#689: Q3 2025 Monetary Base Update with Matthew Mežinskis

Episode Transcript
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(00:00):
Matthew is anxious.

(00:01):
Our pet's heads are falling off.
Bitcoin down 6% today, sitting at $86,262.
Is it over?
Marty, we've been through this before.
We need to step back, congratulate everyone who's listening for still having diamond hands.

(00:27):
If you traded a little bit, congratulations even more.
But life is good when you hold Bitcoin, spend time with your family.
Don't think about this too much.
Although I haven't done, you know, like I was telling you, I was even blissfully sleeping.
Usually I'm blissfully sleeping during Twitter drama, you know, primetime US Twitter drama over here in Europe.

(00:48):
But I did want to check and I didn't even check it.
This $5,000 drop has to be, not necessarily in percentage terms, but in gross dollar terms, one of the biggest daily drops we've had.
Really?
We're right back to where we were seven days ago.

(01:09):
We're actually up 37 basis points since this time last week.
Depending on your time frame, it's either bullish or bearish.
We did a nice little BART formation here on the chart.
Yeah, you got the old Simpsons.
People are very worried, though.
People are looking out there and they're saying,

(01:30):
hey, cycle theory is broken.
There's a lot of demand out there.
There's a lot of buying, a lot of ETF inflows,
but the price isn't moving.
JP Morgan is manipulating the price of MicroStrategy's stock.
there's Caitlin Longs out there saying there's price repression.

(01:52):
What are you seeing, sir?
Well, you know, on my streams, I try to do some deep dives on the price
relative to other assets over a longer period of time.
And with the theory being that, you know, you can manipulate,

(02:13):
if you want to use that word, manipulate or suppress markets,
So you can absolutely do that in the short term, maybe even the medium term, but it's very difficult to do that over the long term.
I think that'd be most evidenced by gold, right?
There's a lot of Bitcoin conspiracies don't hold a candle to gold conspiracies.

(02:36):
You know, Alan Greenspan said in 1996 or so, central banks stand ready to sell gold should the price rise.
And yet here we are, gold $4,000 an ounce.
Now, a Bitcoiner wouldn't like that.
Bitcoiners expect bigger moves faster.

(02:57):
And we are indeed on a much faster growth trajectory than the gold market.
But I think the market eventually gets that price that buyers and sellers accurately reflect
their demand and supply.

(03:19):
And I think will eventually sort itself out.
But yeah, I envisioned doing my daily streams here.
You've seen all my percentiles and running against the power curve.
And I envisioned during exactly this time talking about,
okay, so how many days have we been above the 80th percentile, 90th percentile,

(03:40):
just preparing people that we could run, trying to stay calm.
I like the phrase, my friend, he goes by APSK.
He's a good power law.
He does a lot of charts on Twitter.
He's like, you said Bitcoin would break all our models,
but didn't expect that to be to the downside.
So, you know, we're going to have to see.

(04:04):
But in general, you know, we can look at the charts whenever you want.
But I mean, in general, we're still on a power trend.
Nothing is broken there.
And as long as you understand that Bitcoin grows like a network, which obviously you've talked to plenty of people who can reinforce that way different than any other traditional finance asset.

(04:34):
I think you're going to be okay.
And the best way to do that is we've been talking about now for, I don't know how many years.
Going on seven.
It's crazy.
Yeah. But I was not going to say just about the base money stuff, because that is true for the sort of the taxonomy of where we are. But rely on that power curve for some comfort.

(05:01):
because I still think, and I've said this before in your show, I still think that
95% of what Bitcoin does right now is relative to the power curve, right? Whether it's over,
under, this is a trajectory of network adoption. You put it on log-log scale. It's a beautiful
straight line. This is how networks grow. We can talk about that in as much detail as you want.

(05:27):
but that nothing has changed from that thesis.
And, you know, you can compare it with gold,
compare it with dollars, the stock market.
They all have power relationships, which is wild.
It is a wild thing because, you know,
the rest of the world is run on credit
and grows exponentially and often very in a non-stable manner.

(05:54):
So, even with these big swings in Bitcoin, you're still very much hugging this 96% R-squared
power trend, which is something to take comfort in. It's a sustainable trend, unlike
TradFi trends, which are not stable, often very volatile, often booms and busts.

(06:20):
Bitcoin has a different trend.
Yeah.
And I'm not sure if you've been following it, but to your point, 95% of what we see in price action is driven by this network adoption.
The other 5% by external variables.
If we're looking at short term.

(06:43):
Impact on price.
I mean, I was a bit tongue in cheek with the suppression talk earlier.
But I think what we're seeing now is McQueen's use case as a liquidity alarm bell.
I'm not sure if you saw Japanese bond markets last night and over the course of last month.
Looks like they're blowing out.

(07:05):
BOJ came out.
0I don't know if it was the BOJ or just an official, but sort of signaling, hey, we may have to raise rates here to control this runaway yield curve that we have here.
Yeah. Yeah. And it's funny because Japan, it's a story like Greece. I mean, they've been going at this for 30 years now. Excess of money printing. It sort of always seems to be this surprise that we have to deal with.

(07:39):
But how long this carry trade will continue to go, to anybody's guess, I don't know.
The yen, unless you're really worried about MetaPlanet, most people, it's just Japanese

(08:00):
investors that are usually...
The ones most affected are Japanese investors trying to get in and out of other currencies
to get more yield than they used to get or typically get with their own currency.
I don't think about it too much, but yeah, it is a major currency.

(08:20):
Yeah.
Well, let's dive into the charts, give people some peace of mind.
Good.
All right.
So obviously, you want to start with price first and foremost.
Okay, this is the old power curve.

(08:41):
If this was an exponential trend, as I often talk about, this would be a straight line,
not this nice, smooth, sustainable line.
And we're definitely low.
All right.
I got this little dip in, 86,600 when I pulled in the model.

(09:02):
If you just go to the fun ones, let's go to say the 90th percentile.
All right.
I did quantiles now, which is a little different.
I would have the sort of jagged lines in the past sometimes because that was a multiple overrun trend.
To keep a fixed multiple now, this is a fixed percentile.
In any event, it's a very similar result.

(09:23):
So I envisioned somewhere here, Bitcoin jumping above, and then I'd just be talking to my viewers like,
okay, so let's just expect how many days are we above it here? Let's just think about how many
days we've been above it, which usually is not more than two to three months, right?
But that hasn't materialized other than a little bit at the end of last year after the election,

(09:47):
and then a little bit last summer. But again, when I show these charts, I always caution
a lot of what the analysts, the technical traders will do on trading view is they're usually thinking
in straight line and log linear space or exponential growth, which is how typically

(10:10):
stocks move. And Bitcoin just doesn't do that. So I think whether you're talking about these
Elliott waves or ABCD corrections, all that stuff, Bitcoin, there's not an established
method over the long term that it's definitely going to do that because it just does not have
a straight line uh exponential growth on log scale so anyway if we take it the median the

(10:34):
50th percentile it's a little bit below the trend uh 40th and then 30th is where we are
so another way of saying that is based on the power trend which should give everybody a lot of comfort
the price right now uh has only been this low 30 of the time okay so 6 500 days of bitcoin or

(11:00):
whatever it is you know 600 days would be 10 so 1800 days something like that you know you can just
do the rough math it's been at this level of course it can go lower can always go lower but
But what this can tell us is just the relative risk of where the price is relative to its relationship to the trend in the past.

(11:27):
And if we go to the lowest levels expected, which would be levels like this back in 2022 with the SBF puking and all the other DeFi scams of that time.
right now that suggests a lowest lowest level of 57 000 bitcoin by the end of the year

(11:52):
it'll be a little bit higher of 60 59 000 right the trend itself the overall trend will be 125k
uh and then getting in the 90th percentile which whether you do it a two different a
couple different metrics. I think you get like 200k or 250k. Now I have been one of the few people to

(12:16):
not fully discount four-year cycles simply because we haven't been through it. I know a lot of people
seem to be keen to make that call. I'm not saying it's definitely not going to be over. So it's kind
a wimpy call from that side.
But I just, I don't know.
The data, you know, the data's not all in yet.

(12:38):
We haven't even finished the year.
You never know. 143 00:12:40,1000 --> 00:12:41,780 There could still be a pump.
And there's just some other interesting little data
that I could show you that shows at least something
is happening on chain with some movement of coins.
So we can look at that as well.
But yeah, I'll stop there.
Yeah, I mean, this is a good day to hop on.

(13:00):
with you. The price is falling.
Wondering if you're out there,
particularly if you relatively new I sure you thinking maybe you bought Bitcoin above 100 maybe maybe you bought a little bit at the top at to You thinking gosh what did I do

(13:21):
What did I do?
What am I doing?
Did I get duped by these people?
This is why we check in with Matthew once a quarter.
Look at the power trend because nothing is out of whack here.
Yeah, and it moves fast.
If you want to know some numbers as far as how this thing goes,
The trend itself goes up $100 a day, still does.

