The Wolf Of All Streets - “The 4-Year Bitcoin Cycle Is DEAD! Here’s What Replaces It" | James Lavish

Episode Date: November 30, 2025

Everyone says Bitcoin runs on a 4-year halving cycle... but what if that era is over? Former hedge fund manager James Lavish joins Scott Melker to explain why Bitcoin’s next major moves won’t be driven by the halving, but by global liquidity cycles, Fed policy, and a changing macro landscape. From shrinking bank reserves to political pressure on the Fed, James reveals the hidden forces that will shape Bitcoin’s price over the next decade. If you still think it’s “just the halving,” you’re already behind.

Are we done? Is that it? Is the bull market over for Bitcoin? And my answer is they're going to do whatever they can to make sure that the market doesn't draw down significantly just due to liquidity issues. This measure doesn't really make any sense anymore. Housing, insurance, childcare have all ballooned to levels that put the poverty line closer to $130, $140,000. If the stock market is going to dip, it would be better to do it now or in the coming six months before it's truly midterm season. I don't think this administration wants it to happen at all. But if they're going to need to have a drawdown in the markets to force the Fed's hand, well, of course, they'd want it to happen now rather than by the time you hit the election.

But we've done as much as we could. We can't cut anymore. We're going to cut any more. We're going to cut into flesh and bone, which means Social Security. What are your choices? You're going to cut Social Security? Medicare, Medicaid? They're not going to cut defense budgets.

And interest on the debt, that's it. You're already in deficit. This is dope. 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 term. You and I were in Vegas a couple weeks ago and had a conversation about this being the strangest bull market of all time because seemingly everybody has lost money. I want to start with, are we actually in a bull market at all in your mind and then sort of dive into what we spoke about privately for everybody else? Yeah, I mean, I don't think we ever got out of. a structural bull market for Bitcoin because we have so many things that are going forward and so many tailwinds that we didn't have prior to this. We have so many tailwinds that have developed over the last two years between the ETFs, options on the ETFs, a favorable administration now for crypto and Bitcoin. You've got stable coin legislation. You've got other legislation coming

online, you've got the choke point 2.0, which we thought was kind of dead. We'll talk about that. But, you know, that repeal of Sab 121 now became Sab 122 and banks are able to custody Bitcoin and create collateralized products around it. That's a big deal. These are all like big structural issues. You had the ETFs, the IBETF was the fastest asset gathering ETF in the history of ETFs. And so, you know, it gathered, I think, $50 billion in just over a year, which is just incredible. So since then, we had this new administration. You saw Bitcoin get repriced from 60-some-odd thousand up to over 100,000. And then it has been grinding sideways. ever since. And since that time, this summer, we've had a sharp sell-off here in the fall. And I'll attribute

most of that sell-off to liquidity drying up or contracting global liquidity contracting. And, you know, so the question is, are we still in a four-year cycle for Bitcoin or is that dead? And my answer, which you and I have talked about before, is I think that the four-year cycle is dead, that we're now in a liquidity cycle. So are we still in an expanding liquidity cycle global liquidity overall, where you're going to have a little bit of movement in between, but the long-term global liquidity cycle is more like, I'd say, somewhere around six years, seven years, which puts us into next year until that starts to really contract again, meaningfully. But right now, it's just like this interim contraction. And Bitcoin has been, has been, has been,

pricing that in and showing everybody that that's happening across the world, whether it's ECB, or it's a UK, or it's Japan, or it's the Fed itself, or it's the Treasury and the Fed, which we can talk about further, or it's just the Bank of China that's not expanding as much as people had hoped or expected. So all of those things have kind of played into Bitcoin here, And, you know, being the tip of the risk asset kind of spear, which unfortunately is just the way it's being treated still, Bitcoin's being sold off. And it's telling you that the liquidity has been drying up. So, but that doesn't mean that's going to continue into next year or through next year. I think that we do get an expansion of liquidity.

I think we're going to get it soon. Is that going to be coming from the Fed? Is that coming from the Treasury General account that obviously is now full? Is that more a function of China and Japan and things changing there? How do you view this flood of liquidity that's coming? Well, okay, so let's talk about that. So first of all, you have seen issues and some kind of red flags in lending markets and overnight lending markets. And so what do I mean by that?

Well, you're seeing more financial firms. using the overnight repo facilities. So the Fed has a standing repo facility they put in place after 2019 because 2019 we had a repo shock. What do I mean by that? Well, it means that we had financial firms that were looking for dollars that needed dollars Scott and they couldn't get them. And so back in 2019 in September, we've talked about this a little bit, but for your listeners who haven't heard this before, back in 2019, you had an issue where you started seeing the lending markets tighten up. And the reason for that was kind of a threefold. You had, first of all, you had tax payments, corporate tax payments being due in the middle of September.

