{ "episodeId": "SLP560", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "thomas_fahrer": { "name": "Thomas Fahrer", "role": "guest", "tag": "THOMAS" }, "guest_2": { "name": "Guest 2", "role": "guest", "tag": "GUEST" }, "guest_3": { "name": "Guest 3", "role": "guest", "tag": "GUEST" } }, "segments": [ { "speaker": "stephan", "time": "00:00", "start": 0.48, "text": "Hi, you're watching Stephan Livera Podcast brought to you by Swann dot com. Today we're talking about tracking the new Bitcoin ETFs. So as you know, these new Bitcoin ETFs were approved and launched a couple months ago, roughly, and there's been a lot of movement in which ones have been popular, which ones have not been popular. Thomas Fahrer from Apollo joins me to discuss and analyze the ETFs and what they mean for Bitcoin as a market. Now on to my chat with Tom." }, { "speaker": "stephan", "time": "00:41", "start": 40.55, "text": "Tom, welcome to the show. Thanks, Stefan. Happy to be here. So, Tom, I hear you've got a doctorate in Bitcoin bromomics. Tell us how you got that." }, { "speaker": "thomas_fahrer", "time": "00:51", "start": 51.43, "text": "That is a, yeah, self-proclaimed, Title, obviously means nothing, but, yeah, it's just, it's, it's just a, yeah, I mean, obviously what I'm really asking is, how'd" }, { "speaker": "stephan", "time": "01:05", "start": 65.34, "text": "you, how'd you get into Bitcoin? What, what was your, some of your, your learnings of, you know, going over the cycles?" }, { "speaker": "guest_2", "time": "01:11", "start": 71.31, "text": "Yeah, sure. Look, I, actually, I, I, I first discovered, Bitcoin about ten years ago. I was doing" }, { "speaker": "thomas_fahrer", "time": "01:18", "start": 78.15, "text": "a, internship at the Australia's central bank, the RBA, which actually is, kind of, I guess, general advice for people is sort of be" }, { "speaker": "guest_2", "time": "01:28", "start": 88.12, "text": "mindful of who you listen to, because, you know, I, I, I, I discovered, Bitcoin at the time, but I didn't really get into it too much just because every person that I talked to about, although I was fascinated by it, but Every single person I talked to about it told me it was, well, it's gone to zero, obviously. As, as they would still, as they would still today," }, { "speaker": "stephan", "time": "01:50", "start": 109.85, "text": "wait for the news articles. X central banker was excited about Bitcoin in twenty fourteen." }, { "speaker": "guest_2", "time": "01:55", "start": 114.88, "text": "Yeah, but then I, so I did my, I did my, anyway, I did my university thesis on it, after that internship, anyway. just, just, love studying it. It was very interesting, you know, it's, it's like a super high volatility asset, certainly And that kind of, that alone, just from like the statistics, the maths angle of it, found it very interesting. Like I, I did my, I was studying like, what's the, the tail risk of it, or how do you hedge it? I was looking at like Litecoin and whether you can, whether merchants can accept Bitcoin and then kind of hedge their risk shorting Litecoin and all, all this, this kind of stuff But then I, finished university, went into the kind of traditional finance world, sort of forgot about Bitcoin for a couple years, and then really kind of, I guess- Bitcoin never, never goes away, right? And it, it's, a lot of people need, a number of touch points to sort of really get into Bitcoin, and I, I certainly did. And I kind of, when I first saw it, I thought This is gonna be like this big future world money, or it's gonna be nothing. And at the time, I was like, my sort of eventual conclusion was it's gonna be nothing. And then over time, I had to kind of reevaluate, my perspective, obviously. And Bitcoin is, like, my, my experience with it is true, I would say, for literally, I don't, I've never met anybody else that had anything different, which is to say, you discover Bitcoin, you ignore it, the price goes up A lot, and then you have to have the kind of painful experience of sort of, just rejecting your ego and, and, and, and accepting it at the, at the price you can get anyway. And then, yeah, fast forward a number of years, obviously personally investing or whatever, but then, a couple of years ago, founded Apollo, w-co-founded Apollo with, with, with partners who, sort of a, a Bitcoin-based discovery platform for Bitcoin products and services, and- Really just now completely focused in my life, hundred percent, focused on Bitcoin, and that's, that's what we do, it's what we think about, what I do, certainly." }, { "speaker": "stephan", "time": "04:06", "start": 245.51, "text": "Great, and I know you guys have an ETF tracker there at Apollo, so, let's get into a bit of that. So the ETFs, you know, launched early this year, there was a lot of excitement around them. but there was also a lot of talk about it, right? W-would they be priced in? Were they, you know, was it over, overhyped because, or there's already a Canadian Bitcoin ETF, that was the line some people were saying, what's it been like for you as you sort of zoom out and look at Bitcoin ETF approval?" }, { "speaker": "guest_2", "time": "04:38", "start": 277.96, "text": "Yeah, well, I think I, I, I might have had a- So somewhat of a unique vantage point, not unique, but I, I, I just had a vantage point on it, because I sort of came from the traditional financial world where I was working in investment consulting, for a number of years, and I sort of have an idea about how institutional investors look at investing, investing their assets, kind of like pension funds and this, these sort of things. And I knew, which, look, I'm certainly not the only person that knew this, but understood that this ETFs a very, very big deal because it unlocks, just it, it, it removes the friction for these investors in a way that They just never would have even considered buying Bitcoin previously, simply 'cause they don't have a vehicle. Like, it's as simple as that. And if you look at, if you're a big investor I know some people think, \"Oh, but look, you can buy MicroStrategy or something like, like you can allocate to that.\" But the reality is, is that if you're a, if you're a significantly large investor, you can't Allocate to one company, that's far too risky. It's not something that any kind of, endowment or pension fund can do. They can't put five percent of their portfolio in microstrategy. It's not a viable investment vehicle for them. Like a, you know, a retail investor can do that for sure, but it's not a vehicle for any sort of real capital. But these ETFs are, they, they actually fit, if, if you want an allocation to Bitcoin, In terms of like a serious allocation for a pension fund or an endowment or an insurance fund, these ETFs provide a vehicle in a way that has never previously existed, and obviously they could have held it, You know, they can actually just hold their own private keys. I understand that's possible, but it's just very difficult. It's very difficult for a board to wrap their head around that, even frankly if- All of the individuals on the board are Bitcoiners, which almost certainly they're not, or they're varying degrees along the way. But for an investment committee, it's just extremely difficult to invest in the asset historically. And then all these hurdles have just come tumbling down, basically, with these, with these ETFs, and it's just gonna unlock an incredible wall of capital, in the US, I know, like, for example, this is something that has been shown actually, even, even for years, even in the pits of the bear market, there would be these surveys that go out to traditional financial advisors and ask them their interest in investing in Bitcoin, and they would always come back and say, \"Yeah.