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- [00:00]
Carlo
Morning everybody.
- [00:01]
Scott
Welcome to Crypto Town all every other day here on X at 10:15am Eastern Standard Time. There's quite a few topics we can talk about. We tend to venture down the path of macro town hall or smelting town hall when we should be talking about crypto. So I don't really want to like bloviate on the Fed and what's going to happen with Jerome Powell because I'm sick of talking about those guys. We do have someone I'm not sick of talking about though, which is Paul Tudor Jones who went on a podcast and said that bitcoin beats gold, that it's the best inflation hedge. And he was very emphatic about it, pointed out quite a few reasons why he believes that the stock market is once again near a top. Now he's been saying that for quite a while, but mostly that US equity market cap is 252% of GDP right now.compeak was 270. Previous crashes were far far less. So getting into dangerous territory here and do you really want to buy stocks that are largely overvalued? He thinks that it would be very hard to make money in stocks over the next decade and that bitcoin is the most obvious answer. So I guess we can start there. What do you guys think of Paul Tudor Jones comments? And then we can talk about Defi United which I'm having trouble parsing. Could use your guys help. So Paul Tudor Jones, bitcoin beats gold. What do you guys think?
- [01:25]
King
Hey, morning guys. Morning. Get off on that one. King here from Treasury, a European bitcoin treasury company. So I was at a Galaxy event hosted by Mike Novogratz at his house in New Orleans last November and Paul Tudor Jones came and kindly spoke to the group giving his whole history and how he got into bitcoin and how he approached everything. And one thing that is really I think very important about him, he's obviously one of the most recognized and important hedge fund managers of all times, frankly, especially in the macro space. And he was really the first to publicly adopt bitcoin and push it and even write a paper about it. And I think it takes a lot of credit for that because you know how hedge fund guys are. I used to be one myself. You kind of follow each other. You don't want to be too contrarian, certainly publicly. And he was really the first one to do that. And at this event he did sort of reiterate that same thesis. And he started off by saying how in 2000 y2k just sort of happened. It hadn't happened, actually. Right. It was January 1, 2000. The world looks very good, he said. He said it never looked so Good. And now 26 years, 25 years later, he felt that actually it looked a lot worse and that even for that reason, bitcoin had become more important. You know, the arguments behind that. So I think, if anything, it's only gotten stronger.
- [02:41]
Scott
Yeah, I mean, he's been saying this effectively since 2020. Right. So I don't think that it's necessarily a new comment, but having that same conviction in 2020 markets and data look the way they do, I think is still a signal.
- [02:57]
King
Yeah, absolutely.
- [02:59]
Matt
Oh, go ahead, finish your thought.
- [03:00]
Scott
Sorry, Ken, you can finish your thought.
- [03:02]
King
Yeah, sorry. I was going to respond to that. So, yeah, I think. Absolutely. Because obviously we've seen this massive resurgence of gold last year. We've seen gold overtake and also to some extent take over the volatile assets sort of feature of Bitcoin for a little while where leveraged traders globally started using gold for this exposure. And we also saw that sort of leveraging unwound earlier this year. So I think it's a very important comment in that context where people earlier on were saying, hey, look at that. See, gold's outperforming bitcoin, but people sort of forget the sort of core features of sort of value. I think it's the last thing I want to say on that.
- [03:41]
Scott
Yeah, I mean, it's not. Comparing bitcoin and gold price misses the entire point. Right. It's the properties that matter and not the price action. And that's where so many people get confused when they hear digital gold. They think it's supposed to track it in price, which is, to me, it's just nonsensical. Matt, go ahead.
- [03:57]
Matt
Yeah, I think it matters a lot because it's no longer really just a Wall street problem.
- [04:01]
Joe
Right.
- [04:01]
Matt
When stock prices are really this deeply tied to, like, household wealth, or household wealth, I guess you could call it retirement accounts, for example, or even tax revenue and corporate confidence. A major market drop doesn't really stay neatly contained on a trading desk. It kind of leaks into the real economy, from what I've seen. Jones was actually. This was a really interesting point, Scott. He warned that 35% market decline could hit capital gains tax revenue, widening the federal deficit and pressure of the bond market. So that's kind of a nightmare loop. As stocks fall, tax receipts weaken, the deficit looks worse, bonds get hit, and investors are forced to sell more than what they own. And he also cited some of the big IPOs. He said a flood of new share supply from companies expecting to go public combined with insider lockup expirations could create pressure similar to the setup before the dot com bust. He pointed to companies like SpaceX, Chime and Stripe. So it was very, very interesting interview and article. So, yeah, good stuff.
