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- [00:00]
A
Welcome back to the HURDLE RATE, Episode 47 for the week of February 9th, 2026, I'm Tim Kotsman. I'm joined by Matt Cole, Joe Burnett and Ben Workman. And it's Bitcoin Investor Week here in New York City hosted by Anthony Pompliano. If you're in New York or you can jump on a flight, I'd recommend it. You can see all the details. Get tickets@bitcoininvestorweek.com speakers include our very own Matt Cole, Mike Novogratz, Cathie Wood, Anthony Scaramucci. I could go on and on. Lyn Alden, Jeff Park, Fred Thiel, Bo Hines, Barry Silbert, Dan Tapiero, Bill Miller, David Bailey. Where am I? Robby Michnick, Matt Hogan, Mike Belchy, Fong Lee, Natalie Brunel, Sam Callahan, Jordy Visser, Alex Leishman. If you recognize these names, you probably want to be in the room. I'm excited to hear what Matt's itinerary is for New York. Sounds like it's going to be busy. And we have some topics, current events and happenings, including the strategy earnings call, the latest strategy buy bitcoin, price action, treasury companies selling bitcoin, the Financial Times saying bitcoin is still about 70 ish thousand dollars too high and falling SaaS valuations. So we can dig into the current landscape at the intersection of AI and bitcoin. But Matt, you just made it to New York. What are your expectations and excitement around this week as far as your thoughts?
- [01:40]
B
Well, I'm bummed. I got in about 20 minutes too late to be in studio with you. So that's point number one. But these weeks are always valuable, right? I mean we've talked historically on this pod about some of the value that's happened in the room at these conference, at your on conference where that was kind of the makings of the Semler merger, right? Being in the room with a bunch of passionate, smart people that are in this industry, right. And just talking about ideas, right? You get, you get a lot of people in the room like that and something happens. And you know, sometimes you have these conferences and they happen at the top of bull markets and you know, the, the hype is super high. I think the ones in a bear market are actually the most important ones. They're probably more likely to be the ones that some people tune out too. It's, it's not surprising. But bitcoin media, bitcoin conferences has a cyclicality to it, right? You have the, I was talking about this on my ex this weekend in response to Brett Weinstein, for those that don't know, he's like a scientist, someone that I for a long time and he was like, I don't know how to talk to the bitcoiners because you don't know the ones that truly believe versus the ones that are just, they bought bitcoin and they believe because they bought bitcoin. And I think that one's actually really easy to deconstruct because I've met a lot of people that bought bitcoin and believed because they bought, they didn't actually understand the fundamentals. And those are the ones that can't handle the volatility they sell when you enter a bear market because they didn't ever actually believe. They came because they thought they saw an opportunity to make money and become rich quick. And for bitcoiners that have been in this for a long time, you know that there's nothing further than the truth that this is not a simple journey. You have to have deep conviction because this asset is volatile. And then enter bitcoin. Treasury companies that are designed to be amplified. Bitcoin more volatile than bitcoin by design, on purpose, because we see an opportunity to actually outperform Bitcoin by embracing and structuring around that volatility. Well, that's a whole nother thing, right? So now you even need a deeper conviction because now you have effectively volatility squared, right? And so when you have these down markets, you will naturally weed out the people that thought they saw an opportunity to make money quickly. But then for those that are actually the true believers, or maybe someone that, that maybe even weren't even sure if they were a true believer. But. But they're still in it. They have. They actually want to dig deeper. These are the moments to understand. Is, is the thesis broken? Is it not broken? And I think the tldr, and I'm sure we'll all probably say similar versions of the same thing, is that the thesis is not broken. The fundamentals have never been stronger. And this volatility is expected, not expected. As in we forecasted this bear market, this drop to this day or this week. No, that. That's a. That's a silly man's game. But, but you expect this volatility in the journey and for us, we've structured around it. I'll tell you, I've slept just as fine the last week as I have the last three months. In a sense, I probably slept better because I wasn't in the Middle of an M and a transaction, another one. But, but, but because of that structuring, right? And that structuring to say, okay, if you want to take on volatility in the space, how do you do it? What are things that are smarter to do? What are things that you should avoid? Don't post margin, don't encumber your bitcoin, underwrite longer cycles. And this isn't a statement about underwriting the four year cycle, but just you're underwriting expected volatility. And when you do that, these moments are not expected, but actually prove the point. And I think that's where getting this group of people together and talking about these things, going in depth about these things, what's happening in the markets, what's, what's the future look like? Let's debate some ideas. You know, let's talk about the, the SAS breakdown correlations, like all these different things that are happening. And I think what will come of that for people that pay attention and engage in these conversations will be a deep conviction that it's not broken with bitcoin and that this thesis that we've all underwritten is still alive and well and strong as ever. And, and that's really helpful, especially for people that are newer. And then obviously there's ideas that'll come of it. So that's what I'm expecting to come from this week and very excited to be on stage with Pomp and, and with Jeff Park. Those are, those are some smart, smart dudes. So I'm sure we'll have a great conversation.
