TFTC: A Bitcoin Podcast - Trump's Executive Orders, the DXY and Bitcoin Backed Lending - Bitcoin Alpha 006

Episode Date: January 24, 2025

0:00 - Disclaimer 0:24 - Larry Fink is bullish 8:28 - Ross free 16:54 - Energy policy 25:06 - Crypto policy 34:27 - Meme coins 50:19 - State SBR bills 58:05 - Dollar Index and Gromen analysis 1:15:04 - Coinbase lending 1:28:44 - NYDIG 1:32:38 - Corporate treasuries 1:43:51 - Repeal of SAB-121 1:46:02 - 2025 predictions

The following is for informational and entertainment purposes only and should not be construed as financial advice. This discussion is a presentation by 1031, the leading institutional investor focused on the Bitcoin ecosystem. 1031 has over 10 years of experience in Bitcoin and has deployed nearly $150 million into the leading opportunities in the space. To learn more, visit 1031.vc. You, if you're frightened of your debasement of your currency or you're frightened of your economic or political stability of your country, you could have an internationally based instrument called Bitcoin that will overcome those local fears. and so i i'm a i'm a big believer in the utilization of that as a as an instrument

and so if that becomes true and you don't know and you see that it it is um it could be a proper hedge against maybe hope security or equities yeah the question is could you see a two or five percent allocation i was with a sovereign wealth fund uh during this week and that was the conversation. Should we have a 2% allocation? Should we have a 5% allocation? If everybody adopted that conversation, it would be $500,000, $600,000, $700,000 per Bitcoin. I'm not promoting that, by the way. So that is not my promotion. Larry, you had a fumble there. It's not if all these sovereign wealth funds have these conversations, the price could go down. It's when they have those conversations. Larry,

They're all going to have those conversations. Welcome back to Bitcoin Alpha. It's been a month, gentlemen. Shame on us. It's been a month. That's what, you know, that's what happens when you're in the arena, right? Like, things come up and you got to deal with them. So, you know, I think, have we done an episode since we broke 100K?

Maybe one. Maybe one. Well, if not, good time to commemorate it. But unfortunately, Larry is still much too bearish. He needs to add at least another zero to his price target. But I think he'll come around in time. It was a great promotion for Bitcoin, it being a non-promotion. But it seemed like a promotion to me.

It is great for anybody new to my personality. some people like to call me marty jones i've uh i've i've had some quibbles one-way quibbles i don't think larry's ever ever quibbled back but larry fink has been uh the ire he's been at the center of my ire for for many years because of the esg policy and many other things that uh I don't think are great for humanity from his position at BlackRock, and particularly during these Davos meetings the World Economic Forum holds. At the beginning of each year, he's been the purveyor of stakeholder capitalism, the need to get the net zero, the private-public partnerships

that could lead to a dystopian future. And it is just very weird seeing him become one of the biggest Bitcoin bulls in the world. But that's the beauty of Bitcoin. bitcoin is money for enemies uh not to say the larry's an enemy i disagree with a lot of um his views on the world and where we should go and how we should get there but bitcoin just makes sense no matter who you are and to see him in davos pumping a two to five percent allocation uh to bitcoin for sovereign wealth funds is just it is a weird timeline every every economically self-interested actor capitulates eventually right yes um as you're

saying that's the beauty of it and i love how his larry's progression in public is very similar to like anyone who is has gotten interested in bitcoin over time you know it looks very similar start out as a total denier then a skeptic then maybe you dabble a little bit and increasingly it's like well maybe i can have 10 basis points my portfolio maybe one percent you know maybe maybe 2%, maybe 5%. Um, you can just watch him in real time, increasing his, uh, his potentially suggested allocation and his, his price target. So that's why I say it's, if his progression is like everyone else's, then, uh, there's another zero coming on to the end of his price target sooner than later. Yeah. He'll get there and then he'll add one more zero, uh, 10 years from now

as well. And I think we'll, we'll Reeves from fold CEO founder, fold, good friend of the show, good friend of the fund uh put it perfectly uh logan if you could pull up the tweet if you sit by the mempool long enough you will see the utxos of your enemies float by that's uh that's what we're seeing right now everybody comes to bitcoin one way or another but on a serious note i think again it is shocking that we're at this point in 2025 where larry fink As you described, John, long-time Bitcoin critic, recent convert, is experiencing a lot of success due to the launch of the iBit ETF at BlackRock, one of the most, or not one of the most, the most popular ETF launch in the history of the product. and yet to say props for props or do you agree with larry i mean as we head into the year the new presidential administration here in the united states new economic policies um many would deem

very antagonistic economic policies bitcoin is this asset that is separate from from government intervention from government control that is permissionless accessible by anybody and um i do think he's making a good point if you're worried about the debasement of the currency or political instability geopolitical instability bitcoin is the asset you want to be holding and if you're a sovereign wealth fund an institution a pension a family office you need to seriously be considering getting material exposure to the asset yeah and i you know what were the numbers that he quoted in the in that video um exposure of three percent five percent um something like that i mean that's that's pretty material um to go from zero to something like that and he said

if if everyone does it then the price will go up to you know those numbers that we said was like pretty understated i think only a small handful start doing something like that you know states governments you're going to see those prices if everyone does it we're talking you know a whole another order of magnitude like you guys said it might be worth getting some just in case it catches on you know a wise man i think a wise man once said no but it grant just to pick up on that briefly um the two to five percent thing i think is actually pretty interesting because in your traditional 60 40 portfolio construct and that's moving around a lot in the last few years with how badly that traditional portfolio has performed and this kind of new regime.

But within those traditional constructs, typically that low to mid single digit range is like what you think of as like an allocation of gold, right? So this is kind of from a traditional asset manager's perspective, you're kind of now recommending, and he says he's not recommending it, so I don't want to put that on him. But to the extent that you're actually having that conversation with clients and big wealth managers, they're starting to think about and ask themselves, like should i allocate effectively a gold-like position within my portfolio to this um i think we all agree that that is the first of many stops for bitcoin is gold parity but um quite a big move in the last 12 months to go from uh institutions really not caring about this at all to more or

less co-signing that it does that the digital gold thesis does have you know a good deal of legs yeah and i guess that's a big question on everybody's mind today larry fink private sector manages trillions of dollars on behalf of tens of millions of people in institutions and then we have the public side the u.s federal government uh headline of the week it is thursday january 23rd which means that we are day four of donald trump's second uh second uh what do we call it his second term as u.s president and man started out with the bang and i guess we'll talk about the wide-ranging actions that donald trump has taken in his first three days in office but focusing on what we like to talk about here at bitcoin alpha which is bitcoin

and policies that pertain to that great news this week ross albrecht founder of the silk road imprisoned to two life sentences plus some has been in jail for the last 13 years i believe or not 13 12 years was granted a full and unconditional pardon which trump campaigned on he didn't campaign on that it campaigned on the idea of commuting ross's sentence and campaign promises made campaign promises over delivered in this case ross ulbricht full and unconditional pardon he was released from prison two nights ago um and is back with his family it's great to see yeah you love to see it um very powerful i mean even just seeing the picture the picture of him uh after he was released i mean that's uh it's been it's been a long road

for him and you know you see you know people who've gone to the bitcoin conferences have seen lynn around the conferences and a lot of you know she's around and she's talked to people trying to you know advocate and incredible to see um that make a difference uh and so you got to feel just incredibly happy, especially for her. I mean, I can't even imagine that journey that she's been on. So, yeah, very happy to see it. Yeah, no doubt. There's not much else to really say about it. For anyone who hasn't followed the space as closely or, you know, is just kind of starting to dip a toe in and is wondering why um this has been such a meaningful um campaign point for bitcoiners and why people are so happy about this you know take five or ten minutes and just

go read about you know the the basics of kind of what went down in this case and um you know the the way that the book was i think we would all say unjustly thrown at ross um to an insane degree and um you know within that context just kind of consider what it means to actually have that um the sentence that he was given not just commuted as you said marty but effectively reversed um you know unconditionally um it's uh it's a big moment obviously for him and also just for um a very as a very small repudiation of the system that kind of put him in that situation and that threatens to put a lot of people in in a situation like that so definitely um one of the only white pill moments that i've had in politics in the last my entire life probably to actually

see it um trump you know follow through on on that promise get ready for more white pills um i don't know i'm not gonna make any promises but i think for the context of this part of of the conversation too it's important to um give the silk road story the justice it deserves and it's hard to do sitting here as uh investors and um what we're doing is above board but silk road whether you like it or not um it is it was one of the first killer use cases of bitcoin bitcoin at that point when the Silk Road launched was a very nascent experiment on obscure corners of the internet, mailing lists and forums. And the early Bitcoiners were trying to figure out if it was viable as a medium of exchange, a digital currency, if you will. And whether or not we

agree with um the ethos of the silk road which was very free market um oriented and uh had a a bend towards safety particularly when it comes to the uh transaction of of drugs online um bitcoin fit into that that use case perfectly and the silk road um really validated bitcoin as a digital currency, whether you like it or not. This is the truth. Money is an apolitical tool. If you have a good money, a digital bear instrument, if you will, it needs to be able to serve those use cases. Yeah, no doubt. I mean, it has the fact that it was able to be used, even in its nascent state in that context, has implications that reverberate through every use case you can think of, right? And, you know, even if you have never had any interest in buying illicit substances or controlled substances online, the fact that the that Bitcoin existed outside of a framework where it could be controlled by a corporation or a state and continues to to this day has meaningful implications.

