What Bitcoin Did - Bitcoin, Gold & the Coming Liquidity Pivot | Lyn Alden

Episode Date: November 18, 2025

Lyn Alden is a macroeconomist, investor, and the author of Broken Money, known for her deep analysis of liquidity cycles, fiscal dominance, and long-term market structure. In this episode, Lyn breaks down the major macro shift happening right now, the end of quantitative tightening, the turning point in global liquidity, and what this means for Bitcoin, gold, interest rates, and risk assets. She explains why QT is effectively finished, how repo market stress is signalling a balance-sheet pivot, why fiscal dominance is driving inflation, and why Bitcoin’s stagnation has more to do with liquidity and capital rotation than the halving cycle. We discuss the real reason Bitcoin is flat in 2025, how AI has redirected investment flow away from BTC, why OG-holder distribution still shapes every cycle, and why the four-year Bitcoin cycle is dead. Lyn also breaks down gold’s explosive run, the mechanics of fiscal deficits, the “nothing stops this train” thesis, and how the next phase of global liquidity will impact Bitcoin, gold, equities, and the broader macro environment. THANKS TO OUR SPONSORS: IREN RIVER ANCHORWATCH BLOCKWARE LEDN BITKEY FOLLOW: Danny Knowles: https://x.com/\_DannyKnowles or https://primal.net/danny Lyn Alden: https://x.com/LynAldenContact or https://primal.net/lyn

people kind of get into a mindset where they're owed a bull market, which no one's owed a full market. Some percentage people bought Bitcoin for maybe the wrong reason. They bought it because they think Uncle Sam's going to buy it rather than buying it for its own qualities and kind of the longer term story of what it is and what it changes. A lot of people are either too heavily in treasury companies, too heavily in altcoins, or they are too heavily in Bitcoin in the sense that their expectations don't match reality. I do expect that, you know, in 2026, we'll be back into the six figures. And whether it's 26 or 27, I think we'll be seeing new all-time highs, most likely.

There's no particular reason to believe that there's a four-year cycle intact. We haven't hit euphoric levels this cycle. Therefore, there's less of a reason to expect kind of a major capitulation. The cycle could, you know, go on for longer than people expect because it's not driven by the having. It's driven by broader macro and interest in the asset itself. Lynn Olden, great to see you. Always one of my favorite people to have on the show. How are you?

Good. Happy to chat. How have you been? Yeah, really good. It's been quite a while since we've done a show talking about macro stuff. We obviously did the one with Andy Constan about three months ago, but that was all about micro strategy, which we might talk a little bit about today. But there's so much happening that I almost don't know where to start.

We've got Bitcoin at just under 92K. Gold's had an insane year, just a 12-month bull run. We've got repo market crisis. There's liquidity drying up potentially. Maybe a liquidity injection coming. I don't know if this is like recency bias or just the stuff you see on Twitter, but does it feel like the macro world is at a really pivotal point right now? So good question.

I do think it's at a pivotal point. I think the magnitude is probably less than you'll see in a lot of sensationalist tweets or podcasts and things like that. But I do think that it's at a pretty pivotal point and kind of to the literal extent, which is that we're getting to the end of a multi-year reduction in the Fed's balance sheet. We're pivoting toward a more flat balance sheet and then probably eventually, and not that long, eventually, a more upward tilting balance sheet. And that does mark a multi-year change, even though it's not always what the

the sensationalist headlines will say about it. So this is quantitative tightening coming to an end. I do want to get into that. But I want to start on Bitcoin because we're down quite a lot just under 92K. Lou Grohman talks about Bitcoin as sort of the last functioning smoke alarm of liquidity. Do you view it the same way? I do. I think it's one of the many hats that it wears.

right so I still think it's a small enough and volatile enough asset that that's not the only thing it is that basically that's and I've seen him describe that before that's a because it's still a rather free market compared to other markets that are somewhat more controlled that that one is able to kind of show things before they happen and then Sam Callahan and I did research to kind of correlated Bitcoin to liquidity and showed that while you can't do the thing you'll see on Twitter where you overlay the global liquidity chart, the Bitcoin chart and trying to make like three-month projections about Bitcoin, that there still is a general causal and an interesting correlation there over a longer time frame. And it generally gives you a pretty good insight into

direction. Of course, the other variables is that because Bitcoin is this new and emerging asset and compared to other assets, even though it's been around for a while, it's still new and small, that it's subject to idiosyncratic things. And so, for example, example, the election in November of last year, almost exactly a year ago, that gave a really big boost because it kind of changes the forward estimates for what's going to happen with regulation, what's going to happen with different things like that. And that has nothing to do with liquidity when something like that happens. And same thing with the ETF launch, same thing with some of the accounting changes for Bitcoin treasure companies. These are things that have

nothing to do with macro or liquidity that can really shift the asset around. But then, of course, I think liquidity is a really big variable, and I think that Bitcoin is more correlated with liquidity than most other assets. And how much of a part do you think that's playing in this drawdown now? Because I would say 2025 is probably in the time I've been in Bitcoin, the year that almost no one's been right on Bitcoin. Like, I don't think it's gone up nearly as much as people thought. There was a lot of calls for this being like the cycles being over, potentially they still are. But how do you like take this in? Why do you think Bitcoin's crashing now?

So I think it's actually the more interesting factor is why it's been flat for so long, because the crash itself, like even in the 2017 bull run, that was a fairly smooth and kind of parabolic bull run, but it still had multiple sharp 30% corrections along the way, like several. Yeah. And it would just have these V corrections and shoot back up. So it's not necessarily that this one's had really big magnitude. I mean, we were, we touched like 75K back in April, for example. it's not really the size of the corrections. It's more of the length of time of lasting in the state.

So the fact that we were 100K in November of last year, and after a year we're basically flat, now we're down to some extent. That's, I think, the more noteworthy item. So I don't really view Bitcoin as crashing. I view it as basically stagnating at this time. I think that's the more noteworthy event. There's a lot of factors that can go into that.

I think that liquidity is a factor. So we do have tighter liquidity now. But when you look at kind of broader measures of liquidity, they're really not that bad. And I don't expect them to get that bad. I think we're kind of in the bottoming phase for domestic-based liquidity at the current time. And broader liquidity is mostly fine. So I think that liquidity is doing it no favors this particular month. I think there's a broader issue.

It's AI potentially sucking. some kind of capital enthusiasm away from Bitcoin as kind of the fastest horse narrative. Obviously, gold has had a really good year. And then there's also, to some extent, the disillusionment with the other catalyst for Bitcoin. And so, for example, one of the most popular questions I got on Bitcoin podcasts in early this year was what do you think about a sovereign Bitcoin reserve? And I found that the most boring question. I mean, people had to ask it, but I found it, and I even said it a couple of times, that it was like the most boring question because one as far as kind of ethos of Bitcoin,

I find the decentralized aspects way more interesting than what is the nation state going to do with it. And two, I'd said I'd rather kind of have a price estimate that doesn't include, you know, Uncle Sam buying a half a million coins. I'd rather be surprised at the upside if that does happen than to factor that all in and then be surprised when it doesn't. Because my view at the time was that, sure, they're going to ring fendon. to the coins they already have, that they don't owe back to someone else. But that any accumulation from there, I think, would probably be marginal at best.

