The Wolf Of All Streets - I Own Bitcoin, You Should Own Bitcoin, Bitcoin Is Great!

Episode Date: January 28, 2025

Joining me today are Jeff Park, Head of Alpha Strategies at Bitwise, and my friends from Arch Public, Andrew Parish, and Tillman Holloway, who will provide an update on the $10K algorithmic portfolio.  Unleash algorithmic trading with Arch Public: https://archpublic.com/  Andrew Parish: https://twitter.com/AP_Abacus  Tillman Holloway: https://twitter.com/texasol61  Jeff Park: https://x.com/dgt10011 ►► 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.com/ Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Investments 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 own Bitcoin. You should own Bitcoin. Bitcoin is great. Now, I think we all agree with that sentiment, but we have to check our sources because it came from none other than Jim Kramer, the greatest market counter indicator in history. Does that mean that we are in a devastating bear market now? Okay, that's going to be one of many topics I'm going to discuss today with Andrew Parrish, maybe Tillman Holloway, and definitely Jeff Park, who will be here soon. Guys, we do our Arch Public Show on Tuesdays. Here it is. You don't want to miss it.

Let's go. What is up, everybody? I'm Scott Melker, also known as the Wolf of All Streets. Before we get started, please subscribe to the channel and gently caress that like button. Jeff will be here momentarily. I've got Andrew right now. I heard that Tillman is clearing snow. Yes. Yes. Lives in Colorado. Lots and lots of snow, cats and dogs sleeping together, wild stuff happening in Colorado. So yeah. So since Tillman's the largest person I've ever met in person, does he just like strap a snowplow behind him and walk the streets? He just takes his arms and he just shovels snow that way.

Just walks down the street and just shovels snow like Shrek. Can you imagine how Shrek would shovel snow? That's how he shovels snow. All right. So I got a video for you while we're on a humorous take. Here you go. This is the title. I own Bitcoin.

You should own Bitcoin. Bitcoin is great. Let's go. This is the title. I own Bitcoin. You should own Bitcoin. Bitcoin is great. Let's see what he had to say. Hey, look, I say, if you want to own Bitcoin, own Bitcoin. I own Bitcoin. You should own Bitcoin.

Bitcoin's a great thing to add, to have in your portfolio, but not microstrat. Just own the Bitcoin. That's it. Yeah. I'm surprised that Bitcoin isn't at 79,000 this morning, right? Typical Jim Cramer.

It's amazing the way that the sheep kind of follow their leader once a leader makes a material shift, right? These guys were all anti-Bitcoin 24 to 48 months ago, don't touch it. It's not real. It's not serious. It's not something that you should consider, yada, yada, yada. You should own Bristol Myers. That's Kramer's thing, right? For 15 years, he's talked about Bristol Myers being the penultimate thing that you should own if you own anything associated with an asset. So, you know, the reality is, is that Larry Fink has decided to be a Bitcoin evangelist and won't stop talking about it no matter where he goes. So, yeah, in Davos. And so Jim Cramer is like, well, I can either be an idiot or I can get on the train and start talking about it myself. Because, oh, by the way, the only people unquote shilled by Larry himself, the Bitcoin ETF,

and have put money into it based on the total inflows associated with that product. So if you're Jim Cramer and you're not talking about Bitcoin, when these people have heard their demigod, Larry Fink, talk about Bitcoin for over a year now, then he's falling behind. So it's simply, he's a sheep following. Did we know that he owned Bitcoin again? I mean, I know that he's been in the ups and downs and he loved it and he hated it and touched a premium and sold some to buy a mortgage. I remember the whole character arc of Jim Cramer with Bitcoin, but I was not aware that this was his current view to be honest. Well, what's interesting is, no, we didn't know that he currently owns Bitcoin. So that's a positive surprise. I have seen him talk from time to time about owning Ethereum and

then selling Ethereum and liquidating his Ethereum as a crypto holding. So I've seen him talk about that. I have no idea if he holds anything other than Bitcoin right now. Maybe he does, maybe he doesn't. It would be smart of him to own a couple others because they've moved in a significant manner over the past six to 12 months. But who knows? I don't know. But just that revelation alone is meaningful because again, there is no more trad-fi guy than Jim Cramer. And so it's meaningful stuff. Another thing that I found comical yesterday

when we were in the midst of the deep seek AI blow up of the markets. Well, it's over now. Well, it's over now. Yeah, it's over now. But yesterday was meaningful. I was reminded of Jason Calacanis and his, if you're in crypto, pivot to AI, which was in June of 2023. So I went and found that and, you know, quote tweeted it as, you know, possibly the worst call ever.

And again, a meaningfully terrible call when, quote unquote, AI is taking down large swaths of the market. I mean, it single handedly, you know, nuked NVIDIA. Now NVIDIA will pop back. Bounce back today. Yeah, it'll all it was a five percent pre-market yeah it'll all bounce back or today and over the next week or so because that's the nature of the markets right now net you know net long um but at the same time it's it's it's good to remember um that people that are seen as quote unquote, the smartest guy in the room, they're often really

wrong, really wrong. So it doesn't make them the smartest guy in the room about everything. Right. Correct. We live in a society now where if you're good at one thing, you're allowed to be an expert on social media about everything. Everything. Right. Right. Well, I mean, over the past 12 months, you know, anybody that's involved with Bitcoin has been an expert in geopolitics, artificial intelligence, strategic reserves, presidential politics, senator, the whole thing. And they're just there. They are experts in everything. And we're not entirely sure if they're even Bitcoin experts. yeah it's a uh some of them have laid meme coins for example over the weekend so yeah it's uh you know um people should stick to what they generally i see

i see jeff in the wings good morning jeff hey good morning jeff god i can't hear you can't hear jeff so he's gonna have to work on his mic he'll figure it out you're not muted but we can't hear you the next thing i want to talk about we can kind of as jeff figures it out here yeah i'm figuring it out yes happy tuesday this is how it's happening happy tuesday so um andrew just dared inv invoke the name of Skynet, aka DeepSeek, the destroyer of markets. I think now the Terminator is coming for us. What are you thinking about? I want to get into that before we transition. The effect that DeepSeek had on the market yesterday and what that means.

