John Arnold is a colleague of mine at Ten31, we are five man team focused on investing in and supporting the best bitcoin businesses globally. This is our third quarterly update where we cover current market dynamics and our outlook.
More info on Ten31: https://www.ten31.xyz
Quantum: https://www.ten31.xyz/insights/quantum-computing-bitcoin-security
Note: AnchorWatch does not use taproot. I was mistaken.
John on Nostr: https://primal.net/john
John on X: https://x.com/JohnArnoldTen31
Ten31 on X: https://x.com/ten31funds
EPISODE: 186
BLOCK: 927606
PRICE: 1108 sats per dollar
(00:07:01) Four Year Cycles: Liquidity vs. halving
(00:12:21) Market manipulation?
(00:13:53) Day vs. night: IBIT hours, ETFs, stay humble and stack sats
(00:16:40) Premarket/postmarket liquidity and trading
(00:16:47) Quantum: FUD Rising
(00:24:03) Address types at risk: P2PK, P2PKH race, Taproot exposure
(00:25:11) Practical mitigations
(00:27:28) Long-range vs. short-range quantum attacks and feasibility
(00:28:40) Reality check: scaling physical QC and secrecy constraints
(00:31:01) Coordination and upgrade paths: post-quantum options
(00:33:30) Social contract: no seizure of old coins
(00:36:25) Did quantum FUD drive the drawdown?
(00:40:00) Why gold and silver are at highs while Bitcoin lags
(00:51:06) Mega-cap tech as the new savings account and TINA
(00:57:36) Fed cuts, QT ends, QE or not semantics, and Bitcoins response
(01:07:00) Looking ahead: more cuts, policy path, and 2026 setup
(01:13:01) Giga-bullish case: scarce assets vs. fiscal-monetary impulse
(01:16:03) Gold vs. Bitcoin for individuals and sovereigns
(01:20:02) Counterparty risk with ETFs and the case for self-custody
(01:26:12) Bottom in? Price targets, humility, and risk management
(01:30:29) USD tokens (stablecoins): growth, limits, and policy aims
(01:35:04) Tethers dominance, gold tokens, and a silver tangent
(01:41:03) Closing thoughts: on-chain flows, whos buying, and sign-off
more info on the show: https://citadeldispatch.com
learn more about me: https://odell.xyz
[00:00:32]
Unknown:
Happy Bitcoin Friday, freaks. It's your host, Odell, here for Citadel Dispatch. The show focused on actual Bitcoin and Freedom Tech discussion. The current time is it is December 12 at eighteen hundred UTC. The current block height is nine two seven six zero six, and sats per dollar is 1,108. As always, huge shout out to the freaks who support the show. Dispatch is purely audience funded by Bitcoin donations. We do not have ads or sponsors, and it's it's it's pretty it's been it's been a beautiful experience over the years running this show with you all, on the value for value model. The easiest way to support the show is on Primal or other Nostril related apps. It's also great because you can easily interact with fellow freaks and myself.
The top zaps for last week's show was Andy. He said, thank you for the return of the intro music, and he sent 50,000 sats. And Mav 21 ride or die freaks said great rip, and he zapped 10,000 sats. If you don't have sats to spare, sharing with your friends and family really does help. Dispatch is available in all the major podcast apps. All relevant links are at silldispatch.com. Anyway, Freaks, thank you again. I have a great show lined up. Return guest, one of my partners over at 10:31. We have John Arnold here. How's it going, John?
[00:02:17] Unknown:
Great to be here as always for your one, your one suit rip per quarter. The ten thirty one market update. That's what I'm gonna call it. How does that sound? That's great. That's exactly what the people who signed up for actionable Freedom Tech information wanna hear from from this feed.
[00:02:37] Unknown:
Look. Look. We're we're in it for the tech, but I would like if my tech maintained its purchasing power, considering my family's entire, life savings is is in this protocol. So I think it is it is actually relevant.
[00:02:51] Unknown:
It is it is a monetary protocol at the end of the day. But I feel like we've got some reasonably good tech oriented topics that we'll that we'll have today.
[00:03:00] Unknown:
John is, John was upset to find out that this was an audio only rep, because he is wearing his, Patagonia vest right now.
[00:03:09] Unknown:
Specifically curated my outfit, in the hopes of trolling our host, with the, the finance bro wear. It's my only Patagonia, jacket actually, so I I really don't, I don't really qualify for the club. But, unfortunately, no one will get to see, the, the fit today.
[00:03:29] Unknown:
Well, they can imagine it. They can imagine it. Just think, John, last I think last, time you came on, one of the freaks called you our quant at 10:31. Do you think that's a relevant title?
[00:03:45] Unknown:
I mean, I think if I'm the quant, then we're in, like, a lot of trouble. Like, we have the good fortune to not really need a a quant. But I probably am the closest thing we have insofar as I'm probably the only one on the team who has opened Excel in the last three months.
[00:04:04] Unknown:
So I open it when you send me an Excel doc. Oh, yeah. Okay. That's fair. Yeah. What it I guess, quants are, like, more, like, hedge fund style. Right? Like, active trading strategies, stuff like that? Yeah. You don't see a lot of, like, quants at, like,
[00:04:19] Unknown:
private, private funds, like, longer dated, less liquid funds. Quants are usually reserved for, high frequency trading strategies or, like, market neutral pod pod shop strategies. So probably probably not a totally appropriate title, but the meme, this is my quant, is funniest when it's used for someone who said who's saying abjectly, stupid things that are, highly falsifiable. So we'll go with that because I I say stuff like that a lot.
[00:04:49] Unknown:
Love it. I mean, on the topic of quants, there's been a lot of talk lately about the Jane Streets of the world and the citadels and stuff, playing around with Bitcoin, moving the market around. How how much credence do you give to I mean, presumably, they have a bunch of quants on payroll. Right? Like, that's their thing. How much credence do you give to that theory?
[00:05:11] Unknown:
Yeah. I mean, look. Like, the if you follow, like, you know, the zero hedge account, for example, they very clearly have very large Bitcoin and ETH bags, whoever runs that account, because they're constantly, like, every single day, like clockwork at 10AM, they complain about the Jane Street slam, the 10AM slam, where if you look back, over the price chart over number of months, certainly since the ETFs started, you see, what appears to be a a pretty tough and maybe even manipulated sell off with Bitcoin right around that time. I mean, look, I I think there's definitely we we would be very naive to think that the market dynamics day to day, week to week haven't changed meaningfully.
And then you've got you've absolutely got shops out there playing all sorts of games, running all sorts of strategies to, harvest volatility, with with Bitcoin. And they're using IBOT options in a lot of cases to to do that. I'm not in the weeds enough on the, nuts and bolts of any of those strategies to say to, like, look at the price chart and do the Leonardo DiCaprio meme and and point out something and say, you know, there it is. That's that's what's happening. But, yeah. I think we should definitely expect, like there are big players with huge bags, in the market right now who don't really care about some of them probably have a Bitcoin thesis. There are probably a lot of Bitcoin owners at BlackRock, at Citadel, at Jane Street.
But as institutions, they don't really care about where it's going long term. That it, you know, it's generally like a another volatile and highly liquid instrument to trade, and that's gonna affect, and I have an option to help with that. And so it's gonna affect just day to day price action. The flip side is, like, I I think that conversation is just an outgrowth of the reality that we also need to get used to, the I think as everyone has seen over the last, like, two years, four year cycles, I I think we can safely say, are essentially fake. I think they are r RAs probably fake, but certainly now, like, the having is way less relevant.
You know, the the date on the calendar is is way less relevant. And I think my point is, like, Jane Street, Sodal, BlackRock, etcetera, are all of a piece with one of the reasons that, like, our traditional cycle dynamics, which are based on all of three data points historically, are getting less and less relevant. The just because the composition of the market is is changing so much.
[00:07:49] Unknown:
Wait. Let's just, I didn't have this on the list, but let's just go back a second. You think the last, you think four year cycles historically have been fake? I mean, they've existed. They've I think four year cycles are a sigh up. Because
[00:08:02] Unknown:
I think the the initial, like, 2012, 2013, pump was I think that was what people, like, mean when they talk about, like, a crypto native cycle, post first having. Because the having at that point was so meaningful to, overall supply, significant, downshift in newly issued Bitcoin the pace of newly issued Bitcoin relative to existing supply. And I think and also just, like, that was the first time for most people that anyone, like, a, that we saw that the having, like, worked as intended and the network continue to do what it was going to do and it actually was, like, reinforcing its monetary policy. Like, okay, that's the first data point, helps to draw people in. And I think that that created, like, a a pump absolutely. Like, that was related to the having.
And I think you could definitely argue that, 1617, was as well because having was still pretty meaningful. There, I even think I even think there it starts to get murkier because you start to see, like if you look back historically, the clearer correlation seem to be, like, combination of, like, liquidity cycle and what, like, ISM PMIs are doing. So basically, like, what what was, like, the broader economy doing? Like, was credit, like, more or less available? Was it kind of on the upswing, on the downswing? What, was economic activity in, like, The US and major markets? Was that on the, you know, upswing and downswing? You know, like, or even just, like, worldwide, China as well, similar thing. Like, if you look back at those data points, those seem to have a lot, those map very cleanly as well to Bitcoin pumps. And I think first cycle, you could say that was all, like, crypto native, Bitcoin native, totally endogenous and idiosyncratic.
Second cycle, like, definitely some of that, but I think you're you were starting to see it was getting big enough and distributed enough that it was actually being affected by a liquidity cycle. And I think 2020 is, like, the fakest of all because 2020 and '21 I mean, obviously, not to tell anybody. We all remember what was happening then, but it it's very convenient that right around the having, we got, you know, the most, significant massive pump of new liquidity into the market and expansion of the Do you think they plan that? Maybe.
I mean, I I'm not look. You know, I'm not gonna say one way or the other whether the timing was suspicious. I'm not gonna say one way or the other Whether, the events of 2020 are related to the events of late twenty nineteen with the spasm in the repo market and, tightness in in reserves, that you saw at the end of that year. But in any case, Bitcoin's price action that year is so swamped or, you know, over those two years is so swamped by what was happening with monetary and fiscal. And it's, like, really hard for me to say, well, the calendar shifted, to the year when Bitcoin is supposed to pump, and so it pumped. And so, ergo, you know, the correlation is there, post hoc AeropropterHawk, and that was what that was what caused it. Like, I think you've seen diminishing relevance of cycle dynamics each time. And this past these past two years, like,
[00:11:15] Unknown:
bear that out even even more. Yeah. I agree with go ahead. I agree with I agree with the phrase we've seen, decreased significance of cycle dynamics as time has gone on is a very different claim than Yeah. I mean Yes. All the past cycles have been fake.
[00:11:34] Unknown:
I think fake in the sense of it's fake to say that because the calendar is a certain way, Bitcoin has to do a certain thing. Like, that's never been true, except Right. Like yeah. I I'll I'll happily say that's never been true. But, like, cycles like, economic cycles exist, liquidity cycles exist, financial cycles exist, and, like, all of those things play into Bitcoin with increasing relevance at, you know, the bigger and bigger it it gets.
[00:12:00] Unknown:
Okay. I'm going to I've there was two comments I wanted to bring up, and that was the first one from your first comment. The second one is you said, manipulation, by, you know, Jane Street and other other funds that are maybe buying at night and then trying to dump when The US market's open. Just, philosophically, since this is such a philosophical podcast, is does market manipulation exist in a free market?
[00:12:31] Unknown:
Well, I mean, I if I said manipulation, that's not really what I meant. Less like, not that it's manipulative, but that, like, the, biggest players in the biggest capital market in the world, choosing to harvest volatility and run option strategies, on top of this asset, like, yeah, that has impact. Like, I think it's I don't know why you you don't have to have believe any particular conspiracy, to think that that's the case. No. That's definitely happening. Yeah. Why wouldn't they? Yeah. Whether that constitutes, like, manipulation. I mean, like, it probably depends on your definition. That's not what I would call it. It does feel like we dump on market open often. Yeah. We do. It but we have recently, for sure. And there was, there was a stat that I saw this morning about and I can't source it, so everyone's just gonna have to trust me, bro. But, on some reasonable time frame, if you had owned Bitcoin exclusively in outside US market hours since, like I think it's since the launch of iBit, you would be up, like, you know, 400% or something, 400 something percent. And if you had owned it exclusively during market hours, I think you would be down 40%.
[00:13:48] Unknown:
Did you see they're coming out with an ETF that only holds it
[00:13:52] Unknown:
Yeah. During off hours. Is that a Bitwise product?
[00:13:56] Unknown:
I, I don't remember, but I I did I did see that. But They announced it they announced it this week. It's a comp it's a company I haven't heard of before. Let me see. It's called Bitcoin After Dark. I don't who's running it. Yeah. I'm I'm sure it's, how Presumably, if it was Bitwise Yeah. They would have said it was Bitwise.
[00:14:14] Unknown:
Yeah. I mean, the problem with anything like that is to even to the extent that there is some signal there, like, that's also gonna quickly get, like, arbed away. So I don't know that that's, like, oh, if you just own Bitcoin through vehicles that only have exposure to it outside of US hours. I don't know. That's a durable strategy to outperform. But The better argument is not I mean, I I will never
[00:14:37] Unknown:
advocate for the average person to actively trade Bitcoin. I think they're better off just staying humble, stacking sides. I think there's a better argument for, why holding self custody Bitcoin and holding, like, real Bitcoin is is has many different values, many different benefits, including this overall holding something that is, you know, only traded during eight hours, a day, which is kinda crazy.
[00:15:04] Unknown:
Yeah. I mean, it's a tie market hours are a tiny amount of the total, available hours in a year. And It's not even eight hours a day. Right? What is it open? It's 09:30 to four. 09:30 to to four. Yeah. Oh, it's six and a half hours.
[00:15:18] Unknown:
That's that's insane. Yeah. So yeah. So there's there's seventeen and a half hours. Great math. Seventeen and a half hour. Maybe I'm the quant. You're the quant. Seventeen and a half hours of the day that IBOT isn't being traded. I guess there's, like, you can trade some I mean, they made it get easier to trade after after close nowadays. Right? There's, like, a window, but the volume is less. Yeah. I mean, there's always been,
[00:15:42] Unknown:
and I don't know what retail's, like, level of access to it, like, actually is. There's always been there's there's premarket trading and and postmarket trading. I mean, my in my last seat when I worked on, like, the hedge fund side, like, basically, the axiom that I lived by and that I was taught is, like, all of that stuff is fake. Like, it's I mean, there's the volume is so thin pre market and post market. Liquidity just, like, dies. Yeah. It just it doesn't really mean it it can probably tell you directionality. You know, if a company has a great or a terrible earnings print after the close or something and it's, like, up 20% or down 20% after hours, like, yeah, that's probably telling you it's gonna be up or down a lot in the morning, but, you quickly see, around 10AM, actually, on on most days like that. You you quickly see that those those big moves from overnight kinda reverse. So, yeah. Generally, that's another that's another good piece of advice for people is stay home on StackSats. And if you're gonna trade, don't don't trade around, pre and and post market of traditional fiat securities.
[00:16:41] Unknown:
Yeah. I mean, just don't trade. Just don't trade. To the quant. Okay. I don't know what's next on the, next on the docket. I mean, Quant. We were talking about Quant. Do you wanna do you have Quantum on this list? Do you wanna update the freaks on Quantum? Yeah. I mean,
[00:16:59] Unknown:
I, if you've been on Bitcoin, Twitter it's actually it's funny. It's less on Nostr. And I think that there's signal there because I think people on Nostr generally have, a much sober a much more sober kind of view of the world and are generally less, click baity and rage baity, and also are more informed on Bitcoin. But at least on Bitcoin Twitter and on some on the podcast circuit too, like, I I've definitely heard a lot of people whom I respect.
[00:17:30] Unknown:
And Yeah. Preston specifically had a specific episode where I had a bunch of ten thirty one LPs reach out to me afterwards.
[00:17:38] Unknown:
It's interesting. Yeah. So, you know, I'm I'm not throwing shade to Preston specifically because I've I've heard it from I mean, like, Luke Groman was on Jack Farley's podcast,
[00:17:48] Unknown:
this week. I don't think Luke owns any Bitcoin anymore.
[00:17:52] Unknown:
I I can't tell if he if he fully blew out of his position or if he just size it down a lot. But in any case, he mentioned, you know, quantum as a a growing concern of his. I think that's his trade was much more on, like, the the macro the near term macro concerns. But, if and then if you listen to the Forward Guidance podcast, which is a very, like, you know, directionally fiat and there's some crypto shills in there that you'll have to swallow. But, for, like, general macro commentary, it's an interesting one. But on on all three of these, right, like, these are pretty prominent guests and voices across, you know, general macro and then within Bitcoin as well.
There's been this growing kind of, worry about quantum, and, you know, its its potential to compromise Bitcoin keys. And in general, like, I think, there's this is one of those things that's, like, there is a lot to say about it, but it's the one, like, piece of Bitcoin FUD that doesn't really have, like, a definitive slam dunk debunking answer right now. You know, energy usage, what if the government bans it, what what if they copy Bitcoin, can't they just make another Bitcoin, like, all the things you kinda hear in in Bitcoin one zero one conversations. Like, those have been, like, very well addressed for many, many years. There are books written on, like, each one of those topics and articles everywhere, podcasts. Like, if and anyone who's actually curious and interested will quickly get hit in the face with a bunch of material on, like, any of those topics. The quantum issue is, like, an interesting one because, it's theoretically, like, a real concern, and it doesn't have a perfect solution you can point to yet.
But I think I'm seeing a lot of, like, the conversation right now, is coming often from people who don't who haven't deeply dug into the nature of, quantum computers. And I'm not positing here that I am, some QC gigabrain by by any means. Spent a lot of time looking at it, wrote a piece that you can find on 10:31 early this year about it. Yeah. I'll link to it in the show notes. We actually
[00:20:00] Unknown:
we we released it in January. It was ahead of, like, public concern around it, I think. Yeah. It was after the the Google,
[00:20:08] Unknown:
paper and the Google update about kind of their strides and error correction came out, like, in December. We put that paper out, and it seemed like there was, like, a wave of discussion then, and then it kinda died down. And then, like, I think partially also because of, like, quantum stocks have just been, like, the meme stocks of this year. If you look at, like, tickers like IonQ or, like, I think it's RGTI, Rigetti Computing, like, D Wave computing. Like, if you look at any of those charts, I mean, they look like shitcoin charts.
[00:20:33] Unknown:
Are they down yet, or are they still up?
[00:20:36] Unknown:
No. I think they've gotten kinda rents in the last because I don't even if you,
[00:20:43] Unknown:
like, even if you believe quantum computing isn't reached, like, I don't understand how you monetize it. It's, like, nonmonetizable.
[00:20:49] Unknown:
That that's a whole that's a whole other thing. But with meme stocks, it doesn't really matter. Right? Like, the military can monetize the military could, like, use it once. Yeah. Yeah. Exactly. But it's like I mean, and Quantum is also, like, famous for so you've had, you know, these these stocks have gotten a lot of, a lot of momentum, and there have been, you know, press releases, left and right about different things that strides that they've made, and it's all usually, like, so, like, opaque that any random person is not probably gonna be able to decipher whether they have, like, needs anything or not. Yeah. Lots of hype. Quantum is very famous as a space for, announcing a lot of announcements or, you know, being two years away from being two years away, from, you know, making some great, some great strides or something. But so anyway, all all that momentum and and noise is kind of, taking the air out of the room a little bit in the last few months.
And, you know, we can talk about a bunch of different elements with it, but I think the thing that no one seems to none of these, like, voices that I'm mentioning seem to have fully grokked, and I don't wanna speak for every single person who's had, like, a a quantum opinion. Nick Carter, for example, had a paper out, like, this week or a multi part paper on quantum and, like, at the very least, like, you know, that was fairly, like, nuanced and well considered. But in general, this as, like, a FUD category, partially comes from, like, people not even understanding, like, what the threat is or how it would manifest or, like, who would be compromised potentially.
And I think it's, like, important for people to understand. First of all, there's a very limited set of I won't say very limited, but a definitively limited set of UTXOs on Bitcoin's blockchain that could be, could be affected by this. Also, we don't care about mining. Like, it's not a SHA-two 56 thing. Quantum computers are nowhere close to, being able to crack, SHA-two 56, via Grover's algorithm. That's, like, a much, much harder challenge. What we care about is, the something called Shor's algorithm could theoretically has been shown to theoretically be able to, with a sufficiently powerful quantum computer, crack, an ECDSA based key, which is the, the curve that Bitcoin uses to, generate private public key pairs.
It could potentially be used to a quantum computer, sufficiently powerful, could be used to crack one of those. The only real risk categories though are, the initial category of, address types that, Satoshi uses originally, which are paid a public key, which is to say, like, the the public key that which is the the input that the quantum computer would need to reverse engineer the private key to spend the Bitcoin in that address. The and with those address types, which haven't been used in ten plus years, no wallet you buy uses them or, like, we'll make them for you. Very, very old legacy address type.
Those have the public key exposed. So Satoshi's coins or coins of that era, like, very, very early stage, those could be moved. And those will probably be could Yeah. Go ahead.
[00:24:04] Unknown:
Yeah. Then we had the then we had segued addresses. Oh, then we had paid a public key hash addresses. Right. Yep. And, those are hashed. So the public key isn't shown, but there is there is a concern that at the the when you spend from it Yep. It's shown. Yep. So there there could be a race condition if fees are high. There could be a race condition where you broadcast to the miners, then the miners or anyone who's listening to the network, right, because it's a public broadcast relay, then on demand to try and break reverse engineer the public key to the private key. And then last but not least, Taproot isn't that's those are bare public keys too. So, like, the Bitcoin wizards that came up with Taproot didn't think quantum was a real concern.
