Latest / Simply Bitcoin / Alex Thorn | Why Bitcoin Isn't Topping Yet | Simply Bitcoin IRL

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Alex Thorn | Why Bitcoin Isn't Topping Yet | Simply Bitcoin IRL · Simply Bitcoin

0:00
Hello everybody. Welcome to another episode of
0:02
Simply Bitcoin IRL. Today we have a very special
0:05
guest. We have Alex Thorne, he's the
0:07
head of research at Galaxy. So before we get into the
0:10
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0:52
I do want to bring up our very special guest Alex Thorne, huge
0:56
fan of his work. I've just been seeing his, a lot
0:59
of his work on on on Bitcoin Twitter and you do an incredible
1:02
job and it's an honor to have you on simply Bitcoin IRL today.
1:06
Yeah, hey Nico, great to be here.
1:08
Same thing. Fan of your work.
1:09
Been watching the show for a while and and really happy to be
1:11
here. It's an exciting time.
1:13
It is. Things have been wacky.
1:15
It is so exciting. It is so exciting.
1:17
The volatility today, the Coinbase circuit breaker, I
1:21
mean, OK, Alex, all right. I don't want to go down any, you
1:24
know, conspiracy theory stuff, but we got to be real here for a
1:29
SEC. Like, they've had three years to
1:32
kind of work this out. Why is it that Coinbase goes
1:34
down every single time you have these huge volatility swings?
1:39
Of course, you know the the conspiracy theorists are like
1:41
no, if they're doing it on purpose, I don't think it's on
1:43
purpose. What's your take on that?
1:45
It's it's just awfully convenient.
1:47
It's awfully convenient, I'll say that.
1:49
Yeah, I mean look I I I don't want to I don't know anything
1:51
about that. I will say that we, I think it's
1:55
fair some people have said that you know we're not in a bull
1:58
market until Coinbase goes down. So it did today.
2:01
I mean I I don't know and look we hit 64,000.
2:03
I mean let let's be real that's practically the all time high
2:07
you you know we'd like to talk about 69,000 as the all time
2:11
high. If you look like that was on
2:13
November 8th, 2021, we wicked to 69.
2:16
In reality we closed that day at like 67450 and we were only
2:21
above like 64 for about 48 hours, right.
2:24
So I think it's fair to say that honestly we're we're basically
2:28
flirting with straight up price discovery right now.
2:31
This is it you know Bitcoin. I haven't.
2:33
I did the math when we were at 58, but of course it's changed
2:35
now. But like, you know there was
2:36
only like at 50, there was only like 80 days that we'd ever
2:40
traded higher than that. So and and obviously it's 61
2:43
we're at right now. Like it.
2:44
I'm telling you it's about 5 or 10 days Max that we have traded
2:47
here. So yeah, it's look, I don't know
2:51
why it keeps going down. I'm not a tech guy in terms of
2:54
building stuff. But you know, presumably it's
2:56
record logins. It doesn't surprise me on a day
2:59
like today that a bunch of people that haven't checked
3:01
their Bitcoin and maybe own some on Coinbase logged in for the
3:04
first time in years. Yeah and and I I would agree
3:07
with that like the amount of volume that the amount of you
3:10
know amount of people that are just going onto the platform
3:13
just on the same day. You know they it's been, you
3:16
know all quiet on the Western Front for for a little bit and
3:19
then all of a sudden you have this, these two last last two
3:22
days crazy volatility. People were waiting for the
3:26
so-called God candle didn't happen in, didn't happen in one
3:29
day, but it happened in two. And I I don't think a lot of us
3:33
expected for things to happen so quickly.
3:38
So what's your take on that? Do you believe that that was
3:41
partially caused because of the Bitcoin ETFs, the overall excite
3:46
excitement in the market, the narrative?
3:49
I I kind of have a little theory and I want to run it by you, if
3:51
you don't mind. Yeah, go ahead.
3:53
So I think last cycle a lot of people were let down.
3:57
I think it was artificially cut short by the China mining ban
4:01
that caused the hash rate to drop by 50% and then the price
4:05
went down with it. And that's just cause miners had
4:07
to sell, you know, their equipment to relocate some more
4:10
favorable jurisdictions. And I think that played a major
4:13
role in why we didn't hit potentially 100K last cycle.
4:17
There's no way to know for sure, but that's my theory.
4:21
And I have a little bit of PTSD because of that because I think
4:24
a lot of us had high expectations for the last cycle
4:26
and it felt like it was almost cut short a little bit, you
4:29
know, and you hear this narrative a lot in the
4:31
community. American Huddle talks about it.
4:33
So what's your take on that? I mean I I I think it's fair.
4:37
I don't I haven't really considered whether the China ban
4:41
and the eventual hash rate flight you know a lot of it to
4:43
the US in the summer of 21 was specifically it.
4:46
But I will say look Elon also rugged and caused that first
4:50
drop down from the 5060 area right when he said he was
4:54
removing Bitcoin as a payment option from Tesla right after
4:56
they built it because he just sort of realized that it mining
4:59
uses electricity right. I I do think it's it's fair to
5:03
say that part of the problem with the last cycle was we
5:07
really just didn't get high enough for them the sort of
5:10
historical math to be congruent with the prior cycles it made it
5:15
a lot easier to for example there was this whole thing that
5:17
you said you know that no prior no Bitcoin bear market had ever
5:21
dropped below the prior all time high and a lot of and I I
5:25
remember saying that the in thinking that it was quite
5:28
bearish that we went below 20 in that you know 2022 bear market
5:33
20K that is and that probably wouldn't have happened if we'd
5:37
gotten higher during the bull market.
5:40
So I don't know exactly why it it did feel like it was you know
5:44
especially given the level of money printing the the run that
5:47
equities were on after coming out of the COVID market, it felt
5:52
like we could have gone higher for sure.
5:54
Yeah, yeah, I I agree with that. And and and again, like there's
5:58
so many, you know, a lot of people feel like FTX played a
6:01
big role and and you know this and this and that.
6:03
So there's no way to know for certain.
6:05
But there there's something interesting that we were talking
6:08
about earlier on. And I do want to get your take
6:11
on that, which is this idea that we're running up way too fast,
6:15
too quickly, right. You mentioned that you wrote
6:18
this excellent thread, Opti. If you could pull up, that'd be
6:20
great. I think it was this morning.
6:23
Please correct me if I'm wrong. And thanks Opti.
6:26
And yeah, so you know, do you believe that like is this an
6:31
early top? A lot of people were, you know,
6:33
I've seen that be speculated on. You know, I've seen multiple
6:36
videos on this. I've seen people talk about it
6:38
on Bitcoin Twitter. So why aren't we topping Alex?
6:42
Yeah, I think people have talked about this a lot.
6:45
I think there's historically if you look at the Bitcoin having
6:51
we're 52 days away. If you assume the having is on
6:53
April 20th, you mean obviously that's subject to block time
6:56
speculation but like that's that's the 10 minute.
6:58
If if we have 10 minute blocks from now until the the halving
7:03
then then this then it would be around April 20th and this would
7:06
be 52 days from now. If you look at the prior the 2nd
7:09
halving which occurred on July 9th, 2016, Bitcoin was 400 and
7:16
52455 dollars 52 days before that which was 60% below its
7:22
prior all time high. If you look at the third having
7:25
which occurred on May 11th, 2020, Bitcoin traded at $6174
7:29
which was 68% down from all time high today.
