A (3:07)

I think bitcoin bores people to death. This is what bitcoin does. It lulls people into a state of complacency and uncomfortability where they're not happy that it's not reaching new all time highs every day. But again, it's insane. Looking at the charts now, we're at $2.5 trillion market cap. And thinking back to our conversation earlier this year where bitcoin had established itself as a $2 trillion asset and it's already added 25% more in market cap since then. And it's like, what do people want? What more do you want? It's up almost 100% over the last one year. It's up 32.6% year to date, five years, up over 1,000%. It is monetizing in real time. But you were alluding to some things that have manifested over the course of this year that may have some longtime bitcoiners butthurt because they made the wrong decision.

B (4:03)

Oh yeah, the old treasury company trade. This is one of those things that I love it. Like all things, I love the gray zone. The gray zone is where I find it interesting. And you know, you look at some of the comments I get on Twitter, I was, you know, I poked fun of them on Twitter saying, you know, Bitcoin's at 125 grand, it's punching all time highs. And I just flick through all the treasury company charts. Down 60, down 70, down 85, down 95. It's like some of them are punching new lows as bitcoin is ripping to new all time highs. You just look at this thing like something is going on here, right? The market is in my view, like my real high level view. I've had this line that M Nav gravity is towards one. It appears to be that M Nav gravity is indeed towards one. By the way, gravity just means that's the acceleration, that's where it wants to go. There are a handful of these companies that I think are going to be able to fight that gravity. But you need a toolkit, right? And if your stock goes below one, it's just hard to dilute shareholders. We're below one. And then people are saying, oh well, why don't they buy back this stock? And I'm just like, why would you want to own a hedge fund that isn't a hedge fund that basically sells bitcoin at the high before it runs to buy back their stock, which is in a downtrend, right? You're like you're rotating out of your winner into your loser. Why would I want to own a company that does this? So I just think the toolkit for companies that aren't strategy, that aren't maybe Meta Planet, like there's a handful of these things that make sense. I just think the market's sending a really, really brutal signal that there isn't quite the demand people thought there is for this like hundreds of treasury company trade type idea companies that save in bitcoin's great. But like I just, I like, I just think there's a lot of, there's a lot of capital that's been incinerated and I think that's put a dampener on moods. Honestly. Some of them might come back and if bitcoin goes on a tremendous run, there's no question there'll be some kind of premium baked back into these things. But will they ever, like if you go and do that calculation of what it takes if you're down 95%, if you're down 95, it means you've been down 90, you've been cut in half again, you've got to get a really, really big return to get back to break even. To get back to break even. So it's a challenging proposition.

A (6:14)

I think it really is. And for most of these companies, I agree with you, there's going to be a Pareto distribution, probably even more pronounced of a distribution. And I've been saying it all year, it's Just too good to be true, that you can just easily spin one of these up and issue shares, do converts, whatever it may be, accumulate Bitcoin and have your stock outperform Bitcoin. To your point, operating businesses that are profitable, doing something completely different and unrelated to bitcoin, that has value and provides utility to the market and they're funneling their profits into Bitcoin, I think that's the best strategy long term.

B (6:56)

Totally. I mean our business does exactly that. So like, and that's, that's the separation. There's like the all in sale of style strategy. Whenever I talk about treasury companies, that's all I'm talking about. Like companies that just sweep cash into btc. Good, fantastic. Exactly what you should be doing. It's the ones that go all in. That is a very, very tough, it's a tough business because you don't have the scale, like strategy has the scale to tap debt markets. They have the scale to do preferreds. They have enough inertia where the market believes that they can, you know, 640,000 corn. Sure it's going to be hard to double your stacks and then over two is challenging, but they also have the most means and likelihood of being able to do that if once you get these small penny stocks, once they go below an end of one, like how do you restart those engines? It's tricky. But you know, that's, I think that's one element. But I also think that part of this whole story is actually just derivatives as well. As the market matures. That is, I mean the least discussed. But I think most important thing since the ETFs, there's a market structure shift has been these IBIT options. I don't think people understand how big they are. I'm doing a report as we speak on this. It's $0.51 of options leverage per dollar in IBIT. Like it's exploded. It's now 57% of the trade volume for options. It's overtaken deribit. And then he went live in November. So this, this is just a massive, massive, massive shift to market structure. You know, it creates more avenues for leverage. Wall Street's going to start playing games to capture volatility. But as we know, Bitcoin has this very, very unique characteristic where it lulls everyone to sleep and then it rips and it just moves. And that's the kind of thing where you can get a bunch of guys really offsides. And where we are right now, we're 125something or 124. There's a massive pool of calls, like 350,000 contracts that are due in October, just October. So it's a massive, massive chunk of, of total open interest. These are people who've sold covered calls above the previous all time high. They've just flipped over to being out of the money. Right. So they've essentially the court, the buyers of those calls are in the money, so they're happy. But the guys who sold those covered calls, sure, if the price stays here at 120, 425 till the end of October, that's fine. They collect the premium, they. But if we go to 130 or 140 and we just keep climbing, suddenly they've given up all that upside at massive scale. So you'll probably see the higher that the price goes, the more of those guys are going to say oh shit, I shouldn't have sold that upside and start flipping and going the other direction. So it's going to be a very interesting dynamic.

A (9:34)

Well, that's one variable of many that you highlighted in a recent report that you did in collaboration with Unchained about the changing market structure. And we've been touching on this during, during our quarterly catch ups throughout the year. But I don't know, I read the report, went through it, you seem more bullish than you have been throughout the year. You're calling for 150 and I believe the report had some potential targets above that.

B (10:02)

