Speaker 1: They just keep printing bad money and it eventually crowds
Speaker 1: out the good money. Bitcoin is going to do reverse
Speaker 1: Greshoms law. The good money will eventually crowd out all
Speaker 1: the bad money. In a world where the white guys
Speaker 1: decide what the interest rate is, that's not a free market.
Speaker 1: That's market manipulation. You get a persistent theft of real
Speaker 1: wealth from the masses to the few.
Speaker 2: They're all bending the knee. Vanguard capitulated JP Morgan's new intokenization,
Speaker 2: City Banks talking about custody and launching its own stable coin.
Speaker 2: Are we seeing the full capitulation here?
Speaker 1: Yes, But.
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Speaker 2: welcome into the Thinking Crypto podcast. I'm your host, Tony
Speaker 2: Edward and joining me today is Mark Usco, who is
Speaker 2: the founder, CEO and CIO of Morgan Creek Capital Management. Mark,
Speaker 2: great to see you, Great to see great to be
Speaker 2: with you.
Speaker 1: It's been a little too long, so great to catch
Speaker 1: up again and hope you had a good summer. And
Speaker 1: now fall is fully engaged football season. And although I
Speaker 1: was gonna say colder weather, but it's eighty one degrees
Speaker 1: here in Chapel Hill today, so no cold weather yet.
Speaker 2: Yeah, it's eighty three here in New Jersey, so it
Speaker 2: can't complain. And bitcoin hitting new all time highs. Mark
Speaker 2: I figured I got to get you on to get
Speaker 2: your perspective on everything that's happening. You know, what are
Speaker 2: your thoughts on bitcoin hitting this new all time high
Speaker 2: and then the outlook for Q four.
Speaker 1: I mean, look, there's an inevitability about bitcoin's price in
Speaker 1: dollars or yen or euros or whatever you want to
Speaker 1: price it in rising as countries devalue their fiat currency,
Speaker 1: and the more they devalue, the higher the price. You know,
Speaker 1: it's funny most of us talk about bitcoin in dollars,
Speaker 1: that's our kind of reference point. But like if you
Speaker 1: looked at bitcoin in Lira, it's been making all time
Speaker 1: highs for years because the lira has literally devalued ninety
Speaker 1: nine point nine percent, saything in Venezuela. So there is this,
Speaker 1: you know, I call it home market myopia, where one
Speaker 1: you think all the smart people are in your home market,
Speaker 1: which is clearly not true. Two you think you dominate
Speaker 1: every market, like you know, all the stocks are traded
Speaker 1: in the United States. Well it's not actually true. I mean,
Speaker 1: some of our stocks now are crazy valuations. So they
Speaker 1: they you know, dwarf, you know, Nvidia dwarfs the entire
Speaker 1: Japanese market in the MSCI World Index, I mean in
Speaker 1: Spain and France, and so that can definitely happen. But
Speaker 1: in digital assets, I think it's interesting. You know, you
Speaker 1: got our president saying, oh, we want to be the
Speaker 1: crypto capital of the world, and then the bitcoin is like, no, no,
Speaker 1: we want to be the bitcoin capital of the world. Okay, fine,
Speaker 1: but neither one is going to happen. Right, We're twenty
Speaker 1: odd percent of global activity. You know, binances orders of magnitude,
Speaker 1: bigger than coinbase's greatest coinbase and as great as Kraken
Speaker 1: and Gemini and these other exchanges are. You know, finance
Speaker 1: run circles around them on a global basis. So Tether
Speaker 1: is this gigantic beast of a company. You know, we're
Speaker 1: all excited about Circle, right, Circle goes public, great, goes
Speaker 1: up to forty billion dollar market cap, fantastic, excited for
Speaker 1: Jeremy and the crew. But I heard a stat that
Speaker 1: Teather makes more every four days then Circle will make
Speaker 1: in a year. Wow, you know, so what's that worth? Now?
Speaker 1: Now they're trying to raise money? I heard, yeah, at
Speaker 1: a five hundred billion dollar valuation, which would make it
Speaker 1: the second largest bank by market cap in the world
Speaker 1: behind JP Morgan. It's pretty impressive for a company with
Speaker 1: like fifty employees. So that's a rambling, kind of strange
Speaker 1: answer to your question about how to feel about the
Speaker 1: all time I but it is a high, right, I mean,
Speaker 1: one twenty six yesterday is higher than we've ever been.
Speaker 1: But when you inflation adjust and you look at it
Speaker 1: relative to how much devaluation has occurred and how much
Speaker 1: M two has been created, and actually what gold prices
Speaker 1: have done are actually not at a high now. I
Speaker 1: think we will, we'll get there. And then the big
Speaker 1: question on everybody's mind, and yesterday was interesting, you know,
Speaker 1: October sixth, we're recording on the seventh. October sixth is
Speaker 1: interesting in that if you look at the previous two cycles,
Speaker 1: the seventeen cycle and the twenty one cycle, and now
Speaker 1: the twenty five cycle. If you look at seventeen and
Speaker 1: the twenty one, the time from cycle peak to low
Speaker 1: is three hundred and sixty four days in both of them, precisely.
Speaker 1: And then the time from cycle low to cycle high
Speaker 1: is one and sixty four days, and so one thy
Speaker 1: sixty four days from the previous low was yesterday. And
Speaker 1: what's crazy is there's a guy and I wish I
Speaker 1: remember his name, so give him credit. But I saw
Speaker 1: there's this guy that tweeted in twenty twenty three, two
Speaker 1: years ago that the simulation will be repeated and the
Speaker 1: new high will occur on October sixth, and then we
Speaker 1: head back down.
Speaker 2: That's pretty wild.
Speaker 1: Wow. Now there are a whole bunch of people like, no, no,
Speaker 1: we're going to the moon by the end of the year.
Speaker 1: I mean maybe maybe so anyway, lots of stuff talk about,
Speaker 1: but mark is your base case still.
Speaker 2: I think you alluded to it. The currency devaluation that's
Speaker 2: happening around the globe by central banks. That's driving asset
Speaker 2: prices higher because as you mentioned, gold is ripping, you
Speaker 2: got real estate ripping, even though the mortgage industry is
Speaker 2: like flatline. And then you have the stock market going nuts.
Speaker 2: So are all these assets moving with the liquid from
Speaker 2: around the globe?
Speaker 1: One hundred percent of liquidity drives markets. One of my
Speaker 1: favorite things to tweet. And at the end of the day,
Speaker 1: this is money illusion. Right. Stocks are not at all
Speaker 1: time hives, right. I mean, yes, nominally they are, and
Speaker 1: you can't debate that, but in real terms, meaning if
Speaker 1: you price them in anything other than you know, the
Speaker 1: toilet paper, which is the US dollar or the yen
Speaker 1: or the euro, which you're going to race to the
Speaker 1: bottom to devalue if you priced it in anything solid,
Speaker 1: pun intended like gold. Here's the crazy stat. Stocks are
Speaker 1: down since nineteen hundred priced in gold. Wow, actually not
Speaker 1: up now, but that doesn't count. Well, it kind of does.
Speaker 1: And look, most of us don't feel it when things
Speaker 1: are more expensive. Our rent is higher, are you know
Speaker 1: the price of a hamburger is higher? You know, you're
Speaker 1: up in New York, New Jersey. There's this place in
Speaker 1: downtown New York where you know, they only take cash,
Speaker 1: and there's a huge line and you get the privilege
Speaker 1: of paying thirty dollars for a hamburger. And I went
Speaker 1: once with one of my guys, and it was a
Speaker 1: perfectly fine hamburger. But it wasn't like twenty times better,
Speaker 1: you know, or ten times better than the other hamburgers
Speaker 1: I've had. I'd probably prefer shakeshacks hamburger over that. But
Speaker 1: that illusion is what's happening when inflation right, which robs
Speaker 1: us of our wealth, and for most of our existence,
Speaker 1: up until two thousand and nine, there was no alternative. Right,
Speaker 1: you lived in the fiat world. You I everyone lived.
Speaker 1: We lived in the Fiat world. Well, we tried to
Speaker 1: save dollars, but the problem was in saving dollars if
Speaker 1: we didn't put them at risk, like if we just
Speaker 1: put them in cash, then every day they're stealing a
Speaker 1: little bit back through this thing called inflation. And what's
Speaker 1: really funny about inflation is the normal state of a productive,
Speaker 1: innovative society is deflation, not inflation. What I mean when
Speaker 1: you think about it, if you innovate, then you make
Speaker 1: things better. Right, you're getting more for the same amount.
