We Study Billionaires - The Investor’s Podcast Network - BTC248: Bitcoin’s Institutional Wave w/ Willy Woo, Max Kei, Efrat Fenigson, and Preston Pysh at Baltic Honeybadger (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. So last week, I had the pleasure of participating in the Bitcoin Honey Badger conference over in Riga, Latvia. And on one of the panels, we were talking about whether the institutional wave that's currently sweeping Bitcoin is a good thing, or if this is some type of Trojan horse to capture the protocol. And this was a really fun conversation. We had Willie Wu, we had Max Kai, we had Effort Fennigson. And everybody just brought some really unique insights to the conversation. And I wanted to share the panel with the podcast.

Starting point is 00:00:37 So I reached out to Max and Anna, who run DeBify and Hoddle Hoddle, which are the ones responsible for putting this whole conference together. And they were kind enough to let me re-sindicate this onto the podcast. And with that, I hope you guys enjoy the conversation. It was a fun one. Celebrating 10 years. You were listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Being your moderator today is the star and the host of the You're the Voice podcast.

Starting point is 00:01:20 Efrat Fannickson, I don't know if you guys have listened to her podcast. If you haven't, you 100% should. Frat, please come up onto the stage. Thank you so much. I have been a guest. Yes, that's true. Max Kai, you need no introduction. He's back.

Starting point is 00:01:33 Max is back here. Thank you. Preston, you're back up on the stage to talk about this one as well. and Willie Wu is just making himself up here. So, Willie, thank you. Willie all the way from New Zealand. Thank you very much, Willie, for coming across. And the title of this panel is Bitcoin's Institutional Phase, Trojan Horse or Tipping Point.

Starting point is 00:01:51 And just to help get this one spiced up a little bit, did you guys see American Hoddles meme? Who's Trojan horsing who? No? That was very interesting. And his message behind that was a we being Trojan horsed by the institutional order option. So anyway, off to the panel. Thank you very much, guys. Give me a big round of applause. Okay. Thank you for being with us after lunch. I'm sure you would have preferred being in the sun, but we are going to be just as shiny. In the past 12 to 18 months, Bitcoin has entered a clear

Starting point is 00:02:23 institutional phase, ETFs, treasury companies, mainstream stacking. But Bitcoin was not originally built for Wall Street. Bitcoin evolution is being shaped at the moment, not just by ideology, but by capital flows. As someone who truly appreciate self-sovereignty and freedom, me, I'm opening myself up to this inevitable evolution of Bitcoin in our fiat reality, and I'm learning much about it. So I'm keen to have this discussion with these three masterminds. The overarching question here is,

Starting point is 00:02:55 are we seeing a train horse or a real tipping point? And let's start with what defines this phase that we're in? How would you personally define the institutional, phase of Bitcoin, what triggered it? Who wants to go first? So you can think of Bitcoin as a little Pac-Man and we'll be eating these little dots. Gobble, gobble, gobble. Now the big cheese you're digging into that, right? So I think the tipping point, and I think it really was a tipping point, was last year when the Black Rock ETF came on board and the high priest, Larry Fink, said we're doing this ETF and now you can talk about buying Bitcoin for the rest of the

Starting point is 00:03:34 traditional world, right? That encapsulates $900 trillion of wealth assets. Bitcoin at this point is $1 trillion. And we always hear talk about liberty, separation of money in state. That means the government can't overspend and then tax you run through dilution, effectively stealing from the poorest. That doesn't end until that Pac-Man gets big enough to displace the US dollar, flips gold, and becomes a monetary standard. And that's not going to happen until you get the large gate-key of capital opening up to Bitcoin and pouring that money in. And so it's a necessary step. With it comes risks.

Starting point is 00:04:13 We can talk about the fragility of centralization. If big pools of Bitcoin get stored in one location, that might get nationalized and so forth. But that's a different discussion. This is always going to happen if we're ever going to effectively change the way the world uses, what we use is money. In short, I would just say that it's in Bitcoin's culture to be very skeptical at all times, which is a very healthy thing. And one of the main reasons why it's done so well to date, when I think about just an image of where we were for the last, you know, since its inception until right now, I would say imagine two galaxies, if you've ever seen like these memes of