\" Actually very interested in investing in Bitcoin, and not many people paid attention to it because, you know, actions are more important than words, and these guys weren't, weren't allocating to Bitcoin. They'd say, \"Oh, yeah, we're interested,\" but, you know, nothing's happening. And now, now it's available to them, and now they are jumping on it. we were seeing, you know, ten billion in flows, roughly whatever, in the first two months, but There are just, just financial advisors in the US, they're managing eight trillion in assets. It only takes such a tiny percentage To really move the needle on the Bitcoin asset because it's such a like small dot in the ocean of o-ocean of financial capital out there. and sort of these estimates are, some of the estimates I've seen are looking at say 70% of them want to allocate, and they're thinking about two to three percent allocation. And if that happened, you'd be looking at, say, three hundred billion dollars of capital flowing into the ETFs over a couple of years. And it takes time, 'cause these, these people, if they're institutional, they have to do board meetings and investment committee meetings and this sort of thing. But what happens is it just happens slowly over time. You know, these meetings that come up And the, the capital just dribbles in or comes at, what appears at a rate, you know, it, it's dribbling in from the perspective of five billion a month. It, it appears from us watching the market, it feels like it's an ocean flooding in, 'cause it's very exciting. But from the perspective of the total, capital outside of Bitcoin, it's really dribbling into these ETFs, but it's creating this kind of, ocean swell of another Bitcoin bull market, which is just like, frankly, really exciting. to, to watch this thing that, you know, a lot of us have been really focused on for a number of years." }, { "speaker": "stephan", "time": "09:23", "start": 562.69, "text": "Right. And as you also were touching on there around the compliance hurdles that some of these firms will have to go through, they might be doing some kind of risk review thing, and then they might have to take it to a certain committee or get it approved here, get it approved there before they're allowed to actually do things. The other element is some of these large players will add it to already existing portfolios or, or funds. Like the, you know, if BlackRock or Fidelity were to add it to as a default to these funds that people are already in, that's gonna sort of set up this whole new round of, not just like a one-time shot of capital, but just kind of ongoing, steady, purchases. So that's another- I think interesting angle that, you know, a few people are talking about, but maybe that hasn't been fully realized yet." }, { "speaker": "guest_2", "time": "10:14", "start": 613.53, "text": "Hasn't been unlocked at all, and it's especially important when you think about the context of- There's kind of a race going on in the ETFs market, right, where you want traditionally these kind of commodity ETFs to, Sort of center around one ETF, and it doesn't look like that's exactly happening in the Bitcoin market, but there's really kind of two big players and then one sort of washing out with GBTC slowly depleting, and then you basically, you've got BlackRock and Fidelity in this kind of race with each other. And if you think about the game theory of that They wanna make sure, like it's really important for them to grow because that enables them to have the liquidity which enables them to grow in the future. So it's actually, they need-- they want it now, but they also need it to be able to have that kind of liquidity to be able to attract, a big investor in the future, and the simple reason is if you think about it If you have, if you only have five billion dollars in assets, you can't, you can't accept, you can't accept a big, you can't accept five billion of buying purchasing power on your, on your asset. You don't have the liquidity to offer a big future investor. You need to have the bigger, investor you are, the more kind of funds you can accept. So I think you're absolutely right. I mean, when you look at, say, the game theory of it, I would expect BlackRock and Fidelity to offer it Within their balanced and growth funds. Fidelity's already kind of like hinted at it a little bit because if you look at the, Canadian branch of Fidelity, they've, they have a, a balanced fund in Canada that offers, that includes Bitcoin as a percentage allocation, they've got three percent allocation to Bitcoin It doesn't really affect, it's not like, doesn't really affect the Bitcoin market today, but if you think about Fidelity managing about a hundred billion dollars of assets just in their balanced and growth funds today, you say, \"Oh, okay, well, well, when they add Bitcoin to their balanced fund, which they will, I mean, it's-- I would put the likelihood of that happening at ninety-nine point nine nine percent chance, like this is a big asset manager that's proven over the years that they have a strong conviction. In Bitcoin, there's absolutely no reason why they wouldn't do that. Well, that's another, well, depending on their allocation, but you might say that's another five billion coming down the road, and obviously it's, it's even frankly more for BlackRock. So, but Where I see the big money coming in over the next couple of years is these kind of advisors or these, Certainly like college endowment funds, insurance funds, just looking to get like tiny little two, three percent allocations, and that's just all gonna, that's just gonna all add up." }, { "speaker": "guest_2", "time": "13:08", "start": 788.46, "text": "Which is, frankly, it's just going to-- it's difficult to project the exact number, but you're looking at like potentially hundreds of billions of dollars flowing into Bitcoin. And the other thing I would just say as well to keep in mind is that Bitcoin has this odd property of unlocking higher levels of capital as the market cap grows. You know, it's like right now, even today, even though it feels like it's quite big, but it's also like, it's still too small. For, certain pools of capital out there, it just-- th-th-there are, there are, there are investors out there that have so much capital that it's kind of uninterest-- like they can't invest it because They don't wanna own thirty percent of Bitcoin, right? They, they, they don't wanna have that kind of illiquidity. It, when Bitcoin is a thirty trillion dollar asset, it's like, \"Oh, I can park five hun-- you know, I can park five hundred billion in there and it's, it's fine.\" But right now, it's, it's not, liquid enough. And, and, and Bitcoin needs to contin- just like it has in the past, right? We could never have gotten a micro strategy in twenty fourteen 'cause two, it was a We have these kind of treasuries that can't be unlocked, but we're gonna unlock the, the pension funds, and then we're gonna unlock, eventually, we, it un-unlocks sovereign wealth funds, and this is probably the final kind of Stage of where it goes, but yeah, it's kind of an interesting property that it does gen- like it unlocks higher pools of capital as the market cap grows that simply just can't invest right now." }, { "speaker": "stephan", "time": "14:48", "start": 887.76, "text": "What about the question of rebalancing, right? Because we're dealing here with a lot of- Professional investors, and many of them will have an allocation target, right? They may be using their traditional portfolio, you know, strategy. They may say, \"Okay, let's go for a three percent Bitcoin allocation or whatever, five percent.\" now of course, maybe you and I might say, you know, maybe a conservative allocation is eighty percent and an aggressive one is ninety percent, but, you know, this is, this is the level they're at, and let's say they start with three percent And this bull cycle carries out, and within a year, they're-- that's now ten percent or fifteen percent. They're gonna have to now sell them, right?" }, { "speaker": "guest_2", "time": "15:26", "start": 925.74, "text": "Yeah, yeah. They, they, they-- I mean, you're, you're right. I mean, that's, that's, that's how, that's how they're gonna operate. They're going to-- They're probably gonna create-- Typically, what you do is you create bands, so you say, \"We'll have a three percent strategic allocation,\" but- We're, we're fine for it to be operate sort of plus or minus one and a half percent, say. But yeah, if, if, if, if, if, if, if some of these funds invest in Bitcoin and then it goes to six percent, they will, they'll, they'll trim. And that, and that I suspect In the long run, although I don't foresee it happening like in the next six months, but in the long run, yeah, it's gonna curb volatility of Bitcoin because these big institutional players will be Literally, they'll be buying the dip when, when their strategic allocation is sort of under, under hit, and on the flip side, yeah, they'll be, they'll be selling, Selling their, their profits. you know, until we get to a situation where investors start to kind of like re-denominate things in their head and they start going like Bitcoin actually is the unit of account that I'm interested in. Then it, obviously, it gets very different, but that's such