(13:42):
All right.
By the end of the year, the trend will be growing at 42% a year, 42%.
So you compare that to your stocks, bonds, gold, whatever you want to, JGBs, whatever
you want to compare it with.
The trick, the interesting thing, which a lot of people are trying to figure out, including

(14:06):
myself is there's this interesting, as we have this thing, it's not a straight line, right? Like
the stock market would be the gold market, which I'll show you in a second. That actually means
that the rate of growth is declining for Bitcoin ever so slightly. You can find these calculations
on my website, but it's an interesting phenomenon.

(14:33):
And well, without getting too deep into it, I think it's possible that Bitcoin could go
exponential, which means it could turn into a straight line on log scale, which by the way,
is faster growth. If you just want to go sort of full case or...
I don't know, you might like exponential growth.

(14:56):
But the thing is, wrapped inside of exponential growth,
there's a lot of fiat interest.
And that's just the nature of the math.
Mortgages, your car mortgage lines of credit,
everything in the world is exponential growth.
And so if Bitcoin starts to take on enough fiat credit behind it,

(15:16):
maybe Bitcoin itself will be pulled into this exponential growth.
What I'm hoping though, because this is sort of an idea that I think is like, okay, well, maybe early investors will just have number go up, but the rest of us will be still laden with a lot of debt and there'll be debt, you know, a lot of fiat interests swirling around the lower levels of the Bitcoin system.

(15:41):
I think a more interesting scenario could be as the world continues to go through these debt crises.
However, they may play out.
There's a lot of theories there.
But however these sort of sovereign debt crises or situations may play out, whether there's excessive inflation or some deflationary crashes, which, as you know, you and I are both inflationists.

(16:06):
They're always going to print to paper over that.
But in any event, how this might play out is if the world starts to understand that Bitcoin really is that risk-free asset, and no matter how you want to phrase it, you cannot print Satoshis like you can print dollars, there's a possibility that credit could completely change.

(16:30):
The whole game of credit could change.
And so that's what I'm trying to think about right now a lot.
I talk about this a lot because then you might be in a situation where this nice, beautiful, sustainable power curve of Bitcoin changes the entire TradFi system.
The entire TradFi system doesn't go into these unsustainable booms and busts, but it more becomes into the sort of gentle growth that mirrors the growth of Bitcoin that you can see with the hash rate or address growth or the growth of the price and market cap itself.

(17:00):
so that's a little bit you know that's a lot for the start of the episode but that's one of the
things that i'm thinking about sort of will bitcoin change the system or will bitcoin be changed
by the system yeah and this is a thread we've been pulling on all year essentially when the power
trend slope and the exponential slope intersect what what takes over what

(17:26):
I hope it's the
I hope it's the
the Bitcoinization of finance
and the sort of curbing of
excess risk taking
and credit creation
I'm hopeful that can happen too
yeah
but it's going to be a fight
you know I mean like
we talk about this all the time
in crypto Twitter right

(17:47):
Bitcoin Twitter
crypto Twitter
it's like okay
well we have all these
you know you have these like
Ethereum ETFs
You have a lot of Wall Street chasing a lot of garbage, as they usually do.
Zcash.
Zcash.
It's not good right now.
Zcash.
Yes.
Yes.
Unfortunately, I don't have any of those saved.

(18:11):
Hawk into Bitcoin, but when you win some, you lose some.
um the the idea that wall street can just sort of come in and overtake the bitcoin industry like
it's overtaken any sort of native nascent industry is of course strong in this you know you started

(18:33):
out the top of the show talking about what caitlin long's saying what a lot of people in wall street
are saying and i think still a lot of people in wall street don't even buy into bitcoin right they're
more interested in AI, not at all asking about the energy consumption of AI versus Bitcoin,
but that's another story. And the verdicts, the jury's still out on that, obviously. Bitcoin is

(18:59):
a global thing. It's just not, even though it might be very nicely tailored for some collateralized
Bitcoin instruments where you can draw on it,
sort of like you can draw on Manhattan real estate
and all that stuff.
Bitcoin is a global system

(19:20):
that's really outside the purview of any central bank.
And as long as it doesn't get co-opted by central banks
like the gold market has done in the last 100 years,
I think at least that short to midterm manipulation to use that word would be very difficult.

(19:43):
And probably not even the longterm, as we said, I don't think the longterm, you can manipulate this stuff over the longterm, but they're going to give it a big fight, man.
They're going to give it a big fight. And, you know, all these people were talking about a year ago, how the Trump administration, I'm curious to hear your thoughts about this.
like the Trump administration's going to legitimize Bitcoin and crypto.

(20:06):
It's hard for me to see them legitimizing anything at the moment, Marty,
but I'd be curious what you think about how –
I do not think that the nation-state threat to Bitcoin is over yet.
A lot of people thought it was a year ago.
No, I don't think it is either.
I think we have some recent actions that would prove that the fight is not over, particularly the samurai plea deal and then sentencing, which was incredibly egregious.

(20:43):
in terms of the attack on open source developers
building non-custodial wallet software being punished for that.
That's not a good sign.
That's happening in Trump's America.
And then as it pertains to Trump and his crypto policy,
I think obviously the two of us are of a certain purview

(21:10):
that Bitcoin is a thing worth focusing on
And if we're just being objective of the first 10 months, 11 months of 10 months of this administration, it's been unfocused on Bitcoin and more focused on stable coins market structure and potentially.
creating the foundation to co-op Bitcoin

(21:33):
by putting strict laws and regulations around it
and sort of ordaining particular companies
as those are the ones that you're allowed to interact with Bitcoin.
And again, going back to the samurai thing,
the sort of punishment of those using Bitcoin

(21:57):
in a self-sovereign fashion and building tools to enable people to do that.
But yeah, I think we're in a weird spot.
And actually, I think the way you set that up in terms of
is Bitcoin going to get co-opted like gold or is it going to break free
considering the fact that it is this unique beast, this unique tool

(22:20):
that gives you the ability to do both.
I think the last six months specifically have been, if you're not paying attention, you probably should be because we've seen this sort of conflict coming to be, whether it's micro strategy, strategy, launching all these preferred offerings, trying to put Bitcoin into these wrappers and provide yield on top of it.

(22:50):
obviously strategy stock has not been doing well we can get into the theories around jp morgan and
their attempts to co-opt products like that because they they deem them as a threat but i
think if you juxtapose sort of those actions with what we've seen from companies like block
and their square point of sale rollout to really and their aggressive their aggressive campaign to

(23:13):
make Bitcoin everyday money. I think if you look at public markets and two of the behemoths
in public markets as it pertains to Bitcoin strategy in block, we're seeing those two
visions sort of duke it out at that level right now as well. Maybe not even duke it out,

(23:34):
just simply present two different paths for Bitcoin's future.
Yeah. And it's going to be interesting to see how strong the US really can be in some of these things with this global asset.
Because I was on a panel in Helsinki with Peter Todd, and I'm back over the summer, and it always revolves back to this sort of political nature versus the sort of economic force that Bitcoin is.

(24:03):
And Peter was he said this a lot.
You've probably seen him, right?
You know, he's referenced the cypherpunks in the 90s and the
code of speech and, you know, the national security issues
that were surrounding code crossing borders in the 90s and

(24:24):
the US as the sole
hegemon at the time, that was a huge deal.
And it was one that that issue was one in the courts of the US that, that, you know, code was speech to some extent.
And it's not, you know, these national security issues like you could take code across borders.

(24:46):
And the cypherpunks did that.
On the other hand, so I think there's a lot of.
So what Peter was saying, basically, is at some point it is going to have to be political.
You're going to have to win politically.
But then on the other hand, I think about this a lot.
in that it seems almost bizarre that Bitcoin would have to be deemed legitimate.

(25:10):
At the end of the day, what's it going to come down to?
A Supreme Court ruling over something specific?
It's like five guys in black robes or ladies in black robes deciding that this some Bitcoin ruling is really going to sort of set the policy for Bitcoin.

(25:31):
in the next 50 years.
I think that that's actually less likely,
especially based on the way that the rest
of the geopolitical world is kind of going at the moment.
You know, China's trying to be big in gold
and obviously Russia's a basket case,
which we are dealing with over here.
And the U.S. is having its own new approaches

(25:55):
to geopolitical issues in the Americas, North and South.
So it seems less likely to me that a Supreme Court ruling
would be sort of like the final arbiter of where we go with some of this.
But anyway, starting to philosophize a lot on that,
so we can bring it back to the charts.

(26:17):
So anyway point is 70 of the time will have been higher than this relative to the trend So with some statistical accuracy you can say there a 70 probability that we be higher than this into next year

(26:37):
especially if you don't consider,
or if you consider that we have not had really a blow off top,
which would make it more likely
that we shoot below these levels.
Anything can happen,
but that's sort of how I'm looking at it.
If you look at gold now, all right, so here's gold over the last 50 years on a weekly basis.

(27:01):
And its trend is not as good, but it's an exponential trend, straight line.
See, Bitcoin has this nice curve, right?
Which everybody should know now, by now in log space, log linear.
Gold is a straight line, so it's exponential growth.
And obviously, we're super, super high.
If you do these quantile regressions, which sort of just take every individual level as their own thing and try to run their own trend lines, the worst was in the early 2000s.