So that drew some liquidity out of the markets as basically firms had to draw on liquidity and send it to the government, right? So for tax payments. That's number one. Sorry, I got out of focus there for a second. Number two, you had overseas you needed dollars in, right? So overseas, there was a demand for dollars and there was low liquidity. And that all has to do with euro dollar and dollar market overseas and exchange rates. But then the other big thing was that the Treasury kind of misstep and they expanded their QRA, their quarterly refunding announcement, and they expanded the number of treasuries that they would be floating to the market. And so you started seeing firms and big banks hold

on to their dollars and be reluctant to lend them or just not have them to lend. And so the overnight lending markets, the rates spiked. And they went into about 9% intraday, which was three or almost, it was over three times what the normal rate was. And so liquidity kind of just locked up. And it made the Fed almost go into a panic. And so the Fed and the Treasury teamed up pretty quickly. And in 48 hours or so, they stopped QT and started QE. And so if you look back at the Fed balance sheet, and this is where you get all tied up with QE, not QE, was it liquid, is it, was it really QE or not? And the Fed came out and said, it's absolutely not QE. This is not QE. And so we call it QE not QE now, because it obviously was, if you go look at the Fed balance sheet,

it expanded at the end of 2019, and it never contracted again. Now, part of that is because we came out with that, you know, the liquidity bazooka in 2020 and dumped $5 trillion into the markets, but, and then they started contracting after that, but that money's still there. They never, they never took that money out. And so that's been on the Fed balance sheet ever since. Okay, so that brings us to today. So what happened recently? But what happened recently is that, well, first, we're still running multi-trillion dollar deficits now. And so the Treasury just continuously needs money. They continuously need to float T-bills and anything they can that doesn't draw down bank reserves. Well, here's the issue. The Treasury also had to build up its general account. It's

checking account. So their target right now is $850 billion. However, as they were building, that up and going into that buildup, the government decided to close because they couldn't agree on a budget. And so here the government closes. The TGA is still being filled up. The, you know, the Treasury doesn't stop issuing debt. It needs to keep issuing debt on its schedule. It has to. It has to keep issuing debt. So what happens to that capital they get in, they put it in the Treasury General account, yet they're not spending it. So that's been a draw of liquidity. And it's been a draw to the tune of over $100 million or $100 billion. So now you've got the TGA that's bumping up against a trillion dollars while the government remains closed

last month. And at the end of the month, in October 31st, you saw a spike in need for dollars again. So you saw the overnight repo facility, the, sorry, the standing repo facility, which means that if you're one of the few banks that they're allowed to use it, you can take your treasuries, you can send them to the government, they'll turn around and send you dollars for those, and you pay a nominal interest rate, which is just a little bit above the Fed funds rate. However, or a little bit below, actually, because it's a collateralized product. However, you saw that the overnight rates that the banks charge each other to borrow spike. And it spiked up to 36 basis points above the Fed funds rate. Okay. So the S-O-F-R is, you know, so the Sofer rate is what is now,

that's what has replaced the LIBOR rate that spiked up, which told you that there was a need for dollars and there was a lockup of liquidity. Was it a catastrophic event? No. Was it leading to one? Well, there was a question of whether or not it was. And so was it something like in 2019 where we saw the markets just lock up? No, not yet.

So, but what is significant, Scott, is that that lending is picked up. That need for dollars has picked up. It's picked up right up to month end and a little bit through month end. We haven't seen it spike up again. recently but we're watching but what has stayed high is the rate at which the banks are willing to lend to each other and so that's the you know that sofa rate has been it's been ticking up so that's the that's the issue that people are watching to say is is this is this sofa rate over fed funds is that spread getting wide enough that it shows that there's a liquidity problem so then you dig back

dig back into, well, what would indicate that we have tight liquidity? Well, that's one of the indications. The other indication is, and this is the structural part that is meaningful, is that bank reserves are low. They're down below the point at which the Fed feels very comfortable with the 10 or 12 percent of GDP or of the total bank assets. Now, the bank reserves have fallen below $3 trillion, which brings them below that level, they're still considered ample, but they're declining to the point where it gets the Fed nervous. Back in 2019, that level was somewhere around 7.5%. So we're in 9 some odd percent right now. If it continues to contract which they expect it to naturally, then that's going to be an issue, which gets us to what the Fed said last

month at their meeting and at the press conference, Powell said they recognize that bank reserves are getting to a level that they're going to, they have to stop QT and they're going to, they're going to add to liquidity eventually. Not right away, but they're expecting to sooner than rather than later. Now that gets everybody on Twitter and, you know, in our investing universe fighting about, is that QE or is it not QE? Well, in my mind, And if they're adding liquidity to the system, it's QE. That's literally just the definition of adding liquidity to the system. They can say that it's short term, that it's not meaningful.

But if you're adding $20, $30, $50 billion of liquidity to the system every single month, that's still adding liquidity. It's not taking it away. It's the opposite of QT. And so now the only question that we're asking for Bitcoin and in this cycle, and your question is, are we? are we done? Is that it? Are we, is the bull market over for Bitcoin in this cycle? And my answer is, I don't think we're any longer in a four-year cycle. We're no longer in the four-year

cycle. And we are in a liquidity cycle. And watching liquidity, I expect liquidity to expand again going into this next year for all the reasons I just laid out in the banking system. But also, because we're going to go into midterms and we have a political atmosphere that's changed. changing rapidly at the Fed, and that's going to change the spring going into midterms, and they're going to do whatever they can to make sure that the market doesn't draw down significantly just due to liquidity issues. Like we can't manage Black Swan events, but you can manage liquidity issues. How long does it generally take after that flood of liquidity comes in?

I mean, 2030, $40 billion is not that much in the relative. No, it's more like a, that's like a, that's like a, that's like a, that's like a, a steady stream, right? Slow drip IV. Yeah, so if we get a real flood of liquidity, how long does that usually take to show up in markets or in assets, right? It depends on the asset, right? So in Bitcoin, it can show up a little bit faster in stocks a little bit, a little bit faster,

you know, but it really depends on the form of it, where it's coming from, and that cantalon effect that we always talk about, just how close are you to, you to, you to, you? the liquidity spigot. And so I expect that Bitcoin moves pretty rapidly off of it. And I'm talking weeks, not many months, you know. We're talking maybe six, eight, ten weeks, not three, four, five months. So that's my expectation. Now, when that happens and how much it comes is really what drives that.