a long way away realistically for the vast majority of investors that, yeah, I mean, it, it's, it's true, these, a lot of these guys are going to take a small position Bitcoin is gonna double, three X, whatever, and they're gonna sell, and then it's, it's just gonna repeat, ad, ad infinitum basically." }, { "speaker": "stephan", "time": "17:01", "start": 1020.86, "text": "Yeah, interesting. And so we may see this weird dynamic of like FOMO amongst some people, and then other people are sort of rushing to sort of sell a little bit out to kind of change their position down, I also find it interesting that, you know, there's this race to get some Bitcoin now while it's still relatively cheap compared to what it, you know, what it should be, right, in our minds. but there's all these pensions, pension funds, insurance funds, people who- You know, especially at a state pension level, many of them don't have enough, right? Like they just won't have enough. And it's, it's sort of like the first one to blink is okay, like the first few who get into Bitcoin now, they'll be okay because they got some early and, you know, Bitcoin will go up. But the, the ones who are late- They might just be really screwed." }, { "speaker": "guest_2", "time": "17:57", "start": 1076.89, "text": "Yeah, well, look, this is one of the interesting, fascinating, consequences of kind of a monetary restandardization, which is what we're going through. I mean, if we just live in a- Pretty interesting time in history where there is, there is a massive wealth transfer between the people that understand, the monetary system is rebasing on a, on a new money and the people that don't understand that. It's not like, it's kind of interesting philosophical, I don't know if it's fair or, or what, but it's just, that's the world, that's the world we live in," }, { "speaker": "stephan", "time": "18:29", "start": 1108.98, "text": "yeah. And so- Let's talk a little bit about the, actual holdings. So on your site, you've got the BTF ho- sorry, the ETF BTC holdings over time, and you can, you can sort of see that basically, I mean, as I see it, Grayscale started out with six hundred thousand Bitcoin, and now that's grinding down over time, and they've got maybe three fifty or so, three hundred fifty thousand ish. And now it looks like basically iBit or Fidelity, sorry, sorry, BlackRock. iBit is BlackRock and Fidelity, which is, FPTC, have like Been the real, you know, main two horses in the race. Do you wanna just comment a little bit on what you've seen there in terms of which ETFs have been accumulating the most Bitcoin?" }, { "speaker": "guest_2", "time": "19:16", "start": 1155.76, "text": "Yeah, for sure. I mean, yeah, so as you mentioned, BlackRock, so on, on, on day zero, right? Black, G-Grayscale had, they converted their previ- their, their trust into a spot Bitcoin ETF, and they started day zero with six hundred and nineteen thousand Bitcoin. and then you had all these other ETFs, crop up. Now, the big sort of factor that's affecting the market is that GPTC previously operated On a fees basis, they were charging their customers two percent per year to hold the Bitcoin, and while conversion to, ETF has a lot of benefits, for them, it also brought about a whole bunch of competition where these new ETF providers are coming in, and typically an ETF is actually very cheap. You know, everybody else has come in at about twenty-five basis points, about two point, zero point two five percent fees, and GPDC have decided strategically for them They're going to keep their fees at one point five percent, and we, we can kind of talk about that 'cause that's kind of a pretty interesting decision by them. But the consequence is that a lot of investors are leaving GBTC and kind of flowing into, these other ETFs. And we kind of have two phenomenons happening at once, which is there's a flowing out of GBTC into these other ETFs, and we also have fresh capital just coming from- From people that weren't ever invested in any of these, trusts or ETFs going into it, and the consequence is that today Grayscale within basically two months has gone from, a little over two months has gone from six hundred and nineteen thousand Bitcoin to About three hundred and thirty-five thousand Bitcoin. They've lost basically half their Bitcoin holdings. Now, of course, depends on if you think about it from their perspective, from a game theory perspective for them What do they care about? Do they care about their Bitcoin holdings, or do they care about, care about their dollars under management? I don't know the answer to that. We'd have to ask their management team. From a dollar's perspective, they're not doing too badly, right? Because Bitcoin price has risen. And it's actually quite plausible that they end up with a lot more dollars under management in a year's time than they had at the start of this whole BT, ETF cycle Even though obviously, as we can see, they're really heavily bleeding on the Bitcoin. But BlackRock, and you know, Larry Fink just went on television and said accurately, \"This is the best launch, ETF launch they've ever seen in the history of BlackRock.\" and it is by sort of any kind of inflows metric, it just is, and in fact, the second best ETF launch of all time is the Fidelity Bitcoin ETF. So both of, both of these guys have had, you know, a huge success. so BlackRock has had about two hundred and fifty thousand Bitcoin they've acquired in, you know, these ten weeks, and, and Fidelity is, it's not, it's not as strong, but it's, what is it? It's about one hundred and forty-four thousand. So, you know, they, they would have to be stoked with" }, { "speaker": "guest_2", "time": "22:36", "start": 1355.71, "text": "So, and, and, and the other thing that's quite interesting, I would say in terms of this market, is that some of the other players have also done really well. I mean I imagine Bitwise, which is a, kind of a no-name brand relatively speaking, I mean, now I think they're building a brand, but the truth is, is that how many people had heard of Bitwise six months ago? I'm gonna say not many. But they've got over a billion dollars in assets under management from Bitcoin, and growing. Mark have had a, also a quite a nice launch in terms of allocating to, like, sort of building at these kind of ETF assets under management as well, acquiring about forty thousand bitcoins so far. So the market is kind of- There's basically five ETFs right now that kind of have significant, Bitcoin holdings, and, and Grayscale is the big one that's falling right now. It's unclear to me, I've actually been talking, kind of trying to like do a bit of my own kind of like investigation to, talking to some GBTC holders, and figure out like What's going on here? Like, are people, like, what's gonna happen to GBTC? Is it going to zero or what? because it's very interesting that they've-- the management team have decided to have these very high fees at one point five percent, and I, I think that what is happening is that You have to look at the history of Grayscale, which is that they held over four hundred thousand coins back even from, say, September twenty twenty. So back-- and of course, the Bitcoin price back then is like sub ten thousand dollars, or I'm gonna call it ten thousand dollars. And so they would be knowing that a lot of investors are subject to capital gains tax. And Selling, selling, selling Bitcoin now to move it to another ETF and incurring, depends on the state you're in, depends on your circumstances, but ten to twenty percent capital gains tax might not be worth it to save on the kind of one percent, fees that you would save relative to, say, moving to another ETF. And so I imagine that's the bet that Grayscale are making, that there's gonna be a lot of investors that are just not gonna wanna take that capital gains hit? but it's a, it's a totally fragmented market, you know, some people invested in 2021, so they didn't have all that many sort of capital gains anyway. And then there are other people that like, they're, you know, they've got other capital losses, they're able to sort of offset it. Some people are selling based on principle, like I, I have talked to investors that are like, \"I'm just gonna take, you know, this...