Starting point is 00:04:53 two galaxies, they're like coming towards each other and then they're hitting and that's just particles and debris and planets and whatever, just kind of flying. all over the place. I would say that we are right at that point where these two galaxies are starting to touch. You have this legacy system that has been pretty much gated off, and the flow of capital from that traditional system has been somewhat limited, pretty limited, as it flows into Bitcoin, and Bitcoin is really that counterforce. I would argue that all of the crypto tokens that are stable coins are actually a manifestation of the legacy system and not actually Bitcoin, and that those where like the early tentacles of the connection between the two, but now you're really starting

Starting point is 00:05:35 to make impact. And I would say the thing that's causing that impact to really take place is the massive shift in policy coming out of the United States, which is then having repercussions all around the world that they're also saying, okay, well, if they're doing it and, you know, the king of the dollar that's dominated the planet for the last, however many decades, like, there must be something here. And so that's causing the policy shift. With respect to are they trojan horsing us. I'll give you a real simple example. The last administration, when they approved the ETFs, they purposely did not allow in-kind redemptions. I would argue that that act of Gary Ginsler and the SEC at that moment in time was very Trojan horse-like in its action.

Starting point is 00:06:20 As soon as the new administration came in, all of a sudden, now you have their pro-Bitcoin, they're pro-everything. But what I find interesting is, I see. suspect, but I don't know for sure that Black Rock and some of the larger banks that have the ETFs were actually the ones pushing for the in-kind redemption. And I find that to be extremely healthy and not a Trojan horse. And for people that don't know what the in-kind redemption is, it's, you know, if you have $5 million worth of Ibit or some number like that, is that the right number, Willie, do you know if is it five, it's like a $5 million threshold and higher? If you have that many shares of Ibit, you can actually go to Ibit and you say, here's the shares, give me the

Starting point is 00:07:00 Bitcoin in no exchange. So that's a big, and the fact that that was purposely left out of the past administration just shows you they were really wanting it to be a cash settled market so that it could be compromised just like the gold market's been compromised because it's cash settled and not physically settled. So things like that are refreshing. It doesn't mean that we're like out of the gate or that you can let your guard down, but that would be my argument for why we're not just, you know, getting scammed. I would say, I would commend on the current cycle. You know, in developed markets, I think it's institutional bull market, right?

Starting point is 00:07:36 We don't see many retail in developed markets, obviously. But in developing markets, it's actually a retail bull market. So I think that, yeah, the beginning was BlackRock ETF. And before that, it was Michael Saylor. So if we look at the longer cycle than 2020, I think Michael bought first something, something Bitcoin. I don't remember the amount. It was 500 million in 2020. Yeah, and that kickstarted.

Starting point is 00:08:02 But it took four years for other companies to understand the purpose and to like Bitcoin treasury thing. And it's only after four years now, we're seeing five years actually. We see that every day there's like new treasury company coming in, which is kind of unhealthy at this point. But I mean, it's part of the game. It was a year ago when I interviewed Saylor and I asked him, are any other CEOs approaching you to try and copy your playbook and he was like, maybe one here or there. It wasn't happening

Starting point is 00:08:34 in June last year. And in one year, look where we are at. It's crazy the acceleration of this phenomenon. Okay, so the institutionals that are now stacking, are they furthering Bitcoin's mission or are they capturing it? I know you said, Preston, that it's not so much scamming us right now, but where do you think it's leading us? Well, on the Treasury thing, I think the reason that it's taken off so much just in the past six months is because I think that there was a massive realization by Michael and Micro Strategy that using preferred stock is very different than using convertible debt. And so like what's so different about that is you don't have to pay back the face value if it's not convertible. He just did a new issuance the other day and he's raising

Starting point is 00:09:19 $4.2 billion. He immediately sweeps that in the Bitcoin that benefits the common shareholder, but he never has to pay back the face value of the $4.2 billion like you do if it was a bond. And even if it's convertible, if it was a convertible bond, that face value is dilutive to the common shareholders after five years. So even if the convertible debt was running, he still gets that massive dilution factor. So I think that they kind of cracked into something that was really big, which is when you use preferred stock, you get very different economics, that you're still servicing the fixed income space in the way that they want, but you never have to pay back to face value, or the preferred stock, it's called book value. And I think that was a big unlock. So when the space

