Latest / Simply Bitcoin / Nik Bhatia | Fed's 15 Year Record Rate Hike | Simply Bitcoin IRL

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Nik Bhatia | Fed's 15 Year Record Rate Hike | Simply Bitcoin IRL · Simply Bitcoin

0:01
Hello everybody. Welcome to another episode of
0:04
Simply Bitcoin live today. I have Nick Bhatia and talk to
0:10
him a little bit but first, I want to give a shout-out to the
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0:32
said Nick, thank you so much for joining us on.
0:35
Simply Bitcoin are out, you've been on the Regular Show before.
0:38
I don't think you've been on the interview Series, so I'm super
0:42
happy to have you and we actually get to have a long
0:46
conversation, so I'm really looking forward to.
0:48
I'm really looking forward to that.
0:50
Thanks Nico, thanks for having me back, appreciate it.
0:53
So Nick again, I think this was a total coincidence.
0:57
You were coming on the show after the Ed just announced that
1:01
they are hiking rates, the highest rate hike that we've
1:05
seen in over 15 years. What, what are your thoughts on
1:09
that? Yes, so we are at the highest
1:13
federal funds rate that we've had since the financial crisis
1:18
and it is the result of a lot of inflation in 2021 and 2022.
1:25
The Fed was definitely behind the curve.
1:28
In terms of hiking rates It's inflation was already above 5%
1:32
when they started and so it was, I think it was obvious to all
1:39
that they would make their best effort to hike rates as much as
1:42
they could. And I think it also surprised
1:45
many that they were able to get this far without breaking the
1:50
financial system which they haven't done yet.
1:53
They are starting to break the economy but we haven't had any
1:57
breakage and financial Plumbing. Aside from what happened in the
2:03
UK Government Bond Market and the bank of England response a
2:08
few months ago. So besides that, we haven't had
2:11
any financial crisis or any crash and stocks and because of
2:16
that, the FED has Runway to keep going.
2:20
Now I do think that there at the end of where they could or where
2:25
they can hike rates to this, might have been the last time.
2:29
Hike today we might get one more in February.
2:33
I'm not sure about that. My bias is probably that we
2:38
won't, but here we are at fed funds at four and a quarter.
2:45
And again it did catch many people by surprise that they
2:50
made it this far. So a lot of people are
2:53
anticipating of recession in 2023.
2:57
Do you believe that's the case? Yes.
3:01
And what we saw in 2022 was that q1 and Q2 we're actually both -
3:09
real GDP growth quarters. But the reason for those
3:14
quarters being negative is because even though the economy
3:18
was growing at about 6% per year, the inflation adjustment
3:24
was above 7% for both of those quarters.
3:27
Therefore the real growth component Opponent came back
3:30
negative now. The economy had positive growth
3:34
in Q3 and it looks like it will or it might Escape Q4 with
3:40
another positive growth. But looking forward into 2023,
3:45
the Outlook is quite - looking at a few components here.
3:51
So number one is, the housing sector housing is in a severe
3:57
contraction right now, housing prices.
4:00
Are declining month, over month for a few months in a row.
4:04
And by the middle of next year will be declining on an annual
4:08
basis as well. Housing is about 25 percent of
4:12
the economy. There's a lot of employment also
4:15
that goes along with finishing houses finished, houses,
4:20
household formation and so, the economy will slow widely due to
4:26
the contraction housing. The economy is also all Already
4:30
slowing because of a decline in business spending.
4:34
So businesses have been looking at the economy and the interest
4:38
rate Outlook over the last few months and they have decided
4:41
that a Slowdown in the economy is very likely.
4:45
They're slowing spending, they're slowing investing in
4:48
projects and they're also slowing hiring and actually
4:52
starting to lay off workers. So from a couple different
4:55
places, we do see that contraction and slow down is Or
5:00
likely. And then we'll just have to wait
5:02
for this Statistics. I think whether or not an
5:06
official recession is in the cards for 2023 is up to the
5:10
government statisticians. So I'll let them decide that.
5:14
However, I think it's pretty clear from our perspective at
5:18
the Bitcoin layer that the economy is heading to quite a
5:22
slow down, yields will come down in response to that.
5:26
The FED will have to stop hiking rates in response to that.
5:29
And other things will happen accordingly.
5:32
So I'm going to take advantage of that before.
5:34
I ask you more questions in relation to what you just said.
5:37
I want to take advantage of the fact that you brought up the
5:39
Bitcoin layer to ask you. What is the Bitcoin layer Nick?
5:42
What do you guys? It's awesome.
5:43
You guys started a YouTube channel.
5:45
I see it. You guys are doing dropping
5:46
shorts interviews. I think you had sealer at one
5:48
point. So for anybody that hasn't heard
5:51
about it, what is the Bitcoin layer is?
5:53
It just a YouTube channel? What are you guys?
5:54
What are you guys working on over there?
5:56
Yes, the Bitcoin layer is a research platform.
6:00
We cover Bitcoin through a global macro lens and we have a
6:04
lot of products right now for the audience.
6:08
We have a newsletter, which people can find at the Bitcoin
6:13
layer dotsub stack.com by the way.
6:15
All the links are available at the Bitcoin layer.com so you can
6:19
sign up for our newsletter. We have a free product.
6:22
We put out a weekly update that covers Global macro and Bitcoin.
6:27
We have paid updates as well. That come a couple times a week
6:32
that includes the more in-depth research and analysis on the fed
6:36
and things that are going on in interest rates and other risk
6:39
markets, including Bitcoin, including on chain insights, and
6:43
on bitcoin as well. We have a YouTube channel, we're
6:46
putting out to long-form episodes per week.