Yeah. So I think the dynamic as it stands. So chopsolidation has been my meme of the year. Right. That's been actually meme of the cycle. We've had two major phases. The first one was in 24, proved we're a trillion dollar asset. Tom. Second one, I would say all of 2025 has been one big ass chop solidation. And just for clarity, when I say chop solidation, it derives its name from an index, a technical indicator I call the choppiness index. And it basically looks at how much energy is in the tank for a market to keep trending. Short story is when the market runs really hard in either direction and it works on daily, weekly, monthly timeframes, you just hit a point of exhaustion where the market can't keep running. It's gotta take a break. And my definition of chop solidation, so obviously taking the chop part, combining with consolidation, price goes nowhere for like 6, 8, 12 months. Absolutely nowhere. You close your eyes, but it's sold off, it's rallied, it's blown up, it's liquidated. People like Accounts of the bodies of traders are littered all over the road to get there. And the price is dead flat. 2025 is more or less been that right up until very recently. We're at 110. We had a previous all time high in January at 110. The market's gone basically absolutely nowhere. And only in recent history we started actually lifting off that base, that 2025 zone. Here's some, some fun facts for it. 30% of the supply currently has a cost basis above 95k 60 if you price those coins based on when they moved on chain. So really people, yes, some of us think about things in BTC terms. Most people think about it in USD terms. When you buy a big slug of bitcoin, you're looking at the price relative to that purchase price. So the dollar value is actually what people emotionally anchor to. So 30% of the coins are up there. But 60% plus of the dollars that have ever been invested in bitcoin is above 95k. This is our new home, right? Imagine if we go down below 95, suddenly that 60% of dollars, they're all underwater going, holy shit, did I just buy the top? So you can imagine how the sentiment would shift really badly if we're below 95. However, we've now bounced, right? We're now at 125. We tried to sell off. And let me tell you, there are plenty of signs of slowing momentum in this market. And you're right, I've been, I've been relatively cautious over the last, I would say month or two really since the first 125, all time high. Somewhat cautious because I was like, why is gold ripping? Why are equities ripping? Why isn't bitcoin ripping? And there's this idea I've been floating around recently where gold I think tells us the future. It's where we're going when all is said and done. It smells out the debasement first months in advance. Bitcoin is much more sensitive to the near term local liquidity. So if bitcoin was showing weakness, gold is ripping. One interpretation what that could mean is that the path between here and where gold is is a bit weaker. Right? Where you maybe you see a crack in the equity market, maybe the AI bubble slows down. Whatever it is, the response is going to be debasement at a monumental scale. This is the big print idea, but bitcoin is going to show us the road to get there. Now the fact that we're still pushing up to 125. Great. And honestly, the market is now saying, I want higher. So my like big picture view here is we like, we could have gone to 95. That would have been I think all over for, for the bull. We didn't, we didn't even get below 110, which is a critical level there, short term cost basis. And we've bounced. We did that twice. The bulls are now in control. If we go back down to 110, you now have to ask yourself, where the hell are the bulls? What are they doing? Like, where's your firepower? So it kind of sets us up with a really nice just framework. But going back to your original question, that shop solidation we're seeing in 2025, if my thesis is correct, we've built an enormous base up here at 2 trillion. We proved a trillion in 24. We've proved 2 trillion in 25. So now the question is how many trillions? And I mean the most logical thing is let's go to 150, let's see what that looks like because that's 3 trillion. But we've got this massive base, right? 60% of the dollars invested in bitcoin have said I want it above 95k. Like that's more of a floor than it is a ceiling. So it's one of these nice binary setups and markets. You've always got to hold two views at the same time. We have no, there's no excuse for the market to go down to 95 right now. We have proven that we want to go higher. The bulls are in control. If not, the bulls are just weak source and probably over for a period of time. But that's not the base case because we're at 125 and it feels like we want 150 and we're coming off a really, really nice stable base. You can kind of start lifting some of your targets and saying, well, because we've proven 110, that's the floor. Where, where do we go from here?

A (14:57)

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B (17:24)

And so I'm pretty sure that I called out this chart. Like, if there's one thing in the entire bitcoin market cycle, if there's one data point that says, like, this is measurably different. And it's important to make the distinction here. When I say this time is different, it is not in the financial sense of the word, which is that when, like the foremost dangerous words in finance, this time is different, is when it's ripping to the upside and everybody is just saying, new paradigm, no, no more bears, blah, blah, blah. That is not what I'm talking about. This time is actually different. And you can see it in this chart. We are trading in a very, very different regime. If you look in previous bull markets, Bitcoin is very commodity. Like, volatility picks up during the upswings and then compresses in the bear when no one cares about it. We've had this very, very compressive old profile. And there's a number of factors that come into this. There's derivatives, there's options. There's also just this kind of institutional bid that's under us. One thing that's been very characteristic of this cycle, if you look at spot order books and because as you would know, you can do taker or you can do maker, right? If you're a maker, that means you're putting in a limit order and saying, I want to buy Bitcoin below the price. Or if you're a seller, I want to sell it above the current price. The taker is the one that goes across the order book and actually hits the ask or hits the bid and is actually taking liquidity out of the books. For almost the entirety of this cycle, we've had a massive bias towards net sellers, people who are market selling into buy walls and the price hasn't gone down more than 32% twice. There is a huge amount of liquidity that's just sitting there on the buy side, but it's not rushing to the other side of the book. And it's not doing FOMO buyers, it's allowing the market to sell to them. It's a much more patient, much more conservative, sophisticated, honestly bid side. And it does, it compresses the volatility because you're not getting those crazy downswings. We're also not getting the crazy upswings. But there's this like, demand cushion sitting underneath the price, just accepting all the sell side. And let me Tell you, there has been some tremendous sell side this cycle. Tens of billions of dollars in a month. We saw 80,000 bitcoin get sold. The market went down 3% and then recovered. There's just all these dynamics that say that we have a very sophisticated bid side and they are, they're just boring people to death, right? People are selling because they think, oh, you know, bitcoin cycle's over and, you know, we've come to the end of the four year cycle and it's been shit, I may as well get out of this position. And then these like giant ball of buyers just like, thank you very much, keep it coming, keep it coming. We're just going to absorb, absorb, absorb. And then one day it's just, there's going to be no sellers left. It's just going to rip. Yeah.

A (20:05)

And it's funny too, the October meme really becoming true in the first six days of the month. But then just pattern recognition of the psychology of the bitcoin market. Specifically, you have Paul Tudor Jones on CNBC this morning. Bitcoin's going to rip. Gold's rip. Bitcoin's going to rip. You have a bunch of people in tradfi. You had JP Morgan come out and basically say, we surveyed our clients and we're asking them why they're investing in particular assets when it comes to gold and bitcoin. They're doing it because they're worried about debasement and fiscal dominance taking over. And then you had Mohammed Elaine come out and basically say, oh, bitcoin is the debasement trade. And so you sort of have this mimetic power narrative, power building around it at the perfect time too.

B (20:54)

Which, by the way, bitcoin has just memed that shit into existence, by the way. Like, we literally just said it enough times now. The whole world says it's great.

A (21:01)

It is. I mean, it seems like the basement is on the table. I think if you look at what's happening here in the United States, particularly with the economy, it seems like the economic data is painting a different picture than what's actually happening behind the scenes in terms of the quality of life of most Americans that particularly don't own financial assets. You look at this push towards AI dominance and it being viewed as an arms race that we have to win. And when you factor in the amount of money that's going to need to be poured into that, it's immense. And we're seeing that manifest in the form of industrial policy being at the scale that it probably hasn't been since World War II with the Trump administration taking stakes in chip manufacturers, rare earth metal companies, pushing for the takeover of social media companies as well. And it seems like we're definitely hitting a point here in the United States where the sort of combined factors of the economic backdrop and the industrial policy and goals that the Trump administration wants to go after demand that, that we unleash the money printers or inject stimulus into the economy one way or another.

B (22:19)

And they just, there's just. There's only so many options that they have, you know, like these. This is just what they have to do in many ways. So it's part of that dynamic of the trapped. If you look at the. The correlation between like people say bitcoin's just levered Nasdaq, but bitcoin's the correlation between bitcoin and the Nasdaq, Bitcoin, the S and P, bitcoin and gold. Since 2022, since the bottom of that bear market, it's basically bitch has been one. So everything is just correlated to everything. And this is abnormal. And it's because it's all one trade. It's all one trade. There's just something wrong with the denominator. And again, gold is sniffing this out. We have an inert yellow metal as well as a bunch of silver medals. In fact, I think I said on your pod sometime back that I was a platinum maxi. Platinum is like one of the best performing precious metals at the moment. Kicking ass. The market is just saying give me something that isn't cash because cash is just not doing it for me at the moment. Which is. It's incredible to watch.

A (23:12)

No, it really is. I'm going to pull up this chart. I can't find the Luke Roman chart off the top of my head, but I know that we shared it from 10:31 this morning. But just really drive this point home. It's crazy how under the radar it is for most people, especially when you consider how much bitcoin gets besmirched in the media. If you look at the S and P going back to 2020 denominated in Bitcoin terms, it's clapped by 88%.

