← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Rally Cools Down, Will 'Crypto Week' Trigger the Next Big Surge?
00:59:06
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- [00:04]
Scott Melker
Bitcoin hit an all time high around $123,000 before cooling off slightly, now trading around $117,000. But even with this very, very slight drop or correction, we have a lot of immediate and long term catalysts that should continue to propel bitcoin and the rest of the market this time upwards. Here to talk about it, of course we have Andrew and Tillman, but one of our favorites, Bill Barheit from Abra. We're going to break it all down right now. Let's go.
- [00:37]
Andrew Yang
Let's do.
- [00:52]
Scott Melker
Happy Tuesday everybody. I'm going to tell you something that I've not told you in months. Like and subscribe. I did it. I'm a YouTuber now. I'm contractually fulfilled for the next month. I've said my piece. Andrew Tillman Barheit. Welcome sir. How are you?
- [01:07]
Bill Barheit
Good, thank you. Good to see you all. It's 6:04 in the morning. Only for you guys do I do this.
- [01:14]
Scott Melker
Yeah, well, you know, we deserve it. We're worthy. I think once a month, once every couple months. You sent me a hell of a of a text by the way. I don't know if it was last night or this morning because I probably texted you at 2 o' clock your time, I think. Yeah, I'm a reading. Mother of all asset bubbles coming, economy clearly slowing, inflation subdued and interest rate cuts are coming. Will make 1929 look like a mini bubble maybe. Good topic for morning.
- [01:45]
Bill Barheit
Bring it.
- [01:46]
Scott Melker
Go ahead. You bring it. You bring it. That's quite a claim. 1929, the beginning of the Great Depression. I mean look.
- [01:56]
Bill Barheit
Where are we at? The US economy is clearly slowing, consumer spending grew at the slowest pace in a couple of years. We've got business activity cooling, we've got unemployment. Claims that I think are ticking up now, although I've never believed the denominator for that number, which is a point I've made to you many times. I think inflation is coming down like a rock. Investment in business sentiment is somewhat suppressed, although I think the IMS is going to pick up later this year. So all of this points to interest rate cuts, but in the meantime, asset prices are sky high. So if asset prices are sky high, we're injecting massive liquidity into the US and Chinese systems, which really is the majority of the of the liquidity. If you measure global money supply, where's it going to go? It's going to go to assets. Right. And so I don't know, I think given the de dollarization of the global economy, the way we're devaluing the dollar, it's just going to create a massive asset bubble right now. And just given the state of the global economy and the fact that the US has no choice at some point to institute some kind of austerity, this is not going to end well. It's not going to end well. The best thing, unfortunately, I hate to say it, but the best thing that they could probably do for the global economy right now is nothing other than, you know, getting the dollars act in order. But I don't think that's going to happen. I think, I think Powell is going to capitulate and I think we're going to see a few rate cuts this year and I think you're going to see a big, big asset bubble forming going into next year. And I actually hope I'm wrong, but.
- [03:53]
Scott Melker
Well, we all know that PAL is data driven. What data that is sometimes have. No, no, no idea. But if he is data driven, we have our fifth month of CPI coming in below the forecast. That's obviously happened. So to your point, by the metrics they're using, inflation is definitely continuing to drop. I mean, you can see the official report there. But this is kind of supporting the idea that we will get rate cuts. I guess September we will.
- [04:22]
Bill Barheit
Yeah.
- [04:22]
Scott Melker
Yeah.
- [04:23]
Andrew Yang
I don't know. I'm kind of interested in signing on to an asset bubble. Sounds pretty cool to me. I mean, on the way up, it's pretty fun, you know. You know, asset bubbles are interesting. And here's the thing about the United States. They, they've kind of outlawed recessions. You know, they've kind of outlawed, you know, big explosions to the downside. You know, the Fed and all the requisite abilities to, to pull levers and move things around to avoid serious problems have, have been kind of the way things have gone down for several decades at this point. So asset bubble or not, you know, Bitcoin being part of that asset bubble sounds pretty good to me. Real estate being part of that asset bubble sounds pretty good to me. And again, it's been a long time since we've had a meaningful downturn both in the economy and in, in asset prices that has been sustainable. Right. So, yeah, we can talk about, you know, Covid, in 2020 that lasted about 60 days. We can talk about, you know, over the past three years, any number of, oh, no, something bad's about to happen and the market goes down by 6, 7, 8, maybe 14% and then snaps back immediately. You know, we've been in this pattern where there's some level of something bad could happen and everybody talks about it, the market goes down a bit and then it snaps back higher than it was before the panic started. So, you know, that, that, that's, that's the way that I see it and that's the way that I've seen it happen now for basically 30 years. I mean, ever since the great financial crisis, we've been in a quote unquote, secular bull market. And there's been really nothing that has, quote unquote stopped that train. So there may be all sorts of, you know, data points pointing to potential problems. But you will see. Yeah, we'll see.
