Why This Bitcoin Bull Market Is Different | Checkmate - What Bitcoin Did

Episode Transcript
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(00:00):
I'm seeing that interest from people who actually have money to protect.

(00:06):
I haven't been on this Bitcoin wave, but like they're watching this low volatility
climb and they're going, I think I actually need some exposure now.
There's just a lot of things that are starting to feel a little bit like we're in a
bulletproof bull and that's okay, right?
This is normal for this kind of cycle, but things can really start to accelerate from
this point forward.
There is a good chance that we get some serious momentum to the upside.

(00:26):
But as that happens, if we leave this stair-stepping pattern, we do move into more unsustainable territory.
And then you start getting closer to a meaningful top.
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Checkmate.
My favorite person to interview, I think.
I always love talking to you.
You're the person I bug offline the most,

(02:58):
asking questions, saying, am I being stupid here?
But vibes are good right now.
Bitcoin is at 117K.
Yes.
I was just commenting on how much I like that little dashboard
you've got floating behind you.
It's pretty neat.
Yeah, yeah.
Shout out to Chester.
so chester was i think he's our was our longest subscriber on the patreon on the old what bitcoin

(03:19):
did when we had one um he's an absolute legend he's making these called the blocktron i like it
i don't know if they're for sale yet but they're pretty fucking cool but i've got this like janky
setup behind me because about a week ago i was upgrading the studio i was going to put these
like nice shelves i got in and i drilled straight through a water pipe right behind me nice so that's

(03:41):
put on hold yeah you need to find yourself a stud finder or something mate well i had a stud finder
and i was using it and it said there was like something there oh you said you thought it was
a stud and you went well i drilled through the stud and then through the water pipe and so
this place was a fucking mess so i'm on a bit of a janky setup right now but we will make it happen
it's worth it yeah that's that's the joy of uh of home ownership and uh you know making a mess of

(04:05):
things exactly um i'm probably not going to touch a drill again for a little while but we're here
Anyway, checkmate. I probably spend about 10 minutes a week looking at charts. It's really like, what's the Bitcoin price? Do I feel rich or poor? That's about it. But I do think even still, like when you've been in Bitcoin for long enough, you just get kind of a vibe of what's happening, like where the market's at. And right now I'm feeling pretty fucking bullish. What's your kind of just give me your vibe take on what's happening?

(04:37):
Yes. So strangely enough, this is actually why on-chain data is so interesting to me,
because it's all about vibes. It is literally all about, you don't look at charts, but you have a
feeling, right? And it's generally based on the price. It's based on how long you've been in the
market. It's based on your average cost basis. It's also based on your last buy. There's nothing
quite like buying and immediately goes red 10%. You're like, God, that sucks. Even if you've been

(05:00):
in this market for like eight years, you buy and it goes down, you're like, oh, I should have
weighted, right? But that whole aggregate sentiment, that's really what we're looking at.
We're looking at all the profit, all the loss. Now, I think the numbers at the moment in aggregate,
the unrealized profit. So this is everyone's obviously got their cost basis. You've put
X amount of money into the system. And what is your cost basis delta between where the price

(05:25):
currently is and where the average guy is? There's $1.4 trillion, $1.4 trillion worth of
unrealized profit in the system. An incredible number, right? When you really think about it
and the market, the metric that I look at, in my opinion, it's the most important metric in Bitcoin.
Whenever someone asks me about, is Bitcoin being adopted? Is it growing? All this good stuff.

(05:48):
You can point to transaction counts. You can point to the ETS, but at the end of the day,
it all boils down to the realized cap. So let's value every single coin when it last transacted
on chain. This is the backbone metric and it just crossed a trillion dollars. And the cool thing
about this, if you've been around for a long time, you've been stacking coins since 2019, 2020, 2021,

(06:09):
you've bought it 10K, 15K, 20, 50, 100, all of those coins. If you just DCA and just like stick
it in your cold card, all of those coins are saved at that price. The last time that you
transacted them. Now, yes, there's imperfections here or there for individuals, but like in a broad
scale, it actually shows us how much wealth has been saved and stored in Bitcoin. So for this

(06:30):
thing to cross over a trillion dollars, you're basically seeing that all of these investors have
trusted a trillion dollars worth of their hard-earned savings, granted, denominated in fiat,
but that's what most people earn. We've trusted a trillion dollars to the system to look after it.
And there's then 1.4 trillion worth of total paper gain. So the whole market is really,

(06:53):
really up feeling really good that's great now if you imagine that let's make that you know keep
the cost basis there at a trillion bucks let's push the price up another 2x 3x 4x suddenly that
that paper gain it starts getting a bit stupid so that's why you actually end up getting a top
eventually is because too many people go it's just a big number but uh you know i don't think we're

(07:17):
there yet um certainly a lot of like when you normalize this stuff because like yes there's a
trillion worth of wealth. There's 1.4 of paper gains, but that's actually a fairly normal statistic.
So this is where we look at things like MVRV ratios and basically how in profit is the system.
It's nicely in profit, but it's not at some kind of extreme level. We're still within the bell curve

(07:38):
of normal Bitcoin bull market environments. Once we start getting to the right tail where things
get a little bit stupid, you've really got to get up into the 160, 180k type range before those
kind of levels get hit. But we saw that 80,000 Bitcoin come back to life. I mean, people are
saying, why would you sell now? It's like, bro, he's up $10 billion. It literally doesn't matter.

(08:01):
But the market took it like a champion. It's amazing. That 80k is one of the other, 80k Bitcoin
sold is one of the really bullish signals, I think. There was a ton of speculation on who it
was selling. I don't know where the Roger Verr came from. I think it was literally,
someone just guessing on twitter oh people people love to just throw random guesses out there and
they say it with such conviction you're like oh what if it is and then i i kind of fell for the

(08:24):
narrative that it was maybe going to be used to fund one of these treasury companies but it's
that's officially been sold now right i believe so so they went through galaxy um and this is one
of those things like everyone's speculating and saying oh was it sold was it not sold and meanwhile
the realized capture says yeah we've just seen a coins have just changed hands move on and so
80,000 Bitcoin sold on the market.

(08:45):
It made like, what was it?
What was it?
Like a 3%.
3.5%.
Yeah.
It was basically nothing.
Really, I mean, on a weekend too.
So pretty amazing stuff.
Is that the most substantial single sale of Bitcoin that we've ever seen?
I don't know if the most it could be.
I think it's definitely in the, it'll be in the top 10 for sure.
I did write a piece on this.

(09:05):
I'm just trying to remember the numbers.
Certainly in terms of the on-chain world, the metric that it did hit an absolute all-time
high for was CoinDay destroyed.
So every Bitcoin in the supply accumulates one coin day per day that stays stationary.
And when that was spent, because I mean, they're 2011 coins, right?
So you've got 80,000 every day since 2011, just chunking up all these coin days.

(09:28):
So it was the largest expenditure of coin days that we've ever seen.
The only one that comes close to that was when the Mt. Gox trustee moved their coins in 24.
I think it was like July or August or something.
and they were held since I think 2017 because they did a couple of tranches where they moved
them to the trustee and there's a few transactions there. So that's 140,000 Bitcoin, but held for a

(09:49):
shorter period of time. So it definitely blew that out in terms of like realized profit metrics. I
mean, very rarely do you just see someone just like move $9.6 billion worth and just like, yeah,
it's just one transaction. I mean, it's pretty wild that someone stuck around that long.
It's insane. But like when you say, of course he sold like it's $9 billion, but what, like,
I don't understand what he's selling for.

(10:09):
Who needs $9 billion right now?
Yeah, well, it's a good question because,
and if I believe in Galaxy's press release,
they basically said it was part of the client's
inheritance planning, which, you know,
when you really think about it, look,
there's every chance that it could be just like
they sold it, they wanted to realize it,
they lock in that cost basis,
there's obviously a tax implication,

(10:31):
they may want to move it to somebody else,
they may want to move it from them to a trust,
there's all sorts of reasons why they might do this.
But when you're moving that kind of money, how often do you think about what you've got to do with your cold storage, right?
If you just don't come home one day, imagine having to do that with a $10 billion lock.
There's a whole legal structure involved in doing something like that.

