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- [00:00]
A
Yeah, I mean, you know, it works like clockwork. You know, I picked a sarcastic title saying Bitcoin lost 80,000. You know, markets, you know, on the employment report and other thing, other markets are up this morning, you know, gold, silver, blah, blah, blah. And you know, just trying to see if I could get people. But of course, literally, as, as we, as we start the show, it goes back up over 80 again. So sorry, guys, that, I guess the crash is canceled. It was brutal though.
- [00:29]
B
I got a T shirt that says I survived the crypto crash of May 8, 2026.
- [00:35]
A
All kidding aside, it was fascinating. I mean, Scott and I were both at consensus for three days and I mean, the only reason I even knew what the prices were was because coindesk was putting a ticker on their main stage so I could see it. But I honestly wasn't looking at the market for three days. It was just conversations with actual professionals in the industry and what they're doing. And I think the most important, my most important observation as far as bitcoin is concerned, I have two important observations. One, as far as bitcoin is concerned, quite literally, there are no conversations of why does bitcoin have value and where is it going? It's just assumed that bitcoin is moving and becoming a mainstream financial asset, part of the collateral stack, part of, part of what Wall street does, business as usual, and that they're going there. I mean, it isn't even a question and that is a very big deal. So for all I will say for all the doomers out there, including my friend Mr. McGlone, who thinks that Bitcoin will fall 60% below where it did in the FTX crash. If we have a stock market down is. I think you may very well find bitcoin as much less correlated to the downside than you think if there is a major correction in the markets. I also think that in terms of where it goes in the future, that if you get through or into a cycle, this grinding rally is going to ultimately result in fomo. But I think it's going to take a lot longer than people think and it'll be from a much higher price. The other major observation trying to tee things up for people here is that crypto and whatever token you're talking about, whatever technology you're talking about, is here to stay being embraced. But the value models are not what it was in 17 or 21. The value model is provide utility and have a reason for the token to exist before you buy it. And I think that that is Just basically assumed by most of the people there. Now, that is not bad for a lot of assets. It is. I mean, Tom Lee thinks it's incredible. I mean, I saw his presentation and think that, honestly, I think that, you know, he's smoking something before he goes up on stage because he's just so extreme about it. But the truth is that it is good for assets that are gaining adoption. And I had several. I had a long talk with the chief counsel for the SEC's crypto task force. Taylor is a great guy. And the thing that was funniest is when I made the comment that the biggest problem in crypto from a regulatory point of view is the idiocy that because of previous policies and bad rules, that being a security with air quotes around it was a death sentence for crypto. He basically laughed and he said, yeah, you're spot on. Everything should be, but we should basically make it so that it could be usable. And understand this is not a armchair quarterback. This is someone who's literally on the ground, is the general counsel to the crypto task force. The SEC's goal here is to make digital asset securities something that can be traded with modern technology. And what does that mean? That means that instead of buying a governance token that does fuck all, that you could buy economic stake in a network. Well, I don't know about all the rest of you, but if you asked me do I want an economic stake in Ondo or Chainlink, I'd say that's pretty interesting. Tell me what the participation is to give me the numbers. But it could be extraordinary. The idea of buying a governance token that you have no idea what does it mean, however, basically makes my stomach turn. And I think that that's, that's going to be what's going to be the impetus for a lot of the utility tokens going forward. Okay, that's my long rant for today, Scott. Hopefully this got someone involved. Adam, did you lift your mic?
- [04:36]
C
Yeah. I was actually wondering what your thought after, you know, being there and meeting with people. What, what your thought then is, you know, on these kind of older protocols that have these governance tokens and, and where do you think, how do you think they find a way forward?
- [04:50]
A
Well, no, they're not.
- [04:53]
B
They're not.
- [04:53]
A
Just kidding. They're not. If they're, if they're smart. I mean, I think probably all of these places are meeting with the SEC and looking to see can they change the structure in a way to appeal to their investors. I think they're the smart ones, are doing that, but obviously that's inside information. I don't have any of it and even if I did, I wouldn't talk about it. So, you know, I think that if you are invested in tokens, it's, it's incumbent upon you to be particularly governance tokens is to, to be talking to the management and trying to find. What are you guys doing? Is this, is it because there's this new thing that people are all abuzz about, the innovation exemption. I strongly suspect that founders could use that innovation exemption to do something like what I'm talking about if in fact they think that's what it's going to be. Now, if they want to stay as digital commodities, that's okay too. But then you have to have what's the utility of the commodity? Because the other thing that's happening that people don't realize is behind the scenes, the CFTC staff and SEC staff are working on rules for digital commodities. It's going to take a while. You won't see anything for some time. But all this is happening. Does that answer your question, Adam?
- [06:06]
C
Not really. I want to know what, what the real way forward, you know, for, you know, these, these, you know, teams that had to use these kind of DOW structures just for legal reasons previously. Is there even, I mean, person.
- [06:22]
A
I'm, I'm.
- [06:23]
C
I mean, I know Scott said it jokingly, but I'm kind of like they're stuck. Like, I don't, I don't see like there's going to be a way forward for these guys other than these kind of, you know, obviously antiquated kind of old DAO models, which kind of totally suck and don't allow real pass through of value, you know, just take it simple. How's, how's Uniswap going to go through, you know, come up with a move forward in this environment, you know, or do they just have to wait it out, you know, and just, you know, go forward later, but there's nothing that can happen now, you know what I'm saying? So, you know, do I buy Uniswap now? Because it's, you know, nobody knows and now's the opportunity because nobody knows and they'll figure it out because they're a big player or. Yeah. What's your just general consensus feeling on that?
- [07:09]
A
I don't have one. I mean, I'd say Scott, you know, either your team or, you know, Mario's team should try to get someone senior from Uniswap to come on and tell us.
- [07:18]
B
Maybe, but nobody answers those questions. That's.