- [06:30]
C
Yeah, I think what's, there's been this lore around every bitcoin conference ever that usually comes along with a bitcoin crash.
- [06:38]
B
Right.
- [06:39]
C
It's like people just won't let the bitcoiners have fun at their own conferences. And so we typically get this price action. But what I do think is actually really interesting when this comes around is when you get in those rooms, you actually see people shift. The mentality shifts quite a bit. When times are good, you know, everyone's just having fun and everyone's going along for the ride and it's been a great ride. But when you get into these moments, it's where people go back and start to build, they start getting creative, they start thinking out of the box. And I think that's what drives a lot of those more interesting conversations at these types of events because you've got a lot of like minded people who have saw the value in this type of a thesis that you just described Matt but now they're all looking at different ways to approach this and they have to, because the capital structures for all of these companies are different across the board. Right? There's some similarities, but they're all in very different places. And so the way people are thinking about how they're going to approach this next cycle in the market, no matter what it may bring, whether it's up or down, that's when the creativity starts and that's actually when a lot of the work gets done.
- [07:44]
D
Right?
- [07:45]
C
You build during the bear, so you can thrive during the bull. And this is the time where a lot of people need to be building and making sure that they've got the structure in place that they want to have and that they're designing this to outperform. Now what you're starting to see a lot of is the long term investors seem fine. They understand the thesis, they understand the amplified moves. They already have a thesis around holding these for years at a time. The traders, they're fine too, because this is volatility and volatility is what ignites the trading cohort, right? They want things to move, they want it to move a lot. It's what lets them play in the derivatives market. It's what lets them trade the stocks themselves. So, so they're having a great time. The people who aren't having a great time are the ones with a medium term outlook here, where you're looking at these. Either you jumped in and thought it was going to run straight up and you had kind of a three to six month trade on your hands, or you just took a position without actually having a conviction one way or another here, and it ended up going the other direction. That's where I'm seeing most of the noise come from, is the people that kind of had a moderate term outlook. And to your point, Matt, part of running one of these companies is you really can't take any type of a short term outlook on Bitcoin. We have no idea what it's going to do. If we could, these conversations, we'd be getting down to the exact formula for how we predict bitcoin moves. But every time we see a big bitcoin move, it causes new debriefs. You saw a lot of those come out this week that ends up resulting in some very different catalyst than what we saw in the past that caused the same types of moves. And so it's a constantly evolving asset class. You've got new players getting in all the time. Everyone's positioning for different outcomes on different time frames and it creates a lot of volatility. So I agree with you. I think this week's going to be a lot of fun. I think a lot of the conversations are going to be really engaging because this is when people really turn it on and they start to really focus on strategizing so that they're prepared for what the future is going to bring here.
- [09:46]
D
Yeah, I think in my experience, thinking back to all the bitcoin conferences that I've been to over the years in both bull and bear markets, and just thinking about bitcoin in general in terms of bull and bear markets, I would argue that the bear markets are actually healthy to some extent. Right. Like you're, you're purging a lot of the fat or the, the bad ideas that are out there. You're purging a lot of the weak hands that are holding bitcoin for perhaps not great reasons. And I think, you know, in my mind there's probably like three main reasons why people are selling bitcoin at levels today. One is like you're overexposed. You know, you can have extremely high conviction, but if you're 100% all in amplified bitcoin with debt on your own personal balance sheet, that's going to be incredibly painful in your head and mentally painful. And even if you have incredibly high conviction, you may not be able to tolerate that. And then two, like we've talked about before, you could be overleveraged. Right. You know, we talked about like why bitcoin treasury companies are structured like strategy and strive structured the way that they are. It's to avoid margin calls, it's to avoid liquidation risk so you could be over levered. And then three, I think it purges a lot of the people that don't necessarily understand what they owned. So I think throughout these bitcoin bear markets, it's getting rid of all of the people that lack the conviction or simply the ability to continue holding the bitcoin and conferences. From what I've seen at the various different booths and talking to different people, it purges a lot of the bad ideas too. Whether that's FTX or BlockFi or whatever else. It gets rid of all those weak hands and the bad ideas in the market. And then by the time the next bull market comes around or the correction ends, whether it's a bear market or bull market still is debatable. But by the time the next bull market is very clearly coming around, the only people left are the, or the only people left holding the Bitcoin are the people with the strongest hands, the strongest balance sheets and the people with the best ideas in the market. And I think, you know, strategy has proven that the, the bitcoin treasury model can work, has worked. And I think the long term holders that have that four to seven to decade long perspective, those are the ones that tend to survive and avoid selling at the worst possible time.
