← The Wolf Of All Streets
The Wolf Of All Streets
$1,000,000 Bitcoin & The Death Of The 4-Year Cycle | Arthur Hayes & Allan Marshall
00:54:13
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- [00:00]
A
The four year bitcoin cycle might be dead and the next crypto boom could be fueled by something far bigger. Today I'm joined by Arthur Hayes, co founder of Bitmex and one of the sharpest macro minds in crypto. Alongside Alan Marshall, CEO of upexi, the first Solana based digital asset treasury. We're breaking down the rise and possible collapse of the new wave of Bitcoin and Solana treasury companies.
- [00:25]
B
A lot of people are selling puts to generate extra yield, especially if you're not getting 8%. I've got this stack. How do I generate some yield? Okay, let me go in the OTC markets and start selling puts. I don't know where these strike prices are, but there's going to be a lot of people who are going to have to come up with a lot of cash at a particular level in a bear market. And that could be the end of a lot of yak companies who mismanage versus exposure.
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A
Why Arthur believes liquidity not havings drives every crypto cycle.
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B
There have been three four year cycles and there's very good reasons for them all center around US and Chinese monetary policy. It's really about fiat liquidity between the.
- [00:57]
A
US and China and how government money printing could send Bitcoin to $1,000,000 this cycle.
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B
Obviously I said million dollar Bitcoin. I think it's possible. Tell me how much money you think that XYZ policy print. I'll tell you what Bitcoin is going to be or a range.
- [01:11]
A
This conversation dives deep into the debasement trade, the super cycle math and why Arthur says most digital asset firms are just hedge funds with better marketing. If you want to understand where the next bitcoin leg starts and when it ends, this is the interview you can't afford to miss.
- [01:42]
B
Dope.
- [01:43]
A
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- [03:14]
B
Really? Yeah.
- [03:16]
A
I think it was a $12 or a $10 was their first one.
- [03:20]
B
Is this Bailey's?
- [03:21]
A
And they did a small raise at five bucks and they're trading at 90 cents. So, like, you know, where are we at on the bitcoin? Let's start with Bitcoin. Where are we at on the bitcoin asset? Digital asset. Treasury companies saturated.
- [03:34]
C
Saturated. And I think, you know, I mean, for me, it's like there's still no return on Bitcoin other than the upside. So these small companies, everybody knows they have to sell something at some point. Right? They're not MicroStrategy. So, I mean, and now there's. One of the reasons that we didn't do that was there was already 50 of them. We didn't want to be number 51 or number 52. So I think that's the real problem is just trying to work its way through retail.
- [03:57]
B
Right.
- [03:57]
C
Like, retail is trying to pick who it's going to be. And you got to keep it simple for them. With the acquisitions and the things. I think. I think people are just looking for a pure player. They have microstrategies that it doesn't have to sell its bitcoin. And everybody's afraid they might.
- [04:12]
A
Yeah. I mean, Arthur, where do you stand on Bitcoin treasury companies right now?
- [04:16]
B
I mean, in general, there'll be a few in each category that are dominant. Obviously, MicroStrategy is the OG and the creator of the entire meta narrative. I think Tom Lee's been talking about how MicroStrategy and Bitmine are what like 90% of all trading volume of the entire DAT space. So if you're in ETH or Bitcoin as your token, then like it's pretty difficult to compete because average daily trading volume is really like the, you know, a financial advisor cannot recommend a stock that doesn't trade, especially if the other alternative trades a thousand times more. So it's like a no brainer.
- [04:53]
A
Yeah, I mean that makes sense. It was going to be hard for many people to replicate what MicroStrategy did specifically. I feel like whatever the premium to nav on MicroStrategy is, is pretty much your ceiling at what you can anticipate another Bitcoin treasury trading at. I get that some of them are smaller and it's easier to maneuver and do things, but still, I mean Alan, it makes a lot of sense why you didn't dive into a bitcoin treasury company.
- [05:18]
C
Yeah, well that's the way we looked at it. We looked at MicroStrategy is one of seven now it's down to 1.5. So we thought that's the ceiling for Dats in the Bitcoin space because of the way bitcoin works and it's just compressed along with all the rest of them. But like Arthur said, volume is king. So they still have plenty of opportunity. The problem is anything they do has to be so massive.
- [05:43]
B
Right.
- [05:44]
C
If they raise $500 million tomorrow, nobody cares, Right. So they have to use to do billions and billions at a time, but they're the king of it. And volume is going to be in those leader. Like Arthur said, the leaders are going to matter. Like there's going to be a couple in each category.
- [06:00]
A
So then why Solana? And that's a question for both of you. Obviously Alan, you started upset. I mean you were within 24 hours of being the first. I don't know, won the race technically, but you obviously saw an opportunity. And that was even before the ETH ones were huge. Right. I mean you were very, very early on deciding to roll with a Solana treasury company and raised at the time what was very sizable.
- [06:25]
C
Yeah, there was, there were no ETH ones at the time. I don't think like Bitminer came after, SBEC came after. So what we saw was, was what I saw was that, that single issue that I think for small companies launching these are how are you going to have cash flow? So if, if there were already 50 Bitcoin, you know, bitcoin companies out there, you know, accumulating all this bitcoin and they were trading if 17 was your ceiling, why, why, you know, and MicroStrategy is there, why do it? And what we looked at, we looked at Solana, the staking revenue and the way you can compound that, never mind the availability to buy that discounted lock sold from the FTF bankruptcy which, you know, we've managed to get 40, no 60% of our portfolio unlocked. So saved average of 15 to 17% on those purchases. So every month you get, you get that adding onto your balance sheet and that 8% staking revenue really runs the company, leaves us profit. So we don't ever have to sell any if we, if we don't want to.
- [07:23]
A
Arthur, why back a Salana treasury company with all the options in the world?
- [07:29]
B
One of the first, obviously we participated in the pipe so we were comfortable with the management and how they operated that particular deal. I'm sure people have seen some interesting market actions and some of the subsequent deals of other DAT companies which we've chosen not to participate in and yeah, and obviously the yield, right, because obviously you want to stack, you know, a creative soul per share at the end of the day because what are you in two years time, what's going to be the story about dat's if maybe the market's going sideways or what have you. It's like who's making money, who doesn't have a particular binary price point at which if it goes below this level and they gotta start selling and doing some, you know, some things they would rather not do. And I think that's what, you know, made us comfortable taking, taking the plunge and getting into this, this realm. Because obviously we're not really equity folks, we're more pure token people.