(10:53):
So who knows? There's a thousand and one reasons why they might have done it.
But to me, I just think it's really, really cool that A, we can see that these coins are back alive.
and strangely enough that i actually i'm going to use this as a bit of a a talking point because i'm
still thinking through and writing my piece on quantum it's just taking me ages to get my head
around it but there's obviously this debate around should we freeze coins right this is one take of

(11:18):
it i'm i've the more i've thought about this the more i'm like no we can't because what if they
were considered to be lost and then someone comes back and by the way we don't know if quantum moved
it or if someone just decided yeah now's the time for me to upgrade my cold storage so we can
never know that a coin is lost. We can only estimate how many coins are lost because really

(11:38):
the owner is the only person that actually knows they don't have the keys. So we can measure things
by coin day destruction and coin day accumulation. This is what Dave Puel and I did with Coin Time
Economics. We built a fairly simple, I mean, it is simple. It's quite a simple, elegant system
to not actually need to know how many coins are lost, but we can still discount them based on the

(12:00):
aggregate amount of coin day destruction and holding, you can correct a lot of our metrics
to adjust for those lost coins in a fairly simple way, but we don't actually need to know which ones
are lost, which was a really, really cool innovation from that little study.
I think the quantum argument is super interesting. I can't remember if we spoke about this on the
podcast or privately, but this idea of whether we need to freeze coins or not, I'm just,

(12:25):
as of right now, I'm 100% sure that my belief is that we cannot freeze any coins.
I agree. And I don't understand the argument of we should steal them before a bad actor steals them.
But I do think that this is going to become a very kind of hot topic in Bitcoin over the next few years.
And I also think I might end up being on the losing side of that argument, even though I think morally it's the right stance.

(12:48):
Yeah. I mean, from my perspective, if let's just use Satoshi as an example here.
if we freeze the coins for the petoshi entity if we are freezing the our decision right the network
has chosen and the debate really centers around what is the actual risk is somebody getting into
the quantum field and actually extracting the private key and then being able to spend those

(13:09):
coins is that a breakdown of bitcoin's security assumption or are bitcoiners freezing someone's
coins on their behalf a breakdown of the security assumption and you know from my perspective he who
have the private key has the coins. How they come across that private key, now that doesn't
necessarily mean it's a legal ownership because you can steal someone's private key. Legally,

(13:30):
they are the original owner's coins, but you have possession of them. So, you know,
where's the possession is nine-tenths of the law, something in that ballpark. So if we are freezing
somebody else's coins, we are making a decision for them. Yes, there's the argument that we can
have like flag days and say you have to upgrade by this time, but if they choose not to upgrade
to a quantum resistant system and their coins get stolen, that is their decision. That is their

(13:54):
choice. We didn't make that choice for them. And the other thing I come at this from,
and maybe this is just where I sit as a Bitcoiner, I do not believe that price is a relevant metric
for consensus code. I think that the market price is completely irrelevant when we're talking about
consensus level code. So from that perspective, what is the actual impact? If you're the Potoshi

(14:18):
entity, your coins get stolen either by Bitcoin as freezing them or by quantum stealing them,
right? Or you come back and spend them. So in either way, unless you're the one that spends
them, you lose your coin. So the outcome for Potoshi is identical, no matter what happens,
their outcome is exactly the same unless they come in and take them themselves. So in that regard,
if the rest of the system is then saying, I'm going to freeze your coins,

(14:41):
what is our motivation for that? It's actually because we're afraid that the price is going to
go down. The other one is, you know, maybe the Bitcoin security system is broken, but this is not
a like out of left field thing where people are starting to talk about this, which is, by the way,
is really good. This is not like a surprise. And honestly, when I think about it, if a million
coins came back on the market or one point, whatever it is, one point, I think it's 1.2 or

(15:05):
something, what we call zombie coins, coins from the old addresses that haven't moved since there's
been a Bitcoin price, most likely lost early miners, Potoshi, all that. If those coins come
back to market, there will be a line out the door of Bitcoin saying, yeah, I'll step in and buy a
million sats of Satoshi's coins. Absolutely. Of course I would. So I think the market will actually
absorb that. There's another claim. I think Jameson Lopp talked about this, and I disagree

(15:29):
with this point, that there's address reuse in exchanges. And if Binance doesn't upgrade their
system full well knowing that there's a quantum threat coming, I mean, that's on you really.
and then what are you going to do launder 500 000 coins from binance through what right so unless
like north korea or one of these actors gets them i mean like the odds are it's going to be either

(15:53):
you know us or chinese government it's going to be a high-flying tech company what are they going
to do steal some steal binance's coins and launder them through the dark market like you know there's
a bunch of things that just don't really make sense so from my view yes it's a threat yes it's
probably a long way away um in my view yes we have to start thinking about it soon but honestly
freezing someone else's coins, I think is actually far worse than just allowing the market to deal

(16:18):
with it. So that's where I sit on the general issue. And just to add to that, Bitcoin as a
system enshrines property rights. And if we break those property rights because we're scared of what
happens to the price of Bitcoin, I think you can't have that conversation without acknowledging that
the price of Bitcoin is because it enshrines property rights. This is all reflexive. And
And without property rights, is Bitcoin worth $117,000?

(16:42):
The idea of Bitcoin, in my opinion, is more important than a known technological bug that
we can all see coming.
We can all start thinking about it in advance.
We can all do something about it.
Solve it for, give everybody the choice and the option.
Once you break the social contract, you're a shitcoin like everybody else.
And you can't repair that.
There's no recovery for that.

(17:03):
So in my opinion, the Bitcoin idea is far more important than the Bitcoin code, actually.
So really, you have to protect the idea the most.
And that is that they are your coins and I cannot take them off you.
So in my view, it's actually in my best interest to say, no, you cannot freeze that guy's coins because otherwise you could freeze mine too.
So stuff here.

(17:24):
But there is the kind of market participants where price is hugely, hugely important, even short term price.
And I'm thinking of like the sailors of the world here.
And they obviously have a massive kind of social pull.
And I think whatever Saylor comes out and says is going to resonate with a lot of Bitcoiners.
I don't know where Saylor will stand on this, but I would assume his incentive is to freeze

(17:48):
funds to make the price move as little as possible.
So I would go down the path, and I think this is interesting because we start getting into
consensus code.
I also just look at this thing and say, what is the most likely outcome?
like realistically, let's peel away all the narrative. What is the most likely outcome?
The most likely outcome is that we're going to do nothing. That Bitcoin will not change because
not enough people will get on board. So therefore the most likely outcome is that people can shout

(18:13):
and yell and scream and run nodes and all this kind of stuff. But the truth is that I just do
not think that we're not going to get some kind of a hard fork out of this and we're going to get
two coins I don think that how this plays out So you know we all part of the same system and I think the most likely outcome is that we actually don do anything We probably implement some kind of quantum resistance scheme People can optionally move across

(18:36):
but I do not think we're going to get broad-based consensus for everybody to free someone else's
coins. And in that regard, people are going to, they can yell and scream and they're not going
to achieve any ground whatsoever. I think that's how Bitcoin most likely plays out because the
rules are hard to change by design. Well, I think we're on the same page with that.
But back to the 80,000 coins have moved.
Does that change anything when you're looking at on-chain?

(18:59):
Did you assume that those funds were lost?
Well, I never look at individual UTXOs, but we can basically say over a period of time,
it's likely that there's this batch of coins.
And I think actually this is the first time we look at the HODL waves, which is basically
a breakdown of all the coins by age bracket, how long they've been dormant for.