[00:24:51] Unknown:
Because we just got Taproot. Well, the the the good the good thing is that those, is that basically nobody uses Taproot still. So there aren't that many, Bitcoins secured by Taproot addresses. But but, yeah, that's where I was gonna go next is, like, the other big, like, tab where you portfolio company, AnchorWatch uses, Taproot addresses. Yeah. No. But they're they're they're leading edge. You know, Rob Hamilton's, one of the smartest people in Bitcoin. So they're But they served Quantum with Lloyd's of London insurance. Exactly. But, yeah, like, the other the the real category that anyone should be worried about is, addresses that have already been spent from, which is why in addition to privacy privacy, there is a security best practice of not reusing addresses that are where you already spent from. So just like one easy best practice to mitigate, near term or a couple of best practices to mitigating near term concern you might have about your Bitcoin would be maybe take it easy on Taproot for now, and then only, only spend from, or fully fully sweep addresses that you spend from. So don't don't spend, like, part of, you know, some Bitcoin out of, out of an address and leave legacy, you know, UTXOs in there. Don't read your entire address.
Yeah. But but but I think part of the fear that people have okay. So Then there's the short yeah. You mentioned the short run attacks. Like, those are long long what's called long range attacks that would basically assume, like, there are UTXOs at rest that are not moving,
[00:26:19] Unknown:
and you have, like, as a quantum attacker, like, an unboundedly high amount of time to try it. You have, like you're you're just racing against other quantum attackers, basically. Right. Yeah. But you have infinite time. Yeah. The short range of tasks in question for those that everyone, whether they say it or not, is concerned about is, like, the lost lost Bitcoin, Satoshi's Bitcoin, you know, a couple million Bitcoin worth of liquidity could hit the market if someone did it. Yes. People are worried about their banks. The gigabrain conspiracy is that the, quote, unquote, OG selling narrative that we've been seeing lately is actually just them slowly getting quantum and then sold, which I don't think there's any credence to that. If that's if that's true,
[00:27:05] Unknown:
I would say, like, y'all have no idea how, like, giga bullish that is, that quantum computers are out there. And so Bitcoin's already, like, theoretically, compromisable. But they are selling slowly in, like, an orderly fashion to not crash the market. And, like, not Satoshi's coins. They're doing smaller OG laws. Right. Exactly. But the short range attack thing is, like and I go through this a little bit in the paper I wrote. It like, it's already it's already gonna be very challenging to do to get to a crypto cryptanalytically relevant quantum computer, CRQC, and that can do, like, a long range attack with basically infinite time. Definitely not impossible, but there are in addition to, like, being able to do the relevant calculations that you could show on, like, you know, bench top, like, simulated conditions that you could put in, like, a paper or something, to scale that up physically in the world, requires, like, a huge amount of physical infrastructure investment and getting a thousand different dials right. Like, if you if you've looked at all AI, if you looked at, like, data center build out, there's a huge amount. It's not just, like, NVIDIA makes, like, a Blackwell, accelerator, which has all the chips in it, all the GPUs, and then they go and just, like, plug that into an outlet and and now you have AI. Right? Like, there if you go and look at, like, the transition from, the hopper class data centers into Blackwell, like, those have been partially delayed because there were all these, like, thousands of little, like, tweaks on the margin that NVIDIA had to make to actually make the accelerator optimized for, for the data center. And and it's a little things, like, they had to, like, reengineer, like, the floors of the data center to be, like, solid enough to, like, hold hold the racks, and various other things with, like, the way that the, the clusters, like, interact with each other.
And so I I say all that because, like, quantum is gonna be that times, like, a thousand. Like, there's so there's so much additional, conditionality that has to be, that has to be right. What's that? Then you have to do it in secret. And it has to be secret. There's a there's a ton of power that is required. There are a ton of things that have to go right in the physical world, infrastructure that has to be set up. And, also, the hacking of keys will will, like, the the power required to do that scales linearly. So, like, which is to say, like, you there is not, like, a way to efficiently, just, like, take all of the p to p k keys out there and just, like, at once in one shot, like, compromise them all. Like, each one has to go through would have to go through, like, the process of kind of being run through, quantum computing process, which I go through in the paper as well. And so, like, it's gonna be costly.
It's gonna be very difficult to, just do physically. And that's just for long range attacks where you have, like, as much time kind of as you want. Short range attacks, theoretically, you have to do like, you kind of have to assume you have, like, a ten minute window, like, on average. Right? Because once it's in a block, once it's in a new address, assuming you're not spending to, you know, a vulnerable address in some way, if once a new address, like, the key that was exposed is no longer relevant. It's it's in a block, can't be reversed. And so you basically have to you just have to think not only we've gotta deal with all those all those challenges I just enumerated. You've gotta do all that in ten minutes. Right? So short range attacks are are that's the scariest thing for sure, because then, yeah, you're in, like, a basically a fee war, right, to make sure you can get into a block fast enough to, to not have your Bitcoin compromised in flight once you've exposed the public key to spend it. But it's also, like, far and away the highest bar, to be met. And I think there's still a ton of physical stuff that has to happen in addition to just the basic mechanics of error correction. And that's, like, by itself more like a software and design question that still hasn't been fully answered at scale.
So there's a lot that needs to happen for this to get to a point where it's actually, a relevant threat. And in the meantime, you do have a lot of ways to mitigate the potential threats. But then there are also a lot of solutions already that you and I are not, either probably like there's this idea of a a load bearing Internet person. And I think similarly, there are, like, load bearing cryptography people. But it's, like, maybe, like, 500 in the world who are less responsible. Yeah. Like, the reason we can have any sort of impression, like, functionally across any system is because, like, 500, like, you know, geniuses and graybeards. It's less than a 100 people. Yeah. Probably. Right?
But fortunately, some of those, are very interested in working on Bitcoin. And there have been several proposals, some of which I walked through in that piece, and one of which actually just hit this week, to potentially, upgrade Bitcoin in ways some of and some ways to do that would not even require a software. But there are also software proposals out there, to to do it. They all have trade offs. They all have, things that we need to be considered. But the idea that, like, this is some insoluble problem that is just, like, existential for Bitcoin and it's just we're about to drive off a cliff with no way to, you know, reverse or, hit the brakes or avoid it is just very, very misplaced.
There are a lot of options available to upgrade Bitcoin to harden it. Again, many of which are fairly lightweight and don't necessarily require some massive change to the protocol. So, yeah, there's a lot of reason for optimism on that. But the one, I guess, you know, caveat to that is Bitcoin as this very hard to change system that's, you know, based on rough rough decentralized consensus among global actors with no president or benevolent dictator for life who can kind of force through a change, like, you know, we do have there there will be, like, some coordination friction probably to any kind of change. So it's worth thinking sooner than later on how would you, you know, what would you ultimately wanna do to make a fix for this that, mitigates risk without without injecting incremental risk to Bitcoin. And, ideally, you wanna do that before it's, like, you're actually on the clock to, you know, figure it out, with, like, a real quantum computer that may or may not actually exist.
[00:33:30] Unknown:
Yeah. I mean, I love how you started off that, like, ten minute explanation with one of the problems is there's no clear concise response. Case in point. I mean, look, I think from my opinion, first of all, the on the hype side in terms of quantum hype, just one example of quantum hype is that before Vitalik launched Ethereum, she raised money for a, quantum scheme that was supposed to dominate Bitcoin mining. And that was all bullshit, and then he launched Ethereum afterwards. I I personally, you know, not a cryptographic not a cryptography expert.
I could hardly even pronounce the word. But, I don't really give this much credence. I don't give that much credence to this threat. I don't really believe it's a real threat. Maybe I'm wrong. That said, I think the the quote, unquote mitigation is relatively straightforward. I think there's a lot of good research being done. I think we saw fork in a new address type that is quantum resistant. Resistant. It'll probably cost more in fees to use it. And then people will choose if they wanna use it or not. And then we can just put a pin in this. And just whenever someone says anything about quantum, it's like, okay. Use the quantum resistant address type and pay more for it. And people can voluntarily choose to use it or not.
I think it'd be a relatively easy soft fork if we need it. If it needed to be a soft fork, which I think most likely it would be, it'd be a relatively easy soft fork because it doesn't affect anyone who doesn't use the address type, period. As for proposals about what we do with coins that are sitting in, pay to pub key addresses or whatever, like, just hard knack, no. I completely disagree with seizing them or freezing them or anything like that. I think that just fundamentally, you know, the the the quote, unquote cure is worse than the disease. I think it it fundamentally breaks the the social contract that that Bitcoin stakeholders have have gone by this entire time, which is that property rights is sacred.
So if if the quantum believers are correct and it's not all hype and the old addresses get hit, we will have some short term volatility. Bitcoin will take a hit. It will not be a kill shot, and that will be fine. If we seize the if we seize Bitcoin preemptively Yep. And quantum never materializes, we just kill shot at Bitcoin ourselves is what we did. Like, Bitcoin has very in my in my opinion, Bitcoin fails at that point. Yeah. Just to put a pin in this, just to I'm curious your opinion. Do you think so we were the all time high was one twenty six. You're already on the record saying cycles are fake and to sigh up.
We're at 90 k. So I'm I'm not the quant. That's, like, a 35% or 35% down or something like that from all time highs. Am I correct on that? Yeah. Do you think quant the quantum stuff has had anything to do with that, price action? I tweeted,
[00:36:58] Unknown:
like, a few weeks ago. I, I put out a tweet, and I'm sorry that I didn't, post it on Nostra instead. I don't really know why I didn't. I think it was just some more, like, fiat tweet, so I left it back there. But, I said an inexhaustive list of things not causing the Bitcoin sell off, Zcash rotation, quantum computing, spam, spam debates, the yen carry trade, and elaborate micro strategy fan fiction, which was floating around a couple weeks ago. So I think quantum computing is not the reason that we dumped from, all time highs to 90.
I I think that has much more to do with, liquidity cycle, bank reserves getting tight. Bitcoin's always the first thing to move in both directions when, there's a when you're running up on a liquidity, issue or when liquidity is starting to inflect higher. And, you know, there's also, like, in general, the market for the last month or so has been traditional assets has been rockier with a lot more fears on the AI trade and, some of the AI stalwarts kinda coming under pressure. Bitcoin, rightly or wrongly, has clear correlation to tech stocks and, high beta high momentum stuff. So, I think that that is, like, 99.9% of the reason that Bitcoin moves kinda, like, ever other than the only other major drivers are something really fundamental, like, the president of The United States gets elected and said he wants says he wants to do his treaty Bitcoin reserve or, like, ETFs come into play or something like that.
No. I don't think we sold off because of any of those individual things. On the margin, do I think, like, there are people who were looking at the price action and looking at, shit, it fell from $1.27 to 90. I feel pretty bad about that. I don't, you know, I don't love the macro setup for the next six months. And there's this, like, random quantum thing I don't understand that everyone's telling me about. Like, yeah. You know what? I might as well take some off the table. That definitely is, like, a thought process I imagine a lot of people have had. But the, the reason for it, for, like, the initial sell off impulse, I think, has nothing to do with quantum computing. Ironically, I do think it might relate to the four year the four year cycle meme because there is, like, an element of self fulfilling prophecy, and there are people who have been in the trade thinking that they were gonna get some crazy Bitcoin pump in q four because that's what the calendar says. So you definitely have tourists and leverage traders who have gotten wiped out or gotten blown out, when, you know, that didn't play out. So, like, that that has probably been, I think, more relevant than, like, quantum computing spheres. But, yeah, that's that's my thought on that.
[00:39:36] Unknown:
I will just say that there hasn't been a single serious investor who has asked me about Zcash. So it's definitely not related to, quote, unquote, Zcash rotation, but I like that you had it in there. So then on that note, like, how do you explain how do you explain Mag seven near all time highs, gold at all time highs, silver at all time highs, and Bitcoin down 35%?
[00:40:01] Unknown:
Yeah. Well, like I said, like, Mag seven's definitely gone through, like, more volatility in the last month, and I think when Mag seven, like, sneezes, Bitcoin catches a cold a lot of the time. The gold one is the more interesting one to me. Right? Like, the And silver. Yeah. Silver's are more than gold. Silver's got silver's got, like, an industrial dynamic to it where if you look at a lot of, like, industrial metals, they're kind of, showing similar moves, because of, I think partially because of the the AI build out and, people pre positioning ahead of seeing all the, metals are gonna be needed to, pull that off whether it's here or in China or somewhere else. So to some extent, I think that's, like, a an industrial story. But, you know, we've always we've always wanted to see Bitcoin decoupling from gold, and then the monkey's paw curled, and we decoupled the wrong way.
And I think, a couple years ago, Parker Lewis had a, did a talk at, it's like a club in Dallas, called Bitcoin is not a hedge. And it's it's good talk. It's, like, probably only twenty minutes long. One of the points he makes in there is that effectively, like, the knowledge of Bitcoin is not sufficiently, like, widely distributed for Bitcoin to serve as, like, a valve for central banks around the world and treasuries around the world and big sovereign actors and massive institutional actors to express the what you could call, like, the debasement trade thesis. And so when those when those groups look to get out of the dollar system and or even just like the fiat systems in general, get into outside money, like, gold realistically has, what, like, a ten thousand year track record, and a lot of them already own a bunch of gold anyway.
They're set up to be able to allocate to that quickly. They get it. They it is, like, it is less volatile, although Bitcoin's volatility is coming down, so they have that argument. And I think, like, the knee jerk for the headlines that we're seeing this year about, The US is gonna do financial repression, US debt burden's crazy, we need to get outside of, rotate some value potentially out of US treasuries, especially given what's probably coming down the pipe in the next couple years, what Trump wants to do with one big beautiful bill, everything else. Debt and deficits are only gonna expand.
And meanwhile, the The US is basically telling everyone, like, in some sense, like, take your capital and go home because we wanna reshore, manufacturing and we wanna basically rework the entire entire global trade order. So, like, your natural move is if you want to rotate into some other, like, neutral reserve asset, the really the only thing that's available to you if you're in that mindset is gold. Right? And I think only this past year this past year, year and a half have groups like that really had to confront that trade that we've all been kind of, like, implicitly or explicitly expressing with Bitcoin, for the last, you know, fifteen years.
They've only really started to take that seriously, I think, in the last couple years, other than China, which has been rotating heavily into gold for the last ten years. But for them, all that is to say, like, the the move there, if you want to express that thesis, is just naturally gold. Right? It's not it's not Bitcoin, yet. Although there's some maybe growing exceptions to that that we can talk about. But we're so early in Bitcoin's life cycle that, the tailwinds that you've seen for gold, I think, are happening for reasons that are not yet easily, like, replicable
[00:43:53] Unknown:
for Bitcoin because Yep. Knowledge of it and understanding of it just is not sufficiently distributed among the people who are making those decisions. Well, at some point, like, this Bitcoin, I think, will be treated as the ultimate safe haven, like, the ultimate risk off asset. And we're just not there in its adoption cycle yet. And I think part of it, by the way, is if you're not if you're not holding self custody Bitcoin, it's hard to feel the safe haven aspects of Bitcoin. Like, if you're holding iBit, it feels like a shitcoin to a degree.
You know, it feels like a risk on asset in a lot of ways. A lot of a lot of, like, the intrinsic and I, you know, I kinda use that word in a in a punny way. Value of Bitcoin as a safe haven asset comes from the fact that I can hold it offline, that you can't seize it for me, that I can spend and save it without permission. And I think people that aren't using it in self custody fashion, it's gonna be harder for them to come to terms with that. But this is why I brought up the Mag seven. Right? Because I think it's reasonable to be like, okay. People are starting to realize mandibles is starting to get priced in.
And people are starting to realize that, and they're moving into gold and silver. Silver was kinda like an echo trade to gold. Right? It's like gold moved first, and then people are like, oh, I can make some money on silver that hasn't moved yet, and then it moved harder. But but the interesting one is the Mag seven. Is that that I mean, that Mag seven is basically the S and P now. And so if you look at the S and P, the S and P is, like, right near all time highs, and that's obviously a risk on type of scenario. How do you explain that? Like, do you have a good explanation for that? I have my own theory. But Well, I mean, first thing I would say is, like, give it some time. Like, let's see. Because,
[00:45:39] Unknown:
historically, you know, Bitcoin's done this before in on both the upside and the downside, where, like, even earlier this year, if you remember, like, the local top at the start of this year was Trump's inauguration. And then it was just kinda, like, down only on Bitcoin. It was, like, really ugly choppy price action for a couple months, and equities didn't really respond until, like, late February, early March. And then you had, like, the real dump in early April when Trump did Liberation Day. Right? So we're coming up on a period that, like, you know, if if you were to map the, you know, early this year to now, like, you're coming on a period that could be potentially start to get actually more meaningfully rocky for equities to the extent that Bitcoin is again predicting, you know, tightness in liquidity, or some other, like, issue in the system. And that's, like, that's one anecdote, but you if you go back through Bitcoin's, like, price history, like, you'll see that over and over again that Bitcoin will have, like Last fake cycle or whatever, March 2020.
[00:46:39] Unknown:
Yep. Bitcoin fell first. Yep. And then equities had their bloody few days of, like, limit downs over and over again, market closed, and then Bitcoin, bounced first before everyone else. I'm looking at the chart. Like, Bitcoin ended
[00:46:56] Unknown:
January 2020, like, right bumping up against, like, 10,000. And then, this chart doesn't capture the the really brutal day in March, but, like March 12. March 12. Yeah. But, like, in early and by early March by early March, it was down to, like, 6,000. Right? And that was before anyone like, that was before the NBA had closed down, and everyone was, like, that's that seems to be the day that everyone took seriously that, like, they were really just gonna close the economy. But you had a couple months of, like, pretty bad price action for Bitcoin before it was, like, really obvious to the equity markets. And I was, like, I was in hedge fund seat at that time and, like, yeah, February was I remember February being, like, choppy and, like, people were talking about, COVID, but, like, it was still, like, effectively racist in, like, 2020.
[00:47:41] Unknown:
To be clear to be clear, the NBA shut down March 11. Yeah. Yeah. So the the really bad day in Bitcoin was the day after the NBA shut that was when it hit everyone. They were like, oh, fuck. Yeah.
[00:47:54] Unknown:
So, anyway, not not to get us on the Sorry. That particular, like, period of That was actually the having cycle that had that was a little bit it was tangentially related. But there are a bunch of examples like this is my point of when you see, like, inexplicably, like, oh, Bitcoin just took, like, a 40% bath for no, like, obvious reason, or it's, like, suddenly trading really badly before everything else is, like, what's going on? Like, you know, generally, I've found since I've been paying close attention to Bitcoin, generally, I found that that's typically a good signal that there's choppiness ahead for for general risk assets, probably on the offset of, like, you know, one to three months. Right? So all that is just to say, like, let's see, like, let's see what happens with Mag seven. If you've been paying attention this week, like, Oracle had an an awful print, stock was down Oracle is not Mag seven. Today, which hilariously, like, for, like, just as a quick tangent, like, Oracle is this great example of yeah. It's down another 4% today.
Oracle is this great example of, like, the the logical conclusion of, like, late stage fiat because you may remember this summer, the stock was up, like, 40%. It's, like, already it was already, like, a, you know, multi $100,000,000,000 stock, like, $600,000,000,000 stock. It was up, like, 40% in one day because Larry Ellison made some crazy projections about, you know, ridiculous numbers over the next few years that probably they're never gonna hit. And then since then, it's it's had this massive down move. It's unwound all of it. And it's basically, like, a round trip this year. You've got, like, essentially a trillion dollar company that has had these insane moves this year on both the upside and the downside. It's basically gone nowhere. So as we just think about, like, why Bitcoin and why are we seeing why why is something like this necessary and useful as, like, a long term savings vehicle?
You know, there's there's your answer. Like, one of the biggest companies in the world, one of the you know, a 50 year old tech stalwart is trade trading like, you know, a meme coin. Right? But anyway, if you're looking at that, if you're looking at the Broadcom print today, you're definitely seeing NVIDIA has been under pressure. OpenAI is now has gone from being, like, in, you know, six weeks being, like, the industry darling, you know, to to end all industry darlings to, like, everyone basically saying, like, yeah, they're they're, you know, they're dead. Google is gonna, price them out of the market and, you know, Alban's gonna be it's gonna be a total zero. Right? Like, that's the, that's the consensus now. So, like, all that is just to to get back to your point on Mag seven. Like, the AI complex is, like, not looking great right now.
And that's before you even consider, like, other, you know, liquidity dynamics in in the background. So, like, let's see, like, what happens over the next, like, month or two with with equities, before we really make a call on Bitcoin's, like, correlation and whether it's, like, you know, totally off base. But I do think, like, more generally, for people who are looking ahead to do do you wanna say something? I'm sorry. I've been filibustering.
[00:50:50] Unknown:
No. I was looking at the Oracle chart. It like, it's pretty hilarious five year chart. The, well, the one thing I would say is and I I like just letting you cook, so don't let me interrupt you again, but you offered, so I'm gonna interrupt you. I have no equities exposure except for the Bitcoin businesses that envy, that ten thirty one has invested in. Obviously, most of those are private companies with the, exception right now of Fold, which we hold public shares and that we're private, and we help bring them public. So I'm very much like a stay humble stack assessor. But for the average person, from my view, you know, so the Mag seven is Apple, Microsoft, Amazon, Alphabet, Facebook, Meta, Nvidia, and Tesla.
