TFTC: A Bitcoin Podcast - #713: Bitcoin Was Warning Us for Months with James Check

Episode Date: February 7, 2026

Marty sits down with James Check to discuss the current Bitcoin bear market, where on-chain data and mean reversion models suggest we're in the bottom fifth of the cycle, why capitulation is a necessary process, the quantum computing FUD, the role of gold as portfolio ballast, and why staying convicted through the storm is the only rational move if your decision tree says Bitcoin isn't dead. James on Twitter: https://x.com/_Checkmatey_ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Bitkey https://bit.ly/4pOv2L4 Promo Code: TFTC99 Unchained https://unchained.com/tftc/ SLNT https://slnt.com/tftc Lygos: http://bit.ly/3ZtQLwp Salt of the Earth: https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. James Check, we meet here in the bottom fifth of the spare market of this capitulation. Where are we? It's time for the eulogies, mate. It's Bitcoin obituaries are going to be flying left, right and center. Peter Schiff's having the best day of his life. Bitcoin has died once again.

Yeah, mate, here we are. It's amazing watching. I mean, socials, socials are just a cesspool at the moment. It's just noise, everything. But yeah, look, it's a hell of a sell-off. I think a lot of people are probably caught by surprise. At a minimum, getting down to $70K wasn't too much of a surprise. I think a lot of people are now shocked that we're back in the 2024 chop consolidation range. We're trading at like $63K as we speak. But as you said, if you look at things from a mean reversion perspective, I know you had Matthew Mazinskas on recently. You can look at power law, you look at realized price, you can look at 200-day moving average. And the 200-day moving average, in terms of the deviation we are below it, only 4% of all days in Bitcoin's history

have ever been further below the 200-day moving average. All these mean reversion models, I checked a bunch of them this morning, we're in like, you know, 18% of days are lower, 15% of days are lower, 20% of days are lower. So we're like in that bottom 20% of a lot of these long term mean reversion models and i mean look my general framework there's a lot of people my inbox is just absolute chaos i got people coming at me from all angles terrified scared dms are going crazy um that's usually a good sign that we're at we're at the real fear part right people are now questioning their thesis bear markets are a horrible thing because they just keep going until we run out of sellers you just got to exhaust the sellers and there's some combination of price down

time pain um and also just people watching their unrealized profits get eviscerated some combination of those and i want to add in another one we could probably talk about this but uh parabola envy i think the thing that actually like i know i know crypto minced people i know treasury companies mince people but you know what really just like caused a mental rift is watching gold go up people just got smoked by watching gold go up because there was this expectation that the world was going to choose Bitcoin on round one. The Romans used gold, guys. I'm sorry, they weren't going to choose Bitcoin round one. But I've just got this simple framework. Look at a decision tree. If Bitcoin is dead, this is a fundamental question. If you truly believe

that Bitcoin is now dead and the path is towards zero, then this bear market has no floor. And therefore, turn it all off. Walk away. It's over. Who cares? None of this matters. If, on the other hand, and I would wager that pretty much everyone listening to this, except for you, Peter Schiff, everyone listening to this believes the other path, which is it's probably not dead, then you go, well, where are we in the bear? We're in the bottom 20% based on every mean reversion model you can possibly imagine, technical, on-chain, the whole thing. Are we at the bottom?

Who knows? This is probably likely to inspire some capitulation based on the fear that we've got. We've got a lot of the recipes in there and the ingredients for creating that capitulation. It'll take time. it'll probably go down more it'll be choppy it'll be painful you get bear market rallies they get the hope back in you'll buy that rally then it will sell back off again it's gonna be a process but unless your decision tree is a bitcoin is dead this bear market has an end and we've done a lot of the work in my view we've done a lot of the work i used in my

my piece recently i used two analogies one i like the idea of like the bison bison when the storm comes a snowstorm or a storm they turn and face it and they basically go through it because it's the fastest way to get to the other side or everything else runs away from the storm it gets rinsed the whole way and the other one is you've got your you know your mate on a desert island and he swims 80 of the way back to shore gets tired decides to turn back around it's like go the last 20 push through yeah i think what do you see on chain in terms of the archetype of seller out there because i think there's a lot of speculation obviously i'm sure you've seen on x over the last couple days many are saying by bit and binance are blowing up

there's bodies that are about to um surface on top of the water dead bodies at that uh is there any validity to these theories in your mind um look i i've not done enough of a deep dive to give you like a, I'm very confident what I have, like I had a quick check. Finance had like a 0.5% outflow of their Bitcoin. Like it doesn't look insolvent to me. Again, you know, I'm not going to make a claim about what's going on the inside of Binance, but I'm pretty sure they have a regulator sitting in the office, you know, tracking all this stuff. So, you know, this to me feels like people looking for a reason for why we're down. Lots of people want to know what's the news? why is price down price is down because the bear market so um from a just like a big picture

perspective for the last couple of probably months since uh i would say at least november i've been talking about this thing like air pockets how many times have you and i talked about air pockets and for those who don't know what i mean by that in the on-chain world you can also see in the technical world if you look like a volume profile um where you've got long periods of price history lots of coins change hands lots of demand has been there people have traded the coin, people have traded the asset, true for all assets. In the on-chain world, we can then see, well, where do people still have a cost basis? Where do they buy their coin and still hold them? 80% of all the dollars that are invested are well and truly underwater. It's

probably more than that now, actually. And then there's a chunk of about 10% of the supply in the 2024 chop consolidation range, between like 50 and 70. Between 70 and 80, which we just broke through, and I think this is actually an important element for people to get head around, breaking through that 80 floor, you probably noticed there was a shift. People now accept that it's a bear market. We got to that final stage of grief where people now accept. Why was ADK important? First, it was obviously the low set in November, and people were hoping it was like a one and done sell-off. Printed a bear flag, bear flag, send a break lower. But the other thing is there's an on-chain model called the true market mean, which is really, statistically speaking, the middle of

the Bitcoin cycle. It is the long-term cost base of active investors. It gets rid of Satoshi and lost coins. And the more dormant a coin is, the less it's considered active. Coins that are moving around and transacting, all those hodlers who sold, that's what's beautiful about this stuff. It will auto-correct because those old coins that were previously discounted come back to life and we now know they're alive. So 80K is about 81, but 80K was that average cost basis for everyone. and it was also 82 and a half is the average cost basis for the ETFs. So breaking below that level,

suddenly everyone realizes that everyone's underwater. It's like a common knowledge event. Everyone now accepts it's a bear market. And that supply air pocket between 70 and 80, which had no price history, like it just shot straight through in November last year, no, 24, just shot straight through. We never really tested it during the tariff tantrum.

