What Bitcoin Did - Bitcoin Crashed. What Comes Next? | Joe Consorti

Episode Date: February 9, 2026

Joe Consorti is a Market Analyst & Head of Growth at Horizon. In this episode, he breaks down one of Bitcoin’s most volatile days since the 2022 bear market. We unpack what’s really driving the selloff, why this isn’t a Bitcoin-native event, and how risk appetite, credit spreads, and Fed policy are shaping the move and the future. We also look at ETF behaviour, the dollar, and why Bitcoin may be deeply mispriced at current levels. THANKS TO OUR SPONSORS: ANCHORWATCH BLOCKWARE LEDN BITKEY SWAN CAPE CLUB ORANGE FOLLOW: Danny Knowles: https://x.com/\_DannyKnowles or https://primal.net/danny Joe Consorti: https://x.com/JoeConsorti

I think this is a really great entry point for asset prices. It's a mathematical necessity for the Fed to continue cutting interest rates and to continue expanding its balance sheet. Ultimately, Bitcoin right now is trading at a massive discount to where it should be because the market doesn't understand what it is yet. It's completely wild. I mean, in dollar terms and percentage terms, I haven't seen anything like this in a really long time.

And it's great to be back. The pain in equities is about to be here. It's already sort of begun. But Bitcoin, as it historically has done, it's going to find its bottom first and then begin moving higher first. It might seem scary, but ultimately you're going to look back on this time, 10 years down the line, five years down the line next cycle and say, man, I wish I had bought around that $60,000 zone.

Joe Consorti, good to see you, man. What the fuck is happening? Danny, this has been, volatility is back in Bitcoin. It truly is. Like, this is the single most volatile day for Bitcoin. I think since the 2022 bear market. I have a chart. I'll pull it up and kind of show people we're looking at.

But one of the hallmarks of the post-ETF era for Bitcoin has been this markedly low volatility. You know, James Check has talked about this before, like this idea that Bitcoin, like the path of least resistance for Bitcoin in the post-ETF era is what he calls chop consolidation, where basically nothing happens for a really long period of time. And then we take the next leg higher and so on and so forth.

You can see here, this is the 10-day rolling volatility on Bitcoin. And this is the highest it's been since the bottom of the 2022 bear. Now, we'll talk about like market timing and what we think is going to happen as far as the remainder of this and as we hammer out of bottom, but this is just completely insane. And for the post-ETF crowd, like the boomers, the pensions, the hedge funds, everybody who's gotten in since January of 2024 and these things launched, this is not something that they've ever had to deal with. So for us, OG Bitcoin, well, OG is being a relative term, for us who've been around

the gambit for a pretty long period of time, this is business as usual. It's certainly, you know, dusting off the shoes. We haven't felt it in a while. But I'm amazed at how well the ETF cohort is holding up despite this volatility. We dropped $10,000 in a day yesterday, which is the first time that's ever happened. So we got Samson Mao's Omega candle, but in the wrong direction. And then today, we also had a plus $10,000 day. So it's completely wild. I mean, in dollar terms, in percentage terms, I haven't seen anything like this in a really long time. And it's great to be back. I think the move yesterday and today has single-handedly revived Bitcoin Twitter. So that's one thing we could be happy about here.

Totally. I mean, I know people get mad at me saying this, but I love these. I love the down days. I love the up days. Like, just give me something. Like, I think that I got the dopamine hit. Like, Twitter was on fire. Like, it's fun.

This is where you just got to sit back and watch and be kind of humbled by Bitcoin. But why do you think this happen? That's always a question that I get frustrated about. So I'm sorry to ask it because there's never just one reason why this happened. But do you think there was something in the market that kind of forced this move? For sure. I mean, it's a couple of things, right? A lot of folks have been thinking this is a Bitcoin native sell-off.

And I'm here to dispel that. I want to make it abundantly clear that this isn't like an idiosyncratic Bitcoin thing where something happens, some leverage on wind occurs. Granted, there was a lot of leverage that got purged from the market. In the last 24 hours, we saw $400 million worth of long positions like, and then today $400 million worth of shorts liquidated. So certainly a lot of folks got liquidated. What actually drove the move was just this decline in risk appetite.

And it's been happening over the course of the last couple of months. I have a couple of charts to show here. The first one being a broader indicator of risk sentiment, this is Bitcoin and US Credit Spreads. So for those who are listening on audio, basically what this chart is showing is that as credit spreads widened, Bitcoin tends to decline. You could see that all the way back during the sell-off we had in the spring of

last year when we went from that the first time we went above $100,000 all the way back down to below $80,000 as they narrowed or tightened Bitcoin rose from about 80K all the way to 126K. And we've been in this regime of elevated and rising or widening credit spreads since October. So this is the first chart that sort of indicates this isn't necessarily a Bitcoin native sell-off. Like there aren't, you know, there's no three arrows capital blowing up. There's no FTX blowing up. It's just pure, good old Bitcoin being a really great indicator for risk sentiment.

Just before we go on to the next one, I just have a question on it, because I don't exactly know what that means when you're saying the credit spread's widening. Yeah, you got it. So basically, a credit spread is the difference between the benchmark rate in the United States, so the 10-year U.S. Treasury yield typically and corporate bonds. So basically the difference between the rate that corporations can issue their debt and the prevailing benchmark rate. And so what you see here, these numbers on the right-hand side,

Those are in basis points. So for instance, people can focus more on the white line. That's high yield credit spreads. So think junk borrowers, right? Zombie companies, people who it's really hard to raise capital for, very capital-intensive firms, they're trading at 2.75% or 275 basis points above U.S. Treasury rates. So it's very, very hard for them to borrow. When it's very hard for them to borrow, capital expenditure tends to decline and risk appetite

in the market more broadly reigns in. That's one of the reasons, there are a couple of other reasons, but one of the major reasons you saw such a huge rally in gold and silver, and why Bitcoin and other names, particularly software names, quantum stocks, all of those have sold off over the last couple of months. It's a direct result of what you see here, credit spreads widening, it becoming more difficult for US corporations to finance their debt. And so why is that spread happening?

Yeah, well, it's happening for a couple of reasons. I mean, Chief among them, we've started seeing a little bit strength in the US dollar, particularly since Kevin Warsh was nominated as Fed Chair. We've had a pretty big bout of weakness in the US dollar over the last year, year and a half. And up until recently, that's been the case. More recently, you saw a rally in the US dollar with Kevin Warsh being nominated as Fed Chair. But more broadly, it just boils down to cycles, right? You could see here that we are at like over the last couple of years.

And if I was able to zoom out this chart even more, I would show it. But we're at like multi, not multi-decade, but the tightest levels that we've seen in U.S. credit spreads in quite a while. And so when that happens is really only one way for them to go. You pair that with the reality. The market is pricing in the Fed's rate cutting cycle is about to come to an end toward the end of this year. If I look at my chart here, we've only got a couple of rate cuts priced in between now and the end of the year. Looks like only three rate cuts priced in between now and the end of the year. So with the Fed's cutting regime coming to an end, it's really no surprise this is happening.

Basically, it's just a market saying that, hey, look, we expect monetary conditions to move from outright easing to this on hold period. And so as a result, credit spreads are moving a little bit higher. Interesting that the dollar is strengthened since Kevin Walsh, because Scott Bissent has always had the intention of weakening the dollar. But with Walsh coming in, is that strengthening because they think he's going to be a hawkish Fed chair? It is. And for me, I think that's a big mispricing. And so that's why I think this is a really great entry point, not to say that this is the bottom again, but I think this is a really great entry point for asset prices, because regardless of what people think about Kevin Warsh, people think he may be a hawk. He's come out and spoken against quantitative easing numerous times. He doesn't want it to be a policy tool anymore. And so that sort of hawkish sentiment gets priced in the market in the form of the odds of more rate cuts declining, the dollar strengthening. I think that's a lot of

that's a mistake because regardless of who you put in there, the math doesn't change, right? It's a mathematical necessity for the Fed to continue cutting interest rates and to continue expanding its balance sheet, at least at the rate of GDP growth, right? So 3% year over year. So for me, it's a big misprice in the people think Kevin Warsh will be a hawk. You also have to consider Donald Trump does not want to put anybody in the Fed chair position who won't agree with Scott dissent and his goal for a week of dollar. Obviously, Trump wants these tariffs to last, He wants them to be a longstanding source of U.S. revenue. And in order for that to happen, a weak dollar is a necessity.