- [04:57]
Scott
Yeah, he's smart guy. Listen, the thing is that, you know, doomers are wrong like 99% of the time and then they're right 1% and people don't really listen. But I don't really view him as a doomer. I think he's got some extreme logic and data behind him. And yeah, I mean, where's the money for multi trillion trillions of dollars five years going to come from selling other stocks? Right. I mean, that's it. So I think that there's a lot of pressure as well there. Anyone else on this topic before we move on? Yeah, Carlo, go ahead.
- [05:31]
Carlo
Good morning, Scott.
- [05:32]
Scott
Carlo.
- [05:34]
Carlo
Yeah, I think he's talking about sound money and he's talking about the fact that the reality is that the dollar is not going to get better, it's only going to get worse as we continue to print more of it. And as long as we don't see bitcoin commercials on Fox News, I think it's probably the better option than gold. So I think he's very wise to see where the puck is going because everything with respect to how we move in custody money is going digital and gold is the exact opposite of that. And I think it's just going to become more and more marginalized. And yeah, he's probably right about the stock market. It does have a tendency to continue to just go up, up, up. So I would add that as a counterpoint that every time we've ever faded that this is the top. Yeah, we've had corrections. But if you zoom out, just like on the bitcoin chart, these risk assets, especially the tech stocks and so forth, just seem to continue to push upward. And they're cyclical. But I think overall the trend is that equities go up.
- [06:39]
Scott
David, hey.
- [06:41]
David
Yeah, call Tudor Jones. Been around a long time. Made a lot of money, made some really smart calls. I listened to him back in 2021 when he wrote his piece talking about bitcoin basically being his favorite investment.
- [06:55]
Scott
The fastest horse. That was the one that set the world on fire. Yeah.
- [06:59]
David
Yep. That pony had rockets on it. And so when he comes out and makes statements about saying that this is sort of reminiscent of the bubble background 1999, 2000. Yeah, I gotta pay attention to him. You know, the one transaction I probably worry about most is SpaceX when it comes to market to the extent that this thing is going to be rushed into the indices before it's really seasoned. And you know, yeah, Elon Musk, he's a very controversial character. He made people a lot of money, maybe made himself a lot of money. But I was at a meeting yesterday in Boston with a lot of people who'd been associated with money management firms up here for a long time. And yeah, people are looking at the second half of 2026 is possibly having the air taken out of the room just by the size of some of these transactions. So, you know, equities are an issue. But good to see Paul Tudor Jones come out and, you know, put his money back on Bitcoin and we'll see if we can get things moving from here.
- [08:13]
William
Yeah, I think this could be the turning over the tide towards more positive sentiment. And we need more than just Paul Tudor Jones to say this. I think the positive signals are coming back and I wouldn't be surprised to see Bitcoin at 2 to 300,000 by the end of this year. I think, as you know, it tends to move in violent moves and it won't be any different. It's been sitting at this current level for too long and it's going to move with it, some of the top other currencies with it. So I'm very, very positive and very optimistic for the rest of the year.
- [09:03]
Scott
Should we talk about Defi United? I know you guys have got to have some thoughts on this. For those obviously, I guess, who don't know the context, we had the Kelp DAO hack which then led to a problem with toxic debt across all of Defi, which led to an issue specifically on aave, which is obviously considered the blue chip, safest defi of I think roughly 200 million, I don't want to quote it wrong, in toxic debt. And we have sort of a J.P. morgan early 1900s situation where it gets everybody in a room and asks for a private bailout. So we have, I guess, a mix of different companies either sort of donating, I mean, Stanny himself, I think millions of dollars or offering loans, but basically plugging up this whole. I think it's $300 million already has been pledged, which is a bit misleading because some of that is actually coins, I think, that were on Arbitrum from the hack itself, that were frozen, being contributed. So those obviously are not donations, those are people's tokens, actually. You could argue that should go back to those people and not to this rescue fund. And then you even have Circle saying they're buying AAVE tokens and tagging Defi United. This reeks, I think on the surface of TARP, a government bailout like 2008. But I think that's sort of a lazy comparison because it's voluntary and it's not forced and it's not the government. Right. But really kind of interesting to see sort of a, from the surface of Defi bailout. Carlos.
