← Coin Stories with Natalie Brunell
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- [00:00]
A
The risk point is not economic, it's always political. Because from a political standpoint, if you continue to shut out huge segments of the population and not allow them to share in the prosperity, what you're going to do is you're going to increase political instability. And that will manifest itself on the right, will manifest itself on the left, and it will continue to come to a boil.
- [00:25]
B
Hey everyone. Joe Carlisari back in the house. It's been about a year since we last recorded. We were all expecting bitcoin to do amazing things in 2025. Disappointed us a little bit. And you were one of the ultimate bulls. You thought that this thing was gonna hit what, 130,000? There were some even more excited predictions than yours. 200k, 444k. What happened?
- [00:49]
A
Well, I think you had three big factors that I think we were working through through the year. Number one, I think you had an underestimation of the OG selling that people had psychologically in their head, this idea of 100k bitcoin. And I'm gonna lighten up a little bit there and I can tell you just from personal experience that I had a lot of clients that were selling, you know, at 100K. And it's not because they are not bullish about the asset. It's just because that they've been sitting on piles of bitcoin for a long period of time. And you know, that psychological number of 100k was gonna, gonna hit us and be something that they wanted to just lighten up, you know, buy that, you know, house in Aspen, whatever. And that's just something we work through. And I think you see that on chain. But that which was further complicated by the issues with, you know, the tariffs and the volatility that sort of disrupted the early part of the year. And it's kind of not dissimilar from what happened with the China mining ban in 2021, where we had this sort of interlude in between like the first 60k peak and then a sell off to 30. And then near the end of the year with the ETF launch, we had the futures ETF launch of 2021. We had us back up to 69k. So. So that interlude, that introduction of volatility in the traditional markets, I think derailed some of the bullish sentiment that was there. But you absorbed, which I think is the most encouraging thing, you absorbed a lot of the OG supply, which is what you. Those people that were holding coins, you wanted those coins to go into the ETFs. You wanted to go into long term holders that are going to be more bullish on the asset. So although we didn't hit the top end price, if you recall, back in 2024, I was on several podcasts and I think we might have talked about this in the original. Um, I, I'm a big believer in the cycle being dead. I think the cycle has been dead for a while here, even going back to 2022. So the fact that we didn't hit this ultimate peak in the marketplace, that doesn't mean that we can't be higher this year and higher the year after that. I think the cycle theory is dead and we can get into that. But the other issue I think, I do think the treasury companies that took a lot of the wind out of the sale of money, people were thinking, well, it's a bull market. I'm going to go into these treasury companies which are just leverage plays on bitcoin. And because of that, you know, that's depriving capital organically of the bitcoin marketplace. A good thing in the long run, in the short term for bitcoin price, maybe a little bit of a headwind. And then the final complicating factor I think is that you have this, you know, you have this notion, I call it sort of a myth of the four year cycle, right. And this idea that we have to peak out in October, November of 20, you know, with the year after the halving, right. This is something we're digesting, we're working through it and I think it's very optimistic because once that dies, once bitcoin truly is understood by the retail masses, sort of an institutional asset, I think it's going to send us much higher in this year and in the next year. But I'll just tell you anecdotally, because we were talking before camera came out about some of my experience. I play poker with a regular group of guys. They're involved in a lot of different assets. They're in crypto assets and broader, you know, bitcoin, some, some bitcoin exposure, but mostly crypto assets. And what they all told me is they all sold. I was the only guy at the table in this regular game who had still held as of December, we're recording here in January. December was the only guy everybody else is the cycle's dead or the cycle is over. Joe, you got to pack it up because we're going into some big, big bear market. If and when I always respond to them is if you all thought there was going to be some explosive high growth Q4 and that didn't come right. We kind of peaked out really early in Q4. It wasn't really explosive at all. It wasn't bubbly in my estimation. Then why do you expect a big 70, 80% drawdown? And I think that money flows in. I think it's just waiting on the sidelines, waiting to buy back in. The capital hasn't permanently left the space. So it's really exciting. Like the death of this four year cycle theory is going to be massive. Particularly when you look at the broader economic picture. That is really bullish. I just saw today as I was coming here literally like we had growth productivity numbers for Q3 of 4.9% US productivity, which is blazing hot. Just to give you a frame of reference, that's the highest productivity quarterly number we have had in six years. So you know this reacceleration of the US economy, reindustrialization, the idea that we're going to have a broadening out of the rally which just again today we had small caps. Russell 2000 hit a new all time high. All these signals are really fascinating and it's exciting to talk about them.
- [04:45]
B
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- [06:26]
A
Yeah.
- [06:26]
B
Because we've seen it on X and Luke Grohman has gotten some flack for saying that he sold a big chunk of bitcoin thinking that it's going to go down and then he'll buy back lower. My recent guest, Colonel Douglas MacGregor revealed the same thing sold around the same price in the mid-90s, thinking that it's going to go down to maybe 60k, 70k and then they'll buy back in. Do you ultimately think they're going to be wrong or could we see a drawdown that wouldn't be 70 to 80% if we go maybe to 70k bitcoin and that they'll end up being right and scoop up some cheaper sats?
