BTC Sessions - This ALWAYS Is What Happens Right Before Bitcoin EXPLODES | James Check

Episode Date: November 11, 2025

Mentor Sessions Ep. 038: James Check on 2025 Bitcoin Bear Market Paradox, Great Rotation Bullish Selling, Cycle-Breaking Outlook & 200K Price PotentialIs Bitcoin in a "modern bear market" up 7.8% YTD despite massive $290B old coin sell-offs? On-chain expert James Check from CheckOnChain reveals why 2025 price action defies expectations, with 63% supply cost basis above 95K creating a "top-heavy" plunge risk to 80s—yet silent institutions absorb billions in "bullish selling" for a great rotation slingshot. In this BTC Sessions interview, Check breaks down paradoxical sentiment (Google Trends at all-time lows), why the 4-year cycle is dead as Bitcoin transitions to macro asset, derivatives shift (options now dominate futures for volatility explosions), treasury mania "smoldering ruins," AI bubble black swan printing trillions, and bull case for 150K fair value exploding to 200K+ fast. Essential Bitcoin price analysis for 2025: Bear firepower fails, sellers evaporate—stack now or get screwed? Don't miss this deep dive on on-chain data, macro traps, and why bears are "really, really wrong" for max pain upside.Chapters:00:00 Teaser & Intro00:01:31 Bear Case Setup00:02:35 Monthly Expectations Defied00:03:11 UTXO Cost Basis Analysis00:04:17 Bullish Selling Phenomenon00:05:19 Bearish Sentiment Reasons00:07:08 Institutional Buyers & Demand00:09:03 Supply Side Indicators00:10:55 Great Rotation Explained00:12:18 IPO Moment Challenge00:17:54 Future Growth & Capital Inflows00:18:42 Bear Market Drawdown Risks00:21:28 Psychological Hurdles Post-100K00:25:24 New vs Old Bitcoiners Psychology00:29:30 Broader Macro View00:33:13 M2 Chart Dismissal00:38:55 States Jumping In00:42:02 Treasury Companies Mania00:51:28 Derivatives Market Rundown00:57:40 Black Swan Events & Bull Case01:12:13 Outro & PlugsAbout James Check:On-chain Bitcoin analyst, founder of CheckOnChain newsletter—delivering data-driven insights on supply, sentiment, and market structure.X.com: @_Checkmatey_CheckOnChain: checkonchain.comCheck previous ep with Tom Luongo: https://youtu.be/5oS4sop9t2Y💰 Supported by @BowValleyCU — Tired of big banks? Join Bow Valley Credit Union, run by freedom and sound money advocates, as Canada's only traditional institution directly integrating Bitcoin for seamless, no-hassle transfers, no rehypothecation, self-custody withdrawals, insurance, auditability, and ideal corporate balance sheet integration. If you or your business is in Alberta, switch today! 👉https://qrco.de/bgGaIQ😏 "Supported" by @PantiesBitcoin — Gentlemen, Panties for Bitcoin has you covered! A Bitcoiner brand for Bitcoiners, run by a HODLer family. Gift your lady top-quality underwear with BTC—surprise her with style & orange-pill her into the Bitcoin economy! 👉 https://qrco.de/bgEYRO⚡ POWERED by @Sazmining — the easiest way to mine Bitcoin and take control of your financial future. ⛏️You own the rig 🌍 It runs on clean energy 🔐 You get cheap Bitcoin BELOW Exchange Cost Start stacking wild sats today: 👉 https://qrco.de/bg8Jwq 📚 FREE Bitcoin Book Giveaway: New to Bitcoin? Get Magic Internet Money by Jesse Berger FREE! 👉 Click: bitcoinmentororange.com/magic-internet-money 💡BOOK Private Sessions with Bitcoin Mentor: Master self-custody, hardware, multisig, Lightning, privacy, and more. 👉 Visit bitcoinmentor.io Follow Us on X:• BTC Sessions: @BTCsessions• Nathan: @theBTCmentor• Gary: @GaryLeeNYC#Bitcoin #JamesCheck #OnChainAnalysis #GreatRotation #BitcoinBullCase #DerivativesShift #TreasuryCompanies #AIBubble #BitcoinPrice2025 #BTCSessions #Crypto #BitcoinAnalysis

The cycles aren't going to look the same as previous cycles. The bears have the most artillery firing that they've ever had, and we're down plus 7.8% on the year. The majority of Bitcoin's wealth has a cost basis above 95K. What happens if you go to 95KK? And the Gapbook doing 95 and 80s is also pretty quick to move. It's a majority, I think, now of Treasury companies are trading below their par value. We're in the smoldering ruins phase. When this AI bubble cracks, it is going to tear down the economy.

I've been calling it the great rotation at some point. Just going to evaporate sellers. We're going to see these explosions in volatility. We're going to come all back at once, which means 200 starts to look like a bit of a stretch target. That's James Check, author of the Check on Chain newsletter, Charting Wizard, and absolute master of Bitcoin analysis. He's brought some mind-blowing stats to unpack the insanity in Bitcoin's price action

and why everyone's been so wrong. He breaks down the paradoxical bear market sentiment. Why aren't we at zero? Like under this kind of pressure The great rotation and what he calls bullish selling. You can't have billions of dollars a day being sold and the market going sideways

and not deduce it. There's just buyers and they are big. And the cycle breaking bull case and price potential. What if the early four years cycle thing? What if that's the anomaly? Plus James shares why the derivatives market has had a massive shift and what it means for Bitcoin.

Options are now much bigger than futures. Much bigger. Awesome. Good morning. James, thank you so much for joining us today. Really excited to dive in because there has been a little bit of excitement in the price action lately. So I really, really, really want to get your perspective on it. Now, I imagine like any good analysts out there, you've got a bull case and you've got a bear case and it's all about the probabilities. Now, we'll get to the bull case in just a little bit, but I actually want to start with the bearish setup right now here too. In terms of what has you

worried at the moment? What are you currently seeing in the charts and on chain? What's what's got your attention? Yeah. So I think everybody's probably aware that 2025 hasn't quite been. the explosive end of the year bull run that we're expected. I put out a chart, yeah, yeah, surprising that. So here's the interesting thing about this particular market structure. People aren't salty because it hasn't gone down that much. Like we're still actually up on the year. So if a modern bear market, because like I think we can all agree,

sentiment is like bear market levels. FGX was a bit worse, but we're not far off that mark. And we're up, I checked this morning, we're up like 7.8%. So like, you know, the modern bear market isn't up 7.8%. And so people are salty because we haven't gone up as much as they expected. When you look at the average returns on like a monthly basis, just about every single month this year has been the opposite of what people expected. November is supposed to be a booming month and it's been down. October is supposed to be a good month and it's down.

September, if you look across like any average you want, September is supposed to be the weakest month. We had an up month. So like everything is just defied expectations. So the bear case, there's a couple of elements to this. the first one is if we look at all the UTXOs, all the coins in the Bitcoin supply, and you price them, you give them a price as to when they last transacted. The way I like to think about this, where do people save their money? Where do people invest their dollars and what cost basis was that at?

63% is above 95K. So, like, yes, the majority of Bitcoin's wealth has a cost basis above 95K. So that's great because it shows we have a stack of demand. above 95K. What happens if you go to 95K? What if you go to 90? Suddenly you've got a very what I call top heavy market. Lots and lots of people who are suddenly meaningfully underwater. Now we're not quite there yet. So like even at 100k where like on the border of where a typical dip tends to form. But if you go down to 95, there's very little, very few coins have transacted down to 85 and really you've got to go down to that 2024 chop consolidation range before you hit like a meaningful demand

So the gap between 95, like we're at 106 right now, the gap from here to 95 is not far, and then the gap between 95 and 80s is also pretty quick to move. Now, the other thing that's really, really important is just there's been a tremendous amount of sell side. Now, I actually released a piece yesterday called bullish selling, which is a stupid term, but I think it's, it kind of explains where we're at because the sell side that we've seen this market, and it's funny because I often write about things. things and then like six months later, like people argue about it and say it's bullshit.