Apple, Microsoft, Amazon, Alphabet, Meta. So, basically, not Nvidia or Tesla. I think there's, like, a decent argument that they're being priced as risk off assets. It's like, how bad could it get? Like, I'm not once again, this is not financial advice. But, like, if you're sitting there and you're trying not to lose your money and you're looking at debasement happening and you're looking at chaos in the world, and you don't really know what to do, like, those those five of seven, I'm looking at those, and I'm like, okay. Like, how bad could it get for Google? Right? Like, Google has got a massive war chest. They're sitting in a great position.
Apple's sitting in a great position. Amazon's sitting in a great position. They're mostly recession resistant. Like, I I think they might be trading, and maybe the market is wrong about it, but the market is almost pricing them as a risk off type of trade. They're like, I'm just gonna index to them,
[00:52:46] Unknown:
put my money there, and I should be good. But is that crazy thought? No. I think that I mean, I would maybe phrase it a little differently, but I definitely think that's right, like, in, directionality. Like, the biggest companies in the S and P are effectively, like, everyone's savings account now. And, you know, it's funny because, like, they're all you know, they used to be cash flow machines, with massive Fortress balance sheets. And now this year, they've a lot of them are, like, really levering up in increasingly, like, opaque ways to fund the the data center build out. So that's kind of a funny, you know, development in the narrative behind those businesses. But I I definitely think that's that's a big piece of it. Like, people have been trained to to buy the dip on large cap stocks.
It's worked extremely well for the basically, since financial crisis and certainly for the last ten years. And I think even more so, I don't know that it's necessarily that people see it as, like, a risk off asset as much as it's, like, kind of there is no alternative. Yeah. You're not gonna own bonds if you think there's financial repression coming. And assuming you're not, like, a retiree who needs, like, the current income. Right? Like, you you wanna kinda deweight bonds. So if you don't believe in Bitcoin, well, your options are, like, gold and large cap stocks. Because, like, smaller cap stocks, harder to underwrite But specifically, like, the top five. Yeah. Right. Exactly. Like, they're you're gonna concentrate to the biggest brand name. It's not large cap. It's like mega cap. Mega cap stocks that have the dominant market position that are basically, like, monopolies slash, like, duopolies, in in, like, the fastest growing the only really growing sector in, like, the Western world, right, is, like, at least from an the only, like, industrial growing sector is, like, data center build out and AI leverage and then, like, tech more generally. So that's where you concentrate. But I think, like, specifically too, there's this, like I do think the market is becoming more and more aware of what the plan is from the Trump administration. I think that plan is basically, like, pretty explicitly to run it hot, to, as Besson has said, grow our way out of the debt.
You've seen the one big beautiful bill that got passed earlier this year. That's gonna have a lot of, things that kick in in '26. And, you know, Trump is likely going to institute, a a sycophant, of some sort at the Fed who's gonna be his yes man. He they're gonna get rates lower and they're gonna get the Fed to accommodate, the what the treasury needs because, like, at the end of the day, like, the sovereign's gonna get funded. They have, you know the treasury has the guns and the Fed doesn't. So, like, treasury's gonna gonna get what it needs one or the other. That may flow through the commercial banking system. Maybe it's the fed. Who knows? But in any case, I think people are looking at that. And they're looking at this the basement trade's happening. They're gonna do financial repression. They're gonna run it hot on an existing massive debt burden. Well, I need to own something that's not bonds. And I'd like to maybe own something that is basically getting to the point of being, like, too big to fail and key to the strategy of being able to run it hot, which at this point is, like, mega cap AI stocks. Right? Like, you know, Sam Altman, CFO at OpenAI, kind of a few weeks ago floated the idea of OpenAI getting, like, a federal backstop for all their build out because it's so capital intensive. And she kinda walked it back later.
But it definitely seemed like a trial balloon. David Sacks tweeted a couple weeks ago about how vital the AI build out was to GDP growth and that we can't afford to go backwards or we'll have a recession. And so I think people are looking at that as well saying, like, so these guys are explicitly telling they're giving the game away. They're telling us, like, no more Doge. We shut Doge down, like, you know, months early. The plan is to, spend away and hope that there's enough fiscal impulse to, for GDP to outpace, the growth and debt burden and to subsidize ongoing deficits. Trump is out there telling like, yesterday, Trump said, like, I I don't see why we can't have 25% GDP growth. People see that, and I think it's, like, they need, like, a a general, like, a way to respond in terms of just where where do I move my capital in that environment. But then also, like, specifically, it seems like these several industries are getting called out as, like, the only industries that matter to keep the economy going. And, like, the the companies that are most critical to that happening are, Google, Meta, Amazon, Nvidia, and the the rest of the Mac seven and a few other big large top three. Fail trade, basically. Yeah. Exactly.
Like, there is it's there is an alternative slash too big to fail kinda colliding, and I think that's a big piece of it. People could, I think, express a lot of that bet more cleanly, or or that, that thesis more cleanly by just owning Bitcoin for the long term. But I I think that's a that's a part of it too is, like, this this Tina effect.
[00:57:25] Unknown:
Yeah. I don't know. It's an interesting it's an interesting scenario. So the on the QE piece, the Fed just cut rates again. Bitcoin kind of I I kind of reacted and then immediately dumped. What is your what what is your read on that?
[00:57:48] Unknown:
Yeah. It's just it's just BART price action all the way, both up and down. There you got your bar. You got your reverse. We hit, like, $94.05.
[00:57:56] Unknown:
People are like, the bull market's back in session straight to $1.26, and then we dump. Yeah.
[00:58:02] Unknown:
I, I I posted on on Oster last week, or maybe early this week. I saw some, like I think it was, like, a Bitcoin mag post about, like, Bitcoin rockets to 92,800 doll and, you know, the bull market's back in swing. And I was just, like, we are not gonna really restart the bull market until people stop posting, like, overly excited tweets about 3% moves to, like, random price thresholds that don't mean anything. But, yeah, I mean, Bitcoin's moves around, like, FOMC meetings are, like, famously kind of, you know, not super helpful and scammy. Scammy both ways, like, you get shorts taken out and longs taken out, and mostly when it's all said and done, you kinda end up right where you were.
But so I don't know if there's a lot to read into from Bitcoin's reaction. But you're gonna you're gonna piss off a lot of people on, financial Twitter, which I know you really you're you're really worried about that. They're listening they're listening to the show, so be careful what you say. There are lit there are literally ones of them listening to the show right now. But,
[00:59:09] Unknown:
I like FinTwit. I'm I was I was a lurker.
[00:59:13] Unknown:
Yeah. Okay. So, you know, like, the, there will be a lot of people in that crowd who will say that, you know, QE hasn't restarted because QE is long duration asset purchases intended to stimulate risk appetite. Yeah. It's like a semantics thing. Right? Yeah. And you know what? That's fair enough. But at the end of the day, so what happened at the Fed meeting was, in addition to the rate cut, the Fed said, you know, quantitative tightening is ending, which we knew, they announced they're going to go to a cadence of buying, $40,000,000,000, a month of short dated US treasuries.
But short dated, means for them apparently up to three or tenors. So, like, that's that's more duration than people thought. So that was, like, incrementally dovish. They're gonna be doing that ostensibly as a way to, for reserve management purchases, so RMPs. So a new I believe that's a new acronym for them. They might have used that before, but, usually, it's, like, directionally bullish over, like, a twelve month period. The the trailing twelve month or, I guess, the leading twelve month performance after, a new Fed Alphabet Soup, facility is created is, like, generally pretty good. So they're gonna do this because, as I kind of referenced earlier, reserves in the banking system have started to get tighter, below, like, what is commonly cited as, like, a $3,000,000,000,000 threshold.
That's having all sorts of, impacts on, the the repo market and kind of, interbank plumbing rates, that if you're, like, wonkish and, like, follow this stuff, you can see. And they're definitely that's something they really care about, so looking at that. But anyway, you're you're now flipping to a a stance of not quantitative tightening, so not letting the balance sheet shrink naturally as, securities mature, but, actually going to purchasing, on net securities outright, and treasure securities. And you could say, like, well, that's not taking duration out of the market, but what happened if if that's coordinated at the same time with the Fed shifting even more aggressively away from issuing at the long end at all and issuing a lot more at the short end, and then they've got the Fed turning around and subsidizing directly a lot of, that issuance, then, like, that that is absolutely, like, on net incrementally taking duration that otherwise would have been there out of the market.
It's like a duration rotation from long term to short term. Yeah. So and there there have been debates on this throughout, like, the last twenty years of, like, operation twist, if you remember that from, like, ten or fifteen years ago. You know, what counts as QE? Like, frankly, I don't remember This
[01:02:00] Unknown:
is the joke we make on rabbit hole recap. Like, it's not a Bitcoin dump unless Marty certifies at a Bitcoin dump. Yeah. Right. Exactly. Yep. It's a it's a it's a bullshit semantics that doesn't really matter. But my question to you more is as someone who, holds all my assets in Bitcoin, you know, when when do we see it, like, are like, Bitcoin should react positively to this to this move. Right?
[01:02:29] Unknown:
Yeah. I mean, it's always a question of, like, what are the competing
[01:02:33] Unknown:
headwinds and tailwinds. Yeah.
[01:02:35] Unknown:
Please tell me that I'm gonna be rich in a month. It's always a question of the competing headwinds and tailwinds. And I think there's still, like, a lot of uncertainty around some of the topics we discussed a second ago that will probably put a damper on risk appetite in the near term. Especially in the year end, it's like you sometimes get if everything's, like, in a Goldilocks zone, you can get, like, a Santa rally kind of at the end of the year. Maybe we'll see that. But But there's gonna be tax selling too. Yeah. There's there's tax selling, and then there's also just, like, big asset managers often get paid on, you know, their bonuses are based on, like, what happened through the end of the year or, like, through, say, Jan one to December 31. Right? So, especially anyone with, like, a good year to protect, like, probably on the margin is not incentivized to take incremental risk in the last few weeks of the year.
So in general, like, I don't know that I expect some massive, like, pump
[01:03:32] Unknown:
in the near term. I have a good college friend finance bro. Done quite well for himself. He's one of the few college friends that listen to me about Bitcoin. And he strongly believes in the Christmas bonus bump of all the lower level finance pros. Like, they get their Christmas bonus, like, January or something like that, and then they just ape into sets.
[01:03:54] Unknown:
Yeah. I mean, I I think there are probably, like I don't know. Maybe there are dozens of people doing that. A lot of, finance pros are getting their bonuses, and then I literally knew a guy who every bonus season would go buy himself, like, a new $20,000 watch. So there's a lot of that that will happen too. So the Well, he's been in, he's been in Bitcoin
[01:04:14] Unknown:
probably nine, ten years, and maybe three or four January's, I've gotten a text like, yo, Christmas bonuses. Because the other six times, it didn't happen. But Yeah. Those four Januarys, he let he reminded me.
[01:04:28] Unknown:
But I think, you know, into the end of the year, don't know that I expect a ton. And it's also, like, we've known for a couple months the, like, quantitative tightening tightening. I I think at least, like, a month that this was gonna end at this meeting. So,
[01:04:43] Unknown:
yeah, I think Well, I don't know. Polymarket was, like, all over the place. It was, like, a little bit interest it's interesting because you have, like, a pure you have a more pure, priced in metric with the prediction markets, the liquid prediction markets now. Like, of course, like, you can look at assets. You can look at all these, indirect metrics to see, like, if a decision is priced in. But, like, if you literally have a betting market that is, how much will the Fed cut, or will they cut? Do you have, like, a more objective measurement? And it was, like, you know, 20 like, a point 25%, 25 bps was, like, 80% or 75%, then it fell to no change.
[01:05:32] Unknown:
Like, it was neck and neck with no change, and then it popped back up maybe, like, a month ago. Yeah. Well, like, the yeah. The cut I know was, like, hit or miss, but the QT ending, I think, was more, was more certain because I believe that they just announced they were gonna do that, or Palace said in the speech, like, a month ago. But in any case, like, the consensus, like, definitely drifted toward, like, this this being over and probably, like, some sort of, like, QE restart or, like, you know, reserve management restart happening.
[01:06:00] Unknown:
Well, I mean, if people thought there was gonna be a no change if the majority opinion thought there's gonna be a no change on federal funds rate, doesn't that kind of imply that they thought, QE would not be starting?
[01:06:15] Unknown:
Maybe, but they're not necessarily directly related.
[01:06:18] Unknown:
They're two totally different, like, transmission mechanisms for By the way, I'm look I'm looking at Poly right now. Yeah. No. It flipped to no change November 21.
[01:06:29] Unknown:
Didn't it? But it flips, like, right back, didn't it?
[01:06:33] Unknown:
I I don't know. You're looking at the chart, you tell me, but I don't know. What am I I'm looking at the wrong chart. What will the Fed January how do I look at the historical charts?
[01:06:43] Unknown:
Great radio.
[01:06:46] Unknown:
I'm freaks. I'm not gonna edit this out. I, I don't know. There's gotta be a way to look at historical Polymarket charts. But, anyway, I'm looking at their January 27 decision Yeah. Which I think will be no change right now.
[01:07:01] Unknown:
Yep. Which actually, like, I probably take the
[01:07:05] Unknown:
I take the over on that, but we'll see. Would you think there'll be another cut?
[01:07:12] Unknown:
Yeah. I I I probably wouldn't I wouldn't bet against it. I'd probably lean more that way than the other way. Because there's free money. They're you
[01:07:20] Unknown:
can print a dollar for 23¢
[01:07:22] Unknown:
right now. I'm probably not sure. I should go,
[01:07:26] Unknown:
I should put one in the right amount. How big the cut is. You just have to bet no against no change. That's true.
[01:07:32] Unknown:
Well, that's what I'll do when we go out here. Ape all ten thirty one's reserves into that single poly market? I think we should really just become a poly market fund. That might be, the way to go. But going into next year,
[01:07:44] Unknown:
all that is to say,
[01:07:47] Unknown:
I think, like, I've not really ever seen fundamentally as bullish a setup as I think what we're looking at right now, from a risk adjusted perspective. I can't tell you, like, when any of that's gonna play out. And I also can't tell you, like, that there's not gonna be, like, another dump, ahead of, like, an upward impulse. I think depends on a lot of things and how policy goes and how the China, ongoing disputes go and how they sequence different different things that they may or may not do. And I also don't know, like, if the, the Fed's latest kind of pivot away from QTE to something more QE ish, whatever we call it. Like, maybe that's not enough, right, for the reserve tightness that that was out there, that seems to have have caused, like, some issues with risk appetite and, like, underlying, treasury plumbing. And so if there if there were to be, like, some issue with that, like, that's probably a down impulse first on, like, everything that's not, like, the dollar and maybe gold.
But, like, over the course of twelve months, I mean, Trump is gonna take over the Fed. I don't really think, like, he's gonna figure out a way to do it. Like, this week, he was, you know, suggesting that a lot of these a lot of these governors, you know, I've heard many people are saying that they were appointed by AutoPin. You know, he's big on, like, rolling back anything that was done with AutoPin. So, like, he's already got, Myron on as a as a, fed governor. Bowman and Waller are gonna vote with him, with what he wants. He's gonna very likely replace Powell with Kevin Hassett, who is, like, the ultimate Trump yes man, and that that'll happen early next year. And frankly, if he announces it beforehand, the market's gonna trade it whether like, well before it happened well, before, like, he's actually in the seat.
So you've got that. You've got a a government that's explicitly, you know, one of the most indebted governments in history, that's The most. The most. I don't know if it's actually literally the most indebted government in history, but, certainly, like, it's right up there with within The United States' history. Wait. In absolute terms, we must be. No? No one does it bigger than us. I'm thinking of, like, debt to GDP. But in in terms of absolute numbers, like, yeah. Probably. Yeah. But, like, on a debt to GDP basis numbers that are unfathomable. I guarantee you that Zimbabwe is at, like, you know, four Fair enough. Because they have very low GDP. Yeah. Yeah. In any case, you've got a fading hegemon that has, you know, a very large debt burden with growing, entitlement draws every year from a very powerful boomer class, who still control most of the wealth and, you know, will vote for their bags.
And that government is trying to wrest power away from, an emerging power that has basically taken over its ability to to go to war on a sovereign basis. And it's, you know, it needs to spend like crazy to facilitate that, to reshore capacity, and that's a matter you know, that's there's price inelasticity there because that's a matter of national security and maintaining literally maintaining sovereignty, I think, in their mind. You could argue maybe that's like an overstatement, but I definitely that's how a lot of people are looking at it who are making decisions. You roll all that together, and I just don't see how you're not looking at a massive monetary and fiscal impulse in the next twelve months. And that's before you even consider midterms, that midterms are coming, late in '26.
Republicans are down bad right now, if you look at the results of November local elections. You know, we've got a communist running New York, and, pretty much Well, he's not running New York yet. Well, okay. So maybe there's still time to figure out some bailout strategy, but He will be running New York. Very likely he's gonna be running New York. Right? And every you know, a bunch of other localities, also, you know, swung blue. Like, there was a there was a Georgia, like, county commissioner election or something. I I can't remember the exact seat, but it was, like, some seat that hadn't been blue in, like, decades.
There were two, like, open open spots and they both, like, aggressively swung blue. So they're looking at, like, not a great political setup into a very important election. And if that doesn't go Trump's way, he's probably a lame duck again, for his last two years. Almost definitely getting impeached again, like, if if they can't. If they can figure out a way to do it, if they can get the votes, like, he will definitely go through, like, 14 impeachment gauntlets again. And so I think their only response to that or one of their big responses to that is gonna have to be, you know, in in so many words, like, handouts. Right? They're gonna have to politically bribe the right classes of voters to, whether that's, like, you know, subsidizing certain industries or, you know, making sure that certain classes of voters, like, get access to different jobs or different, you know, stimulus programs, whatever.
They're gonna have to make enough people happy to have a shot at turning the tide here, on the midterms. So I look at all of these things, and I look at there only being 21,000,000 Bitcoin, and I look at there being a massive ETF pipe for, bigger institutions and very wealthy people and, even sovereign wealth funds that are now buying I don't know why they're buying IBIT instead of just, like, self custody Bitcoin, but but indeed they're doing that. Got college endowments like Harvard, taking, I bet it's now their largest disclosed position. They don't disclose, like, most of their portfolio, but, massive sea change there. I look at all these things and I'm just, like, all that's hitting the wall of only 21,000,000 Bitcoin.
And the president is has his own Bitcoin bags. The president and his family have, like, you know, billions of dollars directly and indirectly in Bitcoin bags. And, certainly, he's not known for necessarily being, totally scrupulous about self dealing transactions. And we're transitioning to a world where, like, we need some sort of probably, if if they're serious about what they wanna do with the global trade order, there's going to be, a necessarily massive bid for, neutral reserve assets that are outside money, because you gotta go out of if treasuries are not gonna be it anymore, which they can't be if we want to make make our own stuff again in mass, All that capital is gonna have to rotate somewhere. And the only real place it can go that's big enough right now is gold. But on the margin, as we kinda referenced a second ago, some of it's gonna start flowing to Bitcoin too in different spots.
And so I look at all that and I'm like, that's gotta be the most giga bullish, best risk adjusted setup that Bitcoin has ever seen, especially when you consider, at least for the moment, the regulatory backdrop is mostly better. There are definitely things that we can talk about that still need to change. But from just a price perspective, that's kinda my outlook. Like, I can't tell you where it's gonna go. I can't tell you when it's gonna go there. But '26 to me looks like it is set up to be extremely positive, for Bitcoin. Absent absent war breaking out and China taking Taiwan and,
[01:15:18] Unknown:
all the Asterisk. Asterisk. Asterisk. So very long winded, mandibles in the Bitcoin standard, basically, answer. By the way, I found, I found the December Poly Market, and it was around the same time. It was November. It flipped to 75% were saying no change. And it's a pretty big volume market. This was a $400,000,000 market. And that was twenty days ago, which just shows, I mean, just shows how, like, what interesting times we live in. That twenty days before, the tea leaves were saying no change ever so briefly. I think it was, like, a specific Powell comment that was mentioned. The gold dynamic is interesting. Right? Because, like, from a sovereign perspective, yes, it's Lindy. It's been around forever, basically, and it's much easier to allocate to than Bitcoin. But from the individual point of view, it's much more difficult to allocate to than Bitcoin. Like, I was talking about this on a rabbit hole recap.
Like, I don't even know how someone would go about, you know, if if you wanted to put, like, a million dollars into physical gold. The you're I think if my math is my basic math is, like, that's 250 gold bars you'd have to go out and buy and not be counterfeit. Like, that's pretty final too. Right? Like Yeah. That's a pretty insane thing to explain to your wife. It's just like and do they arrive in the mail?
[01:16:56] Unknown:
Would you go would you go to a physical location to buy them? It's been a while since I bought 250 gold bars, so I can't remember the exact process that I had to go through. But, and then well, the other thing too is, like, do you want 250 gold bars in your house? Right? No. Probably not. So you've gotta vault them somewhere, and they can't unlike unlike Bitcoin, which where ownership can be split across a multisig quorum and, you know, you don't have to trust any one, institution or any one physical location to be to not be compromised, to maintain ownership for your Bitcoin. The gold can only be in one place. And, like, you're probably not gonna have in your house of of any, like, mean of quantity. Right?