And these things, I don't know why it is, you know, same as CME gaps, they supply airpods they just want to get backfilled back in 2022 the air pocket that we had back then went from 30k down to 10k where do we backfill 15 right we backfilled the vast majority of it so from my perspective the move down to at least 70 was very predictable um just because it's bitcoin just does these things you're in a bearish trend bear flag supply air pocket and i described in my piece yesterday i think the easy part of forecasting this bear is now over and what i mean by that as we were breaking down from 110 i think we spoke when we broke through

110 i said if we go below there the risk just compounds exponentially until you get to 95 once you're at 95 you're probably going straight to 80 and you know you get your framework becomes before that that part was easy enough to at least have a framework for the air pocket down to 70 also easy enough to have a framework for we're now in that law again that last fifth of the price action i would i mean based on mean reversion stats whatever we're in that last fifth of the price action where you've got to hammer out a floor you've got to find where that bottom is it's a process it sucks everyone now believes it's going lower everyone's now lowering their price targets everyone's now pulling their bids everyone's gone and what will happen this is what

I've been waiting for for a long time. You want to see the capitulation on the on-chain side of things. You'll see a massive week, couple of days, whatever it is. The ETFs will just be flushed. You will see so much panic and fear when this happens. Realize losses are going through the roof. We're already seeing right now long-term holders who bought the top and have huddled through this whole thing. They're now starting to capitulate. Their losses are starting to spike higher as well um all this stuff it sucks but this is how bear markets end process just push through to the other side because unless your decision tree is bitcoin is dead things gonna end and it's a journey between here and there yeah no if you look at the the backdrop of

the macro landscape as well particularly here in the united states you're looking at case schiller pe ratios near.com bubble levels you're seeing a bunch of deleveraging with this geopolitical uncertainty that's out there and uh it just seems like a chaotic time and you get the epstein files you got the ice stuff going on here you've got greenland venezuela russia ukraine very uncertain yeah yeah what's not to love like why wouldn't everything be going straight up in a vertical line yeah and it's uh it is a crazy time uh in markets and bitcoin and that's what i think would really riles up the animal spirits too because you have not only the uncertainty of where bitcoin's going to find its floor but you have this external uncertainty that only seems

to be building as well it seems like a big get risk off the table moment globally yeah and i mean there's a very reasonable and rational interpretation that bitcoin was just telling the world that this was coming for months been saying there's something wrong out there it just ain't going all well and it was kind of masked by there's a bunch of capex spend in ai pressure metals are doing well. Everybody's like, you know, stock market's kind of hovering around all-time highs. And a lot of people just, you know, the human condition is people want to be optimistic and long. That's the default position. So when you see Bitcoin doing something, you're like, ah, it's just Bitcoin. It's like, no, but what if it's actually information? What if it's

actually telling you what's going on? Likewise, we've got this bear flag. How many folks and just, you know, markets are a psychological journey. Something that I have learned and I think is really valuable is it's like a market lesson. The only thing you can control in markets is your decision so whenever you're feeling something it's generally because of a decision that you did or didn't make you can only control your decisions right markets are just purely information and your emotional response to it is a function of the decisions that you made up until this point so when it broke 80k and you get this like sinking gut feeling is that because you never thought 80k could possibly go there was some reason it couldn't go and people ignore that it looks like

a bear flag retested the short-term cost basis and failed at 98 there's all these things like it kind of looks like it's not going higher anytime soon so then when it goes below 80 you know this is how i like to think about things sure my net worth goes down but i'm prepared for it i'm just like i'm mentally getting ready and i'm not doing anything stupid so i don't regret my decisions of just buying a fat stack thinking 80 is the bottom and then it goes lower you know having that plan in place and just saying what could happen um there's this story about this we did i was at the um uh conference here in australia and would have been after the adk sell-off and uh this i did my talk and there's a bunch of people around me asking questions and this bloke

comes up to me and he goes uh i've done something stupid i said oh yeah and he goes yeah i started leverage trade i said oh that is stupid right a bit of a chuckle and he goes um yeah i kind of put my like house money into a perp at 110 or 105 or something and like liquidation level at 70 and i was like matt i can't like i can't give you a tip for that but all i can say is like 70k is in play don't if you're going to regret something going to 70k he's going for whatever you got to do go through the motions but like got to prepare for these things even if they suck get out of that trade i hope he got out of that trade it's well well he's out now Yeah. So if we're in a bear market, I think a lot of the discussion is, are the four-year cycles just replaying? Was it a gotcha moment, getting to 125, not going as high as many people thought? People thinking the institutions are here. We got the green light from the US government. Bitcoin is here to stay. It's going to be implemented into the financial system.

there's no way we're going to have these four-year regimented cycles like we've had in the past it seems like that may be playing out and in terms of finding a bear market bottom and crawling through that bottom do you expect it to be similar to cycles past where we make it to the next having and then six months later things start creeping up again yes i mean my general framework so first things first i i do not like actively look at the four-year cycle and say this is how i'm going to design my analysis. Because in my view, I think it's anomalous. I think we've got a bunch of series of beautiful coincidences. You can explain just about everything in the Bitcoin market structure. Some cliff notes, 2017 was just a pure organic market. People are speculating on

everything under the sun, like pure parabola. Barely had a trading view chart at that point in time uh you can look at 2018 we've got an overhang from a 100x move and many 100xs and everything else was in that in that cycle and also no one really knew what bitcoin crypto was going to be 2019 you've got the plus token ponzi followed by the distribution by the chinese government of those plus token coins then you got covid and the stimulus then you got rate hikes and ftx and just a complete evisceration of the lending markets um you know you choose your weapon um economy doing good, economy not doing good. I think you can explain just about everything. 2025, why we stopped going up, a bunch of people sold. Why'd they sell? Doesn't really matter. They sold. From my

