What Bitcoin Did - The Macro Shift That Could Send Bitcoin to $500K | Matt Cole

Episode Date: October 5, 2026

“You actually have the president and the Treasury working for Bitcoin because they’re working for a weaker dollar.” Matt Cole joins to discuss why he believes America’s debt crisis leaves the government with few good options, how rising bond yields could force the Treasury and Fed to intervene, and why a weaker dollar could fuel Bitcoin’s next bull market. We also get into why AI could create abundance without generating enough tax revenue to fix the debt problem, his case for $500K Bitcoin by 2030, and whether Bitcoin is entering a supercycle. THANKS TO OUR SPONSORS: LEDN - Explore Bitcoin-backed loans and get 0.25% off your first loan. ANCHORWATCH - Insured Bitcoin custody, security & inheritance. Book a consultation: BITKEY - Get 10% off the new Bitkey wallet with code WBD. EXPAT MONEY - Build your Plan B. Explore second residencies, citizenship and offshore wealth protection. FOLLOW: Danny Knowles: https://x.com/\_DannyKnowles Matt Cole: https://x.com/ColeMacro

They're going to buy back bonds. They're going to try to effectively reduce the debt load by making the currency less valuable. You actually have the president and the Treasury working for Bitcoin because they're working for a weaker dollar and that's one of the strongest determinants of where Bitcoin does. We actually think that over the course of the next, call it three to seven years, that we will see the biggest decline in the value of the dollar as measured through the DXY index in Bitcoin's history. Sometime I would say in the next 18 months you see real meaningful intervention. You see the dollar become the release valve explicitly.

It's hard for me not to think that this Bitcoin whole market that I think we will be entering into over the course of the next 18 months will be substantially better than the one we saw in 2024. Like when you hear this, it makes me want to literally go on my phone right now and buy more Bitcoin. We've been talking about doing this for a long time, man. I know. It's been way too long. I'm glad to have you on the show. There's so much talk about.

I want to get into a lot of things with you. But no, I don't actually normally do this, but I'd be interested. I want to get into your background a little bit because I've read a little bit about it. But tell everyone where you came from before you were in Bitcoin. I came from traditional finance. You could say I was a suit, but I actually never wore a suit at my old job, but I do wear a suit now that I're on a Bitcoin company at times. And an orange tie.

Actually, I usually go blue tie. I feel like the orange tie It's over done. It doesn't work for me. So I think I've rocked it like one time and then I put it in the closet. But I came from the largest pension fund in America. My parents, they were law enforcement officers. They had their pensions tied to calpers.

And so when I graduated college, it was at the start of the great financial crisis. And what you saw across the world, but I'm obviously in America, was pension funds became underfunded. And growing up in Northern California, I saw the pension fund of my parents, my other family members, a lot of friends, become underfunded. And so it was a very personal mission to go there

and try to fix the underfunded pension crisis. And in a sense, a very similar thought process to strive is how do we maximize total returns at this pension, fix the underfunded pension crisis, and eventually got a job in the fixed income unit there, which is for people that maybe aren't familiar with institutional investing in fixed income versus equities, fixed income units within institutional investments are usually where active management is most likely to occur. So more active risk taking a lot of things

similar, but in a different context to what we would talk about now in a Bitcoin strategy. And so I rose up there. I rose up to be their youngest portfolio manager and management. about $70 billion. Wow. So about half of that was structured products, which is to structured finance, which is what I view our company today to be is to be a structured finance company. The other half was U.S. treasuries. And so it wasn't exactly 50-50, but let's just call it $35 billion in each bucket that I was

actively managing. And the treasury bucket was what was important for the Bitcoin journey because obviously in the United States, in the world, there is a debt crisis. I think one of the most important drivers of Bitcoin's success is the debasement trade of fiat currencies. And as I was talking to the Treasury and the Fed, before I was a Bitcoin, it just became so clear there was no fixing this debt crisis. There was no stopping the train. Name your analogy that you want to use. But whether you're a Republican or a Democrat in the United States, you cannot get elected on a fiscal conservative agenda. You just can't do it. And so the incentives in DC, and incentives matter a lot

and matter a lot in our space as well, incentives drive behavior. And the incentives were just bad. And so when you would ask the tough questions, there was no answer. And so it just became clear as a large investor that, you know, it became very, I would say, unsatisfying to work in fixed income into a debt crisis that when I first took the job, I didn't really realize what I was walking into, but it became a challenge at the company. There was other challenges around mandates that I, that I didn't like and politicization working for effectively a government entity and a pension, so I ended up believing and going to strive. But that treasury process and managing a large Treasury portfolio ultimately led me to Bitcoin after rejecting it for several years in late

2016, early 2017. I put pretty much my entire net worth into Bitcoin. It gave me financial freedom. Oh, no, of us. And I was the only bitcoiner on both the fixed income and the equity desk at CalPERS. And yeah, like one of us, you know, you talk about Bitcoin. And everybody thought it's crazy, but they actually would listen. So I would show them me buying Bitcoin and just was fascinating in 2017 to be to showing people that and a lot of debate in my late in my career there actually looked into Bitcoin for the pension just like how do you maximize risk adjuster returns if you were to add Bitcoin I think their view at the time was that it was too small of an asset when you manage half a trillion dollars just the even now today with

Bitcoin under a two trillion dollar market cap for an allocation at a pension fund. that's now getting close to a trillion dollars, they would probably want to see Bitcoin even bigger. And so that's where the bigger it gets, it actually does make it more likely for some of these institutions to adopt risk in that direction. I've got a lot of questions on that, all of that. Fascinating story, though. So when you say you were talking to the Fed and they weren't willing to do anything about the debt problem, and obviously politically it's not a popular decision, they tried to do it with

Doge, it didn't work. They know the problem's there, though, right? Like everyone in D.C., everyone at the Fed, they know the problem exists. They absolutely know the problem exists. And some people in D.C. actually want to fix it. I think they earnestly do. The problem becomes, if you actually fix it, what are you fixing? What do you have to do?

And so it's actually the fixing, it's more at the Treasury. The Treasury manages the finances with Congress. And then the Fed, you know, they manage inflation technically. But then, you know, basically they, I think they're most important. objective is to make sure the Treasury markets actually don't collapse. Even though it's not an official part of their mandate, I think it's the most important part, especially. But I was talking to both of them, but I think the Treasury part was more interesting there.

So Treasury, they are not elected officials. They are appointed typically by the president. The president elects Scott Bassett to run the Treasury. Then there's career people within Treasury. But then Treasury ultimately does the budget that Congress approves. right and so that's kind of how the whole thing works and so treasury itself doesn't even have the ability to cut spending right it comes from congress to give them a mandate and and so i think scott ascent would love to cut spending he doesn't have the ability i think he might be the smartest

head of treasury at least in my lifetime that we've seen but it doesn't it's not really the person and i think to your point on doge evan musk is the best builder in the world in a generation he couldn't fix the problem because it's structural. He also seems like the person that would be willing and able to make hard decisions. He seemed like a perfect fit for the job and still nothing really happened. Yeah. And I was very optimistic in the sense when Doge started that if there was a way to fix the problem, putting the smartest people in the world in DC in those seats with that mandate was the best chance we're going to see and you saw how quickly it crumbled. Yeah. And so that should give you so much confidence as a bitcoiner that this problem will not be solved. I mean, unfortunately for the United

States, but I guess fortunately, if you're a, if you see the problem, you can invest in in the solution. Yeah. And obviously, Vivek was a part of that originally, who's the founder of your company. Have you ever had these conversations with him? Oh, absolutely. So when Strive was founded in 2022, we were not a Bitcoin company. We were pushing back against ESG, against DEI, pushing for capitalism for meritocracy. And that was a mandate. that still is very important to me, but I think is in a lot of ways solved. But in the early days, so my wife was actually part of the day one team at Strive. And the long story short is because it's actually interesting context is we were working on the same idea independently as Strive.

And we were talking to certain investors, certain potential business partners. And one of those potential business partners introduced us to Vivek and just like, hey, he's working on the same idea. And so we joined the company, joined forces. And she was running marketing in the early days. She's now raising our family. And so she was helping get Vivek out there on the talking tour. And we were Bitcoiners. And he was not a Bitcoiner at the time.

And we're like, hey, we think the Bitcoin community will love this pro-freedom, pro-capitalism message. You should go talk about strive to different people, to Marty Bent. to name your podcaster. And initially it's like, I don't know. I'll try it once. And so I think his first one was Marty Bent. And he went on there. And what's great about the Vake's Bitcoin journey.

And I think we were pushing him out there into it was that when he first did it, it's very public. He's like, ah, Bitcoin's not really for me. But the government shouldn't shut you guys down. You guys should be able to compete. But that's kind of,

which I think is a principled freedom stance. Yeah. But also like you don't have to lie. But then what happened is that we were talking to him. We were helping him, hey, here's what you should know about Bitcoin before you go on these podcasts. And then he would go talk to some of the smartest bitcoins in the world. And he very publicly got orange-billed. And it was, it's authentic.

