enjoyed this, Joe.
• 1:18:14
  Like you say, this is one of those buying opportunities that don't come around all that
• 1:18:18
  often.
• 1:18:18
  So up your DCA if you can.
• 1:18:21
  You'll thank yourself later.
• 1:18:23
  Joe, thank you, man.
• 1:18:25
  This has been awesome.
• 1:18:25
  Danny, I appreciate it, man.
• 1:18:26
  Thank you.