Speaker 1: That's deflation or cheaper. Right, you can produce more like
Speaker 1: the model t for it. We discover the assembly line,
Speaker 1: and so cars started to go down in price. And
Speaker 1: from seventeen seventy six, when we started as a republic
Speaker 1: till nineteen thirteen, there was no such thing as inflation.
Speaker 1: We had a persistent deflation now was interrupted by a
Speaker 1: couple big wars and a depression like the depression of
Speaker 1: eighteen It was like eighteen forty eight or something like
Speaker 1: that was worse than the Great Depression. But no one
Speaker 1: ever talks about it because it's too long ago. To remember.
Speaker 1: So in nineteen thirteen the FED was created. What does
Speaker 1: the FED do? Well, the FED artificially manipulates markets. So
Speaker 1: free markets are prone to deflation because if I can compete,
Speaker 1: Let's say there's some provider of a gooder service. If
Speaker 1: I'm in a free market and I can compete against
Speaker 1: that person, I'm going to try to win business by
Speaker 1: maybe underpricing or making something better, both deflationary. Well, if
Speaker 1: the market is not free, right, if there are barriers
Speaker 1: or tariffs or restrictions or regulations, then you tend toward inflation. Well,
Speaker 1: if you manipulate the price of money, meaning in a
Speaker 1: free market, people would bid openly on the acceptable return
Speaker 1: that they would take for safety. Right, someone said well
Speaker 1: I need six percent. Someone will say, well I need
Speaker 1: five and a half, I need five, I need four
Speaker 1: and a half. And there's a natural market clearing price
Speaker 1: for risk assets. Well, in a world where a bunch
Speaker 1: of old white guys, I had to say it, but
Speaker 1: an old white guys decide what the interest rate is,
Speaker 1: that's not a free market. That's market manipulation. And so
Speaker 1: in that environment you get a persistent theft and I
Speaker 1: use the word intentionally of real wealth from the masses
Speaker 1: to the few, so income and wealth generate income and
Speaker 1: wealth ownership that divide becomes great, gater and greater and greater.
Speaker 1: Today it's the highest it's ever been in history. And
Speaker 1: I think it's interesting, Like, I understand why the people
Speaker 1: in the club right to say it's a small club
Speaker 1: and you ain't in it, right. I understand why the
Speaker 1: people in the club want that. What I don't really
Speaker 1: understand is why the rest of us don't pick up
Speaker 1: the pitchforks literally at some point and say no, no, Moss,
Speaker 1: Like we want open in free markets. We don't want
Speaker 1: this manipulated market inflation. Like who convinced an entire population
Speaker 1: of people that taking half of my purchasing power every
Speaker 1: thirty years is a good thing? That makes no sense, right,
Speaker 1: I mean, I worked hard for that money. And you know,
Speaker 1: Jimmy Song, I'm sure you've probably even had him on
Speaker 1: the podcast, but Jimmy and the cowboy Hat, and Jimmy
Speaker 1: made an impression on me. I heard him speak, you know,
Speaker 1: kind of around the same time we met back in
Speaker 1: twenty eighteen, maybe twenty seventeen, and he said something very
Speaker 1: profound that you know, people get really agitated when I
Speaker 1: say it. But it's like he said, Look, if you
Speaker 1: work for a salary, you're a slave. Everyone. Oh, you
Speaker 1: can't use that word. That's a bad word. It's like, no,
Speaker 1: think about it. You're a slave. Right, you get paid,
Speaker 1: you put your money in savings, and then they take
Speaker 1: it back from you if you don't spend it through
Speaker 1: this thing called this stealth tax called inflation. Well, if
Speaker 1: you work and get paid in bitcoin, you're no longer
Speaker 1: a slave because your money actually appreciates. Now here's the thing.
Speaker 1: Bitcoin didn't change. One bitcoin, one bitcoin, the bitcoin we
Speaker 1: talked about seven years ago, and the bitcoin today, it's
Speaker 1: the same thing. It's one bitcoin. The amount of dollars
Speaker 1: you need from sixteen thousand to one hundred and twenty
Speaker 1: six thousand, that's different, but it's still the same bitcoin.
Speaker 1: So what changed was the money worse, not Bitcoin getting better. Now,
Speaker 1: Bitcoin did get better. It's got better hash rate, it's
Speaker 1: got more decentralization, it's all. It actually is better. The
Speaker 1: network is better, and that's why the value of it increases.
Speaker 1: But at the end of the day, is the fiat
Speaker 1: that went down in value? And what's interesting about saving
Speaker 1: in bitcoin versus saving in fiat if you save in bitcoin,
Speaker 1: and again I'll give Jimmy full credit for this, he says,
Speaker 1: you you actually unleashed the most powerful force in all
Speaker 1: of human history, which is human creativity. Because if you
Speaker 1: don't have to constantly be working and striving to preserve
Speaker 1: the pursoning power of your money, and you your money
Speaker 1: actually grows, you have some time to think, to create,
Speaker 1: to maybe start a new business, right, maybe build a
Speaker 1: new product. You know, you don't have to just do
Speaker 1: this slave labor and get paid in this depreciating asset.
Speaker 1: So again, long answer to an instant question, but it
Speaker 1: to me, it all kind of weaves together in that
Speaker 1: why bitcoin is such an important innovation, why the construct
Speaker 1: of money is changing in it. Look, money is a
Speaker 1: very unique thing. It's an asset that exists in the
Speaker 1: absence of a liability, right, That's what money is. And
Speaker 1: that basically the only thing that meets that criteria that
Speaker 1: is used is gold. Silver meets that criteria. You know, copper,
Speaker 1: you know, puka shells. There are a lot of things
Speaker 1: that would meet that, but but the only one that's
Speaker 1: been used for five thousand years roughly because of belief
Speaker 1: and custom, is gold. But gold. You know, we've talked
Speaker 1: about this before. Gold suffers from two problems. It's not
Speaker 1: very portable, meaning it's really heavy, and you can't like
Speaker 1: stuff it in your pocket a gold bar and walk through.
Speaker 1: Actually you can walk through the radar detector, I mean
Speaker 1: the metal detector because it's inert. But anyway, so gold
Speaker 1: isn't very portable, and it's not very divisible. Like if
Speaker 1: I had a bar and I wanted to break it
Speaker 1: in half, I'm not strong enough. And even if I
Speaker 1: could break it in half, I couldn't stuff it in
Speaker 1: the computer and send it to you. You know, all
Speaker 1: the bitcoin in the world fits right here now. I
Speaker 1: don't have any on my phone. Don't sim swap me.
Speaker 1: It's not worth it. I keep mine in cold storage.
Speaker 1: In fact, I'm wearing my Chili Willy socks today for
Speaker 1: bitcoin cold storage. The point is that it's also very divisible.
Speaker 1: I can send you one one hundred millionth of a
Speaker 1: bitcoin right there. That's a one satosha. I can send
Speaker 1: you one satoshi for free, and that's better than the
Speaker 1: current system. So it is this technological improvement that takes
Speaker 1: old money, five thousand year money, into new age money.
Speaker 1: For the next five thousand years. But it was says, well,
Speaker 1: that's not money. Money is dollars and yeend in euros, like, no,
Speaker 1: those aren't money, those are currency. And you know, JP
Speaker 1: Morgan said it right, gold is money. Everything else is
Speaker 1: just credit because they're backed by debt and sailor you
Speaker 1: know can so oh, no, bitcoin is money, everything else. Okay, great,
Speaker 1: but it's true, right, everything else is credit, everything else
Speaker 1: is debt. Everything else lives in a world where governments
Speaker 1: can print it. Now, in the old days, you literally
Speaker 1: had to printing, press it and cut the paper and
Speaker 1: fold them up and hand them out. Now you just
Speaker 1: push a button and you create more ones than zeros.
Speaker 1: Well that's just too easy. There's no proof of work, right,
Speaker 1: which is you know, one of the great innovations of
Speaker 1: a bitcoin. But anyway, I digress.