But I do expect it to start to occur, depending on what happens here with the markets, I do expect it to them to start adding some liquidity by the year end here. And I mean, we're just five weeks away from the year end. So it's getting to the point where they're going to have to start adding soon. Again, I'm not talking about full-on, you know, definition of QE where they start printing money and buying long-term treasuries. we're still in the short-term T-bill market for liquidity, but they're going to continue. They don't really have much choice.

At some point, it's going to have to happen. And they understand that. They've already admitted it. Is there an argument to be made that if the stock market is going to dip, it would be better to do it now or in the coming six months before it's truly midterm season? We talked about this before the past election, so it didn't necessarily happen. but, you know, if you know that the floor is going to fall out at some point, people have very short memories.

So as long as it's back, as long as by, you know, May or June, we're ramping back up that maybe this would be the time to let it happen. Well, yeah, I mean, if, if I don't think this administration wants it to happen at all. But if they're going to have to, if they're going to need to have a drawdown in the markets to force the Fed's hand, well, of course, they'd want it to do, happen now and early spring. rather than by the time you hit the elections because remember what we just said is it's going to take some time for that liquidity to you know that goat to make it its way through the boa right and so if they start if they start adding liquidity early this next year or in the

first quarter that's that's time enough for it to really get through the snake through the markets for the summer for it to be a good setup for midterms but if you wait until summer or fall to start. It's too late. And you could have a drawdown that it would be, you know, it could be catastrophic for midterm elections. And so they're going to do whatever they can. So what are we talking about here with with the Fed and more favorable Fed? Well, Powell, his term is over the spring. And so by May, we're going to have a new chair of the Fed, which will likely be pretty favorable to this administration. And so it's up to Trump to pick that. to nominate that person, and he's got, he said he's got a handful now, four or five that he's

choosing between. And you can see them jockeying for that position in their statements and whether or not there are, you know, pro expansion here, meaning more liquidity and easing of Fed policy versus contractor, you know. And so you've got that kind of, you've got to split Fed right now. But you can see who's jockeying for it. And Wallers is, you know, making some pretty good, he's making some pretty good statements to say that I will be very favorable to this administration and to explain the economy. And you've got others who, who, you know, will fight against that. So, but this is, this is kind of unique here, Scott.

We don't usually have a Fed that's split like this, that's got statements coming out from all over the map constantly, week after week after week. And now so you see it in Fed Fund's futures, you could see the Fed Fund's futures go from an 80 or 90% probability of a cut in December, down to 30% off of certain statements, and then back up to 70% because the New York Fed Williams came out, the New York Fed President Williams came out on Friday and said, I can, I'm generally favorable of a rate cut in December. So now you've, and he's a pretty powerful. figure being the New York Fed, and usually aligned with Powell that gives you an insight that those two are thinking cut, so it's more likely than not. And now you've got Fed Fund's futures at 70% probability of rate cut. So it's kind of all over the map here, which is not normal. You don't normally have two or three participants, officials, dissent off of the rate cut or hike or Fed policy decision. It's just not normal. And so this is the first time in many years

that this has been occurring. And it's going to continue right into next year and through next year, I expect, because, again, the Fed has become a little bit more political than we would say would be normal in history. When I hear you talk about this, how complex it is, how many buttons and levers they're pulling, it just becomes increasingly more nonsensical. it's like the politics of it the will this happen how much of it it's such nonsense that this is what it takes to buoy a free market yeah so it gets you back to first principles you have to go back to first principles which is what are their options and really comes down to the treasury what is the treasury's option well treasury's going to be they it's not the treasury's fault that we spend so

much it's congress congress refuses to cut they absolutely refuse to to cut nonsense programs, you know, and whatever they're doing for their own constituents, they try to trick each other into cutting, but there's no such thing as austerity anymore. Not in the, not in the United States. Doge literally ended this week. Like, Doge is gone. Yeah, they said, well, there's, we've done as much as we could. You know, there's really no much more than we can, we can't cut anymore.

You know, we cut any more. We're going to cut into, cut into flesh and bone, which means Social Security. and it's just not going to happen. And so what are your choices? You're going to cut Social Security, Medicare, Medicaid? Because between those programs, the defense budget, which they're not going to cut defense budgets, and interest on the debt, that's it. You're already in deficit.

That's it. We are already in deficit. The only other choice is to raise taxes. And when you raise taxes, you wind up, you wind up. putting a top on productivity, and there's less reinvestment from companies, especially small companies that are investing in small productive lines or in hiring people, well, that kind of gets cut out, and then you have declining productivity, so that's no good either. And so they're not going to do that. And nobody wants to raise taxes. It's not, I guess unless you live in New York,

it's just it's not a popular tactic politically and so new york's going to they're in the f a foe phase of you know they're in the f a phase of fo so they're going to find out they're going to find out and so but you know you're going to continue to have this these deficits and we're going to continue to fund them so the first principles are that's not going to stop and how are they going to fund those well you need liquidity to fund those you need bank liquidity to fund these deficits you need to continue to expand GDP nominally to have the tax base the so-called tax base to operate from and so they're going to continue to debase the u.s dollar just like they're doing to other major currencies fiat-based currency you know the fiat-based debt and currencies they're going to