- [08:21]
A
Right? I mean I wouldn't. Alan, I don't know where you stand on this but Arthur, I certainly wouldn't have defined you as like a Solana Maxi before coming into this. Right?
- [08:29]
B
I'm a money in Arthur Hayes pocket.
- [08:32]
A
Money, Arthur's bank account Maxi. But Alan, you either. Right, I mean listen, you have a long multi decade career on Wall street, right? This is a consumer goods company. So you were obviously opportun, you obviously thought opportunity with a very specific asset to do a very specific thing. But in your mind was it because Solana is the greatest asset that exists in the crypto space? Could be. Or is it because it was the best opportunity for a Treasury company?
- [09:03]
C
I think it was a blend of all three.
- [09:04]
A
Right.
- [09:04]
C
Like we actually thought about basket, you know, making a basket bitcoin. But Solana was still always going to be the lead. But as we looked at it we thought, you know, keep it simple, right? So one story, like Arthur said, we can stack, we can stack that. And then once we started seeing that the, you know, the opportunities in lock soul, you know, if we stack that 15 discount, you know that yield to maturity is close to 11. So we're really. The way I saw it is if you as crypto always has a winner, it has a summer, it has a winner, you know and there's, there's, there's just the way it's going to go. We never wanted to be in a situation where we own something and had to liquidate it because that's the death of your premium at some point. So it just gave us the best opportunity as a small company to do it that way. And the difference between, between us and you know, even our, we didn't take any debt like we didn't do any debt at the beginning like the first one before they did all debt to start. So trade it a little different. We wanted to do straight equity and make sure you secure down that balance sheet 100% and leave yourself the opportunity to manage properly going forward.
- [10:06]
A
It sounds like for some reason you think there's going to be bear markets in the future, but I was told that it's a super cycle and they will never draw down again. So seems like you're not really a believer.
- [10:20]
B
I hope so. That'd be nice.
- [10:22]
A
I read Arthur, I'm going to hope.
- [10:24]
C
You'Re right, but I'm going to plan for the other.
- [10:26]
A
I read Arthur's medium and I'm just telling you that's how I feel when I'm done.
- [10:32]
B
I'm just doing my job.
- [10:34]
A
So listen. But it does beckon a very interesting question which is how do digital asset treasury companies generally prepare for the somewhat inevitable winter? I'm not saying it'll be a part of the four year cycle, but we all know that bear markets will come and at the end of the day, is that just management? I mean Arthur, you talked about the fact like, you know, these guys, you invested, you identified that the management was competent and was likely to be able to steer the ship. Probably not the case with every digital asset treasury company from what I've seen anecdotally. Right. So I guess how do you prepare to survive a winter with, with one of these and you know, how do you make sure that you are solvent when that happens?
- [11:16]
B
I mean I think you have to look at derivative exposure to the extent that people disclose it. I know a very big Strategy for a lot of companies. I mean I don't know a lot, but I know some DATs and I don't believe you have to disclose this in your, your Results or your 10Ks or AQs or whatever they're called is a lot of people are selling puts, they're selling naked puts and to generate extra yield, especially if you're not getting 8%. Okay, well I've got, I've got this stack. How do I generate some yield? Okay, let me go and go in the OTC markets and start selling puts. And so I don't know where these strike prices are, but there's going to be a lot of people who are going to have to come up with a lot of cash at a particular level, whatever that level may be. I don't know what it is in the bear market. And that could be the end of a lot of DAT companies who mismanage their derivatives exposure or they issue some funky sort of debt equity like structure that has a particular strike price knock in knockout. Like people get really funky with this stuff. It's gonna be fun to trade as a trader, but I think people can get super, super duper funky and that's going to lead to tears when the market turns.
- [12:23]
A
Sounds like a lot of them are just hedge funds with a basically label.
- [12:30]
B
Hedge funds and people who like to pay fees to bankers basically.
- [12:33]
A
Right. I just like we clearly have a very, like we have a major problem in crypto with naming things appropriately. It's like the Inflation Reduction Act. Yeah, but it's still inflation, it's still above. I don't totally just less from 9 to 8. We are a fiscally responsible crypto asset Treasury. Right. But I mean, Alan. Right. You've looked at all of these I'm assuming. Right. Interestingly, like as much as you were one of the first, I know these deals still cross your desk and you probably say no to most of them. Like what are the glaring things that you see when you think, wow, this one's not going to make it. I'm not putting a penny into this thing.
- [13:13]
C
Well, I, I, I, I didn't put a penny into many. So after the first two or three, what we've seen, and I'm sure Arthur's seen it because he's, he's everyone that I've seen, Arthur's seen 10. So whatever, whatever opportunities land on my desk, Arthur gets them first. So the way I see it is like they've gotten more and more diluted for the actual retail and the investor, you know, the, the sponsor warrants and all those things. And the great thing that they're doing is they still say all of. They don't really include them in the dilution. They include them in the dilution at the 1.1 NAV when they go out and market it. But then the company tells you that it's going to trade at 2 NAV. So if that's true, then it's not at 1.1 anymore, it's at 1.35.
- [13:56]
B
Right.
- [13:56]
C
Because that's a 20% dilution on this warrant. So I think those are the ones that are going to cause investors problems for us the way we would or for me. Like, the way I think about it, I'm not, I'm not a cryptos. So I'm not like Arthur. I don't think everything goes straight up actually. Like I'm in a. I'm from the, I'm from, you know, the logistics business. So when I was building XPO logistics, you know, we had thousands of trucks out there. The crazy things. On the weekend, my, the phone would ring or so back then we didn't have really cell phones. I didn't really carry a cell phone. You know, when I was building that in 2000, my wife would come outside and every time she'd come outside I'd think, just don't tell me that the truck hit a school bus or something crazy like. So I'm always planning for the worst. Like I wouldn't sleep at night so I couldn't have enough insurance. So the way we look at it on a short, short form of this is not too much leverage. We don't put all our money to work at once. Yes, investors give us money to put it to work, but they put it, they gave it to us, you know, to put to work in a reasonable manner. They wanted us to get into the market. But we don't raise a billion today and buy a billion tomorrow. So even if you look at our chart, the way we bought it, we, you know, we have a hundred. And I think when we went out the, the cost of soul was like one or the price was like 159. We raised what, a couple hundred million dollars after that. And our cost is still 159. And Seoul has been up since then. We've strategically put stuff to work. So I think those are the things that we can do. And I come from traditional finance, from Wall street, so I think it's a good blend. Like we're taking just a little different approach. We think crypto's the future and Solana is the future. Just a smaller approach, not too much leverage. When everything goes down, I'd love to have some leverage available and some cash available to take advantage of that moment in time.
