Debt, Oil, AI and Bitcoin: A Gradual Print Until It Isn't

Hey everyone, welcome back to Stephan Livera Podcast. Rejoining me on the show today is my friend James Lavish. You guys might know James as the author of the Informationist. He is also co-managing partner of Bitcoin Opportunity Fund, and he's also on the board over at Strive, which is a Bitcoin treasury company or digital credit company, if you, if you like. James, welcome back to the show.

Oh, Stephan, it's good to be here. I always like talking to you, so thank you for having me on.

Yeah, I was, looking at some of the insights you've been sharing recently and thought it'd be good to have a chat. Lots of things going on. Obviously, the, I know you've been chatting about, fiscal dominance. Obviously, the debt kind of question is kind of an ongoing thing in this era.

Oil. But, yeah, well, like, just give us kind of a broad, like, how are you looking at markets right now, just kind of from the, the proverbial 30,000-foot view?

Yeah, it's a good question. I mean, there's, there's been a lot of confusion lately about markets, and you know, coming from the era that, that I've grown up in, on Wall Street, so much attention is always put on the Fed. And so we've been watching, the, the oil prices, like you said, inflation, how much it's caused inflation, and just the reaction out of the Fed, this new Fed chair, Kevin Warsh, who it, everybody's trying to get a, kind of a, a temperature of him, trying to get a handle on exactly what his, what, what kind of legacy is he trying to, establish at the Fed, and how is he going to do that, and how much is it, does it have to do with the, the information that's being provided in the markets to him versus, his own legacy and how he wants to be seen. There's been some confusion around that because as you look at information coming in and his insistence that the Fed is not going to give forward guidance, they, they keep talking and giving forward guidance, you know.

So, and you're watching the, the, the interest rates fluctuate around that. What's important about that is investors are trying to figure out big picture, how, how much more runway does this AI trade have in the general markets? The, just the handful of names that are driving the NASDAQ to all-time highs, while, the S&P, if you look across the board, a great number of the 500 names in the S&P are down this year, while the, the index itself is bumping up against all-time highs. So the question is, how much more gas does this so-called AI trade have? Is it overdone? Are they overindebted? Are they going to have to keep borrowing? How much of that is impacting the markets and inflation, the general, markets?

How, where, where does the Fed come out on the recent readings we've had of CPI, PPI, how much of that is due to the, the war and oil prices? So all of this has got people kind of confused in the markets, and yet when you pull back and you look at it, the general economy here in the United States remains pretty strong. Now, step back once again. It's pretty split. So you've got a, a certain demographic that's doing extraordinarily well, the ones who own stocks and own real estate and, and own assets and companies. And then you've got the other demographic who are wage earners who have been struggling through this inflation, and their, and their wages have not really kept up. And so that's kind of the big picture, and investors are, are, are weeding through that carefully here. And it's been, it's been a little bit confusing, and you've seen some volatility, around these, these names that we're talking about, these tech names.

But by and large, the, the market's kind of been stuck up here in, in this range for a little while. So the question is, which way does it go from here as we head into the election? So there's a lot of, there's a lot of, factors that are on the table now, and that's the last one, the election itself. So that's kind of what we're We're, we're trying to weed through.

Well, I mean, the AI trade, as you will, is, I mean, it's so many people are focused on this right now.

I guess these are kind of the questions people are asking of like, okay, how sustainable is this? Like, is it a real boom? Where's the productivity going to come from? You know, who's making the money here?

I guess, where are you at on AI? Like, I presume you kind of see it as like, hey, it's a tool, we're, it's going to be around. The question is, maybe it's like the valuation of Anthropic or OpenAI, this kind of thing. Is that more called into question, or how do you, how do you see that?