I think the DeepSeek story is fascinating. I also think that heading into the week, there was generally a lot of exuberance in the market. So I think the market was also maybe looking for an excuse to sell off. And this was kind of a moment that everyone could agree upon, which I think the main focus isn't as much about China dominating in technology that's going to overtake American dominance. I actually think the real risk is that if this is true, that they were able to build this at such a low cost relative to our own, then their story that China continues to export deflation at a meaningful level is just definitely a trend that is never going to stop. And so that is, I think, the overarching worry on the macro backdrop that is a problem to the productivity growth of the GDP if we can't actually find a way to monetize these things

because China. And so I think that's another component of it. And at the same time, Bitcoin sold off and had an amazing bounce back at some level, because I think for most investors, especially like sophisticated investors who are looking at crypto and equities, it tastes like yesterday. It's like a gift, because if you really think there's something worthwhile here, maybe it is time to reposition. But if you think that we need time to digest it, some of these names, especially in the power, energy and infrastructure segment, like sold off meaningfully, like down 20 to 30 percent. So from a risk of war perspective, you might actually say, hey, Bitcoin feels a little overvalued, like relative to where 10 year rates is and where dollar indexes since October. And maybe I actually think the right bet is to rotate into these mispriced growth equities. So you see that tactically from time and time where they seem correlated when there's extreme moves in the market. But the good news is over time, it usually digests and Bitcoin does untether from it and eventually continues its rise as

people seek to redeploy regardless. Literally my first instinct, and I messaged my producer, Misha, I was like, get me Jeff Booth. I don't know who's read The Price of Tomorrow by Jeff Booth, but I think he came out in 2020. I reference it all the time. I've had him on four or five times, but the natural order of things is deflation by technology. Exactly what you discussed. I mean, look at the price of a TV over time, right? They get bigger and cheaper.

That's the way that things should work. And that should actually cause more human abundance, entrepreneurship, a renaissance of thinking as people don't need as much money in theory in that world. They need less money to be abundant and have more time because technology is handling things for them, but the stock market's not going to like that. The transition to deflation is not happening anytime soon, but your point about them exporting deflation to us, I think, is the key that most people haven't been talking about. Yeah. I think this is the growing worry in general with risk assets here in the US. The story of GDP growth can't sustain itself without seeing some productivity gains as we've leaned on the AI narrative as one of the only escape valves for it. And so everything has been kind of correlated towards that as singularly being the most important thing where valuations

are. And there are a lot of people who would argue like valuation is not super stretched from an earnings power perspective. Like a lot of American companies are still doing really well. That's why I think at some level, the tactical rotation into some of these discounted trades is actually maybe the right bet as an overall portfolio, non-exclusive of crypto. And so these Bitcoin and crypto sell-off can look correlated at moments. But again, I think the good news is that it generally does detach over a longer time horizon. And Bitcoin carries its own thesis through. I mean, it was correlated for like a couple hours, right? So this is what's been happening. I'm just going to show a chart. This is what's been happening every time we have one of these massive sell-offs that has something to

do with some sort of news or market is you get this big dip and immediately that bought right back up to where the day started it's been happening every single time now this was the last one went below 90 here we obviously had price yesterday going to 97 before ultimately almost closing back. So the bid on Bitcoin is indisputable right now. You got this quick sell-off when the news drops. And then as it absorbs, Bitcoin leads the bounce all the way back up. Of course, we're seeing Nvidia back up today. But this bounced after an hour. I mean, it was the quickest bear market in history.

Yeah. You know, I'll share you a story. I was having dinner with a few of my hedge fund friends last week. One of my good friend runs a TMT fund. And this person was telling me they actually now have allocated to Bitcoin. And I was really surprised because as a TMT fund, my initial bias was that if they ever chose to invest in crypto, they would have to actually trade Ethereum or Solana or tokens that have some accrual to the tech theme and not a store of value theme.

And yet the lens in which this person actually justified it was through power and infrastructure and AI. Actually, Bitcoin having a role in the connectivity of her power infrastructure holdings as well. Should they just buy miners? Well, that's a story for another day, Scott, which we can go around. But nonetheless, I was really intrigued by it. And it was actually a 5% of the fund, which is not insignificant for a TMT fund to tell your investors you own Bitcoin. Your point, I think the bid is relentless.

It's there. There are people, new investors coming in for it. I just love that miners are now data centers who are going to participate in ai right so that seems to be what you would bid in that scenario you get the benefit of bitcoin mining plus you get the narrative of uh ai infrastructure andrew go ahead well that that's the what jeff just described that's the story associated with bitcoin over the short and medium term um from a macro standpoint. At some point, it can't be ignored. And the reason why it can't be ignored is the performance in and of itself over longer periods of time and at the same time, shorter periods of time.