(19:20):
if you look at the 10-year hodl wave 10-year plus it's basically this continuously growing curve
because as coins move into that 10-year bucket i mean most coins that haven't moved in 10 years
are most likely lost now yes sometimes they get spent but very very infrequently and you know yes
if you were to do like a a one-day diff you'd see that there's sometimes declines in that hodl wave

(19:44):
but as a just a visual look at the chart you've never seen it go down except for this so this is
really the first time that the 10 year old hotter wave has actually declined at a visible scale on
the chart which is pretty cool um so you know very rare this is not a common event these kind of
things so how many of these entities are still out there remains to be seen how many more 80

(20:06):
thousands of this does this dude have you know like i often hear people talk about oh what about
that guy who sold 10,000 Bitcoin for a piece. I'm like, the dude was mining on GPUs. He's fine.
You know, he's got plenty of coins. Don't worry about that 10,000. So, you know, look,
how many of these things are out there? There's not many. In fact, I was up in Brisbane recently,
I had the pleasure of meeting a bloke who has actually-

(20:28):
Thanks for telling me you were here, mate.
I know. I was at a dinner and you weren't invited. But he was, mate, this bloke was
mining like 25 days after Satoshi and he's got like mined block Coinbase rewards, which by the
way. They're so old that they don't show up on mempool.space. You've got to go to other block
explorers. But yeah, it was mining like 25 days after Satoshi. So these guys are out there and

(20:50):
it's just amazing to think that this is possible and feasible. That's incredible. Is this 80,000
Bitcoin sale an anomaly or are you seeing sort of selling pickup now? No, no. This is very much
a unique event. Even not in size, but as a trend, is selling increasing? Yes, it is. It is. I mean,
it always does. And this is the thing. So there's basically two ways you can interpret the data.

(21:14):
When we see the market moving higher, which it has been since April, which it did in November,
December, which it did in March last year, there's two ways you can interpret it. Lots and lots of
people decide to consolidate their UTXOs when the market rallies, or lots and lots of people like to
take profit when the market goes up. It's funny. So the way I look at it, like, let's just look at

(21:38):
What is Occam's razor?
Yes, somebody consolidated their wallet.
But yes, we are seeing a lot of sell side.
This is the reason why the market doesn't go straight up.
This is a line I use all the time.
And I think it's actually really instructive and useful.
Markets are a process, not a result.
And I think we saw today that Saylor bought 21,000 coins, right?
Two and a half billion.

(21:59):
And people are like, why isn't the price in the stratosphere?
It's like because someone sold 80,000 Bitcoin and he bought 21,000.
And so if you've got another four sailors, now we can equalize things, right?
So it's one of these dynamics where it just takes time.
Markets, like when a coin gets sold, it doesn't immediately go into like the deepest, darkest,
cold storage in a vault somewhere.

(22:19):
It goes to some guy who's now going to start trading it and then someone else is going
to trade it.
And these coins move around the system.
They buy and they sell trading ranges.
And then eventually, at some point, some hodler comes in and just DCAs out a million
sats, puts it away.
sayler comes in dca's out 21 000 coins puts it away but there's still all these coins like

(22:40):
bouncing around there's trade ranges there's derivatives there's all sorts of stuff that's
just how markets work but uh you know it's all in the good fullness of time i know you're joking
there about people consolidating while price is ripping but like mempools are pretty empty
are you surprised that the mempool is so empty as price is ripping like this is a pretty new
phenomenon right so it is and it's it's a little bit interesting because the last time we saw the

(23:03):
market at all-time high for all the intents and purposes the last time we were at all-time high
in the mempool was this dead was the second all-time high in 2021 now which is a scam all-time
high which is a scam all-time high now there's a number of differences uh if you look at i mean
pretty much any metric you want to look at if you go back and look at that second all-time high in

(23:24):
21 now we can't really use these metrics today because they're a bit spoiled because of um
ordinals and inscriptions and all that shit. But you had a massive lot. We didn't have any of that
back in 2021. So one active address was one active address. And I'll explain why it doesn't count
today. One transaction was one transaction, right? We're all just talking about monetary
transactions, broadly speaking. Massive lower high. That second all-time high in 21, all of

(23:50):
these were like a big bearish divergence. MVRV, which is the unrealized profit held by the system,
massive bearish divergence. So how can you have price at a higher level, $69,000 versus the first
all-time high in April at $64,000? How can the price be higher, but everyone's unrealized profit
is lower? It's because a bunch of people have now sold the top. You've got a pool of all these new

(24:11):
investors with a very, very high cost basis. Now that part is actually true today. The average cost
basis is much, much higher. It's like $76,000 on average per person at the moment. I use a metric
called the true market mean. I won't go into the details of it. Short-term holder cost base is like
105K. And I've got these heat maps I look at that show where all the supply has been bought and sold.

(24:34):
That 95 to 100K region, there's like 40% of all the wealth invested. I was talking about
RealizeCap before. It's above 90K. That's an extraordinary stat. 17% of the wealth invested
has a cost basis in our current trade range, 17%. For similarity's sake, everything below 50K,

(24:57):
if you value every coin when it last moved, literally every coin below 50K, 17% of the wealth.
And we've got that in our current trade range. We've been here for two and a half weeks.
So it just gives you a bit of a sense of scale of how quickly these things move. Now on the
transaction counts and active addresses, we can't really compare them because the way that
ordinals and inscriptions work and they play around with the witness data, you can fit more

(25:20):
transactions in. So transaction counts are at all time high, but a lot of these guys are using either
algorithms and bots to trade this stuff. Or they treat a Bitcoin wallet like an Ethereum address
where they reuse the same address. So in order to not double count, one active address may be
sending 20 transactions in a day. So it's still one active address. So some of those activity

(25:43):
metrics are a bit bung at the moment. But the other one is on-chain volume is very, very high.
So we've got a small number of transactions, but the size of these transactions is massive.
So what does that really speak to? Big money. The network is being used by fewer transactions,
like the skew has gone towards institutional size money. So we're not seeing retail punters. We're

(26:08):
not seeing like in 2017, people used Bitcoin as the casino chip to go and punt on Binance.
So in 2021, we had that retail fervor because money printing and stimulus and all that stuff.
This cycle, it's, yes, there's an ETF component.
Yes, there's more of these institutions moving around, but retail aren't on chain.

(26:29):
That is a very, very different dynamic.
How long it takes retail to come back?
I mean, I see posts all the time saying, when retail, when retail.
It's like, when retail, you don't want retail.
Retail means end of days.
That's the top.
You actually don't want that.
The fact we're not seeing retail right now is indicative of both the market structure.
They're going in through ETFs, a lot of them, but a lot of them just don't care.

(26:51):
They really just don't care.
And really, in my last two years, I've had no phone calls from people who are no-coiners.
I've had lots of phone calls from Bitcoiners saying how to lever up.
But increasingly, I am getting questions, and mostly in-person, questions from people
who actually have money.
So these are people who've got wealth behind them and they're saying, I'm not that scared about Bitcoin anymore. Can you tell me a bit more about it? And for those kinds of things, I know a lot of Bitcoiners have the same story. I don't try and orange pill people anymore, but if you have a question about it, I've got all the time in the day.