If you are an activist in a country with an oppressive government, if you are a sovereign that has had your reserve assets seized by, say, the United States, if you are trying to advance United States goals in one way or another and need to be able to do that in a financial framework that exists outside of something that is controlled and surveilled and regulated. like it can the the point is that it can be used for any number of of ends as many ends as there are people um the key is just that it exists outside of a framework where it can be arbitrarily censored and controlled um and so that's what you know that that's what ross showed that's what the silver road showed early on and that bitcoin's continuing to prove out to this day ross is free it's crazy and i i think building what you said grant uh lynn i think this this the in the ultimate um freeing of ross the other day is a story of a mother's love of grassroots movements and uh as john said a white pill that if you put enough effort into

something for enough amount of time you can actually affect change in the world and and affect change in politics which many people don't believe is possible and it has been truly the the efforts of an individual mother and then a grassroots movement of people spread all throughout the world to make sure that ross didn't get forgotten in that the um the the politicians were forced to basically reckon with the fact that he was unjustifiably thrown in a cage for way longer than was necessary. And this was, I didn't even realize this until yesterday.

I mean, people were sharing the final verdict and the comments from the judge, and it was complete, like, woke. She literally cited white privilege has reason for um for uh extending the sentence to two life sentences and making a making an example of him based on the color of his skin which is not what we need in a in a land that runs by rule of law and it looks at things objectively it was very uh subjective the sentencing particularly but last we're not here to talk about ross the silk road the judge the

whole time. Other executive orders were signed as it pertains to Bitcoin. Most important executive orders that were signed to date have to do with energy policy. And it seems like we're going to drill, baby, drill. And the Trump administration is highly focused on incorporating sane energy policy in the United States, pulling as much energy resources out of the earth as is possible to lower energy prices, to enable the expansion of energy grids, which are in extremely high demand right now via the combination of Bitcoin mining and AI data centers, which Bitcoin and AI seem to be two particular sectors that Trump wants to lean into and wants the U.S. to dominate in.

And so part of that dominance necessitates an expansion of energy resources in the United States. And it seems like it's back on the table, baby. We got Christopher Wray as the head of the Department of Energy. For those who are unaware of Christopher, I actually know him. I had him on TFTC and back when it existed, the GAMCAST, the Great American Mining Podcast that we did. And what he's done at Liberty Resources and the way he's run that company, somebody who studied that company leading up to that interview and talked to Ray during the interview, Chris Ray during the interview, I don't think we could have a better person in this position in the United States. He knows how to run a business. He innovated in the oil and gas, um, uh, upstream operations, a part of the industry, uh, better than anybody. What he did with Liberty resources. I think if

you talk to anybody in the industry, oil and gas, particularly they'll, they'll, um, immediately acknowledge that what they've done has been immensely beneficial for that industry. Uh, and I think he's energy forward and obviously he's an oil and gas guy, but I think he's pro nuclear and is the best person in this position to make sure that American energy dominance turns a corner here, because let's be honest, the Biden administration was woefully terrible for energy policy in the United States. Yeah, absolutely. You know, I think thus far, the executive orders that Trump assigned, There's been a huge flurry of them and really too many to keep track of.

I've seen various law firms have already spun up their own kind of proprietary trackers for, I guess, their clients to keep tabs on how all these different EOs may affect their industries. But thus far, we're still awaiting a few that may or may not more directly affect Bitcoin, which we can talk about in a second. But yeah, this is the energy executive orders that I've seen so far seem like the most meaningful for our country, but also just our space and Bitcoin. you know, anything that is going to have a more kind of realistic approach to energy production and the deployment of energy and power in the U.S. is, I think, just going to naturally have synergies with Bitcoin mining. You know, a realistic kind of approach to energy and power deployments kind of almost inevitably just leads you to understanding and seeing the synergies Bitcoin mining can have with flare gas mitigation in the oil field and then just the grid balancing

thesis that a lot of bigger miners have proved out in Texas, Tennessee, and elsewhere over the last few years. And so, some of that, there will still be, I'm sure, kind of adversarial roadblocks in different states at the local level as it relates to some of those deployments but if the you know the backdrop of um where national energy policy is going definitely seems like it will be um directionally much more favorable to uh bitcoin mining over the next four years certainly relative to some of the um elizabeth warren inspired uh department of energy gambits um that were you know directly targeting the mining industry over the last few years that we saw yeah i want to i want to make an on-air correction i was saying christopher i had

I had the FBI director in my mind. It's Christopher Wright. I was going to say, I thought you maybe said that. I was going to say it definitively would not be a good thing to have Christopher Wray at the head of the DOE. I'm stuck in the last administration. Christopher Wright is the head of the DOE. Sorry, Christopher. I mean, as we've sort of said in various forums over the years that, I mean, mainly because of Bitcoin mining that we thought we would see over, you know, over the last several years and over the coming years that there's going to be this insatiable demand for energy, for rack space.

And that's only growing exponentially even because of the AI stuff, right? I mean, there was the OpenAI announcement about the Stargate project and I don't know how many, $500 billion worth of AI infrastructure that they're planning on deploying in the U.S. And there's no way that we could possibly meet any of this demand without having, you know, policies that are more accommodative. You know, the interesting thing when you compare the demand for AI versus, you know, Bitcoin mining, energy infrastructure, the more that you, I mean, both are very capital intensive. AI is certainly, you know, you just have to throw tons of compute at it. And the more that you throw at it, you know, generally there has not yet been diminishing returns. So you just have to keep throwing more and more at it and you get more and more out of it. Whereas as the demand for Bitcoin increases, yes, theoretically, you can throw, you know, more dollars in compute at Bitcoin mining and command a higher percentage of the Bitcoin that gets distributed through mining and transaction fees.

But you're not necessarily going to accelerate, you're not going to accelerate the distribution of Bitcoin because it's fixed in time. And so that naturally adjusts. So that's just like an interesting dichotomy between the two. But no doubt between both of those and just the increasing demand that we're going to need generally as we continue to progress as a society, there's going to be probably a massive inflection in the energy requirements. Yeah. And I think having the seat that we do where we are within the portfolio, particularly the companies with mining or working in the mining industry, I think I'm going to be more excited for them, particularly upstream, Giga, Satoshi Energy, the work they've been doing the last two years and this policy lining up. I think they are extremely well positioned to facilitate many different parts of this energy explosion that the Trump administration wants to unleash. So I think it's going to be an interesting time.

Energy infrastructure. We need more transformers. We need more data centers, obviously. We need more infrastructure companies to build those data centers. And then as all this capacity gets built out, this generation gets built out, you need people to facilitate the contracts, the PPAs. And it'll be interesting to see if Bitcoin real-time payments takes off during this administration. It should be, which is something that has been talked about for a while. And maybe the timing's right.

We'll see. We got next on the list. bad bad he is what executive orders uh did you like the least john for lack of executive orders yeah i don't know if i've seen i look i'm sure if i combed through them all like you know trump is uh far far from from perfect um perhaps an upgrade relative to prior administration but certainly uh no angel and i'm sure amid the thousands of executive orders that have been signed i can find more than a few that I don't love. I would say from a Bitcoiners perspective, I think it's hard to say that the ecosystem was not pretty, pretty bulled up and

maybe over its skis a little bit on expecting a day one strategic Bitcoin reserve executive order. There was clearly a lot of disappointment. You can look at the chart and the price action over the course of day one, you know, when he, his inauguration address didn't specifically mention bitcoin which when you zoom out and consider all of the priorities that he has to address i know we're all on bitcoin twitter a lot or on nostre and um you know developing our own echo chamber around the stuff and it seems like the only thing in the world that matters and certainly i think we all believe it is disproportionately important relative to almost anything else but you zoom out a little bit and you remember like probably that's not gonna find space um in his you know

whatever it is 30 minute or an hour inauguration speech um and you know it wasn't uh mentioned later that day and thus far i don't think he's meaningfully addressed it in any way so um people will have to wait a little longer to see if uh trump is is gonna pump their bags with an executive order um and perhaps that's been the if you want to call it you know the most deflating element of uh his his first week if you're you're focused on bitcoin you can definitely see uh a little of the air went out of the room yeah is that trump's fault or is that uh all the all the pumpers fault the the announcers it's it's definitely the latter yeah the announcers of the announcements that are to come the pre-announcements they've been being made for um since trump spoke at

the conference in nashville last year and as you mentioned john country has a lot of problems or a lot of issues that the trump campaigned on that he wants to solve and i think if we're being objective and purveying the the social sentiment i think in most american eyes uh day one bitcoin strategic bitcoin reserve act or executive order is not in the priorities the top top three priorities of most americans if we're being honest it'll come he was just at he just gave a speech to the world economic forum this morning he wants to be the he wants the united states to lead in crypto we're going to be the crypt the the dominant country when it comes to crypto during his administration he said the c word not the b word and then and another thing not to get your

hopes on is that uh it's probably not going to be like any legislation that goes through i would put like a 50 50 chance on it being bitcoin only the the hordes of shit coiners and the money that they can throw around have descended on washington dc from what i understand and they are in the years of the president and money in the waters so i think we will inevitably get a bitcoin strategic reserve uh whether or not it comes from an executive order i would be skeptical i imagine it is going to have to go through congress and the senate and eventually get to trump's desk to sign but i think we should just take our wins we've got somebody in the oval office who is wildly encouraged and motivated to make sure that bitcoin succeeds in

the united states and we should just take that win the strategic reserve we've been talking about it for quite a while and i've been pretty bullish on it but i think um you let wild fantasies get the best of you sometimes in this industry. I think we need to be more sober, more objective. It will come. Conversations are happening. It's a process. I'll take the under on the 50-50.