(27:32):
And the best is indeed now.
It's relative to the 1980 top.
And relative to the 2011 top, we're creating new highs basically almost every day.
whether this is some real long-term resistance i have no idea but i can tell you one thing

(27:54):
the peter like some peter i've drawn these different trends on my stream like this line
right here if you just like imagine here like the price my mouse is over the b here which it
shouldn't be a b actually just realized with this chart because it's a gold price but uh over the b
it is obviously going super fast from the end of 2023 and

(28:19):
or the end of uh yeah the end of 2023 that's like a 40 percent uh trend line growth a year
40 it's matching bitcoin basically that and you know that that's like a peter shift trend i just
do not imagine that continuing uh in fact you can run all the numbers like it's just it's not

(28:40):
going to continue it could it go for another year too yeah could we get to ten thousand dollar gold
sure but gold just is not on any sort of a trend to reflect you know a hundred thousand dollar gold
or two hundred thousand dollar gold well so yeah does this chart speak to you in terms of the thread

(29:02):
we've been pulling on in terms of bitcoin power trend meeting the exponential growth trend of
credit at some point in the future.
And what happens with this?
So we're looking at gold over the last 50 years.
Obviously, gold, I would imagine in the early days,
millennia ago, it had a power trend adoption

(29:24):
as it was being monetized.
And obviously, it's been fully monetized for
millennia now at this point.
And now that it's on this exponential growth trend,
is that what happened to gold?
it sort of ran into the exponential trend of credit growth
long before Bitcoin.

(29:46):
And this was the end product.
That's an interesting question.
I've never been asked that or thought about that.
I have no idea if gold would have followed a power trend
at the beginning, but I imagine that...

(30:07):
If gold was the general unit of account in silver as well, and we had credit, which is Sydney Homer has said from the history of interest rates credit, which I agree with, you know, credit, credit is long before gold, right?
It can be in primitive societies, advanced societies.
You don't need barter.

(30:28):
You don't need money.
You can promise your uncle the proceeds from the yield from the crop next season if he lets you use his plow or something.
I mean, you can make credit out of anything.
And credit itself by nature has interest.
I would imagine that there would still be some sort of an exponential function always, which, again, makes Bitcoin really, really unique, weird.

(30:52):
Like, I've never seen an asset grow in power.
so that's what i would say there um as far as uh bitcoin's or sorry gold's growth it's really not
that uh exciting which is another funny thing right it's been you know a lot of people say

(31:14):
this number like eight nine percent but that's if you're over the long term of gold that's if
you cherry pick down here, the $35 price, and like now, $4,000 price, then you can get up to
8%, 9%. But that's a cherry picked sort of present future value, as I always try to do.
If you take the long term trend, measure the slope of that, you're at 5.25%, 5%.

(31:38):
So it's actually not even been a great hedge if we consider that the global money supply,
which I also measure and have always measured every quarter for the last eight years, has been
growing at 10% to 12%. 12%, if you think about it more in native terms, 10% in USD terms, it means

(32:00):
the USD accretes 2% over other currencies or other currencies lose 2% relative to the dollar.
On average, it shows the dollar's supremacy. If you think about those rates of growth, then yeah,
Gold is actually not even that great there.
So I would say it doesn't apply.
It's a gold, gold, just it's so wrapped around credit.

(32:24):
Here's the thing with Bitcoin.
Bottom line, if Satoshis are so rare, as rare as we know that they're going to be,
you can look at the supply schedule that how many Satoshis are going to be, you know, minted 50 years from now.
And it's like such a small amount.
credit's going to become
you know

(32:45):
it's
going to be
in my view very difficult to have credit markets
because
holding on to those satoshis
passing them down to your family is going to be a much more
valuable endeavor than just
you know going after a few extra percentage points
on some
short term corporate loan which might

(33:05):
fail right
and
so that's the one thing. Then the other thing is
it's just how long can this fiat game keep going?
I think it can actually keep going for a long, long time and I can show you lots of charts
that will sort of reflect that.

(33:26):
But I have a hard time, unless it's
full, this is where unless we sort of lose the legislative or the political
battle, like unless
everyone is literally sort of at the you know in a financial panopticon at the
wind of a gun forced to use fiat currency for the next 80 years and again that's going to happen for

(33:48):
a while you know next 10 20 years that's going to start to be a question mark when there's
you know bitcoin starts to become so huge uh i think it's gonna be hard you know everything that
You've always talked about on your show is basically what I'm describing here in mathematical terms.
It's going to be hard to issue more and more debt to raise money for your armies and militaries.

(34:11):
It's going to be hard to issue more and more debt for your welfare programs.
Bitcoin is what you're going to be fighting for.
Everybody's going to be fighting for.
And Bitcoin doesn't mix well with exponential growth.
It's a limited sustainable growth pattern.
And it's just doesn't, you know, it's hard to wrap your mind around this idea.

(34:35):
But, you know, if credit, if debt, if interest represents something that can take off, can gallop exponentially and cause a lot of these booms and busts, Bitcoin by its nature, and we've seen this in the math, does not do that.
Even in dollar terms, which is wild.
so i have a hard time seeing that it might do that in the future i can serve charts on this

(35:02):
as well to make it more concrete like as far as bitcoin continue to grow as power versus maybe
growing exponential we can look at those but the general idea is yeah i think a more uh just and
exciting future for everybody would be if we're not all forced to use these fiat units

(35:22):
And then the powers that be understand that they need to accumulate Bitcoin for their war chests and their treasury chests more than having the right to print money.
So it's going to be crazy.
Next 20 years is when you're going to start to really, the rubber is going to hit the road.

(35:43):
That's where Bitcoin is going to be large enough to meet the level of the U.S. debt or the monetary base or a lot of these other things in the TradFi system.
Yeah.
Well, bring it back to, I mean, you mentioned on-chain data that you've seen.

(36:04):
What are we seeing?
There's some hot waves.
This is a great site, by the way. It's ResearchBitcoin. People don't know about it.
You can get most of the data for free, a little bit for some of the extra data, but these are

(36:24):
all the different HODL waves, right? So generally, as people HODL, you'll see longer and longer,
more darker, purpley, blue-colored waves here. Every once in a while, though, you'll see those
waves shrink like we did here July 4th. Someone sent like 84,000 bitcoins to Gemini, right?

(36:45):
Actually, this deep 10-year hodling wave shrank. Anyway, if you take out the longer-term waves and
you just cap it at a year, we are seeing some little bit of short-term UTXOs growing, which
typically have been around booms, right?

(37:06):
That takes time. It could take a year.
But you see it happen here, you see it happen here, you see it happen here.
And of course, we've had this long boom, right?
With the three distinct tops here since the ETFs were
approved. But there was an interesting notable jump here
over the last couple of days.

(37:28):
again i'm not i'm not saying but the farm on it but as the utxos are destroyed on the longer side
and uh created on the shorter side that sometimes means some excess hype in the markets for price
well in fact all the times means that when we go really extended and we're you know you can see we

(37:56):
had three sort of two booms in the last one and even during this last price
can you hear me yeah all right sorry uh and even during this last uh price spike in august of 2025
we did not have as much of a sort of a boom in the short term uh utxos but now we are which is

(38:21):
interesting with this deep discount where we got down to you know 80 85k intraday i think intraday
was even 80 right i don't think i picked it up on the daily 85 but so there's something
so we're gonna pump in the end going straight to the to the 90th percentile

(38:44):
it's uh it's probably too early too early to tell uh you know i was talking to james
check matey a couple weeks ago and he was trying to you know he's very good at reading the on
chain data he's like probably shouldn't say it but it kind of looks like a dip and uh
it turned out to be a deep dip if it still is just a dip you know to be seen but

(39:09):
there is a noticeable jump
in
short-term
UTXOs. And if that
spike in short-term
UTXOs gets
sort of proportionately high
relative to the other UTXOs,
then you
always see the price pump.

(39:30):
Yeah.
So,
look,
do I have to give my Midwest
caveat of not financial advice I never going to give you that I never never going to say bet the farm We pumping to the 90th percentile but it fun to look at right
Yeah.
It's fun to look at this data.

(39:50):
It's fun to look at all of it. Well, and that's the other thing I think
I've been trying to really wrap my head around too, is like, what's going on in the incumbent
fiat system? Like, what's your read on what's going on here in the United States? What's
happening broadly with these geopolitical tensions increasing obviously we talked about the japanese

(40:12):
bond yield blowing out earlier it seems like we're at this point and i don't know if you've
been following the tea leaves of like deep economic prognostic not prognosticating but
people trying to read what besant and trump are doing at the treasury and what they're trying to
do at the Fed. And there's a lot of talk about this needle threading that they're attempting to

(40:37):
do with tariffs, reshoring manufacturing, weakening the dollar, and trying to make sure that we can
get it on the other side and still have a sense of dominance, particularly in the realm of
monetary economics. And I think we're just in a really weird inflection point as it pertains

(41:01):
to geopolitics and its effects on macroeconomics?
Yeah, two things I would say.
Two things come to mind.
The first one, to be a little bit redundant on purpose, what I just talked about at the
top of the show, take comfort in the fact that we have a very unique trend for Bitcoin.

