The Wolf Of All Streets - Bitcoin Or Bust: Lyn Alden Warns Of Fiscal Doom

Episode Date: August 10, 2025

I sit down with Lyn Alden on The Wolf Of All Streets to find out if anything can slow America’s runaway debt train. We dig into tariffs, interest rates and fiscal dominance – and why they point straight to Bitcoin. Watch and let me show you how these forces could hit your wallet sooner than you think. Lyn Alden: https://x.com/lynaldencontact This episode is brought to you by Binance, the world's #1 crypto exchange, trusted by over 270M users worldwide. Start your crypto journey with Binance: 👉https://binance.onelink.me/y874/wolfofallstreets Binance is not available in certain countries, including the U.S., check its Terms for more information: https://www.binance.com/en/terms ►► JOIN THE WOLF PACK - FREE Telegram group where I share daily updates on everything I'm watching and chat directly with all of you. 👉https://t.me/WolfOfAllStreet_bot ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/ ►► Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities! 👉https://archpublic.com/ ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code '10OFF' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker Follow Scott Melker: Twitter: https://x.com/scottmelker Web: https://www.thewolfofallstreets.io/ Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Investments Timestamps: 0:00 Intro 0:36 Nothing Stops This Train 2:00 Tariffs And Debt 5:26 End Of Falling Rates 9:32 Political Gridlock 12:11 Fiscal Dominance 17:16 Yield Curve Control 21:02 Fed’s No-Win Situation 25:28 Bitcoin’s Role 31:54 Portable Capital 36:21 Global Currency Choices 40:52 Institutional Adoption 46:41 Cycle Outlook 47:22 Sovereign Bitcoin Reserves 54:33 Altcoin Treasury Risks 56:32 Cycle Signals The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

I'm curious if you found anything that could possibly slow this trade. When it was done in the 1940s, it was World War II. So nobody was looking at treasuries. They're all looking at what's happening in the Pacific, what's happening with, you know, Europe. You probably get a weaker dollar. You probably get a boom in emerging markets because they have all that dollars on in debt that gets relieved. Time-based capitulation. My favorite thing to watch when people lose their mind at the same price as it was six months ago.

You loved it six months ago. You hate it now. It's literally the same price. If you've listened to my interviews with Lynn Alden in the past or any interview with Lynn Alden, you know that nothing stops this train. So I started with a simple question, does anything slow this train? That started an incredibly interesting conversation about fiscal dominance, the path of United States debt that approach our government and the Fed are taking to the economic situation

in the United States, and of course where Bitcoin fits into it all. You can never miss an incredible conversation with Lin Alden. So you've gone and remained viral for saying nothing stops this train. I'm curious if you found anything that could possibly slow this train. This episode is brought to you by Binance, the world's number one crypto exchange, trusted by over 270 million users worldwide. Start your crypto journey with finance at finance.com.

Finance is not available in prohibited countries, including the U.S. Check its terms for more information, www.finance.com slash e.N. slash terms. There are certainly things that could slow it. We saw attempted to be slowed pretty heavily in 2022, for example, when the Fed started their initial very hawkish activities. And it started to reaccelerate roughly by the end of the year and especially in early 2023. One of the things I've been highlighting in my research is,

that right now one of the levers that does somewhat slow it are the tariffs that basically represents at least at a current kind of monthly basis the biggest tax increase in a very long time and so that actually does somewhat reduce the near-term deficit not by cutting spending but by increasing taxes now the numbers are still smallish even though we're talking giant numbers here so when you look at say you know the u.s economy's 30 trillion dollars GDP roughly annual spending by the federal government is over like $7 trillion. Their income is like over $5 trillion. So you're talking about a $2 trillion deficit delta. And the tariffs are raising hundreds of billions of dollars at an annualized basis. We'll see how long that is sustained

if volumes kind of change based on some of those numbers. But I think it's not necessarily that the train accelerates every year. It's more about the unrelenting nature of it. So sometimes it slows that a little bit. Sometimes it re-accelerates. For example, the big, beautiful bill kept it going pretty strong. If anything, it gave it a minor extra push. But then the tariffs kind of pull it back a little bit. And so the main point is that deficits as a percentage of GDP remain historically elevated. And while they can go up and down maybe a couple hundred basis points, they're pretty locked in. There's very little that I can actually stop it. And we're paying a tremendous debt service on it, which inevitably makes it continue to increase even if you end up

in a small budget budget surplus or neutral, right? Yeah, the interest expense is one of the key levers that changed. So a lot of people ask, what changed? I mean, people have been talking about the debt and the deficit for decades. It's kind of infamous at this point. People, you know, in the late 80s, early 90s, it kind of reached a crescendo in American politics. That was kind of the peak zeitgeist for it. For example, the famous national debt clock went up in the late 1980s. 80s, Ross Pro ran the most successful independent presidential campaign largely on this topic in the early 90s. And that was kind of the peak period. If you look at it up, that was actually the peak level of interest expense as a percentage of GDP. Because he still at that time had pretty

low debt the GDP, but it was combined with very high interest rates. Now, what they didn't really foresee, and the reason a lot of these people were like 30 years early in their alarm is it was not because the problem didn't happen, but because it happened slower than they thought. And one of the main reasons was they opened up China to the rest of the world starting in the 80s. The Soviet Union fell in the early 90s, and that whole block opened up to the world. So you took Western Capital, Eastern labor and resources, combined it together, very disinflationary. That was beneficial for interest rates to continue falling, so we had this 40-year period of falling interest rates, which really kind of minimized interest expense.

If you double your debt, but you cut your interest expense in half and you keep doing that, it's sustainable. And the problem is we've roughly, you know, the whole Western world hit zero. You know, in some places it went negative. Negative. Yeah, in the U.S. It went borderline zero, depending on what part of the curve you're looking at. And so now, if we're merely in a choppy sideways pattern going forward,

which is, you know, less extreme than that kind of negative or zero yielding environment, because now the bond market is more demanding of some yield. And because the realities that the fiscal situation are understood, that's one of the key levers that changed, along with demographics and some other factors that make this kind of the past five years or so different than the past, you know, 40 years that came before. So you mentioned tariffs, obviously, slowing the train a bit. I love how you aptly named that a tax, right? Which is sort of the opposite of the rhetoric we've seen about lowering taxes and, of course, the inflationary effects of the big, beautiful bill.