- [06:38]
Tillman
I had the benefit of growing up in a household with a dad that was a big gold bug and he used to talk about the sky falling every day back in the 80s when interest rates crack above 20%. You know, everything's a cycle, everything goes up, everything returns to balance and then it goes down and then it returns to balance. I mean, that's a frequency of life as far as I'm concerned. That's never going to change, especially when you have markets that represent human emotion. I, I think there's another thing that comes to mind. It says, you know, I used to hear this all the time. It's like the markets can stay irrational longer than you can stay solvent. It doesn't really matter if we think that the number's too big. The number will be too big when we are not able to force those dollars down the global economy's throat. And I don't see that happening anytime soon. I think that especially if we have a very directed effort, if we print a lot of new cash and direct that cash into a, into innovation, into a new financial system like we're on the cusp of releasing to the world, if we're the epicenter of that growth potential and we take an additional unbanked, you know, 1 billion people and turn them into banked people, that, that type of innovation and that type of an expansion in our top line GDP globally can absolutely, in my opinion, absorb all the inflation risk that we're incurring right now. And you know, the question becomes is when does it crack? Every fiat currency is in, in the history of the world has ever cracked. I mean, they've all failed at some point. I think the average last time I looked was like 300 years. So we're due. The question is, is, you know, politicians are really good at making sure the problems don't fall within their term. And if you keep kicking that can down the road, you know, how far can they kick it before it actually falls on somebody's term? And I just think that Donald Trump, I think he is the most underestimated man in the entire. The guy had the entire media cabal basically blacklist him. And, you know, now he essentially has every media outlet by the strings. He. You know, I just. It would be hard for me to think that him lowering interest rates or effectively getting them lowered, coupled with a massive printing press. Burr isn't going to carry us for five plus isn't gonna carry. It's gonna carry us through his term for sure, probably halfway through the next term. And so I'm just sitting here going like, you know, with that, coupled with legislation like the opportunity zone extension for eight years, I mean, there's a lot of money that, to Bill's point earlier, it has to go somewhere. So the question is, where does it go? Well, if it goes into strategic development potential and in the United States, and if it goes to strategic expansion of a new, you know, financial future or financial backbone in the form of crypto, I think we could see, you know, a very large return on that investment. Something that would be. Be worth borrowing a bunch of money for. But I don't think we want to borrow a bunch of money and do what we've done in the past, which is basically give it away to people that we don't know what they're doing with it and we don't know where they are. That. You know, I think the days of, like, it reminds me of all of these congressional hearings where you see these people that have been given billions of dollars and they go, where is the money? Oh, we don't know. It was distributed to a lot of banks in the, you know, in. In the core, you know, of Europe. Okay, well, how much did you give to who? We don't know that either. I mean, it's crazy. I mean, this. This is just nuts. So I think those days are gone. I think that maybe if we could take some of that, Those printed fiat dollars and redirect them into something that has a force multiplier attached to it, like a mathematical, you know, scarcity curve, I think that's. That probably would be a pretty good thing. And I do think that we could, you know, eventually, if you just take the simple premise that I've used, and I think everybody that has Bitcoin in their life for any significant period of time realizes that debt becomes really cheap to pay back if you hold Bitcoin long enough. And I think the Trump family kind.
- [11:22]
Scott Melker
Of gets that debt becomes really cheap to hold to pay back. If you hold debt long enough, you would take the bitcoin out. So you had the bitcoin part in. It's really good.
- [11:31]
Tillman
Bitcoin's the knife that cuts both ways, right? Yeah.
- [11:36]
Scott Melker
Bill, I don't know if you have any final thoughts to wrap that. Go, go ahead.
- [11:40]
Bill Barheit
Look. I mean, yeah, it's very hard. I think the definition of us and what, you know, Tony's talking about is probably the key here. Right? So, yes, for all of us, we know bitcoin and tech stocks and to a certain degree, certain types of real estate, especially here in Silicon Valley, are still a levered bet on the, on everything that we're talking about. Right? Meaning. Meaning the dollars got to go somewhere that are being printed. Okay. We intuitively get that. We know that it's been true forever. But I do believe now we're reaching a point of, of no return. Yes, you can avoid recessions, but at some point you can't avoid the Depression. I think that right now 25 is starting to feel more and more like 27, 19, 27. I mean, and you know, we know what happened within 24 months. So, you know, I guess selling. The other problem is, is that when we say selling, if you're holding bitcoin, we're reaching a point now where I don't really care about the value of bitcoin in dollars. Right. Because the dollar is losing its value at such a fast rate. We have to start looking at purchasing power parity for some of these assets that we're holding.
- [12:57]
Scott Melker
Right.
- [12:57]
Bill Barheit
And clearly bitcoin will increase from a purchasing power parity perspective. Say that three times fast. But, you know, what does that mean for the average person who's still at zero? I think that's very difficult for those of us in our crypto bubble to understand. Most people are at zero. And it's my number one job is to get, you know, that's our slogan internally, get people off zero. Right. And, and so it's not happening fast enough to make a dent, in my opinion, in what's. What's coming. Right. So it's incumbent on all of us, in my opinion, to help people get off zero as quickly as possible because it's going to feel amazing the next 18 months, in my opinion. Amazing, Right. Oh, boy. But what's coming next is what's really.
- [13:37]
Tillman
Interesting, I couldn't agree more, and that is a mission of arch publics as well, is to get people off zero is to get them trading, get them buying one unit of measurement into anything that they deem valuable. Bitcoin, salana, ethereum, like just start, start your journey is essentially the point. I think you a good pivot from what you just said though and I think where we could make the biggest impact and what we're trying to do at our arch public is aid and facilitate this bitcoin treasury on the balance sheet type of a notion, especially for private small businesses because there's nothing that preserves their purchasing power more. There are a lot of businesses that have to keep cash on their balance sheet or cash equivalents on their balance sheet for emergency fund type applications. And I think bitcoin as that. If you look at the middle class and look at what's made America strong over our, the course of our history, it's been having a strong middle class and what's been weakening inside of our own system is the middle class has been weakening. And so how do we, how do you build that back? Well, if every entrepreneur, if every small business starts to adopt this notion that bitcoin should be a diversification tool on my balance sheet corporately, I think that 10 years from now could have an exponentially large effect on America and the society as a whole. And I, I think we could do that. I think we're on the cusp of leading that innovation and that charge, I guess I hear you saying though, two years from now the inevitable is going to happen regardless of.
- [15:14]
Bill Barheit
I, I hope it's two years. I, I don't know. I mean, I, I look, we're clearly in the, in the late stage debt bubble. It feels like a debt crisis to me. It's not being basically touted as a debt crisis because nobody's incentivized for it to be touted as a debt crisis. Who wants to basically have the public believe that we're in a debt crisis?
- [15:35]
Andrew Yang
Who.
- [15:35]
Bill Barheit
Right. There's zero people on this planet incentivized for anyone to believe that. So my job is not to, you know, interpret what people believe. That's part of it. But the majority is the, is the, is to interpret reality.
- [15:49]
Scott Melker
Right.