- [07:21]
A
Well, no, but they didn't used to. But there's not a whole lot of danger in answering the question in terms of what they want to try to do now. That's the thing. I mean, you're right. A year ago, and certainly under Gensler, it would have been suicide to even talk about it, but I don't think it's suicide to talk about it now. I think that the smarter projects are going to realize that, but we'll see. I mean, you know, maybe it'll take another six months before they start realizing it, but at some point they're going to realize it, I think. I mean, it's one man's opinion, I could be wrong and maybe it's because I have personal friends who are working on this from the, from at the regulators and that I trust and know. But I think that a lot of people in crypto are for obvious reasons ridiculously skeptical of the government and the regulators because they've cost them so much money that they're, they're gun shy. But the smart ones are going to be the ones to embrace it first. That, that's what I think. I mean, as I said, that's different. It's different if you're a, you know, an obvious utility token, right. You know, an obvious, you know, your, your, your use is to pay gas fees, right. You know, your use is to, is to be staked, to run validators. You know, in, in those cases there's no point. I mean, you don't have to worry about it. But that's the difference, right? I mean the head of the Solana foundation was, was very clear about that when she talked on the main stage, for example. So that's their point anyway, maybe that.
- [08:49]
B
I spoke to Carolyn Pham, obviously she's at Moonpay now, but she was the midterm director of the cftc, has been there for a long time and she really believes that certainly any layer one, layer two, exceptional, etc. Token is a commodity. And it's not even a question if it's being used like gasoline and is burned for a transaction. It's commodity.
- [09:15]
A
I agree and I think that's very clear that. I think the sec. The difference is there's no pushback against that view. That's a major difference. But we're, we. I was talking about utility tokens or projects, right? You know, that, that are earning revenue, which is.
- [09:32]
B
Yeah, those, those, those never needed tokens.
- [09:35]
A
Right. So the tokens need to be something. Yeah, exactly. But there are a lot of those.
- [09:40]
B
So yeah, 95% of the market, if you had to guess, are probably those. Right?
- [09:47]
A
Either that or memes, I don't know, I have no idea. But here we are. The other big news that came out this week, you did the interview and I guess with Saylor, the other big topic, the one we didn't put in the title is STRC and Coinbase earnings. And Coinbase earnings and what they said. So you want, you want to run with that one, see if we can get somebody to comment? Sure.
- [10:14]
B
Well, I mean, if we want to do Coinbase. Coinbase earnings obviously down bad. No question there. Right. I mean there was anticipation, actually a profit. I think they lost 400 million, $300,000,000,000 net. Two bad quarters in a row. But I don't think anybody's surprised that when crypto's in a bit of a winter and retail trading volumes are down that Coinbase and others are going to suffer. So I don't really think it's like a massive indictment or anything. I do find it curious that they laid off 14 of their staff and called it because of AI days before. I find that slightly curious. And you know, at the same day that they, by the way, reported earnings at a seven hour outage because of AWS. So it was a bad 24 hours for Coinbase. You know, we saw them talking in the past. I didn't, because we were on the ground. I didn't really get to like steer the earnings call or dive too deeply into it, which I intend to do in the next hour before I do the Daily Wolf. But, you know, they had touted that they had these 10 or 11 other business verticals that had done 100 million, whatever the number was in previous earnings. And I don't know if they talked about any of that, but it's very clearly clear that as many things as they're building, retail trading is still going to be the bulk of their earnings calls up or down. Adam?
- [11:33]
C
Yeah, man, I, I honestly, I think it's time for Brian to find a new leader over there. That's my view, to lay people off at the end of, of the bull and well into the Bear is late. Like, come on, man, I mean, use your lose, use a little bit of vision. His acquisitions pretty much all suck. We all know it's kind of a joke what they paid for Kobe's whatever echo and, and I just, it's so his acquisitions suck. His ability.
- [12:04]
B
It was a pretty good acquisition.
- [12:05]
C
Okay, one, I'll give him one. But you know, whatever he's they've built internally, they're slow, they can't move. Which would say, hey, we should acquire outside to be able to move fast. But they move fast into directions that are not great and don't, don't bring in revenue. They overpay. It just. He's just not a good operator that way. I mean, I just, you know, so burned last cycle with the nft, you know, marketplace that, you know, caught everybody's attention for literally eight months to finally release it and release it into the biggest nothing burger of all time. You know, he's just, he just can't do it. I don't know how else. He just can't do the kind of operations you need, I think, at a company that should be the leader in the space. Yeah, and he did it last cycle too. I mean, he was spending all the way through the bull and we had this same thing. I don't know the drawdown, but it was like, I don't know, 70, 80 drawdown on the stock last time. I, I had imagined the same thing is going to happen here again. And yeah, I just think, I think it's time for him to, to step aside. That's my view because I just don't think he.
- [13:16]
A
I don't.
- [13:16]
C
I think his acquisitions generally, other than whatever deribit, have sucked hardcore. And I mean, I'd love one person to defend the Kobe acquisition, you know, $400 million for a product that they literally could have built. It's not like some outrageous product. The product itself, by the way, had almost no. I mean, it had some traction, but. And I understand you're buying kind of a face, but dude, $400 million? Come on, man. It's just, it's, it's hard to even fathom how bad an acquisition that was.
- [13:50]
B
And if Brian's listening, Crypto Town hall is available for purchase. We'll do it for 30, we'll do
- [14:00]
C
it for 40 grand.
- [14:02]
B
I think he. Yeah, I mean, I'm just saying at the 10th, literally, and we've had as many people probably listening a week as, you know, Echo had. I mean, you guys, we just got a KYC aml, everybody in our following
- [14:14]
A
and don't let Brian do that. He's going to make an AI avatar and then he's going to fire you and everybody else on this program. You.
- [14:23]
B
Me, fire me with $4 million in my. Gary gone.
- [14:27]
A
Gary AI is coming for you. My zero dollar salary.
- [14:32]
B
Yeah, I mean, we're here, Dave. We're really cleaning up over here at crypto Town hall.
- [14:36]
A
So I mean, I mean, you know,
- [14:37]
D
this is not for profit.
- [14:40]
A
Yeah, this is a not for profit that actually is not for profit profit as opposed to the ones that, that everybody uses as their corporate piggy banks in dc. But you know that, that's, that's a different story. But look, the, the real story with Coinbase this week, the earnings are bad, but the other story was worse and that is the, the ongoing price war of Morgan Stanley undercutting Schwab. And Schwab will respond and Morgan Stanley
- [15:09]
B
will respond, but they also wildly undercut Robinhood and Coinbase.
