December 11, 2025 • 53 mins
Jamie Coutts, Chief Crypto Analyst at Real Vision, joins to break down why Bitcoin’s current bull market looks nothing like the cycles of the past — and what that means for investors navigating the storm ahead. From shifting liquidity regimes to the rise of Bitcoin treasury companies, Jamie reveals how debt, deficits, and central bank policy are reshaping crypto’s place in the global financial system. In this conversation, we dig into why the classic 4-year cycle is breaking down, how fiscal dominance is rewriting the rules of markets, and why Bitcoin’s next explosive volatility may decide the winners and losers of the treasury “arms race.” Jamie also explains where Ethereum and other large-cap cryptos fit into this moment, and what the battle between Trump, Powell, and global liquidity means for the future of money.
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Episode Transcript
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Speaker 1 (00:00):
This is the time which bitcoin would typically peak. We're
in the latest stages of the bullmarket. This is not
where easy gains are made anymore. Momentum destruction underneath the
surface of the price has been the marginal buyers, being
Bitcoin treasury companies and the ETFs. We will see massive
volatility expansion at certain times. You'll start to continue to
(00:21):
see our performance from some of the other crypto asset
for the bitcoin treasury companies well managed one, they'll be
like a delineation and you'll start to see sort of
a divergence.
Speaker 2 (00:30):
Bitcoin is commodity with no common issue or a pre mine,
but also with a fixed supply. And then you have
these assets like ethereum that doesn't really have a known supply.
From the treasury standpoint, how does it make sense to
buy an asset that's not clearly defined has no fixed supply.
Speaker 1 (00:44):
Yes, sir, I mean.
Speaker 2 (00:47):
We're going to jump right in with my friend Jimmie
Cowty is the chief crypto analyst over at Real Vision.
They do amazing work and especially what I love is
the work on global liquidity on macro. We're going to
dive into the four global equity cycle. Is the bitcoin
four year cycle intact, are we gonna peak at the
end of this year, what will the price of bitcoin be,
(01:07):
what's gonna happen with bitcoin treasury, companies with digital asset
treasuries like Ethereum, the crypto market, and so much more.
It's an amazing interview. Let's go ahead and jump right in,
and don't forget to hit subscribe on that channel so
you don't miss more of these. All right, let's go, Jamie,
Thanks for joining me. I have been looking forward to
this conversation and we just spent so much time talking
(01:27):
off offline, but let's just jump right into it. I
have a bunch of topics and questions for you, but anyway,
thanks for coming on. Appreciate it.
Speaker 1 (01:35):
Yeah, thanks Mak. I'm glad we finally got to do this.
It's been a couple of months in the miking.
Speaker 2 (01:40):
Yeah. Well we tried to hook up in Australia last
year and then yeah, we're trying to connect here. But
you know, I love the research that you do. I
love the research that you do and real vision does
I know in the bitcoin space a lot of people
just don't like raw Paul, and they don't like real vision.
But I think I think you guys do great work there.
I'm not gonna buy your NFTs, but I appreciate that.
I appreciate the macro research.
Speaker 1 (02:02):
I don't know ye all right, I know rale of
those NFTs.
Speaker 2 (02:07):
But let's just let's jump right at the top and
try to understand where we're at in the cycle where
we're going macro for your cycles, Global equidy, bitcoin, crypto, bitcoin,
treasury companies, dats all that. So let's let's start at
the top though. So you know, I love the macro
research that you guys do. Why don't we just start off?
Can you just frame out where we're at right now?
(02:28):
This is nine fifteen, We're about a couple of days
away from Jerome Powell to FED making some of a
big announcement. Where are we at in this macro cycle
right now? Frame it up?
Speaker 1 (02:39):
Yes, sir, I mean we if people are following sort
of the stationary models for crypto, then we're at pika
cycle right. This is the time which bitcoin would typically
pake and we'd be sliding into a bear market sort
of by next year. Now, this cycle has been very,
very different. We can talk about what a cycle actually
(03:01):
means in crypto because it does mean different things to
different people, but also people are now hyper sensitized to
the word cycle, and therefore everyone talks about it. This
where I think we are, though, is at the We're
in the latest stages of the bullmarket, Like this is
not where easy gains are made anymore. Bitcoin is six
(03:24):
x from the lows in twenty twenty two, but I
still think there is more upside. And the reason why
I think there is more upside for bitcoin and for
other crypto assets is that, you know, we've had a
extraordinary or a very different period coming out of the
coming out of the last bullmarket, which was really just
(03:46):
a hangover from the excess liquidity that was pumped into
the system because of the COVID madness. So the fallout
obviously has been higher consumer price inflation, but also a
deficit in the US and in most West and governments
that has exceeded the growth in economic growth. And therefore,
(04:06):
you know, you've got a problem with too much debt,
not enough liquidity. A business cycle, which is incredibly important
and ties into the cryptocycle that has been more or
less been in sort of has flatlined, hasn't really been
an expansion phase. It's the longest period where the business
cycle has remained all the ism has remained under fifty,
(04:30):
but that has changed the I guess the duration of
the cycle. And therefore we're at a point now where
it's clear that the business cycle is starting to improve.
Corporate earnings are you know, dramatically improving. Positioning in risk
assets if you look at equities is not ephoric. And
(04:52):
you've got this problem that the central banks are patently
aware of that they have a system which is incredibly
indebted within amount of debt has increased way more, and
then the liquidity they've allowed back into the system through
interest rate policies or through central bank balance sheet activities,
and I think that gives us a liquidity impulse in
(05:14):
upsurch towards the end of this year and into next year.
So my view is that we this you know, this
market extends into sort of the first half of next year,
and then it's sort of anyone scares as to where
the peak might be. But we at real Vision have
the frameworks basically to outline probabilistically when things are going
to turn right.
Speaker 2 (05:35):
Would you say that things would you say that global
macro markets fundamentally changed in two thousand and eight, so
we got the introduction of QE, we got all the
central bank balance sheets have been overly extended, levered up
at this point, and it looks like, in my opinion,
you know, previous to two thousand and eight, they sort
(05:57):
of allowed the markets to sort of deleverage, which they
tried to do in two thousand and eight and things
fell apart too fast, and they said, oh, we can't
do that, right, we levered the system back up, and
since then twenty nineteen, obviously twenty twenty, the banking collapse
in twenty twenty three, any time there's been even the
slightest hint of some sort of deleveraging. The bank's collapse
(06:18):
in twenty twenty three, it took six days to get
a bell out, and it just seems that now the
system has become so levered up. But not just that,
the appetite, the willingness to allow any deleveraging has also changed.
The amount of tools that they've implemented to prevent that
de leveraging have been radically changed, especially since COVID and
(06:38):
you mentioned the amount of deficit spending and debt spending
that's really driving the market. So do you think that
you know, this four year cycle could be changed based
off of the government's ability to stop adding liquidity or
wanting to stop adding liquidity, or willingness to Is it
(07:00):
like almost like a policy thing.
Speaker 1 (07:02):
Well, I mean I always talk about investing as really
playing like this game of chicken with central banks, Like
we know that, we know what the game plan is,
and so I think that they're always going to step in.
And now you've got the government, you know this, We're
in a sort of fiscal dominance regime. That's been a
(07:24):
that's been the shift. I think that's probably most important
to understand in terms of cycle work, because if you
think about cycles being driven by liquidity, yes, the bitcoint
harving definitely drove cycles, but it's become less and less important.
But it also just happened to coincide with this cycle,
(07:46):
which the liquidity cycle, which tends to operate in a
three to five year time frame. Yeah, everyone says it's
like four years, but really, why is it on a
three to five year time range. It's because it's based
on the duration of the debt at the sovereign level.
Now sovereigns will take out will fund themselves through an
array of different maturities, but were sort of the average
(08:08):
has been around this sort of three to five period.
That's just what has looked like a four year cycle,
which was attributed to the bitcoin harving cycle. I think
it look I think it was always there. If you
go back to nineteen ninety eight. There was a recent
report which I think you that you got as well,
which I published, was looking at sort of what happened
(08:30):
in ninety ninety eight around LTCM. The central banks have
always been willing to step in, but they the events
were so infrequent or relatively infrequent as compared to it today,
that they were generally slower. But they show they always
showed their true colors. I mean, they've got this dual mandate,
which I think is a facade. The actual mandate is
(08:52):
to ensure that there is no default of the system
yep right, because they are in the case of the US,
there definitely a private entity. It's different setups around the
world for other central banks, but essentially they're they're just
to prop up the banks, the commercial banking sector. So
the cycle itself now is because of fiscal dominance, is
(09:16):
morphing again. And this is a This is work that
you know, we're looking at Rale's definitely looking at it.
You know, Ral and I do independent researcher but it's
all on the real Vision platform. But we have sort
of the same frameworks that he's informed me so much
in my process over the years. But I was having
this conversation with him just the other day. It's like,
you know, now, that's so much of the liquidity is
(09:37):
now being driven out of the Treasury by issuing short
term debt. What does that mean for the liquidity cycle?
The traditional liquidity cycle where you know, they used to
operate on a fairly standard maturity sort of program and
we could sort of time it within sort of three
(09:59):
to five years, and it's changed. And so I think
that not only was the excessive reaction to COVID the
reason why we've got an elongated cycle this time around,
but also now the US since twenty twenty two, with
the Treasury doing what it's been doing, you know, maybe
these cycles get shortened. Maybe there's more volatility because once
(10:19):
you start stuffing in all the debt of the short
term at the short end, Yeah, stable coins are great.
That's going to find a whole new bunch of buyers
for the toxic debt of the US. But anything that
goes wrong, you know, is much more it's susceptible to
cause flash points in the in the financial system because
they'll need to be very very quick to step in,
(10:41):
even more so and even more unorthodox than before. So
the Fed's just basically tied to the US debt wagon
at this point.
Speaker 2 (10:48):
So they are you seen something changed in two thousand
and eight and it's.
Speaker 1 (10:52):
A and eight when basically the US government took on
the debt of the private of the banks.
Speaker 2 (11:00):
So with the short term debt that we have building up,
and there the leverage has been built up that can't
unlever their willingness to act potentially anything, any disruption that comes,
they're going to step in right away, just like we've
seen in the past, and that could disrupt these cycles
as we've as we've known them.
Speaker 1 (11:16):
Yeah, I mean, I just think that what the Treasury
has done is new and that needs to be incorporated
in sort of forward thinking about what cycles will look like.
But like the trajectory doesn't change.
Speaker 2 (11:28):
Because it's not just the it's not just the US Treasury,
right because like in London, for example, the BOE has
been cutting rates but like the long end is blowing out, right,
So we see other other central banks that are like
getting maybe losing control of their bond market. Japan's having
a problem with theirs, and so what happens then they
have to start printing to control that long end of
(11:49):
the curve. And and anyways, that's kind of some of
the some of the things that I'm thinking about, Like,
I feel like the cycle is an effect until it's
proven to be otherwise. But there's a lot of things
that are happening that seems like maybe it just won't
play out exactly click we thought it did before.
Speaker 1 (12:01):
Yeah, well it's already that's already proven to be the case.
If you held the view going into this year or
this circle was that it was going to be a
standard four year cycle.