- [12:13]
B
And it's important to remember that strategy had to go through their own growing pains when they first started their strategy. They didn't buy bitcoin and instantly go to the moon, right? They weathered the storm with conviction and with the appropriate structure to make it through that. There's a saying that when you were talking about that Joe, about you know, the three different types of people that will be selling here of back in my fixed income days, that there's two sources of alpha. One is insider information, the second is time. And so when we're talking about a bitcoiner or even a well structured bitcoin treasury company, the alpha is time actually right. That the alpha in the amplification story that we talk about and the difference between that and debt and posting margin is the ability to weather out time.
- [13:09]
D
Right?
- [13:10]
B
Now obviously with amplification there's more time risk than just buying bitcoin and putting it in cold storage. But you've appropriately thought of bitcoin as a long duration asset and gone to the longest duration possible for financing amplification. And and the other thing that I was thinking about when you said this was there's a guy that I follow, I'm not going to say his name but I followed him and he's followed me on X and he posted a long form post and been a big, big bitcoin treasury investor about how he took on personal debt, posted margin and was a forced seller and ended up getting margin calls and basically is like, oh, like I've never been margin called and he ended up disclosing the entire margin position prior to the full flush out. And if he wouldn't have done that, he would have literally lost all of his bitcoin. And so you think about that and that is key to what we've been talking about and it's one of the, I mean obviously I'm glad that he didn't get completely liquidated and he posted that as more of a warning to people to be extremely careful using margin with regards to bitcoin. And, and you see some of these bitcoin companies that offer these margin loans and now like, like one of them just recently extended the period that you could cure margin from like 24 hours to 72 hours. And I'm sitting here and I'm like okay, with bitcoin's downward volatility the point should be that you probably just don't want margin like that.
- [14:43]
C
Like that.
- [14:43]
B
That's, I agree that you know, 72 hours is helpful if someone has, you know, multi custody but like you, you just don't want margin. This is such a volatile asset that you need to be able to go to sleep for a night or be able to say I could go somewhere for a week, Bitcoin could go to a dollar and I'm fine. And if you can't say that or go to negative, you know, whatever in the futures market like oil did. Right. Like before then oil rips hard. You just don't know in a short term period where something could go and it's, and it's with the high vol asset like Bitcoin I think it's just such a massive mistake to put yourself in that position. And, and I think maybe transition a little bit. I think that's what we saw a little bit in the bitcoin treasury space. We saw a very large sell this week by Kango. I admittedly I don't know these people and, and don't fully understand their strategy but they just, they just recently went up the bitcoin ranks and they had to sell over half their bitcoin and they called it a balance sheet strengthening move to sell your bitcoin at these low levels. And I think what it's showing is this, who did not take the approach that understood you needed time, that understood you needed to be able to handle these periods of volatility and the markets are mean and they will sniff out these forced weak hands. I mean I would probably almost everybody that's selling down here doesn't want to sell. There's some reason that they likely have to sell. And, and if you do not want to be in, in that position and I, and I think that this will show the value of a well structured bitcoin treasury company, one that can ride this out. Like why does, why does you know, is it as a M nav premium justified? There's several reasons but one of the biggest ones is the ability to access amplification in a way that an individual couldn't. And to say this type of a structure is not accessible to other people and there's value in that. And I think that these markets unfortunately prove that point.