\" The thing is, is that it's an insult the fees they're offering, right? It's a, it's a slap in the face to people 'cause they-- people know they're kind of being screwed when they, take these one point five percent. Right." }, { "speaker": "stephan", "time": "25:42", "start": 1541.81, "text": "Back to the show in a moment. The lead sponsor of this show is Swann dot com. Over at Swann Bitcoin, you can buy Bitcoin and also learn about Bitcoin. Now you can do this over on the website, Swann dot com, or get the Swann Bitcoin app available for your iPhone or Android. Over at Sw And then do either a smash buy, buy a lump sum of Bitcoin, or set up an automated recurring purchase plan, just regularly purchasing some Bitcoin. People call it DCA, some people just say stacking zats, whatever you wanna call it. The safe way to do it is to buy and withdraw to your own self custody. That way, you're not putting too much risk into some other custodian. So with Swan, we make it easy for you to self-custody. It's free automated withdrawals into your own self- Custody over at swan dot com. Over at swan, there is a range of learning material that you can use to learn about Bitcoin, whether that's Welcome to Bitcoin course, which is a free course hosted by Natalie Brunell and I helped write some of the content. There are various shows such as Dante Cook's Daily Bitcoin Show, there's Swan Signal Live hosted by Sam Callahan, and so much more. Go to swan dot com and you can find a range of services and products related to buying Bitcoin over at swan dot com. This show also brought to you by MemPool. Mempool dot space, the leading Bitcoin and blockchain visualizer. I use it all the time when I wanna get an idea of what's going on in Bitcoin's mempool, and I use it just before I'm about to send any on-chain transaction so that I can target my fee according to what's happening in Bitcoin's mempool. Now, mempool dot space are continually innovating, they're continually rolling out new features, new visualizations, and new things to understand about Bitcoin, and also, not just Bitcoin on-chain, you can see the- Mining tab, you can see Lightning, you can even view Liquid. There's so much stuff you can do over there at mempool.space and check out mempool.space/accelerator for those of you who wanna sign up on the accelerator program waitlist. And lastly, when it comes to securing our Bitcoin, we need to use physical security devices. My favorite is the devices made by Coinbase dot com. Now, notably, they've got the Cold Card. This is a device that you can use to generate your Bitcoin private keys offline, and you can write down the twelve or twenty-four words and write down, obviously, the details there, and then you can generate Bitcoin addresses and receive Bitcoin into those addresses. And this gives you some confidence that you have created this Bitcoin address and not somebody else. And so this is also a great way to keep your private keys offline. So the idea with securities, you wanna keep your private keys offline and keep them off of online internet connected devices. This is a great way to help give yourself some additional security and confidence that your coins are secure. So to get your cold card, go to coinkite dot com, use code livera. I like to use Use my cold card with Sparrow wallet, but there's a range of different options such as Sparrow, Specter, Electrum, Nunchuck, Keeper, and various others. So get yours at coinkite dot com, use code Laverro for a discount on your cold card devices. And now, back to the show. These one point five percent fees. Right. You're paying one point five percent instead of point two five percent, I mean, it's literally five to six, six x the fee that you could otherwise pay. But like you said, there's a capital gains impact, Premium dynamic as well. So there could have been a lot of people who were kind of in, they weren't like long-term hodlers in GPDC, they were just kind of, \"I'm in the trade because of the premium, and now the premium is closed, I'm gonna close out my position and run for the hills,\" you know what I mean? And so it's kind of, you've got these different, I guess, camps of people, and maybe Grayscale just made the calculation of, \"Hey, we, you know, from their perspective, I don't agree, you know, They may have thought, \"Yeah, yeah, we'll bleed people out, but it's better for us to strategically bleed people out at one and a half percent than to even try to be competitive.\" Yeah, I, I," }, { "speaker": "guest_2", "time": "29:56", "start": 1795.73, "text": "I think that's right. And the, the thing is, is that from an outsider looking in, it's very difficult to know. But the only thing I would say is, is that there's like an inf-informational, asymmetry. Arbitrage. They have, they have much more knowledge about the, who their customers are They, they know what price points they bought at. They're in the, like, the one thing we can assume is that they are optimizing to make maximum amount of profits over time. I'd like I think that's a pretty fair assumption. It's not guaranteed because there might be other factors at play, which we can talk about, but There is an assumption that they're, they're kind of trying to make the maximum profits they can, and that means they're kind of figuring, they might have done some calculation and thought, \"You know what? We're gonna bleed to two hundred thousand coins, but...\" You know, Bitcoin price ten x's and hey, our assets under management is still looking great anyway, we're gonna make really good money out of this. There is a kind of conspiracy angle which is related to the idea that this is basically like the US government has come, come along and essentially tapped them on the shoulder and said, \"We want you to wind down\" because Grayscale has been involved in some- yeah, pretty dodgy stuff back when the bankruptcies of the twenty twenty-one, saga and it's kind of a complex, sort of financial institution there with- Dif-different, different issues at hand, and there is some kind of," }, { "speaker": "stephan", "time": "31:35", "start": 1894.98, "text": "yeah, idea that-- And, I mean, on that point, it's Barry Silbert did resign as Grayscale chairman, in December last year, so, I mean, maybe that's, yeah, something related, I don't" }, { "speaker": "guest_2", "time": "31:45", "start": 1905.05, "text": "know. No, I, I, I doubt that's an issue, but I, I, I mean- If you had the framing, if you looked at it and you went, \"This is an organized, orderly wind down of GBTC,\" and you were just watching it so far today, it's indistinguishable from that kind of worldview. On the other hand, if you said, \"Hey, no, they know they're gonna lose half their assets, but they're gonna hold a good chunk, and they're gonna end up making lots of money out of this anyway,\" you can't really-- it's still, frankly," }, { "speaker": "stephan", "time": "32:17", "start": 1937.43, "text": "yeah, it's-- I mean, personally, I'm more- More in the make-hay, I think they're more in the make hay while the sun shines, right? They kind of see it as, hey, BlackRock and Fidelity have shown up here, we may not be able to compete with them, you know, on their own game, but let's just kind of strategically bleed out the customers that we can and just kind of ride out what we can, maybe that's the way they're thinking." }, { "speaker": "guest_2", "time": "32:37", "start": 1957.46, "text": "Yeah, I mean, that would be very short term. If they thought they were gonna lose all their assets, it would be kind of a dumb idea because e-even if you made point two five percent on six hundred thousand Bitcoin for the next few dec- like, if, if, if they didn't lose, you know, BlackRock, I mean, I kind of put out a tweet, talking about this, how like, when, when Bitcoin, when, when BlackRock holds five hundred thousand Bitcoin and the price is a million dollars a coin BlackRock just by the, you know, twenty five basis points. They're, they're minting one point two five billion dollars per year every year, and that's just like, they're not, you know, that's just printing money basically for them. They're not doing anything for it, so except using their branding basically. So there's a lot of money still left to be on the table if you look at, if you project out Bitcoin over the next couple of decades. Depends what the other an- the other" }, { "speaker": "stephan", "time": "33:31", "start": 2010.95, "text": "angle that maybe we haven't brought up yet is the angle that Grayscale could be Arguably the cash cow of the DCG group, right, of Digital Currency Group, and maybe for some reason they need that revenue now, and maybe that's why they've been a bit more high time preference argu- arguably, let's say, I'm speculating, but it could be that's also driving some of the decision making." }, { "speaker": "guest_2", "time": "33:54", "start": 2033.95, "text": "Yeah, I, I think there's actually, and I think there's, that's pretty good, I, I, I would ascribe a pretty high probability of that because you know they've got, bankruptcy debt related issues to Sort out. So that, that, that, that might well just be a big factor. They might just go, \"Hey, I can't afford to cut my revenue by, you know, making the" }, { "speaker": "stephan", "time": "34:13", "start": 2052.84, "text": "long game. Let's just, you know, make as much as we can now.