And I'd be happy to be proven wrong, but that was kind of my base case, and I would just plan for that. I think a decent chunk of Bitcoiners were kind of really bullish on that outcome, really bullish on a lot of things. And then when those expectations don't really align, even though it's otherwise a pretty good environment for Bitcoin, especially looking over two, three years rather than just the 12-month period, you start to get deflated expectations. And then lastly, because it's had this pretty small sample size of this four-year cycle behavior, so it peaked in quarter four or 2021,

it peaked in quarter four in 2017. There are a lot of people saying, well, it's probably going to peak here in quarter four of 2025, and therefore they sell it preemptively and kind of create a self-fulfilling prophecy. I think that the having cycles no longer are particularly relevant. I don't think even last cycle they were particularly relevant. I think they happened to correlate with the liquidity cycle. I think they certainly were relevant. The first, say, three halvings periods, I think were pretty relevant. I think they've diminished to the point where it's no longer a factor I particularly

concern myself with it all. It's more about those other factors. And so I think there's a bunch of disillusionment that's being kind of washed out. And you can have an asset that is a good asset that's sometimes held for the wrong reasons. And so I think the coins are kind of rotating. away from people that held for the wrong reasons or the wrong expectations, and back toward the hands of those that have, I think, more conservative expectations, while still, of course, being bullish, which is why they hold it in the first place.

So this has been like a bit of a growing narrative in Bitcoin that it's the long-term holder selling Bitcoin here. Checkmates talks a lot about this. Jordie Visser wrote that piece about Bitcoin's IPO moment. Do you think that that is what's happening and that's what's causing this dropping price? Well, I think yes, but not uniquely. So, so far, in every major bull cycle, there has been distribution from longer-term holders. That's true for kind of any emerging asset. So if you have a startup company that first starts with like three co-founders,

and then it's got a handful, a few dozen early employees, and then it's got hunters, and then it goes public, and then it trades public for a long time. And you get that distribution by people that either want to rebalance or want to upgrade their lifestyles that have been holding for five. 10 plus years into the newer buyer. So that part, Bitcoin is going through a similar distribution cycle. It happened in 2013. It happened in 2017.

It happened in 2021. And it happened over the past two years, really, of this kind of like OGs selling into the strength. What's a little different is, of course, now that it's more integrated with the financial system, it's a little more complex because you have some saying, okay, I can actually own Bitcoin in some of them want a more regulated environment to own it in. They'd rather not have a billion dollars on a wallet somewhere. They, of course, they're more sophisticated ways as a whole with multi-sig and stuff.

But there's something to say, I'd rather bring some of it back into the system, even though it might not be the kind of the Bitcoin ethos. You're some of them that funded treasury companies to some extent, some of them converting into ETFs. And so that is generally happening. But that's actually pretty overall, aside from those specific reasons, the overall distribution of older coins is pretty much aligned. with other bull markets. That's not particularly new. What is new, there's been obviously

more selling pressure from five to seven year plus holders. But one thing I pointed out on Noster with opposed is that there's a higher ratio of people that have held for five to seven years in the cycle. The older Bitcoin gets, the more of these kind of older like cohorts unlocked, because five to seven years isn't even that old in Bitcoin terms anymore. So you get people from two cycles ago, of course, selling into some of this. So I generally discount that it's uniquely associated with this cycle, even though that is the number one selling pressure. So it's not about new coins and the having. It's about what price will unlock existing tightly held coins into the market. I think another factor is that while most of the demand has been treasury companies and ETFs

and by extension, all of their investors, there's been pretty weak kind of just broad retail demand. The narrative has been elsewhere. And so the combination of pretty concentrated demand side stuff, kind of moderate liquidity situation, and then the ongoing pressure of, you know, OGs or semi-OGs selling into the strength is giving some weakness. The bullish part, I would say, is that there's no particular reason to believe that there's a four-year cycle intact. We haven't hit euphoric levels this cycle compared to prior cycles.

therefore there's less of a reason to expect kind of a major capitulation of sorts. I mean, that's, I guess, famous last words, but basically you hit less euphoric highs. There's kind of less to potentially wash out. And I think as we return to a more pro-liquidity environment, and as some of the coins that were maybe held for the wrong reasons are already kind of evacuated, I think the cycle could go on for longer than people expect because it's not driven by the having. It's driven by broader macro and interest in the asset itself. What Bitcoin did is brought to you by the massive legends, Iron, the largest Nasdaq listed Bitcoin miner using 100% renewable energy. Iron are not just

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enjoy talking to him. I love how I'm on the show. But he, in his recent newsletter, said that he was recommending people sort of trim Bitcoin positions. Do you think there's people that think the four-year cycle is still alive and well and might get caught really offside with this? I mean, I think to some extent it's already happened. I think, I mean, a lot of people are either too heavily in treasury companies, too heavily in altcoins, or they are too heavily in Bitcoin in the sense that their expectations

don't match reality. So what too heavy in Bitcoin means can of course vary depending on the person, but it's either having too much exposure compared to your volatility tolerance or holding it because you expect a 10x gain in a very short period of time, even though it's a $2 trillion asset,

as though it's a prior cycle. And they're rather than holding it as something that, you know, maybe you expect to outperform significantly, but not in that explosive time. I think that people kind of get into a mindset where they're owed a bull market, which no one's owed a bull market. But then, I mean, the emotional kind of rollercoast is pretty palpable. If you watch Twitter, back when, you know,

whenever like microchategies at three times MNAV, the whole Twitter feed turns, and they're like, well, I could actually go to five times MNF. It could go to 10 times EFNF. We're going to the moon now, guys. And then as soon as everything rolls over, it's like, oh, the cycle's dead. That's a Ponzi. This whole thing.

It's just like the rollercoaster is pretty palpable. If you have your, if you're just watching it regularly, it's kind of like a cartoon almost, how these kind of roller coasters come and go. It's usually not as good as people expect, and it's usually not as bad as people expect as often how these things play out. So you can basically just. counter trade Twitter. We should talk about the Treasury companies a bit, though,

because the last show we did was with Andy Constant, and this was pretty much solely focused on micro strategy. Strategy of, like, the share prices drops a lot. I think they're at 1.2 MNAV or something like that at the moment. A lot of these other sort of pure play treasury companies are now below 1XMNAV. Do you see that as a buying opportunity, maybe specifically, to strategy? Or do you think part of that trade is kind of unwinding? Well, I'd round back in 2022 and then restart it again.

So I think the question is having unwound, will it have another positive cycle? My base case is yes. I mean, so far, like, for example, in that discussion, one thing that Andy and I agreed on is that you don't want to particularly high MNF. That's where you run into pretty significant risks. I think the number I gave in that one was obviously there's a lot of flexibility. I think something like a 1.5 is reasonable. and I put the 1.2 to 1.8 band around it for something like them. So now we're on the lower end, but still within, roughly speaking, that band.

I'm not that interested in the long tail of these pure play treasury companies because there's a self-reinforcing liquidity network effect. And so basically, if you're the fifth biggest one and you're not differentiated in any meaningful way, there's not a lot of demand for that. obviously if you're the biggest in your own capital market, if you're the biggest in, you know, country XYZ, that's interesting because that's a, that's a differentiated separate thing. So I think the handful of ones that are leaders in their market, I still think the structure can make sense. I'm more interested in the rise of ones that are cash flow positive

personally. That's actually where I think my, I think that'll be kind of a next interesting narrative. But in terms of the pure play ones, my only focus is on the highest quality ones, kind of the leading one in a given jurisdiction, whereas the other ones are more, could be anyone's guess. And so we're kind of in that scenario where, obviously, it's de riciton, the, the whole, like, treasure thing got really overstretched this summer. I think what surprised a lot of people, including myself, is how quickly these things turn.