- [15:49]
Bill Barheit
And the reality is that no one wants our debt. We tried raising, we tried lowering rates in September. Midterm long term rates went up. That's not supposed to happen. So the question is if we're looking at a 12 month reprieve and this coming September we lower rates again and Trump hasn't convinced anyone outside of tether to buy or debt, what's going to happen? I wouldn't Be surprised if we see another spike in long term rates exacerbates this, this, the commercial real estate problem and bitcoin goes to the moon in parallel. Okay, great. So we're, we're, we're fine, all of us and what happens everyone else? That's what I think anyway. We're going around here but I, I, I, I, I think we're in sync on this.
- [16:36]
Andrew Yang
Yeah. In invoking 1927 respectfully seems a bit far fetched. You know, there are significantly different dynamics and different ways that things are handled than they were a hundred years ago. But everybody is, you know, have your opinion and thoughts on, on things. But I, yeah, I, I think we're, we're, we're far afield associated with, with, with that type of stuff.
- [17:08]
Scott Melker
Yeah.
- [17:08]
Bill Barheit
By the way, I wasn't there, believe it or not. I know it's hard to believe, but, but you know, I just, I read and I, I watch and you know, I don't know, I, I, Yeah, yeah.
- [17:20]
Tillman
This type of wide sentiment though, the delta here tells me that we're just gonna have good volatility, which is good. Like if there's a lot of people out there that think that there's a crash that's imminent and then there's another large group of people out there that think we're going, you know, because I, I personally don't think, think we're pre depression. I think we're going to inflate to the moon and I think we've not. I mean when bananas are $350 a dozen, then I'll start going, hey, we might, we might start looking like, you know, yeah, we start looking like Mexico here pretty soon, you know, last point.
- [17:56]
Bill Barheit
Then Scott, please move on. But, but you know, 2007, 2008 was caused by this, this belief that we needed to inject massive money in the system after nine, 11 attacks. Okay. And we did, right. Interest rates basically fell precipitously and it caused the housing bubble, an asset bubble of epic proportions and that brought down the global economy temporarily because, and I say temporarily because the US was still in a position to print a trillion dollars, which at the time was all the money in the world. Now we're doing that every few months.
- [18:34]
Scott Melker
Right.
- [18:34]
Bill Barheit
And, and so to, to say that, anyway, you get my point. So to say that, right, it's, it's, it's a big okie doke is just, it's not.
- [18:46]
Tillman
Yeah, but it's kind of the real, it's all relative, right. You go to the, if you're a gambler, you go to the casino. I've been a gambler my whole life. And you go there as a 20 year old and it can't, you can't fathom losing $10,000 in a night. But then you go into the high roller room and guys are betting a million bucks a hand and, and you know, it's all just relative. The number, it's, it's about the units. Right. And so who cares? Like our kids don't have the bias that we have. They didn't, they haven't seen what we've seen in terms of the escalation of debt. It's all relative to the people that are alive at the time. So the question ultimately to me is can the, can the innovation curve outstrip the inflation curve? And that, that would be the question I have for you.
- [19:30]
Andrew Yang
Is great way to put it.
- [19:32]
Bill Barheit
That's a great way to put it. And I think from an AI robotics.
- [19:37]
Tillman
Perspective, that's what I'm talking about. Can that be.
- [19:39]
Bill Barheit
But that's five, 10 years out. We could have a depression for a couple of years while we dig our way out. You brought up, you know, the perspective of the kids. I've got two kids that just graduated college in the last 18 months. They're actually very lucky and fortunate that they're one of the few who actually are finding jobs. We have recorded unemployment for college grads in this country right now as a matter of fact, probably the highest since World War II. So, so you know, robotics and AI is not going to solve that problem. Right.
- [20:12]
Andrew Yang
Yeah, I just, I, I just, I can't. You know, depression is a serious word. It's a very, very serious word. And it hasn't exist in a meaningful way here in the United States in a hundred years. We've had significant recessions, 1970s as an example, but just as a, as a, you know, as a backdrop from an investment standpoint, to put us into a depression, the amount of assets that would have to be sold off in a. I gotta get out of everything. I'm, I'm, I'm panicking because I'm concerned nothing's going to be worth half of what it is now. That's not the mindset of every investor. Over the past 40 years they've been taught time and time again, buy low, sell when you die, not buy low, sell when it's high. And so, you know, finding ourselves in a depression, very different than a recession. And I think we're significantly a ways off from any meaningful recession. I mean, remember in 2020, we had a guy like Bill Ackman, irrespective of his tennis skills, getting on CNBC and saying, hell is coming. Prepare yourself. And while there again was a dip in the markets to the tune of 25%, that dip was eaten up within literally 90 days. And so markets, Market dynamics are very, very different too. So to find ourselves in a depression type of atmosphere would take almost unfathomable collection of actions that. Again, I. I just, I. I can't. That's a bridge too far for me.
- [22:00]
Bill Barheit
Rolling over.
- [22:05]
Tillman
It's like. I didn't think Covid could happen, but it did. I mean, I didn't think the world could get shut down for. If you had told me that prior to it. I think that that's what's great about the markets. It's. It's the unknown. Could you be right, Bill? Maybe so. I don't see it.
- [22:21]
Scott Melker
It's gonna happen eventually.
- [22:22]
Tillman
Well, it will happen.
- [22:24]
Scott Melker
I mean, listen, nobody here believes that the path we're on is sustainable.
- [22:29]
Tillman
100%. It's no different than what I tell treasury companies. Every business fails. What would Dillard's look like now if they had bought bitcoin? The entire rise of their. And had a huge Treasury? They'd be a different company. They'd be able to change.
- [22:44]
Scott Melker
Yeah. They'd have no stores and they'd own a lot of bitcoin.