I wouldn't be surprised if it's a less than 50% chance that it's Bitcoin only. There's a lot of telling factors in it, I mean, namely around like what Trump has done with launching his money grab, you know, meme coin and then the reports around and what like how he's factored in or refactored his proceeds from that into other shit coins. But I don't know. I'm not too surprised that they haven't announced anything or, you know, there wasn't a day one executive order about the strategic Bitcoin reserve. I mean, if you really if you really want to acquire as much Bitcoin as possible at the lowest price possible, you don't you don't actually announce that you're going to do it like they did last year. But obviously, there's some political posturing and reasons why they might have wanted to do it.

uh but i i mean with that i also think it's not surprising that they haven't done anything yet because you know these guys are going to fill up their bags before they move the market um that's what trump literally has been doing it's just like filling up his bags uh and you know you can take that cynical point of view that you know maybe it's going to be more delayed so that they can all establish their positions before they move the market in a big way Well, you would also say like, not on the meme coin side, which I think we'll talk about a little more, but from just a fiduciary perspective, right? Like if you were planning to, you know, there is an executive order draft that the Bitcoin Policy Institute published late last year, so

December, that theoretically, you know, Trump could go sign tomorrow and that would buy something like, you know, 200,000 Bitcoin as part of the exchange stabilization fund that exists under the president's purview. So that would be doable. But even if he wanted to do that, why would you ever make that announcement and sign that executive order and hold up the sign like he likes to do before you've made the purchase? Why would you ever let the market front run you on something massive like that? So it may be the case that I don't even know if this is legal. I assume it probably is. And certainly, I think the executive branch has shown that it doesn't really care that much about legality anyway. But it may be the case that this

an executive order like that gets signed you know months before it is ever you know officially announced it seems like you would see that in the market but you know if you spread out 200 000 200 000 bitcoin buy over enough time you know maybe you wouldn't necessarily see some like radical uptrend that looked anything different from what you would kind of expect in a typical you know bull market so it may be the case that we just have to wait quite a bit longer for something like that even if he wanted to do it because that's you know strategically advantageous to do it that way yeah yeah i mean i've been hearing birdies behind the scenes too that just the prospect of the u.s signaling and actively going after bitcoin strategic reserve

has lit the fire under the ass of other world leaders and they are seriously considering either front running the official announcement from the united states or getting their house in order and accumulating bitcoin and through via the legal processes at their fingertips to get in the game as well hearsay rumors birdies behind the scene take that with a grain of salt um but i mean it's it has to be true i mean you're seeing it with i'm sure this is a topic as well but you're seeing with all the you know 10 u.s states now either with proposals with bills with state senate proposals um so it's happening at the state level i'm sure it's happening at the nation state level yeah it's up to 11 now logan we'll pull up the

charts on the um the map it's on the tftc page i'll find it and put in in our chat here but yeah go ahead john i was just going to say i mean it's something that i think we talked about right after the election when we did our episode a few months ago that even if it you know a lot of world leaders around around the world are just have to take it even seriously that this could happen and they look at a fixed supply asset like the incentive with something like that is is to move first not second right so to the extent that it's even being taken seriously which the um this map here suggests it is being increasingly taken seriously the fact that it made you know the front page of the new york times this week shows you know it's breaking into

the mainstream consciousness i'd say it's certainly being taken more than seriously um and you know the the incentive as a result is uh to acquire some probably fast yeah one way to acquire bitcoin is to launch a coin and as we mentioned uh our president uh late last week during the crypto ball they they launched uh the trump coin the trump meme coin is it on solana ethereum i don't even know it's solana solana which which is maybe meaningful too maybe meme coin launched immediately ran up within 48 hours to what a 70 billion dollar market cap increasing trump's net worth by many multiples in the process

like i said shit coins all coins will be politically correct on the show have historically been used to accumulate more bitcoin those who issue them those who run exchanges that offer them and help them make fees, um, uh, use those fees to buy more Bitcoin. And I actually do have a tweet here to verify that. Um, Michael, uh, Michael Goldstein warned us, everyone's a scammer and no bigger scammers out there than people, um, selling all coins. Bill Miller Jr. Um, shared with the world a conversation he had with an exchange ceo that offers a lot of these these

all coins and he said um coinbase ceo brian armstrong he was quote tweeting some of his comments at davos where brian was saying he thinks he'll see bitcoin get into the millions multiple millions price range bill nutter said i agree i spoke separately this past weekend with another big exchange ceo and asked him about how his personal nest egg was split and he said pretty much all bitcoin was the response from a guy whose company trades it all um point being the quick way to accumulate wealth in the quote-unquote crypto economy is to launch a an altcoin a cryptocurrency a token uh have people funnel into it dump it and then use the proceeds to buy bitcoin it looks like our president's in that game and uh i don't know if this is

associated with world liberty fi or whatever it seems like it is there's weird loose connections going on here uh and they did just that raise billions of dollars quickly i mean reportedly david bailey said they sold 500 million dollars of proceeds and funneled it into bitcoin and other assets and they've been buying bitcoin consistently wrapped bitcoin not actual bitcoin wrapped bitcoin on Solana and it's just insane to see it's not actually insane to see this is par for the course for Trump they put their name on everything buildings golf courses stakes board games waters whiskeys whatever it may be it makes sense they would put their name on a digital asset and try to make money off of their brand which is how they've built their wealth over the course of many

decades um but lesson in shit coinery to whoever is running world finance liberty whatever it's called the perceived scarcity is the most important thing they they made the biggest fumble in meme coin history ran up to 70 billion and they were like oh let's do this again launched melania two days later crashed uh trump crashed 40 melania did not go up commensurately um so wiped out tens of billions of dollars with the value almost immediately uh and it's crazy what do you guys think presidents and meme coins i mean look obviously this is gross disappointing stupid um all of those adjectives apply can i make the case that this is actually bullish i mean everything's bullish for bitcoin but i think this is actually like very bullish for bitcoin

yeah it's a speed run to understand that bitcoin is the only thing that matters yeah yeah and it's like this meme coins especially and this is like the meme coin to like end all meme coins and i i don't say that to indicate that there will not be more meme coins but just like this is you know the apex so far that we've seen in meme coins um these things just really show you know it just rips the veneer off of crypto right i feel like this cycle we are increasingly just finally being honest when i say we i mean people who trade crypto which is does not include us but um a lot of people are just finally being honest that this, this is the real use case, right? You know, it's, it's not, here's my 500 page white paper and my, you know, 10 year roadmap and technical

gobbledygook of some Rube Goldberg machine that, you know, has a ton of issues that'll never be solved. But in any case, like, um, hiding behind this veneer of technical jargon, no, it's just like, bro, we want to trade memes, right? We want to do degenerate gambling. I want, I want to pump, uh, I want to do a hundred X leverage into something that could pump a thousand X overnight. And if I lose it all, whatever, like that's that's the ethos that has always driven crypto, non-Bitcoin crypto. And finally, it feels like people are just being honest about that. And, you know, I think the thing in conjunction with that, that fully hammers home that thesis. I just put it in the chat, Logan, this this tweet of the ETH BTC chart, which someone pointed out, at least as of the day of the tweet a few days ago.

is now lower. This ratio. So Ethereum priced in Bitcoin is now lower than the day it was first listed on Coinbase in 2016. Right. This is like this was the altcoin that, you know, got to hundreds, has gotten to hundreds of billions of dollars in market cap. There have been constantly shifting narratives about how this is the Bitcoin killer in one way or another. And, you know, it's had everything I'm talking about with the white paper and the long technical roadmap and the incredibly confusing infrastructure and the underlying nature of it that very few people can actually untangle the constantly shifting sands of its narrative, right? And you're seeing that the market is basically kind of moving on from it. Not going to try to call a bottom in

this. Certainly, any degenerate crypto cycle could pump it up again. But the long-term trend here like looks pretty clear. It's never come close to its all time high price in Bitcoin, because I think what people want is not the world computer or the, you know, access to Rube Goldberg DeFi. Maybe there's some appetite for that. What people really want is to trade memes. And I think just having ripping that bandaid off and having institutions be able to fully see that differentiation between everything that Bitcoin is and that it continues to be, you know, settling 20 plus trillion dollars a year in permissionless value, 99.99% uptime, perfect scarcity. It's never going to be disrupted. True decentralization relative to