So you're probably gonna put it in some sort of, like, you could put it in, you know, safe deposit box in bank. You can put it at, like, a You're not gonna put $250 of gold in the safe deposit box. You're gonna put it in, like, a real vault. Right? Which Yeah. Or you're just gonna buy the ETF, which is probably Yeah. Most likely what you're really gonna do is buy the ETF. Right? But if you wanted to have some sort of, like, comparably sovereign experience with it, your your really only option is to make yourself, like, a sitting duck for $61.00 2 and, like, don't tell me that if gold is becoming systemically important again and it's getting reintroduced into the monetary system, like, don't tell me that they're not just gonna do that again. Right? Like, and that's that's a risk for, like, the GLD ETF too.
You know, easily what could happen, like, one Friday night is, or on one Sunday night is some announcement is made about a gold revaluation, for The US. And, they tell, on Monday morning, you wake up with a note that you've been stopped out of your g d GLD ETF trade for the the Friday closing value. Right? So you get paid out in cash, you know, what it was, the the minute before the announcement was made, but you don't really get to participate in that upside. And I think if you ever see You think that's actually realistic? Yeah.
For sure. I mean, look, like, there there are pros and cons to doing that, and you think about, like, what constituencies you piss off and how, valuable it might or might not be to the government to do that. But, is is it realistic in terms of could they do it? Like, yeah. How does How does this play into, like
[01:19:16] Unknown:
what what about this isn't there a similar risk for, like, Bitcoin stocks and iBit and Yeah. MicroStrategy? For sure. Yeah.
[01:19:25] Unknown:
I mean, the exact same thing could happen with either. Right? Like, if Sunday night, Besson says, like, we're effectively setting a floor price of Bitcoin of, like, you know, a million dollars or something. Nice. Arthur Hayes has a Arthur Hayes has a great, fan fiction piece from earlier this year about, why they would do that, how they could do it. And I think his target was Besson should effectively set up floor price at 1,800,000.0, per Bitcoin. So I'm holding out for that. I I think it's gonna go. Why 1.8? That's so I can't remember. He he has math that gets him there. But, yeah, go go read it. It's from, like, February. It's it's a very fun read if you want some Hobium.
But if that ever happened, like, at, you know, at the same time, like, yeah, they could absolutely just, like, cash you out at, the the value of your your iBit holdings, you know, before the announcement was made. And so all that just speaks again to, like yeah. There's, like, counterparty risk is still a thing. Like, it ain't going away. So consider that carefully as you make your allocations. And I think that definitely applies to the central banks and sovereign wealth funds that are, stacking iBit instead of stacking Bitcoin.
[01:20:32] Unknown:
Yeah. I mean, it's a fascinating thing to think about because, like, I'm pretty sure mandibles and a Bitcoin standard is I mean, freaks now. I'm a broken record. Is I think what is playing out here. But that's some crazy waves. Not necessarily to trade through, but, like, as, like, a leader of a family, you know, whatever growing family, it's like, how do you properly prepare for that? And I've come to the solution, like, real skills, building local community, and staying humble in Stacking SaaS, but it feels too simple. But, yeah, it's pretty crazy. I don't know.
[01:21:17] Unknown:
I mean, it's, like, it's simple but not easy. Right? Yeah. That's the that's the thing. But, yeah, I don't know. I still I I'm not my base case is not USD hyperinflation. So I don't know if we'll get full on mandibles, but I definitely think oh, by the way, the key to all this happening, that I was describing for '26 is, like, I think we get we do get inflation. I think they have to be okay with it going higher. I think you can make that freeze yeah. Go on. Well, I was just gonna say, I think you can make that work politically if wages are keeping up and ideally, exceeding, the rate of How would that happen?
Well, you might you might notice that, Trump has very much foregrounded the role of, ICE and border enforcement in his administration. Right? You might notice that he, or at least many people in his camp have been kind of aggressively going after the h one b program and the whatever 600,000 Chinese students that need to be admitted or not be admitted to universities in The US. Like, I mean, there's definitely a world where I think there's been significant I think anyone would say there's been significant pressure from a wage perspective on labor in the last twenty years.
The last twenty five years, right, since China entered the WTO and since kinda now. There's definitely trade stuff. Yeah. Right. And increasingly, even on white collar stuff too, like, you see there's a lot of, you know, there are a lot of tech workers and a lot of kinda, like, mid level management workers, in the last, like, ten, fifteen years that, have come from countries outside The US. And, like, this isn't, they took our jobs, like, rant, but just, like, factually, labor has gotten more competitive in The US and kind of intentionally so. Right? And I think a lot of presidents and politicians up to up till now have, like, kind of even explicitly said, like, yeah. That's a good thing. And it's good for corporate margins, and it's good for, like, it's good for inflation pressure.
It's good for, the bond market. But I think the if if you're gonna say, we're pretty much gonna cap yields and the bond market's gonna take a bath and the Fed's gonna get on sides and we're gonna shift all the issuance to the front end and, we're gonna do financial repression of the bond market and then accept the resulting, price inflation that that causes, I think you also then have the leeway to say, if I don't care about where rates go, if I don't care about the bond vigilantes or whatever, then I, then I can actually let, wages run. Right? I can let this political base potentially, be the beneficiary of, we just kicked out 50,000,000 people or whatever. And also we're trying to build, like, you know, ASI with, these massive Manhattan sized data centers all over all over the country, and we're trying to bring back manufacturing and our, defense supply chains to The US. So I can, like, do all that and spend all that and run it hot and also give the benefit of that to, like, my political base, and let them benefit from it because I'm basically sending their foreign labor competition home.
I think you could kinda do it that way. Whether that would on net be, like, good for society, or long term sustainable, I think that's much more of an open question. But I based on everything I'm seeing, like, I kinda think that's, like I kinda think they're telling you the playbook. Whether you think it'll work or not, like, different question again, but, like, that world where that's happening, again, feels, like, pretty directionally bullish for scarce assets.
[01:25:03] Unknown:
Yeah. I mean, it there's a weird dynamic because it's a weird dynamic because, like, basically, like, in a hyperinflationary environment, we crash up, Where I think that's also why markets are being weird right now is because just intrinsically people think you of course, the crash should go down, but the money's broken. So, people are concerned about where we stand right now, but, really, the trade is to is is to go long, which is a weird it's a weird dichotomy. And then, obviously, wages are just not indexed to inflation, and it's really hard if real inflation is 12%, 13%, 14% is hard to go to your boss and be like, yo, bro. Like, I every year, like, give me a 15% pay increase. It sounds insane.
So it's it's an it's a weird dynamic. So, I mean, with all that set, we've been going for a while here. I got two two more things I wanna hit on. The first thing is, is the bottom in on Bitcoin?
[01:26:21] Unknown:
Is the bottom in?
[01:26:23] Unknown:
Yeah. Do we go low what do we hit? Like, 81 k? I really wanna say yes. Okay. I really wanna say yes. I really wanna say yes. Quarterly update, we'll just you can just own it if you're wrong. It's fine. This time next year, what's the price of Bitcoin? And before John answers, I just wanna let the freaks know that ten thirty one, are very proud to invest in the best Bitcoin businesses in the world. I'm, incredibly bullish and optimistic on, the founders we have chosen to back through the years. We do have a portfolio retreat that's only the only the founders of the companies we've invested in, are invited to every October. And we did the same thought process. After a few drinks, we did the same thought process where we asked them to predict a year out in the future.
And so far, they've been incredibly wrong to the upside. It was we were probably trading what was what was the price during bear claw?
[01:27:24] Unknown:
It would have been, like, 60 k? No. This year? No. Oh oh, I mean, yeah, this year. Last year when we first made the predictions This year, we were at, like, a 120
[01:27:33] Unknown:
k, and we asked people to make a year out prediction. And, like, the lowest one maybe there was one outlier that was, like, a 100 k or 90 k or something, but everyone else is in, like, 400, 500 k, 600 The the top the top prediction,
[01:27:50] Unknown:
that came out of it, I won't say who it was because Chatham House rules Yeah. Don't say who it was. But it was 800,000,
[01:27:57] Unknown:
dollars. So Yeah. I'm not gonna go that high. For next year? Yeah.
[01:28:02] Unknown:
I was my my long pause was me trying to think about how I can best frame this to minimize the chance of being wrong and being able to say that, being able to claim some kind of victory if it if it doesn't work out. But the way that I phrased it for the bear claw prediction was effectively, like, what is the top that we hit before we see any kind of, like, 50% drawdown? Because I think that's definitely still possible depending on, like, the pace of the move. I think we're done with the days of, like, 80% draws. But yeah. Knock on wood. I know.
Monkey's paw curls again. But, I definitely think, you know, if if we have a parabolic move, but I definitely think will be possible in the environment I'm describing, you could still see a 50% draw. So to me, the top number that we hit before that happens, I'm gonna go I'm gonna go with four twenty. That's what I said at Bear Claw. I'm gonna say it now. Now I don't know Yeah. That was my next question. What'd you said at Bear Claw? Do you know what I said at Bear Claw? I think you were, like, I think you were in the three hundreds. I think you were, like, three fifty.
[01:29:13] Unknown:
I was reasonably conservative.
[01:29:15] Unknown:
Yeah. That's like the down the middle of the fairway answer that I think most people like, the the Asian woman golfer just, like Yeah. Hitting par all the time. The modal answer, if you ask most Bitcoiners, I think right now, they're like, I'd be happy with, like, a $3.50 k kinda, like, top, quote, unquote Dude, I'd be a I'd be a static $3.50. Yeah. I went higher than that because I wanted to express more bullishness, but not so much bullishness that,
[01:29:40] Unknown:
I lose all credibility if I even have any at this So you did a little 20% boost on it. Yeah. Exactly. So Okay. Well, I'm glad we got that out there so we can hold you on the record. To the freaks who are listening, stay humble on StackSites. Don't don't trade on that belief. No one has any fucking idea. And also don't trade on the belief that the bottom isn't. I'm not,
[01:30:06] Unknown:
I'm not so confident on that. Hopefully, it is. Hopefully, you can tell by my answer that I'm also, like, 51% confident at most.
[01:30:14] Unknown:
Yeah. I mean, it just didn't feel sad enough, but I don't know. Maybe I'm just bruised old man. And at this point, I just don't feel things, at least on Bitcoin price stuff. The last question I have is where did the big narrative this year has been stablecoins. Where does stablecoins fall into all of this? Or Yeah. I hate calling them stablecoins. USD tokens. USD tokens is it's it's better.
[01:30:43] Unknown:
There's, like, a massive amount we could say about this, and it's probably even worth its own, its own show, at some point. But, I would say I definitely think stable as it relates to the themes we're talking about here, I think that USD tokens will continue to proliferate. Whether they continue to leverage so called public blockchains I think a totally different question that I take the under on.
[01:31:11] Unknown:
Interesting.
[01:31:12] Unknown:
But but ultimately, I think the US government definitely has an interest in finding any marginal buyer that it can for incremental debt issuance. They basically said as much. The treasury's put out research papers on how stable coins can, you know, be the, the new valve for, t bill uptake. I think, like, the outside on the outside ran into the range, like, Besson has said, it could be, you know, as much as, like, $3,000,000,000,000 of incremental new buying through, Stablecoin proliferation around the world. And I think there's maybe some truth to that, and certainly it's not gonna hurt, and certainly, like, further encouraging that will, you know, further entrench, like, USD hegemony and, you know, you you want more people reliant on the dollar, not less. Right?
So, I I think all those themes pointed into, like, the like, this time next year, like, there will be more stable coins in circulation than there are right now. I'm I I question to some extent outside of even just, like, the, you know, long term fate of stablecoins and what they look like or what USD tokens, like, what the long term, incarnation of that is. To some degree, I, like, I question the consensus narrative that seems to have just been, like, completely accepted, like, hook line and sinker by everyone that, you know, are the salvation of the treasury market is in, like, spreading more stable coins to, like, you know, countries that are, like, fifth percentile in GDP. Like Like Nigerian taxi drivers saving treasury markets. Yeah. I mean, like, it's and and don't get me wrong, like, you know, I completely get the utility in that situation, and, you know, what it does for a person in the situation. But, like, also by the nature of the the market that you're addressing there, like, you know, that's not where, like, there ain't $3,000,000,000,000 of, like, excess value sitting in, like, Sub Saharan Africa that's, like, just antsy to go buy, like, stable coins, or, you know, in in, impoverished countries in Southeast Asia or whatever. Right? Like, so, you know, there are, like, you could say wealthier European countries like the EU, maybe, like, they would try to switch to some degree to into, USD tokens.
I I agree with the thesis that on the margin among fiat currencies, like, if you gave anyone an AB test, would they rather use the dollar or their local currency? Yeah. They'd rather use the dollar. I guess I just question the magnitude of, loose change that's out there in kind of the broader non g seven world to flow into these things and be effectively effectively provide, like, the the asset swap that's necessary to absorb all the treasury issuance that we're gonna need over the next few years. So, you know, I I think, and if you look at the pace of, stablecoin growth, like, to get to, I don't have the math off the top of my head, but, like, to get to over the next couple years, like, the target that this, like, $3,000,000,000,000 target that Dustin and Myron have thrown out, you know, we need a a dramatic acceleration, from where it's been this year to kinda bridge to that to that number, to have, like, incremental debt to absorb the incremental debt issuance to that degree. So I think it's a it's a bit of a lazy narrative in my mind that, like, the government loves stable coins and stable coins are gonna be the next, like, buyer of all this issuance. Like, I I don't really know if there's, like, enough capacity to, like, make that work. But I do think USD tokens in some form will continue to to grow and proliferate.
[01:34:49] Unknown:
Well, so I have the stats in front of me. I mean, Tether is very much the king of USD tokens. I think everyone else is kinda negligible, you know, Circle being the the the biggest quote, unquote competitor. And they were kind of banking on getting Tethr banned or even worse than banned, you know, like cruise missile, I always would say. And it looks like that ship has sailed considering how embedded Tethr has gotten with, the powers that be in The US. You know, Howard Lutnick is holding a bunch of their treasuries while his sons are because he's not involved in the day to day at Canter, allegedly.
But, and Howard's in the White House. So, like, I mean, Tether's, like, pretty much here to stay. They're the they're the juggernaut. A stat for you, a year ago, Tether in circulation was a $140,000,000,000, and it's basically backed one to one with treasury. So you can kinda think of it as treasury demand. I think this is a interesting way I think this is a correct way of thinking about it. And now it's at a 186,000,000,000. So that was an incremental 40,000,000,000 in treasury demand. Yep. Does that make sense?
[01:36:04] Unknown:
Yeah. I think that's basically right. Assuming, like, each one of those is, like, totally, like, incremental, like, dollar for dollar,
[01:36:10] Unknown:
new treasury demand. So then I have a question for you that I just thought of while I was on CoinMarketCap looking up these stats, a site that I do not go to very often, but I don't know where else I would check a TetherMarketCap. Tether Gold is relatively new to the picture. So USD I mean, you don't have to actually have an answer for me because I'm just kinda Tether USD is at a 186,000,000,000 circulating, and Tether Gold is at 1,600,000,000.0. So it's about a 100 x more USDT measured in dollars, than what are they called? Tether Gold? X a u t. U t. Yeah.
Do you think and and this is interesting because people don't think about it, I think, when they call it stable coins. But if you think about USD tokens versus gold tokens, is there, like, a dark horse? I mean, this is, like, nothing you can actually trade, but, if if they let Tether into the which it seems like, you know, Tether is, like it's very much kinda like a Trojan horse thing. Right? They're obviously Bitcoiners. They hold a lot of gold on balance sheet too. They hold a lot of Bitcoin on balance sheet and a lot of gold. Maybe the Nigerian cab driver switches to the proverbial Nigerian cab driver. Maybe he switches to Tether Gold. Maybe that's the real stable coin all along.
[01:37:39] Unknown:
Well, that would be, extremely bearish for the, the USD token thesis if if that actually happens. But it's making me think we should start a, Tether Gold Treasury company.
[01:37:50] Unknown:
Tether Gold no. I mean, what did I say? I will I will break Chatham House rules for myself. In the 10:31 group chat, I suggested that we launched the first $50.50 split silver Bitcoin treasury company stacking silver. It's got a ring to it. It's outperformed gold. Yeah. It's positive stacks over with it and Bitcoin. Well, I've like, you could do crazy things. Like, are there any silver I guess mining companies, right, would be, like, the closest thing, but they don't even keep on balance sheet that much silver or gold. Right? Yeah. I mean, I the vast majority of precious metals miners are, like, selling it all right away. But the balance sheet is is, like, their claims. Like, what's in the ground is the balance sheet. Right?
[01:38:43] Unknown:
Well, I mean, they've got, like, traditional, like, fiat assets too, and, like, PP and E and everything. But, yes, they also have, like, whatever, claims they have. So, like, existing mines or, like, proved reserves or whatever, would be on there as well. But, yeah, I don't I don't know if I would call that a silver treasury company. So maybe it's, maybe there's a lot of financial innovation that I think we could figure out, with pipeline. We should this would be like a a we got Tether Gold, we got silver, then we can launch then you can launch so we got our silver treasury company, then we can, work with, maybe Bitwise would do it. Maybe they would do a, a two x levered long, single stock, ETF on our silver treasury company.
We launched several of these. They can put them in a basket and do that as an ETF as well. So there's a lot of, we're, you know, we're we're fixing capital markets here. It really does make it all seem like a scam. It would be the funniest it would be the funniest timeline
[01:39:43] Unknown:
if all this shit was a flash in the pan. Bitcoin was a flash in the pan, and then, like, Apple started transitioning some of their cash into silver. Just like a massively cash flow positive business just just, putting putting, quote, unquote, precious metals directly on balance sheet.
[01:40:03] Unknown:
It would be it would be very it would be specifically funny if it was silver. Right? Because then, like, none of the sound none of, like, the sound money crew would actually be, like, cabby.
[01:40:11] Unknown:
And it makes it it makes it way more funnier if it's not gold. Interesting. Well, I'm glad we walked walked through that together. John, this has been great. I have rabbit hole recap, and we've been going for an hour and forty. I told you I told John. John was trying to plan his day. I told him we're gonna do a tight hour, and we're at hour forty right now. Thank you for your time, sir.
[01:40:37] Unknown:
Yeah. No worries. I I know what a tight hour means,
[01:40:40] Unknown:
largely largely because I can't stop talking, so that's that's on me. Yeah. And you have to work with me. It's a pleasure it's a pleasure getting to spend so much time with you both on a professional capacity and a dispatch capacity. Do you have, any final thoughts for the freaks before we wrap and with with the expectation that we will see you in a in a quarter or so three months?
[01:41:03] Unknown:
Yeah. Final thoughts, somebody we can just talk about. Go take a look at the Check on Chain dashboard if you're not following James Check who does on chain analytics. He's really the only game in town as far as I'm concerned, for kinda looking at the way that, Bitcoin flows are shaping up on chain. And he's got charts that you can just, for free, use on his website. One of which shows basically, like, revived supply across basically, like, ages of UTXOs. And first of all, I'd say, if you go to that dashboard, you'll see, if you click out of everything but, like, UTXOs that are, like, over five years old, you're gonna see that, like, that piece of, like, the selling in the market are assuming that every UTXO that moves is, like, actually being sold, which is, like, an overaggressive assumption, but let's say, for the sake of argument, you're gonna see for all the OG selling narrative, that's a tiny piece of total distribution, in in the last, in the last year, last couple years for long term holders, which he he defines anything over six months because of statistically, at that point, you're basically just as likely to to move or not move, a UTXO. But in any case, the first thing you're gonna see is that's a tiny piece of the market. It is higher than most periods in history.
It's been higher before, but that to me, to some extent, calls into a bit of question, like, that we've got this view that, like, OGs are selling, OGs are dumping, whales are dumping, that's it. A, historically, it's not really even that far off the mark from where it's been. But, b, if you look at that dashboard, there has indeed been, like, a ton of Revive supply between, you know, one year, two years, three years, up to five years, and then and beyond. And the price is at a level that, like, most of most of, like, financial commentariat would have thought was, like, absolutely ridiculous just a few years ago. Right? Especially after FTX.
And it's held in at that level at those, like, apparently ridiculous levels despite this massive wave of revived supply. And some of the some of the trades on the other side have been treasury companies, have been MSTR, but not like a huge amount. And some of it's been ETFs that's, like, that's been big, but it doesn't those two together, like, don't come close to explaining all of it. So the question I leave people with is who's on the other side? Who's on the other side of the trade? And why do they appear patient and, you know, able to let the market come to them?
Why are they why is it the type of buyer that's not FOMO ing in, at just the wrong time? Who's on the other side? That's what I'll leave people with. I think the answer to that question is about as should make you about as bullish as you can get, but I'll just leave people with that, rhetorical question to to cut off here.
[01:44:04] Unknown:
Love it. Yeah. Well said. And I would just the the whole OG selling thing is oversold. We hear that all the time. We've heard in all the past, quote, unquote, scam cycles, fake cycles, psy ops cycles. Psy ops cycle. Price goes up, people sell. Every seller has a buyer. It's important to remember. Freaks. I'll put all relevant links in the show notes as always. I will get this up later today. So when you're listening to it it was earlier today that we recorded. You can find John at primal.net/john. Give us your feedback. I I hope you I think you're I think people find these converse even though they're a little bit outside the wheelhouse, they're very much outside the wheelhouse to still dispatch.
I think it's still highly relevant to people. I like the transparency. I mean, so much of our time is focused on building out ten thirty one, so I like the transparency of of what we're thinking about on the market side. But, also, I just think, you know, we come at it from a different angle than maybe than we definitely come at it from a different angle than than your typical, you know, whatever, macro podcasts, when we talk about these things. So I think it'd be highly relevant. But, anyway, Freaks, feedback is always appreciated. The easiest way is your favorite nostril app. I really like primal.