continue to do this. And that's just the first principle, which deficits are going to continue. They're not going to get smaller. And we're going to continue to fund them. And we're going to continue to print money in order to debase the dollar to not pay down the debt, but just to continue this charade. And it's going to go, it's going to continue ad nauseum. So the only question is not whether or not they're going to print, but when, what drives them to do it, is, it a black swan event or is it just a run-of-the-mill, you know, vanilla worry of recession that they start pumping liquidity into the system, which is what you heard Powell say last month, that's where they are now. It's just the run of the mill. We're going to start adding liquidity

to the system. Can they do that? Can they do enough of that to keep it going? Or are they going to have to really pump it? So forget about all the nuance and the politics and QE not QE, the programs, the BTF, whatever it is, it doesn't matter. Is there liquidity going to, is there going to be liquidity added to the system or not? And my answer would be absolutely, they're going to add liquidity. So just be ready for the debasement of the dollar. It's going to continue. Okay, so I want to go back to the original question, which is the conversation that we had in Vegas about this, if it is a bull market, whatever we're going to call it, how difficult it's been for most actors, because arguably it's because of all the creative things that we're going to,

we've tried to beat Bitcoin, right? Because if you're sitting in Bitcoin, even if it's in the 80s, wherever it'll be by the time this comes out, you've done very well if you've been in it for a long time like these people. So all coins have gotten destroyed, obviously. So there hasn't been really a lot of fun to be had in that market for those who have exposure there. And then the other trend, obviously, has been treasury companies.

Micro Strategy, ETFs have done well. They've tracked Bitcoin. but my feeling is that even the people who preach not taking risk with their Bitcoin have found creative ways to lose money thus far. So very few people have made money in 2025 if they've done anything but hold Bitcoin and even those people are somewhat disillusioned by the price kind of going, you know, into November here. Yeah.

I mean, you know, there's been, we've seen liquidity flushes. And so the part of the issue is that you can look at Bitcoin and say, okay, it's the safest Crypto asset. Clearly, I believe that and you believe that, I believe. So, however, if you're, look, this goes back to exactly what we just talked about, Scott, is that if you're younger and you're not sitting on a pile of money and you're just treading water, you're trying to keep up with all this inflation, you can hear the PhD economist wax poetic ad nauseum about, inflation's coming down. They should be happy. Nonsense. Prices are not coming down. The inflation rate is slowing, but you're still experiencing inflation. And if you're a family of four with two working individuals, two working adults and trying to make ends meet with higher rent, higher health care, higher auto insurance, higher auto payments, whatever it is, And if you're trying to borrow, your interest on your debt is higher, like your child care is through

the roof, you know, your grocery bills, you're just trying to make ends meet. And you listen to them talk about how that, you know, you should be happy. Inflation's coming down. The prices are still 50% higher than they were before COVID. Then it's not okay. And so, but that gets us to going back. to the first principle of the people who the case-shaped economy okay so you've got the asset owners who have done very well the 10 the top one to top 10 percent has done they've done very well in the

past you know five years the bottom 50 percent is not done so well and so or the younger people they've just gotten out of college they've got debt they've got you know their student loans that they've got to pay off rent is higher food is higher um all the all of the insurance costs that we just talked about are higher so they're getting into these markets then they see the crypto market as a place that you can make money well we've seen people get absolutely demolished in some of the you know um the nonsense cryptocurrencies that don't really have any any value or any any protocol that that has any tangible value to it you know so if they go into something like bitcoin they think okay this is a safe asset but man it's

not going to give me that 10x or 100x i'm looking for how do we get that well i can do it on the perpetual preferred market or perpetual uh futures market where you're you're buying bitcoin on a 10x 25x 50x margin and you know you're you're literally levered up to the point where if bitcoin just moves a percent or two, you get wiped out. That's not a wise choice, but you're seeing this happen over and over and over again and people getting completely wiped out because they're pushing more chips on the table. Why do you think lotteries do so well? I mean, the likelihood of you winning a lottery is so low, it makes zero sense for you to do that. But you see people doing that because they're like, well, if I just, it's a few dollars. And maybe I win and I get out of this hole. God help me. Just

help me get out of this hole. So we've come into a situation where people feel like they've got to take risk and they've got to take more risk than is warranted for the investment profile of the security. And so, or they're putting those dollars at risk in a way that doesn't warrant that risk. And so, but why are they doing that? Well, because they're just trying to do anything they can to catch up. Forget about get ahead. Some of these people aren't thinking, well, I just want to get rich. I want to go have my have my mansion. No, they're thinking, I just want to be able to have enough money put in the bank that I can feel secure for my family for the next three years. Because I am terrified. Yeah, I'm terrified. And so what's the harm for me to, if I got a thousand

dollars, it's not going to get me there. So I might as well, I might as well risk that. And that's, that's the problem is that the Fed and the Treasury and all of these central banks, Central banks at large have put people in the position where they must take risk with the money they've earned in order to not get ahead, but just keep up. And that's the issue. So that's the first principle that everybody's dealing with right there. I read in passing, so I can't really quote it tremendously well, but Michael Green wrote a substack or an article that just was going around this morning. And it was about the way they calculate the poverty line. Did you see that by chance?

