Latest / The Income Show / Is The Bitcoin Bottom In | The Income Show | Ep. 11

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Is The Bitcoin Bottom In | The Income Show | Ep. 11 · The Income Show

• 0:00
  I think a lot of people think the bear market started around about October, you know, the October 10 flush that we saw and people speculate as to why that happened.
• 0:08
  I think Bitcoin was already weakening and on a downtrend before that.
• 0:12
  And it kind of started around that July period.
• 0:15
  So we're around about 12 months mark.
• 0:16
  Bear markets tend to last about 12 months.
• 0:19
  So I think we're approaching that.
• 0:20
  I would give it until the end of August.
• 0:23
  So now we've actually got something that's quite fundamentally sound backing these digital credit instruments.
• 0:29
  I see a demand in the hundreds of billions at the very least.
• 0:32
  I think we could see over 10 years,
• 0:34
  one or two trillion dollars in demand flow into Bitcoin
• 0:37
  through these digital credit instruments.
• 0:39
  All those people who are clowning on sale are saying,
• 0:41
  aha, your stock is down 80%.
• 0:43
  I think they're going to be made to eat their words within 18 months
• 0:46
  because don't they realize what's just happened?
• 0:49
  They've hit product market fit on these preferred shares in a bear market.
• 0:53
  And at one point they were buying up two, two and a half billion dollars
• 0:56
  of Bitcoin funded through these preferred securities in a bear market? What do you
• 1:01
  think they're going to be able to buy in a bull market? Hey, everybody, welcome back to The Income
• 1:13
  Show. This week, I have on Archie from the Bitcoin Archive. Archie, welcome.
• 1:19
  Hey, Joe. Thanks, man. It's good to be here.
• 1:21
  Yeah, great to have you. Archie, you have one of the largest accounts on Bitcoin X or Bitcoin Twitter. So I think you have like a generally a good idea of how the broad population thinks about just investing and saving for the future as a whole.
• 1:39
  And so I kind of want to ask you, like, how do you think, you know, the million, you know, 1.8 million, I believe, or so people that follow your account, how do most people or the typical person think about investing?
• 1:54
  Well, that's a deep question.
• 1:56
  I think most of the behavior, sentiment, feedback that I see is mostly related to Bitcoin and the people who are within that space.
• 2:06
  You know, they probably have very different financial objectives.
• 2:10
  I think we're all in Bitcoin.
• 2:12
  Let's face it.
• 2:13
  We're all in it for number go up.
• 2:14
  And that's what attracts us, most of us in the first instance.
• 2:17
  You know, there are people who are ideologically motivated, but it's really such a small section of the Bitcoin community and Bitcoin holders who are like cypherpunks, genuinely in it for the tech, for privacy, and for the independence.
• 2:33
  Most of us are here because of monetary debasement, inflation.
• 2:38
  Some of us, like me, I got in it because of a trade.
• 2:41
  And then I learned about monetary debasement and all the financial issues that we are facing,
• 2:46
  which were quite puzzling to me before I got into Bitcoin.
• 2:50
  So thank God I was interested in the hype and the parabolic bull run of late 2020.
• 2:58
  So that's what got me into it.
• 3:00
  So if I was to put my finger on it, I'd say a large number of people, most people are in it for
• 3:07
  number go up. And I would even go so far as to say that if number doesn't go up, Bitcoin
• 3:13
  is going to be a failure. It's going to fail. Number has to go up. I mean, that's the core
• 3:18
  thesis is that Bitcoin is a sponge for excess liquidity that would otherwise go into other
• 3:24
  productive assets, which have since become sort of financialized. And we've spoken about that with
• 3:28
  respect to items of passion like art and watches and other items of beauty, scarce beauty, and also
• 3:37
  in particular housing, which has, you know, been quite a destructive force within society, the
• 3:42
  financialization of the housing market, rather than to serve a utility of housing people who
• 3:49
  want to start families and put a roof over their heads and have that sort of social security
• 3:53
  for themselves and their loved ones, it's turned into a financial instrument. And I don't think
• 3:59
  that's served society particularly well, at least not in the countries that I've been a part of. So
• 4:06
  I'm Australian. And, you know, that economy has been doing particularly well because of its
• 4:13
  abundance of resources. The United Kingdom, I live in London, so it's quite a separate market
• 4:20
  from the rest of the country, quite a distinct economic structure as well.
• 4:25
  But even so, it's really expensive.
• 4:28
  Like the idea of buying a place and starting a family in London
• 4:32
  is out of reach for most people.
• 4:34
  They really have to go to the far outskirts of London
• 4:37
  to even contemplate that or, you know,
• 4:43
  stomp up and sign up for an extremely large mortgage
• 4:47
  that leaves you in sort of servitude to the mortgage for the rest of your life. And there
• 4:53
  really isn't much else that you can do with your salary. So I think traditionally 30, 35% has been
• 5:00
  about the mark of what people have allocated to their mortgage. And I think in London,
• 5:05
  it's upwards of 50%, which is quite a burden. You know, there's really not much else you can do
• 5:10
  with your life because you don't have the money to do it. So
• 5:17
  I think the investment approach for most people is to buy and hold.
• 5:22
  There's obviously a large contingent of people who also trade.
• 5:26
  And some people do both, of course.
• 5:29
  But for the most part, we are all in it for number go up.
• 5:32
  Some people have a shorter time horizon than others.
• 5:35
  Others have a much more patient approach to what happens to Bitcoin.
• 5:40
  And I think that's the most productive way to look at it.
• 5:43
  You shouldn't look at Bitcoin or any investment in a short-term timeframe.