- [15:12]
A
Right, right. Well that's my point. I'm saying that from a Coinbase perspective, if your margins and they've, they've managed to keep margins that are triple digit basis points for quite, quite frankly for, for four or five years more than I thought they would. But then again I didn't think Gensler was going to come in and crush it in the way he did and not in a good way. But now that everybody's going to be offering it, I mean keep in mind retail trading, the model for retail trading in equities went from, you know, effectively the same as where Coinbase's margins are still down to when it deregulated, down to something. But it very quickly, within years ended up at zero because retail traders for market makers are profitable to trade against. So Robinhood uses a similar model. There's no explicit cost, there's just market making spread involved. And so Robinhood's been cheaper for a while, but it's part of their system and people don't really know it. It really wouldn't take much for retail trading to drop into the single digit or very low double digit basis points. And that from Coinbase's perspective would be catastrophic for their earnings, at least in the short run. Now they have other areas of earnings, but they're sized based on that cash cow. And that's always been the issue with Coinbase. Doesn't mean that they, that they can't survive, thrive and grow, but it means that they have to adapt to that world. Yes, Adam,
- [16:45]
C
I'm selling my Coinbase.
- [16:46]
E
I'm out.
- [16:47]
C
That's all I know. No, I don't really have much else. You know, my shit on Brian fest is over. I just don't see anybody even, even like the one person in the company who actually like moves the needle attention wise Jesse. I mean, Jesus Christ, they leaned into that creator Coin nonsense for six months solid like this was going to change the world, you know, and never admitted that it was a, I mean, it was always just no. And then finally agents came around and, oh, we're, we're in agents now. And it's like really? I just, yeah, I just, I honestly just think it's bad management at the core and, you know, I, I, I appreciate what he's built over there, you know, and, and going through the really, really difficult, you know, legal structures and stuff that had to take place to keep him alive, but at this point in time, it's a, it's a shit show. And everyone.
- [17:40]
B
I'm just wondering how you really feel,
- [17:44]
D
bro.
- [17:44]
C
You, you were around during the NFT cycle, man, and if you were in NFTs at all. You remember Coinbase, NFT and this was going to change the world. This was it. This was like everybody's exit liquidity. It was the biggest dud of all time.
- [17:56]
A
So I, I mean, just, just, just
- [17:58]
B
to be fair, Facebook also rebranded as Meta for the Metaverse and they're doing all right.
- [18:03]
C
Yeah, but we can't argue Zuck's a way better off. You know, get Zuck over there, then you'll have something, man.
- [18:10]
F
Not sure if nothing our data out for sure and, and weaponized against us at least.
- [18:18]
B
Yeah, well, that's probably everyone, The, Yeah, Dave, I think the Morgan Stanley story around that is actually really huge. Do we lose? Oh, yeah, you're there. I didn't even think about that in context of the earnings call. But it's a big deal. The sailor thing is, you know, people are getting it very wrong. But I understand it as well.
- [18:36]
A
Yeah, well, we understand it because you, you, you talked to him and he was very.
- [18:40]
B
I understand it because he told me flat to my face when I asked him, hey, he'd sell bitcoin.
- [18:44]
A
Yeah.
- [18:45]
E
What does that mean?
- [18:46]
A
Well, I mean, I think that the most important thing that he said was that first that the notion of bitcoin on a balance sheet that is impossible by covenant to be sold would make it an impaired asset and the accounting treatment of that would be, is disastrous. I mean, it's really bad. So it can't be, it literally can't be that way. I mean, that's, that's the first thing. Now, he said a lot more than that in your interview, which I guess, you know, which you'll get out in the next couple of days and people should watch to understand it. But the notion of never selling is silly. The notion of continually net buying makes sense. And that's basically what, exactly what he said.
- [19:27]
B
Yeah, I mean, it was quite a Day, right. I woke up Wednesday morning, groggy, late Tuesday conference night. And I looked at my schedule. I'm like, oh, we finally. Because I've been going back and forth with him on a time. And we were like, let's just do it before the conference opens at 8:30 in the morning. And then I literally. Okay, I'm like, cool, that's confirmed. And then I look at the news, the first two stories that Michael Saylor says he would sell bitcoin to inoculate the market. I was like, oh, that worked out well for me. But yeah, I mean, I think
- [19:58]
C
maybe
- [19:59]
B
the story underneath and I kind of talked about this morning, it's what Bill Barheit said and others is also that, you know, when you have scrc, which is a retail facing security, the SEC and retail need to hear that you're not going to allow this thing to collapse no matter what. And the best way to assure that long term is to be willing to sell bitcoin to make that happen. Right. I mean even, you know, that's not why he's saying he's doing it. But that seems very, very obvious if you say I will never sell my bitcoin and you know, this thing drops to, you know, strc drops to 50 bucks or the, you know, they run through the cash reserves and Bitcoin drops 50% the market, the SEC, they need to know that it has the assets actually backing it in practice and not just in words.
- [20:44]
A
Yeah, no, it's true. And the other big thing is that the notion that what he said changed the investment case is. I mean, it's just asinine. Right. He gave a presentation later that was more shill than. More sales pitch than. Good discussion. Your discussion was, was fantastic. I'm so glad that I wiped the sleep out of my eyes and got.
- [21:10]
B
Yeah, you got there early for that.
- [21:11]
A
Yeah, because I knew I wanted to listen to it. And, and it was. And of course it's very hard to listen to live, you know, live content except when nobody's in the place. Then you could hear a pin drop in the convention center. So it was great. But the difference is, is, look, what he said is if you want to get enhanced yield and you believe bitcoin is not an, is not a Ponzi scheme. If you believe that it's real, that it is, it has a basic floor and it's an asset, you know, in, you know, along the reign of gold, then STRC for yield seekers make enormous sense. If you believe that bitcoin is going to significantly outperform other assets, then MSTR is the asset you want to own, and they have a variety of other instruments in the. In between the two. Or you could just buy Bitcoin and that's obvious. I mean, microstrategy is going to underperform in bear markets and in sideways markets. Right. STRC will continue to chug along in those markets. And that's the point. And he also made the point that their leverage is really low and everyone's worrying about, oh, my God, well, if he keeps buying, what's it going to get to, et cetera? Well, maybe at some point that's something to worry about. Certainly, you know, right now, I guess this leverage is between two and three times. Maybe if it gets to five to 10 times, you start worrying about it. But we're not even close there to that yet. Right?