6:49
Those are either me interviewing somebody as part of our guest
6:53
lecture series or myself just giving my own research and
6:58
Analysis take And then we have shorts coming out.
7:02
So every single day, my research associate jokin, sortie, he does
7:08
a daily show it's called The Daily cup of joe, 45 seconds to
7:12
a minute. Gives you all the global macro
7:14
highlights that you need to know and economic outlook for the
7:18
day, what's coming in terms of data or what did we just see in
7:22
terms of data and, and then shorts on YouTube and Instagram
7:27
and Tick Tock Twitter as well. To just kind of condense all of
7:32
this content that we're doing and give people short-form
7:35
digestible content on bitcoin and Global macro.
7:39
Now in 2022, we spent a ton of time on the FED at the Bitcoin
7:44
layer and that's because Global macro has been in the driver's
7:47
seat and moving around asset prices especially with high
7:50
inflation rate hikes and week risk markets but we are here to
7:57
cover the transition. Of the Global Financial system
8:03
to a more Bitcoin Centric one. And in my personal thesis, I
8:07
believe that to be a multi-decade process.
8:10
I'm not a huge fan of the word, hyper Bitcoin ization, but I'm a
8:15
big fan of the concept of Bitcoin ization as a slow and
8:19
steady process. So Bitcoins in you know, about
8:22
year 14 of its life, you know, I think another 14 years will be
8:27
still sitting here talking. About the maturation of Bitcoin.
8:32
Transition of Bitcoin to becoming one of the global World
8:37
Reserve currencies. A centerpiece Global asset as a
8:43
storage vehicle and other things of that nature.
8:45
So that's what we're covering at the Bitcoin layer and I'm
8:49
looking forward to doing it for a very long time.
8:51
Awesome. Yeah, I'm a big fan of
8:53
definitely checked out. Some of your guys is content.
8:56
So Nick, it's interesting because that kind of goes Ends
9:00
the Bitcoin narrative so to speak on Twitter.
9:04
Right? Which is you hear this all the
9:05
time? Hyper Bitcoin ization.
9:08
Why do you believe it's going to take a little bit longer than
9:11
everybody else thinks? So I'm in about year, six of my
9:16
Bitcoin journey. In the beginning, I read about
9:19
the concept of hyper Bitcoin ization and I was attracted to
9:23
it and it was an interesting thought, exercise to see what
9:28
will the world look. Like as Bitcoin starts to catch
9:31
on but now that I'm six years in, I can see that it's not
9:37
happening in any hyper sort of way and, you know, I'm just
9:44
narrowly using the word fast. Here and so we're six years in
9:50
and there's no more. I guess today, the people
9:55
looking at Bitcoin as a potential Global Reserve asset,
9:59
six years ago are looking at today and saying oh yeah, it's
10:02
started to become that. Not that wow, it really
10:05
happened. Quickly and Bitcoin is taken
10:07
over the world and all other currencies are dead.
10:10
So will that is that the eventuality for Bitcoin that all
10:14
other currencies die? I'm not so sure.
10:17
And What is the eventually image reality for Bitcoin coexisting
10:22
with other assets and currencies and taking a more dominant role
10:27
in the way that money moves or even the way that governments
10:31
and companies and people store their wealth.
10:36
So we've had one country to adopt Bitcoin as legal tender
10:42
and it's not, it's only legal tender.
10:43
It's a sharing legal tender status with the dollar.
10:48
We have one S&P 500 company Tesla that has added Bitcoin to
10:55
its balance sheet and subsequently sold it.
10:59
You know the other 499 still haven't we have a few of the
11:04
world's top asset managers namely Fidelity, Bank of New
11:11
York Mellon, announcing custody products for Bitcoin, but it's
11:17
still not. Not.
11:19
You know, industry-standard to offer a Bitcoin custody product
11:24
at custodian at the custodian level.
11:26
So it's going well, it's going well for Bitcoin, but to qualify
11:32
for hyper Bitcoin ization. You know, it would have to be
11:37
happening a little bit fast in it, so it's a semantics game.
11:41
I still strongly believe in the long term adoption and growth of
11:46
Bitcoin and the user adoption. And we might hit a point where
11:52
we we leave Bitcoin ization, the slow and steady and we get to
11:56
hyper bit quantization but it's too speculative for me to make a
12:04
central part of my thesis at the Bitcoin layer when I'm writing
12:09
material to just keep talking about hyper Bitcoin ization.
12:13
It it's nice to think about the long-term but I'm And a cover.
12:19
What's happening trying to look for 3 to 6 to 12 months still
12:24
keeping this idea that long-term Bitcoin adoption is here with us
12:29
and here to stay. But you know it doesn't have to
12:33
happen in six years or 16 years just that it's happening is what
12:39
I'm covering. And again I'm in year six so
12:44
it's not. It hasn't happened in these six
12:47
years yet so I'm just Just using, you know, my time in the
12:51
industry to support that. So it's interesting because I'm
12:59
on your six as well 2016. And I you know what, i in it was
13:11
this isn't the first time I've heard this Nick.
13:13
I've also heard Vijay mallya Ponzi when he when he came on
13:16
and he has a, I guess a similar theory that the adoption is
13:22
going to be a lot slower than people think.
13:27
I don't know how I feel about that, but I'll ask you this and
13:31
then perhaps we will. Elaborate will dive a little bit
13:34
deeper into that. Do you believe Bitcoin is
13:37
inevitable? Yes, I do.
13:41
And the reason that I think it's inevitable is because look, how
13:48
Bitcoin has popped up all around the world.
13:51
So when Bitcoin pops up in the United States in 2009, 2010, and
13:58
then the UK and then Australia and then it starts happening in
14:04
different languages. Non-english languages, the white
14:08
paper is written in English. Right?