(27:26):
and I think a lot more people are in that kind of world and I'm seeing that interest from people who
actually have money to protect increasingly a lot of retirees as well who are going yeah I haven't
been on this bitcoin wave but like they're watching this low volatility climb and they're going I
think I actually need some exposure now so I think all of this stuff is just it's a different system
I think you're on the verge of saying this cycle is different but every cycle is different

(27:50):
let's hold that for a second because I do have I was looking through your newsletter
and there are a few really interesting charts that I wanted to pull up and get you to go through
and let me just get these so yeah I mean every cycle is different no no we're coming back to
this because this behavior pattern is the same human fear and greed is the same so talk us through
this chart we've got here yeah so SOPA is my Swiss army knife I use this for everything so

(28:14):
what we're looking at is short-term holders so people who've bought within the last five months
people love to debate me and say short and long-term five months doesn't matter the statistic
says five months, the probability of a coin being spent once it's been held for five months
is diminuous. It's so small, it's logarithmically small. And actually, there's a power law. There's
a very clean power law that Glassnode did a study on a couple of months back where they showed that

(28:37):
it really is a power law between how long a coin has been held and the probability of being spent
on any one day, which is pretty neat. And what we're looking at for short-term holders, 95 plus
percent of the on-chain volume every single day without fail is short-term holders. So they just
dominate all the coins, move around, move around, move around until they finally hit a cold card

(28:59):
and go off market. Now, I mentioned MVRV before, which is the unrealized profit or loss. SOPA is
the sister metric. It's the realized side of the equation. So it shows us the average profit or
loss being locked in by coins that are on the move. So for short-term holders, there's this
typical pattern is in bull markets, most of the time people are profitable. Short-term holder

(29:23):
metrics are really, really powerful because they are literally the only ones who can buy the top.
You cannot have a long-term holder buying the top because they haven't held their coins for five
months yet. So when short-term holder SOPA goes into the red, it actually means that local top
buyers, they bought the top, they watch the market go red, red, red, and then they finally go, ah,

(29:43):
damn it, I've got to sell now because I'll buy back later. And they sell the exact bottom.
So for me as a hodler, that's when I actually DCA, when I see those kinds of events.
So what we're seeing in this bull structure is it's most of the time profitable with really
healthy retests of that breakeven level, which shows that those top buyers are getting flushed
out and then we spring back again. So it's got this structured bull market behavior.

(30:09):
When we get too much profit taking, so the way that I think about this,
if the dude who bought two weeks ago is looking at his portfolio and going i'm a genius then
something like you're probably a little bit overheated in the short term so whenever this
metric gets too high it doesn't mean that a top is going to get put in at some kind of global level
short-term holder metrics are generally speaking they're more about local stuff but you know like

(30:31):
for me as a hodler again bring it back to like how i personally dca i'm probably not going to
lump sum a big chunk in when there's stacks of people who are feeling quite happy about their
recent swing trade starting to sell on my head. I'm going to wait until that cools down a little
bit and then I'll step in. So it's just a tool to help me manage my emotions. It helps me manage

(30:52):
kind of where the local cycle is. And just, I've been in this market long enough. I'm just tired
of buying high and then watching it go lower when I know it always goes lower. It always goes lower
in the short term. So I'm just like shifting my DCA over just a little bit to try and correct for
that. All right. I want to go through all these charts because the question I have kind of
encapsulates all of them. So then we've got the Bitcoin realized profit and loss. So talk us

(31:15):
through this one. Yeah. So we mentioned before the realized cap. So the realized cap looks at
every coin based on the price when it last moved. Some guy buys at 10K, sells at 120K.
Someone had to come in with the delta. And this is actually, this is one of my favorite tools
for measuring demand. Because even though Realized Profit is a sell-side metric, that guy had to come

(31:38):
in with extra money. The original cost basis was 10K. The new cost basis is 120. He's got to come
in with $110,000 times the coin value, right? If it's half a Bitcoin or whatever it is, he's got to
come in with extra capital. So the reason that the Realized Cap increases is because old money
is selling to new money. There is a rotation of the holder base. And this is really, really

(32:01):
important. So for every buyer, there is a seller. For every price, it literally requires a buyer and
a seller on both sides of the book. So when you're measuring sell-side pressure, which is what this
metric is, we're actually measuring demand because you're measuring the opposite, the inverse.
When you see 80,000 Bitcoin gets sold, that means that someone came in and bought 80,000 Bitcoin.

(32:22):
Now, it could be many someones, but someone. When a seller buys 21,000 Bitcoin and the price doesn't
go up, I wonder why. It's because
someone sold 21,000 Bitcoin.
You know what I mean? This is just how the system works.
Now, the chart
that we're looking at here is basically that volume.
I've normalized it to BTC terms so
we can pair across cycles.
And I believe I do a four-year just to

(32:43):
try and look for when is
it hot, when is it overheated,
too much sell side. I've just
applied a four-year standard deviation.
So when you go above half standard deviation, you're
usually in a ripping bull. When you get above
two standard deviations, it's
getting pretty steamy in the room. So really what I look at here, it's all about incentive
and action. When people are feeling really profitable, we started this conversation by

(33:08):
saying, you're feeling good. There's $1.4 trillion in the system. That's the incentive.
If you wind that up to $2 trillion, $3 trillion, $5 trillion, suddenly someone out there is going
to go, yeah, it's time for me to lock in that $10 billion worth of profit. At some point,
it may not be you, it may not be your friend, but it's some guy out there is going to take that
profit. What I'm trying to look at here is what's the incentive, unrealized profit and loss. And

(33:32):
then this one is telling me, did they actually sell? Because you actually need sellers to create
a top. If you don't have sellers, then the market just keeps climbing and climbing and climbing
until it finds them. So really price is actually the result of that supply and demand balance.
It's going to inflect higher when it cannot find the supply. It's going to inflect lower when it
cannot find the demand. That is literally how markets work. And this just gives me a nice tool

(33:55):
to understand when are we getting too much sell side relative to recent history? When are we getting
too much demand, right? Trying to understand both sides of the equation.
All right. And then the last one, we've got the bull market corrections.
I mean, this is just such an amazing chart. I think I described it in the video for the post
saying like, this is one of those charts that is worth a thousand words. So for those who are

(34:18):
listening, basically what I'm looking at is the last three bull markets. So 2015 to 2017,
I used the 2018 bottom all the way through to the 2021 second top, and then our current cycle
since basically FTX blew up. So ignore the drawdown from the all-time high. We're only
looking at the drawdown within that bull market uptrend. How deep are they? So if you go back and

(34:41):
look at the 2015 to 17 cycle, getting a correction of 30, 40, 50% wasn't uncommon, but maybe not
50. 40 was like about as bad as it gets. The key difference between 2015, 17 and today,
because we've only had two 30% corrections. And we've got to remember that we are a hundred times
bigger in market cap size than we were back then. And yet the drawdown profile is actually

(35:05):
less bearish this cycle than it was back then, which is incredible because think about the amount
of sell-side pressure. We're not talking about a million dollars or $10,000 worth of sell-side.
We're talking about $10 billion worth of sell side today, and the market is barely clocking.
The bears can't get any ground, getting a 30% correction.

(35:27):
The other interesting thing about 2015-17 versus today, the drawdowns back then were
much quicker.
If you went away for a weekend and came back, you missed a 40% correction, and then it's
springing back to all-time highs.
Their corrections today may take six months, eight months.
They're much longer, more drawn out processes, which creates a lot of frustration and boredom.

(35:50):
But really, the cycle's not actually that far away from where it typically is.
But we've got to remember that it's much, much bigger.
But the middle period, and strangely enough, this chart's actually really good.
I've been rethinking the idea of cycles.
A lot of people like to use the halvings and the bull market tops and the bull market peaks and all that stuff.
I've actually been using a very different framework more recently.

(36:11):
they're not too far away from those kind of delineation points, but I use two delineation
points and I think we've had three cycles and this chart kind of shows it. The first cycle,
in my opinion, ended on the 2017 top. So that period was very adoption driven. You can see it
in every metric. I mentioned the transaction counts and volumes and just you name it. There

(36:33):
was a very different pattern back in that pre-2017 top era. Very organic. We barely had a trading
view chart. There's very few hedge funds. There's no leverage. There's no stable coins.
It was just buy Bitcoin and maybe speculate on some of these old coins. But it was a Bitcoin
dominated organic cycle. And the psychological side of this is people were responding to Bitcoin

(36:56):
as this brand new thing No one knew anything about it What is this cool thing Yep That middle period from the 2017 top until FTX blew up very volatile A great metric if you want to actually study this
Just use the Mayer multiple, a ratio of price in the 200-day.
You'll see back in 2017, it had this nice rhythmic pattern.