7:33
And by the way I wrote this one Bitcoin was 59330.
7:35
Obviously we're at 61 so the math's even even tighter than
7:39
this. But 52 days before the expected
7:41
having Bitcoin was at 59330 which was only 12% down from the
7:45
all time high and it's even less now before 61.
7:49
This is giving people pause because the the obviously I
7:51
think all your viewers know Nico that you know Bitcoin tends to
7:56
run into a bull market several months after the having not
8:00
before not a new all time high before.
8:02
And the fear I think people have is that, wait a SEC is this the
8:06
bull run, Is this are we speed running the cycle now?
8:09
Like if we break the all time high now and start running, does
8:13
that mean that we won't get another bull run or continue the
8:16
bull run in the, you know, 6 to 12 months after the having as we
8:20
have historically? That's the fear.
8:22
And I wrote this piece specifically saying no, I am
8:26
here to tell you I literally said I'm here to say I don't
8:28
believe that for a second. And yeah, I am saying this time
8:31
is different. And the the primary reason is
8:34
that the ETFs by the way that's also that the the ETFs are why
8:38
we have a lot of room to run purely on flows.
8:41
But it's also why we've run so hard for having.
8:44
So it it it's it's idiosyncratic not cyclical for why we are
8:49
trading at 60,000 today. Right.
8:52
If if all things had been equal, as in no ETFs, then you could
8:57
see sort of the normal liquidity and having cycles.
9:00
Global liquidity is a huge part of it.
9:02
Rates or would would be probably would engendered the next bull
9:06
run. But the the reality is these
9:09
ETFs are vacuuming up coins at astonishing rates far beyond
9:12
what I expected by the way or far earlier.
9:15
We we predicted in October and I predicted we'd suggested a
9:19
conservative defensible number for a projected net inflows in
9:24
year one was 14.5 billion. We're already at like 7.
9:28
So like most likely our prediction will be low it will
9:33
come in over that prediction and and I think the reason that we
9:36
had thought that number was a bunch of work.
9:38
You can we have a report on our website you can see if you want
9:41
a galaxy.com/research. But was that we viewed financial
9:45
advisors and wealth management platforms as the net new
9:48
accessible market for Bitcoin ETFs that the average person,
9:53
you and I like retail investors. We we've been able to buy
9:56
Bitcoin for years on Swan River, even Coinbase, right?
9:59
Like that hasn't been much of an impediment, you know, for the
10:02
most part. But financial advisors can't
10:05
like they can't they they they can't manage a bunch of sub
10:08
accounts for their end clients through those platforms.
10:10
The exchanges really don't offer that functionality.
10:12
And even if they did, these advisors use platforms if
10:15
they're independent like Fidelity, Schwab, Pershing, LPL,
10:18
which are sort of white label like advisor platforms or
10:22
they're affiliated with a big bank or broker dealer, think of
10:24
like Morgan Stanley, Goldman Sachs, like Merrill Lynch,
10:26
whatever. Those, those platforms do not
10:29
support any real form of Bitcoin exposure.
10:31
They don't allow the cash futures ETFs.
10:33
They didn't mostly allow the trust products like from
10:36
grayscale. So there was no way.
10:38
And so we just looked at like the size of that.
10:40
It's 48 trillion AUM in the US and we conservatively said like
10:44
if 10% of that capital allocates 1% of their portfolio, then
10:48
that's he's not. And then by the way handicap
10:51
like well you know, maybe bank XYZ doesn't allow it in year
10:54
one, maybe they allow it in year two, right.
10:55
We did this whole thing. Point being though, and this,
10:58
it's not just to say what we predicted and yes, the flows
11:00
have been astronomical frankly and we didn't.
11:03
And they're really only trading on brokerage platforms like
11:06
Fidelity and Schwab. It doesn't mean it's only like,
11:09
you know, small retail investors buying it, but they are buying
11:12
it it. It's also hedge funds and high
11:15
net worth and family offices, they use those platforms too.
11:18
But we didn't think we would see this level before the advisor
11:21
platform start to turn on and they really haven't turned on
11:23
yet. So the one of the reasons why
11:25
this is likely to prolong well beyond, I mean really like for
11:30
you're going to see a drip over the next three to 18 months of
11:34
these platforms. Again the banks, broker dealers,
11:36
wealth management platforms, independent platforms announcing
11:39
and actually turning on the ability for their financial
11:42
advisors to allocate their end clients to Bitcoin ETFs.
11:46
And it doesn't happen all at once and it for a variety of
11:48
some may never do it like Vanguard just says they won't do
11:51
it. They don't like Bitcoin.
11:52
Some others don't allow cannabis ETFs.
11:54
They just don't like it right. Even though they're totally
11:56
legal. They're totally regulated
11:57
products. They just may choose not to but
11:59
you will see many of them do it and it's going to be this phased
12:02
thing where you're going to get these bullish catalyzing
12:04
headlines. But it's not just that the
12:06
headlines are bullish. The substance of the headline is
12:10
also one that creates flows. And so that's going to take a
12:13
while it's not even really happened yet.
12:15
So the fact that we're, you know, gobbling, I mean I think
12:18
gobbling 10 times the daily Bitcoin production from the
12:21
miners per day like for the 21 of the last 22 days in a row
12:25
have seen that inflows into these products.
12:27
Like these things have to vacuum up actual coins and store them
12:30
in Colt storage. And you know, prices are set on
12:33
the margin and 75% of coins are held by long term holders.
12:37
So there's really just not a lot of people, not a lot of coins.
12:40
And the only way to make those coins available for these buyers
12:45
is to offer them at a higher price.
12:47
And so, I mean, that's what you've been seeing.
12:48
That's why we're up 20% in three days.
12:52
We were at 38, five just a couple weeks ago and now we're
12:55
at 61. I mean, it's a huge run.
12:58
I think it's primarily driven by this ETF demand, but for a
13:01
variety of other reasons. And I'll pause here, but I would
13:03
say that this time the cycle is just going to be different.
13:07
You have this giant new complex of demand that did not exist.
13:11
It's not only going to fundamentally alter the way we
13:14
think about Bitcoin price cycles, but it will also
13:18
dramatically impact the Bitcoin market infrastructure when they
13:21
offer options on these ETFs, which all the big prime
13:25
brokerages will eventually, most likely it's going to like
13:29
revolutionize and disrupt the Bitcoin options market.
13:31
It's going to disrupt the lending market because you're
13:34
going to be able to do margin and securities lending directly
13:36
on your brokerage platforms with ETFs.
13:40
And it's it's going to do annoying things like it's going
13:42
to change how we assess holder behavior to the extent that you
13:44
believe things like tracking addresses with certain volumes
13:48
and or at certain times of Hodling like it's that's going
13:51
to be impacted because you can buy and sell a share but if it
13:54
Nets like they never move the coins.
13:56
So like even metrics I used in this piece like MVRV like
14:00
they're not going to work the same like the whole thing is
14:03
going to get disrupted. And so the look, I mean I think
14:07
this, this time really is different.
14:09
I I think the rules are made to be broken.
14:11
So there's more in that piece. I won't.
14:14
I'll I'll pause here though. But anyway, I think there's
14:16
plenty of reason to believe that we have a ways to go.