14:10
So non-english-speaking countries, that get the concept
14:15
and they embrace it and then Bitcoin continues to win Network
14:19
effect battles, every few years and in different continents as
14:25
well. So Asia, for example, will have
14:32
had their own experiments with altcoins, over the last 10
14:35
years, Latin America, to would have their own experiments with,
14:40
which coins could work in that part of the world.
14:44
Each one of those experiments has succumbed to Bitcoins
14:51
Network effect So that your question is, is it inevitable?
14:56
Well is it? Can we say it's inevitable
15:00
because it's popped up in every corner of the world in 100
15:05
languages around the world, and beat out competitors of the same
15:12
technological or let's say an aspiring technological brand.
15:19
So, I do believe that it is inevitable, especially with the
15:25
decentralized nature of it. The fact that it can't be shut
15:28
down, and can't be censured, and can't be subpoenaed as well.
15:35
Adds to, this inevitability people have recognized it as
15:39
money. The fact that it still isn't
15:42
dead makes its inevitability. I think already with us today
15:47
and it's just a matter. ER of growth now and of course,
15:52
Bitcoin has to get through this bear Market as it has in past
15:59
bear markets. And then, you know, in two years
16:03
if the Bitcoin prices at a hundred thousand dollars, it's
16:07
very easy to say, yeah, it's inevitable.
16:09
Because each time that it's supposedly dies, it comes back
16:14
to life. But this is the depth of the
16:16
bear Market or were people, maybe On bitcoiners will have
16:20
the most doubt that Bitcoin is inevitable, but I think people
16:23
that are maybe in their first or their second or even their third
16:26
bear Market feel more strongly that this is just another part
16:31
of the cycle. So do you think so one of the
16:34
things that I'm hearing a lot the cycle and I'm curious to
16:38
know what you think is. I've heard this a couple times
16:42
which is like Nico, the price that the Fiat price has actually
16:48
gone down. Down below the 2017 high and you
16:53
can actually make the argument that it's been.
16:56
Like if you of course, you have to pick the dates, you know, but
17:00
you could make the argument that hey, you know, this thing has
17:03
been flat. I mean, you know, it has ups and
17:05
downs. But this thing's been flat.
17:07
Really. Since the 2017 Peak, what would
17:12
you say to those people? Are they wrong or they just
17:14
don't have a long enough time preference.
17:17
No, they're not wrong. Bitcoin is flat over five years
17:21
and it doesn't it now doesn't even matter if you're picking
17:25
dates because there's a several month range from late 2017 to
17:32
early a 20-18 where we are flat on price or down.
17:37
So no, I mean, that's an accurate assessment.
17:42
It's also, I would think accurate to say that the Fed In
17:47
trying to raise rates over the last year, is trying to recreate
17:52
regain. Some of the credibility that it
17:54
lost in part to bitcoiners pointing out easy monetary
17:59
policy around the world. That was, it is a big part of
18:03
the investment case for Bitcoin is that central banks don't have
18:08
any way to tighten their belt. Well, that has reversed and it
18:15
has been reflected in the The Bitcoin price as well now
18:18
Bitcoin. Falling below the 2017.
18:21
Hi is technically is technically quite bearish.
18:27
And what we, what we saw is that basically once it went 20
18:31
through 28 went straight to 15 in short order and that type of
18:37
price action there is. It's almost if you look at the
18:42
chart it's almost obvious that once you lose that level that Is
18:46
not a lot of support and one of the things we do at the Bitcoin.
18:50
There's we look at how many days actually calendar days.
18:54
It's spending in each one of its price ranges like in 1,000
18:58
dollar cohorts or five thousand dollar cohorts.
19:01
And what you can basically see is that there was no time spent
19:04
between 20 and 30 k, a bunch of time around 20K and almost no
19:09
time between 12 and 20 K and so there there's Not a lot of
19:17
liquidity in some of these pockets and for Bitcoin to get
19:21
back above its 2017 all-time high.
19:25
It's going to, you know, run into this resistance, this
19:28
behavioral resistance that we see here and it is it is
19:33
concerning I was asked this a few months ago, you know what,
19:38
what do I what what I think of you know, Bitcoin fell below 20K
19:43
and all that and it is Is concerning on the chart.
19:49
When you think about how it got here to below 20, we're at 18,
19:55
right? Not much blood. 20.
19:57
We came off of two massive busts in the industry that had Cascade
20:04
selling to go along with them. Not to mention the entire
20:08
calendar year of 2020, to one of the supposedly largest exchanges
20:15
allegedly. Selling paper, Bitcoin into the
20:19
market without sort, without even sourcing it.
20:23
Now I'm talking about ft x here and some of the work that on
20:26
chain forensic analysts are doing and trying to prove that
20:29
they were never actually even sourcing any of the Bitcoin that
20:34
people were buying on their platform or most of it.
20:36
Let's say so it is, it's worrying.
20:41
But again, like in Bear markets, we understand that At it.
20:48
The bear Market is going to wash out as many people as it can and
20:52
it's going to last for as long as it has to to rid the
20:56
ecosystem of Bad actors or people that are maybe
21:00
disingenuous or not actually interested in Bitcoin for the
21:05
technology and we're only in there for a quick profit.
21:07
So Bitcoin has this really natural flushing mechanism and
21:13
we're right in the midst of that.
21:16
It It hasn't changed my conviction on the long-term
21:18
adoption of Bitcoin and actually has brought me some relief.
21:22
If I'm being completely honest with you Nico, some relief that
21:26
to learn what FTX was doing this year and that maybe not all of
21:32
the price action that we saw was natural.