- [15:34]
A
Let's talk about that. Because what happens when they blow up? Arthur, is it merger and acquisition season? Do the big ones eat the small ones? Is it like a general space collapse? Do you see it as they just go away and a few survive? I mean there's so many scenarios of ways this could end.
- [15:50]
B
Yeah, I mean I think why do dads really exist? Even a bunch of zombie small ass companies that do all. And so this is a great way to re energize the stock price. So I don't think these things are going to like disappear in the same way that you know, there's a lot of cryptos that still trade above zero and that, that.
- [16:09]
A
Yeah, right, 200 million market cap or something. Totally. So.
- [16:18]
B
How difficult is it to take over a board, go to the agm, make them sell the tokens or redeem this and do that? It's all lawyer US capital markets stuff. It's harder, it's easy, I don't know. But that's kind of the thing that you know, certain types of investors who are really, really good at that like navigating that legal capital markets, you know, rules and regulations game. They'll make a killing on this because there's gonna be some awesome opportunities for assets that like, you know, people like me are not going to get involved. It's just too hard, it takes too long, costs too much money. But there's people who, this is what they do, right? Like an Elliot, right? They go and they, they buy this distress and they figure it out and all of a sudden, you know, they're, you know, they bought it at 50 cents, it is trading at 95 or whatever it is. So I think those are the type of people who will salivate at all these broken DATs that will exist in not. Doesn't even need to be like a super bear market. Just like the bull market is kind of over. Maybe we're just in a slight downward sideways. When the volatility declines, retail becomes less interested and all of a sudden these things, you know, trade a few bucks a day and at a massive discount to mnav.
- [17:26]
A
Yeah, I had a conversation with Caitlin Long last week and she basically said Wall street has somewhat dampened Bitcoin's volatility. And volatility is what these Bitcoin treasury companies prey on. Saylor Just needs things to be going crazy. Sideways is really, really bad when they're trying to do all the financial engineering and make all these moves. So you just really need it to be extremely volatile for them all to be able to operate and make money.
- [17:52]
B
Yeah, but then the more convertible bonds and all these sort of like you know, accumulator type structures that are issued on top of these stocks, the more retailers or whoever is buying these and probably high net worth private banks are just crushing volume and as the volume comes down it becomes harder and harder to issue these things and then it makes the underlying asset less interesting to trade from a retail perspective.
- [18:18]
A
Yeah. It turns out that inefficiencies are very quickly arbed out of markets. So they're like who's buying convertible note on Bitcoin? Treasury Co. 57 and what are they trying to offer to even get a single investor? That's always what concerned me is like once you get past a few of these, what kind of risk has to be taken on to compete?
- [18:42]
C
Well, that's going to be the key, right. If you have to take on too much risk. And I think that's when people have. Well the only thing that can happen faster than that is people issuing a new debt that. Because we've seen like 180 in 60 days. So I didn't even know you can get that Many registered in 60 days. Actually none of them register any shares yet. So it doesn't matter.
- [18:57]
A
I was just gonna. That's my next question. We'll get there in a minute.
- [19:03]
C
I, you know, I think that there's. Yeah, I think I agree with, with Arthur and you guys on this. It's, it's gonna get played out in a, in a not so pretty way on, especially on some of the assets when they've reached for tokens because everyone wants to do a new deal. And like Arthur mentioned, it's really hard to do an acquisition because even when you know how do we just just say us as a dad and we're trading at 1.5. Whatever, whatever it is. How can we justify. Go pay. Go going to pay 1.5 for a dat that has 400 million in crypto. So really I'm paying 600 million for something I can buy in the open market for 400 million. My, my investors would go crazy. I'd be out of my mind. So they have to trade below Nav. And then you go talk to them and say hey, we'd like to buy you below Nav. And they're like well we'll just sell the crypto. So why are we going to sell below now? So then you get this whole, I don't know how it's going to play out. And I've done, you know, with XP, I did probably did 12, 15 acquisitions. I don't know how, I don't know how they're going to get done yet.
- [20:01]
A
So then what happens if, let's say the acquisition environment is too difficult, what happens to ones that wash out? I mean shareholder value just goes to zero and see you later.
- [20:11]
C
No, they probably, no, no, they're probably end up being a beautiful shell with $300 million in it or $100 million that another tech company just slips in and takes over. So it kind of, it's the.
- [20:23]
A
I'm not kidding, I'm just laughing. No, I'm laughing because it's like some dead medical company reverse merges into some digital treasury company which then reverse merges into some sort of $300 million in.
- [20:35]
C
It which you can't find so you can't see sell it. Right. So, so most of these companies had million dollar market cap, two million dollar market cap and that's just, it was an easy deal, but now they're going to be Zombie Companies with 200 million of ton or whatever is next that they go, whatever it is that that fails but still has a value. They come in, they liquidate the treasury and they got. So the shareholders are going to get a percentage of whatever new company goes in there. Unfortunately it's going to be a lot less than they think because they're going to get the looted out with like ridiculous, you know, warrants and banking fees.
- [21:06]
A
So I mean we have such creative ways of blowing up our market. So maybe the question is, is this any sort of risk to the actual crypto market or is it just a risk to the digital asset treasury companies like Arthur, do you think that because they're all forced to puke at whatever that tipping point is level, you said that we get a bigger drawdown that causes a larger bear market. Or do you think that basically anyone who bought the shares in these just gets washed?