It's all like on the record of him doing that. And so then when he ran for president in 2023, he became the first presidential candidate to speak at a Bitcoin conference. In 2024, when Trump was running for president, Trump called out, a few people on stage and why he was there and Vivek was one of them. And so that in a roundabout way, it directly contributed to the United States taking a more friendly stance on on Bitcoin through strive. Obviously, there was other people as well, but I think we directly played a role on that. That's very cool. You know, one of my best predictions ever, Vivek came on the podcast, you know, in its previous iteration when Pete was still running it in

probably 2022 maybe. He came out to Nashville and we did a show and after we recorded, me and Pete just walked over to the coffee shop. And on the way, I was like, he's going to run for president. And then it was maybe six weeks later he announced he was running. That was my best prediction. I'm still claiming that one. That is a great one. Internally at Strive in early 2022, I think everyone thought he would run for president. I don't think people knew he would be that cycle, but I think it was clearly his passion. Yeah. And he has a passion, which is truly great because I think sometimes people come down on

a billionaire for running for office. And it is one of the worst financial decisions that you could make to take what I would say is a generational talent in building businesses out of the game of building businesses and in to try to fix public policy. He has a passion for it. And I mean, I'm looking at it. I'm like, you are an equivalent to a all-star Hall of Fame or a Kobe Bryant type of talent in building businesses. And you're walking away in your prime to go do politics.

I was like, that's not for me. But I appreciate that because it is, he really does care about that. And it is obviously a very tough system to fix as we saw as an example with Doge. Yeah, for sure. Okay. So we can't not talk about the bond market, given your background. Give me your overarching view on the position it's in right now, because yields are high, the Treasury has stepped in with this, not yield curve control, yield curve control.

What's your sort of overarching view on everything that's happening? The Treasury and the Fed will have to step in substantially more. And so I guess to start with where are we right now, the Fed owns over 25% of the entire supply of long-in bonds. And I do think the long end is the point, the place that's the place that's the way that it's more interesting to talk about right now, especially in an era of fiscal dominance, which just means the fiscal situation, the debt crisis, matters more than inflation. Yeah.

Can I just ask you a question on that before we carry on? You say it owns over 25% of the long end now. What would that be, give me some context. Say you go back to 2017. What would that have been then? 2017, it likely would have been not a ton different, but in the early era of QE. So QE basically played out through the great financial crisis. but it effectively been nothing.

Okay. Right. And then you have QE1, QE2, COVID, and it just kind of continues to go up. But then the Treasury is also issuing more debt. And so this era of post-GFC is when it rose substantially. Yeah. And so that's the important part.

And obviously the debt crisis continues to get worse that does not ever go down. And so you think about this, and sometimes it's helpful to bring this back to the concept of a company, imagine a 25% owner of a company. That is your majority owner. It is the biggest owner. If a 25% owner liquidated, it would crash the price of the stock unless you had someone that was interested to buy it at that price. And so there is already substantial intervention in the rate of U.S. government debt. And I think this gets into, I think, an important question where you

look at not only the fact that the debt GDP level in the United States is over 100%, which is pretty common. And it's also very common in other countries for massive intervention. But if you took out intervention, you looked at the debt to GDP level, and then you looked at the trajectory of growth of debt, right, not just the current level, but where it's growing. And I think when you combine all those, most models would say the fair market rate of the 10-year treasury is over 10%. I don't think we'll ever get there. I don't think they will not let that happen, but it, but it's just important to think about intervention. How much is intervention actually bringing rates down? So right now, the 10-year treasury yesterday passed 5.25. We actually, I think this is actually

really helpful for the context running a Bitcoin treasury strategy, but Strife has an asset management business. One of our funds is a bond fund. It's a total return bond fund. It's what I used to do. And I still run the highest level decisions of that. And I think, it's like it's almost like exercise that keeps me sharp and also the Bitcoin Treasury strategy. Yeah. But and I made a long form post about this with regards to Bitcoin about rates, but yesterday that fund for the first time in its history, what started to go long duration. So it bought 10 year treasury futures when it passed 5.25%. And it would potentially increase that duration long position up to like 6% on the 10 years.

So basically, like, it just kind of lagged in like a small leg into it. But if rates go higher, it will continue to leg in more. And so you might say, well, is that because you think it's reaching the highest the yield, they're going to allow the yield to get? Yes. So it's important that you said the highest they will allow it to get. Well, yeah, can I, I do want to, I don't want to just like derail the conversation from there.

But I do want to ask, like, why can't it get to 10%? I know that's a big number, but we were over 10% in like the 70s, right? Like, why couldn't they do that now? What breaks? This show is brought to you by our lead sponsor, Ledin. I've taken out multiple Bitcoin back loans with Ledden, and I think they're an awesome company. So if you do need dollars for a business expense, a tax bill,

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built his own life this way and brings that personal experience to helping others do the same. If you've ever thought about building your own plan B, download their free report at expatmoney.com forward slash WBD. That's expatmoney.com slash WBD for your free report. So what breaks is the level of debt to GDP and the fact that they have no ability to roll back entitlements. They have no ability to roll back spending. And so here's the things that don't break right now, which is it is important. So right now we have an AI boom. Yeah.

There is a lot of investment in data centers. And that capital is actually not sensitive to interest rates. And so if interest rates goes up, basically these barge companies, like, I don't care. Let's build the data center. We want capital. You know, give me the capital. I'll pay 10 percent. I'll pay 12 percent.

Because they just need to put computer, compute online right now. Yes. Yes. And so that part doesn't break down. So I do not think that if rates go up, we go into a recession. But because of the debt level of the United States, the United States itself cannot support the debt level. So it's not the economy. It's the country and it's the fiscal dominance situation.

The fiscal situation is the most important thing for the Fed and for the Treasury. And so what, and we saw this last week where the bond auctions were one of the weakest bond auctions in several years. I mean, there was very little demand for treasuries. Yields are moving higher. And then you've seen actions from Bessent, so Bacent saying, I am the house. And he has basically a trillion dollars to buy back bonds if he wanted to. But he started with $6 billion, which is $6 billion of effectively a trillion dollar pot of money is a very small amount. But he said, I will use this if I have to.

And then interestingly, I was just going to say, I saw a tweet from Luke Groman when Bessent came out and said that saying, anyone that tells you they're the house, they're not the house. I think he's implying that the market's really the house. The market is the house. I've said, you know, I believe percent. And what I mean by I believe him is I think that he will deploy all of that money. The question becomes how much pain is he willing to tolerate? And I think something interesting happened yesterday that I think has not been really covered

as much in the Bitcoin community yet. But yesterday, a long time head of macro at Jeffrey, his name is David Zerber. I don't know if you've heard of them or not. No. But someone that in bond space, bond nerds listen to him a lot. And so, you know, I, I, you know, he used to come into CalPERS a good amount and all of the head pms watch what he would say very, very carefully. And he actually coined the term bonfire in the era of QE, which, and he was very supportive

of it. It wasn't a critical message. It was, and he was talking about different countries and basically a soft, default by making the value of the currency less and effectively doing a bond fire, you're not defaulting, but it's debasement. And he was a big proponent of that. And he just got put in basically as the second person under percent. Interesting.

Yesterday. And I found that fascinating because you have percent saying I'm the house. You have someone that is on the record historically, not only calling, but supporting basically currency devaluation. going to the Treasury, and I think he's very smart. I think that's good for the Treasury. Unfortunately, I think it's the best option that they have. But you think about that and you pull that back to Bitcoin,

what does that mean if someone goes there that you know that's their view of the world? You have the cent saying the house. What do you think they're going to do? They're going to buy back bonds. They're going to try to effectively reduce the debt load by making the currency less valuable. And it's soft to follow. Buy Bitcoin.

So when we say they're not going to allow it to go over 6% or whatever that number ends up being, how are they going to stop it? What tools will they use? Do you think we'll have a very explicit yield curve control in the US? I think we can get there. You see what they're doing right now. So what are they doing? They're starting small.

And I think they're seeing what they have to do. Yep. Right? So they would not want to go to explicit yield control unless it was a last option. I think they will take steps. So steps would be increasing the size. And I think because he's already signaled, I think he's going to have to deploy the full size.

The market is in control. I think the question becomes... In terms of like treasury buybacks. Treasury buybacks. And help me understand this. Because are they buying back sort of off the run long term debt that's not... Or are they buying like from auction brand new debt? Off the run.

But my view is it doesn't overly matter when you look into a lot of institution. So as an example, CalPERS, which would be similar to a lot of others, for their treasury portfolio, they own a lot of the on the runs, but they own a lot of the off the runs as well. They really just own a lot of duration, a lot of long end debt. And so, yes, you're supporting liquidity by buying the off the runs, but you're really just reducing the amount of long-term debt. And then you're pushing it in the front end where the front end, the Fed actually does have control of the actual rate, right? So I think that's what's going to happen is that they're going to push more long

into the Fed's levels. And then over time, I think the Fed will bring that down and that they won't potentially actually need to control the long end because they'll just push more and more financing to the short end where the Fed can control it. Okay. So before Bessent came in, he was very critical of Yellen for issuing all the debt at the short end. And he's come in and done the same thing, essentially, which, like, the only thing you can really derive from that is that they've got no other option. Is term dead, like, is long-term

debt dead in the sense that obviously you have to have a take on the debasement rate, inflation, but also when you add, like, AI into the mix, how are you meant to know what the world looks like in 30 years, therefore take the risk of buying 30-year debt? Yeah, I think that... Does that make sense to question? It does make sense. And I think that your framing was right in the sense that in 2020, I thought the United States should be doing 100-year bonds. But the reality is, and it's easy sometimes on the outside to play quarterback to be, you know, you should be doing this, you should be doing that. And when we hear this all the time as a company, it's like, well, I know things you don't know. And probably what Yellen knew was there is no buyer.