Speaker 2 (12:11):
Right, So as you said, I think when you first
kind of opened up, you said, I forget the word
that you use. But if you looked at these things
kind of frozen in time, we should be peeking right
around here somewhere in the next month or two. But
these are moving targets, right, And so it's like, well,
let's just see what happens in Q one and we'll
let you know in q one sort of what the
policy is at that point. Every day we see headlines
(12:33):
about inflation and dead and diminishing control over our own money.
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Speaker 1 (13:51):
Yeah, I mean, look, I don't think that's you know,
the same like the risk models that I have built
around bitcoin. You know Dydite's screen euphoria. We had euphoria
in sort of Q four of twenty twenty four. So look,
if the cycle ends, we'll all look back and say
Q four was really the top in the un chain
(14:12):
data and all the risk metrics in the same way
as May of twenty twenty one was really that was
the real top of that cycle because it took out
all the momentum and so yes, we went higher. But
you know, there isn't really in this the most recent
run up to one hundred and twenty five thousand in bitcoin,
there wasn't really a there wasn't screaming euphoria.
Speaker 2 (14:35):
One of the.
Speaker 1 (14:35):
Reasons maybe we can get into as to why there's
been sort of I guess momentum destruction underneath the surface
of the price has been the marginal buyers being bitcoin
treasury companies and the ETFs peeking into that cycle and
then then basically you know, declining quite rapidly since then.
(14:57):
So that is that is the critical swing factor for bitcoin.
But that will follow the liquidity cycles, SORR. If liquidity
picks up, the ETF buys will return, the bitcoin treasury
companies will see maybe not fooling m nabs, maybe expansion,
who knows, but their capacity to buy and become, you know,
(15:18):
and get more involved in buying bitcoin will increase.
Speaker 2 (15:22):
I want to definitely get back into that topic a
little bit more, but before we do, I'm curious what
you think about bitcoin's KAGAR. So depending on what time
period you take a look at, right, maybe it's a
fifty to sixty percent annual compound and annual growth rate
over the last three years, three to five years, maybe
eighty five percent if you go back five years plus.
(15:42):
The general rule of thumb seems to be that the
law of large numbers says that that number continues to decelerate,
and we go from eighty to sixty to fifty to
forty to thirty, et cetera. What do you think about
or have you thought about the potential for Kagar to
actually start to reaccelerate again. And the reason why I
asked that is if you think about like traditional assets
(16:04):
that would be probably started from venture capital round and
they've got all the private equity money in before they
go public, and then you start having retail, which is
small incremental money that kind of comes in, and so
as the asset gets bigger, it's big checks first, small
checks later, whereas like Bitcoin seem to work the other
way around, where it was little checks in the beginning.
(16:24):
And today to your point that you just brought up
about the bitcoin treasury companies, now we have billions of
dollars of buyas coming in at a time, and so
now with the treasury companies, with the institutions, as you mentioned,
the detfs, with even sovereigns coming in, could we be
sort of, you know, looking at technology with an S
curve type format. Could we sort of be in that
pair of ball at phase with the big checks coming
(16:46):
in that could potentially invert bitcoin and see that Kaggar
start to accelerate it again a little bit.
Speaker 1 (16:52):
I think what's offsetting that hypolthsis mac is that you've
got now you know, in the early stages ying spot
buying only and you had sort of the uniqueness of
the hardcap as well with the declining inflation rate, that
was perfect for parabolic rises, especially when it was just
(17:13):
the plubs us buying it. Then as more as the
as the network evolved and I guess more sophisticated players.
Speaker 2 (17:25):
The futures, the options, et cetera.
Speaker 1 (17:27):
Suppressing the volatility. So you know, I even look at
the the research that I do. I look at the
elasticity of bitcoin to changes in liquidity, which is, you know,
anyone who says there's a perfect metric or perfect correlation
in financial markets doesn't nate certain financial markets because markets
(17:48):
are nonstationary. But at least historically and still today, the
relationship with liquidity is statistically extremely significant, but it is
moderating over time, and so looking at sort of just
the last couple of years, bitcoins elasticity to the changes
in liquidity is less this cycle than in the last cycle,
(18:09):
but not by a massive amount. And just where we
are in the liquidity cycle is typically when you start
to see a real uptick, and therefore the elasticity generally
expands also during this period, but more so in the
same sort of scenario from previous cycles. So I just
look at that and I think, Okay, you've got suppression
of volatility, and you've got just the maturation of the
(18:31):
market and the sensitivity of the asset to the drivers
of the price starting to decline. So I am in
the camp that we start to see k gars moderate
over time. But it's going to be interesting because there
will be explosions of volatility in and along the way.
And if you look at like, you know why you
(18:52):
invest in the S and P five hundred from a
traditional portfolio management standpoint is that you stay allocated because
if you try to time that market, generally like nine
percent of the returns come from like ten trading days
in the year. Same applies for bitcoin, and we will
see like massive volatility expansion at certain times, like we
(19:12):
saw in twenty twenty three with the bank bailout, and
the first time that bitcoin basically gave the signal that
this is a systemically integrated asset with real risk of
characteristics because the interbank market exploded. Bitcoin always fell in
those scenarios, it didn't that time, So it was another
sort of proving point, and I think we'll see a
(19:34):
lot more tests like that where Bitcoin will show that
it is truly a risk of affort asset and sort
of shrud the criticism that it's just a you know,
it's a risk asset correlator to the Nasdaq, which is
not true.
Speaker 2 (19:46):
Yeah. I mean, certainly, in the last five years, the
sharp ra show has been much better than US treasuries,
and we can see how since the introduction of the ETFs,
the volatility has really come way down, so as it's
like we could just continue just sort of being boring
and just continue creeping.
Speaker 1 (20:05):
Higher and higher and higher.
Speaker 2 (20:06):
You know, maybe you mentioned the global liquidity and some
of the elasticity that sort of diminished their real vision.
Ral talks a lot about global equity flows and sort
of this potentially whatever eight to twelve week lag that
Bitcoin might have to that global equity move. And so
when you look at this global equity move right now
(20:27):
and then adjust for this lag, I mean, it looks
like there should still be a pretty another big leg
up in front of us.
Speaker 1 (20:34):
Yeah. Yeah, I mean the problem with using the lags
is that markets on nonstationary, so change of its time,
but directionally it should play out unless there's something fundamentally
different about this asset that we're not aware of, and
that it's not tied to, you know, the increase in
marginal new units of currency in the in the financial system,
(20:54):
which I don't believe to be true. Sorry, that the
problem is that twitters as attached itself to this chart.
I think it's been in the most shared chart of
twenty twenty five, and it's fixated on the on the lags.
You know, Rawl said this many times and I would
certainly say it as well as like, if you're trying
to invest on one chart with one correlation fixed with
(21:17):
a fixed timeline that's been working for the last two years,
then you're gonna you're gonna come on stuck. Yeah, but yeah,
you're right like that that the divergence between the two
is as expanded, and it's not just M two, which
I think is the most shared sort of version of that.
It's total global liquidity. So you know, you're looking at
(21:40):
central bank balance sheets, you're looking at the impact in
the shadow banking market and everything else.
Speaker 2 (21:44):
So when you look at that, and to your point,
certainly don't don't just focus on one indicator, But if
you look at that plus a handful of other indicators
that are commonly used, like MVRV scores for example, or
even if you want to look at Fibonacci lines, which
I don't really put a lot of credit towards those things,
but you look at some of these Neurpal scores or whatever,
it does sort of look like Bitcoin is maybe halfway
(22:06):
through its cycle. Like from a is it expensive? Is
it cheap? You look at the M two lag. If
you look at again these types of indicators you mentioned that,
you know, from a static time frame like October November
sort of peak from a timeframe, but from a like
I said, all these on chain indicators, et cetera, it
looks like maybe we're like halfway through. And so again
(22:26):
that's from a static view. Now we could see Bitcoin
go on a thirty forty thousand dollars rip, which would
then put it to the very top of the top
of the peak real quickly, which then maybe does make
me think, well, maybe it does hit that M two lag.
We do pop up, We do end up magically right
in November here at the at the top of the
at the top of cycle.
Speaker 3 (22:44):
Right.
Speaker 1 (22:46):
Yeah, I think the best thing for bigcoin, if you're
in it for the long hole is that you get
sort of a moderate increase, because it's when Bitcoin goys
parabolic that you generally find the crescendo top because that's
what encourages over positioning, increased leverage, which always gets unwound.
(23:10):
And if it's unwound at a time and global liquidity
is starting to slow or decelerate, it doesn't have to top.
Global equidity can expand well beyond a Bitcoin peak, and
it has in the past. It's really about that subtle
change or that rate of change. But if you have
the ingredients of a parabolic rise with a massive explosion
(23:32):
and open interest and mvrve goes up, which is all
the unrealized profit in the network, then you have the
ingredients to form a top. This peak has been you know,
we saw you for it tops in intermediate or mid
cycle tops in Q one to twenty twenty four, and
I was calling it out then in Q four of
(23:54):
twenty twenty four again, which I was calling out again,
which no one was willing to listen because the timing
of financial contnitions to the US dollar and liquidity was
just not supporting it. But you know where global liquidity
is today and where it kind of needs to get
to to stop anything from happening. Is still a fair
(24:15):
way away. So it's I think that the trend itself
is looking you know, it's tired because it does rely
on liquidity. But we haven't seen a far ad powerbolic
rise that would just take the wind out of the
sales for the rest of the cycle.
Speaker 2 (24:31):
One more question about this and then we're going to
move to a different subject. But Trump is the force
to be reckoned with. He has been very aggressive towards
Jerome Powell at the FED, lower rates, lower rates. He
calls him names like too late, et cetera. Right, He's
been extremely vocal. He wants rates, I don't know, three
and a half points lower than where they're at today.
(24:53):
It looks like potentially Power is going to cave. Maybe
we get a couple of rates cuts this year, but
it seems like one way or another, Trump's are you
going to get his way? We know Power will be
out next year. He'll replace him with a dove and
he'll probably get his way, and maybe this time next
year rates are three points lower in that scenario hypothetical,
would that be enough the US acting alone to influence
(25:16):
the direction of that global liquidy.
Speaker 1 (25:19):
Oh massively, because if the dollar continues to decline, and
so it's already had a pretty historic move in twenty
twenty five from sort of one oh seven and I
think it got even high. It's down down ninety seven.
That's a big move, and the dollar it doesn't look
like that move is over. But if the US were
to aggressively cut and I think the more important than
(25:42):
the interest rate moves is the balance sheet moves like
they're they're still doing QT now that the margins it's
fairly small relative to where it was in the past,
but it's still tightening the balance sheet, which is putting
pressure on the financial system, and so that if there's
a pivot there, it would be very meaningful for total
global liquidity. It's driven by the dollar, it's driven by
(26:04):
balance sheets, is driven by volatility in the in the
treasury market. So all those things would be very very supportive.
But it would also give other central banks to cover
to do more. So China wants a you know, basically
the US to continue to do so that gives them
(26:24):
cover and takes the pressure off off their currency as well.
They already have been aggressive, they need to be a
lot more aggressive, arguably, and I think the US move
would just provide the cover and it would be it'd
be open season again and would get a pretty big impulse.
Speaker 2 (26:40):
So again we'll pivot from here. But I just I
think Trump seems to get his way. He's a forest
and I'm guessing he's going to get a fed chair
and that he wants seeing as he gets to elect them,
and we could see a sustained draw down all the
way through next year. The Dixie is is low, as
you said, but it's still historically pretty high, so I
mean we have quite a bit of room to come down.