And so whoever Trump would have chosen, whether it's Kevin Warsh or HACID or any of the other folks who were in the running, it was going to be someone who would listen to Scott Besant and listen to Trump and his aims for a weaker U.S. dollar. So to me, it's a major mispricing. I think the dollar goes weaker over the next several months. I think as we approach Warsh actually becoming Fed share, you're going to start to see some of that weakness. And I think you're going to start to see a bottoming out process in all risk assets that have done poorly. Software stocks, Bitcoin included as we approach that date, because it's just a mathematical necessity that the dollar has to be weaker, not just for the tariffs, right, to actually

work and be a really big source of US revenue, but for our debt situation more broadly here in the United States. Yeah, I think that second point is really important, though, in that Trump is a lot of things, but he's not an idiot. Like, he's not going to be nominating someone that he's not had long conversations with and knows is kind of on team Trump, I don't think. With all the stuff that's happened with Powell over the last couple of years, like there's no way he's going to nominate someone who he thinks is going to work entirely independently from him and not take orders from Scott percent, in my opinion. I don't know if you agree with that. No, I certainly agree with it because ultimately, like, for a really long time, we've had this false notion or this like fabricated idea that

the Fed and the U.S. Treasury are somehow separate. But every single time push comes to shove, they're more than willing to work together. Back in 2020, the Fed was more than willing to print a bunch of money and buy U.S. treasuries for banks to make sure that, you know, we could maintain manageable levels of U.S. debt. Back in 2023, the Fed was more than happy to spin up this facility out of thin air in order to purchase distressed U.S. treasuries or lend against them at par value. So every time push comes to shove, the Fed has been more than willing to work directly with the U.S. Treasury. So it's not an independent organization. I think it would be a great development. to finally have a clear and tacit recognition of that.

And I think, you know, with Trump being able to nominate the Fed chair now, he learned his lesson when he nominated Powell. It was his first time in office. He made a lot of wrong picks. This time he's being much more shrewd and prudent about who he brings in. So I completely agree. Like he's, he has made this decision under the assumption that the person he nominates is going to listen to him, is going to push for a weaker dollar.

And so like asset prices in that environment, you know, there's really only one direction for them. So I think there's a pretty big mispricing in markets right now. This episode is brought to you by Anchor Watch. The thing that keeps me up at night is the idea of a critical error with my Bitcoin cold storage. And this is where Anchorage comes in. With Anchor Watch, your Bitcoin is insured with your own A plus rated Lloyds of London insurance policy, and all Bitcoin is held in their time-locked multi-sig vaults. So you have the peace of mind knowing your Bitcoin is insured while not giving up custody.

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to show that kind of indicates why this isn't a idiosyncratic selloff for Bitcoin is Bitcoin and IGV. So this is the I-Share's software ETF. And you can see that, you can see that, you know, they were directly moving in the exact same way. And this goes back to before 2024, but I zoomed in here just to really highlight this. You could see that, like, this shows pretty clearly that this isn't a Bitcoin native sell-off. You can see right around October,

when Bitcoin began selling off, so too did IGV. Now, IGV has a bunch of holdings, Oracle, Salesforce, Microsoft. So I think, like, number one, the reason for this sell-off is because of the waning risk appetite. But number two, especially with software stocks, you have to consider the rise of AI and tools like Claude. Kind of hurts the value proposition of names like Salesforce and Adobe and even a lot of tools from Microsoft. If your team internally can buy a Claude Pro subscription, can spin up Claude code, and you can make your own CRM that's as good, if not better, and more tailored to your needs than Salesforce, why on earth would Salesforce stock do well?

So I tend to think it's a little bit of that. but more so it's the risk appetite thing. So it's kind of those two things in tandem that are affecting software but is also affecting Bitcoin. So this is the second chart that showcases this isn't an isolated Bitcoin event. It's not a result of some exchange blowing up,

some overseas shop blowing up. It's purely risk sentiment. And Bitcoin tends to be the leading indicator, if you will, or one of the great barometers for risk sentiment. And so that's why it's so sensitive to these changes and it's down 52% from the high. Well, actually a little bit less today because we rallied. So I think it's like 44% from the high.

But even still, that's kind of your explanation here. Yeah, that makes sense. I think one of the things that's frustrated a lot of people is that obviously gold had an insane last 18 months or so. Silver has even, I don't actually know what silver's at right now, but it had a really good run before it kind of came back down. And the whole time Bitcoin was just sideways. And then as soon as everything turned over, Bitcoin got the volatility to the downside.

Yeah. Why did you think it didn't catch any of that bid with the, like, debasement trade, gold and silver stuff? Yeah, so it's just a function of the market not understanding what Bitcoin is yet. For a very long time, and I'll pull up the chart if I could find it, for a very long time, Bitcoin and gold were trading with about a one-month lag. So, you know, all the way back to, I think, 2019, it was pretty clear that moves that were made in Bitcoin, or gold, rather, tended to be followed by Bitcoin with about a 100-day to 120-day lag.

You could see on this chart right here, they were following one another, at least directionally, pretty closely for quite some time. This is a chart that Lawrence Lepard created over the Bitcoin Opportunity Fund. And you could see, and if I adjust this a little bit more so that you can kind of see the better fitted to one another, this really started breaking down in October. And so what this tells me is that, you know, debasement fear has been persistent. That hasn't necessarily gone away. That's what drove the rally in gold. But what drove the rally in Bitcoin in tandem with that, we're talking since like the 2023 bottom, is the fact that the Fed funds rate was coming down. that even though we were experiencing QT,

the balance sheet was on its way to normalizing. So QT was on its way to ending. And so both of these trades were kind of happening at the same time as one another. And only one of those trades has continued, right? We had this decline in risk appetite, but gold and silver stole the show, as far as investment capital is concerned,

because of the fears around monetary debasement. And also you have to think, like, the speculative mania that happens when events like this occur cannot be understated. So obviously, gold is a dinosaur of an asset. It is 30 plus trillion dollars in size. For it to be making moves that are adding multiple trillions of dollars of market cap within days and weeks, same thing goes for silver. That's something that catches a lot more headlines than one might think. And so it was both

the fears of the debasement trade, but also this reflexive loop of people just trying to get in by this thing. You saw all of the Twitter posts of people waiting outside gold dealers trying to purchase gold, and that happened multiple times. And so really, you know, the reason for the breakdown here in my mind is that we had a decline in risk appetite. If Bitcoin traded the way that its monetary properties allow it to, then it would have followed gold and would currently be well above $200,000 or even higher, but because it's more tightly correlated to things like software stocks, QQQ, other really high beta risk names in the equity market, then that's what's caused to sell off here. So I think, you know, looking at this chart, there are two schools of thought, and then I'll shut up because I've been rambling for a little bit.

But school of thought number one is that Bitcoin will never be a debasement hedge. It's clearly failed. And school of thought number two is that Bitcoin is just severely mispriced relative to how it should trade. So if you look at this chart, this is a real, even if it's not like an actionable chart in terms of making trades, one thing that it does do is it illustrates how wide this informational gap is. You and I both know, and chances are the listeners of this show, understand that Bitcoin performs all of gold's functions, but better. And so the only thing this chart illustrates to me is that we still have so much work to do in terms of narrowing that gap, in terms of educating people, and the market finally coming

around to the reality that Bitcoin truly is digital gold and should trade like it. Yeah, I mean, that's quite an insane chart. Do you think part of this is the sort of self-fulfilling prophecy of the four-year cycle narrative? To be fair, I have been on the hype train that the four-year cycle either never existed or is definitely over. I still feel that way, I think, but I don't know how you kind of take that in, especially with what's happened over the last few days in Bitcoin. Right. So it's interesting. The four-year cycle itself, I have some thoughts on this. It's basically this idea for people who might not be aware. I think anybody listening to what Bitcoin did knows what the four-year cycle is. But it's generally this idea that we have a 17 or 18 month bull run after the halving.