- [10:39]
Carlo
The first thing that pops in my mind is the irony of the, the, the headline Chancellor on brink when it comes to crypto. So it's interesting that there's a unified TARP esque bailout of crypto and defi. Look, I don't know, man. I think it exposes a bigger problem and obviously Defi is really on the ropes right now. People are really starting to question whether it's worth trying to farm for 4% in DeFi with all the risks that come, especially with the way AI is accelerating exploits and finding weaknesses in Defi. So I think there's probably going to be more bleeding in Defi as we continue to see more of the contagion effect of this start to ripple out. I think it just reinforces the narrative that bitcoin is probably the safer place to be. And it also seems to make a stronger case for the institutional derivatives of bitcoin like strc. And I've seen a lot of people in the timeline comment about that as well, that I'd rather go into something like that and get a money market style return than risk my tokens in defi.
- [11:50]
Scott
And you're giving the thumbs up, you agree? But yeah, I do.
- [11:53]
Matt
I, I, I, I, I like Carlo. He's, he's one of the, one of the smartest guys. I, I suggest if you're not following him, you should. Flowers for you, amigo. But yeah, I, I echo, echo that sentiment. Exactly. I'm in the most volatile asset class that we play in, guys. I tend to play it uber conservatively. I look at it like a par 5 dog leg left. And so I'm going to lay up, I'm not going to try to hit the green, avoid the bunker and get wrecked. And I, I think that the stretch is way more appealing than what, what like Carlo's talking about trying to lock up. Define. I got to jump through hoops and, you know, maybe get hacked. Nah, don't worry about it. I'd rather take the 11% that sailor's going to give me sit back bitcoin and chill.
- [12:29]
Scott
Yeah. I'm going to try to lay up and hook it into the woods and then be stuck in the dog leg in the, in the trees personally. But go ahead, Joe.
- [12:38]
Joe
I mean, Scott, just depends if you can actually hit the three wood. 250, 275. If you can just. I mean, you're going for the green. You rather end up in the sand. Little pitch, you know, you're in.
- [12:47]
Scott
I'm going, Honestly, I'm going over the trees with some strange hybrid and it's like a 1 in 100 shot that I'm getting.
- [12:53]
Joe
No, just take it 78% smooth three wood. You're there real quick. I haven't looked at the price of bitcoin since Sunday when I went to bed and it was 79. And I want to guess what the price is.
- [13:05]
Scott
I, I don't even check anymore, to be honest. I've already done a morning show and I didn't check.
- [13:09]
Joe
I mean, I just, I feel like it's not over 80 because I don't see the euphoria. But I've blocked everything. So I, I'm going to guess. I mean, I want to say 82. Are we at 82? No.
- [13:21]
Scott
767.
- [13:22]
Joe
God damn it. We just can't win. We can't win. Back to the. Yeah. I mean, what's the precedent here with Defi United? You know, if the hack is $4 billion, are they. Are they putting up the money? You know, I think it was like in a sweet spot of where they thought it was achievable to backfill some of the money. But I just don't think it, you know, if the hack is bigger, you know, I don't think that they, they can backfill it.
- [13:52]
Scott
Right.
- [13:52]
Joe
They just don't have the money. So I don't know.
- [13:54]
Scott
I guess the question to that, Joe. Yeah, I agree. I totally agree with that, by the way. But like you have competitors basically stepping in to some degree, right? And the original sort of crypto ethos, for better or for worse, is like free market, let it die. Right. I mean, critical of tarp. You know, AIG should have failed and taken Goldman with it and them. Right.
- [14:15]
Joe
I think decentralized. I think the banks and everyone's seeing this. Like, they probably love that. They love it because they're like, oh, sweet. Like we're not going to lose our money as much or they're going to at least attempt to do the right, you know, do the right thing by some of their customers. But yes, you're absolutely right. Like, you know, too big to fail is probably the feeling that they're kind of getting. But at the same time, if you look at how many funds are stolen from the banks and the fraud and everything else, this is still such a drop in the bucket. And I think that they actually have to hit some sort of critical mass there where it's like Wells Fargo just shrugging off $5 billion fines and money being stolen. So it just kind of shows that it's still, the immaturity is there. They're trying to get there. They know the ret bid is just completely gone out of crypto. And so they needed to probably do something that makes more institutional hands feel better. Maybe they got way more, a lot more text messages from people that actually had a lot of bit of money in there and they said, you better do something. But it is nice to see people coming together. I mean, I know Scott, we've talked for a long time on this show about like, there's almost too many entrepreneurs right in the space and there's too much stuff going on and they need to combine powers to, to try and get a little bit more critical mass. So maybe, maybe we see some of that. So we'll see. But yeah, my big thing is like, you know, if it's 5 to 10 billion dollars of an hack or like, is Stani, like, is he, you know, going to take out a home equity loan on his homes to backfill this? Probably not.