B (23:45)

On my deck, there's two charts are probably relevant. Look at slides 8 and 9. These are both really nice visualizations. I think bitcoiners misunderstand gold a lot of the time. I like gold, my second biggest holding. And I think it shows us the future. It helps me understand where the bitcoin trade is going to and why it's doing what it's doing. So get, I think to the next one, this one here. So I like to use gold as my benchmark. So basically for those who are just listening, what we've basically done here is since 2022 and specifically February 2022, and the reason that I've checked that date is that's when the US froze Russia's reserves. That's the immediate signpost to say, hey, the treasury market is no longer your sovereign savings vehicle. To anybody who is listening now. It also, the reason I like to pick that date is a, it's a very important geopolitical date where the, the foundation has been challenged at a fundamental level. Counterparty risk has been reintroduced to the savings asset. But also it's not cherry picking like bitcoin's bottom and saying, look how much it outperformed. We're not cherry picking bitcoin's top and saying, look how, you know, how much it got destroyed. It has the bear market and it has the bull market that follows. And basically what I've done is everything is indexed to gold. So gold is the benchmark of one, and it's just looking at all the major fiat currencies. Dollar, Mexican, peso, Aussie dollar, euro, pound, whatever. They're all down 40 to 60% in gold terms. And that's when I took these measurements, which would have been in late August. So it's down even more than that. I view gold as like the benchmark inflation rate over the long arc of time. It is the real, the real inflation rate. Bitcoin is up 50 to 80% more than that. Now it is versus gold, and that includes a 55% drawdown versus in the 22 bear market. But if you go down to the next chart, you can just say, well, you know, fiat currencies, they're all programmed to debate. So yeah, of course bitcoin and gold are beating fiat currencies. Well, let's price the s and P500 silver TLT bonds, which is Luke Grohman's favorite line. Let's price all of these in gold and they're down 10% for silver, 24% for S&P, 65% for bonds since that same period of time. So clearly there is something going on with these hard, scarce, sound money assets. Coins of all shapes and sizes are doing particularly well. Everything else, yeah, everything's part of the fiat Ponzi, not so much.

A (26:16)

Well, do you think, I mean, taking into account that this time is different in the sense of the market structure and the players that are involved in the bitcoin order books and the derivatives around them. Specifically, do you think people are beginning to wake up to this? And if so, how does that change things moving forward?

B (26:37)

So here's an anecdote. If I regularly track what's going on at the local bullion dealers here in Australia, almost all 1oz gold coins are on backorder only. When I was buying platinum, every time I would go in I would say, hey, is anybody buying this stuff? And they'd be like, more sellers than buyers. No one really cares. I can't find a platinum coin to save my life now. Sold out everywhere. All the gold coins are on backorder. Even the silver market, right, they've got, they got thousands of these, you know, silver coins with stupid designs on that no one wants to buy even they're starting to run out. So like just the local bullion deals are moving into back order. Only here in Australia there is a clear demand. Now what does that do to people's psyche once people work this out? And this is another thing that I think bitcoin has memed into existence. Gold bugs tried forever to get fiat currency. Call it what it's actually called, give it the name. It took forever for gold bugs to even achieve any kind of, you know, acceptance of the term bitcoin to show up on the scene. Next thing you know, everyone from Gen Z to boomers are talking about fair currency. So we managed to just crack that egg and say, hey, there's something wrong with your denominator. Call the evil what it's called. And as people work this out, this is another thing I think is really interesting. We're obviously in an era where information travels much faster, narratives travel very quickly through the Internet. There's this dynamic at play where we're just kind of working out what the actual trade is much, much sooner. So I think about this in the context of the AI boom. I think there's a lot of evidence that it's a bubble. I'm certainly a little bit concerned about it because I get there's the industrial policy side of it, but also the revenue picture of it is very, very questionable. But how quickly. If you look at the dot com bubble, it took a long time for people to actually work out. They had many, many years of this thing just going vertical. And there's no question there was a, you know, all the fiber was laid and all that. The Internet was super powerful, blah, blah, blah. Are we going to reach that point of the pets.com recognition moment much sooner? So if People kind of index and say, oh, it's still 1999, but what if the timeline from 19 to 2001 isn't two years? What if it's two months? What if things just travel much, much quicker? And in my view, that's the one thing. If there was a major risk vector for bitcoin, I actually don't think it's internal. I think the bitcoin market is actually quite sound, quite solid. I just think that the external factor of, hey, suddenly the AI bubble isn't quite as healthy as we thought. There's some kind of external event that just breaks down. That's the main thing that I think is hard to analyze, hard to kind of track when those things pop. But there's enough warning signs that we should be paying at least a little bit of attention.

A (29:26)

Yeah, it's funny, I've been spending the last two days really battling over this question internally in my own mind. I've had Jordy Visser on the podcast and I've been watching his weekly show and watched a bunch of other shows to it too. And when you, when you compare the AI boom to the dot com bubble, like they obviously rhyme in many other ways, but then there are ways in which they don't rhyme. Like.com era was laying broadband and there really wasn't much use for that broadband yet because nothing had been moved to the, to the digital world in size or materially or anything that was worth monetizing at that point in time. And I guess this is what Jordi and many others are saying is that it's different in the sense that the AI has utility from a productivity standpoint right now for whoever uses. I think ChatGPT has 800 weekly active users and everybody admits that there's definitely a massive misallocation of capital going within AI specifically. It's just the question of is it as sort of catastrophic, the end result is catastrophic as the dot com bubble bursting, or is the signal within the capital that's been allocated to AI strong enough to just shed yourself of the bad investments and the good ones will shine? Not only will they shine, but they'll produce so much productivity in advance, the people who leverage them so much that it won't be as bad as 2000, 2001? I don't know yet. Jury's still out in my mind. But it is one of those fascinating inflection points that we find ourselves in and trying to make decisions, because this is all new to everybody who's involved, especially when you consider the exponential increases to productivity that AI is bringing the world.

B (31:24)