- [21:32]
B
I don't think usually the failures happen at the bottom of the bear market. So if there are rafted failures, it'll happen at the bottom of the bear market in the same way that FTX Luna 3 arrows really failed at the bottom of the market. So I think it'd be a great signal as to when they could start going along crypto. When some of these DATs fail, whatever that means in the dat context. But the best thing about at least Bitcoin, Ethereum, Solana, all these, you know, major tokens is that they're, you know, public blockchains that work irregardless of what the price is. Right. Tech still works. And so that's the point is we don't have to worry about some central bank of crypto or some dudes and gals, you know, in a, in a private room deciding whether or not they're going to save this guy, that guy. Like we don't have any of that. And that's the point of crypto. It's like we don't have to worry about this stuff.
- [22:23]
C
Okay?
- [22:23]
B
Who cares if the price goes down 99% as long as the blocks keep getting validated.
- [22:29]
A
So what happened? I think everybody intellectually can get behind Bitcoin, Ethereum, Solana, digital asset, treasury companies. But we're already starting to see like number 98 on Coin Market cap, Digital asset, treasury companies. I mean what is that all about? Why do they.
- [22:46]
B
I mean it's really mostly it's about and I don't know how much. Maybe Alan has a better idea of what you're supposed to disclose or not disclose. A lot of these are, I've got lock tokens and I think I can get some liquidity today or multiple on it by putting it into a public vehicle. And maybe there's some tax advantage and all that kind of stuff and that's really the motivation for a lot of these like tier 2 tokens for doing dash. Yeah, it's like hey DC guy needs to get a DPI in their investment or show that they actually did something. Let me go put this in this public vehicle, slap it on my investor report and say please pay me 20%.
- [23:21]
A
Isn't there also an element there where it's like you get to sell without telling everybody you sold? Especially I'll say in the bitcoin ones you have these whales who are diamond hand never sell Libertarian. Screw the government. And all of a sudden he transferred 30,000 bitcoin into a bitcoin treasury company that's selling without telling everybody.
- [23:43]
C
Yeah, I worry about the same thing with what I talked about. The, some of these deals and the way they're funded. I think also like when they're doing the in kind deals on these IPOs, it's just like, like, like Arthur said, there's, there's these founders coming in or people coming in on like whatever the tokens is. I don't want to name anybody but they're just Contributing this illiquid token for $20 million or $50 million and creating the basis for the, the DAT and then the bankers and everybody's using that to raise the other 200 billion, saying, oh, we got a 50 million dollar lead, but, but the 15 million. And he's not leading, he's exiting. So I think, I think that's the problem. And on the dad downside for us, I want to focus on the positive because I think we have a huge Runway. We have a huge Runway and I think these dads really do have a huge Runway for the ones that are run properly and really understand the metric. But on the downside, I think what I worry about is the ones that are not disclosing or mismanaging are going to cause the retail investor to rush out of these things and then make it harder. Right, it's, but, but like, like Arthur said, as that happens, there'll be opportunity for the ones or ones that don't. But it's just a shame that it's going to most likely somehow come to that, you know, in the short term, even before crypto winter, it can come to that because, because of some of these things. So we'll, we'll see what happens.
- [25:03]
A
But. So you just kind of alluded before to the fact that a lot of these have filed, but very few have actually registered their shares. There's been a lot of rumors that the NASDAQ and even the SEC are not looking as kindly on these as people expected. Maybe at the very beginning. Are we in a situation where we're going to hear about a whole lot of news of ones launching or attempting to and then they never actually get off the ground?
- [25:28]
C
No, I don't think so. So we've been through, we went through a registration. You know, it's always painful for people. The first one's the most painful. Second one, third one, they get easier because your float's bigger, you have more liquidity, you have a deeper market. These ones on the first round, the first round for us was painful. I'm sure Arthur saw it. Like you went to bed one day and he had, it was 20 bucks a shirt. Woke up and it was three bucks a share. But I know he probably didn't care.
- [25:49]
A
I mean, he's like, it did, he's.
- [25:55]
C
Like, no, Alan, I was perfect out of that one.
- [25:57]
A
Yeah, I was skinny man.
- [26:00]
C
No, but I think I, I, I, all I've seen from them is that they wanted to put the brakes on it. It's not taking longer. The thing I think that's taking longer for everybody is you're taking a lot of people from crypto into traditional markets, right? Like in crypto you don't have to file a registration statement with the sec. So, so they're learning how the SEC does this stuff. And they're very, they can be very difficult. They can be, not in a, in a way intentionally, I don't believe, but just that they have a structure. It's this, this, this and this. And what's the most frustrating is they say, hey, answer this question and then you're done. And then you answer that question, they say, well, since you answered that question, I got three more for you. And then the frustration level, and if you don't have really good experience with it, when you answer that question, you got to make sure you do not give them a reason to ask you another question. Like, you got, we're not answering the question.
- [26:46]
A
Yeah, but then your problem, but, but then the issue is for a lot of these, at least so far, is that the news goes out, you have this low float stock trading on complete speculation without shares register, you registering and no idea what actual price discovery would be. And you get the Christmas tree chart. I mean, that's why you get these Mount Everest mountain charts from zero to 20 bucks and back to zero before anybody even has shares to sell or they can buy the asset. It seems like that's hugely problematic.
- [27:16]
C
It is problematic. It was problematic for us. We were like, oh, please. I mean, I really.
- [27:20]
A
When it happened, and you can't say anything.
- [27:22]
C
You can't say anything. We had no idea that people were going to take a dad the way we did. When we did it, we were the first to really. And I woke up and I'm like, God, this is the worst thing that can happen. You want to tell everybody, like, why are you buying the stocks that day? Like, you can't. It doesn't do us any good. We're not selling any stock. I mean, some of the, some of the ones after have sold off of registration statements I don't agree with. But I think, you know, if you look at the new deals that I've launched, the retail investors gotten smarter. They see it, they're talking about it. I'm sure Arthur's seen it. You've seen a couple deals in the Solana space. They haven't traded at huge premiums. They're not trading a lot of volume. Like, even ones that came after us, we're still, I think, the leader in Solana with the most volume per day. And the you know, pretty consistent trading. So I think that, I think, I think the investment community's figured it out. But yeah, it's been a big problem, but there's still a huge flush to come for these other ones that haven't filed or have filed. It hasn't happened.