- [15:49]
Carlo
Hey, maybe since Trump is considering bailing out Spirit, he can bail out DeFi.
- [15:55]
Scott
I think that Trump is more interested in extracting from Defi based on the last few weeks than bailing it out or, excuse me, Trump adjacent world Liberty Financial that no longer has his face on the website is potentially interested in extracting value. But yeah, I like the joke anyways, Carlo. It's a good one, William, go ahead.
- [16:16]
William
So the way I saw this, the analogy is that what Defi did is the equivalent of a FDIC insurance kind of a thing where, you know, what's backing this up? I see it as a positive capital
- [16:31]
Scott
from other, like that would be like pooled capital from other entities basically, right? Banks contribute into fdic.
- [16:37]
William
Yeah, well, yeah, I mean, in the, in the current world, it's the Fed that came in and rescued the banks a year and a half ago when they had an issue. So in this case, the industry itself did that. So that's a positive. I think it's a bit of a, of a of a good cushion. And of course, only AAVE could have pulled this off because they are such a big kahuna in the industry. Nobody cared when Three Arrows went belly up or some of the others that had issues. This is different. I mean, this is not just about the 4%. I mean, if you just see the 4% as the draw, it's not. It what AAVE is doing. You have to look at the V4, their new protocol, that's kind of quite innovative. It's really like Sani's vision is to open up liquidity, like a new liquidity pool that was not available to the traditional markets. So think of Defi as an alternative borrowing market, and he's backing himself into institutions. If this hiccup hadn't happened, we would have heard a lot more about integrations of V4 with institutional rails. He already started to talk about that in Cannes about four weeks ago. I was there, and Avi was like, everywhere. Every day he was on a panel, they had ads. If you know the Majestic hotel in Cannes, it's one of the top ones. As you enter the lobby, they had taken big billboards advertising as you go in to the driveway. So he was really. I mean, I really feel for him, like, coming off such a high at ECC in Cannes, just barely three to four weeks ago, and one week later, that thing happened. So right now, they are catching their breath, and I think Defy is getting stronger again. I want to use a cliche. What doesn't kill you makes you stronger. That is so much the case here. And, yeah, I mean, that's. That's what I wanted to say.
- [18:46]
Scott
Just I. I get it. I'm just not sure. Like, I think there's a lot more skepticism now on Defi. So I think it's. I think it's a good signal that there's support. But to Joe's point, if it was 5 billion, DeFi would be done right. So the size, I think, matters. And considering the attack vectors and AI and North Korea, it seems like this is a great conversation until the next one inevitably comes. I mean, these things happen. Everything. 2.7 days or something. I read. Some sort of Defi hack, mostly small. It's not a small problem. Interestingly, though, I guess we can also point to the fact that Bybit got hacked last year for what, 1.5 billion? And everybody did step in to help them. So I guess the contagions of 2022 people learned a lesson. King, go ahead. Yeah, I'd say.
- [19:33]
King
Only thing to add is obviously we're always talking about institutional adoption of Bitcoin and maybe Bitcoin sort of crypto broadly. But I think these kind of things don't really help because the whole point of DeFi, obviously is it's decentralized finance. It's supposed to work on code that is a theory behind it. And the fact that sort of the community got together on this bailout with an interesting parallel with TARP on one end, it's good. But I don't think it really helps the whole institutional adoption thesis because actually it's the opposite. Right. It's now become based on individuals actions as we always knew. So I think it's sort of this weird hybrid where certainly it's a good thing that is happening. On the other hand, it sort of goes a little against the whole concept of digital assets and decentralized finance.
- [20:18]
Scott
Yeah, I mean wouldn't you imagine if institutions are looking at this, they see the power of utilizing smart contracts a better way obviously for yield and lending, but won't want to do it in a decentralized manner. And this may actually ironically push them to use the technology to build centralized walled gardens to offer yield for their own customers and not be a part of the larger system where there's potential contagion. Like why doesn't Goldman Sachs just have a. Goldman Sachs like, you know, it's not DeFi, but centralized lending. Put it all together themselves and close it off. The most logical direction there. I don't.
- [20:57]
Joe
Do you guys.
- [20:58]
Scott
Joe, do you. Was. Am I right? Bybit? Was it like 1.5 billion? Didn't all the other exchanges come in and basically bail it out? I mean I have such a short memory.