Starting point is 00:10:02 saw that, you now have this big influx of Bitcoin treasury companies that are trying to do the same thing. Most of them don't even have access to the markets yet, which is an issue for all of them. But to Max's point, that there's concern there, and I agree, I share that concern when you have a Solana treasury company, or you have an Ethereum treasury company. And you got, I mean, it's totally absurd what is coming to market, and it's going to be a lot of froth, and there's going to be a lot of dead bodies that kind of come out of it. With all that said, I do think that where it is healthy is in incentivizing more institutional custodians. Because right now, when you look at the ETFs, you could strongly make the argument that it is very captured

Starting point is 00:10:47 with Coinbase being the custodian for almost all of these. and the whole reason that unfolded is the first one got through with the SEC and everybody was like, oh, well, let me look at their paper. Oh, they used Coinbase. Just use Coinbase. Use Coinbase and we'll get approved. So, like, everybody got Coinbase, but the Bitcoin Treasury companies, like you had Adam back this morning on stage, he's getting ready to do one with, you know, a lot of Bitcoin in it. And if you think Adam's going to go to Coinbase, I have no idea where Adam's going, but if you think he's going to Coinbase, I would be blown away that he went to Coinbase for his institutional custody. So what you could do is you can make the argument that the Bitcoin Treasury companies are actually going to help decentralize institutional custody, which is something that I think is really healthy. I think that because if you think that these publicly traded companies are going to self-custody, you don't understand how the public companies work and how they're auditing mechanisms work and how they're reporting mechanisms work.

Starting point is 00:11:43 It will be institutional custody. Whether people like these changes, I would help you go back to the visualization of the two galaxies coming together and they're colliding. And now there's just a different environment. We're operating in a different, as it grows up, things are going to change. And people might be comfortable with that. Other people are going to be looking at the old way that things were done and saying it needs to still be done like that. And I would argue things are changing. So.

Starting point is 00:12:09 Willie, your take on that? I don't think centralization around Coinbase and that being hacked as the data. danger. I think it's really the nationalization path, which happened with gold and it's happened before. And if the US dollar is structurally getting weak and China's coming in, I think it's a fair point that the US might do an offer to what the treasury companies incentivize that. It could be then put into a digital Fort Knox, create a new, you know, gold standard. You could then rug it like happened in 1971. It's all centralized around this digital Bitcoin. The whole history repeats again and we're back to Fiat again.

Starting point is 00:12:46 And now we're in this position where we tried this Bitcoin thing, but that didn't work, you know, so it makes the second temp harder. I think that is the centralization risk when it comes to a very big and powerful nation state. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. and every conversation you have is with people who are actually shaping the future.

Starting point is 00:13:17 That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereigns.

Starting point is 00:14:08 diversity, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedomforum.com with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world?

Starting point is 00:14:47 Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the NetSuite AI connector, you can use the AI of your choice to connect directly

Starting point is 00:15:24 to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, NetSuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide demystifying AI at netsuite.com slash study. The guide is free to you at net suite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's

Starting point is 00:16:04 That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S., from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful AI tools that write product descriptions and even enhance your product

Starting point is 00:16:38 photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. So do you think it's more probable that the U.S.

Starting point is 00:17:11 may acquire an existing company with a lot of Bitcoin and Treasury rather than holding their own treasury? Yeah, I think that if you were like, say you wanted to get, say, 4% of the 4 million of the Bitcoins, are you going to buy out on the open market and drive the price to infinity?

Starting point is 00:17:30 and Michael Saylor becomes probably the richest person alive and therefore, let's say most powerful person alive because it's common stock held. Or you're just going to like do a share offer and effectively nationalize in a very free market fee a way. You've got this big bag of X million by then Bitcoin. You haven't run up the price. And then everyone who's just sold their micro strategy stock, let's say, now has to buy back their bitcoins and then it runs up.

Starting point is 00:17:57 I think that would be the smarter way to do it. But just thinking about the dynamics of how would you get a big bag of Bitcoin and then create dollars trading off it or backed by it and then how do you rug that into fear it? I think that's a path that's been done before. If you want to try to predict the future, you start with the incentives and you try to deeply understand how the incentives are going to interact. So when I look at every developed nation state in the world right now, they've got a massive of addiction, and that addiction is to spend way more than they actually bring in or the value

Starting point is 00:18:31 that they add. And that trend is only accelerating. It is only becoming more popular to promise a bunch of money, hey, I know you went to college and you made these decisions and you were going to pay back this debt, but don't worry about it. We're going to just print some money. We're going to pay off that debt for you, even though people that went to school five years ago paid for their debts, right? Because they want the political vote. So that trend against Bitcoin is a massive issue because where this is going to go is they're going to be so indebt up to their eyeballs. And more importantly, their collective cognitive decision making is to just get more votes by wishing away more printing. Right.