• 5:49
  And I'm kind of glad that we've got those incredible bull runs behind us as Bitcoin matures,
• 5:55
  because I don't think it's particularly healthy to have a large segment of society,
• 5:59
  an ever-growing segment of society, just holding Bitcoin and waiting for it to go up to get rich.
• 6:04
  I do think you need to participate in society, find a productive purpose in life, and be involved in society.
• 6:11
  I don't think it's particularly healthy for people, especially younger people, to sort of look for a shortcut out of finding a purpose in life by just, you know, putting some money into something that just goes up and then voila, you've got money.
• 6:27
  You no longer have to think about those existential questions like, what's the point of life?
• 6:33
  What is my purpose?
• 6:34
  How do I meaningfully contribute to society?
• 6:37
  Those are all really interesting and profound questions that people need to attack head
• 6:42
  on.
• 6:43
  And I don't think it's healthy for you to look for and get a way out of that journey,
• 6:49
  because I think that's part of our purpose is to find that in life.
• 6:54
  so I'm not sure if I've fully answered your question but I think we're all hodlers
• 6:59
  most of us some traders and a few of us do both but it really does depend on sort of your life's
• 7:07
  the stage of your life that you're at and your risk appetite as to what you end up doing because
• 7:15
  as we're now seeing you know with the advent of various financial instruments that are under
• 7:21
  or underpinned or backed by Bitcoin.
• 7:24
  I think some Bitcoiners are having real difficulty
• 7:27
  reconciling the difference between the HODLers mentality
• 7:31
  and the ethos of Bitcoin
• 7:33
  and some conflicting or complementary financial objectives,
• 7:38
  which, you know, some older people,
• 7:40
  they don't have the time for number go up.
• 7:42
  If you're 65, 70 years old,
• 7:45
  you don't have the time to wait for number go up.
• 7:49
  And what you want is not to get poor, whatever you've saved, you don't want that to be debased. And you do need to live on something. So if you're retired and you want to generate an income, how do you do that? Do you want to do that with TreadFi instruments? You're sure welcome to do that.
• 8:07
  But if you're so convinced of Bitcoin's success, well, there are new instruments that are out there that allow you to seek an income through those.
• 8:19
  And we can talk about that in a second.
• 8:22
  But I think that's a separate question.
• 8:25
  I think much of the tension that we're seeing arise in the discourse amongst sort of the
• 8:30
  traditional Bitcoin maximalist ethos and the emerging sort of financialization of Bitcoin I think they all stem from a misunderstanding of having different financial objectives One is not a substitute for the other So there is no substitute for Bitcoin Let make
• 8:49
  that clear. There's no substitute. Nothing you can buy other than Bitcoin can give you the properties
• 8:55
  that Bitcoin gives you, which is censorship resistant means of exchange and store of value.
• 9:00
  There is nothing on the market that can compete with that.
• 9:03
  And so it's important we understand that.
• 9:06
  But also we need to understand that not everybody in their life has the sole financial objective of countering monetary debasement.
• 9:16
  Some people may have a greater risk appetite for a portion of their portfolio.
• 9:21
  Some people may have a desire to generate an income.
• 9:24
  and these are things that need to be considered independently of your hodling portfolio as well
• 9:31
  and so i think the discourse largely misses that nuance um and needlessly really because it's quite
• 9:39
  a straightforward case to make and none of those undermine the case for bitcoin the case for holding
• 9:45
  bitcoin yeah i think that was very well said i mean i think like you made a great point of like
• 9:52
  okay the bitcoin community or the people that hold a lot of bitcoin which in my mind is still
• 9:57
  a very small subset of the global population like one percent or less they have that longer time
• 10:05
  horizon that enables them to wait four or five ten plus years or longer and they're willing to play
• 10:12
  that game and ride the 80 percent drawdowns and you kind of encapsulate like how they think about
• 10:18
  investing you mentioned like the boomers like they kind of just want less volatility more stable
• 10:25
  income like consistent income where do you think like the 99 of other people fit the ones that
• 10:32
  aren't necessarily old boomers but they're just kind of like regular people that aren't fully into
• 10:39
  bitcoin or don't have any bitcoin at all like how do you think they think about investing
• 10:43
  Well, that's also a very interesting question because it depends on your approach as to how one would answer that question.
• 10:54
  So if you were to ask, you know, the absolute fanatical Bitcoin maximalist, they will say we should only ever encourage self-custody Bitcoin in cold storage.
• 11:06
  That's, you know, you take personal responsibility for.
• 11:08
  I think Saylor made the case for why that's not always possible for certain entities and some people who are, for example, in estate planning.
• 11:16
  So we don't really need to go into that here.
• 11:19
  But needless to say that some people have legal constraints that prevent them from doing that.
• 11:24
  And others might just have, you know, risk management that prevents them from doing that as well.
• 11:31
  So if you're estate planning, you know, you need to maybe self-custody in cold storage becomes a little bit difficult if you're relatively new and you haven't taken on the advice of how to do that collaboratively with the people you're going to leave something behind for.
• 11:55
  I'm forgetting your question, Joe.
• 11:57
  just how like the the 99 percent of people think about investing compare not not necessarily boomers
• 12:04
  that want you know and consistent income and not necessarily the bitcoin maximalists that you know
• 12:10
  want to hold gold storage bitcoin for the next 10 plus years it's the other 99 percent with respect
• 12:15
  to how they how they should access bitcoin and expose themselves to bitcoin not necessarily just
• 12:20
  more so like how do how do you think they think about investing like why have they not bought a
• 12:25
  lot of bit. I see. Yeah. Well, I think it's quite evident that you either get these sort of
• 12:30
  people who think they can manage their funds for themselves or those who prefer to give it to
• 12:38
  a fund to manage it for them. So some people like to manage their portfolio for themselves and
• 12:43
  play the markets as they say. And for the most part, they lose money. Other people,
• 12:49
  engage in a professional fund manager who stiffs them on the fees and generally underperforms the
• 12:57
  indices, right? And then, of course, there are the index ETFs that apparently do a reasonable job
• 13:06
  with minimal fees. So I followed the ETF boys from Bloomberg quite closely, James Saifert and
• 13:14
  Eric Balchanas. And, you know, they're constantly posting about how effective some of these ETFs are.