Trump coin and everything else that is now dominating crypto at the expense of even the previous darling children of non-Bitcoin crypto like Ethereum. I think that differentiation is becoming so stark that finally you're going to see bigger allocators get comfortable with what the differentiation is and realize where the signal is. So I think Trump has actually kind of done us a favor in doing the most Trump thing ever with crypto. Should we spin out a meme fund too now that it's just all all out there that's what i that's actually like what do we think the institutions do in reaction to this it's just like oh uh everything's being laid bare we're not we're not feigning um tech innovation here we're going to accept that it's just pure degenerate

gambling and you can make a lot of money doing that if you pick the right the right person and trading these coins okay that's what people may absolutely institutions like may absolutely print on some of these things like that's totally possible but like my point is just like you know at fidelity fidelity has a fund that invests you know in mega cap tech in mag seven and things like that and they have a fund that in you know invests in uh micro cap stocks that are circling the drain and, you know, maybe, you know, just investing in their distressed debt or, you know, just investing in small caps that are way lower quality, but also super cheap. And, you know, maybe there's a valuation arb. And so my point is just like, maybe there will be a place for kind of meme

coins and ridiculous kind of crypto nonsense, even in institutional portfolios, but it will be definitively much smaller than, you know, the fund that's focused on Bitcoin. And the differentiation, I think will be very explicit in terms of what those two funds are, what their goals are, what the risk frameworks are. And I think you're just going to increasingly have to have no choice but to put Bitcoin and everything else into two separate camps, even if you want to keep trading both of them. I, I see where you're coming at with all these arguments, but I don't know. I don't know. People are so confused. I don't know that he's done us a favor. I don't know that it's like a good thing for Bitcoin.

Like I think maybe in the long run, it doesn't like it doesn't have much of an impact. And maybe there is a case to be made that like institution, big money are now starting to see there's a stark difference. But I think there's also a case to be made that they're not yet. uh i certainly know that on like the retail level like i don't think they're waking up just because of everything that just happened if anything they're more confused now like he's starting to like i think it's really disappointing uh i i didn't see it coming but i wasn't really following that stuff and then when i heard about it i mean it's not surprising it's not surprising he would have done something like this uh in hindsight um but the unfortunate thing is like he sort of

it it um it may show that he doesn't really understand that like it is bitcoin and everything else um and he's normalizing the fact that like maybe like it makes an impression on people that maybe having meme coins or having other cryptocurrencies makes sense because what did he do i mean i saw the tweets about how he started pulling money out of the meme coins and then reallocating it what was he reallocating to not not even bitcoin it was like wrapped bitcoin plus a lot of other nonsense and so i've been getting texts like i got a text last night from somebody who said you know hey long time haven't spoken in forever but like what other coins do you recommend like other than bitcoin and i think like that's i mean if the president is setting an example that

like he's getting a personal allocation across the board and he's launching a meme coin i think it's actually a bad thing i think it's you know yes people will learn the lesson at some point and they'll get wrecked but sometimes people who learn the lesson and get wrecked they just get discouraged and that ultimately delays significantly the amount of time until they actually enter the Bitcoin ecosystem. So I think on balance, I take the other side. I like the optimism that like, it's great. And he did us a favor and the institutions are now going to see it. But we've thought it's been obvious, the differences between Bitcoin and everything else for years and years and years. And you can definitely look at the long term trading chart

of ETH to BTC, and it seems obvious. But I don't even know that it seems obvious to people in crypto other than, you know, like the ETH bag holders who've been in it for so long. Like the only people you're seeing capitulate are the people who are like longtime ETH holders. But I think they're being replaced by like noobs that are saying like, oh, like Ethereum,

like I don't see anything wrong with the, like they don't even think about the ETH to BTC chart long term. So I don't know. I'll take the other side of it. And yeah, I mean, just just to be clear, I agree. Trump does not understand the difference. I mean, you listen to his his speech back at Bitcoin 2004, you know, have fun with your Bitcoin and everything else you're playing with. Like, clearly, you can see from everything he said in his actions that that differentiation is not clear to him or his family or his world, Liberty Frye or whatever it's called. And I also, again, think there may still be a ton of flow into meme coins. I just think it is a positive step to have the world see what makes money are Bitcoin over the long term and memes. If you get lucky on them and pick exactly the right one at the right time, you kind of cut out the middle of this.

Look, you know, invest in my invest in the long term 10 year future of my Bitcoin killer that's going to win because proof of stake is better than proof of work. And here's my highly technical roadmap that will look impressive to both a retail buyer and someone at an institution who wants to look smart and make sure that they're diversifying across crypto and paying attention to the latest technical innovations. Right. Like if that if that middle piece can get firmly chopped out, I think that's a good next step to the ultimate goal of everyone just realizing it's Bitcoin and everything else. Totally agree. There will be a lot of meme coining and shit coining and degeneracy. um, this cycle. I just, I'm optimistic that increasingly it will just be honest about what it is. And people will still love that. People love the gamble. Absolutely. But at least we won't have to listen to any more, uh, technical lectures on why proof of work does not work. As a wise man once said, never short the generosity in the United States of America.

Um, no, and I, and I've been saying this on shows I've been recording over the last few days. And if, I mean, given the two options, continuation of the Biden administration and their positioning towards the industry and what we now have, what has materialized, like I'm going to take the latter every day of the week. If getting the regulatory and federal guerrilla off the back of the industry comes at the cost of pure, unfettered, degenerate meme coining, okay, I'll take it. And we're going to do our best here and everywhere else. We're putting out information, talking to people and trying to educate them about what's going on to make sure it's clear to them that there is signal and there is noise. Bitcoin is the signal. Everything else is noise. um but we're then that's the hand we've been dealt is a future with the gorilla

the proverbial gorilla off our back and unfettered degeneracy which is like which begs the question is just completely legal like dave portnoy was on davy day trader this morning saying like should i launch my own meme coin am i going to get in trouble like has the precedent been set like anybody can do this it should be fine i think i don't know i'm not a lawyer not legal advice not investment advice to go launch your meme coins but i think it's valid that's a question that many people like can we just go do this it seems like the libertarian free market fantasy is upon us on to more important markets maybe uh unless you want to say one more thing john

No, I mean, but we'll definitely see more of it. I would, before we move on, I do think we glossed over it a little bit, but it is, I think it is notable how quickly we are seeing states kind of fall into line on introducing strategic Bitcoin reserve bills. And thus far, those bills have been mostly entirely focused on Bitcoin, not broader crypto. We'll see if that continues. But I think that it shouldn't be understated that we are maybe starting to see some real game theory accelerate within the US. And regardless of what Trump does or says about broader crypto, there are people out there who are going to see the proof in the pudding of how these things trade against each other over time and where the real signal is um and i think you're

starting to see that a little bit at the state level and we may see that really accelerate um this year regardless of how trump coin performs yeah for sure i mean i just my screen sharing here yes i just pulled up i mean i i did a deep dive into these just looking at all the states i mean when i did it there was 10 i guess there's 11 now um there's some just really interesting things when you like look at the the the bills or the proposals like i just pulled up the pennsylvania one and you can see this one you know this was this one was introduced in november um and it follows a structure which if you look at some of the other states they all are very similar you know they they outline you know some sort of purpose statement and then eventually they start

getting into some definitions they all very clearly define what bitcoin is digital assets what private keys are what you know custody means um but but interestingly you know a lot of these proposals have come uh more recently uh pennsylvania's was um you know on the on the earlier side and it specifically let me see if i can pull out here so under the declaration of purpose. If you can see this, I mean, they specifically are calling out inflation erodes the purchasing power of the assets that we hold in the state. This this erosion diminishes the value of our reserves. The next statement says the Commonwealth of Pennsylvania does not have direct control over the national money supply. So we're sort of subject to a counterparty risk that

is outside of our control. And then they start saying some very positive things about Bitcoin and its performance and how you might think about it as a hedge against inflation. I mean, that's very well thought through. It also, you know, it lines up pretty closely with what Larry Fink was saying in our intro video, right? I mean, he said, if you're worried about debasement, you might want to think about Bitcoin. And effectively saying, you know, counterparty risk is something that might be of concern to you. And so when you start looking through a proposal like that, And there's, you know, 10 other ones. Some other interesting things that I saw were that a lot of these, as I said, look to be almost carbon copies of one another. And so it started to make me think, you know, these I mean, they're they're looking at each other's notes.

I don't know if they're using one original one, if it's Senator Lummis's original proposal from last year or if it's something from one of the earlier states that put a proposal out there. But they're all sort of copying each other. And there's some tweaks here and there. But they've all start. I mean, a lot of them have started to jump on the bandwagon and replicate each other. And I mean, I'm just starting to think that when this really starts to go, there's going to be a ton of momentum behind it. And now some of the states also, interestingly, they're not as focused on Bitcoin as the example of Pennsylvania was. You know, some of them clearly call out, you know, we want to allow investments in digital assets and precious metals. And they define digital assets as anything with $500 billion in market cap or higher. So they're starting to maybe imply consideration of a basket of cryptocurrencies.