21:36
And so what will happen on the way back up?
21:38
You know, who knows and anybody's guess and the price is
21:41
what it is today. It's not like when the details
21:44
came out about FDX that the price Automatically doubled in
21:48
the market. It's still where it is today and
21:51
has suffered its suffered. A lot of damage has a technical
21:55
analysis term that we use, but there's an immense amount of
21:58
technical damage on the chart. And it'll take time to work
22:03
itself out for sure, 100%. And I think a lot of people
22:07
didn't anticipate, you know, that this was going to happen,
22:10
and it was, it was a perfect storm, right?
22:12
It was minors when I heard this, I thought it was just so
22:15
ridiculous, use In a six themselves, as collateral taking
22:19
out these crazy loans, you know, FTX doing their back room stuff.
22:24
Now, you're hearing chatter about Finance potentially being
22:27
in trouble. Gemini owes 900 million dollars
22:31
from their user funds that were using the yield product.
22:34
But I agree. I think that we're seeing this,
22:37
you know, we always the bitcoiners saying is like
22:38
Nature's healing and I do believe that's what we're
22:41
seeing. Now, you said something really
22:43
interesting. Nick, you said natural Flushing
22:46
Is it? I mean we're seeing we're seeing
22:53
do you think that this what we're living through is just
22:55
something that we would normally see in the markets?
23:00
But for example, what we see in the traditional markets, like
23:04
the example of 2008 is you see this intervention by the state,
23:08
by the government to you know when you hear the things too big
23:12
to fail, like what is that? And what does that mean, right?
23:15
It's fascinating to see there is no too big to fail.
23:19
You just see it fall and I would make the argument Nick, that
23:22
that's a good thing, right? That these companies that took
23:25
these risks, they shouldn't be entitled to these bailouts,
23:29
right? What's the old saying, right?
23:31
It's like you're your capitalist when you know you're making
23:35
profit and then you're a socialist when you're losing
23:39
money, so what are your thoughts on that?
23:42
yes, I agree with you strongly agree with the way that you
23:49
framed that so This is and this is actually one of the greatest
23:55
challenges to this asset class and to holding it because it
24:00
takes a lot of understanding to hold through this, these types
24:07
of flushes. So number one, you're right,
24:10
there is no lender of Last Resort, there is no bailout
24:14
mechanism. And so everyone goes bankrupt
24:17
and goes actually under and sometimes Bankrupt under
24:23
sometimes it's stealing the money and disappearing.
24:29
Sometimes it's stealing the money and going to jail.
24:33
Sometimes it's the SEC coming to shut you down.
24:36
Sometimes it's a hack. Exposing the lack of security
24:41
and and and you know in a theorems case they just Fork the
24:46
chain and go to something different but in in most Most
24:51
other cases it let it crashes and burns and flushes.
24:56
And so that process it's not only natural.
25:02
But it is. It's almost out of the norm of
25:09
how the average investor thinks about the way that asset classes
25:15
should perform. And so, the average investor
25:19
looks at 75% draw Downs. And is terrified and won't touch
25:26
the asset class. So I wrote the 2018 bear Market
25:31
from 20 from 20 down to 3 K. Okay, it's 80% drawdown and this
25:40
time around I'm looking at the drawdown of 80% and reminded
25:49
that in this long-term adoption cycle, you will have fraudsters,
25:55
scammers and money-grubbers come in attempt.
26:01
Some will succeed. Many will fail.
26:03
It will crash and burn, and everything will renew, but for
26:08
most people, How can they watch it Crash and Burn and hang on
26:15
without? Let's not let's say that they
26:18
haven't been through a bear Market before so you don't have
26:22
that advantage and then let's say you haven't Read or studied
26:28
enough about Bitcoins decentralization, and you
26:32
haven't read and studied enough about Bitcoins.
26:35
Adoption in countries, across the world with less, than
26:40
Stellar currency regimes or political regimes.
26:44
It's going to be very difficult to hold.
26:47
And that's why you see people dump I have personal
26:54
relationships. All that sold this year.
26:59
That just couldn't make it through the bear Market because
27:05
the conviction isn't 100%. It's somewhat less than 100%.
27:11
Because, for whatever reason, they don't, they don't believe
27:15
they don't see or their belief was there, but it's been shaken
27:18
because it wasn't strong enough. Again, the word belief is there
27:21
a lot because you do have to believe in the network itself
27:26
and the network effects. And that that Network won't go
27:30
away. And I think you have to be a
27:32
user of the network to like have you sent Bitcoin transactions to
27:37
yourself from your exchange to your own self custody.
27:41
Have you practice self custody. That's another thing we didn't
27:44
even talk about how many people lost everything this year
27:48
because they never made the effort to learn self custody.
27:54
Many people and so it there's no bailout mechanism.
28:00
So there is Max Payne. And if you can remember the Max
28:04
Payne of 2018, you had a better year this year from emotional
28:09
standpoint, but you couldn't remember the Max Payne.
28:12
You might have gotten shaken out and to think that this is the
28:16
last time we'll see that in Bitcoin would be foolish.
28:20
I even wrote something I think it was maybe late last year or
28:23
early this year. Where I said is the four-year
28:25
cycle in Bitcoin dead. I was thinking maybe.
28:31
I was wrong and but we'll have to see going into the having in
28:40
2024. Are we going to see another Bull
28:43
Run? Are we going to see another Bull
28:45
Run? If the Fed goes back into QE?
28:48
If the Fed takes five or six years to get back into QE are
28:54
they, are we going to see another bull run when the FED
28:57
starts cutting rates? Is there going to be Uh, some
29:02
big wave of adoption from sovereigns.