\" Yeah. And, you know, but, yeah, in- nevertheless, it's, been a very successful ETF lo- you know, launch in, in general, especially for BlackRock and Fidelity, And it seems that the demand has been very consistent, and so that's, that's, I think that's quite a promising indicator that there's just like a steady, you know, purchase or bid coming in every few, every weekday. There's just buyers coming in, across Fidelity and, BlackRock, and, you know, especially I know, Fidelity has this big distribution network, right? So there's lots of maybe underlying, investment advisors who are going out there to their individual customers saying, \"Hey, there's this new ETF,\" or maybe for years You've been wanting Bitcoin exposure, now I can give you, now I can give you, you know, exposure. I can help you get exposed through this ETF. So it's, I guess that part is promising, and so what's the scenario then if we sort of start to see a bit of FOMO this cycle or, you know, maybe, maybe not this year, but let's say next year, what does it start to look like in your view?" }, { "speaker": "guest_2", "time": "35:20", "start": 2120.34, "text": "Well, the, the interesting thing is, as you said, there's been this very consistent bid, basically, on average, Coming in, per day. and as you said, it's coming in because they're kind of just knocking on advisors' doors, like really old-school kind of salesmanship that's actually happening right now. It's like literally," }, { "speaker": "thomas_fahrer", "time": "35:41", "start": 2140.55, "text": "you know," }, { "speaker": "guest_2", "time": "35:41", "start": 2140.99, "text": "Morgan Stanley are likely to-- there's sort of rumors, but they're likely to be sort of setting up their platform to onboard these ETFs in the coming weeks, and it's like piece by piece kind of unlocking it as we go. but it has created this effect of a pretty steady bid of five thousand Bitcoin per day. On average, let's say. Well, the thing is, we know the natural sellers in the market are the, the Bitcoin miners. they got, they're selling nine hundred Bitcoin per day right now. I mean, they might be huddling a bit, but the, the point is they're, they're- They're mining nine hundred a day. Obviously, that in it, in itself isn't enough to meet the kind of five thousand Bitcoin per day in demand, and we've seen sort of an immediate effect on this, right? In the sense of In two months, hey, the price is up seventy percent. Like, I think realistically, it's kind of a grind up from here in the sense of we see this continual five thousand Bitcoin per day and we see these new selling on the market. Well, miners obviously, we know with the halving, it's gonna slip to four fifty Bitcoin per day in sales, and you just have this frankly a demand-supply imbalance where- at the current price level, there's more people trying to-- there's, there's more Bitcoin that wants to be bought than wants to be sold, on the, on the margins, right? Obviously, at higher prices, what d-- does tend to happen is it unlocks Kind of previously frozen Bitcoin, right? Where somebody hold, you know, holding their Bitcoin, holding their Bitcoin, well now we're at seventy K, you know, maybe I bought it at fifty in twenty twenty-one, and now I'm actually like, I'm not sure about whether I wanna go through another bear market and, I'm gonna take, like, this, take my profit. So that does happen to some extent, but on the, on the, as a whole, what happens is just the demand, frankly, outstrips the supply, and it just starts to Like at, at the, at the given amount of coins that can be available, and we tend to see this, this sort of cascading effect where we would expect, I would expect a significant price rise coming this year and really continuing as long as we see these ETF flows coming in, I do think that Bitcoin is very sensitive to macroeconomic conditions, primarily because the, the whole traditional financial world is basically like, the, when, when, when Bitcoin is, i-it's not a coincidence that Bitcoin is hitting its all time high at about the same time the stock market is hitting, you know, the, the S&P 500 is hitting its all time high, Nasdaq is hitting its all time high. It's not a, it's- It's not like a random, you know, it's not a random event that these, these things are happening all together. I, I, I think what's happening is that there's an expectation that we will see the, the Fed kind of lower interest rates and loosen financial conditions over the, over the coming year, and this really- I would expect people kind of forecast in advance what's gonna happen, and if they think there's gonna be lose condition to kind of create it in the moment already, pumps up the Bitcoin price, and yeah, I would expect to see, Bitcoin trading sort of multiples of where we are fast-forwarding twelve to eighteen months, but with obvious like volatility along the way because As we know, what happens when people-- when it starts to run up, you get all these people buying 10x leverage longs, and then it becomes like just a great opportunity to liquidate them when a big whale comes along and sells, and you create, you create these kind of cascading effects, so I basically I would assume it's gonna look a lot like prior cycles, which is just a great increase in volatility, but generally with an uptrend." }, { "speaker": "stephan", "time": "39:29", "start": 2369.36, "text": "Yeah, and so I think, yeah, human nature doesn't change, and of course, it would be-- maybe people could fantasize about this idea of an orderly transition, right? Everybody's going to the lifeboats in a very safe and orderly fashion. But we know that's not how it's gonna happen. We know it's gonna be kind of-- people are gonna be running for the lifeboats, and the-- there will be people who buy Bitcoin in a way that they're not able to hoddle it, or they buy an amount above their risk tolerance, right? They might buy an amount thinking, \"Yeah But the reality is they haven't been tested yet, and they're not ready to kind of take a fifty percent drawdown or an eighty percent drawdown as we've seen historically. And, so we'll see a lot of people who do things like sell their house and buy Bitcoin, a-and do all kinds of crazy things. I mean, not that that's a totally crazy idea, but it's just you have to be aware of what you're getting into, and you have to be sort of ready to sort of ride the volatility, and you have to be ready for, I would say minimum five" }, { "speaker": "stephan", "time": "40:31", "start": 2430.56, "text": "I'm holding these coins and I'm hodling for a minimum of ten years. I understand that, that can seem confronting for people, well, ten years, especially if you're new, but I think once you've been around for a while, you sort of start to understand why, like having a long hodl-hodl period is, is a good thing. But, you know, we'll see all kinds of degeneracy, and so, that's something to, be wary of. Now, we will, you know, I think as is tradition," }, { "speaker": "stephan", "time": "41:01", "start": 2460.56, "text": "Chris, where you stand? Do you-- Are you a supercyclist or are you a more like a, a big drawdown guy? What do you, what do you think? Look," }, { "speaker": "guest_2", "time": "41:07", "start": 2466.51, "text": "the, the way I look at it is that Bitcoin, just, just look at the his-history, we've had- I think you could, if you looked closely enough at the price chart, you might be able to find fifteen parabolic runs ended by a, a big crash at the end of it, up until, up until now. I'm not betting that this time is different. that doesn't mean that I plan on-- I, I'm, I'm kind of-- the trouble is, is that I don't know Like, does a parabolic, I mean, you were, we were, we were at fifteen, fifteen thousand only, eighteen months ago or whatever. So truth is, is that you could look at a fifteen K to one fifty as a parabolic run But you, you, you, that might also be fifteen K to one point five million, and if you look at the kind