Like, yes, I would love to sell trillion dollars of 100 year debt, but you don't see that there's no buyer. And I think that's probably the lesson that Besson's learning. Is it a surprise that there was no buyer then, though, when rates were significantly lower, I mean, there was still inflation, but is it surprised that there was no buyer at that point? What does that signal about the market? I think it signals that it's, that it's weak, that there's a, that when you know that there's a, that when you know that trajectory of your own situation and so like you could even in a very different way you can compare this to what we're doing where we want to have a high amplification ratio which means we want to issue a bunch of preferred which is obviously not debt but it's financing and and we have to look into

the market to say how big how much demand do we see and so if they're looking at this and they see a very bleak outlook for demand then maybe they can issue the next 10 million or 50 million but maybe not the next billion or trillion for them, right? And so then they have to, you have to look at the bigger picture of where things are going. And so they then have to move, move it to the short end. And I do think that in a sense, like, you know, to come, you asked about yield care control, and I think this is important because I'm going to go back to QE. So in the era of QE, the Fed and the Treasury, and this was part of what made me a bit-comer, is I would sit with them, not with a microphone, but like this and say, you're doing, you're doing money printing.

You're, and say, no, we're not printing money. And they would give you this long technical explanation that was true. But from a first principled perspective, the Treasury was issuing debt. And within a few days, the Fed had bought the debt. Yeah. And so it's like, clearly you're, you are printing money to buy this debt. And I think if the, if the Treasury or the Fed, but if the Treasury is buying back long-term debt to then issue short-term debt where the Fed does control explicitly the rate, it's effectively

your yield curve control, but it will never be called yield curve control. And I think that's probably the way this plays out. And so it'll probably look like yield curve control. It'll probably smell like it, but it very likely will never actually be explicit yield curve control, just like they did with Huey. Yeah, it's funny. Like, I've had conversations with Jeff Snyder over the years, and he always will, like, he always say that this isn't actually money printing. And maybe, like, technically that's correct. But it's semantics. Like, the reality is that they're creating new money to, to buy these debt, this debt. Yes. Does whatever happens next in terms of how the government try and protect markets and the economy, is it going to come from the Treasury,

not the Fed? Is it, like, with the fiscal dominance, is the Treasury now at the driving seat? they would like that to be true. Okay. And so I think there's a a reasonable chance that if the Treasury deploys the full TGA trillion dollars, that that could be enough

for the next couple of years. But there's not another trillion dollars behind that. It's a, it kind of eventually ends. But I guess what the Treasury could do, the Treasury could issue more and more short-term debt that the Fed controls the rate on, and then kind of pump up the amount of money they have to basically do bond buybacks and do a twist operation at the Treasury that is possible.

To me, I view it is in times of crisis, I kind of view the Treasury and the Fed is the same thing. In times where things are working, they are two distinct bodies with different mandates, one's independent, one's not independent, but it's kind of the... Independent. Yeah, exactly. Exactly. They're the same thing. Yeah. So it's with the Treasury General account, there's a trillion dollars there at the moment, they're likely going to spend all of that. Where does that money initially come from

and how does the Treasury General account get filled back up? So money's fungible. They would probably tell you it comes from tax receipts or something along those lines. but we know that we have a situation where the government is spending more than it actually gets in. And so whether it comes, technically came from issuing bonds that they just held back a little bit of cash, whether it came from tax receipts because they're issuing bonds to pay their expenses, I don't think it really matters. They found a way to get a trillion dollars in the bank account. And I think that's true for any company, any government, that money is fungible.

but they have a trillion dollars and they could top it up by issuing more debt, but clearly they will not be topping it up through tax receipts. Yeah, if that's clear. So the kind of long and short of it is we're just going to have more and more intervention going forward in one way or another. It is a ball rolling down a hill that picks up steam, that unless you fix the debt crisis, the spending. And I am very optimistic on what AI can do for the.

economy for abundance. I'm not optimistic on what it will do for tax receipts. Okay, that's worth getting into because a lot of people will talk about AI as the kind of, the potential savior here in the sense that they can maybe grow their way out of debt with this. Why don't you think that's the case? I'll start with saying, I do think that we should be trying to grow our way out of it. Yeah. There is not a good option. The best option would be fiscal, conservative, rollback entitlement, just never going to happen. But this is not going to happen. So you have to live in the world that exists, not the world that you wish would exist, which I think sometimes people spend too much time on the world they wish exists.

And that's, you know, I guess fun to pontificate about, but it just, it's not reality. So with reality, the best solution is to try to grow your way out of it. That is the rational solution. So I am fully supportive of Bessence saying that, doing that being the salesman to go out and try to sell treasury debt as an American. He also knows there's no way that's going to happen. He knows. Definitely he knows.

He's one of the smartest guys probably that's ever been in the seat. He knows. But it's the best solution. And so if you look at like what does failure look like there, which I do think it'll be failure. And I'll get to why. Failure there looks like you went all in on AI. You created hopefully a world of abundance. You drove technology forward for the benefit of people.

And the dollar potentially is the release valid because it didn't generate the tax receipts you wanted. I would rather have that be the world in five years than if you can't cut back entitlements, we don't do anything. We don't have technological innovation and it still breaks. I would say lean into innovation and make the world, make the U.S. the best you can before it breaks. Yeah. Sounds like the best option to me. But you think about what drives tax receipts, ultimately what drives tax receipts is corporate profits.

And what I'm not seeing is how do we, I mean, when you look at the debt crisis, how do you 2x, 5x, 10x corporate profits? What is the actual driver of that? And I think the era of abundance in AI is actually, it's not even clear that some of these frontier models will have massive profits. They're offering it. They're operating at massive losses right now. Open source, which hopefully never gets banned in the country, is.

whatever, six months a year, maybe it'll be a week. I don't know, just a little bit behind, but at what point does that also become good enough for me, you know? And that distance behind is shrinking rapidly. Like the open source models are very close now. And so will frontier models be potentially a very profitable business? I think yes. But will they solve the debt crisis? I don't, I don't see that. And then this era of abundance, you think about a lot of corporate modes. a lot of corporate modes are going to be really challenged. And so what drives- Already have been in a lot of cases.

Yeah. And so, and then you think about jobs. I think the honest truth is that AI will challenge many jobs. I actually, and this will be, I'll tell you something I think can be controversial for some, maybe not for bitcoins,

but I actually think that we have too many jobs in this country. And this is a fundamental life view. that I think that if you were to go back 50 years, 100 years, what you would find is that typically there's one person in the household that makes money. One person might stay home. They raise a family. And that model does not work anymore, actually, because people can afford it. And so now both parents have to work, and then they have to delay having kids.

And I don't think that that is, and we have to train people growing up that go to college, both you're going to work, both, you know. And I think that's not because that's what most. people. Some people want it and even freedom, but I don't think that's what most people want. It's definitely not what most people want. In my experience, at least, like, so we're in that situation and I'm grateful, but really it's Bitcoin that's allowed us to be in that situation. We have, like we've got a young kid and another on the way soon, but all of our friends who are in the same situation, generally, apart from one of them, like that all, both parents are working,

going back to work, you know, six months, three months after having a kid, which is really hard. And like, realistically, all of them would rather stay at home. and raise their kid. Like, who's better to raise the kid than the mother or the father, however the family works. But people definitely want that. They just can't achieve it right now. And if AI led to huge abundance and made everyone's cost less, like I think most families would pick that. Yeah, I think so. And so then that means what does that mean for the economy? That means less people working. Because they're able to achieve what they need to live a life that is acceptable to them. And I actually think, so a lot of this is, in a sense, this is, I think,

actually a positive part of where I think this could go. I think we're talking a lot about doom and failure of the dollar, the debt crisis and what happens if the dollar fails, well, if we actually try to grow our way out of this and we move to this era of cheap everything, abundance, I don't actually think the failure of the dollar will be painful in a sense, but like I don't think that's the most scary thing if we could actually move to that future. I think it's actually more of a right now we are living in the dark times, a lot of our generation. Obviously, now running a public company financially, I'm never been doing better, but I didn't grow up in wealth. And pretty much all my friends, I mean, most both people work, the mom and the dad work. And they have to,

you know, have someone help raise their kids, but it's not the ideal situation. And most people, my friends, it's hard to own a house. Housing's very expensive. Yeah. That I would rather move to this era of abundance. And even if people weren't Bitcoiners, I think they would say, give me that future. And I don't really have very many dollars to begin with. So if the dollar became worthless, I'd like care. But the tradeoff in that scenario is that the dollar becomes worthless. There's no good answer, really.

There's no good answer. But you think that's a better outcome. It's a better. So right now, you hear a lot of talk about the K-shaped economy, right? The average person is not doing well. The elites are doing really well. And it's so clear. Like you walk around, it's so clear that that exists.