(37:16):
It continued to bounce off the 200-day, and it was quite structured.
2018 to 22, massive amplitude, straight down, straight up, straight down.
like we just had these boom and busts 2018 was just straight down 2019 was straight up then we
had another bear in 2019 straight down covet happened we went vertical and then we just like

(37:37):
it was really high amplitude moves with leverage right this is where retail suddenly got perpetual
swaps on you name it token now since ftx blew up i think everybody knows we can see it in the price
chart. It is trading differently. The drawdowns are shallower. The rallies, it goes up 40%, 50%,

(37:58):
sometimes 100% in a year, and then chops around sideways for eight months. So we do have a very
different structure. It's much more of a slow grind.
Yeah, very much so. And look, at some point, and I think we're probably on the cusp of this,
truthfully, of moving into what I call the euphoria phase. So we've got the bear market
recovery where there's a lot of PTSD. This is really 2023. Everyone was fearing the ghost of

(38:19):
Sam Backman-Freeb was going to come back and we're going back to zero. But we just never got that
lower high and it just kept drifting higher. Then we got the excitement phase. You start getting up
towards the all-time high. I thought that we would have moved into the euphoria phase already because
in past cycles we have, but I think we're getting there. Look at the treasury company trends.

(38:40):
Derivatives leverage is pretty much at all-time high. We're closing on like 5.8% of the Bitcoin
market cap for futures and options. So it's getting leverage. As I said, I've had people
call me saying, how do I lever up my Bitcoin to buy more Bitcoin? There's just a lot of things
that are starting to feel a little bit like we're in a bulletproof bull. And that's okay, right? This
is normal for this kind of the cycle, but things can really start to accelerate from this point

(39:03):
forward, which is exciting for those who've been bored to death. There is a good chance that we get
some serious momentum to the upside. But as that happens, if we leave this stair-stepping pattern,
we do move into more unsustainable territory. And then you start getting closer to a meaningful top.
So take maybe the sentiment out of it. And just purely from this sort of analytics perspective,

(39:25):
do you think there's still a lot of room to run here?
I think so. I mean, and I think when you say a lot, that's a relative term, right? So let's just
kind of correct what we mean by a lot. If we go up to 150K, you know, we were at 100K a couple of
weeks ago, we got to 150. We've added a trillion dollars to the market cap. Now, we really proved

(39:46):
that we're a trillion dollar asset in 24. Chopped sideways for eight months, every dip was bought.
We then said, all right, let's try 2 trillion. And we chopped around there for six months, right?
We had a correction back down to 75 and it was swiftly bought up amongst all the tariff tantrum.
In many ways, we've kind of proven that, yeah, you know what? We're a $2 trillion asset.
So the real question is now, how many trillions are we going to add? How many trillions until

(40:08):
people start to sell 80,000 Bitcoin as a regular thing. How high do we have to go before people
really start to cash in? Now, this cycle is also quite unique. If you look at long-term
holder supply, we've had two waves of sell side, and they've both been very, very meaningful.
I think in total, the amount of long-term supply that's come back to market has actually now

(40:29):
eclipsed the 2017 cycle. So this is the largest in aggregate long-term holder sell side event
we've ever seen. But we've got to remember a lot of that supply, people who bought in 2024 in that
like 50K chop range, a lot of those coins got resold for a quick 50% move by hedge funds,
trading desks, whatever else, up to 100K. Now, maybe they step back in. And in fact, a lot of

(40:52):
the people who bought in the 85K range on that dip in March and April, a lot of those coins are
now being sold up here. So a lot of folks kind of miss that there's still a large trading cohort.
in and amongst the Bitcoin space,
the sell side comes from people who bought 50% lower
because 50% in like a three month period

(41:13):
is astounding returns for TradFi folks.
It's going to take them a long time
to get used to just like buy and hold,
but also their mandate isn't to buy and hold in many cases.
Their mandate is to swap into Bitcoin, get out of it,
move over to Nvidia, get out of Nvidia,
go over and punt on Palantir.
Like they move money.
Their job is to move money.

(41:34):
And the more they move, the more they clip the ticket, by the way.
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Bitcoin is absolutely ripping.
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So let's get back to the cycles being different, because at the bottom here we've got the three cycles.
um 2017 was just like parabolic upside um next cycle was like you said super volatile and this
one's just grinding now i did a show with nick bartier very recently yes and he was saying i

(44:10):
really liked his framework he was basically saying he's like 60 sure the cycle's broken which is
a rounding error from 50 50 but like the the market is different now we have the sort of
sailors of the world buying massive amounts of bitcoin regularly and we've got the etfs like do
you put any credence in the idea that even if it's not sort of quote unquote super cycle,

(44:31):
it is an elongated cycle that doesn't have the same four year bull and bear?
Yeah. So honestly, I really, I aligned very strongly with what Nick was saying. I think
that's the exact way to think about it, which is I'm extremely flexible and how I'm thinking
about this cycle moving forward. The truth is it is different, but every cycle is different.
They all have their own unique characteristics. The one thing that is not different is human

(44:53):
beings, we all have our own decision frameworks. There's a lot of Bitcoiners out there who are just
simply going to hit a level of wealth where they go, I can finally buy the house. I can finally do
that thing that I could never. Bitcoin gives people opportunities that they would never have
had any other way. I was listening to Pete McCormack on Natalie's podcast this morning,

(45:15):
and he was saying very similar things. At some point, your Bitcoin, if it's your savings,
people are going to find things to do with it because that's what money's for. It's about
improving your life. So at some point, people are going to realize those gains. And by the way,
that's perfectly fine. That's what savings are for. So the cycle is most definitely different.
Human psychology is not different. Bitcoiners have this internal sense. The longer you're

(45:39):
around this market, the more your intuition builds. You know when things are getting a bit
silly. This is why there's a lot of these debates. This is why the treasury company thing is a debate.
Every single person who's looking at this can go, I think there's some merit here because they're
looking at what sale is doing, you're going, he's going after the bond market. That's pretty badass.
That's pretty cool. And you can also look at it and go, it's also a bit Ponzi adjacent.

(46:00):
You know what I mean? Like we're kind of sitting on this two sides of the fence. You can actually
hold both of these views at the same time. Things are getting a little bit silly and we've probably
got plenty of room to run. So I think that's the right framework for where we are. I'm very flexible
and that's why I'm trying to live within the next like six months. Like I've got my models and I'm
looking out where it is, but I'm under no illusions. The market could just totally top

(46:23):
out here and just be a sad little curl over and that's the end of it. I don't think that's likely.
I also think we may get a parabolic run, but I also don't think that will be sustainable.
So I've got a couple of anchoring ideas and the rest of it, just allowing the market to just tell
me, rather than me imposing what I expect to happen on the market, I just let the market,

(46:44):
to the best of my ability, tell me what it wants to do and just try and listen. At the end of the
day, the data is just information. I'm just trying to listen to the best of my ability.
One thing that I think could be different there is, I do agree with what Pete's saying in terms
of like, this is money. And at some point you want to do something with your money to improve
your life. That's for sure true. But I do feel like the narrative is becoming more pervasive

(47:06):
that Bitcoin is here forever, or at least for our lifetimes. And what are you selling for?
And this is something we've spoken about a lot.
And I think the market might be understanding that you don't just sell Bitcoin for fiat.
Yes.
No, I fully agree with that.
And I do believe that's actually a unique element here.
I mentioned long-term supply has been sold off.