(27:02):
That's what he wants. We'll see. So these are move
I'm going to just put a pin in this for everybody.
These are moving targets. You can't ask anybody to predict
where this comes out. These are moving targets. We look
at it, you know, as these indicators roll out, I
want to jump into the next thing. Obviously staying on
bitcoin for a minute. But one indicator that I think
(27:24):
is sort of ridiculous, but it seems to work is
bitcoin dominance. And I say it's ridiculous just because like
today on coin Mark in twenty seventeen, if I can remember,
it was like two thousand cryptocurrencies. Today on coin market
cap is like nineteen million, So it's like every time
one new gets created, it brings bitcoin dominance down. So
(27:44):
it seems like kind of like an irrelevant metric in
my opinion. But that being said, in June, around what
June thirteenth, June fifteenth, we saw bitcoin dominance drop ethereum,
and really maybe a better indicator is ethereum. Bitcoin ethereum
seemed to take off with the right of ethereum dat
and then all the bitcoin proxies as they call them,
all the bitcoin treasury companies all sold off at the
(28:06):
same time. So while I like to think the indicator
somewhat irrelevant, it sure seemed to indicate quite a lot
here what's going on with that.
Speaker 1 (28:15):
So bitcoin dominant is really like to the point that
you're making about sort of the explosion in supply are
in the sort of the old coin crypto universe. Yes,
all of that takes attention away and distributes attention, which
I guess you know, makes it harder like if it
was a more concentrated space, But like that's just the
(28:37):
better or for worse, it's just a reflection of the
growing adoption and expanding footprint that crypto has in the
economy and in the lives of individuals, especially younger generation.
The bitcoin dominance chart is really a I wouldn't think about.
I wouldn't think in terms of like the explosion in
(28:58):
supply of all the the you know, the worthless mean
coins and all that sure crap. But it's really a
reflection of large caps in crypto versus bitcoin. So it
what it shows is is Ethereum and the other large
caps starting to outperform. And the pattern plays out almost
(29:20):
every cycle once you get once you get to the
point where you know the business cycle, the economy is growing,
corporate profits are expanding and they're beating expectations. Margins are improving,
cap x is improving. Generally, you have a broadening out
of risk. It's just human nature. And so whether you
(29:41):
sort of see value in some of these other large caps,
you do find at this point in the cycle is
when they start to outperform. And that's what we started
to see in sort of July, and you could see
it in the ETF flows. There's basically a flip that happened,
and I think, you know, it was it was clear
(30:02):
that ethereum relative to bitcoin had also become undervalued, and
so whether that continues over time, it usually starts to
It usually signals the last part of a bull market
because as that risk gets broadened out, and then you
know the increase in sort of a tension that it
goes across the crypto ecosystem. It brings sort of reflexivity
(30:24):
that brings us closer to a top, and then everything
underperforms in the next bear market. Now, maybe these assets
don't underperform as much in the next bear market because
there is legitimate adoption taking place as much as there
is fuck ay going on in the activity and data.
It's unquestionable from my standpoint that adoption of blockchains is
(30:47):
proliferating at a real clip, and therefore, you know what
happens in the next bear market. I don't know, but
like the volatility is so much high, you have to
make sure that you're thoughtful around your position sizes if
you do want to go into that spies.
Speaker 2 (31:01):
It seemed back back to your point about this end
of the business cycle and the money sort of moving
out on the risk curve, which of course makes sense.
It seemed like you know, a couple things. So like
number one, like when you're an institution that wants to
place a billion dollars, I don't think you can put
a billion dollars into Sibi NU. Right, So it's like
it seemed like the bitcoin treasury companies were sort of
(31:24):
like that next speculative play, right, a more volatile play
than bitcoin. So bitcoin's a one x there are three
or five x kind of a play, right, So it's
sort of like the same potential volatility crypto returns, but
in a regulated body. And it seemed like a lot
of those crypto digons, the bitcoin degens latched onto all
of these bigwoin treasury companies that were up, I mean
half a dozen of them more up were up you know,
(31:46):
three thousand percent, five thousand percent, eight thousand percent. Right.
Metaplanet was the very best performing stock in the world
last year. Equity. Yeah, but then when you see bitcoin
dominance roll over, like they all just fell flat on
their face. And so to the point that you're making
about it moved further out the risk curve. I don't
(32:06):
know if that's necessarily accurate, because, like I would say
that those companies were pretty far out the risk curve.
Speaker 1 (32:11):
Yeah, well, I mean that so there was I think
that mini, that mini bubble that took place inside the
bigcoin ecosystem that drew in maybe capital that would have
found its way into the wider crypto economy and some
of these other smart contract platforms and applications, but actually
found themselves in the bigcoin treasury companies. But that also
(32:34):
let you know, that's also reflexive as well, So there
was an increase in supply of these companies and attention
and all is good once the demand is there, and
that becomes the new marginal buyer and driver of the
bigcoin price, even more so than the ETF flows at
(32:55):
least there was in Q two and parts of Q
three this year. But if there's amount of compression, it
just becomes harder to maintain the buying velocity, and then
you sort of get that reflexive move where you've got
less at the margin buying from that segment, and that
slows down the price. Appreciation markets are a funny thing.
(33:18):
They're like they're you know, they allocate capital, you know,
in ways that you perhaps can't sort of foresee.
Speaker 2 (33:27):
They're not rational.
Speaker 1 (33:28):
It's sort of like a mini it's a mini. It's
a microcosm of like what's happening in previous cycles.
Speaker 2 (33:34):
Yeah, you know, while while your point makes a sound,
I mean, obviously those bigcoins social companies were buying an
enormous amount of bitcoins specifically, I mean micro strategy most
of all and Metal Planet were buying a lot as well,
and the atfs were also buying a lot. But no
matter how much they were buying, the price didn't seem
to be going up. In combination with that, it seemed
like there was enough sellers for as much additional buying
(33:55):
as there was, right so, but we did see the buying.
We saw a couple of times, was it eighty thousand
bitcoin in a single day got dumped in and absorbed,
you know, with only a couple of points being moved
here and there. But you know, my main thing.
Speaker 1 (34:11):
That peak in like Q one was off the charts. Yeah,
I mean what macro strategy were in terms of the
marginal buyer. And then really in a que too was
the new treasury companies. I don't know if we can
ever see that. You know, it's not so much how
much they were buying, it's the rate of change or
the acceleration of the buying at that point in time
(34:34):
that it was like the most interesting and that peak
if you look at it on a just a rate
of change basis, was off the charts.
Speaker 2 (34:40):
Yeah. Although when you can look at like Bitcoin Treasuries
dot net and see all the public traded companies with bitcoin,
and if you take out the top couple, I mean
really just take out micro Strategy and take up metaplanet.
The buying. Sure, the rate of change was a lot,
like companies were going from two to four to twenty
four to one hundred, so the rate of change what
they call the bitcoin yield, was dramatic, but it was
(35:01):
like you bought twenty four Michael Strategy was buying you know,
fifteen thousand at a time or whatever. It's a little
bit different, but my interest is mostly there. So let
me see if you can tell me the future. Where
where does this go? I mean, do you think that
you know, at the lead stage of the cycle bitcoin
dominance returns, do you think money comes back to some
(35:23):
of these proxies or was it sort of like this, Uh,
you know, obviously with crypto we have these bubbles, these cycles.
If you will, do you think this is like, you know,
first part of the cycle, shake some of the players out,
and then build up energy for the next one. What
do you think happens when bitcoin dominance returns and what
kind of time frame we're looking at.
Speaker 1 (35:41):
If liquidity is rising, bitcoin will rise. But I think
we're in that stage of the cycle where your start
just continue to continue to see outperformance from some of
the other crypto assets. It's just the way it generally
plays out. I think for the bitcoin treasury companies, the
will managed one. There'll be like a delineation and you'll
(36:02):
start to see sort of a divergence. If you look
at all the bitcoin treasury companies in terms of percentiles
of their m nabs, you'll see more of those companies
start to drop into the bottom percentile. And that bottom
percentile in terms of m NAV will go from like
you know, one m NAB today or less down too
point eight or less as they get sort of more
(36:22):
and more distressed or out of favor, and so they'll
just have to be a consolidation. And we'll look at
this period in the next cycle and see much less
companies that are pursuing this strategy, and you'll start to
see the winners more clearly affirmed. I guess by the
market because you know you're involved in this space and
(36:44):
you know that well, I would imagine I'd like to
actually find out from you what you think about this.
But there's definitely going to be some acquisitions, scooping up,
going into sort of the the next bear market, and
consolidation in the space because you'll basically have the opportunity
to buoy bitcoin at a discount. So I think that's yeah,
that's how I see it playing out.
Speaker 2 (37:06):
I mean, certainly it's going to play out that way.
But we're talking very broadly, right, So certainly there will
be companies who find themselves at a point in the
road where they can't raise any more capital, they're trading
below that asset value, and someone's going to come along
make them an offer to give them an equity deal
buy out, and they're going to take it. So of
course that's going to happen. Will that be the majority?
Probably not, not this early in the game, of my opinion.
(37:28):
So a couple things. So number one, these are equities.
So just because the equity price drops, the market cap drops,
and they're below one time zim nav not ass a
value forverybody, so they're keeping up Why does that mean
I have to sell my bitcoin?
Speaker 1 (37:44):
So what it? It's not buying Yeah, so what right?
Speaker 2 (37:48):
Like, I have my business, I'm generating revenue. I'm gonna
keep buying bitcoin. I still have my bitcoin. So what
Michael Saylor told me, he said, like, what's the worst
that can happen? The worst that can happen is I
can never raise money ever again. And I'm a one
hundred billion dollar company growing at sixty percent. That's the worst, right.
So with our company with Satsuma, right, we raised enough
(38:11):
money to buy a two thousand bitcoin. I don't know
what you put the long term price target of bitcoin,
but in my opinion, that's about two billion dollars worth
of bitcoin in five or six years of just NAV alone,
even if we never raise another penny again. Two billion
of NAV. Now in the US, we have a word
(38:32):
for them, We call them unicorns. If they reach a
billion dollar val less than I think it's zero point
zero zero two percent of companies ever make it to
a billion dollar valel So what's the worst that can happen?
We're a two billion dollar company in a couple years, right,
So what's the shakeout? Why do you have to sell right,
So why are you distressed? So certainly, what's going to
(38:54):
happen in the space. I don't see it, but it
is going to happen. Is the nature of the game
is I have to apply leverage, which is how I
can earn that increase now. And some companies are too
far behind, so they're going to use more leverage than
they should be, and they're gonna take a bad deal.
It's gonna be short term. It's gonna be a two
year debt term obligation. They can't keep up with the debt.
(39:17):
It comes due at the bottom of the bear market.
They're forced to liquidate. Certainly, that will happen. I haven't
seen that really built up yet, and I'm sort of
in tune with a lot of the companies here. It
will happen. But I just think about that, and certainly
to your point, yes, we'll see those those acquisitions happen.
I think it's a little bit early for that.
Speaker 1 (39:35):
Oh yeah, yeah, No, we're talking way down the line.