Starting point is 00:19:16 And you're up against this thing that is immutable. And so once the politicians eventually get to the point where they realize, oh, no, like, Like it's literally an oh shit moment that's that's on the horizon. And that moment is going to be, well, who can we rob? Okay, where can we get the Bitcoin to rob? And this is thinking through their incentives. How does a politician think? How can I get the most amount of Bitcoin with impacting the least amount of people possible?

Starting point is 00:19:45 And what I would argue is number one on that list is a private entity that has a lot of Bitcoin. That's like number one on the list. Okay, because you can scrape that Bitcoin and you might have impacted. You've made it 20 people upset. But when you're doing it with a public company, now you have to ask yourself, is that public company in the S&P 500? And how many people in the S&P 500 own it? And I'm not saying that they won't rug it. It might be the first place they go. You never know. But I'm thinking through the incentives of the politician, the politicians want, they're going to rug somebody. I can tell you that right now. They're going to take the Bitcoin because it's going to have

Starting point is 00:20:24 an institutional custodian that does not want to go to jail. So that's their incentives. I don't want to go to jail. So yes, I'll give you the Bitcoin. Okay. And then after they give you the Bitcoin, you know what they're going to do? They're going to jam dollar bills down your throat. And Bitcoin's going to be moving like that. Okay. And the Bitcoin's gone. But you got the dollar bills and you got them here. And now they're that compared to Bitcoin. So there's a lot of people that are going to have a really, and so when we talk about treasury companies, can, and this goes back to what I said this morning, can they outperform Bitcoin? Yes. Do they come with more risk? Yes. Are you accounting for the nationalization of a treasury company in your risk assessment of your position size of Bitcoin versus

Starting point is 00:21:06 owning a treasury company? I would argue most aren't. And that's why my, from a sizing standpoint, I think the sizing should be pretty minimal, relatively speaking, if you want to try to outperform from Bitcoin. At least today, because we just, like, all the incentives are pointing to what Willie just described in, and I would tell you, I think that's a very probable event. It's just how it actually unfolds is the question. And we might be five years, we might be 10 years. I don't know when that happens, but based on the incentives that I'm looking at and how they're going to interact, it leads there pretty quickly. No words of wisdom to add to that. Nothing to add. I get you. Saylor's model is debt-fueled Bitcoin stacking. Is this innovation or risk to Bitcoin's fundamentals?

Starting point is 00:21:55 I don't see it any different than borrowing and lending for the individual. Only it's happening at an institutional level. So if he's over collateralizing Bitcoin by 5x and he can kind of peg it between like 4x and 5x, if you go and you want to take out a loan and you put Bitcoin on the pause at the LTV on it, Right. And it's, you know, you're depositing $200 worth of Bitcoin to borrow 100. That's over collateralization of two. And he's over collateralizing at a five, but he's doing it at an institutional like size. Like the sizing is just different. And for a lot of people that don't understand the financial terminology, they just can't wrap their head around like what he's doing. But when we say these ratios, like he's over collateralized five to one, what else I think is really interesting is those dividend payments are. are denominated in Fiat. If you run the power law, let's just say power law is valid. We had Mr. Mishinskis up here earlier today talking to you about the power law and the R squared values and all that. If we take that model and we take the dividends on preferred stock and you model it out for the next 10 years, those dividends, you know, if it's issued at 100 and he's paying a $10

Starting point is 00:23:07 dollar dividend annually. Do you know what that $10 looks like 10 years later if you swept all the book value in the Bitcoin? It's almost zero in relative value. He's still paying the 10 bucks per share, but you know what the value is in Bitcoin terms? It's almost zero. After the first year, it's like six bucks. It's not $10. It's $6. So there's something to be said for a person who understands the idea of stacking your assets in Bitcoin and denominating your liabilities in fiat. It's a very powerful concept if you really understand it. And I would argue it's maybe even, and this is very controversial, but I'll say it anyway, I would argue that the backing is better than five to one simply because he's of this assets or Bitcoin liabilities are fiat.

