← The Wolf Of All Streets
The Wolf Of All Streets
BTC Hits $108k! Live With Grant Cardone & Eric Weiss #CryptoTownHall
01:00:46
BTC Hits $108k! Live With Grant Cardone & Eric Weiss #CryptoTownHall
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- [00:00]
Scott Melker
Good morning everybody. Welcome to Crypto Town hall, our daily show at 10:15am Eastern Standard Time. There was a long time there where it was tough to find conversation pieces, news to talk about. Now it seems like the velocity of news in the bitcoin and crypto space is so fast that we can't even keep up with everything that's happening. And things that once upon a time would have been the biggest piece of news ever for the space have become footnotes that are entirely missed. It's, it's pretty astounding. I was talking on my YouTube show this morning with Padgett from Gemini and with Andrew Parrish from Arch Public, who's here pretty often, and we were saying that just six or seven months ago we were sort of positing, well, what happens now that Larry Fink is out there talking about bitcoin all the time? What happens when, you know, BlackRock just says, hey, we suggest that everybody have a 2% allocation to Bitcoin. That literally happened last week and nobody didn't even make the news cycle. Crazy that BlackRock put out a paper saying that everybody, you know, that 2% is reasonable. Others were saying, you know, 1 to 3%. To me it's just nuts how many things are happening at once and how hard it is to keep up with them. One of those big ones. Matt, I'm glad you're here. We had this sort of narrative in I guess the end of 2020, beginning of 2021, when micro strategy started to buy bitcoin and Michael Sa saw him really truly orange peeled and him trying to orange peel other companies. And so there was this, I think it was February 2021 and he sat down with 2000 CFOs and was teaching them how to put bitcoin on the balance sheet. And I think a lot of people were underwhelmed that it sort of didn't happen at the time. And then kind of as you dug in, you learned that the GAAP accounting rules were really unfavorable. And basically nobody in their right mind would put bitcoin on the balance sheet if they had to mark it down to the lowest price in the quarter when they reported earning. Right? And so that was a big problem for a long time. Those rules were changed months ago. But I just realized in the news cycle in the last two days that that's now actually kicking in, which means that companies theoretically can add bitcoin to their balance sheets without having to worry about that for the first time ever. So. So Matt, I mean, you guys are out here obviously talking to people every single day on behalf of bitwise with institutions. The ETFs obviously being the sort of lead, lead topic there. But you're also talking about bitcoin adoption. How big is it that now these companies that maybe have been looking at it that we haven't heard about can probably do it if they want to.
- [02:41]
Matt Hougan
Yeah, it's great to be here. It's a very big deal. Just so people understand, you had to mark it down to the low price of the quarter and you could never mark it up ever. So literally, if you bought this asset, the only thing it could do is write down and take down your earnings. You can imagine that was a very quick conversation for CFOs, literally the dumbest idea they had ever heard to add an asset that can only go down in value. I think what you're seeing is this trend is bigger than people think. I think that's actually the important piece there. The common response to this idea of companies putting bitcoin on their balance sheet is, oh, Microsoft's never going to do that, or this or that company is never going to do that. And that remains true. But enough companies are doing it that this is a major source of new demand. I mean, companies alone bought something like 250. It'll probably end up being 300,000 Bitcoin this year. If that doubles next year, that's three, four times the total amount of bitcoin supply. So this story doesn't have to be very true for it to have a very big impact. And I think it's true enough. Right. It's now dozens of companies that are regularly adding bitcoin to its balance sheet. And as you know, Scott, there's just not that much bitcoin out there. So it's having a big impact.
- [04:06]
Scott Melker
I mean, 100,000 of those were added by more. More than 100,000 were added by Saylor in the last five weeks, right?
- [04:14]
Matt Hougan
Yeah. Every day you wake up and it's another billion dollars. But it's not just him, Right. It's marathon its companies in Japan. There's a fund in asia that raised $150 million to invest in companies, convince them to put bitcoin on their balance sheet. And again, if you get 100 companies doing this at this scale of the asset, it's transformative to the supply demand.
- [04:39]
Scott Melker
It's interesting because a lot of people have been concerned, what happens if Saylor doesn't announce on a random Monday that he's bought $1.5 or $2 billion worth of Bitcoin at this point, it's become such an expected narrative. What if he runs out of dry powder? Having 50 more companies buying in smaller amounts behind that effectively negates that narrative.
- [05:01]
Matt Hougan
That's exactly right. I mean, we now have these sort of three horsemen of ceaseless demand. We have companies, not just Saylor, but others, we have governments moving into the scene and then we have institutional buyers and those are all on top of the retail demand. So if microstrategy doesn't come through, another company might. If they don't, you could see governments accumulating if they're not. One of the things I see right now, one of the reasons ETF flows have been so strong is all the sort of forward leaning institutions want to make sure they have bitcoin on their year end statement and so they're piling in. So you have different people to pick up the slack. And I think that's why we're in this sort of relentless bull market for the time being.
- [05:45]
Scott Melker
I just pinned the tweet above from David Bailey, who's obviously been on the show a number of times, the CEO of Bitcoin magazine, one of the people certainly that gets credited for the orange pilling of Trump and clearly obviously getting him on stage at Bitcoin Nashville, saying hundreds of public companies in process of adding bitcoin to their balance sheet, they need to hurry. Now I know that people in this industry are prone to exaggeration, but I don't think he would flippantly say that unless he actually knew something. And then in some of the comments, if you go in, people say name names because as I talked to five today.
- [06:16]
Matt Hougan
Yeah, I think that's the thing. You know, there are lots of companies that have seen people do this and be rewarded for it by the market. Right. These companies are pattern matching to the success we're seeing where adding bitcoin to your balance sheet makes you friendly to the crypto community. Boost your share price. It seems like a win win. And you know, there's thousands, you know, 10,000 public companies around the world, if 5% do this, if 10% do this, it is a major source of demand. I know it's not the source of demand people were thinking of going into this year. They were thinking of institutional demand, maybe they were thinking of governments, and those remain very important. But this is a real source of demand. I think you'll see hundreds of companies.
- [07:05]
Scott Melker
Doing it and you have to assume that they'll either, I guess, buy a chunk when the approval happens or they'll follow a bit of a sailor strategy and just dollar cost average over time. I don't mean by raising a convertible note. We're seeing, obviously, miners do that. Following in his footsteps, Riot just bought a bunch more Bitcoin. But I think most institutions will not do the leverage part. You're just going to add it to the balance sheet slowly, correct?