- [16:59]
C
Yeah, you start to wonder when you start to see the market flush like it did last week. You know, you start looking around for where are the cracks out there in the industry. And you're kind of waiting to see who is in that selling cohort. And you can see, you know, to your point, Matt, in the execution with how they're getting rid of the bitcoin, I think the sales were a sub 70. I think it was in the 68,000 range where when you're selling down on that, you know, wick that we saw, it's usually a move made out of fear. When you're doing that right, you're just ripcording out of there. You need some stability. You understood there was volatility, but you maybe weren't ready for it to spike back up above 100 in short order when it was down around 30 before. And I think that that tests the conviction from a lot of the companies. Now, to your point, I don't know what Kango's strategy was with this. I haven't really seen them be active as a Treasury company where it was core to their overall thesis. So it may just be that they've got a very business model and, you know, bitcoin was just an asset they held, not a core part of, you know, how they need to operate. And so maybe they made some shifts. But you start to watch in, in the weeks following to see where that stress was in the market because I doubt that they, they're the only ones. I'd be pretty surprised if there weren't some convertible bond collateral requirements that got tripped that had to get right sized during that period. Right. I'm, I'm sure there's probably some of that that's out there that we just haven't seen. But you know, to your point, this is why structure matters so much and why you need to be so intentional. And you know, we've even gotten the questions a few times going, well, what was the rush to get rid of the convertible debt? And these are the times when you don't want it. You don't want that true leverage. You don't want to have to have that hanging over your head while you're watching the price plummet down like that during periods of time because you know it's coming. And now you've actually got a piece of debt out there that you may have to take actions on. You don't want that. And I think a lot of companies are learning that lesson as we speak. Right. It's going to show where those weaknesses are and why there are benefits to certain types of leverage that you have out there. Tim and I, we were in North Carolina. We were at the digital assets at Duke conference while this was happening. And we're sitting in the room and bitcoin's free falling, and you're starting to see people getting a little nervous and starting to ask questions.
- [19:36]
A
But even funnier than that, Ben, I mean, we were on stage and when we got up at the end of our panel, people were rushing toward the stage saying, did you see the price of bitcoin went down by $2,000 while you guys were up there? Like it was some sort of achievement or that we caused it. So it was pretty funny, actually.
- [19:52]
C
Yeah, we got up and I go, yeah, Bitcoin's around 6 to 8,000. We get off stage, I think it was 65 at that time. And so it was moving 30 minute period, right? It was. I would not say the vibes were high. Right. It was a period where there were a lot of stressed people and a lot of them are in all the other digital assets, not just bitcoin. So I think they were having a really rough day.
- [20:12]
A
The happiest people were the people talking about stablecoins.
- [20:16]
C
Yeah, that was about the only thing that was stable that day. But it's interesting to hear the conversations during those periods of time because it changes the questions that come out of the audience and the questions that you hear in the background. And it's interesting how everything gets slanted towards this deep rooted fear narrative. And it tells you that we've still got a long way to go for people to really, actually understand bitcoin as an asset and to really understand, I'll say, the technology behind bitcoin, because all of a sudden you started seeing all the quantum stuff popping back up, right? And it was every fear narrative that you've heard starting to get recycled, while people are really trying to figure, you know, is this time different? It's always the question, right? Instinctually, if you've been through this enough times, you go, you know, every single time I've seen a drawdown like this, you always have that little nagging feeling going, did I miss something? Is this time really different? And it never has been. And you saw this one, and I think this one was actually one of the most confusing drawdowns that we've seen, because there wasn't a black and white trigger like on a lot of the last drawdowns, there was a trigger somebody was publicly blowing up, right? There had been rumors about it forever. You saw what kind of tipped it over and started creating that cascading liquidation effect out there on bitcoin. And this one I think unnerved people because you didn't see that at least during those times when Celsius was blowing up and BlockFi is blowing up and FTX is blowing up. You can point to that and in a weird way it brings you a little comfort because you know why it's happening. You can explain it to yourself and you're like, well, this too shall pass. Right? You pull that passage out. But this time people didn't have that. And so it was just a very confusing event. And you could see that with every person that you talked to. There was that level of confusion out there. And so it was really interesting watching kind of the debriefs that happened on the back end of this. Jeff park wrote a really good piece about the multi strat funds and the unwinds and the size of the derivatives complex and how because of the size of the market that bitcoin is the impact that that can have overall. Right. It was really, really fascinating. But I don't know that that brings comfort to a lot of people. In the near term I think that opens the question for them of well, is it done or isn't it done? Right? Did we flush out all of that? Is all the leverage gone out of the system and do we rebuild from here? And the honest answer is we don't know. We don't know what's out there. But that's why this is an asset you keep a very long term view on. Because we have seen this play out many, many times. We've seen more and more adoption happen. We've seen regulations continue to ease. We've started to see acceptance across the regulators where they've actually started becoming supportive and they're starting to champion innovation. I've had conversations with people in the political sphere where bitcoin's starting to enter governor races and all these other areas. It's starting to become a mainstream asset. And so you have to be willing to ride out this volatility because I think on the other side of it is going to be where we see a real change happen out there in the financial markets. But it's not going to be a straight line up into the right.