- [21:05]
Joe
I think they extended the line of credit. I don't know if they even need. They didn't even need it though.
- [21:10]
Scott
Isn't some of this also lines of credit, by the way? So that's. I think the 300 million is sort of being conflated. Like I said, there's a huge chunk of that. Yeah, like I said, I think. Was the arbitrum frozen token part of this?
- [21:24]
Joe
Yeah, it's like 30,000.
- [21:25]
Scott
And then I think. Yeah, I think maybe mantle or something. One of them. I've got to reread it. So it says there's also.
- [21:33]
Joe
They're pending votes though too. I'm sure it'll go through because the people that are putting it through are going to vote it. Are going to vote it in. Yeah.
- [21:44]
Scott
I mean why did. So. So what's the angle do you think? Interestingly here I'M looking right now. So we. But Arbitrum DAO is 30,776, 765 ETH. That's just tokens that were frozen from this hack.
- [21:58]
King
Right.
- [21:59]
Scott
So consensus is up there. But you got Stani Joe Lubin sort of individually. But what I find, I guess I'm wondering the next sort of ancillary story. Circle Ventures is purchasing AAVE tokens because strong defi infrastructure does not build itself. AAVE is helping to shape the future of on chain finance, and we're backing that ecosystem and the entire community built around it. Defi United. So Circle is buying AAVE token. That's not really participating in Defi United with a loan or a donation to fill the hole, but they're actually buying the token to support. I mean, what does that say to you guys? I don't really have a great take on it, to be honest. I'm genuinely sentimental.
- [22:40]
Joe
That's just sentiment. That's just, hey, we're gonna backfill this so people don't dump. It's like, oh, there's like a buyer of last resort.
- [22:47]
Scott
I didn't even realize that Circle Ventures had a liquid fund like, to just buy tokens on the market. So I was 10, 8 years old when I found that out. Go ahead.
- [22:56]
Gary
Yeah. I think having been through this before, where you have an industry that's, you know, if one player has a problem, it just pulls the whole industry down. And all the players just decide, hey, it's better for all of us to support this player. So it doesn't, you know, I mean, imagine, look at Enron. Dude, when Enron went down, credit just got pulled from everywhere. You could have done a credit check with Exxon the day before. As soon as Enron started failing on credit, I mean, you were having to do credit checks every day, every week. So this is a way to just grease the skids and make sure everything doesn't dry up. But it's. It's. You can't keep doing it. I mean, we're having too many problems in this area. It's a fail. It's a failed industry, really, in my opinion,
- [23:47]
Scott
that's got to get somebody's hand up. I kind of agree with you.
- [23:53]
David
How do you really feel, Gary?
- [23:57]
Scott
No, I don't think it's failed. I think we just are the kings.
- [24:01]
Gary
I think it is failing because there hadn't been very much income other than the Monopoly players. But look, it should elicit a comment, but I think it's accurate and it'll. The Players that mutate and morph out of this and realize, hey, this isn't going to work. They'll. They'll create something good. But we clearly haven't found the sweet spot for the product here. I mean nobody can disagree with that, right? The sweet spot for a large addressable market for tokenization just hasn't shown up yet in a farm that people can get really liquid and trade a shitload of it.
- [24:39]
Scott
Yeah. I would argue, I would take that a step further. I tend to agree. I think that, well, bitcoin stands alone, right? So I think the product market fit is bitcoin digital gold narrative. That's been institutionalized. But on the other side, I would say that tokenization itself, stable coins and tokenization are the way that value will be moved in the future. But the problem is that that's less likely to be investable or captured by us or retailer.
- [25:08]
Joe
Scott.
- [25:08]
Matt
Right.
- [25:09]
Scott
They're going to take the technology and run with it in those walled gardens,
- [25:12]
Joe
you know, which there's already dark pools. You know, obviously it has to be exposed somewhere to the, to the markets. But you know, if you had a hundred million dollars in US dollars cash sitting in your checking account today, right. It's like you could go and, and you can. What are the fees to turn that into USDT, right. Then like put that into AAVE and earn 5%.
- [25:39]
Scott
Right.
- [25:39]
Joe
Or you know, USDC a little bit more, you're feeling a little safer maybe. But that now you're getting 4.2 or do you just call Goldman Sachs and get like 3.8% in like a CD or something like the, the spread there is just not worth it.
- [25:55]
Gary
But Joe, Joe, why would you do that when you, if you even know how to spell BTC, you would go into STRC and make 11 and a half.
- [26:03]
King
Sure.