- [07:32]
Matt Hougan
Yeah, I think that's right. I think they'll treat it like, I hope one day retirement savers in America treat it, which is, you know, to drip into it over time, to just have it as a piece of the puzzle. Now, look, it won't be every company. It's not core to every company's business. It's not relevant for what they're doing. They want to use their treasury for other reasons. They're not, you know, allocating to other assets. But. But I think it will be core to many of them.
- [08:01]
Scott Melker
I agree. And I think that the accounting rule change just to kind of put a bow on this, probably. We've had a lot of companies looking at it and now we're going to get those announcements. I just have to assume that that was still holding back quite a few people. And Matt, also I mentioned kind of that BlackRock passively said everybody should just, you know, 2% is a reasonable allocation to Bitcoin. That sort of was missed in the news cycle in your conversations now with people looking to allocate to the ETFs. Is it 2, 3%? Is it 1%? Because it's a big difference. We were talking about 1% six months ago or a year ago. I mean, if people allocate two instead of one and everybody does that, you're talking about two times as much bitcoin being bought.
- [08:49]
Matt Hougan
That's exactly what I found funny about this. It's not just that people missed BlackRock saying you should add Bitcoin to a portfolio, but all of a sudden we doubled the allocation. We went from 1 to 2%. You know, we're seeing a lot of people go to 5% at bitwise. 5% was considered, you know, there be dragons territory even 12 months ago. It was a crazy idea. People would laugh you out of the room. We were still talking about getting off zero, right? Having a dollar invested, and now you're talking about 2% and not just 2% for like a few people at a wealth manager, but 2% is the base rate for a portfolio across every exposure. I think it's really significant. And if you think it's the end of the story, you're Wrong. In a few years, maybe in a year, maybe in two years, as bitcoin volatility goes down, you're going to see Blackrock saying 5%. Right. This is not. We haven't reached the local maximum. There's more to go here. I thought it was an unbelievable story. And just look at the flows. Since they put that out, we've had 5 billion of flows into these ETFs over the last 10ish days. I think that BlackRock message is having.
- [10:06]
Scott Melker
An impact on the Ethereum side. We've seen pretty sustained bullish flows there as well, which kind of going unnoticed as well. Not by you.
- [10:14]
Matt Hougan
Yeah, no, no, not by me. I'm big on this. It's actually more flows than it should proportionally be getting. Right. North of $2 billion in flows, which, if you. If you compare the market cap of Bitcoin to ETH, you'd expect it to be like 4 to 1. Instead, it's like 2 to 1. And I think what's going on there are a couple things. On the one hand, ETH sort of has its mojo back, right? It's right at the center of three big themes in crypto. It's right at the center of stablecoins, it's right at the center of tokenization, it's right at the center of what's going on with AI agents. That's all taking place on base. So it's got that narrative flow. But the second piece is, you know, a lot of people bought Bitcoin for the first time when the ETF came out in January. And what happens when your friends buy Bitcoin six months later or eight months later or 12 months later, they start buying ETH? Like, this is the oldest story in crypto. So of course it's happening in the ETFs and it's going to continue to happen. But I'm really optimistic about ETH going into next year because of that trio of drivers between stablecoins, tokenization and AI.
- [11:27]
Scott Melker
Yeah. We're going to go to the rest of the panel momentarily. This wasn't meant to be the Matt and Scott show, but tends to happen. Sorry, but you also posted a tweet yesterday that I retweeted that kind of blew my mind because I've been harping on this narrative that stablecoins are the killer app, obviously, of crypto. I say it all the time. And that the bulk of USDT was on Tron and that people were using Tron because it was fast and cheap. You posted a chart yesterday. I Think it was sit since. Was it since election day, but since election day. Now ETH is gone, basically. Parabolic on USDT on Ethan is now leading significantly over Tron just in the past, what, month, month and a half.
- [12:09]
Matt Hougan
It's absolutely crazy. You know, I, I had the same reaction chart that you had it when, when you saw it. It's just like, like a shotgun. Right. The election went off. ETH was way below Tron and it's just staircased past it and has never looked back. It looks to me like that's going to go to ETH in a walk. I think it's the clearest visual signal I've seen of what we've been talking about, which is the rebirth of crypto in America. Of course, ETH on Tron is largely an Asian phenomenon. I mean, USDT and USDT on ETH is a US phenomenon. And yeah, if you want any signal that the US is back in crypto, there is no better signal than that one. It made me really bullish about where we're going.
- [12:59]
Carlo
I love it.
- [13:00]
Scott Melker
Yeah. Matt's tweet is pinned in the nest above. For anybody who didn't see it, that chart, basically the blue line is Ethereum, is USDT Supply and Ethereum, and the green line is Tron, which is still impressive, has done nothing but continue to go up steadily. But ETH basically went parabolic there after the election. Carlo, you had your hand up. Go ahead.
- [13:18]
Louis
Can we circle back and take a little victory lap on eth NFTs, Scott? Because I can't have a conversation about this surge in ETH without at least talking about the fact that we're seeing massive inflows back into NFTs yesterday. A spike of $76 million, a nine month high in NFT traffic.
- [13:40]
Scott Melker
Hey, I went on, I told you this. I went on spaces a couple years ago when board apes were like $300,000 or something and got eviscerated. Because I said I will buy, I promise I will buy a bored ape if they go back under $25,000. And everyone went ballistic. And I bought one at $19,000 a few months ago, the floor of 9.9eth or something. Just because I said I would. I don't really want to buy an ape, by the way, but here we are. But yeah, I think that we're starting to see things rally right across the board. So I don't think there should be any surprise that NFTs are going to rally alongside everything else. Go ahead, Louis. I don't think Lou's mic is on.
- [14:23]
Muneeb Ali
Okay.
- [14:24]
Scott Melker
Or, or is working. Lou, I'm gonna drop you down and then we'll, you can request and we'll bring close your app request and we'll, we'll bring you back up. So Carlo, I mean do you think that that trend continues to, to rage?
- [14:37]
Louis
Oh yes. I mean the Pudgy Penguins, a huge community that's, you know, pivoted into its own brand, just dropped their token today and apparently it's being reported that for every Pudgy penguin you own you got a stimulus drop of $85,000. Where do you think that's going to rotate now? Straight into NFTs. Yeah, I mean this is like the arbitrage here is going to be that people are going to cash in that token and I think rotate heavily into NFTs.