Yeah, I mean, the big question for me is just how much debt is going to be required to, keep propelling these companies and their businesses forward, and how much of, of that debt is going to come from the general markets, and how much of it is going to be provided by the government. How much is the government going to be invested in these companies? There's a strong argument that's being made that these companies need to be backed by the government because of defense initiatives. I mean, if, if you think, of course, this first principle is the government's not going to want the, the, this administration is not going to want China to have an edge on the United States in this technology. I know people in the, in the defense sector. I know people who actually work for the DoD, and there, there is a, a great push to keep propelling the military forward using AI. And so if you think about it, that's, that's pri- that's primary.

And so, of course, I believe that the government's going to backstop these companies. The question is, to what extent? And, and I don't really know, I don't have inside information on any of that. I have, I have no idea what, what is going to ultimately happen. But to your question is, is this going to keep driving the economy forward? And really, I think what you're asking, Stephan, is is this going to create the productivity miracle that everybody's talking about at the Treasury and in this administration, saying, hey, we're going to be able to outpace our, our debt with the growth in GDP that's going to be created by these, by these companies? That's a, that's a, now that's a confusing concept, and to try to figure out where we would land on that, there's no end to the different theories about whether AI is going to cause losses of jobs, whether it's going to create jobs, whether it's going to be deflationary, whether it's going to be inflationary.

And so what we just talked about is if they require a massive amount of debt to push this initiative forward, that's inflationary. That's just pulling forward the, the, the, it's pulling future revenue into the now. It's, in, in basic terms. And that's That's inflationary. If you lose mass amounts of jobs because these LLMs become proficient enough that they can replace workers who are doing tasks that are repeatable, that are, analytical, that are, simple, but that require a great amount of manpower to perform. So if you go back into the 1980s and 2000s, the internet was great and it, and it helped, information flow, but it didn't replace accountants. It didn't replace financial analysts. That's what we're talking about here.

Can it replace a whole sector of, of legal assistants, administration, and so that is a good question, and my answer to that, is that I believe that this is just going to ch- it's going to change the landscape of jobs. It's not g- not going to replace people, by and large, at least not yet. And so, I don't think it's going to be deflationary. And so that's really the- and when you're looking at the market and what to invest in, and overall, what you should be worried about,

I- it always, for me, Stephan, probably like you, it always comes back to, I would want to be holding hard assets, because when I hear, when I hear the Treasury, Scott Bessent, talking about we're going to outgrow, this debt, he's not talking about outgrowing it on real terms. He's out- he's talking about-

It's a polite fiction.

What's that?

It's a polite fiction. They say, oh, we're going to outgrow the debt, but actually, you know, there's going to be a lot of inflation, required to, try to get the US government debt into a somewhat less bad position than what it is in.

Exactly. And so, and that brings us all the way back to the, the Treasury and the Fed and the, this kind of, it's, it's a, it's a, I mean, I, I hate to say that we're, that everything's for show, because I don't believe it really is. I believe that there are people at the Fed who, who think that they're going to effect change, but the, just the harsh reality is that, whether or not they raise basis, they raise the rates, the short-term rates by twenty-five basis points is, it's kind of inconsequential. So That's not really what the issue is here. The issue is that the, again, going back to the Treasury, and this is why it always comes back to the debt, and you're watching rates rise across the world. This is not a US-centric thing, that you're seeing long bond yields go higher all across Europe. And so, and the, and one of the reasons is of what we just talked about, this great amount of borrowing that's going to, that's, that's continued to be needed. And so, and at the same time, you've got this energy shock. The, the price of oil rising is causing, prices to go higher across the board. I just wrote about this, simplified it for people to understand it in, in my newsletter, and just to how much impact there is to the price of goods, any good and service, and from the price of oil rising.

And just to listen is,

I guess, just to understand, we're recording this 20th of October 2026. The price of Brent crude, as we speak, is $108, and the 10-year yield on the US government is, 5.13%. So that's kind of the, that's like the rough numbers of where we are, right? Would you say that, you know, loosely speaking, the, the so-called bond vigilantes or kind of bond investors around the world are, are they effectively saying, no, Mr. US government, you need to pay us more in order for us to hold your debt?