- [26:03]
Gary
Again every two weeks get paid better off.
- [26:07]
Joe
I'm saying this, there's a million better options.
- [26:11]
Gary
But I think that's what's happening exactly. Like why would I take ave or whatever yield when I can get 11 and a half, dude?
- [26:18]
Scott
Like I mean a yield, wasn't it like. Yeah, didn't they point like I think like you were saying William, that it was. He was kind of being praised like the. I don't remember what it's called but basically there'd been net like there'd been no loss in. In defi to. To whatever degree and A was being praised. They were only paying like 2,3%. It was viewed as so, so risk free. Right. I mean the rate in defi was Less than buying a Treasury because it was viewed as so solid before this happened. Correct me if I'm wrong, but I believe that that's the case. Like, why, I mean, why would anybody take that right now? Or now you need to see DeFi at 10 to 12% to reflect the new risk profile. Maybe that makes more sense, but Gary. I agree. I mean, I agree, like, you know, this is a good thing for Saylor. He can just look around and say, this is the only yield game in town if you're going to touch, quote unquote, crypto or bitcoin.
- [27:12]
Matt
Matt Hogan said something the other day that about Stretch. It kind of raised my eyebrow a little bit, and you guys are super smarter than me, so I'd love to get your thoughts on it. But he said, basically, I'll paraphrase, the dividend model at Stretch appears heavily dependent on fresh capital and bitcoin going up. So if either dries up, that 11% yield suddenly looks a lot less like income and maybe more like risk wearing a suit. Now, am I looking at that wrong or is that really. Is that. Is there some concern?
- [27:37]
Scott
I think I. I think it's accurate, but doesn't reflect the Runway. I think you're looking at.
- [27:45]
Gary
Look, it's preferred, man. It's preferred over msc.
- [27:49]
Matt
Yeah, it is preferred. About that.
- [27:52]
Gary
Like you, like, let's be clear, okay? Everybody says treasury is pure cash and has no risk. That is utter bullshit. This is preferred above the stack on MSTR, I get 75% loan to value. On my. On MSTR, I went to my bank and I said, hey, I want you to move my treasury position, or at least half of it, into STR and into STRC. You're giving me 3% on the bonds. I get 11 and a half on the STRC. They did it the next day. Dude, Risk management had never seen that trade. I'll bet you they're pumping all their. Any of their clients. They're like, hey, let's get you out of Treasuries and move into strc. It is a preferred capital stack above mstr. MSTR would fail and you're still going
- [28:41]
Scott
to get paid out.
- [28:42]
Gary
It's ridiculous not to look at this trade. And as a cash sweep, Matt, it's an awesome money market.
- [28:49]
Matt
And I heard that they have like 42 years worth of, like, I do think that's, to Scott's point. They have like 42 years that they really could pay this back. They have enough. But I was just, just asking. That's why I appreciate your Insight, Gary, you're super smart.
- [29:00]
King
Well, one thing to add, maybe there's one thing that's keeping in check is that obviously Saylor is really keeping the leverage ratio very. So they have about called 50 billion of Bitcoin and SDRC is currently about 8 or 9. And I don't think he's going to go a lot higher, actually, unless he builds more equity. Right. That's why he keeps the ATM and the SDRC issuance sort of in check, because he'll never want to be, I think, over 20% in credit instruments versus the equity. So that also keeps the risk in check.
- [29:29]
Scott
Yeah, I mean, he has, I guess, to that end, I don't know what the number is, but he's got to have hundreds of thousands of unencumbered bitcoin. Right. I've heard as low as 40,000. But I mean, literally the worst case scenario, which would be a crisis of confidence, of course, is that he would sell a little bitcoin that's not tied to anything.
- [29:48]
King
To be very clear, STRC is an unsecured product, so there's actually no direct claim on the bitcoin. He'll have called a. If he's ever running out of cash, he doesn't have to sell bitcoin. It'd be terrible for his business. Right. He can sort of close the coupon, the coupons will start accumulating. So we'll start accumulating up, but have to actually pay the cash. So he's never forced to sell bitcoin. But if he ever gets that position, it will clearly also make him a terrible credit issuer going forward. So hopefully we'll never get to that point. But there may be theoretically the point where he has to decide, well, I can either just cut off the coupon for now, it starts accumulating until bitcoin recovers, or I sell bitcoin to pay for it.