Ten thirty one's the largest investor in primal, and we're actually involved in the development of it. And we're gonna make it better. It's gonna be even better. Next time John joins, it's gonna be it's gonna be amazing. It's gonna be the best app ever. You're gonna love it. The best.
[01:45:56] Unknown:
Many people that I.
[01:45:58] Unknown:
I got another dispatch lined up for next week. We're gonna keep the ball rolling. Share with your friends and family. Thank you for your support. Thank you, John, for joining us. This was a great chat. Thanks for having me. Cheers. Stay humble, Stack Sats. Peace.
Happy Bitcoin Friday, freaks. It's your host, Odell, here for Citadel Dispatch. The show focused on actual Bitcoin and Freedom Tech discussion. The current time is it is December 12 at eighteen hundred UTC. The current block height is nine two seven six zero six, and sats per dollar is 1,108. As always, huge shout out to the freaks who support the show. Dispatch is purely audience funded by Bitcoin donations. We do not have ads or sponsors, and it's it's it's pretty it's been it's been a beautiful experience over the years running this show with you all, on the value for value model. The easiest way to support the show is on Primal or other Nostril related apps. It's also great because you can easily interact with fellow freaks and myself.
The top zaps for last week's show was Andy. He said, thank you for the return of the intro music, and he sent 50,000 sats. And Mav 21 ride or die freaks said great rip, and he zapped 10,000 sats. If you don't have sats to spare, sharing with your friends and family really does help. Dispatch is available in all the major podcast apps. All relevant links are at silldispatch.com. Anyway, Freaks, thank you again. I have a great show lined up. Return guest, one of my partners over at 10:31. We have John Arnold here. How's it going, John?
[00:02:17] Unknown:
Great to be here as always for your one, your one suit rip per quarter. The ten thirty one market update. That's what I'm gonna call it. How does that sound? That's great. That's exactly what the people who signed up for actionable Freedom Tech information wanna hear from from this feed.
[00:02:37] Unknown:
Look. Look. We're we're in it for the tech, but I would like if my tech maintained its purchasing power, considering my family's entire, life savings is is in this protocol. So I think it is it is actually relevant.
[00:02:51] Unknown:
It is it is a monetary protocol at the end of the day. But I feel like we've got some reasonably good tech oriented topics that we'll that we'll have today.
[00:03:00] Unknown:
John is, John was upset to find out that this was an audio only rep, because he is wearing his, Patagonia vest right now.
[00:03:09] Unknown:
Specifically curated my outfit, in the hopes of trolling our host, with the, the finance bro wear. It's my only Patagonia, jacket actually, so I I really don't, I don't really qualify for the club. But, unfortunately, no one will get to see, the, the fit today.
[00:03:29] Unknown:
Well, they can imagine it. They can imagine it. Just think, John, last I think last, time you came on, one of the freaks called you our quant at 10:31. Do you think that's a relevant title?
[00:03:45] Unknown:
I mean, I think if I'm the quant, then we're in, like, a lot of trouble. Like, we have the good fortune to not really need a a quant. But I probably am the closest thing we have insofar as I'm probably the only one on the team who has opened Excel in the last three months.
[00:04:04] Unknown:
So I open it when you send me an Excel doc. Oh, yeah. Okay. That's fair. Yeah. What it I guess, quants are, like, more, like, hedge fund style. Right? Like, active trading strategies, stuff like that? Yeah. You don't see a lot of, like, quants at, like,
[00:04:19] Unknown:
private, private funds, like, longer dated, less liquid funds. Quants are usually reserved for, high frequency trading strategies or, like, market neutral pod pod shop strategies. So probably probably not a totally appropriate title, but the meme, this is my quant, is funniest when it's used for someone who said who's saying abjectly, stupid things that are, highly falsifiable. So we'll go with that because I I say stuff like that a lot.
[00:04:49] Unknown:
Love it. I mean, on the topic of quants, there's been a lot of talk lately about the Jane Streets of the world and the citadels and stuff, playing around with Bitcoin, moving the market around. How how much credence do you give to I mean, presumably, they have a bunch of quants on payroll. Right? Like, that's their thing. How much credence do you give to that theory?
[00:05:11] Unknown:
Yeah. I mean, look. Like, the if you follow, like, you know, the zero hedge account, for example, they very clearly have very large Bitcoin and ETH bags, whoever runs that account, because they're constantly, like, every single day, like clockwork at 10AM, they complain about the Jane Street slam, the 10AM slam, where if you look back, over the price chart over number of months, certainly since the ETFs started, you see, what appears to be a a pretty tough and maybe even manipulated sell off with Bitcoin right around that time. I mean, look, I I think there's definitely we we would be very naive to think that the market dynamics day to day, week to week haven't changed meaningfully.
And then you've got you've absolutely got shops out there playing all sorts of games, running all sorts of strategies to, harvest volatility, with with Bitcoin. And they're using IBOT options in a lot of cases to to do that. I'm not in the weeds enough on the, nuts and bolts of any of those strategies to say to, like, look at the price chart and do the Leonardo DiCaprio meme and and point out something and say, you know, there it is. That's that's what's happening. But, yeah. I think we should definitely expect, like there are big players with huge bags, in the market right now who don't really care about some of them probably have a Bitcoin thesis. There are probably a lot of Bitcoin owners at BlackRock, at Citadel, at Jane Street.
But as institutions, they don't really care about where it's going long term. That it, you know, it's generally like a another volatile and highly liquid instrument to trade, and that's gonna affect, and I have an option to help with that. And so it's gonna affect just day to day price action. The flip side is, like, I I think that conversation is just an outgrowth of the reality that we also need to get used to, the I think as everyone has seen over the last, like, two years, four year cycles, I I think we can safely say, are essentially fake. I think they are r RAs probably fake, but certainly now, like, the having is way less relevant.
You know, the the date on the calendar is is way less relevant. And I think my point is, like, Jane Street, Sodal, BlackRock, etcetera, are all of a piece with one of the reasons that, like, our traditional cycle dynamics, which are based on all of three data points historically, are getting less and less relevant. The just because the composition of the market is is changing so much.
[00:07:49] Unknown:
Wait. Let's just, I didn't have this on the list, but let's just go back a second. You think the last, you think four year cycles historically have been fake? I mean, they've existed. They've I think four year cycles are a sigh up. Because
[00:08:02] Unknown:
I think the the initial, like, 2012, 2013, pump was I think that was what people, like, mean when they talk about, like, a crypto native cycle, post first having. Because the having at that point was so meaningful to, overall supply, significant, downshift in newly issued Bitcoin the pace of newly issued Bitcoin relative to existing supply. And I think and also just, like, that was the first time for most people that anyone, like, a, that we saw that the having, like, worked as intended and the network continue to do what it was going to do and it actually was, like, reinforcing its monetary policy. Like, okay, that's the first data point, helps to draw people in. And I think that that created, like, a a pump absolutely. Like, that was related to the having.
And I think you could definitely argue that, 1617, was as well because having was still pretty meaningful. There, I even think I even think there it starts to get murkier because you start to see, like if you look back historically, the clearer correlation seem to be, like, combination of, like, liquidity cycle and what, like, ISM PMIs are doing. So basically, like, what what was, like, the broader economy doing? Like, was credit, like, more or less available? Was it kind of on the upswing, on the downswing? What, was economic activity in, like, The US and major markets? Was that on the, you know, upswing and downswing? You know, like, or even just, like, worldwide, China as well, similar thing. Like, if you look back at those data points, those seem to have a lot, those map very cleanly as well to Bitcoin pumps. And I think first cycle, you could say that was all, like, crypto native, Bitcoin native, totally endogenous and idiosyncratic.
Second cycle, like, definitely some of that, but I think you're you were starting to see it was getting big enough and distributed enough that it was actually being affected by a liquidity cycle. And I think 2020 is, like, the fakest of all because 2020 and '21 I mean, obviously, not to tell anybody. We all remember what was happening then, but it it's very convenient that right around the having, we got, you know, the most, significant massive pump of new liquidity into the market and expansion of the Do you think they plan that? Maybe.
I mean, I I'm not look. You know, I'm not gonna say one way or the other whether the timing was suspicious. I'm not gonna say one way or the other Whether, the events of 2020 are related to the events of late twenty nineteen with the spasm in the repo market and, tightness in in reserves, that you saw at the end of that year. But in any case, Bitcoin's price action that year is so swamped or, you know, over those two years is so swamped by what was happening with monetary and fiscal. And it's, like, really hard for me to say, well, the calendar shifted, to the year when Bitcoin is supposed to pump, and so it pumped. And so, ergo, you know, the correlation is there, post hoc AeropropterHawk, and that was what that was what caused it. Like, I think you've seen diminishing relevance of cycle dynamics each time. And this past these past two years, like,
[00:11:15] Unknown:
bear that out even even more. Yeah. I agree with go ahead. I agree with I agree with the phrase we've seen, decreased significance of cycle dynamics as time has gone on is a very different claim than Yeah. I mean Yes. All the past cycles have been fake.
[00:11:34] Unknown:
I think fake in the sense of it's fake to say that because the calendar is a certain way, Bitcoin has to do a certain thing. Like, that's never been true, except Right. Like yeah. I I'll I'll happily say that's never been true. But, like, cycles like, economic cycles exist, liquidity cycles exist, financial cycles exist, and, like, all of those things play into Bitcoin with increasing relevance at, you know, the bigger and bigger it it gets.
[00:12:00] Unknown:
Okay. I'm going to I've there was two comments I wanted to bring up, and that was the first one from your first comment. The second one is you said, manipulation, by, you know, Jane Street and other other funds that are maybe buying at night and then trying to dump when The US market's open. Just, philosophically, since this is such a philosophical podcast, is does market manipulation exist in a free market?
[00:12:31] Unknown:
Well, I mean, I if I said manipulation, that's not really what I meant. Less like, not that it's manipulative, but that, like, the, biggest players in the biggest capital market in the world, choosing to harvest volatility and run option strategies, on top of this asset, like, yeah, that has impact. Like, I think it's I don't know why you you don't have to have believe any particular conspiracy, to think that that's the case. No. That's definitely happening. Yeah. Why wouldn't they? Yeah. Whether that constitutes, like, manipulation. I mean, like, it probably depends on your definition. That's not what I would call it. It does feel like we dump on market open often. Yeah. We do. It but we have recently, for sure. And there was, there was a stat that I saw this morning about and I can't source it, so everyone's just gonna have to trust me, bro. But, on some reasonable time frame, if you had owned Bitcoin exclusively in outside US market hours since, like I think it's since the launch of iBit, you would be up, like, you know, 400% or something, 400 something percent. And if you had owned it exclusively during market hours, I think you would be down 40%.
[00:13:48] Unknown:
Did you see they're coming out with an ETF that only holds it
[00:13:52] Unknown:
Yeah. During off hours. Is that a Bitwise product?
[00:13:56] Unknown:
I, I don't remember, but I I did I did see that. But They announced it they announced it this week. It's a comp it's a company I haven't heard of before. Let me see. It's called Bitcoin After Dark. I don't who's running it. Yeah. I'm I'm sure it's, how Presumably, if it was Bitwise Yeah. They would have said it was Bitwise.
[00:14:14] Unknown:
Yeah. I mean, the problem with anything like that is to even to the extent that there is some signal there, like, that's also gonna quickly get, like, arbed away. So I don't know that that's, like, oh, if you just own Bitcoin through vehicles that only have exposure to it outside of US hours. I don't know. That's a durable strategy to outperform. But The better argument is not I mean, I I will never
[00:14:37] Unknown:
advocate for the average person to actively trade Bitcoin. I think they're better off just staying humble, stacking sides. I think there's a better argument for, why holding self custody Bitcoin and holding, like, real Bitcoin is is has many different values, many different benefits, including this overall holding something that is, you know, only traded during eight hours, a day, which is kinda crazy.
[00:15:04] Unknown:
Yeah. I mean, it's a tie market hours are a tiny amount of the total, available hours in a year. And It's not even eight hours a day. Right? What is it open? It's 09:30 to four. 09:30 to to four. Yeah. Oh, it's six and a half hours.
[00:15:18] Unknown:
That's that's insane. Yeah. So yeah. So there's there's seventeen and a half hours. Great math. Seventeen and a half hour. Maybe I'm the quant. You're the quant. Seventeen and a half hours of the day that IBOT isn't being traded. I guess there's, like, you can trade some I mean, they made it get easier to trade after after close nowadays. Right? There's, like, a window, but the volume is less. Yeah. I mean, there's always been,
[00:15:42] Unknown:
and I don't know what retail's, like, level of access to it, like, actually is. There's always been there's there's premarket trading and and postmarket trading. I mean, my in my last seat when I worked on, like, the hedge fund side, like, basically, the axiom that I lived by and that I was taught is, like, all of that stuff is fake. Like, it's I mean, there's the volume is so thin pre market and post market. Liquidity just, like, dies. Yeah. It just it doesn't really mean it it can probably tell you directionality. You know, if a company has a great or a terrible earnings print after the close or something and it's, like, up 20% or down 20% after hours, like, yeah, that's probably telling you it's gonna be up or down a lot in the morning, but, you quickly see, around 10AM, actually, on on most days like that. You you quickly see that those those big moves from overnight kinda reverse. So, yeah. Generally, that's another that's another good piece of advice for people is stay home on StackSats. And if you're gonna trade, don't don't trade around, pre and and post market of traditional fiat securities.
[00:16:41] Unknown:
Yeah. I mean, just don't trade. Just don't trade. To the quant. Okay. I don't know what's next on the, next on the docket. I mean, Quant. We were talking about Quant. Do you wanna do you have Quantum on this list? Do you wanna update the freaks on Quantum? Yeah. I mean,
[00:16:59] Unknown:
I, if you've been on Bitcoin, Twitter it's actually it's funny. It's less on Nostr. And I think that there's signal there because I think people on Nostr generally have, a much sober a much more sober kind of view of the world and are generally less, click baity and rage baity, and also are more informed on Bitcoin. But at least on Bitcoin Twitter and on some on the podcast circuit too, like, I I've definitely heard a lot of people whom I respect.
[00:17:30] Unknown:
And Yeah. Preston specifically had a specific episode where I had a bunch of ten thirty one LPs reach out to me afterwards.
[00:17:38] Unknown:
It's interesting. Yeah. So, you know, I'm I'm not throwing shade to Preston specifically because I've I've heard it from I mean, like, Luke Groman was on Jack Farley's podcast,
[00:17:48] Unknown:
this week. I don't think Luke owns any Bitcoin anymore.
[00:17:52] Unknown:
I I can't tell if he if he fully blew out of his position or if he just size it down a lot. But in any case, he mentioned, you know, quantum as a a growing concern of his. I think that's his trade was much more on, like, the the macro the near term macro concerns. But, if and then if you listen to the Forward Guidance podcast, which is a very, like, you know, directionally fiat and there's some crypto shills in there that you'll have to swallow. But, for, like, general macro commentary, it's an interesting one. But on on all three of these, right, like, these are pretty prominent guests and voices across, you know, general macro and then within Bitcoin as well.
There's been this growing kind of, worry about quantum, and, you know, its its potential to compromise Bitcoin keys. And in general, like, I think, there's this is one of those things that's, like, there is a lot to say about it, but it's the one, like, piece of Bitcoin FUD that doesn't really have, like, a definitive slam dunk debunking answer right now. You know, energy usage, what if the government bans it, what what if they copy Bitcoin, can't they just make another Bitcoin, like, all the things you kinda hear in in Bitcoin one zero one conversations. Like, those have been, like, very well addressed for many, many years. There are books written on, like, each one of those topics and articles everywhere, podcasts. Like, if and anyone who's actually curious and interested will quickly get hit in the face with a bunch of material on, like, any of those topics. The quantum issue is, like, an interesting one because, it's theoretically, like, a real concern, and it doesn't have a perfect solution you can point to yet.
But I think I'm seeing a lot of, like, the conversation right now, is coming often from people who don't who haven't deeply dug into the nature of, quantum computers. And I'm not positing here that I am, some QC gigabrain by by any means. Spent a lot of time looking at it, wrote a piece that you can find on 10:31 early this year about it. Yeah. I'll link to it in the show notes. We actually
[00:20:00] Unknown:
we we released it in January. It was ahead of, like, public concern around it, I think. Yeah. It was after the the Google,
[00:20:08] Unknown:
paper and the Google update about kind of their strides and error correction came out, like, in December. We put that paper out, and it seemed like there was, like, a wave of discussion then, and then it kinda died down. And then, like, I think partially also because of, like, quantum stocks have just been, like, the meme stocks of this year. If you look at, like, tickers like IonQ or, like, I think it's RGTI, Rigetti Computing, like, D Wave computing. Like, if you look at any of those charts, I mean, they look like shitcoin charts.
[00:20:33] Unknown:
Are they down yet, or are they still up?
[00:20:36] Unknown:
No. I think they've gotten kinda rents in the last because I don't even if you,
[00:20:43] Unknown:
like, even if you believe quantum computing isn't reached, like, I don't understand how you monetize it. It's, like, nonmonetizable.
[00:20:49] Unknown:
That that's a whole that's a whole other thing. But with meme stocks, it doesn't really matter. Right? Like, the military can monetize the military could, like, use it once. Yeah. Yeah. Exactly. But it's like I mean, and Quantum is also, like, famous for so you've had, you know, these these stocks have gotten a lot of, a lot of momentum, and there have been, you know, press releases, left and right about different things that strides that they've made, and it's all usually, like, so, like, opaque that any random person is not probably gonna be able to decipher whether they have, like, needs anything or not. Yeah. Lots of hype. Quantum is very famous as a space for, announcing a lot of announcements or, you know, being two years away from being two years away, from, you know, making some great, some great strides or something. But so anyway, all all that momentum and and noise is kind of, taking the air out of the room a little bit in the last few months.
And, you know, we can talk about a bunch of different elements with it, but I think the thing that no one seems to none of these, like, voices that I'm mentioning seem to have fully grokked, and I don't wanna speak for every single person who's had, like, a a quantum opinion. Nick Carter, for example, had a paper out, like, this week or a multi part paper on quantum and, like, at the very least, like, you know, that was fairly, like, nuanced and well considered. But in general, this as, like, a FUD category, partially comes from, like, people not even understanding, like, what the threat is or how it would manifest or, like, who would be compromised potentially.
And I think it's, like, important for people to understand. First of all, there's a very limited set of I won't say very limited, but a definitively limited set of UTXOs on Bitcoin's blockchain that could be, could be affected by this. Also, we don't care about mining. Like, it's not a SHA-two 56 thing. Quantum computers are nowhere close to, being able to crack, SHA-two 56, via Grover's algorithm. That's, like, a much, much harder challenge. What we care about is, the something called Shor's algorithm could theoretically has been shown to theoretically be able to, with a sufficiently powerful quantum computer, crack, an ECDSA based key, which is the, the curve that Bitcoin uses to, generate private public key pairs.
It could potentially be used to a quantum computer, sufficiently powerful, could be used to crack one of those. The only real risk categories though are, the initial category of, address types that, Satoshi uses originally, which are paid a public key, which is to say, like, the the public key that which is the the input that the quantum computer would need to reverse engineer the private key to spend the Bitcoin in that address. The and with those address types, which haven't been used in ten plus years, no wallet you buy uses them or, like, we'll make them for you. Very, very old legacy address type.
Those have the public key exposed. So Satoshi's coins or coins of that era, like, very, very early stage, those could be moved. And those will probably be could Yeah. Go ahead.
[00:24:04] Unknown:
Yeah. Then we had the then we had segued addresses. Oh, then we had paid a public key hash addresses. Right. Yep. And, those are hashed. So the public key isn't shown, but there is there is a concern that at the the when you spend from it Yep. It's shown. Yep. So there there could be a race condition if fees are high. There could be a race condition where you broadcast to the miners, then the miners or anyone who's listening to the network, right, because it's a public broadcast relay, then on demand to try and break reverse engineer the public key to the private key. And then last but not least, Taproot isn't that's those are bare public keys too. So, like, the Bitcoin wizards that came up with Taproot didn't think quantum was a real concern.
[00:24:51] Unknown:
Because we just got Taproot. Well, the the the good the good thing is that those, is that basically nobody uses Taproot still. So there aren't that many, Bitcoins secured by Taproot addresses. But but, yeah, that's where I was gonna go next is, like, the other big, like, tab where you portfolio company, AnchorWatch uses, Taproot addresses. Yeah. No. But they're they're they're leading edge. You know, Rob Hamilton's, one of the smartest people in Bitcoin. So they're But they served Quantum with Lloyd's of London insurance. Exactly. But, yeah, like, the other the the real category that anyone should be worried about is, addresses that have already been spent from, which is why in addition to privacy privacy, there is a security best practice of not reusing addresses that are where you already spent from. So just like one easy best practice to mitigate, near term or a couple of best practices to mitigating near term concern you might have about your Bitcoin would be maybe take it easy on Taproot for now, and then only, only spend from, or fully fully sweep addresses that you spend from. So don't don't spend, like, part of, you know, some Bitcoin out of, out of an address and leave legacy, you know, UTXOs in there. Don't read your entire address.