14:20
Yeah. And and what the, you know, the
14:22
famous sailor are saying, right. All your models are destroyed.
14:26
I I, I completely agree. I don't think I actually said
14:29
this today. It we've never seen absolute
14:31
scarcity before and Wall Street is getting a taste of absolute
14:35
scarcity. Gold can never provide that.
14:37
Right. This is absolute scarcity.
14:39
Doesn't matter. If the price goes up, the
14:42
production stays the same. Actually does.
14:44
Not only does it stay the same, it's good in half every four
14:46
years, and there's having coming up in two months.
14:49
Are you not entertained? It's going to be wild.
14:51
You know, we're also going to get in mid-april, we're going to
14:54
get these things 13 F filings, which all the a bunch of classes
14:58
of institutional investors have to file to disclose their
15:01
holdings. And you can see them by looking
15:03
up like on a Bloomberg Terminal or on the SEC Edgar website by
15:07
by vehicle. So we're actually going to get a
15:09
crazy catalyst probably two or three weeks after the close of
15:12
Q1, AKA like week two or three of April.
15:17
That's when the having's going to happen of a whole bunch of,
15:20
of a whole bunch of reporting on who bought these things in Q1.
15:24
And I'm just guessing here, but I think you're going to see some
15:26
massive names, pensions, endowments, who knows what, But
15:30
it's so, I mean there's so much more that happens now because
15:34
these things exist. I totally agree.
15:36
All your models are destroyed. I think you know we These things
15:40
effectively represent a wave of new demand smashing against a
15:43
programmatically scarce asset of which 75% is held by long term
15:47
holders and many of them me included, I'm sure you and many
15:51
of your audience included are effectively like diamond hand
15:54
zealots that forge their love of Bitcoin through multiple
15:57
devastating cycles like so. Like it's not even just the
16:01
asset scarcity it's the composure of the holder base
16:05
which is truly I mean like nobody's like dying for their
16:08
Apple stock. No, like in general or whatever
16:10
it is like the the, you know, I tell I'm trying to tell the
16:14
traditional investors like please learn about and do not
16:17
underestimate the the demand and and love and commitment to the
16:22
project that is Bitcoin and what it represents among the Bitcoin
16:25
holders. 100% and and I, I, I've kind of seen this like first
16:31
hand, 'cause you always have this, right.
16:33
So you know my parents coddlers since 2016, same as me.
16:38
First two years, they're like, you're crazy.
16:40
Third year they're saying stuff like end the Fed.
16:43
You know number go up even though if I tell them like to
16:46
send me a Bitcoin transact they'll be like I have no idea
16:48
how to do that. But you know they they they
16:50
start benefiting from number go up technology.
16:53
And one of my recent experiences has been with my with my wife's
16:57
parents and you know I I orange peeled them I would say like you
17:01
know before 2020 but they really started allocating this like
17:05
previous cycle and it was really until this.
17:08
But again they thought it was crazy right.
17:11
And then it was really until, you know, this last couple of
17:14
months, right, that I started seeing the little sparkle and
17:18
you're like, Oh my God, this is like, so are you trying to tell
17:22
me that like, I can just buy this and not use a traditional
17:26
wealth advisor and I don't have to buy real estate And.
17:30
And I'm like, yeah. And they they just like, I could
17:35
see it in there. Like they can't believe it.
17:36
They're like, are you trying to tell me I could save without
17:39
investing? And I'm like, yeah, yeah, you
17:42
know. And Pub Key tweeted today that,
17:45
you know, if you pay in Bitcoin like they just lowered prices
17:47
across the bar, Boom. Boom.
17:50
I mean and and sorry to be clear they haven't lowered right just
17:53
Bitcoin number go up means you know Fiat conversion number go
17:56
down SATS SATS per dollar goes down Moscow time goes down and
18:00
it's true. I I I think that point is
18:02
incredibly important look the the the concept of a
18:05
deflationary currency and I'm and I'm not really like I don't
18:08
necessarily my bull case, long term bull case does not require
18:11
that Bitcoin replaces the dollar.
18:12
Personally I think it has a good shot at being a the a global
18:16
reserve asset or even the global reserve currency for sure.
18:20
But you know I do think that in this is like AI think a
18:24
relatively moderate position within you know Bitcoin or
18:27
world. But I do think that the the
18:30
benefits of a deflationary currency as an asset are widely
18:34
maligned you know incorrectly. I think we know central banks
18:40
hate it, economists hate it, the idea of a deflationary currency.
18:44
But you know, savers love it. And by the way, we went to the
18:47
moon on a gold standard, this idea that you won't get any
18:50
entrepreneurial innovation if we don't have, you know, 2%
18:54
inflationary money per year. I just don't think that's true.
18:58
But in any case, the average person does not have the ability
19:02
to, you know, or the time even maybe to to invest in stocks.
19:06
I mean that's how everybody is basically been protecting
19:08
themselves against inflation is by investing and it's just not
19:11
fair that like you have to be proactive with your money just
19:15
so that you don't lose it all in my opinion.
19:17
And anyway I mean we're not really, I guess if you look in a
19:20
longer time frame we're we're already there.
19:22
I mean if you put all your savings in Bitcoin and you
19:24
didn't need to access them like you know very frequently then
19:28
it's been a great, you know, Fiat debasement hedge certainly
19:31
and and investment. But I think when we see the
19:34
volatility come down and it will over time as it's much more
19:37
widely held, especially in these vehicles, that's another part of
19:40
this argument is like the intra crypto cyclicality.
19:43
You know the Bitcoin all time high in December 2017, then
19:48
Ethereum is an all time high in December and January 2018 and
19:52
there's like an alt season. This is because a lot of people
19:55
are just holding their Bitcoin. First of all, they're they're
19:56
not true believers, a lot of them aren't.
19:59
They like Bitcoin, but they, you know, they're not like taking it
20:01
to self custody or anything and they and they have it on a
20:03
crypto exchange where they can easily.
20:05
Transfer it between these thing and they think that they're all
20:07
good traders and you know I don't I recommend that but they
20:10
have done that and it's caused this like classic cyclical thing
20:13
you see it even in many cycles you know like even in the fall
20:17
you know we have a big run up in October around this gamma
20:19
squeeze and like the anticipation of ETF them kind of
20:22
go sideways for a month. Well during that month I don't
20:25
know if bit corners know but like literal mean tokens on
20:27
every single all L1 ran super hard bonk dog money type stuff
20:32
like just while Bitcoin is stagnant right.
20:34
There's a little bit of a rotation.
20:35
Well the ETFs are going to dampen that dynamic
20:38
significantly because money that like an advisor puts into their
20:42
end client's account allocating it to a Bitcoin ETF, it's it's
20:45
not adjacent to this rest of the crypto economy and and even if
20:50
it were like they're not advisors aren't like day trading
20:53
for all their clients every day right.
20:54
It's more of like an allocation with a periodic rebalance.
20:57
And so like that intra crypto cyclicality will dampen but also
21:02
volatility will dampen because again they're, you know, they
21:04
see it go up and down. This is being pitched to
21:08
advisors I think quite sophisticatedly at this point.
21:11
You're not telling people the, the, the the invescos and the
21:15
black rocks and fidelities are not telling these advisors and
21:19
that they're going to like make quick money.