Yeah, I very much agree. And I think there's no question the potential is there. And again, this is very, very anecdotal. I certainly find for me, AI makes way too many mistakes. When I was trying to do this study on IBIT options, I started pulling number from because data sources in the TRADFI world, you'll be amazed how often they diverge. And you're like, hang on a Second, I've got 5 billion from this source, but I got 35 billion from this one. Which one is it? So it's very, very hard to actually reconcile this stuff. So I was using AI, I tried Grok and ChatGPT and I'm like, can you just estimate for me what is the open interest for Ibid options? And then you do the deep think one where it actually really goes through and looks at different websites. And as I'm reading through its copy, it's like, I'm just going to assume that there's a million contracts open and then just carries on. I'm like, what do you mean you're going to assume there's a million contracts open? And I just send it a website. This one here says there's like 53 million contracts open. Oh, yes, you're absolutely, and you're absolutely right, there are 53 million. It's like, fuck me, like, do I have to check everything? And I do wonder. It'll get there. But the mistakes it makes already, I find that I'm using it less and less. And then again, that's just me and how I work. I mean, I like to write my own stuff anyway. But even in my coding, like it helps me do when I'm building up charts and things, yes, it can make things faster, but also the amount of times it just introduces random bugs or like it wants to make a change. I'm like, I don't want to change anything. Just like, fuck off, leave me alone. And sometimes I just have to disable it because I'm like, you're literally just a pain in my ass. I didn't focus on my own work. So that's just where we are at the moment. So again, that's not a, that's not a perfect analogy to say that it's all, it's not going to work, but there's still a lot of errors and I can't quite see. Like, for me, I think the AI, there's a lot of similarities to bitcoin mining. Some examples of this, if we look at like the subsidy and fee model for mining, they don't control their output cost, which is Bitcoin. That's the thing they produce. The subsidy is guaranteed income. The fees are volatile and based on user, user application. We've gone through a phase at the moment where they're training all these LLMs. That must happen. It's like a big race for building up these LLMs. That is guaranteed usage of these chips, of these data centers. That's the subsidy. But at some point that's a very expensive exercise and those models get deployed and they have to start actually generating revenue in people's business models, in apps, whatever it is. Over time that subsidy is probably going to have to give way to the inference side of the equation where people actually have to use AI. And by using it, that's your fees. It has to be useful. If you keep plugging stuff in and it goes, I'm just going to assume this legal premises. You're like, but that's. There's no premises for this whatsoever. The more people are going to say maybe I can't trust this thing to actually do the job I'm asking it to do, so therefore your fee revenue goes down. So it's one of those dynamics to just keep an eye on that we're just not there yet. Where I'm like, it's going to replace thousands and thousands and thousands of jobs. It'll certainly replace some and it is, but I'm not necessarily convinced that we're going to see like a shedding of the workforce in the next period of time. Now that's a longer term view. That is something that probably will happen. And the sad reality that I have to balance this with the world is a bell curve. And sadly, even with all the mistakes that AI makes, there are still a lot of people who probably are going to be replaced by the systems as they stand today because they also make mistakes. So that's also a challenging dynamic to be aware of. But yeah, it's hard to get your head around where we are in this whole mix.

A (34:59)

It really is. It's so fascinating. Dude, I completely agree. I catch it making mistakes every day. We've been leaning more into the video gen stuff which has been fun, but it's, it's just fascinating to think through this. And I wish I wasn't actually, I don't Wish I wasn't 9 years old when the dot com bubble was bursting. But it would be interesting to be able to sort of teleport back to that point in time and try to gauge the sentiment Correlations that are happening, that were happening back then that are happening today. Because everybody in Silicon Valley and obviously on CNBC is like dead set. Like, it's here, it's happening. We're getting to the point where trillions are being poured in. It's like, oh my gosh, better hope this pays off. But it also highlights the relative value of Bitcoin as well. I mean, we talk about this a lot at 1031. You have all these venture capital funds and growth funds being thrown at AI, and yet still bitcoin, which arguably I can make the argument is more important or a bigger total addressable market than AI, because it's going to be the whole money of all the world and AI is even going to be using it. Still overlooked by these same investors.

B (36:18)

Yeah. And I think one thing that I've, I can't remember where it was a couple of days ago you saw the headline that Nvidia invested 100 billion in. I think it was in OpenAI so that they can buy 100 billion of Nvidia chips. And you just like, this is some like PowerPoint plugged into itself type shit. It's starting to get a little bit circular. And like, where have we seen this before? The crypto industry in every facet. Like, we're going to fund this protocol, but you're going to fund this one, which you can put. And you just see these like loops of internal financing and you're like, is that because you can't actually raise money anywhere else? Like, is that what's going on here? So some of those dynamics are also, you know, leverage and debt starting to creep in. And again, I'm not an equity analyst. I couldn't tell you where we are in this whole cycle. But also I've come to trust my gut in markets because generally speaking that serves me well. I just have this, the smell test. Like, like at some point this doesn't carry on the way it's currently going. Right. We're getting close to some kind of climax here.

A (37:17)

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B (39:30)

Yes. And that's one of the real challenges, right? You've got all these competing forces. And I was listening to Brandon Quiddam talking with Danny the other day, the whole fourth turning idea. You've got like the long term debt cycle, you've got the social structures that are the institutions that are weak. You've got all these things coalescing at the same time. Liquidity cycle debt Refinancing, social cohesion, you know, politics, all of it is just a real melting pot with, like, there's not that many stable things when you look around. And actually, I was going back to gold. I was talking to my old man. So he's retired and he has to have his assets somewhere. And he was. He's now properly convinced and he understands the gold trade. But I've been saying gold for years, for years and years and years, and he finally started to catch on. I get it. He's now understands the bitcoin and the gold trade. But he was like, why gold? And I was like, because if you look around the world, there's instability everywhere you go, everywhere you look, there's just stuff that's going wrong. And I said, do you know what a shelling point is? And he goes, no. I said, we're in Paris. And I say, I'm going to meet you at midday. Where are you going to be? And he goes, the Eiffel Tower. So of course you're going to be. That's. That's the shelling point. So when the world is in just a real pretzel and no one really knows how to, like, where do I put my money? And he was saying that he went out for, like a golfing weekend with some of his mates and he asked, how many of you guys know what's in your. We call IT superannuation, your 401k. How many of you guys know what's in your 401k? They're all retired. And he goes, none of them had a single clue what was it, what they'd invested in. They had no idea. And it's like, what are your fees? Like, I don't know. I've never checked. This is kind of where a lot of people are. So if you come back to that view, when people start to finally click and go, I'm struggling to retire and the things I own, yeah, sure, I'm getting 6%, 8% a year, but my bread just went up 25% in three years. Like, something's wrong. I'm not earning enough to stay solvent. What are they going to do? They're going to look around. Like, gold is just that shelling point where people go, I just. I get it. I don't. You don't have to explain gold to anyone. They just understand that it's valuable because it's gold. It's kind of as simple as it gets. So that's kind of the dynamic, I think, why gold makes sense. I think bitcoin it's just, I mean, gold's got the size and the scale and central banks and all that, but bitcoin is the only other asset that has even remote potential to achieve that. And I was talking about this the other day once bitcoin, I mean, it's already at 10% of the gold market cap. And by the way, the gold market cap going up is just raising the ceiling for where bitcoin's going. It's just lifting up where that target is as more people start to click that these two things are synonymous. And in a way we've again, bitcoin is kind of memed that with digital gold, call it an affinity scam if you want. We've basically associated ourself with the only other asset that's kicking ass. People are going to start saying, well, maybe if it's 10%, what happens if Bitcoin goes to 20% of the gold market cap? Once you're at 20, go to 50. And once you're at 50, let's go the whole way. Like, if you can prove that you're at 50%, go the whole way. Because if the market's willing to support that kind of evaluation, then why wouldn't it go higher than that?

A (42:43)

Yeah, no, I think this is a really important topic to dive into because I remember back in. Jeez, like the first time, the sort of bitcoin to gold parity targets are being set out there. I think the first time, if I remember correctly, it was like Bitcoin 336,000. That's when it reaches parity with gold. Then 2017, 21, 750,000. Now it's like 1.8 million. And I think in terms of market cap, that's what people really don't realize. Gold's up, what, 40% this year.

B (43:17)

It's adding literally trillions of dollars to its market cap on a somewhat daily basis at this point.

A (43:23)

And I think we're talking about orders of magnitude that you're climbing up. Gold's obviously been the target for some time, but even the target, it's like a moving target that's drifting higher as it appreciates the more people accumulate that. But the gold has added tens of trillions to its market cap very quietly. And in bitcoin sitting at a $2.5 trillion market cap, it would be basically insane to think that that could happen in the timeline that it's happened with gold. But I think that stat alone highlights how early we are with bitcoin. The fact that gold is quietly Added I believe over 25 trillion in market cap.