- [22:46]
Tillman
That's right. So we as a country have to do that. But here's the thing that, you know, if. If we are able to. If. If at the same time the dollar being inflated is the reason for the crash, if we focus those dollars, we can change the value. We can essentially create a new economy inside of bitcoin. And I do understand what you're saying, Bill, is like, yes. Then that leaves most of the people out of the. Out of. Out in the cold. But it doesn't. If it takes 15 years and it doesn't. If we do a lot of things between now and then that get people included. I mean, I think coinbase being added to The S&P 500, that's a big deal. That is exposure to crypto at some level. For every US citizen that has a 401k.
- [23:31]
Scott Melker
Yeah. And they just hit 100 billion market cap for the first time. So seems like that has had a major impact, obviously alongside this run and this what I love to call alt season of crypto adjacent stocks and treasury companies.
- [23:46]
Andrew Yang
It's extraordinary currency too. Right. So. So equity in the, you know, in the. In terms of share Price becomes, spendable, you know, spendable denomination of currency, so to speak. And you've seen that with Coinbase. They, they're leveraging it with proximity. They're, they're, you know, they've done a couple of smaller acquisitions. They'll continue to do more, and that'll happen with the likes of Gemini. And as terrible as I hate to say it, but I think. Was it DCG or, Or who.
- [24:20]
Scott Melker
Who.
- [24:21]
Andrew Yang
No, it's the other company associated with, with, with Barry Silbert, Genesis.
- [24:29]
Scott Melker
Grayscale.
- [24:30]
Andrew Yang
You know. Grayscale. Yeah. So grayscale, quote, unquote, confidentially filed to go public. Right. So grayscale. There you go, you're on it. Grayscale to go public, Gemini to go public. There's going to be additional crypto companies that go public. So all of that capital awash in the space is going to have meaningful ripple effects across the board and again, in terms of asset prices. Right. So this space will see in one way or another, a quote, unquote, asset bubble. And as per my comments earlier, I'm, I'm more than happy to ride that wave to the upside.
- [25:12]
Scott Melker
Listen, I think, you know, regardless of whose prediction and timing is correct, as long as you, like, keep your emotions in check and have an exit plan, and maybe your exit plan is just bitcoin and you hold it through the roller coasters, but as long as you're aware that it could happen because it has happened in the past and the current path is unsustainable, then I'd say you're better shape than 99% of the planet.
- [25:34]
Andrew Yang
Yeah.
- [25:35]
Scott Melker
Yeah. And speaking of being in better shape, we've got Crypto Week, and it's in the title, so we got talked about it. Crypto week set to be a pivotal moment for digital asset legislation. Matt Hogan, the most literally quoted man on the planet at this point. I went on Yahoo Finance yesterday and they asked me about a Matt Hogan comment, and I was like, he said that on my show. I was like, he was on this one, so. But he's the most quoted person now on the planet. If Crypto Week bill passes, you can't get. Put the genie back in the bottle. Crypto is going mainstream, says bitwise cio. So what's on the docket right now, obviously, is getting genius through and done. But they're also talking about the Clarity act, which is market structure, which would sort of define what is a security, what is a commodity, and then strategic Bitcoin reserve, interestingly not on there, the kind of third one that They've thrown into crypto week is a ban on central bank digital currencies. So I don't know if this is, you know, good PR or if we're going to actually get these things done, but if we get the genius act done and meaningful movement this week on Market clarity, I mean, we've pretty much removed all of the impediments that have existed for the past few years. And Bill, nobody, I mean nobody I speak to on a regular basis that actually still exists has dealt with more of this than you.
- [26:51]
Bill Barheit
Yeah, I wish that was not true. But you speak it the truth. So I have. Every once in a while I meet a regulator that hasn't attacked me and I do feel like I should hug them or you know, like. And by the way, did you. Yeah. I mean I'm still getting caught up because it's 6:30 in the morning. But, but you know, Maxine Waters like, you know, this, it just. Did you read what she, what she wrote about the genius act overnight? I mean, it's fucking crazy, you know.
- [27:19]
Scott Melker
I mean, it'll be the economic ruin of American families, I believe. I don't want to misquote her, but.
- [27:24]
Bill Barheit
Something to that, unlike say dollar printing.
- [27:28]
Scott Melker
If you can use stable coins, every child in America or, you know, or.
- [27:33]
Bill Barheit
Political corruption or excessive term limits. So the most important thing that we can do as stewards of the space, besides getting everyone off zero, is putting a moat around this space right now so that this shit can't happen again. And because as much as you know, Trump may have been our short term savior, he's not a king, thank God. And who's coming next, right? I like Vance. He seems like a good guy. He could lose.
- [28:04]
Tillman
I hope guys like Bo Hines, you know, I, I was pretty okay.
- [28:08]
Bill Barheit
Is not going to be president.
- [28:09]
Tillman
No, no, no, I know that. I'm just saying I, I hope that we've built a stable full of political horses now that we can lean on.
- [28:18]
Bill Barheit
The political horses because they're going to have other problems. Right. I mean, you know, crypto is, believe it or not, not top of mind for every politician what we think it should be, but it's not. And so by when I say emote, I'm not talking about the people, I'm talking about very clear legislation tested Supreme Court cases vis a vis tornado cash that we can point to that make it crystal clear that we're not only are we not going away, but it's been codified into law, into, you know.
- [28:55]
Andrew Yang
Yeah.
- [28:57]
Scott Melker
You can't just depend on like A friendly regulator right now or an executive. Does those get reversed the next time someone comes in?
- [29:05]
Andrew Yang
100. So. So very clear legislation in Washington, D.C. are basically an oxymoron. You know, so that. That's a reality. What. What also is the reality is two years ago, and again, Bill knows this, we were beyond crypto winner. We were, you know, crypto hell, basically, like Bitcoin ETF and Ethereum etf. We're probably good. Yeah, we're probably good to go. And then everything else was illegal. Like, literally everything else was illegal. So now we're in a position where crypto weak actually exists. What do we get out of it? You know, probably some, you know, land of misfit toys at the end of it, which may not be clear legislation, but it's, you know, a hundred miles away from where we were two years ago. Now, what does that mean for where we are three years from now or five years from now? That's a different conversation. But, you know, it'll be a pendulum.