Yeah, it's so clear, so obvious, that I think that that future will be a substantially better future for the average person. It may not be a better future for the average billionaire, but I think they'll be fine. Yes, I think they'll be fine. It's kind of, I don't know whether that's bleak or not, because it sounds like a better future, but I just, I wonder what, what, how? happens in both the economy and society if the dollar does significantly devalue? Yeah. And I have not called actually for the failure of the dollar. What I've called for publicly is a massively devalued dollar. So that's core to our thesis on Bitcoin is that we actually think that over the course of the next, call it three to seven years, that we will see the biggest

decline in the value of the dollar as measured through the DXY index in Bitcoin's history. Not in historical history. It might go to the lowest levels, but if you look at the dollar over the course of the last 50 years or so, what you'll find is that the dollar's actually structurally been getting weaker on average. And then since the great financial crisis in the era of Bitcoin, it's generally been flat to moving up. But in Bitcoin bull markets, it's kind of gone down within that trend in Bitcoin's history. But then if you zoom out, it's actually being devalued over time. And if you think about what the president wants, President of the United States, Trump wants, what Jadie Vance wants, what Bessent wants, I think a lot of them have called for a weaker dollar. And so the structural forces would support a weaker dollar.

They want a weaker dollar. They want to lean into growth. And so I don't see why we won't get the weaker dollar, which kind of means in a sense you actually have the president and the treasury working for Bitcoin because they're working for a weaker dollar. because they're working for a weaker dollar and that's one of the strongest determinants of where Bitcoin goes. Every Bitcoiner eventually has to answer one question. If something happened to me,

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And so you see Bessent saying, I will use the full Treasury General account. I'm the house. I'm blah, blah, blah. But then he hasn't done enough. And so yields are moving higher. So the dollar is strengthened with that. At some point, if that thesis, if they can't take the pain anymore and whether I'm right, that call it like they can't let it go above six, but even if they let it go to seven,

but if they ultimately step in, the trade that I'm talking about on the fixed income side will still play out fine. We're just saying this will be a higher than average rate because of the pain that we don't think they'll take and because AI is likely going to be a deflationary force. So they'll ultimately bring rates down that when they take that action, the dollar will move lower. But until they take that action, it actually the dollar should be moving higher, rates will be moving higher. And what I think's been interesting is that Bitcoin's held up remarkably well through that. Yeah.

And I think that in part of, I mean, I was writing about this when the tenure was still like about 4.6 or so. And I was saying this is what I think is going to happen. Rates will move up higher, the dollar will move up higher. at some point they will reverse that, that will be the start of the real Bitcoin bull run. And right now, what I think's been encouraging for Bitcoin is that I think people are seeing that because if you don't see that and you just see rates moving higher, dollar moving higher, Bitcoin should be moving lower unless the markets are actually being forward-looking and saying, you know, Bitcoin may kind of struggle a little bit throughout this and be choppy,

but it's kind of getting pulled up for what they think might happen. Yeah. And I think Bitcoin did well when it started seeing the intervention. to from the Treasury. Like, I think the writing looks like it's on the wall. It's kind of a matter of when, not if. There's a few things that have happened recently, which is people have called for like oil if it got to, say, 120 or whatever it was. When the Iran conflict started, that was going to be the pain that they can't take. And yields getting above 5% was like the pain they can't take. And so far they've taken the pain and like nothing has significantly changed. What is the

level that you think, okay, that's it. They can't go higher from here. they have to step in and do something. So there is on a short-term basis no level that breaks them. It's just like on a first drive, there is no level that Bitcoin can go down that breaks us. We have no encumbered Bitcoin.

But there's clearly levels that if it goes down and then stays down there would be very hard for us as a company. And the same concept is true for the Treasury. And so the 10-year yield could go to 10% tomorrow doesn't break them, but they clearly can't sustain it. And so I think what is,

Part of the unknown and part of the part that you have to forecast is that Bessent clearly wants is willing to deploy that full trillion dollars. I think he knows he's going to have to. But there's a lot of stakeholders in that conversation. There's Congress that if he just deployed it too early, they'd be like, what are you doing? You didn't have to do that. Who knows what the president's influence is in on that decision? And so ultimately it will be the collective group when they say, okay, like,

we need you to step in. And there is no number that's too high. What we know is that I would say at the current level and above, it's a ticking clock. They cannot allow it to sit at that level for a sustained amount of time. And when I say sustained, what I really mean is several years. But because they're able to model it,

I think they will see it. And at some point, they're going to capitulate. And that's when it changed. So the government needs to go through some time pain. What happens if during the midterms, you know, the Republicans lose, which is like looking likely. Does that speed up how dissent and Trump now deal with this?

I don't know that it really matters. My general view in D.C. is it's just dysfunction. And unless you had D.C. with such a overwhelming majority of Republicans in power or Democrats in power, if it's 51, 49 in the Senate or something like that, it doesn't move the needle. We saw this with the struggles with clarity, that you're able to effectively play political games to kick the can down the road. And so if the Democrats win, I mean, they're probably going to start to try to investigate Trump on who knows what. And if you had a Democrat president, Republican Congress, they would start to

investigate whatever the Democratic president will do. And I just don't think that there is there is an urgency until things break. But I think that they do know that you can't support rates at this level. And so I think they'll ultimately bless that's taking action. By Bitcoin. Yes. What do you think is going to be the sort of near-term projection for inflation? Because I had a show with Lin-olden recently, and she was talking about how rates going higher can also be inflationary. So they are in the sense that they increase the cost of capital. And you have a situation, especially with AI, in the data centers,

where they're not sensitive to because they see this. So they're just going to keep spending. And so that will increase kind of the velocity of cost increases across the economy. And so that kind of gets into the challenge for the Fed. Is they, in an era, and I think when does this better than anybody, is in an era of fiscal dominance. If you raise interest rates, it actually causes inflation. And if you lower them, it probably doesn't have a lot of impact on inflation. And so what's the optimal solution? Well, it is to realize that and to stop raising rates. But the Fed, I think, if that's the stance that

they take, the whole model that they've tried to build trust on breaks. Right. Yeah. Right. And so I see the challenge for them. It's like they probably, at least some of them probably see that. I think some of them are probably too academic. They may, they may not be seeing it yet. But, but I think that is the challenge. And, and it will be a major trust breakdown. And so I think when there is a major trust breakdown at these large institutions, they'll try to do it in a way, just like they did with Huey. It's not money printing. It's not yield curve control. But it is. To try to keep the trust up in their institutions.

It's, like when you hear this, it makes me want to literally go on my phone right now and buy more Bitcoin. I think I might have some cash left. But do you think we get to a point in the next couple of years where Bitcoin does become the fastest horse again? Because over the last few, it's definitely not been. AI has dominated gold, even outperform Bitcoin for a period of time. Bitcoin's looking strong now. But do you think we get a real growth in Bitcoin again in the next few years? I really do. And I'll say that because obviously a lot of Bitcoin bulls, would always say that. I generally do not go out publicly with a create like a very high Bitcoin bull target. I'm kind of more in the camp of I think that it's going to outpace monetary debasement.

I do think generally it would be the fastest horse. And I generally kind of underwrite around a 30% cagger, but sometimes even like a 20% cagger when you zoom out. But right now with everything that we talked about and you keep saying makes me just want to buy Bitcoin, that is our internal house view as well, that when you see the potential and the need for intervention and long-term rates that maybe happens this year, maybe it's next year, probably not beyond that. It's hard to see it going beyond that. But sometime, I would say, in the next 18 months, you see real meaningful intervention. You see the dollar become the release valve explicitly. It's hard for me not to think that this Bitcoin bull market that I think we will be entering into over the course of the next

18 months will be substantially better than the one we saw in 2024, 2025. And I think that was a very disappointing bull market for any Bitcoin bull. I mean, Bitcoin did not break out to new all-time highs versus gold. It basically got to the previous level that it had in the 2021 bull market, and then it fell to break out. And so the fastest horse theory for Bitcoin did not play out. And Bitcoin should be the fastest source. It's an emerging money. It's the best form of money. It's the best form of we've ever seen. And I think as as Bitcoin bulls, how could we not authentically say that if it's not the fastest horse versus gold that in a sense our thesis was incorrect? Yeah. That's just that's just the truth. And I think that's the truth of the last bull market. But I think some of the

game theory in Bitcoin and in the hunt for scarce assets is such that there's just substantially less Bitcoin. There's less supply of Bitcoin into the future than there is a gold. I do think that technology puts some pressure on potential inflation in gold over the course of the next few decades. And I think that trust in Bitcoin is rising. And I think from a US perspective, I think the US is actually incentivized to push Bitcoin over gold because most of the gold has moved across the world. China been stacking heavily. Yes. And a lot more of the Bitcoin is in the United States. And so I think the number one goal would be. preserve the dollars as long as you can, that makes sense. If that fails, what's the best solution?

In the U.S., it's Bitcoin. In China, it probably is gold. And that's not just because they're a communist nation or where a capitalist nation. Where does the actual capital sit in each country? And I think the U.S. is Bitcoin. And it's not just like the number of Bitcoin held in the U.S., which I would imagine is the highest anywhere in the world. But it's also where all the big Bitcoin companies are. It is where the U.S. has the most to gain. Obviously, modeling Bitcoin is really important for your company. Do you think the idea of cycles is over? Over maybe too strong of a statement, but I do think that right now, we are more in what I would coin a super cycle.

But it's important to how to define that, right? Like, we can talk about all these different concepts and terminologies in our space and the nuance and the conversation is actually critically important. And so I've always viewed a super cycle as a cycle. where basically you have 30 to 50% drawdowns, not 80% drawdowns. And this bare market, we saw basically a 50% drawdown. Yeah, it was a very mild bare market for Bitcoin. Obviously for many companies that levered Bitcoin, you know, maybe not, but like... That's their problem, not Bitcoin's problem.