(41:24):
That, you know, look, I've been on this trend, you know, the bleeding edge of this trend
since the beginning.
a lot of wacky characters in the space of the in bitcoin in general but you know the people talking
about different trends and you know we've had stock to flow projections and all this stuff

(41:44):
i've been following this for seven years the the power curve itself what's your 2025 yeah and 2018
i first did it so the giovanni character uh he's big into it he's a little bit ahead of me
but no matter how you you know follow people in this space in this in this space everybody's very

(42:06):
passionate let's say and what i can tell you trying to be you know mostly understated with
some disclaimers as i usually do uh i'm highly confident that the power curve itself is
it's it's like one of the main drivers of growth and it's the reason you know i was on danny's show

(42:29):
recently talked about it the reason is this is how networks grow there's a lot of this is you know
there's a lot of research to suggest that organisms grow this way you know uh i talked about this on
my uh talk uh sort of my summer circuit when we're talking about growth rates and stuff like
this might have been a jeffrey west book as well scale which is a great read

(42:54):
like something like godzilla that would be an exponential growth type animal all right it would
like it's a massive thing it would need like a mountain of food and by the way it would just
collapse on itself it's just not possible sort of in nature but what we see in nature is you have
this nice relationship with proportional relationship with the way organisms grow like

(43:16):
pretty much all mammals. Sometimes people take it to the whale size until they get to an elephant
size. But they need actually a proportionately less food as they get bigger. But they also,
they don't grow to Godzilla size. This is proportionate growth. And if you
charted that, sort of calories and size on log-log scale, you'd see a nice beautiful straight line.

(43:40):
You see it with networks, right? You see a few large nodes take a ton of connections,
and a bunch of small nodes take few connections. It's 80-20 rules, basically. It's a power law.
There's power curves everywhere, but to see it in Bitcoin is really, really wild.
And so again, take comfort in that because you don't see it in the growth of gold. You don't

(44:05):
see it in the growth of the S&P. You don't see it in the growth of stocks. Let me show you this.
this is the top eight tech stocks in the world same thing now this is a very fast r squared by
the way and uh you know big drops it can go from this is you know this is all the like this is apple
microsoft google uh top eight stocks got broadcom in there as well as now a big one with the chip

(44:31):
chip race but you know they were 11 trillion dollars the top eight tech stocks in the u.s
in 2021 fell down to 6.8 by 2023 then the ai boom started just like gold they've had 40 growth by
the way with like a huge 30 uh well not 30 maybe 15 percent drop yeah during during liberation day

(44:56):
liberation day my favorite day of the year now it's hilarious 13 goes down to 13.9 trillion now
all of a sudden back up to 22.8 that's volatility that's volatility and this is a uh this is an
exponential curve actually one of the best performing uh if you if you just track these

(45:17):
eight stocks so sometimes exponential growth can help you sometimes it can hurt you with inflation
but it's it's a very volatile volatile thing but the fact that bitcoin is not growing that way is
very important, very interesting. The next thing that I would show you is this chart. Remember this
one? I always show this guy. Yes, yes, yes. This is long-term debt of the United States.

(45:46):
And again, having in mind what I just said about how the nature of Bitcoin is something to take
comfort in itself, here's the nature of debt in the history of the United States itself.
it grows, grows at 7% or so doubles every 10 years. It's actually growing even slower in recent years,

(46:07):
surprisingly, compared to where it's growing, say, just after the Bush years. But anyway,
we have overlaid with this is the central bank holdings of US debt. You see it peaked in like
18% at the end of the Vietnam War. And it went down, but it was actually going down because
debt was growing faster than central bank holdings then you had the crisis this big dip was a wall

(46:32):
street bailout they swapped corporate bonds for treasury bonds on the balance sheet for a time
then they gave everybody guarantees and they went back then they'd q123 drop big uh taper tantrum
repo spike in september 2019 before the madness of 2020 then the madness of 2020 and now we're down

(46:53):
So where does that leave us today? November 2025, the Federal Reserve
held $6.2 trillion in treasuries. $38.3 trillion have been issued. All right, so that's 16%.
Where have they been at the max? Well, during the crazy season, November 2021, they max it out at 28.3%.

(47:16):
So by my count, that's over 12 points, 12 percentage points that they could go.
So, all right, it's not a full double, but basically, the Fed could double what they
have held in the past and still proportionately not be bigger than the highest inflation they've

(47:39):
ever had on their balance sheet.
Now, would they want to do that?
Probably not.
Certainly not all at once.
But we know that we're going to get a very dovish Federal Reserve Chairman in soon.
And anyway, anybody who casually follows economics knows that the Federal Reserve, no matter how much they say it's independent, it's not independent.

(48:00):
The president will always get the interest rates that they want eventually, no matter the president, Democrat, Republican.
So it's part of the course as far as I'm concerned.
And look, they have a lot of room to go higher if they want to go higher.
No matter all the noise, all the talk, you just look at this chart.

(48:20):
I'm not saying it's a good thing, by the way.
I'm not defending the actions,
but they have a lot of room to inflate.
I mean, at the very least,
it would not be unprecedented if they did inflate
and go back to all-time highs from here,
which is like eyeballing the chart pre-2008.

(48:43):
Like well before that dip pre-2008,
they were 10%, 9%.
We're hovering at 16 now.
It's an interesting history of the United States right here all in one chart.
Federal Reserve was not really involved in the funding of World War I.
You see they had less than 1% of government bonds.

(49:07):
It was more like J.P. Morgan.
Private bankers were doing that.
They did become involved after the Great Depression or during the Great Depression
and as well during World War II.
and much more during Vietnam, actually.
And then much more after the crisis.
But there's no start date or end date to this stuff.

(49:30):
They're just going to continue to print
and to try to hold on to their power.
Yeah.
So that's what we can expect.
Can you overlay the percentage of holdings of followers?
Sure.
this one hasn't been up to
this might not be exactly correct

(49:50):
in the last couple months but basically it goes
down
and that's a problem
for Besson he wants
more foreigners for sure
and
it's going down
foreigners used to hold
maybe 35% of the debt
at the peak
and now they're down somewhere to

(50:12):
22
23
this might even be a little bit lower i haven't updated this in
a couple months it's some something like this do you buy into the theory that the genius act
was a way to get this like would tether be considered a foreign holder
i don't buy into the theory of any of that at all yeah uh it's what was the market cap of

(50:38):
stable coins 180 billion i think right now yeah the repo market itself is by my count seven
trillion i've heard higher uh it's not very um clearly stated but i can show you the old
yeah tether's money supply there's 184.6 billion usdc 76.5 billion right growing growing but here's

(51:07):
old total money supply of the united states all right calculated by yours truly federal reserve
has not calculated m3 since 2006 so you actually have to go back into the numbers most of the data
is still there but it's hard to sort of parse through and euro dollars are not there so this

(51:28):
is even bigger than it shows so it's a little bit conservative here but the most analogous
buckets of money that will fit into stable coins are these buckets right here, which is part of
M2 and M3. By the way, what's the difference between M2 and M3, Marty?
Uh, M2 and M3. M3 gets into credit, right? It's a common, you know, how many Twitter charts have

(51:59):
you see of Bitcoin lagging M2's money production.
Too many.
Clairvoyt.
Yeah.
First of all, Bitcoin is not comparable to M2, folks.
It's M2.
The difference between M2 and M3 is M2 is less regulated retail deposits.
M3 is less regulated institutional deposits.

(52:20):
There we go.
And by the way, what's the hottest money?
Institutional.
So why in the hell would Bitcoin be anything related to M2?
M2 is a retail type money supply. It does not include the hot money.
It's basic stuff. And again, I can forgive plenty of people for being confused on this,

(52:43):
because the Federal Reserve themselves have not published M3 since 2006.
So you got to go through these numbers. You got to sort of figure it out. But my account,
The hottest money right now is $7 trillion in all-out repurchase agreements on the
Bank and shadow bank side, $5.3 trillion in money market funds for institutional and $2.1 trillion in retail money market funds.

(53:11):
You put those two together, obviously, it's seven.
So seven and seven, $14 trillion.
$14 trillion.
probably not mostly you know this is the instrument itself but probably 14 2. trillion is
us and some foreign holders mixed in there it's not just you know but this is that's the biggest

(53:33):
holders of treasuries right there if these these instruments and so i don't i don't see any like
tomorrow fix for sort of a lack in demand for treasuries, if there is one,
coming from stablecoins. I mean, it's a drop in the bucket compared to these markets.
It's $14 trillion compared to $200 billion in stablecoins.

(53:56):
Hey, $250 billion. Okay, they're picking up.
Yes, yes. Look, it's going to grow. It's going to grow, no doubt. But none of this stuff is...
Trump definitely wants a bite of Lutnik's Cantor earnings.
Everybody knows there's a great business.
Don't get me wrong.
It's all great stuff for them.