- [28:19]
A
All right, let's talk about then the market and where, where we're at because we all, we know that this is all kind of beholden to where the market heads. We are in this endless debate right now. The four year cycle, does it exist? Is it dead? Are we in the super cycle I joked about before, you know, are we following liquidity? I mean, Arthur, you're kind of the master of this. Like where do you think we stand right now with the fiscal monetary situation in general and where the market is poised to go?
- [28:48]
B
Yeah, some. My essay comes out tomorrow and my take on the four year cycle, my, the TLDR is like, I don't. There has been, there have been three four year cycles and there's very good reasons for them all center around us and Chinese monetary policy. I don't, I know that there is a technical factor in terms of mining rewards, but I think that is not really the real driver of all this. It just happens to happen at the same time. It's really about fiat liquidity between the US and China. And if we think about like this particular cycle, if you just listen to what the politicians are telling us and they usually, as, you know, liars as they all are, they usually tell the truth about some things and the consistent message whether, you know, we're all around the world is we will do all these things for people and we're not going to tax them for them. Whether that's building bombs, it's building factories, it's building houses, whatever it is. Taxes are not going up to the level needed to pay for all this stuff. So it's just all about printed money. And whether it's the Fed or it's a pboc, it's you know, ECB or whatever central bank you want to talk about. The politicians are saying, hey, we need cheaper money and we need more, more of it. And there's various ways of getting, getting that, getting to that point, which is why I think bitcoin is, Bitcoin and gold for that matter are basically telling us the future is more fiat debasement. And so I don't think the four year cycle applies in this particular instance, mainly because nobody knows what the world order is going to look like in the next two to three years. But surely we'll be volatile, and surely politicians will print money to make sure that people feel okay and vote for them or support them in the political process. So I'm, I'm long. It's long and strong.
- [30:33]
C
Yeah, it's right on. That's. That's what's going on.
- [30:36]
A
It's just, I mean, J.P. morgan said Bitcoin, gold, silver. Yes, that J.P. morgan, the one with Jamie Dimon, said bitcoin, gold, silver, and called it the debasement trade. Then Paul Tudor Jones said the debasement trade, and he said bitcoin, gold, nasdaq. And then yesterday, Ken Griffin came in and said bitcoin and gold on the debasement trade. So we've definitely got a new hot take coming across the board on Wall Street. I don't know if they, like, call each other. Like, the word of the day is debasement. Let's get it. You know, like. And, But, I mean, Alan, do you agree with that? Because it seems like that's what's happening. You don't usually get gold, silver stocks, bitcoin. You know, interest rates. Somehow they're all rising at the same time.
- [31:17]
C
You don't.
- [31:17]
A
It.
- [31:18]
C
And it's just. This is crazy how much money we printed is. Never mind. The European Union can never stop printing money, right? Because they have no money coming in, really. They have money and, and, And China. You know, I mean, they're, they're. I mean, they've got cities that are empty. So what are they going to do with their money? And obviously, with this administration and the, and the US Also wants to. You know, for four years, we've failed to actually be part of the crypto. You know, everybody who went crypto in us was afraid of getting arrested almost some level or charged with something. So I think all of that money coming in, never mind the money being printed. I mean, I'm with Arthur. I don't know that this isn't the beginning for a little while. I mean, gold's at 4,000.
- [32:00]
A
4,000.
- [32:02]
C
And today I was driving home and a friend of mine called and said, oh, I just bought 2,000 tokens of silver. For what? I'm like, why did you do that? He goes, silver's going to the moon.
- [32:12]
B
And I'm like, you.
- [32:13]
C
We're at a random call and I bought 2,000 ounces of silver. He's. The guy in Tampa's got 2,000 more if you want them.
- [32:19]
A
I'm like, I'm good.
- [32:21]
C
So it's. It's just starting, right?
- [32:23]
A
I Did until you're the one who told me about it. But you're my top signal.
- [32:26]
C
But I'm out.
- [32:30]
A
I didn't, I didn't have it on my bingo card that like we'd have the same signals from, from Silver that we were getting from do Silver.
- [32:36]
B
I mean, I mean, I'm long. Silver's definitely going to 100 plus 2011 high.
- [32:43]
A
I do agree with that.
- [32:44]
C
It's just he didn't call to see how I was doing it. I called to see if I wanted to buy silver.
- [32:49]
A
He was trying to use you as exit liquidity for his 2000 that he bought. That was all a lie. But I mean, to your point, Arthur, I think the clearest thing is you can believe Trump when it comes to where he wants markets to go. He's extremely clear about how he, about how he gauges the success of his presidency. And they literally went from Doge and austerity for like three days to we're going to grow our way out of this. Well, how can things not go up if the government is literally telling you they don't care about anything but growth? And we all know that growth is fake. Really. Oh, and we got stimmy checks now, right? We're gonna get some tariff checks.
- [33:28]
C
Are we getting tariff checks?
- [33:30]
A
Yeah, 1 to 2000 a person. That's. We only got 1500 in Covid. And look what that did to GameStop in crypto. Right.
- [33:37]
C
Well, we better wait to see if the Supreme Court. Because I don't want to check back to China because somehow I'll come back to my boy, you know, not in a good way. So let's, let's see if the tariffs stick, right?
- [33:48]
A
I mean, are we really going to get stimulus? Is that really a thing? Like is, are these. I mean, I feel like that's bluster, but like, wouldn't you.
- [33:56]
B
I don't think so. I mean, it's a very popular policy.
- [33:59]
A
Both gets a lot of votes.
- [34:01]
B
Democrats and Republicans love handing out stimulus checks.
- [34:04]
C
They love giving out free money.
- [34:06]
B
It's not really. They're politicians.
- [34:08]
A
Yeah, we call them airdrops where I'm from, but, you know, whatever. So if we're not going to see the normal four year cycle, it also can't be up only forever. We've talked about the fact that there will be a winter. So Arthur, like, even if it's an extended sort of bull market here, Matt Hogan joked to me that recessions have become illegal. There still feels like that leads to a worse end whenever it does. Tip.