I think this is a golden opportunity to get in
and acquire bigcoin and put it on the balance sheet
and maximize the opportunity while their conditions were good, and
I just think that you know that even if this
sort of gold rush is over, so to say, and
(39:56):
that there's delineation, was the right thing to do. You
were using the capital markets to acqui the most important
global asset of generations.
Speaker 2 (40:09):
But I think I think Jamian just just to also
expand this a little bit, just I mean, it's a
fun conversation to have, but I think there's a lot
of tools at your disposal. So you think about, like
if the capital markets close off to you, right, for example,
and certainly in a massive liquidity crunch, and the whole
market sells off back to twenty twenty two or orse,
you know, twenty twenty or something like that, certainly it
(40:31):
could be hard to raise liquidity. But for the most part,
like there's an I don't want to say unlimited. There's
a lot of money available just in taking convertible debt.
For example, We're talking billions and billions of dollars sitting there.
I mean, we had people begging us to take their
convertible debt and we were like, nope, we're not taking it.
So like in a bear market, we could use debt,
(40:53):
we could get it turned out of three years or
four years, right, I mean, we believe in the long term. Obviously,
none of this works if you don't believe in the
long term case of bitcoin. But sure, I'll take zero
percent debt for four years. I'll roll the dice on that, right,
So like we have that at our disposal. There's all
types of options. There's bonds, there's bitcoin bonds that are
being rolled out. Obviously, there's additional raises which get tough
(41:14):
in a liquidity cycle. There's equity raises you know at
the market offering, which are tough when your ymnats get compressed,
you know. And there's there's prefs and all different types.
Is there's a whole bunch of tools that are available
for good companies for good companies, that's right, So it'll
be it'll be interesting. I don't believe. I don't believe that.
I think it's if you look at Metaplanet, which is
(41:34):
the first company that was able to duplicate the strategy.
They've had just in the last twelve months alone, they've
had twelve draw downs or I'm sorry it was about
eighteen months and last eighteen months, I've had twelve drawdowns
of twenty percent or more. Seventy nine percent was their
most profound draw down last year, their duration of lasted
(41:57):
anywhere from twenty days up to four months. One hundred
and nineteen day was the longest duration they've had. So
instead of like one cycle every four years, they have
like six cycles a year. And the m NAB isn't
the most important metric. I think a lot of people
put too much under that number. So for example, you
could have bought Meta Planet last year at seven times
and made a ton of money, and you could have
(42:17):
bought it two months ago at three and lost your
ass right, So it's like the MNAB doesn't mean everything.
But you know, again, they had a seventy percent draw
down last year and returned to thousand after that, so
I think, you know, it's just part of the cycle.
It's they're extra volatile. That's why people buy them for
the extra volatility. So it'll be interesting. But what do
you think about the dats and these are the digital
(42:40):
asset treasuries, And let me let me frame up why
my audience obviously knows. For four years I wrote cryptocurrency research,
I decided to be bitcoin only. I don't spend a
lot of time focusing on cryptocurrency anymore. It's all just bitcoin, right,
So I can't debate nineteen different, nineteen million different cryptocurrencies.
But I was in London two weeks ago and I
(43:01):
met somebody that's launching a Salona treasury, and you know,
I kind of told you before recording. He told me,
you know, he doesn't even know the bowcase of what
he's doing. But here's my thought on this. When I
think about a Salona or or an Ethereum treasury, so
you know, bitcoin is a commodity, right, It's there's no
(43:22):
common issuer, there's nobody that pre mined it, nobody has
that control of it, and it has as a has
a fixed supply right twenty one million. So I could
see how a company would put a commodity on its
treasury that'd bud goal, I'd put oil something like that.
But if you think about like Ethereum's bowl case, for example,
it's like the World Computer, Right, we're gonna put everything
(43:42):
on top of it, and we're gonna do all the
smart contracts in this World computer, and Joseph Lubin and
Metallic and Consensus, you know, they can control this algorithm
and they're going to keep it working and blah blah
blah whatever, right, the votes and all that. So it's
like a tech company. So it's like it's like Apple,
Like Apple's three trillion, so like their market caap potential
is three trillion, like so like Bitcoin's going for money
(44:04):
five hundred trillion. They're a tech company number one, number two.
Like again, it makes sense to put like a commodity
on my balance sheet, But why would I put a
tech company, Like we don't see typically companies putting other
equities on their balance they're not allowed to. But it
wouldn't really make sense to put Apple under your You
wouldn't create a treasury company around Apple maybe. And then
and then the third point I'll ask, and then I'll
let you kind of respond to these. The third point
(44:26):
is then back to you know, again, bitcoin is commodity
with no common issue or a pre mind, but also
with a fixed supply. And then you have these assets
like ethereum that that doesn't really have a known supply.
And so I'm just curious, like, you know, I think
you sort of believe in also those types of treasuries
as well, but like maybe you can film me in
on the bowl case and the other guy couldn't.
Speaker 1 (44:47):
Yeah, well, I think, you know, so the way hard
frame Ethereum and these other smart contract platforms is that
they are platforms, the application platforms, which is just essentially
a derivation of a tech of a tech company or
a new type of tech company. So it requires a
different framing when you're looking at them as an investment.
And I think that Bigcoin obviously has owns that commodity
(45:12):
framing because of the supply schedule and because of the
level of decentralization. Now with Ethereum and the Solanta and
all these other platforms, you've got a case to be
made that actually, you know, they are going through an
adoption curve which is going to be pretty dramatic over
(45:34):
the next couple of years. And I think that you know,
with the amount of with the amount of adoption that
they've already gained, and that's putting aside. I guess the
activity metrics which we do trackers on train analysts in
the space, which I think is a lot of it
is gamed, and you're talking about the treating, yeah, wash trading,
(45:58):
but also just you know, there's activity, there's cyble, you know, attacks,
and like there's tons of stuff that inflate numbers. So
you have to look at it sort of more holistically,
but it's undeniable that you're seeing adoption and now you've
got basically integration with the financial system with stable coins,
(46:18):
and stable coins are going to move on blockchains. Blockchains
have facilitated the need for the US government to find
new buys of its debt, and so whether we like
it or not, these platforms are going to facilitate a
huge amount of global commerce.
Speaker 2 (46:35):
Let me ask you about that. So yes, I one
hundred percent agree with you. The number one stable coin
and not buy a little bit, but by a lot.
Seventy five percent of the market share is Tether. Pollow
from Tether is a bitcoiner and they announced just a
few weeks ago they want to move it all over
to the bitcoin blockchain. They're moving into RGB number one,
number two. We've seen some of the other players and
(46:58):
new entrants are building their own blockchains, so they're not
going to use Salona or a theory or Bitcoin. They're
going to build their own. So it seems like it
seems like the exist that the dominant player wants to
move to Bitcoin not ethereum, and then the new entrants
want to move to their own platforms.
Speaker 1 (47:17):
Yeah, so is the argument, is the argument whether you
should buy ethereum is one of these other platforms, or
is the argument a blockchain is going to increase in
terms of total usage.
Speaker 2 (47:27):
I was more thinking about just from the treasure you standpoint,
where like, how does it make sense to buy an
asset that's not clearly defined, has no fixed supply. That's
what I was kind of trying to think. Understanding from
a speculative standpoint is one thing, Creating a treasury company
around it and raising money in public markets seem to
be like a different animal for me.
Speaker 1 (47:48):
Yeah. Look, I mean it's I know where you're coming from, Like,
it's I think it's a changing of investment philosophies all around.
So let me give you an example of what I
mean here. The Swiss National Bank, the same bank started
buying Apple and tech stocks back in twenty sixteen. That
was that seemed crazy, right, But they understood the debasement game,
(48:08):
and so they thought the best thing they could do
with their asset, with their with their reserves was to
put that into tech stocs. And that proved to be
an incredibly smart move worked from unfortunately not mirrored by
a lot of other central banks. So I mean, where
is the where is the growth happening in the global
(48:29):
economy right now if you look at you know, the
legacy financial system or the crypto economy, the crypto economy
is exploding and putting all the gaming aspects aside. Settlement
values on blockchains are growing at seventy eight percent compound
for the last five years, and that was really before
government said, hey, stable coins are okay. Now the question
(48:50):
of like whether he wants to take a investment punt
on Ethereum versus Solana or versus I guess any stripees,
new platform or new tether blockchain. That's more like a
a investment decision with which is a lot of risk
and therefore it becomes very tricky for these digital asset companies.
(49:11):
And there's a lot more risk there with a platform
that's in a hyper competitive space where there's basically no
barriers to entry. It's just opened his open software that
anyone can fork or replicate. But there's also a thing
called network effects, which are very hard to budge, and
so there is there's definitely network effects exhibited through you know,
(49:33):
the top smart contract platforms. But the you know, we'll
see in five years time, what the right smart contract
platform is or has been the best performer, if at all.
I mean, I put bitcoin at the center of my
entire investing world because it is in my eyes, and
I think in the eyes of even sovereigns now it
(49:55):
is the emergent global reserve asset, and it is the
It is the clear leader and will continue to lead.
But I do look at those other platforms as investment punts.
But when you start looking at the digital asset companies
in that space, you can argue that the high quality
ones come first and then like it starts to tail off,
and then you've got added risk that bitcoin doesn't have
(50:17):
because it is not a fix. It doesn't have the
characteristics of the monetary network of bitcoin. And the other
thing that we don't mention, we haven't mentioned yet, is
that the reason why bitcoin is not only because of
its monetary properties is a sound investment with lower risk
of sort of downside over the long term, is because
(50:40):
of the energy aspect. It is gobbling up excess energy
around the world. Is now strategically important for companies that
actually understand how to drive value for their citizens that
they bring bitcoin mining into their economy, and they subsidize
it and promote it because not only will it monetize
(51:00):
excess energy, it will drive investment in a space which
is directly linked to AI and so like that, our
whole aspect just supports that network growing even faster. So
is this I guess, to come back to the original point,
there is a lot more risk, a lot more uncertainty
in putting any other digital asset on the balance sheet.
(51:22):
But still there's an argument to be made that the
underlying smart contract platform assets themselves, the ones with network effects,
will continue to outperform or you know, outperform tech stocks
for instance, maybe not Bitcoin, but should do well. And
you know, you allocate with the right sort of position
size to that because of the volatility and the uncertainty.
Speaker 2 (51:41):
Yep. Yeah, And that's a question that I kind of
always come back to, you know, in regards to the
equity side of these things. Is like, as a bitcointerer
or is like, is this going to be a bitcoin?
But most of the world doesn't think that way. They're
just like, does it beat the S and P find under,
does it beat inflation? And so they're sort of like
building out their basket sort of a.
Speaker 3 (51:59):
Thing like that.
Speaker 2 (52:02):
Man, There's so many other things that we could dive into,
but I think I think we're probably just going to
wrap it up right there, Jamie. But I would like
to do this again sooner, maybe on the next report
that you have out, will come on and talk about
the report, and I wanted to get in some other
topics such as talking about location sovereignty, so maybe we'll
table it for another talk again. Like I said, your
(52:23):
research is amazing. Just tell everybody what kind of stuff
you do and where they can find it.
Speaker 1 (52:26):
Yeh. So I'm the chief crypto analyst at Real Vision
and we've got a platform which is basically pretty much
focused on all the exponential technology plays, but primarily crypto
and how that plays into the whole macro framework. The
business cycle analysts analysis that Ral does and Julian does
(52:47):
is by father the best but business cycle analysis out there.