And then six months later they see it in the narratives on Twitter. Selling is now like the dominant narrative. And everyone's talking about OGs and all this kind of stuff. The reality is there's been a tremendous amount of selling. We had $3.1 billion worth of what I call revived supply, coins older than six months on the weekend. So lots and lots of coins every single day coming back to market. So the bear case is there's a lot of people up here. There's a lot of selling up here.

and then the bull case just has me going, why aren't we at zero? Like, under this kind of pressure, the bears, like, the bears have the most artillery firing that they've ever had. And we're down plus 7.8% on the year. It's like, that's kind of, kind of impressive. That's incredible. I'm curious if you have any thoughts on why the bearish sentiment, because I completely agree. A couple weeks ago, I was at the Canadian Bitcoin conference, and I made the comment

that it felt like a bear market conference. it was wonderful to hang out with everybody, but there was no Bitcoin curious whatsoever. And even just looked at Google Trends before we jumped on, Google Trends is just down from this point last year. There's no world. All right? Yeah, it's dead. Yes, yeah. It sounds like all time low on the year.

There's no interest currently in Bitcoin. What have people just been beaten up by the market that much that they can't get excited or they've just lost the plot? What's going on with that kind of market mentality? Honestly, I actually think that it could be even simpler in this. I just think that there's competitive markets. So if you wind back the clock to 2021, you know, the Bitcoin crypto world was the only thing that was, like everything was going up,

but that was like just exploding unlike anything else. This year or this cycle, AI, like people have literally been able to just go and buy Nvidia and get the same kind of returns that they're expecting in the crypto world, right? So I think that there's been a lot of mine share sucked out of this entire industry. And I also think that the divergence between Bitcoin and crypto is just massive. Like I was looking at the numbers yesterday. You're going to be speaking at a crypto conference in Australia.

I need to bring some Bitcoin only content. And the gap between Bitcoin and Ethereum is now $1.75 trillion. Like, it's just not even close. So I think that what's happened is people in the crypto world didn't get their old seasons, so they're gone. And the ones that did survive got liquidated on the 10th of October. So all the survivors of the crypto world are now gone. So there's like just no money there.

For the Bitcoin space, what I also think we're having is people, aren't coming in. So we're not getting new retail money coming in because people are just looking elsewhere. And I also think that the people who are coming into Bitcoin, they're a different creature, right? They're institutions, they're patient, they're sophisticated. And again, let's just go back to that previous point. The amount of sell side is extraordinary, like historically big. In dollar terms, in Bitcoin terms, have we going to measure it. And we haven't gone down. To me, this is telling us a really interesting story about buyers who are not, hitting the smash buy button. They're not chasing the price high. They're not subject to the

same kind of phomo that the average retail guy is. They're absorbing supply. They're allowing the market to sell to them. So that is a very, very different characteristic. So I just think a lot of the, like, the energy isn't there because the price hasn't gone up. And generally speaking, people tend to like momentum. So I think there's just a different pool of investors with a different set of incentives and they're a lot more patient and they don't tweet about stuff. They're quiet. Right, they just, like, institutions aren't tweeting out their positions. They're just allowing the market to sell to them. And I can't help but think at some point, we're just going to evaporate the sellers and there's

going to be no one left. Like the guys who are sitting there absorbing billions of dollars today, they're not looking for a 10% pump. You know, like these are forever allocated. So it's just a very, very different structure. And I was describing it in a piece recently is that it's like an estuary. Bitcoin's kind of mastered its freshwater lake. And it's in the process of swimming out into the salt water, which is the big,

bad ocean of finance. And it's massive. It's just so much bigger than the pool that we've been in. But there's this transitional period as the water's mix and it kind of acclimatizes to a salt water environment. That is really what I think is going on. And we're just in that kind of chopping around phase. It's like what to look like as we change the guard and Bitcoin market structure changes forever. That's very interesting. Gary, before I let you jump in, I did want to ask, because there might not be anything, but just in the curiosity, is there anything that you can look at to get a read on where we are in terms of the supply side? Like, would there be any indication that more supply is coming on or we're starting to drain

through it or is it like, nah, those things can just be unlocked after 15 years, so we got no clue where we are. Yeah, I mean, so here's the really interesting dynamic. When we look at investor conviction, we often use like coin age. How long as a coin midheld for? You may have seen the hotter waves or long-term holder supplies, various ways we can do it. Long-term holder supply is declining, but it's also at like 75% of the supply, which is historically high.

So we've got this like honestly, the world in the Bitcoin world right now, it's full of dichotomies. We have almost all-time high long-term holder supply. And yet we also have tremendous amounts of sell side because there's coins coming out of it, but there's as many migrating across that five-month boundary to become a long-term holder. So the way to think about this, we actually have a story of in previous bulls. It's a story of sellers. One big parabolic bull and people sell more and more and more as it goes up. until we finally kill it. This cycle, we've had three waves of cell side, peak, chop.

Sell side, peak, chop. What we're watching at the moment is like it's a sell side story, but there's also a buyside story. The people who buy in April and March and April of 24, they didn't sell. They kept hodling. They became long-term holders. Then we're going to rally up to 100K in November, December. A bunch of selling, but the guys who bought kept holding. And here we are in this kind of third wave of they're still selling, but the folks who are buying are just as likely as the folks who sold to hoddle. So we've got the, it is a unique dynamic here of both buyers and sellers, whereas historically people would sell, it would oversaturate demand, and then we go through a bare market until we finally found a price where people actually want to step back in.

Here, people are willing to step in at all the prices, but it just doesn't happen overnight that we keep going up. It feels like a major kind of like, we just say like distribution or like rotation. Like it feels like we're distributing old coins. I've been calling it the great rotation because I really do think that is the that that is the most coherent explanation. And with all this stuff, right, I'm just looking at the data and saying coins are moving, coins are buying, coins are holding.

When I look at all of this, the best way I can frame this up is it's the great rotation. We are seeing old holders. And in particular, there's a lot of like old holders, five year plus. But there is also a huge, like the dominant majority of people who just believe the four-year cycle. And the ramp up of the selling we're seeing right now, in my opinion, is a bunch of people who think the four-year cycle is done. It's over. We've topped with peaked. They're exiting as a result. And there's just that part of me that goes, you're telling me all those guys on Twitter are going to be right? Like, when does that happen?

So, like, I'm like, I wouldn't. I don't believe this idea, like, TXMC had a great tweet a while back where he says, Max Payne is never to the upside. And I, like, 99.9% of the time agree with him. Most of the time, people say Max Payne is to the upside. are people who are very long and are trying to cope with the price going down. I have a feeling we might actually be in an environment where, like, at some point, we're going to have max paying to the upside because all those people who sold the four-year cycle, their bare market was a plus 7.8% year. And then next thing we know, we're moving again and like, oh, man, that's going to fire up a lot of people.

God, I can't wait to see it. I know. I'll pull part that in the cycle through a little bit more in a bit. But Gary, let me let me let you jump in here, good sir, and get your questions in. Thanks, man. I guess mine's a little more broad years out. We talked about the great rotation where everybody's talking about the IPO Bitcoin moment now. I'd like to challenge that a bit in my very limited capacity. Is it any different than what we've been dealing with for all of Bitcoin's history? I mean, you're looking at some of the early adopters back in 09 and 10. They're doing like 500x, a thousand X. I'm sure they had their quote unquote IPO moment where they pulled out. And I'm sure in another cycle or two, if cycles are still the real. deal when states come in and buy in their sovereign wealth funds. There's going to be the IPO moment where everybody who's a private citizen or even a private company is like, all right, I'll take some profits now that these governments are buying in. So is it somehow uniquely this time an IPO moment? Or is it just something that we're going to continuously encounter every so often? No, I think you're dead right. We've had many IPO moments. However, I think this one is different

not because of the sellers, but because of the buyers. So if we go back to 2017, one big sell side event, long-term supplies is this giant big cratering hole, and then there's just the demand evaporates. And once we go from 20K to 6K on that first sell-off, the demand just goes to zero. Like, there's no new inflows. The difference this time is that we have this persistent inflow and they're not tweeting about it. There's just like you can't have billions of dollars a day being sold and the market going sideways and not deduce it. There's just buyers and they are big. They have to be big. There's not. no other way that I can picture this.

The only other explanation I've come to that's coherent, there's a bunch of people who are like, I'm going to go and trick that on-chain dude, that one dude with a small news, I'm going to go and trick him by spending. We're going to coordinate spend our seven-year-old coins because we want to spoof this dude and make him look like an idiot. If that happens, well done.

But I just don't think we've got billions of dollars a day for 12 months. In total, if we look at coins older than one year, in 2025, so far, we've had $290 billion. dollars of coins older than one year move. Now, not every single one of those coins is sold. However, a very, very, very large majority of them are. Every single day, we see about a billion dollars plus go into exchanges as deposits and about a billion dollars get withdrawn. This is why exchange balances basically never go down. I know you see people saying that they're going down, but that's generally a data error. They've been going sideways, really, since 2017. And the reason is

because the inflows match the outflows all the time. But there's, that's this changing of hands. Someone sells, someone buys, someone accumulates, someone recalateralizes, someone gets liquidated, like markets of this process of coins changing hands. So I think the difference is we have this persistent inflow of demand that usually evaporates and disappears when it's all retail. And we have those previous big bear market.