perspective, we're looking for, whether it's on a four-year timeline, honestly, I think people get lost in the source just saying, oh, it has to bottom in October, must bottom in October, November, always bottoms in November. Maybe, but if you take away, it must do this thing. Don't impose your expectations that it must do this thing. What we're looking for is that capitulation event where there are no sellers left. The only people left in the trenches are people who actually want to own and hold Bitcoin. And we'll get there. Again, unless your decision tree is Bitcoin is dead, you've probably turned off the pod. If it's not, then at some point, we're going to flush out all the long-term holders who bought the top, put all the bear, and they all sell at a loss at the

same time. Short-term holders will get washed out. And really, I don't know if we'll see this. We may, but I don't think it's as likely, but it's nice to have. The third thing that happens at the bottom is you get long-term holders in profit sell because they're afraid it's going to go lower and they're cutting their losses. They're afraid that their $20,000 Bitcoin is going to get hit that level as well. So you see people take profit at the bottom as well. That's like your perfect capitulation signal. I need to check the data this afternoon to see whether we've got something like that i don't think so but um that would be a good signal that it's it the low is truly in do you think there's any treasury company overhang as well oh no no question now i mean i don't think

and again going into the deep dive of like you got to study each one of these things in depth and frankly i just don't care enough to do that uh strategy is gonna be fine they've got a you know billions of dollars of cash they can service all the dividends so i think strategy is fine you made a plan it's the like they're gonna be fine that once you go down the list and you get beyond the big ones. The market, to the best of my knowledge, the market just didn't really give these companies any leverage. There's a bunch of pipe deals, which means a bunch of insiders got cooked. There's a bunch of the initial hype cycle and equity sales. But a lot of it is just like it's going to come out in the share price, less so in the fact that the company has to sell all

the Bitcoin, even if they do. I don't think there's that much coin there to be sold. And you know what this reminds me of this is just your 2026 version of the minor capitulation that happens every cycle right the miners huddle all the way into the top now the miners are fine because they've got ai revenue and stuff ticking over in the background and we'll see if some of these treasury companies consolidate i mean let's face it it was it was a silly idea i think everyone's kind of aware of that there'll be some phoenixes that rise from the ashes but this idea of thousands of treasury companies i'm just not i just don't think it's makes any sense so we'll see some consolidation we'll see a bunch of them capitulate but i'm not too concerned about that being like a

ftx grade you know send it all to zero type event yeah yeah i mean they have the ability to be a bison and run through the store storm and just sit tight and do nothing as long as you have any debt and you get no leverage creeping up you just need to run whatever zombie company you had before and just you know keep treading water so freaks this rep was brought to you by good friends at Ligos Finance, Celsius, BlockFi, FTX. They took your Bitcoin and gambled it away. Ligos can't because they never hold it. Non-custodial lending on Bitcoin's base layer. Your keys, your collateral. It's verifiable on-chain. Go to ligos.finance. Tell them that TFTC sent you. So freaks, if you've been listening for a while, you've probably heard us all talk

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for you freaks, okay? February only. You got 28 days, not a leap year. I'm pretty sure. 28 days you listeners tftc listeners can get bitkey for 99 using code tftc99 at bitkey.world that's b-i-t-k-e-y dot world use the code tftc99 and you're going to get a bitkey for 99 i've seen you go back and forth uh on twitter asking critical questions about the quantum fud out there oh yes and i saw a thread of yours i think it was a few weeks ago or a couple months ago about it um and obviously that there's opportunist out there who are looking at the price going down. See, I told you, we got to be worried about this quantum risk. We need to change Bitcoin. That's why the price is going down. What would you say to the people attributing this price drop to fears of quantum

at the institutional level? Yeah. No, it's not like, so my general view, let's just start with my general view on quantum. So I've spent meaningful time, again, quantum is one of those things where if you know what's going on with quantum i think you're lying because no one knows what the hell is going on with quantum no one no one understands this uh i've done enough research to at least satisfy where my current thinking is at i do not believe that quantum is coming in the next two years i think that's not happening uh i also understand that there's been meaningful developments in the field right they you know talk about logical qubits and error correction, all this kind of stuff, different fidelities of these things. Again, if anyone

pretends to understand this stuff, I think you're lying because no one understands any of it. I think there is a credible case. So first of all, there is no question some people are not allocating to Bitcoin. Some of these big TradFi guys will probably just sell because very simply, if you don't understand something, you shouldn't own it. And if people don't understand the risk of it to their portfolio, they're probably not going to own it. So there's going to be capital on the sidelines and capital that's selling no question because of quantum there is no chance in my mind that it is the thing that has caused us to go down to 63k right i just don't i just do not believe that that is the reason we're in a bear market we saw a tremendous amount of sell

so it's going to take months for all of those coins because remember when a long-term holder sells right they've sold to some new guy he's probably not going to huddle it it's going to go to the next guy and then he's going to capitulate lower he's going to buy the dip not the dip not the dip keeps going eventually those coins will find a cold card so my general view is it's just going to take time to absorb that like digest all of the sell side so you know again more than i have to check the numbers more than 80 of the dollars invested in bitcoin are underwater that's a lot of people it's a lot of capital like it's nasty there's a lot of people who are going to be panicking. I've got multiple messages this morning saying, I'm terrified. So that's where

we're at. So let's go back to quantum. I'm of the view that there's obviously two issues when it comes to Bitcoin and quantum. There's what to do with the lost coins, and what do you do with quantum secure algorithms? Lost coins, if I can just put one like, let's actually think about this rationally, the lost coins debate is going to be the least productive, most destructive, we will never ever reach consensus on that all breath spent on that before we have solved the other part which is the quantum secure address concept is just people arguing on twitter and it's just going to be a distraction so on the probably more important issue we have to as bitcoin be able to give people an option and this is where you get to a fork in the road there's

many folks credibly who say there has been no progress in quantum and from measurable like what are the problems that they're solving has shaw's algorithm being run the answer is no but could it be run if they get there yes and this one of these ideas that if because right now with the quantum the qubits and all this stuff there's too much error to actually run shaw's algorithm in the first place so they kind of got a when they do factor 15 or 21 they kind of have to like give it the answer be like hey look it solved it so but once you get to a certain if if and once you get to a certain level of fidelity and noise reduction suddenly shaw's algorithm can start doing stuff now i would suspect that we will see that incremental progress

but then you have the problem of it takes time to upgrade bitcoin it takes time for us to argue online it takes time for us to move the coins so from my view the most sensible thing truly is to look at what they do. I think BIP360 is very sound because even if you pretend quantum isn't a thing, just pretend quantum isn't a thing, BIP360 actually makes Taproot better.