Speaker 2: So on that note mark, we see that the United
Speaker 2: States has established a strategic bitcoin reserved or using the
Speaker 2: bitcoin the confiscated from bad actors over the years. But
Speaker 2: what's being discuss right now is how can they use
Speaker 2: revenue neutral ways to buy bitcoin to add to the reserve.
Speaker 2: So whether it's selling some of the goal reserve or
Speaker 2: using the tariff revenue. What are your thoughts on that
Speaker 2: and how that might play out?
Speaker 1: So one one caveat right, we actually don't have the
Speaker 1: strategic bitcoin reserve, which would be awesome if we did.
Speaker 1: What we have is the stockpile, the digital asset stockpile. Now,
Speaker 1: why is there a difference. That's the distinction without difference. Well,
Speaker 1: it's because you center Lumas and a couple others. We're
Speaker 1: trying to get this strategic bitcoin reserve to get the
Speaker 1: government to buy two hundred thousand bitcoin every year for
Speaker 1: the next five years. And and it makes perfect sense,
Speaker 1: right if you are a central bank and you have
Speaker 1: the money layer. Right, the way the money layer works
Speaker 1: is the central banks own gold. Sometimes they own other stuff,
Speaker 1: like the Swiss central Bank. I shouldn't say this, but
Speaker 1: isn't a real country. No, I'm just kidding around. I
Speaker 1: mean they don't make stuff. I mean it's just like
Speaker 1: a that it's like a it's a neutral place where
Speaker 1: you hide your money in Swiss banks, So that's what
Speaker 1: it is. But their central bank owns stocks and stuff
Speaker 1: because it's not a real central bank. It's like a
Speaker 1: private company that must to make money, so they buy stocks.
Speaker 1: But real central banks like you know, the Central Bank
Speaker 1: of the US or the Central Bank of China, the
Speaker 1: Central Bank of Europe, although that was less real. They
Speaker 1: buy gold and sometimes I buy euros or yan or
Speaker 1: dollars or whatever, but mostly they buy gold. Well that's
Speaker 1: the base layer of money. Then they issue debt to
Speaker 1: create you know, their paper currency out of thin air.
Speaker 1: That's called fiat. So in that environment we should think
Speaker 1: about replacing gold with bitcoin. Makes it perfect sense or partially.
Speaker 1: I mean I could go all the way. I mean
Speaker 1: I don't need to go all the way. I mean
Speaker 1: they they can coexist. But for me, I transition. I mean,
Speaker 1: I get I have nothing against gold. It's it just
Speaker 1: isn't as good as bitcoin, sure so, and it doesn't
Speaker 1: mean gold is bad. But just like gold beat silver.
Speaker 1: Remember in the early days, nineteen hundreds nineteen twenties, you
Speaker 1: had things called silver certificates, Like if you had a
Speaker 1: piece of paper money. It wasn't like today where it
Speaker 1: says in God we trust and it's worth nothing. Like
Speaker 1: if you gave that to the government, they give you nothing. Right,
Speaker 1: you don't get gold, you don't get silver, you don't
Speaker 1: get tax or seats, you don't get anything. You don't
Speaker 1: get teriff revenue. You get nothing. It is just a
Speaker 1: piece of paper to settle debts between private or public borrowers,
Speaker 1: so it has no value. But in the old days
Speaker 1: it was backed by silver, like every dollar you printed
Speaker 1: had to have gold or silver in the vault that
Speaker 1: if someone surrendered that money to you, you had to
Speaker 1: give them the hard asset. That went out the window
Speaker 1: in nineteen thirty three and then again in nineteen seventy one.
Speaker 1: But gold nudged out silver, and silver nudged out bronze,
Speaker 1: and bronze nudged out puka shells or stone wheels or
Speaker 1: whatever it was in the early days thousands of years ago.
Speaker 1: Because people have always wanted a medium of exchange. Right,
Speaker 1: Let's say you grow chickens and I grow cows, carrying
Speaker 1: our cows and chickens around with us all the time
Speaker 1: so we can barter. That's a pain in the ass.
Speaker 1: So let's have you know, you would print little tokens
Speaker 1: with chickens on them, and I'd print little tokens with
Speaker 1: cows on them, and we'd exchange those. But then how
Speaker 1: do we know how much a chicken token is worth us?
Speaker 1: A cow token sounds sounds like now right, everyone prints
Speaker 1: thrown token, so it didn't really work. So then they said, well,
Speaker 1: let's have one token and let's call it. You know,
Speaker 1: your first one in China was called flying money because
Speaker 1: literally it was made of paper and it's actually more linen.
Speaker 1: But it would fly away in the wind, right because
Speaker 1: it wasn't like you know, gold, it would not fly away.
Speaker 1: That was the first one, and then the Dutch came
Speaker 1: along with the dolar, and then we've copied that and
Speaker 1: we made the dollar. So we have these these things
Speaker 1: that we can we create them out of thin air,
Speaker 1: and gold would be better than those as a store value,
Speaker 1: but bitcoin is better than that. So to me, it's
Speaker 1: logical and natural that all nations states should migrate to bitcoin,
Speaker 1: not tomorrow, but over time. That makes sense to me.
Speaker 1: You know, Murray Stall, who's right up there your neck
Speaker 1: of the woods runs Horizon Kinetics used to have them
Speaker 1: on the show sometime. He explained this way better than
Speaker 1: I do. How you normally in the world, there's something
Speaker 1: called Gresham's law where bad money crowds out good And
Speaker 1: we've seen all the stories Venezuela, Turkey, you know, Zimbabwe.
Speaker 1: You know, I have over there on my desk, a
Speaker 1: one hundred trillion Zimbabwe dollar bill. Wow, right, and wouldn't
Speaker 1: buy a loaf of bread? Right? One hundred trillion. And
Speaker 1: they just keep printing bad money and it eventually crowds
Speaker 1: out the good money, and the and the country goes
Speaker 1: down the toilet. So that's Gresham's law. Well, Murray describes
Speaker 1: Bitcoin is going to do reverse Gresham's law. The good
Speaker 1: money will eventually crowd out all the bad money. And
Speaker 1: even though gold is money and it's good money, bitcoin
Speaker 1: should even crowd that out. So in the short term
Speaker 1: I probably have a little bit of both, but over
Speaker 1: long term it's Bitcoin. Governments like Fiat because governments are
Speaker 1: run by a small number of individuals, right, Congressman, senators, politicians, presidents,
Speaker 1: vice presidents, pretty small group those people. When they come
Speaker 1: to power, they're usually not very rich. Occasionally someone's already rich,
Speaker 1: but most of them actually aren't very rich. They're doing
Speaker 1: and as public servant. By the end they're super rich. Yeah,
Speaker 1: how's that happen? Like if you get paid one hundred
Speaker 1: grand and you got to pay your bills, you're not
Speaker 1: going to get rich that way, so you must be
Speaker 1: getting rich some other way, well, it's the payola for
Speaker 1: this project, or or hey, let's just print money and
Speaker 1: you know, allocate it back to ourselves, like hey, I know,
Speaker 1: we'll allow ourselves to buy companies before either the government
Speaker 1: buys them or some big announcement happens, because you know,
Speaker 1: it's just the committee and we're on the FDA, and
Speaker 1: we know that something's going to get approved, so we'll
Speaker 1: just buy the stock and it'll go up. That sucks,
Speaker 1: but because most people can't do that. In fact, if
Speaker 1: you do that in the normal world, you go to jail.
Speaker 1: You do it in as politician, you know, as ms
Speaker 1: Pelosi said, I was just part of my compensation, Mike,
Speaker 1: Hell to the no. But all of that is to say,
Speaker 1: the system is what the system is, and governments really
Speaker 1: like FIAT, so they're going to fight the adoption, which
Speaker 1: is why we don't have a strategic bitcoiners with. It's
Speaker 1: like why we don't have the Epstein files. Well, why
Speaker 1: is that? Well, because the people in office are in
Speaker 1: the files, I mean, so so they're not going to
Speaker 1: release them. I mean, and look, I don't really care
Speaker 1: about all this stuff, but it is just kind of comical.
Speaker 1: It's like, why won't you release these things? Are you joking? Right?
Speaker 1: Because self incrimination, I don't have to do that, so
Speaker 1: and it doesn't. I mean the last guy was in him,
Speaker 1: and the guy before that, and the guy all before.