And then after that, we have about a 10 to 11 month bear market. And so that would have put Bitcoin's top right around early October. And many people, including myself, are saying, okay, in the post-ETF era, flows from trad fire dominating, Bitcoin native flows don't really matter. The four-year cycle is dead. However, and I'll pull this chart up right now, this is a chart of all of the Bitcoin halvings. And as you can clearly see here,

this is the first line you could see here on the left is the Bitcoin halving. And then over here is the subsequent top that Bitcoin made 17 months back in 2016 and 2017, 18 months in 2022 and 2021. And then again, 17 months post-having we topped out. So it's kind of hard to argue with a chart like this. However, so the four-year cycle does remain intact.

But what I will say, the way people should think about this is that it's not an absolute rule. to live by. So the first reason being, Bitcoin is now very broadly, very tightly correlated, rather, with the broader market, which is evidenced by the correlation to software that I just showed, right? Previously, Bitcoin was sort of an asset that marched to the be of its own drum because it wasn't being traded by the same folks who are trading all this other stuff. Now it is, right? So it's not something you should live by because of that reason. And the second reason is that the prior bull market began over a year before the last having. So it's not an absolute rule to

live by. It's not this rule for timing. Like you can see here that, you know, in the prior sort of having cycle, if you will, this four-year cycle idea, Bitcoin was just chopping around between the all-time high and the subsequent start of the next bear market. It took a really long time. But here, right, Bitcoin's bull market began well in advance of the next having occurring. So it isn't necessarily a rule to live by, but what I will say is that at some point, as you mentioned, and it does become a self-fulfilling prophecy. So even though it didn't necessarily, it shouldn't have necessarily driven the sell-off,

I do believe that there were a lot of folks who were looking at this and placing sell orders beyond a certain point because they expected this to occur. So I think at some point we lose this. I think at some point, you know, right now there's only 3.125 Bitcoin being issued in every block. At the next halving, it'll be a little bit over one. And then the halving after that, it'll be less than one.

So, you know, we're coming up on the point where 20 million Bitcoin will have been mined, and there will only be one million Bitcoin to be mined over the next 114 years. So I tend to think that it's going to have a minimized impact, but at the very least, you can't really argue with this chart. I think it's just become a self-fulfilling prophecy at this point. Yeah, I mean, it'll be interesting what happens this year, because if Bitcoin rallies from here has a good year,

maybe gets close to all-time highs or new all-time highs in 26th, then that does break this cycle idea, I think. I would still put that at a pretty high probability, but I guess the last few days have kind of humbled all of my takes that I've had over the last few months. But we will see. I'm interested what's happened with the ETFs because obviously the inflows during, you know, 2025 were pretty insane. How bad have the outflows been over the last sort of few weeks?

So honestly, I'm amazed. Like the ETF holders have held pretty tough and I have some data on this. So the first chart that I'm going to show here is Ibit volume. On the top, you could see the dollar amount that was traded. and at the bottom, you could see the shares that were traded. So you could see, and this goes all the way back to the launch of the ETS, back in early January of 2024. So you can see here, like, this is the largest volume day for Ibit ever,

which makes a lot of sense, right? It was an insane day for Bitcoin. Obviously, it was going to be an insane day for the spot Bitcoin ETFs. But what I want to, like, make note of here is that it wasn't necessarily driven by, like, ETF capitulation. What we can do to gauge that is we could take. take the volume traded, which is on the top pane, as a percentage of iBits market cap. And then we can extrapolate that out to the other ETS.

So there's only about $10.2 billion in volume here, as you could see. That's only 6% of IBIT's market cap. Comparing that to Bitcoin, we had $140 billion in Spot Bitcoin volume yesterday. It's 11% of Bitcoin's market cap. So it tells me that the ETF holders are actually more diamond-handed, if you will, than the spot Bitcoin holders, even during this absolutely historic sell-off. So it's not necessarily like ETF holder capitulation. The selling is coming primarily from spot Bitcoin, which is really, really unique to see.

And the other chart that I'll show is actually the ETF average cost basis. And this sort of illustrates how remarkable it is that so much of the ETF assets under management have held tight. What you can see here, and this dates again all the way back to when the ETF's first launched. And this isn't just Ibit anymore. This is every single U.S. based spot Bitcoin ETF. So this is the average cost basis translated to, to Bitcoin's price for the ETF holders. You could see here that we are 17.5%

at the time of recording below the average ETF cost basis. And they're still holding strong, right? The day hasn't closed just yet. It remains to be seen how tough they held, but it's pretty remarkable how well they've held up. So this narrative of like ETFs introducing more stability into the market, that's true, but only for the coins held by ETFs.

The coins that are held by, say, OG Bitcoin holders, people who've been here for a very long time, those are still highly volatile. And so what this indicates to me is that more of the market, as more of the market is dominated by ETF buying, people who have this tendency that we've seen to buy these coins, to sit on them,

to not be as flighty as Bitcoin investors and cycles prior have been, then Bitcoin will only get less volatile, which is good, right? It's a very interesting stat to pull up, and it kind of validates this narrative of ETFs, bringing more stability to the market, just not in the way that we expected, right? Typical Bitcoin holder behavior, we just saw it. It's still intact. But at the very least,

during this insane sell-off, the ETF holders have held pretty strong. So do you think that's a function of the sort of the place that these ETFs are being held? Are they being held in retirement accounts and therefore it's not very easy or you can't necessarily trade them on a down swing? Whereas if people are holding Bitcoin, especially if they're holding on an exchange, which obviously we don't think people should do, then they're very very easy just to click a sell button and get out. That's one reason. And the other reason is access to leverage.

Like, you're spot on the money, Danny, with the first part, which is that, you know, when we talk about retirees, like the people who I bit is being advised toward, those folks are buy and hold players, right? When we're talking about the typical American,

they're passively allocating every two weeks and they have no idea what they're investing in. If at all, right, chances are most of the time they don't know, chances are they don't have any control over what they're investing in either. So they're in half. a long-term player. The second thing is that you have Harvard, you have Brown University, you have a bunch of other endowments who are purchasing Bitcoin through Ibit or these other spot Bitcoin ETFs. When they make those sorts of purchases, again, they don't necessarily

trade in and out. It's not because they can't, but it's because they're holding them as long-term plays. And so the people who made those allocation decisions are putting Bitcoin price targets well above where they purchased it at, right? The average cost basis here is at $85,000. dollars, all of the investment managers, all of the fund managers who work for these university endowments have placed much higher price targets than 85K. And so that's probably one of the other reasons they're holding tough. But on the flip side of the equation, in Bitcoin, you have, in Spot Bitcoin, not only do you have much easier access to just click sell, like market sell your Bitcoin that you're holding onto the exchange, but you also have much deeper access

to leverage. And so the likelihood that you'll get liquidated is far higher, right? There's no way to add leverage to these Spot Bitcoin ETFs in a retirement portfolio. At least, at at least not in the size that you can with spot Bitcoin. So that's that's sort of the reason that they've held tough. And again, it's really encouraging. Like as the market structure is composed more of these ETFs, then you'll tend to see a decline in volatility or a lower amount of instances like today over time. Yeah, it's super interesting.