I did. And, you know, and it's a, I think it's a 1950. 50s, or I think it was in 1963. 63, I think you said. Yeah. Calculation where, what their calculation is, it's basically three times the cost of food. Right. But the problem is, and he points us out very well, so anybody who has not read it, it's, you know,

it's on his Professor Plum is his handle, correct? I think it's Prof Plum and it's the guy from Princess Bride is the avatar. is the, inconceivable. Yeah, but he's, he's very smart. And he's got his

medium or substack. It's on medium. It's a free article. You can catch it. You'll put it in the show notes, I'm sure. But the, the crux of the article is that

this measure doesn't really make any sense anymore. Because you've got, you're measuring three times the cost of food as a poverty level, which would get you to like, you know, $30 something thousand dollars now,

which is just, imagine living near an urban center on $30,000. That just makes absolutely no sense. Of course, you're not going to be able to survive on that. So what's the real measure? Well, the issue here is that housing, insurance, child care have all ballooned to levels that put the poverty line closer to $130, $140,000. That may sound insane, but when you go through the numbers, you add it up and you take

out everything. You take out vacations, Netflix, any out, dinner's out, sporting events, like take all of that out. And you just add up the insurance costs, the health care cost, you know, the cost of autos. You need two autos because you need two working adults in a family now. That's what they've taken away. That's what they've created. They, meaning central banks and the manipulation of the money supply, have created a situation where you need two working adults in a family.

And the problem is that second income is largely going to health care for somebody else to watch your kids while you're working. Yeah, I'm sorry, child care. Just to add one or $2,000 a month to your bottom line just so you can make your car payments and your health care payments. Because otherwise, you're not making ends meet. It's not the food. That's the problem. And that's the issue is that the poverty line is nonsensical now. And the poverty line is really well over $100,000 because you're not getting jobs that are going to give you meaningful salaries way outside of city centers anymore.

I mean, we've had a great, we've had a migration to cities and there's a reason for that, the urban centers. And as everybody is coming back to the office and, you know, by and large are going back to the office, even the companies that figured out that they could save so much money on rent, they're also figuring out that. that they're not getting quite the same productivity from workers that they're sitting at home. And so they're calling them back to the office by and large. And so you need to be in urban centers. And if you're in an urban center, that is going to be costly. And you're going to be living below the poverty line unless you're getting toward that $200,000 a year between two families or two incomes. It begs the question then if we're miscalculating these things and we know that liquidity is coming and we know that the Fed is

trapped and governments are trapped what's the answer for those people it's only going to get worse that's not there's there's no solution here right so we can talk about recalculating it and understanding the situation that they're in but there's nobody who's saying how do we fix that for them there then that's the issue that's why that's why we talk about this every day is uh the issue is that you must own assets in order to get get past this in order to climb up into that upper echelon you must own assets and that means not just owning your house, but owning tangible assets that you can move around liquidity in times of need. Whether that's stocks, whether it's gold, whether it's Bitcoin, you need to own assets. And so that's been the argument. The best assets to own are ones that can't just be

inflated away that can't be debased. So dollars are not a great asset to sit on because they're being debased every single day. You don't want to be sitting on a pile of dollars in your checking account. This blows Boomer's minds, typically, that they're like, they're just sitting on a pile of cash in their checking account. They're like, why not? Well, I don't think, you know, they have enough assets outside of those that they're not realizing that you can't just sit on cash as a safety anymore, which goes back to the point of what we were talking about before, which is you are forced to take risk. You are forced to somehow, you're, somehow compile some assets, find a way to put money away every single month, however you

can, and then take risks with those assets in order to keep up with the inflation rate around you so that you're not left behind when you want to go buy a house, when you want to go buy a car, or you want to go do something that's not just living, not just paying your grocery and health care bills, that you actually want to take a vacation with your kids. And so, but you're forced to take risk in order to get to that point. And that's the, and that's why we keep saying that, you know, you've got to do a few things, which is do whatever you can to start putting away money to an asset and have a long-term view on it because you've got to be able to ride these liquidity cycles.

And these people can't do that. That's the thing is that's such a trap because if you're living, if you're living check to check and your expenses are going up and you're not making enough money to track that, you can't even put a hundred bucks away, much less the $10,000 or $100,000, you would need to be patient and watch it grow. It's an impossible. Yeah.

And the younger generation sees that. They already experienced it. They're like, well, I don't see a way I can ever own a house. I mean, the median age, the average age of a first time home buyer now is, is in the 40s, you know. So that, like, that's just crazy. So they're like, it's going to take me a long time to get there. And so is it any surprise that you're seeing the rise of people electing officials who are socialist, you know?

Is it any surprise? It's no surprise at all. The money system is, this is what we've created. And we've created that through the separation of wealth. And so they can feel it. And so that's not any surprise whatsoever because they're thinking, well, at least I'll get something at least i'll get some sort of either rent control or grocery price control or eventually hopefully i'll get a ubi you know universal basic income so i can get by without like and i'll be

able to raise my family and so and that that's the that's the you know that's the failure of the system right there if you want if you want to have a measure of failure of a so-called capitalist system, if you have a rise of socialism that's occurring in the midst of that capitalist so-called system, then that capitalist system has failed. And that's the argument that we're not really in a true capitalist system. We're more in a canton, a system of the cantalon effect, you know. I mean, we always joke that Bitcoin fixes this for everything. It's become a meme. But does Bitcoin actually fix that? Or are you back to the problem where, you can't buy it and you can't hold it long enough, then doesn't fix anything, right?