Well, I think that it, there is, there is an element of that. Now, the, the, it's, again, it's confusing, right? Because when you see the 10-year, it gets up above 5%, and, and now you're thinking, well, I could be paid five and a half percent to hold this, and if we have a crash in the stock market, where's the money gonna go? I mean, it's gonna go into cash, likely. Everything go, everything will go down, including gold and Bitcoin. So if you're worried about the, the market topping out, you think, well, this wouldn't be a bad thing. And you look back in the, in the last 25 years, this is a pretty high rate for the, the 10-year. It's not at, it's not at the highs of the last, 20 years, but it, you, you, everybody remembers ZIRP. And so if and when the, the Treasury comes in to keep these yields low, then, then you, there would be a good trade.

So, but on the flip side of that, the, the Treasury has had some pretty ugly, bond auctions recently, and so they, they are well aware that there's only so, there's, there's only so much demand for these at this point. And even when you look at the, the offshore buyers of bonds, the greatest, the largest buyer of, the in, indirect buyers, so you've got direct buyers, you've, you've got the primary dealers, and you've got the, the indirect buyers. Well, the direct buyers are, they could be you and me, they could be, US citizens, US-based companies that are buying directly from the auction. The, the indirect buyers are supposedly, they're, they're foreigners. So foreign central banks, foreign investors, and then you've got the primary dealers who are the banks that are, that are kind of like, they're, they're, they're there to soak up anything that's not, that's not bought. And so they get sometimes saddled with more, more paper than they, they initially wanted or whatever.

But the indirect buyers, and this is, this is one of the things that people get confused about, one of the largest buyers of the, of the bonds that are offshore are in the Caymans. It's the largest buyer is in the Caymans. And who's in the Caymans? Typically US-based hedge funds that have offshore vehicles for non-taxable entities. Okay. So why is all this matter? It matters because there, like you said, They're demanding more yield for treasuries. They're not going to just sit here and hold them, because they don't need to have them. Pension funds, endowments, they're matching, they're, they're matching some of their liabilities, long-term liabilities, with bonds, and they have to stand there and buy a certain amount of paper. And when it matures, they go back out and, and re-up and buy more. But there has been, there have been rumors and talk about whether or not the, the treasury should once again retire that 20-year bond, because there's just not enough demand for it.

It's kind of, it's kind of in the middle between 10 and 20, and it's, so that tells you that the demand for longer-term paper is not great. It's not phenomenal. And so, that's a long answer to your question of are vigilantes out there? I don't think that there's, it's not like the, it's not like back in the eighties where the vigilantes said no way, we're like they just stepped away from the market. It's nowhere near that. It's more like a

Relative deprioritization.

Yeah, it's just like, exactly, exactly. So, and so I, I think that's what we're seeing. But also what we're seeing is the, it's a reaction to worries about long-term structural inflation. I mean, that's really what it is. And so investors are, are demanding being paid more to, be compensated for that. And as we watch, as you watch oil, the, the, so when you look at the, the last two inflation prints, the CPI and the PPI,

When you look at those two last prints, we watched the, the 10-year and the 30-year in particular yields spike right after those prints, because investors knee-jerk said, oh my gosh, inflation's getting out of control here. But then when they step back and they look through the numbers and see how much of it was, really short-term driven and, and energy related, you saw those yields kind of sink back towards earth throughout the day. And that happened both, both of those prints. And so investors are getting wiser, realize that this is, this is a little, this is not as, embedded as, as they, they're, they're worried about. And so looking at that, looking at the long-term trajectory of inflation, I don't think we're going to keep following the 19, late 1970s and early 1980s, that, that chart that you've seen, I don't think we're going to follow that. We're, we're not going to continue all the way, through in this cycle. I just, I think that we're going to be highly incentivized to have a resolution out in the Middle East, and, and that will calm some of this. It, it, it, it's not demand. It's, it's a, it's a supply side issue. And so, which brings us all the way back to the Fed fighting inflation on the demand side when it's not a demand issue. And they, I think they're well aware of that.