I focused, you know, strictly on macro and crypto. So
if you're interested, check us out.
Speaker 3 (52:56):
Yep.
Speaker 2 (52:56):
We'll link to that down below, and he shares his
reports with me. I've done some YouTube videos, so just
look out for that. I always link back to that. Jamie.
Thanks so much for taking the time, appreciate it.
Speaker 1 (53:06):
Thanks again, mat I love it.
This is the time which bitcoin would typically peak. We're
in the latest stages of the bullmarket. This is not
where easy gains are made anymore. Momentum destruction underneath the
surface of the price has been the marginal buyers, being
Bitcoin treasury companies and the ETFs. We will see massive
volatility expansion at certain times. You'll start to continue to
(00:21):
see our performance from some of the other crypto asset
for the bitcoin treasury companies well managed one, they'll be
like a delineation and you'll start to see sort of
a divergence.
Speaker 2 (00:30):
Bitcoin is commodity with no common issue or a pre mine,
but also with a fixed supply. And then you have
these assets like ethereum that doesn't really have a known supply.
From the treasury standpoint, how does it make sense to
buy an asset that's not clearly defined has no fixed supply.
Speaker 1 (00:44):
Yes, sir, I mean.
Speaker 2 (00:47):
We're going to jump right in with my friend Jimmie
Cowty is the chief crypto analyst over at Real Vision.
They do amazing work and especially what I love is
the work on global liquidity on macro. We're going to
dive into the four global equity cycle. Is the bitcoin
four year cycle intact, are we gonna peak at the
end of this year, what will the price of bitcoin be,
(01:07):
what's gonna happen with bitcoin treasury, companies with digital asset
treasuries like Ethereum, the crypto market, and so much more.
It's an amazing interview. Let's go ahead and jump right in,
and don't forget to hit subscribe on that channel so
you don't miss more of these. All right, let's go, Jamie,
Thanks for joining me. I have been looking forward to
this conversation and we just spent so much time talking
(01:27):
off offline, but let's just jump right into it. I
have a bunch of topics and questions for you, but anyway,
thanks for coming on. Appreciate it.
Speaker 1 (01:35):
Yeah, thanks Mak. I'm glad we finally got to do this.
It's been a couple of months in the miking.
Speaker 2 (01:40):
Yeah. Well we tried to hook up in Australia last
year and then yeah, we're trying to connect here. But
you know, I love the research that you do. I
love the research that you do and real vision does
I know in the bitcoin space a lot of people
just don't like raw Paul, and they don't like real vision.
But I think I think you guys do great work there.
I'm not gonna buy your NFTs, but I appreciate that.
I appreciate the macro research.
Speaker 1 (02:02):
I don't know ye all right, I know rale of
those NFTs.
Speaker 2 (02:07):
But let's just let's jump right at the top and
try to understand where we're at in the cycle where
we're going macro for your cycles, Global equidy, bitcoin, crypto, bitcoin,
treasury companies, dats all that. So let's let's start at
the top though. So you know, I love the macro
research that you guys do. Why don't we just start off?
Can you just frame out where we're at right now?
(02:28):
This is nine fifteen, We're about a couple of days
away from Jerome Powell to FED making some of a
big announcement. Where are we at in this macro cycle
right now? Frame it up?
Speaker 1 (02:39):
Yes, sir, I mean we if people are following sort
of the stationary models for crypto, then we're at pika
cycle right. This is the time which bitcoin would typically
pake and we'd be sliding into a bear market sort
of by next year. Now, this cycle has been very,
very different. We can talk about what a cycle actually
(03:01):
means in crypto because it does mean different things to
different people, but also people are now hyper sensitized to
the word cycle, and therefore everyone talks about it. This
where I think we are, though, is at the We're
in the latest stages of the bullmarket, Like this is
not where easy gains are made anymore. Bitcoin is six
(03:24):
x from the lows in twenty twenty two, but I
still think there is more upside. And the reason why
I think there is more upside for bitcoin and for
other crypto assets is that, you know, we've had a
extraordinary or a very different period coming out of the
coming out of the last bullmarket, which was really just
(03:46):
a hangover from the excess liquidity that was pumped into
the system because of the COVID madness. So the fallout
obviously has been higher consumer price inflation, but also a
deficit in the US and in most West and governments
that has exceeded the growth in economic growth. And therefore,
(04:06):
you know, you've got a problem with too much debt,
not enough liquidity. A business cycle, which is incredibly important
and ties into the cryptocycle that has been more or
less been in sort of has flatlined, hasn't really been
an expansion phase. It's the longest period where the business
cycle has remained all the ism has remained under fifty,
(04:30):
but that has changed the I guess the duration of
the cycle. And therefore we're at a point now where
it's clear that the business cycle is starting to improve.
Corporate earnings are you know, dramatically improving. Positioning in risk
assets if you look at equities is not ephoric. And
(04:52):
you've got this problem that the central banks are patently
aware of that they have a system which is incredibly
indebted within amount of debt has increased way more, and
then the liquidity they've allowed back into the system through
interest rate policies or through central bank balance sheet activities,
and I think that gives us a liquidity impulse in
(05:14):
upsurch towards the end of this year and into next year.
So my view is that we this you know, this
market extends into sort of the first half of next year,
and then it's sort of anyone scares as to where
the peak might be. But we at real Vision have
the frameworks basically to outline probabilistically when things are going
to turn right.
Speaker 2 (05:35):
Would you say that things would you say that global
macro markets fundamentally changed in two thousand and eight, so
we got the introduction of QE, we got all the
central bank balance sheets have been overly extended, levered up
at this point, and it looks like, in my opinion,
you know, previous to two thousand and eight, they sort
(05:57):
of allowed the markets to sort of deleverage, which they
tried to do in two thousand and eight and things
fell apart too fast, and they said, oh, we can't
do that, right, we levered the system back up, and
since then twenty nineteen, obviously twenty twenty, the banking collapse
in twenty twenty three, any time there's been even the
slightest hint of some sort of deleveraging. The bank's collapse
(06:18):
in twenty twenty three, it took six days to get
a bell out, and it just seems that now the
system has become so levered up. But not just that,
the appetite, the willingness to allow any deleveraging has also changed.
The amount of tools that they've implemented to prevent that
de leveraging have been radically changed, especially since COVID and
(06:38):
you mentioned the amount of deficit spending and debt spending
that's really driving the market. So do you think that
you know, this four year cycle could be changed based
off of the government's ability to stop adding liquidity or
wanting to stop adding liquidity, or willingness to Is it
(07:00):
like almost like a policy thing.
Speaker 1 (07:02):
Well, I mean I always talk about investing as really
playing like this game of chicken with central banks, Like
we know that, we know what the game plan is,
and so I think that they're always going to step in.
And now you've got the government, you know this, We're
in a sort of fiscal dominance regime. That's been a
(07:24):
that's been the shift. I think that's probably most important
to understand in terms of cycle work, because if you
think about cycles being driven by liquidity, yes, the bitcoint
harving definitely drove cycles, but it's become less and less important.
But it also just happened to coincide with this cycle,
(07:46):
which the liquidity cycle, which tends to operate in a
three to five year time frame. Yeah, everyone says it's
like four years, but really, why is it on a
three to five year time range. It's because it's based
on the duration of the debt at the sovereign level.
Now sovereigns will take out will fund themselves through an
array of different maturities, but were sort of the average
(08:08):
has been around this sort of three to five period.
That's just what has looked like a four year cycle,
which was attributed to the bitcoin harving cycle. I think
it look I think it was always there. If you
go back to nineteen ninety eight. There was a recent
report which I think you that you got as well,
which I published, was looking at sort of what happened
(08:30):
in ninety ninety eight around LTCM. The central banks have
always been willing to step in, but they the events
were so infrequent or relatively infrequent as compared to it today,
that they were generally slower. But they show they always
showed their true colors. I mean, they've got this dual mandate,
which I think is a facade. The actual mandate is
(08:52):
to ensure that there is no default of the system
yep right, because they are in the case of the US,
there definitely a private entity. It's different setups around the
world for other central banks, but essentially they're they're just
to prop up the banks, the commercial banking sector. So
the cycle itself now is because of fiscal dominance, is
(09:16):
morphing again. And this is a This is work that
you know, we're looking at Rale's definitely looking at it.
You know, Ral and I do independent researcher but it's
all on the real Vision platform. But we have sort
of the same frameworks that he's informed me so much
in my process over the years. But I was having
this conversation with him just the other day. It's like,
you know, now, that's so much of the liquidity is
(09:37):
now being driven out of the Treasury by issuing short
term debt. What does that mean for the liquidity cycle?
The traditional liquidity cycle where you know, they used to
operate on a fairly standard maturity sort of program and
we could sort of time it within sort of three
(09:59):
to five years, and it's changed. And so I think
that not only was the excessive reaction to COVID the
reason why we've got an elongated cycle this time around,
but also now the US since twenty twenty two, with
the Treasury doing what it's been doing, you know, maybe
these cycles get shortened. Maybe there's more volatility because once
(10:19):
you start stuffing in all the debt of the short
term at the short end, Yeah, stable coins are great.
That's going to find a whole new bunch of buyers
for the toxic debt of the US. But anything that
goes wrong, you know, is much more it's susceptible to
cause flash points in the in the financial system because
they'll need to be very very quick to step in,
(10:41):
even more so and even more unorthodox than before. So
the Fed's just basically tied to the US debt wagon
at this point.
Speaker 2 (10:48):
So they are you seen something changed in two thousand
and eight and it's.
Speaker 1 (10:52):
A and eight when basically the US government took on
the debt of the private of the banks.
Speaker 2 (11:00):
So with the short term debt that we have building up,
and there the leverage has been built up that can't
unlever their willingness to act potentially anything, any disruption that comes,
they're going to step in right away, just like we've
seen in the past, and that could disrupt these cycles
as we've as we've known them.
Speaker 1 (11:16):
Yeah, I mean, I just think that what the Treasury
has done is new and that needs to be incorporated
in sort of forward thinking about what cycles will look like.
But like the trajectory doesn't change.
Speaker 2 (11:28):
Because it's not just the it's not just the US Treasury,
right because like in London, for example, the BOE has
been cutting rates but like the long end is blowing out, right,
So we see other other central banks that are like
getting maybe losing control of their bond market. Japan's having
a problem with theirs, and so what happens then they
have to start printing to control that long end of
(11:49):
the curve. And and anyways, that's kind of some of
the some of the things that I'm thinking about, Like,
I feel like the cycle is an effect until it's
proven to be otherwise. But there's a lot of things
that are happening that seems like maybe it just won't
play out exactly click we thought it did before.
Speaker 1 (12:01):
Yeah, well it's already that's already proven to be the case.
If you held the view going into this year or
this circle was that it was going to be a
standard four year cycle.
Speaker 2 (12:11):
Right, So as you said, I think when you first
kind of opened up, you said, I forget the word
that you use. But if you looked at these things
kind of frozen in time, we should be peeking right
around here somewhere in the next month or two. But
these are moving targets, right, And so it's like, well,
let's just see what happens in Q one and we'll
let you know in q one sort of what the
policy is at that point. Every day we see headlines
(12:33):
about inflation and dead and diminishing control over our own money.