21:21
Everyone is pitching this is a long term investment, right.
21:23
So they're not going to look at it that often.
21:25
They're going to check in on it periodically.
21:27
That's going to lower volatility and and that is going to result
21:30
in people being able to buy a lot more of it, right.
21:32
Because when volatility is high, you have to adjust for risk.
21:35
If you're like a huge allocator like a sovereign wealth fund, if
21:37
volatility is lower, you can actually put in more capital
21:40
because your risk adjusted returns are are easier, right,
21:44
like this, it's in general. So like this has a big feedback
21:48
loop and so the the ETFs are going to add a lot here as well
21:51
because it's going to create this.
21:53
Honestly, they're by definition ETF buyers.
21:56
Historically a lot of them sort of regular people, not the high
21:59
frequency stuff, but like they are much like longer term than
22:04
you know, like Robin Hood day traders.
22:06
Yeah, yeah. And and that's very interesting
22:09
how you said it, it's gonna, it's gonna dampen 'cause that's
22:11
the flow, right? It goes from Bitcoin to high
22:15
cap, all coins to mid cap to low cap.
22:17
It's very interesting and and I agree with that specifically the
22:20
way that you explained it. But I I I have some questions
22:24
too on the the diminishing return.
22:25
I'm not sorry I didn't say that, I did say that, but that's not
22:28
what I meant to say. The Bitcoin volatility will
22:31
decrease. So I mean you know again if
22:36
you're if you're new to this, if you just arrived on the scene,
22:40
let's say you know you're not a high net worth individual per
22:43
SE. You know, you didn't have the
22:45
luxury of getting to Bitcoin in 2015, 20/16/2020.
22:50
I mean, you hear that and you're like, oh, man, did, did, did
22:52
that. Does that mean I missed the bus?
22:54
Does that mean, you know, I can't use Bitcoin as this
22:58
mechanism to to, you know, to to change my life?
23:01
What's your take on that? I would say it definitely does
23:05
not mean that. I think obviously it's becoming
23:08
more capitalized. So you know you know if you
23:10
bought in 2015 at like $250 then you're not going to see that
23:15
level of return most likely maybe not for a long time.
23:18
But I would say that there is just objectively a long way to
23:21
go here. This is still quite a small
23:23
asset. When when you talk about capital
23:24
markets in general trillion dollars is pretty good.
23:26
But I mean like I mean it it it doesn't compare gold to gold is
23:30
12 or 13 like. So you know we're we're, we're
23:33
getting close but in dude gold is like that's low hanging fruit
23:37
here. I mean it's obviously better
23:38
than gold. By the way the Bitcoin ETFs have
23:39
seen about 6 or 7 billion in net inflows since January 11th.
23:42
Gold ETFs have seen that outflows of 3.6 billion.
23:45
So and I don't know a single person who's thinks their kids
23:50
are going to buy gold by the way, I'm not buying gold so like
23:53
I I so and so that's low hanging fruit and that's like a it's
23:56
like a 10 bagger from here, right.
23:58
So that's pretty good returns by the way for something that also
24:02
has a lot of utility. You know and of course I look I
24:04
like the ETFs in general. I think they have an important
24:07
role but I I use like multi multi custodial services for
24:12
self custody like I recommend actually getting the asset if
24:14
you feel you can and there's a lot of ways to learn about how
24:17
to do that. I know Niko's done plenty of
24:18
work on this as well because you know if you own the ETF like I
24:21
mean you can't actually use the Bitcoin network.
24:23
It's good for price exposure. And there's reasons why I would
24:26
own the ETF and do by the way like in Iras and stuff and
24:29
places that I can't put spot Bitcoin.
24:32
But I would say look I think there's a plenty reasonable bowl
24:35
case and it's much less risky than like low cap penny stock
24:39
altcoins right. Like there's potentially higher
24:42
gains, but like so many of those trend to to zero over time,
24:46
whereas Bitcoin has basically beaten almost everything over
24:49
time in this in this sector. And then also just like when you
24:54
talked on the volatility question specifically, right,
24:56
when I say that it might sound like, oh man, I I don't want
24:59
volatility down, but volatility up, I'm fine with them sure.
25:03
And and and I say this on a day where Bitcoin move like 6 or
25:05
$7000 in one day. So I am cognizant of the fact
25:09
that it's still plenty volatile. But on a realized basis if you
25:13
look and if you look on the post that like we were talking about,
25:15
I have the chart in there, it's it's actually in like the
25:19
subsequent tweak because it didn't fit because of X you can
25:21
only do four in the post but like it is objectively down over
25:24
time. So it has been declining.
25:28
I think The thing is is like the vast majority of Bitcoin's
25:31
profits, some some huge percentage come like on 10
25:34
trading days per year. So if you think you can trade in
25:37
and out of this, you're likely to miss those days.
25:39
That's one of the reasons why it's important to huddle, right.
25:42
So I mean you you can see this is on a realized basis, I mean
25:45
just look at even the top ticks, right, like starting in, in
25:47
March 2020 like it's been lower highs over and over again and
25:51
we're starting to consolidate you know down in this 20 range,
25:54
which is like pretty reasonable. So I think that first of all
25:59
that makes it a lot better like I said for investment bigger
26:02
pools of capital can allocate right now it's traded like a
26:05
macro asset meaning that like there are literally traders who
26:09
trade geopolitical risk and other macro theses that that
26:12
trade Bitcoin like we know them we trade with them at Galaxy
26:15
there's plenty of them but it's not big enough for you to be
26:17
like oh you know what like big rate decision coming let's
26:20
instead of treasuries let's use Bitcoin as the hedge.
26:23
We're talking like billion dollar trade.
26:24
We're not even close really to that being big enough for it
26:27
being big enough yet. But as volatility decreases, you
26:30
can put more and more in without, you know, while
26:33
maintaining better risk adjusted returns.
26:36
And as the ETFs grow, they'll make the overall thing more
26:41
liquid as the market cap grows, right?
26:43
So like, liquidity attracts liquidity and volatility as part
26:45
of that. And like I said, like you, you.
26:48
This is one of the reasons everyone who's been in Bitcoin
26:51
for a long time says buy and hold right, stack SATS, whatever
26:55
the meme is. And it's because we've all
26:57
watched like Bitcoin go sideways for months and then have crazy
27:01
moves in, in one way or another. And while we've come down plenty
27:04
of times, there's been plenty of downward ball, there's been tons
27:08
of upward volatility and and there definitely still will be.
27:11
It's just that do the assets maturing as it grows and grows
27:15
bigger volatility will decline. That's good for everyone.
27:18
Yeah and OK. And I'm really glad that you you
27:21
clarified that and another thing and I really wanted it because
27:24
it is really fascinating you said in the in the beginning of
27:27
of of the show and I was just very very interesting the way
27:30
that you broke it down, you explained it this idea that you
27:33
know we're not even near close to topping then we're sitting
27:39
almost at all time highs havings around the corner.
27:42
Are you looking for a kind of blow off type type of scenario
27:47
2025 and then 2026 bear? You know the the the meme, the
27:52
American Huddle 3 green one red or do you see that breaking
27:57
because of this because it because the asset is maturing
28:01
like you said? I you know I don't have a strong
28:04
opinion on this. I would say it's totally
28:07
reasonable to look at history like Huddle American Huddle has.