I see. Yeah. So you see it as, you know, one way or another, the conflict, will resolve, and that you think oil pri- oil prices will then come back down, and then maybe that releases some of the CPI pressure.

But there's still the fundamental kind of big US government debt problem, but, you know, it'll be a little bit more, you know, CPI, at least CPI rates will be down. It's kind of how you're seeing it then?

Yeah, I mean, exactly. That how I'm seeing it is this all leads back to, whether or not we have a, a drawdown in the markets. Let's just say that we, that people are right, that, that, the, the noise about, I can't call it noise, the concerns about, CoreWeave debt, for instance, causes, a hiccup. Maybe, maybe they trip a covenant or something. I'm, I'm not saying they're going to, but let's just say that one of these companies does, and you have a drawdown in the markets. Well, that would in turn force the Fed, the Fed's hand. Again, once again, you can't, the Fed can't, because we're so financialized in the US, our economy is so tied into the market, the stock market, that if we had a, a prolonged drawdown in the market, we, we would likely go into recession. And that's the one thing that the US government cannot have is recession, because it would in turn take that two trillion dollar deficit and turn it into a three, maybe four trillion dollar deficit, depending how bad and deep it is. And when you've got a, you know, when you've got a, a treasury that has to refinance thirteen trillion dollars of paper, between now and 2027, and then another two, three, four trillion on top of it, that starts becoming problematic because then where's the demand going to come from?

Well, the demand's going to come from the Fed. And so, that's, and again, that's, that's why, that's, that's why we're looking at that, that number and why it's so important to us.

I see. And so in that scenario, I mean, maybe it's not that likely, but let's say, so let's say it did happen, what do you think the first few responses would be? Like, would it be at the Fed side? Would it be on the Treasury side? What would be the, you know, do you think, are you saying it would be like a, oh, we can't let this AI trade stop, we need to do something to come in, or like how, what's the, paint us the scenario.

Oh, man, it depends on what happens and why, right? So, what, if you go, if you go back and, and look at the, you go back and look at the September of 2019 repo crisis. Let's say that there's some sort of, of, of credit crisis that causes rates to blow out. Well, the first thing that would happen is the Fed would immediately, within days, come in to shore up the markets, in my opinion. How much they print and how quickly really depends on the severity of the, of the shock.

The Treasury's already talking about how, Scott Bessent has already talked about how he's handling demand for, for bonds in the market.

People, okay, so there, to have the Treasury pull back and, and, and cancel auctions or something like that, that would, to me, that would be that would be severe. That would be pretty drastic. So I don't see that happening. To have the Treasury, managing the, the supply and, doing yield curve control itself, I just, I, I don't see a, a function there. But I do see the, the Fed coming in and having what Brent,

Brent Johnson from Santiago Capital has been talking about is kind of a shotgun wedding where there's not much choice. They understand that their, their fundamental value, the, the two of them is, it's pretty narrow. The, so the Treasury has to find a way to manage the spending of Congress. That's what their function is. The Fed has to find a way to keep confidence in the US dollar and the US Treasury. That's really what their function is. We say it's, it's stable pricing. We, we say it's full employment, but again, why do those two things matter? You have to look through to what, why are those their mandates? Well, because in, if inflation rages out of control, then the demand for dollars will drop, because who wants to hold something that's being debased rapidly? Nobody. And so, unless it's the one that's being debased, less rapidly than everything else in the world.

So that's one side. And the other side is, again, the Having full employment just means that we're not going to be in recession. We don't know what full employment really is, but you can't have a recession because that would cause the deficit to blow out. And if the deficit blows out, that puts more pressure on the Treasury to borrow more. And so it's just a kind of a circular function. And so the, the central bank is there to maintain balance and be sure that we don't have disruption in our markets that would cause something to unravel. Could we have a, a catastrophic event? Sure, of course we could. I mean, we've seen hundred year events. I've seen a number of them in my, in my thirty year career.