• 13:21
  So I think for the most part, people use a combination of those and probably some
• 13:25
  professional, some of them take on some professional advice as well. But in terms of,
• 13:30
  you know, how they would allocate and whether or not Bitcoin is even on the radar for them,
• 13:35
  I would say that, you know, for most people, they're not even, like Bitcoin is not even on
• 13:40
  radar for them. They still have 2013 FUD well and truly embedded in their brains. They're still
• 13:47
  thinking about volatility, swimming pools, worth of water for every transaction, you know, this sort
• 13:53
  of nonsensical ecological FUD and the volatility being something you need to stay away from rather
• 14:01
  than embrace. So I think for the most part, the average person out there, that's their
• 14:10
  impression of Bitcoin. And that's the lens through which they would assess any proposition to invest
• 14:17
  in Bitcoin, which is quite sad because it just means they're being kept out of Bitcoin until
• 14:24
  the institutions are ready to tell them, hey, we found a way to charge you a fee for something you
• 14:31
  could otherwise access for free. And that's a real shame. I think that the public has always
• 14:37
  been susceptible to that kind of messaging and gatekeeping. And it's highly effective as we see
• 14:43
  from the inside as Bitcoiners. How do you think about the evolution of Bitcoin adoption itself?
• 14:51
  You know, I'm thinking back to like early, early Bitcoin days before I was even around,
• 14:56
  you know, like really, if you were mining Bitcoin, that's how you got Bitcoin and you had to hold the
• 15:00
  keys because there was no custodian and you had to run a node to mine the Bitcoin. And then it kind
• 15:05
  of coinbase came out and people started using centralized like custodians but still some people
• 15:11
  continued to to self-custody then etfs came out like two years ago that was a very you know primary
• 15:18
  way for new people to buy bitcoin now we have digital credit and treasury companies like do you
• 15:23
  see that this continuing to evolve over time do you see there eventually will be like a resurgence
• 15:29
  back to like the the core ethos of bitcoin like how do you see that playing out
• 15:33
  well i think first of all as a community as bitcoin is we should always champion
• 15:40
  um self-custody we should always hold that up as the ideal as the aspiration and as something that
• 15:48
  everybody should be working towards and that should be your messaging to everybody but
• 15:52
  it shouldn't necessarily be the first thing you start people off on when i'm talking to people
• 15:58
  about Bitcoin who are new to it. The first thing I will do is try to send them $5 over the Lightning
• 16:04
  Network. And if they don't have a wallet, get them to download that and send them $5. Now they have
• 16:08
  Bitcoin. Now that seed has been planted in their mind to be mindful of Bitcoin. Now they have a
• 16:16
  reason to check a price or if the price flashes before them on a news headline to take interest
• 16:21
  in that. If they're actually ready to buy, get them to buy Bitcoin the easiest way possible.
• 16:27
  and how's that? It's usually from a mainstream exchange. Just get them to buy something.
• 16:33
  Once they've bought Bitcoin, get them comfortable with the idea of self-custody.
• 16:39
  And once they're ready for that, walk them through the process. And if you don't feel
• 16:43
  comfortable doing that, there are some reputable companies in the space who make it their business
• 16:50
  to actually give people that white glove service to take Bitcoin off the exchange into self-custody
• 16:57
  in a way that makes them feel comfortable and mitigates all the potential risks of loss.
• 17:03
  So there is a process through which you can take people. The trouble is,
• 17:08
  what I find, I think as Bitcoin is, most of us are terrible at orange pilling is that
• 17:14
  my observation is that we try to impress people with how smart we are and overwhelm them with the information that we all accumulated over years in just you know a five conversation And it just
• 17:26
  it overwhelms people to the point where they just go, it's just too complicated.
• 17:30
  You know, that was one of the reasons why I didn't buy Bitcoin in the first place,
• 17:33
  even just as a speculative gamble, is because the user interface around 2011, 12, 13 was just
• 17:39
  absolutely horrendous. And it was such a speculative sort of thing at that time that I just thought,
• 17:46
  why should I even bother? There are dozens, if not hundreds of these projects all over the world.
• 17:54
  Why should I bother with this? And I didn't bother with it.
• 17:59
  So with respect to all the other ways that people can access Bitcoin, I've been a big,
• 18:04
  big supporter of ETFs, big supporter of Bitcoin treasury companies in general, but I don't think
• 18:12
  that should be the first port of call for people. If someone expresses interest in Bitcoin, I'm not
• 18:19
  telling them to go and buy an ETF. I'm not telling them to buy a treasury company equity either,
• 18:25
  because that's a different thing. So the ETF is like Bitcoin, it's Bitcoin exposure, right? You're
• 18:32
  exposed to the price without any of the benefits of the properties of Bitcoin. And with Bitcoin
• 18:40
  treasury companies, again, you're exposed to the appreciation in price with some leverage,
• 18:47
  but you don't have any of the benefits of the properties of Bitcoin, which is censorship
• 18:52
  resistant means of exchange in the store of value. You do get some exposure to that,
• 18:57
  but in a levered way.
• 18:58
  So there's a higher risk way for sure.