- [34:34]
B
Yeah. I mean, and I think at least in the US context, one signal will be sort of the ratcheting up of rhetoric from the opposing team Blue Democrats in late 27 and starting in 2028. Right. Irregardless that they all have the same essential party and they all do the same stuff. It doesn't really matter. It's a popularity contest. Half the country hates one dude, so the people running against him, like, we're not going to do what he does. And then investors are, oh, no, what if they're serious? Maybe we should not own whatever it is that we own at that particular time. Crypto being one of those assets. And I think that'll be the, that'll be the, the start of a massive sell off in crypto. Stocks, golds, everything globally, as people, you know, ponder whether or not American think your politician, whoever's the opposition party, is serious about trying to run a different policy, even though we all know it won't. But that doesn't mean that the forward changes and people start taking steps off the table and that causes a collapse in prices. So that's sort of my mental model. 2027, 2028 time period, when I want to be, okay, well, what am I going to buy now? I've got, I've made all these great gains in fiat number. How do I convert that into something real that's going to last me through this next beta cycle, however long that lasts.
- [35:54]
C
I even see it like in the midterms. Like, the only good thing about the midterms is that if it happens, it just stagnates where nothing can change. But I still think there could be a temporary bump there too. And then, and then, you know, if, if it becomes a stalemate, it's off to the races again. And then if it, you know, if kind of the red side or the Republican side wins, you know, it probably just continues, just chugs right back along again. But I agree with Arthur. You have to really wait for a change.
- [36:25]
A
Yeah. What do you sell into at that point? Right. Like if gold and crypto and bitcoin are the things that have completely mooned on the debasement trade and you think that there's going to be a bear market, where do you put your money?
- [36:35]
B
Lands, you know, space rockets? I don't know. We'll figure it out.
- [36:39]
C
Yeah, we'll figure it out.
- [36:41]
A
We'll be so rich it won't matter. Cash is not that bad either.
- [36:45]
C
You know, it's not horrible to have a little cash sitting around.
- [36:48]
A
I've heard it's trash. That's the thing that's being debased, last time I checked.
- [36:52]
C
But yeah, temporarily, it's okay. It's okay. You know, but yeah, yeah, I don't think, you know, it could be. It could be the opposite where by then crypto's got such a hold that crypto, you know, actually has a little run into that where people don't want to go into the dollar or something or, you know, depending on that.
- [37:09]
B
But.
- [37:09]
C
But it's inevitable. There'll be. There'll be a down check.
- [37:12]
A
But isn't that the time that Bitcoiners will be screaming that it's going to become the global reserve currency and that fiat is dead and that's our moment?
- [37:23]
B
Unfortunately, everyone agrees it's usually not what's going to happen.
- [37:27]
A
Yeah, but whatever, man. That's not what I heard. So they told me.
- [37:32]
C
I read it every day. I just. It doesn't appear to be true on the tv.
- [37:36]
A
Yeah, Every single day. So, Alan, not to get too deeply into politics, but I mean, factually, if one House flips, if the Senate flips blue. Elizabeth Warren is the head of the Senate Finance Committee. That's literally a reality. It's like she becomes ahead of, like, as a CEO of a publicly traded digital asset, treasury company, do you have any concerns that if the political environment changes, things could become more difficult for you? Or do you believe that, like, at least from where you stand and not maybe for public blockchains or projects trying to build, since you are publicly traded, it's not a problem. Like, is there an environment where the pendulum swings all the way back and we go full Gensler and they come after you or anyone for things that were done during the Trump administration when the environment looked better?
- [38:25]
C
That part, I don't worry about that too much. Like, that's it. They can't go back on policy and come after companies, you know, post that stuff. But I will say what I, What I've always said as a. As a career, business person, whatever, who's ever in whatever house, whoever it is, it'll take them six months to change something because they're so stupid. And it will take a good business person, like, six hours to figure out.
- [38:50]
B
A way around it.
- [38:51]
C
So just give me like 24 hours after they do it, and I'll have a new policy for them and they can go do whatever they want to do. They're really not to get into politics. Politics is irrelevant in your life if you just focus on your life.
- [39:02]
A
But do you think it matters Then if we get the Clarity act or once you have it.
- [39:08]
C
Yeah, I think if you, if you get the genius act next year and the Clarity act done, man. I think Arthur probably agrees. I hope he does. And if he doesn't, just say you do anyway. No, I think it's off to the races for a little while.
- [39:22]
B
I don't know what's in the ax.
- [39:23]
A
So I don't live in the Americas.
- [39:25]
C
I really.
- [39:25]
A
Nobody knows. But it's provocative.
- [39:28]
C
Here's what it gives you.
- [39:29]
A
It gives all.
- [39:30]
C
It gives JP mortgage to them of the world. They're able to stuff that in everybody's retirement account. And that's, you know, 5 or 10 of $16 trillion going up by however much every.
- [39:39]
A
Every month.
- [39:40]
C
So it's a big amount of money.
- [39:42]
A
I mean, isn't that really the thing that will buoy crypto and break the cycles is passive flows? Yeah, I mean that's how everybody, I mean that's how all money is invested at this point. Right. I mean you just buy like a Vanguard mutual fund or something in your 401k and never check it again. And if it has microstrategy in it, microstrategy goes up or coinbase. Right. I mean that, that's the reality. So is it now a race to become big enough to be included in indexes?
- [40:06]
C
It'll just create some liquidity on the underlying tokens. That's what's really going to happen for the top. Like even though they're pretty, they look, they look. Well, Bitcoin's completely liquid. Ethereum's got it more liquid because Tommy buys all of it and, but like it's, it's, it's a lot of the liquidity is there, but it could get better. But yeah, if you're in the index or big enough to be in like the Russell 1000-2000, it just creates liquidity amongst some of these companies. It'll be a really good thing, I think, you know, a temporary sugar high, put it that way at least.
- [40:38]
A
So I've been kind of joking consistently since the circle IPO that we've had a huge alt season, but it's just in public equities that are crypto adjacent instead of actually in altcoins. Arthur, do you think we get an actual alt season with all this liquidity that's coming in?
- [40:51]
B
You've had an alt season, hyper liquid.