Because you're just going to end up selling it on some volatile day when it goes down 20% money and pay your bills. Yeah, well, it fixes it if you actually, if you actually start pinning the value of debt to it. So, you know, we got off the gold standard in 1933 and then we got off it completely in 1971. And so you've seen how inflation has raged in periods since then and how much the dollars devalued since then. Well, if you actually, if you have debt tied to something that cannot be debased, something like Bitcoin, well, you could stop that from happening. You could stop that pain. Are they willing to do that? It remains to be seen. You know, there's a lot of chatter

about it. You've got Cynthia Lemmes talking about it, the senator from Wyoming, and she's been pushing for the Bitcoin Act, where the U.S. government actually buys Bitcoin, puts on its balance sheet, and then we can shore up the debt around that. Is that going to happen? We'll see. It remains to be seen. I can tell you that it's kind of like a self-fulfilling prophecy. If right now, people say the government would be out of their minds to do that, because look at the volatility of Bitcoin. that's just crazy. However, if they did do that, what do you think Bitcoin would do? I mean, that's game theory right there, where every nation, every, you know, nation that's

that's fiat based that issues debt in their own currency would have to do something to kind of keep up with that. Whether they're going to back their currencies with gold or they're going to back it with Bitcoin, well, if it comes out, the U.S. government is buying Bitcoin and it's going to start showing up their debt. with Bitcoin, you better believe that they're going to be doing the same thing. So it becomes self-fulfilling where Bitcoin becomes the preeminent asset of the world. And it gets completely revalued. It doesn't go from 100,000 to 500,000. It goes into the millions. And again,

this is not a number-go-up kind of argument. This is the graduation of Bitcoin becoming from going from a speculative asset to becoming one of the best stores of, if not the best store of value in the world. That's the difference. And so it's the argument of this is not a number, this is not a get rich quick scheme. This is a not get poor slowly scheme. And that's, that's really the hope of Bitcoin. That's, that's why we talk about it so much. Let's dig into the treasury side. So obviously micro strategy is, taken a beating. There's a lot of fun and nonsense that we've actually discussed about where that's coming from, whether it's some sort of, you know, some sort of conglomerate is getting together

to destroy micro strategy and get them delisted. We don't need to dig into all of that. But I think we obviously saw a major hype bubble or excitement around Bitcoin Treasury companies coming into the summer and a very, very quick washout. I think most of them have honestly taken the approach you just said, which is that they are not trying to get rich quick. They're trying to get poor slowly. But the investors tend to try to get rich quick. So they haven't done that particularly well when they've bought these at, you know, 10x multiples before these companies could even buy Bitcoin or register a share.

Right. So I think there was just something structurally wrong with the way they were launched. But, you know, obviously you can't talk specifically about the ones you're involved with, but just sort of setting the table for the environment now. What rises from the ashes? What do we see from the treasury company space moving? forward now that that bubble has somewhat popped. Yeah. So I think it's rather than I mean, it's come back to Earth, right? And it was a really short live kind of feeding frenzy on these

things. So there's a good reason for that. I think that there's a there is a tremendous use case for these companies. And that's long term, Scott. So just to back up a little bit for For maybe listeners, when you said Treasury, they're wondering where you're talking about. You're talking about the Bitcoin Treasury companies, you know. And so things like Microstrategy that is the one that started all of it, Michael Saylor. And then you had met a planet and, you know, you've got CEP 21 with Jack Mallors and strive asset management. I'm on that board. So, but there are a handful here, Scott, that I think that are going to continue to grow and they will thrive in this.

Here's the thing, though, when these started coming out last spring and into the summer, there was so much enthusiasm around that because it was basically an arbitrage of the capital markets. You're using dollars to, you're using a debasing. currency to go borrow and buy Bitcoin with in the capital markets. Some of the companies use convertible debt to do it. Some of them just issued equity. And then you started getting into micro strategy, forge a path of using preferred equity, which is, you know, it's perpetual debt that doesn't have to be paid back. And it's the strongest way to use your balance sheet to buy.

bitcoin and then strive we we did the same thing we floated a perpetual preferred as well not everybody can do that so let's move back a little bit let's move back one step you had a feeding frenzy a ton of these companies come out and it was it was euphoric bitcoin was at all-time highs in the 115 to 120 range and people were buying these things left and right and they didn't really understand what they were buying at the price they were buying it And there's been a lot of anger on social media about this. And the truth is, they were just buying at levels that just made no sense. So what do I mean by that?

Well, when you look at these companies, you've got the basic, the most basic measure of all these companies is their MNAV. And that's the market capitalization of the entire company over the amount of Bitcoin that they own, the market cap of the business. Bitcoin they own. And that's called the MNAV. And if they're trading above that, and you have the most basic, basic measure is just using their, the fully diluted common shares to get to the market capitalization of the company over the amount of Bitcoin they own, the dollars worth of Bitcoin they own. You have to take it a step further and you really should be using enterprise

values. You should be using their debt as well. If the debt can be converted to, equity, you should convert it to equity first. But those are the kinds of measures. That's the basic measure. So if you're trading at one, that means that your stock is trading at the value of the Bitcoin. If trading above that, that means that your stock is trading above the value of the Bitcoin, meaning that the investors expect that you'll be able to get more Bitcoin on your balance

sheet in the future. So they're buying the bet that you're going to be able to get more Bitcoin per share on the balance sheet in the future. future. And so that's, that's what that MNAV is. So the issue is these MNAVs got out of control. If you look at some of these got up to, you know, five, six, eight, 12, 15, 18 times MNAV. And it was insane. And so some of them didn't even own Bitcoin yet. And we were watching this. And so being in here's here's where people got really frustrated. being a hedge fund and so my my hedge fund the bitcoin opportunity fund we were we had access to some of these

opportunities being big buyers of them we had access to them prior to the float of the public equity in it so it's called a pipe you know where we would buy these shares privately off exchange and then we would be locked up and wait until they came to market meanwhile these things were trading in the market And we had no access to it. We just watched them. But we were buying them at close to 1MNAV, maybe a little bit above or a little bit below, depending on this situation. And so that made people pretty angry.