Like in previous bear markets, especially the last one in 2022, there was a very easy narrative as to why something was happening. like FTCX was blowing up, three arrows capital, Luna, we had a ton of a ton of people getting washed out, whereas this time we don't have anything like that that I'm aware of yet. But there are people saying they think there's going to be some bodies come to the surface at some point over the next week or two. Do you think that's true or do you think people are positioned much better now? I tend to think Bitcoin, you know, people are positioned much better now to whether these storms in Bitcoin. There could be a couple of players off sides. Some market makers in particular,

Like a lot of folks were saying that, you know, on October 10th, market makers were caught offside and Wintermute, chief among them, has been a forced seller into the market over the last several weeks, over the last couple of months. You know, that remains to be seen. Like, we'll have to hear the news of that for confirmation. But it's not unprecedented necessarily for Bitcoin to make massive declines with no clear exogenous catalyst. I mentioned that, you know, this is one of the worst crashes for Bitcoin since three euros capital. But prior to that, if you look at November 2018, when we dumped from $6,000 all the way to $3,000, that didn't have any catalyst. It was just a function of there being a lot of froth in the market. There being this massive rally

with a lot of euphoria. And naturally, there was profit taking and selling afterward. So it's not necessarily unprecedented for this to happen. It's just unprecedented in the modern So I do think people are much, much better position than they historically have been. You also have to think, like, with the developments in Washington that we've seen, it behooves players, particularly in the United States, who want to be looked upon favorably by the administration to make it so that they're not playing these crazy leveraged games.

And so I just think by the very nature of where we sit now in the United States, these companies want to be in the good graces of the politicians in Washington, D.C., and not play any crazy games to increase the likelihood that these market structures built structure bills pass. So I don't think we'll see anybody's float to the surface over the coming weeks, but it could be wrong. Ultimately, moves like this are, they do tend to take folks out, especially because of how unexpected it was, you know, two weekends or last weekend, actually, and as we're recording this, we're talking about the last weekend in January, Bitcoin cratered from the high 80s to the high

70s very quickly. And many people thought that that was a very end. But then Bitcoin proceeded on a random Thursday to dump by 14%, which is one of the largest percentage drawdowns over the last couple of years. It's the largest percentage drawdown since the 2022 bear market. In absolute terms, it's the largest drawdown in Bitcoin's history, which just makes sense the first ever time that we've had a $10,000 candle in Bitcoin's history. So if people weren't positioned properly, then absolutely some bodies will flow to the surface, there will be some for selling. We'll see news about different exchanges having to close their doors. But that's something that you learn after the fact. So we'll see. There's always a load of

sort of rumors flying around on Twitter or speculation flying around on Twitter, I probably should say, about like the Treasury companies and things. Do you think they're all going to weather this storm okay? Because really the only company that's been through anything like this, I believe, is strategy. I don't remember exactly where Metaplanet's spun up. But most of the Treasury companies, this is the first, like, real drawdown they've seen. Do you think they're all going to, to be positioned okay and survive? That's a really good question. It all boils down to capital structure, right?

If they were able to acquire their leverage in such a way where they could weather an 80% drawdown on Bitcoin, I think that's the stress test, then they'll be okay. Like strategy, for example, it's managed to pay off all of, if not most of its convertibles, I'm pretty sure, and they just have the preferreds as their form of financing for their Bitcoin purchases. And that has a duration of infinity, right? There's no fixed date at which that becomes due because it doesn't come due. So strategy will be okay, right?

They've been here before. They started buying in 2020. They weathered the drop from $69,000 all the way to $16. So I think they'll be okay. Metaplanet, I'm pretty sure they started their Bitcoin strategy in early 2024, and then they brought Dylan on in like April or May of that year. And so it remains to be seen, right? Time will tell.

I know they had been buying pretty persistently all the way up to the top. Now, of course, we're about 50% down from the top. So it remains to be seen. I know we saw sequins for instance, sell a great deal of their Bitcoin. So you're starting, and that was back in earlier last year, right, not earlier last year, but late Q2, early Q3 of last year. So you're already seeing some selling.

I think the ones that hold tough, it's just will be the ones that have good capital structure, right? Those who have liquidation levels that are far lower than, you know, where Bitcoin's price is currently. Safeddin had a pretty good quote on this. He said, if your business model can't withstand an 80% drawdown on Bitcoin's price, you need to reassess your business. business model. And I fully agree, particularly with an asset as volatile as Bitcoin and a business

model as, we'll call it different, as simply accumulating Bitcoin by leveraging access to public capital markets, risk management becomes very important. So I have a feeling that strive and some of the more intelligent players very well capitalized will be okay. But some of the smaller treasury companies potentially may be at risk here. We'll see. What if you could lower your tax bill and stack Bitcoin at the same time. Well, by mining Bitcoin with Blockware, you can. New tax guidelines from the Big Beautiful Bill allow American miners to write off 100% of the cost

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But when I saw Bitcoin at like $62,000 or whatever, that is insane value to me. And so I was stacking pretty hard yesterday. But do you think the bottom is in at this level, or what do you think is likely to happen from here? I love this question, and I have so much prepared for this question. So the first thing I want to show is this chart right here. This is the Coinbase premium. So for folks you may not be aware,

basically the Coinbase premium is a percentage difference between the price of Bitcoin USD you can get on Coinbase and the percentage difference that you can get on Binance. And this illustrates whether or not sell pressure is coming from the United States or it's coming from elsewhere, right? So it's basically a U.S. buyer dominance. Why does that matter? Well, it matters because it's helpful to know the size of the players involved

and where the selling is coming from. And also for people who can and have the ability to arbitrage between exchanges, this is helpful for them. So let's say you have an account that's overseas, you have an account that's here. If you can purchase Bitcoin at a discount, say, on Binance or some other overseas exchange and you could purchase it and then you could sell it at, a premium in the United States, that's something that people do. So, you know, hedge funds, market makers worldwide, this is a tool that they can leverage. It's less important for retail

traders, but that's kind of the importance of this index. I do remember. I don't know if it was 2016 or 2017. There was an insane premium. I think in South Korea and loads of people were trying to add that at the time. Yeah, the chemistry premium. I think it got to the point where it was like a $5,000 premium, maybe even higher. It was insane, like it was an insane premium. Yeah. Yeah. So it can get pretty wild. The chart that I just showed showed that a lot of the selling since the top has come from the United States. So it's been pretty U.S. dominated, which again articulates this point that it's not a Bitcoin native sell-off. It's just broader risk aversion in the United States. And that's why the selling is coming from in the house, as it were, or the call is coming from in the house.

If you'll take a look here, there's another version of this chart that I have. This is the one-day coin-based premium. And what this shows is that this is actually the minute- by minute chart. And you could see here that once we ticked down to the bottom, or the local bottom of 60K, there was a massive spike in the Coinbase Premium Index. So what this shows us is that there is massive buying pressure in the United States at 60K. And we know that most of the institutional capital that's flowing into Bitcoin is from the United States.

So clearly, there's a lot of support at that level. And plumbing the lows, as it were, 60K is a huge zone of support. So then the question becomes, like, what are the next logical areas that Bitcoin can fall to? So one of the big ones in my mind is the 200-week moving average at $58,000. Now, I was of the opinion that, and I tweeted this out last week, 58K for the memes. That's right, exactly, 58K. You know, it's funny. That's been going around for three, four years.

I never thought we would see these prices again, but here we are. I'm very much like you in the sense that when Bitcoin's right, I'm a permable. And then when it falls, you know, I have every explanation in the world for why it fell, but I can't see it. As far as foresight goes, I'm not the greatest in the world. Hindsight, I got plenty of explanations. But, you know, it's poetic irony that the 200-week moving average is at 58K.

So the reason I bring this up is because if you zoom back even further from here, the 200-week-moving average has served as a pretty reliable bare market floor. So you could see back in 2022, that's the level where we were consolidating around before ascending higher. And that's where we bounced really cleanly off of. And it just so happens to rest right above 60K, which is where we saw that massive line in the sand zone of support.