And then you add the constant drumbeat of narrative from the largest financial names on the planet. And whether you're a fund, whether you're a family office, whether you're an individual investor, there's just too much pro Bitcoin conversation and commentary that you can't look away, right? You just can't look away because the associated performance that you get on top of it is so meaningful. Right. And then on top of that, you know, whatever this fund is and any fund of any kind, a fund is made up of investors that that's what a fund actually is. So those investors have conversations with the folks that are managing their money in one shape or form. And those conversations, there's a portion of them that are asking,

hey, well, why don't we have any exposure to Bitcoin? It's done fairly well. It's fairly integrated now in the traditional financial system. Isn't there a case where we should have some exposure here? My guess is that versions of those conversations, whether they're coming from investors, whether coming from macro or whether it's coming from, hey, we can't, we just can't ignore the performance anymore. We've got to do something here, ends up being what Jeff just described. And then that's happening, not just at one TMT fund that

Jeff happens to know and had dinner with. There's lots of them out there all doing the same thing, kind of all at the same time, thus the bid, right? So we're ranging in between 100 and 105K for the last few weeks. Imagine that six to 12 months ago. Nobody- Weren't we supposed to get sent to 150K when we started talking about strategic reserves, though? You know, like we had the bill last week, finally, the crypto executive order.

I think that it laid out all the things that people generally wanted to see, right? Talk about CBDCs being banned, stable coins, obviously, the right to self-custody. And of course, a strategic stockpile of digital assets, which has thrown Bitcoin maxis into a tizzy. Let's talk about that. So speaking of things that threw Bitcoin maxis into a tizzy, I then immediately tweeted because I had heard from very reliable sources that XRP was likely to be considered as part of that reserve. Brad Garlinghouse has been on a bit of a roadshow, obviously, talking about that. And it's become a bit of news, right? XRP CEO Brad Garlinghouse bats for diversified US crypto reserve. You rock the world now. You're rocking the boat over here, Andrew. Not going to happen, right? So it's not going to happen. But I will tell you that from very reliable sources,

there's a lot of panic in the Bitcoin community that this could happen. I was the first one to tweet about it. I'm going to just play you a very quick clip about Jack Maulers from Jack Maulers. Then we're going to talk about it because this went wildly viral. And it's amazing but hilarious also. Okay, emergency press conference. Ripple is undermining American prosperity and freedom. I can confirm.

Ripple is actively spending millions of dollars trying to undermine a strategic Bitcoin reserve in the United States of America. This is not just an attack on Bitcoin, but on principles of transparency. Okay, yeah. We're not going to do five minutes of that, but you get the idea.

I wasn't lying, right? And I guess the question now is, why didn't we see this huge move in Bitcoin when we basically got the first inkling of a hint of a chance that we might get the strategic reserve. Yeah, I can take this first. And I'd love to hear your thoughts, too. My general feeling today is actually just relief. I believed more strongly that the strategic Bitcoin reserve is not or should not be the key dominant news source for excitement around Bitcoin enthusiasm at this moment in time. And I was really actually worried that much of the price might have been built into an outcome that, as you described, would have failed to meet expectations.

I'm very relieved the case is that that's not the case. But the thing that perhaps in the market that appreciated that I didn't see as much folks talking about, but I believe is actually more important is the repeal of SAP 121. Truly the most important thing was the lowest hanging fruit, which was that action to bring upon SAP 1222 because this is the floodgate that is opening the opportunities for like the TMT funds that I described to be more comfortable in buying Bitcoin. By the way, they bought the ETF, which is actually one of the reasons they were able to do it rather than buying the token assets. And even the ways in which market makers can now go about thinking about physical creates and redeems in ways that were not possible. Thinking about how even mining companies can now provide true asset management

services on the back of their hodl assets that they historically could have difficulties with because of the inability for them to find banking partners. All of these things actually is the most important thing. And then from a consumer perspective, if the banks are able to offer you to own Bitcoin, the ease in which the UX allows somebody to just click a button to then allocate to Bitcoin, the banks are going to figure it out because it's good for their business and the consumers want it. And that's the kind of one click buy to Bitcoin on the wall of cash that is sitting on all these checking accounts that is being unleashed. Only SAV121, the repeal of it, can have done that. And I think that is maybe why the market still is resilient, because that was the thing that was most important thing.

And of course, it delivered and the probability was very high it would deliver. But it came very quickly, which actually I think was the most important thing in the first week of the administration. Well, Bitcoiners and then crypto in general are getting an education in politics 101. Right. So executive orders, no matter what they are, foundationally, they're making some version of a shift in a law that already exists, like going back and if there's been a rule or an adjustment to where that law is being adjudicated in a certain way, an executive order then makes a different shift. That's what executive orders are. There's already laws on the books and executive orders are bouncing off of those and there are shifts that happen. You can't just do an executive order for a strategic Bitcoin reserve.

That can't happen. There's an actual process. You know, Scott and I have been around long enough to where we watched shows when we were kids about how does a law become a bill become a law? Right. We remember the schoolhouse rocks. My daughter is actually just auditioned for that yesterday. And she's saying, I'm just a bill. And Conjunction Junction, what's your function? not going to be easy, but it couldn't just happen via executive order. On top of that, though, Jeff is absolutely right. SAB 121 and the quick recension of that, again, that's associated with the adjustment of rules that are swimming around actual law. So that was a rule that was enacted, an accounting rule that was rescinded. And again, now we have the floodgates that are open. So the ability for institutional entities, whether it's a hedge fund, a family office, a global IP, a G-SIB, all of these different folks, they can now look at the availability of quote unquote crypto assets, Bitcoin being first, and then you go down the line.

Their ability to get involved and it not meaningfully hurt their their bottom line um so that is a massive massive massive sea change just with the recension of a particular rule that's why the rule and it's and the advocacy for it at the sec and the existence of it was so I don't want to be too hyperbolic here, but it was it was really, really problematic. Right. It was a poison pill, let's call it, as it relates to TradFi and crypto. And that poison pill has been dissolved and removed. So big, big, big deal. And we're going to see the ramifications of it. Q1, Q2, Q3, Q4 of this year.