- [30:05]
Tillman
Swing both ways, and it'll become more rational as time goes on. That's how it works. You know, the reaction to the suppression that we've had is a free for all and, you know, Trump Coin, whatever you want to call. But I mean, to. To. I'm a big fan of Bills. I didn't know Bill from Adam until this podcast today, other than the fact that I've been a user of his product since 2018. And I love. I love builders. I love people like Bill who are trying to make it easier for people. He made it easier for me on my journey, for sure. And so the question is, is now that the lid's been taken off, the innovation that's been. That I've been personally seeing that's coming out of this community is jaw dropping. You talk about integrating financial systems. We ain't seen nothing yet. Like, I've told somebody this. This is the analogy. You know, we've. We just drove across the Nevada line, and we're at the gas station looking at the four slot machines in the back of the gas station going, this has got huge potential. Vegas hadn't even been built yet, in my opinion. So I just think that if we play our cards right, Amber Alert, if we play our cards right, we're gonna see the innovation take place at such a pace that's gonna let VC money continue to funnel in. And I think Andrew made a very sly but very important point earlier about, you know, these new crypto fortunes that have been found and now are in the possession of companies like Ripple. Where do you think all that money is going to go? It's going to go into mergers and acquisitions. I mean it's going to go into broadening the network, it's going to go into building infrastructure, it's going to be going into making it easier to get people to own crypto just like Bill's mission was. So it's just, it's no like, honestly, in my opinion, and this is completely from an outsider, Abra was Exodus before Exodus was Exodus and it, and it would be bigger than Exodus if it wasn't for the fact that he had to cut through the jungle with a machete versus a bulldozer. And that's, that's how every market is birthed. Every market point at it. Napster, now we got itunes. Like you, you can't have this type of disruption in any market segment. Not expect for legislation to be very slow in their response and then they be over aggressive in their response and then they realize the error of their ways if it's truly good. And they'll be the other way. And it's, you know, we'll find ourselves, you know, 20 years from now finally in the middle where we have common sense legislation that allows, you know, innovation and growth but without all the fraud and monkey business that we see see currently going on in the space.
- [33:00]
Scott Melker
Bill says the check is in the mail. Gentlemen, thank you for the opera. Hey, listen, honestly, I'm a user too.
- [33:10]
Tillman
I'm just a geek at heart and I love crypto so much that, you know, when I get to talk to people that I've been using their product for over almost a decade, that's pretty.
- [33:17]
Andrew Yang
You know that that was incorrect. You're not a geek at heart. You're just a geek. It's okay. You can embrace it. All right? You, you can embrace it. That's fine.
- [33:27]
Scott Melker
It's fine. Listen, I want to talk at 6:30.
- [33:30]
Bill Barheit
In the morning is not a geek. Look, I think that the mode that I was referring to is a stopgap because I don't think any of this is going to matter in 10 years. Right. I think government's ability to regulate shadowy super coders and to regulate, you know, information freedom, whether it's crypto based, decentralized systems, the merger of crypto and AI, for better or worse, it's going away. Right. I have a lot of concerns about, you know, how AI is basically becoming centralized and I wish that wasn't happening, but I think that pendulum may swing as well. But the bottom line is I Don't think these governments are going to matter in 10 years because there's a few things happening now that have never happened before. Right. We talked about 29 before. We didn't have the Internet in 29. We didn't have Bitcoin in 29. We didn't have AI in 29. We didn't have nuclear missiles. So we have. That's maybe a deterrent if anything.
- [34:25]
Scott Melker
So.
- [34:25]
Bill Barheit
So the, the things that are money like. Right, yeah, so. So it's a we. Yes. We've had these 100 year cycles that I do believe in. But the structural differences this time are huge. Right. That doesn't prevent the cycle from eventually exploding. The question is what happens after? I'm. I'm super interested and excited by what happens after and it's what my life is all about. So, yeah, I think this mode is that we're talking about is a stopgap because it's not going to matter in 10 years.
- [34:56]
Tillman
Yeah, yeah, I agree.
- [34:57]
Scott Melker
Go ahead. I want to talk briefly about bitcoin treasury companies because I have to ask every new person who comes on their opinion every single time we have a show, period. And so that means that, Bill, you're now in the crosshairs on that. So listen, I've been somewhat critical of the bitcoin treasury company model, at least the potential future implications of it. I think it's fine right now. I've sort of differentiated bitcoin balance sheet from bitcoin Treasury. Bitcoin balance sheet being those who just are like us, right, dollar cost average into Bitcoin with some of your cash to hedge against it. And then you have the financial engineering side. So actually I've done a really deep dive. I've called a lot of friends over the past few days who are very deeply in these guys who are launching them, raising billions of dollars. Actually they've kind of said the demand is drying up. I don't know if you've seen that, but for the bitcoin treasury companies, we kind of had a few that raised almost a billion bucks. Now people are trying to raise a billion bucks and the money's not out there. Actually had a personal announcement today, which is ironic because of my sort of being critical of it. But my friend Todd Shapiro in Canada has a publicly traded company called Red Light Holland which is an amazing psychosylibine company. We've been friends for a long time. He came to me and said, listen, I want to adopt a bitcoin strategy. And my adopting bitcoin strategy, I'm Their advisor. Because I said let's slowly buy bitcoin responsibly with the cash, not do any financial engineering. And you guys have been debanked because you're in the psychosyllabin. You should own some bitcoin. He agrees. He's a bitcoiner. No announcements yet because it might be under embargo potentially. But if someone brings someone like me on an advisor, they might tell them to use a certain algorithm to do that buying for a bitcoin treasury company so that that human being doesn't have to be responsible for it. But that's not announced yet. But Bill, what's your take on all of these? In general, I'm very happy to help anyone responsibly buy bitcoin.