(47:27):
We've had two waves and we've actually just started the third wave of long-term distribution.
What is unique?
It's actually not the sell side that's unique.
What is unique is that when we hit that peak in March 2024, long-term supply stops decreasing.
and then it very, very quickly recovered.
So when you think about long-term holder metrics,
particularly supply,

(47:48):
it takes five months for a coin to get to that threshold.
The coin may chop around several times
and move hands every so often,
but eventually it hits that threshold.
We have not seen in previous bull cycles,
we see a massive sell-side event,
the top gets put in,
and then those coins recycle themselves
for ages and ages and ages in the volatility of the bear

(48:09):
because no one actually wanted to buy and hold it.
This cycle is unique because we've actually almost recovered
back to all-time highs twice now.
And that is actually showing you about the buyers.
We saw the sell side when the long-term supply decreases,
but we actually see that the coins they got,
the people who bought those coins are hodling them.
Now, some of it's the ETF, some of it is hodlers,

(48:29):
some of it is sailor.
That is what's different.
We've got a cohort of people who are now acclimatized to 100K.
and I know people may not like a lot of Udi's views,
but he's had these on this tirade recently
saying this rotation of holders.
And I think this is very, very real.
I'm not quite there on the we're going to 400K this year,

(48:49):
but there has genuinely been a rotation of capital
from a 2011 whale to modern buyers
like sailor, treasury companies, ETFs, retirees.
My old man, my old man been in the Bitcoin world since 2020.
um that was his first kind of entry to the market so he rode the up he rode the down and i heard all

(49:11):
about it now he's riding this low volatility grind up um he is sold during this market cycle to get
his initial capital out and he's now going should i what's the best way to maybe i don't know get
back in he doesn't care that it's a higher price because he's got his risk out now he's willing to
take that risk again because he's become comfortable with it there's a whole plethora of people out

(49:33):
there who now they don't know anything except Bitcoin going from 50k to 73k to 110k to 120.
And every time it does it, it goes there and it stays there. That's the history. They know the
Ibit chart. They have no idea that Bitcoin came from two cents. They don't care about that period
because it's not relevant to them. They see the Ibit chart, which is just an uptrend. It's only

(49:56):
ever been in an uptrend. So you've got to think about where these people are coming from. We have
acclimatized to these price ranges. I have long since given up 80% drawdown, what, to 30K?
Good luck with that. It's just not happening. So I've given up on that idea. So I do think that is
different. And actually, this is a bearish sign for all the other shit out there, all the altcoins,

(50:21):
because people know that Bitcoin is the winning ticket. And I can only imagine how many shit
Bitcoiners are out there and they've got big bags of this stuff. They are looking for every exit
pump they can because they know that everyone now knows you have to go back to Bitcoin. So
the sell side actually is going to show up everywhere else because the rotation is towards

(50:42):
Bitcoin. I like that take. We started this talking about vibes and we've gone through all the sort of
positive vibes on the Bitcoin price at the moment. But there are a couple that stand out to me as
being like potentially toppy signals. One being the fact that we're just getting a new treasury
company every fucking day. And then the other is that shit coins are pumping again. Like ETH's been

(51:02):
flying over the last few months. Do you see that as a sign that maybe the top is closer than we
think? No, honestly, like when you look at any asset, whether it's a bankrupt company or a shit
coin, they do not go down in a straight line, just the same way as they don't go up in a straight
line. Every single one of these things is going to get a relief bounce. Now, I think it's actually

(51:22):
quite interesting because the core reason I would say, the narrative I would describe,
so for ETH, for example, they've been getting quite a bit of inflows for the ETFs. What is the
event that might have happened? The genius bill. So there's a bunch of folks out there who are
betting on usage of stable coins is going to benefit the underlying token. And something,
actually I was talking, I can't remember who I was talking about this with yesterday.

(51:45):
It was actually Peter Dunworth. I was having a phone call with him. And we were talking about,
my view is that we're in a hard money world now not hard like you know gold or bitcoin hard
but interest rates aren't zero we're no longer in a zerp world i've had this long-running thesis
and we've seen this with altcoins they've really struggled to catch a bid this really is the first

(52:07):
like actual bid they've had yes solana had a period of time but like even it's rolled over
and its btc chart looks just the same as eth does um just earlier in that cycle i think the market
it. Generally speaking, yes, there's plenty of stupid stuff happening in the world. But if you
look at the Russell 2000, it's doing pretty shit. If you look at the not so magnificent 493,

(52:28):
that's doing kind of average. Really, we're seeing this like concentration towards the winners.
It's very much a winner take most, winner take all type environment at the moment.
This is anti-ZERP. This is people actually being more discerning with their capital.
I would say we're even seeing this with treasury companies.
I did a study the other day.
The drawdown most of these treasury companies have had from their IPO, I guess you call it

(52:52):
like, I'm going to call it like an IPO pump.
When they announce, oh, look, we're a treasury company, they go up 5,000% and then they've
just been in a horrendous downtrend ever since.
It's kind of that initial pump.
Strategy, yes, it hasn't blowing through all-time highs, but it's also not down anywhere near
as much as most of these other companies.
So I've had this long running thesis that more and more people are going to be more discerning with their capital.

(53:15):
We're not in a ZERP world yet.
I also don't think we're going back to a ZERP world anytime soon.
Maybe if Trump gets his own way.
Yeah, maybe.
TBC.
But I think, I mean, I have zero edge in this, but I would assume that power is probably going to stick it out.
And this is all just narrative, TBC.
But yes, you're right.
Eventually, maybe.
Maybe we get to that point.
but the genius bill just because people are using stable coins doesn't actually mean the

(53:39):
eth price benefits doesn't mean that sole price benefits you know and i've run this exercise
before go and look at your all-time high gas consumption and compare it to your all-time
high holdings i did this back when i had my my eth back in 2022 i ran this experiment i realized
i'd bought 250 years worth of excess usage i sold it all the next day and i was done
right so that was just the end of it um so if you look at all those different dynamics

(54:02):
i just i think that a bunch of analysts are going to realize that there is actually no
underlying demand for these tokens and just because someone's using it doesn't actually
translate into value right i think it's tom lee he's saying that they have to buy the eth to secure
their network i'm like that sounds like you probably don't want that system right that's
is that really the kind of world that we want to live in like in that case just run a database

(54:25):
if that's the case just use jpm servers why do you need a token to go alongside this thing
and i i think a lot of these institutions are going to work this out pretty quick so
it's an interesting point um i think if eth rolls over in the next like couple of months and just
really struggles to punch a new all-time high i think the red candles that come for alts if that

(54:46):
happens and again i don't know maybe maybe the world animal spirits just comes back but if it
rolls over i think that is going to be just a the reddest candle you've seen because i that's the
world realizing that there really is no demand for this stuff and you know good luck to the true
believers yeah um i do want to talk about treasury companies because you tweeted recently um the

(55:08):
drawdowns most these treasury companies will experience will be epic 2012 bitcoin grade depth
but with gold grade duration yes um why do we start with just your general take because i think
we align we talk about this quite regularly offline and like i think we align quite closely
and that there's there's sailor and then there's everyone else yes that's pretty much where i see it
so and interestingly enough and again people people are going to find all the nitty reasons why arguments are wrong But think about things from a general perspective We have seen this process before in shit coins in penny stocks and you name it

(55:43):
I use a framework of extremes inform the mean.
So let's go to the most extreme example and see where that puts us.
If you look at strategy, if there was only one company doing this strategy,
strategy. It makes sense that everyone has to buy that firm for it to do well.
If everybody's doing this strategy, then what's your differentiator? Probably your size,

(56:05):
your liquid options market, your access to debt. The truth is when you've got so many of these
things, when you're printing a million shit coins a day on pump.fun, there's literally not enough
money to buy this stuff. I also think about it from the smaller you are, the more your only
option is to sell equity. That's the only option you actually have. All the other companies,

(56:28):
if you look at strategy, for example, they can do all sorts of exotic preferred stocks and debt
financing and you name it. That's going to benefit them in both the bull and the bear because they
literally have more access to capital. There's obviously a spectrum, by the way, between all
these things and different companies at different distances. But the chasm between strategy and
literally everything else is, it's like saying, what's the difference between a billion dollars

(56:48):
and a million dollars, it's about a billion dollars. So the chasm is so large between strategy
and everything else, it kind of doesn't matter to compare them. So then you've got this kind of
middle bucket, Metaplanet's probably the leading example of those, and then you've got the long
tail. What is the differentiating factor between the long tails? I really struggle to see it. And

(57:09):
there is a reason that these companies are hiring Bitcoin podcasters as their front men,
because if they do not attract retail speculator capital,
there is no other demand for this.
In my opinion, there is no serious institution
buying a penny stock with a cold card.
I just don't see it happening.
So if they can't access debt,
if they can only sell equity,

(57:31):
eventually people realize,
why the hell am I holding this thing?
If there's Ponzi adjacent,
unless there's more money coming in,
and this is the thing with these MNAVs and these premiums.
And by the way, this is not throwing out every single company.
This is like a broad statement that we look at extremes and then there's going to be outliers.
But if everybody's doing this and your premium expands very quickly, right?