B (44:00)

Crazy. It was 25 trillion. I think it started the year somewhere around 25. And I think if you go back to like the run here really started in 23 from memory and if you go back 22, I'm pretty sure it's like 7 trillion at the start of that 2020 run. So it's basically added $20 trillion, right? 10 bitcoins worth of value in the span of like three years. And I really believe this is very much a elephant through a keyhole type idea where you've like, if you look, I saw a sentiment poll recently and it basically showed the allocation that institutional investors have to gold. And like 45 or 50% of them had less than 1% allocation. And you're like, no one owns this thing. And even like the upper bound was like 4%. Most institutional investors have no allocation to gold. Very, very small. And then you look at their bitcoin position, it's even smaller. I ran a study, it's a little bit outdated now, but it would have been in the first like two or three quarterly cycles of the ETFs going live. Something like 20% of the ETFs were held by institutions. And the vast, vast, vast majority of these firms had like.0001% allocated to Bitcoin over there. AUM. Now that.0001% was like tens to hundreds of millions of dollars. Like it was infant, like tiny portfolio allocation, massive dollars. And he just like, what happens if they go to point zero zero, 2.00, 3.1. Suddenly you're getting like a 10x now we're talking about billions of dollars coming in, elephants through a keyhole. At some point, like there really is just so much capital that has to find a home and it just takes time. It takes time for the market to work out. There's something wrong with my denominator and I got to go looking for an alternative.

A (45:45)

Yeah, I think that's bringing it back to like fourth turning. I know this time's not different in terms of if we get to new breakout, all time highs and it's the new paradigm super cycles here. But it is fascinating. You had Germany come out today and saying they want to raise the retirement age to 72 to make sure that they can pay out their pensioners. Trump, flippantly, just offhand comment two weeks ago, posited the same thing here. Let's raise the age to 67. I don't know if you're seeing it over in Australia. And I'm sure You've seen the TikTok videos from over here in the United States. People are in the cars talking about health insurance premiums are going up like 50% on average across the board here in the United States this year. We have the open enrollment window, which just opened up at the beginning of this month and will be open till the end of January. And people get to pick their healthcare plans there. And I think on average across the United States, the premium is going up anywhere from 25 to 60%. And the cost are just getting way out of hand. People are intuitively understanding that something has gone off the rails. And at what point do they force their politicians or wealth managers or RIAs to say, hey, you need to get into these hard assets. The math, it's funny. And then it's like I. I mentioned to you before we hit record, I moved to a new area. I was at a little cocktail party on Friday night and met a gentleman who runs a big RIA book here in the United States. And he sort of pulled me aside. He's like, I need you to teach me about bitcoin. I don't know much about it. Anytime somebody's pitched it to me, it seems too good to be true. But it's like, dude, you manage billions of dollars and you don't have a grasp on bitcoin yet? It's not. I didn't say it to him and hope he doesn't listen to this, but if you are listening to this, we need to sit down and talk because it's not okay.

B (47:46)

But it's also getting to the point where people are asking those questions. And that's again, a very, very big difference. I've successfully orange peeled four or five different people this cycle, but I don't go out of my way anymore to orange peel people if they've got questions. I've got infinite time. But the way I would characterize the folks who have actually come to me with questions, people who actually have wealth, they've got some kind of serious family wealth behind them and they're looking around and going, there's something wrong here. You know, I don't really want to keep. Invest. Like real estate's illiquid and there's certain risks with those depending on where you live. There's just all these things. People go, you know what? Maybe I actually need to look into something that is scarce liquid and just I can. Hands off, I don't have to think about it anymore. So that's the kind of dynamic I Think the kind of the high net worth individual, also the retirees, you know, we are one of our plans that we have at check and change, our orange plan disproportionately. Retirees who have a meaningful amount of wealth and they're now looking ahead and saying, well, I need to buy myself some Runway. But I also really understand bitcoin. Trying to find that balance between like, I don't really want to sell all of it, but I kind of need to sell some of it, or I need to, you know, find some kind of liquidity somewhere. But that dynamic of the type of investor who is now coming into bitcoin and staying here, that is a really, really different dynamic that I think a lot of people have missed. We're not in that like millennial Hodler phase anymore. And of those millennial Hodlers, I think a lot of us, like people say, well, why would you sell your bitcoin? This is a topic that, you know, I like to talk about because one sold bitcoin is one bought bitcoin. It's actually a measurement of demand. But there's a lot of people like you and I who are at that phase where they've got kids, they need a house, they've made a bunch of money, they kind of need liquidity to like improve their life and live. Because that's kind of more important than your bitcoin. That's another phase I think is misunderstood. People sell because they just have life requirements that are more important than number go up. Right. Because lifestyle go up is just more valuable. So I think that's another component that is worth tracking.

A (49:48)

Agreed. With that in mind, what are you seeing on chain talking about new market dynamics, new drivers for liquidity in the market and new buyers and sellers. What are the levels that are sticking out to you now that we cross over? A new all time high?

B (50:09)