- [15:11]
Scott Melker
Interestingly, I, I know Dave Weisberger was here yesterday or maybe it was actually on YouTube and he said I don't understand, we were talking about kind of market, market froth and he said I don't understand why FTT token still has like a billion dollar market cap and was trading like crazy. And then I read actually that for some reason, I have no idea why because I'm not up on NFTs. But if you held FTT, you actually got a Pengu airdrop as well.
- [15:32]
Louis
Yeah. There are several collections that also could have benefited as long as they, I think, you know, hit the deadline to, to, to, to get verified on the discord. So it's a massive stimulus that's coming across the board. I don't know what's going to happen to the price of that penguin token. It's, you know, typical that when you get an airdrop there's an immediate dump and then it retraces possibly. But there's no denying that you've got now a tremendous amount of liquidity coming back into and this is liquidity coming to NFT holders. So what are they going to do with this liquidity? And across the board you're seeing that all the forgotten projects of 2021 that were active throughout all this bear market are now starting to see a resurgence as well. Cool cats. You've got Gary vee actively buying NFTs again, you've got the cool cats pumping all those NFTs from back in 2021 that everyone thought were dead and gone are now starting to come back over 18 floors and so forth. So it's just another, it's another indication that we're in a full on bull market. And it is an obvious Play that you're going to see that rotation because it's happened before and it's just so predictable.
- [16:49]
Scott Melker
We have Muneeb here and Alex both, so it's a good time to pivot because there's a lot being built on Bitcoin as well. We talk about, of course, NFTs on ETH Carlo. We know that there's been, at least over the past year, 18 months, this huge sort of explosion of ordinals and runes and all this building on Bitcoin. But Muneeb, Alex, you guys have been here with Stacks, obviously long before that building, before it became so fashionable to build everything on bitcoin. But you have. I just happened to read, I pinned it above from Bitcoin L2 Labs, SBTC launching and a rewards program there. I know that the term yield still like gives people PTSD to some degree, but you're doing it in a very interesting way. Can you just kind of talk about what's being built generally and what you're doing with SBTC here?
- [17:41]
Muneeb Ali
Hey everyone, my name here, Stacks founder.
- [17:43]
Scott Melker
Hey, man. Good to catch up, by the way. Been a while.
- [17:46]
Muneeb Ali
I know, I know. I think first I wanted to follow up on something that Matt said about bitcoin demand, like how there are so many different sort of like, you know, sources for it, like institutions, potentially governments, companies doing it on their balance sheet. But I feel that there is one sort of very big, almost like a black hole for bitcoin that doesn't get talked about that much, and that is enabling yield on Bitcoin. If you look at Ethereum, a very large percent of the supply, I think it's like probably 35% or so. It's locked up because people are earning yield on it and they don't want to sell because this sort of income for them. And Bitcoin BTC yield doesn't really exist. Like, you can do it in small ways through centralized parties, but people have PTSD from BlockFi and the last cycle and so on. So I think this cycle, especially with all the development that happened for Bitcoin L2s, there is almost like this new category opening up where your bitcoin can actually directly earn yield without the centralization company risk. Right. So you can deploy it in smart contracts. You can actually start earning decent yield numbers and that that is likely going to be another big factor in the price of Bitcoin. At least. At least I believe that. Right. It's like almost like a black hole. A lot of bitcoin is going to start flowing into these L2s like stacks and then people will park it and because they'll be earning a yield on it, they're even less incentivized to sell that thing. And another thing is going to be decentralized, the lending market, right? Like where a lot of the OG holders, I've been holding Bitcoin for almost like 11 years at this point. And a lot of people from that era or even like a couple of years before, like they don't want to sell, but they're looking for liquidity now. They want to lock up their BDC and take a small stablecoin loan. And they don't trust companies. They do not want to go to centralized companies that we burned or they've seen their friends burned many times. So I think that's another market. So when there is a OG holder who can now get like liquidity on even like you know, 2% or 5% of their holdings, they're even less incentivized to sell. And I think that's going to be a very interesting dynamic on the supply demand side of bitcoin that these L2s are actually going to enable. So speaking of that, as you mentioned today, SBTC is going live. People who are sort of not familiar think of Stacks as a Bitcoin L2 as one of the earlier projects. It's secured by 100% of Bitcoin hash power. It's extremely tightly integrated with Bitcoin. And now sort of like bitcoin deposits are opening. Right. So we're doing it sort of like slowly. It's a decentralized way to take your Bitcoin from L1 to L2 and to incentivize early liquidity. There are some protocol incentives. And the interesting thing here is that the incentives are in btc because Stacks is a BTC yielding asset. We can go into that like how that exactly happens. But it's a pretty unique asset. I think the only one out there in CoinMarketCap Top 100 or anywhere where you hold FCX and you earn BTC. So what's happening is that if you deposit bitcoin and there's a cap like right now, I think initially it's a thousand BTC cap. You might raise it to 3,000 and so on slowly. But that BTC can now earn direct BTC yield. And why, why is the project doing this? It's to give people a taste of what bitcoin yield is going to feel like. Right? Because these people now have to move their BTC from cold storage. They have to actually use a web wallet. Like bitcoiners haven't used web wallets, right? Like, they. It's not Ethereum, where everyone has used Metamask and things like that. So there are a bunch of these really good web wallets like Leather and Xworth. So it's to incentivize these people that let's move from your old clunky cold storage. Put a little bit of bitcoin in a web wallet, put it in deposit, in the protocol. And then once they do all of that and they start seeing like a 5% BTC yield coming up in their wallet, I think they get a taste of company like, oh, interesting. What else is out there? And so that's sort of like what's happening. But I think it's a very, very big step for bitcoin personally. We've been working on all this for like two plus years, so it's a pretty big day for us.
- [21:56]
Scott Melker
You talked about, obviously, especially whales, but I think it'll be anyone eventually, depending on how high the price of bitcoin goes. But to avoid selling, to be able to basically take a loan against it. And you kind of highlighted how dangerous that had been with CEFI and some of the platforms that we had before. What does that look like to you in the future? How will that work safely and do you think? I guess also we talk about sailor buying every day. I think that might kind of be his end game, as he said, offering a full breadth of bitcoin financial services and effectively becoming a bitcoin bank. Is that where we're headed?