Yeah. But but but I think part of the fear that people have okay. So Then there's the short yeah. You mentioned the short run attacks. Like, those are long long what's called long range attacks that would basically assume, like, there are UTXOs at rest that are not moving,
[00:26:19] Unknown:
and you have, like, as a quantum attacker, like, an unboundedly high amount of time to try it. You have, like you're you're just racing against other quantum attackers, basically. Right. Yeah. But you have infinite time. Yeah. The short range of tasks in question for those that everyone, whether they say it or not, is concerned about is, like, the lost lost Bitcoin, Satoshi's Bitcoin, you know, a couple million Bitcoin worth of liquidity could hit the market if someone did it. Yes. People are worried about their banks. The gigabrain conspiracy is that the, quote, unquote, OG selling narrative that we've been seeing lately is actually just them slowly getting quantum and then sold, which I don't think there's any credence to that. If that's if that's true,
[00:27:05] Unknown:
I would say, like, y'all have no idea how, like, giga bullish that is, that quantum computers are out there. And so Bitcoin's already, like, theoretically, compromisable. But they are selling slowly in, like, an orderly fashion to not crash the market. And, like, not Satoshi's coins. They're doing smaller OG laws. Right. Exactly. But the short range attack thing is, like and I go through this a little bit in the paper I wrote. It like, it's already it's already gonna be very challenging to do to get to a crypto cryptanalytically relevant quantum computer, CRQC, and that can do, like, a long range attack with basically infinite time. Definitely not impossible, but there are in addition to, like, being able to do the relevant calculations that you could show on, like, you know, bench top, like, simulated conditions that you could put in, like, a paper or something, to scale that up physically in the world, requires, like, a huge amount of physical infrastructure investment and getting a thousand different dials right. Like, if you if you've looked at all AI, if you looked at, like, data center build out, there's a huge amount. It's not just, like, NVIDIA makes, like, a Blackwell, accelerator, which has all the chips in it, all the GPUs, and then they go and just, like, plug that into an outlet and and now you have AI. Right? Like, there if you go and look at, like, the transition from, the hopper class data centers into Blackwell, like, those have been partially delayed because there were all these, like, thousands of little, like, tweaks on the margin that NVIDIA had to make to actually make the accelerator optimized for, for the data center. And and it's a little things, like, they had to, like, reengineer, like, the floors of the data center to be, like, solid enough to, like, hold hold the racks, and various other things with, like, the way that the, the clusters, like, interact with each other.
And so I I say all that because, like, quantum is gonna be that times, like, a thousand. Like, there's so there's so much additional, conditionality that has to be, that has to be right. What's that? Then you have to do it in secret. And it has to be secret. There's a there's a ton of power that is required. There are a ton of things that have to go right in the physical world, infrastructure that has to be set up. And, also, the hacking of keys will will, like, the the power required to do that scales linearly. So, like, which is to say, like, you there is not, like, a way to efficiently, just, like, take all of the p to p k keys out there and just, like, at once in one shot, like, compromise them all. Like, each one has to go through would have to go through, like, the process of kind of being run through, quantum computing process, which I go through in the paper as well. And so, like, it's gonna be costly.
It's gonna be very difficult to, just do physically. And that's just for long range attacks where you have, like, as much time kind of as you want. Short range attacks, theoretically, you have to do like, you kind of have to assume you have, like, a ten minute window, like, on average. Right? Because once it's in a block, once it's in a new address, assuming you're not spending to, you know, a vulnerable address in some way, if once a new address, like, the key that was exposed is no longer relevant. It's it's in a block, can't be reversed. And so you basically have to you just have to think not only we've gotta deal with all those all those challenges I just enumerated. You've gotta do all that in ten minutes. Right? So short range attacks are are that's the scariest thing for sure, because then, yeah, you're in, like, a basically a fee war, right, to make sure you can get into a block fast enough to, to not have your Bitcoin compromised in flight once you've exposed the public key to spend it. But it's also, like, far and away the highest bar, to be met. And I think there's still a ton of physical stuff that has to happen in addition to just the basic mechanics of error correction. And that's, like, by itself more like a software and design question that still hasn't been fully answered at scale.
So there's a lot that needs to happen for this to get to a point where it's actually, a relevant threat. And in the meantime, you do have a lot of ways to mitigate the potential threats. But then there are also a lot of solutions already that you and I are not, either probably like there's this idea of a a load bearing Internet person. And I think similarly, there are, like, load bearing cryptography people. But it's, like, maybe, like, 500 in the world who are less responsible. Yeah. Like, the reason we can have any sort of impression, like, functionally across any system is because, like, 500, like, you know, geniuses and graybeards. It's less than a 100 people. Yeah. Probably. Right?
But fortunately, some of those, are very interested in working on Bitcoin. And there have been several proposals, some of which I walked through in that piece, and one of which actually just hit this week, to potentially, upgrade Bitcoin in ways some of and some ways to do that would not even require a software. But there are also software proposals out there, to to do it. They all have trade offs. They all have, things that we need to be considered. But the idea that, like, this is some insoluble problem that is just, like, existential for Bitcoin and it's just we're about to drive off a cliff with no way to, you know, reverse or, hit the brakes or avoid it is just very, very misplaced.
There are a lot of options available to upgrade Bitcoin to harden it. Again, many of which are fairly lightweight and don't necessarily require some massive change to the protocol. So, yeah, there's a lot of reason for optimism on that. But the one, I guess, you know, caveat to that is Bitcoin as this very hard to change system that's, you know, based on rough rough decentralized consensus among global actors with no president or benevolent dictator for life who can kind of force through a change, like, you know, we do have there there will be, like, some coordination friction probably to any kind of change. So it's worth thinking sooner than later on how would you, you know, what would you ultimately wanna do to make a fix for this that, mitigates risk without without injecting incremental risk to Bitcoin. And, ideally, you wanna do that before it's, like, you're actually on the clock to, you know, figure it out, with, like, a real quantum computer that may or may not actually exist.
[00:33:30] Unknown:
Yeah. I mean, I love how you started off that, like, ten minute explanation with one of the problems is there's no clear concise response. Case in point. I mean, look, I think from my opinion, first of all, the on the hype side in terms of quantum hype, just one example of quantum hype is that before Vitalik launched Ethereum, she raised money for a, quantum scheme that was supposed to dominate Bitcoin mining. And that was all bullshit, and then he launched Ethereum afterwards. I I personally, you know, not a cryptographic not a cryptography expert.
I could hardly even pronounce the word. But, I don't really give this much credence. I don't give that much credence to this threat. I don't really believe it's a real threat. Maybe I'm wrong. That said, I think the the quote, unquote mitigation is relatively straightforward. I think there's a lot of good research being done. I think we saw fork in a new address type that is quantum resistant. Resistant. It'll probably cost more in fees to use it. And then people will choose if they wanna use it or not. And then we can just put a pin in this. And just whenever someone says anything about quantum, it's like, okay. Use the quantum resistant address type and pay more for it. And people can voluntarily choose to use it or not.
I think it'd be a relatively easy soft fork if we need it. If it needed to be a soft fork, which I think most likely it would be, it'd be a relatively easy soft fork because it doesn't affect anyone who doesn't use the address type, period. As for proposals about what we do with coins that are sitting in, pay to pub key addresses or whatever, like, just hard knack, no. I completely disagree with seizing them or freezing them or anything like that. I think that just fundamentally, you know, the the the quote, unquote cure is worse than the disease. I think it it fundamentally breaks the the social contract that that Bitcoin stakeholders have have gone by this entire time, which is that property rights is sacred.
So if if the quantum believers are correct and it's not all hype and the old addresses get hit, we will have some short term volatility. Bitcoin will take a hit. It will not be a kill shot, and that will be fine. If we seize the if we seize Bitcoin preemptively Yep. And quantum never materializes, we just kill shot at Bitcoin ourselves is what we did. Like, Bitcoin has very in my in my opinion, Bitcoin fails at that point. Yeah. Just to put a pin in this, just to I'm curious your opinion. Do you think so we were the all time high was one twenty six. You're already on the record saying cycles are fake and to sigh up.
We're at 90 k. So I'm I'm not the quant. That's, like, a 35% or 35% down or something like that from all time highs. Am I correct on that? Yeah. Do you think quant the quantum stuff has had anything to do with that, price action? I tweeted,
[00:36:58] Unknown:
like, a few weeks ago. I, I put out a tweet, and I'm sorry that I didn't, post it on Nostra instead. I don't really know why I didn't. I think it was just some more, like, fiat tweet, so I left it back there. But, I said an inexhaustive list of things not causing the Bitcoin sell off, Zcash rotation, quantum computing, spam, spam debates, the yen carry trade, and elaborate micro strategy fan fiction, which was floating around a couple weeks ago. So I think quantum computing is not the reason that we dumped from, all time highs to 90.
I I think that has much more to do with, liquidity cycle, bank reserves getting tight. Bitcoin's always the first thing to move in both directions when, there's a when you're running up on a liquidity, issue or when liquidity is starting to inflect higher. And, you know, there's also, like, in general, the market for the last month or so has been traditional assets has been rockier with a lot more fears on the AI trade and, some of the AI stalwarts kinda coming under pressure. Bitcoin, rightly or wrongly, has clear correlation to tech stocks and, high beta high momentum stuff. So, I think that that is, like, 99.9% of the reason that Bitcoin moves kinda, like, ever other than the only other major drivers are something really fundamental, like, the president of The United States gets elected and said he wants says he wants to do his treaty Bitcoin reserve or, like, ETFs come into play or something like that.
No. I don't think we sold off because of any of those individual things. On the margin, do I think, like, there are people who were looking at the price action and looking at, shit, it fell from $1.27 to 90. I feel pretty bad about that. I don't, you know, I don't love the macro setup for the next six months. And there's this, like, random quantum thing I don't understand that everyone's telling me about. Like, yeah. You know what? I might as well take some off the table. That definitely is, like, a thought process I imagine a lot of people have had. But the, the reason for it, for, like, the initial sell off impulse, I think, has nothing to do with quantum computing. Ironically, I do think it might relate to the four year the four year cycle meme because there is, like, an element of self fulfilling prophecy, and there are people who have been in the trade thinking that they were gonna get some crazy Bitcoin pump in q four because that's what the calendar says. So you definitely have tourists and leverage traders who have gotten wiped out or gotten blown out, when, you know, that didn't play out. So, like, that that has probably been, I think, more relevant than, like, quantum computing spheres. But, yeah, that's that's my thought on that.
[00:39:36] Unknown:
I will just say that there hasn't been a single serious investor who has asked me about Zcash. So it's definitely not related to, quote, unquote, Zcash rotation, but I like that you had it in there. So then on that note, like, how do you explain how do you explain Mag seven near all time highs, gold at all time highs, silver at all time highs, and Bitcoin down 35%?
[00:40:01] Unknown:
Yeah. Well, like I said, like, Mag seven's definitely gone through, like, more volatility in the last month, and I think when Mag seven, like, sneezes, Bitcoin catches a cold a lot of the time. The gold one is the more interesting one to me. Right? Like, the And silver. Yeah. Silver's are more than gold. Silver's got silver's got, like, an industrial dynamic to it where if you look at a lot of, like, industrial metals, they're kind of, showing similar moves, because of, I think partially because of the the AI build out and, people pre positioning ahead of seeing all the, metals are gonna be needed to, pull that off whether it's here or in China or somewhere else. So to some extent, I think that's, like, a an industrial story. But, you know, we've always we've always wanted to see Bitcoin decoupling from gold, and then the monkey's paw curled, and we decoupled the wrong way.
And I think, a couple years ago, Parker Lewis had a, did a talk at, it's like a club in Dallas, called Bitcoin is not a hedge. And it's it's good talk. It's, like, probably only twenty minutes long. One of the points he makes in there is that effectively, like, the knowledge of Bitcoin is not sufficiently, like, widely distributed for Bitcoin to serve as, like, a valve for central banks around the world and treasuries around the world and big sovereign actors and massive institutional actors to express the what you could call, like, the debasement trade thesis. And so when those when those groups look to get out of the dollar system and or even just like the fiat systems in general, get into outside money, like, gold realistically has, what, like, a ten thousand year track record, and a lot of them already own a bunch of gold anyway.
They're set up to be able to allocate to that quickly. They get it. They it is, like, it is less volatile, although Bitcoin's volatility is coming down, so they have that argument. And I think, like, the knee jerk for the headlines that we're seeing this year about, The US is gonna do financial repression, US debt burden's crazy, we need to get outside of, rotate some value potentially out of US treasuries, especially given what's probably coming down the pipe in the next couple years, what Trump wants to do with one big beautiful bill, everything else. Debt and deficits are only gonna expand.
And meanwhile, the The US is basically telling everyone, like, in some sense, like, take your capital and go home because we wanna reshore, manufacturing and we wanna basically rework the entire entire global trade order. So, like, your natural move is if you want to rotate into some other, like, neutral reserve asset, the really the only thing that's available to you if you're in that mindset is gold. Right? And I think only this past year this past year, year and a half have groups like that really had to confront that trade that we've all been kind of, like, implicitly or explicitly expressing with Bitcoin, for the last, you know, fifteen years.
They've only really started to take that seriously, I think, in the last couple years, other than China, which has been rotating heavily into gold for the last ten years. But for them, all that is to say, like, the the move there, if you want to express that thesis, is just naturally gold. Right? It's not it's not Bitcoin, yet. Although there's some maybe growing exceptions to that that we can talk about. But we're so early in Bitcoin's life cycle that, the tailwinds that you've seen for gold, I think, are happening for reasons that are not yet easily, like, replicable
[00:43:53] Unknown:
for Bitcoin because Yep. Knowledge of it and understanding of it just is not sufficiently distributed among the people who are making those decisions. Well, at some point, like, this Bitcoin, I think, will be treated as the ultimate safe haven, like, the ultimate risk off asset. And we're just not there in its adoption cycle yet. And I think part of it, by the way, is if you're not if you're not holding self custody Bitcoin, it's hard to feel the safe haven aspects of Bitcoin. Like, if you're holding iBit, it feels like a shitcoin to a degree.
You know, it feels like a risk on asset in a lot of ways. A lot of a lot of, like, the intrinsic and I, you know, I kinda use that word in a in a punny way. Value of Bitcoin as a safe haven asset comes from the fact that I can hold it offline, that you can't seize it for me, that I can spend and save it without permission. And I think people that aren't using it in self custody fashion, it's gonna be harder for them to come to terms with that. But this is why I brought up the Mag seven. Right? Because I think it's reasonable to be like, okay. People are starting to realize mandibles is starting to get priced in.
And people are starting to realize that, and they're moving into gold and silver. Silver was kinda like an echo trade to gold. Right? It's like gold moved first, and then people are like, oh, I can make some money on silver that hasn't moved yet, and then it moved harder. But but the interesting one is the Mag seven. Is that that I mean, that Mag seven is basically the S and P now. And so if you look at the S and P, the S and P is, like, right near all time highs, and that's obviously a risk on type of scenario. How do you explain that? Like, do you have a good explanation for that? I have my own theory. But Well, I mean, first thing I would say is, like, give it some time. Like, let's see. Because,
[00:45:39] Unknown:
historically, you know, Bitcoin's done this before in on both the upside and the downside, where, like, even earlier this year, if you remember, like, the local top at the start of this year was Trump's inauguration. And then it was just kinda, like, down only on Bitcoin. It was, like, really ugly choppy price action for a couple months, and equities didn't really respond until, like, late February, early March. And then you had, like, the real dump in early April when Trump did Liberation Day. Right? So we're coming up on a period that, like, you know, if if you were to map the, you know, early this year to now, like, you're coming on a period that could be potentially start to get actually more meaningfully rocky for equities to the extent that Bitcoin is again predicting, you know, tightness in liquidity, or some other, like, issue in the system. And that's, like, that's one anecdote, but you if you go back through Bitcoin's, like, price history, like, you'll see that over and over again that Bitcoin will have, like Last fake cycle or whatever, March 2020.
[00:46:39] Unknown:
Yep. Bitcoin fell first. Yep. And then equities had their bloody few days of, like, limit downs over and over again, market closed, and then Bitcoin, bounced first before everyone else. I'm looking at the chart. Like, Bitcoin ended
[00:46:56] Unknown:
January 2020, like, right bumping up against, like, 10,000. And then, this chart doesn't capture the the really brutal day in March, but, like March 12. March 12. Yeah. But, like, in early and by early March by early March, it was down to, like, 6,000. Right? And that was before anyone like, that was before the NBA had closed down, and everyone was, like, that's that seems to be the day that everyone took seriously that, like, they were really just gonna close the economy. But you had a couple months of, like, pretty bad price action for Bitcoin before it was, like, really obvious to the equity markets. And I was, like, I was in hedge fund seat at that time and, like, yeah, February was I remember February being, like, choppy and, like, people were talking about, COVID, but, like, it was still, like, effectively racist in, like, 2020.
[00:47:41] Unknown:
To be clear to be clear, the NBA shut down March 11. Yeah. Yeah. So the the really bad day in Bitcoin was the day after the NBA shut that was when it hit everyone. They were like, oh, fuck. Yeah.
[00:47:54] Unknown:
So, anyway, not not to get us on the Sorry. That particular, like, period of That was actually the having cycle that had that was a little bit it was tangentially related. But there are a bunch of examples like this is my point of when you see, like, inexplicably, like, oh, Bitcoin just took, like, a 40% bath for no, like, obvious reason, or it's, like, suddenly trading really badly before everything else is, like, what's going on? Like, you know, generally, I've found since I've been paying close attention to Bitcoin, generally, I found that that's typically a good signal that there's choppiness ahead for for general risk assets, probably on the offset of, like, you know, one to three months. Right? So all that is just to say, like, let's see, like, let's see what happens with Mag seven. If you've been paying attention this week, like, Oracle had an an awful print, stock was down Oracle is not Mag seven. Today, which hilariously, like, for, like, just as a quick tangent, like, Oracle is this great example of yeah. It's down another 4% today.
Oracle is this great example of, like, the the logical conclusion of, like, late stage fiat because you may remember this summer, the stock was up, like, 40%. It's, like, already it was already, like, a, you know, multi $100,000,000,000 stock, like, $600,000,000,000 stock. It was up, like, 40% in one day because Larry Ellison made some crazy projections about, you know, ridiculous numbers over the next few years that probably they're never gonna hit. And then since then, it's it's had this massive down move. It's unwound all of it. And it's basically, like, a round trip this year. You've got, like, essentially a trillion dollar company that has had these insane moves this year on both the upside and the downside. It's basically gone nowhere. So as we just think about, like, why Bitcoin and why are we seeing why why is something like this necessary and useful as, like, a long term savings vehicle?
You know, there's there's your answer. Like, one of the biggest companies in the world, one of the you know, a 50 year old tech stalwart is trade trading like, you know, a meme coin. Right? But anyway, if you're looking at that, if you're looking at the Broadcom print today, you're definitely seeing NVIDIA has been under pressure. OpenAI is now has gone from being, like, in, you know, six weeks being, like, the industry darling, you know, to to end all industry darlings to, like, everyone basically saying, like, yeah, they're they're, you know, they're dead. Google is gonna, price them out of the market and, you know, Alban's gonna be it's gonna be a total zero. Right? Like, that's the, that's the consensus now. So, like, all that is just to to get back to your point on Mag seven. Like, the AI complex is, like, not looking great right now.
And that's before you even consider, like, other, you know, liquidity dynamics in in the background. So, like, let's see, like, what happens over the next, like, month or two with with equities, before we really make a call on Bitcoin's, like, correlation and whether it's, like, you know, totally off base. But I do think, like, more generally, for people who are looking ahead to do do you wanna say something? I'm sorry. I've been filibustering.
[00:50:50] Unknown:
No. I was looking at the Oracle chart. It like, it's pretty hilarious five year chart. The, well, the one thing I would say is and I I like just letting you cook, so don't let me interrupt you again, but you offered, so I'm gonna interrupt you. I have no equities exposure except for the Bitcoin businesses that envy, that ten thirty one has invested in. Obviously, most of those are private companies with the, exception right now of Fold, which we hold public shares and that we're private, and we help bring them public. So I'm very much like a stay humble stack assessor. But for the average person, from my view, you know, so the Mag seven is Apple, Microsoft, Amazon, Alphabet, Facebook, Meta, Nvidia, and Tesla.
Apple, Microsoft, Amazon, Alphabet, Meta. So, basically, not Nvidia or Tesla. I think there's, like, a decent argument that they're being priced as risk off assets. It's like, how bad could it get? Like, I'm not once again, this is not financial advice. But, like, if you're sitting there and you're trying not to lose your money and you're looking at debasement happening and you're looking at chaos in the world, and you don't really know what to do, like, those those five of seven, I'm looking at those, and I'm like, okay. Like, how bad could it get for Google? Right? Like, Google has got a massive war chest. They're sitting in a great position.
Apple's sitting in a great position. Amazon's sitting in a great position. They're mostly recession resistant. Like, I I think they might be trading, and maybe the market is wrong about it, but the market is almost pricing them as a risk off type of trade. They're like, I'm just gonna index to them,
[00:52:46] Unknown:
put my money there, and I should be good. But is that crazy thought? No. I think that I mean, I would maybe phrase it a little differently, but I definitely think that's right, like, in, directionality. Like, the biggest companies in the S and P are effectively, like, everyone's savings account now. And, you know, it's funny because, like, they're all you know, they used to be cash flow machines, with massive Fortress balance sheets. And now this year, they've a lot of them are, like, really levering up in increasingly, like, opaque ways to fund the the data center build out. So that's kind of a funny, you know, development in the narrative behind those businesses. But I I definitely think that's that's a big piece of it. Like, people have been trained to to buy the dip on large cap stocks.