For Bitcoin, it doesn't care, right? So Bitcoin, it was a very mild bare market. It was a very emotionally taxing bare market for OG bitcoins with self-custody and vulnerability. So it was a emotionally challenging one, but from a return perspective, it was very mild. And ultimately,

that's from like a super cycle perspective, what matters. And so if we did have a mild bear market, that would be, and then we're moving into potentially the best macro conditions or one of the best macro conditions Bitcoin's ever seen.

Which means one of the worst macro conditions. Yeah, one of the worst macro conditions for the world. But right, that's what, Bitcoin is. It's an opt-out from the system. It's not, it's understanding the world that exists, not the world you wish that existed and taking advantage it for your own situation, your own family, right? Sovereignty. And so I do think that that's the situation we're in.

And so it would break down the theory of four-year cycles. I think the four-year cycles, partially was driven by the havings, which obviously every having, the amount that it decreases, just matters less and less. That's just the, the math, but then it also is driven by macro and business cycles, which also have tended to run in Bitcoin's history and basically four-year cycles when you look at financial conditions and monetary conditions. And that doesn't have to be the case. And so I think that, one, the fiscal situation, but two, the era of AI that we're entering into,

the growth era, I think they both support less of what we've seen from a four-year cycle perspective before, which does make me very bullish that Bitcoin could do really well for the next decade or two. Although our thesis on like a way of a thesis on like a 50% Bitcoin Cagger through 2030, which effectively would be one year over an average four year cycle. But I like to give myself a little bit more time to be right in projections, which is why our focus is on, And I think we just got through a bare market. Everyone's concerned about cost to capital, blah, blah, blah, all these, you know, how do you do this? And a bull market, it's, can you have a high amplification ratio and can you sustain it?

And I think that's going to, it's moving from fear to greed. And right now we're, you know, still at very low bit of coin prices and people are, you know, they have PTSD and those things. But I think we're going to start to move towards the greed area, which will have a mindset shift in what it means to be successful in our space. Yeah, I think, so you obviously mentioned. Bitcoin only felt 50% this cycle, this bare market. I think people are underestimating how important that is. The difference between 50 and 80% is once it's dropped 50%, you drop another 50%. I've said that over and over again, but I don't know if everyone understands how big the difference is. You obviously speak to a lot of institutions with your business. Are they seeing

that as a real game changer and looking at Bitcoin differently now? They are. And I think that what's interesting is that Bitcoin dropped 50%. It still dropped to its 200 week moving average. And so part of that was because you had a pretty unattractive bull market. So Bitcoin didn't go up as high. And so it didn't have to drop as far to get to its 200 week moving average, right? And so you had a mania or less of a mania, so less of a need for a correction. And I do think that part of that was the institutionalization of Bitcoin.

But you do have, I think, long-term allocators that viewed Bitcoin at 200-week moving average as attractive and started buying the dip. I think you – and so I think that we saw that. I think we also saw macro conditions start to change and give more reason to be optimistic about Bitcoin into the coming years. And you're starting to see the momentum build towards optimism around Bitcoin. but Bitcoin's still at 84,000, right? It's not still pretty far off of its all-time high. And importantly, it's like even if you look at as an example, our 50% cagger for Bitcoin, which will not be linear. If it was a 50% cagger, you're basically talking about Bitcoin being back at its all-time high late next year.

And I think sometimes what I think happens in the space is people think too short-term. They get two-year for a little-forica, maybe, and this could happen, but Bitcoin's going to go back to its all-time high this year. year. Could happen. I have no reason to believe it will happen or won't happen. But then it's like, oh, well, 50% all-time highs up at the end of 2027. Oh, that's too bearish. But then, but then you zoom out and said, I say, I think Bitcoin might be 500K by the end of 2030. And I think the average is like, that's actually higher than people would think because they're trying to think diminishing returns. Maybe Bitcoin would only go up to 250K over the course of the next few years. And I think that the short term versus long-term nature, just compounding.

People struggle with compounding. They think too much in the short-term and less on the zoom out. I think you're probably describing me. Because I don't think we'll probably get all-time highs this year. And the next year, I could believe that. But then 500K by 2030 seems high. Like, I'm going to take it. I hope it does.

Like, it doesn't change how I behave. But it seems high. But I hope you're right. Do you think it's important that Bitcoin decouples. from things like the NASDAQ. And it looks like it has done to a degree so far. But again, when you talk to institutions, is that a problem for them if it's just behaving exactly like the NASDAQ?

It isn't if they actually are underwriting of both uses. And so when you look at, so institutions think differently than Strive. So Strive is all in. We're talking about maximizing, amplifying, focused on total returns. And institutions tend to think about risk-adjusted returns. So they're thinking about modern portfolio theory. This is what I did when I was at CalPERS.

I was on a stage yesterday with Rick Edelman, one of the largest RAs in history, and, you know, putting Bitcoin in a model and how much Bitcoin is the optimal amount of Bitcoin to maximize risk-adjusted returns. And Rick's, I think, started came out with a recommendation of 10 to 40% for Bitcoin for a lot of investors. And that's very different than a lot of advisors that might focus on maybe a 1% or a 3%, 5% allocation, which I think you hear a lot from advisors. And what's interesting is getting the math on that. And I've done all the math on this. And so what happens is that if you don't believe in Bitcoin, you haven't done the work, then you pretty much have to start

at like a 1 or 3, maybe 5% allocation because you can't handle the single asset volatility of Bitcoin. Yeah. You don't believe in it. So it crashes 50% and you one out, even if the whole portfolio would do better with a 10 or 40% allocation because you can own less risk because your risk is in Bitcoin. Rick just says, if you want to maximize risk adjuster returns, the mass has 10 to 40%. That's what it says. He's then out there trying to educate orange pill people and get people comfortable with that volatility. And why this matters is that ultimately from an institutional perspective, the more you educate yourself, the more you can actually move to what the mass says. And the less you do, you have to go based on emotions.

And ultimately, this goes back to is your goal to get off zero. And basically, which I think is kind of the BlackRock approach of which I do appreciate. And I actually do think it's the right approach because they have a broad base of clients that do not understand Bitcoin of just put it in your portfolio in a way that doesn't matter. Watch it. And then ultimately, if you're trying to maximize risk risk, gesture returns, effectively replace bonds with it, which is the 10 to 40 percent and you think about 40 percent in a 60, 40 portfolio. And then if you are a sicko that just has pure conviction in Bitcoin, then you either put your whole net worth in Bitcoin, which a lot of Bitcoiners do, or if you're like Strive, you're like, I actually want to amplify

Bitcoin's returns because I have even more confidence in that. And it really just comes down to conviction and the ability to concentrate versus diversify. Okay, so let's get into Strive. Well, maybe it's going to be obviously centered around Strive, but maybe it's going to be obviously centered around strive, but maybe treasury companies more broadly. So you're saying you're predicting a 50% CAGA by 2030 until 2030. Why should people own a treasury company over Bitcoin? So let's just assume that that bull thesis is true. And really actually, any bull thesis, if you're saying over about a 20% CAGA for Bitcoin, okay, that if anything above that's true, the number one determinant of total returns over the course of a bull market cycle will be the

amplification ratio. And so right now, strive is 50% amplified. And our, what does that mean? It's basically leverage. And so we use amplification to note that SATA is a preferred equity. It is not debt, which is very important for the downside. And so if you think about this as, and I don't mean this in like the sense that we are a rocket ship, but like if you think about it, like you're trying to build a rocket ship, what you want to do is you don't want the thing to blow up and you want to get to the destination, get to the moon or whatever. And so if you have debt and Bitcoin's volatility happens, you blow up. And we saw a few examples of that.

I think there were other examples that were extremely close to actually blowing up, but didn't blow up. And thankful for those companies that did not blow up. I'm glad they didn't blow up. But we were stated we do not encumber any Bitcoin, which is important. Bitcoin can go to a penny. It's kind of like the conversation earlier, how high could the U.S. Treasury go? If it goes as high as it needs to go, it doesn't really matter, but it just can't sustain at that level.

And so you're really thinking about more calculus, like area under a curve, how low could it go, how could it sustain? Where I actually would, I don't think this happens, but I would love for Bitcoin to make a new all-time low because what I think would have to happen for that to be true. I think if the treasury was too slow and the 10 year shot up to 10%. I think the dollar would go up. I think you would see Bitcoin make new all-time lows in that scenario. But then what would happen would be the mother of all interventions in the market, which would be the most bullish thing for Bitcoin ever. So it would be like a flush.

It would be like the COVID dip. Yeah, exactly. And so I don't think it happens. But if you could give me the scenario that I would actually want to happen, And even though it would not be fun for a few months, it's like, give me that scenario. Like bring it on. Let's do it because of the reaction function. So why own a treasury company?

If a treasury company is not very amplified and they don't have cash flow, then I don't think there's a lot of reason that I could see to own a treasury company. Because if you're not very amplified, you don't really have a levered return profile to Bitcoin. If you don't have some sort of a cash flow generator to buy more Bitcoin, then really your model is very dependent on a premium to be able to sell in a creative manner, which obviously is valuable to do when that exists. But I view that as more of like a cherry on top thing than a foundation to build a business. If you're underwriting a Bitcoin both these is, well, an institution, a corporation has access to financing the individuals do not have.