Starting point is 00:23:58 Well, strategy is probably the most robust of these companies, and you see in this cycle everyone's following the model, but it's not the exact model. We have to be careful of the risks that are being taken. Strategy, originally when they were doing the convertible debt, I think it was a five-year-out debt. And so, you know, I think Microsoft strategy might have been close to liquidation in the last bear market, had the debt not been pushed out five years. So I see a lot of these companies now have quite short-dated debt using the older model of convertibles, where strategy went to 8 to 12 years and now they're doing the preferred stock. You look at Metaplanet and they're doing this sort of hedge fund play where there's a hedge fund, they're doing a back and forth, back and forth to simulate a at-the-market offering

Starting point is 00:24:47 to effectively simulate the ATMs that Mark's strategy are doing, but they're taking big trenches of debt, 300 million at a time, and then selling that into the market to replenish to then pay off the debt. If the market turns on that at the wrong time and they cannot do this market operation, you're going to get liquidated. And it's not four-year debt, it's not eight-year debt, it's immediate debt. And so you really need to look at the copycats and look at the dangers in the debt structuring and liquidation risk.

Starting point is 00:25:19 And, you know, in my opinion, a meta-planter is that they are quite expert at timing the market, Maybe that's the game that they played. They absolutely bought the bottom wick of the last major dip and unloaded almost $300 million in that one buy. So maybe they're proving they can time the market, but that's what you're buying. You're buying a treasury that is opted to time the market and they think they can unwind the debt at the top

Starting point is 00:25:43 from the looks of how they've structured things. And, you know, there's a lot of these treasury companies, there's a lot of paperwork to work through. You want to know what you're buying. There's risks in it. My strategy is the blue chip. very, very robust, still risks, obviously with everything. My concern is the copycats that aren't doing it at the same level or have, you know, how many

Starting point is 00:26:03 of these guys can offer preferred stock? What are their options? A lot of the latest vogue is to really start small and run up the leverage, get the yield right up and grow fast. We're tail end of a bull market right now, so I think a lot of people are going to get hurt and we'll have massive MNAV compression, we're going to have liquidations of some of the weakest treasury companies and we'll see who's, you know, who's going to survive and what's going to break over the next beer market. And I'm wondering about what the commentary from Trade

Starting point is 00:26:35 Fire will be as I look at those Bitcoin or crypto people, look what they did there and look what broke and another cycle of jokes on us. Yeah, there'll be survival of the fittest and a lot of fud around that, right? So in terms of adoption, Willie, you've estimated 1 billion Bitcoin users by 2030. Do you see treasury companies in corporate adoption accelerate this pace? I'm not sure, to be honest. I'm not even sure if that projection will... It's very hard to count.

Starting point is 00:27:05 Like, what do you call an adopter? Like, you know, today it's hard to say. To your point, it's like if strategy gets included into the S&P 500, how many people own SPY index? Exactly. If the fact of they have Bitcoin through... You call it surrogate, right? Yeah, so it's very blurry right now.

Starting point is 00:27:26 We own a lot of assets. Everyone pretty much has exposure to the SP 500. Even if it's in a pension funding, you're saving retirement. You don't know what you're owning, but it's going to be the SMB 500 in there. So that means Bitcoin's in there. So I think these metrics become a little bit more clouded. I was tracking self-custody and exchange custody. But it's growing at a decent clip.

Starting point is 00:27:50 Almost 5% of the world population has exposure to this asset. asset, excluding the sort of S&P 500 pattern. So, yeah, and given that, it's still quite early. I think it's still quite early. Yeah. We're still early. We're still early. I've been thinking in terms of generational sort of times, we're 16 years into this asset,

Starting point is 00:28:09 and it's only $2 trillion. I mean, it's probably gone 100 X to grow, and it's probably going to take decades to get there. What about longer-term projections? Because I've heard you speak about thousands of years from now, like 10,000 years. I've heard you give really long predictions about Bitcoin. Well, I value long-term thinking, that's for sure. And we are trapped inside, I think, inside this Fiat world in

Starting point is 00:28:33 19701 to now. And I think that that is a paperization of a liquidity crisis. And we had gold and silver's money for 6,000 years. And it's been the agrarian age, the industrial age, we're in a digital age. And I think the Fiat will blow up eventually. The only thing that's special about now is the whole world got rugged all at once. So we're all sort of debasing ourselves to oblivion where when one kingdom debased, they blew up really quick because everyone ran to the gold-backed kingdoms.