- [22:36]
E
Yeah.
- [22:37]
B
Andre.
- [22:38]
A
Andre. Good.
- [22:41]
G
All right. Happy Friday. I hope you can hear me well. Working.
- [22:46]
B
Yeah. You sound good.
- [22:48]
G
Okay, perfect. So I think, like, I, I don't see any kind of imminent insolvency risk or bankruptcy risk either. But I think eventually strategy, they, I think they would effectively be forced to choose between increasing leverage or abandoning the pack. I think that's the key risk for strc. So I think, like, if you think that BTC declines. Right. Or will continue to stay in a bare market. Right. I think leverage mechanically increases because assets fall relative to liabilities, which in turn weakens SDRC's credit quality. And I think that deterioration could push STRC below par, triggering this kind of automatic dividend step up outlined in the SEC filing. Because nobody talks about this, but they actually have to step up their dividend payments if STRC is trading below a certain threshold. I think it's 95 or so. Right. It's actually in the SEC filing. And so the higher the dividend then increases the cash burden. Right. Reinforcing the same dilemma.
- [24:01]
A
Right.
- [24:01]
G
Either take on more debt. Right. More leverage or abandon the pack. Right. So don't trade close to 100. So I think, yeah, it's, I mean, apart from this, I think it's worth mentioning that strategy has this kind of option to cut dividends.
- [24:17]
B
Right.
- [24:17]
G
By 25 basis points per month also per the SEC filing. Right. Something I think that's not being highlighted anywhere.
- [24:27]
B
Right.
- [24:27]
A
I mean, yes, sure.
- [24:29]
G
But exercising that option would itself likely imply a break of the pack. Right. Again, why? And so because the pack itself. Right. Depends on the dividend yield. So the, the, the present value of the bond. It's essentially bond. Right. It's perpetual it's like yeah, you know, bond, right.
- [24:52]
A
And so Andre, obviously they need that flexibility. If the Fed, if Warsh comes in and we, we, we look at a world where instead of three and a half percent interest rates are two and a half percent, you don't think strategy is going to cut their, their Yield down to 10 and a half percent or nine and a half percent.
- [25:08]
G
Of course they, of course, I mean, yeah, of course. Then they cut the dividend yield 100%. But what, what if worse increases interest rates?
- [25:17]
F
Right.
- [25:17]
G
We don't know that actually.
- [25:18]
A
But yeah, you want, I, I, I, I would love the prediction market that would let me bet against that. That's all, all I have to say.
- [25:26]
G
I mean that funds, features, they, they imply no change whatsoever. I'm aware until year end, I'm aware
- [25:33]
A
when he gets, then that will probably be my first Kalshi bet if I can. But that's besides the point. They tend not to want to play those markets. But that one seems obvious. But anyway, but the point is that I actually still think that the STRC's yield is, I mean look, it's designed to be, to become a giant vacuum cleaner to hoover up liquidity. That's what it is. And it feels like, it feels like it's overpaying to me, but I don't know that it needs to be that high.
- [26:04]
G
I agree, 100% agree. Because if you look at similar securities, Right. Let's say US preferred equity, right. General index S&P 500 S&P preferred equity index yields 6% dividend yield. Right. So that's the benchmark 6%. If you look at higher bonds, even like B minus rated B single, B rated, highest bonds in the U.S. like 7%, seven and a half. Right. If you look at even triple C higher bonds, they yield probably 13%. So it's like, but we know that FCRC has a ball of like 1% realizable. So it's, it's yielding like a deep junk bond, but it's trading like a sovereign bond.
- [26:48]
E
Right.
- [26:48]
G
It doesn't really make sense.
- [26:49]
B
And in our conversation he actually said that, you know, the next unlock is squashing that volatility even further down and offering a slightly lower yield production, you know, like zero Vol at 8% or something. He said that?
- [27:01]
A
Yeah.
- [27:01]
B
Dave, did you think so? I thought obviously the never sell your bitcoin part would kind of be the biggest astounding revelation in our conversation, which was only like 35 minutes or something, which is like, that's just an introduction for Sailor but then he started talking about defi and tokens and tokenized STRC and yield tokens.
- [27:20]
A
Yeah, well, I mean look that that was the other major takeaway from consensus from conversations that I had and I don't know how many but dozens of people realizing the fact is, you've heard Carlo and I talk about this on this show many times that what is coming post stablecoin adoption and post tokenization is a much higher velocity of financial markets and that will mean that sitting in static bank deposits and stuff is going to go away regardless of whether or not stablecoins are paid because people won't be keeping their money in stable coins. What fascinated me was multiple people from very large firms. So I'm not going to get them in trouble by naming them. But we'll talk about, we'll say top 10 largest financial firms not just understanding but telling us about sweet products that are being built in order to be able to trade whatever and making rails for individuals. I mean Saylor talking about STRC being tokenized. What you're basically seeing is wait a minute, you can have a tokenized version of sgrc that pays 11%. That's an actual real regulated thing that you can use and you can get access to by pledging USDC on a defi channel. And the answer is yes. And that that is what's coming. I think I. But I heard it not just from him, Scott. I heard it from large banks, from various people. They know this is coming. Not just SDRs.
- [28:54]
G
You know what they the biggest, biggest tail risk is for a strategy next year. I generally think it's all about how long the cash buffer lasts. Right. And whether he can replenish it. As it stands, I think the cash buff is already less than two and a half years seller said it would before and a cliff to be aware of is are these put options on this convertible nodes that are already underwater. Right. And they become exercisable in September 2027. So I think the market will at some point front run this if strategy the stock price doesn't rise and or they are unable to show that they can raise more cash and refinance.
- [29:41]
A
Yeah, I see. I would actually like to hear a grain of salt's response to that if we were going to talk about it but I'm not a co host so I can't bring them up.
- [29:51]
B
But I saw him before but I don't see them now.