And I think this is very important for leverage concepts because I do think that there's a lot of Bitcoin companies that are really working hard to bring better terms to individuals. And I think that's a good thing. But it's very hard to do. It's very hard to get the underwriting for individuals. And so then they run the risk of being liquidated if Bitcoin goes down either in a single night or over the course of a month or two months. basically their ability to maintain and not blow up if Bitcoin goes down is very challenged to where our company, we have 18 months of dividend reserves, and then we also have a lot of Bitcoin, but if Bitcoin dropped to a penny, we could just say, you know what, we have 18 months of cash.

We'll pay it and we'll see what happens. And obviously, that's not going to happen. But just point being is that no individual could do that. And so then we have effectively a 50% amplification, which you could just think of as a leverage ratio, right? That if Bitcoin goes up, we are 50% levered exposure to Bitcoin. And so then the question then becomes, can a company maintain a reasonable degree of amplification if Bitcoin starts moving up? Because if Bitcoin doubles and we did nothing, the amplification ratio is going to half. Yeah.

Right. And so there's a, and so if Bitcoin goes to 500K, you also need the engine to be able to continue to issue and be at the size to be able to issue that and maintain a reasonable application ratio, which is why I'm very bullish on what we're doing, because we have the best liquidity, both on our common and on our preferred equity in the entire capital markets. I think we're the right size. And what I mean by the right size is that to get institutional investors, you need to be, you could be a little bit smaller than strive, but not a lot smaller than strive.

Otherwise, a lot of them is just too small for them to matter. And then if you're too big, it's not. that it's an impossible job, but you could be too big for the markets to actually be able to sell enough preferred equity or debt to actually maintain amplification as Bitcoin potentially moves to $500,000. And so, when I was at CalPERS, I managed $70 billion. I know what it's like to be the cruise ship, to be one of the largest investors in the space. And what it's like is when you're that big, when you're huge, you see a bunch of investment opportunities that are too small. for you.

And I saw that when I was at CalPITL. I mean, I outperform my index every single year while I was there. But I had to ignore a lot of the best opportunities because they were too small for my portfolio and I had to find things that were massively big. It's achievable. It's just a different game where we're big enough for institutions to care. We've built the liquidity. We have just over 50% amplification, which is for someone that can't be liquidated, the highest

amplification ratio in the space. So I think we're ideally situated, and I think the market has recognized that, which is why we have a leading premium in the space, is that we kind of have the engines humming. And we've actually bought Bitcoin throughout the entirety of the bear market. I mean, if you look at our common equity as an example, when we announced the strategy to now, we've outperformed Bitcoin, year to date, we've outperformed Bitcoin. And I think that is because of the ability to have that amplification ratio, to build trust, you know, bare markets are for, building and I think we've built the engine. So, you know, when you say you have no debt, you obviously have a lot of obligations in terms of paying the people that own SATA.

Is that almost semantics like the money printing thing we were talking about earlier, where it kind of behaves like debt even if it's not? So we actually intentionally put investor protections in SATA to make it as much like debt as we could without being debt. And so it's it's semantics, but it's important. because of the downside risk. And I think this is, you know, if you're in underwriting an investment thesis and say that it's preferred equity and preferred equity is a hybrid instrument. And what's important about a hybrid instrument in preferred equity is that

the terms of the hybrid instrument really matter actually because it's a spectrum. Something could be more equity like or it could be more debt like. So you could have no investor protections. You could have non-cumulative dividends and a very low dividend. It converts in to equity, that, you know, I don't know the exact number, that might be 99% like equity. You could have very strict investor protections that could make it 99% like debt. And so the details matter. You are. Obviously, this is a preferred equity, but are you on the furthest side towards debt possible?

We are very far towards the terms that that's like that. I mean, there could be additional terms that could make it even more like debt. But I would say on the spectrum, we're much more like debt than we're like equity. And so I'll get into some of those investor protections, which kind of give you a sense of why that would be true. And so let's say that Bitcoin dropped. Obviously, we're talking about the Bitcoin both pieces, which I think will be, cost of capital won't matter. All these things will matter less. But let's say the credit protections, Bitcoin drops.

We put in an investor protection that we cannot lower the interest rate on SATA. So if Bitcoin dropped to 40K and let's say SETA was struggling, we couldn't just say this was a failed experiment. Interest rates 13%. Now it's 12.75 and to basically just drop it down. And Stretch can do that, can't it? They could. Yeah. Obviously, Sailers done everything he can to bring Stretch to par, he's investing in billions. But technically from an investor perspective, he could do that.

We could not do that. We have to have the average price of SETA over $99 for the month to lower the interest rate. So we could not lower the interest rate. Another protection we have is not only are the interest payments cumulative if we stopped paying them, there's actually a ratchet up in the interest rate. So the amount that we would owe ratchets up if we stopped paying them. Additionally, if we stopped paying them for over a year, board seats are given to SETA investors. And then lastly, if we miss a single dividend payment for the year, zero bonuses are paid for anyone at the company.

And so we've tried to align incentives maximally that we, have investor protections that it would be maximally painful for us to not pay a dividend as a company. We could not, you know, we don't have the option to screw investors. And if you have cumulative dividends where the interest rates ratcheting up and there's a liquidation preference that's very painful. Those are very debt-like covenants that I put in there intentionally. And the reason I put in there intentionally is that my view is that we are underwriting a bull thesis on Bitcoin. And that bull thesis needs to be right. Otherwise, the entire structure of our

company is wrong. And so to underwrite risk and to say, I want to build trust with investors through our actions, I think we've done by maintaining cash reserves and all the actions that we've taken and we want to have a high amplification ratio, trust needs to be there. And I think that trust is there partially by, you know, that Bitcoin saying don't trust verify. We have verified. viable investor protections in SETA, but then our actions are also supportive. And I think that combination is why you've seen SADA trade really well, even though we've brought amplification ratio so high. In terms of the SETA investors, do you have any idea what percentage of them are retail versus

institutions? Yeah, probably a little bit higher percentage on institutions than STRC. And a lot of that's driven by the investor protections, which every... They came out and said it was 80, 20 retail. Is that right? They did. The data is really hard. So there's data when you start to get in there. So the data providers will lump some institutions and retail together, which we have a lot of experience looking into because of our ETF business. So there's some data integrity issues that not that anything is misleading. It's just some part of it's unknowable. So it's kind of an estimate. But then importantly, it's important to talk about what is retail actually. And this is very important. So of our retail investors, I can say confidently that the average retail investor is a multimillioner. Okay.

And I think that a lot of people think, oh, you're talking about the grandma that's investing $1,000. And when I'm talking about retail, because I have met so many of these people and they tell me how much they've invested in SETA, is that the average one is someone that's around retirement age or older, multimillionaire typically is looking for cash flow, has real estate investments, it's comparing. they see the debasement trade. They don't love the volatility of Bitcoin. They often haven't bought Bitcoin or own very little Bitcoin and are either selling their bonds

or they're selling sometimes real estate properties to buy SATA in the order of millions of dollars. And that's retail. And I think that there's this connotation that you're taking advantage of the grandma, the retail investor. And I'm like, we're invest, millionaires are an affluent millionaire

are investing in digital credit. And I definitely don't think you're taking advantage of anyone. Like, whoever wants to invest in this can. Like, I don't think there's any taking advantage here. But the reason I ask is, because if we're expecting, you know, again, to go back to your thesis, 50% Kaga on Bitcoin, why would anyone own SATA rather than own Bitcoin? Because I understand the volatility side of things, but position sizing fixes. I've seen you have a ton of debates with Parker Lewis about this.

And you probably know his arguments better than I do. Yeah. So the average person, even affluent person, is very fiat-minded. It's really that simple, that they would not underwrite a 50% category for Bitcoin. They would say, well, debasement's happening. I largely think Bitcoin is going to do well, but I'm 60 years old. I'm 50-year-old. I'm 70 years old.

Give me 13% cashful, and I can live a great life for the rest of my life. And I don't have to worry about the volatility. volatility about Bitcoin. I'll let you underwrite that risk. And if you're right, you can have the excess returns. And I can get my cash flow and move about my day. It's really that simple. And I think it's as Bitcoiners, and I'm very public about this. So I do not own SETA. I have many family members that actually are of retirement age that do own SETA. So it's not that I don't actually believe in SETA. I literally personally live this experience of these different investor profiles.

Is this just because you can stomach volatility more? You want the volatility. Yes, volatility. It literally gives me no heartache at all because I'm not worried about where Bitcoin goes over the course of years. I would not be able to sleep if we had a liquidation point, which is why we do not encumber our Bitcoin while we turn down those terms. But when you can actually zoom out and underwrite a multi-year thesis, which we can do

because of our cash reserves and the way we've structured the company, I sleep very well. with owning Bitcoin and Amplified Bitcoin exposure. So those are effectively the only two things that we own still because we obviously have a lot of common equity in strive on a personal basis and then also have Bitcoin. I basically own nothing else. And I sleep really well with that. But a lot of other people, like I'll give you an example that I hear very commonly.

I own people, multi-millionaire, they own one Bitcoin or two Bitcoin or five Bitcoin. and they just don't want more than that. And then they want cash flows to live their life. And so they actually are looking for Bitcoin minus returns, but with stability. But then they also don't love investing in debt in the midst of a debt crisis. And so they like that profile for them, which is to me not surprising.