And I think, again, to come back to what Trump did, I think he's unfortunately setting a bad example of having a personal allocation and all these other irrelevant assets. And so if the U.S. government does the same thing and doesn't focus exclusively on Bitcoin, you can bet like the states are just going to sort of copy what the U.S. government is doing. But I think this is a very powerful, very powerful trend. If you look if you look through some of the individual bills, I think it really starts to show that this could be real and this could be real relatively quickly. And once one domino starts to fall, not every state will jump in line, but I think a lot will. Completely agree. I think the states leading the way has been a theory of mine since 2019.

I was at Great American Mining and was seeing how state actors in Wyoming, North Dakota, Texas were engaging miners. And when you think about it makes sense when you talk about social scalability and nimbleness compare state governments to the federal government and it's much easier for an individual state to make a move compared to the federal government. this scales all the way down to the individual that's why bitcoin is so beautiful particularly satoshi's supply schedule is that it was aggressive in the beginning to make sure it got in the incentivized people to try to get their hands on it and most of the bitcoin in the world is held by individuals in self-custody now we've seen companies add it to their treasuries states are um writing legislation to potentially add it to their treasuries federal government nothing yet but it's being talked about and many people are expecting something so bitcoin is working as

designed and anybody listening to this individual institution you are on the smaller scale of of this compared to states and governments and i think um you should be acting as nimbly and as with purpose and urgency to make the right decision in Bitcoin. And hopefully the information we share on this show and the others that were involved in the other work that we do helps you clearly define that there's Bitcoin in everything else. Don't make the same mistake that WorldLibertyFi, the potential digital asset basket that could be included

in the strategic Bitcoin reserve at the state or federal level. john you got the dixie on the list what's going on with the dixie yeah i mean marty everything you just said is going to become even more important i think over um the next year or so um given i mean for a variety of reasons but um given specifically kind of what we've seen with uh the dixie the dollar index um relative to basket of the currencies over the last couple of months. And Logan, if you pull up that chart, yeah, you'll see we've kind of bounced off now. The top chart is the dollar. The bottom chart is the U.S. 10-year yield. Just early this year, so January, we kind of bounced off this 110 level, which we had not

really seen since kind of late 22 during the first rate hiking cycle. And you can kind of see a similar path here with the 10-year. The scales aren't perfectly adjusted to each other, but generally same story. And the 10-year also briefly, I think we got a little over 4.8, didn't quite break 5, but you've seen as we've gotten up into this neighborhood, it's rejected that a couple of times as well over the last few years, but it's always coincided with market turbulence, bond market sell-off, obviously, naturally, mechanically, that's what that means but then also um you know some degree of a sell-off in equities um and to some extent bitcoin as well but um you know it's this is kind of telling a story that i think um luke

roman and various others but especially luke um has really been banging the drum on very well over the past couple years where when we entered our most recent rate hiking cycle which was the first in basically 20 years, that set off greater strength in the dollar for the first time in a long time. And the problem with that, with our debt levels where they already are, is that begets even higher rates because the higher dollar relative to foreign currencies makes outstanding dollar-denominated debt that foreigners owe more difficult to service on the margin. and foreigners, largely institutions, central banks, um, and companies, you know, own 10 trillion. I think it's like, uh, you know, 50 trillion in total us assets, probably at least

10 trillion in, um, USD denominated treasuries. And so when debt gets more dollar denominated, debt gets more difficult to service on the margin, where do they go to, to raise the liquidity necessary to deal with those obligations? Well, they want one major thing they can sell, you know, the most liquid asset in the world is U.S. treasuries. So that puts selling pressure on treasuries, driving rates higher, which on the margin then puts more upward pressure on the dollar and kind of rinse repeat. And so you've seen the Fed and the treasury as well in different ways kind of step in with, you know, not QE, QE and issuance on the shorter end versus the longer end to kind of manage that, especially when, you know, at least it looks to be the case that when

we get to these kind of Dixie levels of kind of high 100s, getting into the 110 range, when the 10 year gets to close to 5%, you start to see things happening in the background to ease that pressure. And, you know, you saw that in late 22, you saw it in early 23 with the banking crisis and BTFP, you saw it in Q3 of 23. Maybe we've seen it now again, toward the end of 24. And so it's a key dynamic to be watching for the liquidity backdrop to the extent that the Fed is ultimately going to have to come in and manage that. But there's even something kind of beyond that, that obviously has implications for all risk assets and for Bitcoin and directionally that's good for Bitcoin. But Luke has recently kind of been highlighting something that I think is really

interesting related to that thesis that's particularly interesting now as a new administration comes in that is talking about instituting massive tariffs for the, you know, first time in a long time. And you've got a treasury secretary and Scott Besant, who is kind of has made allusions to reordering the global economic stage and kind of changing the system that we've been operating in for quite a long time, at least since 1971. And so I don't mean to make this a Luke Roman rehashed podcast but um there's a there's a short clip of you know one of his recent podcast appearances on monetary matters with jack farley that i think summarizes very well kind of what um what we might be looking at here and i think it directly ties into um everything that we just

discussed for the last 45 minutes about what the government may or may not do you know with bitcoin so I think it's worth checking out. So you don't think Trump has much negotiating power with tariffs? And also, you don't think tariffs could meaningfully reduce the deficit by generating income? As with anything, it's matters of degrees, right? Let's take it for illustration to an extreme, right? Extremes inform the means. Let's say we put 100% tariff on everything that comes into this country. Immediately, prices on the shelves are going to go up. People say, well, the dollar will just go up a lot to offset that. that's the okay but what did we start to show by saying if the dollar goes up like the dollar's

already too high like that's again people are saying things and not looking at second and third derivatives very important second and third derivatives tariffs up 100 we're gonna have a bunch of money come in okay dollar's gonna go up a bunch okay foreigners are going to dump bonds like never before they are going to dump stocks like never before u.s consumer spending is going to fall like never before, to use Trump's words. U.S. tax receipts are going to fall like never before. Treasury is going to dysfunction like never before. It will drive an enormous crisis and it will drive a tanking in risk markets and consumer spending and GDP. Bigger picture strategically, again, the post-71 system is very well defined,

particularly post-1980. The United States rule, supply the world with dollars and for a long while, not anymore, the risk-free asset to recycle those dollars into. In other words, we send our factories and jobs there. They send us the stuff. We send them the dollars. They buy our stocks. Well, if we put 100% tariffs on it, that is a declaration that is over. 100% tariffs, high tariff rates are a declaration that the post-71 structure of U.S. dollar reserve asset is over. I, Donald J. Trump, am ending it. And I think that might be what is at work here. And I think that's ultimately a very good thing for America. And the last thing I want to own are treasury bonds. The inflation in this country is going to go nuts. The Fed is going to have to do

some sort of yield curve control to contain yield as inflation explodes higher. The world isn't going to sit around and go, oops, I don't have enough dollars. I guess I'm just going to sit here in my factory and starve to death and let my wife and kids starve to death, all seven and a half billion of us. No, they've already got other pipelines, things set up in terms of whether it's the Chinese payment system, whether it is this gold settlement system, there's lots of way. Now, the bond market in that world has to get crushed on a real basis. And the United States government and consumer cannot afford a 10-year yield much beyond five. So that world, in my opinion, again, the second and third derivative strategically of, hey, let's tear up to finance

ourselves, U.S. wages explode. U.S. investment in productivity equipment explodes. Bond market yields explode until the Fed comes in and goes, we will buy every 10 year, every 10 year, everything to keep yields at five and a quarter. And we're going to, you know, keep the front end at two and a half. And we'll print as much money as we need. We'll send our balance sheet to 40 trillion, 50 trillion, 80 trillion, 100 trillion. We don't care. This is what, this is the second and third derivative of the breakdown of that system. It's. Ooh, doggy. Yeah. They're, they're in the, In between a rock and a hard place, and to your point, John, about Treasury Secretary Besant having been signaling over the better course of a year, year and a half, and not so slyly either, explicitly saying he thinks we need like a Bretton Woods reset, you got to rip the Band-Aid off at some point. And I think you may have touched on it, but I think it's important to reiterate.

We have $6 trillion of debt that needs to be rolled over this year. As we can see, the 10-year is elevated by 5%. That's not ideal. So the prospects of a better future in America, everybody's very bullish on them with the Trump administration coming in, but there are immovable forces at play in global sovereign debt markets that the Trump administration is going to have to reckon with. And if we're being honest, I think having Scott Besant in the position that he is in

is massively beneficial for the country just to navigate it. It's going to be tumultuous. It's going to be chaotic, volatile. There's going to be a lot of people losing a lot of money, But it does seem like Scott Besant has some sort of plan to try to thread this needle. Yeah. And, you know, I don't know that Trump has necessarily thought through all of the downstream implications of this. Maybe he has. But to the extent that his administration really wants to run this aggressive terror policy playbook and Besant is, you know, aligned with that and consenting to that. And he may or may not, you know, have total influence on exactly where that policy goes. But certainly he's got a key seat at the table to the extent that he is aligned with it.