- [07:02]
A
Well, look, if you're in the game of predictions, you're almost always going to be wrong. Sometimes you're almost always going to be right. Human beings are notoriously bad at predictions. Look at all the people that have been calling for a recession and broader economic decline since really the pandemic. I mean it's gone back, you know, years now, five years now. So you can never say never. Right. Like I'm not going to sit up here with a crystal ball and tell you there's no chance bitcoin could go to 50 or 60 thousand dollars. I'm very skeptical to answer your question directly. Yes, I do think they're going to be wrong because I do think there's so many indications of this cycle actually being different. Objectively. Number one, which I think you have to be honest about if you are a bull or a bear, is that we didn't get some, you know, huge blow off bubbly type move. We just didn't. I mean you began the year at, you know, right around Trump's inauguration. I think we hit 109 roughly. That was an all time high. People forget this. But on, on the date of the inauguration, January 20, we had the all time high flash Forward near the Q4 peak. We're at 126 memory serves. I mean, okay, yes, it's a decent move, but it's nothing compared to what people had expectations of. I mean, I, I remember when I, when I, in January and February when I was saying I think 130 is going to be the target for the year, that's where I was at. That was based on the model I use and also some of the prior cycles based on like the performance and appreciation. But I was accused of being a bear. Like people said, you're crazy. It's we're going to 200, 300 plus. My buddy, American Hodl, he said million dollars not out of the question. You know, and those predictions, I think, you know, they're all coming from a good place. We're all optimistic about the asset, but you have to be realistic about other macro forces that are in play and potentially can put a lid on the bitcoin price action. And in the intro, I didn't, I didn't mention. The other thing I did think was a headwind for bitcoin, which is rather unexpected by people this year, is the move in precious metals. I do think that gold getting moving and it's part of what Luke's talking about. Like, if you listen to Luke's podcast about this, Luke Grohman's positive. He's talked about, like, how, you know, gold's performing very well. Why isn't bitcoin? Well, you know, there's various different factors in play that the assets are not comparable. I view them very differently as assets. But my point is when you see a shiny moving object, pun intended, money's going to go there. There are portfolios that literally will fast money, that will just chase what's moving and that has this compounding effect. So if bitcoin's not moving and gold, which is understood, and you know it's held by central banks, it's. It's not as, quote, unquote, risky as people perceive bitcoin is. To me, like, that's just explaining. You're taking flows that would go to bitcoin from retail frenzy, and they're putting them into gold. So why wouldn't you expect one to underperform?
- [09:37]
B
Well, and he's really been pricing everything in gold. So even when he said he sold bitcoin, he said he did it like 21 ounces per bitcoin, and now it's already fallen. So depending on how much gold rises, he could get like almost a 70 decline, 70% decline in Bitcoin, but we'll see. But you think the bottom's in?
- [09:53]
A
I do, yeah. I mean, so the, the big thing you got to think about markets is that moves are relative, and they're also very much mean reverting. Okay, so what do I mean by that? If you take a rubber band and you stretch it, right, like you have in prior bull markets, the, the classic one that I think most bitcoiners associate with that are a little bit. Have been in the market for a While is the 2017. You know, when we go from $1,000 roughly at the beginning of the year in 2017 to 19,600, you're stretching the rubber band, you're putting it, you know, over its skis to the point where it needs to snap back. And although people have this PTSD of a very pronounced bear market in 2018, where we went from 19,000, ended up bottling, bottoming in December of 2018 to like $3,000 roughly. The reason was because we never should have got to 19K. There was, there was a. Numerous, numerous factors that had this huge flow of capital in where people didn't understand the asset. They were just throwing money at it. They didn't appreciate, you know, the institutional involvement that was years away at that point. You didn't have hedging tools, you didn't have an options market that was US based, that you could, you know, hedge your whole position and you could buy IBIT puts right now if you want to hedge your position. We didn't have any of that. We had this shiny new object people didn't understand and people were getting rich. So people threw money at it in a crazed way without even appreciating what bitcoin is. They didn't have great books like Bitcoin is for everyone. Right? So flash forward to now. You don't have the rubber band pulled. I view there being very little slack in the bitcoin market. I say there's always the fast money, the tourist money, right? I don't think there's any tourist money in bitcoin. I don't think people were piling into Bitcoin in 2025 with the expectation that they were going to sell after a 20% decline, there was far more other options in the marketplace from the quantum stocks and the mining stocks. There's some excess there, right? But bitcoin, natively, I think there's very few sellers. And the only exception that would make me bearish is if the broader economy declines, the broader stock market declines, then, yeah, I think bitcoin's gonna take it on the teeth and probably could go down to those levels. But I'm very bullish on the economy for reasons we can get into. I think that if anything we're gonna see strong growth this year. I think, you know, you're seeing already the green shoots of that. Morgan Stanley talks about it like the rolling recovery. For years we've seen the manufacturing, the ISM numbers be depressed in so sort of below 50. I think you're finally seeing signs that we could actually have far better growth. Which means that Bitcoin's not going to have as much of a headwind from the macro conditions. And at the same time there's very little excess in the market. So where is the next marginal seller going to come from? That's why I'm skeptical of 50, 60,000.
- [12:27]
B
So I want to unpack the idea of running this economy hot because I do agree with you that they're going to have to do that. But first, going back to the four year cycles, since you think that's dead, what is going to replace it?