(54:18):
Clean, just collect that interest and issue the token.
But that's a money market fund.
It's going to take a long time for that stuff to revolve into stable coins.
And it probably is going to come, but it's just not.
Structurally, it's not even there.
It's like when I show you the chart of Fedwire versus Bitcoin, right?
Remember that?
I can pull that up if you want to see it.

(54:38):
Yeah, well, that's one of my favorite charts.
So I guess I was loosely correct when I said M3 is when you get into credit instruments.
It's when you have all these repo, money market funds, retail market funds, buying bonds, which are credit instruments.
Sure, yeah.
But to be strict on what I'm counting here, it's actually you're just counting liabilities of financial institutions and banks.

(55:02):
That's how you count money.
Yeah.
So it's just liabilities.
And what they buy on the other side is not specifically stated in the money supply.
That's why I said it's probably mostly treasuries, but not always.
But if you want to talk about the hottest, fastest money that's chasing U.S. government
bonds, it's here.
And this is not part of M2.

(55:25):
Well, retail money market funds are, but institutional money market funds and re-burchase
agreements are in M3.
So again, it's kind of a nitpicky thing, but that's important for people to think about.
All right, this one, what have I, I haven't actually, it doesn't really matter.
I haven't updated this one since August, but here's the old Fedwire.

(55:48):
This is again why, you know, just relax.
Bitcoin's got some time here.
we have 1.1 quadrillion dollars that goes through fedwire a year and bitcoin as of august
uh four and actually that actually looks even wrong i think something happened on my back end

(56:08):
i think it's seven but it doesn't really matter one of those uh is close enough
it's just orders of magnitude difference
actually yeah something happened on my back end that's why i don't have this up on my site yet
it's it's it's like seven seven trillion i don't know why this is showing four now so the black

(56:29):
line is slightly better down a little bit yeah black line will be down better but it doesn't
really matter for the it illustrates the point i mean in the black line uh for people both
watching the video and listening at home they can't see the black line it is on a consistent
trend down into the right as time goes on.
And what it's measuring is the sort of ratio

(56:51):
of Fedwire transfers to Bitcoin network
transfers. That means that Bitcoin is
growing in prominence. When that gets to one,
then Bitcoin will be competing, you know, apples to apples
with Fedwire. Yeah. So we're not,
I think starting like 2010 on the black line.

(57:17):
Yeah, I could just take this off.
Something happened on my back end.
This is partly right, but I don't know what happened just here.
But anyway, it doesn't really matter.
The best, we're actually not even at the best.
Say it's seven right now.
The best that Bitcoin did on a trailing 12-month basis was 18 trillion.
18 trillion, which would have been at the time 57 times.

(57:41):
smaller, or Fedwire, more appropriately stated,
Fedwire within 57 times larger than Bitcoin, which is good.
I mean, that's a great run by Bitcoin.
But still, if you just look at this simply with your eyes
and you see how huge the dollar network is, it's massive.
And you got to think about how day-to-day, block-to-block,

(58:04):
how much time this is going to take to accrete, right?
for Bitcoin to accrete in value.
It's going to take time.
It's not going to take forever,
but we're on the sort of 10 to 20 year track
when we're going to meet a lot of these levels,
both in terms of volume and in terms of value.

(58:26):
Yeah.
I mean, if you put the black line too,
just to put it in context,
in 2010, 2011, Fedwire was more than a million times.
or excuse me more than 250 000 times yeah we get to no 2011 may uh which was very close to a

(58:47):
peak in bitcoin right i could probably zoom into june
june was a peak 420 000 the month before 5 million
so uh and these are correct by the way so so it's uh you know it can be growing very fast at times

(59:08):
for sure but this is a massive network with a lot of guns behind it and it's going to take time
yeah
uh let me show you this one so we talked about bitcoin we talked about tech stocks
let's look at Bitcoin market cap in terms of tech stocks.

(59:33):
This is another interesting thing.
So this is also a power curve,
nice, beautiful curve line on log scale.
But what is sort of interesting is Bitcoin has fallen off it
since it's been coming down in 2022
because AI has been growing so massively,
specifically during this time.

(59:54):
So if we draw some percentiles,
you will see we are putting in new lows basically every day
which is wild so again depending on how you want to look at this depending on how
an investor might look at this especially if they are in if they are coming at this from the lens
of being a tech ai investor which there are a lot of those for bitcoin bitcoin is getting cheaper

(01:00:19):
every day compared to the top eight tech stocks now again you could argue some of that's justified
AI is an amazing tool. It's going to take the cost down for a lot of things
and the market cap up for certain companies. But Bitcoin itself
is a more amazing tool, as we know. So it's getting very cheap for tech investors

(01:00:46):
looking at Bitcoin. If you had all eight stocks and you were just sort of looking at maybe
rebalancing, getting very, very cheap. It's basically putting in new lows every day.
Yeah, which is wild. Now let's look at Bitcoin in terms of gold.
Same thing. The power curve dominates. It's still a 95% R-squared. But similarly, this run,

(01:01:12):
since gold has also had, just like tech stocks from 2023, 40% growth since 2023.
you know very if you're a gold investor now looking at bitcoin you are at
almost as far as the quantile model goes
all-time lows

(01:01:32):
it's relatively cheap right now it's relatively cheap right now 20 20 ounces of gold per bitcoin
And I would also caution here, which I think is very wild.
So 20 ounces of gold per Bitcoin, that's like setting a new low on the quantile model.

(01:01:53):
But go back even here, where Bitcoin didn't get, in terms of gold,
was not at the zero with percentile, was definitely under the 10th.
It's probably around the 5th or something of all time.
the price of bitcoin at the time was nine ounces of gold so three years ago bitcoin was still

(01:02:20):
uh cheaper or in other words bitcoin right now even with its extremely poor performance against
a booming gold asset bitcoin is still double what it was three years ago that's a wild thought
That is why.
And to think if we have this saying, right?
At least the investors I used to work with would joke about a lot.

(01:02:44):
Like, you can be a pig, but don't be a hog.
I am very curious how good gold bugs might have it at this point.
Like, is it going to go back to nine?
I have a very hard time believing.
I mean, literally, again, just like the tech thing, the tech analysis, we're setting new lows.

(01:03:05):
on this trend every day.
So, you know, statistically,
Bitcoin is as cheap as it's ever been
relative to the trend of gold, BTC gold.
Well, if we go down to the zero percentile
of the power trend, that would be nine times.

(01:03:28):
That's when we would go back, right?
Be around 56, 52.
You mean the power trend in dollars?
Yeah.
I mean, if gold stays at 4,000, Bitcoin goes to 56.
That's nine times, right?
Yeah.
Or if another way to think about it is the power trend of Bitcoin right now in gold ounces,

(01:03:49):
the trend is 64 ounces, right?
So we're at 20.
So 3x staying at current gold prices would take us back to trend for gold.
So 3x in dollar terms, meaning definitely close to 200,000, if not more.

(01:04:13):
Doesn't mean it's going to happen.
Doesn't mean it's going to happen in this cycle.
Doesn't mean the cycles are not over.
but it's it's it's we're at wild extremes you know globally on a macro level from where bitcoin
has been and certainly at levels that wall street you know like wall street knows about the power

(01:04:34):
curve by now like they love this fear they love it so they would love to exacerbate this more
accumulate more bitcoin no question about it how long do you think they could exacerbate it
I know you said short to medium term.
No idea.
Yeah.
Your guess is as good as mine.
Yeah.
There's a lot of fiat dollars and fiat interest running around,

(01:05:00):
paying people salaries.
You know, I mean, they could go a long time pushing this price down.
But, of course, Bitcoin has a very, specifically in the gold analogy,
Bitcoin, as we know, balances its budget every 10 minutes. And Bitcoin, due to the difficulty

(01:05:21):
adjustment, is not susceptible to the same supply-demand relationships of gold. So gold
miners are just loving life right now. I mean, they are... I'll show you this one.
How hard are they digging right now?
Very hard. And I mean, you got projects, no doubt, that are just absolute duds that are

(01:05:45):
now being revived and just pie in the sky projections, I'm sure, scaling up slowly.
And some of those projects are going to work out fine.
Other projects are going to remain complete duds.

(01:06:06):
And there probably a lot of jokers that are coming into this business just like jokers coming to the Bitcoin business But the difference is this As they say the cure for high prices is often high prices if you a buyer And the cure for
low prices is often low prices if you're a seller. So the idea that Bitcoin is...

(01:06:32):
is, you know, or sorry, that gold is just going to, like I said at the beginning, looking at the
gold trend, just going to continue to 10, 20, 30k per ounce. Again, it might go a little bit on the
short term, but supply and demand is going to start to rear its ugly head. And people are just
going to like wonder literally in the jewelry shop, like, why am I paying this much for gold?

(01:06:53):
And they might go into platinum or whatever. Let me show you this chart, which will show you
a little bit what I mean here about how crazy this is for some of these people right now.