So, for example, I'm on a record in the tweet saying, I like Metaplanet. It was back in June. I was like, I like Metaplanet, but I don't like it a 6th MNAV. and so I was like, I viewed it as overvalue, but if you were to ask me at that time, do you think it'll be at a one MNAV in a handful of months? I'd say, well, probably not. Something big would have to happen. But the fact that it'd go from six to like sub one that quickly, you know, these things can

kind of move around so fast. So the direction of a lot of this cooling off was not surprising, but that it just kind of happens all at once is pretty surprising. And we'll see, I think it would be a test to the biggest, most reliable one to see. you how they handle it from here. I think if you do get another bull cycle in Bitcoin, the ones that survive the bearishness with their leverage intact, you know, there will be demand for it because once kind of momentum shifts back again, there will be people saying, well, if I'm bullish on Bitcoin, why am I not bullish on Bitcoin with a little bit of kind of

intelligent leverage attached to it? So the question is, how can they manage their downside to get through these types of environments? And we did see like almost. all the Treasury companies try and sort of de-leather over the last 12 months, I guess for a situation exactly like this. So you would look at something like Metaplanet and strategy as being good value right now. Overall, yes. I think, I mean, obviously, you potentially face regulatory challenges. That's been some of the news out of Japan a little bit, a little bit of regulatory and kind of exchange pushback, potentially. With strategy, I think the big question is obviously the ongoing interest expense that they now deal with. So I think,

you'll think yourself the approach, even the best ones with caution. But I don't, I think that, you know, once we, once Bitcoin action itself kind of settles, I still at pretty low MNAV multiples, find the top names. Interesting. And I think it's, it's a matter of position sizing. I think when someone over, over allocates a portfolio to like levered Bitcoin, that's going to be a challenge. At the end of the day, it's kind of, you want to own the core thing. And the extent that you use the others, that's kind of the accelerator rather than a core position. Yeah, it'll be interesting. If Bitcoin price remains, you know, flat going down, it'll be interesting to see who does survive and who keeps going for, you know, who's still here in four years time. That's the big question,

especially when it gets to that long tail. But a little bit earlier, you talked about global liquidity and you were saying it's not actually that bad. You see the chart of almost like the sine wave of liquidity. Where on that sine wave do you think we are at the moment? So I think I think it's messer than normal. So global liquidity is still pretty good. I mean, basically, there's been liquidity out of China, especially the first half of the year when the dollar was weakening. That was pretty good for global liquidity. Now that we've had the dollar kind of firming up a little bit, and as you have kind of some of the stock stuff rolling over a little bit, it's more middling now. The part where the pressure has been is been onshore U.S. kind of base

liquidity. That's where there's tightness. it's pretty similar to the September 2019 repo spike environment, which is to say it's one of those things that takes over macro Twitter for a few weeks, but they never reached the scale where the average person knows about it because it's not that big of a macro fire. And so far, it's actually in line roughly with what the Fed expected. They thought that by around, and they've been publishing reports in the, in the New York Fed, like these annual reports they do on their balance sheet, they've been

kind of anticipating that sometime in 2025, 26, they're going to reach a level of QT where they kind of run into liquidity constraints and that their plan after that was to go back toward expanding the balance sheet in line with nominal GDP. And so I think they were kind of in that inflection point where we're not at the expansion phase yet, but we're at the point where they've already signal that they're going to end quantitative tightening. And then some of the members are talking about potential expansion. So you talked about something there that was going to be one of my questions, which is like, why does macro Twitter care so much about the repo market? Because obviously in 2019, this was a big story. A couple, I don't know, about a month ago, there was an

issue in the repo market. Again, it became big news on Twitter. Why is it watched so closely? So I would separate it in two buckets. I do think it's worth watching. For example, in my research reports, it's often something I touch on. We've been kind of anticipating something like this happening for a while because when it does happen, it marks a pretty big shift. It goes from kind of structural multi-year balance sheet decreases to increases. It's also the first time potentially you're going to have an expanding balance sheet in this era without zero interest rates. A lot of people have it in their mind that the balance sheet won't expand until they cut rates all to be zero. But if it's expanding for a different reason, not for the purpose of economic stimulus,

but the purpose of facilitating liquidity, it absolutely can expand without zero interest rates. And that's what happened before 2008. That was kind of a general tendency. Now it'll be happening at a much higher reserve level. So one is it just kind of represents a structural shift. The part that I would generally disagree with is where the sensationalism comes into play. So when you have something that's happened, you have people coming out of the woodwork to say, oh, like there's a major crash going to happen or the fed's going to have to print a trillion dollars or a major bank is failing or, you know, like a liquidity tsunami's coming. You get that kind of excitement. Sometimes it's genuine in the sense that people want a reason to be bullish or

bearish. And so they do that. If you're bearish, you say, look, it's all going to be a problem. So that's if you're bearish. If you're bullish, you say, look, it's a problem now, but they're going to come with all liquidity. So the assets I like are going to do. great. So you get that kind of like genuine emotionalism, but then you also sometimes, of course, you know, there are people that want clicks and will lean into these sensationalism because they know there are other people that want to know what's going on and they'll watch that episode or read that tweet or read that substack that kind of leans into sensationalism. So I think that, again, the underlying pivot is real and substantial, but it's like less emphatic, I would say,

and the numbers I think are almost certainly going to be more mild than a lot of people think. So when this happened, obviously the people calling this like the repo crisis comparing it's 2019, you think it's more mild than that and it's not like a huge systemic issue. Even the 2019 repo crisis was basically a Twitter crisis. Like it wasn't, so it happened. Then the Fed came in and did repo. Then there are people like myself and Luke Roman that were saying, okay, it's actually not really a repo problem.

It's a T-bill over-supply problem. They're going to go back to structurally buying T-bills. They did a few weeks later. Then you had kind of a mildly positive liquidity environment. They still weren't trying to stimulate with their balance sheet. They were just trying to put out the liquidity fire, and they did. And that was kind of, it was good for asset prices until COVID hit a few months later. And then, of course, everyone forgot about the repo spike, and that became the multi-year thing.

This is very similar to that, which is you have problems in repo. The difference is that now the Fed has a standing facility, so they're already ready for it. So it's even a more mild issue back then, which wasn't even a giant issue. It's one of the things that's like, it freaks people out because if unresolved, it is a massive issue. If overnight lending rates spike like that, it's a disaster. But basically anyone that's in the markets knows that the Fed's going to put out that fire. They have the facility specifically to put out that fire. And it doesn't take big numbers to put out that fire. So that's where you get that kind of disconnect. where you can theory craft why it's a catastrophe.

In practice, it's this little thing that gets talked about on Twitter and Substack and YouTube. And you know, you'll see Bloomberg headlines around it. But it's not like the regional bank crisis, 2023. It's not these kind of the bigger things. And instead it's more of a pivot where they have the tools to fix the problem that all involve money printing because that's how these things go. And then the question is, how judicious are they going to be? with their tools, how are they going to frame the use of their tools? And basically, we're gradually going to go back toward a structural environment of rising base

liquidity rather than we've been an environment of kind of flat base liquidity in the U.S. So you've had a falling Fed balance sheet, which has been offset by money coming out of the reverse repo facility. This is like all this plumbing stuff that I think we've talked about before. But the point is the outcome is that it's been all. almost perfectly flat base liquidity, but we've had rising broad liquidity. So broad money supply, all the IOUs that are built on top of that base liquidity, that's been in a pretty good shape ever since 20, 23.