So BIP360 purely as a sensible update to Taproot makes a lot of sense. And for the Ray DeLeos out there who don't understand it in the first place, you can now say it's quantum secure because they don't care. Like that's, you've done something.

You've shown that we've done something. i actually think that supporting bit 360 makes a lot of sense because it's totally benign from like a bitcoin without quantum perspective um it makes a lot of sense because it just like makes taproot a bit better and you're then going to waylay a lot of these fears by the folks who don't understand and still won't understand but they'll believe it's solved so you're going to solve that element just by actually doing a sensible upgrade that is useful even without quantum and then you argue about like what happens when quantum comes live now from my perspective first and foremost do not reuse addresses because you want to be quantum secure don't reuse addresses

as long as you're using like segwit modern wallets you're not using legacy pay to pub key your coins are safe the only place they're not safe is if you do address reuse and in theory short-range attacks in the mempool but let's let's be real here is google going to invent a quantum computer and hack my thousand dollars i'm trying to send from my dca into my wallet no no they might go after like binance moving their massive hot wallet but like finance has got engineers that are going to be aware of this i think they're going to solve for it if we see the incremental steps then you go down the path of saying do we actually need like quantum secure signatures let's just start with something like bit 360 makes a lot of sense to me um makes

taproot better even without quantum way later fears keep working on and preparing for and planning for so even for the quantum naysayers i think it actually makes a lot of sense to have a plan have a credible plan there are people working on it this is great i disagree with a lot of this rhetoric that like the developers are just completely asleep at the wheel it's like they literally had a quantum conference like they're writing quantum papers sure some people don't believe it i don't frankly i don't believe it i don't know how anyone kind of can it sounds all a bit fantastical however we should at least account for the threat if we think about things in terms of a risk matrix what is risk consequence times probability probability i'd say is almost

nothing but the consequences is really bad so therefore you have to weight that thing and say we at least need a credible plan nothing wrong with having a credible plan in motion on the table ready to go and then what would people that want to work on this so that's my angle yeah i think the big if thing around quantum specifically like to your point i was following a thread that you were in with um charles earlier today and it's just like yeah he was i mean my observation seemed like it was giving like roundabout like beating around the bush but it's like if you're handing the sort of quantum researchers like a hard coded variable that gets them to solve a logical qubit or factor 21 i think it's like you're cheating so you don't actually

have actual quantum but to your point if it is a worry i think bit 360 is the best way to do it right because it's opt-in so for those who are unaware bit 360 uh put forward by hunter beast would basically allow you to manipulate a script in the tap leaf that creates an address that you put bitcoin in that is quantum resistant yeah because taproot by default exposes the public key i think they undo that and makes taproot quantum secure great and remember i i think what's really important the the the fear merchant side of this whole thing credit to it it has sparked the conversation good that's excellent it is now in my opinion well over its skis we're now at the level where it's like the the coins are gonna get market dumped and it's happening in

two years and you know 15 researchers who are paid by quantum firms believe quantum is coming that that one of my big issues with it and i spent a lot of time with gemini and grok because how else are you going to bloody search this stuff i'm not going through all the paper people seem to like you know avix research papers you're like i'm not reading that get out of here i'm a quantum physicist um so i basically just talk to the lms test them against each other see what they come back with the general framework and i've read number of articles just saying like you know, quantum is bullshit. And the consistent feedback that I got from the LLMs, both of them, and they kind of checked and said, I generally agree with each other. The general feedback was

up until like 2025, pretty much all the critique saying it's all horseshit was true and very credibly defensive. There's apparently been some updates in late 25 about error correction and all these things, which starts to look like maybe that's now an engineering problem rather than a can't be done problem so that's why i think at the minimum even if you are skeptical um spend half an hour just pinging these llms and just like see what it comes back with because i actually found it quite useful in exercise um a good use case for ai i suppose um but again like i think this doom merchant side of like everything's gonna get market sold and bitcoin's dead because of quantum and i actually think we're now well and truly into the counterproductive stage because

a lot of the evidence a lot of the evidence that is proposed is quantum company says quantum is coming quantum expert who works for quantum company says quantum is coming we surveyed seven of them so they all think it's coming they're also paid by a quantum company you can look at some government bureaucracy agency committee says quantum is coming who's probably advised by those same experts who work for the quantum company there's like a whole lot of things with like this guy this smart dude over here said it's coming and the skeptics go well i understand that there's a bunch of people who say it's coming can you factor a number bigger than the fingers on my hand can you do this and you know maybe there's breakthroughs that need to happen but the gap

between where we currently at and what is needed for breaking ecdsa is quite large there's assumed growth rates and expansion rates and again i'm not smart enough or deep enough in this stuff to properly handicap it but if i just think about this from like a pragmatic if i was an engineer and i was going to just solve this social problem have the plan this bit 360 looks pretty benign solve some stuff that we need to do anyway waylay the fears and get the conversation moving and just keep an eye on this thing and once we get developments we should already have a quantum secure signature scheme planned out mapped out bitcoin is going to upgrade you know like i mean if it really comes to fruition and they start cracking keys yes i will support giving people

an option to have secure bitcoin like i'm not going to nuke my own net worth and i'm sure there's a lot of bitcoins listening who do the same even if you're skeptical the moment you see a key start getting cracked and then the next one getting cracked you know you're on that journey and if you you want to have the plan ready to go before that happens because then there is no capital that can say i shouldn't invest in this thing because of quantum just that the whole thing goes away yeah it's uh it's exhausting because it has been fun for quite some time people have been focused on it within bitcoin which in the development community as you mentioned there was a whole conference about it last year but then like to your point it's like