of bull, scenario there, I don't Have any kind of pre-like knowledge about what that kind of top is, so I'm not going to be planning on kind of selling all my Bitcoin and trying to predict At the market top, but I do expect, I do expect we will gonna have a bull run and then we're gonna have a bear market following it, just as we have the previous kind of sixteen runs, I, I think actually eventually there will be a kind of a trimmed volatility. I just think we're so, like, people have this idea that we're like Kind of at the end, like sort of Bitcoin, you know, people have an idea that like, oh, 2013 was the wild days, and 2024 it's kind of over, or it's like, now, it's like- It's like, nah, we're kind of maybe halfway through. That's kind of how I, I see it. We're kind of halfway through. And so it's gonna be wild for a while" }, { "speaker": "guest_3", "time": "43:06", "start": 2585.95, "text": "yet. Like it will eventually, you know, maybe when Bitcoin is kind of ten million a coin That's when you start to go, oh yeah, it's kind of, it's, it's monetized. Right, it's gonna" }, { "speaker": "stephan", "time": "43:15", "start": 2595.18, "text": "stabilize a bit then, yeah." }, { "speaker": "guest_3", "time": "43:17", "start": 2597.05, "text": "Yeah, but it's not, it's" }, { "speaker": "guest_2", "time": "43:19", "start": 2598.95, "text": "so far away from stabilizing that I would expect And, and I also think that historical models aren't, aren't that, aren't that helpful in the sense of like, we just because Bitcoin did kind of seventy-five percent last time Doesn't mean it c- couldn't do ninety percent next time. Like, i-it's not like, the, the, the rules don't, go out like, it's not like, oh, well, it's, it's bigger, so it- not that I'm expecting a ninety percent drawdown, but, I would just say that, like- You can't-- you, you have to look at it from the fundamentals of what it is as opposed to, lines on a chart." }, { "speaker": "stephan", "time": "44:07", "start": 2647.48, "text": "Right, right. This is a good topic to get into, as I, I know you've been commenting about this as well, and there's been a lot of argumentation online about this as well, because people are talking about- Whether, whether it's the power law model or the, you know, this other model, and, you know, the classic Michael Saylor line is, \"Hey, all your models are gonna be broken,\" right? Like, which is sort of-- And I think what you were getting at, which I, which I agree with as well, is, I think it's more useful to think about the markets Bitcoin will- Go after or replace or maybe subsume or take from, let, let's call it monetary premium out of stocks, property, bonds, you know, like gold, et cetera. Like it's gonna take, it's gonna suck something, quote unquote, it's not exactly precise, but it's gonna take something out of those markets and Bitcoin is gonna subsume and become that, and so that's kinda how I'm seeing it, but I'd love to hear your take on that. Like, I know you've, disagreed with the Powell or model as an example Power law model, you know, flawed in your view?" }, { "speaker": "guest_2", "time": "45:06", "start": 2705.76, "text": "Well, look, the, the-- First of all, I mean, there's, look, there's a few different factors there. I mean, one is it, the power law model doesn't-- A power law model might hold when you chart Bitcoin versus US dollar, but it's an exchange rate. I live in Australia, right? Like, s-suddenly it's actually, it's a different, it's a different model, for Bitcoin, Australia. Or then you get- Yeah. If you're on that" }, { "speaker": "stephan", "time": "45:30", "start": 2729.94, "text": "point, they would, they would argue, \"Oh, no, the US dollar is the reserve currency of the world, therefore you should compare it against the US dollar and not against even shittier shitcoins,\" you know? Yeah. Like they would say that, right? Otherwise, you end up with like Turkish, you know, lira, Turkish coin, Turkish, whatever the Turkish fiat coin is, or the Venezuelan coin or whatever, right?" }, { "speaker": "guest_2", "time": "45:47", "start": 2747.15, "text": "Right. So, okay, so we can establish, we, we-- then we can all agree it doesn't" }, { "speaker": "guest_2", "time": "45:59", "start": 2758.68, "text": "United States. I mean, the, the problem is, is that we're not comparing, like, bi-- Bitcoin is, although it's volatile, it's a kind of a stable system, you know what you've got with Bitcoin, but the truth is, is that" }, { "speaker": "guest_2", "time": "46:14", "start": 2773.95, "text": "like you, American system, the, the debt could go parabolic at any point in time. We don't, we don't, I'm not necessarily predicting it's gonna happen next, in the next six months or whatever, but the fact of the matter is, is that, The, there's nothing fundamentally different about the US dollar versus all the other, currencies in the sense if it's not backed by anything except," }, { "speaker": "guest_2", "time": "46:42", "start": 2801.88, "text": "the confidence of the people. You can think about it like it's, equity in the US government, I guess is, is one way of kind of framing what the US dollar is. It's sort of a confidence in the US government system, the US dollar, that's kind of what a fiat token is, and that can only be drawn upon So long with new issuance, new issuance until you have a kind of a jump phase shift in suddenly, Suddenly I don't like, I've gone from-- it's binary, it's binary where we've gone from having some level of confidence, having no confidence. That can happen, and it, it, it has happened historically with-- well, certainly we've seen it with every other fiat currency in history, so I wouldn't necessarily expect the US dollar to be any different." }, { "speaker": "guest_2", "time": "47:33", "start": 2852.87, "text": "I do think that there are like, I do think it's interesting that the power law tracks as well as it does historically, like I, I'm not kind of like completely Oh, just, you know, it's total crap. Like, no, it's, it's quite interesting. But I've, I've done like the power law modeling myself, just, just out of my own curiosity. And the, the big thing, you know, people have to realize with this is that The actual model you get varies a lot depending on, like, very few data points, as in, which is to say, if you take the price of Bitcoin and you model it out, right? And then you go, \"I wanna start in twenty twelve, \"or \"I wanna start in twenty eleven. \" If this is some like natural law, natural rea- you would get kind of a very similar result. But the truth is, is that the kind of like power law model you get will tell you a very different kind of expected price depending on, you know, I can create a power law model which says the price should be about seventy k today. I can also create a power law model which says the price should be about one hundred fifty k, just depending on which data points I put in in the model. Like, so I'm not gonna trade off this model when it's kind of, I'm drawing lines on a chart. And the other thing I would say is that these things w- these things fundamentally work until they don't. I mean, I would say that like the Lindy effect is important the longer it's been trading, The more sort of confidence you can grow in it, but, a lot of these same arguments could be used to be, sort of fundamentally extremely bullish about Ethereum, for example." }, { "speaker": "guest_2", "time": "49:26", "start": 2966.48, "text": "And, there, there is some kind of validity to it in the sense of you can go, \"Hey, look, it's four hundred billion dollar network.\" so are you really gonna question, question that, right? 'Cause it's gone from nothing to a four hundred billion dollar network? Like how are you gonna say, this isn't extremely valuable? But then I, then I would say to that I would have to go sort of delve deeper into some of the fundamental things about what might be propping up that price and whether it's kind of sustainable and all these like fundamental real factors to actually, you, you kinda, you just have to dig deeper. and if you wanna just kind of extrapolate into the future, it's a very naive way of doing it. I, I would also like" }, { "speaker": "guest_2", "time": "50:12", "start": 3011.89, "text": "think about something like, The Terra Luna situation for, back in 2022, 2021. This was a kind of a perpetual motion machine, Asset. And all the people theoretically said, \"You know, this can't work. It's gonna blow up because, it's a perpetual motion machine. It's fundamentally impossible for this to sustain itself.