It's worked extremely well for the basically, since financial crisis and certainly for the last ten years. And I think even more so, I don't know that it's necessarily that people see it as, like, a risk off asset as much as it's, like, kind of there is no alternative. Yeah. You're not gonna own bonds if you think there's financial repression coming. And assuming you're not, like, a retiree who needs, like, the current income. Right? Like, you you wanna kinda deweight bonds. So if you don't believe in Bitcoin, well, your options are, like, gold and large cap stocks. Because, like, smaller cap stocks, harder to underwrite But specifically, like, the top five. Yeah. Right. Exactly. Like, they're you're gonna concentrate to the biggest brand name. It's not large cap. It's like mega cap. Mega cap stocks that have the dominant market position that are basically, like, monopolies slash, like, duopolies, in in, like, the fastest growing the only really growing sector in, like, the Western world, right, is, like, at least from an the only, like, industrial growing sector is, like, data center build out and AI leverage and then, like, tech more generally. So that's where you concentrate. But I think, like, specifically too, there's this, like I do think the market is becoming more and more aware of what the plan is from the Trump administration. I think that plan is basically, like, pretty explicitly to run it hot, to, as Besson has said, grow our way out of the debt.
You've seen the one big beautiful bill that got passed earlier this year. That's gonna have a lot of, things that kick in in '26. And, you know, Trump is likely going to institute, a a sycophant, of some sort at the Fed who's gonna be his yes man. He they're gonna get rates lower and they're gonna get the Fed to accommodate, the what the treasury needs because, like, at the end of the day, like, the sovereign's gonna get funded. They have, you know the treasury has the guns and the Fed doesn't. So, like, treasury's gonna gonna get what it needs one or the other. That may flow through the commercial banking system. Maybe it's the fed. Who knows? But in any case, I think people are looking at that. And they're looking at this the basement trade's happening. They're gonna do financial repression. They're gonna run it hot on an existing massive debt burden. Well, I need to own something that's not bonds. And I'd like to maybe own something that is basically getting to the point of being, like, too big to fail and key to the strategy of being able to run it hot, which at this point is, like, mega cap AI stocks. Right? Like, you know, Sam Altman, CFO at OpenAI, kind of a few weeks ago floated the idea of OpenAI getting, like, a federal backstop for all their build out because it's so capital intensive. And she kinda walked it back later.
But it definitely seemed like a trial balloon. David Sacks tweeted a couple weeks ago about how vital the AI build out was to GDP growth and that we can't afford to go backwards or we'll have a recession. And so I think people are looking at that as well saying, like, so these guys are explicitly telling they're giving the game away. They're telling us, like, no more Doge. We shut Doge down, like, you know, months early. The plan is to, spend away and hope that there's enough fiscal impulse to, for GDP to outpace, the growth and debt burden and to subsidize ongoing deficits. Trump is out there telling like, yesterday, Trump said, like, I I don't see why we can't have 25% GDP growth. People see that, and I think it's, like, they need, like, a a general, like, a way to respond in terms of just where where do I move my capital in that environment. But then also, like, specifically, it seems like these several industries are getting called out as, like, the only industries that matter to keep the economy going. And, like, the the companies that are most critical to that happening are, Google, Meta, Amazon, Nvidia, and the the rest of the Mac seven and a few other big large top three. Fail trade, basically. Yeah. Exactly.
Like, there is it's there is an alternative slash too big to fail kinda colliding, and I think that's a big piece of it. People could, I think, express a lot of that bet more cleanly, or or that, that thesis more cleanly by just owning Bitcoin for the long term. But I I think that's a that's a part of it too is, like, this this Tina effect.
[00:57:25] Unknown:
Yeah. I don't know. It's an interesting it's an interesting scenario. So the on the QE piece, the Fed just cut rates again. Bitcoin kind of I I kind of reacted and then immediately dumped. What is your what what is your read on that?
[00:57:48] Unknown:
Yeah. It's just it's just BART price action all the way, both up and down. There you got your bar. You got your reverse. We hit, like, $94.05.
[00:57:56] Unknown:
People are like, the bull market's back in session straight to $1.26, and then we dump. Yeah.
[00:58:02] Unknown:
I, I I posted on on Oster last week, or maybe early this week. I saw some, like I think it was, like, a Bitcoin mag post about, like, Bitcoin rockets to 92,800 doll and, you know, the bull market's back in swing. And I was just, like, we are not gonna really restart the bull market until people stop posting, like, overly excited tweets about 3% moves to, like, random price thresholds that don't mean anything. But, yeah, I mean, Bitcoin's moves around, like, FOMC meetings are, like, famously kind of, you know, not super helpful and scammy. Scammy both ways, like, you get shorts taken out and longs taken out, and mostly when it's all said and done, you kinda end up right where you were.
But so I don't know if there's a lot to read into from Bitcoin's reaction. But you're gonna you're gonna piss off a lot of people on, financial Twitter, which I know you really you're you're really worried about that. They're listening they're listening to the show, so be careful what you say. There are lit there are literally ones of them listening to the show right now. But,
[00:59:09] Unknown:
I like FinTwit. I'm I was I was a lurker.
[00:59:13] Unknown:
Yeah. Okay. So, you know, like, the, there will be a lot of people in that crowd who will say that, you know, QE hasn't restarted because QE is long duration asset purchases intended to stimulate risk appetite. Yeah. It's like a semantics thing. Right? Yeah. And you know what? That's fair enough. But at the end of the day, so what happened at the Fed meeting was, in addition to the rate cut, the Fed said, you know, quantitative tightening is ending, which we knew, they announced they're going to go to a cadence of buying, $40,000,000,000, a month of short dated US treasuries.
But short dated, means for them apparently up to three or tenors. So, like, that's that's more duration than people thought. So that was, like, incrementally dovish. They're gonna be doing that ostensibly as a way to, for reserve management purchases, so RMPs. So a new I believe that's a new acronym for them. They might have used that before, but, usually, it's, like, directionally bullish over, like, a twelve month period. The the trailing twelve month or, I guess, the leading twelve month performance after, a new Fed Alphabet Soup, facility is created is, like, generally pretty good. So they're gonna do this because, as I kind of referenced earlier, reserves in the banking system have started to get tighter, below, like, what is commonly cited as, like, a $3,000,000,000,000 threshold.
That's having all sorts of, impacts on, the the repo market and kind of, interbank plumbing rates, that if you're, like, wonkish and, like, follow this stuff, you can see. And they're definitely that's something they really care about, so looking at that. But anyway, you're you're now flipping to a a stance of not quantitative tightening, so not letting the balance sheet shrink naturally as, securities mature, but, actually going to purchasing, on net securities outright, and treasure securities. And you could say, like, well, that's not taking duration out of the market, but what happened if if that's coordinated at the same time with the Fed shifting even more aggressively away from issuing at the long end at all and issuing a lot more at the short end, and then they've got the Fed turning around and subsidizing directly a lot of, that issuance, then, like, that that is absolutely, like, on net incrementally taking duration that otherwise would have been there out of the market.
It's like a duration rotation from long term to short term. Yeah. So and there there have been debates on this throughout, like, the last twenty years of, like, operation twist, if you remember that from, like, ten or fifteen years ago. You know, what counts as QE? Like, frankly, I don't remember This
[01:02:00] Unknown:
is the joke we make on rabbit hole recap. Like, it's not a Bitcoin dump unless Marty certifies at a Bitcoin dump. Yeah. Right. Exactly. Yep. It's a it's a it's a bullshit semantics that doesn't really matter. But my question to you more is as someone who, holds all my assets in Bitcoin, you know, when when do we see it, like, are like, Bitcoin should react positively to this to this move. Right?
[01:02:29] Unknown:
Yeah. I mean, it's always a question of, like, what are the competing
[01:02:33] Unknown:
headwinds and tailwinds. Yeah.
[01:02:35] Unknown:
Please tell me that I'm gonna be rich in a month. It's always a question of the competing headwinds and tailwinds. And I think there's still, like, a lot of uncertainty around some of the topics we discussed a second ago that will probably put a damper on risk appetite in the near term. Especially in the year end, it's like you sometimes get if everything's, like, in a Goldilocks zone, you can get, like, a Santa rally kind of at the end of the year. Maybe we'll see that. But But there's gonna be tax selling too. Yeah. There's there's tax selling, and then there's also just, like, big asset managers often get paid on, you know, their bonuses are based on, like, what happened through the end of the year or, like, through, say, Jan one to December 31. Right? So, especially anyone with, like, a good year to protect, like, probably on the margin is not incentivized to take incremental risk in the last few weeks of the year.
So in general, like, I don't know that I expect some massive, like, pump
[01:03:32] Unknown:
in the near term. I have a good college friend finance bro. Done quite well for himself. He's one of the few college friends that listen to me about Bitcoin. And he strongly believes in the Christmas bonus bump of all the lower level finance pros. Like, they get their Christmas bonus, like, January or something like that, and then they just ape into sets.
[01:03:54] Unknown:
Yeah. I mean, I I think there are probably, like I don't know. Maybe there are dozens of people doing that. A lot of, finance pros are getting their bonuses, and then I literally knew a guy who every bonus season would go buy himself, like, a new $20,000 watch. So there's a lot of that that will happen too. So the Well, he's been in, he's been in Bitcoin
[01:04:14] Unknown:
probably nine, ten years, and maybe three or four January's, I've gotten a text like, yo, Christmas bonuses. Because the other six times, it didn't happen. But Yeah. Those four Januarys, he let he reminded me.
[01:04:28] Unknown:
But I think, you know, into the end of the year, don't know that I expect a ton. And it's also, like, we've known for a couple months the, like, quantitative tightening tightening. I I think at least, like, a month that this was gonna end at this meeting. So,
[01:04:43] Unknown:
yeah, I think Well, I don't know. Polymarket was, like, all over the place. It was, like, a little bit interest it's interesting because you have, like, a pure you have a more pure, priced in metric with the prediction markets, the liquid prediction markets now. Like, of course, like, you can look at assets. You can look at all these, indirect metrics to see, like, if a decision is priced in. But, like, if you literally have a betting market that is, how much will the Fed cut, or will they cut? Do you have, like, a more objective measurement? And it was, like, you know, 20 like, a point 25%, 25 bps was, like, 80% or 75%, then it fell to no change.
[01:05:32] Unknown:
Like, it was neck and neck with no change, and then it popped back up maybe, like, a month ago. Yeah. Well, like, the yeah. The cut I know was, like, hit or miss, but the QT ending, I think, was more, was more certain because I believe that they just announced they were gonna do that, or Palace said in the speech, like, a month ago. But in any case, like, the consensus, like, definitely drifted toward, like, this this being over and probably, like, some sort of, like, QE restart or, like, you know, reserve management restart happening.
[01:06:00] Unknown:
Well, I mean, if people thought there was gonna be a no change if the majority opinion thought there's gonna be a no change on federal funds rate, doesn't that kind of imply that they thought, QE would not be starting?
[01:06:15] Unknown:
Maybe, but they're not necessarily directly related.
[01:06:18] Unknown:
They're two totally different, like, transmission mechanisms for By the way, I'm look I'm looking at Poly right now. Yeah. No. It flipped to no change November 21.
[01:06:29] Unknown:
Didn't it? But it flips, like, right back, didn't it?
[01:06:33] Unknown:
I I don't know. You're looking at the chart, you tell me, but I don't know. What am I I'm looking at the wrong chart. What will the Fed January how do I look at the historical charts?
[01:06:43] Unknown:
Great radio.
[01:06:46] Unknown:
I'm freaks. I'm not gonna edit this out. I, I don't know. There's gotta be a way to look at historical Polymarket charts. But, anyway, I'm looking at their January 27 decision Yeah. Which I think will be no change right now.
[01:07:01] Unknown:
Yep. Which actually, like, I probably take the
[01:07:05] Unknown:
I take the over on that, but we'll see. Would you think there'll be another cut?
[01:07:12] Unknown:
Yeah. I I I probably wouldn't I wouldn't bet against it. I'd probably lean more that way than the other way. Because there's free money. They're you
[01:07:20] Unknown:
can print a dollar for 23¢
[01:07:22] Unknown:
right now. I'm probably not sure. I should go,
[01:07:26] Unknown:
I should put one in the right amount. How big the cut is. You just have to bet no against no change. That's true.
[01:07:32] Unknown:
Well, that's what I'll do when we go out here. Ape all ten thirty one's reserves into that single poly market? I think we should really just become a poly market fund. That might be, the way to go. But going into next year,
[01:07:44] Unknown:
all that is to say,
[01:07:47] Unknown:
I think, like, I've not really ever seen fundamentally as bullish a setup as I think what we're looking at right now, from a risk adjusted perspective. I can't tell you, like, when any of that's gonna play out. And I also can't tell you, like, that there's not gonna be, like, another dump, ahead of, like, an upward impulse. I think depends on a lot of things and how policy goes and how the China, ongoing disputes go and how they sequence different different things that they may or may not do. And I also don't know, like, if the, the Fed's latest kind of pivot away from QTE to something more QE ish, whatever we call it. Like, maybe that's not enough, right, for the reserve tightness that that was out there, that seems to have have caused, like, some issues with risk appetite and, like, underlying, treasury plumbing. And so if there if there were to be, like, some issue with that, like, that's probably a down impulse first on, like, everything that's not, like, the dollar and maybe gold.
But, like, over the course of twelve months, I mean, Trump is gonna take over the Fed. I don't really think, like, he's gonna figure out a way to do it. Like, this week, he was, you know, suggesting that a lot of these a lot of these governors, you know, I've heard many people are saying that they were appointed by AutoPin. You know, he's big on, like, rolling back anything that was done with AutoPin. So, like, he's already got, Myron on as a as a, fed governor. Bowman and Waller are gonna vote with him, with what he wants. He's gonna very likely replace Powell with Kevin Hassett, who is, like, the ultimate Trump yes man, and that that'll happen early next year. And frankly, if he announces it beforehand, the market's gonna trade it whether like, well before it happened well, before, like, he's actually in the seat.
So you've got that. You've got a a government that's explicitly, you know, one of the most indebted governments in history, that's The most. The most. I don't know if it's actually literally the most indebted government in history, but, certainly, like, it's right up there with within The United States' history. Wait. In absolute terms, we must be. No? No one does it bigger than us. I'm thinking of, like, debt to GDP. But in in terms of absolute numbers, like, yeah. Probably. Yeah. But, like, on a debt to GDP basis numbers that are unfathomable. I guarantee you that Zimbabwe is at, like, you know, four Fair enough. Because they have very low GDP. Yeah. Yeah. In any case, you've got a fading hegemon that has, you know, a very large debt burden with growing, entitlement draws every year from a very powerful boomer class, who still control most of the wealth and, you know, will vote for their bags.
And that government is trying to wrest power away from, an emerging power that has basically taken over its ability to to go to war on a sovereign basis. And it's, you know, it needs to spend like crazy to facilitate that, to reshore capacity, and that's a matter you know, that's there's price inelasticity there because that's a matter of national security and maintaining literally maintaining sovereignty, I think, in their mind. You could argue maybe that's like an overstatement, but I definitely that's how a lot of people are looking at it who are making decisions. You roll all that together, and I just don't see how you're not looking at a massive monetary and fiscal impulse in the next twelve months. And that's before you even consider midterms, that midterms are coming, late in '26.
Republicans are down bad right now, if you look at the results of November local elections. You know, we've got a communist running New York, and, pretty much Well, he's not running New York yet. Well, okay. So maybe there's still time to figure out some bailout strategy, but He will be running New York. Very likely he's gonna be running New York. Right? And every you know, a bunch of other localities, also, you know, swung blue. Like, there was a there was a Georgia, like, county commissioner election or something. I I can't remember the exact seat, but it was, like, some seat that hadn't been blue in, like, decades.
There were two, like, open open spots and they both, like, aggressively swung blue. So they're looking at, like, not a great political setup into a very important election. And if that doesn't go Trump's way, he's probably a lame duck again, for his last two years. Almost definitely getting impeached again, like, if if they can't. If they can figure out a way to do it, if they can get the votes, like, he will definitely go through, like, 14 impeachment gauntlets again. And so I think their only response to that or one of their big responses to that is gonna have to be, you know, in in so many words, like, handouts. Right? They're gonna have to politically bribe the right classes of voters to, whether that's, like, you know, subsidizing certain industries or, you know, making sure that certain classes of voters, like, get access to different jobs or different, you know, stimulus programs, whatever.
They're gonna have to make enough people happy to have a shot at turning the tide here, on the midterms. So I look at all of these things, and I look at there only being 21,000,000 Bitcoin, and I look at there being a massive ETF pipe for, bigger institutions and very wealthy people and, even sovereign wealth funds that are now buying I don't know why they're buying IBIT instead of just, like, self custody Bitcoin, but but indeed they're doing that. Got college endowments like Harvard, taking, I bet it's now their largest disclosed position. They don't disclose, like, most of their portfolio, but, massive sea change there. I look at all these things and I'm just, like, all that's hitting the wall of only 21,000,000 Bitcoin.
And the president is has his own Bitcoin bags. The president and his family have, like, you know, billions of dollars directly and indirectly in Bitcoin bags. And, certainly, he's not known for necessarily being, totally scrupulous about self dealing transactions. And we're transitioning to a world where, like, we need some sort of probably, if if they're serious about what they wanna do with the global trade order, there's going to be, a necessarily massive bid for, neutral reserve assets that are outside money, because you gotta go out of if treasuries are not gonna be it anymore, which they can't be if we want to make make our own stuff again in mass, All that capital is gonna have to rotate somewhere. And the only real place it can go that's big enough right now is gold. But on the margin, as we kinda referenced a second ago, some of it's gonna start flowing to Bitcoin too in different spots.
And so I look at all that and I'm like, that's gotta be the most giga bullish, best risk adjusted setup that Bitcoin has ever seen, especially when you consider, at least for the moment, the regulatory backdrop is mostly better. There are definitely things that we can talk about that still need to change. But from just a price perspective, that's kinda my outlook. Like, I can't tell you where it's gonna go. I can't tell you when it's gonna go there. But '26 to me looks like it is set up to be extremely positive, for Bitcoin. Absent absent war breaking out and China taking Taiwan and,
[01:15:18] Unknown:
all the Asterisk. Asterisk. Asterisk. So very long winded, mandibles in the Bitcoin standard, basically, answer. By the way, I found, I found the December Poly Market, and it was around the same time. It was November. It flipped to 75% were saying no change. And it's a pretty big volume market. This was a $400,000,000 market. And that was twenty days ago, which just shows, I mean, just shows how, like, what interesting times we live in. That twenty days before, the tea leaves were saying no change ever so briefly. I think it was, like, a specific Powell comment that was mentioned. The gold dynamic is interesting. Right? Because, like, from a sovereign perspective, yes, it's Lindy. It's been around forever, basically, and it's much easier to allocate to than Bitcoin. But from the individual point of view, it's much more difficult to allocate to than Bitcoin. Like, I was talking about this on a rabbit hole recap.
Like, I don't even know how someone would go about, you know, if if you wanted to put, like, a million dollars into physical gold. The you're I think if my math is my basic math is, like, that's 250 gold bars you'd have to go out and buy and not be counterfeit. Like, that's pretty final too. Right? Like Yeah. That's a pretty insane thing to explain to your wife. It's just like and do they arrive in the mail?
[01:16:56] Unknown:
Would you go would you go to a physical location to buy them? It's been a while since I bought 250 gold bars, so I can't remember the exact process that I had to go through. But, and then well, the other thing too is, like, do you want 250 gold bars in your house? Right? No. Probably not. So you've gotta vault them somewhere, and they can't unlike unlike Bitcoin, which where ownership can be split across a multisig quorum and, you know, you don't have to trust any one, institution or any one physical location to be to not be compromised, to maintain ownership for your Bitcoin. The gold can only be in one place. And, like, you're probably not gonna have in your house of of any, like, mean of quantity. Right?
So you're probably gonna put it in some sort of, like, you could put it in, you know, safe deposit box in bank. You can put it at, like, a You're not gonna put $250 of gold in the safe deposit box. You're gonna put it in, like, a real vault. Right? Which Yeah. Or you're just gonna buy the ETF, which is probably Yeah. Most likely what you're really gonna do is buy the ETF. Right? But if you wanted to have some sort of, like, comparably sovereign experience with it, your your really only option is to make yourself, like, a sitting duck for $61.00 2 and, like, don't tell me that if gold is becoming systemically important again and it's getting reintroduced into the monetary system, like, don't tell me that they're not just gonna do that again. Right? Like, and that's that's a risk for, like, the GLD ETF too.
You know, easily what could happen, like, one Friday night is, or on one Sunday night is some announcement is made about a gold revaluation, for The US. And, they tell, on Monday morning, you wake up with a note that you've been stopped out of your g d GLD ETF trade for the the Friday closing value. Right? So you get paid out in cash, you know, what it was, the the minute before the announcement was made, but you don't really get to participate in that upside. And I think if you ever see You think that's actually realistic? Yeah.
For sure. I mean, look, like, there there are pros and cons to doing that, and you think about, like, what constituencies you piss off and how, valuable it might or might not be to the government to do that. But, is is it realistic in terms of could they do it? Like, yeah. How does How does this play into, like
[01:19:16] Unknown:
what what about this isn't there a similar risk for, like, Bitcoin stocks and iBit and Yeah. MicroStrategy? For sure. Yeah.
[01:19:25] Unknown:
I mean, the exact same thing could happen with either. Right? Like, if Sunday night, Besson says, like, we're effectively setting a floor price of Bitcoin of, like, you know, a million dollars or something. Nice. Arthur Hayes has a Arthur Hayes has a great, fan fiction piece from earlier this year about, why they would do that, how they could do it. And I think his target was Besson should effectively set up floor price at 1,800,000.0, per Bitcoin. So I'm holding out for that. I I think it's gonna go. Why 1.8? That's so I can't remember. He he has math that gets him there. But, yeah, go go read it. It's from, like, February. It's it's a very fun read if you want some Hobium.