- [22:31]
Muneeb Ali
Yeah, I think absolutely. I think once you start accumulating a lot of bitcoin and your mindset sort of shifts. I feel like when people, they enter the space, they look at bitcoin as a trade, right? They look like, oh, this thing is going up. I'm going to enter and I'm going to exit. But the real orange filling happens when people realize that you're never exiting your bitcoin. This is your savings, and you just want to keep accumulating more and more bitcoin. And I think the next phase of that is that it's not just accumulation. You need to turn that into productive capital. You need to build financial services both centralized and decentralized. So I feel like Saylor is doing God's work, but it's still on the centralized side. And I think some of the work happening at stacks and some of the other L2s, we are basically enabling the decentralized version of those financial services. And I think both are going to exist. Right. Like Coinbase, for example, they started their CB BDC on base and I think it has cost like $2 billion in BDC issued on it pretty quickly. But it's kind of like in the middle. Like you are trusting Coinbase and those centralized parties. You're going through kyc, you probably are going to get like a tax set when you convert your BDC to CB bdc, because there's a custodian in the middle. And I think what we are doing is we're more on the decentralized end of the spectrum, like fully decentralized, fully open. Anyone can use it, you know, no need. There's no one in the middle to do kyc. There's no custodian in the middle that, you know, you're sort of like relying on. I think that's. That's very interesting. Yeah.
- [23:57]
Scott Melker
Alex, obviously you're part of the stacks ecosystem building these tools. I mean, I assume you generally agree, but anything to add to what said?
- [24:06]
Alex
Yeah, I just think this is going to be really big for builders. The only option you really had to be able to make deployable bitcoin at this point is to port it over into the ETH ecosystem, which obviously has plenty of DEFI protocols and applications and things going on. But as we saw when Ordinals kicked off a year and a half ago with everything, people want to keep it in more native bitcoin realms. Right. Kind of goes against a lot of the ethos on it. And so that's the thing I'm excited for. I've talked to a lot of builders who are on this. It does sometimes surprise people when they find out that the bitcoin ecosystem, and especially on top of stacks have all of the same primitives and capabilities. You can do bitcoin lending through zest. You can hit dexes like bitflow and Alex and Valor on top of it. There's really big opportunities and I just think at the end of the day, this is where Defi is going to end up. On top of bitcoin.
- [25:04]
Scott Melker
Right.
- [25:04]
Alex
Bitcoin is the digital gold. It is the asset. So I'm really excited to see what people do with it and as they just kind of discover the amount of opportunity that exists there.
- [25:16]
Scott Melker
Kind of talking about the centralized versus decentralized use cases of everything in crypto, basically. But it's obviously a gray sliding scale maneb. You sort of pointed out cbbtc, which still to me sounds too much like CBDC for my brain to. To process it. But CBBTC Coinbase is wrapped Bitcoin. Where do you think that your average person, I guess in this cycle, then future cycles will land on using those services. Is there going to be a point when they become so easy for mainstream to use that people will default to the decentralized side? I think ideally everybody wants to use a decent centralized protocol to do these things, but it's still pretty complex. As you said, bitcoiners haven't even used these wallets.
- [26:03]
Muneeb Ali
Yeah, I think, but I think we're getting there, right? So this is, this is sort of like that interesting thing that I, I noticed that, you know, people are talking about NFTs earlier, but some of this actually goes back to the revival that we saw with ordinals and NFTs on Bitcoin L1 right. Like when that happened, suddenly first the djens came, right? Like all of these NFT traders and people came, but then capital followed and developers came and they started impro UX of these wallets and actually testing them on mainnet with sort of like real capital, real assets and all that helps. Sort of like the next generation. Now we've had almost two years of these bitcoin web wallets getting polished up. The UX is getting better, hardware support is getting better for multisig support is coming for large whales and holders. And I think this cycle, this sort of stuff you've seen before, right? Like before stablecoin lending became a big thing on ethereum, like in 2017, people were trading like, you know, kittens or whatever at that time, right? So, and bitcoin is following sort of like that evolution, but much later. But because bitcoin is so much bigger, I think the impact of it is potentially going to be a much larger. Right, like the, just the amount of capital that's available or the amount of sort of like institutional demand and sort of the scale of bitcoin, I think it's, it's, it's just huge and I think that's, that's like what I'm pretty excited about.
- [27:33]
Scott Melker
I'm digging into sort of other news here and like I was saying at the beginning, it's just crazy how much news there is, I think on a daily basis. So we have RL USD launching today on Exit rp. I didn't even see this, but Exodus movement. So the Exodus wallet was approved to list on the New York Stock Exchange. Did anyone see that? Because they've been trying for ages. There was a story I think yesterday that Athena was launching a Stablecoin or a We won't call them algorithmic stable coins. I don't remember what they call their stable coins to not call them stable coins. But that's backed by BlackRock's build fund that launched and got 65 million in TVL on day one. I mean, the velocity of stories right now is. It's just astounding. Lou, I know you wanted to comment before because your mic working. Lou, is in the glitch. Welcome, welcome. Paul, you have an.
- [28:28]
Grant
Yeah, there you go.
- [28:28]
Louis
I'm sorry.
- [28:29]
Scott Melker
Yeah. Lou, we did it. It was a. Are you a boomer like me?
- [28:34]
Eric Weiss
Unfortunately, yes. The. I was going to hark back, actually, just to build on something that Matt was talking about with regards to the likelihood of Blackstone upping their percentage from 2% and that, you know, I remember the first time that I met Cathie Wood in 2017, and she was talking about how, you know, she was a first institutional investor in gbtc, but she kept to sell because the price kept on going up and she was capped at what percentage of her portfolio could be in one single investment. And I think what we're going to see at Blackstone is as the price of bitcoin rises and rises, they're going to have people who are at 3 or 4% of their portfolio and they're not going to want those people to sell. So I think over time, BlackRock is undoubtedly going to raise that 2% to 3%, 4%, 5.
- [29:20]
Scott Melker
Yeah. Or they're going to. You missed maybe some of the conversation. Or they're going to find more unique ways to use options, obviously, to hedge those positions or to borrow, lend, yield, do the things that Muneeb was talking about before. But to your point, I always find it funny when, especially with Cathie Wood, I think is a great example, when ark, for example, sells Coinbase stock and people freak out, they don't realize that these people have balanced portfolio strategies for these funds. And when something becomes overweighted, they have to sell it. It's just they have to. They have a fiduciary duty to maintain the balance in their portfol.