\" But we had like six months" }, { "speaker": "guest_3", "time": "50:43", "start": 3043.36, "text": "of it getting bigger and bigger and bigger, and you would have just drawn this beautiful line on it, and it's just like, this is just working perfectly. And you had influencers" }, { "speaker": "stephan", "time": "50:54", "start": 3054.1, "text": "shilling it and everything." }, { "speaker": "guest_3", "time": "50:56", "start": 3056.16, "text": "Yeah, of course you got influencers shilling it, but you would just look at it and go, \"This is just growing and hey, I know it's not supposed to work, but it is working.\" And then it didn't, then it didn't work. And the, the point is, is that- You actually have to like," }, { "speaker": "guest_2", "time": "51:11", "start": 3071.06, "text": "the reason why I'm excited about Bitcoin is like, the really, I would guess I would start, for anybody, I would say they should read like Vijay Boyapati's bullish case for Bitcoin. I think that's probably the best, most fundamental way of just sort of understanding Bitcoin in the sense of you have to get to like, what are the core properties of money and what are the core properties of Bitcoin and why does that make- Bitcoin a good money and why would that lead you to the conclusion that over time it's going to be adopted as money? And these are like fundamental properties and not, These aren't, these aren't not, you can't chart this. and, and that's why I would say Bitcoin is like exciting and bullish. I wouldn't invest in Bitcoin Because of a power law model, because I just think that's a really good way to get wrecked when the model breaks, basically." }, { "speaker": "stephan", "time": "52:08", "start": 3128.02, "text": "Yeah, I think that's a great summary. And, as I'm, I'm a big fan of Vijay. He, in fact, Vijay was episode number two on my podcast. We're now, what is this, five hundred and fifty, sixty or something now, but, you know, five hundred episodes ago, he was episode number two on my show for a reason. and Safteen was episode number one, and so it was were very important and will, you know, people will look back and be like, \"Hey, this was kind of a nicely spelled out example of why Bitcoin is gonna win and why it's gonna become money.\" but, you know, we're, we're just early days, right? w-well, while we're here talking about models, are there any other, you know, kind of- M- or do you think, any other models you wanna take a shot at here, or is it just kind of, y-you'd say that same critique is pretty much applicable, on other models?" }, { "speaker": "guest_2", "time": "53:00", "start": 3180.22, "text": "Look, I think that, I think that models can be interesting, in, in terms of guiding for sure. Like, if somebody w- I would love to see some really good models outlining, for example, looking at, like a good, a good model to me is looking at, for example, when I hear there are eight trillion dollars- worth of assets held by financial advisors, and then as these, these advisors are surveyed, and then they're saying, saying, \"Yeah, seventy-five percent of them want to invest in Bitcoin, and we want to invest two to three percent.\" And then you go, \"Oh, okay, maybe that, that, a model might be saying there's two hundred and fifty billion dollars worth of Bitcoin buying there. And then a model might say, \"What does that imply for the Bitcoin price? \" That to me is an interesting model. It, it's not, like it's, it's not a precise view of exactly what's gonna happen, but it's a very logical kind of reasoned understanding about how Bitcoin can grab, hey, as we talked about, monetary premium or just grab energy from other investment assets. These are interesting models for me, figuring out like what kind of asset, like what potential of the potential pool of assets out there in the world, how much could flow into Bitcoin. That's an interesting model 'cause then you can kinda- Now, it doesn't get you all the way there 'cause we don't know what the kind of multiplier effect on the market cap is gonna be, right? And that also requires a kind of a model. And so you can kind of look at historical numbers, and that's also interesting too. That's an interesting model. Like, I, I wanna know, for example- Get some kind of estimate of, oh, okay, when we had say ten billion flowing into Bitcoin over the last, over the last few months, approximately, and it led to this sort of fifty percent price rise based on the relative market caps, what does that like- Oh, it's increased the market cap by four hundred, four hundred billion, there's ten billion new, so maybe there's a forty x multiple on the kind of flows. That's an interesting model to me. What's less interesting is like, say, like stock to flow That's, like that, that's a tricky one because I do fundamentally believe there is some, like, there is a connection between the halving and the price, but I also don't think you can kind of, I don't believe in like" }, { "speaker": "stephan", "time": "55:25", "start": 3324.72, "text": "that you can chart it." }, { "speaker": "guest_2", "time": "55:26", "start": 3326.06, "text": "You can chart it, no, no, I don't believe you can chart it. Yeah, I do believe that's a fair," }, { "speaker": "stephan", "time": "55:30", "start": 3330.3, "text": "that's a fair way to put it. I think some people also, I think Joe Carlissari made this point recently on Twitter or on X, and he was saying that many people in the financial world, they sort of, they use models as a CYA, right? It's to cover your ass. It's kind of like a, oh Hey, client, invest in this thing 'cause I've got this model. And, and then if they invest and it breaks down, oh, see, it was the model that, you know, and it's kind of like how people go and hire a consulting firm like McKinsey to kind of rubber stamp or bless their project that they wanted to do anyway, and say, \"Oh, see, it broke down. Well, see, McKinsey told us this, this was a good plan, so you can't blame me.\" You know, that's kind of the-- That's where maybe that's the A way for giving research, to clients to say, \"Hey, here's why you should buy my product, because this model says it's a good thing.\"" }, { "speaker": "guest_3", "time": "56:22", "start": 3382.34, "text": "Yeah, and, and I will say sometimes I feel bad because I, I have a general rule I try not to attack bullish models as a general, as-- because I do think that there is a kind of a mimetic warfare going" }, { "speaker": "guest_2", "time": "56:35", "start": 3395.03, "text": "on here, and if somebody wants to point to a power law model that says Bitcoin is going to a million in five years' time Part, there's a big part of me that says, that wants to say, you know, yeah, that's a great, great looking model right there. but it just depends on like I don't know, there is-- if we're, if we're searching for truth, then we kinda have to be honest with our, on-- honest with ourselves as well. But as you said, there is a kind of element of, give, like, people need a reason, like They need a because, you know, there's the famous thing with the, with the, there's a famous story where, you know, you can persuade people better by giving them a fake because. You know, I, I don't know if you've heard this experiment, yeah," }, { "speaker": "stephan", "time": "57:22", "start": 3442.32, "text": "yeah, yeah, like people cut in line and say, \"I just need to get in front,\" yeah, like, and not, not even give them a, like, yeah, a, a kind of like a nonsensical reason, and people just accept it, you know?" }, { "speaker": "guest_3", "time": "57:33", "start": 3452.87, "text": "If you, if" }, { "speaker": "guest_2", "time": "57:35", "start": 3454.99, "text": "you give them Someone would say, \"Can I jump in front of you?\" And they, they do it very poorly. But if they said like, \"Uh, can I jump in front of you?\" And then they gave any reason at all, even if" }, { "speaker": "stephan", "time": "57:52", "start": 3472.43, "text": "it had like," }, { "speaker": "guest_2", "time": "57:53", "start": 3472.91, "text": "\"Yeah, can I jump in front of you?