(01:07:17):
Again, I'm missing something here, but I'll zoom in from this point.
All right. This is similar. Hold on.
it's a little bit outdated but it'll do the job this is similar
chart um kind of like the transaction throughput but this is mining revenue okay this is through

(01:07:44):
june actually this is through september close enough all right to today um 16 billion by the
way not even a top on a trailing 12 month basis around this just assumes all miners sell their
Bitcoin in terms of their block reward and their fees every 10 minutes at whatever
prevailing price there is. This is academic calculation. A lot of miners hodl. A lot of

(01:08:09):
miners don't even pay fiat. They take credit. They don't pay out of pocket. It's a crazy business,
as you know. But this is generally how the mining business is. It's a $16 billion business right now.
this is gold now over the same oh shit gold is getting you know fourth it's about 100 million

(01:08:30):
ounces of gold that are on a mind a year gold is becoming a 400 billion dollar industry it's
massive like that i mean this christmas is just going to be amazing for gold bucks they're just
going to be you know i don't know how i used to curse more on your show but i feel less inclined
to now. I mean, it's going to blow off. There's no question. This is not going to sustain,

(01:08:57):
but it's going to be a fun ride for a lot of people in that business right now. And it's just
like, even from, say, January of 2021, they were making record revenues for this business at $200
billion. Now it's getting close to a $400 billion industry. But just so you see how
small Bitcoin and gold are compared to oil. This is the oil markets,

(01:09:21):
right? Trillions of dollars a year. So,
you know, again, doing the math on where we are in Bitcoin,
back out, don't freak out, block the block day to day,
you know, not financial advice, but maybe take advantage of some of these cheap prices.

(01:09:43):
there's just a lot more
to the whole structure of all of this
than I think can be
than one needs to stress about
over one morning waking up and see a Bitcoin crash
you know 5k
and I think another thing to put into context is this is not abnormal

(01:10:04):
for
bull markets either
it's 30% corrections which is
what we've seen over the last month
and look i mean it's going to go on for a while i mean look at the oil markets you know they can
they can crash a trillion dollars in annual revenue um it's it's just it's part of the game

(01:10:26):
still going back to what we talked about bitcoin being the sort of pristine asset risk-free asset
i believe all of those things i do believe that we could have all of these markets you know
eventually priced in btc or something like that but it's going to take a long uh long time
trillions and trillions and trillions, tens of trillions of dollars to come in before that happens.

(01:10:46):
Right. What do you think about silver and its blow off top right now?
What does that say historically? Sort of lagging silver off top to gold?
Yeah, it's high. I don't think I have one charted, but it's obviously it's the same deal.
I mean, you're at 100th percentile, right? I mean, it's it's could not have been higher.

(01:11:09):
Let me see if I have one on the 10th.
Let's see, where is it right now?
Silver is trading at 57.
New all-time high.
Yeah, this is all-time high.
And as far as, if you would measure that as far as minor revenue,

(01:11:30):
even more of an all-time high because there's more bullion,
silver bullion being mined now than there was 15.
years or not 15 12 13 years ago when silver was last at 55 bucks so
yeah these guys metals investors are having a good christmas no doubt

(01:11:52):
um but oh maybe i didn't completely finish the thought about the supply demand though so
at some point a lot of these jokers particularly i believe in the gold industry which is obviously
a very analogous asset to Bitcoin, high prices will become the cure to high prices. There would

(01:12:15):
just be too many speculators, investors, miners in the business chasing too many projects,
too many jokers will start to come in, and supplies just going to outstrip demand.
And once that happens, price falls.
All right.
As we know, Bitcoin is not susceptible to that problem because of the difficulty adjustment,

(01:12:40):
because its budget balances every 10 minutes.
It's just a completely different beast.
You know, that's why we have number go up technology.
We have just a, you know, however you want to define it, the only fixed asset in the universe.
It's a completely different thing.
I'm very much looking forward to how Bitcoin will react in the future to some of those supply-demand dynamics because there's just simply a cap on the amount of coins that can come out every 10 minutes due to the difficulty adjustment.

(01:13:19):
And you just don't have that in the gold industry.
You don't have it in the silver industry.
You don't even have it in the oil industry.
so that's the again backing out trying to be more calm about what's happening we can we can expect
that's going to happen you know do i you know this could go another year or two these gangbuster

(01:13:41):
prices for gold and for tech with ai they're growing at 40 a year right now on a trend it's
massive but bitcoin actually is also growing at 40 a year on a trend so have that in mind as well
Yeah.
It's interesting to bring up Bitcoin mining too,
because it did, I don't know, for...
Yeah, we're still over as ZetaHash.

(01:14:02):
We sort of crescendoed a couple weeks ago.
We've had two downward difficulty adjustments in a row,
but there was a point where we passed an XAHash
with authority on a trailing average in the middle of September.
And then between the middle of September and the end of October,

(01:14:22):
we added 100x a hash in that six-week period.
And I think putting things in perspective,
like it took, I think my memory serves me correctly.
It took us until 2020 to get to 100x a hash.
And so the network, yeah, it took us like April 2020

(01:14:45):
to get to 100x a hash with authority.
and so it took 11 years to go from zero to 100x and my work added in six weeks between september
middle of september and end of october this year yep precisely that perspective like when i
sat back and looked at the chart and put that in perspective like holy crap that's uh it's an

(01:15:11):
insane amount of hash rate coming on the network.
And now, granted, the ASICs are way more efficient.
Bitcoin's been industrialized to an extent,
but I still think there is some signal there
in the hash rate markets.
Yep.
I would really like to chart that, actually.

(01:15:34):
That's a nice, that's a very nice...
nice stat basically uh let me show you what we've done in terms of
market cap this is going to go a little slow hold on
hash rate by the way another screaming power curve when it comes to bitcoin right and

(01:16:02):
And we can show you how the hash rate relative to the market cap, or i.e. the network value, has trended.
So this is literally dollars per hash of value.

(01:16:27):
So you get extremely small numbers, even smaller as we go up because hash is so outstripping market cap.
But nonetheless, you would assume that during the booms, you would have, you know, these busts.
Sorry, you would have these peaks in market cap versus the trend.

(01:16:48):
And it's interesting.
It's not growing as fast as it used to at the beginning, but it is kind of stabilizing.
I don't know.

(01:17:09):
This is one of the other ones that I would say is more for a more stable sort of Bitcoin future with not as much volatility relative to the trend.
But this is with my multiple around the trend. It's a little bit different. Might need to run this on the percentile or the percentile quantile analysis. But in any event, yeah, it's not like, as one would expect, prices booming relative to the hash rate at the moment. And it's just sort of stabilizing at this number.

(01:17:38):
But regardless, it's just incredible how much Bitcoin security has grown relative to the value of the system.
Yeah. What does that say to you?
It's maturing. It's maturing.
Do you think there's more price-insensitive hashers in the market?

(01:18:03):
You would be able to probably answer that question better than me.
I don't know.
But I would say, looking at the revenue, which is another way to back into this question, I could find the damn chart.
Here, here, here.

(01:18:24):
So here.
here, this is a little bit more refined. This is 30-day miner revenue. It's not even at a

(01:18:45):
30-day all-time high. Miners would make $2 billion a month back in March 2024. Now,
making 1.6, 1.7.
And
hash is what it is, right? Growing, growing,
growing. So
again, like super secure
network, competitive.

(01:19:10):
At some point, you would expect these
numbers to be much, much higher.
But predicting that is
difficult.
Yeah.
This is definitely a number
go up chart right I mean and it going to be more profitable in the future to mine This very scarce asset one can argue about you know the reasons why it not so high or whatever

(01:19:36):
But it's undoubtable to me that this is going to be a huge number in the future, something that compares with the gold markets or, you know, even the oil market.
It certainly looks to be trending in the right direction.
yeah but you know one would think it'd be much higher yeah one would think well but you're the

(01:20:01):
mining guy yeah i think there's more price insensitive hashers in the market and i think
i also think the market's got like i said obviously the machines are more efficient and i think uh
there's been enough time that the industry has sort of wised up to,
okay, we need to really focus on cheap energy, cheap electricity.

(01:20:23):
And there's a ton of people going out there and finding stranded,
wasted, isolated energy to mine Bitcoin with.
Then obviously you have the industrialization of the mining industry
on the demand response side, which is becoming critical to grid systems.
I don't think they're there yet, but I think you will have somewhat price insensitive or less sensitive grid operators that really need it for demand response.

(01:20:58):
Yeah.
But let's bring this back.
I know we got less than 30 minutes here.
Really focusing on the topic of the soul of Bitcoin.
And what is it?
Is it this capital asset?
Is it digital capital that is to be used as a collateral asset only to have structured credit products built on top of it?

(01:21:24):
Or is it peer-to-peer digital cash to be used in everyday transactions?
I'm a believer it can be both.
It can get both out of it.
But I do think there is, again, this year particularly,
I think the fight over the soul of Bitcoin's future,

(01:21:45):
or maybe it's like a perceived fight,
because I don't think it really is a fight.
Like I said, I think it can and will be used as both.
And I actually think it's very productive
that this conversation's been, for lack of a better term,
hashed out this year and going back to the juxtaposition of block versus strategy i think

(01:22:08):
that's actually extremely healthy for the long term and i've been more focused on how do we
make sure that bitcoin becomes peer-to-peer cash more recently because i do think it's important
i do think the meme of it's only going to be digital capital never sell your bitcoin never
spend your Bitcoin is completely short-sighted and asinine.