Right? I've seen, you saw one in '87 before I even got on the street, then another one in '98, and another one in 2000, another one in 2001, another one in 2008, another one in, in 2020. I mean, like, it's just one after another. So, of course, you can have major market disruptions, but what you can't have is long, prolonged, drawdowns that caused the economy to tip from being in, into, in a, a recession into some sort of depression. The, you, it's just, it's, untenable for the United States government and for these two. It, it just cannot happen.

But we should also walk through the scenario, like, let's say, you know, they're okay. CoreWeave is not, like, at trouble. Like, okay, yes, right now the, you know, the people are saying the credit market was implying like a fifty or sixty percent five-year, you know, implied default probability. But let's say, you know, the AI trade is, is right, right? That maybe that we're just in a slight dip, but we're in a broader kind of bull trend for AI and AI-related things.

Paint us that scenario. What does that look like?

Well, I think, in that scenario, I think you do find a, a balance. Oil prices come down, it, there, there is a balance of what we just talked about with AI being deflationary in one sense, but then another sense, it adds revenue to GDP on the other side. So, I mean, think about it for yourself. I'm sure you use AI. I use AI to help me research every single newsletter I, I, I write. I don't need to hire a research assistant, and I can, I can find much more information and create more value because I have at my fingertips, analysts that are, that can look at things for me. We use it at my hedge fund. We use it for analytical work.

You, is, does that replace people? No, it doesn't replace them, but it allows us to do more work and do better work. And so, for less money. And so we can create more value for less money. That's deflationary. And so, that's, and that in and of itself is what I think, it, that creates that balance between the, the, there will be some job losses for sure, but they'll be replaced by people who understand AI and they'll just be, it, the jobs will be transferred to something else. And so, and we've seen that in other revolutions, whether, you know, whether it's the technological or industrial revolutions, you, you saw the same exact, scenario play out. And so in that scenario, yeah, we, we keep moving forward. GDP grows nominally. There's a lot of debt that's, that's, that is created and pulls that future revenue into the now.

And so there is a nominal inflation that occurs. And so stocks will continue higher. I don't think bonds would be a good investment in this scenario because it will be, it ultimately nominally inflational, in, in, inflationary when you look at nominal terms. And so things like gold, Bitcoin will do very well in this scenario, and stocks, of course. So, and that's kind of my base case. I don't see us diving into a, a recession. I don't see CoreWeave or other companies just imploding here. I do see the demand for them, and, it just may shuffle around a bit, as we've seen many times before, especially during the, the dot-com era. This is not like dot-com in that there is just this feeding frenzy on companies that have absolutely no reason to have the valuations they have. That, that was, that was just a completely different bubble.

That was, that really was a bubble. So, but these companies actually are, they are generating value, and they're, and they're going to continue to generate value. The question is how much and how much debt needs to be drawn on to do that. But either way, I don't think we're going to dive bomb into a, a recession here. I'm optimistic that we're going to resolve the, the conflict in the Middle East. Then after the midterms, likely have some gridlock in DC, and the markets love gridlock. It's just, it keeps things status quo. What the markets don't like is uncertainty. And so if you have a little bit more certainty, a little bit, less volatility around the possibilities of flare-ups in the Middle East and, and other areas. And, the AI trade, the AI investment continues on. I think it's ultimately good for both markets and, and for asset owners.

I think there's an interesting point where historically, let's say those of us in Bitcoin saw it like, oh, they're gonna print. There's gonna be a big print, right? Or even like, you know, your, colleague Larry talks about the idea of the big print in his book, the Big Print. Are we maybe having a, a slightly different conception of how Bitcoin gets adopted then? Because maybe it is just gonna be more like this kind of deflationary story, more growth, and, you know, what, how then does the, the gain flow back into Bitcoin? Is it more like, you know, people make their profits and they store their winnings in Bitcoin per se? How do you see that?