I do totally get it. And like for my parents' retirement age, like have some savings. This probably makes more sense for them than buying Bitcoin in some. scenarios. I'm trying to, what I don't necessarily understand is what happens to the common shareholder, assuming you, you know, as we go into a bull market, you'd imagine the common stock is going to go up. It's probably going to go up more than Bitcoin.

I can totally believe that. But over sort of cycles, bull and bear market cycles, is it just amplified in the bull market then amplified in the bear market where it gives back all the gains it made in the bare market and it kind of evens out as like a net neutral trade. So obviously to a certain extent entry point matters, but that would be true in any business. So even if you're investing in Google or meta, I believe strive is a great company. And if you're investing in a great company. Over the course of a market cycle, any great company at times will be undervalued, at times will be fairly valued, at times will be overvalued. And it's actually incredibly difficult,

even as the leader of the company, to confidently say at this moment, it's overvalued, undervalued, or fairly valued. I think there becomes clear moments, like I would say in early this year, where effectively our entire management team bought our common equity, that we had a very strong belief that our common equity was undervalued versus what was reasonable. And a lot of our employees basically put every penny of liquid net worth into the common equity, which was awesome to see. But over the course of a market cycle, underlying our company is a cost of capital to financing. We debate the semantics of debt versus preferred equity, but it is an obligation that has a 13% cost of capital. And so very simplistically, as we grow,

our corporate expenses, our salaries, I mean, on an average year we'll represent less than a 1% cost of capital. We've talked about this in depth, and I think we've been a shining star in a in a trust issue around compensation philosophies. But as we grow, it'll likely go even, if we do grow successfully, it will grow even less than 1% of a cost with, And it will really matter is the cost of capital of the preferred equity if we can maintain amplification. So if Bitcoin goes up on average more than 13% across market cycles, we will likely structurally outperform Bitcoin. If our MNAV shoots to 10 and someone buys it at a 10 MNAV, that individual might underperform Bitcoin, right? Like you as an investor have to underwrite the amplification ratio, the growth of Bitcoin, the ability to maintain it.

contrast that versus the valuation of the company, which I think you would find is if any reasonable Bitcoin bull thesis plays out right now, and if we're able to maintain implication, at the current MNAV, you would likely still drastically outperform Bitcoin. What is the current MNAV? Current MNAV, it depends on the way you model it.

And so there's different philosophies in MNAV valuation. And what we've tried to do is move away from the name of MNAV because I think it was kind of a made-up term. And to say, how could you look at our company? I think right now it would be around a 1.5 on an EV basis, which I view is the best basis. But we actually provide three different numbers. We provide the EV number. We provide the number.

If you take our Bitcoin, subtract all state of liabilities and get to kind of a net treasury asset value and compare that to the market cap of the company, which would be around a two. Or if you look at it versus the kind of the original, just ignore the fact that there's that there's, there's liabilities and just what's the value of the Bitcoin versus what's the value of the equity then to around a 1.2, 1.3. And so I gave you three numbers, but I think it's actually important to just go into a conceptual point on this because in institutional investing, any different metric, there's typically three to 10 different measures that institutions look at. And so I think some people say, there's three MNAVs. This is crazy. Like, what are you doing? And I'm like, well, in fixed income investing, there's 10 different measures of duration.

There's 10 different measures of yield. And what I noticed was that different successful portfolio managers had a framework that would focus them on a couple of those different metrics as what they viewed as the most important. Then other successful portfolio managers would have a different set. But the question becomes, do you actually have a framework that then you take those numbers and put them together into an investment philosophy? And if you do, I think you could use any of those MNAVs and come up with a framework that works. and then I will have my own preferred way,

but I actually reject the notion that any one of those is the single right way and it's the only way to look at a company. Okay, so for sake of argument, then, let's use your preferred way of calculating the MNAV at 1.5. I'm under the impression. I don't think we're going to see MNAV to blow out like they did in the last cycle.

I've metapalanta got to over seven, I think. That seems like it's probably not coming back. I could be totally wrong, and you might have a different opinion on that. But at what point do investors look at this, be like MNAVs at 1.8 or 2, they're just going to hit the ATM, bring that back down, and that's now like not an investment until they do that. So I think that this space will continue to evolve over time.

And this is important because people are looking at the last cycle where there was very little amplification. Actually, I think the strategy was around 1.2 times levered in the last full market. It's a meta planet, I don't think, had substantially different amplification ratio. We're at 1.5 times. And so if you have no amplification and then you're just expecting MNAP to go up an issue, that's obviously not a sustainable model. Amplification ratio in and of itself, if you can say it, is more sustainable.

What would be most sustainable would be having a high amplification ratio, but actually being able to use your balance sheet like a traditional company, whether that traditional company is an insurance company, whether it's a bank, that traditional finance would look at this company less as it has Bitcoin and it has cash. And instead it has a multi-billion dollar balance sheet. And so that is part of the work of this industry that if you can get that done, then you do have the opportunity to earn non-correlated returns or yields off of your Bitcoin that is not selling options on Bitcoin, selling calls or selling puts, which we have not done.

and we do not like the convexity profile that that puts into our company. It's, you know, if you had to, if you had to do it, you had to do it. But if you could do things in traditional finance, like an example would be in traditional finance, a lot of balance sheet companies, maybe it's like an alliance, Berkshire Hathaway did this a lot, they would underwrite non-correlated insurance risk, where you have basically a bell curve of hundreds of thousands of insurance. contracts, the risk is very known and you need balance sheet capital to put to work. And you could earn mid, sometimes low, sometimes mid, sometimes high single digit returns on capital. That would be a

traditional business that has existed for years. The challenge is don't look at Bitcoin and puk that it's Bitcoin that's underneath there, but it's actually a balance sheet. So that's the work as an industry. But if that were achievable over time as Bitcoin is more and more accepted as capital, which I do think is, let's say if that were true, how would you rate a Bitcoin Treasury company that has amplified Bitcoin exposure, but is also in a non-correlated way to Bitcoin, putting that to work in a way that's similar to other companies. Well, then you actually should see MNAV expansion, right, because a balance sheet company that has cash or fixed income, like an Alliance or something like that that puts it to work, their balance sheet would trade

to premium because of their ability to generate a sustainable, non-correlated yield to their investments. And I think that sometime over time, I think that will happen in Bitcoin, whether it happens in this cycle or if it's a future cycle, TBD. But I would agree with you that the MNAV just goes to 10 scenario would not play out other than something like that occurring at a fundamental level with a lot of the balance sheet put to work. So you think generally there needs to be a maturation of like how people view a company with Bitcoin on the Yeah, and in the traditional finance base. And I do think that is a lot of the players in the industry, we're doing this, but a lot of a lot of the other treasury companies are also

engaging with these institutions, which most of these institutions now have real bitcoins that sit inside them somewhere that also want to help shepherd this. You see this as a very public example at Marsh where you have Garrett Johnson that's helping trying to help push the best people to educate Marsh about Bitcoin and have them accept Bitcoin more and more as a long-term source of capital that can be underwritten against. And so I do think that we ultimately get there. I think the hardest part is over what time frame, which is why, you know, I think, you know, I've been talking about how amplification is going to be the most important thing to drive total returns. And I think that you could clearly look at strategy and say,

well, they're so big. They don't have a lot of amplification right now. stretch, you know, what does the growth trajectory of stretch? But on the long-term basis, I think they're going to be the biggest balance sheet company in the world. And I think that's a, I mean, they've won. I think they're going to win. And these from a zoomed-out perspective, I think, are micro-issues for what I think they'll mature into as, you know, one of the most successful companies in history. Yeah, I mean, they are so set up right now. There's been a lot of iteration in what a treasury company is since Saylor first did this. Like initially, he was just putting excess cash into Bitcoin, then there was like the convertible notes, and obviously now there's the

preferreds. What's the next thing? Is there a next thing? Or do you think you have the secret source right now? I think you'll continue to see evolution. I think you'll see building on top of some of the preferreds. And so just very simplistically, it preferred is obviously equity. It never matures. And when you can look at as an example, what an insurance company might want as an asset, well, they would actually want something that matures. And so you could have Bitcoin bonds, bit bonds, whatever that would go in there that are rated. You could have structure on top of SETA or Stretch,

where you actually take SETA stretch and you have a junior tranche that basically provides downside up to 20% or 30%. It really can pick your number that's required. And then at the end of the term, let's see you have a three-year term, if Seda is above 80, $80 a share, obviously, which we're maintaining it at 100, but just because you have downside protection, then the top tranche gets paid in whole.

The bottom tranche takes those first losses, if there are losses. And then you have a term. You have structure to provide protection. That top tranche, very likely could be investment grade rated. Then you have a term. You have an investment grade rating. You have structure. That then becomes, you transformed it in something that's investable with likely a very high yield.

I mean, who knows what the yields are, right? Because you have to basically have two investors that want to invest in each of those tranches and come up with what the economics are. But let's say you had something that paid 7, 8% that was investment grade rated. I think there'd be a lot of demand for that. And that unlocks a different pool of capital that has restrictions on what they can invest in. It needs to have like duration or a rating or whatever it might be. Yes.