- [23:30]
D
Yeah, I think over the years of watching the bitcoin price over time, I tend to think that the price moves and then market narratives then try to justify why the price moved for whatever reason. I think, Ben, like you pointed out, Quantum seems to be one of the returning criticisms among bitcoin. And I think it's really like the price is falling for an infinite number of reasons. It's very difficult to predict exactly, given bitcoin is such a highly volatile asset to begin with. A lot of these moves really could just be random noise that are just completely normal relative to Bitcoin's historical volatility. And instead people latch onto the extreme volatility and then they try to explain it with a very simple, concise narrative in their head or on X. And I just don't think that that's not always necessarily the case.
- [24:25]
B
Right.
- [24:26]
D
Like in some cases in the past, like, oh well, bitcoin fell today because FTX collapsed. That makes sense, but it's not always that straightforward. And what I like to think about sometimes as well is just going back to like the fundamentals of Bitcoin. It's like, okay, bitcoin is this perfectly scarce monetary tool. If you look at its monetary properties compared to all other historical monetary tools, it's not necessarily even an argument that bitcoin is competing with these other monetary tools. Like Bitcoin is objectively more scarce, it's objectively more divisible, it's more portable, it's more durable. All those monetary properties and nothing has really changed over the last 12 to 18 months, despite the price going up and down and so on and so forth. And even over the last 17 years, arguably the monetary properties have been pretty sound that entire time. And if anything, with the Lindy effect and the fact that bitcoin has been resistant to so much outside change and outside narratives and so on and so forth and growing in scale, it's still pretty sound. The monetary policy is completely unchanged, the technology is still censorship resistant. And so to me, that always provides comfort in trying to understand, okay, the price is down. There are some outsiders that are trying to say, oh, we were right, Bitcoin is down, it's collapsing, it's at 70k. Yet 5 years ago, 4 years ago, it's still up from where it was back then and 10 years ago, obviously incredibly up. And I think part of it is just Bitcoin's fundamentals are still clearly intact. This is very normal market volatility. And that's just kind of the price that you have to pay for an extremely high potential compound annual growth rate that Bitcoin's been exhibiting for the last 17 plus years.
- [26:21]
C
Well, look at how different other assets are behaving as well from their norm. You used to go into the metals because you wanted that slow stability that would align you, you know, with monetary debasement or inflation. And that was your thesis. And all of a sudden you started getting wild volatility and hockey stick moves straight up. And the entire market's getting a crash course in volatility right now, and none of it's clearly explained. The price action's all over the place. I think investors are just incredibly nervous in general right now. Right. When you start seeing those moves, you're looking for something structurally that's breaking. And the scary part is the markets have structurally been breaking for a long time now. It's just starting to get heightened at this moment in time. And you're starting to see things like inflation coming way down. And the Fed looks like they're kind of behind the curve on that one. Now we're in this no man's land kind of until the next Fed chair is going to come in. So we've got this period of uncertainty here ahead of us of a few months. And so I don't think anyone should be expecting, you know, market stability and calmness during that. Right. Those are not the ingredients that typically bring calm markets. And I think it's confused a lot of investors. And then with Bitcoin not responding in the same way that the metals did, that was confusing to the bitcoin community. Right. Because everyone thought that when the metals move, bitcoin would move right away. Even though in the past we've seen that that's not how that's worked.
- [27:47]
D
Right.
- [27:47]
C
That's. That's not the path that it's taken. So we'll see what we've got in store here as we come into the summer. But I'm expecting a lot of ch. Choppiness and a lot of uncertainty and fear narratives that are going to creep up along the path here.