- [36:50]
Bill Barheit
I have three, you would probably surmise I have strong feelings about this. I have three strong feelings about this. The first is the part that I love is we help companies put bitcoin in their balance sheet. I've done it for mid size, mid cap companies, non profits and they, you know, use the Abra private model to have a vault for their, their bitcoin. They can borrow against it whatever they want. It's, it's great. This is free marketing for that. Okay. And I think that's wonderful. Second, I think that the market is not tapped yet. I think it's tapped for these. Me too. Companies that don't look any different than the first 150 that Cohen and Ken and others are out pitching and financing. So I do think you're going to see part of the second point. You're going to see some consolidation when a lot of the converts basically start getting sold in Q1. I do think that in the third point is I do think you're going to see a second and third wave of companies that look very different than just the pure play companies might be baskets of crypto could be operating companies in our space that basically are generating free cash flow, maybe generating yield on crypto that can also take advantage of those markets and have a very different set of measurements because it's not the sailor yield which is basically cleverly using leverage to get more bitcoin per share. It's real yield either from a lending or defi perspective or leveraging, you know, other crypto assets that are stakeable that ends up generating real yield that hasn't started yet. That's coming. The chances that nobody tries that in mass are like zero.
- [38:40]
Scott Melker
Yeah. And to your point number three. Tell me. I know we have a lot of things under embargo So I never know we can talk about or not. But I will say that generally I think a lot of different companies are going to unlock other pools of capital that are not yet involved in insurance, real estate, all those things.
- [38:56]
Bill Barheit
That's right. What, what, why is this happening in the first place? Because interest rates are so high that it's enabled the traditional debt markets. Right. Vis a vis what Saylor came up with to play. And even if the Fed lowers rates another 1% in the next six months, which that might even be aggressive, they're still historically high. Right? So, so from a convexity perspective, bonds might be more short term attractive than they were before, but my guess is they're still going to make more money on these converts with the right companies than they are on primary bond issuance. And if that's true, that could give this model in some fashion, whether it's, you know, hybrid or whatever, another year.
- [39:41]
Scott Melker
Since I'm now a, you know, court certified advisor on Bitcoin treasury companies, which makes me an expert. And obviously, what if, you know, like you said, you've actually been working with quite a lot of them. So on your side, it's more the custody. It can be the purchase as well, but the custody and then what you can do with it once you have it. So what if in a theoretical world there was a really great algorithm that could optimize the way people buy it on exchange, but then those Bitcoin removed from that exchange into the vault by another company that allowed things like this. Would that be something that would be interesting to a Bitcoin treasury company?
- [40:22]
Tillman
Look at you. Matchmaker. Matchmaker.
- [40:24]
Scott Melker
No, I, I'm just saying theoretically.
- [40:27]
Tillman
Yeah, no, that's a good point. I think to, to Bill's point, what, what really has happened with Bitcoin specifically, but it's happening with other cryptos as well, is that it's being recognized for its collateral value. Collateral in the debt markets is a, a big problem. If you take a loan on a car, the collateral is the car. It's a depreciatory asset. It's hard to repossess. There's a lot of downside to being, to having a bunch of debtors or having a bunch of debt on your books attached to the things that are hard to repossess. When you're a bank, you're looking for the easiest thing to repossess with the highest growth potential while it's being held. And so Bitcoin and the digital age is opening up. In my opinion, a lot of people's eyes to the strength that collab that it provides as collateral. And I think that entire debt markets are going to be forever changed based upon this notion. And I think what's stronger than what we're seeing today, which is essentially a debt cycle of borrowing on the back of the future potential of bitcoin in these public, you know, zombie companies is a notion where, and, and by the way, Scott, I know. No, I don't disagree with you that there's a distinction or you can make extinction between treasury companies and bitcoin balance sheet, you know, just DCA companies. But I also think it's just a spectrum. It's like, how aggressive do you want to use the collateral to, to borrow against the future? Right. And, and so I, I think the strongest play is companies who are very profitable that are diverting a portion of their cash flow in net profits into buying bitcoin. Why do I think that's the most potent? Well, number one, there's a lot of profitable companies out there. And if they used it as a forced way to save money and it has the disproportionate upside, you could be talking about doubling started.
- [42:29]
Scott Melker
Sailor started with, he was like, I have a viable business and I don't want to hold cash like it turned into this. But I mean, that's where most people fall on the spectrum. That's where individuals fall on the spectrum. But here's the bitcoin reserve for a country falls on the spectrum.
- [42:43]
Bill Barheit
The issue is.
- [42:46]
Tillman
That's right. Here's the punchline though. I think VC firms are going to understand that they can buy if they can get a commitment from a company that is highly profitable and very quickly expanding to become a Treasury company and divert 10% of their net profits into bitcoin, they are better collateralized against lending them money and, and writing a bigger check against that expansion potential. And that is going to be a huge innovator, a difference in innovation pace. We're going to be able to innovate through that curve much more quickly because the capital is going to have better collateral to lend against. That is, I think, something that is going to unlock itself. And the companies that are going to find the sweet spot are the ones that say, you know what we're going to dedicate when we can afford to dedicate 40% of our net profits to Bitcoin 50. Why? Because if I'm a VC and I go, okay, I want to own as much bitcoin as I, as I can, what's the best way to do it? Well, it's to buy it incrementally over time. Well, if I have this business that's producing cash and I'm buying quarterly or monthly with that net profit, I'm dcaing on the back of the profits. There's no downside and only large, large upside. And we've done a lot of case studies for companies that have a, even as high as a 25 profit margin and then putting 10 of that net profit into bitcoin doubles their profit margin in eight years if you play the last eight years out. So it's just too much upside to ignore for no exposure. Basically zero exposure. I mean very little.
- [44:26]
Andrew Yang
Yep, yep.
- [44:27]
Bill Barheit
I'd like to see higher growth companies starting to adopt this. The issue that we've had is, is it's the only high growth companies adopting the strategy right now are crypto native companies. Everybody else is either zero growth, low growth, regardless of where their profits are. Right. Sailor included. Right. I mean he had, he was on a zero or negative growth trajectory when he started buying, buying bitcoin. Until now I have not seen any traditionally like what we would call high growth, fast growth companies adopting this strategy. And it's partially because the perception is they didn't need to or they don't need to. And if that changes then that's going to be.