And we had doge and talk of austerity and cutting from the beginning. It seems like the current administration is all over the place as to how they view the debt versus everything else or how big of an issue they see it as. I mean, we've clearly seen a pivot to we're going to grow our way out of this, not we're going to cut our way out of this. Yeah, I think, I mean, like any administration generally has different voices in it is the typical thing where there's a king and a bunch of advisors.

is trying to get the king's ear. You know, this administration had more of the pro-tariff side versus more of the more free trade and cut side, which was kind of the musk side of it. Obviously, you know, Doge. I've been kind of vocal from the beginning that Doge would be ineffective at doing major cuts because they weren't going after the main areas.

They didn't really have the authority to go after the main areas, which are interest expense, Social Security, Medicare, defense, veterans benefits. You can kind of add that to defense. that alone represents by far the biggest piece of the pie chart. Everything else they were going after was like the other 15 to 20%. So even if you were to somehow meaning to reduce that 15 to 20%, you know, let's see, cut a quarter off of that,

there's really not a ton. You're kind of picking up nickels in front of the steamroller. So yeah, they have pivoted more toward that running hot, keep industry's low environment, which is what we saw the last time the U.S. was in fiscal dominance, which was the 1940s. that is kind of the main thing going forward. And I think right now, I guess one of the surprising things to me is the speed of the pivot toward tariffs,

which is that they got a pretty significant chunk of people to be really happy about tariffs. So, you know, when the government says, hey, look at all the hundreds of billions of dollars were raising from tariffs, this is winning. It's like, well, if you actually look at who's paying this, it's mostly Americans so far. And it's challenging because they were in a very politicized environment. So if you're just trying to analyze just nonpartisan, what's happening with the numbers. If you're just trying to look at the numbers, you'll, you know, people can have it colored by, you know, people are against it. We'll look toward one type of source and people for it.

We'll look at another type of source. But we can look at things like, for example, you know, import prices are measured pre-tariff. They're not down in aggregate so far. You can look at, for example, consumer prices around the margins for goods are inching up is somewhat complex. by the fact that there was import front running. So businesses rightfully, you know, in quarter one, when they saw these tariffs coming, they were like, well, this import double our amount. Get everything into a bonded warehouse and worry about it later. Exactly. Exactly. Yeah. Yeah. And that gives them a few months of trying to keep prices low,

see if they can weather through it, you know, because they're other competitors and nobody wants to raise prices first, obviously, if they can help it, you know, to keep market share. And so there are a lot of complex variables, but right now, you know, the majority of it is being paid by the combination of American consumers and businesses, you know, offset by some front running and around the margins and some lower volumes. The Nothing Stop to Train thesis really had two layers to it. One is that there's so much political gridlock that it's very hard to meaningfully raise taxes or cut spending. And then the next layer below that is that the U.S. is so financialized that even if you somehow did do austerity, for a period of time, it would likely slow down the economy and or cause the stock market to have a flatter period, which because our tax receipts are so financialized and thus tied to ever rising stock prices, starts to hurt you on the income side. And what tariffs are interesting is that they kind of found a way to pierce through that first layer, which is that

by calling in a national emergency, they were able to kind of bypass that, you know, polarized congressional environment and actually just do a major tax. increase, which, you know, if you asked me a year ago, would not have been my base case. So that's why it does somewhat slow the train around the margins, but then it starts running into that second layer. And that's why I think it'll be, if we are having this conversation three years, five years from now, we will still be in a very high deficit environment, even though the numbers can go up and down a little bit. I've had multiple conversations with people about tariffs who believe that the country,

the other country is paying them still. So I don't think you can even have a baseline conversation. I wonder if when Trump started floating them, it was really about raising money or about unfair trade deals or if he just quietly knew this was a way to tax people without that narrative spreading. Yeah, I have trouble speculating about that because I don't know. It's hard to read what people think. I can only look at the numbers of what's happening. And if you think about it, I mean, it costs like trillions of dollars to rebuild a manufacturing base somewhere else. So we import trillions from the rest of the world. world, we spent something like the baseline was 80 billion annualized rate of manufacturing

construction spending in the U.S. That was kind of the maintenance cost of a flat industrial base. There was a little bit of subsidies of the past couple of years to build semiconductor facilities. So they, you know, increase that by temporarily 160 billion or so. That's actually currently rolling over. So we're actually gradually spending a little less on manufacturing construction, even though ostensibly to offset these tariffs, you'd have to build stuff locally. We don't see some like giant new bursts of new spending, at least compared to the past two-year baseline. And we don't really see a reduction in aggregate import costs. Now, generally speaking, you'll see kind of people that are that are more in the camp that the foreigners are paying

it, they'll show like anecdotes. Like, hey, look, you know, Japan had a reduction in auto export volumes, or something. You'll see these individual cases. But obviously, any sort of investing thing is what's happening, especially talking macro, what's happening in the grand sense, not what's happening with this one company, this one industry, what's happening across the board. And some months into this, the answer is import price is roughly flat, taxes being raised, it's not really being paid by foreign exporters. And it's somewhat spread between American consumers and businesses and that front running that happened. Makes perfect sense.