Yes. So if, if I kind of. It's easier to illustrate on the downside, because on the downside, the real risk is 95. 95 is a level that we don't want to hit. And honestly, we go back down to 110. You're like, why? Why did we go there? We have no place being there. I was describing that whole block, that 60% of all the dollars invested. I called the Hodler's Wall because that zone is super, super. Like just so many coins are there, so many cost bases there. It's where our sentiment lives. We don't want to go below that. Now on the buy side and the upside, this is where things start to get really interesting, I think there's a chart I think I can see in the background there, this chart with waves. There's two arguments that I think should be put to bed. The first one that trade fire guys love to put in the put out there is that Saylor has been the only buyer in this market and it's just measurably false. There's no way. The numbers simply aren't big enough for Sailor to be the only buyer. If you flick down to. So actually we should come back to this chart. There's another one at. I think it's slide 21. So if we look at the overall. Keep going, keep going, keep going. I think it's after this next one. This one? No. Although this one's also useful. Let's just start here. First things first. The most bullish metric of all time in bitcoin, the realized cap. The realized cap. I just want to pause here because it's actually really important. It explains the next chart. The realized cap prices every coin when they last moved on chain. So the coins that you bought back in 2019 or 2013, you still hold those UTXOs. It's saved at that price point. And the reason why I like this is it represents our as investors, as bitcoiners, this is our proof of work. This is the money that we earned in our fiat job and we gave to bitcoin to look after. Right. It's when we allocated it, it just crossed a trillion dollars. So bitcoins, a 2 1/2 trillion dollar market cap. We have collectively allocated $1 trillion in our hard earned savings to this thing to look after. And by the same token, we're now sitting on $1.5 trillion of unrealized profit. Just let that sit with you for a second. Bitcoin is sitting on a 1.5 trillion of unrealized profit. Berkshire Hathaway's market cap is a trillion. So we've got an additional half trillion worth of just profit relative to Rat Poison Squared's market cap. Kind of tough. Anyway, so go down to the next chart. I think this is a really good one to understand the supply and demand balance. So I mentioned that Saylor, it is impossible for Saylor to be the only buyer in this market. So that's the first thing I want to put to bed. For those who are listening, the chart we're looking at here. So the realized cap is like the on chain market cap, if you buy a coin at 10k and you sell it at 100k, someone had to come in with an additional $90,000 to buy that coin. So it's really representing a capital inflow. And likewise, if you buy the top and sell the bottom, you've destroyed capital. So you realize cap you can increase and decrease as we all do this in aggregate. So if you look at the 30 day change of the realized cap, the best way to think about this is capital flows. It is profit taken by one guy, but new demand by another guy. Newton's third law, equal and opposite forces. So if you look at the orange curve, we see these massive waves in the 2024 peak in March, in the January, November, January of this year, November of last year. And we're talking about 70 billion, $80,100,000,000 a month in profit taking. But that's also demand. Profit taking and demand, they're synonymous. So there's two narratives that go to bed. The first one, the purple, the dark purple you can see there is Saylor. It's just so much smaller than the amount of aggregate demand. There is so much more demand than Saylor very rarely is. He's buying more than like 10 to 15% at most of the overall demand profile. So it is literally impossible for Saylor to be the only buyer because you're missing 85% now there's about 20%. The green zone is looking at the flows into the ETFs. So this is how much coin the ETFs are buying. So this puts to get bed another narrative that a lot of people have missed. They just say that all the pro. It's not really profit taking. No one's actually taking profit. They're just rotating into the ETFs. The ETFs are five to six times, sorry, the, the profit taking is five to six times larger than the ETF flows. It's impossible. It is impossible for all of those coins that are taking profit, so to speak, at the top are just rotating into the ETFs. The ETF should be 10 times bigger for that to make sense. It just doesn't make sense. So I think those two narratives can be cleanly put to bed. Now. When I talk about sell side, in my opinion, it's super bullish. Like it is the most bullish thing that's happened this cycle. 55 to 65 billion dollars a month in July and August of net sell side and the market went down 12% and it's just rallied to all time highs. That is 55 to $65 billion a month of demand that all the bears just aren't Quite understanding is sitting underneath us. So yes, there's a lot of sell side and I'm actually, I'm running a report as we speak. The average age of coins that are being spent this cycle is much, much larger than previous cycles and trending higher. We are seeing a lot more old coins, whales, OGs, like actual serious old money, lots more of it is coming back to market this cycle like significantly more than any previous cycle and it's sustained and it's been going on since mid 2024. So that's a important thing to note. And we've barely pulled back 32%, you know what I mean? Like the demand profile of who is coming in, it's institutional in scale. If you look at the actual the mempool, we have very, very few. Like the mempool is almost empty. We don't have as many transactions. But the volume, the on chain volume is like almost at all time high. So what does that tell you? You've got few transactions but it's almost all time high volume, big money. We have huge pools of capital. What we don't have this cycle is retail at all. And I talk about this in terms of bitcoiners as well. If you look at the 90 day change of all of the balances held in like UTXOS under 1 BTC. So the shrimp cohort, we've been in net distribution since 2023. The overall balance of small retail holders has been decreasing persistently since 2023. So there's a lot of sat stackers out there who are also taking profit, which is just, that's just part of the handing of the baton. Right. We are seeing a major change in Bitcoin's ownership structure.

A (56:52)

Well, and that's one thing I worry or not worry. I wonder with this cycle, too many people anchoring 2017 and 2021 specifically and saying retail's not here, retail's not here. And I'm sitting back thinking I don't think retail's coming. This like I don't think retail money, I don't think they have the money to come.

B (57:10)

I think that's true. And also you actually don't want retail to come because they come like, sorry. And I say there's two ways to think about this. You do want retail to come because you don't want Wall street to be the only player in the market. So that's the more sovereign side of the equation. But you don't want dumb retail to come because that means it's over. So you kind of want to balance your views. Like if you're waiting for retail to come, that means it's actually finished, it's all over. So I also just think that bitcoin is a big enough market that you kind of need institutional money to move this thing. Now. It's just the nature of being a very large multi trillion dollar asset. Retail just don't really move the needle. They, you know, a small factor, but even so, after all these years, shrimp only have like 5% of the BTC. You know, they're a very, very small component. Saylor's got whatever, what is it, 3%, something like that, you know, one entity versus all of the shrimp. Comparable. Yeah.

A (58:01)

What are some of the sort of events or entrance into the market that you're keeping an eye out for in the coming months that would signal that things have not only changed, but are changing massively. Are you expecting nation states? Are you expecting normalization of ripping cash flows into a bitcoin treasury for profitable businesses? I think the last time we talked was right after Figma filed their S9, or excuse me, their S1 to go public and we were made aware that they had 70 million in IBIT and they intended to buy 30 million of spot BTC as well. What are some of the sort of sticky demand drivers that you're looking out for that we haven't talked about yet? Obviously we got ETFs, treasury companies.

B (58:52)

Family.

A (58:52)

Offices and high net worth individuals. But is there anybody else?

B (58:57)

I mean, no one specifically. I just think that we're watching a modern bitcoin cycle and we've got to come into this thing recognizing that things have changed, Right. It is measurably different. There's still going to be cycles, we're still going to have peaks and we're going to have troughs. But as we've seen so far, those peaks and troughs, they have a very different character. The volatility profile is very different. The derivatives landscape is evolving. Like as an analyst for me, this is awesome because I'm watching bitcoin grow up and mature and there's all these different facets, right? Yes, I'm known for the on chain side of the equation, but that's really just the substrate that stitches all these things together. It's like it's the settlement layer between all of these different vehicles. And really you've got to analyze and study all of these components. It's not as simple as just looking at old metrics and saying, oh, it's got to get to this height now. It's Got to get to this level or it hasn't hit that level. I think a lot of people are going to hang on to old ideas way too long. I also think people are going to throw out things at work because they're like, oh, it's a new cycle now. We don't that that's broken. They're going to throw stuff out too quickly and they're going to hang on to stuff too late. For me that's, that's exciting because we get to live in this very, very new, modern idea of like, be flexible, allow the market to tell you where it wants to go. Look at what the ETFs are doing, look at what treasury companies are doing, look at what sovereigns are doing. Like there's a whole bunch of different angles here that we've got to study and it's just all information. Like for me, some people look at metrics and they go, oh, this metric has to do this. But to me it's information. Tell me about the profit of investors. Where's the supply dynamics? How many coins are and aren't moving? What's the average age of them? All of this stuff just helps you understand who the buyers are, who the sellers are. One thing we've seen that's very different this cycle in 2017 and 21 we had like, if you look at long term holder supply, it was basically one big sell side event. The ball was just one big sell as you go up type thing. We've had three waves already of that and we saw that in that chart before. Massive sell side in 24. But then what was really interesting is long term supply recovered almost back to its high. Then we had the second wave of sell side in November, December, long term holder supply recovered. We're having the second or the third wave of net sell side as we speak. But here's the thing that it's telling you on the way down for long term supply. So price is up, supply is down. That's telling you a story about the sellers, lots of sell side. But then the recovery is telling us about the buy side who bought those coins five months ago. They are hanging onto them. So that's one thing that's very different. This cycle we are not seeing this. Like, I'm going to exit my bitcoin position because bitcoin's overvalued. There's a, I'm taking profit because I've got to do X, Y and Z or my firm has to do it or I need to retire or whatever it is. I'm going to take my profit. But then the buyer's like, hey, I really want to own this thing, stick it in my vault and sit tight. Whether it's ETF or Spot doesn't matter. So that's a dynamic that's very, very different. We have this buy side that is willing to buy at 100k, 110k, 95k and put it in the vault and sit tight. That is a very, very different dynamic that we've seen that in previous cycles, but not only with the hardcore huddlers. Now it's a bit more mainstream. The huddle idea is much more mainstream than I think people give it credit for. And that's super bullish.