- [45:09]
Tillman
Well, it's changing, Bill. 40% of my time is spent talking to those types of companies now. In fact we have I think the fastest growing franchise that we're going to be announcing here soon that has adopted a, we're buying $10,000 of Bitcoin per store and we'll keep doing that as many stores and they've, you know, they've got, they're going public in six years and has a thousand store potential. So these, and these are cash flow positive from day one. So we're going to be announcing some really exciting stuff. And if you put a bitcoin treasury model and you put the last five years of historical performance onto these growth curves, it's exceptional. I mean it gets you excited to write checks again, I can promise you.
- [45:54]
Bill Barheit
Yeah. The other thing that's interesting to me is outside of 21 million, which I think is mostly tether's bitcoin, the majority of these companies haven't bought the bitcoin yet because they're still in S4 registration phase. Sorry if I'm using the wrong legal terminology. And that's all going to come to a head in most likely in, in between now and you know, end of Q1 as these SEC approvals roll off the proverbial tongue and they have to start buying via these pipes.
- [46:22]
Scott Melker
I heard the same. I heard actually a lot of these quietly are having a lot of trouble with the sec getting official approval, whatever the process is, to change their business. Because you can't just, you know, if you're a publicly traded company that, you know is reported as a certain kind of company, you can't just change your entire business model outright without permission. Right.
- [46:43]
Bill Barheit
So back advantage, because you can do whatever you want in theory, as long as you document it correctly. Yeah.
- [46:47]
Scott Melker
Yeah. So I don't know what that looks like, but to your point, I think, you know, we've seen small buys, but when someone says I'm raising a billion dollars and then they make an announcement they bought $10 million worth of Bitcoin.
- [46:58]
Andrew Yang
Yeah.
- [47:00]
Scott Melker
Where's the rest of that going?
- [47:01]
Bill Barheit
Right.
- [47:01]
Scott Melker
Yeah. Andrew, any takes on this?
- [47:05]
Andrew Yang
My take is, you know, when it, when the dust settles, balance sheet companies are going to be the, the cream of the crop again. We're going to see a bubble on the treasury side. It'll probably be fairly short lived. I also don't think the fallout is going to be as, as, you know, world ending, as some people think on, on crypto Twitter.
- [47:29]
Scott Melker
No. I just think that shareholders of the ones that fail gets.
- [47:34]
Bill Barheit
True.
- [47:34]
Scott Melker
Yeah. Welcome to the free market.
- [47:36]
Andrew Yang
Yeah, those are, those are risks of investing. You're investing in anything. There's no guarantee of, of any meaningful return. But I, but I think again, the individuals, the entities that are, that are left standing will gobble up the, the, you know, what's left of some of these companies.
- [47:56]
Scott Melker
Yeah.
- [47:57]
Andrew Yang
And it's not a surprise to me, you know, your thoughts on, you know, hearing that some of the capital is drying up.
- [48:04]
Scott Melker
Yeah.
- [48:04]
Andrew Yang
Because people are again taking a look at the quote unquote fundamentals of what does this look like over a three to five year period.
- [48:11]
Scott Melker
Is it worth also competing with people who just want to buy bitcoin? Right. You're trying to convince them to buy something else for bitcoin exposure. Bitcoin.
- [48:19]
Andrew Yang
So the realities of, of, of, you know, Nakamoto going from a dollar, you know, pre transaction to whatever it was at 27 or 30 and wherever it is now. Yeah, that, that's meaningful. But at the same time, where is that going to be in six months? It's not, probably not going to be at 27.
- [48:38]
Scott Melker
Right.
- [48:39]
Andrew Yang
It's going to be at a, a fairly muted share price, but at this. So, so, you know, are people trying to capture other transactions trying to capture that one to 27 in this, you know, moment in time. Sure there is. But at some point that goes away. Bill knows this, Tillman knows this. The organizations that are also doing these transactions, doing these RTOs, everybody on wall street knows that an RTO is about, it's about as based and as low a transaction as you're going to find on Wall Street. These are not the kind of investment banks transactions that are being done at Morgan Stanley, JP Morgan and Goldman Sachs.
- [49:22]
Scott Melker
Those are pretty done. Yeah, what I'm hearing, those are pretty.
- [49:25]
Andrew Yang
They won't touch any of this stuff because it's a reputational risk.
- [49:30]
Scott Melker
RTO is a reverse takeover for people who don't know. That's what you're seeing here is when you go take basically a zombie company and you plow yourself right into it for, and you become that company kindly.
- [49:41]
Andrew Yang
You could do that to the tune of two or seven or even $10 billion. And again Morgan Stanley, Goldman Sachs, JP Morgan, they're not going to touch that, that, that transaction. They just won't. So there's, there's, there's a limited life cycle and capital available to, to this trend and the balance sheet, you know, idea is going to be.
- [50:03]
Tillman
Yeah, I would agree with you guys.
- [50:05]
Scott Melker
Really quickly tell me. I just don't want to keep. Bill, I kept you like way over time so I just, you know, if you gotta go.
- [50:11]
Bill Barheit
Yeah, you know, a few minutes. Look, I think the, Sorry, there's a pause. I think the, this entire kind of flywheel is simply perpetuated on these debt markets or convertible markets being able to sell at a higher M nav than you know, what they're pricing these deals at which can incentivizes them to simply convert and then you know, most likely sell. Since they're not really motivated long term buyers, at least not yet. And I don't think that's going to change. I don't think they're going to become motivated long term buyers. So you know, I think that right now they know that they have a much better chance at doing that with micro strategy. Right. Versus some upstart with a management team they've never heard of. But if that team is actually able to generate Bitcoin on their own via profits or yield or lending net interest margin, that's you know, and, and so I do think we're going to see a wave and I don't think the stock price ultimately is going to be reflective of how interesting that is over the next year because there'll be a bubble and then There'll be a crash, most likely in that stock price. But remember Coinbase listed at a high and was down for like what, 18 months, two years, right. And so I wouldn't be surprised if some companies get, you know, kind of caught up in that. But if they have viable businesses, then, you know, see all time highs in three or four years.