And now we're kind of entering a period where base liquidity is going to start kind of rising as well, maybe early next year, for example, maybe mid next year. I would say probably the latest, but we'll see. and that does mark a transition. I think the numbers are going to be mild. I'm interested to know what that means because you say, like, quantitative tightening coming to an end, it'll go back to some form of QE and that might be in line with GDP growth. But that's the first time that's happened with higher interest rates, or first time in recent history at least. What does that actually mean for the market?

What will be different? At first, not a ton. It basically means banks kind of have less anxiety on their liquidity. It potentially frees up lending. It's more about managing what won't happen. So for example, if the regulators say, okay, there's this much, you have to have these liquidity requirements. And then they don't expand the base layer, the balance sheet.

What happens is you kind of reach like a limit of how much lending you can do as a banking system. And then you've got to stop making loans. Kind of like how if you had a gold or a Bitcoin base system, if you're over your skis in terms of fractional or banking, there's no bailout on the way. You have to actually manage risk and liquidity. And so you would have basically banks saying, hey, we're at our liquidity constraints. We can't make loans.

Or we can only make loans as you replace other loans. But instead, because they're going to go back to increase in the balance sheet, it allows that type of lending to continue. So it's more about being anti-deflationary than it is. like some sort of, you know, inflationary, stimulatory jolt. On average, the expanding balance sheet does have positive correlations with asset prices. Doesn't mean it's always like that. I mean, if you have an AI KAPEX fueled market, that's disconnected from the balance sheet. But it is one variable that has historically been pretty positive for asset prices broadly,

including Bitcoin. And basically, it just goes back to that kind of rising structural period. It also is generally good for banks because then they'll have more reserves that are also paying them interest. And it's just generally kind of pro-liquidity, slightly anti-dollar and a slight upward tilt on other assets. But then it's just a question of magnitude. It's not the same thing as the Fed coming in in like 2020 and printing, you know, trillions of dollars. their estimates for how much they're likely going to increase the balance sheet when they get to that point are pretty mild in line with nominal GDP. In addition, they are specifically trying to only buy treasuries.

So they're still going to continue letting mortgage-backed securities mature off their balance sheet, which means they're not really coming to help with the housing market. And part of a really doveish cycle is they cut rates and they also buy mortgage-back securities in an effort, to try to lower mortgage rates. And if you get really low mortgage rates, you can have a big refinancing cycle. People can take their money out of their home equity, especially in the U.S. because we have all these long fixed rate mortgages that are not super common in other parts of the world. And it's kind of a free lunch for consumer spending when that happens. Of course, it shows up elsewhere, but from the refinance consumers perspective, it's all upside.

And basically, because I don't think we're going to get to a lower low in mortgage rates, parched because of the Fed, partially because of other factors, that whole thing's off the table. So I think that the stimulus is just generally going to be weaker going forward, but it instead will be kind of, what will be notable about it is the persistence of it. So it goes back to the nothing stops his train thesis,

which is more about duration than magnitude. So I think that basically we're going to get to a period with a more grinding higher Fed balance sheet, but not really in that explosive sense, most likely. Of course, certain wars or certain totally unpredictable outcomes could always trigger an extra liquidity boost. But the structural backdrop is toward a more kind of gradually inclining Fed balance sheet rather than these kind of multi-trillion short-term injections. So when I talk to people about this, like one of the common things is that once the Fed start doing QE again, it's going to have to be a scale much bigger than we've ever seen before. It sounds like you're kind of fading that narrative and saying they're going to be able to do this at, you know, three, four percent a year or whatever it is.

Will they be able to keep that going at a low rate for a long time, do you think? Potentially, yeah. So my base case is that it will be generally slower. You're starting from a higher, when they started QE back in like the 2000-Hs-9 period, like bank cash was something like 3% of total bank assets in the U.S. It was the most highly levered the system was since literally 1929, right, in the U.S. We're starting this period, much like September 2019, we're starting this period from a higher kind of liquidity threshold. Now in 2019, of course, what was coming was COVID, right? So you lock down the economy and then giga stimulus, everything.

Assuming we don't have a crazy war, a crazy economic, so taking those, you're going to, just things off the table because that's, you know, out of the scope, just normal macro stuff, there's no particular reason to expect that this next one is going to be bigger than the one we had in the prior kind of extreme cycle. 2019 and this time are more liquidity-driven reasons for the balance sheet to go up rather than intentional stimulus. And sometimes 2019 gets lost to the noise of COVID because it was so kind of close to that. But this, I mean, assuming again, something like, Like a COVID-level thing doesn't happen, which is external, is likely to be far more gradual

this time. And it's different than QE1, QE2, QE3, or kind of COVID-QA. It's more like what was happening in late 2019 alone before these other big variables hit. Okay. And so what does this mean for things like inflation and markets? Because you've been talking for a long, long time now about the fact that we're in like a fiscal dominance era. and monetary policy has less of an impact on the economy during that.

So what does this mean for maybe particularly inflation? The short answer is not a ton because the fiscal side is way more impactful. What this mainly does is it keeps enabling the fiscal, which was always part of the nothing-sops-is-trained thesis, is that, for example, when the fiscal authorities keep running these deficits, when eventually banks get kind of tight on how much treasures they can hold, hold. And as you start getting strains in either the treasury market or the repo market, that's when the Fed comes in and they keep the party going. Back in the global financial crisis, a lot of people thought that the balance sheet expansion they were going to do would be inflationary or some

even said hyperinflationary. And for the most part, it wasn't. And the reason was that money didn't really get out to the public. It wasn't helicopter money. It was recapitalizing the banking system, which is why I've described it as anti-deflationary rather than outright inflationary. And during 2020, when they were doing this latest round of the massive balance sheet increases, some of the people were saying, look, all the people said it'd be inflationary last time. It's not going to be inflationary this time either. Whereas, like, one thing I was focusing on is this isn't like last time. This was literally helicopter money.

This was massive fiscal spending that was then supported by all this QE. And that's why we had that really big inflationary impulse. It was a huge increase in the broad money supply, all this. the type of QE that we're likely to see going forward is more like older QE, which is that it's not combined with necessarily any new fiscal stimulus. Now, those could be separate decisions by the administration. They could send out a check that they call, say, a tariff dividend, or they could do another tax cut. They could separately decide to do something fiscally.

But they already have this kind of structural, large fiscal deficit. and mostly what this change with the Fed does is it just keeps that train going. That part's already there. So I do think that part of the reason we have above target inflation right now, based on most ways that they measure it, is large because of the fiscal side. And it just keeps that going. So is this really entering a period of much healthier economic and balance sheet growth? I would say no, not particularly because it's, but it's not emanating from the Fed.

The fiscal side is sickly in the sense that we have basically a two-speed economy right now in the U.S. and certain other parts of the world, which is the deficits are largely – like, if you're on the right side of fiscal deficits or AI CAPEX, you're doing great. If you're not on the right side of those two things, you're pretty much in a world of hurt. And so there's very – like right now, consumer sentiment in the U.S. is near record lows, even as the stock market is near record highs. which is a pretty unusual environment. It's something you tend to see in like fiscal dominance. And so basically what this means is that state continues, which is right now the fiscal deficits are flowing towards Social Security, Medicare, Defense, and Interest Expense primarily.