- [29:53]
G
So yeah, I'm like I'm generally bullish on MSTR because like if you, if you believe we're in like a recovery phase, bottoming out phase. And bitcoin will start its new bull market soon. Right. Then of course, MSTR will be fine. Right. And because these convertible, these put options and the convertibles, they will, they won't be exercised. Right. But I think if you stay in a kind of, yeah, prolonged bear market, that's actually risk.
- [30:22]
A
So here's a funny conversation. So thank you, Andre, for teeing me up. It's kind of funny. So on this show, what, six weeks ago when we were around 60, I made the comment that my base case is this is the bottom and we're gonna have a grinding rally. And people aren't even going to call it a rally for a long time. Now here we are at 30% higher. We've been grinding up for weeks and we're still talking about it like it's not a rally. And that was actually Tom Lee's best point that he made on his is he said the thing about rallies when bear markets end and bull markets start is it takes months before people even recognize the fact that the bull market has started. And I think that's exactly where we are. And look, it's partially because we have the war, because we have oil prices still elevated, although they've come down. I'm not, you know, Gary's up here. He could talk more about the oil market. I actually don't even understand how oil dropped back below 100 again, given that nothing is really resolved. But that's besides the point. But it feels to me like the selling exhaustion in bitcoin is real and that, you know, just strategy, buying and a few other things. Buying is enough to continue to push the market forward. And it, I don't think retail is really there yet. And, you know, you don't really have a bull market.
- [31:44]
G
It's never been right. It's never been just the previous cycle. Yeah, no retail.
- [31:49]
A
That's true. And, and without retail, I mean, you know, Gary's.
- [31:52]
F
Can I interrupt with an innocent question before we pull up the expert, Gary, on the. On the topic.
- [31:57]
C
Sure.
- [31:59]
F
Did that happen with practically everything in the last one and a half year, bitcoin road, and it was sort of a market front running the retail traction. And then it happened with gold and not gold so much, but silver, which was the obvious, you know, run out for the next six months and then it happened again with oil. Don't you think so? And this might be a totally stupid take.
- [32:25]
A
Well, I don't think. I think oil is different. Right. I think silver for Sure. I mean, in fact, I don't think anything is different.
- [32:32]
F
Like oil went to negative Covid. I don't think anything is beyond speculation and front running with large capital by these large market players is just the leftover of whatever is left over in the market.
- [32:47]
A
I mean, I think oil trades differently than. I think silver is a different story. Silver is absolutely a retail story. It's absolutely from. There's been lots of speculation. It's in an elevated level. Where are we over 80 again? Somewhere on my screen. I can't find it. Oh yeah, yeah, it's up over 80 again. And you know, but that's because of structural reasons. In the silver market, oil is much harder because the spot market has been leading the futures market more than the other way around during this, since the war started. So I don't know those two are concerned. But yeah, you're absolutely right about, you know, retail speculation being in. There's more retail speculation in gold and silver than there has been in bitcoin. That's true. That hasn't changed. It might, but it hasn't changed yet as far as bitcoin is concerned. Gary, I don't know, I, I was, it was, it was packed. But your br. Were you there for your brother's presentation?
- [33:48]
D
No, I didn't go.
- [33:49]
A
Yeah, I didn't think, I didn't see you. It was really good. He was, he was outstanding.
- [33:53]
D
Oh yeah, well, he's, he's seasoned. Second nature to him. Hey, back on oil,
- [34:02]
C
I think what
- [34:02]
D
you're seeing is, you're seeing demand destruction, right? Like this is the beauty of oil. The higher it goes and you're right, the prompt market at 125, that is destroying demand. So flights aren't leaving, restaurants aren't opening. You know, people buying LPG in India aren't going to sell tacos. And, and this is, this happens very, very rapidly. And that's why we're not seeing, we're not going to see these $200 price forecaster. Just so ignorant. With all due respect, you'll just have demand just go to. I'm not playing. I can't make a margin at 200. So this, this will get under control. The longer you give it, the more they'll get logistics back in shape. They'll, they'll pressurize wells. And one thing we do know though is every research product, every project that's ever been thought about on developing another MMBTU or another kilowatt of energy, dude, every one of those papers, research documents have been dusted off and people are looking at them seriously. So you're going to see production come on monster in the next probably 12 months.
- [35:25]
G
Can already see, right US oil exports are at new all time highs, right? And even like there's an interesting time series I think on Bloomberg Global oil and transit, right has picked up from the lows, right. Re accelerating.
- [35:42]
E
So Gary brings up an interesting point about oil is that as the price goes up and especially as it goes above $100 a barrel, there's demand destruction. But with bitcoin it works differently. As the price goes higher, the demand for it goes higher because it's a veblen good. And so that's a weird, that's a weird thing in economics.
- [36:02]
D
Well and grain with like keep your mic open because this is very interesting to me. Not only that, but the higher the price goes it destroys demand. But at the same time it has everybody and their brother chasing another project. So you end up with this bloat of fucking energy in 12 months and you end up with a supply shock to the other side. That's why oil, oil, look at NAT Gas, what it's doing. This is so bullish for the ap. The, the high, you know, the data centers, the API guys. Anybody that's in the future like Nat Gas at $2 and 50 cents, why is that? Because everybody's drilling for oil, dude. And with oil comes water and comes natural gas and I mean you're, we're going to be swimming in that gas. I didn't mean to interrupt you. I think it's a very interesting.
- [37:03]
E
That won't happen in bitcoin. It doesn't have bitcoin because as the price goes up and the demand goes up with bitcoin, the emission rate, the so called halving that happens every 210,000 blocks which is every four years, continues the same thing. They can't bring more bitcoin online in order to fill demand and that's why you don't have an increase of supply. That happens that Gary just said while this is unknown to probably most people, I actually have private placements in the oil industry. And, and, and I've been doing this since COVID and what's interesting is that we had some and they're based in Pennsylvania in the US and I just got a phone call from the person that runs the fund and he's like oh, we had an unbelievable first quarter and he reported the numbers and what happens was exactly what Gary just said. There was a whole bunch of wells that were offline that they brought them online. So I got a windfall in oil that I was not getting for the previous year and a half, two years, because the price was low. Now, but the important part that what Gary said is as the price of oil skyrockets, the problem is you have demand destruction. So that's the way it all works. And then as more supply comes on, you have this boom cycle right now where the price goes high, and then you have a bust as more supply comes online. So that's what happens with oil. With Bitcoin, it's fundamentally different. But I did want to address. I can address what Andre was saying about strategy, and maybe that's helpful. Is that all right if I pivot to that?