- [30:33]
Scott
Right. Anyone else had any other thoughts here? I'm just like, yeah, I'm very torn on this Defi United kind of going back to the initial. Obviously, I want people to be made whole. We've all suffered through the contagions of the past, but the precedent and the mechanics leave me very fearful for the future of Defi.
- [30:50]
Joe
It's just tough to get. Keep getting kicked while you're down, Scott.
- [30:55]
Carlo
Exactly.
- [30:56]
Joe
Like we're down 90% on anything else that we've bought that's not bitcoin.
- [31:02]
Scott
Right.
- [31:03]
Joe
Like some people down, more things have been lost. Like retails just got barely, like almost no heartbeat left and Then the little bit of eth, maybe that you, you know, that, that someone had trying to earn a little bit of yield, you know, hoping to get a little bit more capital for the next run. You know, they want 4 to 5% more of their principal right to go run because they haven't been able to put anything in. And then it's just like that's gone. And that's happened on multiple chains and it's like, this is a bigger one. But that's happened segments all over the place. And so it's like when you're just ripping the heart out, it's like, it's how much more can. Can these people take before people are like actually saying, like, I'm fully done with this and I'm moving on to the next thing. And a lot of people have. And that's why a lot of people are bitcoin only now. And I think that's. That number is going to grow. That number is going to continue to grow. And a lot of these people also, it's like they're, you know, they got their boomer dad just laughing at them because they're like, oh, I just, I took, I've been taking all these AI companies for these like, like these, you know, 10x rides. Meanwhile, you're sitting there, you know, in Polygon because Poly Market is there and they got the polys in the name and it's like, oh, my God, how can this coin the largest thing ever? How could this thing not 10x? It doesn't matter what's going on? Nope, down 90%. So I think that's just the scenario right now and we'll see if we get out of it.
- [32:28]
Gary
Well, can I, can I just add to that? I don't think we do get out of it, Joe. And, and the reason is like, I saw Mahlers, a couple of Mahlers responses about what they're doing at that company and I'm like, wow, none of these STRs, whatever you call them, none of them are going to make it. Except Saylor. I mean, maybe BM and R, I'm not even sure about them, but if they don't make it, the token market is like, it's all toast. Now, I don't see, hate to be like Mr. Negative here, but I think we go for another round down bitcoin because there's too much money that's just dying to get the. Out of XXI and NACA and all these, you know, like, none of these companies have done, man, we're gonna buy 50,000 Bitcoin. Okay, well, when you gonna start? So it's, you know, you just have one winner. I mean, am I being really, really. Even the miners. Look, the miners are getting kicked in the face today. Or even.
- [33:38]
Scott
They're not even miners anymore anyways, like,
- [33:41]
Gary
you see what I'm saying? It just seems like the whole industry's failing outside of bitcoins holding really well, I think in a geopolitical shitstorm.
- [33:51]
Joe
Yeah, you gotta, you gotta operate, right? Like, you know, I don't know jack, you know, but I, you know, looking at that company, it's like, hey, a couple bitcoin conference announcements with some other people are getting people hyped or kind of like, you know, attacking other people and on the guise of, oh, bitcoin, you know, it's like you're just another bitcoiner. Right? Like that's got a little bit of a microphone. Like, you operate. You have to operate right. And it's just competing with Saylor on that level. Like you're just going to get destroyed and you just can't shout your way out of that. You actually have to make connections. You have to create the trust. I just don't see people handing hundreds of millions of dollars, you know, over without the main operator there.
- [34:38]
Scott
Right.
- [34:39]
Joe
You can have a couple of nice advisors on your website. That's just people need to, they're talking to you at the end of the day, the CEO of the company and you have to operate. And I just don't see it outside of, you know, Saylor.
- [34:52]
King
Yeah, maybe for myself, I'm also founder of a Treasury company in Europe. And maybe not entirely objective, but I think, look, there's about 180 of these companies globally, which is way too much. So I totally agree. There's going to be a much smaller number, much, much smaller number surviving. But there are examples of real winners, aside from Sailor in this, for instance, Metaplan in Japan, which RIA has shown that the model, the treasury model works in different markets and not just by one company. And that's actually the reason why I started mine in Europe, because we don't have one in Europe on the primary exchange. But I totally agree with that after we've seen this hype cycle last year, that you need to have an operating model with a real distinguishing factor.
- [35:31]
Scott
King, what you're doing is actually unique. Sorry.