Those are the four biggest buckets. And then to some extent it then trickles out from there. Like, you know, all the DOD and defense contract employees, of course, they spend their income into the property. broader economy. And health care workers spend them into the broader economy. And so security recipients spend that into the broader economy. So that's who gets it kind of first. And then the cantya effect, it kind of gets out there. That's a stimulus for a certain parts that are either directly or indirectly in the line of sight of it. But if someone is, say, a young family,

not really on the right side of deficits, homes are expensive right now because mortgage rates are pretty high while also home prices are elevated. They're feeling and they're getting all the inflationary effects from the fiscal stimulus and in some limited pockets tariffs, they're doing pretty bad right now on average, unless they just happen to get a great new job or something. So the average day is pretty weak. So instead of being like a big macro crash or anything like that, it tends to manifest in just growing dissatisfaction where people are like, well, I see the stock markets all the time high, but I'm struggling. And you get more of that is, in my opinion, set to continue. Now, the extent that AI CAPEX eventually runs into

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but does something have to stop it eventually? Do they have to move from a fiscal dominance era into, I guess the opposite is a monetary dominant era? So the short answer is that if they eventually stop it, it's because they accelerate it so much that it kind of gets the next 10 years done in one year, right? That's kind of how, is death by fire rather than death by ice? which is that they can't really stop it until there's a pretty big reset in terms of the debt values and in terms of global trade flows.

And as things get worse, that actually intends to accelerate the train. And when I use the nothing-stop-this-train kind of approach, it's basically the time horizon from an investment standpoint is like 10 years, right? So it's not talking about what's going to happen in 2070. It's talking from now to like the mid-203. 30s where you have some degree of visibility, beyond things like that or like just total, like political, nonlinear moments, that type of thing is a separate matter. But basically it's that because of demographics, because of voting patterns, because of polarized Congress, because of the nature of the Fiat system that has to grow or die, and then now it's more funded by the fiscal side

rather than the bank lending side, you get into this pretty persistent state of running it hot, but only for part of the economy. And the other part kind of gets dragged along with the inflation and kind of some of the fiscal boost. And people keep wondering, well, manufacturing activity is flat. Inflation's hot. Obviously, both commercial and residential real estate are struggling. And it's like, well, who's winning? Because, like, you know, they see hot GDP numbers, but they're like, well, it's not here, here, here, and the answer is it's primarily those on the right side of fiscal deficits and AI. So I guess that kind of brings it back to the Bouncy expansion.

You said that it's going to be all treasuries, not these mortgage-backed securities. And Trump's recently come out talking about like a 50-year mortgage. Do you think that is all part of the same picture there? And it's really like a way of attempting to help the housing market without directly like cutting rates and offering and buying these mortgage-backed securities? I do because I think left to its own devices, the housing market has ended like a generational cycle, which is to say you've had lower and lower industry rates, both in the short term and the long term, for 40-ish years. And I think that's structurally behind us. We kind of bounced off zero.

Now we're, let's call it sideways industry rates, let alone up. Let's just say we're in a sideways band now. You don't get lower lows, which means that any sort of refinancing cycle, like, Anytime we get moderately lower mortgage rates, the only people that are going to refinance are those who took out a mortgage fairly recently, and volumes have been low there. So any sort of refinancing cycle is very weak. So normally when the Fed cuts rates and when the market pushes down longer term rates, and sometimes the Fed helps with that by buying longer term, longer duration securities, when you get that lower rate cycle, it does a couple of things.

Obviously, you know, businesses can take out kind of cheaper loans now and invest in things. they might not have done to higher rates. But one of the biggest things is the consumer kind of homeowner market can refinance their homes and spend more without really sacrificing anywhere else. And that's done. To the extent of that happens, it's only that kind of smaller, tiny, like refinancing cycle rather than a big one, which means when they cut and as things stagnate, it doesn't fix the problem like it did in prior cycles.

you kind of have a longer term stagnation. We've already seen, for example, like usually manufacturing PI, it looks like a sign wave where activities soaring for maybe 18 months, and then it's kind of contracting for 18 months, and then it's soaring for 18 months and it's kind of, it keeps going through the cycles. It kind of mirrors the liquidity cycle. And this has been like the longest stretch. We had the longest inverted yield curve in U.S. history combined with like manufacturing kind of like stagnated and just stayed down.

collapse, but it just stayed weak for like three years. And obviously, housing has kind of been in a similar boat, commercial real estate, a lot of private equity ran into headwinds in this environment. And it's, on one hand, it's held up by the fiscal spending. It's stimulatory. It's run it hot. It's like pre-stimulus before recession. So it kind of prevents the bottom for falling out, at least for the economy as a whole. But there's also this tight lid on the top. too. So you get that more static inflationary feeling where you have like

F tier consumer sentiment but you still have inflation above target even though a lot of areas are kind of grinding into a halt and you have a few pillars holding up the whole thing and that's that's that's the fiscally dominant era and so it feels sickly

to a lot of people because it is sickly and it's you're more likely to obviously get rising social discontent in those types of environments, not just in the US, but globally. And I think that's, that's kind of the, probably the biggest story we'll be facing over the next several years, is kind of how both policymakers in the public deal with this situation that is kind of structurally different than prior cycles. Could you actually argue that the 50 year mortgages are another driver of wealth inequality in the sense that if you own scarce assets, gold, Bitcoin,

and equities, whatever, and you're essentially shorting the dollar over a longer time period with a 50-year mortgage, you'll potentially do quite well. On the other side, if you are low-income and you would take out a 50-year mortgage, you just have longer paying off interest and all that part of it. To some extent, I think that on average, I mean, the whole kind of, the whole modern system, it's really rewarded those who have taken out, like, have good access to long-term debt and use it to buy scarcer assets. And the 50-year mortgage in some sense is no different. I generally, like the 50-year mortgage concept is making a lot of headlines.

I generally view it as less impactful than what other people seem to think. If you kind of do the calculations for how much it can lower a monthly payment on the same house, it's not, I mean, it's not immaterial, but it's not like a game changer. And it's kind of like an artificial extension of what I just talked to. about, which is they basically ran out of runway with the 30-year mortgage. It's like we're not getting almost certainly not getting lower lows in that. Doesn't mean we'll get lower, you know, we could get lower than we are now, but it's like not like the series of ever lower lows for 40 years, which is, you know, lower highs and lower lows. And because of that, it really kind of puts a cap on

real estate appreciation, also puts a cap on housing affordability and all this. And so it's, this is like a way of saying, well, we can't fix that. So let's try this like Band-Aid. We don't even know if that's going to fully get into effect. But even assuming it does, I think that at most that gives you like another half cycle. And maybe not even that. It's just like it's not as big of a factor as a structurally falling interest rates and that kind of perpetual refinancing cycle.

And so, you know, it benefits those who take out as long and low of mortgages as they can buy a property in a place that ends up being better than average. Like it's a rising environment, for example, like a city that's going from a tertiary city to a secondary city, for example, kind of a booming area. But I don't think outside of kind of more limited contexts

that it'll have kind of macro scale significance. The other part I wanted to touch on was the Fed. So they've obviously were tipped to be doing rate cuts going into the end of the year. I know that the next one in December's sort of called into question now. What do you think will happen with interest rates? So first answer is I think that that's one of the kind of the minor catalyst for why Bitcoin might have sold off recently is that the market had to kind of readjust to slightly less

doveish fed potentially for the remainder this year. Now, one rate cut is not like a giant story, but when the market was expecting A and then they get B, even if B is not that different, it does have to kind of reprice things. And when you already have a spooked market for other reasons and you get these repo issues and stuff like that, it's not that surprising to see frictions in especially the most volatile parts of the market. So there's that. You know, I generally don't have great insight in what they're going to do in a given FOMC meeting. Mostly whatever the market says is almost always what happens.