29:07
All of those things were not sure will not.
29:08
We're not sure how the Bitcoin Market will react, but you have
29:12
to answer your question. It is very important for Bitcoin
29:17
to not have that lender of Last Resort.
29:19
It's it brings a lot of pain. To the Casual investor and it
29:29
honestly keeps Bitcoin a fringe asset to use that term lightly.
29:36
It keeps it Fringe at as long as it keeps having 80% draw Downs
29:41
every four years it will remain Fringe because the portfolio
29:46
management textbooks can't even compute that type of volatility
29:52
their models are out. So It's another reason.
29:55
I think that we're not in for any hyper bit quantization this
29:59
year, just proved it again, that with all this, you know, pain
30:05
that has to be experienced by the Casual investor, it
30:09
precludes some of that mainstreaming of Bitcoin, some
30:14
and and also and I completely agree with you.
30:17
I think that it's a feature, not a bug and what's really
30:21
fascinating to me Nick as well is the fact That it doesn't
30:25
matter who you are, what your status is, whether the CEO of a
30:30
public company. You're the president of a small
30:33
nation Central America, you still have to pay your price of
30:37
tuition, which is something, you know, so we got in your 20s
30:41
class of 2016 6 years. We paid our price of tuition.
30:43
2018, that was brutal. You know, and you're looking at
30:46
your portfolio, like, wow, this is crazy, but you also need the
30:50
religious fervor and the understanding to not only endure
30:54
that pain. Pain.
30:55
But, you know, December, 2018, 2019.
30:58
You're like, how can I buy more? Like, how, you know, how can I
31:01
grow my stack? And what's fascinating is
31:04
watching Michael sailor and name?
31:07
Bouquet Lee, going through this experience, you know?
31:11
And of course we're seeing what they're they're showing publicly
31:16
and it reminds me of what I showed publicly and 2018 and I
31:19
was like, no like this this I'm right like this is the thing but
31:24
That must be a tremendous amount of pressure.
31:27
I can't even imagine what Michael Sailors going through
31:31
psychologically. When I am bouquet is going
31:34
through psychologically, but there's a beauty to it, which is
31:37
everyone's equal here. You can't avoid it.
31:40
You have to pay the price. Let me ask you a question you
31:43
go. Do you have friends and family
31:45
that are potentially underwater on their Bitcoin position?
31:48
And in some part, thanks to you telling them at some point in
31:52
the past, you should be involved in Bitcoin. 100% absolutely.
31:57
And is that pressure from family and friends?
32:00
Any less than what a Michael sailor or not jubu.
32:03
Kelly has to face from the public.
32:06
I mean, internal emotions. I'm talking about human emotion.
32:10
You know, you're responsible for someone you love.
32:14
I think that it's, it's, it's the same and I think that's
32:20
something that all bitcoiners. I know have had.
32:24
Experience in some way where they have to go through this
32:30
state, the stages of Bitcoin, let's say Bitcoin evangelism, or
32:36
even the Disciples of Satoshi. As I said, Marty bent labeled by
32:44
someone of his readers yesterday.
32:46
I love that. Marty is one of satoshi's
32:48
disciples and he is, but my point.
32:54
Point here is that all bitcoiners have gone through.
32:59
Oh my God. We got to tell everyone about
33:01
this. When you when you first died
33:03
down there at them, I gotta tell everyone about this, then it's
33:06
like, you tell your family, you gotta buy some Bitcoin.
33:09
Like do you have any, are you protecting your aportfolio?
33:14
Do you own any and then have you figured out your own self
33:19
cussing, you have your own wallet, and then you realize
33:22
that, oh my God, people aren't going to take Once ability,
33:25
they're going to buy it on coinbase, they're going to leave
33:27
it there. What do I tell them?
33:30
Then they you told them to buy at one thousand, three thousand,
33:35
ten thousand, then it's like 48,000.
33:38
Like should I buy and you're like, I mean, I guess so why
33:42
haven't you yet? And then and then you're down
33:45
75%. These are emotions that.
33:49
I think every Bitcoin has to live through.
33:51
We all have to figure out what is the right. right way to teach
33:58
people about this technology and the societal good.
34:03
That's part of why I'm in Bitcoin believe that as an
34:06
enormous amount of potential for societal good.
34:10
And then how do you play off of people's greed that you know,
34:15
just because they're your friends and family, doesn't mean
34:18
that they're all of sudden in it for the tech and saving it for
34:21
saving the world and giving people Financial Empowerment,
34:25
they might just want to make a buck And so you know there are a
34:31
bunch of challenges here. I know your questions about
34:33
sailor and buchelli but it's not just them, it's all of us.
34:38
And you know what message? Are you trying to put out there?
34:43
When you're, let's say people on Twitter that have public
34:47
profiles and are talking about Bitcoin research and Analysis on
34:52
a daily basis. What what type of behavior did
34:56
they have? In terms of what are the values
35:00
that they're promoting, so is itself custody, is it number go
35:04
up? Each narrative, you have to own
35:09
that narrative. And so, you know, on a personal
35:13
level, It's I don't evangelize to friends and family anymore.
35:20
I just write and if you want to read what I'm writing about, you
35:24
can follow along now but I'm not going to go and Shake you and
35:28
say, hey why don't you own Bitcoin yet?
35:31
Because the emotions that we just described over the last few
35:35
minutes, through Bull and Bear markets, can be taking me heavy
35:39
for some people. Some people are like, okay, I
35:42
don't mind if you didn't listen to me at 3K.
35:45
You're an idiot. And you should be above water,
35:49
not underwater in your position, some people are not.