So yes, we have had many IPO moments. The difference is the demand side. And if I think about these whales, like back in July, we saw Galaxy Liquidate 80,000 Bitcoin. Some dude bought me in 2011. Right. Price went down three and a half percent and recovered two hours later. Incredible stuff. The last time we had 80,000 Bitcoin get sold like that was when lunar imploded and the price went from 45K to 15. So like a very, very different animal, right? So we have the liquidity, the demand side, whether it's the ETFs, treasury companies or, you know, just these giant spot buyers that we have.

If you're a whale and you've got 80,000 Bitcoin, and by the way, that may not be your only clip. That's just one of your clips. If you've got that much coin, you've never been able to sell. You've literally never had the opportunity to ever sell that much coin, ever. Now you have the demand to soak it up. And also, you're not going to get a bank account frozen when you pull $9 billion out and say, yeah, I've got this from Bitcoin. Like, go back to the previous administration, you'd have the feds up your ass. So I think that there's just a different environment that's allowing the demand side to absorb the sales side in a way that we've never seen before.

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So we have so much liquidity in here. And like you said, we're building up because eventually we're going to run out of sellers. And I assume, at least in this cycle, and I assume at that point we're going to see, you know, number go up really fast. I guess my question is with how much capital is in Bitcoin now, will we ever really see major large percentage growths again, aside from states coming in and buying a lot? And as we know psychologically, that's what seems to drive interest. Like suddenly you go from like 10,000 to 69,000. It was like, oh, we're talking about Bitcoin.

So if that's not going to happen, and maybe it will, I don't know, you tell me, what else would drive interests where people are every day going on Google? What is Bitcoin? Tell me about this. Yes. So, great question. So there's a couple of things to think about here. If we have, let's go back to our bear case. If we have some kind of a bare market drawdown, we drop below 95 and people start to panic. I strongly doubt that we go down, like, I think that that 2024 zone, like 275K was the top of it. I would be amazed if we end up at like 60K. I think that's too, I think that's too cheap. So I think by a step in before. that. Now, if we go into like, say, 85K, where we bottomed out in the tariff tantrum,

if we go down to 85K, that's a 35, I think it's 35% from the all-time high. Are people going to look at their cycle chart and, like, reset as if it was FTX or the 2018 bottom or the bottom of COVID? Are they going to reset their cycle chart from there? And then if we go to 200, which I think is also, like, not infeasible in any way, shape, or form, are they going to start saying diminishing returns because this cycle started at 85 and went to 200? Like, are people going to reset their mental frameworks because the bear market isn't really a bare market anymore? Gold went up $12 trillion this year, just this year.

Can Bitcoin go up to trill? Yeah, it can. Like, it really can. So when you look at all of these dynamics, it's like, gold doesn't move often. But when it does, you've got to pay attention. It's sending a very, very clear signal. There's something wrong with the denominator. Bitcoin is just so well positioned for this macro environment.

You know, everywhere I slice this thing. like, you know, $12 trillion in a year, Bitcoin's only $2 trillion. It's gone up six bitcoins, just in the delta of one year. Like the capital, and you don't need that much capital to come to Bitcoin to achieve something similar. So, you know, I just kind of look around at the spread of things and go like, can I really see some of these equities? I can, in video, go from $5 trillion to $10 trillion? I don't know. That's hard. That's really hard. Like it's kind of doesn't make sense of $5 trillion. Can Bitcoin go to $10 trillion? Yeah, I can like, I can do it in the back of a napkin for you and make that very convincing. So I just think that like at some point,

people are going to question like, do we have a cycle? Like, do I reset my chart? Where's the bottom? Like, where are we in this whole thing? I just think people are going to lose their minds because the cycles aren't going to look the same as previous cycles. And I would almost argue, this is why I use that estuary analogy, what if the early four years cycle thing? What if that's the anomaly? Bitcoin is never destined as a macro asset to have these four years cycles. That's just kind of the bootstrapping phase. And it was always going to transition to be a lot. If it's going to be a macro asset, it's going to be affected by macro things. And if macro things don't have a four year cycle, then Bitcoin's probably not going to have a four year cycle. So I think

that we're almost in that transitional period where people are using the old rules and trying to apply it to the new world. I just think the new world is the new world. So you can't really take those, don't be anchored by the old rules because they may not apply. That makes a lot of sense. I'm actually curious to you on that like 200K note. Like I wonder if it, at some point, maybe, I'm sure the institutional investors do, like on the retail side, that kind of what you call that price bias. Like put it on a log chart. Look at it in terms of percentage. Like that's a 2x for Bitcoin. That's, that's nothing at this point in time. I'm curious if you have any thoughts on because very clearly the 100K was a major psychological

hurdle, which made sense, right? That would be like the number that you dreamed of. And I can absolutely see why people who have been here for a very long time who may be bought in these three figures or two figures or even four figures are taking the lifestyle change and buying an island at this point in time. But what I can't see is what's the next psychological hurdle? Like 100K makes sense to me. But if we actually chew through all the supply that's coming on right now, I don't think we stop at 200.

But again, that's a very kind of like amateur psychological insight there. Yeah, totally. So price discovery from here, I actually agree with that. I think that 100K is a very special level because, you know, it's a long way to a million, which is the next 10x move. Look, I think 100K was that stretch target for a great many people. and I've heard this anecdotally. Like there's just a lot of whales who were like, it was just time.

It was just time for me to just make my exit. So this is just part of the process. I don't know where those next psychological hurdles is. So price discovery moving forward is going to be quite interesting. It's also going to be much more dynamic. I see a lot, like a lot of people like to look at just price or, you know, simple metrics. We've got to look at things like the options market. Like the Ibit options are massive and they're going to play a huge role moving forward.

There's going to be periods in time where lots, like people are going to say, why the hell to we find resistance at 148K? Why is that strange number? It's like because there's a bunch of people with call options there or a bunch of people who are like putting on some kind of volatility, capture, trade or whatever it is. So I think there's just, it's a increasingly complex and dynamic market environment. You know, for me, I specialize in the on chain side, but like my website's got what's

going with treasury companies, what's going on with derivatives, what's going on with all spot markets, the whole lot. You've got to look at everything as a cohesive system. And more often than not, they speak the same. same language, right? You'll see ETFs need to rebalance. Some investors, price go up, they have to rebalance. Price goes down. They have to rebalance. So there's all these dynamics that are going to come into the fold. And actually, there's a point I was going to say before. A lot of the high octane bitcoins are disappointed with this cycle. My old man, I got him in in 2020. So he rode the bull.

He rode the bear and he told me all about it every day, right? When's the number going to go up? hated it. And now, so he took his initial investment out in 2024. So he's square. He's playing with house money. And the price is now trading in a way. He's like, it's really stable. I'm actually thinking about buying back in. So my old man wants to buy back in. And the average Bitcoin is like, this is the worst cycle I've ever seen. Like, think about those two different types of investors. And I would wager that we've hit a lot of like the hardcore Bitcoiners. I think a lot of people who are going to find Bitcoin at the level that you and I have probably have. have found it already. The pool of my old man is massive and they have so much money if you think

about all of the retirees, all of the people who've like just sold a business and they've got a bunch of capital or just folks with like who need to protect themselves from the inflation debasement that's coming, they're going to go looking for a solution. They're slowly coming around to gold and they're slowly coming around to maybe I shouldn't park all my money in the S&P 500 and I should perhaps actually look for alternative assets that are going to do this for me. So I think that pool, wealth advisors, financial planners, like as people become accustomed and used to Bitcoin, and by the way, they see the iBit chart. They don't know the Bitcoin traded $1,000. They couldn't care less. They see the iBit chart going from $25 up to $75. That's their history.