A (62:13)

And do you think this has been made easier by derivatives? So the institutions get in, buy and then hedge out?

B (62:20)

Yeah. And that's derivatives getting bigger. Yes, it massively changes market structure, but it gives them an opportunity to buy in the first place because they can hedge risk and when they can hedge risk, they can take the risk in the first place. So it actually enables big money to come in. It's a natural part of market structure. There's no question. It changes volatility profiles and you can call a paper Bitcoin and whatever else, but it also enables the initial buy side. You had that chart up before, that was looking at the cash and carry trademark. We saw the ETF flows and CME open interest trade alongside each other. Now we're seeing IBIT open interest trading much the same with, with what's going on with the ETF flow. So covered calls, and I mentioned before, at 123k there's an enormous call wall, people who've sold covered calls at that zone. But you can see how these things move together. And what's really interesting, if you go back to pre November last year, it doesn't matter what ETF you buy in order to put on a buy spot, sell the future on the cme. It doesn't matter which ETF you buy because they all track the bitcoin price. So up until November, all of the ETFs were growing at the same rate. We saw FBTC growing, even the small ones. It was a Pareto distribution. But IBIT had some advantage. But it wasn't just like tearing away. If we look at IT since November, IBIT as of today just crossed over 58% of the overall AUM dominance flows into all the ETFs except IBIT are flat for the last basically year and IBIT is just tearing away. Now we're Seeing that the IBIT options are the preferred vehicle for pretty much all these traders, futures volume and futures open interest is kind of stagnant across like Binance and cma. CMA is down. Binance is flat since November by a bit. It's flat since November. We haven't seen that much growth in futures. And they used to be like the lion's share of trade volume options. Absolutely parabolic in every single metric you look at. Just straight parabolic. So this is now the thing that is, in my opinion the most under discussed biggest change to market structure since the ETFs went live themselves.

A (64:31)

The fact that IBIT options surpassed Arabit as quickly as they did is kind of mind blowing.

B (64:36)

Oh, totally. And Derbit's been the market leader like 95% dominance forever. Yeah.

A (64:42)

And I guess, let's talk. You mentioned paper bitcoin summer, but James, Wall Street's going to take over Bitcoin. Price suppression is on the way.

B (64:51)

So that's what's right now. Right now we've just seen a bunch of guys with covered calls at 123k suddenly go, hang on a second, we're at 125. Did I sell too much upside? Now for those who aren't familiar with options, when you sell an option you're basically, if you sell a call option, you're basically selling the upside above that strike price. So you do collect an insurance premium. So if the price goes to 123 or 124,125and stays there for all of October, you actually win because the insurance premium that you collected for selling that covered call will more than offset your losses. Generally speaking. If on the other hand, we go to 130 or 140 and the Bulls really are in control and we start moving, all these guys are going to say, whoa, hang on a second, I got my $600 worth of insurance premium, but I just missed out on $25,000 worth of upside. Maybe I shouldn't do that again. Right. And more people will come in. But these options, the way that options dynamics play out, same as futures, if you've got a very large liquidation level, let's just say at 125k, let's say there's a giant guy who sold all these contracts, it may be easier for him to lean on the spot market because it's smaller than the futures market. Sometimes it's easier for them to lean on spot in order to keep their futures position alive. But we have to remember this paper bitcoin summer, the bulls have the same artillery, they have the same leverage in play. And all the guys who've written those call options, there's a bunch of guys who bought those call options and they want it to go to 100, 130, 140. So paper Bitcoin, summer. In many ways it works on both sides of the ledger. Both teams have the same weaponry. And it's like in many ways I might, if I had to predict what goes on from here on. If we go down to 110, I think the bull market's over because we just have no place being down there. That's my like, I think it deteriorates quickly below that. That's not my base case. My base case is I think we're heading higher. If we're heading higher, I think the era of chop solidation as we know it is probably going to take a back seat because I think we now enter the proper euphoria phase. If we get proper legs from here, I think it's off to the races. And my base case that we probably get more corrections, like actual proper sell offs that make people shit themselves and go, damn, it's over. And then it springboards higher again. So I suspect we actually move into a more volatile regime that's going to bring more options traders in. The more options traders who come in, the more they have to buy the underlying to sell the covered calls. Like suddenly you actually get more liquidity, more demand, more inflows. All of this assumes that, you know, we don't get an AI bubble that implodes and just nukes everything. But my base case is that we actually move into a much more volatile environment moving forward. Exactly. This shot dead on.

A (67:44)

I can't stop thinking about this chart and when it dies. Well, like when money, like if you haven't read when money dies, go back, you only have to read like a few pages of it. When they're talking about every paper boy was trading stocks and thought they were wealthy on paper, like they thought they were wealthy, but they didn't realize that the denominator was getting blown out. And it feels like we're living through that now. And to your point about increased volatility, this could be what the bitcoin price chart or the return chart looks like over the next. I mean, this is a 10 year chart. This can be compressed to a year, two years moving forward from here in.

B (68:22)

The age of the Internet. Yeah. So I personally think volatility is mispriced. When I say volatility is mispriced it basically means a bunch of people who've got very, very comfortable with that chart we looked at earlier. Volume just goes sideways, markets lulled to sleep. We've tamed bitcoin, right? We've tamed a wild horse. Next thing you know, volatility comes ripping back and it just blows people's socks off. And you know, remember, options are 100 to 1 Levitt. So when shit happens, it happens in a really big way. So to me it's going to be pretty like I'm, it's pretty exciting. I'm, I'm looking forward to this next phase where bitcoin kind of reminds everyone, hey, you haven't tamed me just yet.

A (68:58)

Yeah. All right, what's your adjusted upside potential here?

B (69:04)

So my, I think it was January. Pretty sure it was January. I wrote a piece that was basically saying if we had a. So this is where we've rallied to 100, 100K, I think we might have tagged 110. And I basically was looking at the amount of capital that we see come in per unit of market cap change. And my case back then was I don't know if we have the real capital inflows yet to justify going to 150. So if we go into a different universe where bitcoin had of gone in January and February this year, let's say it had gone from 110, it had to reach 150, I think we would have come back down to this 90k region. I think it would have been a major top big correction. Probably would have looked much the same in many ways like chopped around and then away we go again. But I don't think we were ready for 150. And my base case was I think the ETFs approximately have to double in AUM and then we probably justify 150. Well in that process, if you take the ETFs and Saylor, just those two entities which really are just like net buyers, we now have that doubling. So personally I think we belong at 150. I think like the difference is I think we go to 150, I think we stay there. That's the big difference. Now obviously it'll correct and consolidate and chop around. But I think Bitcoin deserves a 3 trillion market cap. And I think the market's going to keep saying, well, how many more trillions? If you get up to 160. 180, 200 possible for sure. But also we're really on like the, there's low probability of it happening. We're in the like sub 10%, sub 5% of all trading days. Markets are mean reverting. And the thing about chop solidation when you're doing a mean reversion model and that's what I base a lot of my stuff on. It's like how high do we have to go before the average bitcoiner is in so much profit that they have literally sold in every previous cycle. The sell side we looked at before it was always because we hit some meaningful deviation away from the mean. And the mean is some cost basis. Whatever it is, 200 day moving average, you pick it. If we get to 200k, just about every mean reversion model is stretched into the far right tail. It's just like improbable events happens during euphoric bulls. Unlikely we stay there. 150 is kind of that like it's medium heated. It's yeah we'll probably get some volume there. It'll chop around but like we're not overheated, we're just toasty. So that's how I'm thinking about things at the moment. I think people deserve 150. I think a lot of people are going to look at it and go well all these metrics are overblown again. But what if it keeps going and then they're going to buy the top and then it's going to sell back down. You know I'm excited for that phase because I think volatility is going to come back in. We're in that late phase of the bull but is this bull a little bit different? Right. Are we just going to keep stair stepping higher but with a bit more volume? Take some time for for the market to adjust. But it's exciting times.