Yeah. I have to imagine that, by the way, Coinbase is going to lose custody of some of those ETFs in that process. I mean, the only reason Coinbase ended up as the custodian of every single ETF was because the banks literally weren't allowed to do it. I mean, that that ended up being such an unintended consequence from the SEC that that happened. The company they're suing ends up custodying everything. But I do have a feeling that a BlackRock or some of these others are going to probably end up custodying with State Street or Bank of New York Mellon.

And I honestly think we should cheer that because diversity. Well, they custody everything else. Yeah, but we don't want all beauty to get those two organizations failure nobody wants that custody 75 trillion dollars in assets between just the two of them i mean it's a it's a so everything else that exists out there they custody and then there are other organizations that custody less than that but again the custody game is in the trillions, you know, the multi, multi, multi trillions. Yeah. Yeah. Yeah, totally. And just, you know, going back to the ease in which banks can now permit investors to buy Bitcoin.

You guys know how like Bank of America and others have that program where they might ask you to like round up the purchase price and donate those changes into a nonprofit cause. And you put like 60, 70 cents or whatever. You round up the purchase price and donate those changes into a nonprofit cause. And you put like 60, 70 cents or whatever. You round up the nearest dollar bill. Well, you could imagine a version of that where they say, actually, would you like to roll up a certain amount, round it up and buy Bitcoin? Because actually, this is also a humanitarian cause at some level in the ways that you can think about it as an ESG asset. And imagine that kind of flow that wasn't possible before that the bank's going to lock. I mean, these are the creative things you have to think about outside the box of a world we've never known that is now being unleashed by the repeal of Sat121. So I do think there's a lot of momentum here. We should see a

lot of progress over the coming years on this. I invested in a company last cycle called RoundlyX and that was their entire built. It was basically being like the acorns of crypto that you could round up everything. Unfortunately, no retail was hurt, just me. It was actually relatively successful. I just believed in the idea of it's going to be hard to get. So they ended up folding eventually. But like I said, nobody was hurt, but it's going to be hard to get. So they ended up folding eventually. But like I said, nobody was hurt, but it's a great idea. It was like, yeah, you spend 94 cents on something. We round up the other six cents into Bitcoin. And it would be incredible to see that sort of on an institutional level or with these larger in anyone's bank account anywhere.

I want to talk about, though, MicroStrategy, Jeff, because you said you wanted to talk about it. MicroStrategy launches 2.5 million perpetual preferred share offering called STRK. We didn't really get to unpack this, actually, on Macro Monday yesterday, but you tweeted, and I'm assuming it was in reference to this. There's so much financial illiteracy about the relationship between preferred common stock that you said you'd clarify on the show,

so I want to give you a chance to do that. Yeah, thanks for that, Scott. I would love to go into it a little bit. This is the big news. I think people were excited about it since the end of last year, wanted to get a sense for pricing and timing and the size, of course. And the book is being built. We'll know more by the end of the week. But the general terms have been sketched out. So I think there is now meat to at least discuss what this might mean for micro strategy investors. The first thing I think people don't quite always know without having traded preferred is that preferred equity in general is kind of what I call the armpit of the capital structure. Nobody really loves preferreds, really. It's not that exciting as an equity, and it's not as flexible as bonds with the liquidity that it requires to actually trade hedged positions.

Usually, pref equity is a kind of an instrument made for a very specific purpose. And historically, it was used for one- CapEx, or emergency funding for bank capital requirements. And it feels like a little bit of like a special purpose need. And of course, it comes with features that look like bonds, but it's called preferred equity. And it's more like bonds than actually it's more like equity. So that in itself is a bit of a misnomer. The other thing is preferred equity is actually perhaps in general, the most adversarial security to the common stock. The reason is they're not really senior to the extent that debt and senior secured loans and bonds can be. So they are slightly above the equity, but they have this non-competitive market-based yield that has to be paid in cash, which actually is literally taking dividends and the growth potential away from the ROE that equity investors expect. So it's a tricky dynamic to navigate and one that requires reminding that converts and preferred equities are different.

So what are the things that we should be watching for? One is where exactly the convertibility of the preferred to common would be. And we saw details on that yesterday. It's also worth noting, by the way, most pref equity don't have convertibility features in common shares. Most Prefs actually have a call for the issuing entity to buy it back at the price it was announced within a few of the years for which they don't require that emergency funding anymore. So the conversion in itself is a little bit novel. It's not that common. So here's the thing. You can convert your pref equity into one tenth of a common share, meaning if you can get 10, you can get one of MicroStrategy share and the price is at a thousand. Right. So it feels like the strike price is at a thousand as people are interpreting it, as I see it on crypto Twitter. But that's actually not correct. The reason that's not correct is because the PREF instrument itself has to be valued at a level where you're comparing that arbitrage to be pari passu.