99.8 percent of climate scientists agree that cataclysmic client climate change is right around the corner nine out of ten dentists say you should use this toothpaste it's like okay what are the incentives behind all that but yeah correct so look i mean i think risk consequence times probability consequences dire probability is not large some will argue about that's where people can debate the end of the day what's the correct solution in my view start the process have the plan be ready waylay all the fears just show that bitcoin is going to be fine and what what case is there against it just nuke the fud with really you don't even have to probably change bitcoin bit 360 sure we can debate whether we do that but like you don't have to roll out quantum

secure signatures until there's like a known threat we just need to have the plan ready well i mean that's having talked to jonas nick and mikhail kudinov who wrote the um hash based quantum resistant or hash based signatures for bitcoin which would is a way to bring quantum resistant um addresses to to bitcoiners you think about like all the standardization that's been built around hardware wallets and coordination via multi-sig lightning channels like if you just it's it's not an easy lift and the uh the people flooding uh bitcoin because of the quantum risk and under appreciating that sort of massive lift of standardization and transition that will be necessary on the other side if you sort of rush toward a quantum resistant um address structure

is not in anybody's best interest at the end because that's the other risk too if you rush something and it's not a not a big as a it's not as big of a threat as we thought it was maybe we have 30 years 50 years maybe it never comes and you make all these rash changes uh that that severely deprecates the user experience of Bitcoiners. They have to factor that in as well. Yeah, exactly. And, you know, at the highest level, you segwit coins unless you're reusing addresses

and you don't expose your ex. And this is the other thing. There's a whole series of things that, just from a user experience, right? Ex-pubs. Pete McCormack had his whole thing where he's like, ex-pubs, the hell's an ex-pub? And rightfully so.

No human alive should really need, like just a typical user should ever need to know what an ex-pub is. how many people have put your xpub into a tax accounting software that just tracks your bitcoin wallet guess what if that tax accounting software gets hacked and quantum comes to fruition all of your coins are now exposed right public key is exposed so there's stuff like that that just completely nukes the user experience of this whole thing so consequence massive probability up for debate solutions gonna take a long time to roll out and i think to to the credit of the

the folks who are pointing this thing out because of how big the lift is. That's why you need a significant lead time, which is also why you probably don't want to wait for it to start like cracking keys that are close to Bitcoin to do something. It's going to take a long time to do this. But I also think a lot of the, in my view, the rhetoric around we should do absolutely nothing is wrong. The rhetoric that we need to do everything tomorrow is wrong. The answer is somewhere in the middle, as it usually is. That gray zone is really what we should be talking about even if you're skeptical of quantum just consider the magnitude of the risk and then even if you are for quantum telling people that satoshi's coins are gonna get market dumped on

a tuesday next week is completely and totally counterproductive you're actually wasting everyone's time by making people dislike you therefore your message stopped getting heard it you know work within the middle here because that's how you actually get to a solution yeah and i think the developers focused on this product problem have been operating in that middle sort of middle path that's the engineering that's the engineering path you got to find

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morning last night for you uh 55k was that the long-term yeah so yeah so give a bit of a road map of where we are um so uh we're in the 2024 chop zone we're at 63 almost 64k now uh this is underneath the 2025 zone uh this is the next biggest supply cluster transfer volume trade volume like this is this is where bitcoin spent eight months every time it went below 50k which is about a trillion dollar market cap the market bid it right so on the downside we've got the realized price this is the average cost basis for all coins everyone satoshi the whole lot um that so uh the realized price is derived from the realized cap and i'll explain what these things are for folks in the audience the realized cap is actually in my opinion the most important metric

in Bitcoin, because it is a measure of how much people have saved, actually dollar value saved in Bitcoin. The coins you bought back in 2019 at 8K, they're saved at 8K. They're saved at the price when they were last moved on chain. Not a perfect measure, but even if you run the most magical entity adjustments and all that kind of stuff, the realized cap never deviate has been more than 5%. It's one of those things where at an individual level, there's error bars around it, But in aggregate, it doesn't matter if finance is consolidating stuff. It doesn't matter if you're moving from a cold card to a ledger or back. The overall aggregate doesn't move by more than 5% over all its history.

So that number, the amount of capital that Bitcoiners have saved in Bitcoin, measurably, is $1.1 trillion. That is about a 52, no, sorry, it'd be 55, 55K. So if we go down to 55K, you've got the 200-week moving average of like 57. That's like every bear market wicks on that level. And by the way, there's no reason that every bear market of the past is indicative of the future. Bear, this is one of those classic things in markets. But if you just think about this from a core fundamental standpoint, it's kind of nice,

the 200-week moving average. So all the technical boffins out there are going to look at that and say, that's where it's going to bottom. The realized price at 55, that is where everyone has invested their capital. Let's think about this from a value investor perspective. A company like ExxonMobil is trading at an MNAV, an equivalent book value of 0.9. They've spent all this money building all of the infrastructure to pump oil. They've got all the smarts, all the people, all the hardware, all the drilling rigs, all the pumps, everything. And you're going to sell that to me for less than

what people paid for it. That's where Bitcoin is at $55K. We as Bitcoiners have invested $1.1 trillion into this thing. At $55K, you are buying Bitcoin at its all-time book value. The actual book value for people who are real, like not Satoshi who doesn't transact and move and lost minor coins and all that stuff, that's the true market mean at $80K. We're already below the average cost basis for normal people who are actually alive in the cycle and active. So we're in that, I would say, I mean, in my opinion, personally, I think we're in the deep value zone. Below 70, I deem to be deep value because we're in that bottom 20%

of all price history across all models. Once you get down to the low 50s, you're now in the territory where it's like, please make me a case that isn't a bottom. You have to actually really go down the first path and say, no, Bitcoin is dead. once you get down to those low 50s you're now saying something is wrong with bitcoin and we are truly going to zero so that's kind of that's the framework here now if we go below 50 imagine the capitulation week but you're still going to ask yourself that question am i buying an asset