Starting point is 00:29:02 So this will blow up and then what replaces gold and it's not going to be gold again because you can't get, it's no longer scarce and not in 100 years, not 1,000 years. I mean, gosh, who knows what technology will have then. And it's only a few decades away to mine asteroids given the pace of that technology. So you have to secure the scarcity, the ledger, with something that grows with technology and that's energy and Bitcoin's had the 5% adoption. Very hard to catch something like that. For money, there's only two properties of money.

Starting point is 00:29:36 One is it's accepted. Number two, it's secure and robust. And that was the scarcity element of gold. And all the other stuff was just people thinking about gold. It should be divisible. It should be durable. And that was us using atoms to secure the ledger. but that doesn't apply anymore.

Starting point is 00:29:53 And so you pan this 4,000 years of technology, it's got to be an energy coin and we've got one and it's reached hundreds of millions of people already, soon to be a billion. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business.

Starting point is 00:30:15 That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with VANTA.

Starting point is 00:30:47 That's not just faster compliance. It's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at vanta.com slash billionaires. That's vanta.com slash billionaires. Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and plus 500 futures is the perfect

Starting point is 00:31:15 place to start. Plus 500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for. See a trading opportunity, you'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures

Starting point is 00:32:07 involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than $600 million invested in a 7.97% distribution rate, With traditional savings yields falling, it's no wonder private credit has grown to be a trillion-dollar asset class in the last few years.

Starting point is 00:32:49 Visit fundrise.com slash WSB to invest in the Fundrise Income Fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right, back to the show. Just something that I've noticed recently on the future and Bitcoin adoption. Has anybody noticed GROC is an absolute hardcore Bitcoin maxi? Does anybody else notice that? I really mean it.

Starting point is 00:33:39 so much so that like you see the typical trade five people that just don't understand Bitcoin. They've been around for eons and it seems like every day there's more of them. And I remember in the early days I would go in and I would reply, I would take my time trying to explain it and all that. And nowadays it's just like, hey, Grock, tell this person why they're wrong and just like, I'm gone. Like I just don't have time to like sit there. And what's amazing is Grock just like lays it all out.

Starting point is 00:34:05 And then what's really funny is then the person starts arguing with Grock and Grock is coming back and just kind of just hammering the next point and the next point. And then other people are chiming in it. And it's turned into like this array of just Grock orange pilling everybody in the thread. And the reason why I think that this is we're just on the cusp of something really, really big, which is today we look at the AI and we're like, it's usually right. It's pretty good, right? Five years from now, if you're arguing with an AI, I think you're just going to kind of be stupid for the most part.

Starting point is 00:34:38 unless you're just like a leading expert in something that's like really deep, you might have a keen insight that's better than the AI, which gets into this whole idea of like localized intelligence is the thing that really kind of discovers new things. But for a person who's just kind of like a casual observer or somebody who doesn't really understand a topic and they're interacting with AI and AI is giving them these answers and they thought Bitcoin was a Ponzi scheme in their mind and this AI is just like lighting them up. And then all the crowd and everybody's laughing at them as they're interacting with the AI.

Starting point is 00:35:12 I mean, I literally saw this with Jim Chino's. He literally made his name in shorting Enron. I mean, he's the real deal. And he's shorting micro strategy right now. And Grok was in there and he's there arguing with Grok and Grok is just tearing him apart. So I think this is a big important thing that's going to help in the education process because people at a certain point are just going to say, okay, well, this thing's like really smart and here I am arguing with it, so I must be wrong. And it's going to be a little bit different

Starting point is 00:35:39 because you know you're dealing with something that's of super intelligence. You're not just dealing with this guy who's got a Mohawk who's got all these followers and you're like, yeah, he's probably stupid. I mean, to continue on the AI topic, I think there's a good synergy between AI and Bitcoin, because if you'll think about it, what kind of money AI will use in the future AI agents. It's not only about educating, but also like working capital, etc, etc. Obviously it's Bitcoin. There's no other option because it's like digital agents, digital minds, working with digital money.

Starting point is 00:36:13 So that's a very powerful thing that a lot of bitcorners even don't understand yet. Whether there will be bear market, bull market, whatever, it's a very bright future in a way that we have a huge opportunity. We don't know actually yet the full capabilities of AI. and they're going to use digital form of money and it's definitely not going to be a fiat. Why won't it be ultrasound money, Ethereum? No, no way.