Well, I, I don't, I don't disagree with Larry that there's going to be a big print. I do believe there's going to be the need for that at some point in the future, and we're seeing, that's why we're, we're seeing worries about long-term bonds across the world. And so when you just think about the, the indebtedness of these, countries and now the, the need for central banks to inter, to intervene, that I, that I do believe is a pending problem. The question is, how long can we continue doing this? How long can we continue this charade of piling borrowing, borrowing on top of borrowing? Again, like I said, I think that it doesn't happen overnight. I think that we, we kind of just keep marching forward because the, the, the easiest path, Stephan, for all legislature, all legislators for reelection is to continue spending and making their constituents happy, avoiding recession, keep spending, keep borrowing, keep spending, keep borrowing. Eventually, that, that bill does come due, though. And when it does, it will be a global shock. And there will be, the, the US dollar, I think, will unfortunately for many, other developed countries will, will benefit from that in a way that it'll be the last one or one of the last ones to, to, to fall.

And so it's a, it's an enviable position in one way, but as it doesn't save it completely. So I want to be clear that I don't believe that we're right up against that, that event today, but I do think it's in the future. So along the way, I believe that Bitcoin will be the best store of value as the debasement increases. When, if and when we do have a massive print of the Bitcoin and will be, of course, and of course, gold will be fantastic, places to keep, keep your, your assets protected, in my opinion. And so that, that's, it's a two, it's kind of a, it's kind of a, a, a two chapter story, right? Or act one and act two. So act one is we just keep debasing and keep,

You know, keep on this trajectory. Act one, and then you have that inciting incident. Act two is, that's a, that's a completely different story. And then I think that's where, you know, when people talk about Bitcoin going from three hundred thousand to a million or a million to ten million per coin, it's, again, yeah, that, that's when that happens. But it's not really that Bitcoin is, is, is becoming that much more valuable. It's just that the, it, it's reflecting the rapid debasement of the underlying currency that you're, that you're valuing it in.

That said, it will take market share. It will take market share from bonds. It will take market share from real estate. It absolutely will, because it's, it will be the pristine asset that people want to keep on their balance sheet in order to protect their, their, wealth.

And so in that scenario then, are we talking As I'm understanding you, it's going to be like an expansion in the base money, right? As in the balance sheet of the Federal Reserve is going to dramatically expand, just like it did during COVID. And over the last few years, you could say it's been dropping a little bit, but it's still dramatically higher than, you know, it was, you know, pre-COVID.

Yeah, if you look at it now, if you look at it now, it's actually been expanding. And so that's just that if you look at the, the balance sheet, the Fed balance sheet now, it's been expanding the last few months. And so.

Right, but in a much more kind of a gradual sense, right? This is like the Lyn Alden kind of gradual print idea. So would you see it as like, it's a gradual print for now, but then eventually it's going to become the big print? Is that kind of the, you know, is that where you're seeing it?

That's, that's exactly how I see it. It's a gradual print until, until all bets are off, and then it's a, it's a massive print because. They're, they, I hate saying they, but the, the central banks will have little choice but to, do everything they can to, to stabilize their own systems, and the US is, will be the largest one.

Yeah, I see. And so then are we, like, are you seeing it as like, I'm not asking you to predict the future or something, but do you see it as like there's gonna be a big event that drives that, or is it just more like the debt just reaches this unsustainable position that more people kind of realize it? You know, some people talk about, as an example, I think in America you have, I think is it social security kind of is gonna start to run out of money around 2031, 2032? I think that's kind of like-

2029, 20, 2030, yeah.

Right, yeah, I guess depending on your assumptions around interest rates and, you know, entitlements and so on, is it, as we approach, you know, as, you know, as you guys approach that, more people will start to Okay, there's a problem, or do you see it like that, or how are you seeing that?

No, I mean, here's the thing, is that think about it, psychologically, it's extraordinarily difficult to change people's mind about what they believe in.

So, and they believe in the dollar, and they believe the dollar across the whole world, and you live in Dubai, you, you, you can see in the Middle East, you can see in Europe, you can see in Asia, you walk around with dollars, by and large, people are willing to take dollars, they just believe in it.