You could see how crazy this one-week candle is. Look at the size of that wick. Bitcoin managed to go all the way down to 60K, now we're all the way back up to 70K. So that suggests really strong support at 60K, which also happens to be just $2,000 above this 200-week moving average. This has historically been like a line in the sand level for bear markets. Now, it's worth noting that in the 2022 bear market, as you can see here, Bitcoin did fall

$30,000 underneath the 30% rather, underneath the 200-week moving average. And so for me, the first line in the sand zone of support level would be right around $58K. Reason being, not just because it's a 200-week moving average, and that's historically been a pretty good for for bare markets, but also it's because it lines up with the average on-chain cost basis for coins, which is just so happens to be right at 58K. And Bitcoin holders tends to want to buy right around their cost basis, right around the level at which most of their coins were purchased. And historically, again, it's been a pretty good line in the sand for Bitcoin's price. The other price level that I'm looking at, which could be a potential bear market low for Bitcoin,

is $40,000. Now, it sounds crazy. it sounds insane. But the reason I say that is because in 2022, as I mentioned, Bitcoin fell 30% underneath this line that we see here, the 200-week moving average. And so if that were to happen, again, that would be a $40,000 price. That $40,000 level also lines up with the long-term holder realized price. So those who have held their Bitcoin for 155 days or more, right now that line in the sand is at $40,000. So if we can hold $58,000, consolidate around there over the course of the next couple of months, then chances are, that's the bottom. But if we see a break underneath that, the next logical target would be 40K just because of the confluence of those levels. So that's

where we are currently. There's a lot of support at 60K. And we'll see how the next couple of days shakes out. This is a pretty crazy bear market rally here. But I would want to see a little bit more consolidation around some of these key targets that I mentioned before saying, you know, we're back in a bull market. We're long ways from the resumption of the ball market. Now it's just a function of figuring out when this thing ends. I mean, when you say things like 40K, I never would have guessed we'd hit 60K. But saying 40K also seems like pretty wild to me. I mean, we may see it. I have no idea. But this kind of also is one of the things that plays into the end of the, at least the sort of traditional four year cycle

that we used to think of because one of the key sort of caveats there was that we never went below previous all-time highs. We did that last time. We've done that again here. do you think if we do, you know, like when we hammer out of bottom, it will be like a long consolidation period around there, or do you think it's like V-shaped recovery? We get back up to, you know, 80, 90K quite quickly. Right. There's a chance for a V-shaped recovery, but I ascribe a lower likelihood to it, and here's why the V-shaped recovery, if we do get it, it would be much less sustainable than an extended period of consolidation. If you take a look at the amount of time that Bitcoin has spent between different areas.

And you can actually see it pretty clearly on this chart. There's a massive gap in volume between $60,000 and $70,000. And if you could take a look back in time, that checks out. The amount of time spent within this zone right here, and even all the way up to 80K is very, very low. So what you can call like a pocket, an air pocket where coins just haven't changed hands. Bitcoin tends to spend a lot of time in those zones. First of all, it tends to revisit those zones,

and then it tends to spend a lot of time in those zones. And going back, you know, over the last decade or the last 15 years, there really hasn't been an area in Bitcoin's price where there's been this sort of air pocket and volume that Bitcoin hasn't revisited. And all the way up to $80,000, you'll recall when Trump won, Bitcoin basically skipped directly past the $70,000 range and hit $80,000 extremely fast.

You could see, right here between 70 and 80K, we've spent maybe three weeks, maybe four at most. And so very few coins have changed hands here. We've jumped above it. We've gone back down below it. And so I tend to think that Bitcoin is going to hang out in this zone.

I don't think we see a V-shaped recovery. If we do, I would fade it because those tend to not be very sustainable. Bitcoin tends to always consolidate in these regions before moving higher. Makes sense. So people are going to have a lot of time to a stack here, you think. What percentage chance would you put on 60K that we hit yesterday actually being the bottom of this? I would put a 20% chance on it. I think it's a really low likelihood.

I believe that we revisit $60,000 and oscillate around it for quite some time before ascending higher. As far as timelines are concerned, I think this can last over the next couple of months. You know, your question was like, are we going to have a V-shaped recovery or are we going to recover really are we going to spend a lot of time here look like the the bull tends to mirror the bear that follows and so the bull market that we had for bitcoin a lot of people were saying we didn't have a bull market for bitcoin um but the bull market that we had for bitcoin was three years in length so we bottomed in november of 2022 and then we wound up topping in october of 2025 so three years uh and so if we are to believe that that's the case then i would say that chances are this bear market maybe a little

bit more protracted than not. So I wouldn't put my money on a V-shaped recovery. I would put my money on Bitcoin spending and hanging out, hanging out down here. And so like the reason I assigned a 20% probability to $60,000 being the bottom is purely because every single Bitcoin bear market that we have had, we have always revisited that 200 week moving average that I showed. And we've always spent a pretty decent amount of time there. If you go all the way back to the first half, having epoch, the second having epoch, the third. It's just something that's been consistent throughout all of Bitcoin's life.

So, you know, I'm not saying we couldn't have an unprecedented. Bitcoin doesn't touch the 200-week moving average and it ascends higher. But then again, right, you know, because obviously you just mentioned breaking precedent with Bitcoin moving lower below the prior cycle's all-time high. We've done that twice now. But, you know, generally speaking,

I would say that there's a much higher likelihood that we go back down beneath it and hang out there. It's, we had a really, really, really good run on Bitcoin, and now it's kind of this cooling off period. We've seen it time and again. And so that's just generally what I think Bitcoin's going to do. You also have to consider like Bitcoin is at a really oversold level.

And a lot of folks have been saying because Bitcoin is so oversold, that tells us we're nearing the bottom. All the oversold metric tells you is momentum, right? whether or not bearish momentum is dominant, whether or not bullish momentum is dominant. You can see here, this is Bitcoin's 30-day RSI, and this is the third most oversold day in history as of yesterday.

So you can see here, we whicked all the way down to, I think, 25 on this RSI, which shows overbought conditions versus oversold conditions. I mentioned the three arrows collapsed in 2022, for good reason. That was the only other day that was like yesterday in recent memory. and then prior to that, they crashed from 6K to 3K back in 2018.

And so what you want to see on this, on RSI, in order to confirm that the move in Bitcoin isn't a debt cap bounce, but it's actually a sustained rally, is a lower low in price, followed by a higher low in RSI. So for instance, you know, if Bitcoin were to move down to $60,000,

but RSI didn't move as low as it did yesterday, down to 25, and that would tell you that like selling momentum is exhausting. Chances are we're closer to hammering at a bottom. But because we haven't done that yet, I tend to wager that Bitcoin's going to revisit that level again. The last thing I'll say here is another really good analog for what's happening now in Bitcoin is the prior cycle.

You know, and for good reason. If you take a look over here, you can sort of see this bear flag where we were kind of ascending in this channel here. Bitcoin broke down beneath it. And then we had another period of consolidation. and then Bitcoin broke underneath it again. If I were a betting man, and I'm not, I would say that Bitcoin hangs out in this 70 to 80K range,

as I mentioned, for a decent chunk of time, before breaking back down below that 60K level and then consolidating between 45 and 55K for some time. That would be my base case, right? If we had this choppy, stair stepping price action on the way up, chances are we're going to have it on the way down to. I mean, I would take that. As much as I love seeing Bitcoin pumping,

the chance to accumulate more Bitcoin at those levels, I didn't think we were going to get this opportunity. And if that happens, I'm definitely going to make the most of it. The one thing that I'm really interested in here is if you think Bitcoin's going to have, potentially more downside, a long period of consolidation here, what do you think is going to happen in the sort of broader markets macro world? Because you showed the chart before where Bitcoin is incredibly correlated to especially tech stocks. Like, do you think they're going to go through a period of pain over the next few months and maybe throughout 2026 as well?

Yeah, it's a really good point. You know, I do think so. And it's long overdue. Bitcoin topped before the S&P 500, before the NASDAQ, and we continue to see pretty good performance in both of those. I'm just looking over here. The S&P 500 is flat over the last month. The NASDAQ is just slightly down. So it seems like they're just starting their sell-off, whereas Bitcoin has already had it.

If you'll recall all the way back to 2022, Bitcoin was one of the first assets to bottom. It certainly was the first asset at the top, but the benefit of that is that it's also one of the first assets to bottom. I think we are just getting into the weakness and equities. You take a look at, and the reason I say that is because we had a Microsoft earnings miss, and then yesterday we had an Amazon earnings miss. Both of those are massively down after that.