- [29:58]
Eric Weiss
Yeah, exactly. And I totally agree with what Muneeb was saying. I really think the great untapped thing that's going to send us to a million is when this really goes mass market and the average person on the street starts buying it for whatever reason. And it could be for interest. I don't know what it's going to be, but we're going to find that over time. And I think that's really when history was written, it's going to be when billions of people bought it. That really sent it flying.
- [30:24]
Scott Melker
Yeah. Matt, how do you view that as bitcoin grows and all these bitcoin adjacent stocks that are part of funds become overweight, assuming prices continue to go up, do you think that will cause some sort of selling pressure? Do you think that options can solve that or that there's going to be things that mitigate that?
- [30:45]
Matt Hougan
Well, I mean, I think we're a.
- [30:47]
Carlo
Long way from that. Right. My starting point is 95% of the people who are going to buy bitcoin still haven't bought it. So they have a long way to dial up before we have to worry about them sort of decumulating and being overweight. They're massively underweight right now. You know, bitcoin crypto is maybe 3% of global capital markets and the average allocation in people's portfolios is still zero. So until we get up to 3, 4, 5, 6%, I don't think they need to sell back. Eventually that will happen for sure. And it does happen, as you mentioned with these specific portfolios. We run portfolios that are capped at X percent of any individual name and those portfolios have to sell. So there is a national capping side. The flip side of that is during the market pullbacks you'll have the opposite effect. You would think that this would overall be volatility dampening over time. It would trim when the market screams and it would add back in when the market pulls back. So on the margin I think that's true. But I still think we're early innings for people getting up to weight even before they get, you know, overweight these assets.
- [32:00]
Scott Melker
Paul, thanks.
- [32:02]
Paul
One thing we didn't talk about in detail was all the state level reserves that are being kind of talked about out there and Texas is probably the biggest one. Pennsylvania from a few weeks ago, Florida's been talking about it. So it's going to create this.
- [32:19]
Muneeb Ali
I.
- [32:20]
Paul
Wouldn'T say competition, but it's just like a bitcoin friendly state versus non friendly state and very as a reserve, as accepting taxes in bitcoin and then as the overall private sector gets more friendly to bitcoin because there's more competition and it might be on firms balance sheets. It's also attracting companies. There is some, some level of competition of, of states like hey, we're pro bitcoin state, we're pro crypto state. Here's, here's what we're doing to do this and it's not Something that you really think about. I don't think it's going to add up to a lot in terms of purchases because you know, ultimately states run deficit, a lot of states run deficits and they, and they just spend. So there's, there's not like they don't have large reserves in kept but it's just the ability to attract other companies or becoming a business for state, a business friendly state for bitcoin. I think that's something that's going to be very important and you're going to see it's going to be, the difference is going to be are you a bitcoin state or a non bitcoin state. I think that's going to be very clear in the coming, definitely in the next four years it's going to be very clear what states and that affects also on the energy side, obviously Texas is a big state for bitcoin mining. You know there's, there's some states in the Midwest for that. They have green, green energy states in the Southeast, around the Tennessee Valley Authority, out west with remote gas sites. So there's going to be a lot of connections with energy and bitcoin and the fact that now it's, it's becoming bitcoin friendly is going to push it even further.
- [34:08]
Scott Melker
So Texas, yeah, tech, to your point, Texas has already been bitcoin friendly in general. And so seeing them propose a strategic reserve which obviously has a long way to go to be passed, is huge. But for people who don't realize how big it is when states, especially like Texas propose something like this, I believe last time it was reported the Texas economy is $2.6 trillion. That makes it the eighth largest economy in the world. Larger than Italy, Canada, Russia. You're talking about a massive economy. This is actually in theory would be much bigger news than in El Salvador or even any almost other country in the world adding bitcoin to the balance sheet. These state budgets are absolutely massive. So this would be huge, huge, huge news. And I think it's just a part of the process of getting to what Matt was talking about before. These sort of pillars of demand, right. The institutions of course, with the ETFs, but then talked about companies adding it to the balance sheet. Well, if we have states and countries adding it to their holdings on the balance sheet, it's incredible. I mean Matt, we're sitting here talking about this, talking about Pennsylvania or Texas. If the United States does follow through with a strategic bitcoin reserve, which people are saying could even happen with executive order and we talk about this a lot, but like, this is the United States of America. Every, I feel like every country in the world is going to be put on notice that they have to have it on their balance sheet.
- [35:38]
Matt Hougan
Yeah, if, if we, if we actively.
- [35:42]
Carlo
Buy bitcoin, I think there's a difference between just converting the Silk Road holdings into a long term position and adding bitcoin. If we get something like Lummis's Bitcoin act, which calls on us to acquire a million bitcoin, then the race is on. And bitcoin's at a million dollars in short order. Yeah, you would have to see every country would have to, from a game theoretic perspective, stake their claim before it's too late. So part of this recent rally, I think has been the market slightly rerating the possibility that that will happen. This is an idea that bubbled up and it hasn't gone away. It keeps coming back important people keep talking about it. I think there's a non zero chance that it happens. And if it does, I think it gets to the end game pretty quickly. I really think the rally you see in bitcoin, if that happens, would be hard to imagine.
- [36:40]
Scott Melker
That's scarce asset. I totally agree. Grant, glad to have you here. If you're actually available, obviously you've been close friends with your brother for a long time. I think it's been fun to watch the process of many people being orange pilled, obviously, like yourself. Right. And we always talk here about kind of strong opinions loosely held and that the smartest people on the planet are the ones who actually do the work. You tweet about this all the time, how much research and due diligence you do before you get into anything. Who do the work tend to find their ways to bitcoin and never go back. And we've seen that, you know, with many, many billionaires over the years. Well, you seem to have come in wholesale at this point as a believer now, you know, I follow you closely and you've launched even this real estate and bitcoin bitcoin fund, which I think is exceptionally novel. I would love to actually hear more about that and why now. You know, at $100,000 Bitcoin, you're very much sold and, and launching things like that.