- [38:38]
A
Fine with me.
- [38:39]
G
Yes, of course.
- [38:40]
E
Yeah. Yeah. So I was at the bitcoin conference last week, and I said this already online. I was talking to Fong. I walked up to him. This is a public setting. There's other people around. That's not a problem. Private conversation. And I said, one of the questions that I get all the time from people is, how do you guys manage your cash? Like, would you rather do it as a lump sum in order to pay dividends, or do you see it that you would do it over time? Like, do you just acquire enough cash to pay the monthly and quarterly, or do it a full year at a time? And Fong looked at me and he just said, so you're asking if we have a strategy about how do we acquire cash? He goes, yeah, that's it. And he said, we're long bitcoin and short cash. He goes, we can raise cash anytime we need it, and we're not concerned about it. And so if you have a company that can raise the full year's worth of dividends in one week, they have no concerns about paying the dividends. So what you were saying before about Andre, that if they lose the peg or somebody thinks they're going to lose the peg on strc, strategy could buy back those shares. They can. That's the whole reason why they said
- [39:49]
D
they can sell Bitcoin as long, as long as the faucet's flowing. If that's really the way the conversation went, it reminded me very much of Enron. It's awesome, you know, when you have your marks, and I'm not suggesting he's an Enron, by the way, I do not think strategy is a Ponzi, like everybody says. But, you know, you can raise cash as long as the cash is available, but when the cash drops, and it's just not like the spigot. Like there's no guarantee. That's my point.
- [40:21]
E
Right, right. There's no guarantee. But let me give you the interesting point. And this was in their slide. And by the way, there's a couple things. I believe it's slide 114 that says that the, the amount of return that STRC pays will drop over time and the average they're showing is like about 8, it'll drop to about 8% long term. So that's in their deck also. It's not like this stuff is hidden. But the other interesting part about this is that if strategy has, let's say strategy cannot raise money from the capital markets, right? Well, Saylor said they could sell bitcoin and there's a very particular slide which I've posted before. Strategy has 129,000 bitcoins that are priced over a hundred thousand dollars that they bought it. So what they can do is they can sell their bitcoin which they said they can book a realized tax loss on it.
- [41:11]
A
Right?
- [41:12]
E
They book a loss on it, which is something that they could not, something that they said that they would not do, but they actually did in they did it.
- [41:19]
D
They have done this and they would
- [41:21]
E
be done it once.
- [41:21]
D
They would be stupid not to do it.
- [41:24]
E
Correct. So they book. So they now, now they sell bitcoin high cost bitcoin and they already told us, see, one of the things that we don't know from the other bitcoin treasury companies is we know the average price, but we don't know how many tranche bitcoins are at different prices. Strategy gave us that in their presentation. So they have these 129,000 high cost bitcoins. They sell those bitcoins, right? And look, if you assume the number is 100,000, right. They don't have to sell a lot in order to cover $1 billion worth of payments for the full year and they don't have to do it as a lump sum. And so that's the part when I hear, oh, they're going to lose the peg. It's like they can continue paying those dividends for 50 years. And that's the part that people are missing, is that they, if you don't believe in bitcoin, you definitely don't believe in strategy. But I find it weird that people believe in bitcoin and that strategy is the publicly traded company the most bitcoin. But we don't believe in what they're doing because it could fall apart. That's the difference between, you know, These other companies that we just talked about and holding other assets and the liquidity of it, how much it trades per day. Again, I would tell people to go to their, their Q1 2026 presentation and really the slides after slides 100, you know, basically spell all this out. I don't, I don't know how you get any more detail than that, but I'll take any questions on that. Hopefully are making sense.
- [42:55]
G
I just want to say like I'm personally bullish on mstr. Right. I do think they're arbitraging the fiat world and they actually, they're accelerating this flow of capital from Tradfi into Bitcoin. Right. Which totally makes sense. As long as you have expect returns for Bitcoin of 30, 40% plus per year over the next 10 years.
- [43:17]
B
Right.
- [43:17]
G
It makes sense to pay in 11.5 rate and borrow money.
- [43:21]
E
Yeah, but, but Andre, Andre. But they don't need that. That's the part you're missing. It's in their deck. They only need Bitcoin to grow at a little bit over 2%. That's the part you're missing. To break even. They don't need the 30%. You see when you're, when you know Gary's going to appreciate this, you know, in real estate, if you own one quadplex and, and you're underwater, you, you got a problem. But when you own 4,000 doors or 4,000 apartments or 40,000 apartments and you get in trouble, that's the bank's problem, not yours. Because your asset base is so huge and people tend to think, oh, how I work on it. The other thing you said that they're arbitraging fiat. They're arbitraging everything, their capital formation. There's a distinction between the GAAP accounting and the IRS treatment tree just said that they sell a high cost bitcoin and they can have a realized gain or realized losses. They were unwilling to do that. That was all gap accounting because they were unrealized gains or losses. Now they're not only arbitraging the fiat system, the debasement of currency that we all know, M2, they're also arbitraging the capital markets and they're able to use tax treatment that they were unwilling to do a week ago. That is the fundamental, there's three vectors here that they're doing and they have this massive capital base. So if again, if you believe in bitcoin and the company that has the most Bitcoin and they do have about 10% leverage, which is the converts which they're trying to get rid of, once they get rid of that, their balance sheet is completely clean. People are not going to understand this. They're going to keep on saying people think that when you issue equity, they think that that's leverage. It's not, it's permanent capital. And in the sense that also they can now it's permanent capital that they could sell at any time. That was the net, the net unlock. And Scott, I can't wait to watch your interview of Saylor. I did not talk to him this last time, but I did talk to Fong multiple times and their investor relations. But Gaurav has his hand up. Andrew, I'll take your questions, but it's
- [45:31]
G
somewhat leveraged because they have to pay the dividend yield. I mean they can change that dividend yield. Right. But like the way I think.
- [45:39]
E
Andrea, I got a question for you. Tell me what, tell me what bond. Right, right. There's all these corporate bonds that exist already. In fact they have a name for some of them called junk bonds. But all these bonds are those returns guaranteed?