And so we're just now seeing the spillover, effect from Bitcoin being one of the first to sell off to equities selling off after it. So I tend to think that more pain is in store for equities, more downside is in store for the S&P, for the NASDAQ. I think those will mirror what has happened to software over the last couple of months. And even though Bitcoin is going to have further downside, I think it's going to be one of the first to find its bottom and then consolidate and then begin ascending higher. You know, this is a function of Bitcoin being a 24-7-365.

global asset. Luke Roman has talked about this. He's called Bitcoin the last functioning alarm bell for global liquidity. And so I tend to think that, you know, even though Bitcoin has been really, really tightly correlated to software stocks, it seems like it's going to, similar to how it did in 2022, find its bottom first, even as equities are just getting into their underperformance, and then when risk appetite turns, Bitcoin is going to be one of the first movers again. So that's where we are. You know, I think that there are going to be some more earnings, misses over the next couple of weeks, you're going to start to see the NASDAQ trend down even more. You're going to start to see the S&P 500 follow.

And then well before those two indices find their bottom, Bitcoin will have found its industry, Bitcoin will have found its bottom, rather. And, you know, if we look at prior cycles and try to think about, try to think about when this could occur, Bitcoin takes about three and a half years on average to go from cycle low to cycle low. And this is the case throughout every single time Bitcoin has bottoms to when it's top to when it's bottomed, to throughout history. Currently, it's been three years and three months since the 2022 low. So we bottomed in November of 2022.

Obviously, three years and three months ago. And so that would imply bottom formation. Like, we find the absolute bottom of Bitcoin's price within the next three to six months. Now, speaking probabilistically, that could mean we already found the bottom for Bitcoin. It could mean the bottom was that one-day wick down to $60,000. We spend some more time hanging out there. We may even trend back toward the lower 60s, but we never touch that price again. That could be the case, or it could mean that Bitcoin's bottom will be found sometime as far out as August of this year.

It's a pretty wide range, but at the very least, we're sort of through this worst part of the bear market, where everybody's sort of in denial. People think that it's just a bull market correction. So now we're all in agreeance that this is the bear market. and now we're into a similarly painful part of the bar market, but not nearly as painful, which is trying to figure out when the market's going to bottom. So that's sort of where we are. As far as like the rotation from stocks into Bitcoin and Bitcoin into stocks and vice versa, the pain and equities is about to be here.

It's already sort of begun. But Bitcoin, as it historically has done, it's going to find its bottom first and then begin moving higher first. It's funny that you brought up Luke Groment. I was actually emailing him yesterday because where, When he made his call, he's selling Bitcoin, I think it was, I don't know, either in the 90,000s or maybe even low hundreds. I thought that was a very bold move. Who knew an investor for 25 years, one of the best macro analysts in the world would know

more than a podcaster, but here we are. So he obviously talks about this being, as you say, the last functioning smoke alarm for global liquidity. I also had James Lavish on the show recently who talks a lot about the global liquidity. And James's take is that it's rolling over. might be in a downtrend there. Do you think that's going to have a huge impact on, is that what's driving these sort of broader markets to go lower? It certainly is, and it's definitely impacting Bitcoin more acutely. You know, when we talk about Bitcoin being

a really great fire alarm for global liquidity and really being able to sniff out these moves well in advance, it's for a couple of reasons. Like, number one, it's a globally distributed asset. Anybody can have access to it. The second thing is that it's highly liquid, right? And when we're talking about liquidity, we're not just talking about size, but we're talking about breadth of the market. It's available to trade 24-7-365, and you have instant settlement. So even though gold tends to sniff out these moves quite well, Bitcoin is far more sensitive to it. You know, there's far less price manipulation, but also because it's global, it can be traded 24-7, and there's final settlement. And so that's why Bitcoin tends to move in advance of things like

global liquidity declining, and the exact same is true for the uptrend. So when global liquidity inflex, Bitcoin tends to move higher in advance of that. So I would certainly expect that it's one of the many reasons that we're going to see Bitcoin underperformance, I believe, over the next couple of months. But when global liquidity eventually turns up again, then Bitcoin will be one of the first to reflect it. And, you know, James talks about this all the time. That's it, you know, it's of absolute necessity that we keep printing money, that we keep creating new money. And out of thin air. We live in this credit-based global economy where in order for the banks to say solvent, they have to continue extending new credit, printing money into existence, prices continue

to have to rise by 2% annually. We have to keep debasing the money by 5% to 7% every single year. And so in order for that to happen, the absolute amount of money supply in the system has to expand. And so even though some assets perform this function a little bit better than Bitcoin right now, over a long enough time horizon, Bitcoin will perform this function the best, which is to be this apex hedge against global monetary debasement. Right now, Bitcoin is really tightly correlated. We spent most of this show talking about why this sell-off

is in Bitcoin native. It's just a decline in risk appetite and what's going to happen from here. But ultimately, Bitcoin right now is trading at a massive discount to where it should be because the market doesn't understand what it is yet. And so the longer that that persists, the more you can get Bitcoin below its fair market value. And opportunities like this are a moment for reflection, right?

If you're experiencing hot flashes in the middle of the night, if you're really anxious about why Bitcoin's price is falling, then I think it's time to reassess and try to understand the asset a little bit better. If you are very comfortable with your position and you're looking at dips like this as moments of excitement, then chances are you have a really firm understanding of it. And you're in the global minority, right? As far as Bitcoin holders are concerned, you were in the 1% that understands what this asset

asset actually is. Totally. Everything you say there kind of breaks this little hobby horse idea that I've had for the last six months or so. I have been under the assumption that Trump is going to try and run things insanely hot, get the economy absolutely flying going into

midterms. Personally, I think he's probably cooked in the midterms anyway, no matter what happens at this point. But getting the economy really going is one of like his, the best livers that you can pull. So if that happened, I can't see how that would be in any way bearish for Bitcoin. I think that would be incredibly bullish. But that means that we're not going to have, like, if you think that theory is true, we're not going to have, you know, eight, nine, ten months

of consolidation. Like Bitcoin has to rip at some point. How do you sort of trade those two things off? For sure. So Trump has very few things going for him right now, which is unfortunate, right? You know, he was the Bitcoin president. He was going to bring law and order back to the United States. but his, you know, that's a platform that he ran on, but unfortunately his success at that, particularly toward his constituents, has been mixed to poor. You know, one of the main things that he ran on

was this idea of mass deportations and many folks who voted for him are upset at the number of mass deportations. And people who are on the fence and may have grit their teeth and voted for Trump despite a lot of things they may have disliked, chances are they're definitely not voting for Republicans in the midterms.

And so the only thing Trump has going for him now is asset prices. And so that's one of the main reasons he picked Kevin Warsh, right? Or any of the three people that he was talking about is that basically, you know, sort of this under the table agreement that they would run it hot no matter what, right? That there would be many more rate cuts priced in. And right now I think rate cuts are underpriced. I think that, you know, Kevin Warsh coming online, he's talked about how he wants to lower Fed funds by 100 basis points, lower than it is today. There are only two cuts priced in or three cuts priced between now and the end of the year.

And so I think cuts are underpriced. Kevin Warsh is going to have a pretty... A cuts underpriced or are the market saying, just calling bullshit on that claim? No, I think cuts are underpriced here. You know, this is... And also, one of the reasons I can say that pretty confidently is that we're still a couple of months out

from the Warsh nomination, and we're a few months out from the next meeting. So we have the next meeting middle of March, and there's no cut expected. The next rate cut that's expected, is after June. And so... Makes sense.

Once pals out. Exactly. Once Worches in, there are only two cuts priced in between now and next year. And so, and 25 basis point increments. So if you've got a guy

who's going to go in his Fed chair who has said he wants 100 basis points worth of cuts and the market is only pricing in 50, I think it's a pretty good assumption that he's going to cut more than the market is pricing and cuts are underpriced.