35:52
And so that's, you know, that's kind of my Approach, and I hope
35:58
to reach people in all corners of the world and all
36:02
socioeconomic backgrounds because I think then you'll get
36:06
a better or you'll reach more Bitcoins like that 100%.
36:12
And I think that, That Britt. So many realizations and
36:18
mistakes that you you learn a along the way and I'm yeah I'm
36:23
at that point I'm at that point where I've it's not that I've
36:26
lost faith it's just that like you got to do you, you know, and
36:32
I'm done trying to convince somebody I think I've said
36:35
everything that that's needed to be said but interesting and in
36:39
before and I want to take advantage of the fact that
36:41
you're here to talk about something that was very Historic
36:45
today, right? And but what I believe we're
36:49
seeing Nick is, you know, we hear this all the time, right?
36:53
Then they fight you stage and I do believe that Bitcoin has
36:57
reached such a high, such a popularity.
36:59
You're seeing, you know, BlackRock announced.
37:02
It Fidelity announced it, right. You're seeing it really
37:06
potentially be embraced by its it.
37:08
Of course, you know, FTX collapse.
37:10
You could make the argument that said it back a couple of years,
37:13
but it was Flea on track for that.
37:15
But the thing that I want to talk about nigga, or at least
37:17
want to get your opinion on is the bill that was introduced
37:23
today by Senator Elizabeth Warren, and Senator Marshall.
37:27
So, it is bipartisan and the bill would require devs to
37:30
register their identity obtain, a license sensor and surveil
37:35
users and it would ban privacy tools as well, right?
37:39
So it clearly in the way that I see it as the state.
37:44
It's fighting back. This isn't my words.
37:46
This is coin centers words. They do believe that this bill
37:51
is not because they aren't educated on this matter.
37:54
It's on purpose and they took advantage of the FTX collapsed
37:58
and they use that as an excuse, as a justification in order to
38:04
introduce this type of language. And even if it doesn't pass at
38:09
least, what it's going to do is move the Overton window.
38:12
So what are your thoughts on on? On that Nick.
38:15
I'm sure you've ran into it because it was all over Twitter
38:18
this morning. Yes, I so maybe this is the
38:25
portion of the interview where I take out my American flag and
38:29
start waving it behind me. But I have, let's say, I have a,
38:37
I have almost no confidence in Washington, but a ton of
38:43
confidence in Americans. and, I believe that the Restriction of
38:54
personal privacy rights and all that will be fought at the
38:58
legislative level appropriately. and if there are laws that are
39:05
passed, That restrict people's ability to do things in an
39:11
online setting. Let's just say that Americans
39:14
will ignore what they believe is unconstitutional for as long as
39:20
it takes for that course that, for that case, to make its way
39:25
into a court. And to see the light of day.
39:29
So this, that's my optimism hat, that Bitcoin is an expression of
39:36
math and computer code. That is a form of free speech.
39:41
It is protected by a Supreme Court decision, or sorry, a
39:48
federal circuit court decision. And that the Freedom of people
39:57
in America to purchase Bitcoin and to transact Bitcoin was
40:02
never given to them. How finny did not ask his
40:08
government whether he could start using Bitcoin, and,
40:15
Americans have a pride in their own freedom.
40:25
Using whatever technology and form of money that they see fit.
40:32
And any method of communication, also that they see fit Bitcoin
40:36
is a method of communication. So, just because a bill makes it
40:43
its way onto the floor, doesn't mean it's going to pass.
40:47
I'm confident that Americans will respond in the appropriate
40:51
way to protect what they need to in terms of their own privacy
40:55
and rights to communicate whether it's through
40:58
mathematical code or just through messages.
41:03
And that politicians listen I have it on decent source that
41:09
Senator Warren is on the take from the Ripple Lobby. so you
41:14
can just make of that what you want, but I think this is a
41:20
serious issue and it will be taken seriously by Americans,
41:23
just because we get a bill introduced doesn't really mean
41:28
anything to me, I know that there are people that need to
41:31
get out and make do the fight in terms of identifying the
41:37
negatives in the legislation. I see somebody saying I'll be
41:41
calling my congressman that's what that's what's going to
41:43
happen and I we all have our role.
41:49
So I'll Out there writing and then people will be reading,
41:52
they'll be calling and we'll all work together to protect the
41:57
American right to communicate in the way that we want, which we
42:00
have. And it's, it's an inalienable
42:04
right? You can't, you can't put a lien
42:07
against my right to speak in the way that I want to and Bitcoin
42:11
is part of that. So I'm just going to beat the
42:13
drum on freedom of speech, American flag and will.
42:19
We'll look to see how the country response.
42:22
I don't have any such optimism across the pond.
42:25
So if you go to Europe and spend any time there, your optimism
42:29
will get crushed the optimism that we'll all have freedom of
42:34
speech. I will get sucked, will get
42:37
sucked out of you. And so you know, I think there's
42:41
a big difference between the way that American legislators and
42:45
European legislators will take. So do you think that's a
42:47
cultural thing because Only because I noticed that as I
42:51
noticed that as well, Nick, right?
42:52
Which is the and you see this with how the European how
42:57
aggressive the European Regulators have been and how
43:00
much more successful they've been with introducing this type
43:04
of intervention in people's lives.
43:08
Like the idea that because of some keys that you're typing in
43:12
a computer. They could put you in a concrete
43:15
box and lock. The key is just absolutely
43:20
absurd to me. It's absolutely disgusting and I
43:22
do agree with you inherently. It is super anti-American and
43:28
technically you are protected. To say, whatever.
43:31
You know, it can't be violence. It can't be any of the thing,
43:34
but you are protected to speak your mind.
43:36
Like, that's literally it's in try.
43:38
They put it as the first amendment for a recent, right?