But if that ever happened, like, at, you know, at the same time, like, yeah, they could absolutely just, like, cash you out at, the the value of your your iBit holdings, you know, before the announcement was made. And so all that just speaks again to, like yeah. There's, like, counterparty risk is still a thing. Like, it ain't going away. So consider that carefully as you make your allocations. And I think that definitely applies to the central banks and sovereign wealth funds that are, stacking iBit instead of stacking Bitcoin.
[01:20:32] Unknown:
Yeah. I mean, it's a fascinating thing to think about because, like, I'm pretty sure mandibles and a Bitcoin standard is I mean, freaks now. I'm a broken record. Is I think what is playing out here. But that's some crazy waves. Not necessarily to trade through, but, like, as, like, a leader of a family, you know, whatever growing family, it's like, how do you properly prepare for that? And I've come to the solution, like, real skills, building local community, and staying humble in Stacking SaaS, but it feels too simple. But, yeah, it's pretty crazy. I don't know.
[01:21:17] Unknown:
I mean, it's, like, it's simple but not easy. Right? Yeah. That's the that's the thing. But, yeah, I don't know. I still I I'm not my base case is not USD hyperinflation. So I don't know if we'll get full on mandibles, but I definitely think oh, by the way, the key to all this happening, that I was describing for '26 is, like, I think we get we do get inflation. I think they have to be okay with it going higher. I think you can make that freeze yeah. Go on. Well, I was just gonna say, I think you can make that work politically if wages are keeping up and ideally, exceeding, the rate of How would that happen?
Well, you might you might notice that, Trump has very much foregrounded the role of, ICE and border enforcement in his administration. Right? You might notice that he, or at least many people in his camp have been kind of aggressively going after the h one b program and the whatever 600,000 Chinese students that need to be admitted or not be admitted to universities in The US. Like, I mean, there's definitely a world where I think there's been significant I think anyone would say there's been significant pressure from a wage perspective on labor in the last twenty years.
The last twenty five years, right, since China entered the WTO and since kinda now. There's definitely trade stuff. Yeah. Right. And increasingly, even on white collar stuff too, like, you see there's a lot of, you know, there are a lot of tech workers and a lot of kinda, like, mid level management workers, in the last, like, ten, fifteen years that, have come from countries outside The US. And, like, this isn't, they took our jobs, like, rant, but just, like, factually, labor has gotten more competitive in The US and kind of intentionally so. Right? And I think a lot of presidents and politicians up to up till now have, like, kind of even explicitly said, like, yeah. That's a good thing. And it's good for corporate margins, and it's good for, like, it's good for inflation pressure.
It's good for, the bond market. But I think the if if you're gonna say, we're pretty much gonna cap yields and the bond market's gonna take a bath and the Fed's gonna get on sides and we're gonna shift all the issuance to the front end and, we're gonna do financial repression of the bond market and then accept the resulting, price inflation that that causes, I think you also then have the leeway to say, if I don't care about where rates go, if I don't care about the bond vigilantes or whatever, then I, then I can actually let, wages run. Right? I can let this political base potentially, be the beneficiary of, we just kicked out 50,000,000 people or whatever. And also we're trying to build, like, you know, ASI with, these massive Manhattan sized data centers all over all over the country, and we're trying to bring back manufacturing and our, defense supply chains to The US. So I can, like, do all that and spend all that and run it hot and also give the benefit of that to, like, my political base, and let them benefit from it because I'm basically sending their foreign labor competition home.
I think you could kinda do it that way. Whether that would on net be, like, good for society, or long term sustainable, I think that's much more of an open question. But I based on everything I'm seeing, like, I kinda think that's, like I kinda think they're telling you the playbook. Whether you think it'll work or not, like, different question again, but, like, that world where that's happening, again, feels, like, pretty directionally bullish for scarce assets.
[01:25:03] Unknown:
Yeah. I mean, it there's a weird dynamic because it's a weird dynamic because, like, basically, like, in a hyperinflationary environment, we crash up, Where I think that's also why markets are being weird right now is because just intrinsically people think you of course, the crash should go down, but the money's broken. So, people are concerned about where we stand right now, but, really, the trade is to is is to go long, which is a weird it's a weird dichotomy. And then, obviously, wages are just not indexed to inflation, and it's really hard if real inflation is 12%, 13%, 14% is hard to go to your boss and be like, yo, bro. Like, I every year, like, give me a 15% pay increase. It sounds insane.
So it's it's an it's a weird dynamic. So, I mean, with all that set, we've been going for a while here. I got two two more things I wanna hit on. The first thing is, is the bottom in on Bitcoin?
[01:26:21] Unknown:
Is the bottom in?
[01:26:23] Unknown:
Yeah. Do we go low what do we hit? Like, 81 k? I really wanna say yes. Okay. I really wanna say yes. I really wanna say yes. Quarterly update, we'll just you can just own it if you're wrong. It's fine. This time next year, what's the price of Bitcoin? And before John answers, I just wanna let the freaks know that ten thirty one, are very proud to invest in the best Bitcoin businesses in the world. I'm, incredibly bullish and optimistic on, the founders we have chosen to back through the years. We do have a portfolio retreat that's only the only the founders of the companies we've invested in, are invited to every October. And we did the same thought process. After a few drinks, we did the same thought process where we asked them to predict a year out in the future.
And so far, they've been incredibly wrong to the upside. It was we were probably trading what was what was the price during bear claw?
[01:27:24] Unknown:
It would have been, like, 60 k? No. This year? No. Oh oh, I mean, yeah, this year. Last year when we first made the predictions This year, we were at, like, a 120
[01:27:33] Unknown:
k, and we asked people to make a year out prediction. And, like, the lowest one maybe there was one outlier that was, like, a 100 k or 90 k or something, but everyone else is in, like, 400, 500 k, 600 The the top the top prediction,
[01:27:50] Unknown:
that came out of it, I won't say who it was because Chatham House rules Yeah. Don't say who it was. But it was 800,000,
[01:27:57] Unknown:
dollars. So Yeah. I'm not gonna go that high. For next year? Yeah.
[01:28:02] Unknown:
I was my my long pause was me trying to think about how I can best frame this to minimize the chance of being wrong and being able to say that, being able to claim some kind of victory if it if it doesn't work out. But the way that I phrased it for the bear claw prediction was effectively, like, what is the top that we hit before we see any kind of, like, 50% drawdown? Because I think that's definitely still possible depending on, like, the pace of the move. I think we're done with the days of, like, 80% draws. But yeah. Knock on wood. I know.
Monkey's paw curls again. But, I definitely think, you know, if if we have a parabolic move, but I definitely think will be possible in the environment I'm describing, you could still see a 50% draw. So to me, the top number that we hit before that happens, I'm gonna go I'm gonna go with four twenty. That's what I said at Bear Claw. I'm gonna say it now. Now I don't know Yeah. That was my next question. What'd you said at Bear Claw? Do you know what I said at Bear Claw? I think you were, like, I think you were in the three hundreds. I think you were, like, three fifty.
[01:29:13] Unknown:
I was reasonably conservative.
[01:29:15] Unknown:
Yeah. That's like the down the middle of the fairway answer that I think most people like, the the Asian woman golfer just, like Yeah. Hitting par all the time. The modal answer, if you ask most Bitcoiners, I think right now, they're like, I'd be happy with, like, a $3.50 k kinda, like, top, quote, unquote Dude, I'd be a I'd be a static $3.50. Yeah. I went higher than that because I wanted to express more bullishness, but not so much bullishness that,
[01:29:40] Unknown:
I lose all credibility if I even have any at this So you did a little 20% boost on it. Yeah. Exactly. So Okay. Well, I'm glad we got that out there so we can hold you on the record. To the freaks who are listening, stay humble on StackSites. Don't don't trade on that belief. No one has any fucking idea. And also don't trade on the belief that the bottom isn't. I'm not,
[01:30:06] Unknown:
I'm not so confident on that. Hopefully, it is. Hopefully, you can tell by my answer that I'm also, like, 51% confident at most.
[01:30:14] Unknown:
Yeah. I mean, it just didn't feel sad enough, but I don't know. Maybe I'm just bruised old man. And at this point, I just don't feel things, at least on Bitcoin price stuff. The last question I have is where did the big narrative this year has been stablecoins. Where does stablecoins fall into all of this? Or Yeah. I hate calling them stablecoins. USD tokens. USD tokens is it's it's better.
[01:30:43] Unknown:
There's, like, a massive amount we could say about this, and it's probably even worth its own, its own show, at some point. But, I would say I definitely think stable as it relates to the themes we're talking about here, I think that USD tokens will continue to proliferate. Whether they continue to leverage so called public blockchains I think a totally different question that I take the under on.
[01:31:11] Unknown:
Interesting.
[01:31:12] Unknown:
But but ultimately, I think the US government definitely has an interest in finding any marginal buyer that it can for incremental debt issuance. They basically said as much. The treasury's put out research papers on how stable coins can, you know, be the, the new valve for, t bill uptake. I think, like, the outside on the outside ran into the range, like, Besson has said, it could be, you know, as much as, like, $3,000,000,000,000 of incremental new buying through, Stablecoin proliferation around the world. And I think there's maybe some truth to that, and certainly it's not gonna hurt, and certainly, like, further encouraging that will, you know, further entrench, like, USD hegemony and, you know, you you want more people reliant on the dollar, not less. Right?
So, I I think all those themes pointed into, like, the like, this time next year, like, there will be more stable coins in circulation than there are right now. I'm I I question to some extent outside of even just, like, the, you know, long term fate of stablecoins and what they look like or what USD tokens, like, what the long term, incarnation of that is. To some degree, I, like, I question the consensus narrative that seems to have just been, like, completely accepted, like, hook line and sinker by everyone that, you know, are the salvation of the treasury market is in, like, spreading more stable coins to, like, you know, countries that are, like, fifth percentile in GDP. Like Like Nigerian taxi drivers saving treasury markets. Yeah. I mean, like, it's and and don't get me wrong, like, you know, I completely get the utility in that situation, and, you know, what it does for a person in the situation. But, like, also by the nature of the the market that you're addressing there, like, you know, that's not where, like, there ain't $3,000,000,000,000 of, like, excess value sitting in, like, Sub Saharan Africa that's, like, just antsy to go buy, like, stable coins, or, you know, in in, impoverished countries in Southeast Asia or whatever. Right? Like, so, you know, there are, like, you could say wealthier European countries like the EU, maybe, like, they would try to switch to some degree to into, USD tokens.
I I agree with the thesis that on the margin among fiat currencies, like, if you gave anyone an AB test, would they rather use the dollar or their local currency? Yeah. They'd rather use the dollar. I guess I just question the magnitude of, loose change that's out there in kind of the broader non g seven world to flow into these things and be effectively effectively provide, like, the the asset swap that's necessary to absorb all the treasury issuance that we're gonna need over the next few years. So, you know, I I think, and if you look at the pace of, stablecoin growth, like, to get to, I don't have the math off the top of my head, but, like, to get to over the next couple years, like, the target that this, like, $3,000,000,000,000 target that Dustin and Myron have thrown out, you know, we need a a dramatic acceleration, from where it's been this year to kinda bridge to that to that number, to have, like, incremental debt to absorb the incremental debt issuance to that degree. So I think it's a it's a bit of a lazy narrative in my mind that, like, the government loves stable coins and stable coins are gonna be the next, like, buyer of all this issuance. Like, I I don't really know if there's, like, enough capacity to, like, make that work. But I do think USD tokens in some form will continue to to grow and proliferate.
[01:34:49] Unknown:
Well, so I have the stats in front of me. I mean, Tether is very much the king of USD tokens. I think everyone else is kinda negligible, you know, Circle being the the the biggest quote, unquote competitor. And they were kind of banking on getting Tethr banned or even worse than banned, you know, like cruise missile, I always would say. And it looks like that ship has sailed considering how embedded Tethr has gotten with, the powers that be in The US. You know, Howard Lutnick is holding a bunch of their treasuries while his sons are because he's not involved in the day to day at Canter, allegedly.
But, and Howard's in the White House. So, like, I mean, Tether's, like, pretty much here to stay. They're the they're the juggernaut. A stat for you, a year ago, Tether in circulation was a $140,000,000,000, and it's basically backed one to one with treasury. So you can kinda think of it as treasury demand. I think this is a interesting way I think this is a correct way of thinking about it. And now it's at a 186,000,000,000. So that was an incremental 40,000,000,000 in treasury demand. Yep. Does that make sense?
[01:36:04] Unknown:
Yeah. I think that's basically right. Assuming, like, each one of those is, like, totally, like, incremental, like, dollar for dollar,
[01:36:10] Unknown:
new treasury demand. So then I have a question for you that I just thought of while I was on CoinMarketCap looking up these stats, a site that I do not go to very often, but I don't know where else I would check a TetherMarketCap. Tether Gold is relatively new to the picture. So USD I mean, you don't have to actually have an answer for me because I'm just kinda Tether USD is at a 186,000,000,000 circulating, and Tether Gold is at 1,600,000,000.0. So it's about a 100 x more USDT measured in dollars, than what are they called? Tether Gold? X a u t. U t. Yeah.
Do you think and and this is interesting because people don't think about it, I think, when they call it stable coins. But if you think about USD tokens versus gold tokens, is there, like, a dark horse? I mean, this is, like, nothing you can actually trade, but, if if they let Tether into the which it seems like, you know, Tether is, like it's very much kinda like a Trojan horse thing. Right? They're obviously Bitcoiners. They hold a lot of gold on balance sheet too. They hold a lot of Bitcoin on balance sheet and a lot of gold. Maybe the Nigerian cab driver switches to the proverbial Nigerian cab driver. Maybe he switches to Tether Gold. Maybe that's the real stable coin all along.
[01:37:39] Unknown:
Well, that would be, extremely bearish for the, the USD token thesis if if that actually happens. But it's making me think we should start a, Tether Gold Treasury company.
[01:37:50] Unknown:
Tether Gold no. I mean, what did I say? I will I will break Chatham House rules for myself. In the 10:31 group chat, I suggested that we launched the first $50.50 split silver Bitcoin treasury company stacking silver. It's got a ring to it. It's outperformed gold. Yeah. It's positive stacks over with it and Bitcoin. Well, I've like, you could do crazy things. Like, are there any silver I guess mining companies, right, would be, like, the closest thing, but they don't even keep on balance sheet that much silver or gold. Right? Yeah. I mean, I the vast majority of precious metals miners are, like, selling it all right away. But the balance sheet is is, like, their claims. Like, what's in the ground is the balance sheet. Right?
[01:38:43] Unknown:
Well, I mean, they've got, like, traditional, like, fiat assets too, and, like, PP and E and everything. But, yes, they also have, like, whatever, claims they have. So, like, existing mines or, like, proved reserves or whatever, would be on there as well. But, yeah, I don't I don't know if I would call that a silver treasury company. So maybe it's, maybe there's a lot of financial innovation that I think we could figure out, with pipeline. We should this would be like a a we got Tether Gold, we got silver, then we can launch then you can launch so we got our silver treasury company, then we can, work with, maybe Bitwise would do it. Maybe they would do a, a two x levered long, single stock, ETF on our silver treasury company.
We launched several of these. They can put them in a basket and do that as an ETF as well. So there's a lot of, we're, you know, we're we're fixing capital markets here. It really does make it all seem like a scam. It would be the funniest it would be the funniest timeline
[01:39:43] Unknown:
if all this shit was a flash in the pan. Bitcoin was a flash in the pan, and then, like, Apple started transitioning some of their cash into silver. Just like a massively cash flow positive business just just, putting putting, quote, unquote, precious metals directly on balance sheet.
[01:40:03] Unknown:
It would be it would be very it would be specifically funny if it was silver. Right? Because then, like, none of the sound none of, like, the sound money crew would actually be, like, cabby.
[01:40:11] Unknown:
And it makes it it makes it way more funnier if it's not gold. Interesting. Well, I'm glad we walked walked through that together. John, this has been great. I have rabbit hole recap, and we've been going for an hour and forty. I told you I told John. John was trying to plan his day. I told him we're gonna do a tight hour, and we're at hour forty right now. Thank you for your time, sir.
[01:40:37] Unknown:
Yeah. No worries. I I know what a tight hour means,
[01:40:40] Unknown:
largely largely because I can't stop talking, so that's that's on me. Yeah. And you have to work with me. It's a pleasure it's a pleasure getting to spend so much time with you both on a professional capacity and a dispatch capacity. Do you have, any final thoughts for the freaks before we wrap and with with the expectation that we will see you in a in a quarter or so three months?
[01:41:03] Unknown:
Yeah. Final thoughts, somebody we can just talk about. Go take a look at the Check on Chain dashboard if you're not following James Check who does on chain analytics. He's really the only game in town as far as I'm concerned, for kinda looking at the way that, Bitcoin flows are shaping up on chain. And he's got charts that you can just, for free, use on his website. One of which shows basically, like, revived supply across basically, like, ages of UTXOs. And first of all, I'd say, if you go to that dashboard, you'll see, if you click out of everything but, like, UTXOs that are, like, over five years old, you're gonna see that, like, that piece of, like, the selling in the market are assuming that every UTXO that moves is, like, actually being sold, which is, like, an overaggressive assumption, but let's say, for the sake of argument, you're gonna see for all the OG selling narrative, that's a tiny piece of total distribution, in in the last, in the last year, last couple years for long term holders, which he he defines anything over six months because of statistically, at that point, you're basically just as likely to to move or not move, a UTXO. But in any case, the first thing you're gonna see is that's a tiny piece of the market. It is higher than most periods in history.
It's been higher before, but that to me, to some extent, calls into a bit of question, like, that we've got this view that, like, OGs are selling, OGs are dumping, whales are dumping, that's it. A, historically, it's not really even that far off the mark from where it's been. But, b, if you look at that dashboard, there has indeed been, like, a ton of Revive supply between, you know, one year, two years, three years, up to five years, and then and beyond. And the price is at a level that, like, most of most of, like, financial commentariat would have thought was, like, absolutely ridiculous just a few years ago. Right? Especially after FTX.
And it's held in at that level at those, like, apparently ridiculous levels despite this massive wave of revived supply. And some of the some of the trades on the other side have been treasury companies, have been MSTR, but not like a huge amount. And some of it's been ETFs that's, like, that's been big, but it doesn't those two together, like, don't come close to explaining all of it. So the question I leave people with is who's on the other side? Who's on the other side of the trade? And why do they appear patient and, you know, able to let the market come to them?
Why are they why is it the type of buyer that's not FOMO ing in, at just the wrong time? Who's on the other side? That's what I'll leave people with. I think the answer to that question is about as should make you about as bullish as you can get, but I'll just leave people with that, rhetorical question to to cut off here.
[01:44:04] Unknown:
Love it. Yeah. Well said. And I would just the the whole OG selling thing is oversold. We hear that all the time. We've heard in all the past, quote, unquote, scam cycles, fake cycles, psy ops cycles. Psy ops cycle. Price goes up, people sell. Every seller has a buyer. It's important to remember. Freaks. I'll put all relevant links in the show notes as always. I will get this up later today. So when you're listening to it it was earlier today that we recorded. You can find John at primal.net/john. Give us your feedback. I I hope you I think you're I think people find these converse even though they're a little bit outside the wheelhouse, they're very much outside the wheelhouse to still dispatch.
I think it's still highly relevant to people. I like the transparency. I mean, so much of our time is focused on building out ten thirty one, so I like the transparency of of what we're thinking about on the market side. But, also, I just think, you know, we come at it from a different angle than maybe than we definitely come at it from a different angle than than your typical, you know, whatever, macro podcasts, when we talk about these things. So I think it'd be highly relevant. But, anyway, Freaks, feedback is always appreciated. The easiest way is your favorite nostril app. I really like primal.
Ten thirty one's the largest investor in primal, and we're actually involved in the development of it. And we're gonna make it better. It's gonna be even better. Next time John joins, it's gonna be it's gonna be amazing. It's gonna be the best app ever. You're gonna love it. The best.
[01:45:56] Unknown:
Many people that I.
[01:45:58] Unknown:
I got another dispatch lined up for next week. We're gonna keep the ball rolling. Share with your friends and family. Thank you for your support. Thank you, John, for joining us. This was a great chat. Thanks for having me. Cheers. Stay humble, Stack Sats. Peace.
Four Year Cycles: Liquidity vs. halving
Market manipulation?
Day vs. night: IBIT hours, ETFs, stay humble and stack sats
Premarket/postmarket liquidity and trading
Quantum: FUD Rising
Address types at risk: P2PK, P2PKH race, Taproot exposure
Practical mitigations
Long-range vs. short-range quantum attacks and feasibility
Reality check: scaling physical QC and secrecy constraints
Coordination and upgrade paths: post-quantum options
Social contract: no seizure of old coins
Did quantum FUD drive the drawdown?
Why gold and silver are at highs while Bitcoin lags
Mega-cap tech as the new savings account and TINA
Fed cuts, QT ends, QE or not semantics, and Bitcoins response
Looking ahead: more cuts, policy path, and 2026 setup
Giga-bullish case: scarce assets vs. fiscal-monetary impulse
Gold vs. Bitcoin for individuals and sovereigns
Counterparty risk with ETFs and the case for self-custody
Bottom in? Price targets, humility, and risk management
USD tokens (stablecoins): growth, limits, and policy aims
Tethers dominance, gold tokens, and a silver tangent
Closing thoughts: on-chain flows, whos buying, and sign-off