28:09
I love his. I love I love that guy he's the
28:12
best. But I would say like I am
28:15
arguing that it's very possible that this cycle looks completely
28:20
different. I mean they're just it's hard to
28:22
under. I don't want people to
28:23
underestimate the magnitude of the amount of capital that can
28:26
be unlocked by these vehicles and how that will dramatically
28:29
change price cycle. It's going to change a lot.
28:31
Like even some of the metrics I used aren't going to really
28:34
work. Like the whole thing is going to
28:35
look weird. So like yeah, I think it's
28:37
totally possible that even that doesn't happen in in the same
28:41
way we expect. And that could be that could
28:43
mean a lot of things, right. For all we know we could blow
28:46
off earlier and then then have two Reds or we could have no
28:48
Reds for a while. It it's just it's just I I want
28:52
people to think with an open mind given the magnitude of this
28:55
development. Personally, I think it's, I
28:57
think it's extremely extreme magnitude of impact on the
29:01
Bitcoin markets. So I I don't have a strong view
29:05
on that honestly. Like I just think this time is
29:07
different. So I wouldn't be surprised if it
29:09
doesn't play out that way. And in general like there's just
29:14
there's just so much the whole the whole main market that needs
29:17
the ETF to get access to Bitcoin isn't even here yet.
29:20
So I mean I just don't see how we can be topping.
29:23
I will say it like it's healthy. I mean, I was recording my
29:26
podcast earlier, Galaxy Brains, when we came in it was 61.
29:30
Got to 62 of a block clock behind me where I record and
29:33
pointing 'cause I'm in, I'm in the producer's seat right now.
29:35
But and it was like 62. It ran to 64 while we were
29:40
speaking and when I walked out to get a glass of water in
29:42
between segments, it was 58. And then when I came back in and
29:45
recorded more and went back out, it was 62 again.
29:48
So it's 64 to 58 is $6000 move. I'm happy to see some
29:54
consolidation like the last three days looks like a little
29:57
too parabolic for my liking. So there will be corrections.
30:01
There were like 720 plus percent corrections in 2020, sorry in
30:05
2017 I I forget the number from 21, but very common right to
30:09
have plenty of deep corrections even just recently we right.
30:13
I mean we opened the ETF on ETF day I think we hit 49 K and then
30:18
we in the like week or two after that we hit 38, five like it's a
30:22
big correction, right. Like I think we can expect that.
30:25
I don't want people to expect up only it's really not healthy to
30:29
have the asset go parabolic like that.
30:31
It it encourages more steep corrections when that happens.
30:36
So I think but I mean who am I to tell the market what to do.
30:39
It's really hard to you know preach caution when there just
30:42
is a net buyer of this size. I mean it's like, you know, I
30:45
think we're we're like 300,000 coins these ETFs now hold it's
30:49
like already like you know 50% bigger than Sailor like and the
30:53
guy's been buying for like. Per year no and it's absolutely
30:56
crazy cuz it the the just fidelity and BlackRock or own.
31:00
I already caught on to sailors. Been doing that for three years
31:04
and and Sailor did it tactfully, right?
31:06
He bought a little bit along the Wall Street's just like, give me
31:09
more. It's just gaping like, well,
31:11
they can't even control it. I mean that's the thing like the
31:13
vehicles are so efficient and they're so available that when
31:16
people go in and buy the shares, they're just forced to buy.
31:18
They're they can't wait for a better time.
31:20
They have to buy every day, every day that there are net
31:22
share creations. They have to go and buy Bitcoin.
31:24
Like what they have to do. There are strategies to minimize
31:27
the impact, you know, like trying to buy from.
31:29
I don't know if they know somebody over the counter they
31:31
can buy from without it. But I mean like this is
31:33
exhausting all the, the amount of demand that these ETFs have
31:37
is exhaust is exhausting currently all like tricks that
31:41
you could employ to not impact the price.
31:42
Typically they don't want to impact the price like they don't
31:46
want that slippage, they they want to buy and get the best
31:49
price that's every buyer does. It's just that like again like
31:53
the amount of demand we've seen is really shocking and you know
31:57
we're starting to see some asset managers say they're turning on
32:00
like it's just you're going to see that over and over again.
32:03
And if we see, I mean I you know again our our estimates were for
32:08
you know, modest but strong inflows from advisors.
32:11
But like you know we just haven't, they haven't really
32:15
started yet. So we don't even know what
32:17
that's really going to look like.
32:18
We have a whole our entire estimates based solely on their
32:21
behavior. We didn't even really anticipate
32:23
that there'd be this much interest before they turned on.
32:26
So again room to go at least on the inflows unless we're crazy.
32:30
And by the way our model said that 10% of AUM would choose to
32:34
put 1% in and that gets us to 15 billion or so 14-5 in the first
32:39
year which would be meaningful. As you can see six to seven is
32:43
doing this so like or you know contributing to this so and that
32:47
I think that's pretty conservative that like one in 10
32:50
like we do it by AUM but like you know shorthand like one in
32:53
10 clients decide to put 1%. I mean it could easily be more
32:57
than that, right? Like this is intended to be
32:59
conservative. Yeah.
33:01
Of course. And then that 1%, we all know,
33:05
we all know what happens. You put that 1% allocation, that
33:09
1% allocation starts to outperform the rest of your
33:12
portfolio and you're like, why? No, they're not.
33:14
Too, if you're doing it yourself then it's hard to manage that
33:18
right to not be like wait a SEC, let's let it ride.
33:21
Advisors, if they're discipline and many are, they will
33:24
rebalance it back down to 1%. But that but that's that also
33:28
contributes to dampening volatility because when it
33:30
outperforms, they sell it back down to get it to 1%.
33:32
But if it underperforms, they buy it right.
33:35
So like that is going to also dampen volatility over.
33:37
Time. Interesting.
33:39
Interesting. Following a model.
33:40
Portfolio. You're targeting a specific
33:42
allocation, right? So they'll sell high and buy
33:46
low, which will help stabilize overall, right?
33:49
Interesting, man. The Bitcoin.
33:51
Bitcoin is growing up. It makes sense.
33:52
It's in its teens. You know it's 15, it's going to
33:55
be 18 and you know. It's like drivers learner
33:57
learning permit. Right, exactly.
33:59
Can't drive alone just yet, but like it's starting to get behind
34:02
the wheel. So I did want to ask you, Alex,
34:07
because what you were saying, you kind of buried the lead in
34:11
the sense of maybe not to your usual listeners, but perhaps to
34:16
my audience, which is this idea. You said it and you said it in a
34:19
way with confidence and you said this is a trillion dollar asset.
34:23
I mean that's just getting started but trillion you know to
34:27
a lot of people that perhaps don't come from your background,
34:31
you're like that that's pretty big, right.
34:33
So what is the total addressable market cap that that you know
34:38
you see this thing potentially reaching and I think I asked you
34:43
this question earlier but maybe I maybe I phrased it a little
34:46
bit differently but you know are are are people late if the, you
34:50
know if the market caps already at a trillion?
34:54
For a single asset like if you look at it as a corporate I've
34:57
there I forget there's there's one of those cool website that
34:59
like one shows it as a a foreign currency one other shows it as
35:03
like a as if it was a corporate market cap.
35:05
Yeah, it's, I mean it's it's pretty big.