Meaning the assumption that it's $1,000 means that the PREF is $100. But imagine if the PREF goes to $200. Then actually your new strike is not $1,000, it's $2,000. So the strike moves based on the basement of the PREF equity valuation itself. This is the piece that I feel that people are not understanding as properly as they should, because with convert bonds, the strikes are fixed. So you know where the option is going to be pinned on- And those are the offerings we've seen before, just to be clear, the convertible notes

that everybody's been talking about that he seemingly announces every 37 seconds. Yeah, exactly. And those are very clean because there's no basis risk. It is literally the conversion price at a stock where you can trade it. Here there's basis risk. The basis risk is the PrefEquity's valuation can change away from a hundred based on its own underlying factors. So the question is, what is that underlying factor? Without a doubt, the most important thing for PrefEvaluation is rates and probability of defaulting. Because again, you can call it perpetual, but if the company defaults, it's over. Perpetuity means nothing. So those are the two most important inputs that will move the price of the pref equity. The sensitivity rates is the most profound

because right now it's pricing at tentatively 8% fixed yield. That's in a rate where we see the 10-year at 4.5 to 5.5 range. But if the risk-free goes lower, let's say actually we go back to a world where we're talking about 2% to 3% in 10 years, the PREF equity is hugely valuable now because you got an 8% fixed rate in perpetuity. So the effect it will have, the DVO1 on PREF, where it goes from 100 to 200, is not determined by the course of MicroStrategy's price. It's actually determined by rates. And here's the question, is the PREF helping the common stock volatility, or is it the other way around, where pref is benefiting from micro strategies, volatility for the option. If it actually just stays at a hundred, this is the different dynamic as an, you

know, what, which one is wagging, which one's tail, if you will. And, and in that sense, there are some things about it that I think needs to be a little bit more digested. We have to see the real terms. But in general, the fact that the yield is fixed is not great. If it was floating, the dynamic would be a little bit different. The callability in itself, people are applauding it to have a perpetual feature because the issuer can't call it. Well, you can't call it. You can't call it when it's convertible because like I said, the bond may

actually, the PREF equity may trade at 200 and the common might still be at 800. You can't call that. Right. Sorry. The common might go to 1,200. So it might be in the money, but you can't call it because it's actually out of the money relative to the price of the PREF. So that's actually a given. Of course, they were never going to have the right. And then the last thing is, prefs don't have explicit duration. But again, there is duration, it's default risk. And that's what people are now going to start pricing in more carefully. Also, the fact that- Yeah, so who buys this, right? I mean, the convertible notes were not available to select retail, right? This one is. I'm assuming that means accredited investors, but maybe I'm wrong. Yeah. No, I think accredited investors are allowed up to a minimum that needs

to be filled. So I don't think you can buy like a hundred shares. I think there's probably a minimum for it to be in that definition. All this being said, by the way, I actually think there's a chance that pref equity is itself a very good security, right? There is a world in which I actually think pref equity might be the trade. The question I think though most people want to know is, is it good for the common? Right. Is it good for the share price? Exactly. Exactly. And this is a little bit of an experimentation where I think we're going to have to find out by the trading pattern of where we see the relative value and richness to the cheapness of the common to prep as the market digests it.

I'm actually also curious about that substitution effect. As you said, Scott, accredited investors can buy it. So it's also possible someone who owns MicroStrategy Common today might actually say, you know what? The prep is better. I'm going to swap. Yeah. Rather than thinking as a complementary good where you buy both, you might start swapping.

So we have to see how a little bit of this unfolds. But I actually think the pref equity could be a really compelling instrument. I think there's a lot of reasons to think that is a very good security in the way that it's coming to market. But it is a little bit facetious to describe that it's going to be a low volatility asset. If you imagine that once it nears convertibility features, it's going to trade like the stock again. But the question is, who's pushing that equity to that strike zone? What's amazing to me is how many creative ways Saylor has found to purchase Bitcoin, right? I mean, so obviously, the first narrative was MicroStrategy is a proxy ETF. Then we got ETFs. So he created convertible notes, which basically opened buying Bitcoin now from retail, buying MSTR to insurance companies and everyone else who can't buy stock, but would buy a fixed debt instrument or something.

And now this is yet another novel way for him to raise money. The question is, I mean, we know that, you you know if your stock goes up you create more stock right this is the uh mentality he's using to buy bitcoin effectively yeah right i mean millions millions of more shares it's also yeah all the credit to his creativity in the financial engineering the other thing that here is neat is that the um coupon can actually be paid in kind to the MicroStrategy stock. It actually says you don't need to pay it in cash. So this could also be a clever way to tap into the ATM type features of distributing stock to investors without really affecting the market. Now you have to believe that these holders then will want to keep it and not dump it for cash.

Though, pref equity investors generally like cash. So we're going to have to see how that unfolds. But it's a clever way to kind of bring more stocks into the ecosystem as well to different kinds of investors. Andrew, before I let you go to this, Jeff, have you ever seen the movie The 40-Year-Old Virgin? Oh, my God. I think I saw it in my high school years years i'm making it go down memory lane here there's a there's a scene which might be kevin hart's like first big scene in a movie even though it's basically a cameo and and i said to andrew right before he said the same that sometimes this is how we feel when when you're talking i just want to play this scene really

quick just so you can see it see if this works now you're being condescending you've been warned all right let's move forward amicably okay well check this out first of all you throwing too many big words at me okay now because i don't understand them i'm gonna take them as disrespect watch your mouth right so sometimes when you talk I just don't feel very smart. It is a, yeah. Was that not like a master class in? It was a master class in deconstructing the ways that Wall Street and frankly, public companies have access to capital. It's almost a never ending cascade of different ways to leverage your equity, right? Whether it's the bond version of it, whether it's the equity

version of it. No, by the way, both on the bond and the equity, there's like a ton of different versions of those, you know, top line opportunities, right? There's almost a never ending cascade of it. And, and Saylor has, is, you know, there's going to be, there's going to be Harvard business class reviews of how he did all this. At least there should be. Because the way that he's pulled this off, the way that he has...

Remember, I mean, MicroStrategy, for all intents and purposes, a decade ago, was just a dead company doing a whole lot of nothing. And the way that he's turned this... Vibrant business software. Right.