And then the problem is it's recursive. Like the Fed governors do look at what the market is expecting. And if the market is way off course of what they're intending to say, that's when Fed speakers usually come out. And if the market's too hawkish, then they'll come and say some duffish things. If the market's too dovish, they'll come in and say some hawkish things. And they try to get it a little bit closer to what they kind of are already anticipating what they're going to do.

So rather than try to play that game, I kind of focus on the longer term. I do think that within 2026, we will see a handful of rate cuts. Whether or not we have one in December or not, for me, is like a coin flip right now. And it's more about what happens next year. And so, yeah, I think we'll see mildly lower interest rates. while we're also going back toward balance sheet increases, but I think that they're largely separate variables. You don't have to have one to have the other.

I think you're right in that whatever happens next year is going to be the most interesting thing with the Fed. Jerome Powell's going to be done. I don't think we know who's going to step in yet. I know there's people sort of guessing who that's going to be. But if it does become someone who is essentially like a Trump stooge and is just going to do whatever he wants, what does that mean both in terms of like fiscal dominance,

and just Fed independence. So obviously be a reduction in Fed independence, if that were to happen. Fiscal dominance in general chips away at Fed independence. Like the fact that the Fed is going to go back to increasing their balance sheet in line with nominal GDP, one of the challenges there is that the fiscal deficits, the size of them, contribute to nominal GDP. It's one of the inputs into that. So basically, the Fed is kind of indirectly saying our rate of balance sheet increases

will be partially dependent on how big the difference. fiscal deficit is. And so that's already at least a minor reduction and a kind of a persistent reduction in Fed independence, I would argue. Now, what they mean generally by Fed independence at the root layer is that there's at least some separation between like near-term rate decisions and the election cycle. So it'd be very bad if like incumbent administration could say, okay, cut industry rates right now a ton because it's got an election coming up and then, you know, go back and maybe raise them. That's kind of the cycle they try to avoid. There's no such thing as pure Fed independence. More like how acutely can the Fed kind of operate on their own terms? Now that, again,

you can call on the question the entire purpose of the Fed. Should a central board of 12 people be setting interest rates? I would argue no. But it's still the case that you have a somewhat independent board doing it. Even if they replace, you know, a couple of governors at a time, you still generally are likely to have some degree of independence where they don't want to look. look like a total sham, especially because it can backfire. If they look super dovish, the bond market could freak out and say, well, I don't want to own any duration yet. So if they perceive the Fed as acting too political, they could sell off mortgages, the market, and you could get higher mortgage rates, even if you have shorter short-term rates, which is not what a, even a, I'll say a hypothetical

like Trump's stooge Fed, they wouldn't want that. So they always have to project some degree of kind a pseudo credibility to say, here's what we're doing now. So I wouldn't expect like just a 180 degree change in what they're doing, but that's separate from the fact that because from fiscal dominance, like, they're going to go back to increasing their balance sheet, even if inflation's above target, because it's just, it's keeping the treasury market kind of liquid. And, I mean, they can also, they have other variables they could tweak. I mean, they can tweak the supplemental leverage ratio, which sounds really wonkish,

but it's almost like a shadow QE for banks. It just kind of frees up some of their liquidity constraints that they have and allows them, it kind of for them acts like QE. And so there's various levers they can pull, but all those levers have in common is that they allow kind of the existing thing to keep going without causing acute liquidity constraints. So just the trains keeps going, the fiscal deficit stay high, the Fed doesn't go out of their way to stimulate,

but they do keep a lid. on little fires that pop up and it just keeps running at this kind of stagflationary pace. And Lynn, is there anything else on the macro side that you want to touch on? I just have a few questions on goal before we close out.

Right. The other one would, I guess the final touch would be AI in the sense that if you get like a rollover in really big asset prices, whether it's Nvidia, Apple, you know, Microsoft,

things like that. I'm not predicting it. But like, that's where you can get kind of a disconnect where the Fed could be stimulating, the fiscal could be stimulating, but if you got a multi-trillion dollar destruction in just kind of capital, that wealth effect can reduce than consumer spending. You can have things like Bitcoin get caught up in it, which is why I separate, when I say nothing stops his train, I'm talking about the fiscal

deficits and the liquidity to keep fueling the fiscal deficits, which over the long run, does have implication for asset prices, but it does have implications for asset prices on a year-by-year basis or a quarter-by-quarter basis. You can get all these crazy fluctuations. Valuations do matter in the longer run. And instead, it's more of like that macro backdrop that gives you a foundation that other analysis can then be done on top of. On the AI side, there's a lot of talk of like AI bubbles. There's these sort of circular deals between Nvidia and Oracle and all these major companies. Do you think we are potentially in a bubble in the AI side?

I think we're kind of in this like euphoric kind of local bubble phase most likely, but that I think the underlying trend for the most part is real, which is that this is a pretty big transformation, especially white collar types of work. It kind of like how, if someone asked, was Bitcoin in a bubble in 2017, it's yes and no. It's like a local bubble built on a structural thing. That's kind of how I view AI right now,

maybe less extreme, but it's kind of saying, Sure, I think certain things are overdone. Sure, I think euphoria is high. It's crowded. Some of the deals have become somewhat incestuous in that sense. And you get that kind of circular aspect, which can be frightening. But that I do think that when that kind of washes out, I think that that's still sets a stage for growth. So I do think that, you know, when we look back for 10 years from now, you know, will there be quite a lot of data center activity running AI that's doing all sorts of stuff for us?

yes, and bigger numbers than they are now, but that occasionally you front run and kind of pull too much forward and have to cool off for a period. Yeah, that makes sense. When I had Luke Groman on the show a couple months ago, we talked a lot about AI and the impacts that that might have on the economy. And I don't actually know what the term is for this. It's almost like a black swarm that you can see coming at some point. Like, if AI does start replacing a meaningful number of jobs, how does the economy sort of cope

with that? Well, on one hand, it's just like prior kind of productivity cycles, which is like when hydrocarbons started to become used at scale and we made like the tractor, like one farmer could do the work of like 10 farmers. Right. So what that does is that freed up the other nine farmers to go work in other areas. Right. So instead of like, you know, 80% of the society running our agriculture and 20% doing other things, over time, we would have it so that like 2% of people can feed everyone. the other 98% of people can do other stuff, like build technology or take care of things or do health care.

And what this does is it kind of is like another version of that. It's saying some percentage of human labor can be replaced by basically pure energy, combined with hardware. So you say, okay, well, we can take electricity and GPUs, and that can replace some percentage of, especially our white-collar labor force, which is disruptive when it happens. But then it frees up people to do other things. in general, we want machines to do a lot of the routine stuff for us so we can do other things.