It's like literally a bull market only. So, you know, I just think it's a different psychology for the people who are coming in versus the people who are already here. That's very interesting. Gary, go for it. Sorry, you talk about the different psychology of the people who were already in versus the people that are coming in now. Nathan and I touched on this a little bit about kind of new Bitcoiners versus old bitcoins. And is there a way that you can you can sort of look on the charts and kind of get a sense of that in the sense of the, I guess the psychology of the people, because Nathan and I were joking before we got on with you, like, I'm checking the price almost every day and I

don't know why I'm doing it. Like, even if it went up to two or three or 500K, I'm not selling. And even if it went down to five or 10,000, I'm still not selling. selling. So why the fuck am I wasting my time checking the price when I could be playing with my kids? And yet there have to be other people in who are like, yeah, I'm checking the price because I might sell. They're not in it as Bitcoin is the end onto itself. It's they're in it to get more paper monopoly money from Fiat government. So is there a way to kind of figure out like, hey, who are the original kind of like cypherpunk libertarian types and how much of those are left versus new people? Not specifically, but what you can see, and that's why I've been

writing about recently is like the narrative for folks like us for a long time has been that Hodler's buy and buy it. That's it. And how many times have you seen people go, there's only 450 coins per day to be bought like from the miners? Nonsense. Nonsense. The vast, vast majority, and this is why the halving doesn't matter. The vast, vast majority of coins coming back to market on the 7th of November, whenever that was weekend, we had 28,000 Bitcoin come back to life that were older than one year, 28,000. So whenever you see people, looking at like, oh, Michael Sela just bought 5,000 Bitcoin. Why isn't the price up?

Because existing holders sold 15,000 that day. Like the amount of sell side coming from existing holders, folks are just starting to work out that a lot of people just trade the cycle. They trade the volatility. When we looked in the 2024 zone, right, that sideways chop that we had there, I think from memory, about 70% of the cell side that we saw were people who bought the bottom when FTX blew up. And then when we went from the 50K zone,

in 2024 to 100k in November December, 70% of the coins came from that 2024 shop. People who bought, they were very happy to go from 50K to 100k. They took a clean 2x. And that's where the majority of the sell side came from. So there's just this like pool of people who are always happy to take a 2x. They really do just see this thing as a trading asset. This is actually the majority of people. The majority of people are not the long-term hodlers. If you look at things from a like a balance perspective. Here's probably a stat that isn't my favorite. Retail holders, so people with less than one Bitcoin, their overall on-chain footprint, they have been net sellers since mid-2020. This cycle, they have seen very, very few periods on like a 90-day

change or a 30-day change basis where their balance has increased. We have seen net distribution by Hodlars. Now, some of those might be migrating into an ETF. Sure, that's possible. By the way, retail hodlers have barely ever been more than 5% on the same. supply anyway. So like it's a very small pool of people. There's a lot of them that it's a very small pool of people. Even if you look at it from like a UTXO, I'm getting at my my actual numbers wrong here, but from memory there's like 42 million UTXOs. And we know that like everyone's got multiple addresses, multiple UTXOs from like last time I calculated, I think we'd be lucky if there's two million people with on chain Bitcoin, like two million individuals. I think we'd be lucky

if it was that big. So I think we've like generally speaking, the next. narrative is broadly overstated as to how many cold card wielding Bitcoiners are actually out there. They're very important. This is the thing. They are so important for Bitcoin's governance, even if they have a small representation in the overall holdings. So I think that's just a really important element to like, it's the asymmetry. Bitcoin is designed to be asymmetrically powerful. And it is because you can have this like intolerant minority that's like, no, this is how this works. No, that makes sense. And as I was going to say, two million, two million sounds right. to me. Like two million globally, I could, I could buy that. That would make sense because I have

to talk about. And that excludes exchanges and all that kind of stuff as well. You know, we're talking about on-chain DCA. I've got my coins and my cold card type hollers. It's basically like the city, I'm near like Calgary Alberta. It's like two of those. Like that fits. That fits with my impressions. Also with the fact that like the majority of people that I talk to know the name Bitcoin, but if I ask them any specifics about how it technically works, they know nothing. Like I rarely could, I would rarely run into somebody who could explain the difficulty adjustment to me in the wild. That wasn't at like a conference or something. I want to, I want to I want to change gears for just a moment.

We touched on the broader macro a little bit as well, too. And there is a ton going on. So I wanted to get your sense of that. So we've got like government shut down. We've got the repo market kind of going crazy. Trump's talking about two K stimmy checks. We're looking at 50 year mortgages, which I feel would be like a plethora of capital coming online there.

There was a lot happening. The labor market seems a bit weak, potential recession looming in the US as well too. From that broader 30,000 macro view, what are you seeing and what does it mean for you? What has your attention there? Yeah. So it is,

I consider myself a macro, tourist, right? I kind of observe it through the eyes of other people, you know, most of my podcast diet is trying to understand this kind of thing because I'm just fascinated by it. It's really hard to read. Honestly, it's really hard to read. And people I respect, and I guess this is what makes a market. People I highly respect sit on both sides where they're like, there are cracks everywhere in the labor market. I had a private conversation with someone the other day, and they're like, I mean, it just feels like a recession, right? And there's a lot of things where I think the majority of people are struggling. But then I think

there's also this, I guess you call it a distortion effect, whether it's all the CAPEX being spent on AI, whether it's the government fiscal deficits, whether it's stimulus that might be coming. There's so many things where like there's a few centralized pockets where the money pouring into the economy is absolutely enormous. So I think there's this like, I think K-shaped is probably the right way to think about this. A lot of signals are broken. Like if you think about the unemployment rate, like immigration's gone basically to zero in the US. Arguably it's gone negative. So suddenly you've got less people. So therefore your unemployment rate, of course it's going to be low.

So unemployment is low. And yet at the same time, inflation is above target. So there's just like there's all of these pieces of the puzzle. You're right. Like the TGA's been being refilled. So that's been pulling liquidity out. Government shutdown. I think that's finished.

I don't know. It's like it's a real circus of challenging environment and challenging structures. Honestly, I couldn't give you a cohesive thesis at the moment. if I was to distill it down, like if I just had to look at prices, I would look at the gold price and the Bitcoin price. Because I think that they are very special assets because gold doesn't do anything except be yellow. That's all it does. It's just yellow and scarce. Bitcoin does nothing except be orange and scarce.

That's all it does. It literally has no other purpose. So therefore, why would people buy it? Because they have some view of the macro. So that's certainly why I buy it. So from that perspective, if I was just to look at the gold and the Bitcoin price, my initial read would be, I think they're going to print a boatload of money sometime in the future. That's what gold's telling me.

They're going to print a boatload of money and they're trapped. Bitcoin is telling me. Wait to step out on a limb there, James. Go ahead. Totally. And then Bitcoin is telling me it's probably not happening yet and we might have to see a crack form before they step in. So gold's kind of predicting that they're going to have to step in and,

backstop, whatever it is. But in the near term, it might be a bit of a rocky road before we get from here to there. So that's like how I just simplify a lot of these things. I say, well, Bitcoin and gold really are information as much as their assets. And if I was just to look at those two, that's actually been my guiding framework because Bitcoin has been sideways. I know I can look at all the sell side and IPO moments and all that. But if I take away all of that noise and I just look at the price, it could be a rocky road between here and where gold's at. Interesting. But that also explain why like so Bitcoin's deviated from gold but it's also deviated from that classic like

M2 with a 10 week lead chart as well too yeah put that chart in the bin put that chart in the bin that's no no yeah one of many uh I don't know what Bitcoin is like I don't know where it comes from Bitcoin has just love to find like there's always a stock to flow model out there

somewhere everybody wants a stock to flow model to predict the price the problem with the M2 chart is it's basically taking the Indian M2 and the Chinese M2 and the Japanese M2 and then it's converting it to dollars. So you're taking monthly or sometimes quarterly government M2 data, whatever value that has. And then you're applying the dollar exchange rate.

And what happened this year, the dollar went down. So the Indian M2 went up in dollar terms. The Chinese M2 went up in M2. You're actually just looking at the dollar losing value. So it's a very convoluted complex way to just chart DXY and Bitcoin. How does DXY and Bitcoin look? I haven't checked out actually that in a while. Well, they're going in the opposite direction, right? Bitcoin's going sideways and slightly down,

and DXY is going down a lot. So, you know, it's really, that whole M2 thing, yeah, put those charts in the bin. Done, thrown out. Gary, any questions? No, I guess I'm wondering from an on-chain expert like yourself, how much can you look at it and factor in, I guess, a psychology of what people are already factoring in their minds. Like, you know, I joked about way to go out on a limb, but the government's going to print more money. Like, yeah, all of us hardcore Bitcoiners know as Lynn Alden says, nothing stops this train. So we've already factored that in. Like, oh, it's going to have in four years?