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Speaker 1 (13:51):
Yeah, I mean, look, I don't think that's you know,
the same like the risk models that I have built
around bitcoin. You know Dydite's screen euphoria. We had euphoria
in sort of Q four of twenty twenty four. So look,
if the cycle ends, we'll all look back and say
Q four was really the top in the un chain
(14:12):
data and all the risk metrics in the same way
as May of twenty twenty one was really that was
the real top of that cycle because it took out
all the momentum and so yes, we went higher. But
you know, there isn't really in this the most recent
run up to one hundred and twenty five thousand in bitcoin,
there wasn't really a there wasn't screaming euphoria.
Speaker 2 (14:35):
One of the.
Speaker 1 (14:35):
Reasons maybe we can get into as to why there's
been sort of I guess momentum destruction underneath the surface
of the price has been the marginal buyers being bitcoin
treasury companies and the ETFs peeking into that cycle and
then then basically you know, declining quite rapidly since then.
(14:57):
So that is that is the critical swing factor for bitcoin.
But that will follow the liquidity cycles, SORR. If liquidity
picks up, the ETF buys will return, the bitcoin treasury
companies will see maybe not fooling m nabs, maybe expansion,
who knows, but their capacity to buy and become, you know,
(15:18):
and get more involved in buying bitcoin will increase.
Speaker 2 (15:22):
I want to definitely get back into that topic a
little bit more, but before we do, I'm curious what
you think about bitcoin's KAGAR. So depending on what time
period you take a look at, right, maybe it's a
fifty to sixty percent annual compound and annual growth rate
over the last three years, three to five years, maybe
eighty five percent if you go back five years plus.
(15:42):
The general rule of thumb seems to be that the
law of large numbers says that that number continues to decelerate,
and we go from eighty to sixty to fifty to
forty to thirty, et cetera. What do you think about
or have you thought about the potential for Kagar to
actually start to reaccelerate again. And the reason why I
asked that is if you think about like traditional assets
(16:04):
that would be probably started from venture capital round and
they've got all the private equity money in before they
go public, and then you start having retail, which is
small incremental money that kind of comes in, and so
as the asset gets bigger, it's big checks first, small
checks later, whereas like Bitcoin seem to work the other
way around, where it was little checks in the beginning.
(16:24):
And today to your point that you just brought up
about the bitcoin treasury companies, now we have billions of
dollars of buyas coming in at a time, and so
now with the treasury companies, with the institutions, as you mentioned,
the detfs, with even sovereigns coming in, could we be
sort of, you know, looking at technology with an S
curve type format. Could we sort of be in that
pair of ball at phase with the big checks coming
(16:46):
in that could potentially invert bitcoin and see that Kaggar
start to accelerate it again a little bit.
Speaker 1 (16:52):
I think what's offsetting that hypolthsis mac is that you've
got now you know, in the early stages ying spot
buying only and you had sort of the uniqueness of
the hardcap as well with the declining inflation rate, that
was perfect for parabolic rises, especially when it was just
(17:13):
the plubs us buying it. Then as more as the
as the network evolved and I guess more sophisticated players.
Speaker 2 (17:25):
The futures, the options, et cetera.
Speaker 1 (17:27):
Suppressing the volatility. So you know, I even look at
the the research that I do. I look at the
elasticity of bitcoin to changes in liquidity, which is, you know,
anyone who says there's a perfect metric or perfect correlation
in financial markets doesn't nate certain financial markets because markets
(17:48):
are nonstationary. But at least historically and still today, the
relationship with liquidity is statistically extremely significant, but it is
moderating over time, and so looking at sort of just
the last couple of years, bitcoins elasticity to the changes
in liquidity is less this cycle than in the last cycle,
(18:09):
but not by a massive amount. And just where we
are in the liquidity cycle is typically when you start
to see a real uptick, and therefore the elasticity generally
expands also during this period, but more so in the
same sort of scenario from previous cycles. So I just
look at that and I think, Okay, you've got suppression
of volatility, and you've got just the maturation of the
(18:31):
market and the sensitivity of the asset to the drivers
of the price starting to decline. So I am in
the camp that we start to see k gars moderate
over time. But it's going to be interesting because there
will be explosions of volatility in and along the way.
And if you look at like, you know why you
(18:52):
invest in the S and P five hundred from a
traditional portfolio management standpoint is that you stay allocated because
if you try to time that market, generally like nine
percent of the returns come from like ten trading days
in the year. Same applies for bitcoin, and we will
see like massive volatility expansion at certain times, like we
(19:12):
saw in twenty twenty three with the bank bailout, and
the first time that bitcoin basically gave the signal that
this is a systemically integrated asset with real risk of
characteristics because the interbank market exploded. Bitcoin always fell in
those scenarios, it didn't that time, So it was another
sort of proving point, and I think we'll see a
(19:34):
lot more tests like that where Bitcoin will show that
it is truly a risk of affort asset and sort
of shrud the criticism that it's just a you know,
it's a risk asset correlator to the Nasdaq, which is
not true.
Speaker 2 (19:46):
Yeah. I mean, certainly, in the last five years, the
sharp ra show has been much better than US treasuries,
and we can see how since the introduction of the ETFs,
the volatility has really come way down, so as it's
like we could just continue just sort of being boring
and just continue creeping.
Speaker 1 (20:05):
Higher and higher and higher.
Speaker 2 (20:06):
You know, maybe you mentioned the global liquidity and some
of the elasticity that sort of diminished their real vision.
Ral talks a lot about global equity flows and sort
of this potentially whatever eight to twelve week lag that
Bitcoin might have to that global equity move. And so
when you look at this global equity move right now
(20:27):
and then adjust for this lag, I mean, it looks
like there should still be a pretty another big leg
up in front of us.
Speaker 1 (20:34):
Yeah. Yeah, I mean the problem with using the lags
is that markets on nonstationary, so change of its time,
but directionally it should play out unless there's something fundamentally
different about this asset that we're not aware of, and
that it's not tied to, you know, the increase in
marginal new units of currency in the in the financial system,
(20:54):
which I don't believe to be true. Sorry, that the
problem is that twitters as attached itself to this chart.
I think it's been in the most shared chart of
twenty twenty five, and it's fixated on the on the lags.
You know, Rawl said this many times and I would
certainly say it as well as like, if you're trying
to invest on one chart with one correlation fixed with
(21:17):
a fixed timeline that's been working for the last two years,
then you're gonna you're gonna come on stuck. Yeah, but yeah,
you're right like that that the divergence between the two
is as expanded, and it's not just M two, which
I think is the most shared sort of version of that.
It's total global liquidity. So you know, you're looking at
(21:40):
central bank balance sheets, you're looking at the impact in
the shadow banking market and everything else.
Speaker 2 (21:44):
So when you look at that, and to your point,
certainly don't don't just focus on one indicator, But if
you look at that plus a handful of other indicators
that are commonly used, like MVRV scores for example, or
even if you want to look at Fibonacci lines, which
I don't really put a lot of credit towards those things,
but you look at some of these Neurpal scores or whatever,
it does sort of look like Bitcoin is maybe halfway
(22:06):
through its cycle. Like from a is it expensive? Is
it cheap? You look at the M two lag. If
you look at again these types of indicators you mentioned that,
you know, from a static time frame like October November
sort of peak from a timeframe, but from a like
I said, all these on chain indicators, et cetera, it
looks like maybe we're like halfway through. And so again
(22:26):
that's from a static view. Now we could see Bitcoin
go on a thirty forty thousand dollars rip, which would
then put it to the very top of the top
of the peak real quickly, which then maybe does make
me think, well, maybe it does hit that M two lag.
We do pop up, We do end up magically right
in November here at the at the top of the
at the top of cycle.
Speaker 3 (22:44):
Right.
Speaker 1 (22:46):
Yeah, I think the best thing for bigcoin, if you're
in it for the long hole is that you get
sort of a moderate increase, because it's when Bitcoin goys
parabolic that you generally find the crescendo top because that's
what encourages over positioning, increased leverage, which always gets unwound.
(23:10):
And if it's unwound at a time and global liquidity
is starting to slow or decelerate, it doesn't have to top.
Global equidity can expand well beyond a Bitcoin peak, and
it has in the past. It's really about that subtle
change or that rate of change. But if you have
the ingredients of a parabolic rise with a massive explosion
(23:32):
and open interest and mvrve goes up, which is all
the unrealized profit in the network, then you have the
ingredients to form a top. This peak has been you know,
we saw you for it tops in intermediate or mid
cycle tops in Q one to twenty twenty four, and
I was calling it out then in Q four of
(23:54):
twenty twenty four again, which I was calling out again,
which no one was willing to listen because the timing
of financial contnitions to the US dollar and liquidity was
just not supporting it. But you know where global liquidity
is today and where it kind of needs to get
to to stop anything from happening. Is still a fair
(24:15):
way away. So it's I think that the trend itself
is looking you know, it's tired because it does rely
on liquidity. But we haven't seen a far ad powerbolic
rise that would just take the wind out of the
sales for the rest of the cycle.
Speaker 2 (24:31):
One more question about this and then we're going to
move to a different subject. But Trump is the force
to be reckoned with. He has been very aggressive towards
Jerome Powell at the FED, lower rates, lower rates. He
calls him names like too late, et cetera. Right, He's
been extremely vocal. He wants rates, I don't know, three
and a half points lower than where they're at today.
(24:53):
It looks like potentially Power is going to cave. Maybe
we get a couple of rates cuts this year, but
it seems like one way or another, Trump's are you
going to get his way? We know Power will be
out next year. He'll replace him with a dove and
he'll probably get his way, and maybe this time next
year rates are three points lower in that scenario hypothetical,
would that be enough the US acting alone to influence
(25:16):
the direction of that global liquidy.
Speaker 1 (25:19):
Oh massively, because if the dollar continues to decline, and
so it's already had a pretty historic move in twenty
twenty five from sort of one oh seven and I
think it got even high. It's down down ninety seven.
That's a big move, and the dollar it doesn't look
like that move is over. But if the US were
to aggressively cut and I think the more important than
(25:42):
the interest rate moves is the balance sheet moves like
they're they're still doing QT now that the margins it's
fairly small relative to where it was in the past,
but it's still tightening the balance sheet, which is putting
pressure on the financial system, and so that if there's
a pivot there, it would be very meaningful for total
global liquidity. It's driven by the dollar, it's driven by
(26:04):
balance sheets, is driven by volatility in the in the
treasury market. So all those things would be very very supportive.
But it would also give other central banks to cover
to do more. So China wants a you know, basically
the US to continue to do so that gives them
(26:24):
cover and takes the pressure off off their currency as well.
They already have been aggressive, they need to be a
lot more aggressive, arguably, and I think the US move
would just provide the cover and it would be it'd
be open season again and would get a pretty big impulse.
Speaker 2 (26:40):
So again we'll pivot from here. But I just I
think Trump seems to get his way. He's a forest
and I'm guessing he's going to get a fed chair
and that he wants seeing as he gets to elect them,
and we could see a sustained draw down all the
way through next year. The Dixie is is low, as
you said, but it's still historically pretty high, so I
mean we have quite a bit of room to come down.
(27:02):
That's what he wants. We'll see. So these are move
I'm going to just put a pin in this for everybody.