- [28:00]
B
I completely agree. And it's why you'll never see me say the bottom is in. It could be, it might not be. If I look at historical time frames, like, it would suggest that it's not, but also that it could be. And it just gets into, like, when you have a. A upward skewed asset like Bitcoin, you can't afford to be on the sidelines once the bottom is in. And so I think you just have to almost zoom it out and say it doesn't. Doesn't really matter. And, and ask yourself to go to kind of Joe's checklist points of everything you think about Bitcoin. Has anything changed? And the answer is, is no. Like, what were your thesis in investing in bitcoin all the, the attributes you, you laid out, Joe, I completely agreed with is the debt crisis of fiat currencies or in the United States. Is it getting fixed as we speak or is it not getting fixed? It's not getting fixed. We've seen that very clearly. So you know, big positive for Bitcoin. And then just to accept that, you know, AI is a transformational technology and, and when AI is disrupting the entire economy, which is happening right now, that that's just going to be messy, right? Like gold and silver are, are going up to the moon. And then you have SAS companies completely collapsing. What is a SaaS company worth in the future? Is it zero? Is it less? Is it, is it decent? And, and, and then, you know, you see the power of, of the AI tools and, and where this is going. And then you see a weak labor market, you see inflation crashing, you know, and, and then you say like, like how do you even make sense of that versus the post covet era? The post covet era where inflation was skyrocketing. AI was not showing as at the time as being the transformational technology, even though people like Elon were saying it was going to be at the time, right. That, that so much has changed in the market over the last couple years and, and it's going to continue to change that. That is an environment that you should expect high volatility. And I think that that's where it's like you can be a, it really in these, in these transformational technological markets. It really in my view, decreases the value of something like a technical charting analysis, which I think you see people do all the time, and I like to look at them too. But, but I think it increases the value of fundamental analysis to say is the fundamental thesis still there for what you believe in? Because there's going to be times where the fundamental thesis of an entire sector is going to be challenged with AI. SAS is the perfect example of that. Actually I was, I was laughing because it was last year, I think it was April or May Strive actually our asset management segment. We wrote an engagement letter to Intuit. It was around this like censoring of bitcoiners and chimp mail and USC people got blacklisted. And so we wrote them a letter about that. But we also called out their TurboTax product and the risk for TurboTax in the era of AI and recommended that they put Bitcoin on their balance sheet. Not only stop censoring bitcoin, but put Bitcoin in your balance sheet and the reason that we did that and we called it out was that there was no sector more at risk than a software company. And so that was almost a year ago. Now you see the weakness in these software companies and you wonder what is the bottom? And the answer probably will be for some of them it probably will be zero. Some will probably reinvent themselves. But heightened risk in this industry and you know, I think a lot of people on AX have covered this well, but it kind of makes sense that bitcoin could get swept up in, in that type of a sell off because of the money that was going into those exact companies and also potentially going into bitcoin with somewhat of a, of a decent correlation amongst some of those investors that, that when something gets sold off so much, you have to go to something that's liquid. And it makes sense that now that would be a contributing factor to bitcoin. But then you just think for a second you're like, okay, well bitcoin is a scarce asset. Software is not a scarce asset. Where are we going? And the only thing you can conclude in my view is that bitcoin is going to have more value in the future than it probably even would have five years ago. But I think that you have to almost, I would say, think about the world in a heightened volatility sense and potentially even heightened return opportunity sense in the sense that I don't think that they go, that they're disconnected from each other. I think that what we've seen in the last year or two have only made me think that the ultimate ceiling of bitcoin is higher than it was. And that's why I like to say, and I mean it when I say the most common bias in bitcoin is that you're not bullish enough. Like, like, it's like that's the most common. And then, and then probably 1A, 1B and then 1B would be. Your time horizon is not long enough. Like, and I've definitely suffered in my bitcoin journey with both of them. I think like when I was originally buying bitcoin it was around a thousand dollars. And I was hoping that someday I'd be able to sell it for like $10,000. I was like, oh my gosh, that would be such a win if this thing went to $10,000. And then I gotta sell because, and then, and then you realize this is like, man, like, then it was like, oh, maybe a hundred thousand. And it's like, there's no top because the other side's being debased. And, and I think that's where more of this community is, is going or going to. And I think that's ultimately the correct answer.
- [34:15]
C
Yeah, all you wanted was 10,000 and now it crashed all the way to 70,000. Mat. But you gotta, you gotta look at it the same way you look at all investments, right? And the reality is, it's. The reaction is at the individual level, right? I always say that the emotional baseline struck with your cost basis, right? The way that you view the asset, the way you view the assets performance, whether or not you think it's over or not, a lot of that does start with your cost basis. And so when you get a lot of people that bought in, when it's above 100,000 or 110,000 or 120,000, they've got a fundamentally different view right now. And this is the time actually where I think the journey takes off, right? This is where those individuals will dig in and they'll really learn what it is they're holding or they won't. And if they don't want to take that journey, they'll sell it. Like Joe was saying earlier, right? Some of those weekends that came in for the trade, that weren't in it for the innovation here, and what it's going to mean for the future, that's one cohort. But you're also going to get the people that really dig in and they're going to go, all right. A couple of months ago, I was talking about how much conviction I had in this asset. I was going to be transformational. Have I actually changed my mind on that? Did what I believed about the asset, have those qualities that are those