Where people get spooked is when you have machines so good that, like, a lot of people can't find any work that they can do that is better than a machine. So even though tractors replaced farmers at farming or at least allowed one farmer to do the work at 10, those people could still say, okay, well, the tractor is doing that, so all go research medicine or something, right? You had other types of work. where that game could change is if you have machines that are so good that people, as meaningful percentage of population, not just, you know, certain, say at the current stage, they're disabled people that have trouble being economically kind of functioning in any capacity. But if that, if kind of the percentage of population has that happened to them and it becomes a very meaningful percent, that's when you get kind of a unforeseen territory. What does that look like?

people have talked about UBI, people have talked about revolution. That's where it's a hard to predict outcome. But in general, there's that difference between what happens in the kind of disruptive near term versus structurally what we want, which is we do want machines and energy to replace as much work as possible to free people up. And there's that kind of march toward that end wherever possible. Yeah, I think the scary part of this is that it's not only going to replace sort of, manual labor, it's, you know, it's almost everything, like accountants, teachers, finance people, people working in medicine. Like, it seems like across the board it's going to replace a pretty decent number of jobs and what's left, I guess, is the question. And this is why, like, UBI at this

point, I don't know if I'm being doomed here, but just seems baked in a cake. Like, I don't, I don't know what other outcome that could be. Yeah, I think there are pockets that will end up demanding it. I think, I think the silver lining is that basically, there's a huge difference between data center AI and portable AI, aka robots. I mean, the human brain runs on 20 watts of power. In order to do that in a data center, you need megawatts of power, like the same amount of processing power. Now, obviously, certain things a computer can do really cheaply, like a calculator.

We've had that for like a century. But in terms of all the things a human brain does, the amount of bandwidth it takes in from the environment, all the automatic processes that are running, and then on top of that, a conscious decision-making process that can help handle edge cases, and then it's a self-healing robot as well, that's super advanced technology. And so I'm actually kind of, like, especially in timelines, like, robotics certainly will play a bigger role in our life. We already see, if you go to Japan, I mean, robots play a bigger role in a lot of their functions than here. So first they just get to Japan and then we'll get further than that. So we are going to get more robotified.

but for example the idea of a robot coming out to your house and like fixing your HVAC system right and basically going out into the field dealing with all the edge cases that I think is an extraordinarily long way off it's it's data center AI that I think is the star of the show right now which is basically displacing a lot of white collar work the bonus is that it allows each remaining white collar person to kind of do more because rather than just all those tools running completely autonomous it's basically extensions of a person where they can have some data collection do something for them. They can have this thing, edit their thing better, you know, faster and cheaper than a human could and all that stuff. But there's still, there's still decision makers and governors in that whole process. And so, yeah, I think we get disruption of white collar stuff a lot quicker. And ironically, I think you can get kind of a boom in some, especially in the field blue collar stuff. So it's easier to automate things in a very controlled environment, like a manufacturing floor. It's much harder to automate things out in the, out in the broader world where all those

edge cases come into play. And then when you have, say, a massive number of robots, mass amount of data center, all of that has really high turnover. GPUs have to be replaced. None of this is self-healing. This is like literally a constant replacement cost. A lot of it relies on, you know, kind of semi-rare materials that can run into shortages and get expensive. You can have environments where a society starts pushing back on robots and vandalizes robots if they find them kind of out in public and almost like kind of forced keeping human the loop. So I think that will happen to. I think there are kind of basically self-correcting loops, both positive ones and some negative

ones, that especially in terms of like all work across all fields, I generally fade that sort a hyper-bullish thing, at least in any sort of investment or kind of planning time horizon. I'm not talking about what happens in the 50 years or next century, but what happens in to say at 10 to 20-year period, data center AI is a much bigger deal, in my opinion, than like, portable AI and basically in the field. So I think that there's kind of a potentially force shift toward, you know, people kind of doing more physical work and also community somewhat being more self-sufficient.

If a whole kind of area gets kind of disfranchised by AI, that's a lot of people out of work. Well, that's a lot of people that together are out of work. So it's like someone's got to build the home. Someone's got to do all this. And they don't have enough, I guess if there's robots, they can't afford the robots to come in and do

it. So they got to work with each other. And you kind of almost restart the whole, what an economy is. And of course, the challenge there is the path to tenants along the way. As you have societal breakdown, as you have deterioration of social contract, and then more extremism or whatever based on that, that's where I think the real issue is, rather than that say, AI replaces 99% of jobs in sort of a generation. That's not what I

concerned about. It's more like what happens when it replaces 10% of jobs and those 10% of people are really angry. That's, I think, the actual thing I worry about rather than that kind of more extreme scenario. Yeah, that's a scary scenario anyway. But I mean, it's good to hear that you're bullish on humanity, at least for the short term. I needed to hear that, Lynn. Before we close out, can we just very quickly touch on gold? Because if you'd have asked me a year ago, if gold would have this insane bull market while Bitcoin was flat, I would have put that at a pretty low probability. Why do you think that's happened? What's going on there? It's funny because I've been a gold bull, but I'm surprised as well that it hit 4,000 this year.

You know, when it was in the, when it still had a 2,000 handle on it, I was kind of eventually looking forward to the 3,000. But I didn't think you'd kind of just race right to 4,000. So I'm happy it did, but wouldn't put it as my base case, especially given the size of the market. It's a huge kind of multi-trillion dollar market cap increase in it. There's multiple shifts happening. One is ever since 2009, you've had a gradual shift towards sovereign reacumulation of gold. So prior to then, you had a multi-decade kind of de-vestment of gold among sovereigns and toward treasuries. Starting in 2009, that gradually reversed.

It got kicked into overdrive in 2022 because then you have potential risk of confiscation or freezing of assets. if a sovereign is holding their securities of another nation, they're not really sovereign assets. And so there's kind of been a shift toward that. Then there's the increasing awareness of fiscal dominance and the increasing awareness that nothing stops his train, which says, well, if this is just going to happen for five, 10, 15 years, maybe I want to own some gold.

That's the one that's got an established track record. So big pools of capital already know what to do with it. They don't have to research it. They already know what gold is. and then in addition, this is not really, even though the stock market is near all-time high, it's because it's so narrow, it's mostly not even a risk-on environment. Like I mentioned before, we've been an usually long period of kind of like flat yield curve, PMIs, like purchasing managers indices of like manufacturing and other signs that are just

kind of like in stagnation. outside of AI, the stock market is pretty flattish, kind of consolidating. And so it's not a very risk-on environment, even though liquidity is good. So when you have kind of pretty decent liquidity up until maybe very recently, and then you have kind of stagnating broader economy, the Fed's still trying to tighten things where it can, the things that have taken off has been AI, gold, like kind of the what the market ironically looks as low risk. They view AI as low risk,

even though the pockets of it that are obviously not, but they viewed as low risk because they viewed as like a sure thing. It's like, okay, that's cycle resistant. Let's go to AI. Then they say gold, okay, that's low risk. Bitcoin until pretty recently was in that bucket, where it was benefiting from liquidity,

from kind of gradual adoption. But as you have kind of like a flattish environment, Bitcoin cooled off. So I think, Basically, gold's behaving kind of, you know, rationally, just a little bit, you know, these things tend to not be linear. So you tend to overshoot to the upside, then overshoot to the upside, then overshoot to the upside. So this did overshoot the upside fast than I would have thought.

But I think it's a gradual realignment for things we've talked about in prior podcasts, a more multipolar world, less kind of a focus on every country, just holding one country's bonds as the reserve asset and saying, okay, we'll hold those, but we also want to hold these other, say, three things. We don't want to hold gold, maybe we want to hold another trading partner's currency around the margins. Smaller ones may say, well, let's look at Bitcoin a little bit. You get that kind of gradual broadening of assets that are viewed as kind of reserve assets. And gold, you know, as the incumbent is kind of been the chief beneficiary. When we're talking about the market's being increasingly spooked about these tens of trillions

of dollars of sovereign debt. So whether it's the U.S., it's Europe, it's elsewhere, the market is kind of long term says, okay, what's the end game here? And you have gold, which is a much smaller market despite being huge than those sovereign bonds. It only takes a small gradual spillover for investors to start kind of going into gold. They don't have to do a ton of research because they know what gold is. Yeah. One of the things I found really interesting is the kind of retail fomo around gold. Because as we were saying earlier in the show, there's really not been a huge influx of new retail participants in Bitcoin. But I don't know if you saw the pictures going around Twitter and stuff of people literally queuing on the street outside gold shops.