A (71:48)

It really is. I know we got to wrap up here. You mentioned it earlier. What are the metrics that people aren't going to throw away that probably they should throw away, not focus on this time around?

B (71:59)

Good question. So I think a lot of people like to look at MVRV and MVRV is a very powerful tool. The realized price is one model that I think a lot of people look at. It's the average cost basis for all BTC in the supply, includes satoshi, includes early miners, all that stuff now. It's currently trading. If I haven't checked it for a while I think it's like 155k, something like that. We have gone below that in every single previous bear market everyone. I don't think that happens anymore. So I'm Going to put it out there. I think there's a new model that Dave Pu and I developed in coin time economics called the true market mean. Now the true market mean basically we, we filter out or we process and get rid of the satoshi era coins. The early miners, people who just don't spend their coins are long lost to history. And the reason why this is important in order to be at the break even level, which is like where the average bitcoiner is not bitcoin. The average bitcoiner satoshi can't respond well, no, I shouldn't say can't. Probably won't respond to a ripping bull market. Lost coins can't really respond to a bull market. But the guy who bought the top can. He's going to sell, he's going to buy, he's going to trade in and out. So the true market mean is currently about 80k. That's where I think if we have some kind of a bear market, not necessarily at 80, but wherever that true market mean is, that's where I think we start to bottom out. And the reason is that that's currently the average cost basis for active investors. Saylor is at 75. The ETFs are at 80. There's like four or five different levels all coincident with that price model. So I think a lot of people are going to expect that we go down to the realized price in the bear and I think that's too bearish. I just don't think we have that kind of a drawdown potential these days. If we rip to the upside right, these models will all drift higher. But I just don't think that looking for the same thresholds to the upside, the same thresholds of the downside, in my view, look at the incentive, how much profit are people in? Look at the result. Are they taking profit, Are they fearful? Are they actually taking losses? Are they not? This is where I live and I love it. I think it's great. And quite frankly, bitcoiners tell you the answer. When you see people capitulating and like just panicking, get me out at any price. Bear market, when you see a couple of top buyers get flushed out and then the market rebounds, you flush out the top buyers, away we go. So there's these very distinct character shifts that we see. So look at these metrics more as information, less as it's going to hit this level, you know, get rid of that kind of very basic horizontal line. You're looking at incentives, it's all about incentives and then the actions and reactions to it.

A (74:43)

I love that. Thank you for starting your day with us. It's Tuesday where you are.

B (74:48)

It is.

A (74:49)

It is Monday night where I am. I'm losing my voice. And this is a great check in. I can't wait to do the next one which would be the beginning of next year. And I'm sure a lot is going to happen between now and then. So it should be a pretty fun catch up in January.

B (75:07)

So let's, I think we at least tag 150 between now and then.

A (75:10)

At least you heard it here first. 150. I think it's written into destiny already. 150. We could be at 150 by the end of the week. Who knows?

B (75:21)

We could be. No, we could be. Again. This is not a special call here. Right. 25 grand which is 12 and a half percent move or 20% move. Let's go.

A (75:32)

Yeah, I'm not calling for 150 by the end of the week. But I think the one thing that is clear is that we've entered a new market dynamic. People are waking up to the debasement trade. They're waking up to the fact that bitcoin is scarce, comparing it to gold, saying why, if it is digital gold, where can it be? I think people are obviously we're here, we've woken up to bitcoin, But I do think we are at this incredible inflection point where people are beginning to take it more seriously than they ever have, which is important. Part of the process should be expected. But don't get over your skis, don't get too greedy. Make sure you have cash, cash flow, most importantly and you're able to stay alive. And that's why we bring James back every quarter. Because you are check the analysts at least is very level headed, making sure that we're all staying in line and not getting over our skis.

B (76:30)

And the most sage advice of all time is just stay humble and stack sats. You really don't have to deviate too far away from that plan. The rest is just managing your own mental state, making sure that you're never confused by why things are happening. Never be a deer in the headlights. If I can help people, not be a deer in the headlights. Whether we go to the moon or we go to doom. That is essentially what I like. That's what I love doing. I like helping people just go, why did bitcoin do what it did? I don't care that it's up at 150k because I'm not a seller. I don't care. They went to 75. Because I'm also. I'm a buyer. I just don't care. But I want to know why. Because if I understand why, it makes it so much easier to dig through and just get rid of all the noise that you see in narratives and just focus on what's really going on. Because it's fascinating.

A (77:13)

It really is. If you want to download this full report, you can go to unchained.com tftc if you want to read through it yourself, throw it into an LLM, see if that LLM is hallucinating.

B (77:25)

You're absolutely right.

A (77:27)

Go check that out there. James, thank you and congratulations.

B (77:31)

Thank you.

A (77:31)

Birth of your new child since the last time we met. It's a big thing. And likewise, welcome to the bitcoin dad club. It's a fun one.

B (77:40)

Yes. I've always thought someone should do like, because there's all these things like, how do you deal with kids in AI? Right. Bitcoiners are going to be the ones who are, we're trying to pioneer, like, how do you do this stuff? Right. How do you teach them the right tools? There's scope out there for all these bitcoin dads and mums to just like, how do we do it? There's going to be problems and challenges with like, how do we as bitcoiners navigate this parenting thing? Because it's weird for us. It's going to be bloody weird for them.

A (78:04)

It's definitely a double edged sword. Me and the boys, we've had some fun with AI purely for learning, learning reasons. If they ever have a question, it's like, okay, let's, let's explore this. We see a mushroom, a random mushroom while we're walking. All right, let's take a picture, let's see what it is. And yeah, there's definitely going to be a whole new sort of niche carved out of child AI that is safe for children.

B (78:32)

Literacy.

A (78:34)

Yeah. I'm actually joining. It reminds me an email joining a task force for AI my child's school. So need to make sure that they're doing it right. Get involved.

B (78:44)

Good man. That's good stuff. That's what you need to do. There's been a few podcasts. I've heard people saying this. We as bitcoiners, we've got to make a positive change. If you just win and walk away, what's the point? The whole idea is to try and make the best change you can within your sphere of influence. Yeah.

A (79:01)

Go forth and make some good change, be a good influence in the world and stay humble. Stack sets Peace of Love Freaks okay, thank you for listening to this episode of tftc. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can, leave a rating on the podcasting platforms, that goes a long way. Last but not least, if you want to get these episodes a day early and ad free, make sure you download the Fountain podcasting app. You can go to Fountain FM to find that $5 a month get you every episode a day early ad free helps. The show gives you incredible value, so please consider subscribing via Fountain as well. Thank you for your time and until next time. Okay.