Interesting. And in terms of like the treasury companies that we have right now, there's obviously like, there's strategy and you guys which do it. were doing the preferred at the moment. And I don't mean this and I just don't know a better way of framing it. But that's like what I would consider like a pure play Bitcoin treasury company. I don't mean, I know people take that term the wrong way. And then we have the ones that are trying to be like operational Bitcoin companies that are, you know, buying Bitcoin businesses and doing things like covered calls on their Bitcoin. Do you think they are going to become

two very separate like pools of Bitcoin treasury companies essentially? Are they going to be viewed very differently within the market? They will. And here's how I think, I don't take any offense to the pure play. I think both of those are pure play Bitcoin companies. I think the return between them and the risks will be very different. And so you take a 21 as an example of a company that has substantially less, I think they have a convertible note, but substantially less amplification, they're focused on building Bitcoin businesses.

And you've heard Rafa say this, that they're, they want to focus on risk-adjusted returns. And so let's say that they're successful in maximizing risk-adjusted returns. My view is that would likely be less returns than Bitcoin, but maybe more return per unit of risk than Bitcoin. Okay. And so that will have a very large pool of capital that would want to invest in that risk-return profile.

It will. If they're successful, they could be very successful, businesses. But because they're investing in cash flow, if Bitcoin goes up 30%, 40%, 50%, that cash flow growth will just be less than Bitcoin. But if Bitcoin goes down, that cash flow goes really helpful, right? And so it's less risk, but also for less return. There's a, there's a tradeoff. There's a likely break-even rate of return of Bitcoin that will vary based on what they do, based on what we would do where one company would be better off from a return perspective than the other, but there's in all forms of finance, there's a lot of people

that care about sharp ratio. There's also a lot of people that care about just total returns. I just say, hey, don't break the thing and just maximize returns, right? Those are just different mindsets. And so, I mean, I've met with a lot of these people. I respect their strategy. And I think that they can drive massive success. Is one a pure play, is one not a peer play? I think they're both technically pure plays, unless they're investing, I think maybe orange juice might be doing this, like non-Bitcoin businesses. Yeah. I think that would also fall in the realm of risk-adjusted returns, cash flows plus Bitcoin, plus Bitcoin. It's less of a pure play Bitcoin company, but it is a, I would say, likely a Bitcoin minus return company, but with less risk than Bitcoin, which I think that.

And actually, I love those companies existing. They are out there. They are helping orange pill small businesses. I'm very thankful that they exist. And I think that they'll be super successful. Ours is the, we are a Bitcoin bowl. We are all in. We are trying to outperform Bitcoin explicitly.

That is our mandate. And when you have that mandate in a bull thesis, it becomes too costly to invest in cash flow businesses. Now, that's different than what I was talking about when I said, if a traditional finance business could underwrite our balance sheet and allow us to put that that balance sheet to risk,

that's not investing in a plumber or something like that, right? That's just on top of what we would already be doing. That would be additive for us. That would be additive for an orange juice or a 21 that could be additive for both sides. But the return profile, I think, will be very different. And what do you think of the Treasury companies

that are trying to generate yield on their Bitcoin? And there's a few strategies I've heard of, like there's people, And I think this is generally smaller treasury companies that are trying to do, like run lightning routing nodes and collect fees there. I think that will go very quickly to zero if enough people do it. Like it doesn't scale to your size. And then there's the other ones that are doing things like covered calls on the Bitcoin, which you just said you don't like for your business. But what do you think about it?

Why don't you like it for yours? And then what do you think about it in general? Yeah, I'm going to focus on the covered calls. To your point, the lightning things are just not a scalable thing. Yeah. And so very small Bitcoin treasury companies would have. inefficiencies of the cost or a strategy and they would be looking for small opportunities generated yield like that to basically offset those things and so I think

that makes sense for them not something that is even implementable for us or strategy the the option stuff technically would be implementable for us we could definitely do that but it comes down to negative convexity and so simplistically if you sell a covered call we know that bitcoins returns tend to be generated from five or 10 trading days over the course of a year when you get the massive green candle. And if you're selling calls into that, you likely don't get the full return on Bitcoin's biggest days of the year. And in exchange for that, you get a yield. And so you're doing what's called a negative convexity trade. And so if Bitcoin is very non-volatile, it does not have big

days of return, you actually probably get better returns. But if you're underwriting a real Bitcoin bull thesis, you get a yield, but you get a yield, but you can. get less return, right? And we're trying to maximize total returns. And then on the opposite side, if you're selling puts, even if they're cash covered puts, their cash covered puts, then you have to hold more cash. And why do you want to hold cash? I want to as much Bitcoin as I can in this little cash. But let's say we have 18 months of dividend reserves and we started selling puts against it. Well, then when Bitcoin goes down and we need that cash the most for dividends, we are then forced to allocate to Bitcoin and potentially, I mean, if the put level was higher than where Bitcoin goes,

we just lost a bunch of our cash trying to generate a yield. And so we just don't like that risk return profile. Now, if you talk to professionals that are implementing these strategies, they'll tell you why they're different, why they are not actually selling the upside or why, and they'll do collars or all these sophisticated things. And what you'll find is that the average one of them are doing exactly what I said. The best performer will actually be able to manage this. But then you're talking about selection of like, you're playing poker and there's 10 people at the table and one of them will be able to do it correctly, but their nine won't. That's not a game that we want to play as a business. No, that makes sense to me. And, you know, assuming we are now

in a Bitcoin ball market, last Bitcoin ball market, we had this sort of peak crazy of treasury companies where every single person was coming out. It was almost like one a week we were getting at a time. Do you think that is over? Do you think the companies that have survived to this point will continue to do well and we're not going to see a crazy influx of new treasury companies popping up? Are we going to have paper Bitcoin summer again? I think that it's just like any startup. So any new technology, what typically happens, you see a good idea. There's a rush of capital and 90% of startup, fell in any industry. I think we saw that in paper Bitcoin summer last year. But in any industry, there's actually an opportunity, a few people emerge as winners in the space. And I think that

you will see that. I think Strive has emerged as an early winner. I think you will see a few other companies emerge as winners. I think there's a lot of ideas and have some hated rallies. And I think you'll also have ones that do not emerge. But I think the willingness to an invest in this space in a new idea, the bar got raised substantially. Yeah. And I think that will be true even in a in a bull market. I think that's a really good thing. Yeah, and I think that's a great thing. I think we saw a mania. I think we saw a handful of companies and this is one one of the more disappointing ones of companies that I think viewed it as a get rich quick scheme. I didn't even have a conviction in Bitcoin and they just exited and good riddance. Then you saw

others that never got their footing that maybe had a thesis or took bad debt terms, I think that those are potentially learnable experiences. I mean, no one is perfect. And so they can learn. They could not learn. If they do learn, then that could be an emerge from the ashes scenario, right, where they took some pain and they reflected and they learned. And we've seen that in other businesses, right? A lot of businesses end up having a thesis and they pivot and they ultimately find success. Pivoting doesn't mean you'll find success. But I do think that it is possible for some of these other players. And with the ones that are still around,

do you think we'll see a lot more M&A going forward? Like obviously you guys have already done that with Semler. Do you think we're going to see more of that? I think you should. I don't know if we will. So why say you should? We're seeing right now some of the players issue digital credit instruments as an example

with 10 million, 20 million, 30 million. And... Just don't have the scale. It's no scale to drive any institutional interest. Yeah. You probably need, in my view, a minimum of 200 million. And that's like a minimum to get real institutional interest. And we saw this when we IPO data. We started out, we went out with 125 million. And this was a learning for us. There was very little interest at 125 million. We ended up selling 250 million notional. And it was over two times oversubscribed. And the reason was we heard consistent feedback. No bid, no interest at 125. I'll take 20 million, 30 million. million, 40 million, 50 million, if you do 250. And so then I look back, I look at companies that either have to or choosing to do a very small size and say, what's your path to growth? Well, your path to growth is basically probably start with your current investor base that wants to help

you get off the ground, which is reasonable. And then pretty much through retail only try to grow that up. But there will be no, like, I don't think any institutional support until they grow that up massively. And so I say that to say, if you consolidated a couple companies, but now you take two companies that have 3,000 Bitcoin, now you have 6,000 Bitcoin. You start getting to that scale. To get to that scale faster. So I think that's, that should happen. Whether where it happens and if it happens will be TBD, but I think it would help accelerate the growth path for some of these people, but it probably won't make sense for strive, given where we're at. Yeah. It's interesting. It's going to be really interesting to see how it all plays out because obviously it's been a really

rough year for most of the treasury companies. Probably like the Bitcoin bull market saves a lot of things. And I think it's going to save a lot of companies. Obviously, you guys are positioned really well. The performance is going to be interesting to watch. I don't know what to expect, but it's going to be good. Thank you so much. I think this has been an awesome show. I really appreciate the way that you, you know, I see you on Twitter fighting the haters. And I think you do it in a really good way. So I appreciate the help. Well, thank you. I do view the Bitcoin community. community as that we're all brothers and sisters that are almost all freedom-minded. There's obviously always a few bad actors, but there can be vigorous debate where underlying the principles that

people live their life, I think can be very similar. And so, you know, for almost all of it, it's I actually view the debate as healthy, as good. I definitely think it's good. These things, these ideas need to be stress tested to the maximum. Exactly. It's fun. Awesome. Thank you so much. Thanks for having me. That was great. Thank you.