We got to think he's very likely, you know, thought through those derivative implications. And so then you have to ask, like, if if Luke is right, that running that playbook effectively means, you know, implicit and implicit acknowledgement that the post 71 trade system that we have is done. it's over. It needs to be wound down and changed. That means that we have to move likely to some sort of neutral reserve asset system again. And that would also align very nicely with Trump's stated desire to reshore manufacturing and the defense industrial base and bring a lot more blue collar jobs back to the US if we are no longer the sole issuer of the world's fiat currency and reserve asset. And so you have to ask yourself, like, if he's thinking that and gamed it through and there is a need for a neutral reserve asset, certainly you'd think gold would

have a role to play there. But Basant is also, you know, more than aware, it seems from what he said of Bitcoin's existence and what it might be able to do. And I highly recommend to that point, everyone should go read the Bitcoin Policy Institute's paper addressed to Scott Besant that was released late last year. No idea if he's read it or not, but a lengthy paper that walks through all of these dynamics and suggests how Bitcoin might fit in to a new world where there needs to be some sort of neutral reserve settlement system and reserve asset. Um, so to, to all of the conversation earlier, uh, for the first hour about a strategic Bitcoin reserve, you know, it, it sounds like Bitcoin or hopium and it, it obviously everyone wants

their bags to get pumped and everyone wants to get rich and there will be noise and the waters will get muddied by Trump coin and meme coins and things like that. But Marty, like you're saying, these are real dynamics at play right now that are going to have meaningful implications for the next couple of years. And, you know, what happens over the next century may well turn on, you know, what happens over the next few years with the monetary system. And certainly seems like more and more people high up in the administration are aware of how Bitcoin might work in as a solution to some of these issues. Yeah. From what I can tell, Scott gets it. Bitcoin, when I say it, I mean Bitcoin.

I don't think he's as up the curve as we are, but I think he's a sound money guy. He's always been a gold guy. And I think the natural sort of evolution, if you understand sound money and gold, and you're not a Luddite who is just a pure gold bug that has big, large bags that you've been waiting to pump for five decades, um you will you will recognize that bitcoin is a superior neutral reserve asset and

from the geopolitical incentive slash game theory perspective if you truly believe that china and russia have been accumulating large gold stockpiles over the course of the last two decades in preparation for a pivot away from the u.s treasury and dollar dominated reserve asset system if If you really wanted to throw a wrench in that plan, you would try to move some of your reserves to Bitcoin and pick that horse over gold. Yeah, again, on the margin, you know, you don't want to be last to make that move, right? No. And everyone's keenly aware of that. Yeah, that's inflation still elevated, ticking higher.

Hot jobs report earlier this month. And, yeah, I think people were in the honeymoon phase. We're very squarely still in the honeymoon phase of the second Trump term. But I think the honeymoon phase is going to end rather quickly, again, because of all these dynamics that Luke described, despite the fact that we have a new administration and we're turning the page from an American political perspective. These problems are persistent in the background.

And again, that was the big meme towards the end of the year last year. Interest expense on the debt surpassed military and defense spending for the first time ever, and yields where they are, and the necessity to roll over $6 trillion of debt this year, that problem's only going to be exacerbated. That line is only going to go up higher. That slope's going to get steeper, and the problem's going to be way more front and center this year.

I think people are a little hungover with the inauguration and everything and this transition, but now it's time to settle in and actually deal with structural problems that exist in our economy and particularly the fiat monetary system and the debt system, the sovereign debt system. Are you going to say mandibles? Are you asking me? Yeah, you look like you're ready to say it.

I was curious if you guys were going to ask me. That would be a very Matt O'Dell thing to say. But I mean, look, the last 10 or 15 minutes, like that was a very complicated macro discussion that what we're pointing to, like you don't want to own treasuries, like maybe it makes sense to own Bitcoin. Maybe we're going to have like a different monetary reserve system. Like, I agree with all that. I don't pretend to be a macro pundit. So like I'll be, you know, John's doing the right curve investing, like pointing to Bitcoin. I'm just on the on the left curve.

I see the secular trend. It seems pretty obvious to me. There's I mean, with Bitcoin, there's there's so many different ways you can look at it, whether it's from a macro lens, whether it's from a political lens, any technology lens that all you can find a path to Bitcoin from so many different ways. I'm not, I don't pretend to be a macro expert. Uh, you know, what you guys are saying makes sense. I'm a, I've been a private company investor for 20 years. I go deep on that. I'll stay out of the macro lane. Um, but yeah, I think, uh, mandibles, uh, maybe, uh, but, uh, just don't, uh, just don't mid curve it. That's all, that's all that matters. Left curve, right curve, all fine. Just stay away from the big curve. Yeah.

That is the only money we owe ourselves. We're fine. We're fine. That is the only money we owe ourselves. All right, next part of the show. You have it in the deal breakdown section, but it's not really a deal. It is Coinbase bringing back a lending product,

a Bitcoin-backed lending product, but there's some nuance here. John made a tweet that perfectly illustrates the complexity of this particular lending product that coinbase launched they had a lending product in the past they shuttered it and they're bringing it back in a new form and john since you made the meme i'll let you explain the dynamics of this particular lending product yeah i mean look um the the general idea of this is what what people want when they have so to take a step back um bitcoin backed loans are uh have been you

a very successful product within Bitcoin. Unchained Capital has done probably over a billion dollars of originations now with zero loan losses over the last five or six years of running that product. You can see why they're popular for someone who bought Bitcoin at a much lower cost basis and has been holding it for a while, maybe wants to use it to use the purchasing power embedded in it to make a down payment on a house or pay large expenses, kids education, pay for retirement expenses, whatever it may be. They likely don't want to, if they can avoid it, pay the capital gains tax immediately on doing that, which they would have to if they sold it, sold the Bitcoin and use the resulting dollars for the purchase. And they also may just not

want to miss out on future purchasing power gains if they remain very bullish on Bitcoin's path going forward, which most people who hold Bitcoin are. And so you can kind of see why taking out a loan against your Bitcoin is desirable. Same reason as it's desirable to take out a margin loan for a large stock portfolio or home equity loan or something like that. Similar concept at play. It's historically definitely been hard to get great liquidity at great terms into those products, largely just because the traditional financial world and, you know, dollar liquidity providers, as we've kind of discussed for an hour on the show and prior shows and Marty for the last five or six years on your podcast, you know, the world is still very slowly waking up to Bitcoin

and understanding its differentiation versus crypto and its properties that make it pristine collateral for a lending product like this. And so it's been difficult for massive dollars to come in and size to fund the dollar side of those transactions. But the top part of that meme was, you know, it's the gymnastics meme of a girl basically walks from one end of the mat to the other. First step is deposit Bitcoin. Second step is borrow actual dollars. Coinbase has rolled out this product this week, or I guess relaunched the product in a new form this week or last week that is offers kind of Bitcoin back to lending, but with a lot of strings attached and asterisks and additional layers of technical risk under the hood. So whereas an Unchained Capital loan

with an energy capital loan, you deposit Bitcoin into a two or three multi-sig vault where you, as the borrower, always hold a key and have visibility directly on Bitcoin's verifiable blockchain that your collateral has not moved, has not been re-hypothecated. You can have it, you know, you have that throughout the life of the loan and you receive dollars, like real dollars that you could go, that could go into a bank account that you could go spend on something right away um coinbase has kind of taken a different approach where uh you know they've built out a proprietary ethereum l2 called base um there is a a separate uh company or protocol developer not related to coinbase uh called morpho that has developed a lending protocol

that can interact with base and um you know that's where the collateral is is held and that collateralization process gives you a loan in usdc so a stable coin which is effectively a synthetic claim on dollars usdc is managed by circle which famously was holding you know the vast majority of its um billions in reserves uh at svb which uh almost went under and entirely nuked the usdc products if not for effectively a fed bailout two years ago you take that usdc and then if you want to go spend it on your down payment or on your car or on your child's education then you need to figure out a way to swap the usdc for what we would call actual dollars that you know could be spent that you know any bank or merchant would you know actually

understand and be able to interface with i got some pushback on the meme saying that there's no such thing as actual dollars because they're all made up um agree with that but uh certainly there is a dollar system with one node called the Federal Reserve that all of your banks are plugged into. And when I say actual dollars, I'm talking the language that they speak, right? And USDC is at best a synthetic claim on top of the language that they speak that does not buy you anything in the real world unless you want to get a Coinbase card, which then it's yet another layer of kind of lock-in and yet another layer of removal from anything like a, you know, permissionless system. It's as permissionless as it can be, at least, that you would have with kind

of a real Bitcoin-backed loan. So in any case, the point of all this is to say, if you went to sleep when I was delineating the differences there, that's kind of the point, right? Is look at how complicated that, you know, a company like Coinbase makes a product like this just to avoid having to natively interact with Bitcoin blockchain and as a complicated workaround to actually getting dollar liquidity into the system for Bitcoin holders. You know, there are huge, as I said, technical risks of all this, you know, daisy chain of combined permissioned proprietary layers at play here that you have to accept if you're going to use a product like this. Your Bitcoin is entirely custodial. You have no kind of guarantees of where it is. And at any

given time, you have no guarantees that it's not being kind of lent out and re-hypothecated to someone like a three hours capital who famously blew up last cycle. And you're dealing with variable rates in a product like that that can move around quite frequently and may or may not lead to more frequent margin calls. So basically, there are Coinbase's way of dealing with the deficiencies and difficulties of a Bitcoin backed loan. It seems to have been create incredible complexity and counterparty risk to get you dollar claims that you can't actually spend anywhere. And I delineate all that because the killer app that people want, right, is just to deposit the Bitcoin, ideally with, you know, a key that allows them to to see it on chain, but at the very least

just deposit Bitcoin in a relatively safe way and receive back dollars that they can go spend on something. We have definitely seen growing indications. Unchained's had that for a long time. As I said, the liquidity has been tough. We've definitely seen growing indications that there are more products like that coming, that there's a lot more institutional interest because everything we've talked about on the show in lending against bitcoin the there is a growing understanding of how bitcoin natively on chain is pristine collateral that can be liquidated 24 7 365 with perfect visibility and i think over the next year or two um the solution to this problem is is going to be more dollars naturally come into the system not let's create a rube