35:08
If you think of Bitcoin as money, whether that's a Fiat
35:12
replacement or more of like a commodity money good like gold.
35:16
It's really not close. It's there's gold.
35:19
Like I said, gold's like what, 12 times as big like and it's
35:22
useless basically. I mean you can't even imagine
35:25
trying to send a bill. I saw somebody who did a billion
35:27
dollar transaction on chain a couple days ago, they paid $2.00
35:29
in fees, right. It's weightless.
35:31
It can go around the world. I mean it's just significantly
35:33
better for store value and transfer should you need to.
35:37
That alone is a huge use case right?
35:39
And you can get into, right. There's companies like Strike
35:41
and others that are doing like you know cross-border with it or
35:44
maybe you want it for small payments, small fast payments,
35:46
micro payments. You're doing lightning related
35:48
stuff like there's plenty of other use cases that change it.
35:52
But again, if you just think about gold, it's obviously
35:54
better gold in my opinion. And you know, don't get me
35:57
wrong, gold has this, whatever you know, multi millennia
36:00
history. But again I don't know anyone
36:02
that is remotely young. And by the way eventually old
36:04
people die and young people become old.
36:06
So like that's how new trends emerge in human history, right?
36:10
Like I I just don't know any young people who think gold is
36:13
something important like. And so I really do see it
36:16
gobbling that sort of commodity money store value.
36:21
Then obviously, you know, you can look at things that have
36:24
monetary premiums, right? Stuff that like people pay more
36:27
than they really should be worth because there's some market for
36:29
their value. Think of like high end art,
36:32
right? I mean, I love art, so I'm not
36:34
casting aspersions on the quality of art.
36:36
But is a painting worth like $150 million usually these are
36:41
these are highly illiquid assets.
36:43
Yes, a Veblengood simply Bitcoin points out that's exactly right.
36:47
Luxurious items that take on this extra value.
36:51
And the reality is like so many of them are looking to put real
36:55
estate's another great example of people parking capital there.
36:57
But they're very illiquid. They're hard to sell.
36:59
They take time to sell. They may not may not be able to
37:02
find a market for them to sell that helps them create this And
37:06
and look art and real estate are scarce as well so there's a
37:09
scarcity aspect but I think it's it's totally reasonable to start
37:12
seeing people storing something in a in a mathematically
37:15
cryptographically scarce asset that also has these this other
37:19
utility and doesn't have all the and is liquid is tradable
37:22
doesn't have all this other baggage that the other you know
37:25
luxury items do. It's honestly I don't have the
37:28
numbers in front of me so I don't want to but it it it's so
37:31
easy to for me to see that Bitcoin can you know grab the
37:35
store of value use case from a lot of other assets.
37:38
So but again I I just keep it simple like gold I think is
37:41
totally reasonable. We all know that Bitcoin people
37:43
call it digital gold. They do for a reason.
37:46
I won't reiterate that reason. We all know it's scarcity
37:48
properties it's monetary properties it's things like that
37:52
I think it's totally reasonable to just look at it that there's
37:55
so many ways to look at Bitcoin. But if you just think of it as
37:57
digital gold that's that's a 10 bagger just if it meets gold,
38:02
like I think that's totally within range.
38:05
And again you're doing it with an asset that's you know,
38:10
decentralized resilient. It's it's in my mind it's it's
38:13
just separately aside from how the market decides to trade it.
38:16
Obviously it's been a volatile asset as I've said but it's much
38:20
less risky than like relying on the management team of a company
38:23
to execute a road map and do XYZ really well or or or or lots of
38:28
these other types of investments.
38:30
I mean I I like other things to be clear.
38:31
I don't only own Bitcoin like but I'm just saying like I think
38:34
it's a it it it's really quite a stable predictable thing network
38:40
asset and so there's it has plenty of addressable market to
38:44
capture. Yeah.
38:46
And what's the, you know, and again I, I, I, I we don't
38:50
speculate on on our live show and we don't speak on the IRL
38:53
show. But I think the question that is
38:57
a lot on a lot of people's minds is yeah, 10 Packer would be
39:01
phenomenal, would be great. You know some people would be
39:03
life changing, right. What's what's the timeline here
39:06
like, you know and especially with what you're seeing these
39:09
crazy moves are we talking about, you know the end of the
39:12
decade, you know, Kathy Wood like her base case was 250 K,
39:16
her sorry, her bear case was 250 K, her base case was 648 K and
39:21
then her bull case was 1.5, right.
39:24
So what what is the, what is the kind of the timeline that that
39:28
you're, you know you're expecting these things to
39:30
happen? I think it's totally reasonable
39:35
that we like in short, I mean I I think you're crazy if you look
39:38
at the action we're seeing in in the case of this growing demand
39:42
and inflows. If you don't think like 100K is
39:44
insight this year, like I think it's obviously Insight.
39:47
It's totally possible like that it would hit 100.
39:49
Ki mean I think over time like you know, I mean I I could
39:54
absolutely. I mean I think what David Bailey
39:56
has done the math on this and said that Gold's market cap
39:58
would make it 650K per coin just to match that.
40:01
Right. And math is pretty simple.
40:03
I just didn't do it. So I'm trusting David got this
40:05
right that's in play. Absolutely in play.
40:09
And I and you know five years five I'm I'm, I'm actually not
40:13
very good at this type of like prediction speculation.
40:16
But you know, I think by, you know, was it 2024?
40:19
Now by the end of the decade, that's six years.
40:21
Like it could be a million. It's possible.
40:25
It's definitely, I'm not going to say it's not possible.
40:28
I I wouldn't really be that surprised, would I be, you know,
40:31
pretty euphoric, Sure. But I mean, I've watched this
40:35
thing enough, It's surprised enough.
40:37
And honestly, like, it really is a teenager.
40:40
Like the entirety of Bitcoins history has been in terms of
40:43
like on and off ramps and trading has been on the back of
40:46
startups. Right now, you have it in the
40:48
heart of really like the most deepest advanced capital market
40:52
in human history. Is, is is that a good thing?
40:55
Is that a good thing that that, you know, it's not in the hands
40:58
of start-ups anymore. It's not in the hands of, you
41:00
know, these these companies are innovating that they're trying
41:03
to, you know, create a new kind of a new kind of system.
41:07
Is it a good thing that it's in the, you know, the traditional,
41:10
you know, the traditional finance, you know, these
41:13
established players that have been around, you know, for a
41:16
very, very long time And of course, you know, I'm a free
41:19
market maxi, right? Let the free market decide.
41:21
But I I guess you know, just just for the sake of
41:23
conversation. I would just say yes, it is a
41:25
good thing, but I understand the the there's a variety of.
41:28
What? What?
41:29
Why? Why do you say that?
41:30
Why do you Why do you say it's a good?
41:31
Thing take the ETF wrapper in general it's a fantastic
41:33
product. It's truly has revolutionized
41:35
like equity trading indexes like the the because it's it's it
41:39
it's just actually financially brilliant like the way they
41:41
operate with the crates and redeems to keep the to you know
41:43
peg to the baskets and the the infrastructure.
41:46
I mean there's a reason why BNY Mellon is one of the biggest
41:49
custody banks in the world. Alexander Hamilton founded that
41:52
bank. It's the oldest bank in America.