• 19:02
  But here's the thing, as Bitcoins,
• 19:04
  we can't do anything to stop them.
• 19:08
  And I was just saying the other day,
• 19:10
  I've only been in this space about six and a half years.
• 19:15
  Six and a half years ago,
• 19:16
  everybody was saying, just you wait,
• 19:19
  Bitcoin's going to be the base layer of global capital.
• 19:22
  Everyone's going to have to buy Bitcoin.
• 19:23
  Every company will have an allocation of Bitcoin
• 19:25
  in their treasury, just like it was US treasuries or, you know, anything else that, you know,
• 19:33
  you might have an allocation to.
• 19:35
  And suddenly we have that happening now, right?
• 19:38
  We literally have Bitcoin treasury companies, which are kind of like the vanguard of
• 19:43
  corporates because they're solely dedicated to acquiring Bitcoin.
• 19:49
  But now we're also, as a result of that, the ice has been broken, you know,
• 19:52
  Sailor started and then there was MetaPlanet and then there were a bunch of others. There are
• 19:56
  probably dozens of treasury companies now. But now we're also seeing certain tech companies,
• 20:02
  you know, smaller, obscure ones, but like, yeah, we're putting 10, 15% of our treasury into Bitcoin.
• 20:08
  You know, we've seen that for a few years now. And, you know, they're the companies which have
• 20:15
  greater autonomy and they're more forward looking and they probably have a board that's much more
• 20:20
  familiar with Bitcoin as an investment vehicle as well. So they're the vanguard. They're doing
• 20:28
  that first. So it's inevitable that I think it will filter through to some of the more traditional
• 20:33
  companies. And Bitcoin will just be seen as another tool in a company's arsenal to manage
• 20:41
  their treasury. So there's nothing you can do to stop it. But five, six years ago, we were all
• 20:46
  saying that this was all inevitable. And now that it's happening, you see so much pushback against
• 20:51
  that. And I think for the reasons that we've kind of, I alluded to earlier on in this discussion,
• 20:58
  but I think they're kind of short-sighted a little bit. It's a little bit too insider-outsider
• 21:04
  tribalistic. It doesn't mean that there aren't new vectors being opened up for attack, for example,
• 21:11
  but I'm not yet convinced that that is the case,
• 21:15
  like that there is an attack.
• 21:16
  Some people think there is an active campaign of attack
• 21:19
  on Bitcoin right now.
• 21:21
  And through the financialization
• 21:23
  and institutionalization of Bitcoin,
• 21:25
  that's what they believe.
• 21:28
  I think that's possible.
• 21:29
  I'm not convinced that's happening,
• 21:31
  but it's definitely possible.
• 21:32
  So they're not crazy for thinking that this is a risk vector
• 21:36
  or an attack vector,
• 21:37
  but I'm not with them that I believe
• 21:41
  an attack is underway.
• 21:43
  Some people say there's no, you know, that's a difference without a distinction or vice
• 21:49
  versa.
• 21:49
  But we can't do anything about it.
• 21:54
  Like you can't stop BlackRock from launching an ETF.
• 21:58
  You can't stop Saylor and his company buying Bitcoin.
• 22:04
  So what should we do?
• 22:05
  We should always champion self-custody.
• 22:08
  But I'm not sure it's a productive use of our time.
• 22:11
  to be attacking financial institutions,
• 22:17
  corporate entities who want to buy Bitcoin,
• 22:20
  securitize, financialize and monetize Bitcoin
• 22:23
  and then sell securities based on Bitcoin.
• 22:26
  I think if we are being honest with ourselves
• 22:28
  and we think Bitcoin will become the base layer of global capital,
• 22:32
  this is how it happens.
• 22:34
  Like this is an example of something that should be happening
• 22:39
  on the path towards hyper-Bitcoinization is that we see companies like Strategy and your company,
• 22:46
  Strive, and MetaPlanet and others say, we have such conviction in Bitcoin that we believe it
• 22:51
  will go up 25%, 35%, 40% per year. And we're willing to share a percentage of that. And we
• 23:00
  will underwrite a percentage of that as income for a security if you give us your capital to invest.
• 23:08
  and we'll take that risk.
• 23:09
  That to me is mega bullish.
• 23:11
  That's showing me that these companies
• 23:13
  have total conviction in Bitcoin.
• 23:20
  So what are you going to do about it
• 23:22
  if you don't like it?
• 23:24
  You're going to warn people off that?
• 23:26
  Fine.
• 23:27
  Like I don't tell people
• 23:28
  to buy Bitcoin treasury companies.
• 23:30
  I don't do that
• 23:30
  because this is Bitcoin archive.
• 23:33
  It's not Bitcoin treasury archive, right?
• 23:35
  but it doesn't mean that I see them as a bad thing.
• 23:43
  I think they're companies that want to buy Bitcoin.
• 23:46
  I'm all for companies buying Bitcoin
• 23:48
  but I'm not telling people to buy MSTR.
• 23:53
  I'm not telling people to buy Strive.
• 23:55
  I'm not telling people to buy MetaPlanet.
• 23:58
  I just don't do that.
• 24:00
  But if you want to do that, go for it.
• 24:04
  Like if you have a greater appetite for risk and you want to expose yourself to more volatility
• 24:11
  and potentially more upside, you know, investing in equities is a perfectly legitimate thing
• 24:17
  to do.
• 24:17
  I think sometimes as Bitcoins, we forget that and we call them fiat games or whatever.
• 24:21
  That's nonsense, right?
• 24:24
  You can't be a libertarian capitalist and then the moment someone invests in something
• 24:29
  other than Bitcoin, you disparage them as being fiat-minded or a scammer or a grifter or whatever.