You and I have talked at length in the past about fiscal dominance. I assume that your base case is still that we are in a fiscally dominant environment and not in a obviously looking to the Fed, but everybody's still looking to the Fed. It seems like people don't get it. The main headlines are still Trump's berating Powell and when will Powell leave and who will be the next Fed chairman. Are you still have the opinion that rate cuts will do very little,

even if Trump gets what he wants? So I think that any given FOMC meeting is not that relevant. So a 25 or 50 basis point change is not particularly relevant. Now, if we start talking, you know, replacing a Fed chair and other parts of the committee and getting like a 300 basis point cut or something like that, I mean, that starts to become meaningful. So magnitudes matter, you know, if we're running at 1 to 2% interest rates, that's a different environment than 400 basis points and change. Now, if you look at kind of the purpose of industry rates, like what the central bank's trying to do, you know, they're obviously their mandates are unemployment and inflation, but then the question is, what are they hoping to do with industry rates? Why does that matter? And what the Fed mainly does is impacts bank lending. That's kind of the whole, you know, purpose of the industry rates is in theory higher industry rates would slow down bank lending by making borrowing more expensive, whereas cutting rates.

makes borrowing more attractive and you kind of restart the credit cycle. Now the problem is that when you're in fiscal dominance, bank lending is not the main source of new money creation. So for example, back in the 70s, when baby boomers were entering their home buying years, which is peak credit formation, we had the highest historical rate of bank lending in the country. And so the money creation was largely led by bank lending

with some fiscal on top of it. Obviously, you had the Vietnam War, you had great society programs, these were adding to it, but there was more money coming from bank lending. So in Volker jacks up industry rates, he did meaningfully slow down bank lending. And the problem is that this entire cycle, starting before COVID, during COVID, after COVID, none of this was really caused by excessive bank lending. It was all that really large fiscal stimulus that was monetized. So the Fed is trying to kind of slow down bank lending, which is just not really the key thing here.

So their handful of industry changes don't make a huge difference in that sense. Where it shows up, if they do a massive cut, you probably get a weaker dollar. You probably get a boom in emerging markets because they have all that dollars on in debt that gets relieved. That can cause a kind of more demand for commodities in general, including energy, which could be somewhat inflationary. Around the margins, they can restart lending to some extent. the challenging thing is that we see them talking

as though short-term rates and long-term rates are the same thing, which they're not. So the Fed primarily controls short-term rates. And what we saw is that just because they trim short-term rates doesn't necessarily mean that, like, say, mortgage rates go down. The bond market didn't buy it at all. I mean, we saw yields go up, right? They didn't buy it.

And now maybe if they, let's say they cut 300 basis points that completely kill the short end. You know, there's two outcomes that could happen. One is, if people are not getting industry rates on short-term paper anymore, maybe they will bid for the longer end. They'll buy long duration treasuries and mortgages. Maybe they will drive those down to some extent. Or they could say, well, this Fed's not serious about inflation. Why would I want to own the long end of the curve?

And they could sell it off. So it's actually unclear how that would play out in fiscal dominance. It wouldn't necessarily lower actual borrowing costs. Well, it didn't last time. Yeah. The small sample we have so far this cycle is it didn't. Now, whether a bigger one or a second one would, I mean, market conditions could change. If you have tariffs and the economy slows down, then maybe you get a different result.

I wouldn't want to fully say it wouldn't do it. But they're just not the same thing as the point. The longer end is more set by the market, especially when the Fed's not actively buying and selling a ton of securities. If anything, right now they're trimming their longer end securities and mortgages. I think the Fed is less relevant. It's not irrelevant, but it's less. relevant than probably the market thinks. The size of the fiscal deficits is more relevant and the tariffs are more relevant. Basically, if we're going to, if we're going to have, you know,

400 plus billion in new taxes this year, that's a bigger variable, I would say, than 50 or even 100 base points from the Fed. You have to get into a lot bigger hikes or cuts to really start having an impact of that scale. This all seems like it yields. That was a fraudulent. This all seems like heads towards yield curve control, right, when the Fed effectively accepts that we're in a fiscally dominant situation and just falls prey to that. I mean, the train to use, you know, your words might not be at the yield curve control station yet, but it seems like it's heading that way rapidly. I think so. There's different types of yield curve control. I mean, during the height of the pandemic, the lockdowns, the Fed openly talked about,

code control in their meeting minutes when they were kind of stabilizing the bond market. You know, they dropped that. They didn't have to go to that route. You know, right now we see kind of talk about politicization of interest rates. That's not new. I mean, for example, in the prior administration, you had Elizabeth Warren, she was on the Fed's case about trying to get rates down. Now I have the Trump administration on the Fed's case trying to get the rates down. So everybody in power. She's still on it too, I think. Yeah, probably. One thing they can agree on somehow. Yeah. Yeah, they both want. Yeah. And, but I do think that as, so one of the outcomes of fiscal dominance is you tend to get less separation

between the government and the central bank, because the central bank, whether they like it or not, generally has to step in and put out fires. An example of that is when the Bank of England had the guilt crisis in 2022. So they announced a budget that had a bigger than expected deficit. They're not the reserve currency. So they, and they have a parliamentary system. So they're a little bit more volatile with some things that happen. And basically, their guilt market sold off. They had leverage in the market that kind of resulted in more sell-offs. And so the Bank of Inklund, it's kind of comical. So inflation there was like 10% of the time.

They were going to start balance sheet reduction, quantitative tightening. And they had to cancel a conference about balance sheet reduction to instead go and buy gilts to put out the fire. Now, once they put out the fire, then they eventually got to a period of quantitative tightening as they planned. But the point is they had to drop everything they were going to do. and buy government bonds with new kind of temporarily printed money to put out a fire. And that's generally what happens when you start to get more toward fiscal dominance.

And in the U.S. case, we have a situation where the Treasury has been more active in what they're doing. So, you know, people have called this, like, activist treasury and other things. It started under Yellen. So far, it's continued under the current administration, which is that they can do things like shorten the average duration. of their debt, they can issue a higher percentage of their debt as T-bills, which is where there's more demand for it rather than term out their debt. They can refill their cash balance less quickly than they might otherwise would. They have different levers they can pull that are, in some cases, roughly equivalent to a handful of industry cuts or a little bit of quantitative easing,

for example. But basically, you get less independence. The Fed, if look at the New York Fed's annual report on the state of their kind of securities book, they plan in roughly a year to go back to gradual balance sheet increases. They probably wouldn't call it QE at the time unless there is a recession, but they'll be ending their period of quantitative tightening and go back to gradual increases in that.

Whether we get outright yield curve control, I mean, that's a very politicized thing to happen. And it's also, it's hard to do without a major acute crisis. So, for example, when it was done in the 1940s, it was World War II. So nobody was looking at treasuries. They're all looking at what's happening in the Pacific, what's happening with Europe. And there was a very kind of raw-knit-together culture at the time. It was a very centralized culture in a way.