Yeah, no shit. We've already factored that in. So how many people on chain is it possible to realize like, oh, yeah, this is maybe, like you said, this two million people who are hardcore, stick it on your cold card, are already factoring all this in. And how many people are like, oh, the government's going to put more money, I better respond. They just don't see it coming.

Is there a way to parse that out where like something crazy happens? You're like, yeah, but it's not going to be a direct one-to-one because some of it's already built into the price. I mean, not cleanly, but I think Bitcoin should pat themselves on the back. Here we are in the year 2025, right? We've had six, whatever, six trillion dollars pumped into the economy in 2021. Inflation ripped through the roof. And now in 2025, J.P. Morgan comes out and says, oh, there's a debasement trade on it. It's like, oh, really?

Really? Are you serious? I didn't know. So, like, if you're a bit coiner, I click to this whole thing. I didn't know what shape would be. I didn't know that COVID was going to be a stimulus thing. I didn't know like all this. I didn't know.

It was going to be tariffs or geopolitics. All I knew is that they got a lot of debt and they're kind of stuffed. And I worked that out in 2019 properly. And I started buying Bitcoin because I'm like, this just makes the most sense. That's like, that's what else am I going to do? And then here we are seven years later. And like the big banks are finally starting to say, yeah, I think we have a printing money problem. Yeah, okay.

So if you've worked this out ahead of these guys, just pay, from the back because like you are way smarter. The average retail holder is so far ahead. And that's also why I really love the on-chain side of things. It is just native Bitcoin data. It gives you a read on the holders and the sellers primarily. If you can just like get your head around how Bitcoin operates, you are just leagues ahead of all of these tradfile analysts. They got no idea. They got no clue how any of this stuff works. And I'd love that about Bitcoin and Bitcoin data. We are so far ahead of even the smartest Wall Street quants just because we've been paying attention. Imagine mining Bitcoin cheaper than buying on an exchange with direct payouts hitting

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today. Stuck on your Bitcoin setup? Unlock expert guidance from top educators. Schedule a free chat at Bitcoin Mentor.io and get started hassle-free today. All right, let's jump back into the episode. I'm going to, I love that idea because. it speaks to my ego. So great. I'm an only child and an actor. I love having my ego stroked. But that said, I'm going to push back for just a little bit. I do wonder just as a thought

exercise, how much of that is just us being really super smarter than the banks and how much is like, yeah, the banks, they knew it. It's not that hard to figure out, but they are so tied into the traditional financial system and government favors that they can't push back too much against it because then they're going to lose their place in the traditional fiat system. Totally. And they need to have their positions on the board before they start telling the retail mass public to say, hey, you should also buy these things that we're long. Of course. This is my favorite thing about Jim Kramer.

Like people like, why is Jim Kramer always the inverse signal? It's like because he's been paid to tell you the stocks they're unloading. Like when Goldman Sachs is trying to unload their position on stock A, it's going to be the hottest stock of the month. I tell you that. So that's the whole point is that the retail public is exit liquidity for these guys. So they don't say anything until they have their position and they're ready to go. This is just how the finance world works.

It's a tanness, but that's just how it works. Do you believe that in the next cycle, if we're still on a cycle thing, that over the next four years, you will see a whole lot of states jump in? Because it always seems to be one behind. Like last cycle, oh, it's supposed to be the big companies jumping in, but it really wasn't until this cycle. And this cycle is saying it's going to be the states, but maybe it's not until next cycle.

And I know you talked about it under the recent podcast, and I agree with your analysis here, that it's going to be the huge states that have to protect their position and the small ones that can be nimble enough to be like, hey, we have nothing to lose. Let's just try it. Do you see like a massive inflow of states in the next four years? Yeah, well, I think that probably the most important, aside from like the fiscal side and the inflation side, I do think the most important dynamic is that the global reserve asset, the savings asset, is changing. That is why gold is moving. What happened in February, and you'll see a lot of my charts, I anchor, if I'm looking at like gold

and Bitcoin performance. I will anchor to February 2022 because that's when the US froze Russia's reserves. It's a massive geopolitical event. It's where every country, if you're Saudi, if you're a Qatari, if you're looking at that and go, I could be on the wrong side of the US at all. I cannot have my national savings frozen. So from that point, I mean, it's been building up before that. 2008 is actually when a lot of Eastern countries just started ramping up their gold purchases very, very clearly. That is a tipping point. 2008 was a big one, but February 2020 is where they made it explicit that their savings asset has counterparty risk now, hasn't had that in a long time, or at least it has, but no one's thought about it.

So there are only two assets in the world that are of the properties required to be that savings asset at a sovereign level and it's Bitcoin and gold, and Bitcoin's only two trillion dollars. It's not big enough for that type of flow. But the way I've often thought about this, we're going to, like, if I wind the clock forward five years, there are going to be settlements happening in gold bars. There are going to be like major transactions between governments where it is settled in gold. There is going to be, I think the dollar is going to remain the global reserve currency because there is no second best banana out there. It is the only one that really works for that structure. But the currency, the medium

of exchange component, like I like in Linn-Aldens framing. Sometimes you've got to hold the dollar as an asset to do stuff working capital, but you don't want to hold a lot of it. The savings used to go into treasuries, now they're going into gold. I mean, let's just, let's think about this. If we're transferring gold bars in planes all the time, right? And you need military personnel that cost you $5 million to send this thing every time. Like, you could also just send a Bitcoin transaction. There's going to come a point in time where Bitcoin starts to operate as like a liquid layer

that just sits on top of the gold. And they go, let's just use it for these transactions. Oh, this one. Oh, actually, you know what? That was pretty useful. That actually kind of worked. Maybe we should hold some of it. And just you start with 0.000,0001%.

And then the next thing, you know, you're at 2%, and we're talking about trillions. So, you know, I think it's going to be a gradual thing. But like, Bitcoin's a 10x better product. It's going to win because it's a 10x better product. So I just think it's going to hit that point. It is money for enemies and the world's full of enemies. So to me, it makes perfect sense.

It's just going to take time. Completely agree. And to that point, anyone has ever tried to do like an international wire transfer or something, Bitcoin is so much easier. So much easier. If you got staff in like Australia, and the U.S. and Canada and you got to pay them all. My God, is lightning and even on chain Bitcoin,

which is super cheap right now. Super, super, super, super 10x, easy better. I wanted to pivot for just a quick second, and I do want to get, I want the Uber bullish case, and I will hound you for the Uber bullish case, but I want to get your kind of thoughts on the Treasury Company mania, because I feel like, one, it was a mania, and I think that it's done,

but I'm curious what your view on that currently is and what you're seeing. And then additionally, one thing that kind of, I was curious, and there might have been any information regarding it is, speaking of holding Bitcoin, With regards to the custodians, where do you put rehypothecation risk or is there any indications that there might be some out there? People opt in a way to paper Bitcoin summer. But even just thinking about it, like, I don't think for one second that Coinbase doesn't have BlackRock's coins.

I'm pretty sure those are there. But I wouldn't be surprised to find out that they had like 75% reserves to like claims on the retail side or somewhere else. I'm just curious if you have any insight on that or anything you see that may be like mild cause for concern. No, so on the on the paper Bitcoin and there's two ways to describe paper Bitcoin. One is the derivatives, right? Like literally bucket shot people betting on the price exposure. That's a different thing. Paper Bitcoin in terms of Coinbase selling IOUs they don't actually have.

No, no. The risk is not that Coinbase doesn't have the coins. The risk is that Coinbase has over three million of them. The risk is they have way too many on them. All these, like there is an exchange out there that has unbacked Bitcoin and you've never heard of it. You'll hear about it in some random news story like BitTomato blew up. You're like, what the hell is BitTomato? Like you won't know any of this stuff. So sure, there's paper Bitcoin out there and it doesn't matter. On the derivative side, that's a different animal.

We can probably cover that in a separate section in the Treasury companies. You're right, was hype, no longer hype. My view on the Treasury company trend, and I wrote about this first in November at the all-time hire for strategy. I first actually went in, did the research. And my view was I'm pretty sure MNAVs are going to compress towards one, like for a variety of reasons. And the more that I looked at this, I was like, I think this is going to get really ugly for a lot of people. And that is more or less what has happened. I think we're in the smoldering ruins phase of that market cycle where just, I mean, it's a majority, I think now, of treasury companies trading below their par value. A lot of people discarded the closed end fund GBTC analogy.

turns out that's actually probably kind of right. I traded a premium for a while and then all premiums get arbitrage to zero. And people then realize, like at some point you realize, it's kind of better for me to have Bitcoin rather than a share in someone else's Bitcoin. So at some point in time, I know it's weird, right? At some point people go, oh, shit, maybe I, yeah, actually, you know what? My Bitcoin's kind of more useful to me than their Bitcoin in an IOU. Now, I do believe that there is a thing happening in the Treasury.

company space. Strategy is onto something of this like monetization of the Fiat system, right? Getting in there and absorbing bond market capital. That's a real thing. I think Metaplanet is in a unique position because of his Japanese position. I don't think Mr. Treasury Company 45 with 10 Bitcoin is changing the world. Like not really important. So there is a very, very wide gap between strategy 640,000 Bitcoin and literally everything else. So, you know, even if you run Bitcoin to a million dollars, right, there's a whole pool of these treasury companies with 5,000 Bitcoin.