Speaker 1: I mean, they're all in it. So this group of
Speaker 1: people they like making themselves wealthy, and FIAT helps that,
Speaker 1: whereas a bitcoin standard you know, to quote safety would
Speaker 1: would not promote that. And so I understand why there's reticence.
Speaker 1: I understand why. You know, Senator Lummus is great, and
Speaker 1: she's you know, she's up there and she's talking about it,
Speaker 1: and they're like patterner on the head saying like Cindy
Speaker 1: lu who right, you know, setting her off to bed
Speaker 1: with their glasses milk, you know, the grinchs like, no, no,
Speaker 1: I'm not going to do that because because that hurts
Speaker 1: my ability to keep getting rich. At the end of
Speaker 1: the day, how would that ever change? Well, term limits,
Speaker 1: maybe you go back to the old system where you
Speaker 1: came for two years and then you went back to
Speaker 1: your farm. You know, maybe two years is too short,
Speaker 1: but you know, maybe four, maybe six. But lifelong politicians.
Speaker 2: Bad generational where for example, not to be an ageist
Speaker 2: or anything, but the boomer a crowd.
Speaker 1: Oh you can be an agist. I'm a boomer and
Speaker 1: the boomers are geniuses. And I don't mean that just
Speaker 1: because I'm one, but they are geniuses, right, Because what
Speaker 1: did boomers do? They created something called entitlements. What's an entitlement?
Speaker 1: An entitlement is a promise you make to yourself that
Speaker 1: you don't fund and you ask other people to pay for.
Speaker 1: Who wouldn't vote for that, who wouldn't sign up for that?
Speaker 1: So what did we do? We created a system that
Speaker 1: rewards debt, real estate ownership, stock ownership, and it makes
Speaker 1: promises to pay us old people. Right, So every day
Speaker 1: in this country, ten thousand people turn sixty five, and
Speaker 1: you know they start to become eligible to receive these
Speaker 1: these benefits. Well, that created the inflation that led to
Speaker 1: housing prices being now unaffordable for the average person, particularly
Speaker 1: a young person. Okay, so I can't buy a house.
Speaker 1: It's like you know, the you know, white house picket fence,
Speaker 1: you know having kids. Now, this is bullshit, But they
Speaker 1: tell you it's too expensive. It's not. It's just not.
Speaker 1: I mean, yes it's expensive, and yes it's hard, but
Speaker 1: do stuff this hard is good and it's the best
Speaker 1: thing you could ever do. But some people are having
Speaker 1: less kids and they're not buying the houses, and so
Speaker 1: they're like, well, I I found my way out. I
Speaker 1: can just down bitcoin. And it's actually not the craziest
Speaker 1: thing because what bitcoin does is it it's like it's
Speaker 1: like an anti matter machine. It sucks up all of
Speaker 1: the grift and the graph and corruption and it energizes
Speaker 1: it and it and it grows again. Bitcoin itself doesn't grow,
Speaker 1: but the number it's it's there's that great picture U.
Speaker 1: It's a so it's a big triangle like this and
Speaker 1: it's green. Then there's a little triangle at the bottom,
Speaker 1: which is bitcoin. So this is fiat and and it's
Speaker 1: literally like a funnel. And eventually all that that capital
Speaker 1: that's been created out of thin air, it just keeps
Speaker 1: pressing down into bitcoin, and that bitcoin triangle is going
Speaker 1: to keep growing. So you're right, there is this generation gap.
Speaker 1: I mean, I joke all the time. My granddaughter, my
Speaker 1: youngest granddaughter is three. She'll never have one of these, right,
Speaker 1: She'll never have a leather wallet, She'll never have paper money.
Speaker 1: She won't even know what paper money is. She'll laugh
Speaker 1: at the idea, you picked up a dirty thing and
Speaker 1: you hand it to somebody you know, silly, just tap
Speaker 1: your wallet. So but the point there is that the
Speaker 1: system is set up to, as you absolutely identified, to
Speaker 1: take advantage of this digital divide. Right, Ask anyone over
Speaker 1: thirty five, who's your broker? I don't know, Maryland s ubs? Why?
Speaker 1: How much gold have? I don't know? Three four percent?
Speaker 1: How much bitcoin? Yah? Zero? My god? Are you kidding me?
Speaker 1: That's a Ponzi scheme? Haven't heard that? Peter Schiff guy?
Speaker 1: Asked anyone under thirty five? Who's your broker? What's a broker?
Speaker 1: I mean, I mean I got a Robinhood account?
Speaker 3: All right?
Speaker 1: How much goldie? Oh my god? Zero boomer rocks? Are
Speaker 1: you kidding me? Haven't you heard that? Peter Schiff guy?
Speaker 1: How much bigcoin you have? Don't want to talk about it?
Speaker 1: Why not? Because it's a really big piece of my
Speaker 1: net worth and I'm kind of embarrassed by it. So,
Speaker 1: I mean, not embarrassing in a bad way, but I
Speaker 1: don't really want to tell you. So that digital divide
Speaker 1: is real. And look, thirty nine trillion. It's a big number.
Speaker 1: Thirty nine trillion. Remember, one trillion is a dollar every
Speaker 1: second for thirty one, seven and ten years. So thirty
Speaker 1: nine of those babies owned by me and my brother
Speaker 1: and sister and all us boomers. It's all going to y'all, right,
Speaker 1: we're all gonna die, I mean hopefully not soon, but
Speaker 1: what we're all gonna die, and all that money is
Speaker 1: going to get left to the next gen. And those
Speaker 1: people aren't gonna leave it in brokerage counts. They're not
Speaker 1: gonna leave it in gold and real estate. They're gonna
Speaker 1: live in a digital world. And and what's really crazy
Speaker 1: is that next generation. So you got you got you
Speaker 1: got the boomers, and then you got gen and gen Y,
Speaker 1: then you got gen Z and jen A and the
Speaker 1: Z and the A. You know my old well, I
Speaker 1: got two older sons who are gen wise, older son
Speaker 1: and daughter to get this right, So a son and
Speaker 1: daughter who are gen wise, and then I got a
Speaker 1: a gen Z little baby. And then I got my
Speaker 1: grandkids who are Jenna's and so my zoomer son is
Speaker 1: just never ever ever. I mean, my older kids, the
Speaker 1: gen Wise they have brokerage accounts, they have Fiat accounts.
Speaker 1: My zoomer son and my alpha grandkids they're just not
Speaker 1: and that's okay, and that's good, and that's progress and
Speaker 1: that's innovation. And at the end of the day, what
Speaker 1: does this mean for biclin? What means Bitcoin is gonna
Speaker 1: continue to rise? The big question, the question on everybody's mind.
Speaker 1: It was yesterday the cycle peak? Or is the cycle
Speaker 1: obliterated and there's no more cycle because there's so much
Speaker 1: demand from institutions and sovereigns and maybe there was going
Speaker 1: to get this cheek bitcoin reserve. I'm on record saying
Speaker 1: I don't think October sixth is the peak. My calculations
Speaker 1: gave me end of October beginning of November, and the
Speaker 1: way I get to that is seventeen was December eighteenth.
Speaker 1: Twenty one was November twenty first, both coincidentally correlating to
Speaker 1: days when the CME announced futures projects which would allow
Speaker 1: the big uglies to go naked short to push the
Speaker 1: price down. Is there a date in late October where
Speaker 1: this CMME is going to make an announcement. The CMME
Speaker 1: did make an announcement last week, but I think they
Speaker 1: said it's coming in twenty six but I have to
Speaker 1: get my details on But they said they're going to
Speaker 1: go to twenty four to seven three sixty five digital
Speaker 1: asset futures. That's a bad thing. That's be careful what
Speaker 1: you asked for, you might get it. We don't want
Speaker 1: more paper, we want more real We want more bitcoin,
Speaker 1: not futures bitcoin. Because when commodities can be created out
Speaker 1: of thin air, then prices tend to get spoofed. Whether
Speaker 1: it's gold now when they finally break out. Gold was
Speaker 1: stuck for a long time, from like twenty eleven until
Speaker 1: recently this year, and now boom, it finally goes up
Speaker 1: because the people who were spoofing got overwhelmed by the demand.
Speaker 1: And it's mostly safe haven demand from places like China
Speaker 1: and India and places where you know people are waking
Speaker 1: up to hey, FIAT is really not a good thing.