- [12:38]
A
I think it's going, as Bitcoin becomes institutionalized and mature as an asset, it's going to perform more in line with the broader quote unquote, risk complex. So you know, people always associate Bitcoin being, you know, a risk asset in the SEC in the sense of like, well, it's tied to the equity market or whatever. To me, I don't view that as a bad thing. As someone who's held the S and P for you know, 20 years now, like I don't, I don't really see that as a negative by any respects. I mean that's where most of the retirement is concentrated. Like people literally will buy it every single month with their risk asset. But the reason I bring up that is that if Bitcoin is correlated with a particular asset class, I'd rather it be correlated with stocks personally in the short run because it's growing, it's growing in terms of its adoption and you want to have that capital that's going to be willing to withstand volatility. You don't want bitcoin to be perceived as sort of the boring dead thing that doesn't move. That's, that's not as attractive. And gold was dealing with that for a long time. Suddenly gold's woken up and is performing much more akin to, you know, a quote unquote high volatility asset. But you know, the reason why I think the four year cycle and how it's going to trade is going to largely be on macros because that's where liquidity comes from. That's where flows come from. You know, people talk about the stock market, right? The stock market, they say it's all overvalued. It's all just, you know, seven stocks. Well the reason why it's those seven stocks and is because that's where the majority of the productivity and the gains have been concentrated. That's where the earnings growth has been. But if you look at even like the median stock in the S&P 500 which you know, has gone up, you know, really well year after year after year. The last year we posted 10% earnings growth. So that's, that's, you know, I agree inflation's still, you know, closer to 3 than 2. But you're, when you're printing 10% earnings growth per share, why wouldn't stocks go up? That's, that's very attractive to me. So, so like look at Bitcoin. If Bitcoin is going to mature and be understood more as a portfolio must have, it's going to be correlated with broader liquidity and economic conditions. And as long as the economy remains strong, Bitcoin's going to do well. And I think you've seen signs of that. I mean, you know, bitcoin consistently trades, I think well when there's a broadening out of economic growth. There's periods in the, in the past where you saw little indications of this as becoming, think it's becoming even more pronounced now.
- [14:53]
B
Do you think that that will also dampen the volatility on the upside as well though? So we won't have these blow off tops with where we'll suddenly go to a million and then crash back down.
- [15:01]
A
Absolutely. And one of the reasons why it'll be dampened is because of the build out of the ETFs as the ETFs play more of a role in the bitcoin ecosystem. And today I just saw that they were again back to net inflows. Right. Even though people think it's a bear market, you have net inflows into the major ETFs. That should be encouraging. That should be telling you that in past cycles we, when there was fear in the marketplace, people just stopped buying. Right? There was, the bid fell out. This happened particularly in 2018. I think it definitely happened in 2022 when the bond market was in chaos, when you had the 10 year bearing down at 5% when you had massive contagion in the crypto markets where FTX was going down and Alameda and three arrows. You don't have that. You don't have some Systematic failure where people are literally wondering what will be the next entity to go into bankruptcy. So explain to me again what is the next marginal seller that's going to come into the market other than a US recession, which I don't see that's going to cause us to cascade down? I don't see it.
- [16:02]
B
Okay, let's dig into some of that because I've obviously had guests that view this very, very differently. First person that comes to mind would be like a Danielle DiMartino booth who talks extensively about how if you peer under the surface, you have all these delinquencies and more companies are filing for bankruptcy and the average consumer is really strugg and that's going to put real, a real big pressure on the market. So you disagree with that?
- [16:29]
A
Totally disagree. Because while it's one of those things where everything she's saying is accurate, she's not in any way manipulating data, but she's losing the forest through a few of the trees. And the reason is for that is because when you're talking about the economy, right, we're not talking about Joe or Natalie, we're talking about the aggregate data. So if the aggregate data remains relatively robust, Driven by an AI capex boom, driven by 6 to 7% deficit to GDP, the nothing stops this train. You can keep the economy as a whole together, even though you have pockets of weakness. That's the most important thing, right? When people. There's not a time in history where you couldn't point to certain segments of consumers that were struggling. You can go back the last hundred years, there have been people that are the haves and the have nots, k shaped economy, et cetera. But the most important stat, which I think is underappreciated is that the vast majority of consumption is done by that upper quartile, right? That upper segment of the population who has disposable income, who have the ability to go out there and spend. You know, I always use the analogy there, there's several restaurants by me and I can see certain lower tier restaurants, entry level places, they're vacant, right? There's no one there. But some of the higher priced Italian restaurant my wife and I like to go to, it is packed, like completely packed. And the same is consistent with a lot of people's expectations. I mean, I think there are periods where or there are places where they cater to sort of more high end consumers. They're doing really well. And there are people that are more entry level bargain outfits and they're struggling. So what is that telling You, I mean, if you look at an economy and you say, okay, these people are doing fantastic and these people are really struggling, the aggregate data looks really well. But that, that's not to say these people aren't struggling. They clearly are.
- [18:18]
B
I mean, I guess I've come to reject the recession forecast only because what Luke Grumman says I think is right, which is that U.S. stocks kind of back the economy at this point and they can't afford for there to be a significant decline because then the tax receipts will decline and then the whole there, there could be dysfunction in the treasury market. Right. So do you see it that way? Because ultimately what that says to me is that we're going to keep propping up the stock market, which means we're going to keep printing money, which is the whole. Nothing stops this train and we're going to keep running these hot deficits in order to finance everything we need to do in terms of growth.
- [18:53]
A
Yeah. So, okay, let's unpack that a little bit. I do not believe that if there was a significant event, there was, there's, there's sort of a inability for the Fed to react. Right. I'll totally concede that. Right. I do not think that we've been remotely close to that since the pandemic because of the fiscal impulse, because of some demographic issues, because of the fact that you've had this AI Capex boom, which, you know, by some accounts has contributed to roughly 1% of GDP annually. I mean, there, I think that might be a little high, but that there, there are studies out there that says.
- [19:34]
B
Massive, like, well, Nvidia at a $5 trillion market cap is telling you that it's huge.