that's truly going to zero or are people just kind of overselling this thing and it comes back and i didn't stay humble at this point what am i doing what would need to be the conditions for the answer to the question of is this thing going to zero what would what would it take for that to be yes in your mind yeah it's a very good question i mean like you i mean you could argue that the the quantum thing if suddenly there's a quantum break tomorrow yeah we're in trouble no question no doubt so if quantum does manifest tomorrow yeah it's probably probably over right that's that's hard to come back from um i mean i've been staring at this thing i mean i dedicated my career to this thing not because i'm like oh yeah

i want to just jump on the bitcoin train it's like i spent hours and hours and hours and i still spent hours and hours and hours studying this thing i'm like you know really what are the two things that kill bitcoin well let's say three there's one overarching there's something like a quantum could be a cryptography break could just be like a code bug you import that same thing i put that in the same bucket developers go and rush something they put something in the code truly just kills it that's that's probably a zero mode right that's not good no one wants that so something where like the fundamental properties of bitcoin are eviscerated that's a problem um i would also say that like i mean apathy is kind of the parent of a lot of this stuff in terms of

just like people just don't care and that's maybe where we can start talking about where gold fits into this picture because I think a lot of people have this parabola envy over gold. I really think the gold rally cooked people because they thought, but they didn't choose my coin. They chose the old coin, right? Assuming that we're going to choose the new coin first time. And we're never going to choose Bitcoin first time. It's again, Roman money. So it's pre-Roman money. So I think from that perspective, I think there's a lot of people who are saying, has the bitcoin macro thesis broken down and my simple answer to that question is maybe however if bitcoin bottoms and starts rallying how quickly do you think that narrative

will drop off the map just like it does every time bitcoin was dead for a decade in november 2022 that was the narrative it's over finished ftx has completely nuked every reason why anyone would own this thing it's like in my view we're going to find a floor we're going to look back at this period and go oh yeah yeah it didn't die how interesting right security budgets one but like we it's no one's selling bitcoin because of security budget you know i mean like that's that's that's years and years in the future right miners as we found miners are mining they're making a ton of money some of their stocks are at all-time high so you know this is this is part of the industry that and it's funny that we're going through this uh this capitulation i mean i think

we're in the process of capitulation right now and i know we've talked about this in the past about ai you were just mentioning going back with the models but i've been playing around with open claw for the last two weeks and uh have had my my little agent spin up a phoenix d server i've got trading just play money just to see i really want to see if it could uh if it could ln url off into lm markets without me having to set up any credentials and it can and like wow the point being it's fascinating to me that we're in this capitulation process where we have something emerging that could be this incredible demand driver for bitcoin which is the machine payable web that we've been talking about for over a decade um finally manifesting because the the

tooling and the infrastructure is finally there to make it viable can you um would you mind giving it some of my silver coins and seeing if it can you know make some money out of that or have we got a problem here yeah exactly hey maybe tether will will launch uh the equivalent of tether gold and tether silver it could use that it could choose that maybe i'll prefer maybe we'll prefer tokenized uh shares of stretch who knows yeah maybe maybe yeah i mean that's awesome that's that's one of those things we're like and you know having held precious metal still hold precious metals i know that bitcoin is better in every possible way you know like it's 2026 you know like gold has its place it's important it's going to continue to be an important bedrock of the of

the of the world and the financial system but like bitcoin is just better in every way you know you can teleport around the world it's because no storage cost it's you know it has trade-offs there's user experience challenges but like you know i think about my son is he gonna have a you know what's a bad user experience going to the gold bullion dealer that's a bad experience like you know i don't mind it you get a cup of coffee it's part of a process i don't mind it but like it's it's a job it took my whole morning it was it was it was a bit of a process bitcoin is trivial is he going to be able to use uh a bitcoin wallet on a on a mobile app yes of course it's gonna be second nature to him he's not going to think about it so user experience is a is a process

and it gets solved over time but i don't bet against the young because they're going to outlive you yeah my five-year-old knows how to use a bitcoin wallet already he's got any cash well yeah short money yeah um uh has he bought any silver coins yet no oh really why not yeah not yet not yet but i mean speaking of this the bullion dealer you i mean you had a great anecdote on twitter i think it was last week but you you experienced the animal spirits for yourself and like i did waiting i do some of your physical silver let's walk through that experience in your your view of the animal spirits around that market particularly yeah it was i mean there's some time back i'm pretty sure it was uh we had a pod and i was saying like i mean platinum

platinum was my like speculative play but i ended up adding a bit of silver and again we're talking about a small like five percent of my precious metals which is like ten percent so that's you Now, we're not talking about serious money here, but I wanted to just like have a couple of silver bars. I got a couple of silver coins. I've got a little kangaroo here that I have next to me. Yeah, I like it. I think precious metals are great.

However, silver is an industrial metal. I'm under no illusions here. So is platinum, precious metal, but also industrial metal. And my simple thesis was gold's going to go up for all the reasons that make sense. People are going to just go and buy poor man's gold because that's what they do. People love to trade shit coins.

just how it works. So I was like, silver is at some point going to run. And my thesis was fairly simple. I didn't know the exact kind of frameworks or like gold silver ratio goes down to like 40, 45, 50. It's kind of the lowest level it gets to in my lifetime. It was lower back when it was pegged, has been pegged for a long time. In the post 1970s gold standard era, getting down to a Gold-silver ratio of like 50 is unlikely. And if it does stick the landing, it's for a couple of days, and then it's over. So my view was I'll trade a little bit of it,

sell some of the bars, and just get out of it. Anyway, I started seeing every community on Twitter was just becoming a silver bug community. You just see froth. The price is going parabolic. And for a bit of context, it was on the Friday. The Monday was Australia Day, 26th of January. And obviously, everything's closed on a public holiday.