Software business. Right. Respect. He's already a billionaire i'll just say that yeah so so but the but the growth associated with it and the the you know the growth that we've seen and the way that he's leveraged um the levers available to him on wall street are are i've never seen it before. And it's truly remarkable stuff and should be studied and a ton of respect should be given to it. Again, this is a new version of it that just got

announced, and I expect additional new versions down the road. And the other thing that needs to be said here beyond Michael Saylor's ability to do this stuff, there's the other side of the ledger that's effectively helping him. Banks are behind all of this, being a part of the process and facilitating the movement of capital and creation of all that stuff. So, you know, that's all available, by the way, to additional companies of scale down the road. And again, you know, we've all talked about it, all three of us in different ways and at different times over the past couple months. The idea that corporates are going to,

in some way, shape or form, begin to do what MicroStrategy has done with Bitcoin, how small or big is going to be a massive trend in 2025. He's doing every part of the potential playbook. The question is, though, like, you know, I think it's becoming harder and harder for people to assess the risk of this, especially in the, you know, he's not just doing one of these things right now. He's got like three, four or five, as as you said or will creative ways to sort of raise more money to buy bitcoin

i don't think this but i will ask both of you do you think that he's flying a little bit close to the sun and listen let me just say this the main character arc is never good in bitcoin right yeah i'm not saying there's no fraud. I'm not saying like an SPF or a Doquan or crypto, right? But he is the whole narrative now, to some degree. I think that Trump is now running with that, fortunately, depending on how you view it. But for a while there, it was all like, what's Michael Saylor going to do? This is the catalyst for everything. I mean, is there a way that this blows up if he has all these instruments running? The underlying asset is Bitcoin, right?

I mean, that's where we're at. So the underlying foundational asset associated with this is Bitcoin. And I think he stands on a fairly firm foundation there. And again, I'll say that behind all of this is not just Saylor's mind. And let me figure out how I can trick Wall Street into giving me more money. There's a lot of people sitting in a lot of conference rooms giving a thumbs up to, yeah, we'll do this. We'll do this. We'll facilitate this.

We'll do this. We'll loan. All of that stuff. So I don't even let's. OK, let's say, Jeff, I want you to answer that. But like, I don't think there's liquidation risk. Right. All the things people are saying, like, I don't think that we saw it even in the last cycle. Right. If Bitcoin goes below 25, Saylor gets liquidated. Obviously, that didn't happen. Right. That was just misunderstanding of what he was doing. But even if for some reason he was triggered to have to publicly sell, any could be the sort of catalyst that would, you know, he has to liquidate something to cover.

So I don't know. But that could be just a narrative catalyst, right? But I mean, Jeff, do you see any risk here for the broader market? I think the financial structure and capitalization of micro strategy is sound. So to your point, Scott, I don't think there's risks to there being a cascading liquidation type of effects to emerge out of this entity itself. That being said, I think both of you are right to acknowledge there are idiosyncratic risks when you become the main character, which is what are the unique sailor specific risks that could emerge. And the reality is at some point that starts to blend into the status of the social capital of a person and the figurehead.

And one of the things that I think people will start to be more curious about is what's the limit? Like, at what point is MicroStrategy owning too many Bitcoin? Like, at some point, the line of ethos has to be questioned. And I think it will happen where Saylor will have to come to the market credibly and explain his positioning on what that limit is. You know, so far, no one's really asked. No one's really cared that much about it. But you can imagine the path will merge towards that direction. And there I think are, yeah, it might be a million. And then we'll have to understand how he's justifying it and how the market digests it. It's I think the most important thing at that point when you become such a leader in this space.

That being said, one of the things I'm really excited about with like Bitwise launching the Bitcoin Standard Corporation's ETF, where we buy other companies in addition to MicroStrategy that are pursuing the strategy is to promote the reality that we could build diversification around that financialization. Saylor himself has said, you know, many folks can do what I've done. If they read the playbook that I've written, the reality is there's benefits to scale that not everything can be perfectly replicated, but a good chunk can be. And so part of, I think what Bitwise will also do is to help that financialization with this Bitcoin cap weighted ETF, which I think is a really cool feature that you actually get bigger sizing in the ETF if you own more Bitcoin. There's going to be a sizable corporation at some point that does a little bit of this.

At some point that will happen. As an example, even though Microsoft held a vote and it basically went nowhere, reminder that Satya got on TV and said, yeah, we're good for 80 billion for AI. We're all good. That's a lot of money, guys. That's a ton of money.

So imagine if they are like, you know what, the Bitcoin thing, we'll throw 3 billion at it. We'll throw 5 billion at it. That would be nothing for them but at the same time the ripple effects associated with you know the concept on the docket for meta right now right yeah right so it doesn't have to be 100 billion or 50 billion or 70 it could be 5 billion right well the 5 billion turns into 10 companies turned into 20 turns in

that's that's very, very. I mean, let's think about this. Just the game theory, since it is on the docket at Meta, if Zuck, who we know now, like is like aggressively backdoor filleting Trump and Elon Musk and anyone else, you can get his mitts on. Right. You know, dressing like them and hanging out and staring at Sanchez's boobs. Right. I mean, what better way to get in the good graces of Trump than to just buy a little Bitcoin on the, on the balance sheet of meta right now. Yeah. He has the kind of power to do that.

Right. I mean, he's not, I don't think he has quite as much control as a sailor does of micro strategy, but Zuck could basically unilaterally add Bitcoin to the balance sheet. He has some serious control. It's very different than Microsoft's setup.