- [19:39]
A
But my overall point is like, there are things even beyond the Fed's control. People don't need to understand that. And my point is that I think that people underestimate the dynamism of the American economy. And that is not to say there aren't people struggling, but there are clearly opportunities out there. I mean, with the productivity growth, we've averaged 2% productivity growth since the pandemic. That is not all just money. Printer Go Burr. That's not all just fiscal spending. Because if you isolate for the fiscal spending, a lot of that spending is unproductive. It's the segments of the people, the entitlement state. It's money that's not actually going to circulate and drive productivity growth. So I think the US Capital markets have distinct advantages that people frequently underestimate. It's a. Alan Greenspan talked about the secret sauce of the American economy. We really are unrivaled in terms of our growth that is continuing to accrue globally of gdp. Our share of global GDP, of global productive output has risen significantly since the pandemic. I think it's like 3 to 4% since the pandemic. The reason why that's, that's massive to me is because like a lot of countries spend, A lot of countries have deficit spending. They finance it, they borrow money. You know, they're indebted, right? Why is the US unique? The US Unique is unique because I think we have a lot of resources, we have a lot of workforce, we have rule of law, we have a market that makes it attractive for international capital come in. And all of that contributes to our productivity growth. And if we can stay at the forefront on new technologies and we can win the AI revolution relative to peers, to me, I think that the problem a lot of people have is they consistently underestimate the ability of Americans to deliver. And I think we have a wonderful country that is going to continue to have outsized returns.
- [21:26]
B
Well, so just to kind of simplify it for people, where is the money for all this growth coming from?
- [21:31]
A
Well, it's, I mean, it's borrowed, right? I mean, there's capital in the marketplace consistently, right. And even when the government, when people say the government is, you know, running these deficits, what is the, where does the government get the cash? The Fed has been drawing down its balance sheet. And we talk about this because it's, it's an interesting way to put about it, thinking about it, We've been drawing down our balance sheet, right? So the Federal Reserve, who. People just say, oh, it's all the Fed. It's all just. They're monetizing the debt. They have drawn down their balance sheet 2 to $3 trillion since the pandemic high, okay? Meaning their balance sheet's significantly lower. To put that in context, everybody's always afraid of, you know, China and Japan dumping Treasuries. They've dumped the entire market of China in Japan off their balance sheet in the last several years. It's all gone. So all the people that are like the doomers talking about, what if China dumps our treasury to Japan? The Fed basically did that. That's been the headwind we've been dealing with in capital markets for the last several years as the, as the QT is engaged. They're stopping that, of course, right now. But my dear point, right? Where does the money come from? Right? The treasury goes out they have to say capital markets, we need money, we need to raise this via auction. We're going to borrow that money from the private sector. We're going to borrow it some. Mostly us, right? Mostly US citizens, mostly pensions, people that have defined obligations, they want to buy Treasuries. But then there is some international buying that's not to be underestimated. Obviously that number is going down, as people like Luke often point out. But realistically, like if you just look at the share of US debt, the bulk of it's held domestically, it's not international. So we're borrowing from themselves. I know people don't like that phrase because it's out there, but we are, we're borrowing from ourselves. People are still bidding Treasuries. You know, contrary to the forecast of some economists for the last couple years, 10 years at 4.1%. If we had some raging out of control inflation problem, why is the tenure at 4.1%? Some economic actor out there just stupid that they're willing to lend the government money for 10 years at 4%? To me that tells you that the inflation story is at least optimistic in the next two, three years. Maybe we're not going to get down to two, but we can get to two and a half, which is fine. So I mean if we get cpi, you know, the official government stats, which I know are questionable and everything, we get those back down to 2%. I don't think that's going to disturb the makeup of the system. That's not going to cause things to fall apart. You know, 4 or 5% consistently does. But I think if you look at the last year of inflation data, right, we got that December print where we had core come in under expectations. I don't remember that, where they imputed shelter costs of like basically zero. You look at last year, they're basically saying between 50 and 75 bips of the inflation we've seen the last year was the pass through, through the tariffs. And if you go back, roll back the tape, it's always, I have a little bookmark of people's like forecasts at early parts of the year. And I always say people were saying inflation was going to go back to 4%. They said CPI was going to hit 4 and a half percent due to the tariffs. Remember that was a re acceleration of inflation. You didn't see anything like that. You saw one time pass through numbers of the tariffs, you saw those that tick up. But again we didn't even break 3. So what is it? What message is that?
- [24:40]
B
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- [27:18]
A
Yeah, well, it's a serious problem. And nothing I say is meant in any way to discount or discredit anybody who's struggling in the economy, because I think there are millions, tens of millions of Americans that are really struggling. They're working hard, they're constantly falling behind. For them, 2, 3% inflation is unbearable because they've seen the cumulative effect of inflation be between 20 and 30% since the pandemic, right? So that has really hurt the moderate, modest households. So again, there's this disconnect where you have people doing really well and people doing really poorly, right? And the problem is that as a market forecaster, you cannot let your sympathy and empathy for those people who are truly being hurt by the current climate. You can't let that skew your judgment. And I think the problem is too many economists, they sort of think with their heart, right? And they say, oh, there must be a recession because all these people are struggling. All these people can't afford homes. The reality is there are massive amounts of wealth growth that has accrued to the top, say, 5% over the last five years, and that has only made them stronger. It has only increased their share of ownership of key assets, and it has caused a real cultural divide, which I think we're feeling through. So to me, if you want me to be sort of negative or a doomer, okay, And I alluded to this in our first interview. To me, the risk point is not economic. It's always political. Because from a political standpoint, if you continue to shut out huge segments of the population and not allow them to share in the prosperity, what you're going to do is you're going to increase political instability. And that will manifest itself on the right. It will manifest itself on the left, and. And it will continue to come to a boil. Okay, so that's. So my view is that, you know, if you're focused only on the economics of it, you're really losing the thread. You need to focus on the politics of it, because the politics are we're going into a midterm where one president who made a lot of promises has not been able to deliver on all of them. I know people are happy with what he's done, but I think most people are a little bit, I think, disappointed in certain aspects. And the question is, like, is their Disappointment enough for them to turn to something far more radical. And I think possibly it could, you know, you got a narrow majority. People remember this big blowout election that the President had. He's got a few seats in the House of Representatives and if the House is taken over by the opposition party, everything changes.