We don't really have a reason. It's like, well, decades of kind of bad decisions have caught up to us is the answer. And we just kind of gradually build up this really big debt. burden with industries that are going down anymore. So we need to do yoid curve control. That gets really sloppy. So I think they're going to try to push it off. But I do think that there could be various kind of yield suppression techniques that keep

it somewhat below what the market might otherwise settle at. What do you think Powell should be doing right now in context of everything we've discussed with tariffs? Obviously, they're supposed to have a dual mandate, unemployment, and labor. So in theory, none of this should be their problem. right excuse me and inflation none of this should be their problem and we have a historically high stock market we have until last week's revisions we thought we had a strong labor market i mean until that point wasn't he effectively right to stop cutting maybe they shouldn't have even

cut at all yeah so i think the problem is that like i said before when there's fiscal dominance happening there's really no right answer by the fed if they cut interest rates too much it causes problems. If they keep industry high, they're just blowing out the fiscal deficit more than if they had it low. So it didn't really it's not bank lending, that's the problem. I think the best thing they could do is be transparent and just say, look, this is

primarily a fiscal issue. We're going to try to make bank lending happen to a moderate pace with the tools we have, which is what we're doing now. But we don't really have good interests here. I mean, I would hate to be in that role. It's terrible. There's no amount of

money you could pay me to want to even, if I was even qualified to run the Fed. I just absolutely not. So until recently, with stock market at all time high, Bitcoin all time high, gold all time high, roughly, and unemployment running within their target band of low 4%. It's not really screaming. We need cuts. Now, the recent weakness in the job reports certainly increases the odds of a trim.

The whole global economy is kind of slugged. energy prices are kind of low you have some degree of deceleration that is that argues for a cut i would also generally say tariffs like that's a different type of inflation than inflation from money supply growth so they generally should look through tariffs per se just because that's that's more of a tax increase than a you know debasement driven price inflation is this very different type of thing. So I do think they should look through that and mostly just think, you know, are we controlling bank lending at the rate we're targeted to? Now, we can have a whole separate discussion. Should the Fed even set interest rates? Right, of course not. I'm in the camp that

they shouldn't. Should the Fed even exist? Yeah. So it's like if, yeah, if they have this algorithm that they're supposed to roughly follow, which is keep unemployment, you know, as low as possible, keep longer industry rates moderate, keep inflation in check, they're kind of in a position where there's no right answer right now. But leaning somewhere toward moderately hawkish makes sense given the tools they have. So then let's say Trump gets what he wants. He puts in a more politically favorable Fed chairman and we get 300. Like you said, you know, we really start heading back towards ZERP. Does inflation just fly? I think we get an uptick and inflation. Part of a little dependent on what happened with tariffs. I think what happened is you get a weak dollar. Therefore,

where you get a little bit of a boom in emerging markets, and the mechanism for that is that they have dollars-diamid debts. And also, they're trying to not to have their currencies devalue relative to the dollar too quickly. So if the Fed's kind of hawkish, it forces a bunch of central banks around the emerging world to be somewhat hawkish. So if the Fed cuts, it allows a bunch of them to cut, and therefore, kind of multiple economies can get a little bit of a lift, which increases the demand for commodities, including generally energy. So you could get like another round of energy-led inflation and just, you know, kind of higher commodity prices. And so I think that that's the mechanism for how it would show up.

I wouldn't still necessarily expect like a 2022 level of inflation because that was, I mean, we had like a 40% money supply growth in two years. Then we had, of course, the shock in energy prices because of the war in Ukraine. So absent some sort of huge energy shock, I wouldn't expect, say, 9 to 10 percent headline inflation and whatever trueflation was saying at the time. I would expect lower than that, but probably above the current level. Yeah, that makes sense. So let's pivot, obviously. It's a Bitcoin in its current role, how it can be used as a hedge for individuals, governments, or where it really falls in your mind at this point, considering all of that. Yeah, I don't call it a hedge per se, because a hedge generally is something that pays off at the moment you want it to.

So if you wanted a hedge against the stock market going down, you buy certain types of puts, for example. It's more just like as an alternative. It's a parallel system that has many desirable attributes. So as you live in a world with 180 currencies, and they're all generally devaluing at a variable pace, I mean, develop market currencies historically grow in supply by 6 to 8% per year. Developing market currencies historically grow at double-digit percentages on average, some of them much higher. You have Bitcoin, which is this global alternative that people have with no long-term dilution, just currently is very low supply inflation as it reaches its total coins issued.

And more broadly, I put it in the camp of having solved fast settlement. So one of the things I've argued in broken money and elsewhere is that for about a century half, ever since the invention and deployment of the telegraph, we lived in an age where you can make a transaction globally rough at the speed of light, but there was no way to send final value in any sort of fast way. And so we became reliant on these big centralized ledgers to kind of arbitrage and maintain the difference. And Bitcoin, for the first time since the deployment of telegraph kind of closes that gap, where it says, now we have this decentralized ledger backed by energy and backed by code and distributed ways of enforcing it that allows, you know,

nearly instant global settlement. And so rather than being relying on a big central bank or a big, you know, set of commercial banks, there's this alternative and it doesn't debase at any sort of the same way that fiat currency systems do. So I think basically Bitcoin going through this period where, I mean, it started at zero. Now, 16 years in, we're at a $2 trillion plus market cap is still 0.2% of global assets. Gold is 2%. You know, gold, I think, is already kind of reasserting itself to some extent. And I think Bitcoin, at a tenth of the size, is playing catch up.

And so I think it's increasingly recognized global alternative that's been tested technically. It's gotten to a scale of liquidity. where institutions are obviously interested now. They're the main drivers this cycle. And so I think that's, it's basically just this, you know, side thing you can play in, which makes a lot of sense in fiscal dominance. With that instant settlement in mind and your point about, obviously, this being the first time that's possible since the telegraph,

why do you think that so few people are actually using Bitcoin for that purpose? I mean, are you speaking about in a future world where things are denominated in Bitcoin and it becomes a global reserve currency or even an alternative to the other system that you think people will start heavily utilizing it for transactions as a settlement layer because right now we know that most people just want to keep their Bitcoin, right?