Very different, right? He should do that. We should call him. We should call him. We should tell him to just buy Bitwise. He can use an ETF, right? No, I'm just kidding. Actually, the reality is, too, you guys remember,

he did invest in Libra in the metaverse years back. So there is actually a lot of history with Mark and the company that makes more sense than perhaps a Microsoft and others. So I think that could come to surface and play even though improbable, but possible that meta could lead the path forward. I mean, it could be the full conversion

to an actual Chad that he's looking for. Yeah. Just buy some Bitcoin. He would be so beloved by a community that he's looking for. You just buy some Bitcoin. He would be so beloved by a community that kind of hates him. I think that this is a, this would be an absolutely epic move. Libra point is interesting though. Obviously Libra tried to basically launch Facebook money in the form of a stable coin, which is game DM.

And those guys left and it became Aptos, you know, which is a booming ecosystem in crypto. You're right. I mean, he's definitely, he understands it. I bet he owns a lot of Bitcoin himself. I would bet that. Yeah. No, I think he does.

I think it's come out publicly. They all do. Yeah, we all do at this point. I don't know if we're in the early stages. They all do. I don't know about we all. They all do at this point. I don't know if we're in the early stages. They all do. I don't know about we all. They all do. Just one more thing on a positive note to round out Michael Saylor and MicroStrategy.

Despite all the ways people are indexing what he's doing, I will say when people have asked, are the institutions coming for Bitcoin and just waiting on the sideline? The reality is Saylor had already figured it out. Because institutional investors come in all different sizes, they do not have one risk preference. They need many risk preferences. That's what it means to have institutional investors. So the very fact that the pref equity is coming to market is another dimension of providing that towards institutional investor who may have a different risk preference that Bitcoin alone could not provide. And so I still think that we must give him a lot of credit for the onboarding of institutions in ways that might not have been buying Bitcoin token spot, but that's because

they were never going to buy just Bitcoin spot only. They need some risk preference expressions around what part that they want to play in, which is- Right, really quickly. So this could be, if you believe that we're going back to like a Zerp environment, that interest rates are going to come down, right? Then this could be the ultimate bet. It's exposing the Bitcoin and your bet on directionality of inflation or rates. That's right. I think there's a really good chance that pref equity is a very compelling instrument in itself.

I mean, I think most people believe rates eventually come down one way or another. By the way, there was a product that didn't get a ton of crypto Twitter mention that came out a week or so ago. That is exactly what we've been talking about in terms of the financialization of Bitcoin. Some other ETF, Calamos or Calamos or whatever it was. And they're protecting you to the downside, but you're not getting the upside. You're effectively getting a specific yield to the upside, but you're protected downside 50%. There you go. It's starting. It's already starting. Those products will become, they'll be everywhere in six months. They'll be everywhere in six months.

Yeah. Yeah. I think it's a huge TAM. It's a very known TAM already because people build those products off of volatile indices like NASDAQ. And it's had tremendous product success. I almost think Bitcoin was purpose built for those types of structured products because it's literally selling SKU. And there's nothing better in the world to sell SKU than Bitcoin. For the Kevin Harts of the world, just so we know, TAM is Total Addressable Market.

So that means that the market is very, very large for those products. So I just deconstructed. And I have a new idea. Jeff, you bring Andrew places to be your translator. That's right. I got my own. You can bring it down in layman's terms for those dummies. I got Andrew's sequel with me.

It's going to be great. It's perfect. So listen, we're going to move on in a second and probably towards talking about ArchPublic a bit. But I don't know if you guys saw this, but Arizona passes initial step toward the state being able to invest in crypto. We obviously talked about strategic Bitcoin reserve. We've seen, I think, 11 states put it on the docket. This is actually in the process of happening now. So Arizona has legitimately taken the lead here for those who didn't see this story. It's huge. I mean, it was a five to two vote. It's going to the Senate. This would

allow, I think, up to 10% exposure. So this is, I think, the first time, I could be wrong, that we're seeing meaningful movement. I mean, I guess the question that is brewing here is, if the executive order didn't send Bitcoin flying, can a state reserve send Bitcoin flying? What can be our next catalyst if people are looking for a piece of news? Would it be a state actually passing a strategic Bitcoin reserve? Well, I mean, there's a world where you see three to five states adopt some sort of reserve before an actual federal version of a strategic Bitcoin reserve. Those states are moving fast, and there's been tons of announcements.

Arizona is the furthest along. There's been a New Hampshire announcement. There's been tons of announcements. Arizona is the furthest along. There's been a New Hampshire announcement. There's announcements everywhere for it. So the movement continues associated with, quote, adding Bitcoin to your balance sheet. That's going to be, in my mind, that's going to be the real long-term catalyst, certainly through 2025. On the corporate side, on the legislative side, it's just going to continue happening. The movement, you know, there's an impetus, right? Once something gets moving, it's difficult to stop.

There's no version of it stopping in my mind on both of those fronts anytime soon. What stopped that? There's no catalyst to have it coming to a halt. The differences in the regulatory regime, the SEC and the like will encourage all of this stuff now as opposed to actively acting behind the shadows, OCP 2.0 to stop all of this, right? Yeah, yeah. I think it's a great thing. And the framework that I would share is that it's not just the upside capture that's going to be potentially interesting, but I actually think the real de-risking is to the downside. I think the perpetual bid for Bitcoin that will exist through these pensions and public entities that

will have a floor to which they'll acquire. Generally, the way they also work is they have the sense to buy things when things are cheap. And that floor is now just getting bigger. So I think there's a really good reason that Bitcoin doesn't sell off as much as it historically used to and does quickly bounce back. It's because we're unleashing this type of uh buyer activity that historically wasn't there so as you know we're used to having like 80 drawdown types in crypto but actually post this era it may never be that extreme again because the wall of money now that is sitting in as you said these statehoods could just become that defense line in itself without buying right now but the wall is still there as an optionality and states love options i still think we'll see him in all

coins though you know i would love to i would love to like tweet price predictions for trump token at the end of 2025 we get like uh you know these bitcoin price predictions sitting at 29 bucks where do we think trump token will be sitting at the end of the year We get like, you know, these Bitcoin price predictions sitting at 29 bucks. Where do we think Trump token will be sitting at the end of the year? I'm not going to throw out. End of the year. Farcoin still just right under now. I know it went to 2 billion,

but sub 1 billion. Where's Farcoin at the end of 2025? And does it have a Bitwise ETF? Questions everybody wants to know. All right. Well, Jeff, we're going to let you go. Andrew and I have a five minute chat here at the end, man.