characteristics Joe described, have those actually changed or not? And where do I see everything else going? And when you start looking, what you said earlier, Matt, I think, was spot on. When you look at, like the SaaS trade, a lot of people that end up in Bitcoin, you've got to have a tech focus kind of at the beginning. If you're going to get into it and you're going to start trading around it, particularly now that you have ETFs and things that people can actively trade if they want to, or treasury companies, a lot of that capital is going to be in that same bucket. And so if you're getting rinsed on both sides here, right, your SaaS is collapsing. You're seeing, know, is the world being taken over by Mac Minis with cloud bots on them or like, what's happening, You've got all this uncertainty. You thought you invested in technology and innovation for the future. You're watching that floor fall out from under you. And I think bitcoin just gets swept up into that fear moment and you get that full capitulation reset for a lot of those investors. So I would agree. I think a lot of that same capital was also probably in the bitcoin trade. But what was interesting was when we did see that flush out to 60,000, everyone was holding their breath, effectively waiting for these massive outflow numbers from the ETFs, and they didn't come. It was net inflows, which I thought was really fascinating. I think BlackRock had like a plus 300 million inflow. And so everyone had a narrative spinning around that all the people that were in the ETFs, they were dumping. They weren't diamond hands, they were unloading. Right. And none of that turned out to be true. And so I thought that was really reassuring. On the other side of this, which when we talked earlier about this changes your view from technical analysis and you start looking at the fundamentals. I haven't seen anything at all about the fundamentals change here. If anything, what you saw was that the asset's going to weather a storm, right? That type of volatility, that type of transaction, or that volume of transactions happening on that network, the assets being. When you see something come out the other side and survive that and be able to facilitate it. And bitcoin, the blocks just keep getting mined. It keeps moving forward. The supply never changes, the divisibility never changes. Right? All of that is still in place. And now you flushed out all the froth again. And so you do have these periods where you look at it and you think to yourself, you know, did we just flush out the froth and the greed and get back to the foundation where now you get building. But the other reality is those trades likely will be put back on. Right? That's how these work. Incentive shift in markets all the time. And at one point there's weakness in the market and the incentives are to drive it down and get as much as you can out of that direction. But eventually, you know, the juice isn't worth the squeeze anymore and the incentive shift the other way and the capital that's in the market starts flowing that direction as well. So part of this is markets. But when you do look at it from a fundamental perspective, literally nothing has changed about bitcoin. It functioned perfectly. What you saw was markets at work.
- [38:40]
D
Yeah, I completely agree with that. And earlier, how Matt brought up trying to buy bitcoin at a thousand, sell bitcoin at 10,000 or sell bitcoin at 100,000? I think something that breaks a lot of people's brains is, is the idea that there's nothing better to sell into. It's like when you buy bitcoin, you sold out of everything else or something inferior into the best form of money. Or as someone like Pierre Richard would say, the least uncertain asset that exists. And that's, you know, exactly what money is in practice, the least uncertain asset. And so it's like, okay, that's. That's like a complete, you know, shift. It's like, we already cashed out. We cashed out into bitcoin. What else are we going to cash out into? Are we going to cash out into gold at record high prices when we're mining 2% more roughly every year? Are you going to cash out into bonds that. Into government bonds that are massively being debased when the United States government and governments around the world can't stop running insane physical deficits, you're going to cash out into the s and P500 and buy it at record valuations. You're going to cash out into real estate and buy that at record valuations. It's like, it's hard to argue that maybe bitcoin is actually the best thing to cash out into. And the fact that 99.9% of the world still doesn't grasp bitcoin at all or have a serious allocation whatsoever, that's almost another pro of bitcoin in the sense that, hey, there actually might be a pretty significant opportunity here. In a world where almost everything else has been monetized and everything else has this, you know, monetary premium embedded into it. And bitcoin is actually the solution to that monetary premium that's been embedded into all these other asset classes, bidding them up to ridiculous valuations. Bitcoin is the better money that's going to get sucked. You know, it's been for the last 17 years. Capital continues to get sucked back into it. And I think it's an incredibly volatile process. But it's hard not to be like, look back at the last 17 years. That seems like that's exactly what's happening. We're witnessing the monetization of a completely new form of money. And really, there's nothing better to cash out to except bitcoin.
- [40:52]
C
Yeah, I think that that's entirely true.
- [40:56]
A
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- [41:42]
C
You guys want to touch briefly? You know, I know we gotta wrap up here pretty soon, but on strategy's earning call, you know, every time they come out with earnings it always creates a lot of chatter and I'll just say the takeaway that I took from it and then, and what I've seen subsequently when Fong's been doing a lot of these interviews is it's very, very clear where their focus has shifted to. It's 100% on stretch. Right? Stretch is the product that they're going to be investing in that they're going to be pushing on. That was really my key takeaway out of all of that. You know, obviously their team, they're incredibly smart over there, they're incredibly measured, they're calm, which I think was a good showing during what was going on in the market when they knew they were going to get a lot of questions surrounding that. But what was clear was that, you know, they're doubling down on this. They see the value the same way we see the value. They think this is the right structure for a product in this area to be really successful. It obviously checks the boxes where it's going to be impactful for both people or people that are managing Treasuries. It was just such a clear shift in the messaging where so little of it was about the other prefs. And the primary focus now is clearly squarely on stretch.