(01:22:33):
And I am really
interested to see what the data looks like a year, two, three years
from now, post Square opening up
Bitcoin capabilities and their point-of-sale systems. And I think
the product that they released with the highest signal is probably the
automatic conversion of daily revenues to Bitcoin.

(01:22:55):
You can sort of choose the percentage.
That's the Bitcoin treasury play I want to see.
Small, medium-sized businesses sweeping some cash flows in the Bitcoins
and holding it on the balance sheet.
Is that a question?

(01:23:16):
This is a thought, a jumping off point to jump.
It's a great thought.
I have all the thoughts here because like we talked about, I personally have a hard time
chalking all this up like the future of Bitcoin only to be what the Supreme Court of the United

(01:23:40):
States says. I have a lot of... I can understand the sympathy for US being the largest economy,
largest capital markets, largest military, that there's a lot of reason to believe that sort of whatever the U.S. says to enforce the moneyness of Bitcoin, like that could be the future of it.

(01:24:06):
but due to the fact that it is unlike gold where it's not easily confiscatable and remember
during the first year of world war ii
um 1940 80 percent of the world's gold found its way into the united states

(01:24:31):
or somewhere around the United States like Canada into their coffers
because this is actually the biggest nail in the coffin
of the international gold standard was not Roosevelt.
During the 1930s, it was Hitler and Stalin during World War II.
So, and by the way, we're going back to, as you well know,

(01:24:54):
very unstable geopolitical times, which is a topic for another conversation,
But the nature of holding Bitcoin, I think, is way outside of their hands at this point.
Like, you know, ETFs still, large amounts are getting there.
You know, anybody can hop on Bitcoin Treasuries and see it pretty closely how all of that stuff is tracked.

(01:25:19):
But this is still a, you know, cypherpunk retail, like decentralized phenomenon.
And we all want to see it stay that way.
So I would say, hold on to that vision no matter all the news that comes out with the economy and interest rates and Wall Street and this and that.

(01:25:43):
We have this power curve.
It's the way the networks grow.
It's censorship-resistant cash with many use cases that you have studied with your guests throughout the years.
and as long as i would say particularly as long as that decentralized nature holds

(01:26:04):
uh we're going to you know we're going to be fine we're going to be fine but how that would
play out as a pricing mechanism i think that is most interesting and i really would say that i
hope that it continues on this power curve because the power curve would show you something

(01:26:26):
sustainable. So here, I don't know if I've shown you this before, but this is same thing,
got the old power curve, and we also have an exponential curve. So I've shoehorned in
what Bitcoin would look like if it was on an exponential trend. You can clearly see it's not
an exponential trend, right? So at the beginning, it wasn't here. And then when it went through the

(01:26:47):
whole mid cycle of its life.
It barely hit this trend line a little bit here.
And then we've been off it since 2022.
Not even close.
So it's not an exponential trend.
The R squared is worse.
It's just clearly not.
It fits this nice trend.
And if Bitcoin would do what a lot of the people that have been

(01:27:14):
clamoring for, I guess, in Wall Street,
and if it would just be this sort of base asset
where you could collateralize against it
and then draw on it,
and we just have a bunch of fiat interest around Bitcoin,
this trend would not hold.
It could not hold.
It actually, this is where it would have to be something
where all your models sort of break,

(01:27:39):
but presumably it would break to the upside,
but it might not be the world that we want.
So to have the world that we want, it would need to be on this sort of a trend line, and we'd have to have just a different credit market surrounding this.
But if we do have Wall Street take over for whatever reason, you might see something like this where it turns exponential like here.

(01:28:05):
If it happened at the end of the year, it would be more like this trend.
Or here, if it happened after 10 years, it would be more like this.
So this is where you could get it, maybe go on a straight line and you get something like this.
So still could be crazy numbers.
Like if it started to go exponential by the end of this year, and then we go out 15 years, that's $22 million Bitcoin by 2040.

(01:28:29):
Exceeds everybody's expectations, well higher than the power curve, by the way.
But what's behind that $22 million Bitcoin probably loads, mountains and mountains and mountains of fiat interest.
and government bonds and stable coins and all the rest.
That's not really a future that people would envision, right?

(01:28:50):
And for you, the statement that you just made
about it's only this sort of hodling or investable technology
where it's not using peer-to-peer transactions,
that would be more likely under this scenario.
Does that make sense?
Yeah.
When it goes exponential,
it's going to look more like a Wall Street asset

(01:29:10):
And that would be, in my opinion, not an ideal scenario.
It may still be great for investors, right?
Like on that number go up sort of, not even on the number go up ethos, just on paper, it
looks good, right?
But that's the same thing like Manhattan real estate.
It looks good on paper.
You have, you can pull out whatever you pull out a year for your expenses and everything,

(01:29:33):
but you still get rolled over more accumulative debt each year.
And at some point, that's harder for anybody that's there,
unless you have some major business that can keep ahead of
lots of inflation and economic growth.

(01:29:54):
At some point, that debt for personal balance sheets becomes very difficult,
especially in rising interest rate environments.
So that's where I sit, basically mathematically, kind of looking at what you said.
You could see $15, $20 million Bitcoin in the next 15 years.
But in my opinion, that would be too high, actually.

(01:30:17):
You would want a little bit more sustainable, something along this curve.
And compound interest does not work on a power curve.
It just doesn't work.
So that's the thing that I'm sort of trying to figure out with this, how our time, our work is

(01:30:39):
valued and how people are going to value Bitcoins. But I would be very personally very careful. I
know this is like a booming industry and everybody's loving it and Sailor himself has accumulated a
boatload of Bitcoins doing this. But I would just say on a personal level,
one should be very careful about accumulating too much debt behind their stack of Bitcoin

(01:31:05):
because you don't want Wall Street to take it or whoever you're posting the collateral to,
especially if you got to liquidate in a day or less than a day and all of a sudden your Bitcoin's gone
because you were margin called.
yeah
so
in other words
if you want to see that
decentralized future
I think it's

(01:31:25):
it's got to come from
around the world
you know it's got to come
from other currencies
well I think too
the
sailor specifically
say never sell your bitcoin
I'm going to burn my keys
when I die
I mean
it
is this
I don't know if it's intentional

(01:31:47):
or
naive or ignorant, but I mean, the tech
around the payments use case is only getting better.
And I was thinking that today, like right before we hopped on,
it's December 1st, ran Bitcoin payroll
for the employees here at TFTC.

(01:32:07):
Except Bitcoin for part of their
part of their salary. And it's always a beautiful experience. It's like, hey,
you wake up, I get a ZapRite invoice.
Obviously, there's some UX and automation
that can be built around this particular use case.
I don't know, there's companies working on there,

(01:32:27):
but the way it works here, I get the ZapRite invoice.
I pay it, and that person gets that part of their paycheck
in Bitcoin within an hour.
Is that monthly or biweekly It depends on the particular employee Some are biweekly It a good day for that for them Yeah In terms of stats

(01:32:48):
Bad day for the business, good day for them.
No, it's a good day for the business.
They're happy.
Yeah.
But no, it's always,
and we've got contractors who do some miscellaneous work.
and that's one of the stats
or anecdotal data points that has really encouraged me

(01:33:11):
this year is the amount of contractors that
know that we're a Bitcoin company and just send us invoices in Bitcoin.
It's like, okay, this is cool.
So your point about it's going to take retail adoption, I think it's happening.
I think it's only going to accelerate.
I'm not sure if you've been paying attention to developments around ARK

(01:33:31):
and Spark and what's happening with the
Xiaomi events, but the payments UX
pertains to speed and cost.
And then on top of that, privacy benefits. It's only getting better.
And if AI really is taking over, which I think

(01:33:51):
not taking over, but is a thing, I think it's real. I think there's a there there.
We were talking about it before we started recording
We're both using Claude pretty extensively in our businesses, and it is making us more efficient and allowing us to do more than we could by ourselves and without having to hire full-time employees.

(01:34:15):
If the agentic future materializes, when it materializes, these agents are going to need money, and it doesn't make sense for them to use fiat rails.
Yep, not at all.
This is a chart of Japanese yen.
We talked about JGBs at the top of the show.

(01:34:36):
This is Japanese yen in Bitcoin.
This is not from an exchange.
It's triangulated from the dollar with official exchange rates.
But also a power curve, 97% R-squared, and 13 million yen for Bitcoin.
even a little bit below trend now,

(01:34:57):
four years ago,
5.9 million yen at the peak.
So that is a higher
multiple ahead for the Japanese four years ago holding Bitcoin
than it is for us or those who are dollar oriented.
Say 85K versus 60K four years ago, right?

(01:35:20):
so any way you slice this it's going to be better to hold bitcoin and also to transact
in bitcoin get paid in bitcoin you know this is the the old message from andreas right
so yeah i mean i anything that that that can bolster that uh story i'm i'm like 100 percent

(01:35:41):
behind i know wall street's like very exciting and price and everything but
you got to think about what's going to be
behind
that story.
If you really want Wall Street to be there
and that's
the main driver and everything, the only thing that's going to
be behind that story is a lot
of fiat interest.