• 24:37
  And like, hang on, aren't you for capitalism? Capitalism is putting your capital at risk
• 24:42
  for productive purposes and to make a game. And so I don't see anything wrong with that.
• 24:49
  And a lot of the people that I like and respect are very much against Bitcoin treasury companies.
• 24:56
  but I you know I'm able to hold friendships maintain friendships with people I disagree with
• 25:02
  I think that was very well said I mean it's interesting that some people have the perspective
• 25:08
  that bitcoin could be a 10 20 trillion dollar asset or even a 100 or 200 or more trillion dollar
• 25:16
  asset and not realize that a company that's issuing credit at our you know you know cost
• 25:25
  a capital that's lower than any reasonable expected CAGR if you actually expect Bitcoin to be
• 25:30
  a 10, 20, or 100, or 200 trillion dollar asset. It's like that's probably going to be one of the
• 25:36
  largest businesses in the world during this transition period where Bitcoin is growing
• 25:41
  really fast. I do want to ask you more about digital credit specifically, especially since
• 25:48
  this is the income show. How do you think about that as like an overall concept? And you know,
• 25:55
  you talked about the various forms of Bitcoin exposure that people can have How do you see your digital credit fitting in there and who it for Well if you are a Bitcoin bull right and you at a certain stage of your life where you
• 26:09
  need to generate an income, so you need to monetize some of the capital that you hold,
• 26:15
  I think they're a perfectly legitimate way of generating income. But then I have to emphasize
• 26:21
  They are not a substitute for Bitcoin.
• 26:23
  They are a way to satisfy your need for an income, right?
• 26:28
  It's not a substitute for Bitcoin.
• 26:29
  So this is where people tie themselves up into knots, right?
• 26:33
  Because so many people are in Bitcoin, including myself, because of number go up.
• 26:38
  Like, we're all in it for that, right?
• 26:39
  Let's not deny that.
• 26:41
  And so they think, well, they forget that we're in it.
• 26:46
  Also, there are other properties to Bitcoin, like the censorship resistance means of exchange, right?
• 26:52
  And the self-sovereignty, the ability to hold your asset.
• 26:56
  It's a bearer asset.
• 26:58
  No one can take that away from you, provided, you know, you take precautions with your seed.
• 27:03
  People forget that.
• 27:05
  But it's not necessary that you hold, you know, your entire portfolio in Bitcoin, especially when you have other competing financial objectives.
• 27:16
  And I'm sorry, but if you just hold Bitcoin and you need an income, Bitcoin's not going to give you that income, right?
• 27:23
  Because there's just no way of doing that right now.
• 27:27
  So I think it's a perfectly legitimate way to generate an income for yourself, especially if you're a Bitcoin bull.
• 27:35
  Personally, I have no need for that.
• 27:36
  So I don't hold it.
• 27:37
  I don't advocate any of these instruments.
• 27:41
  But I don't hold it because I don't need an income.
• 27:44
  I've got a productive business that generates an income.
• 27:49
  And so I'm happy to sort of hold my Bitcoin and do not much with it.
• 27:54
  But there are people out there who are like, it doesn't make sense for them to do that.
• 27:58
  Now, having said that, I believe we're around about the bottom of the Bitcoin bear market.
• 28:04
  and it's possible for people to do that for themselves right now,
• 28:10
  which is buy Bitcoin that you might otherwise allocate
• 28:15
  to one of these preferred shares.
• 28:18
  And as the price goes up, monetize some of the gains
• 28:21
  and generate your own income.
• 28:22
  But then you've got the downside to worry about,
• 28:24
  which is what these companies say.
• 28:25
  We will pay you the dividend regardless of the volatility
• 28:29
  of the Bitcoin price.
• 28:31
  We're going to pay you that and it may even increase
• 28:33
  as it goes, you know, as we're seeing right now that the coupon rate might even increase.
• 28:41
  So, you know, you can't do that for yourself right now.
• 28:43
  If you want to manage that process and you want to time the market and you want to monetize
• 28:47
  the gains as, you know, Bitcoin emerges from this bear market, price appreciates, you could
• 28:52
  do that.
• 28:53
  But then you've got to manage it on the way down as well.
• 28:56
  And you've got to decide for yourself whether or not these companies present value for you
• 29:00
  to do that on your behalf.
• 29:02
  and um yeah it's it's everyone's got that choice to make when you think about like traditional
• 29:11
  finance and how normal people are you know saving in target date funds for example it's like you
• 29:18
  know typical like target date fund guidance and the way like a traditional financial advisor works
• 29:23
  is like in your young early days you want like high growth almost no bonds almost no income and
• 29:31
  just you want max volatility and maximum long-term upside as you get older you you know when you
• 29:38
  retire or you're on your last leg of your career you want to start taking some of that volatility
• 29:43
  off the table and receiving income do you kind of see that playing out with bitcoin over time
• 29:49
  where like when you're young maybe you want bitcoin and possibly amplified bitcoin and then
• 29:54
  over time maybe you know you keep holding the bitcoin but you also start holding some more
• 29:59
  income assets and maybe if you still think that over the long run bitcoin's going to go up
• 30:03
  maybe as you get older like a digital credit allocation becomes more reasonable does that
• 30:08
  do you agree with that well i think the underlying principle that you take more risk when you're
• 30:13
  younger compared to when you're older i think that holds that makes perfect sense you know and it
• 30:22
  depends how you want to take that risk so the when you're younger it doesn't mean you take all risk
• 30:26
  you might be like 10 and 90 or 20 and 80, right?
• 30:31
  And then how are you going to allocate the risk portion of your portfolio?
• 30:36
  It doesn't have to just be Bitcoin.