These are moving targets. You can't ask anybody to predict
where this comes out. These are moving targets. We look
at it, you know, as these indicators roll out, I
want to jump into the next thing. Obviously staying on
bitcoin for a minute. But one indicator that I think
(27:24):
is sort of ridiculous, but it seems to work is
bitcoin dominance. And I say it's ridiculous just because like
today on coin Mark in twenty seventeen, if I can remember,
it was like two thousand cryptocurrencies. Today on coin market
cap is like nineteen million, So it's like every time
one new gets created, it brings bitcoin dominance down. So
(27:44):
it seems like kind of like an irrelevant metric in
my opinion. But that being said, in June, around what
June thirteenth, June fifteenth, we saw bitcoin dominance drop ethereum,
and really maybe a better indicator is ethereum. Bitcoin ethereum
seemed to take off with the right of ethereum dat
and then all the bitcoin proxies as they call them,
all the bitcoin treasury companies all sold off at the
(28:06):
same time. So while I like to think the indicator
somewhat irrelevant, it sure seemed to indicate quite a lot
here what's going on with that.
Speaker 1 (28:15):
So bitcoin dominant is really like to the point that
you're making about sort of the explosion in supply are
in the sort of the old coin crypto universe. Yes,
all of that takes attention away and distributes attention, which
I guess you know, makes it harder like if it
was a more concentrated space, But like that's just the
(28:37):
better or for worse, it's just a reflection of the
growing adoption and expanding footprint that crypto has in the
economy and in the lives of individuals, especially younger generation.
The bitcoin dominance chart is really a I wouldn't think about.
I wouldn't think in terms of like the explosion in
(28:58):
supply of all the the you know, the worthless mean
coins and all that sure crap. But it's really a
reflection of large caps in crypto versus bitcoin. So it
what it shows is is Ethereum and the other large
caps starting to outperform. And the pattern plays out almost
(29:20):
every cycle once you get once you get to the
point where you know the business cycle, the economy is growing,
corporate profits are expanding and they're beating expectations. Margins are improving,
cap x is improving. Generally, you have a broadening out
of risk. It's just human nature. And so whether you
(29:41):
sort of see value in some of these other large caps,
you do find at this point in the cycle is
when they start to outperform. And that's what we started
to see in sort of July, and you could see
it in the ETF flows. There's basically a flip that happened,
and I think, you know, it was it was clear
(30:02):
that ethereum relative to bitcoin had also become undervalued, and
so whether that continues over time, it usually starts to
It usually signals the last part of a bull market
because as that risk gets broadened out, and then you
know the increase in sort of a tension that it
goes across the crypto ecosystem. It brings sort of reflexivity
(30:24):
that brings us closer to a top, and then everything
underperforms in the next bear market. Now, maybe these assets
don't underperform as much in the next bear market because
there is legitimate adoption taking place as much as there
is fuck ay going on in the activity and data.
It's unquestionable from my standpoint that adoption of blockchains is
(30:47):
proliferating at a real clip, and therefore, you know what
happens in the next bear market. I don't know, but
like the volatility is so much high, you have to
make sure that you're thoughtful around your position sizes if
you do want to go into that spies.
Speaker 2 (31:01):
It seemed back back to your point about this end
of the business cycle and the money sort of moving
out on the risk curve, which of course makes sense.
It seemed like you know, a couple things. So like
number one, like when you're an institution that wants to
place a billion dollars, I don't think you can put
a billion dollars into Sibi NU. Right, So it's like
it seemed like the bitcoin treasury companies were sort of
(31:24):
like that next speculative play, right, a more volatile play
than bitcoin. So bitcoin's a one x there are three
or five x kind of a play, right, So it's
sort of like the same potential volatility crypto returns, but
in a regulated body. And it seemed like a lot
of those crypto digons, the bitcoin degens latched onto all
of these bigwoin treasury companies that were up, I mean
half a dozen of them more up were up you know,
(31:46):
three thousand percent, five thousand percent, eight thousand percent. Right.
Metaplanet was the very best performing stock in the world
last year. Equity. Yeah, but then when you see bitcoin
dominance roll over, like they all just fell flat on
their face. And so to the point that you're making
about it moved further out the risk curve. I don't
(32:06):
know if that's necessarily accurate, because, like I would say
that those companies were pretty far out the risk curve.
Speaker 1 (32:11):
Yeah, well, I mean that so there was I think
that mini, that mini bubble that took place inside the
bigcoin ecosystem that drew in maybe capital that would have
found its way into the wider crypto economy and some
of these other smart contract platforms and applications, but actually
found themselves in the bigcoin treasury companies. But that also
(32:34):
let you know, that's also reflexive as well, So there
was an increase in supply of these companies and attention
and all is good once the demand is there, and
that becomes the new marginal buyer and driver of the
bigcoin price, even more so than the ETF flows at
(32:55):
least there was in Q two and parts of Q
three this year. But if there's amount of compression, it
just becomes harder to maintain the buying velocity, and then
you sort of get that reflexive move where you've got
less at the margin buying from that segment, and that
slows down the price. Appreciation markets are a funny thing.
(33:18):
They're like they're you know, they allocate capital, you know,
in ways that you perhaps can't sort of foresee.
Speaker 2 (33:27):
They're not rational.
Speaker 1 (33:28):
It's sort of like a mini it's a mini. It's
a microcosm of like what's happening in previous cycles.
Speaker 2 (33:34):
Yeah, you know, while while your point makes a sound,
I mean, obviously those bigcoins social companies were buying an
enormous amount of bitcoins specifically, I mean micro strategy most
of all and Metal Planet were buying a lot as well,
and the atfs were also buying a lot. But no
matter how much they were buying, the price didn't seem
to be going up. In combination with that, it seemed
like there was enough sellers for as much additional buying
(33:55):
as there was, right so, but we did see the buying.
We saw a couple of times, was it eighty thousand
bitcoin in a single day got dumped in and absorbed,
you know, with only a couple of points being moved
here and there. But you know, my main thing.
Speaker 1 (34:11):
That peak in like Q one was off the charts. Yeah,
I mean what macro strategy were in terms of the
marginal buyer. And then really in a que too was
the new treasury companies. I don't know if we can
ever see that. You know, it's not so much how
much they were buying, it's the rate of change or
the acceleration of the buying at that point in time
(34:34):
that it was like the most interesting and that peak
if you look at it on a just a rate
of change basis, was off the charts.
Speaker 2 (34:40):
Yeah. Although when you can look at like Bitcoin Treasuries
dot net and see all the public traded companies with bitcoin,
and if you take out the top couple, I mean
really just take out micro Strategy and take up metaplanet.
The buying. Sure, the rate of change was a lot,
like companies were going from two to four to twenty
four to one hundred, so the rate of change what
they call the bitcoin yield, was dramatic, but it was
(35:01):
like you bought twenty four Michael Strategy was buying you know,
fifteen thousand at a time or whatever. It's a little
bit different, but my interest is mostly there. So let
me see if you can tell me the future. Where
where does this go? I mean, do you think that
you know, at the lead stage of the cycle bitcoin
dominance returns, do you think money comes back to some
(35:23):
of these proxies or was it sort of like this, Uh,
you know, obviously with crypto we have these bubbles, these cycles.
If you will, do you think this is like, you know,
first part of the cycle, shake some of the players out,
and then build up energy for the next one. What
do you think happens when bitcoin dominance returns and what
kind of time frame we're looking at.
Speaker 1 (35:41):
If liquidity is rising, bitcoin will rise. But I think
we're in that stage of the cycle where your start
just continue to continue to see outperformance from some of
the other crypto assets. It's just the way it generally
plays out. I think for the bitcoin treasury companies, the
will managed one. There'll be like a delineation and you'll
(36:02):
start to see sort of a divergence. If you look
at all the bitcoin treasury companies in terms of percentiles
of their m nabs, you'll see more of those companies
start to drop into the bottom percentile. And that bottom
percentile in terms of m NAV will go from like
you know, one m NAB today or less down too
point eight or less as they get sort of more
(36:22):
and more distressed or out of favor, and so they'll
just have to be a consolidation. And we'll look at
this period in the next cycle and see much less
companies that are pursuing this strategy, and you'll start to
see the winners more clearly affirmed. I guess by the
market because you know you're involved in this space and
(36:44):
you know that well, I would imagine I'd like to
actually find out from you what you think about this.
But there's definitely going to be some acquisitions, scooping up,
going into sort of the the next bear market, and
consolidation in the space because you'll basically have the opportunity
to buoy bitcoin at a discount. So I think that's yeah,
that's how I see it playing out.
Speaker 2 (37:06):
I mean, certainly it's going to play out that way.
But we're talking very broadly, right, So certainly there will
be companies who find themselves at a point in the
road where they can't raise any more capital, they're trading
below that asset value, and someone's going to come along
make them an offer to give them an equity deal
buy out, and they're going to take it. So of
course that's going to happen. Will that be the majority?
Probably not, not this early in the game, of my opinion.
(37:28):
So a couple things. So number one, these are equities.
So just because the equity price drops, the market cap drops,
and they're below one time zim nav not ass a
value forverybody, so they're keeping up Why does that mean
I have to sell my bitcoin?
Speaker 1 (37:44):
So what it? It's not buying Yeah, so what right?
Speaker 2 (37:48):
Like, I have my business, I'm generating revenue. I'm gonna
keep buying bitcoin. I still have my bitcoin. So what
Michael Saylor told me, he said, like, what's the worst
that can happen? The worst that can happen is I
can never raise money ever again. And I'm a one
hundred billion dollar company growing at sixty percent. That's the worst, right.
So with our company with Satsuma, right, we raised enough
(38:11):
money to buy a two thousand bitcoin. I don't know
what you put the long term price target of bitcoin,
but in my opinion, that's about two billion dollars worth
of bitcoin in five or six years of just NAV alone,
even if we never raise another penny again. Two billion
of NAV. Now in the US, we have a word
(38:32):
for them, We call them unicorns. If they reach a
billion dollar val less than I think it's zero point
zero zero two percent of companies ever make it to
a billion dollar valel So what's the worst that can happen?
We're a two billion dollar company in a couple years, right,
So what's the shakeout? Why do you have to sell right,
So why are you distressed? So certainly, what's going to
(38:54):
happen in the space. I don't see it, but it
is going to happen. Is the nature of the game
is I have to apply leverage, which is how I
can earn that increase now. And some companies are too
far behind, so they're going to use more leverage than
they should be, and they're gonna take a bad deal.
It's gonna be short term. It's gonna be a two
year debt term obligation. They can't keep up with the debt.
(39:17):
It comes due at the bottom of the bear market.
They're forced to liquidate. Certainly, that will happen. I haven't
seen that really built up yet, and I'm sort of
in tune with a lot of the companies here. It
will happen. But I just think about that, and certainly
to your point, yes, we'll see those those acquisitions happen.
I think it's a little bit early for that.
Speaker 1 (39:35):
Oh yeah, yeah, No, we're talking way down the line.
I think this is a golden opportunity to get in
and acquire bigcoin and put it on the balance sheet
and maximize the opportunity while their conditions were good, and
I just think that you know that even if this
sort of gold rush is over, so to say, and
(39:56):
that there's delineation, was the right thing to do. You
were using the capital markets to acqui the most important
global asset of generations.