Rightfully so. Yeah, I think so it's a good question. I think so right now, everybody in the world has a problem of how to store liquid savings in a way that doesn't get debased. So, you know, people for long-term store value, I mean, they can turn to real estate and other imperfect things.

Sometimes they solve needs they have, like, you know, where to live. You know, people would invest in equities and gold and fine art. But especially on the liquid side, everybody has, you know, everybody in the world to some extent has a store of value problem. Whereas fewer people wake up every day and think, I really have too many payment frictions in my life. Some people do. You know, Africa has 40 currencies.

As I was saying, not here, not here, but yeah, definitely another place. Exactly. So there's some percentage of people that wake up and say, I, I just, my payment options are so bad. A lot of us don't, especially in the developed world. And so instead, now, if you're like, like Walmart has, you know, something like 3% net profit margins or something, right? So if you're doing these crazy volumes, then you might actually think, you know,

if I can trim some basis points from payment processing, then maybe this could actually be meaningful. But if the average person, it's more about my wages are getting devalued, my savings are getting devalued, I'm kind of running in a treadmill. mill. If you're anywhere in the developed world, it's twice a speed or more. And so I think that's the killer app in, say, the first quarter century of Bitcoin's lifetime, which is when you go from zero to several trillions, there's capital gains, tax frictions against payments. There's the fact that volatility is an issue and you need upward volatility to grow. If you get upward volatility, it's going to come with leverage euphoria and it's going to come

with then periods of inevitable downside volatility, which prevents people using it as their three-month working capital. It's also, it's too volatile at that time to denominate most things in it, so your landlord is not going to denominate your rent in Bitcoin. They might pay it in Bitcoin relative to dollars, but they're not going to denominate in Bitcoin because they have expenses. So basically, there's an existing network effect that Bitcoin's growing into, where people have their liabilities denominated in dollars

or whatever their local currency is, they need some degree of kind of near-term stability and their working capital to meet their liabilities. And so I think the current era is that it serves as portable capital with the option of enthusiasts and people that find various payment frictions can turn to it. I've used it as a minimum exchange at times. Also, there's alternative stable coins,

which, again, if you're just thinking, hold it for three months, you know, pay, receive, anytime you get a meaningful excess, you then put it into Bitcoin or other longer-term stores of value. That's solving a problem for a lot of people, especially if they're not in like a totally sanctioned area where even stable coins would are more likely to be shut off for them. So if they're not kind of personally running into the fact that stable coins are centralized, if that's not really affecting them, then they're more likely to keep using them. And so I think right now, it's just a very crowded market for payment options.

And I think Bitcoin is the best long-term one because it's like the most unstoppable one. But in this kind of period of growing into the network and being volatile, it's kind of portable capital first. That's like the biggest killer app. And then as it gets bigger, less volatile, I think that payment aspect starts to become more and more interesting over time. Yeah. My next question was going to be then why does everybody use stable coins and do it on

because it's faster, cheaper and they don't care, right? because it's still a step up from probably what they're used to or have access to. But as you describe it, it almost starts to sound like in the short term, you have a savings and a checking account, your Bitcoin's your savings account, and Stablecoins are your checking account, and together they solve most of your problems. That's pretty much, yeah, and that's how a lot of the world is treating it, which is that any Bitcoin, stablecoins, even some other cryptos, can solve a near-term payment problem. You can just pay it and receive it and sell it for whatever you want.

And really, the differentiators, what do you perceive as secure enough to want to hold for five years? And that's what I would say, Bitcoin is solving. And, you know, if someone, you know, people get deplatformed from financial payments. They get debanked. You know, historically, Bitcoin could solve that for them. You know, some of their early use cases was people wanted to get, like, say, money in or out of Argentina, for example, where it's not like illegal per se. It's just hard because all these capital controls went up. And it's like, well, I can use this technology to do it. Stable coins do provide

this kind of near-term alternative, which is, you know, you're paying a debasement tax as you do it. But if you only are doing it with one month or three months of your capital and you're just kind of moving around and using that for high velocity stuff, people don't overthink it. And if you're on the peso as your standard or the boulevard, it's not a debasement tax to you. So I guess it's all relative. Yeah. It's holding it relative to your expenses. I mean, I always use the anecdote that I know like physicians in Egypt that will buy physical US dollars on the, on the basically the black market and like hold them in their apartment as like a kind of intermediate term store value. And basically what's stable coins do is they're like

an offshore bank account for the middle class. So instead of just the rich, they basically say, okay, here's an offshore bank account. We can press the overhead with technology. So anyone with an internet connection can have access to it. You know, and for some people that works as a, you know, kind of checking account and just sending value. But it's not something you want to hold long term with any sort of meaningful amount of capital. And that's where something like Bitcoin comes into play. Years ago, I had a guest who told me a very similar story about Argentina. And I literally can't remember the conversation, but confirmed it with a friend of mine who lives in Argentina.

At that time, before the proliferation of stable coins, people would literally, go on the black market, pay three times what they should for dollars, or the full story was they would receive dollars maybe even into their bank account or receive money into their bank account, go get dollars on the black market, come back and put the physical dollars into a safety deposit the box in the same bank instead of into a bank account, which is, I mean, it's exactly the same thing, but they're going back to the same bank to store it, but not in the bank's system. Yeah, because it's all centralized. If you go to pull dollars out, they can need to say know or they can say, well, here's the fake government exchange rate that we're going to use

rather than the actual exchange rate that is being set by the market by people's ability to actually acquire and sell dollars. And stable coins kind of make that easier because before, if you were bringing dollars through a port of entry, there's restrictions on how much you can bring. It can often, it can just be taken for no good reason. Whereas stable coins, there's just basically infinite density at ports of entry and also just you know like we could you know hold up phones in this call and send bitcoin or staple coins we can't do that with gold or physical dollars other than just using credit rails things like stable coins like you know there's even gold back stable coins if you want to send those around and yeah it's this new technology that reduces the