• 30:37
  It doesn't just have to be treasury companies.
• 30:40
  It could be whatever the emerging technological trend is.
• 30:44
  So, you know, a friend of mine, Stack Hodler,
• 30:47
  made a post maybe a few months back, six months ago.
• 30:51
  He said, look, I'm a Bitcoiner.
• 30:53
  My cold storage stack is not going anywhere.
• 30:56
  But I, as the sort of custodian of capital for my family, I see better returns in the next two to five years in the AI space.
• 31:08
  And people spoke, the responses were like he was a heretic or something.
• 31:12
  And I was like, guys, listen, if you want to go higher up on the risk curve, there are better rewards.
• 31:17
  And it's up to you whether or not you think you want to take that risk.
• 31:21
  It's not that there's anything unethical or immoral about investing in businesses,
• 31:27
  even if they are in a bit of a hype cycle.
• 31:32
  It's a perfectly legitimate thing to do, to invest in businesses that are in the growth phase.
• 31:37
  And, you know, AI companies and all the supporting infrastructure,
• 31:40
  they are definitely in the growth phase.
• 31:41
  And you could say that Bitcoin has suffered as a result of capital being sucked out of
• 31:48
  one market and pulled into the other.
• 31:51
  So I see nothing wrong with that.
• 31:55
  People need to get their heads around the fact that there are many different things to invest in in the world.
• 32:01
  I'm invested in my company.
• 32:03
  I literally sold down Bitcoin to grow my company, right?
• 32:07
  And some people may sell down their Bitcoin to invest in another company like an NVIDIA or a Tesla or some of these, you know, smaller cap AI companies.
• 32:17
  When I say smaller cap, they're still in the billions, aren't they?
• 32:20
  But, you know, in the public equity markets, and you have to understand that Bitcoin is savings now.
• 32:27
  It's maturing into savings.
• 32:29
  There are businesses out there.
• 32:32
  You're going to have to be good enough or lucky enough to pick them.
• 32:35
  And that's the risk, isn't it?
• 32:37
  Right?
• 32:38
  You've got management risk, operational risk, technological risk, competitive risk.
• 32:42
  You've got all of these risks.
• 32:43
  But that's why if you do pick the winners, you know, you're going to get 100x, 50x, 200x, whatever it may be, sometimes even more.
• 32:53
  You're not going to get that from Bitcoin in the next three years or five years.
• 32:56
  You're just not going to get 100x.
• 32:58
  That's not going to happen, right?
• 33:00
  It might take 10 or 15 years for that to happen.
• 33:02
  And so if you're young enough and you've got enough in cold storage such that, you know, if the world falls apart, you're covered.
• 33:14
  Or if suddenly you become, let's just say, your demographic comes under scrutiny by the government for increasing taxation or potentially even, you know, financial persecution, depending on where you are in the world.
• 33:28
  You want to be able to escape persecution, right?
• 33:32
  So as long as you've always got enough for that, and if you think that you need to make other decisions, I think we need as a community to understand and develop a sort of maturity in our conversation that there are lots of ways to skin a cat.
• 33:49
  You know, you might have many competing financial objectives and there are lots of ways to meet them.
• 33:55
  But there is no alternative to Bitcoin for what it does.
• 33:59
  let there be no mistake about that right and sometimes i just think a lot of people are so
• 34:06
  um inculcated in the culture and the virtues of bitcoin and we spend day night that we forget
• 34:14
  there's actually there's there's another world out there and if you had have invested in
• 34:19
  you know nvidia two or three years ago yeah you would have outperformed bitcoin
• 34:25
  And so what if you did invest in NVIDIA? Wouldn't that have been a good idea, right? It's a legitimate business. It's not a pump and dump scam. Like it's building and providing chips for the global technological economy.
• 34:42
  So why wouldn't you have done that if you had the foresight, if you had the conviction to do that?
• 34:48
  It's important we don't detach ourselves from the world.
• 34:50
  There is a productive world outside there.
• 34:53
  They're making things.
• 34:54
  They're providing services.
• 34:55
  They're building businesses.
• 34:57
  Why wouldn't you, as someone who has capital, want to participate in that if you want that extra risk?
• 35:05
  Now, for a lot of people, I would say if you've got a job and you've got savings, buy Bitcoin and just keep working.
• 35:12
  And you don't want to worry about that.
• 35:14
  Just keep working and put your savings into Bitcoin.
• 35:18
  Do that.
• 35:19
  I'm a huge proponent of that strategy.
• 35:21
  So I know we're speaking a lot about alternatives,
• 35:25
  but only because there's just such a strong aversion within the community
• 35:31
  to consider other investment vehicles.
• 35:37
  And I'm not telling people to do that.
• 35:39
  I'm just saying for people who do that, they're not doing something wrong.
• 35:42
  Like they're not doing something unethical.
• 35:44
  It's a perfectly legitimate way to allocate your portfolio.
• 35:49
  Yeah, I completely agree with that.
• 35:51
  And like, if you think about what money is, you hold it in case you need it in the future
• 35:58
  for some sort of investment or some sort of personal consumption.
• 36:02
  And, you know, if you do happen to see a good investment that has a good risk adjusted return
• 36:08
  that perhaps has nothing to do with Bitcoin.
• 36:11
  That's kind of why you hold the money to begin with,
• 36:14
  to allocate capital appropriately, if you so see that.
• 36:17
  Now, as we've learned over the last 17 years,
• 36:20
  it's very hard to find the NVIDIA.
• 36:22
  And so perhaps the best strategy is to just buy the Bitcoin
• 36:26
  and hold it and work and provide value
• 36:29
  however you do it on a day-to-day basis.