- [29:49]
B
Or gridlock.
- [29:50]
A
Yeah, you have gridlock and everything changes. And then that sets the stage for the next election where people say, well, look, we tried everything with this. Let's go even more extreme, like this ping pong effect. Right. But I think the tenor that I keep hearing from people is they're sick of it. They want something different. They're frustrated that everything seems to be year after year more of the haves doing well and the have nots struggling.
- [30:13]
B
Well, I mean, what you're pointing to though, all this growth, it does sound great on paper, but it will ultimately lead to more of the same for the average worker, won't it? It'll be higher prices, it will lead to inflation. And it's not like all of these assets are going to become more affordable for them to kind of catch up. So what do you think is the solution? Because if this keeps going, they will cry out for a revolution.
- [30:36]
A
Yeah, I mean, there's no simple answer that I can give you in 30 seconds on that. I think you. So if you look at what drives the majority of increased costs, right. So forget all the politics of it. Forget who's responsible for putting us on this path. Most people's biggest single line item is what their house, their shelter costs. Exactly right. So what do we have in this country? We have, I guess, you know, you talk to some of the housing analysts, they say we don't have a home housing shortage. Well, we kind of do because there are certain places where people want to live where there's not enough housing. There's tons of other places where people don't want to live for whatever reason. And that's where there's housing and that's where there's supply. Right. So what does that do? That, that causes people like when I'm going to hire my employees, they're going to be demanding. And by the way, I've seen this recently with, with trying to hire some. They're asking for more money, Right. It's because it's not because they're, they're greedy or anything. It's just because it's really expensive to live and to find a house and, and to be able to survive. Right. So that cost pressure, which is cumulative, which growing up every year Right. That needs to be addressed to me primarily in the housing market, which is why the President is talking about. Right now, he's talking about reforms about banning institutional investors from buying certain amounts of property. And then, you know, he wants Congress to pass some bill on this front. And the homeownership issue, we have to figure out as a site, we have to figure out if that's something we're going to prioritize, if we're really going to be more willing to move to sort of a renter type mindset. I mean, it's so entrenched in the American psyche about having a home and having real estate and everything. And I think younger people, younger defined broadly, like say under 40, right. Like, they look at this and they say, well, I don't know, do I want that? Do I not? It's sort of a confused. I see people that are tied to this house now, they can't sell because they got a great mortgage rate and they can't afford to move that mortgage rate. We have to figure that out. We have made real estate a priority through our law. I mean, it's codified in our tax code with all the advantages. We have fha, we have incentives for people to buy home ownership. We have to think about that, I think critically as a society, and deal with the shelter cost, which is again, the biggest line item. If you don't deal with shelter, then you're still going to have this, you know, constant ripple effect because everything stems from the shelter costs. If you can, if your single biggest line item on your expenditures goes down, you can afford to take less, less salary, which means you're not going to have to spend as much to live. And it affects prices across the board for services. And to me, everything's. It's all about housing. Housing is the core.
- [33:07]
B
I tend to agree with you. Have you dug into the story about the potential ban on institutional investors gobbling up single family homes? Because I saw a map and really it actually painted a pretty stark picture that across the country, most states have less than 1% of homes owned by institutional investors. So it's a great headline, great narrative, especially for the younger crowd that really wants to be able to buy a home. But, you know, it might actually be easy to codify this and get Congress to pass something because there aren't even that many homes owned by institutional investors. Have you seen that?
- [33:43]
A
I have seen that statistics. I think that my counter argument to that would be that the locations where I understand ownership among institutions to be particularly higher. Some of the Highest, hottest real estate environment.
- [33:56]
B
Florida is one of them.
- [33:57]
A
Yes.
- [33:57]
B
Yeah.
- [33:58]
A
So, you know, I guess it's one of those things where because of the localized nature of real estate, because it is such a highly localized market, I can see that there are very local markets where the institutional players have a very big role. Perhaps not nationally, it's not showing up in the data, but you know, if those are the hotspots where people want to live, to me that that's going to add pressure on the price point.
- [34:18]
B
I think the housing market is a really interesting one because to your point, there were those really low interest rates during the pandemic. And so of course people are locked into those, they don't want to leave. And then now coming in, the prices have become so inflated for the average person, it is difficult to swallow that kind of a mortgage payment to get a down payment that is enough for affording one of these homes. And then you go in and it's like the maintenance cost, everything has ballooned beyond what it was when a Generation ago a 30 year old, you know, with their new spouse could move in and it wasn't that much of a strain on their paychecks and incomes. Today it really is like you're locking out an entire generation of homeownership.
- [34:57]
A
50 year mortgages don't fix that.
- [34:59]
B
No.
- [35:00]
A
So to me, like, okay, whenever you're trying to introduce measures in place in a market that restrict or try to reallocate the existing supply, I think that should be a red flag. Or okay, wait, maybe in an era of abundance, in an era where we'll be having robots build houses in the near, near term, I think, and I mean like 10 years, we should be trying to increase supply. Like it's always like, how do we ration the, the existing. This sort of methusian type logic, like there's only a finite amount of homes. No, we need to make it easier for builders to build.