- [37:39]
Michael Saylor
Yeah, thank you so much. Yeah, we're super excited about what we're doing. And as you said, I've been seven years, I've been buying real estate here in Florida for very aggressively, by the way, because I hate the US dollar. If you've ever followed anything I've said. I've been for seven years talking about cash is trash. Why save money? It's impossible to do it. So we've been converting, I have four or five businesses that make a lot of cash and then we've been converting that cash into real estate. And as you all know, real estate's very heavy. It's slow, it's illiquid. The last, in the last. This year, just this year, we bought everything with cash because the debt market hadn't cooperated with us, which means we don't have the leverage that we've had in the past. We know we'll get it later but after meeting with Saylor, Mr. Saylor Three weeks ago, I'm actually on his, on, on, on my way to his house right now to show him something that I'm doing. We, we launched an asset, we found an asset that we could buy 15% below market. It's brand new institutional quality, already occupied. Cash flow one will that total bitcoin goes with this Thursday. I mean this is happening, right? So I'm funding this and then we offer it up to, to, I'll backfill it to my audience that already invest with me. I got 18000 investors that aren't bitcoin people. They're real estate people that want cash flow and depreciation and stability and you know, conservative 8 to 15% returns. We're going to add the bitcoin and then every year out of the cash flow, out of the noi of the property. Sorry guys. Out of the, the real estate's free cash flow will purchase will dollar cost average each month and you know, we'll take a deal that's $87 million and it should be in the first five years. I mean like I'm not, not even hitting some of the optimistic numbers you guys are talking about. We're talking about a 4 or 5x on a real estate deal that has no debt. So in a year or two I can still go get the debt, return it to the investors, own the bitcoin for Nothing, virtually for zero and be paid 4 or 5% on the Bitcoin that the real estate is buying on a monthly basis. So I'm not going to do one of these. I'm probably going to come to the market. I mean we're, we, we showed one to our, our little audience and we've already raised $90 million in about five days.
- [40:33]
Scott Melker
Incredible.
- [40:31]
Michael Saylor
90% of these people have no bitcoin exposure at all. Which means we're introducing a new audience to bitcoin, which I think is great for the community and for mass adoption. And I'm going to try to bring 12 of these to market by March of next year and create a fund around the 12 and they go public with the entire portfolio, which would be another big bank.
- [40:59]
Scott Melker
You move fast.
- [41:00]
Michael Saylor
If everything works, you move fast.
- [41:01]
Scott Melker
So listen, you said you. You met with.
- [41:04]
Michael Saylor
Well, I study slow though, dude. I study slow. You know, nobody's seen I've been buying Bitcoin since 14, but didn't tell anybody because I was, you know, we were promoting the real estate, so I didn't want to confuse my real estate investors. I was privately taking cash flow from my real estate and saying, okay, I'd rather have a bitcoin every month than have cash at some point. I don't. I can't buy any more groceries.
- [41:29]
Scott Melker
Yeah, totally agree. It's funny, I see we have Eric Weiss in the audience, the man who orange pilled Saylor. And I've. I think actually I might have introduced your. Your brother to them at one point at the conference. But it's amazing how many people have the story like yours who say, hey, I met with Saylor three weeks ago and now I'm all in. Eric and I had a story where the ex president of Argentina, Macri. The bitcoin conference a few years ago. A friend of mine said, hey, I want to introduce this guy to Saylor. Can you make it happen? I called Eric and Eric. Eric's on stage. Eric, what, like an hour after I asked you to sit the Argentinian president down with Sailor? You had him like at your. At his house. And Macri didn't speak for two hours and then left. And it was like he had met the. Like had met Jesus in person. Right? I mean, these meetings are coming pretty common.
- [42:22]
Grant
I have. I have to give Grant some credit here. Michael and I have met with a lot of people over the years, but no one. I don't think I've seen anyone move as decisively as Grant has. So huge props, buddy. You're kicking ass. I'm excited for this and shit. I might. I might be an investor.
- [42:45]
Michael Saylor
Dude, are you over there right now?
- [42:47]
Grant
I'm going to be over there at the time you get there. I'm just listening into this. Awesome.
- [42:51]
Michael Saylor
Yeah, I'm on my way right now.
- [42:52]
Grant
Space is first.
- [42:55]
Michael Saylor
Yeah. And Eric, thanks for your guidance, man. And the first meeting. It's funny that, you know, I don't know. I was there two hours. I bet I didn't say 20 words.
- [43:06]
Scott Melker
Yeah, I've been, I've been in that room. So Grant, did I ask you and Eric, you're always present for these things. Like you said, you've been buying quietly since 2014, so it's not like you needed some great light bulb moments. But, but in those conversations when he's breaking it all down for you, what, what's the most sort of decisive message that really gives people. You think that aha moment or tips the scales for you, I guess, specifically.
- [43:31]
Michael Saylor
Well, well, he's, you see, when we left that meeting, I, I have these five companies and they're all cash. They're, they're cash positive every year and they have been for 25 years. I mean, they're very, they're, they're great companies. Right? I'm not talking about the real estate right now. And he said to me in that meeting, he's like, look, you need to go public. And then you need to basically, I don't understand securitized bonds. I wouldn't know where to start. Like, I don't even think I could spell those two words together right. So I don't know where to start. I don't know how to go public fast enough to, to, to launch. And you know, frankly, speed is the speed at which somebody can move at something to me determines how much power and influence and success they have without being reckless. I've already studied for seven years. So once, you know, once you have conviction, then you move. So I can't go public fast enough because the, the, the, the securities won't allow me. You know, they're going to put me through a fucking grinder. So we figured out how to do this by taking the real estate that we already own and, or have under contract. And basically, rather than using the debt markets, which are nasty anyway, we'll just do it with the real estate deal. Like, if I do this right, I could literally be the largest REIT in the country. I could, I could dwarf equity residential that's been in business for 40 years, that, that, you know, pays out 3% dividends. I could be bigger than them in, in a year because they'll take forever to get on this.
- [45:11]
Scott Melker
How dependent is that on the price? And you know, what's the math on where price needs to be for something like that to happen?