Speaker 1: I'm on record saying I thought this cycle would would
Speaker 1: go through late October early November. That by my numbers,
Speaker 1: and I think I said this in February. You know,
Speaker 1: we'd hit one seventy five ish would be this cycle peak?
Speaker 1: Now why that? Well, fair value? We can determine right
Speaker 1: metcals law model. Tim Peterson does it easy. You know,
Speaker 1: one hundred and five hundred and ten somewhere around there.
Speaker 1: Maybe it's a little higher now one fifteen fair value.
Speaker 1: In previous cycles we got to two times fair value.
Speaker 1: Fair value was ten thousand. In seventeen we got to twenty.
Speaker 1: It was fair value was thirty three thousand. In twenty
Speaker 1: twenty one we got to sixty nine. So two times
Speaker 1: for why leverage? Too much leverage, too many people doing
Speaker 1: stupid stuff, you know, bitfinex and you know, all kinds
Speaker 1: of crazy bad actors giving people one hundred to one
Speaker 1: leverage and pumping the price. I think those days are gone,
Speaker 1: but doesn't mean there's no leverage, but I think the crazy,
Speaker 1: crazy leverage is gone. And you know, I hear you
Speaker 1: can get fifty x in the purpose market now, but whatever,
Speaker 1: it's less than there was. So I said we'd go
Speaker 1: to one and a half times fair value. So let's
Speaker 1: say fair value is one fifteen. It gives us another
Speaker 1: you know, fifty five, that's like one seventy. And that's
Speaker 1: kind of where I come out. Now. If you look
Speaker 1: at the power law curve, which has been super accurate
Speaker 1: for a very long time, it's saying we hit two hundred,
Speaker 1: like first week in November, second week in November. Maybe
Speaker 1: maybe I don't know, sometime around thanks maybe maybe it's
Speaker 1: even Thanksgiving. They've been really, really accurate, so I wouldn't
Speaker 1: argue with them. So is it possible in the next
Speaker 1: thirty to sixty days we have a short squeeze big
Speaker 1: bull market? Definitely possible. Is it possible that this guy
Speaker 1: was right two years ago, that the simulation has already
Speaker 1: been written and yesterday was the peak and now we're in,
Speaker 1: you know, the beginnings of crypto winner. The only thing
Speaker 1: that makes me think it is it is definitely possible
Speaker 1: is the relative strength. Yesterday was seventy four. Anytime you're
Speaker 1: above seventy that's been a temporal peak. Again, doesn't necessarily
Speaker 1: mean you have to have a crash, but it usually
Speaker 1: means you can't go much higher. Our first fund, which
Speaker 1: we launched back when we met in tent eighteen, you know,
Speaker 1: is now getting towards the end of its life, and
Speaker 1: we bought bitcoin early. We started buying. We waited, you know,
Speaker 1: so we raised the fund in twenty eighteen the market
Speaker 1: was crashing. We're like, jeez, we can't buy this stuff now,
Speaker 1: and and you know, on good good on us now
Speaker 1: we didn't buy it on the day like December seventh.
Speaker 1: I remember the day, you know, because a big day.
Speaker 1: I was on TV and it was CNBC and uh,
Speaker 1: the woman host says, yeah, look how bad bitcoin is
Speaker 1: is you know, three thy two hundred and you know
Speaker 1: it's going to zero? And I said, look, bitcoin will
Speaker 1: outperform stocks next year and for the next ten years.
Speaker 1: In fact, I'm so confident of that. Pomp and Jason
Speaker 1: and I just issued yesterday and I had actually called
Speaker 1: Warren Buffett literally, someone told me if he call his
Speaker 1: private number, he will pick up the phone if you
Speaker 1: call after five o'clock. And I did and he did,
Speaker 1: and we had a nice conversation, and I said, hey,
Speaker 1: you made this hedge fun bet. Would you like to
Speaker 1: make a bet? You take the S and P will
Speaker 1: take Bitcoin. Said well, I mean, let me talk to
Speaker 1: my guys and I'll come back to you. So he
Speaker 1: came back to me and he said, they tell me
Speaker 1: I'm too old to make that bet. I'm like, look,
Speaker 1: you're gonna be chasing my sorry ass around when you're
Speaker 1: one hundred years old. See, you're fine. But he didn't
Speaker 1: take the bet, but so we made it on television, said,
Speaker 1: anyone who wants to take S and P million dollar
Speaker 1: charity bet, just like the buffet thing and you eat
Speaker 1: both fun half and you put it in bonds and
Speaker 1: then you see, you know, charity gets it. It's not
Speaker 1: for me. Long story short, No one would take it.
Speaker 1: We had one guy said all right, yeah, I'll take it,
Speaker 1: and his son said, Dad, are you out of your
Speaker 1: freaking mind. No, we are not doing that. I mean,
Speaker 1: we have no upside. If we win, we're supposed to win.
Speaker 1: If we lose, we look like idiots. So no, we're
Speaker 1: not doing it, which is kind of funny. So no
Speaker 1: one would take our bet. Now it's a good thing
Speaker 1: because bitcoin has kicked the crap technical term out of
Speaker 1: the S and P since twenty eighteen. But we did
Speaker 1: start buying first quarter nineteen, so our average cost is,
Speaker 1: you know, less than five k and and so we're
Speaker 1: literally in the process of determining when will we distribute
Speaker 1: that to LPs and so it's probably, well, we know
Speaker 1: it'll be in fourth quarter, just don't know exactly when.
Speaker 2: So Mark, you mentioned earlier that there's less less leverage.
Speaker 2: There is still leverage, but is less, And then you
Speaker 2: have the ETF sucking up Bitcoin like a massive vacuum.
Speaker 2: Oh yeah, and then you have digital acid treasury companies buying.
Speaker 2: I know you're invested in a metaplanet.
Speaker 1: Yeah.
Speaker 2: Do you feel the downturn in the bear market.
Speaker 1: It's going to be less, it's going to be less small. Oh,
Speaker 1: thank you, very important. So there is an argument this says, well,
Speaker 1: we're not going to have a cycle this time because
Speaker 1: of all the things you said, all the new institutional demand,
Speaker 1: but the level of the bear market I believe will
Speaker 1: absolutely be less because like right now, if one twenty
Speaker 1: five yesterday was that Wren twenty six was the peak,
Speaker 1: the bear market is going to be like fifteen or
Speaker 1: twenty percent, I mean, because we're not that high above
Speaker 1: fair value. Sure, if we got to one seventy five
Speaker 1: or you know, two hundred and we're fifty percent above,
Speaker 1: the bear market might be you know, twenty five sixty percent,
Speaker 1: but it's probably not going to be seventy five or
Speaker 1: eighty four percent like the first couple. So to me
Speaker 1: a correction again, humans are going to human We push
Speaker 1: things up too high, like AI stocks right now, or
Speaker 1: quantum computing stocks right now, or nuclear stocks. I mean,
Speaker 1: we've pushed them to levels that don't make any sense
Speaker 1: and they will correct. Now, some of them, like the quantum,
Speaker 1: they might go down ninety nine percent. I mean, I
Speaker 1: don't know, but if if we peak, if yesterday was
Speaker 1: the peak, we might never go below one hundred k again, right,
Speaker 1: because there's just no downside pressure. We might just just
Speaker 1: kind of fluctuate like this for a while, and then
Speaker 1: this fair value will keep accreating a five to six
Speaker 1: percent a year as they devalue currency, and you know,
Speaker 1: we just have this nice, steady, boring asset. If we
Speaker 1: have a blow off top between now and Thanksgiving, yeah
Speaker 1: we'll correction. And my guess is the correction is always
Speaker 1: proportional to how far you are away from fair value. Sure,
Speaker 1: so if you're fifty percent, if you're one hundred percent
Speaker 1: above fair value, you got to drop at least fifty.
Speaker 1: But then you normally go another fifty of that fifty,
Speaker 1: So that's another twenty five, So you get down seventy five. Now,
Speaker 1: if you're really super crazy, like you know, the US
Speaker 1: stock market in two thousand, you go down eighty four percent.
Speaker 1: Bitcoin in twenty seventeen you go down eighty four percent.