Speaker 2 (40:09):
But I think I think Jamian just just to also
expand this a little bit, just I mean, it's a
fun conversation to have, but I think there's a lot
of tools at your disposal. So you think about, like
if the capital markets close off to you, right, for example,
and certainly in a massive liquidity crunch, and the whole
market sells off back to twenty twenty two or orse,
you know, twenty twenty or something like that, certainly it
(40:31):
could be hard to raise liquidity. But for the most part,
like there's an I don't want to say unlimited. There's
a lot of money available just in taking convertible debt.
For example, We're talking billions and billions of dollars sitting there.
I mean, we had people begging us to take their
convertible debt and we were like, nope, we're not taking it.
So like in a bear market, we could use debt,
(40:53):
we could get it turned out of three years or
four years, right, I mean, we believe in the long term. Obviously,
none of this works if you don't believe in the
long term case of bitcoin. But sure, I'll take zero
percent debt for four years. I'll roll the dice on that, right,
So like we have that at our disposal. There's all
types of options. There's bonds, there's bitcoin bonds that are
being rolled out. Obviously, there's additional raises which get tough
(41:14):
in a liquidity cycle. There's equity raises you know at
the market offering, which are tough when your ymnats get compressed,
you know. And there's there's prefs and all different types.
Is there's a whole bunch of tools that are available
for good companies for good companies, that's right, So it'll
be it'll be interesting. I don't believe. I don't believe that.
I think it's if you look at Metaplanet, which is
(41:34):
the first company that was able to duplicate the strategy.
They've had just in the last twelve months alone, they've
had twelve draw downs or I'm sorry it was about
eighteen months and last eighteen months, I've had twelve drawdowns
of twenty percent or more. Seventy nine percent was their
most profound draw down last year, their duration of lasted
(41:57):
anywhere from twenty days up to four months. One hundred
and nineteen day was the longest duration they've had. So
instead of like one cycle every four years, they have
like six cycles a year. And the m NAB isn't
the most important metric. I think a lot of people
put too much under that number. So for example, you
could have bought Meta Planet last year at seven times
and made a ton of money, and you could have
(42:17):
bought it two months ago at three and lost your
ass right, So it's like the MNAB doesn't mean everything.
But you know, again, they had a seventy percent draw
down last year and returned to thousand after that, so
I think, you know, it's just part of the cycle.
It's they're extra volatile. That's why people buy them for
the extra volatility. So it'll be interesting. But what do
you think about the dats and these are the digital
(42:40):
asset treasuries, And let me let me frame up why
my audience obviously knows. For four years I wrote cryptocurrency research,
I decided to be bitcoin only. I don't spend a
lot of time focusing on cryptocurrency anymore. It's all just bitcoin, right,
So I can't debate nineteen different, nineteen million different cryptocurrencies.
But I was in London two weeks ago and I
(43:01):
met somebody that's launching a Salona treasury, and you know,
I kind of told you before recording. He told me,
you know, he doesn't even know the bowcase of what
he's doing. But here's my thought on this. When I
think about a Salona or or an Ethereum treasury, so
you know, bitcoin is a commodity, right, It's there's no
(43:22):
common issuer, there's nobody that pre mined it, nobody has
that control of it, and it has as a has
a fixed supply right twenty one million. So I could
see how a company would put a commodity on its
treasury that'd bud goal, I'd put oil something like that.
But if you think about like Ethereum's bowl case, for example,
it's like the World Computer, Right, we're gonna put everything
(43:42):
on top of it, and we're gonna do all the
smart contracts in this World computer, and Joseph Lubin and
Metallic and Consensus, you know, they can control this algorithm
and they're going to keep it working and blah blah
blah whatever, right, the votes and all that. So it's
like a tech company. So it's like it's like Apple,
Like Apple's three trillion, so like their market caap potential
is three trillion, like so like Bitcoin's going for money
(44:04):
five hundred trillion. They're a tech company number one, number two.
Like again, it makes sense to put like a commodity
on my balance sheet, But why would I put a
tech company, Like we don't see typically companies putting other
equities on their balance they're not allowed to. But it
wouldn't really make sense to put Apple under your You
wouldn't create a treasury company around Apple maybe. And then
and then the third point I'll ask, and then I'll
let you kind of respond to these. The third point
(44:26):
is then back to you know, again, bitcoin is commodity
with no common issue or a pre mind, but also
with a fixed supply. And then you have these assets
like ethereum that that doesn't really have a known supply.
And so I'm just curious, like, you know, I think
you sort of believe in also those types of treasuries
as well, but like maybe you can film me in
on the bowl case and the other guy couldn't.
Speaker 1 (44:47):
Yeah, well, I think, you know, so the way hard
frame Ethereum and these other smart contract platforms is that
they are platforms, the application platforms, which is just essentially
a derivation of a tech of a tech company or
a new type of tech company. So it requires a
different framing when you're looking at them as an investment.
And I think that Bigcoin obviously has owns that commodity
(45:12):
framing because of the supply schedule and because of the
level of decentralization. Now with Ethereum and the Solanta and
all these other platforms, you've got a case to be
made that actually, you know, they are going through an
adoption curve which is going to be pretty dramatic over
(45:34):
the next couple of years. And I think that you know,
with the amount of with the amount of adoption that
they've already gained, and that's putting aside. I guess the
activity metrics which we do trackers on train analysts in
the space, which I think is a lot of it
is gamed, and you're talking about the treating, yeah, wash trading,
(45:58):
but also just you know, there's activity, there's cyble, you know, attacks,
and like there's tons of stuff that inflate numbers. So
you have to look at it sort of more holistically,
but it's undeniable that you're seeing adoption and now you've
got basically integration with the financial system with stable coins,
(46:18):
and stable coins are going to move on blockchains. Blockchains
have facilitated the need for the US government to find
new buys of its debt, and so whether we like
it or not, these platforms are going to facilitate a
huge amount of global commerce.
Speaker 2 (46:35):
Let me ask you about that. So yes, I one
hundred percent agree with you. The number one stable coin
and not buy a little bit, but by a lot.
Seventy five percent of the market share is Tether. Pollow
from Tether is a bitcoiner and they announced just a
few weeks ago they want to move it all over
to the bitcoin blockchain. They're moving into RGB number one,
number two. We've seen some of the other players and
(46:58):
new entrants are building their own blockchains, so they're not
going to use Salona or a theory or Bitcoin. They're
going to build their own. So it seems like it
seems like the exist that the dominant player wants to
move to Bitcoin not ethereum, and then the new entrants
want to move to their own platforms.
Speaker 1 (47:17):
Yeah, so is the argument, is the argument whether you
should buy ethereum is one of these other platforms, or
is the argument a blockchain is going to increase in
terms of total usage.
Speaker 2 (47:27):
I was more thinking about just from the treasure you standpoint,
where like, how does it make sense to buy an
asset that's not clearly defined, has no fixed supply. That's
what I was kind of trying to think. Understanding from
a speculative standpoint is one thing, Creating a treasury company
around it and raising money in public markets seem to
be like a different animal for me.
Speaker 1 (47:48):
Yeah. Look, I mean it's I know where you're coming from, Like,
it's I think it's a changing of investment philosophies all around.
So let me give you an example of what I
mean here. The Swiss National Bank, the same bank started
buying Apple and tech stocks back in twenty sixteen. That
was that seemed crazy, right, But they understood the debasement game,
(48:08):
and so they thought the best thing they could do
with their asset, with their with their reserves was to
put that into tech stocs. And that proved to be
an incredibly smart move worked from unfortunately not mirrored by
a lot of other central banks. So I mean, where
is the where is the growth happening in the global
(48:29):
economy right now if you look at you know, the
legacy financial system or the crypto economy, the crypto economy
is exploding and putting all the gaming aspects aside. Settlement
values on blockchains are growing at seventy eight percent compound
for the last five years, and that was really before
government said, hey, stable coins are okay. Now the question
(48:50):
of like whether he wants to take a investment punt
on Ethereum versus Solana or versus I guess any stripees,
new platform or new tether blockchain. That's more like a
a investment decision with which is a lot of risk
and therefore it becomes very tricky for these digital asset companies.
(49:11):
And there's a lot more risk there with a platform
that's in a hyper competitive space where there's basically no
barriers to entry. It's just opened his open software that
anyone can fork or replicate. But there's also a thing
called network effects, which are very hard to budge, and
so there is there's definitely network effects exhibited through you know,
(49:33):
the top smart contract platforms. But the you know, we'll
see in five years time, what the right smart contract
platform is or has been the best performer, if at all.
I mean, I put bitcoin at the center of my
entire investing world because it is in my eyes, and
I think in the eyes of even sovereigns now it
(49:55):
is the emergent global reserve asset, and it is the
It is the clear leader and will continue to lead.
But I do look at those other platforms as investment punts.
But when you start looking at the digital asset companies
in that space, you can argue that the high quality
ones come first and then like it starts to tail off,
and then you've got added risk that bitcoin doesn't have
(50:17):
because it is not a fix. It doesn't have the
characteristics of the monetary network of bitcoin. And the other
thing that we don't mention, we haven't mentioned yet, is
that the reason why bitcoin is not only because of
its monetary properties is a sound investment with lower risk
of sort of downside over the long term, is because
(50:40):
of the energy aspect. It is gobbling up excess energy
around the world. Is now strategically important for companies that
actually understand how to drive value for their citizens that
they bring bitcoin mining into their economy, and they subsidize
it and promote it because not only will it monetize
(51:00):
excess energy, it will drive investment in a space which
is directly linked to AI and so like that, our
whole aspect just supports that network growing even faster. So
is this I guess, to come back to the original point,
there is a lot more risk, a lot more uncertainty
in putting any other digital asset on the balance sheet.
(51:22):
But still there's an argument to be made that the
underlying smart contract platform assets themselves, the ones with network effects,
will continue to outperform or you know, outperform tech stocks
for instance, maybe not Bitcoin, but should do well. And
you know, you allocate with the right sort of position
size to that because of the volatility and the uncertainty.
Speaker 2 (51:41):
Yep. Yeah, And that's a question that I kind of
always come back to, you know, in regards to the
equity side of these things. Is like, as a bitcointerer
or is like, is this going to be a bitcoin?
But most of the world doesn't think that way. They're
just like, does it beat the S and P find under,
does it beat inflation? And so they're sort of like
building out their basket sort of a.
Speaker 3 (51:59):
Thing like that.
Speaker 2 (52:02):
Man, There's so many other things that we could dive into,
but I think I think we're probably just going to
wrap it up right there, Jamie. But I would like
to do this again sooner, maybe on the next report
that you have out, will come on and talk about
the report, and I wanted to get in some other
topics such as talking about location sovereignty, so maybe we'll
table it for another talk again. Like I said, your
(52:23):
research is amazing. Just tell everybody what kind of stuff
you do and where they can find it.
Speaker 1 (52:26):
Yeh. So I'm the chief crypto analyst at Real Vision
and we've got a platform which is basically pretty much
focused on all the exponential technology plays, but primarily crypto
and how that plays into the whole macro framework. The
business cycle analysts analysis that Ral does and Julian does
(52:47):
is by father the best but business cycle analysis out there.
I focused, you know, strictly on macro and crypto. So
if you're interested, check us out.
Speaker 3 (52:56):
Yep.
Speaker 2 (52:56):
We'll link to that down below, and he shares his
reports with me. I've done some YouTube videos, so just
look out for that. I always link back to that. Jamie.
Thanks so much for taking the time, appreciate it.
Speaker 1 (53:06):
Thanks again, mat I love it.
Host
Mark Moss
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