Okay, good. You've now got $5 billion of capital. Who cares? Like, a $5 billion company doesn't register on like the 60th page of biggest companies in the world. You're kind of irrelevant. So you have to get to a scale that is just different and like it's massive. So there's a hand, I believe there's going to be a Pareto distribution.

It's going to be a very strong Pareto distribution. There will be some phoenixes that rise from the ashes. But the vast, vast majority of this long tail simply just has no place to exist. And they're going to start spewing out coins. Or they get acquired. But I also, like people say, oh, they're going to get acquired. It's like, that's a horrible idea. Because if you buy stock in this company, no one's going to buy the asset when it's trading

at a premium. They're going to buy it when it's the most distressed it's ever been. You're going to get bought out at the worst possible price. There's some of these companies that are even starting to sell their Bitcoin to pay down dead or maybe some that are going to have to sell to buy back their shares on my So you're telling me you bought Bitcoin at the top, you sold it at the bottom to buy your own shitty stock. I don't want to share in that. So I really think this Pareto distribution, the Forest Fire was necessary.

There will be some winners. There will absolutely be some winners and they're going to be real winners. But we're not going to have thousands of these things that we have to track. There's going to be a handful of winners that kind of win in this business model. And that's kind of it. Yeah, I completely agree. And I feel like any particularly any publicly traded company where it starts to trade below one. The MNF starts to trade below one. It's like you have every incentive basically than to buy it up and sell it for parts. Like you'll get more from the assets. So they'll just all get dismantled. And realistically, I mean, it was never in my view, my very like cold card holden view. It was never meant to be the business. The business was not supposed to be by Bitcoin. It was always supposed to be your savings vehicle. And it was always supposed to be reserved. Like I saw recently start nine sold some other Bitcoin for funding the operations. Like yeah, that's exactly right. That's what I do. Bitcoin is my savings account. It's not my business. My business is doing this. And as you

and consulting. So 100% agree. And James, we are making hundreds of dollars. Hundreds of dollars hundreds of dollars. Tremendous value fellows. And this like this is what we want to say. We want to see operating businesses pulling in greenbacks and buying Bitcoin with this. This is what it's all about. And by the way, that's an important distinction, right? We're a treasury company by the modern definition because our company buys Bitcoin as well. But it's like it's not, you know, we're talking about sale of playbook. If you're an operating business who just sweeps your profits into Bitcoin, Go nuts. Perfect. Exactly what we want to see. That totally sustainable. Converting your I sell widgets business that was also probably a zombie company, a bunch of Bitcoin has come in,

give each other a stock bonus, do a bunch of private deals, take it public and then start like pretending that they're going to buy 10,000 Bitcoin a week. Yeah. No, no, no, no, not happening, guys. I'm sorry to interrupt you, Nathan. I apologize. Go for it. No, no, no, no. I thought earlier because I jumped in on what you were saying. I just couldn't, I couldn't resist the joke. Yeah, geez, dude, what the hell? No, I was to say that like it was, it was like the ICU phase again, right? We always see these constant fear and greed, right? People were getting greedy and like, but you really step back and the way that you phrase that, you just step back and look, it's like, okay, rather than buying Bitcoin, you're going to buy someone else's paper equity so that they can buy Bitcoin, and this is

a good idea why. It's, it's, there's an extra layer to this. I've been of the view for a long time that the product, this is what a lot of these companies got wrong, they think the product is owning a bunch of Bitcoin. False. The product is how you would acquire the Bitcoin. Strategy, for example, their bond salesman. Their product is bonds. They sell bonds, wrapped up as preferred stocks, but they sell bonds. Is their demand for bonds? Yes, there is. Obviously, the bond market's like one of the biggest markets in the world. So yes, there's a lot of demand for bonds. They sell a product that the market wants, and they use those proceeds to buy Bitcoin. If you sell widgets and the widgets are 0.1% of your business model because you've got 5,000 Bitcoin and your widget model is very small.

Why is anyone going to lend you money? What is your mechanism to keep buying it? And the problem is that the only mechanism that they really have is selling equity, which means they want to sell the shares to buy the Bitcoin, which means you're buying the shares that they're trying to sell like they're telling you. They're literally telling you which one is the valuable thing by selling the one that's not. valuable to you. So like, just don't buy it. I heard somebody else make the case recently that it was similar to the dot com mania, you know, like Pets.com back in like the late 90s were like, oh, if you just put a dot com after your name or if you are a company that has a website, oh, you're part of this new era. I better invest in you. But the underlying company had little to know to negative value.

Like it's just this mania. And the thing with strategy, and this is why like strategy, it is in a unique position. I also don't think it's going to see an MNAV expansion to like three, because like how are you going to go from 640? Getting to 2x is a real, like getting a 1.2 mil, that's a big move. That's hard. Right. If Bitcoin goes down a lot, I can actually see the MNAV expanding more because they can buy more at a cheaper price. But like the thing with strategy is they also sell equity, right? But the difference with strategy is if you sell just for round numbers, if you sell $50 billion worth of debt bonds and you've got $100 billion worth of Bitcoin, and then Bitcoin doubles.

Your debt instruments devalue versus your pool of Bitcoin. And people can argue, but all these other companies can have the same thing. It's like, yeah, but they can only issue $15 worth of debt. They have no debt because no one wants to lend to them because they're a widget company. That's a zombie. So they're not big enough to actually play the Sailor Strategy Book. So that's the thing. You've got to get to a milestone where your product, the bonds, can be,

issued so that you can devalue them when Bitcoin goes and it's run. If you have no debt and no debt instruments when Bitcoin runs, you only have equity dilution. That's the only thing you have. That makes perfect sense. I just want to point out too on the Pets.com and the treasury companies that I believe in the video right now is twice the value of Canada. And while I'm not really stoked on Canada, we do got resources. That one might be a little bit out over at skis, but who knows? We'll see. I do want to jump at the derivatives before the bullish case. But Gary, let me get let you get in there, my friend. I mean, I got my big question at the end, which I want to ask.

So why don't you go ahead? Is it when moon? What is it? I mean, if you want me to go, I'll go. Okay, before Gary's big question, I wanted to, you were talking about the derivatives. This is an area that is a blind spot for me. I like tangently kind of get what's going on there, but give me the rundown. What are you seeing in the derivatives markets?

And why is it also important for us to pay attention to this? Yes, so derivatives are a very important part of any market of scale. as any asset like Bitcoin matures, the way to think about Derrida is there's kind of two main types. The futures and options, they're kind of the primary, primary ways. There's obviously 1,000-1 Wall Street instruments,

but they're the two key ones. Futures markets have historically been the dominant source of leverage in the Bitcoin space. Recently, they got up to be like $82 billion in open interest, which is massively higher than where it was in 2021. I think it was like $20 billion was the peak. And we saw a big de-leveraging,

So that sell-off we saw in early October, that was primarily futures driven. Now, futures, they're kind of, in terms of the leverage direction, they're basically levered long, levered short. Now, people can do things like basis trades, which is where they buy the ETF. This has actually been quite popular in 2024. People buy the ETF long, and then they short the CME future, which was trading at like a 10% premium annualized. So that basically means that they buy spot, they're long, and they're short.

they buy it 100,000 and they sell it 110,000. And then as the futures price closes and they get to December or whatever the expiration date is, they lock in that premium. So that has been a trade that's been in play. What is more important now for all of Bitcoin's history up until this year, futures have been much bigger than options. Options are now much bigger than futures, much bigger. And this is primarily because options went live on iBit.

Now, there is no second best options market. when you look at the options market for FBTC, the second biggest ETF, it's like 2% as big as Ibit. And Ibit has now surpassed Deribit as the dominant options place. So options are a much more complicated instrument. The best way to think about them is they're a market for insurance. You've got people who want to buy insurance. Could be to the downside. I want to buy puts.