- [45:53]
G
No, of course not. But like the way I think about STRETCH is it's a fixed income instrument. And Saylor says that himself.
- [46:02]
A
Right.
- [46:02]
G
It's a fixed income like instrument. And I mean it's now trading at par, right. Close to PAR with an 11.5% interest dividend yield.
- [46:13]
B
Right.
- [46:13]
G
So the duration of that bonds around 8.7, which is like a 10 year treasury bond. Right. So if you say similar duration assets have, with the risk free rate for a similar duration Asset, probably like 4.4 U.S. 10 year yield. Right. Which means SCRC already includes like a 7.1% risk premium.
- [46:34]
B
Right.
- [46:35]
G
And that can change, right. Depending on the credit quality, if they increase leverage, that risk premium changes or, and, or the, the, the, the benchmark change, risk free rate changes, treasury yield goes up. So they need to bump up their, their dividend deal as well.
- [46:55]
E
Right. But their volatility is measured in bips. I don't think people even understand that. We don't even measure their volatility in percents anymore. There's a, there's 100 bips in 1%. And we're talking when, when Saylor says that the volatility on STRC is one penny, that's one bip. It's 1% of, it's 1% of 1%. That's why we call it one bip. That volatility is so, so low. And, and after May 26, the 90 day volatility for this is going to be measured, like I said, in less than 20 basis points. That volatility is unheard of. And given the, also the, the, the volume that it trades per day, it's 20x. Any other pref. I, I don't see, you know that, that part you're missing on this. But I, I don't see why, you know, do you understand the order magnitude on the volatility of this, that, that
- [47:48]
G
how low it is that it's engineered. We know that. Right. It's engineered from the 1.
- [47:53]
E
Andre, Andre, I have a great question.
- [47:55]
G
We have the sign from the dividend yield. We know that.
- [47:57]
A
Right?
- [47:57]
E
Yeah, but Andre, I have a question for you. You know, any company does stock buybacks, isn't that financial engineering?
- [48:04]
A
Of course, you know, right.
- [48:05]
E
So what's the problem with financial engineering?
- [48:10]
F
MSTR is a large financial engineering instrument.
- [48:14]
E
I totally agreed. I just said that. So what the catch here is that not only is he doing financial engineering, but the volatility in STRC is off by a whole almost 100x magnitude lower volatility. That's the part that people can't understand is that there's this massive, massive difference. It's financial engineering, but because it's off by a whole order of magnitude, people like this is the one, the one problem that they really have with strc, I'll tell you guys what it is is that it's the belief that it's too good to be true. That that's a big problem. Right. Because why are they paying 11 and a half percent if it was that good? They wouldn't have to pay going this, they wouldn't have to pay that high of a risk premium. And that's what you're saying, Andre?
- [48:57]
A
Exactly. And yeah, I think we all say that. And I think that the reason that they picked that number was basically to do to be able to hoover up money. Despite that. That's what they're fighting.
- [49:09]
F
It was Dave, it was, it was established with the narrative of hitting the fixed income market. You remember that statement from, from Saylor at that time, right. They were targeting the fixed income market. Fixed income market with the likes of Invest Corp. Sits anywhere around 9 to 11. I mean it was at the peak at 11 and settling to 9. And so obviously you have to do something better being a new player.
- [49:41]
E
Yes. I'm going to give a good example. I used to have a job as a product manager launching products into the market. So what we would do is we'd spend money on advertising, search engine optimization and reports to See how great a product is and we launch a product and we'd have a budget and let's say the budget was $100,000 or half a million dollars or a million dollars. Now that money would not go to the people that were buying the product. That would go in order to get the awareness happen. Well what Saylor decided to do this in order to attract the so called hot money that comes in fast. He said I'll just pay a higher than what I need to pay on this and this will go directly to the people that buy it. So instead of spending money on advertising, he gave it back to the investors and said I will give you this higher yield in dividends in order for you to buy it. And that's what helped it ratchet up to get to the parent. So he paid that back to the people, to the investors. Now which would you rather him do? Spend money on advertising, tell you how great the product is, which he already has 5 million followers on X or give it back to the investors and they're like, and by the way, everybody knows business works like this because when I go buy a product, I go to the supermarket, I can get a coupon and it gives me off either $0.50 or 10% or whatever and then I redeem it. And he did that the exact same way. So that's direct to the consumer to say I can either spend money, tell you how great the product is and have a pay an athlete to say this is awesome or I can give you a coupon to say that if you buy the product you get this, you know, discount off or a fixed nominal amount. And what he did that was for the investors. So he's, he, he did exactly what he did. And people are like yeah, but why do you do this? It was the most efficient way to get the buzz about the product and to reward the investors that were early.
- [51:32]
A
Yeah, that makes sense. I mean look, at the end of the day if you're in these markets and you're trading bitcoin, any thought that there isn't a structural bid. The reason why I made the statement about Grinding rally is just think about this. So we're having this conversation. Nothing is going to change unless bitcoin collapses from here and I mean really collapses from here in terms of STRC being able to continue to generate more demand than is mined. So there is a structural, it's a structural up. At the same time we all know what's going to happen with monetary policy where things are going and so it's hard to be on the other side of that trade, you know, yet it's still, the sentiment is still there. I mean, the sentiment. There's no exuberance in the trading market. Right. I mean, some of the interesting things that are going on in the market, I mean, the alt markets are. I mean, we could talk about it on Monday. We'll see what goes on over the weekend. But there are some pockets of interesting things. I mean, maybe the most interesting move and we don't really have a lot of time. I'm curious if anyone has noticed what's going on with zcash over the last few days and is there, is that just, you know, another attempt to push something or is that a privacy narrative that actually has legs?
- [52:54]
F
And yes, we, we shouldn't miss ton in the next one.
- [52:59]
A
We shouldn't miss what? Ton.
- [53:02]
F
Ton. T O n the Telegram Network. The Open. I'm sorry, the Open Network.
- [53:06]
A
Right. So I mean, you know, it's a little late to start talking about that now, but I do think we should talk about that next week. And, and, yeah, exactly.