Starting point is 00:36:38 I think if GROC got it, so I mean the rest of AI will get it as well. So here's a question that's like close to my heart because I like covering this topic of CBDCs. So do you think, are you with me on this camp thinking that those states and governments and global organizations are going to be.

Starting point is 00:36:58 running around trying to implement those CBDCs in different countries around the world in the next few years, while Bitcoin continues to do what it does, while the U.S. has taken the lead on integrating that into the traditional finance. And those two things are going to be happening in parallel around the world. And whether they like it or not, all their experimentation is going to fail because Bitcoin's going to prevail. Are you with me on that? Or do you see it going to go in any other way? Not only because of Bitcoin, because the private sector actually get stable coins and does stable coins better. So it's not CBDC that it's not Bitcoin versus CBDC. It's like Thessor versus CBDC or any other private entity that works with stable coins

Starting point is 00:37:43 because it's already like a huge market, huge amount of liquidity there. And it's really hard to outperform like something like Theser that has 160 billion worth of stable coin. And it's like the adoption is increasing. people are using it and I guess there's no way for them to capture that market as well. But Bitcoin plus private stable coins, I think unbeatable in a way. I would just, you talk to people that look at tether or any large stable coin and they just say it's a de facto CBDC if they need to stop a transaction, you know, Tether or Circle or whoever can get a tap on the shoulder from the U.S. government and they can say, hey, we didn't like that transaction. We want you to reverse it.

Starting point is 00:38:25 You don't think that they would reverse it. You're really naive. I mean, it's just an extension of the dollar system is all it is. And so, like, why is the CBDC always going to fail against Bitcoin? Well, it's always going to fail against Bitcoin because at the core of what that stable coin represents, it's just a manifestation of government overspending and expanding the money supply and needing to pay for their taxes by continuing to expand the M2 at 10% a year. So, like, that's what that representation is.

Starting point is 00:38:52 Whether they can peer into whatever as far down as the Natsass detail, I have no idea, but I think anybody using one of those should just assume that they are. Well, I think it's ironic because the bank shut down banking for the exchanges back in 20, you know, early days in 2013, 14, roughly when Taylor came to be because there was no banking to be had. So they were the de facto banking and they got so big that they're now on track to displace China's buying of treasuries when Bitcoin. hits a million dollars and therefore the US government becomes dependent on Bitcoin. Because how it works

Starting point is 00:39:28 is there's an order book on the exchange. You got Bitcoin on one side, you've got US dollars on the other side, but it wasn't US dollars, it was tether. So as the liquidity increases, there's more and more expansion of tether to trade for it. And now it's at the point where it's displacing the largest nation states to buy the US treasuries. It's quite a, and it's ironic. They were tripping over themselves to pass the Genius Act. And you have to ask yourself, why? Why were these politicians tripping over themselves to get this thing passed? And the answer is really simple. They needed a buyer for all their debt. And the buyer is the stable coin issuers. And it's really kind of interesting to see how that all really transpired and really kind of came to a head is the government had to start

Starting point is 00:40:12 issuing shorter and shorter duration paper because there was no buyers for anything that was long duration because there was so much inflation risk. They're down there like issuing like one month money and it's like, well, who's going to buy all this one month money? Well, you know what? The stable coin issuers literally like they love that because they can back everything. They can gobble up all this new issuance. They don't have the inflation risk that if they were buying 30 year paper, they don't want that inflation risk because they don't know if it's going to be fully backed, right? Or they'd have to keep rolling it to try to like manage that. But if it's really short duration. It's actually perfect for them. And then the really smart ones, what are they going to do

Starting point is 00:40:52 with all the coupons that they're receiving? They're just going to sweep it into Bitcoin. And then it's really backed because that thing's going up at 40 to 50% annualized. It's like extra over collateralized. What I find so interesting with all of this is you literally have BlackRock and all these other banks that are playing a fractional reserve game. They don't even have what they're issuing in the vault. But yet you have a company that's fully collateralized with extra Bitcoin in the vault, and they're making more profit than the ones that are playing the Ponzi game. And they're getting the issue, like, literally from thin air, and they're making more money than them. If that doesn't show you, like, the natural market forces that nature is trying to heal itself,

Starting point is 00:41:35 I don't know what does. Because it's just, it's miraculous to me that you can have something that's over collateralized, just whipping the pants off of the ones that are literally cheating as if it's a, Total Ponzi scheme. So wrapping up and going back to our initial question of whether this institutional phase is a trend horse or tipping point, what are your last thoughts about this? Where are we going to see Bitcoin going over the next couple of years to five years? How do you see that evolving?