But now, flash forward to the future where, you know, we're just getting our shares on the last number of weeks, and these things completely collapsed from... And the price of Bitcoin is down. So the net asset value went down 20. 30% as well. So we took risk buying them, knowing that we would be locked up during that period and they would very well come back down toward that one MNAV. And we took that risk. You know, we calculated that risk. And we've done fine on it because we calculated that risk. We chose, not every company, we chose a few of them. Okay. And so, but they had, they did come crashing down.

Now you've got them trading somewhere around just below one to one and a half MNAV. for some of the best ones okay so why would they be trading around there well to us you've got to have some sort of metric that you can anchor to and so for us we look at these things like more along the lines of the the book values of say banks where you've got banks trading so anywhere between just under one m nav all the way up to two depending on the cycle depending on the liquidity cycle but let's call about one and a half makes kind of sense for these things to settle out at where they're going to be trading between one and a half and two book value, which is essentially what we're talking about, the book value of the bank, you know, assets or with the market capitalization over their

assets, it's just like that with the treasury companies. But here's the issue. For people who are buying these things, even if you're looking at them, and say, okay, okay, I want to own it one, one and a half MNAV or anywhere near one MNAV, just make sure you're doing the calculation properly. And I keep saying this because you see, like, we check these, the monitors, the general monitors that have all of them listed, and they're wrong all the time. They're just not up to date. They're not checking the 10K or 10K properly.

They don't have the number of shares. They're not diluting it the same way we would. I would say just do it yourself and use it. on to Edgar and pull those filings and actually look at the number of shares, look at the dead outstanding, make the calculations yourself to understand just exactly where these things are trading. And then, you know, make your, you make your assessment on which ones you think are going to do well. I think that there's a handful that will do very well. And they've got a long runway, but there will be some that continue to get washed out here, Scott, and they're going

to trade under one MNAF, and their choices either go buy back their shares because you're buying Bitcoin a discount at that point or get sell to another company, which is literally what happened with similar scientific and strive and we're in the middle of that deal, and I can't really comment on it, but that's, that's a situation that you're going to find some other treasury companies in And they'll either be buying about their shares, they'll get bought out. So you tell people to go on Edgar and figure out what the accurate MNAB is, obviously, and take a deeper look. But what are the sort of exogenous or what are the main factors beyond just where they're trading at for MNAV that would make one successful over another? What's the end game beyond just being a company that holds Bitcoin?

Because I think that a lot of people jumped the gun and didn't have a really long plan. I think Sailor is showing exactly what you can do by owning a lot of Bitcoin, right? Regardless of what people think about it, he's proving that there are a lot of financial instruments that can be created when you have a humongous stack. Do you think that the winners will be the ones who have similar plans or who have plans to create different kinds of bonds or instruments that he hasn't yet? Or is it just going to literally be like whoever can financial engineer their balance sheet to buy more Bitcoin? no i think you you you you laid out exactly the way i would say is that the the strongest companies will have the strongest management which means not just um you know it's not the bitcoin influencers like that doesn't matter it's it's it's managers who understand capital markets who have a

strong lines of capital markets i'm sorry operators like strong operators exactly that can actually lead the company okay and that that's that comes in in way of not just management, but also board members as well, who understand capital markets and understand how they work and have a long, long term either both view on how to do this and experience on, you know, different ways to do this. And just like you said, those operators, so the best companies with the strongest balance sheet, with the strongest management and the strongest ties to capital markets are the ones they're ultimately going to survive. Micro Strategies, exemplary of this between their management and their board and their ties to capital markets and

their long understanding of how to do this. They know what they're doing. Shereesh, their treasure is instrumental in all this and he's on the board of Strive as well. And we talk about these things because it's really important to understand all these dynamics. Not every single company can just go dip into the capital markets and issue of preferred. And you're going to you're you're some of these companies are finding that out the hard way i mean you have to have strong balance sheet strong management where the the capital markets will respond to you well what do i mean by that well if you're going to have your jp morgings your you're you know your merrill lynches your goldman sacks of the world um you're the canter fitzheralds go and tap their capital markets

meaning their customers, their long-term clients. We're talking about endowments, institutions, you know, the pension funds, large hedge funds that are going to have an appetite for these types of instruments. They have to have strong relationships with them and be willing to share those relationships with you as a company. And so that's tapping into the capital markets. And so not every single company can do that. So what's the end game?