Rube Goldberg machine with a ton of complexity, layers of technical risk, counterparty risk, et cetera, to kind of halfway solve for the difficulties that this project has seen in the past. So I'll stop and let you guys weigh in further. But I think it's just it's illustrative of what you get when you don't have a Bitcoin only focus. It's, you know, a product that looks like this, right? Versus something that's a lot more durable and actually gets people what they want in the end. Keep it simple, stupid. Put Bitcoin in address. It sits there. Like you said, you have a key. Maybe you don't have a key, but maybe you have a visibility to the address to see it's not being rehypothecated. The Bitcoin's there, the counterparty, the lender sees the

Bitcoin there and they say, all right, I'm going to wire dollars to your bank account. It's very simple and john isn't like the coinbase is trying to uh like solve this liquidity problem that exists i think they're also trying to legitimize this idea of defy and all this complexity that they built another key part of this loan too like if you're a bitcoiner and you want to access this loan because you perceive that you're willing to take the variable rate risks that exist i think rate changes daily or hourly maybe even um because you think on average you're gonna get below the market rate of the competitors out there with the more simple solution uh be aware like if you have bitcoin like there is a taxable event involved because it's not actual bitcoin that's being

collateralized in this complex d5 system that coinbase has brought to market it is rap bitcoin So if you don't have wrapped Bitcoin already and you plan on leveraging this loan product, what happens is you send Bitcoin, they change it to wrapped Bitcoin. That transmutation from Bitcoin to wrapped Bitcoin is a taxable event. So you're not even getting the tax benefits unless you already have wrapped Bitcoin on Coinbase. So be aware of that if you're thinking about going to leverage this product. And I think the other point, which is something we've talked about on this show and it's core to our thesis at 1031, is this whole complex DeFi architecture that's being built out and marketed and pumped this complete noise and a misdirection from what we deem to be the signal, which is going the opposite direction, the Bitcoinization of finance. The world of decentralized finance thinks that we just need to throw away everything that's been erected in the financial system over the course of thousands of years of iteration, legal development, and structured finance innovation. And I simply think that's, number one, stupid, and two, naive.

You have this massive system that's been built up over the course of millennia. Really. And that system desperately needs to be recapitalized with better collateral. And so I think that is what our thesis is, is these more simple structures, which John described, are actually where the signal is and what the system actually needs. It was actually going to help recapitalize the system correctly with better collateral instead of just throwing that system away and being like, no, we're doing pure decentralized finance with all these other utility tokens and crypto tokens. I don't think that's the answer. Yeah, I agree. I agree with that. I mean, I do think I also agree with John, your explanation. I mean, the the Coinbase product.

I mean, I look at it as it's one of the major themes that I see for for this year is just it's sort of an acknowledgement that there there's a real use case for, you know, a lending or borrowing product. Now, we've seen in the past over the years, like these things get structured the wrong way, that there's counterparty risk that many people are not aware of, that the risk is significantly underpriced. But there was tremendous demand, you know, in the last cycle for some of these products, for the credit cards, you know, the ASIC loans. You know, we may not see that level of craziness this time around because people really got burned. But I do think we'll see we will still see, you know, lending and borrowing that doesn't necessarily make sense. But I think that there's going to be a lot that will. And so for me, one of the big themes I expect for this year is just more on the credit side. You know, I think this is Coinbase doing this is one example of it.

You know, Cantor Fitzgerald announced at some point last year, maybe it was at the Bitcoin conference, that they were going to throw two billion dollars initially at Bitcoin back lending. We know of, I mean, there's already a handful of companies in our portfolio that already have some type of lending product. And we think there's demand, there's significant demand coming and more companies that are building interesting things for it. Yeah, and you have it on the list. And John, if you're listening and haven't read Ross Stevens' annual shareholder letter for Stone Ridge, in that letter, he alludes pretty directly to the fact that Bitcoin-backed lending is going to be a pretty big focus of NYDIG moving forward as well. Yeah, highly recommend everyone go check that out. um and it's uh a good example of um the the kinds of green emission candor marty neidig like there are large institutions with deep pools of real dollar capital you know real in quotes whatever

that means that can come in and get involved in this market you know big institutions take time um you know maybe they don't move as quickly as uh you know a crypto startup but when they come they're going to come in size. And the product itself is not that complicated to launch from either a technical or a financial perspective. It makes a lot of sense within existing frameworks, as long as you can get your head around the nature of Bitcoin, what it is, how it works, and why it is pristine collateral. So yeah, reiterate all that. I think the future of finance and the future of um bitcoin backed lending looks a lot more like the counterparties there look a lot more like night egg and kenner fitzgerald than they do um a you know crypto d5

startup somebody who likes these products i welcome the wall of capital coming bring that rate down bring these rates down these rates should be we've talked about this a lot internally But when you consider the risk, particularly with Unchain's collaborative multisig model and the LTVs necessary to get a loan out with them, if you're a credit fund underwriting the risk profile of a credit product and you look at this one and you understand Bitcoin and how it works and the ability to top up collateral very, very easily by sending Bitcoin to an address at any point in time, 24 7 365 like it nothing's risk-free but it is as close to as risk-free as you can get on the lending side of things and there's a lot of demand for buy borrow die do you think bitcoiners wake up to this to this mantra this mindset moving forward i mean you gotta think so right there's uh certainly a lot of latent appetite for um to engage in something like that so i think the and it's notable too the last thing maybe to say on this point is um to the extent that

you can do that sustainably at a reasonable interest rate um with reputable counterparties and you know um uh well-controlled counterparty risk again ideally in some sort of multi-set you have visibility into the extent you can to the extent you can do that um that just increases bitcoin's scarcity that much more right effectively when there's not uh incremental cell pressure from ogs or even just existing holders that came in in one or two cycles ago that now want to you know leverage their purchasing power in some way um if they don't have to take that to market to sell it for dollars right um if they can just sit on their bitcoin and manage a bitcoin backed loan um with whatever income they have um that changes the game too

in terms of incremental supply that's just going to be naturally freely available for distribution as people get wealthier so something to consider as well if you have not established a bitcoin position yet is that um existing holders may over the course of the next uh cycle be uh significantly less inclined to sell it to you they may rather just take out a loan instead yeah moving on we've got a we're going along this episode boys we've got a couple more predictions headlines and predictions first comes from the corporate bitcoin treasury side of things between today and the last time we met about a month ago there has been a new shareholder proposal this time at meta it is the same i believe it's the uh i don't think he's doing

it on behalf of the firm he works for anymore um ethan peck he on behalf of the national center for public policy research um got this proposal in front of microsoft and i believe one other company he's done the same for meta now and meta is oh and amazon as well but meta particularly is interesting because mark zuckerberg holds a sailor-like controlling stake in the voting shares of of his company so if there were one of these behemoth tech companies that could move nimbly. Meta is probably the most likely due to the share structure and the voting structure of their shares and Mark's control over that. Yeah, I believe he owns their controls more than 50% of the vote. So very similar to the position, very similar in that way to the position

Michael Saylor was in when he adopted the Bitcoin treasury strategy for MicroStrategy. The similarity is probably in there in terms of the existing treasury size of the two and the health of the existing business. There's, you know, um, not a much healthier business, at least right now in the world than Meta and the other mag seven companies. Um, but, uh, among the, the mag seven companies that have gotten this proposal. Um, so right now it's Microsoft, Amazon, and Meta. Um, you gotta think if anyone was going to go for it, it would be, you know, Mark Zuckerberg, who has already um shown an interest in crypto right with um with libra the the attempt at you know their own uh facebook currency um that david marcus headed up before he left and went to light spark

um so the the history's there to some extent that he's at least interested in um digital assets and and digital currencies um and so i you know wouldn't shock me if uh the guy with more than 50 of the vote and a massive treasury and a history of being fairly forward-thinking and a bit of a maverick and priding himself on that status, allocated a tiny fraction of his treasury to Bitcoin. I don't really think it'll actually be him. My prediction on the Bitcoin treasury side for this year would be, I do think we'll get a major headline on this this year. I think it'll be like a top 100 S&P 500 company doing that we haven't already seen. Like obviously, you know, Block and Tesla are there, but another one that we haven't seen yet adopting some sort of Bitcoin

treasury strategy. But it could be meta for sure. But just like the Bitcoin back lending thing, you know, I don't think this trend is going away given what we've seen with MicroStrategy and all the copycats that um it's spawning and the growing institutional legitimacy of of bitcoin i think we'll get uh some meaningful headlines on this front this year i'll take the other side i think it could be meta looking at meta's financials right now the company reported net income of 15.7 billion for the third quarter of 2024 representing a significant 35 percent increase from 11.6 billion in the same period the previous year they're printing cash right what are they i mean they could reinvent i mean we know they actually shuttered it's weird to say

but they shuttered the meta project within meta which was there they're a uh ar 4am to ar which failed miserably and i believe they funneled 40 billion dollars into that project over the course of the time that they worked on it um so if you're thinking opportunity costs do we go for this moon shot um project internally or maybe you can still do that or allocate to bitcoin i don't know and zuck's on this trajectory where he's trying to become based man and um bitcoin yeah does align with that and um that sort of aesthetic if you will i'm uh i'm very bullish on this trend i mean And I think at this point, it's not very, I'm trying to pull up my sharing screen again. Can you see no BS Bitcoin?