And so, I mean,

Even the dirham here is pegged to the dollar. It's like one dollar is three point six seven or something like that, dirham, something like that.

Exactly. So, and that's, and that's what you're up against, meaning, it's not a, it's not a challenge, but what the, that theory is up against breaking that confidence, extraordinarily difficult to break that confidence.

For instance, when I talk to people, just normal everyday people, and they're like, yeah, you know, I got this big check, I just threw it in the bank cause I don't know, I just want it to be safe and I don't know what to do with it, and so it's in cash. And I'm like, did you at least move it to like Schwab or Fidelity to get interest on that cash? And, oh no, it's just in my checking account. And they don't realize that They, they're losing half their value every ten years and just sitting on that. And so, if you, if not looking at CPI, but looking at the actual expansion on the money supply of 7.1 percent, since the, the, we got off the gold standard in 1971. So, but people's confidence in the dollar is great. It, and it is, we're, we're not normal, Stephan. We sit here and sometimes agonize over these issues and watch the debt and talk about the debt and talk of the treasury and talk about the, the, central banks and what they're doing and the bond yields and the normal people are just trying to make their wages and, and pay for food on the table and make their car payments. And so getting the vast majority of people to wake up to the fact that the debasement is, is crushing them, and that they don't want to be in these things anymore, that's, that's a, that's a pretty, that's a long road.

And I think it just ha- it takes a lot longer for people to get there. And I'm not talking about just regular people either. I'm talking about institutional investors too. You're talking about people who, who work at funds, who buy bonds, who, who work at pension funds and endowments. They, they have the ultimate, confidence in the US dollar and the US Treasury. And why wouldn't they? It's been a gr- it's, it's been a fantastic, phenomenal environment for investors in the United States for the vast majority of these people's careers, the, the, the length of them. So of course they have the high confidence in them. So that's why I think that it's not going to be, it's going to be gradual until it isn't, and then there is going to be some sort of event that, that creates a, a disruption in the market that, that forces that, that, that reality, that, that forces people to make that realization.

Yeah. And so then what do you make of Bitcoin over the next few years, and where things are going until that event? You still think there's just, there's just gonna be this kind of secular kind of bull market, but not a crazy bull market until that?

I actually think that, look, Stephan, I got this, I, I got this wrong over this last market. I really thought that we were going to, that the adoption with the ETFs, was going to drive Bitcoin to 180,000, at least in this last cycle. I did not, I really underestimated just the sheer amount then of coins that would come to market from OGs. The,

The OG whale selling.

Yeah, I mean, they just said, look, a hundred thousand dollars, I'm out. And when it got to a hundred, a hundred and twenty, man, they were dumping like relentlessly. And so I, I, I miscalculated that on that side. And the other side I miscalculated on was the, there's actually three things. The second thing I miscalculated was the, adoption rate on Wall Street for institutions and professional investors to understand it better. It's not that they haven't looked at it. It's not they haven't heard about it. It's just that they don't understand it. Most institutional investors still do not understand Bitcoin and how it's different from anything else. They still ask me, they, oh yeah, Bitcoin, Ethereum, all that stuff, you know, crypto. The, the, most of them still don't really fully understand it or don't believe in it. They don't trust.

So if you had to explain, what, what, what do you think the key sticking points or errors they are making?