43:42
But why do you think some individuals in the state are
43:46
going to these lengths to try to at least slow down the adoption
43:53
of Bitcoin? Well if you've ever it, you've
44:01
read any any bureaucratic fantasy like 1984, for example.
44:12
And we know that Royals and politicians gift each other 1984
44:19
and Brave New World and other types of these dystopian.
44:25
Bureaucratic fantasies to each other because they love the idea
44:31
of control. All out control from the
44:33
bureaucracy side, so it to expect that they're going to do
44:39
that. It just you have to, you have to
44:41
know your history as well in terms of what governments like
44:45
to do. So government, the government
44:49
will play its role and that role will be restrict freedoms.
44:53
Yeah, I think that we've seen that and it comes from both
44:58
sides of the aisle here in the US and it comes from, you know,
45:06
unilateral party control and other places and through time
45:10
and through history as well. So, If that's what they want
45:16
Total Control then we'll see bills that lead to, you know,
45:21
restrictions on privacy control of the flow of money and all
45:26
that and the US government has done a really good job of
45:30
restricting, money flow and restricting privacy with the
45:36
legislation. So there it's not all optimism
45:39
there because of what the government wants to do.
45:43
But you know, I believe Bitcoin Will Survive its attacks because
45:49
of the fact that you can't really subpoena it or shut it
45:54
down and so it'll continue to live on.
45:58
And then one thing I should also mention is that you have now
46:03
publicly traded companies in the United States in the Bitcoin
46:08
business and you also have the CME.
46:11
The Chicago Mercantile Exchange Delta T, and Bank of New York
46:15
Mellon. For example, all getting
46:18
involved in Bitcoin, technology itself in the case of fidelity
46:24
and Bank of New York Mellon, it's been for more than half a
46:28
decade and so, they'll send people to DC and they'll hire
46:35
lobbyists to. So there will be people involved
46:38
on both sides and it will be a battle for sure.
46:42
So let's talk a little bit about About the source of their power,
46:46
right? So sorts of powers they have a
46:47
monopoly on violence. Most importantly, it's the
46:50
deficit spending, right? The money printing, right?
46:53
A lot of bitcoiners make the argument that Bitcoin will
46:58
eventually lead to the death of the dollar.
47:01
But what we were talking about earlier on in the episode,
47:06
right? Is that you can make the
47:08
argument that the dollar has actually shown strength, right?
47:13
What are your thoughts on that? Yeah, I think the death of the
47:17
dollar is it's one of my least favorite narratives out there
47:24
because if you look at the dollar relative to every other
47:28
fiat currency, it is the best. And it's doing very well over
47:33
the last several years and especially this year.
47:37
So the dollar is actually, if you look at the statistics
47:43
Ranges from 50 to 80% of the denomination of global trade.
47:49
And it depends on how you strike each trade, that goes on around
47:54
the world but the statistics are that at least half of all Global
47:58
transactions are dollar denominated and if you're on the
48:04
ground in countries around the world dollars are still treated
48:11
like real gold and the scarcity of paper Dollars around.
48:17
The world is something that leads to the demand for those
48:20
dollars as a storage vehicle for those people in those countries.
48:25
So the death of the dollar is It's a, it's a very dramatic way
48:33
to describe the current monetary system.
48:36
The death of other Fiat currencies versus the dollar as
48:41
something that's a more legitimate conversation or
48:44
debate to have and the death of the dollar versus real assets.
48:50
Over a long-term time Horizon is something that can be something
48:56
that can be flushed out as well, because I think that that's a
49:01
lot of what bitcoiners identifies that.
49:04
Okay. The dollar is going to lose all
49:06
of its value versus real assets over long-term time Horizon.
49:09
So I want to own stocks I want to own real estate gold or I
49:13
want to own Bitcoin but the death of the dollar itself in
49:18
terms of the dollar going away and losing out to maybe other
49:23
currencies like the Euro or the Chinese Renminbi.
49:26
It's it's fantastical. Well, to me, it's so far
49:31
divorced from the reality of how the monetary system works and
49:35
the network effect of the dollar is so strong that to displace.
49:40
It. It, I mean, it, it's almost
49:43
impossible to think that that could happen over any short
49:46
order, 10 to 20 years, especially because the Chinese
49:52
have a closed currency, everyone's like China's the
49:56
Belton Road initiative and they're spreading the rent.
49:59
It'd be all over the world, they're doing it, and they're
50:02
having some success, but it doesn't mean the Renminbi is
50:05
going to come and challenge the Dollar on a global scale.
50:09
And Europe can't figure out their political alignment with
50:14
each other. They still can't figure it out.
50:16
They're still bickering with each other.
50:18
Every little financial crisis leads to the EU is going to
50:23
break up on homework coming together, okay?
50:25
Germany's going to bail us out. Where's the German bailout?
50:29
It's a mess in Europe and what other currency is there besides
50:33
the Euro and the Renminbi that have any really Global take.
50:37
So the death of the Dollar is again semantics but it's total
50:42
nonsense. If you're comparing it to other
50:46
other Fiat currencies and it has Merit against him.
50:52
You look at a long-term chart on the stock market, since 2009 or
50:58
real estate prices since 2009. But look at the way that the
51:01
dollar has charged back versus those asset classes in the last
51:06
6 to 12 months, It's coming back and the FED likes that the FED
51:11
likes lower real estate prices and lower stock prices, and a
51:15
higher dollar to try to choke off growth and slow down
51:18
inflation. And the FED is making it clear
51:21
that they'll do their best to keep rates high.
51:24
And basically keep the dollar relatively strong as much as
51:27
they possibly can, before inflation can come down.