(57:53):
Let's just say a company has a premium expanded to 10x.
They can either 10x their Bitcoin balance or the Bitcoin price can 10x or some combination
of the two and your price can stay flat.
And now you're an MNAV of one.
Now, yes, can they sustain a premium?
Well, that depends on their growth metrics.
When the Bitcoin price rolls over, the speculative capital will slow down and you will

(58:14):
not get people going out on the risk curve. So this all works very, very well when Bitcoin is
in an uptrend. By the moment it goes into chop solidation, where it's frustrating and boring,
or it goes into a downtrend, which eventually will happen, I just can't see how these companies
continue to attract capital. And as a result, once the engine goes out and this plane's flying

(58:37):
in midair and your engine goes out, you've got no fuel to turn this thing back on because suddenly
nobody wants to buy your stock and then you're just like every other penny stock with a cold
card now someone's tweeted at me and i think it's a valid point it's better than penny stocks without
a cold card agree agree but the problem is that once their m nav goes below one and i do believe
a lot of these companies will once their m nav goes below one because there's just not enough

(59:00):
money to sustain a premium they can't sell equity to buy the bitcoin but they can buy sell the
bitcoin to buy the equity and buy their shares back and then you realize well you know if you're
just a company who's like a shitty hedge fund who buys Bitcoin at the top and sells it at the bottom
to buy back your own stock? Do I really want to share in that? Yeah, it's Bitcoin accretive,
but I can also just borrow money and buy iBit or borrow money and buy Bitcoin.

(59:23):
So I think that people are over-indexing on this idea that we need a treasury company in
every jurisdiction. They're basically taking Metaplanet's success in Japan, which by the way,
is a unique selling point. And they're saying, oh, well, there's one in Sweden and there's one
in Denmark and there's one in Vietnam. And let's put a treasury company everywhere. It's like,
if we talk about it here in Australia, what is the real trapped capital here in Australia?

(59:47):
People say, in fact, I was talking with Pete about this yesterday. He's like our superannuation funds,
which is like 401ks for people in America. All this retirement money, it can only buy Aussie
equities. And my point was, truthfully, if you're actually buying, like for me, I've got some of my
investment that my superannuation fund in mstr why because it's really not hard to access so if

(01:00:09):
we're talking about trapped capital that can only buy aussie equities are they really really that
far down the risk curve they're going to go and buy a penny stock with a cold card no they're not
like the truth is once these this trapped capital it's either not engaged in bitcoin at all or
barely even looking at buying the ETS so early in that journey.

(01:00:32):
And anybody who is smart enough to know that this trade even exists
is smart enough to open an account with a brokerage that can buy US stocks.
I'm just really struggling to see this long-term sustained trapped capital thing.
People have taken the Metaplanet journey and said,
we can replicate that in every country.
And I think that's wrong.
For me, I think that unless you have deep options,

(01:00:55):
unless you have deep debt markets, unless you can finance without selling equity.
Most of these companies are absolutely reliant on this speculative, retail-driven gambler
pocket money.
When you run out of that, the engine goes out and this whole thing.
I just think these MNAVs get crushed.
And by the way, this is not saying these companies are going to go bankrupt.

(01:01:17):
I think a lot of these companies are going to be fine.
But I think the people who bought the shares at the high premium, you're going to experience
to 2011 Bitcoin bear market, which is down 95 in like three weeks. And then I don't think they come
back. So I think then you get your gold level duration because how do you distinguish between
literally every other treasury company? You don't. Once your engine goes out, rebooting that thing is

(01:01:42):
going to be very, very difficult. Yeah, I totally agree. And I do think Metaplanet is different. I
think that one probably will sustain. I think I spoke to Dylan recently on the podcast and
And he's definitely doing some interesting things.
But the thing you hit on there, which I think is the most relevant, is the fact that Saylor
is not only the largest in size, but he's also doing the most interesting things on
kind of like the financial engineering side with these preferreds.

(01:02:04):
And if he's being both the innovator and he's got the size, like how can you compete?
And I think just selling equity to buy Bitcoin is probably done already.
I agree.
No, that's my base case.
I think that's a line I've been using to try and summarize a lot of these ideas.
the Bitcoin in the treasury isn't the product. That's not the product. It's a means to an end.

(01:02:25):
The product is the means by which they accumulate the Bitcoin. For strategy, for example, the means
by which they accumulate the Bitcoin is they construct bonds. They sell bonds. They're bond
salesmen. They sell bonds to a market that wants to buy bonds, that is big enough to make it a
justifiable market to go after it. The treasury is simply a means to an end to make it different

(01:02:45):
to all the other bonds. MetaPlanet, the unique selling point there is that they haven't quite
got to the sailor level of innovation, but they are providing a Bitcoin exposure. There's a tax
arbitrage as well between spot Bitcoin and equities. They are tapping into a very unique
set of circumstances in Japan, which by the way, is a massive economy. It's a massive, massive market.

(01:03:06):
Australia doesn't register anywhere on the blip of anything. Now, I think I should also make a very
clear clarification here. When we talk about treasury companies, I'm not talking about
businesses that sweep excess profits into Bitcoin. That's two thumbs up. Be a penny stock with a cold
card in that circumstance. There's no issue there whatsoever. This is all about the sale of all-in

(01:03:29):
playbooks. And I'm very confident that if you do not go hard, you will go home. We saw this with
GameStop. They kind of like half-assed put a quarter of a toe in and the market said, get out
of here and wiped out their stock and i think this is the game you are either all in with a very good
unique selling point or your m nav premiums are going to one like everybody else and this is what

(01:03:50):
happened to shit coins they dilute themselves out of existence and then what's your differentiator
ah i'll buy strategy because at least they're doing something interesting yeah i want to just
share this chart because one thing that i have probably said in the past but i actually don't
think i was right if i have and what a narrative that i would fade is that this has any meaningful
impact on Bitcoin. So I pulled up this earlier. And let's say you take even the top 15 companies

(01:04:16):
out of this, assuming that some of those, like some of these are different. We've got like Galaxy
in here, CleanSpark, like they're not doing necessarily the Saylor playbook. But then if
you go below 15, the amount of Bitcoin that these companies hold is only, quote unquote,
only 70,000 Bitcoin in total. Yeah, superior distribution, like most things.
and and like again in here you have people like i don't know hive uh bit deer canaan like cypher

(01:04:41):
like these these aren't companies doing the sailor playbook these are just companies that
have stacked bitcoin fold in there yes and so like if you even took 70 000 bitcoin like that's not
going to make a material impact on the bitcoin price i don't think so do you see this as being
just bad for bitcoin treasury companies not necessarily for bitcoin yes yes correct so so
I am wildly constructive on Bitcoin. I think Bitcoin is, I mean, it's just an idea whose

(01:05:05):
time has come. That's very clear. So I'm wildly bullish on Bitcoin. I'm also by, and let's just
keep going down the risk curve here. If I'm wildly bullish on Bitcoin, it kind of makes sense to be
wildly bullish on the entity that's got 620 something, I don't know if this website's updated,
620,000 Bitcoin. That's like a beach ball that's just going to inflate that company. Now, again,