the frictions across borders and so i think we know we're again we're in a world with like 180 different currencies and a lot of people there are billions of people that prefer they want more of a choice of what assets they can have it could be the dollar it could be liquid gold it could be bitcoin and they you know this technology gives them that access and you know even though bitcoin is now 16 years old and stable coins are 11 years old they really only reached kind of serious liquidity more recently so it's i mean stable coins didn't crack the 50 billion or 100 billion mark until kind of last cycle. And so, you know, as these things are now big and well known, they're starting to actually sort of be used and impactful. So obviously the path

to global reserve currency passes through Wall Street and governments and large financial institutions. I got in a lot of trouble for a poorly worded tweet that I had recently, where I believe I said, unfortunately, co-opted. I said, Bitcoin is amazing. Something to the effective, but it's been largely co-opted by the institutions that it was meant to, you know, rage against. And a lot of early whales are basically disillusioned with this, and that's who's been selling. So I think co-opted was the wrong word because it triggered a lot of people that I was implying that the code had been co-opted or the network, which was not my intention. It was more a narrative being co-opted. I still regret using that word. But what do you make of

the institutional adoption and the fact that obviously some who were libertarian or here early may be a bit disillusioned with seeing what it's become, at least in their mind. How do you frame that? So I think it's inevitable that as it gets big and liquid, large pools of capital are going to want to buy some, which can include corporations, can include funds, can include governments. There's never a world. There's never a reasonable path where only retail, you know, people own it, and no large pools of capital want to own it even when it gets big and liquid. It's just, it's not how things work.

And what I would kind of point out is there's a difference between something being co-opted, captured, and therefore made worse for the small users than something that is and, right? So if large pools of capital want to own it, but the underlying network keeps functioning very well and is designed to function in that environment, small individual users can still send it around

and still use all of its cipherpunk properties, despite the fact that large entities are owning it. And if we go back to the prior discussion of why are people using it as a medium of exchange, I mean, one is because it's so volatile. And part of it becoming less volatile is for tons and tons of people to own it, either directly or through proxies that some institution owns it for a million of their investment clients, for example. And as kind of large pools of capital own it, it becomes a non-trival percentage of global assets, that starts smoothing

out the volatility. There's less one whale that can just move the price, for example. It becomes less uncertain in terms of politics, like, you know, people just wondering if it's going to be banned or something, and, you know, large pools of capital wanting to not touch it. As those things diminish, it reduces the volatility

and therefore can allow that going to be used for more short and intermediate term needs in addition to just longer term needs, which actually makes some of the cypherpunk properties better. And I mean, so I'm in general partner, ego death capital, and we focus on investing in Bitcoin startups that try to make Bitcoin usable. So having people buy it and put it in self-custody, building the

payment rails, the liquidity rails for payments, all these different things, rather than just holding an ETF wrapper or a Bitcoin treasury wrapper. Not that there's anything wrong with those approaches, but there is, I think, two parallel things happening. They don't really compute. with each other per se. And if anything, they're just, they're both past that have to happen if you're going to become a multi-trillion dollar asset and stay there. I think I should be hired as the Eco Death Marketing Department. I just had Nico, I think, two weeks ago and Jeff five weeks ago.

I think it's a testament to just what an incredible team you've put together and how successful it's been. And congratulations on that raise, by the way. But yeah, all of that said, would you assign the same narrative to Bitcoin as you do to, you of the fiscal situation we talked about, nothing stops this train? I mean, do you think that Bitcoin also inevitably continues to rise and goes to a million? Or is there anything that you see that's a tremendous risk to that? So I think for the most part, and some people, because I'm active in both the macro and Bitcoin

spaces, when I say nothing stops this train, even though it was originally meant for the fiscal deficits, people will often apply it to Bitcoin, which I think has some degree of sense to it, because one kind of fuels the other to some extent. The way that I, and this is where I would generally agree with Jeff Booth, his heatphrases, as long as Bitcoin remains decentralized and secure, then I think the rest kind of works itself out. I think basically the network effect at this point has reached critical mass. It's a communication protocol along with, like, Ethernet, USB, simple mail transfer protocol,

internet protocol, kind of a more foundational thing, or even like the English language, languages, these kind of network, self-sustaining network effects in ways of communicating. It's basically the dominant communication protocol for, value. It's achieved that kind of liquidity, security, and scale. And so unless something can outright disrupt it, I think that that process will continue. And there's not much I see in the horizon that could disrupt it. I do pay attention to the whole quantum thing, the whole quantum development. And I talk to people that are like working on solutions and saying how, you know, how can we, you know, make signature types more quantum resilient? What is the time frame that we

potentially have to do that, is it a near-term thing? Is it a never thing? Is it a one or two-decade thing? So I don't really see a near-term problem from that, for everything I've studied. But it is certainly one of the things that might eventually have to be addressed. And there are people working on it with solutions to potentially address it. So outside of something actually damaging Bitcoin's ability to function as we know it, as the leader of its category, I think that the category itself is at least the 10x from here in the long arc of time, and that it's growing into that almost inevitably. From my market perspective or price, is there anything that you could see that could derail this cycle or this momentum right now? A lot of people obviously pointing to

Treasury companies, taking on leverage. I've talked about that a lot. Friends have talked to me off the edge a bit because my first take was there's going to be Treasury Company number 97 and 113 and they're just going to be hedge funds taking on more risk. to try to beat everyone else and maybe that, you know, turns the next 30% correction into a 50% correction. I don't know. But do you have any particular thoughts? Do they worry you at all? I mean, how do you view all the things that are happening at this level of adoption and how fast they're moving? So they don't worry me, but I do pay attention to them as a market participant. So this cycle so far has been characterized by less extremes. And so as I mentioned

before, anytime you have, Bitcoin needs upward volatility to grow. Anytime you get upward volatility, you're going to get people saying, well, if I leverage it, I get even more gains. And then people, and then emotions kick in and people can get euphoric. And now in the past, in Bitcoin and broader crypto, this would happen to extreme levels. And you get like a multi-year drawdown and washout. So far of the cycle, and we could later have a blow off top, but so far of the cycle, we've been having kind of more moderate levels of euphoid. So, for example, when the ETFs were approved and the month or two that followed, we had kind of mild before it in the market, and then we ended up getting a seven-month consolidation in Bitcoin because of it.