Speaker 1: Bit that bitcoin in twenty twenty one you go down
Speaker 1: seventy four percent. So if you get crazy crazy, then
Speaker 1: your drop is bigger. Mark.
Speaker 2: Doesn't it feel like it's a bitcoin aside, it feels
Speaker 2: like a stock market's a bit crazy. It feels like
Speaker 2: gold real estate. It seems like we're we're in everything bubble,
Speaker 2: and I don't know, I get this feeling.
Speaker 1: Well, we aren't in everything. But it's an absolutely great point,
Speaker 1: and it's illogical. Right, Normally, your safe havens do well
Speaker 1: and your growth assets do poorly, or your value assets
Speaker 1: do poorly and your growth assets do well, or fixed
Speaker 1: income does well, and equities do poorly, or bonds do
Speaker 1: poorly and equity everything's because that's money illusion. That is
Speaker 1: currency devaluation. That's different than Look, if a company is
Speaker 1: earning more money, they generate money and they return share
Speaker 1: you know, dividends to shareholders. That's real economic value creation.
Speaker 1: If we're doing crazy stuff like this, this this silly
Speaker 1: circular stuff that we're doing, where Okay, I'll tell everyone,
Speaker 1: I'm gonna buy all your chips. If you promise to
Speaker 1: buy you know, capacity from this company that I own
Speaker 1: a little piece of that will I'll like, Well, but
Speaker 1: someone has to pay the money, Like this one yesterday,
Speaker 1: it's like, well, just give us the chips, but you
Speaker 1: have to pay us for them. Oh no, no, no, no
Speaker 1: no no. You give a stock too, but then your
Speaker 1: stock price will go up and then you can sell.
Speaker 1: Oh no, then then that's it. Then we'll sell the
Speaker 1: stock that we got from you for free and then
Speaker 1: we'll pay. Are you serious? And and it worked, So.
Speaker 3: We live in this this weird world where liquidity is
Speaker 3: big but free float is small because so much money
Speaker 3: is locked in passive and look a passive S and
Speaker 3: P can't think.
Speaker 1: It's a dumb strategy, meaning rules based. So if Nvidia
Speaker 1: has a market cap of four trillion and it's seven
Speaker 1: percent of the index, every day that money goes in,
Speaker 1: you must buy seven percent. You don't get to say,
Speaker 1: you know, geez, that thirty times sale, that's probably a
Speaker 1: bad buy. I don't want to do that. You don't
Speaker 1: get to do that. It's an index. So so much money
Speaker 1: is locked and can't do anything except what it's told
Speaker 1: to do by the rules. The amount that's actually free
Speaker 1: floating is small, so if anyone tries to short based
Speaker 1: on the crazy valuation, they just get squeezed. And the
Speaker 1: Tessa's been doing this for years I mean, when you
Speaker 1: have low free float and lots of the asset locked,
Speaker 1: you can manipulate the price. It's like doge coin, right,
Speaker 1: doge coin quote unquote has this multi billion dollar market cap? Really? Well,
Speaker 1: let us think about this. If Elon sold one doge,
Speaker 1: how far with the price fall? If he tried to
Speaker 1: sell five percent of what he owns, how far with
Speaker 1: the price fall? If Mark Cuban sold ten percent of
Speaker 1: what he owns, how far at the price fall? So
Speaker 1: market cap, particularly in crypto, it's just a dumb idea,
Speaker 1: right to say that the like XRP ridiculous. Right, you
Speaker 1: got all this stuff owned by Brad and the foundation,
Speaker 1: and then you got the army trading that shares back
Speaker 1: and forth, back and forth to try to get two
Speaker 1: eighty six or two eighty nine. If the foundation actually
Speaker 1: sold all those coins, the price will basically go to
Speaker 1: zero the feed of the duck thing. Okay, great, but
Speaker 1: that's a that's a winding answer to how bad is
Speaker 1: the market right now? The market is the worst ever,
Speaker 1: Like two thousand was bad and I lived through it,
Speaker 1: and you know we actually got very short it. Now
Speaker 1: we were early euphemism for wrong. So our nineteen ninety
Speaker 1: nine technical term sucked. But man, from two thousand to
Speaker 1: two thousand and two, when the rest of the world
Speaker 1: was down forty percent and the average endowment was down
Speaker 1: twenty five, we were flat. Now flat isn't awesome, Like,
Speaker 1: you know, I shouldn't break myren pat myself on the
Speaker 1: back for flat, but flat sure better than down twenty
Speaker 1: five or down forty. And again, it wasn't us being geniuses.
Speaker 1: Was that people like Viking and Tiger Global and or
Speaker 1: Tiger Tech back then were short these things. Now there's
Speaker 1: one funny story. So you know, we got short subprime,
Speaker 1: so we put ten percent of client assets short subprime
Speaker 1: and gold financial crisis. Who worked out great? And the
Speaker 1: problem with shorting, though, is you know you can short
Speaker 1: all the way down to when things get really really
Speaker 1: close to bankruptcy. But then there's a risk if they
Speaker 1: don't go bankrupt, Yeah, they will squeeze back up. And
Speaker 1: I'll never forget. I was in Chase Coleman's office and
Speaker 1: I walk in. He's in a pissy mood and he
Speaker 1: literally tosses this reported me. He says, look at this,
Speaker 1: like what am I looking at? And this big thick
Speaker 1: report and he you know, throws them and I, what
Speaker 1: is this? Says City Group? Our model City Group is worthless.
Speaker 1: They have more liabilities than assets. This thing should be zero. Right, Yep,
Speaker 1: you're right. But it just went from one to five, right,
Speaker 1: gone from eighty to one and then one to five.
Speaker 1: So you know you're getting your ass kicked, right, And
Speaker 1: he says yeah, and I finally figured it out. It
Speaker 1: was inconvenient for too many people for city to go
Speaker 1: to zero. And that's kind of it's inconvenient for too
Speaker 1: many people to say, hey, open Ai, do you actually
Speaker 1: have any money to buy those ampty chips? You're burning
Speaker 1: eight billion of cash this year, like torching it on fire.
Speaker 1: Oh but our revenues are growing, right, But every time
Speaker 1: someone uses chat GPT you lose money. You actually don't
Speaker 1: make money. You lose money every time they use it.
Speaker 1: And it's the old thing of Jeff Bezos. Oh yeah,
Speaker 1: we lose money on every transaction, but we make it
Speaker 1: up on volume. Hahaha. That doesn't work. You have to
Speaker 1: find a way to make money, and Jeff did obviously
Speaker 1: in Amazon's great business. But I don't see a world
Speaker 1: where they can find a way to make money because
Speaker 1: the transformer model in and of self, it's very inefficient
Speaker 1: in terms of power and demand for electricity. You know,
Speaker 1: maybe someone will figure out a way to do it
Speaker 1: more efficiently and effectively, but then that's bad for the incumbent, right,
Speaker 1: I mean, the person with the new model will get
Speaker 1: all the benefits. So I don't know, but it's inconvenient
Speaker 1: for too many people who have put lots of money
Speaker 1: into that business to say it isn't great.
Speaker 2: You mentioned Citibank, and you and I have talked about
Speaker 2: JP Morgan a lot over the years and all the
Speaker 2: things that have been happening and manipulation and so forth.
Speaker 2: But Mark, they're all bending the knee. Vanguard capitulated JP
Speaker 2: Morgan's new in tookenization. They partner with coinbase to lunch
Speaker 2: crypto custody. City Bank's talking about see and launching its
Speaker 2: own stable coin. Are we seeing the full capitulation here?
Speaker 1: Yes? But so yes, so we're but we're seeing graduated
Speaker 1: capitulation and we're seeing the last stage of the Then
Speaker 1: they fight you by trying to capitulate on stuffed that
Speaker 1: doesn't really hurt them, but then tries to keep their
Speaker 1: monopoly alive. And what do I mean by that, so
Speaker 1: as a nine to twenty sixteen is the first they
Speaker 1: ignore you phase. Yeah, nerds, geeks, magic internet money. You know,
Speaker 1: you gotta meet some in the back alley and you
Speaker 1: get hit with a wrench and then you lose all
Speaker 1: your bitcoins. So science project not really interesting? Trade drugs?
Speaker 1: Are it great? Okay? Seventeen or to nine to fifteen,
Speaker 1: sixteen to twenty one. Then they laugh at you. Ah,
Speaker 1: a bunch of nerds and geeks or your magic internet money?