Starting point is 00:42:03 I think the institutional phase is just a logical step in evolution of Bitcoin. We cannot avoid that. So whether you like it or not, I mean, there's a saying that Bitcoin is good because even your enemies can use that. And I'll add to that. And what's an advice you would give the plebs, us that are watching this and following? No, just educate yourself. That's the best advice. I mean, do your own research, educate yourself. Self custody, I mean, always about that. But yeah, sorry. I mean, I don't like paper Bitcoin, but I do understand that it's a path. It's just a phase in the market. And I guess

Starting point is 00:42:38 institutions going there and buying more and more Bitcoin in the end, it's like better for us as well, because first it's ETF, then it's treasury companies, then it's banks, and banks serve the end customers, which we are. So at some point, I just envisioned that as soon as banks will get comfortable with Bitcoin, you will be able to go into your local bank and, I mean, borrow against your Bitcoin, I don't know, trade it, sell it, buy it. So I think the institutional adoption is inevitable and it's happening already, but hopefully it's happening for good. When I just look at, if you would talk to a Bitcoiner back in 2015 and you say, all right, take us 20, 30 years into the future. How do you see this? They would say, well, I think Bitcoin's the new medium of exchange.

Starting point is 00:43:24 It's the store of value. The whole world is using it. People, business, is governments. Like, that's like the utopia's Bitcoin has completely supplanted the dollar. So when we're at this moment in time and institutions are starting to use it, governments are playing around with it, having a strategic reserve. and they're all upset and all up in arms, I'm looking at them saying, okay, like, how in the world did you ever think we were going to go from there to here? And so it doesn't mean it's safe. It doesn't mean that everything is going exactly like it should. I'm not trying to imply that. I'm just saying, if we're going from nothing to the whole world using this as the unit to settle all exchange, like at some point, the institutions are going to start coming. At some point,

Starting point is 00:44:06 the governments are going to start using it. And the one thing that I've learned through the years in the space is there's going to be some that do it really well, and there's going to be some that do it really stupidly, and they're going to blow up and they're going to hurt a bunch of people. And you know what? That's a free market. That's a free market. We want free markets. We're Bitcoiners. We want free markets. When we were up on stage earlier, Max in Switzerland, the gentleman from Switzerland, he was talking about how everything has to be over collateralized in borrowing lending. I'm looking at it, I'm saying, there's a country that gets it. That doesn't mean every country in the world is going to get it. But with all that said, my advice to the crowd is,

Starting point is 00:44:43 if you just take self-custody of Bitcoin, if you have the technical competence to do that, you are going to do very well based on where I think all of this is heading. And you don't have to like, as long as you don't have like a really lavish lifestyle, that should be good enough, right? If you want to get fancy and you want to do all this short, go buy a treasury company, just make sure it's not a lot. Like, just be smart about it. If you want to have fun or whatever, I don't know, but yeah, self-custody Bitcoin is all there is to it. Yeah, I don't think anything's changed, really. It's the self-custody, hold your own keys.

Starting point is 00:45:17 Everything else has been just on ramps, more and more capital coming in, and now it's institutional phase, meaning bigger capital is coming in, and just please make Bitcoin unruggable, which means self-custody. If we're not self-custodying, then it's totally ruggable, and what we just talked about earlier in the bad path, Bitcoin, can be rugged if everyone's staying to put everything into institutions. So keep it simple, self-custody. Nothing's changed.

Starting point is 00:45:44 Unwrapped to bigger, that's all. It's complicated little stuff around the edges. Every cycle, there's complicated stuff that you can get rugged on. Things to digest. We can learn, but nothing's really changed. Self-custody. Willie Preston, Max, stay open, stay curious, stay humble, stack hats. Thank you.

Starting point is 00:46:05 Thank you for listening to TIPS. Make sure to follow Bitcoin Fundamentals on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - BTC248: Bitcoin’s Institutional Wave w/ Willy Woo, Max Kei, Efrat Fenigson, and Preston Pysh at Baltic Honeybadger (Bitcoin Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.