And then when the election happened, we were perceived with having a much more pro-Bitcoin, pro-crypto administration and policies in play. We got a really big bump in November, and that gave us kind of, again, another like seven-month-ish correction. I think that's pretty healthy when you kind of have this step up and then, big choppy sideways of kind of letting off steam and another big spike up and another big choppy. I generally expect something like that to keep happening. The latest one is, you know, you have some froth around like all coin treasury companies, which I don't think is particularly healthy development. And as even Bitcoin treasury companies, if there's too many of them too quickly and some of them

are not managed well, they are potential. Yeah, there are potential sources of liquidation as soon as you have any sort of severe stress. to prolong mild stress in the market where the market kind of closes on them and they didn't really have the cash flows to support their debt obligation so they end up having to liquidate. I do think we'll get some liquidations.

Last time, last cycle was over 75% correction. I don't know if we'll get that again. Depends on how extreme some of this gets. But I don't think it's fundamentally concerning any more than prior cycles. So far, I would say less than other cycles. Yeah, I agree. But I do think we're going to keep going through

you know, mild euphoria wash out, mild euphoria, wash out. You can either wash out in terms of price or time. You can just go choppy sideways for half a year, full year, get all the interest out, get the, you know, compress all the MNAVs and time-based capitulation. My favorite thing to watch when people lose their mind at the same price as it was six months ago. You loved it six months ago. You hate it now. It's literally the same price. It is really wild to watch. I asked Jack Muller's the same question right when 21 was announced. when we were in Vegas, and he said, good, I hope they wash out the bigger and well-capitalized ones that are managed well, we'll just buy it.

Yeah, you know, they're just, bigger ones, we'll eat the smaller ones, and we'll see who wins in this dog-eat-dog world. And it does feel like, at least in the current iteration, there's just so much buying and there's so much capital on the sidelines waiting to buy that it should cause more upside for now than downside, at least in the shorter term. I mean, it's just crazy how much buying interest there is and how transparent it is for the first time. We literally know exactly who's buying when and how much. Yeah, I continue to be bullish long term. And even in this cycle, I don't think the cycle is over yet.

I've liked the fact that we get these kind of mini cycles of, you know, slightly euphoric and then seven months of sideways chop and another like spike up. And I expect that to continue, at least for, you know, we'll see what happens the rest of this year. But I still think we'll see higher prices before we hit some sort of. longer correction. And how about the governments starting to talk about strategic Bitcoin reserves? I think we had an announcement of Brazil's having a meeting on it, Indonesia having a meeting on it. We also know, obviously, the United States still pending an announcement and sort of an audit of how much the United States already has. How does that play into the game theory, I guess, of this cycle?

So I, on average, I view it more as a next cycle thing, most likely, at least for numbers that really matter. So, for example, when we saw like, you know, when micro strategy started the Bitcoin Treasure Strategy Strategy, they immediately started marketing the idea to other corporations. They really would hold a conference like, you know, Bitcoin for treasuries. And really no one followed them anytime soon. I think that was because of gap accounting rules, or at least that's how I cope. Yeah. Well, there were accounting issues. And also just not many people were in the position of Michael Saylor where he had such a strong ownership level of the company.

He was able to think in terms of years and decades rather than quarters and maybe a couple years. So instead of being like a career executive, like someone who could get easily fired or just trying to optimize their near term pay package, he was an owner and able to kind of make these long range moves. That's pretty rare. But we started to see this cycle finally after a cycle delay, better accounting rules. And like a lot of Bitcoiners saying, well, if existing companies are not going to do it, we'll basically start new companies and do it. So it took more time than many people thought, but it kind of followed. And I think the same thing happens with sovereigns. I mean, obviously El Salvador was an early mover. The Kingdom of Bhutan was an early mover. You know, you see like, you know, UAE at the sovereign level makes some mining investments and ETF investments and things like that as a handful of entities out there. Generally speaking, the smaller ones.

can it kind of execute faster on average. I think we'll continue to see talking about it more so than like, you know, someone kind of just like jumping in and wanted to buy half a half a million coins from some big country and kind of doing the full micro strategy playbook. But I do think that over time,

this will continue to leak into sovereigns. They'll own it indirectly. Like you'll see a sovereign wealth fund own micro strategy, for example, or own an ETF or potentially buy some Bitcoin around the margins. And it just kind of keeps trickling in from there as it becomes a bigger, more liquid, more understood network. I think that one of the bigger things this cycle is increasingly understood at the sovereign level, at least it's here to stay. With like the SEC kind of losing their court case and having to let the spot ETFs come to market.

And then this kind of pro-Bitcoin, pro-crypto administration, which is that even it, you know, I think the markets kind of reach the point of scale and acceptance where even if, say, there's, you know, elections down the line, we have a less favorable administration, it's hard to roll back all of it. Even if you take three steps forward, one step back, it's still two steps forward, especially when looking at a global scale where one country could pull back, another country can say, well, then come to us. Bring your businesses and your capital and here. So I think this cycle is kind of marked more by it's

here to stay at the institutional scale and allowed by most, at least semi-firm, countries. And over time, as more cycles play out, and as the asset hopefully stays big and liquid, you'll get more sovereigns that actually maybe want to buy it and hold it at scale. I guess the question you brought up Michael Saylor, obviously, he's unquestionably the biggest, the best, he's figured this out, he's going to own a meaningful percentage of the Bitcoin supply. But trading actually at a relatively conservative multiple to NAV. While some of these others launch in their eight or nine or 10X, you know, Nav, I haven't looked

of late. I know some of those have sort of compressed, but why should a Bitcoin treasury company trade at a multiple? I understand why micro strategy should, because I truly believe that he's going to become a Bitcoin bank and offer a full suite of financial services. And much like you value a JP Morgan at a multiple to their net asset value because of their services, I think you can look at micro strategy through that lens. But a lot of the rest, it seems like conjecture as to what they'll actually do besides buy Bitcoin. Yeah, I think that's a good question. I think So to start with, I think to have the early ones trade at a premium makes sense because they're offering Bitcoin to pools of capital that couldn't really buy Bitcoin before. So if you're bullish on Bitcoin and your mandate is to only own stocks or only own bonds and you can't own a commodity or in some case you can't even own an ETF, if some company issues equity or bonds that give you Bitcoin price exposure that fits in the mandate of your fund, you've now opened this really big pool of capital and there's plenty of capital to say, well, I mean, if I had to pay 1.2x for it, it's still Bitcoin. So sure, give me that. And then the next layer is, you know, corporations,