Speaker 1: Yeah whatever, Oh it's cute. Block five has ten billion
Speaker 1: dollars came out of JP Moore. Eh, cute. Wait a minute,
Speaker 1: now you're twenty billion. Now we got a fucking problem. Okay,
Speaker 1: so you know, get the new Jersey regulators shut them down.
Speaker 1: You go after Celsius and so get rid of competition.
Speaker 1: So ten seventeen, I'm sorry, twenty two to I think
Speaker 1: twenty twenty seven. Then they fight you faced the first
Speaker 1: part and then they fight you. I mean it was
Speaker 1: the smack in the face, put companies out of business,
Speaker 1: threaten lawsuits, you know. And look Brian Armstrong, you know,
Speaker 1: God loved the guy. I mean, he he just fought.
Speaker 1: He said, come at me. Come at me. I'm doing
Speaker 1: this right, I'm the future, you're not. And he won.
Speaker 1: But now the problem is in theory. JP Morgan should
Speaker 1: just say yep, decentralized is better than centralized. No JP
Speaker 1: morgan coin, uh uh. They want JP morgan coin. They
Speaker 1: want a permission blockchain. They you know, they'll let you
Speaker 1: move money in their system using their blockchain, but they
Speaker 1: don't really want you on a public ledger. So there's
Speaker 1: a little bit of apicition. Now, Vanguard, that is true capitulation,
Speaker 1: because that's you know, the guy's get over my dead
Speaker 1: body where we allow our clients. But that was a
Speaker 1: calculated risk, right. Their clients are all boomers, and boomers
Speaker 1: have all the money. Boomers don't like bitcoin, right. All
Speaker 1: the young kids want to buy the ETFs. They like, well,
Speaker 1: you don't have any money, so go knock yourself out
Speaker 1: on robin hood. We don't care. So it was it
Speaker 1: was a branding thing to say nope, we're not gonna
Speaker 1: do this, and all the boomer are like, oh, yeah, yeah,
Speaker 1: I told you, I told you to palm's this game.
Speaker 1: Well then a few boomers were like, shit, my son's
Speaker 1: making a lot of money at this My daughter's making
Speaker 1: a lot of money at this I gotta do this.
Speaker 1: So once the boomers started saying, yeah, we want this,
Speaker 1: they had to give in. So that's that's real, that's capitulation.
Speaker 1: But the bank capitulation to me is still they're still
Speaker 1: trying to do an end around. You know, they're still
Speaker 1: trying to say Bitcoin is bad, Bitcoin is evil, it's
Speaker 1: for terrorists and drug dealers. But we over here it's
Speaker 1: what's your life of tastes art, right, and we say
Speaker 1: that there's all this predicted programming out there, and if
Speaker 1: you'll watch certain movies, then that happens in the future.
Speaker 1: The one that gets me was a movie, but it
Speaker 1: was a series called Mister Robot. Yeah, and it's scary.
Speaker 1: Evil Corp. In Mister Robot is JP Morgan. I mean,
Speaker 1: they talked about Bitcoin. They talked about Evil Corp shutting
Speaker 1: it down with e coin and evil coin, and it's
Speaker 1: interesting because that is playing out in real time. Now.
Speaker 1: At the end, we know the goodness is we know
Speaker 1: how it ends, right, is that then they fight you,
Speaker 1: then you win. So we know decentralized is gonna win.
Speaker 1: We know that bitcoin is better than fiat. We know
Speaker 1: that real money is better than fake money. But seven
Speaker 1: trillion dollars of revenue in banks, brokerage firms, insurance companies,
Speaker 1: you know, counting firms audits. Like, why do we need
Speaker 1: an auditor and pay them seven hundred thousand dollars a
Speaker 1: year to audit the books and records of the company
Speaker 1: if it's audited every ten minutes on chain? Well we don't,
Speaker 1: so the auditors are probably not very psyched about this business.
Speaker 1: Title I have to pay a thousand dollars every time
Speaker 1: I do a real estate transaction for title search. Well
Speaker 1: what if you do it once and then it's good forever.
Speaker 1: That's just a better business model less. I mean, it
Speaker 1: means you're freeing up capital do other more creative things.
Speaker 1: But I understand the title insurance I like, I have
Speaker 1: two buddies. They own a title insurance company, and they're
Speaker 1: nice guys and they live a really comfortable life, but
Speaker 1: they don't want this to happen. I look at at
Speaker 1: all of innovation the same way. Right, when when new
Speaker 1: technology comes along, it does a couple of things. One,
Speaker 1: it solves the problem that people thought was intractable. Like,
Speaker 1: I love all the charts now are like you know,
Speaker 1: electricity uses going like this, and we're gonna use all
Speaker 1: the electricity in the world just for AI and no
Speaker 1: one else is gonna get any and you're gonna lose
Speaker 1: all your w like, no, you're not. There is zero
Speaker 1: chance that we're as a society going to say, yeah,
Speaker 1: you know, it's okay, we're gonna use all the electricity
Speaker 1: for this stupid thing. So I can ask chatch ept
Speaker 1: you know, a silly question every morning. I mean, we're
Speaker 1: just not gonna do that. And so it's just like
Speaker 1: when everyone's saying we're gonna use all electricity in the
Speaker 1: world to mind bitcoin, No we're not. I mean that
Speaker 1: that's a silly thing. What's gonna happen is people are
Speaker 1: gonna invent more efficient a six, right, They're gonna invent,
Speaker 1: you know, workarounds like deep seek. Deep Seek doesn't use
Speaker 1: as much electricity because they use software to make some
Speaker 1: of the hardware things unnecessary so they don't need the
Speaker 1: power hungry hardware. The fact that innovation always follows this cycle,
Speaker 1: and whenever there's a new innovation like cars, when cars
Speaker 1: came there said oh my god, we're gonna run out
Speaker 1: of oil. Yeah, no, we haven't we haven't come close.
Speaker 1: And oil prices in real terms are actually really low,
Speaker 1: right comparatively, so we get more efficient. And remember telling
Speaker 1: the story, you know fifteen years ago that there was
Speaker 1: more oil in the US than Saudi Arabia, Right, that's ridiculous.
Speaker 1: I'm like, well, it's actually true. It's underneath Colorado and
Speaker 1: Wyoming and Texas. And the problem is it's in the shale.
Speaker 1: And the only way at the time, back then, the
Speaker 1: only way to get it this is crazy. You literally
Speaker 1: drilled a mile down and then you started a tungsten
Speaker 1: steel rod and then you heated it up to like
Speaker 1: seven hundred degrees or something, and you melted the shale
Speaker 1: and then hydrocarbons would bubble up like that just sounds expensive, right,
Speaker 1: And so if that was the only way to get
Speaker 1: it out, we probably wouldn't have got it out. But
Speaker 1: somebody said, what if we fire sand down there with
Speaker 1: pressure and will break the rock? And again, if you
Speaker 1: told me you were going to do that, I'd say, no,
Speaker 1: you're not. That's ridiculous. But it works, and it's cheaper.
Speaker 1: Now we have cheap oil and we produce more oil
Speaker 1: than anybody in the world. So innovation and human creativity.
Speaker 1: It's back to Jimmy's song. If we have more time
Speaker 1: to think and less time to just do what we're
Speaker 1: told to do. If we don't have to, you know,
Speaker 1: be in the monopoly that is the incumbents, Well, life
Speaker 1: will get better and it will so Anyway.
Speaker 2: Before you go, I want to ask you about digital
Speaker 2: accid treasury companies because Mark it feels like a bubbles
Speaker 2: forming here. It started with bitcoin, but now they're expanding
Speaker 2: to ethereum, salon and other assets. What are your thought
Speaker 2: Are somebody these companies going to survive the bear market?
Speaker 1: Oh, for for sure they won't. And it just depends
Speaker 1: on a bunch of things. It depends on balance sheet management. Right,
Speaker 1: if you're overly indebted, it's gonna be a problem. Now,
Speaker 1: it does depend on how deep the bear market is. Said,
Speaker 1: if if we don't go up super high and we
Speaker 1: don't go super low, there'll be more wiggle room. Bitcoin
Speaker 1: or a digital asset treasury company. Why would I pay
Speaker 1: a premium for a rapper to hold an asset that
Speaker 1: I can hold myself? Yeah? I wouldn't. Now maybe you
Speaker 1: could say, well security, they have better security. Okay, fine,
Speaker 1: I'll pay a two percent premium, five percent premium, maybe
Speaker 1: that does make sense to me. Okay, how about ease
Speaker 1: of transaction, right, it's easier to do a transaction with
Speaker 1: an ETF than it is with Eh. That's that's spurious argument.