51:31
So That's my, that's my take on the death of the dollar.
51:35
Again, it doesn't mean that I'm here covering Bitcoin from the
51:39
long position because I feel that the current Financial
51:43
system leads to situations that will lead to large swaths of
51:51
global liquidity coming into the market.
51:53
I can't time that, but I can position myself for it.
51:59
And when I'm thinking about the long-term growth of Bitcoin, I'm
52:02
thinking about the global liquidity that will assuredly
52:08
come our way in waves from the US, and every other country over
52:15
the coming Financial crises. But that doesn't mean that the
52:20
dollar is going to die. I think that's a
52:23
mischaracterization. And okay, that's the first
52:28
narrative, right? And wanted to ask you about
52:30
that. The second narrative is which I
52:32
heard so much last year, is this Narrative of the dollar
52:37
inevitably is going to hyper and flight?
52:40
What are your thoughts on that? It was part of my thesis
52:46
original thesis. When Q, we started in 2010.
52:51
But then I witnessed the empirical evidence which is that
52:54
the opposite happens. It QE is actually leading to
52:59
structurally lower inflation. And that's a conversation for
53:03
another day. But rates went down during QE
53:08
and they went up when the FED stop kiwi.
53:12
And right now the FED is not doing Huey, they're going,
53:18
they're doing cutie, meaning the opposite of money printing,
53:22
they're doing money. Destruction and rates are going
53:25
up and inflation is happening. So it it really is
53:34
Hyperinflation of the dollar is not something that I believe in,
53:39
it's not in my base case scenario, it's always a
53:42
possibility but when you look at structural inflation in dollar
53:48
terms it's just not there. And there are a lot of factors
53:52
to that globalization technology and demographics are some of the
53:56
main ones, but we live in this dollar regime of structurally
54:03
low Inflation and that the pandemic induced Supply Chain
54:07
Break inflation of the last couple years is going to
54:14
eventually fade and give way back to some of the overarching,
54:21
disinflationary trends, including demographics
54:26
technology. And the overall debt stack as
54:29
well is is the dollar the final boss.
54:33
Like, is that the final thing that needs to go?
54:35
Because I agree with you, I think in developing countries
54:41
like you have physical dollars it like, it's it really is tree.
54:45
Like, oh, look at those images. Never Escape my mind.
54:48
It's almost as if it's an educational type of generational
54:52
thing. Right?
54:53
And you know, of course, as bitcoiners we know pick Corners
54:56
better. Might it Ronnie has a cap Supply
54:58
censorship resistant, all that good stuff.
55:00
But is this an educational issue?
55:03
Is this a cultural issue? Where people have these physical
55:07
dollars and they see, you know, Benjamin Franklin, you know, a
55:09
hundred dollar bill and it's almost as if they're treating it
55:13
like that. But we all know, you know, if
55:16
you look behind the hood that isn't the case.
55:18
So is it a psychological thing? Is it a cultural thing?
55:22
Is it an educational thing? What's your perspective on that?
55:26
It just Network effects. Take a long time to die.
55:34
You know. I if you think about
55:40
technologies that have been adopted over the last few
55:43
decades, even the ones that have lost on network, effect are
55:51
still being used by people. So, The dollar.
55:57
We to try to forecast the end of the dollar.
56:02
I think, stretches beyond what we are capable of trying to
56:08
project, the u.s. position versus the rest of the world.
56:13
Today, to project that the US will fall from the world
56:20
superpower to China or to XYZ country.
56:27
And I'm talking about a global influence, not GDP or all that.
56:31
But truly where is the world looking to for leadership and
56:34
all that to say that it's not going to be the u.s. in?
56:38
Let's just say 10 years. That sounds like a ridiculous
56:44
projection. And so I think if you just take
56:49
the us out and put the dollar in, Then that that claim still
56:54
holds like I would still say it's ridiculous to think that
56:57
the u.s. won't be in the same Global superpower position in 10
57:02
years and the dollar kind of the same story there.
57:06
And it's just too strong of a network effect for it to just go
57:10
away from people's mind. Is it the Benjamin that you see
57:13
in your hand? Is it that I mean, I don't know.
57:18
What it is psychological or not but that Network effect is has
57:22
been there since long before I was born and these these Network
57:27
effects move you know, incredibly slowly.
57:30
Look at Bitcoin, we identify Bitcoin is something.
57:33
When was hyper bit? Quantization written 2013, I
57:36
believe 12 or 13 or 14. So, almost 10 years ago, that
57:41
that piece was written, but how slow does it happen?
57:46
It just it just takes time. Yeah, I agree with you, is it
57:52
definitely takes time and it's also a educational thing.
57:58
It's a cultural thing. And this is what I heard from
58:01
Matt Hill, the CEO of Stark 9 start9.
58:04
He said it's also a multi generational thing as well.
58:09
And I'm starting to believe that Nick, I really enjoyed this.
58:14
Thank you so much for joining me today where Why don't you tell
58:19
everybody where they can find what you're working on these
58:22
days? The Bitcoin layer.com you guys
58:25
will find all the links sign up for our newsletter, signup, for
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or subscribe to our YouTube channel.
58:32
Subscribe to our podcast, which is the YouTube content and audio
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form on your favorite podcast platform and just follow along.
58:41
We're doing research and Analysis covering Bitcoin
58:45
through a global macro lens. We've been doing it.
58:48
For over a year and we're excited for the next phase.
58:54
Thanks, Nick. I really appreciate it and
58:55
pretty backstage for a second. There's a slight delay.
58:57
So, bear with me guys. I will see you tomorrow back at
59:01
the live show. 12:15 p.m. Eastern Standard Time.
59:03
Love you all. See you later.