- [53:15]
F
And, and probably we'll see a little bit of settling of prices if, if
- [53:20]
D
Pablo let me know what day that is so I don't have to attend. I'm a bitcoin, that's what I am.
- [53:32]
A
Yeah.
- [53:32]
F
And Gary, Gary, I'm sorry I was discussing our lunch, a long pending lunch in, in Tampa with, with Scott. But you didn't come here to Miami.
- [53:43]
D
No, I didn't come, man. I'm kind of conviction, dad, I think for my life.
- [53:50]
A
Yeah, sure.
- [53:51]
F
I wish I'd be in that space in five years.
- [53:54]
C
Yeah, well, Gary, Gary, don't go, don't completely fade it, man, because this guy has an opportunity to create really the first network state with that blockchain. So I'm not saying I'm buying it,
- [54:04]
D
but listen to a party at my house and you can educate me, but I just don't think I need to travel anymore.
- [54:10]
A
I hear you, brother.
- [54:11]
F
I can come today. Adam, are you here in Miami? No, man, we can drive together.
- [54:17]
C
No, I'm down in Costa Rica, brother.
- [54:20]
F
Okay, cool.
- [54:22]
A
Yeah, I take it the day I'm in Miami. Gorav. But I, I, I, I'm conferenced out.
- [54:27]
F
Yeah, no, not conference. I mean we should meet. I mean we've barely taken it on WhatsApp ever, so. Yeah, I'll text you.
- [54:33]
A
Yeah, absolutely. But on that Note, guys, it's 11:13 and unless we have something else to say, we're going to cut it here and we'll See you all again on Monday morning. Let's see what happens over the weekend.
- [54:45]
D
I'm surprised Dave, you didn't talk about Nvidia and iron. I thought that was an interesting deal. The structure. Fascinating structure.
- [54:54]
E
Yeah.
- [54:56]
D
I think May of last year I suggested Nvidia would be very good, well suited with all that capital to invest in parts of the bitcoin kind of a infrastructure that, you know the guys that take all the risk and sure enough that's what they're doing now. We'll see how, how this goes. Iron had to give up a lot for that deal though, man.
- [55:22]
A
Well, the share price certainly seems to like it. You know as a shareholder I'm not unhappy and you know, we'll see. You know it's, it's one, it's one of those things. I have to digest it over the weekend and decide do I want to lighten up and take some profits because they're long term capital gains so. Well, from Nvidia's standpoint, they're just going to get the money back. Yeah, well you know Nvidia is the 800 pound gorilla in space. Right. You know the real thing for Iron, if you really want to go. What will convince me to sell will be when SpaceX really does start to ramp up on space data centers because that's going to be the future for AI. But that's a long time in the future. But I am looking at it from a narrative point of view. IRON has some very, very strong short term tailwinds but it's the long term one that's actually what I care about. But that's a totally different question from crypto town hall. But it is interesting though.
- [56:20]
D
Well, I think I, I do think it, it's going to impact our world because one investment dollars are going to look at these other spaces and go hey look, I just got a what 15x on this? Bitcoin didn't do that. It's correlated most certainly. You can't not look at it. I think it'd be silly not to look at it.
- [56:45]
A
Yeah, well I just admitted that. Not just looked at it, I invested in it.
- [56:50]
E
So.
- [56:50]
A
Yeah, I hear you but that's exactly part of the reason that my thesis on bitcoin is it grinds for a long time. I think that people are chasing the hot money's not there. But we'll see. I mean the other story that we should talk about next week is there was a really good pretty presentation on, you know, on the, on bittensor economics and what's going on there in AI. I know, Gaurav, and you and I, I actually really would like to meet with you because I want to talk to you about more get, get, get another level deeper there. But there are places in the ecosystem where you could see the green shoots. Right. And, and I think that's interesting. But the AI trade, the notion that this stuff was all going to die, which was a few weeks ago, I mean, it wasn't all that long ago. I mean, you know that the, that like iron bottomed at an almost, it's almost doubled from its bottom and not quite, you know, but 75, 80% up. You know, these things move, right? I mean the money, the, the volatility is just crazy, but so be it. Anyway.
- [57:55]
E
Hey, hey, Dave, can I just wrap it up with some, some good stuff, some, some positive. I'll be quick. Hey, look, guys, look. The S&P 500 is at an all time high. Do I think oil prices are going to drop? Like Gary said, probably at some point in the future they're going to drop. This is probably about as good as it gets, right? You may or may not get a rate cut and we're going to have a new Fed chairman, obviously. And so with that said, the price of Bitcoin is hovering at 80,000. If you're not happy with this, I don't know what to tell you. Right. The world's not coming to an end and I would say I would be bullish over the weekend and be positive.
- [58:34]
A
Gaurav, you want the last word?
- [58:35]
F
Yeah. On the note of what's working in Web3 and the depressive state of the market altogether, my trip in the last nine days across Dubai, Abu Dhabi, New York and Miami now sort of wielded an interesting fact, which is not a surprise and that is the institutional side of crypto is roaring and it's super hot and there are acquisitions of billions dollars and stablecoin payment, Rails and agentic payments and whatnot. And so the, the three startups that won yesterday in consensus were all agentic payments and so on. So that talks a little about where we are heading and what's the positive side. And then sounds silly, but I was surprised to see that like out of the seven sponsors or eight sponsors of one of the best events here were actually my portfolio companies that were like in tradfi, enabled by crypto and they were seriously doing good and I didn't had a chance to catch up with them on how incredible they were doing in the last one year or so. So all the silly boring defi use cases that were thrown out of the way after 2021. DeFi Summers are sort of becoming the ultimate survivors of the winters because they were actually ripping real revenue. And of course they were not as smart looking or shiny as NFTs and memes, but they were the one that made it through the last four years. So I'm super excited about the state of defi and payments enabled by crypto rails in the coming six months, one year and of course, course the next decade.
- [60:23]
A
Yeah, we could go an hour talking about that. There's a lot there. I had a lot of conversations on defi, you know, as well. So we'll get to that next week. Maybe we could stop talking about just bitcoin in the market and actually talk about some crypto stuff. So we'll, we'll, we'll see if we can tee that up for Monday. So anyway, thank you all.
- [60:41]
F
Thank you.
- [60:43]
A
Have a great weekend.