I think they were actually here in Australia. Has that surprised you? And like one of the things we talk about often in Bitcoin is like the unit bias. Obviously the unit bias for gold is lower, but as a market, it's huge compared to Bitcoin. So the short answer is it hasn't surprised me because so back when gold was like 3,000, one of the interesting things at the time was that it was not retail driving it. So when you looked at like interest in gold ETFs or interest in physical coinage, it was kind of lukewarm, whereas the price was going up anyway, and it was because sovereign's institutions were driving it. It was kind of like gold moment of like the Treasury Company thing, right? It's like big pools were interested in it. China and India were interested, so their retail was

interested, but kind of the Western retail was like other things are going on. When the Mag 7 was soaring, No one's like, they're like, yeah, gold's okay, but, you know, I'm not really interested in it. It's only really in kind of the second half of this year where we're retail, Western retail did start to foam one to gold. So that's kind of a later, later stage portion of it. So first, first institutional, then retail. And that's generally how things go. So if anything, if you'd ask me last year, I'd be, I'm surprised there's not a little bit more retail fomo than there is right now. But then I would also not have guessed you gotten to 4,000. But when you'd be, you'd be surprised, you'd be a lot of you do get to 4,000, I'm not surprised that, yeah, you start seeing lines outside of gold stores, either to buy it or sell it, because actually both tends to happen. There are people that need money

and have a gold ring, and they want to go sell it. And there are other people that are then phomowing into it is how these things tend to go. And, you know, if Bitcoin can have a cycle like that where if you break the four-year cycle, you have an up year, institutions are positioned, and it starts to rip, you can bring in retail. So it's like, just because retail is not here now, doesn't mean they can't come later. And unfortunately, retail tends to be kind of the later phase of a given bull run. Now, but I think I view gold in a similar way that I would view AI, which is that it can get into a local bubble, but that I still think it's structurally fine.

The last time I gave a warning of that sort was back in 2020, gold, of course, had a very big moment. And I was like, I could see it taking a breather here. It took a little longer breather than I thought, but then. then it did this whole kind of next doubling that it did. And I view it kind of similarly, which is sure, it's over at skis right now. But I don't know if you it has like structurally overvalued. If anything, it's going from being just kind of structurally undervalued, just like back closer to like what I think makes sense.

And so, yeah, I just view gold and Bitcoin is kind of two different assets. Gold still, because it's the incumbent, it has more of a risk-off aspect to it. It's got more of a sovereign interest in it. whereas Bitcoin is still kind of collectively lumped into a tech play, even though from those that people understand it, it does have, you know, digital gold, digital cash attributes that can be viewed as risk off as well. Just the price action tends to correlate more of the risk on type asset. That makes sense. Okay, Lynn, last question. Bitcoin's just above 90,000 now. I'm not asking for a price prediction here, but just like directionally over the next 12 months, what do you think, how are you

looking at Bitcoin? My guess is up. I don't. I don't have a view of the next quarter. I always do try to avoid price predictions when I get corded into one. Like for 2025, I was like, yeah, anything under, like, if we don't hit 150, be a little disappointing. Of course, we only got to like 125 or so. So it's on the disappointing end. I do expect that, you know, in 2026, we'll be back into the six figures.

I mean, anything can happen between now and year end. And whether it's 2026 or 27, I think we'll be seeing new all-time highs. most likely. And it's funny when I, because I watch Twitter sentiment, when Bitcoin is absolutely soaring, I get sometimes dunked on by Bitcoin or saying, why do you own any gold? Why do you own any stocks? Why aren't you 100% Bitcoin? And it's like, well, because I like some degree of diversification here. And then when Bitcoin's crashing, I get the gold bugs coming out and saying, oh, like, you know, they should just own all gold. Or like, why do you own any Bitcoin at all? And it's like funny how that emotional trend goes. And one of the ways is to say, okay, well, you don't want to,

you don't want to de-worsify so that you own a little bit of everything. You still want to have opinions on assets. And you can make concentrated bets. I mean, I'm quite structurally bullish on Bitcoin, for example. But that's also why I own gold and I own equities that have nothing to do with Bitcoin, because there are different size markets, different performance kind of patterns that they go through. And if me, it's not just about owning what I think is going to be the fastest horse, it's okay, I'll put extra on the fastest horse, but I want to own a handful of horses. And so when you structure a portfolio like this, it's like, okay, I'm disappointed in Bitcoin this year, but I'm overexp, like I'm enthused by what gold did. And if you structure a portfolio

that way, you take the edge off for a lot of these things. And so, you know, I think we'll see a rotation at some point while I'll be disappointed in the gold side of my portfolio, and I'll be enthused about the Bitcoin side, and then probably it'll repeat again. So, yeah, nothing's really changed around my view of any of these assets. It's just they catch on at different speeds and they had different correlations. And like I said before, I think that a year ago or six months ago, some percentage people bought Bitcoin for me with the wrong reason, that they, you know, they bought it because they think Uncle Sam's going to buy rather than buying it for its own qualities and kind of the longer term story of what it is

and what it changes. In addition, I think the broader crypto space is basically out of narratives. And that's basically dead weight now. So other than Bitcoin and stable coins, a couple small tech rails to run that kind of stuff, at a macro scale, there's really no there in the broader crypto space. And so I think that that's part of why kind of the whole space is bearish. Because a lot of people that own Bitcoin own other assets. And they view it as not just a bad cycle, but that there's just what's the next narrative?

You had ICOs, you had NFTs, you had defy, you had meme coins, which is basically the most cynical narrative is saying that we're just flat out saying there's no there there. Then even that kind of eventually rolls over. and you know, there's really no kind of, you can always be surprised by another one kind of coming out of the hat. But I think a lot of that has kind of tested almost every directional narrative that it could. And is kind of set for structural stagnation. So Bitcoin has to kind of decouple from that dead weight to the extent that it's going to keep kind of reaching higher highs. I totally agree with that. I mean, the alt-coin side of things, I think is over.

I don't want to speak too definitively because you never know what might come out. But I've started having the text from the people sort of close to me who might have bought Bitcoin for the wrong reasons being like, is this going to go down to 50K and all the stuff? And I obviously have no idea. But like the best message I think is just just do nothing. If you're not sure, just do nothing. Like just wait because like I know that 90K is not going to be the top of Bitcoin forever. Lynn, I always love talking to you. Thank you so much for doing this.

I'm going to see you at Cheecode in March. Yeah, I missed last year, but I was there the year prior, I believe. So I definitely think it's worth going. I love the conference and it's great to see everyone. It's going to be fun. We've got you announced as a keynote and Jack Malers at the moment. We're going to be dropping some more speakers soon. So cheatcode.com.

There's my little shill. Lynn, where do you want to send anyone who wants to find out? I everyone knows who you are, but who wants to find out more. Just check out Linnaudden.com. Everything can be found from there. or at Lin Alton Contact on Twitter or broken money in Amazon or elsewhere. But thanks for having me.