41:53
Right. Like it doesn't make it bad that
41:55
it's not a start up. So there there there's plenty of
41:57
like let's not it's not just Bitcoin but like the whole
42:01
particularly in like Defy and and like the broader crypto
42:04
world like there's there's like speed running all of financial
42:07
services history and by the way they don't know any of it.
42:09
So they're like naming things the wrong thing and it turns out
42:11
that thing already exists but they didn't know that.
42:13
So like and this happens a little bit in in Bitcoin
42:17
specifically also but the reality is like there there's
42:20
plenty of so many of these types of questions have been
42:24
painstakingly thought out and answered.
42:26
Now bitcoins going to change traditional finance also, right.
42:29
It's not like bitcoins going to like become a suit and like only
42:33
be able to be used and like. And by the way, I'd be against
42:36
it if that were true. I think it's reasonable to fear
42:38
for example, people worry about like fork choice or whether the
42:41
ETFs could like support some kind of malicious hard fork or
42:44
something like that. Like, I think that's extremely
42:46
unlikely, but it's a it's a reasonable thing to worry about
42:49
like whether the Wall Street and the traditional finance and the
42:53
asset managers would like try to change Bitcoin to benefit them
42:56
or something like that. It's certainly possible.
42:59
But you have to realize too like that's why it's incumbent on
43:02
Bitcoiners to bring these firms and their personnel into the
43:05
fold to make sure that they understand Bitcoin.
43:08
That's why I'm happy to be working on this right inside.
43:11
Right. We have a we work with Invesco
43:13
on one of the ETFs like this is we're we're we've got and I know
43:17
I know the teams at BlackRock and Fidelity and Bitwise like
43:20
and Arc. I know all these people like
43:21
they're bitcoiners. They the last thing they want to
43:23
do is destroy Bitcoin right now Will that always be true.
43:27
I mean look financial incentives are are can be powerful but like
43:30
it is important to spread Bitcoin's message not just to
43:33
the buyers of and and to the hodlers and self custody like
43:36
you know, deep bit corners but also to the rest of the world
43:39
like we gotta. This is why I'm so happy to work
43:42
on this now because we have the opportunity to tell the story at
43:45
at previously unbelievable scale, right.
43:48
It's not Andreas Antonopoulos in that empty room in like 2012.
43:51
You know that famous video Of course it's now like if I can
43:54
write a report that I can give to our asset manager and they
43:58
can send to you know 100 sales people who can distribute it to
44:02
like 10,000 investors, it starts to be like well we can we have a
44:08
chance to tell the real story. We we know that the value of
44:11
Bitcoin is that it is a peer-to-peer self custody able
44:14
network. It is not valuable if it is a
44:17
spreadsheet held at BlackRock, right.
44:19
It has to be a decentralized network operated by users all
44:22
over the world to have value. That's the core innovation.
44:25
So I I and I think the the issuers here get it but and this
44:29
isn't exactly what you asked Nico but I I feel it's worth
44:32
addressing. I've talked about this before
44:34
people have said like what what if they try to like promote A
44:37
malicious hard fork. I mean well that would be
44:38
terrible and we we'd have to like UASF them or something like
44:41
that. We'd have to fight back I mean
44:43
but I just don't see any current risk of that.
44:45
I know the teams at a lot of these people and at a lot of
44:48
these places and I mean they're they're they're committed to
44:50
making Bitcoin as it really exists like more widely using.
44:55
Also by the way, if you believe in a a true like hyper
44:58
bitcoinization thesis where Bitcoin is like available
45:01
everywhere and widely used as money and stuff like, well, I
45:03
mean, I don't believe we're going to get rid of banks.
45:06
So. Well, I'm going to need to the
45:07
bank's going to have to be able to handle my Bitcoin, right.
45:10
If it takes over Fiat currency, well, OK, like if banks are
45:13
going to have to exist in those bank accounts or bitcoin's going
45:16
to. I I still believe that some
45:17
people believe that like asset management won't exist.
45:20
There'll be no purpose to invest.
45:21
I totally disagree with that. So I'm going to need Bitcoin in
45:23
my brokerage account. I'm going to need it in because
45:26
think about all the places Fiat money exists.
45:28
It's not the same money. Like you got cash in your hand,
45:31
you got money on a fintech app, you got, you know, money, cash
45:36
in a brokerage account or a money market fund or whatever.
45:38
Bitcoin's going to have to exist in all these places.
45:40
I think for the most bullish theses to be real.
45:42
So we've got a it's a it's a wall of worry that Bitcoin has
45:45
to climb as it becomes more widely adopted.
45:48
I I 100% agree with and and even how Finney said it like there's
45:54
gonna be, you know fractional reserve Bitcoin banks.
45:57
There's gonna be fully reserved Bitcoin banks, right.
45:59
Let let the market decide what the market wants to do, you
46:02
know. But I do wanna take advantage of
46:05
the last 8 minutes or so of of the show and talk about the
46:09
current regulatory environment in the US It was really like me
46:15
and you that were beating the battle drums.
46:18
Yeah, I think it was like a couple weeks ago, maybe a month
46:20
or so ago. But there's been a particular
46:24
senator who has been pretty hostile towards kind of the
46:29
industry in general. And you can make the argument.
46:32
You can make the argument right. It's my opinion that she's
46:36
taking advantage of certain situations in order to achieve a
46:41
certain political end goal. So what's your take on, on on
46:45
the current regulatory environment in the United
46:48
States? Is it heading in the right
46:49
direction, is it heading in the opposite direction?
46:53
What are some concerns, What are some things that perhaps you
46:56
know you you know that I don't some maybe things are are are
47:00
improving. So what's your take on that,
47:02
Alex? Yeah so I I you're referring to
47:05
the Digital Asset Anti Money Laundering Act introduced by
47:09
Senator Warren in the Senate Banking Committee.
47:11
I think it's terrible. It's like straight up it's
47:14
terrible bill. It would apply the Bank Secrecy
47:17
Act requirements which is like AMLKYC SAR reporting with
47:20
suspicious activity reports, two Bitcoin nodes, miners, crypto
47:26
validators. I mean self custodial wallet
47:28
providers which are like I don't know what the developers of free
47:31
software. It would require them to
47:35
basically become money transmitters, even though a
47:38
whole whole classes of the covered entities don't ever act
47:41
as an intermediary at all. Think about a Bitcoin miner,
47:43
they haven't. They really have no way of
47:44
knowing like the identity of every transcender and receiver
47:47
of a Bitcoin transaction like now.
47:49
Theoretically you could require them to only accept transactions
47:53
from previously white to and from previously whitelisted
47:56
entities. Pragmatically speaking, that's
47:58
basically impossible. And even by the way, if you did
48:01
that, you know transactions between unknown entities, they'd
48:04
still go into the men pool and eventually someone else out of
48:06
the US would mine them. So you would effectively crush
48:09
the Bitcoin industry in America if this were true.
48:13
For take the wallet provider, self hosted wallet developers.
48:16
Like they don't even know who we are.
48:18
This is, these are free software thing about Bitcoin Core has a
48:20
wallet in it. It's free, they don't know who
48:23
who runs it, they could never perform KYC.
48:25
It's totally nonsensical and and so it's terrible.
48:29
I would say that this has this issue.