There's nothing open. and i'm watching it on friday i'm like i made the decision over the weekend i'm probably going to go and sell i'm up 3x i'm gonna go and sell a third of my silver and then i'm just risk neutral i'm totally clear never have to care i can hang on to the shiny coins that i like and i got a couple of bars that i'll flog off later on australia day comes and that's when silver had like the full parabolic like vertical move you know adds two and a half trillion dollars in a day slv the etf traded like 36 billion more than the stock market did so like i was like oh my god this is just chaos i was like this thing's gonna top but i can't do anything about it because it's

australia right american markets are open but i can't do anything because australia isn't um so then i was like okay i'm gonna go in first thing on the morning because the people in the comments of my anecdote of my thread all the gold bugs and silver bugs like oh dude you should have like called your dealer and just negotiated a better deal it's like yeah on what day on what day it's a public holiday everyone's closed like what do i do go on ebay um so my my view was i'll go in there first thing in the morning my mate who uses the same bullying deal that i do he's like there's just lines out the door all the time i was like okay i'll go in they open at nine i'll go in at eight get a coffee stand there uh 8 30 i'm standing in the line i'm the first one there i was like

kind of surprising but very soon after i got there the line starts forming and it's racking down the stairs and all the rest of it fairly closed-knit place and i'm just listening to the banter just listen to people talk there's like a dude who's telling him oh i've been telling all my friends no one's been buying in they didn't get it you know i'm like are you a bitcoiner talking about silver um oh yeah i just bought you know the lady next to him i just bought you know these silver coins the other day i'm already up four thousand dollars like i'm making so much money ground like oh my god well and it's just like confirming why i was here um and actually i should add another point as i was counting out and working out which of the silver i was going

to sell i got a message from one of my other mates who's very attuned with markets and he goes so uranium's doing well he's like my uranium group is just all all silver and i was like oh i'm getting another bar out because like it just something's wrong here anyway so i've got this chatter going on behind me i finally go in um and i'm watching the spot price again tuesday morning australia time and in the line i'm waiting there i can see them setting up the shop and like i'm i lost like a thousand bucks on the just waiting in the line uh for this thing to happen uh go in uh go to start you know counting out all the coins and selling them and there was one other bloke who was in there to sell and he uh pulls up this just massive bag thumps it on the table and he's just counting

bar after bar after bar dude was a pretty it was a pretty serious looking dude so like i know he's been stacking for a long time and the lady next to me was saying i want new coins i want new coins and they said we're completely out we've only got these ones second hand she goes no i want new ones anyway they go and find some other brand that they've got and she's like oh i like these i'm i sold it like two percent below spot like 150 aussie um and she was buying about like 220 20 aussie so the premium on the coins right next to me i'm looking at this thing i'm i'm two percent below spot she's paying a huge premium and she's more more more and she's pointing over to my coin saying i want those ones i said we can't sell those ones pawn broker license we're gonna hold

them for 14 days you can't actually sell in case they're stolen you know stop with that so my like thesis was froth gold silver ratio parabolic move i'm standing in line i've got people saying they're making a ton of money of the coins they bought like two days ago um the person next to me after that lady the next one didn't know what a troy ounce was so i'm like i've got people who don't know what a troy ounce is willing to pay a 70 premium my cost basis was 50 like i was buying silver at 50 aussie just paying a 70 premium on coins today it's more than my original cost basis and the only other guy selling looks like he has 10 shotguns and a big safe at home I think I'm in the right place.

I think I'm making the right move. Well, you highlight the benefit of Bitcoin's fungibility there. You're sitting there right at the dealer. So you can't buy these coins. This coin is 70% more, $70. 70 Aussie dollars more. And that was another thing. I don't know if Brent Johnson was trolling people, but he sent out a tweet like,

guy nobody's going to buy my silver like does anybody have a or somebody wants it to sell me 10 10 below spot does anybody have a better deal so you know it was like two to 20 kilos like a massive amount like 200 kilos or something right some big chunk of silver yeah for bitcoin you have these liquid markets 324 7365 sent over the internet you know these fungibility problems yeah the only problem is it's down 50 when you want to sell it but you know who's counting yeah um what should we tell the freaks out there how uh how long do you see this persisting look bear markets come to unless you can come through that decision tree and say the bitcoin is dead and uh choose there's no shortage of fun right apparently epstein wrote something in i i

just i the moment that i saw people associating epstein with bitcoin i literally muted epstein i don't want to hear that shit it's pedocore now i could not be medically powerful i was just like this is a political distraction if i've ever seen it uh so there are going to be fud narratives oozing out the walls it's going to be it's going to be a shit show unless you can really and i come back to this all the time there's two things that really anchor me around bitcoin the first one is having spent a considerable amount of time analyzing how us as bitcoiners behave as shown by the bitcoin ledger nothing that i'm seeing right now is abnormal in any way shape or form it looks like every bear market of the past i find very like as an anchor when i look at how

people behave in bitcoin i'm sorry but there's people with extraordinarily high conviction in long-term holder supply right now it's like 14 point something million 72 of the supply it's almost at 2020 levels before the bull so if we just think about like all the coins that aren't moving. There's a ton of them that are just static. People are hanging on to their supply. Bear markets are a process. But the first one, when I look at all of the data that we see, it's so organic. It's so human. It's so real. It's natural. It looks normal. It looks like people doing what people do, just following their emotions. So I find that just the fact that on-chain data is such a clean, crisp signal of humans being humans, to me, just tells me

there's something about Bitcoin that attracts, that it just feels very real. It feels like a real thing. It's a reminder consistently. And the other one, how many Bitcoiners have you met where you're like, oh, that guy's a moron? No, you meet Bitcoiners, you're like, you did what? You're an astrophysicist or you're a doctor or whatever.

Some of the smartest people I've ever met. I'll never forget at the Chico conference last year, we're at the football, the men's game, and there was like, I don't know, 15 of us left over. and uh you know we're fairly sourced but uh we were talking about how the moon was like really weird like there's just weird things about the moon and anyway there's this bus of like 15 of us going back to uh back to bedford and people just like lean over and go oh oi um you know about this you're a physicist like just tap some dude on the shoulder you're a physicist what do you

think about the moon it's like oh yeah no the mood's really weird and you just like have this conversation with people who are all super interesting right and you just look at the macro mines, like the Lynn Aldens that come into the space. You're like, you're telling me that all of these engineer types who are super bright in their own field, in an environment, by the way, where the whole world was telling them that Bitcoin's a scam, it's wrong, the media, the government, your weird uncle, everyone is telling you that Bitcoin is just going to zero and that you're an idiot. All of these super smart engineer type people came to a conviction to say, no, I think you're wrong and I'm going to keep buying this thing. You're telling me they're