Yep. I mean, at this point, you know, establishing a Bitcoin treasury, I mean, you could make the case that, well, we're, you know, we only have two or three companies in the S&P 500 that have done it. So I don't know. We haven't really broken the ice yet. But, you know, I'm just I'll show some examples here just to show that, like this, this is a trend that's got a lot of momentum and, you know, you're not necessarily stepping out on the ledge by yourself. I mean, this is so no BS Bitcoin is randomly. This is from yesterday. It's announcing, you know, the latest corporate Bitcoin purchases.

I mean, some of these are sort of no name companies, but here's a list right here. I'll go to the next tab. This is from the weekend. Again, MicroStrategy shows up similar scientific. you've got a number of other companies here a distilling company and then there's a table look at all these companies that have announced either establishing a Bitcoin treasury policy

operating on a Bitcoin standard starting to acquire Bitcoin on their balance sheet no doubt some of these are doing it because they may want to pop they think that they've seen it with some of the other companies get a premium on their stock price. So there may be some financial arbitrage at play. Here, I'm pulling up bitcointreasuries.net. It's got a whole list of the known publicly announced Bitcoin treasury positions. I mean, you can scroll down this. This list is massive all across the

globe. So lots of companies are doing it. Some are doing it because of the arbitrage. Some are doing it to pull it back to, you know, the Larry Fink video that they're worried about their corporate treasuries and being debased and wanting to have reserves that don't lose value. Some of them are doing it because there's Bitcoiners that are embedded in these companies and believe in the long term value. We've seen a few companies in the S&P 500 that are doing it. I think that I wouldn't be surprised if it's like three to five percent of the S&P 500 announce that they're going to review it, that they may have a proposal up to establish some sort of policy around. I mean, think about none of the public companies were really going to step out on a limb when the last administration, the government, the SEC, the policymakers were anti-Bitcoin. So the first moves are going to be that, you know, the policymakers, the politicians, the administration changes their stance on it.

We're now seeing that. I mean, we already went through earlier that there's 11 states out of 50 that have put some proposal up to review it. So we've got 20 percent of U.S. states now are potentially evaluating it. Now they haven't approved it. And that's going to take some time. But if there's 20 percent of U.S. states looking at it, that's one interesting signpost. The other interesting aspect of the states, which I didn't mention earlier, is that you can look through the detail and each state is sort of some of them are more specific about what are they recommending. Wyoming is saying, you know, we're going to look at up to a three percent allocation of our reserves. And these are like a limit. So it could be much less than that. Texas said 1% of their general revenue might go towards Bitcoin purchases. Massachusetts called out a much higher number, up to 10% of their funds could be invest in digital assets. flicking through here. Pennsylvania also called out potentially up to 10 percent. So you're seeing

some indications that even states may consider quite large positions. I think that note into Facebook was suggesting a two percent allocation. So I don't know. I think this is a big trend. I think we could be surprised to the upside on it, especially as the U.S. government and some states start to make moves, I think you'll see a larger proportion of large public companies considered. Does that mean they'll be able to move quick enough to action on it? It may take some time. So I'm not saying that 3% to 5% will actually buy Bitcoin, but I think it could be 3% to 5% that are seriously taking a look and announcing intentions to take a look. See, that's a spicy take. That's what we need. That's the alpha, that we could have

25 companies in the S&P 500 make an announcement on this this year. I like that more than my prediction of of at least one. I'm going to go with that, too. I mean, 5% of the S&P 500, that'd be that'd be beautiful. I mean, if you're seeing if you're seeing proposed allocations of 3%, 5%, 10%, then I also think it's not surprising that you might see 3% or 5% of companies consider it. yeah and it gets it gets uh it's it's non-linear too right in terms of um the momentum for it like

it gets progressively easier to do it the more other peer companies of your similar size and stature are also doing it or at least proposing it or looking into it i think i've referenced it before on this podcast but the video of the guy dancing like a maniac on the hillside at a concert and everyone's kind of looking at him and then one guy joins and two guys come and then you know within like a minute it's like the entire group around him is kind of dancing like maniacs as well and so um that can work for the positive and the negative in human psychology but the reality is as more and more of your peers kind of signal socially that something is at least you know worth talking about and thinking about and looking into it gets a lot easier uh pretty quickly to do the

same yeah it's happening it's happening zuck i don't know if i'm comfortable maybe if zuck doesn't kick it to five percent rather quickly but i'll take the dark horse of mark zuckerberg pulling the trigger on this last topic to talk about the repeal of sab 121 many were thinking was going to come yesterday maybe it comes today um but sab 121 uh basically makes it so that banks can't hold effectively cannot hold bitcoin and other crypto assets on their balance sheets due to the reserve requirements um is it because of the reserve requirements i think it is right yeah it's a piece of accounting guidance from the sec that would effectively require them to over reserve um any uh crypto assets held on behalf of clients in custody i think one to one

so effectively like very uh makes it very expensive right now for um traditional custodians to in most cases to to do that really that but impractical because of the volatility everything yeah that too right um bny was notably late last year i think the first traditional custodian to get an exemption from that um but certainly you have to think i mean the banks are very clearly like we've seen just in the last week morgan stanley ceo bank of america ceo have both reiterated comments that they want a path for something like this to happen they want to work with regulators to make it happen you saw bipartisan support for it last year in a bill that was ultimately vetoed by the biden administration which i think actually i don't know that this

could be established via eo maybe it could but i think it has to be like a bill that then trump signs off on but i could be wrong we're i think we're increasingly expanding the scope of what what can and cannot be accomplished under an executive order but in any case yeah the this is another place where the incentives are all aligned um we were almost there last year you gotta think uh it gets there get it pretty soon um and when it happens i think we've said it before but a lot of these asset managers and banks are going to find that there are uh not a lot of um ready-made assets out there to to purchase to um get them into this game quickly so um bullish for bitcoin but certainly bullish for uh bitcoin equity as well yeah

yeah i agree with that i mean i was thinking through other other expectations you know other predictions i i think that um um, you know, the, the Bitcoin treasury theme was a big one and it would make waves. Right. And I think it still can make waves. Like if there's a, a big S and P 500 comes and announce a huge position. So that still could make waves, but I think like the days of, you know, your random company announcing, you know, a Bitcoin treasury position, I think it like the excitement around that is going to diminish. But I do think beyond just these treasury announcements that there's going to be something else. You know, what's going to be the new flavor

of that for 2025? I do think there's going to be something. Is it, you know, if you think specifically within our ecosystem, Bitcoin technology, Bitcoin equity, is there some type of strategic acquisition could potentially could be is there a potential you know public listing uh is there a major partnership or announcement you know company reaching uh unicorn status something like that i mean there's gonna be something like that um that happens um what is what is gonna be the new flavor of it i don't know um but i can i can see that there's going to be you know a next level up that's that's more than just bitcoin treasury um and that i think would be exciting to see

yeah i'll make a prediction on the tech side of things spent a lot of time with cali in costa rica to begin the year and on the bitcoin tech side of things look for the proliferation it's already been happening but i think we're going to see breakout year for eCashBits, particularly on the CashView protocol and innovations and applications that arise on that protocol. I think that it's going to be the year of CashView breakout. It's going to be exciting.

Anyone not following Callie, ideally on Noster, but if you haven't made the jump yet, at least on Twitter, I highly recommend you do that. uh he's constantly dropping alpha on new developments that are happening um with cashew many of which he's not even responsible for he's just kind of reposting things that other devs are kind of building in this um you know the open protocol um which is the power of something like that and something like bitcoin so um agree with you cali is a high signal follow and i think um definitely someone to watch closely in that space someone to watch closely this year that's C-A-L-L-E-B-T-C.

That's his handle on X. And Kali's got some emojis on it, on Doster. Just search Kali on Doster. But that's where the signal is, freaks. I think if you're looking at how the world of quote-unquote crypto, and I think the description of crypto is actually more apt for Casio, considering it is a mint that leverages cryptographic blinded signatures to bring their technology to life.

I think that's the signal in terms of what this industry is going to produce in terms of innovative banking infrastructure. It's actually a return to something that was attempted in the 80s and 90s, which is this idea of e-cash tokens. It's now possible because you have the permissionless Bitcoin network that you can you can build it on top of um so keep an eye on that two hours gentlemen it's maybe the longest rip we've done there was a lot of stored up alpha over the last month that we had to that we had to drop so that explains the longer episode this was the bitcoin alpha of the week

Enjoy your weekend, freaks.