Like you just said, it's to create financial instruments around the Bitcoin base that you have that will appeal to them. And whether that's a perpetual preferred that will stay somewhere constant in price because of the dynamics of your issuance and buybacks of those securities or the changing of the interest rate on them, and what the yield will be for the ultimate buyer of them. Well, that could be very interesting to an institution that has been stuck around three, four, five percent on their money market funds, you know, buying treasury bills and they might want a better yield, but different than something going that, then going after just high yield debt or distressed debt. this would be something that would be more attracted to them because it puts in a completely

different bucket. And that's what we're talking about is finding instruments and finding securities and creating those around your ultimate, you know, your ultimate balance sheet of Bitcoin. And that's what we're looking for is those companies that have the long run way to do that and the experience and knowledge to do it. I know some people think that the market can sustain thousands of these down the road that every company will become a Bitcoin company. But as you describe it, I think there's going to be very few of these are successful because it's such a chicken and an egg problem. You have to have the operator who can do all that and create instruments that have real value, but also have demand. But you have to have a huge Bitcoin stack first.

And it's seemingly impossible for most of these companies to get the Bitcoin, but then actually have. have a strong enough balance sheet and operator to utilize that because most of them just bought the Bitcoin at the top and now I have no options. Well, their option is, like you said, the average down, I guess. Yeah. Average down. Or they could buy, they could buy back stock. I mean to say buybacks. That's one, that's one thing. Or they could sell, you know. And so, meaning not sell the Bitcoin, but sell a company. And so I expect that there will be consolidation in this universe. And then there will be an expansion. as we head into a very strong Bitcoin price cycle,

there will be an expansion of these again. You might see another, you know, feeding frenzy. I don't think it would be like this where, you know, it felt a little, I'm going to be honest. It felt a little bit haphazard where you just had these companies being slapped together and going out, they're raising money and selling equity and buying Bitcoin without a real plan.

And so we avoided, by and large, we avoided those companies. But luckily and, you know, but strategically, you know, but I do believe that there's going to be another very strong cycle here with these. And companies like micro strategy are poised to do extremely well when we have an expansion of price in Bitcoin extremely well. So that and we we're very confident of that. Yeah, I mean, you and I talked about this. It's Monday and this will come out Sunday. So we talked about it on macro Monday, but micro strategy feels like a screaming by to me right now. It just feels like all possible flood is being thrown at it. Every going to

zero narrative, it's all over, delistings, every nonsensical thing you could possibly hear. It just is like, if you're a counter-trader of sentiments, it's about as bad as it gets right now from those people. Yeah. I mean, it's a good entry point for sure. Could you have another drawdown in Bitcoin? Absolutely. It feels like it. hit a local bottom here. It does depend on that. And it will trade with Bitcoin and it will trade probably a little bit of a beta to it, even here. It's trading right now in my calculation. I haven't updated for what he did over the week in which I don't know if he did anything. But it's at about a 1.1, 1.12 MNAV right now, which is really close to one. It's a 10%

you know, delta. Is that to me, that's a pretty good entry point. But I have a very long-term view on this. This is not something I'm, it's probably good to trade around, especially if you're bullish on Bitcoin price here. Could it trade down again? Absolutely. Because if Bitcoin trades down, it's going to trade down with it. But if it gets down below a 1MNAV, I mean, I would be a screen buyer of this.

Oh my God. Yeah. Screening. Remind you of GBTC, which was a 50% of scale, obviously totally different. but I mean, buying Bitcoin at a discount seems like a screaming buy. So listen, I know we're kind of coming to time here. But looking forward to 2026, I don't think either of us think that we're plowing down into a bear market right now for three years, right?

I think it's fair to say that, we mentioned the beginning. So assuming that they can pull the levers and push the buttons and we don't have a major black swan event, how do you foresee the path of Bitcoin? well if we don't have a splash of liquidity soon i see bitcoin drifting a little bit lower maybe and then grinding sideways between 80 and 100 000 for a little bit um until we do see some clear liquidity um added to the to the system which i do expect to come next year and when that does happen i expect us to reach new highs again you know i would not be surprised whatsoever to see Bitcoin at $150,000 or $180,000 next year. Do I expect it? It's hard to expect anything in Bitcoin.

But what I do expect is more liquidity, which means I expect Bitcoin to catch back up. And rather than having a steep drawdown in the markets of 30, 40, 50 percent, I would see a, you know, if there's a hiccup in the markets, they're going to come with, you know, they're going to come with fire trucks if there's anything more than a hiccup. So I would expect for us to be, you know, for the Bitcoin price to start gravitating back up to that all-time high. You know, you've got the, we talked about OGs before selling and starting a little bit of a cascade with just monetizing some of their long, long, long-term holdings and going to, you know, to go live their lives. Well done. That's expected. I think we've by and large cleared that at the $100,000 level. We'll see. I expect there will be some more of that, as well as some of the hedge funds that bought along the way here and some of the smaller institutions. They'll cycle out of it. But once we get through that $100,000 mental level, I think we're going to get right back up toward that all-time high and then kind of just work our way, work our way higher and that's going to have that's going to be due to liquidity it's not going to be

due to any crazy euphoria i don't think it's going to be because jp morgan explodes because of their micro strategies short and then the moon man comes yeah the narratives right now are really they're insounding so thank you for keeping us grounded i'm glad we got a chance to have a conversation without uh mike and dave fighting the same the same thing over and over again but You know, it's important to hear different points of view. It really is. I love it. That's why it's so engaging.

We have to always try to get back to first principles and where we are in the markets and just what to expect from that. And that's where I try to ground myself. And that's my jumping off point every single day. I appreciate it. Now that you've spent the last few hours talking to me, I'm going to let you go live your life, man. Thank you so much. I appreciate your time. Absolutely.

Love the studio, man. We've got to get you in here. next time i'm there right trip to sambo let's go all right man thank you yeah let's go