all wrong. They were just suddenly wrong and they all just missed something. The people in Bitcoin is the most bullish thing about it. So unless you can convince me that all of those people are wrong and therefore the decision tree is that Bitcoin is dead, then the decision tree is at some point, this bear market is going to bottom out. And then it's just a journey of where are we in that process, right? And the only thing you can control is your decisions. That's the only thing. So if you're feeling emotions based on the price, go and think about why that is. Is it because of the buys? Is it because your net worth is down? Is it because you allocated too much? These are lessons that you learn. But once you can expunge those feelings from your life and just look at the

price as information, where is it in this overall cycle? Based on my current assessment, we're somewhere in that bottom fifth. What do I want to do in the bottom fifth of every single previous bear market? Do I regret buying at 8K, 6K, 4K in 2018, 2019? No. Do I care about if it was 20K, 22, 21, 17, 15? No, I don't care. Because over that long arc of time, they were extremely high value, high probability, highly stretched to the downside. Yeah. It's months. It could be months of just chopping around. It could be further downside. For another piece of context, from my perspective in an on-chain view june i think it was 2022 when three arrows blew up we hit 17.6k um we went down as like the minor cost basis was down there's a bunch of things

that process from june through to november pre-ftx had bottom formation characteristics in every way looks like a bottom then ftx show up and took us down to 15 right we stuck down there for another two months it was like a hyper extension type event do i really care like now do i really care about that process it sucks at the time sucks at the time be the bison go through the storm we're in the value zone probably going to go lower probably going to be a take a long time probably going to suck there'll be narratives out everywhere come back to your original conviction say why am i here in the first place and are all these people around me wrong because if they're not wrong stay home what is the other what is the other option on the table to get

through this to gold silver could fall back on that doesn't seem very i'm a i'm a big advocate for a lot of bitcoiners probably should have bought more gold they probably have none uh and here's the rationale like and again this is my personal circumstance but i think it's a nice illustrative reason for why i started buying gold platinum and silver purely speculative i'm just there to play the price. They're the numbers on the screen. Gold has a very particular role. Most of my holdings is an ETF. And I mean, for me, I'm Australian, I'm saving for a house. Our housing market is like many places, but particularly bad. It's just an asset that just keeps running. The number is too big. The number to buy a house is just too big. The gold, what happens if I did

happen to find a place that I did want to buy? Like now, I would kick myself forever for having to sell Bitcoin to pay for that deposit. It would just kill me because I know it's a terrible trade. Gold is doing exactly what I need it to do, not be down 50% when I might need it. So gold is ballast in my portfolio. Its job is the exact same trade as Bitcoin. It's going to go up sometimes when Bitcoin doesn't. It's going to go down sometimes when Bitcoin doesn't. But I know it's not going to be down horrifically. I don't mind selling gold down 20% because its job is to be that house deposit when I need it. So I think a lot of Bitcoiners would have benefited this cycle from having some ballast in your portfolio.

In many ways, having ballast allows you to not sell your Bitcoin. When gold goes through a tear, I'm happy because gold's gone through a tear. Bitcoin wasn't doing so great, but gold was doing fantastically. And when I think about diversification is one of these things, but I'm also of an age where concentrated bets are also generally the framework, which is why I'm Like, just give me sound money assets and let me just sit tight. But, you know, I'm increasingly interested in, like, commodity markets. You know, I think just, again, replacement value. How much does it cost to replace an oil-producing company?

A lot. Do we need oil? Yes. You know, is there going to be value there in a commodity cycle? Yes. Are they a dominant part of my portfolio? Not yet. Probably not.

But just having that extra ballast that allows you to huddle, to actually not be completely 100% emotionally anchored to the Bitcoin price. is going to help you actually huddle through it. It's just an easier strategy. So have some ballast. I think it's important. Have some ballast, freaks.

Make sure you subscribe to James' newsletter. Called a lot of this, called these levels. Told people to watch out for them. We're here now. If you're reading the newsletter, you're not shocked. So go check it out. Highly recommend doing the paid subscription. I've got my little agent.

I hope you don't mind. I'm forwarding it to him again. I'm like, all right, what's James saying? What do I need to look out for? He's done a pretty good job. Yeah. And like, you know, I often think about sometimes I'm a Bitcoin therapist, right? You know, just helping people like rationalize stuff.

But what I love about Bitcoin and all the data that we have, whether it's futures, ETFs, options, on-chain, it just tells us what everyone else is doing. We're all sitting at the big poker table of life. You can't see all the cards, but you can see how many people are bluffing. You can see how many people have been playing for a long time. you can see how many people who are brand new to the game are really really bad at bluffing you just get this like big picture view of like what are the different cohorts doing i don't need perfect precision you just don't need it you just need to get enough of an ebb and flow and say here's where things are likely um and you know a lot of folks think like oh do you trade i'm like no i

don't trade trading's terrible trading's a horrible experience everyone who's done it knows it's just like a it melts your mind in terms of how much stress it induces i very much write for hodlers because at the end of the day, like this is why our catchphrase is your Bitcoin personal trainer. You've got to go to the gym, do the reps, and then none of this stuff

should surprise you. And ultimately, what I'm trying to help people do is eliminate the uncertainty component, right? If you can get rid of uncertainty, whether the price moons to 100K tomorrow or goes to 55K tomorrow, it doesn't matter which way it goes,

you're going to have a level of uncertainty. But if you've thought about why that might take place before, when it happens, you're like, okay, cool. Now I just focus on my decision. And I've probably already made those decisions, right? Either sit tight, stack, whatever.

Whatever it is, your decisions are the only thing you can control. Make them before the move. It doesn't matter if the move doesn't happen, but you prepared for it. Be prepared for exchange. Thank you for starting your morning with us here. Happy Friday to you. I hope you enjoy your weekend. Thank you.

Good on you, mate. And we'll do this again. Hopefully we're in the ninth inning, bottom of the ninth of the bear market the next time we talk, but we'll see. Stay humble. stack sats a job wisdom there is there is never a better time for that to apply than right now be the bison go through the storm cash flow according cold storage stay humble stack sats peace and love freaks thank you for listening to this episode of tftc if you've made it this far

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