- [35:35]
King
Yeah, no, appreciate it. I think for me, the longer term game on this is that bitcoin treasury companies actually will form a very valuable bridge between bitcoin as a decentralized asset into the real financial system and whether they become banks of the future or some sort of other way. And look at scrc. SCRC creates a whole digital credit ecosystem based on Bitcoin thanks to strategy being a listed company and for digital credit become a real market. And I've seen this time again I've been in credit for 25 years is actually you need different layers of that. So you need different issuers, different currencies, different maturities. So once you start trading, you can start trading basis. Then we have real ecosystem. And that's all good for Bitcoin.
- [36:18]
William
Right.
- [36:18]
King
Because it brings in institutional capital that's less risk propensity to go into bitcoin directly. So I'm generally very bullish on the whole model thanks to what Seder has built. But also for different companies to do it in the right way.
- [36:36]
Scott
Yeah, I was going to say you. I've always found it interesting. I think kind of, you know, Meta Planet was the only one in Japan and there was a unique situation there to take advantage of a tax arbitrage situation where it was superior to holding underlying Bitcoin from a tax perspective. And so I find being kind of one of the few in a different market has a whole lot of is just completely different situation.
- [37:01]
Gary
But they can't.
- [37:01]
Scott
Do we need 500 of them in the United States? I don't know. Well, Meta Planet. Yeah, I was going to say Meta Planet could be in trouble because Japan changed how they view Bitcoin and it's now going to be, I think a 20% flat tax or something. So that now is gone. Yeah, but you can see why they did it in the first place, right? There was a huge advantage to buying your bitcoin through Meta Planet if you were Japanese. Go ahead, Carlo.
- [37:24]
Carlo
Breaking news. Fed Chair nominee Kevin Warsh has been approved by the Senate Banking Committee advancing him forward to a full vote in the Senate. Hate to introduce a hot take right at the top of the hour, but it is an interesting and it's not lost on me that as we see a flight out of Defi on eth that we are seeing, and I hate to trigger you, Scott, but we're seeing NFTs absolutely RIP right now.
- [37:51]
Scott
Is that really happening or is this.
- [37:52]
Carlo
It is really happening. Floor prices across the board of OG collections from the first cycle, Bored apes, dead fellas, the whole thing.
- [38:05]
Scott
You're making up words those aren't real.
- [38:06]
Carlo
Now look, I understand most people will think that this is nonsense, but it seems to me that there is a correlation between the flight from Defi and people wanting to custody their eth in cryptographically verifiable art. And I don't think that's a trend that's going to end anytime soon.
- [38:23]
Scott
Wow. How are my lazy lions doing? As they said in the movie Traffic Thunder, I never went full retard, luckily, so I'm safe.
- [38:36]
King
Bark.
- [38:37]
Scott
Safe from lazy lions. David, go ahead.
- [38:41]
David
Yeah, I was just going to say, with Kevin Warsh coming on board, we can expect the DOT plot to go away, which means the bond market's got less information to deal with, so we can probably look at rates on the long end going up. And he also has a bias to saying that AI is deflate, disinflationary. He kind of overlooks the secondary effect, which is that how are you going to support the people who get disemployed by AI? So, nonetheless, with that being the setup, yeah, I would expect wars to be cutting rates as soon as he gets into the chairman's role. So. So, yeah, today's meeting, non event. Jay Powell.
- [39:25]
Scott
Maybe the last meeting we ever have. Maybe the last meeting we ever have. I mean, he's made comments that, you know, that. And maybe to some degree we should agree, but you know, that the public doesn't need 400 speeches from Fed chairs a month.
- [39:39]
David
Well, you know, Scott, as Ivan Boesky said, you know, to Bunny Lasker, you know, your Bunny's got a good nose.
- [39:48]
Scott
You're good at this. You dropped one of these a day. Oh, well, guys, Listen, I love the
- [39:53]
Matt
80s Ivan Boeski reference, man.
- [39:55]
Scott
Going so good, so good.
- [39:57]
Joe
So is Paul Tudor Jones joining now, Scott? Or when does he come on?
- [40:02]
Scott
Hey, yeah.
- [40:03]
David
Everything old is new again.
- [40:04]
Scott
One of us.
- [40:06]
David
Everything old is new again.
- [40:08]
Scott
I hope we do get my Paul Tudor Jones to join, but it's gonna have to be another day because I gotta go. Um, as usual now, you know, Dave. Dave will be back, I think, on Friday. And so the show will continue to run till 11:15, but I got to go pretend I know what I'm talking about on tv, so I'll talk.
- [40:23]
David
Go get him, Wolf Man.
- [40:24]
Scott
Thanks, sir. See you guys on Friday. It's a great show, as usual. Bye.