48:32
The AM LKYC, like illicit finance, use of Bitcoin or
48:35
cryptocurrencies has become a hot button topic in Washington
48:40
following the attacks on Israel on October 7th of last year.
48:46
And you know, the reality is what the initial amount of
48:50
illicit finance that supposedly went to Hamas was greatly
48:57
overstated. But I think after some work, the
48:59
open source community decided it was about $82 million worth.
49:03
But by the way, that was mostly Tether on Tron and it was frozen
49:07
by tether and seized, right? So it's not primarily Bitcoin.
49:12
However, this bill, the senator has repeatedly argued she was on
49:17
Bloomberg yesterday saying that, you know, isn't it totally
49:21
reasonable to be asking the crypto industry to abide by the
49:24
same rules as everyone else? You know, the banks, the bank,
49:27
and whomever the money transmitter, there's a law
49:29
enforcement issue, she says. Well, I I think if you say it
49:32
that way, it doesn't sound so bad.
49:34
But let's be real. The crypto industry, including
49:36
Bitcoin companies that are exchanges for example, they
49:39
already do this, right? So who is she talking about?
49:42
Right? Because if you look at her bill,
49:44
it does not target the industry, it targets the operators and
49:47
developers of peer-to-peer decentralized software.
49:50
And that is highly problematic for a variety of reasons.
49:53
I would say at the moment that's the only like from a legislative
49:55
thing likely thing to really get worked on this year, if it even
49:59
does for other reasons. The Senate and the House are
50:02
very busy and tied up and you got a tiny tiny Republican
50:05
majority in the House is not likely to pass anything from a
50:08
regulatory standpoint. There are issues with again,
50:11
FIN, CEN has some proposed rulemaking, which is the
50:14
Financial Crimes Enforcement Network.
50:16
They they do like money transmission regulation and BSA
50:21
compliance stuff. They're calling for some more
50:24
like they mail KYC stuff. I mean SEC stuff doesn't really
50:28
affect Bitcoin here. It's it's the only asset the SEC
50:31
has explicitly said within the crypto world that is not, that
50:35
is not a security. So I think Bitcoin is mostly
50:39
fine here, save for proposals like the Digital Asset Anti
50:44
Money Laundering Act, which are terrible not just for all of
50:46
crypto but also specifically for Bitcoin.
50:49
So those just have to be opposed.
50:51
I I don't think it's very likely to pass, but it has been gaining
50:55
momentum. When you mentioned that you and
50:57
I had been tweeting and beating the drum on this, it was because
51:00
Senator Warren has now added like something like 1/4 of the
51:03
US Bennett 20% twenty. Senators including including
51:07
two, two or three Republicans. That's right.
51:10
That's right. It's a risk.
51:11
It's a risk. And it really should be opposed.
51:13
I mean, I I it it's it's bad law.
51:16
It's not enforceable, right. So it it creates an
51:19
unenforceable prohibition, you're not going to be able to
51:20
stop me from downloading them open source software.
51:23
It's just like crazy, like it's, you know, it's not going to
51:25
work. Even if you do kick the like the
51:27
mining industry of out of the United States or something, I'm
51:30
still going to be able to send a transaction to Unico without
51:32
either someone else is going to mine it.
51:34
Like it won't have the any known effect except for massively
51:37
stifling American innovation and and capital markets.
51:41
And it will be banning ourselves from Bitcoin if if that bill
51:44
passes. So it's I I think it's it's
51:47
terrible from you know, a freedom and liberty standpoint.
51:50
It's not enforceable which makes it just objectively bad law.
51:52
We shouldn't be in the business of passing laws we can't even
51:55
enforce. And it harms American innovation
51:57
and pushes you know value growth and innovation overseas.
52:00
So it's not great a. 100% I I think there was a really, really
52:04
great way of putting it. So we are getting to the to the
52:06
top of the hour and I I do want to be respectful of your time.
52:09
Alex, if you have any last message for the simply Bitcoin
52:13
IRL audience, what would it be? Oh man, I would say try very
52:19
hard to stay humble in this bull market.
52:22
I'm really hoping if anyone here by the way works in the crypto
52:26
industry like let's try not to have terrible things like
52:29
uncollateralized lending and you know wild you know try not to
52:34
please if you work in exchange do not steal your customers
52:36
money. The last thing that this I mean
52:39
really like the damage from 20 that you know the I'm going to
52:43
be charitable and say unsustainable business models
52:45
you know ranging all the way to what we know like Sam Bankman
52:49
freed effectively outright theft.
52:50
Like the higher we go the more penetrated Bitcoin becomes in
52:57
people's in adoption right. I mean you know the damage can
53:02
be severe if it is like that. So I don't know, just let's try
53:06
to, you know, be responsible. Let's try not to get over our
53:09
skis here. I think that if you're buying
53:13
Bitcoin and holding it, like, let's just make sure you have an
53:18
idea of what why you're doing it, make sure you understand how
53:21
Bitcoin works, have a thesis on what Bitcoin is and it's totally
53:25
reasonable to disagree with it, with people about what it is
53:28
like. I mean it's the the world's
53:30
never seen an open source software network, you know,
53:33
capitalize itself to a trillion dollars in value.
53:35
I think I tell this to people all the time, how do I value
53:37
Bitcoin? I'm like, well, I've got several
53:39
ideas on that, but there is no answer, right.
53:42
So you know, I think again, stay humble, try to learn if you're,
53:47
if you can try to take self custody of your coins.
53:50
I don't want to push people necessarily to do that.
53:52
There's plenty of other ways to store Bitcoin securely at this
53:55
point. Even most of the exchanges run
53:57
trust companies now for custody. So which is which again is like
54:01
a multi 100 year vehicle like that has time tested it's
54:04
bankruptcy remote. There's plenty of ways that
54:06
you're so anyway there's there's many ways to buy and hold
54:09
Bitcoin do what is right for you but I do encourage people to use
54:12
the Bitcoin network. You can't do that if you buy a
54:14
market access vehicle in a wrapper like an ETF.
54:17
But yeah, and just like to enjoy the ride and I've even given up
54:22
on like actually trying to orange pill like my friends and
54:24
family at this point and cause everyone's got to go down this
54:28
path on their own, you know. So make sure you are going down
54:30
the path you. Can you can only show them the
54:32
door, but they have to open it. Mr. Alex Doran, thank you so
54:35
much for coming on the show. Really appreciate it guys.
54:38
You could follow Alex at Intangible Coins.
54:40
That's an awesome handle. Really cool that you got that.
54:43
Alex, thank you so much for joining us and hope to have you
54:46
back on in a couple months or so.
54:47
Yeah, thanks. Thanks so much, Nico.
54:49
Great to be here. All right, guys, that was our
54:51
show. If you enjoyed the show, you
54:51
know what to do. Smash the like button.
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Consider subscribing if you feel like we provided you value.
54:56
And I, guys, I'm gonna be at Bitcoin Atlantis.
54:59
My flight leaves tonight, I'm gonna be crossing the Atlantic
55:03
and I'll be back on Tuesday. Opti is gonna be holding down
55:06
simply Bitcoin Live Thursday, Friday and Monday.
55:10
And I'll see you guys back on Tuesday.
55:12
So everyone have an amazing weekend and Opti will be in the
55:16
driver's seat tomorrow. Let's see if it goes well.
55:20
See you guys later. Today's episode was brought to
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