is a better leverage than most of us have access to. So, you know, we can take out loans, but they could be callable, for example. Whereas, like, Micro Strategy was taking out, like, five-year convertible debt, for example, which is a much better way to get through a full cycle. Now they've shifted more into prefers, which generally require even more scale and liquidity to be able to access something like that. And so part of what they can do is they build a moat, and they basically say, this is the better type of leverage Bitcoin than most other types of leverage Bitcoin,

and therefore people are willing to pay somewhat of a premium for it. And so if you're the leader in your jurisdiction, so in the United States, Metaplanet, for example, I think those make sense. I think when you get into like Bitcoin Treasury Company number 17 and the people can't name the CEO, what are you doing differently in some cases or what market are you going after? That's where I think people start to say, well, why should this one have an MNAV that's above of 1.1 or whatever, whatever the number might be. But I do think that it's not irrational for the ones that are considered to be well executed and leaders in their space to trade at a

premium. Yeah, I 100% agree with that. You sort of mentioned the froth of alt-coin treasury companies. I've been kind of putting myself through mental gymnastics trying to figure out my mind where all these fit. Like, I'm a big fan of Bitcoin balance sheet companies, as I like to call them, you know, just taking 15% of your cash and buying Bitcoin, right? Really obvious, no leverage, no. I think it's very hard to beat Bitcoin with Bitcoin for other treasury companies, as you somewhat articulated, actually as nonsensical as altcoin treasury companies are, because I don't think they should be called treasury companies, because those are not treasury assets. I think it's actually easier to beat ETH or Solana, if it is your benchmark than it is

to beat Bitcoin because they have native yields with staking or you can go into defy and earn a larger yield. It's just much easier to beat those assets as your benchmark. So I'm trying to like mentally figure out their hedge funds, right, but where they fit. Because that actually makes a lot of sense to me the more I've thought about it if you believe those assets will rise. I just can't see the argument for having a Solana treasury in 30 years as your like, you know, as your cash? Yeah, I'd view the more speculations because the problem is that a lot of these,

they offer a service, basically. The services compete on price. Like, stable coins want to go to whatever is cheap and scalable, for example. There's not a lot of huge differentiation there. The winners from one cycle are rarely the same winners of the next cycle. They all tend to have a long-term rollover

relative to Bitcoin after one or two cycles of kind of their initial action. So I think there's some of inevitability that, you know, people are going to look at the top 10 assets and say, well, why shouldn't I try to lever this up or why shouldn't I try to make this available to capital markets? And, you know, there's a pop there. There's a speculation there where they can say, look, we're going to get the staking yield on top of the asset. And you don't have to worry about that. We'll just do it. And we'll test a little bit of leverage to it. And I can see why there's a market for that. The problem is that the way that these bull markets tend to end is that capital just gets fractured everywhere. So it goes into Bitcoin. And then they think, well, Bitcoin rose, let me buy all coin number 82. And that, so it gets split 100 different ways. And then last cycle was like NFTs. And as long as NFTs or things, people are going to keep issuing, you have meme coins.

And now it's kind of like, okay, let's have more and more treasury companies come to market in all these other assets. And eventually just that you exhaust demand. You fracture the narrative. And then we talk about, we talked about washouts before either in terms of price or time, where you have six months or 12 months or depending on how euphoric and then severe it is, you just have a period of time

where anything that's not actually of long-term value starts to drain back into Bitcoin and even Bitcoin can temporarily drain from euphoria back and basically into the dollar until that long tail of weaker assets is largely washed out and then that can set the stage for the next up cycle and hopefully it doesn't have to be one of those

multi-year bear things because hopefully you get less you fork in the first place and then less craze in the downside, it could still happen. But basically, I think either way, you still go through some degree of cyclicality that washes out anything that's not worth being here for 10 years. Yeah, I mean, every time someone says to me, when alt season, you know, I say, have you looked at stocks? Because we're having alt season, it's just crypto equities in a different market.

But it's the same. Fundamentally the same structure, as you mentioned. I know we've only got like two more minutes. You said you don't think that the cycle is over. Do you have any thoughts on, I don't even know if you believe in the four-year cycle or what the cycle means at this point, but when you would potentially see a top being put in before one of those even long periods of consolidation, do you have a premise or thesis on that? So I think that as mining rewards are now a small percentage of supply,

that the four-year cycle is much less relevant than it was for maybe the first three cycles. I think global liquidity is a really big metric to monitor for the overall cycle, as well as levels of euphoria. So I'm thinking less in terms of time and more like that there's a certain set of flags I look for. And the things that give me pause for, like, say, a six-month or 12-month period is signs of euphoria. And my favorite metric for Bitcoin is on-chain,

like it's market capitalization compared to on-chain average cost basis. Basically, the value of all coins last time they moved, which is often to and from exchanges. And that metric might become less relevant over time as more volume happens in other environments. So far, it's not really the case. So right now, that's not a very euphoric marker. If that becomes rather euphoric, I would become concerned because that's more indicative of a big pause. Then I do look at things like, you know, what are the premiums on Bitcoin treasury companies,

how many all-coin companies are coming to market, just signs of froth. Because the more signs of froth you get, the more it is like, yeah, we're probably going to have, six months of, you know, correcting in time or price to wash some of this out and kind of reset. You know, there are signs that you get three-month or six-month corrections at times. Nothing's really kind of warning me about a multi-year correction at the current time, which is why I think this cycle still has legs. And where it would become more concerned, maybe in a multi-year basis would be more extreme signs of euphoria leverage, dislocation from cost basis, and that sort of thing. Yeah. If we go full like 20, 21,

I mean, 22, yeah, that would be bad. We start seeing FTX, Voyager, Celsius-type block-five situation, so we'll all maybe know better this time. And thank you so much for your time. I know we went right up there to the last minute. Always really an honor, pleasure to speak with you. Thank you. Thanks for having me.

Always have to be here. Let's go.