So that's why I say that. You know, this is one of the last thing that Trump has, things that Trump has going for him. And the same goes for every single politician that gets voted in. Regardless of what happens red or blue, they always want to juice asset prices. And it's particularly important in Trump's case where he doesn't have much going for him. And so the Warsh nomination is tactical. He knows that Warsh is going to listen to what he says. And so I think we're going to see a hundred basis

points worth of cuts between now and the end of the year. They're going to try to move very aggressively. Warsh has said that he wants to move away from tools like QE. I don't buy it. That's It's proven to be one of the most effective tools at increasing equity prices and bringing up risk appetite. And particularly now that we're starting to see a little bit of turnover in the labor market, if you look at ISM services, PMI, if you look at the employment component of that, that has been severely underperforming. And if you look at the manufacturing component of that or the manufacturing survey, the employment

component of it, that's been negative for three and a half years, almost four years. So the employment picture in the United States isn't really great. Fed policy is very heavily dictated by what the labor market is doing. And now that we're starting to see some disappointment in the labor market, that's another thing in the Fed's corner that gives them reason to cut. So I think at some point, balance sheet expansion accelerates beyond the $40 billion a month that we have now. I think cuts are underpriced.

And as a result of that, I think asset prices will do well heading into midterms in November. That said, where does that put us as far as Bitcoin is concerned? I mentioned relative to history, it typically takes about three and a half. years from cycle bottom to cycle bottom. And so, again, that would put us sort of in the range of Bitcoin's bottom being found around May, if it's exactly three and a half years, or a little bit longer. So I added and subtracted three to five months from that estimate. And so, you know, the onus is sort of on the Fed share in order to juice asset prices well in advance of November, not just in the

months leading up to it. So that would sort of put a Bitcoin bottom, like the odds of a Bitcoin and bottom closer, much higher to sort of a May time frame. Smack dab at three and a half years, right as Kevin Warsh gets in. And also you have to consider a lot of what the Fed does is forward guidance and speaking what they intend to do into the market. And so potentially even in advance of his nomination, Kevin Warsh is going to be doing a press tour. He's going to be doing a lot more pieces where he's talking about how Powell hasn't cut rates

nearly as much as he should be, you know, the S&P 500. Well, he's not going to explicitly talk about asset prices. I know Trump certainly will. But in advance of his nomination, he doesn't necessarily have to be in that chair position in order to start juicing asset prices. Markets are forward discounting mechanisms, right? And so as his nomination approaches and he finally gets put in his Fed chair, simply saying what he's going to do, we're suggesting what he's going to do, could be enough and will

be enough to start moving asset prices higher. And so if we were to take those two things into consideration, right, this. this idea that Bitcoin is going to find its bottom sometime within the next six to eight months, and the fact that we have a new Fed chair who's going to be working for Trump and trying to juice asset prices heading into November, then that would make it so Bitcoin's proverbial potential bottom, rather, would be found sooner than later, potentially around May. So, you know, it's, it's going to be interesting. You know, we talked about the price levels and we talked about when this could happen. And, you know, ultimately, it all boils around, it all boils around

And those factors at this point. Do you think Warhe is going to come in and really try and make a statement in his first meeting and do like a 50 basis point cut or something, something more bold? You know, drastic times call for drastic measures. And when we're talking about the Republicans maintaining their control in Washington, D.C., I think anything's on the table. I think it would be a bit of a misfire out the gate for him to do something like that right away. there are a few Fed meetings between when he gets nominated and the midterms. So we have a meeting that's in June, July, and September.

So during the summer, you've got a lot of runway in order to work with. But it's also important to remember that, like, the Fed chair isn't the only person who sets interest rates. There's a committee, right? You've got 12 people to contend with. The Fed share is only one of them. So he's going to have some marginal impact on influencing the Fed's decision, but not as much as a lot of people think.

He's not the sole decision maker. So a lot of this also boils down to what the labor market does, the state of the U.S. economy over the next couple of months. And we've seen based on a couple of different things, we've seen based on the Atlanta Fed GDP estimates that the economy actually may be accelerating. It doesn't seem like that's disdainable, at least in my eyes, judging by what the labor market has done over the last couple of days.

You also have to look at consumer sentiment, which isn't doing very well, particularly forward-looking, inflation expectations, those are disappointing, which could suggest that growth is a little bit lower than anticipated. So as far as him making a bold call, I think it would be the right thing to do, a 50 basis point rate cut right out the gate. That would certainly be great for asset prices and for Trump. But the ball's not entirely in his court, if you will. Yeah, that makes sense. All right, can we talk a little bit about Bitcoin as collateral? Because one of the things that I've seen going around Twitter, especially over the last few days, is people calling out the idea of doing

Bitcoin back loans, saying it's too high risk and people shouldn't be recommending this, all that kind of stuff. Like, I have Leden as a sponsor. I use Leden. I think Bitcoin is a brilliant form of collateral. I think Bitcoin back loans are a very useful product. Like, I took out a loan around 100K. Like, when you go into these agreements, you know that you have to do the position

sizing right because you may have to top up your collateral at some point. Like, I think there is very sensible ways of going into these, these, um, Bitcoin back loans and there's people that make a massive mistake by doing like too large a portion of a stack and not being able to actually top up when required. How do you think of Bitcoin as collateral, especially taking into account the volatility we've seen over the last few days? For sure. So it's something that people need to really put a lot of consideration into and learn about the risks before doing it. But that said, all of these platforms, right, whether we're talking about let in or other folks that offer Bitcoin back loans, they're very explicit about management, collateral management,

You know, their LTV ratios that they offer are very reasonable. And their collateral requirements for LTV ratios that will put you at higher risk of liquidation, they tend to be very good about warning you about Bitcoin volatility. So, you know, it's number one, it's like it's a function of risk management, but also like people do need to understand that you need to take out your loan in such a way where it's not your entire Bitcoin stack. You can post collateral so that during these moments where we have these big drawdown, like we just saw yesterday, we're now 50% peak to trough, well, not necessarily the full cycle trough,

but the people who take out Bitcoin back loans, and many are listening to this show, you do have liquidation risk, right? It's something that a lot of people are seeing and hearing about and learning about for the first time. Bitcoin has been a very stable asset over the last couple of years, and so for many folks who may have taken out

their first Bitcoin back loan, this is a bit of a shock. And so ultimately, like, what it boils down to is making sure that the amount of Bitcoin you are taking a loan out against is not your full stack. And if it is most of your stack, then you have liquidity on the sidelines that you can use to purchase more Bitcoin and top up your collateral. It was really tough to see a couple of people over the last couple of days, particularly yesterday posting on Twitter that they had been liquidated or that they had had to sell all of their stock portfolio in order to post more collateral. prudent risk management, particularly with an asset like Bitcoin, is very important. Now, that said, I think over the next couple of years, over the ensuing decade, we'll call it, I tend to think that Bitcoin's downside volatility will decline for a few reasons.