• 36:31
  But there's nothing wrong with buying a stock or a company,
• 36:35
  especially the one that is doing something productive and making the world a better place
• 36:40
  um earlier yeah i think some people sorry joe i just want to say i think some people get a little
• 36:45
  bit um you know their knickers in a twist because of some of the terminology that's used by some of
• 36:50
  the companies around here i don't want to you know point the finger at anyone in particular
• 36:54
  any particular individual but i think sometimes they latch on to a phrasing or terminology that's
• 37:00
  not perfectly aligned with how they want the distinctions to be made between Bitcoin and
• 37:05
  some of these financial instruments.
• 37:08
  And so, you know, OK, fair enough.
• 37:10
  But the world, you know, the world doesn't always comport to your sensibilities either.
• 37:15
  So I agree with that.
• 37:20
  Earlier, you mentioned that you think Bitcoin might be at or near the bottom of the current
• 37:27
  bear market.
• 37:28
  Why do you think that?
• 37:30
  there are two things. I think a lot of people think the bear market started around about October,
• 37:39
  you know, the October 10 flush that we saw and people speculate as to why that happened. I think
• 37:45
  Bitcoin was already weakening and on a downtrend before that. And it kind of started around about
• 37:49
  the July period. So we're around about 12 months mark, bear markets tend to last, the downward
• 37:55
  cycle tends to last about 12 months.
• 37:59
  So I think we're approaching that.
• 38:00
  I would give it until the end of August.
• 38:03
  Just if you want to use that.
• 38:05
  Some people, you know, use fractals and say, no, there's another flush to go.
• 38:08
  And we're going to, we're going to go down to the forties and then bounce back up.
• 38:12
  You know everyone uses different ways of gauging where we are in the market cycle I not saying I right I just saying we about there And one of the things that I start to look for whenever I looking to see if you know
• 38:28
  the cycle is turning up or down is the indicators start flipping on the short-term time horizons,
• 38:37
  the one-day, three-day, one-week.
• 38:40
  And we're starting to see that happening.
• 38:42
  We're starting to see the relative strength index, the pattern that's printing on the one-week chart.
• 38:50
  It's starting to look like the bottom in 2020, 2022, sorry.
• 38:55
  It's starting to look like that.
• 38:57
  And so none of these things are assurances.
• 38:59
  But as we progress from one week to the other, more and more of these indicators start flipping over
• 39:05
  and you develop a pretty strong signal that the risk has mostly been taken out of the bear market
• 39:12
  and it's just a matter of time before the market regains its confidence and we start seeing
• 39:18
  a move back up. I think there are quite a few indicators now starting to flip over. It doesn't
• 39:24
  mean we can't get another low. I just think it's going to be a short-lived low and the risk
• 39:28
  is going to be a matter of weeks before we bounce quickly off those lows and start pushing upwards
• 39:35
  again. I'm very optimistic about late Q3, early Q4. I think we finished the year much stronger.
• 39:44
  There is a huge potential, all things being equal, of course, that by the end of the year,
• 39:50
  we're pushing high 80s, maybe early 90s. I think I expect a strong recovery.
• 39:57
  Last question, then we can close it out. Maybe give me your bull case and bear case for Bitcoin
• 40:03
  over the next five years.
• 40:05
  So you just kind of did it for the end of this year,
• 40:06
  but let's think like five years from now.
• 40:08
  And then also give me the bull and bear case
• 40:11
  for digital credit.
• 40:14
  The bullish case for Bitcoin
• 40:16
  is that adoption continues growing.
• 40:18
  Fiat currencies continue debasing.
• 40:20
  Global economies being as weak as they are.
• 40:23
  The printing will continue.
• 40:25
  The debasement will continue.
• 40:26
  There is no other choice
• 40:27
  and nothing will stop this train.
• 40:29
  So if you're familiar with a lot of the sort of drivers
• 40:32
  I'm alluding to in some of the terminology, the vernacular and Lynn Alden's meme, you'll know
• 40:39
  exactly what I'm talking about. The bearish case is very much that if the AI bubble pops,
• 40:48
  there's going to be a scramble for liquidity and that will be a headwind for Bitcoin because
• 40:55
  Bitcoin sells off whenever there's a need for liquidity. It sells off first and probably the
• 40:59
  hardest as well. So that will definitely happen. And if broader markets are in a correction,
• 41:10
  I'm not convinced Bitcoin fights against that. I'm not sure, you know, we swim upstream
• 41:16
  against that. And if there's a sort of economic malaise without a crisis, I'm not sure how
• 41:28
  strongly the Fed will intervene. Especially if like, you know, we've got a war, we've already
• 41:37
  got high oil prices. I don't really know what will happen in that instance. If there's a crisis,
• 41:44
  I have no doubt If there an acute crisis I have no doubt the Fed will step in as they always do But we not really had a secular I spoke to Willy Woo about 12 months ago and he said Bitcoin never really been in the secular sort of recession
• 42:02
  secular bear market.
• 42:04
  And so we don't know how Bitcoin behaves under those conditions.
• 42:09
  So it's always something to keep in mind.
• 42:11
  And the other thing is, remember, we're five years from top of 2021 until now.
• 42:18
  And we're under the previous high of 2021, right?
• 42:23
  And ostensibly, we've gone through a bull market and just come back down.
• 42:29
  So it used to be said that Bitcoin never goes below the previous cycle high.
• 42:34
  Well, here we are, two cycles in a row, two bear markets in a row,
• 42:38
  breaking the previous cycles high.
• 42:41
  So we're five years where the gains are negative, right?
• 42:44
  From top to where we are now.