Well, the key sticking point is just understanding the difference between decentralized, protocol and centralized protocol. And they don't understand that, that monumental and critical difference between Bitcoin and basically everything else. And so, not, not understanding that Bitcoin being governed by nodes and thousands and thousands of nodes rather than, a, a, a board of directors or, or a management team, it's a completely different concept for them. And it's, it, and I don't blame them. There's been really nothing like that in the history of money, where it, it doesn't have some sort of body governing it some way, shape, or form. I mean, you could say gold has had some, some way of that, but the, There, there's, there's been a great amount of manipulation of gold prices over the years, as, as we know. So, but there's nothing that we can do to change Bitcoin

Individually. There's no person who could change the, the protocol, no one person. And so that's really difficult, and no, no management team. It's really difficult for, for investors to truly understand that. And that's why it sets itself apart from all of the other cryptos. And so that's really one of the big things. The second thing is it, it became political over the last, politic, over the last election. Trump and this administration adopted it. Elizabeth Warren and her anti-crypto army fought it. And, and so it's become a kind of political hot topic. And so will it graduate from that? I think it does. And that's the key. That's the third, that was the third thing. So OGs Wall Street understanding, and then it becoming a political hot topic, like a hot button. I think that we do move past that in this cycle. And the reason I think we do is because you, you're now seeing banks who are capitulating to the reality around it.

JPMorgan put out something, today that, it was a, a research piece, and I have not read it, but I did see the graphic saying that Bitcoin should be the best performing asset, for in the near future. That's just, that's a massive monumental shift for JPMorgan to make after Jamie Dimon called it a scam, a fraud, or whatever he called it over the years, and then all of a sudden his bank is saying, this is going to be the best performing asset we think in the, in the near term. And so that's an, that's an important shift.

What does that do? It gives investors not only permission and air cover to own the asset, it kind of means that it's moving into the frame of, hey, if you, if this thing goes from 80,000 to a million dollars and you don't own any in your portfolio and it, you could have had an allocation to it according to the, the investment mandate of your portfolio and you decided not to, it becomes an investment risk. That's the big shift. And that's the shift where it really could turn into a super cycle. And I believe that that could happen in this next cycle, the next three to five years, where that shift happens dramatically and rapidly. And so that's, that's what I'm watching for is and really understanding how institutional investors are, are coming out on this and, and how they think about it and whether they can separate it from other assets and, and realize that they should have some sort of allocation in their portfolio if it's appropriate for, for their mandate.

Yeah, and, I guess, I mean, I've got my own thoughts on this too, but I want to hear what you think. Obviously, right now, AI is the hot thing. Everyone's talking about it. You can't avoid it, right? It's just, it's just too big of a story. It's too big of an investment. The question people might be thinking is, look, James, why are you so focused on Bitcoin? Like, why aren't you just going all in? Why don't you just pivot to being an AI, AI bro or something in tech? You know, why not focus on robotics and AI? And isn't that the sexy thing? Why are you so focused on Bitcoin? I think that's a good spot to finish.

Yeah, I mean, look, first of all, I don't understand the AI, investment landscape nearly as well as I do the Bitcoin landscape. That's number one. I'm staying in my lane. But, aside from that, why, why haven't I gone all in on AI? Why am I, I in Bitcoin? Because I believe ultimately that in the long run of everything we just talked about, the one thing that I am certain of is that there will be debasement of the currency. I am one hundred percent, ninety-nine point nine nine percent certain of that, that there will be debasement of the currency. And if there's debasement of the underlying currency, I want to own things that I believe will, protect me from that. And so I've always been of the mind, Stephan, that I want to, I, I would rather get rich slowly, like not get poor slowly than try to get rich quickly and lose it all. And so, when people look at Bitcoin and say, oh, it's so risky, if you're going to take that risk, why wouldn't you take that risk in AI?

Well, if you look over a long period of time, Bitcoin isn't, has not been risky, if you hold it long enough. It just hasn't been. And so, but I don't know which companies end up winning this AI game. And so, I'm, I don't, I don't have the confidence in investing in that in the way that I do in Bitcoin and Bitcoin related companies.

Yeah, I think that's a good answer, and, I think it's a good spot to, to, finish up. But, yeah, enjoyed chatting with you. Listeners, make sure you go and check out James's work over at the Informationist. It's a newsletter. You can subscribe. And of course, check out, the Bitcoin Opportunity Fund. And of course, James is also a, director over at Strive. James, thanks for joining me today.

Thank you, Stephan. Good to talk to you.