Number one, we talked about it already on the show, these ETFs who have held really tough despite the massive drought that we've experienced. Naturally, they don't sell as often, judging by their behavior as typical spot Bitcoin holders. So I think naturally it's going to introduce a lot of much lower downside risk. And as a result of that, much lower liquidation potential. And then number two, obviously, you have the Treasury companies. We mentioned that some of them with poor capital structures will be forced to sell their Bitcoin. But the lion's share of them, at least the ones that survive through this bear market and into the next bull market are just going to become buyers forever. And so that also eliminates a great deal of

downside risk for Bitcoin. It eliminates a lot of the supply. So I think, Bitcoin back lending will become much safer over the next couple of years from a price perspective, at least liquidation risk will decline. But all in all, I think it's a function of two things. Number one, people need to understand what they're getting into and make sure that they're not taking out a loan against their entire stack so that they have plenty on hands

to post this collateral in the event that things like this happen. But number two, and I think the companies already do a really great job at this, around educating on the risks of Bitcoin-backed loans, sending push notifications when you need to top up your collateral, or you're at risk of liquidation. And also extending the window of time that you have

to post more collateral before being liquidated. I think Stryger recently increased their window, actually today after the events of yesterday, from 24 hours to 72 hours. And I think that's going to continue to become the norm across the industry. So overall, like from a risk management perspective, Bitcoin back loans definitely warrant a higher degree

of involvement. But I think they're well on their way to becoming one of the most used forms of accessing liquidity against your Bitcoin. You know, Bitcoin at one point, and it will get there again, was the fifth largest asset in the world. So one of the things that it struggles with right now is these Bitcoin-back loans tend to have pretty high rates, right? At least relative to other sorts of financing that you can get, I tend to think that as Bitcoin grows in size, once it reclaims $2 trillion, and then $5 trillion, and then $10 trillion, and then gold parity,

and then eventually the entire monetary premium in the world, the rates on Bitcoin-backed loans will come down. But until the... then until we add another trillion to our market cap and then another $10 trillion after that, prudent risk management becomes like the foremost concern for anybody that's taken on one of these loans. Yeah, I did a show with Mauritio from Leden probably close to a year ago now where we talked about the risks of these and how you should think about position sizing. And personally, like I wouldn't be putting more than, you know, 10, 20% of my stack at most into like one of these Bitcoin back loans. But there are times where like right now I'm really tempted to do another one

I probably will. Because like at these levels, I think anyway, you've got more Bitcoin, obviously not financial advice, do your own research. But like I'm seriously considering another one. How does this play into your business? We've not even talked about Horizon. Do you want to tell everyone what you do? Yeah, for sure. So Horizon is, it's this concept that we came up with when, you know, prior to this, and we obviously have another company called Thea, it's a self-custody solution. A lot of our customers were coming to us and asking, can we do a,

a Bitcoin-backed loan through you. And, you know, we had discussions about this, but being a self-custody platform, that's inherently difficult to do. Our decisions were to either hire the engineering talent and build it in-house or partner with another place. We decided to do none of those things, but we decided to look at it from the flip side. Obviously, Bitcoin-backed loans are a method of accessing U.S. dollar liquidity against your Bitcoin. What we were more interested in is all of these different asset markets in the world that have a lot of monetary premium that people could use and leverage in order to acquire more Bitcoin. And so we started doing some searching. And, you know, very quickly, we landed on the pretty crazy stat that U.S. home equity is now at $35.7 trillion,

which is almost double what it was in 2019. And this was a stat from almost a year ago. So it's probably even higher now. So that's a massive amount of capital. that is now trapped within people's walls, right? And if you look at real estate globally, it's a $370 trillion market. So it's a single largest asset in the world. So it's larger than stocks, larger than bonds,

larger than money market funds. But even though it's people's largest asset, it tends to be 55% of the typical American homeowners portfolio, it's rising less than the rate of inflation. So it's rising less than 2% annually, which is CPI. But if you look at it from the lens of monetary debasement, global M2 is rising at like 7% a year. So you're getting completely trounced when it comes to your home as a store of value.

So really, like the high-level thesis is that homes have become stores of value because when the money is broken, capital flees toward what is scarce. Naturally, capital flew toward gold when we depart of the gold standard. And housing, real estate more broadly, but housing is relatively supply and elastic. So it's difficult to build new homes. Therefore, it makes sense to purchase them because they're going to go up faster than the rate of inflation. Today, that is no longer the case. And so now as a result of all of this capital flight we've seen, there's conservatively a $130 trillion monetary premium embedded in global real estate.

So roughly 33% of all money in real estate, not just globally, but here in the United States, is pure hot air, right? And so basically the concept of horizon, and it's basically sort of the inverse of a Bitcoin-backed loan, right? With a Bitcoin-backed loan, you're using your Bitcoin as collateral in order to access U.S. dollar liquidity to buy other things. potentially to go and buy more Bitcoin. With Horizon, what you're doing is you are utilizing a portion of your existing home equity in order to convert it to Bitcoin, right?

So you are using this asset to buy more BTC, effectively turning your largest asset into a better performing one. So that's the high-level idea around Horizon. We've been around for closing in on one year now, and the success we've had, the feedback we've had has been tremendous. And ultimately, we believe that in an era where homes are forced to be a store of value, you know, the value proposition of Bitcoin becomes even more enticing. And for homeowners who have families, they have children, they're in their forever home,

we're selling your house to buy more Bitcoin may not be an option or taking out a home equity line of credit and adding another monthly payment alongside your mortgage may not be an option. We feel we've introduced a pretty good option. Basically where you can convert your home equity to Bitcoin, a percentage of it, all the way up to 22.2% of your home's net equity, which is what we have currently. And then in exchange, you get Bitcoin. And alongside that, there are no monthly payments, there are no interest charges,

and there are also no term limits. So effectively, for the length of time that you're living in your home, you can convert a portion of your idle equity, which is rising 2 to 3% a year into Bitcoin, which becomes particularly enticing when Bitcoin is down 50% from its all-time highs. So that's the high-level info about Horizon and kind of what we do. That is, I think it's very cool. And so when the, when that, when that,

agreement comes to an end, how do you share the upside in Bitcoin? For sure. So in our current model, we actually don't share in the Bitcoin upside whatsoever. So Horizon and our capital partner, we're solely interested in the financial growth of the home. And the homeowner has total claim of the Bitcoin. So the Bitcoin that they have can be custodied entirely by them wherever they want to, right? Whether they're most comfortable holding it on an exchange or in self-custody, it's entirely there's to keep. Now, the reason we have that model currently is, and this plays into the reason that Bitcoin backed loans of such high interest rates, it's really hard to find capital providers who are willing to take payment and

collateralize Bitcoin at scale. And so in this sort of model that we have currently, there's no Bitcoin appreciation share. As this business progresses, we believe that Bitcoin will become one of the cornerstones of capital markets. We believe that Bitcoin is pristine collateral, right? It's sort of a lender's dream, right? Because it can be liquidated 24, through 65, it's instantly verifiable. It's very easy to hold an escrow. And so ultimately, we believe that as our business evolves, there will be more demand from very large pools of capital to collateralize a financial product like this. And we'll be able to launch a model where we take upside on the Bitcoin. But for now, to the benefit of the homeowner, the Bitcoin is entirely there as to self-custody,

and we don't take any of the upside on it. That's very cool. And it's just like working now. Can people actually do this? It is. Yeah, you can go to joinhorizon.com. You can apply. We're available in 18 states, including California and Florida, as well as Washington, D.C. The process takes 90 seconds to see if you qualify. And the typical lead time for this is about two to three weeks. So faster than a mortgage, faster than a home equity line of credit. And we've helped a lot of homeowners at this point, dozens of homeowners at this point facilitate this process. And it's been very sweet. Yeah, no, we're happy to be, there are other products that are similar to this, but not Bitcoin oriented. And so we're very happy to be sort of the first movers in this market. And we're

excited to see how the space develops. That's awesome. Very cool. Joe, this has been fun. Anything that we've not talked about that you wish we had? No, I think we really covered everything. Just looking back through my notes here, we really did. I think that the big takeaway for folks is that this isn't it idiosyncratic Bitcoin sell-off, everything is selling off. Eventually, it's going to make its way into stocks. But the good news from that is that Bitcoin tends to fall before stocks, which is what we saw. And it tends to bottom before stocks, too. So it might seem scary, but ultimately you're going to look back on this time, 10 years down the line, five years down the line next cycle

and say, man, I wish I had bought around that $60,000 zone. So it's been fun, Danny. Thanks for having me on. When we scheduled this, I didn't think Bitcoin was going to crater by the largest percentage in history, but here we are. I know now we've got the problem where we're recording this on Friday afternoon. It's not going out until Monday. Who knows what will happen over the weekend.

This could all be invalidated. But I've really enjoyed this, Joe. Like you say, this is one of those banks, opportunities that don't come around all that often so up your DCA if you can um you'll you'll thank yourself later joe thank you man this has been awesome danny i appreciate it man thank you