- [42:57]
D
Yeah, I'd agree with that. And I guess to add on related to their focus on digital credit and stretch in particular, it seems like they hinted more towards the idea of like, okay, their USD reserve that they've been obviously building up over the last few months that's focused on making the credit quality behind digital credit and stretch higher quality and kind of, you know, looking at okay, the rating agencies or you know, rating agency have said these are the problems, this is why you're rated junk strategies like, okay, we're addressing those problems. Maybe obviously not today or tomorrow or next month, you'll adjust our rating. But over time, as strategy continues to make the payments on Stretch and Digital credit products and strategy simply doesn't die and they address the problems and have this USD reserve proving that, hey, they can last a long time. Even if Bitcoin isn't performing the way many bitcoin maximalists may expect, then maybe perhaps they don't deserve a junk rating under credit. Maybe perhaps it should be significantly higher. The other thing that I noticed in the earnings call, maybe it's just a small little thing that doesn't really matter, but Saylor's first slide was Trump being the Bitcoin president. And then I think over the weekend I saw a picture of, you know, some of Trump's sons and Saylor in the background, kind of like with his head turned. So, and he also seemed to be taking that the earnings call from a hotel room from what I could see. So maybe there's something going on there, but that could be entirely speculation.
- [44:32]
B
Yeah, well, I agree with the takeaway of the importance of stretch. My takeaway as an investor or someone that would think about this, right? Like we have ETFs that have fixed income products is one those converts have to be about the safest bet that you could make in financial markets to get paid back, which if that's true, they're massively underpriced. Right. Like, like strategy. By focusing on Stretch, they're telling you that they're betting the farm on that one product, but also that one product is going to be contingent on them being credit worthy across the entire suite of the other products. Right? Like, like if they let any one of those products go, which they obviously won't, that would kill any form of them being an investment grade story, which they want to tell. Right. So they, they have, you know, some cleanup to do on, on the converts over the next couple years, which has been well covered. But they are going to prove to the markets that they are an investment grade story. They're going to build up their credit reserves. I think if they had to, which I don't think they'll ever have to, they would sell Bitcoin. That they're going to bet the farm on being investment grade and that by being investment grade, they're going to drive down their cost of capital over time and be able to amplify their bitcoin exposure with no debt through Stretch. It's really that simple. But they do a really good job of this. But they have to be very measured and consistent in actions and in words, improving a digital credit investment grade story. And I think that they're, they're clearly focused on that where and I think that the difference in focus is that that is the, the product and the engine that will ultimately drive bitcoin outperformance to the common equity. But in a bear market, it's right to focus on that product, focus on the engine, prove the engine, build the engine that will then power it through the bull market where you didn't hear a lot of the ample amplified bitcoin or as much as the amplified, but that's the whole, obviously the whole purpose of digital credit. And I think that by being able to prove that engine is going to give them more bandwidth if this is a bear market to continue to stack, continue to amplify and get that car ready to go for the next bull.
- [46:57]
A
Definitely. I was listening to Xspaces over the weekend and some of the participants that are at least well known to me, I recognize the names and the voices they were talking about the call. They were mentioning words like calm, professional, measured, positive and of course the price action being down and then the day after it being up may or may not be correlated. But the moment that stood out to me was as well, when the first analyst asked what about these couple of weeks that was non accretive share issuance. And it was, well, we didn't do that enthusiastically. We would not do it electively or programmatically moving forward. But we do want to and need to defend the credit quality of the company. And so that's what stood out to me. All of the themes from today, along with Jeff, who's not with us today, it just reminds me of the meme is the message I'm listening to Joe basically saying, sell to what right? You own bitcoin? Sell to what? You have Ben saying, don't borrow your conviction. You of course have punter Jeff, we're going higher. And Matt, what you said today I think might stick around. You'll never hear Matt Cole saying the bottom is in. You'll never hear Saylor saying, buy the dip. There are certain things that kind of stick with us as we go along here. Very cool. Well, for Matt Cole, Joe Burnett and Ben Workman, I'm Tim Kotsman. Thanks for listening to the hurdle rate and we'll see everybody next week.