In case the price falls, I want to be insured for everything below there. You've got people who want to insure for upside. It's kind of a weird concept. But if you like sold your position, but you're like sold your position, but you're still want to insure that position. So you still have the upside expanse. You might buy a call option because it's a cheaper way to get exposure for a period of time. There's also people who are selling insurance.

So if you think about how insurance works, if you buy insurance for your car and you don't crash, which means that you bought downside insurance and the price went up, you don't go back to the insurance company. Say, hey, giving back my premium. You understand that you've paid the premium for the service, which protected you for that time at that period of time. The sellers make their money on volume. They sell lots and lots of insurance contracts, and the idea is that some of them pay out, but the vast majority of them don't.

This is how Wall Street makes a tremendous amount of their money. They basically, when the price is trading sideways, they'll sell insurance to the upside, they'll sell insurance to the downside, and the price chops around in between, they just collect premiums. Now, where this gets really interesting is Bitcoin trades 24-7. The options market trades 10 a.m. to 4 p.m. Monday to Friday, not public holidays. So what happens when a bunch of people put on all of these trades and they sell covered calls or they do all of these things? Could be retail, could be Wall Street. There is going to be periods in time where the Bitcoin market decides to go massively up or massively down on a Friday afternoon. And there's going to be a bunch of investors who look at their portfolio and go, oh shit, I can't do anything until Monday morning.

and they can just all weekends stress over the giant red number that's going to show up in their portfolio on Monday because they can't do anything about it. So that is going to happen at some point in time. It's going to be a lesson that gets learned. There'll be blowups. There'll be firms that just get on the wrong side of this thing. And then we'll forget about it. And two years later, we'll have the exact same thing happen and play out. So I'm excited to see that volatility kick back in.

But we are going to see a tremendous amount of volatility changes. because of the options market. It's just how Wall Street players, many years ago, my market mentor told me, options on Bitcoin are going to be Wall Street's killer product. And given the growth rate of this thing, I fully believe it. Interesting. Would that mean like, would firms at some point in time want to have, like, dry powder on hand in case they need to buy or sell Bitcoin over the weekend?

Like, I would almost think, like, as soon as that happens, like, okay, we need a cash position to keep on hand and a Bitcoin position to keep on hand in case we need to tip the scales one way or the other. They're going to need, and this is where you get things like you may have heard about this in the GameStop saga is like a gamma squeeze. So basically the writers of those options, every option is a probability market. So they may say, let's say at 150K, they may be saying there's a 10% chance we get there, which means that to hedge their position, they might need to own 10 cents worth of Bitcoin for every options contract that they've sold. If the price goes

up to 120, they may go, oh shit, I think the odds have gone from 10% to 25%. I've now got to go and buy an extra 15 cents worth of Bitcoin. And if lots of people have done the same thing at the same price, that's where you get a thing called a gamma squeeze, which is as the price goes up, they have to hedge more, which pushes the price up, which means that hedge more, and suddenly you get this squeeze effect. So we were going to see like a compression of volatility most of the time because these options are going to milk Bitcoin for its vol. And then we're going to see there's explosions in volatility where it's going to come all back at once because everything its complacence says, ah, Bitcoin's going to go sideways. It's going to be 106K and $20,000.

28. Let's sell options. Like, don't worry about it. And then next thing, you know, away it goes. Beauty. Now, Gary, before we get to the Uber bullish case, which I am curious about, did you want to ask your question? Yeah. I mean, I guess it's all fascinating. This is beyond my pay grade to figure out all the details of what you're saying here. And I don't have the mental space for it, which is why I just buy and hold. And whatever's going to happen is going to happen. I do want to correct you on something James said if it goes to a million, when it goes to a million.

No, you're right. When. Yeah, I don't know when that will be. I don't have a timeline for you a year, five years, 20 years, 30. I don't know, but it will go. The math is inevitable barring a Black Swan event. And speaking of Black Swan events, as by definition, they can't be predicted. But we've seen that number go up does not happen as rapidly as it once did, which brings all the people back in to talk about it on the Twitters and on the Googles. Is there a type of event that you could see that would just stoke the fire of interesting. in Bitcoin, like, for instance, the Canadian trucker protest where it's like, oh, oh, here's a use case beyond just number go up. Oh, the government's going to try to strangle me. I better learn about this thing that gets me around it. Can you imagine a couple black swan events that would cause number go up or conversely, a couple black swan events that would cause number go down either by. Yeah, good question. I mean, I mean, Trump giving out stimulus checks is a pretty good start. Like, that's a nice place to kind of start this conversation, right? Like, honestly, like, for me,

I just think people just recognizing and coming to terms with the fact that there is government large, yes. Like one thing that I think is at least meaningful to think about, very hard to handicap. Everyone talks about this AI bubble. It's so obvious that it's a bubble. I don't know about you guys, but like I genuinely don't trust AI to do anything. It's never consistent. I can't use it for business purposes. It never does the same thing the same way twice.

You can't automate services with it because it's always making mistakes. It hallucin. Like I was literally trying to solve. this options problem. And I asked it, hey, can you tell me how much open interest there is for Ibit in dollar terms? And it went and just assumed a number. It goes, oh, yeah. If we assume there's like a million contracts, then that means that the open interest is this. I'm like, but where'd you get the million, million? Oh, you're absolutely right. I don't know where I got that from. I just made it up. It's like, I can't trust this thing. And I think there's a lot of applications,

like people asking it about like, what's this bruise? Sure. But people trying to automate a business to actually fire people to make their business more efficient, I just don't think that's happening anytime soon. I think there's major constraints there. And that is actually the business model that justifies your multi-trillion dollar models. These AI businesses are earning like single-digit, double-digit billions, and they're spending trillions in CAPEX and OPEX.

The math don't math at all. So the Black Swan that I think is like the one to at least, have on your radar, when this AI bubble cracks, it is going to tear down the economy, because Nvidia is the stock market and the stock market is the economy in the US. They are going to have to print a boatload of money to solve that problem. So down to go up. That's how I think about that. I don't know how that Black Swan plays out. I don't know when it happens. I don't know what price it is. The math has a math for a while. The math keeps getting less mathy as we move forwards. that's going to happen at some point, and I'm pretty sure they're going to have to backstop the whole system.

So that is where money gets just thrown at the wall. And it will be, I think it's going to be bigger than COVID, truly. This is where I think Larry Lepard's big print comes into motion, because you need something where the equity market, which is the economy cracks, and they just have to step in front of it because no politician wants to deal with that. And I think that's, I mean, the big print, that's what that looks like. I agree. And even just on that note, too, like when they did $800 billion during the great financial crisis, we thought that was a big number. And then that got dwarfed by COVID. And I think you're right. And the AI will probably dwarf this one again. And something that even just popped into my mind, too, that'd be curious to see how it plays out, is all these miners switching to AI instead of doing Bitcoin mining. That's a lot of infrastructure that we might get to take over for cheap if this thing crashes and burns, which would be nice, I think, for the hash rate for the networks. There's a nice sunny side of that as well, too. Yeah, I mean, for the miners, their advantage is they've got good power contracts. That's how they're getting involved. They were the first runners in getting cheap, efficient power.

But of course, you can't repurpose AI mining chips for Bitcoin. So it's, you know, in many ways, the difficulty adjustment forced miners to innovate and they're innovating. I'm curious, yeah, that one is a industry that I do not envy being in because it seems unbelievably difficult to be profitable as a miner. And realistically, I mean, I was having a conversation with Mr. Barber. from upstream data not too long ago. I don't think that mining companies are going to exist in a decade. I think it will be like a subset of other energy businesses, but not the primary purpose. That'll be like a way to recover some costs, but not necessarily be profitable.

Yes. And that's the thing. In many ways, that's actually a very decentralized way to do it. You've got lots of firms where it's like a part of their business, but they can survive with all the other things. And really, they're an energy arbitrage. They're arbitrage in the energy price of the Bitcoin price. And at some point, that makes sense for somebody, out there at some place. If you're mining methane off a landfill, it's always going to be cheap for you because your power is free. People keep making rubbish.

So, like, it, yeah, it makes sense for a lot of fronts. I totally agree. All right, James, we're at the point now where I want to get the, wait, go for it. One final question. Are you on your final question? Because I got one final question. I got one final question. You do your question.