(01:36:03):
Like a lot.
This chart
is basically
telling that story.
It's like
at some point we're going to start thinking in terms of satoshis i know but basically with you

(01:36:23):
know without showing you too many charts in 20 years in 20 years for sure we're going to be at
the level of the monetary base which i haven't talked about this show yet but that's uh probably
when this drops there'll be a another update for people to see the third quarter of base money uh
which is really basically flat, you know, even all things considered.

(01:36:44):
Still about $26 trillion.
So Bitcoin is, you know, less than 10% right now, just like it is.
It's actually about the same level of those top eight tech stocks, by the way.
But anyway, the world where we certainly understand Bitcoin a lot more in five years,

(01:37:06):
a lot more than that in 10 years, 15, 20.
like it is a compounding technology.
But if you want to think about this
in terms of like the old traditional TradFi model
and sort of model it out a straight line on log scale
and do all these ABC Elliott wave stuff,
I'm just telling you,
I've been following this for a long time.

(01:37:26):
It does not follow that pattern.
It follows a nice sustainable growth rate.
And if you want it to follow those sort of old school
Wall Street models with a lot of interest baked in,
right?
there's going to be consequences to that and probably more booms and busts.
So I would say that's not, it's still okay.
I mean, if you're holding Bitcoin,
Bitcoin is going to do well in either scenario,

(01:37:47):
but it's one of these things like, you know, gold bugs, right?
And how many gold newsletters I've read, I just can't tell you.
And I talk about this on my show all the time.
It's like, they sell fear, they sell doom, they sell gloom,
they don't really sell hope.
And gold miners don't hold the gold.
We just talked about this, you know,
how it's just going to be a golden Christmas for these guys.

(01:38:08):
they don't care about the gold they want to get it off their books as quick as they can
you know sell it lock in the profits move on to the next thing it's not a it's not part of their
underlying you know worldview but that's not the case for bitcoin so there's just so many different
things in bitcoin that are going to affect uh the relative growth of the network you know so many

(01:38:37):
political things, geopolitical things, technological things, privacy things
that just no other asset can compete with.
I really think people got to be thinking about those things more.
And yeah, it all comes back to the sort of, as you were talking about,
using this on a day-to-day basis.

(01:38:58):
If you're only about number go up or thinking about this as like some
exponential asset that's going to do better than whatever,
there's going to be a lot there's going to be a real big consequence to that if like wall street
comes in and just loads up a ton of debt and fiat interest behind it it's just that's the
exponential growth for bitcoin would be based on the numbers it would start to look rough it would

(01:39:25):
start to look unsustainable and so that's what what i'm trying to show with these charts is like
Bitcoin, by its nature, very interestingly, is not following the growth trajectory of any other
asset. And that's a good thing. People should try to understand that, pay attention to that.
And, you know, take comfort in that. Because, you know, 20 years up, 10 years up for a gold bear,

(01:39:51):
then 20 years down, then 10 years sideways. That's not a future.
It's no way to go through life.
it's no way to go through life. And, and, you know, just,
it's so fascinating to go back and, and read some of these gold newsletters,
like these old ones.
And then don't even get me started about some of the types of people that some
of these people are. And, uh, you know, there's just some crazy,

(01:40:15):
like just crazies out there in this, in a lot of this, uh, you know,
speculative political space and a hard, hard asset space.
and a lot of them have just been wrong about gold,
like completely wrong.
So don't hit your wagon to Wall Street
or I don't know, just a lot of the hype around that.

(01:40:36):
Yeah, it's going to drive demand, sure.
But I would highly caution about too much debt
for you personally around your Bitcoin or in anything.
But Bitcoin, if it all goes according to the power curve,
debt is going to look completely different in the future.
It's just not...

(01:40:58):
There's just too...
This is not oxymoron sort of...
There is so little Satoshis to back more and more and more fiat interest.
You'll just have to have a different concept of future value and giving up those Satoshis for rates of interest, which probably aren't going to pay.

(01:41:24):
Yeah.
Bitcoin.
It's a better way to go through life.
That is funny.
Thinking about this side,
that's again,
not blowing smoke up your ass.
I always love catching up with you quarterly because as you mentioned,
I find much more comfort in where we are.
I think it's inevitable to succumb to the animal spirits and the sentiment

(01:41:47):
that is a fire hose your way via social media.
and uh if you look at youtube thumbnails youtube thumbnails you gotta you gotta play the game it's
all ending this we'll have a good one for this it'll be a burning background and uh
the elmo yeah but honestly if you're out there relatively new or seasoned and haven't

(01:42:15):
yet internalized that Bitcoin is exhibiting power trend adoption.
It's riding this power curve.
And if you just look at the data, the back-tested data,
going back to Bitcoin's inception,
we are lower, we're below trend,

(01:42:37):
but we've been at this point for 30% of Bitcoin's life
in relation to where the trend actually is.
Yeah, and we're closer than other relationships.
Just quickly as we close it,
here's Plan B's 2019 model.
This might look kind of close,
but on log space,
if you actually look at the numbers, right?

(01:42:58):
So he's at 770,000 right now.
Power Curve's 120.
His is 770.
His 2020 model, more absurd, 6 million.
and then you can do a power trend so but again bottom line without going through the math

(01:43:18):
these are incorrect because they assume exponential there's an exponential component
to this he's using gold silver all sorts of other nonsensical things there's an exponential
component which bitcoin doesn't do so they're wrong bitcoin is a power curve you can uh
sort of shoehorn in a little bit a better one like i do not using these exponential components
again not to be too long-winded it's a little bit better but there's no predictability to it or

(01:43:44):
let's say stability comfort to it so for example if i you see my number here the the the sort of
lighter green shaded one power trend on stock to flow 350k that would be if you didn't assume any
other weird things like plan b did and just leave it at that but still if i had only taken the 2016

(01:44:04):
data and project it out on that way. Whoops. I got this red line. Let's look at the difference.
350 between 584. Again, you're still 200,000 off. So the 2016, the dotted line showed no
predictive. And when I say predictive, I don't mean like I can predict the future. It means
it's statistical. It's showing, you know, it's like, is this medicine going to work?

(01:44:25):
There's no sort of prescriptive predictive in a statistical turn sort of relationship there.
but now let's look at here's the power curve 120k what if we took the power curve from 2016
projected forward and didn't do anything else from 2017 18 19 2021 22 23 24 25
that is the 2016 number 128 000 so if you don't like if you're not on board with this again i

(01:44:56):
don't even care. I don't care if I found it first or if I didn't. It's just a formula. It's not a
big deal. But you need to look into what this actually means, how it's displaying the growth
of Bitcoin. And no other market looks like this. Other markets are these straight line on log scale

(01:45:20):
or bastardized stock to flow things, which are, they're just not, they're not jiving with the way
that Bitcoin grows. And so we can see power curves on address growth, hash rate growth,
nodes, a lot of different things with Bitcoin. It makes sense. It's a network. So it makes sense

(01:45:40):
that it's growing this way. So to understand how the thing grows, which it does in fact,
slow down a little bit every year, it grows sustainably. That's going to give you more
comfort, in my opinion, over the end.
And if it just becomes this savings asset, like you said, which is in some level naive
We're not good. Yeah, it might look good on a price level, but there's going to be a lot,

(01:46:01):
a lot, a lot of fiat units that are baked into this number eight here. And even though it might
look really, really good after 20 years, maybe $30 million Bitcoin, you're going to have like
$10,000 gasoline or whatever. I mean, it's just going to be, it's not going to be as future that
anybody's going to want. So that's the fight. That's the fight. And to do that, you need to
keep it decentralized. You need to use it, spend it, like you said, all the things we talked about.

(01:46:24):
So I'll leave it there with that, my friend.
Thank you for comforting us during this trying time.
I do what I can.
We have bigger issues over here.
I abstained from bringing those up during your show.
So I'm sure your listeners will appreciate that.

(01:46:47):
We'll catch up on it next time.
Yeah, I'm happy to.
Beginning in February next year.
It actually a timely turnaround It about time two months after Yeah it uh like you said there more stuff happening behind the scenes and i hoping to not just be quarterly after the end of

(01:47:09):
this year but maybe we'll get some more rolling better updates not that you and i have to do it
every month but uh but money supplies just it's a backward looking thing do not look at m2 retail
money supply in the united states and think it's going to predict the price of bitcoin 11 weeks
from now. That's not, it's just not doing that.
Not a good way. Have comfort in the power curve,
the network effect and spend time with your family.

(01:47:32):
Yeah. Spend time with your family. And if you're really worried about it,
do your part to expand the network effect by educating people about Bitcoin,
helping them download a Bitcoin wallet and teaching them how to receive
Bitcoin. Do your part.
Matthew. Nice. Enjoy your night. Enjoy
your Christmas and the New Year,
and we'll catch up in 2026.

(01:47:54):
Thank you, my friend.
Always a pleasure.
Peace and love, freaks.

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