(01:05:27):
I should be very clear. It is much better for a company to have Bitcoin than to not have Bitcoin.
So sweeping profits into Bitcoin is great. What I think is going to be a challenge is a lot of
these companies, they come out the gates, they develop a massive MNAV premium. They may stack
a couple of Bitcoin for the first couple of months. Investors get very excited. They buy

(01:05:47):
into the stock price. This is Ponzi adjacent because if you buy early in that trend, if you're
in that telegram group realizing that they're getting one of these scammy pipe deals, if you're
in that telegram group, you're going to be fine. If you buy early in the trend, you're probably
going to be fine. If you buy late in that trend, you are being sold a dream and it's going to hurt

(01:06:10):
a lot when it reverses. So I think that's the thing. It genuinely relies on old money exiting
out to new money. I know this is how markets work, but these premiums are unsustainable for
most of these companies. So it totally depends what premium you get in, what premium you get out,
where you buy on that curve. So these are very, very dynamic systems, but you've got to think

(01:06:33):
about the MNAV premium. That is actually the price you're trading. And buying those MNAV premiums at
very, very high levels means the Bitcoin price can rip, their treasury can rip. And what we've seen
is that the MNAV always has a gravity towards one.
The bigger the company gets,
the more their MNAV drifts down towards one.

(01:06:54):
Even MetaPlanet, they blew up to like 10X.
They're now pulling back down to what,
I think it was like three last time.
Three and a half or something, yeah.
Three and a half.
So people who have bought the top of that MNAV premium,
they're down 50%,
despite the fact they've probably added Bitcoin
to their balance sheet
and Bitcoin's probably about to go on a run.
It's going to take them a long time
to get their money back, in my opinion.
So the gravity, we get small companies

(01:07:14):
with a large MNAV, large companies with a small MNAV, and the gravity is pointing from one to the
other. The bigger you get, the smaller MNAV is going to get. So if we fast forward 10 years,
what kind of MNAV do you think strategy will be sat on? As this market matures, what do you think
the sort of, I guess, because I assume Saylor is going to sit at higher than one.

(01:07:38):
Yes. No, I think they, and they have deservedly stayed at a premium above one. I mean, look at
JP Morgan, look at their book value.
Like in my view, it makes sense to be like, you know, 2X, 3X at a bull run and, you know,
at book value in a nasty bear market.
So, you know, what we're not going to see is thousands and thousands and thousands of

(01:07:58):
companies with an MNAV of 50.
It's, this is, you know, how many people have you managed to convince that Bitcoin is an
important thing?
Very, very few.
Most of us.
assuming that this is like the we overestimate what we can do in one year and underestimate in
10 years bitcoin can hyper bitcoinize the world and the m nav of these companies can still be two

(01:08:18):
right can still be 1.5 because the more normalized these things get the less of a premium because
it's new and unique and interesting and by the way the bigger the pre this is the other thing
extremes inform the mean if your premium is 50x what's the company incentivized to do
sell a boatload of stock they want to dilute the price yes they're going to buy a bunch of bitcoin

(01:08:40):
that's going to generate a bunch of hype but what are they actually doing they're compressing that
m nav now if you buy when that m nav is small and you ride the wave up you are relying on other
people bidding the stock up to keep this game going until the engine goes out and when that goes
then it's it's just down only from there so 2011 bitcoin depth and i do believe gold level two

(01:09:03):
decades of bear market when it finally hits because there's no distinguishing factor for
most of these companies ponzi adjacent i like it all right checkmate let's um let's close out with
the price prediction so every time we do this you you give me a price and i tell you it's
disappointing i'm not going to do that this time and where do you think bitcoin is by let's say
the end of the year well this is important because you pete and i have a bet on this right and i

(01:09:27):
think i think you're gonna win it i know yes so so at that level and again what was that 2023 we
made that. I think my price was $250 is like the top level that we can get to in 2025.
And fortunately, I have all the optionality of the downside because it's closest to the pin.
Look, we could get to, if you want the most bullish level, and again, none of this is

(01:09:49):
prediction. This is looking at where investor behavior changes. The 200-day moving average
is just like a long-term price anchor. There's only so far you can stretch the elastic band away
from that mean before it wants to revert. Mark, it's a mean reverting phenomena. So that's the
simplest one. How far above the 200-day moving average have we got in previous cycles? And the
answer is about 2.4. Sometimes it goes higher than that, but we're in very rare air at that point in

(01:10:13):
time. Now, the 200-day moving average is obviously a moving target. It's evolving as the price evolves,
but as it stands today, it's about 236k from memory. So 236, if we teleport tomorrow into a
parabola, you know, 236 might be 240 by the time we get there. 250, I may end up in the money almost
on the dot, TBC. The other ones we can look at, which I put a lot more credibility into, is just

(01:10:39):
looking at MVRV levels. And I use different variants, short-term holders, coin time adjusted
with AVRV. There's a whole bunch of ones. It doesn't matter. The point is, show me at what
price level. We know where everyone's cost basis is. How high do we have to go before the average
guy is feeling so bullish and so excited that the smart money is going, there's my target audience.

(01:11:03):
I'm going to sell exactly to that guy. People eventually sell. How high do we have to go before
they start selling? Now, I have to remember here that those levels, we then have to say, well,
are they actually selling? They have in every single previous time, but we've always got to
check. There's the incentive. That's my idea. That's my concept. Do they actually sell? My
assumption is they probably will. We get to 130, 140, that's where short-term holders are starting

(01:11:27):
to get fairly juiced up. Now, that doesn't mean we probably top out there, but I wouldn't be
surprised if we bump our head and it takes a bit of time to get through that period.
If we just keep going and we get up to like 160, 170, 180, we're now moving into the territory
where less than 10% of all trading days have been that stretched. Now, we could then go through a
period of chop solidation and that would allow all these means to come higher and start to mean

(01:11:51):
revert and cools things down just by consolidation or even a correction um all those things so 150
160 170 we're starting to get into thin air 180 at the moment is like sub five percent of all days
can it happen yes five percent of the time it does happen do we stay there no so there's 95
chance that we're probably not going to stay there and i think this is also very important

(01:12:13):
don't worry about trying to pick the absolute top wick nobody can do this it's just like it's
It's nonsense.
No one can do it.
You did it.
You bought it in 2017.
Yeah, that was different though.
That was different though.
That is actually the counter signal.
No, you're right.
I did buy the absolute top.
No, but that's the inverse.
You're supposed to sell the top, not buy the top.
So yeah, no, I got smoked in 2017, but that's part of the learning journey.

(01:12:35):
So if we get to 180, we're getting really hot.
Just every metric is going to be overblown.
And again, I use my two personas.
Check the analyst.
Cannot in good faith say that we're at the bottom at 180K.
I just can't because it would be dishonest.
so again they're moving targets they'll continue to evolve but that is where i expect investor
behavior will really start to shift and change um and none of this is to say that bitcoin is not

(01:12:59):
going to go to a million bucks it's just going to take a lot longer than people expect and if you
wake up one day and bitcoin's at a million dollars um either the world is in a really really bad spot
and it's it's happening or it's probably a scam wick and we're coming down 80 percent
well i think i might just send you the 100k sats now i don't i think i said 282
I've already got it in my spreadsheet, man.

(01:13:19):
It's already accounted for in my inheritance planning.
And Pete definitely needs to send you his.
He said 350.
Yeah, yeah, that's not happening.
That's not happening.
Checkmate, I appreciate you, man.
You're one of my favorite people to talk to.
Where does anyone go to find the newsletter
and follow what you do?
If Pete wins that bet,
I'm just thinking about it now.
I mean, that's going to be the ultimate
egg on the face moment, isn't it?

(01:13:40):
I will be very happy to send him 100k stats if he wins.
Truthfully, I'm perfectly hedged
because I'll be a very happy man as well.
you'll find me over at checkonchain.com we've got our newsletter and
charting website so check us out over there all right man appreciate you thanks for the time
thanks mate

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