- [35:33]
B
Yeah.
- [35:33]
A
And if you look at what the builders are building like from, to make their bottom and bottom line work, they're building huge luxury homes. Like they're concentrating a lot of supply and you know, not starter homes. Right. There's not a lot of entry level starter homes that are being built because their math doesn't make sense. So we need to figure out ways where through incentives, through deregulation. You know, that's a massive issue because locally, like it's very hard for builders to build in certain areas because of the codes and it's all local. We need to make it easier for people to Build and increase the supply. And I think that would be a far more satisfying result than trying to reallocate the initial, you know, existing supply. That never works in markets. You want to increase the supply to sort of bring that pressure down.
- [36:15]
B
Yeah, I completely agree with you. It's crazy to see what's being spoken by the new deputy out of New York City talking about how they're essentially okay with potentially even seizing property and making it a collective good as opposed to an individual good. That is not what our country was built on. I can't believe that some of these ideas are even being discussed and that young people are embracing them. But if you put yourself in their shoes, it has to be coming from this position of feeling so behind, feeling so left out of having any equity in the system. And looking at the boomers who, you know, have pretty much kind of coasted throughout their financial lives. They had enough income to buy the house. Now the house is, you know, increased in value. Their stock portfolios and bond portfolios have done well. And that's where it seems like all, all the money is right now with that generation. And how is it going to be transferred to the younger ones?
- [37:07]
A
Yeah, and it's again, it's one of those things where I've gotten in trouble before because I've made the same exact comment about all of the windfalls that I think have accrued to the boomer generation. But, okay, I think a truthful statement is that there are huge segments of boomers who have an old retirement savings who are still working very late and they're late into their, their lives and they're struggling as well. So that's another message. We tend to look at the more affluent aspects of the boomer generation, but there's millions of boomers who are struggling in retirement. They haven't saved enough because they've been trying to make ends meet for their whole lives and barely made it, made it work. So I'm trying to mature a little bit in sort of the generational warfare type rhetoric. Okay. But what I think is a fair point though is that, you know, the boomer generation, who has done very well, I think it would behoove them to, for the sake of the system, for the sake of political discourse that we're talking about, to try to be more forward looking about the next generation, not just Gen Xers and millennials, but even kids younger than that. It's really hard for a lot of young people today. And I think there's opportunity. Don't get me wrong, I always focus on what you can control, not what you can't control. I believe that. But try to figure out, like, what is the path forward for the United States for the next 40 years. We need to have a comprehensive vision of all these things. I mean, they need to totally revamp our education system. I think that's fundamentally broken. And the education system plays right into the real estate issue. Because if people are coming out with hundreds of thousands of dollars of debt and they got to get hit with a massive mortgage, just think about that. I know many lawyers are making hundreds of thousands of dollars a year, and they are paycheck to paycheck. Like, literally, they're like, oh, I don't have any money left in my account. I can't afford to buy Bitcoin or buy some other asset. I'm. Everything goes to mortgage child care, you know, paying my student loans. That's it. And then maybe I can go out once a month or something. Like that's a reality for millions of Americans. And yeah, it's not going to be sustainable. Eventually. What I think happens is you have people that even are who are doing really well and playing by all the rules. They're going to have to continue to accept a lower quality of life.
- [39:19]
B
I think that there is a ticking time bomb that not enough people are talking about, which is Social Security and all the obligations. Not enough people are focusing on that. And what we're actually going to do to solve it. I know Stanley Druckenmiller is one of the only analysts out there, investors that has put a spotlight on it. I think he went to USC and spoke about how your generation is going to have to figure this out because we can't afford it. Have you looked into the numbers at all? Because I think that Social Security is going to run out in what, like 2030 or 2035 at the latest, the trust fund. And then what are we going to do? We're obviously going to have to print, Right? But I mean, how do you think we solve for this? This is like a generational crisis, really how I see it.
- [39:57]
A
Yeah, I mean, there have been numerous proposals. You can go back to, you know, 2011, I think it was the Simpson Bowles. And there's ways to fix the problem. The problem is you need to reform the program to be more consistent with what is happening on the ground today. And that the only way to make that work, the only way to make the math work, is you need a combination of some additional, you know, flows of capital in to support it, some additional taxation, which People don't want to talk about. But you have to, have to figure that out. You have to revisit some of the expenditures, whether that's through means testing. If you're familiar, like, you know, if you're, if you've got significant wealth, like, are you really going to draw on Social Security? Do you really need that extra check? Well, yes, I paid for it. Right. That's the response. But you need to means test that. I think that's the equitable, fair thing to do, to say, like, listen, we understand you paid into this, but for the sustainability of the program, we can't make out these outlays. And then the third thing is you have to, you have to look at the age. I mean, when Social Security was created, it was never intended to be a constant stream of expenditures for people 65 years or older. Right. Because at that point, 65 was like sort of, wow, you made it to live that long. The life expectancy was much lower. You didn't have as many draw. Now we have people where, you know, due to modern, wonderful things, due to modern medical advances, health advancements, you see people living into their 70s and 80s and even 90s on a routine basis. If that is the case. Right. If the, the median age is rising, to me, you should revisit, like, when people can actually be eligible. It's supposed to be a, you know, sort of a, a protective system to prevent seniors from falling into poverty. Right, Right.