- [51:35]
Scott Melker
And my final point on that, so in my sort of bearishness or skepticism about that, as I said, I called a bunch of people, I called Mark Moss yesterday, who a lot of you might know, and he's pretty active in this and he made a really good point that kind of made me feel a little bit better about it. He said, even if you're the dummy retail person who buys at 10x NAV on one of these at the top in FOMO, he's like, @ least this time you have disclosures, transparency, you know exactly who it is, you know exactly what they did because it's public traded. He's like, but if you just wait long enough, you're only doing this because you believe the price of bitcoin is going up generally. So actually you'll catch up like, you know, if you buy it at 4 to M nav and it goes to 2, but Bitcoin goes up in three years enough, it's not investment. I hadn't really thought of that part of it. As long as they hang on and exist and the bitcoin goes up with time, you actually end up doing pretty well. So yeah, Bill, I'm going to let you go right now. You're going to get an email with all three of us and other not to be named people.
- [52:42]
Bill Barheit
All right, man, thank you, that's good, thanks.
- [52:45]
Scott Melker
Obviously we gotta do. Look, I gotta do the. Andrew, you didn't send me a message to do the thing.
- [52:51]
Andrew Yang
Yeah, sorry.
- [52:54]
Scott Melker
Terrible at this.
- [52:55]
Andrew Yang
Yeah, my bad.
- [52:57]
Scott Melker
But I want to show something. It's right here. One second, I'm going to get there. This is you guys selling bitcoin, the algorithm, not you guys, because you guys are idiot humans, but the algorithm that you idiot humans created that's much smarter than us. Sold bitcoin. I don't know what, what price you got here? 100.
- [53:14]
Bill Barheit
Yeah.
- [53:14]
Scott Melker
This is 300.
- [53:17]
Andrew Yang
Yeah, it's 1. 122 and 300 and. And also that happened at like 4:45 in the morning. So our stock arbitrage strategy, our six hour arbitrage strategy pulled that off yesterday. And again, just extraordinary work by our team and frankly from the mind of Tillman to, to have Tools that, you know, again, any institution would be thrilled to have, right? The ability to buy at 77, 78, 79 when we're, when we're, when we're at the tariff panic level, or to buy at 98.99 when we're at the US just bombed Iran panic level. And then the temerity to be able to pull off, you know, we're, we're at a, a pop off high of, of 122, 123. So let's take a sliver off and generate some cash yield, you know, those things, the ability to do all of those things. You may be a human and you may be able to say, you know what, this terrorist stuff's overblown. I'm buying at 77, 78, 79, 80, I'm gonna get it. You may be able to pull that off, but you're not able to pull it off every single time. You're not able to pull it off when you're sleeping. You're not able to pull off a cell at 122 and change when everybody thinks it's going to 125 to 130. So you just. Extraordinary work that we make free for everybody. We always get questions like that on social media, like, how is this free? What's the catch? The catch is, is we're just capitalizing on volatility in the crypto markets for you and we'll give it to you free to, to use with 10 grand every year for forever. That's the, we want everybody to own Bitcoin and that's the best way we knew how.
- [55:15]
Tillman
We charge institutions a fee and we charge high net worth individuals a fee and, but we make it free to the people who can't afford it. That's the best way to put it.
- [55:24]
Scott Melker
Like we are men of the people.
- [55:25]
Tillman
Well, like Bill was saying earlier, it's like, you know, we want more people to use automation. Some people, most people have never been exposed to it. But if you pull that chart back up, Scott, you know, the thing that I'm most proud of is the, the curve. So look at all the activity and say to yourself, like, am I taking some profits? This, each one of those sell points represents use taking some profits off the, the table. It's not selling your entire position. It's just reaping the benefits of large increases in price so that you create more cash during those volatile time periods that are choppy. But look at how many purchases and how many cells happened over that time period. And look at how all of the cells happen at the top of giant green candles and all of the buys happen at the bottom of red candles. So it's a forced discipline that allows you to set it and forget it. And the market, when it presents the opportunities that meet the criteria for the execution there, there it goes, it executes on your behalf. And so that little sell point that we had at the very top of the market, that wasn't all of your position, that was just the position that was one half of one buy and it was in profit enough to take some of that profit and realize it as gains and then be able to roll it back into more Bitcoin purchases. So it's, it's a more efficient way, we believe, to accumulate and accelerate your accumulation in your, in your stack is Bitcoin's not always going up. So when it's trending sideways, why not use the volatility to your advantage, like Andrew was saying.
- [57:09]
Andrew Yang
Did we cover Is. No, I mean covering it. We're available now on Kraken and Gemini. We have more exchanges to come. You know, the, the amount of algorithmic opportunity that exists in our sort of universe, both in crypto and then in future. So traditional finance as well as crypto finance, we've got it covered backwards and forwards. So, you know, our team and the service that we provide people is second to none. You know, we. Whether you're on a free version or whether you're on the biggest version we've got, you're going to get extraordinary service from us, which is, you know, separates us in the crypto space, to be honest. You can get a hold of real people, you can have meaningful conversations with real people on our staff. They will walk you through the process and get you started. So, yeah, it's. We love what we do in the way that we do it and providing people with things that they would. Would otherwise not have access to unless Arch Public did them and created them and are now making them available to folks.
- [58:19]
Scott Melker
I think we nailed it and it's 1001. So let's go. We'll be back next Tuesday. I think I actually going to bring on Todd from Red Light Holland.
- [58:29]
Andrew Yang
Awesome.
- [58:29]
Scott Melker
We can have an actual Bitcoin treasury conversation in real time because by then we'll have all talked and we'll be able to say things I can't say that are really not that obvious from the way I've been talking. All right, guys, before I get myself in trouble, see you tomorrow. Thank you, gentlemen.
- [58:45]
Andrew Yang
All right.
- [58:48]
Scott Melker
Let'S dope.