• 42:45
  if that continues for another two three four years not impossible by the way we're suddenly
• 42:53
  looking at a prolonged period of stagnation similar to what gold went through and we're
• 42:59
  supposed to block bitcoin is supposed to be a nascent um store of value technology technological
• 43:06
  payment network but here we are like eight potentially eight years into it and we haven't
• 43:13
  really made a move. That's something to really take notice of, right? I don't think that's going
• 43:20
  to happen. I don't think the bear market, I give that maybe a 10, 15% chance. I don't think that
• 43:25
  bearish scenario will play out, but it could. It could, right? So, yeah. And you wanted me to give
• 43:37
  the bullish case for digital credit um the bullish case is that the world is hungry and starving
• 43:45
  for yield yield has been low for the longest time i think meta planet what they're about to do in
• 43:53
  japan if they can get it through they're planning there um that could be something really special
• 44:00
  and i think michael and the strategy guys are kind of eyeing japan with a little bit of envy
• 44:06
  I think they can't wait to get into Japan if they could, because they see the opportunity there for yield.
• 44:13
  That's an economy that's been starving for yield for 45 years.
• 44:19
  And so if they can get a Japanese operation up and running and offer yield at 4% or 5% to buy Bitcoin,
• 44:28
  that they think is going to appreciate what their models might suggest, 30% or 40%.
• 44:32
  it's a much better place to be raising capital than the United States.
• 44:40
  That's for sure, right?
• 44:41
  So MetaPlanet is at quite an advantage to Sailor in that regard
• 44:44
  because they're raising capital at a much lower cost,
• 44:48
  at a much lower yield interest rate.
• 44:50
  But they're both exposed to the same upside
• 44:53
  because they're both buying Bitcoin.
• 44:57
  I wouldn't be surprised to see strategy open up something in Japan,
• 45:01
  have a Japanese offering.
• 45:02
  that will be interesting to see play out.
• 45:08
  So I'm really bullish for increased demand
• 45:13
  for digital credit around the world
• 45:15
  simply because as Bitcoin gets greater recognition,
• 45:20
  markets will become more comfortable
• 45:21
  with funding the purchase of Bitcoin through these Bitcoin treasury companies And there an insatiable demand for yield Let not forget that how a lot of these global fund managers got sucked into the subprime
• 45:37
  crisis, right?
• 45:38
  Is that they were promised yield for these junk securities.
• 45:43
  And they were so hungry and desperate for yield that they didn't even do due diligence
• 45:47
  and maintained their sort of monitoring of the securities that they were buying.
• 45:51
  They just thought, yeah, you know, Standard & Poor's is giving it a stamp of approval.
• 45:56
  So let's just buy more and more of them.
• 45:58
  So now we've actually got something that's quite fundamentally sound backing these digital
• 46:05
  credit instruments.
• 46:07
  I see a demand in the hundreds of billions at the very least.
• 46:10
  I think we could see over 10 years, $1 or $2 trillion in demand flow into Bitcoin through
• 46:15
  these digital credit instruments.
• 46:18
  And so it's a bit of a land grab.
• 46:19
  I don't think we've seen the top of the boom for Bitcoin treasury companies.
• 46:31
  Some people think that we've already seen the peak.
• 46:33
  I don't think we have seen the peak.
• 46:34
  I think the demand is just going to get bigger and bigger, probably by at least an order of magnitude.
• 46:40
  So all those people who are clowning on sailors saying, ha ha, your stock is down 80%.
• 46:44
  I think they're going to be made to eat their words within 18 months because don't they realize
• 46:53
  what's just happened? You know, they've hit product market fit on these preferred shares,
• 46:57
  this so-called digital credit in a bear market. And at one point they were buying up the two,
• 47:03
  two and a half billion dollars of Bitcoin funded through these preferred securities in a bear
• 47:09
  market, what do you think they're going to be able to buy in a bull market, right? So they've
• 47:15
  sorted out their issues. Now, let's give Saylor and his team some credit here because
• 47:20
  they're innovating something no one's ever done before. They don't have a background in, I mean,
• 47:27
  yes, they have raised capital in financial markets, but not like this, right? Where
• 47:32
  they're well and truly a hedge, a Bitcoin-backed hedge fund now. And so introducing these innovative
• 47:38
  products into the market and they're seeing how the market's going to react under different
• 47:42
  conditions. They're stress testing them and they're reacting, okay, what do we need to do
• 47:49
  to give the right signals to the market so that they feel totally confident in supporting us and
• 47:54
  giving us more capital? And I think they've discovered that. First of all, credit to them
• 48:00
  for recognizing that they needed a US dollar cash reserve and it wasn't enough to just say,
• 48:04
  hey, we can always sell equity into the markets to raise cash.
• 48:10
  No, the market wants to see you with cash
• 48:12
  because what if market sees up and you can't?
• 48:16
  Then what happens?
• 48:17
  So, you know, credit to them for recognizing what they had to do
• 48:21
  just to give the right signaling.
• 48:23
  And I think they've gone through a period of six or seven months
• 48:25
  of stress testing so that they can make the most of the emerging
• 48:31
  bull market over the next 12 or 18 months.
• 48:33
  and on the way down from that,
• 48:37
  they'll be much better prepared, I think.
• 48:39
  So I'm extremely bullish on demand for them.
• 48:43
  It doesn't mean I'm extremely bullish on you, viewer,
• 48:46
  buying these things, okay?
• 48:47
  That's your decision.
• 48:49
  I don't buy them.
• 48:50
  They're not for me,
• 48:51
  but everyone's got to make that decision for themselves.
• 48:55
  I love it.
• 48:55
  Well, Archie, this has been an incredible conversation.
• 48:59
  Really appreciate you hopping on to do this.
• 49:01
  Any final closing thoughts?