- [40:53]
A
Okay, do you think we get a. Do we, do you think we. Okay there. Bnb, right? I mean, I mean BNB is absolutely crushing entire ecosystem. Do we get the buy a token, throw a dart and wait for your 10x type of arts alt season.
- [41:08]
B
I don't think so. I think every, every cycle is different. Right. The first cycle was, you know, can you get, can you pay a miner off to put your money into an ICO? The D5 cycle was can you farm compound and ave and you know, whatever else you were doing. And this, the next cycle was okay, well any high fdv, low flow token either don't participate or dump that of the open and buy things with revenue. So I think things with revenue, things like Etherfi, Athena Pendle, you know, Hyper Liquid, depending how they do with the fees. Aster lighter, all these things, right. If you have money, if you're going to buy back your token, that'll do well, it's not going to be, you know, throw a dart at the wall and XYZ token is going to do well. You know, I think people are already over memes. It's very, very difficult. What new meme has broken out over a billion post Trump? Yeah, I don't know.
- [42:00]
A
I mean if you think micro strategy puts in the ceiling for digital asset treasury companies. How about the President of the United States throwing out a meme coin on Friday night at night?
- [42:09]
B
So I mean, I guess it's every, every cycle is different and you know, when people say alt season they want to, they wanted to be as easy as it was in the past. But probably most of those people weren't even participating in the past. They thought crypto was too sketchy. So I think it's a bit of a, a misplaced nostalgia.
- [42:27]
A
But that actually sounds like it's a maturing market. You actually want to buy things that have some sort of utility or reasonable economics for the first time.
- [42:35]
B
I mean you always wanted to buy something that had utility. It's just that your Ford was so long. Now the Ford is. Show me right now where is it? You know, I don't want.
- [42:44]
A
Right, you wanted theoretical utility but you were trading on speculation, not on the actual utility. Which makes sense why something like a BNB is absolutely exploding right now. Hyper Liquid is really interesting Aster all of the ones that you mentioned. But do you think that like dinosaur tokens have their day? Like do we get the that.
- [43:01]
B
I mean Ripple is still.
- [43:02]
A
Cardano wrote. Yeah, they are.
- [43:05]
B
I mean I was at token for 2049. Hoskinson was there holding court. Cardano and adjacent projects had like however many square meters of square. They must have paid millions to the token 2049 organizers. So obviously, dinosaur tokens of a particular vintage that do nothing are doing quite well.
- [43:24]
A
Alan. I mean, you listen, you're obviously focused on Solana, but as you look at this market, you know, do you think that there's going to be a lot of value in the underlying tokens or anything? We just focus on the stocks that are trading based on the.
- [43:39]
C
Well, I think there's a, there's a place for both.
- [43:41]
B
Right.
- [43:42]
C
Like I still own Bitcoin, I own Solana individually and I have more than enough exposure of Solana on our, you know, in our equity. But I certainly think that, you know, with, if you pick the right track, you know, treasury company, you can do better. You know, your return should be better than the underlying token, but there's more risk to it. So I think that's, that's for everybody individually, I think. But, you know, I, I really don't go below the, the first four or five tokens personally on investment wise, I don't understand them well enough to do it.
- [44:12]
A
So you don't need to understand them, you just need to understand who's going to push them. That's how it worked in the past. So actually you finally found your moment then in crypto, because that never worked before and now it actually does. I mean, Arthur, how is. I don't know if you can get into it too deeply, but how's Maelstrom deploying right now? Is it more into public markets? Is it more into tokens? Are you dealing with pre sales and things like that?
- [44:42]
C
I think we lost Arthur.
- [44:44]
A
We might have. Sometimes they'll edit it, but it records locally. So usually if he can still hear us, it's still recording on his. That's why we use Riverview. But yeah, we did totally lose him. We'll continue on and hopefully he'll jump back in. We definitely got enough either way. So while we're waiting for him, make sure we covered everything here. Maybe we can talk about what justifies the premium in digital asset Treasuries, because obviously some of them will and should trade at a premium. Some may end up trading at a discount, as we discussed. But what justifies a premium? We're not talking about 10x5x and how high, I guess, can a justified premium be?
- [45:30]
C
Yeah, so the way I see it is what can we do that a token can't do?
- [45:35]
B
Right.
- [45:35]
C
So we can, we can stack the, the, the token using the yield. So the yield for us is something that the returns, you know, higher for us than it does for, for an ETF, because the ETFs, from what my understanding is, they can't stake the whole thing. They have to leave some liquidity so we can be permanently staked. They also can't buy discounted locked tokens like we can. So if we're still buying them and it's still available, 15% 12 discount, that discount for us comes to term each month. So we add another, you know, half a point to return for equity. And then when we are trading above nav, as much as people don't, you know, they all say don't. Oh, don't dilute us. Don't dilute us. When you're, when you're selling stock above NAV 1.5, 1.7 times and buying the underlying token and then doing it over again, it's by definition accretive. It's not dilutive.
- [46:27]
B
It's.
- [46:27]
C
It's the actual opposite of that. So that's what an ETF can't do, and that's what you can't do if you just own Solana. So that's where I think that someone who's a sophisticated investor can really just do the math each time you do it and know where the stock should trade and could trade. And that's why we're doing this the way we're doing.
- [46:44]
A
I think a lot of people just struggle to understand MNAV and how it's calculated. And it seems like every company has a different dashboard on their side. Just very, very confusing. So even those who get deep in the weeds have trouble identifying exactly what one of these might be worth.
- [47:01]
C
So we, we, we, we put a press release probably a few weeks ago that really explained the difference in how, how we look at it. There's really only one way to look at it. It's so it's the total number of tokens you own. What that, what that value of tokens is divided by your fully diluted shares, less any debt you have plus any cash you have deployed into the token at that moment in time. Right, so it's a. Explain it again. So if you, for us, we have 2 million tokens. If it's at 200 bucks, that's 4,400 million. If we have 100 million shares outstanding, which we don't, this is hypothetical 100, then you have 4. Then you have $4 of share. So, so you're M now. And then if you have 40 million in cash, you have to make the assumption that you would put that to work so that you have to add that back in and subtract any debt you have. That's fully diluted M Nev it's not that hard. I know it seems like everyone has a different way of spinning it but you have to work out all of your all the economics so you can the investor knows exactly what they're getting and we're trying to do that like and then the other side is we do it sold per share. So we give you every opportunity on our website to see exactly what we have.