Speaker 1: But let's say security. I'll take that one. Okay. Then
Speaker 1: the only other reason would be, well, if they can
Speaker 1: issue debt at a really low rate and buy more
Speaker 1: of the asset, there's an arbuitage. And Sailor has done
Speaker 1: this famously on CNBC saying, look, if you'll lend me
Speaker 1: money for zero and I can buy bitcoin that just
Speaker 1: accrets to shareholders, and then I'll get an m NAV
Speaker 1: above one. Well, if people pay me a premium and
Speaker 1: I can issue new shares at one point two and
Speaker 1: buy an asset at one, then I have a flywheel.
Speaker 1: But the problem is if your m NAV is one
Speaker 1: or lower, no flywheel. And so I think in the
Speaker 1: bitcoin space there's going to be a small number of winners.
Speaker 1: And I do think, you know, my strategy is one.
Speaker 1: I think metaplanet is one. I do think there's going
Speaker 1: to be definitely a few winners in the other assets.
Speaker 1: I struggle because bitcoin to me is like gold, like
Speaker 1: if you did this with gold makes sense to me
Speaker 1: if you did it with you know, shares of a
Speaker 1: company that did internet security. It's kind of like, how
Speaker 1: I have you a smart contract to me a smart contract,
Speaker 1: it's it's fine, but if I can issue more of
Speaker 1: that token, I don't know, that's that's not that's more
Speaker 1: like fiat.
Speaker 2: So so do you think though to your point of
Speaker 2: the issue of more tokens, but what about like the
Speaker 2: staking the yield component with's.
Speaker 1: Taking you that that's a great point. So certainly cash
Speaker 1: flow generation starts to make it look more like a business.
Speaker 1: And so I do think there's there's some logic there
Speaker 1: and and so you have to balance the two. But
Speaker 1: I said, it's a very important point, Tony. If you
Speaker 1: can generate yield on your asset that cretes to shareholders,
Speaker 1: and you should get a premium for that. I guess
Speaker 1: the question is at what point do they equilibrate, meaning
Speaker 1: the dilution of the new shares relative to the production
Speaker 1: of the yield you know is equal or maybe you
Speaker 1: know the protocol says, you know we're gonna burn you know,
Speaker 1: we are going to reduce supply, We're not going to
Speaker 1: grow supply. Infinitely. But you know, places where there's no
Speaker 1: guarantee on on the supply of the asset. I just
Speaker 1: don't to me. The bottom line digital asset treasuries need
Speaker 1: to focus on scarce assets.
Speaker 2: That makes sense. Mark final thing forre I let you go.
Speaker 2: I wish we had another hour, but uh, do you're doing?
Speaker 1: What's that? We'll do it again?
Speaker 2: Yeah, yeah, the anticipate the Clarity Act gets past the
Speaker 2: market structure, and that's a huge narrative. As you see
Speaker 2: approves additional all coin etaps. We lead to this blow
Speaker 2: off top come November December, and that's it.
Speaker 1: So so it should have gotten approved. I actually don't know.
Speaker 1: I do know, right the incumbents got in there and
Speaker 1: you know, the bank said we don't want this, and
Speaker 1: so ms Warren you know, and her cronies. I guess
Speaker 1: got it got to stop. But I don't. I don't
Speaker 1: know that there's enough. Like it was important for the
Speaker 1: President and the administration to get the Genius Act passed
Speaker 1: because you know, money, you know, and and the you know,
Speaker 1: Commerce Secretary owns five percent of tether and you know,
Speaker 1: so all that I get it. You know, Goldman knows
Speaker 1: how to lobby and Jeremy's ex Goldman, So I get
Speaker 1: that one. The other one, I just think you're dancing
Speaker 1: too close to the incumbents and and they just don't
Speaker 1: like it. But if it were to get pasted, I
Speaker 1: think exactly as you describe would happen, we could get
Speaker 1: We could finally get the all season that doesn't seem
Speaker 1: to be coming it. It's funny. Scott Melker, who's a buddy
Speaker 1: you know, tweets says, yeah, forget all season. I made
Speaker 1: more money on Iran than than all my all coins,
Speaker 1: so I'm just gonna trade stocks, which is kind of funny.
Speaker 1: So bitcoin dominance and stable coin dominance are totally logical, right,
Speaker 1: stable coins payment rails to replace you know, VSA MasterCard, whatever,
Speaker 1: you know, Venmo PayPal, That makes perfect sense. Bitcoin as
Speaker 1: digital gold makes perfect sense. All the other use cases,
Speaker 1: I can see them, and I can make an argument
Speaker 1: why they could work. But but they're they're fighting up
Speaker 1: against incumbents that that have a lot to lose, whereas gold,
Speaker 1: you know, there's really no one. I mean, I guess
Speaker 1: the gold miners have stuff to lose, but they're not
Speaker 1: big enough to matter, so they can't really fight against bitcoin.
Speaker 1: Becoming digital goal. They you know, they're just not gonna
Speaker 1: do it. But but the banks can still fight, So
Speaker 1: we'll see how that goes. But I think it is
Speaker 1: a good point, and I'm not the extreme. There's bitcoin
Speaker 1: and everything else. It's a scam. I don't believe that.
Speaker 1: I do think you know, Ethereum, Solana Avalanche. Smart contracts
Speaker 1: I think have a role in the future. I really do,
Speaker 1: and I think I think they're they're good, and suiy
Speaker 1: is an interesting protocol, and I keep hoping chain Link
Speaker 1: does what they tell me they're going to do. And
Speaker 1: you know their army is like, you know you're missing that. Look,
Speaker 1: I would love there to be interoperability, but armies who
Speaker 1: are angry at you Link and XRP, so well, I'm
Speaker 1: never going to come around XRP just not so army.
Speaker 1: You can hate me, It's okay, I'm just never gonna
Speaker 1: come around. Because look, I've been doing this a long
Speaker 1: time and I've met with more than a thousand groups
Speaker 1: building companies. We've invested in a hundred of them, so
Speaker 1: we probably met with a couple thousand. I've never met
Speaker 1: one building on either XRP or Cardono. That's impossible, right,
Speaker 1: It's just impossible. I mean, now people will at me
Speaker 1: and say no, we're building on I'm like, okay, then
Speaker 1: come see me. No one's ever come see me. I've
Speaker 1: met with hundreds of people building on eth, I've met
Speaker 1: with hundreds of people building on Bitcoin. I've met with
Speaker 1: hundreds of people building on Avalanche. I've met hundreds of
Speaker 1: people building on Solana. I've never met anybody building on
Speaker 1: those two protocols. So to me, I'm I'm just being logical.
Speaker 1: But I makes people angry.
Speaker 2: Yeah, they're going going to come after you with the pitchforks,
Speaker 2: but you know it is what it is.
Speaker 1: Mark and I and look at it doesn't matter what
Speaker 1: I think. If this is a real protocol and they're
Speaker 1: really going to replace Swift, godspeed. But we don't want
Speaker 1: to replace Swift. We don't need another Swift. We don't
Speaker 1: need a better Swift. We need to obliterate Swift. And
Speaker 1: we need a new protoc We need a new system
Speaker 1: based on decentralization, not centralization. So if you can do that,
Speaker 1: love it. I don't think he could do that. But
Speaker 1: but prove me.
Speaker 2: Wrong, Mark, If you can make me a promise, Bitcoin
Speaker 2: hits you know, at least over one hundred and fifty k,
Speaker 2: maybe one hundred and seventy We got to do an
Speaker 2: in person in New York in my studio.
Speaker 1: Oh easy. Absolutely, absolutely. It just didn't worry. I mean,
Speaker 1: I'm gonna be there on Monday, but it just didn't
Speaker 1: work out. So absolutely we'll make that happen in person. Awesome, Mark,
Speaker 1: thank you so much. Always appreciate your insights. All right,
Speaker 1: can see you