- [41:33]
B
So always great intentions. Right. But the outcomes are, especially now, over all this time, one obviously could not account for. And it's just crazy to think how much that takes up of our budget, these types of obligations, the Medicare, Medicaid, again, it's like, how do we pay for all this? Well, they're going to have to print. And sometimes when I've thought about Social Security, I obviously didn't know this growing up, but if you had just allowed the person to invest, they probably could have done pretty great in the market and had a nice little nest egg as opposed to the tiny, you know, pittance they're going to get that has been destroyed by the purchasing powers, completely destroyed by inflation.
- [42:11]
A
The flip side to that, though, just to play devil's advocate, is that people used to have the same arguments with pensions. Right. Just let people invest and put their money. But then what you do is you basically turn the stock market, as Luke Roman and others point out, you turn that into like the retirement apparatus for the entire country, which is not what it's supposed to be. You're not supposed to create a stock market that literally the entire system relies on it going up. Because if you don't, receipts fall and you introduce a vulnerability. So you know, people, when they're putting it together, they would be shocked. You said, well, just let people invest their own money in the stock market. The stock market's not a guarantee of going up unless you make it public policy to make it a guarantee of going up. So it's.
- [42:48]
B
And that's what we have, right? That's literally what we have.
- [42:51]
A
And the reason we have that is because we basically tied everything to it.
- [42:54]
B
Yeah.
- [42:55]
A
You know, so it's like it's not an easy solution if you. The idea was we want, we want seniors to be safe and protected from something like stock market volatility.
- [43:03]
B
Yeah. Well, so let's pivot back to bitcoin for a second. How bullish are you for the next year? And do you think that bitcoin can help create kind of an equity based system where the average person doesn't have to invest in overinflated stocks and real estate and kind of become a speculator, but they can actually save in a form of hard money that is sort of outside of that entire system?
- [43:28]
A
Yeah, I'm very bullish on bitcoin. I think again, as I alluded to earlier, I think that there's very little slack in the market. Now I want to define very bullish. Like I think we can make a new all time high this year. I think we could potentially even go higher than that. Bitcoin as it matures, as people sort of start to look at the asset in a more nuanced way where you don't have to time these cycles every four years, that it's going to flow with the broader risk asset complex and the broader economic conditions. I think the people's approach to how they hold it, what they sell, what they trade, it's going to evolve. And to me you have very, very early indications of this. Now I do think long run as an essential element of someone's portfolio, it's going to be a very nice addition, but it's not going to cause broad spread, equitable. I think resolution of these issues we're talking about in the near term. Okay, if you're struggling, working class person, I don't want to mislead anybody to think like, you know, saving a small amount of bitcoin is going to suddenly make you an overnight millionaire. Right. I do believe generally in the principle of saving and investing. I think bitcoin plays a huge role in that. It plays a role as a diversifier. But you know, there, there are assets as a whole where I think you should try to be more of a saver and consume less and save more with, with the idea that this is a long term play. To me, I'm more excited about Bitcoin, continue to be more excited about Bitcoin than, than anything else because I think that is still untapped in terms of the public consciousness of what the asset can be in a portfolio. That will come a time where bitcoin, I think is just looked at as just kind of like a gold. Right. Like you have some gold exposure, but it's not there yet. It's not anywhere near that. I think it could be 10x higher, which is great. Right. But to me, the equitable concerns, all these other public policy issues, they're not going to be resolved in the short run by just Bitcoin. I sort of fade those narratives that the bitcoin fixes everything in the short run just because I think we've got massive issues and Bitcoin is a tool for a lot of disadvantaged people even outside the United States. It's very attractive and I truly believe it is like freedom technology. But it's not a panacea that's going to be able to solve every issue that we're facing.
- [45:43]
B
What percentage of someone's portfolio do you think should be allocated to Bitcoin?
- [45:46]
A
Well, that depends on where they're at in life. Right. Like, I mean there to me, I think the first question is get off zero. Right? I think it's what I think is crazy. Let's start there. I think it's nuts when I see people that have significant seven figure stock holdings and they own zero bitcoin. I was just talking by a guy about this. You have all these companies and all these different, you know, international stocks, domestic stocks. You've got, you know, 20% fixed income bond exposure. You have zero Bitcoin, zero. You even have. Some of these guys even have gold exposure. Okay, so they're not heavy on gold, but they have all these different assets. But you have no bitcoin exposure. You have this revolutionary technology that's gone from zero to $126,000. It's not dying. You have a whole group of people that believe in this with fervor and are going to do whatever they can to talk about how Bitcoin fits in there. And they're supported by the data. It's not just like you're, you're trying to pump your bags. The Data for bitcoin and bitcoin is diversifying. Your portfolio is very strong. We've got institutional grade research that shows this and you have no bitcoin exposure whatsoever. More even, even the guys that want to trade it and are volatility junkies. I don't understand that at all. Because you can go get your, your volatility fix as a junkie on numerous assets, go trade zero day options or something else. I don't understand people trading bitcoin like that. That makes no sense.
- [47:05]
B
Well, so what's their reasoning for not having it?
- [47:08]
A
I just think it literally is that they don't understand how it fits into their portfolio. They don't understand it. These things take time and a lot of people, I realize this more and more just through conversations with people in the bitcoin space and people that are now coming in, the newcomers. Right. A lot of people rely on in the financial services, somebody telling them what to do. Yes, they tell, they want the answer. They say, you know, listen, I wouldn't perform open heart surgery on myself. I'm going to hire a doctor to figure that out. Same is true of their finances, believe it or not. If you ask even high net worth individuals what's in your, your, your what holdings, what do you, what do you own? They're saying, well, whatever my guy tells me to do. So to me like winning over that class of people, the guys, the FAs that are out there. True. That's massive.