- [48:14]
A
I when I listen to you talk I have a feeling that 50% I'm going to handy I'll say 50% generously of people who have launched digital asset treasury companies can't do that calculation.
- [48:26]
C
I do it in my head every day because sol so I know exactly what our share price is.
- [48:30]
A
Too many crypto guys, too many crypto guys launch a digital asset treasury companies and not enough people who actually have a background in this and understand it.
- [48:39]
C
If you don't do it right it looks bad on you more than it looks good on you. So people say oh you're trading someone we're trading under nav. I'm like no we're not because you have to account for the 40 million shares we issued for the last you know that or the, or the you know Wall street all makes so different with it makes it a little difficult too because you have those pre funded warrants so like there's all these little things that make it a little harder but for as the company we we disclose exactly what it is everything that's out there so it just everybody can make the same choice. They just I don't know if they haven't done it yet or haven't built the dashboards but I think it's important you know and I'm sure Arthur believes you know transparency is pretty important to figure out where you're putting your money.
- [49:21]
A
Yeah as we I know we're kind of coming coming to the end here. I want to go back to just the cycle and the fact that it seems like we're just entering this liquidity cycle. Assuming we this four year narrative is dead. How high can these, how much can they print?
- [49:39]
B
They'll talk to you about how the how the asset goes Tell me how high the printing politics are going to.
- [49:43]
A
Print.33 million per Bitcoin. But I, I think, I think, I think when Trump says and best and says we're going to grow our way out of this there's that's print to infinity.
- [49:54]
B
Same with the Europeans, same with the Japanese, same with Chinese. I mean I think it's that it's a political decision.
- [50:00]
A
I mean the Japanese are, I mean Japan just let the governor off like they elected a kind of Trumpy Trumpian prime minister and their bonds are flying. I mean it's crazy yields.
- [50:15]
C
Well when you have politicians say it's okay, we'll just write a check for it, the bank account never runs out. They don't even, they actually believe it. That's the problem. You talk about like people who can't report mnab. We have politicians just think you could just write the check and the government always cashes it and so no one ever has to pay for it. So I agree with Arthur. If we could. There's a, there's a, there's a per bet or there's a perpet in there somewhere that would tell you how high crypto is going to go depending on how much money someone's going to print. And then if, if this, this act goes through and, and the JP Morgans and the Morgan Stanley's and the Merrill Lynches of the world all start having their, you know, financial advisors allowed to put 3, 5, 10% of money that's created and printed and into retirement accounts. I mean bitcoin and all of them go up until people stop buying them.
- [51:03]
A
And Trump is floated unlocking those retirement accounts for crypto assets. Right. So that's an executive order right now as well which is another humongous. There's so many catalysts, it's out of control. I think Morgan Stanley today said 2 to 4% increase crypto Morgan Stanley. You know I remember dreaming of if Larry Fink would one day say you know, 1% into Bitcoin for every investor. Now we're getting you know, two to four from the non Larry Finks. But are we talking about you know, $500 Salana, $10,000 eth and 250 bitcoin or do these guys literally let it fly and we're talking about a million dollars?
- [51:38]
B
I mean obviously I've said million dollar Bitcoin. I think it's possible. You know I have $100,000 east.
- [51:46]
C
I mean I don't know where you.
- [51:47]
B
Can throw any number out there. Like it's like what is the Chinese GDP going to be? Well I don't give a with the what the GDP is. Tell me how much money they're willing to print and I'll tell you where the GDP is. Tell me how much money you think that XYZ positive willing to print. I'll tell you what bitcoin is going to be or a Range. So stop thinking about the price of Bitcoin and start worrying about how much money they're going to print. I think when you start thinking about it in that way, then everyone feels like, oh, I don't own enough of whatever I believe is the fastest horse. Even if you don't believe in crypto, maybe you're a stocks guy. Why are you buying a bond? You should be owning nasdaq. That's it. Go home. Don't even. Don't worry about it.
- [52:22]
C
Yeah. NASDAQ gold.
- [52:23]
A
That's what Paul Tudor. I mean, that was Paul Tudor Jones. He was the one who included NASDAQ in that. Right.
- [52:28]
C
So I, I agree. Like, I have. My. My price targets are at least double to triple for everywhere, for all of them, wherever they are. If. If Arthur's right, and I think he's right, because that's my theory on this stuff. And I agree with them. Like we're. I still, as you know, just been. I have everything in the market. Even though at this. Every moment in time, every day I wake up and every charts at the top and I'm thinking to myself, I've seen this movie end. I just don't think it's going to end for a while. And the Fed is. Fed is, you know, dropping the rates here in the US everyone's printing money out of control and it's just going to keep going on. You just hope. Hope you can make a good decision or have some.
- [53:04]
A
No, you just hope you can get so rich before it ends that you can't. Then you. Then you get invited to G's Gulch or wherever everybody's going. When, when it, when it goes down, you don't want to be there for the torches and pitchforks.
- [53:18]
B
Yeah.
- [53:19]
C
Because. Yeah, yeah.
- [53:19]
A
Going.
- [53:20]
C
Going up on the.
- [53:20]
B
Yeah.
- [53:21]
C
Going up on the escalator. You always go down on the elevator, Arthur.
- [53:25]
A
You got to have a bunker or something, somewhere.
- [53:26]
B
I mean, you know, I spent a lot of my time in rural northern Japan and. Yeah, I'm. I'll be okay.
- [53:34]
A
I know you'll be okay. He's going to be snowboarding between the zombies or whatever, you know, during the apocalypse. All right, well, we're going to survive. I mean, you know, every time I talk to you, Alan, it gives me increased faith in the digital asset, treasury space, and at least that some who are responsibly managed are going to do exceptionally well. And obviously it doesn't hurt to have Arthur behind you.
- [54:01]
C
Arthur. Talk soon. Scott, thanks for.
- [54:03]
B
Cheers.
- [54:03]
A
Thank you, guys. Have a good one.
- [54:05]
B
See you, man.
- [54:05]
A
See you guys.