\" Like because I'd, I'd love to jump in front of it, like, i-i-any, anything at all, just some kind of because, it's like, oh, oh, okay. That it just increased the probability of being accepted. So if kind of some investment committee out there needs to see a parallel model to invest in Bitcoin Then I hope all the analysts out there chart up the power law and, present it to the, present it to the teams. But," }, { "speaker": "stephan", "time": "58:24", "start": 3503.71, "text": "yeah. Yeah, but I mean, as you said, a-ultimately it comes down to, you're, we're trying to seek truth and trying to be accurate, so at the end of the day, you know, I think that's, you know, what we should aim for. one other area, just before we finish up, I know there's been a lot of chatter now about the price of MicroStrategy relative to the price And I think there was one firm who are now saying that they are going short MicroStrategy and long Bitcoin because they believe the premium is sort of out of whack. I'm curious if you have any thoughts on that, you know, or do you think they're playing with fire?" }, { "speaker": "guest_2", "time": "59:00", "start": 3539.98, "text": "I, I, I would say that MicroStrategy right now is trading about two x its kind of net asset value, if you, you know, it's a thirty billion dollar market cap and they hold fifteen billion dollars of Bitcoin So in order for that to be like logical and rational, you would have to assume they can really grow their kind of Bitcoin per share consistently by a lot, over the coming years in order for that to make any kinda sense. And I would say, like, for me personally, what, what would I rather buy right now? Would I much rather buy Bitcoin than buy MicroStrategy at this premium? But, and, and then people can, like, as a hedge fund, the- Trade is very logical to me, is what I would say. Like, this is what hedge funds do, right? This is literally what they do. they look for, they look for kind of trades like this which are odd but the reality is, is that MicroStrategy trading at kind of a two x to its NAV, I might argue, is kind of already in the bounds of irrational. And what that means, in my opinion, in my opinion, which means that- Once you're, once you're kind of disconnected from fundamentals, then you're in another world, right? Like, to me, when I look at micro strategy trading at two point five times its Bitcoin I go, okay, well, then it can trade at five times as Bitcoin." }, { "speaker": "guest_3", "time": "01:00:29", "start": 3629.17, "text": "Because" }, { "speaker": "guest_2", "time": "01:00:30", "start": 3630.2, "text": "it's, it's not like if it, if it was bound by its kind of net assets, it probably wouldn't be trading two and a half times as it is right now. So I'm not like personally interested in kind of trying to m-make that trade, trying to figure it out, like, trying to buy micro, you know, or I'm not trying to short microstrategy and long Bitcoin or anything like that. because, because this market can get crazy. I mean, we have new coins blowing up constantly, but how, you know, the, the- MicroStrategy, and I will say, I will concede, MicroStrategy has some kind of amazing properties in terms of the ability to add value for their shareholders. I mean, if you think about what- Sailors doing where he's borrowing money at point seven five percent and then selling at a premium to the existing share price, a fif- like a fifty percent premium. It kind of creates a very interesting situation where The share price is already 2x Bitcoin basically, and then he's selling more shares at 50% above that. It's like 3x Bitcoin. So he's borrowing a billion dollars at, let's call it zero, buying Bitcoin at 70k, and selling shares for an equivalent If the share price is one to one with Bitcoin, you'd be selling shares at a hundred and eighty k price Bitcoin right now. Like that's the kind of convertible he's doing, which is, which is Amazing, right? Like that's adding so much value for their shareholders that I can look at that and I can go, \"Yeah, that's a premium. That deserves its own premium.\" So should MicroStrategy be trading at a premium above one? I would say, \"Hell yeah, it should.\" Does that mean it should be trading at, you know, two, two point five? That's where I go like, come on now. You know, come on. That, that, that's, that's aggressive. Yeah." }, { "speaker": "stephan", "time": "01:02:26", "start": 3746.49, "text": "Yeah. So it is a question of what price are you paying for it? And I'm also reminded of the famous saying, what's it? The market can remain irrational longer than you can remain solvent, right? So it's kind of, yeah. I mean, personally, I wouldn't play that game. I'm just, I'm obviously hodling and stacking About it. so let's wrap up here. Listeners, you can find Thomas and his site, it's heyapollo dot com, and you can find him on X, Thomas underscore, Fahrer. Pronounce \"Fahrer,\" yeah. yeah. Yeah, it's correct. Yeah. So, yeah, Thomas, thanks for joining me, and, yeah, I'll catch you around." }, { "speaker": "guest_2", "time": "01:03:03", "start": 3783.85, "text": "Hey, look, it was a pleasure. Thanks, Stefan. To make any kind of sense. And I would say, like, for me personally, what, what would I rather buy right now? Would I rather buy Bitcoin, buy MicroStrategy at this premium? But, and, and then people can, like, as a hedge fund, the trade is very logical to me, is what I would say. Like, this is what hedge funds do, right? This is literally what they do. they look for, they look for kind of trades like this which are odd. but the reality is, is that MicroStrategy trading at kind of a two X to its NAV, I might argue, is kind of already in the bounds of irrational And what that means, in my opinion, in my opinion, which means that once you're, once you're kind of disconnected from fundamentals Then you're in another world, right? Like, to me, when I look at micro strategy trading at two point five times its Bitcoin, I go, \"Okay, well then it can trade at five times its Bitcoin.\"" }, { "speaker": "guest_3", "time": "01:04:07", "start": 3847.22, "text": "Because" }, { "speaker": "guest_2", "time": "01:04:08", "start": 3848.24, "text": "it's, it's not like if it, if it was bound by its kind of net assets, it probably wouldn't be trading two and a half times as it is right now. So I'm not like personally interested in kind of trying to make that trade, trying to figure it out, like, trying to buy micro, you know, or I'm not trying to short microstrategy and long Bitcoin or anything like that. because, because this market can get crazy. I mean, we have new coins blowing up constantly, but how, you know, the, the- MicroStrategy, and I will say, I will concede, MicroStrategy has some kind of amazing properties in terms of the ability to add value for their shareholders. I mean, if you think about what- Sailors doing where he's borrowing money at point seven five percent and then selling at a premium to the existing share price, a fi- like a fifty percent premium. It kind of creates a very interesting situation where The share price is already 2x Bitcoin basically, and then he's selling more shares at 50% above that. It's like 3x Bitcoin. So he's borrowing a billion dollars at, let's call it zero, buying Bitcoin at 70k, and selling shares for an equivalent If the share price is one to one with Bitcoin, you'd be selling shares at a hundred and eighty K price Bitcoin right now. Like that's the kind of convertible he's doing, which is, which is Amazing, right? Like that's adding so much value for their shareholders that I can look at that and I can go, \"Yeah, that's a premium. That deserves its own premium.\" So should MicroStrategy be trading at a premium above one? I would say, \"Hell yeah, it should.\" Does that mean it should be trading at, you know, two, two point five? That's where I go like, come on now. You know, come on. That, that, that's, that's aggressive. Yeah." }, { "speaker": "stephan", "time": "01:06:04", "start": 3964.52, "text": "Yeah. So it is a question of what price are you paying for it? And I'm also reminded of the famous saying, what's it? \"The market can remain irrational longer than you can remain solvent,\" right? So it's kind of, yeah. I, I mean, personally, I wouldn't play that game. I'm just, I'm obviously hodling and About it. so let's wrap up here. Listeners, you can find Thomas and his site, it's heyapollo dot com, and you can find him on X, Thomas underscore, Fahrer. Pronounce Fahrer? Yeah. yeah. Yeah. Yeah. So, yeah, Thomas, thanks for joining me, and, yeah, I'll catch you around." }, { "speaker": "guest_2", "time": "01:06:41", "start": 4001.9, "text": "Hey, look, it was a pleasure. Thanks, Stephan." }, { "speaker": "stephan", "time": "01:06:44", "start": 4004.06, "text": "I hope you enjoyed the show. Make sure to thumbs up if you liked it, and find the show notes at stephanlivera.com. Thanks, and I'll see you in the Citadel." } ] }