- [45:17]
Michael Saylor
I don't think the price of the Bitcoin has anything to do with it. It's the real estate that stands underneath it because there's no going to zero in my scenario because you're not, you're not going through the real estate. The bitcoin go to zero. I still have the real estate, I still have the cash flow, I still have the tax depreciation, still have rent growth. I'm basically combining an old world asset that's proven for 2000 years with this new world asset that's going to replace all the old world assets. So I can't do this with gold or silver and I'm not public, so I can't do it with a stock. So I'm going to scale it and then we'll go public. I'll prove it out, then go public. Imagine having a billion dollars worth of real estate with no debt and another $250 million worth of Bitcoin paid for by the real estate. And now I go sit down with Howard the commerce secretary and say, hey, I want to create a mortgage product out of this over at Canton Fitzgerald. I want to create a mortgage product out of these properties. The best time to get a mortgage is when you don't need one. The best time to get debt is when you don't need it. Right. And if I, if everything's paid for that, they'll look at that real estate and the bitcoin as one entity, not as separate one. So I'm not having to put bitcoin on margin. I could literally get long term debt. Is our hope in the future that we get long term debt on the, the property and the bitcoin combined. Worst case is Trump hammers the Fed, interest rates go back to zero. We have a black swan event, we're going to go to zero again. And if that happens, then I just go grab long term debt from, from Fannie and Freddie against the real.
- [47:06]
Scott Melker
We generally have any concerns about the real estate market at the moment?
- [47:11]
Louis
No.
- [47:11]
Michael Saylor
We're in correction in the I buy, I'm buying stuff 15 under market right now. So we have to buy under replacement costs for this to work. I'm buying a deal that should have sold for 88 million for $72 million right now. We just did $400 million worth of deals. They should have sold for almost 700. These aren't single family homes. These are large apartment complexes being bought from institutions that are having to liquidate to balance their balance sheets.
- [47:41]
Scott Melker
It's interesting, Eric, you're probably with him, but Saylor was on, I think it was CNBC yesterday and she asked him the stupid Ponzi scheme question and he gave the brilliant answer comparing it to Manhattan real estate. Right. And said that's how it's an economy, it's not a Ponzi scheme. This is how things grow. You take debt on something that appreciates to build more things and that's how New York City has become larger. Eric, he's been saying that forever. Literally. On my first podcast with Michael, I think in 2020, he made the Bitcoin is digital real estate. It's New York real estate. You never sell it sort of comparison maybe for the first time. I mean, is that the framing Grant that you have, Eric, that you have still? I mean that sort of, you know, we hear digital gold. I like digital real estate actually better.
- [48:29]
Grant
So I think what Grant did such an exceptional job of is kind of what we all try to do, which is once you understand that bitcoin is good and you want to way to, you know, get more of it, for lack of a better way of saying it, the thing that you know best is your own personal life or your business. And so everybody's got unique circumstances. If you're in sailor circumstance and you have microstrategy and you have a public entity, yeah, that's great. You can issue securities and tap the public markets in a variety of ways. If you're in Grant situation and you have unbelievable kick ass businesses that print cash and you understand your businesses inside out, you can find novel ways in Grant's case very quickly to incorporate bitcoin into that. That if you're an individual, you know your life and your financial balance sheet better than anyone and you can find ways to optimize your life and your balance sheet with bitcoin. And that's, that's kind of the beauty of kind of sailors insights is he gives you lots of different ways that you might consider incorporating and plugging into the bitcoin network, as he says. But I haven't seen anyone do it as quickly as Grant's done it. So props to Grant. It's. But it, the takeaway is, you know, we all, we don't all have businesses like Grant, unfortunately. Unfortunately. But we all have something in life and some way to plug in and apply it. And it's worth some introspection to see how bitcoin can boost you like it's going to boost the cardone real estate empire and microstrategy, et cetera.
- [50:00]
Scott Melker
Eric, you weren't here for the sort of beginning conversation. I don't think maybe you were listening. We were talking to Muneeb, who's still here, sort of about the, not the end game, but the future of bitcoin. Obviously being a Financialized asset with of, you know, yield and borrowing and lending and all of those things. I mean, what do you think the time, I'm assuming you agree with that, but what do you think the timeline for that is with this sort of mass acceleration we're seeing?
- [50:25]
Grant
I think that's all predicated on SAB121 going away. And I would expect that, you know, if Paul Atkins confirmed, as, you know, chairman of the sec, my guess is that goes away very quickly. Certainly I would guess in the first quarter that he's there and that opens the floodgates and then it becomes a matter of how quickly the banks can get their custody solutions to an institutional grade level where they're comfortable custodying digital assets. And I think at that point we will see massive acceleration in lending, borrowing, getting interest on your bitcoin and that will really boost the price. In dollar terms of bitcoin, do you.
- [51:13]
Scott Melker
Think structurally it'll look like loans on other assets, real estate, boats, whatever it is, or do you think that it's going to be more aggressive because it's bitcoin? In the early innings, obviously in C5, which was a disaster, we saw these really high loan to value ratios where you had to deposit a hell of a lot of bitcoin to get anything meaningful back. Do you think it'll be like that or you think it'll be normal loans on any other asset?
- [51:38]
Grant
I think it's going to be as ubiquitous as dollar based loans on everything that banks can think of. They can be pretty creative when it comes to finding ways to make money. And I think that's one thing that Wall street is really good at is squeezing a lot of juice out of those oranges. So I think we'll see some very creative things. We'll start out pretty plain vanilla with rates that you know, and loan to value rates that are a little bit offensive due to the volatility of bitcoin. But in time I think we're going to see, you know, banks develop a better understanding, more comfort, comfort with the asset and more traditional financing opportunities.
- [52:20]
Muneeb Ali
Muneep I think I'm enjoying the conversation here about different types of companies putting bitcoin on their balance sheet. So I think connecting it back to the chat earlier about Bitcoin L2s and potential yield people can get in decentralized ways. I think just like we're tracking how much bitcoin is on the balance sheet of Microstrategy or how much Bitcoin Tesla has and other companies have, I think it's Very interesting to also track how much bitcoin is ending up on these different L2s. If you look at what Coinbase did, I think they have maybe like 20,000 BTC on base. Now you look at some of the other older Bitcoin L2s, like lightning. I don't know the recent numbers but it used to be like 4,000 BTC blockstreams. Liquid Network has like 3,4000. And I think with Sachs SBDC going live as a decentralized version with a pretty large project and a large sort of community of developers behind it, we're going to see these numbers going up. And I think one of my OG bitcoiner Fran was joking that these are rookie numbers, right. It shouldn't be in thousands of btc, it should be like hundreds, hundreds of thousands of bitcoin that's actually being deployed in these L2s. And as I said, they're going to become like a black hole, like where the yield aspect is actually going to just lock in a bunch of liquidity and people who don't want to sell the OGs who would be able to just take decentralized small loans against their bitcoin. And I think that's going to have a very interesting sort of impact on the supply demand of bitcoin.