Okay, my one final question then before Gary's one final question is, of course, we talked about the bear case and everything else going on here. But give me some good old price porn, some bull porn here. we the four year cycle appears over everyone has given up they've left we hit christmas and it's blah it's flat and no one's paying attention what would cause this thing to absolutely rip in the spring maybe going into the summer as well too and how high do you think it possibly could what is the bull case if we see the four year cycles dead yeah so the bull case in my view is like i call it chop consolidation but these long sideways grinds they just wind up the spring right they're just exhausting sellers they're transferring as i said before like these buyers whoever they are they're big they're not looking for a 10% pump. These feel like forever holders. So those coins just get taken off the market. We just run out of sellers.

The bull case is literally we just run out of sellers, which will happen eventually. It can be because the price goes down and suddenly demand comes in and just exhausts them all. Very, very possible. Down to go up is a very real thing. And in fact, the lower we go,

the more the slingshot gets pulled back. You put more tension in this thing, and then away it goes. Now, back in January, I wrote a piece. I use a variety of models that basically look at where did investors in the past? All of us have a portfolio value, right?

If I give you a $100,000, $200,000, $300,000, $300,000 million, if I keep ratcheting up the Bitcoin price, at some point your ROI is going to be so attractive, you're going to have to take some. And there's a lot of Forever holders like, oh, never sell. Okay, Bitcoin price is $10 million. You're going to sit there on your hand? Get out of here.

I'll buy a new mic. Totally. People are all going to sell, right? At some point, there is a level. And it's not a whole stack, but you are going to sell. So there is a level in the past where, on average, people generally get to about 3x multiple, and then they're like, I have to take it. And that 3X is an average.

It means there's a bunch of guys who are up 20%, but there's a whole lot of guys who are up 40%. So there's a spread of people, but the average is 3x. So because we can measure everyone's cost basis, we can say, well, what price do we have to get to for everyone to be approximately 3x up where they've historically started ramping up their cell side? Now, back in January, that level was about 150K. And I wrote at the time, I said, look, I don't think we actually have the capital inflows to justify a move.

We're at 105, I think, at the time. I don't think we have the capital flows to go to 150. If we do go to 150, I think we come back down here to 100. That's like my base case. We obviously stayed around 100, chopped around, went to 85. I then wrote a piece a couple of weeks back, maybe a month or so. And I said, you remember those capital inflows? said we didn't have. Yeah, we kind of got them now. So like 150 to me is like fair value at

this point. That's where I think we belong. I think we deserve a run at 150. And the cool thing about is that this chop solvation phase, the sideways grind as capital comes in, the people who are buying at 95, they don't care the Bitcoin traded at $10 back in the day. They don't care at a $1,000. Their cost basis is Ibit at $65. That's their cost basis. Their next like their run is going to be up towards 120, like a 2x, like 200 starts to actually come into view. 150 didn't make sense back in January, but it now makes all the sense in the world right now, which means 200 starts to look like a bit of a stretch target, right? Maybe we can get there and then pull back to 150 or 140.

So honestly, I think the bull case is that the bears have sold more coin than they've ever sold ever, ever, full stop. And we're down 16%. From an all-time high, we hit 36 days ago. that's the bear the bull case is like the bears have no goddamn stones the bears have no firepower to take us lower this is like if you compare this dip to the one in 25 and the one in 24 this dip is the least bad of those three and they've executed the most amount of cell side the bull case is that the bears are wrong the bears are really really really wrong and like 150 feels like we just it's where we're

going right that's where gravity's going and then everything above that's going to be just fun I can't wait to the fun phase again. I just want to point out because I looked it up from earlier. I believe it was something like 602% of coins were at like cost basis of 95K. So there are 3x is 270. And that just looks wonderful to me. Totally. And I think yesterday I checked it. So I look at like on a probability distribution. Above from memory 200, 200 is where 10% of all trading days in bull markets have been higher. So if you think about that from like a probability standpoint, There's a 10% chance we get to 200 in this ball.

10% is not insignificant. That's like, that's meaningful odds. That's not roulette. Like, that's winnable. Once you get up to 240, now we're in the 5% rare air. But let's say we go to 150, 160. We chop around there for another eight, nine months. The capital's going to come in.

That's 62% that's above 93 is going to be 45, 50% that's above 120. And then suddenly we reacclimatize and no one thinks about $20,000 Bitcoin anymore. I don't think about $2,000 Bitcoin people are going to stop thinking about $60,000 Bitcoin. It's going to be a distant memory. And suddenly everyone just becomes like, oh yeah, 100K is like, damn, I'd love to buy it 100K. I wish I bought it 100K.

You know, like just we reset. And next thing you know, like everyone's like, oh yeah, a million dollars. Like, yeah, 10% of all trading days have been in a million dollars. Like, let's go. You know what I mean? Like, it's a process. I love it.

Gary? Yeah, my question is way more important than Nathan's. why do Australians have an R at the end of no? You know there's no R at the end of that word, right? As in like, yeah, nah. NAR, there's no R there, right? The thing about Australian slang, or just Australian lingoes, we stitch every sentence is one word.

Like, every sentence is one word. That's just one word. We don't put full stops. We don't put spaces. Our whole English sentence is just one word, full stop. So I don't know, we just speak fast. It's kind of interesting, actually. I had a conversation with Dave Pugh.

We spent nine months living in Mexico. And we're living with him at the time. And we have this long conversation about language. And you would think, like if we think about Bitcoin as money, it makes a lot of sense for everyone to use the same money. For obvious reasons, there's network effects. And it's a pain in the ass for me to have to get dollars and Canadian dollars and New Zealand dollars and pesos. And like, it's a pain in the ass. we all have one currency to be better.

Language is the same. It doesn't it make sense that we all should speak the same language? And then Australians, we start to deviate from the English, the Scots. They've deviated from, like, inside, like, two different suburbs in Ireland. They speak different dialects. It's amazing that language, which by all logic should converge, actually diverges. It's an amazing property that's just like it's counterintuitive. People want, like, whether it's a tribal thing, whether it's like a protection,

protectionism thing, whatever it is, it's one of those natural phenomena that wants to diverge and find its own rhythm. Now, interestingly, in Australia, the dialects are, like, fairly similar. The only one where I've, like, really noticed it's, like, distinctly different is Tasmania, which is, like, a forgotten island at the bottom of the country that no one really talks about. And Western Australia, which is, like, in the middle of the desert, that is just the furthest away from anything of any city anywhere. So they're the only two spots where it's only slightly different. Most other place of Australia, it's pretty, pretty consistent. I can't explain the odds. That's a really interesting observation, because I've made the comparison for Bitcoin to language as

well, too. But now it gives me like a new thing to kind of chew on with regards to, like, why would people be so stuck in their crypto bubble and not come over to Bitcoin? Well, that might just be that they don't like their Bitcoin tribe. It could actually just be identity and tribalism of why someone's just like, Manero will one day win. ETH is the only way out of this and the goddamn XRP army. Like, it could just be human tribalism instead of speaking, you know, like Canadian English, they're going to stick with the Aussie version. Totally, totally. And the thing that is, I think, the most interesting about that is within the crypto world,

like, why did English become the bridge language? People in China, if you need to learn like a second language, choose English. If you live anywhere in the world, it's the language of business. So why is that? The internet. The internet was the first time that we had a communication protocol that allowed the exchange across all countries. And English is like the Bitcoin of language,

where it's the one that won. Like even if you like your Ethereum and your XRPs, you're a clown if you don't understand that Bitcoin has already won. The gap between Bitcoin and literally every other coin is trillions of dollars. Bitcoin has already won. So like, ether's going to win and Bitcoin's going to die is wrong. Bitcoin has already won and I kind of like Heath.

I disagree with that position, but I get that a whole lot more than ether is going to win and Bitcoin's going to die. That makes no sense. So, you know, Bitcoin is the English of that whole concept. I love it. Us Commonwealth countries will win with the U.S. I suppose. So beautiful.

James, this has been absolutely fantastic. A ton of fun. Please tell everybody where they can go and check out your stuff. Check out the newsletter, the charts, the works. Good on your lads. Yeah, so you'll find me over at checkonchain.com. We've got a newsletter we do two a week, written and video, usually half hour video and about two, three thousand word posts.

And then the charting website is completely free. If you want treasury company, derivatives, on chain, you name it. We've got pretty much every Bitcoin chart you could want, and it's all available for free. So you'll find it at checkonchand.com. Hey, you. Yes, you watching the Bitcoin price movements and the latest exciting news. It's awesome to stay informed, but the real power of Bitcoin comes from taking control. Don't just watch, take action. Head over to btcsessions.ca.ca.

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