Always appreciate you showing up. Love that you're becoming a regular here. Yeah. Thank you for humbling me and always putting me in my place. Thank you for making me also rewatch the four year version. Now I have to watch the whole new movie. It is so timeless. It's so good. One of the most quotable movies of all time. Dig back in. Thanks, Jeff. It's so good. One of the most quotable movies of all time. Dig back in. Kevin Hart. Thanks, Jeff.

All right, man. Yeah. A lot of meat on the phone. I got to get out there and shovel some snow with Tillman. Yeah. A lot of meat on the phone. A lot there. There's a lot there.

So listen, we've got like five minutes. Talk about Archpublic. I just wanted to bring up your tweet. Yeah. So far in January, our concierge program clients have enjoyed the following trades. NQ, 15.98%. MNQ, 12.57%. MES, 2.8%.

Yes, plus 1.94%. If you can break those, what that means. Yeah. So listen, the MES trade, 2%, that's your $10,000 portfolio. So you add another 2% to last year looking like 35-ish percent for the totality of the year. But our NQ and MNQ outgoes are in our concierge program, and they're just absolutely incredible. I think in the fourth quarter, those outgoes did between like about 33 and 41 percent. Just in the in the quarter itself for the year, they were up 97 to 103 percent for the year. So the deal is, is that here at Archpublic, we work very, very hard to under-promise and over-deliver on two fronts, both the performance of our products, but also the service and communication that we give to our clients.

You know, we reiterate certain points. We reiterate that we don't custody anybody's money. Your money is held at a brokerage account that's, you know, SIPC insured here in the United States, all that stuff. And if you're using our crypto concierge program, all of those assets are held at Gemini, right? So your money is available to you 24-7 and our algos go into the market at very distinct moments, extract performance, and that's how they work for you. That's how you benefit. Here's another benefit, by the way, to our algos. Our algos were not in the market yesterday. So you didn't in any way, shape, or form spend any time riding the big down in the roller coaster associated with DeepSeek

and NVIDIA, the NASDAQ, all of those things. You didn't take a huge dive that washed away any of those gains that you've had just here in January. Those are just January numbers again. Those aren't quarterly numbers or the last quarter or last year. That's just January. So it's just as important that our algos don't take trades at certain times as they do taking trades and extracting performance. So we again, we love what we do.

We're meticulous about what we do. Constant optimizations every three to six weeks on our outgoes. And our customer base continues to grow by leaps and bounds because of what I just described. So, yeah, listen, if you want to go take it real quick, just for fun in the upper right hand corner of our website, there's a new little thing called performance. Once you click that performance, that performance is going to show you, it's going to give you an enormous amount of data associated with each of our publicly available algos, our MNQ,

NQ. You can go over and put a start date, so like January of 2024, and it's going to show you exactly what our algos have done and the pace and speed at what they've done it. If you want to put in January of 2024, Scott, you're going to see what our outgoes did for the totality of the last 12 months. Which one do I want for which? Just put in, it doesn't matter. It doesn't matter which one you do. You just throw it in there and rock and roll.

Boom, boom, bop, boom, boom, beep, beep, boom, bop, bam. Yeah, so the Nq you know 98 right um you can and you scroll down the amount of data associated um with our algo scroll down on that page um you're going to see all the actual trades that was taken so that's going to scroll too so you're going to see each individual trade right that happened for the entire year or two years or three years. Go down to advanced stats. You're going to see profit factor, all kinds of stuff that, frankly, half of it you're not even going to understand. But at the same time, all the data is there for you.

So we often get questions when we're on demos. Can you show us this? Can you show us this can you show us that so besides just being on a demo you can just go to our site click the performance button and it's going to show you everything and it goes back 10 years awesome yep i didn't see this yet this is the first but every single i mean just outperforming massively bottom line yeah huge huge huge stuff you know win rates above 55 to 70 percent across the board and our out goes just math right math is math we continue to use math to our customers uh advantage and uh people are extraordinarily happy just extraordinarily happy so i'll have to make check it out and uh participate i guess yeah just go to

archpublic.com um either grab you know one of our entry-level algos there at the get started button on the top or um you can create a a meeting there's a bunch of different spots um where you learn more and then create a go to a calendar and you end up on a meeting with somebody on our staff. I go to about 50% of those meetings. So oftentimes I'll show up and have a chat with you and talk about what you're looking to try and do. And, you know, we get people involved. It's a very, very simple three-step process to onboard and then you're done. You don't do anything else.

You don't turn it on. You don't turn it off. You monitor the returns on your phone that's it you can move to mars for two years and the algos are going to do what they're supposed to do on top of your account that's it simple i hope you have a big trunk because i'm putting my bike in it that was my favorite question for you you can't get on 40 year old virgin can you oh you were talking i was watching the movie all right it was just continuing to run there while jeff talked i was actually watching the whole movie just happened to get to that scene that's what i was doing yeah all right guys

check out the archpublic.com of course uh follow andrew ap underscore abacus check out jeff uh not that you'll understand a word he says. And that's all we have got for you today, man. Thank you. See you next week. Thanks, Scott. Later, guys. Let's go.