- [47:56]
B
It's so true.
- [47:57]
A
And now we have one of the most. I mean just think about this. You said you started out the show saying bitcoin was a little bit depressing in terms of the price performance of the year. We have Ibid, which was the most successful launch of any ETF in history. I mean that talking point alone should be number one in the face of a sideways market. For a year Bitcoin didn't fall apart. IBIT has increased its bitcoin holdings. It's continuing to have new inflows. To me that's really bullish. And you're talking to some of the biggest financial services companies in the world who will all go out and give their little talking points and the little cheat sheets to their FAs to say, okay, put your guy in a little bit of bitcoin exposure just like he has a little bit of this. And that's really encouraging. That's what you want to see if we're going to get broad spread adoption. Now is it the original cyberpunk, you know, idea of peer to Peer. No. Can it become that 10, 20 years from now? Yes, absolutely. I think it absolutely is the technology that's robust enough to do that. But first you want to get Bitcoin orders of magnitude higher. You want to build out that store of value case. So I've been very frustrated because I think all I see is positive in the bitcoin space. And because we didn't have this big, you know, having cycle pump, people are downtrodden and I don't get it.
- [49:17]
B
That's fascinating. I tend to agree with so many of your points. I think we have such a long way to go. I think the institutional side coming in and the passive investing into Bitcoin is going to make a big difference. So here in the U.S. again, that kind of store of value narrative that's becoming stronger and stronger where you can't not have a little bit in every portfolio. And then in the developing world, the global south, the medium of exchange side of it, the peer to peer side of it growing, and eventually those two worlds, I think will converge. Do you share what percentage of your portfolio you allocate to Bitcoin?
- [49:48]
A
Yeah, I mean, frequently. It's like, it moves quite a bit.
- [49:52]
B
Okay.
- [49:52]
A
I think it's over 80% now.
- [49:53]
B
Oh, so I mean, you're, you're like far in the extreme.
- [49:56]
A
Oh, yeah. I mean, I haven't sold any Bitcoin since 2017.
- [50:00]
B
And you keep buying.
- [50:01]
A
I do keep buying. These days. I've been buying a lot through the ETFs, which there's, there's reasons for that. Just because I, I have my cold storage. I've established that. I don't want to mess with it. I don't want to deal with it. It's just easier with the ETFs, and I don'. I don't view it as a negative. And what is going to come, I think, is you're gonna see much more integration over the next several years between the traditional legacy finance world and Bitcoin, allowing deposits like I fully expect to be able to deposit my Bitcoin into my JP Morgan Chase accounts and into my Fidelity accounts and other accounts. I think you're gonna come seamlessly integrated. You're seeing that already, and it's gonna be really exciting. And I think as treasury companies, I don't think they have had a rough year. Right. But I don't think they're going away. I think there's going to be a lot more treasury companies that are going to want to hold exposure to this. And I think it's only going to grow. So to me, like again, all these things are noise. I really, I really think of the last. Last year has basically been noise. We had sort of a front running of this whole cycle theory, right. Pre election, pre Trump, like we, you know, we made new all time high. I think even before the halving of memory serves. All this stuff is great. I mean, I failed to see a negative on the horizon. The only negative I would say is again, if I'm wrong about the broader economy, then all bets are off the table. But we'll see.
- [51:25]
B
Fair enough. Very bullish. Okay, before we get your final thoughts, since we did it last year, your price prediction for the end of 2026.
- [51:34]
A
So at the end or the high of the year?
- [51:36]
B
Year. Let's do both.
- [51:37]
A
Okay. So for the end of the year, I think we're gonna be in the 120 range.
- [51:44]
B
Okay.
- [51:45]
A
For the high of the year, I think we can get up to one. See, I ran this the other day, I should remember. I think it was 157.
- [51:53]
B
157, yes. The high of the year is the bull case for 2026. All right, you heard it here first. Final thoughts, Joe.
- [51:59]
A
Just that people should be optimistic and realize that there's a lot of opportunity in the world today. Even with all of the problems we're talking about again and again week after week. The people that are out ostracized from the economy, the people that are struggling, I don't mean to undercount that at all, but what I truly believe in sort of is helpful and healthy for people is to focus on what you can control. And there's so much negativity again and again because people are disappointed now politically. But at the end of the day, that doesn't. It's not going to help you. It's not. It's not going to help you become healthier. It's not going to help you become more financially stable. It's not going to help you with your job prospects. People that are listening to this podcast, which I think they're trying to better understand the world and they're trying to also improve their lives. What helps you improve your life is action. Doing something, whether it's being allocated to Bitcoin or learning more about the world, that's what's, what's productive. So instead of complaining this year, try to figure out, you know, several ways in which you can do something to improve your current situation.
- [53:01]
B
That is beautifully said. The information is out there. We can all empower ourselves. Thanks so much. Joe. I will link your legal work in the show notes and hope to see you again soon.
- [53:09]
A
Awesome. Thanks Natalie.
- [53:10]
B
Thank you so much for checking out this episode of Coin Stories. Make sure you're subscribed to the show so you don't miss any new episodes. If you can, turn on those notifications and leave us a positive review, they really help the show grow organically with new listeners. We have a free weekly newsletter. You can sign up@thenewsblock.substack.com this show is for educational and entertainment purposes only. Nothing should constitute as financial investment advice, and you should always do your own research. I'm always open to feedback and guest suggestions, so please feel free to reach my team@infoalkingbitcoin.com I'll see you next time.