- [53:52]
Scott Melker
Agree. And I want to circle back quickly on something. Grant, you can jump in if you want.
- [53:56]
Michael Saylor
Yeah, I was just going to say on the banks. I, I think the banks are a long way from, from being able to play in the space just because they're unrealized. Losses on their books are probably two, you know, exceeding 2008 levels. I mean to get a loan from a bank today you need, you're going to need twice the money on your account. Like they're just lending you their money, your money. Even if you're, you're, you're a great, you're a great customer of the bank with big cash reserves. I mean, you know, they're not, you're not getting a deal. So like if they can't lend money in this environment with old currency that they've been operating with for a thousand years, how long you think it's going to take for them to adopt, you know, this, this new, this new entity. I just think there's a big drag time also, also just getting into any the like me trying to buy right now and set up accounts on, on whatever mechanism I'm trying to hold my, my bitcoin in, dude, it's, it's still very slow. So you got this huge Supply issue. You got mass adoption taking place with countries, governments, companies looking at it, individuals, wealthy individuals, guys that are going to, you know, figure out how to, how to put some bang on my real estate. I'm basically real estate powered by bitcoin like Michael says. And then, and then I got to go get an account which could add a week, two weeks, three weeks. Like it's still not the, the wheels aren't greased. So I think there's a lot of time for, for people to get into this game and figure out how to maximize.
- [55:39]
Scott Melker
Yeah, I mean, I agree. I think like the banking relationships are still contentious. Operation choke point 2.0 is still a thing and hasn't ended and will take time to unwind. Right. It's not like every bank is going to be able to turn on the spigot to your point, the second that Trump becomes president or that we have some changes at the top of the regulators. It was interesting though, Eric. You talk about SAB121 for those who don't know, obviously if you've been listening to the show, it basically was a SEC memo that said that prevented big banks from being able to custody bitcoin without also having enough cash on the other side of the balance sheet to account for it. So obviously you can't custody an asset if you have to raise the cash on the other side of the balance sheet. That would be insane. But what happened when they did that, interestingly was before the ETF is that all of the custody ended up with Coinbase and to a lesser degree Gemini Fidelity custody themselves for the ETFs because the banks at that point weren't, weren't basically capable of doing it. And they went nuts because the BNY Melanie's in the State streets and stuff. They obviously wanted to be able to be the custodians for BlackRock and the other ETF issuers and couldn't. SAB121 then was put up Congress, Senate passed both and was vetoed by Biden. So for anyone who missed that story, that's what happened. Of course then Bny Melling later got an exemption. But Eric, I think what you're saying is when it's not on the books anymore and you know, Goldman, State Street, BNY Mellon and all of them can legally, with no question marks, custody Bitcoin. That's going to be sort of the explosion here. I mean, even David Solomon last week, the CEO of Goldman said we're going to do all this, we just need regulatory clarity. So they're Just waiting.
- [57:23]
Grant
That's right. I also think it's a big part of why Trump became so favorable on bitcoin and crypto. Basically, what happened is after the SEC Gensler put that out and it went to Congress, the Biden administration said if it made it to their desk, you know, that he would veto it. And they. I think they expected the Democrats to kind of fall in line with the party, and it wasn't ever going to get to their desk. They were just kind of signaling that, you know, SAB121 was here to stay. And they were. I think the Biden administration, and frankly, everybody was very surprised that even mainstream Democrats. Democrats voted in favor of banks being able to custody crypto and digital assets and bitcoin, and it did make it to Biden's desk, and he did have to veto it. And so I think when Trump saw that, he said, hey, there's 50 million votes here to be pro crypto. There are no votes to be anti crypto. And that's when he came out swinging so hard. And some people believe that that's also why the Ethereum ETF got approved so quickly, because the Biden administration kind of freaked out that, seized the moment, got all this crypto support, and they needed to do something to try to get crypto people back on their side. And the Ethereum ETFs, which were seemingly likely not to get approved, got approved very, very quickly.
- [58:48]
Scott Melker
That was the. I mean, of all the things that have happened this year, living here in the Stranger Things upside down, that was the craziest, because the Ethereum ETFs were dead in the water.
- [58:59]
Grant
I agree.
- [59:00]
Scott Melker
Down the road and in. And it took all of 18 hours for that to entirely flip. And it was right, as you said, when Trump became pro crypto, bitcoin, crypto, and then sort of more crypto, it was such a reaction, but one that didn't, I don't think, as we can see, helped very much.
- [59:18]
Grant
Yeah, I got a hustle to meet Grant and Mike. Thanks. Thanks for this forum, man. It's great spaces and chat with y'all soon.
- [59:24]
Scott Melker
Always welcome. Yeah, it's. It's about time to. To wrap up. Anyways, Grant, it was great to have you pop in. I'm gonna.
- [59:31]
Michael Saylor
Yeah. Hey, thanks a lot for giving me.
- [59:33]
Scott Melker
Going to harass you over and over again to come up and, you know, recap your meetings.
- [59:38]
Michael Saylor
100%, no problem. I'm a transparent guy, so I tell it like.
- [59:42]
Scott Melker
Like, I don't think there's another person on the planet. Who can say that more honestly than you, buddy and everybody else. Thank you so much. We'll be back, obviously, tomorrow, 10:15am Eastern Standard Time. Also, you know, I always say, but follow our amazing guests who we have on stage. You know, we at 5,000 people on any given day or more listening, and we're very. We curate very carefully who we allow up here to. To share their views because we want to make sure that it's only the smartest, most knowledgeable people who are building in the space and can. Can share really accurate views on what's happening with the market. So please follow them when you. When you leave the spaces, of course. And also, you know, since we have Maneb here, guys, check out sbtc, everything that's happening on Stacks. I've been a huge fan for a long time. Account. Account. Maneb is a friend and it's. It's a lot of fun to finally see all the things you've been talking about for so many years coming to fruition, and I think it's only gonna only get improved. All right, everybody, we'll see you tomorrow, 10:15am Eastern Standard Time. Thanks. Have a great.