Talking With Mike Alfred

what the heck is going on in this crazy, crazy world. Um, you know, I try to bring to you some education so you can understand really what's going on behind the scenes, because of course you were never taught it and you're being misled all the time. Try to bring to you the latest breaking news, and of course I try to bring some interesting guests on so you can hear from some other people. But me talking all the time. And I am joined in the studio right now with one

of my good friends, Mike Alfred. Mike, thanks so much for joining me today. Yeah. Thanks Mark. It was good to meet you in Miami. Yeah. Yeah, we just got to meet each other recently. We've been kind of following each other on Twitter for a while and we got to hang out there in uh in Miami, go to go to go to some some of the parties together. That was That was a fun way to get going. I enjoyed that. Um. I think we met at the unchained cab little party and then the Gemini party or whatever.

But you know what's cool about that is um social media. You know. UM, I have a daughter who's just graduated high school and all her friends parents are like, UM, so eager to send their kids off to college. And I'm just not a big believer in that. And there's certainly things you need to college degree for, but unless you need that, I'm just not a big believer in it. And I'm I would ask them, like, you know, okay, what's you know, what do you see as big benefit?

And most of them would always go back to not the education, um, the experiences. They lean on that, but then they lean on the connections. They're gonna get the connections. And I'm like, dude, have you heard of Twitter? Because like, I've like met everybody in the world on Twitter, Like Mike and I we were like friends on Twitter before we were like friends in real life. You know, pretty amazing. I'm sure you use it the same way. I thought it was overvalued for most of the time I use it.

It wasn't until last summer when I left Nideck that for the first time I tried to actually engage with the platform every day, And now I see how valuable it is because I've met maybe hundreds of people through Twitter just over the last twelve months. It's opened up a whole bunch of doors. It's allowed me to invest in a couple of new bitcoin companies. I joined a couple of boards all from Twitter, and that surprised me because I used to think it was kind of a

foo fou thing that people did. It was sort of a waste of time for CEOs to be engaging with social media. But I've seen the light now, Mark, and you came right up to me at a at a party and you you knew who I was. I knew who you were. And it's all because of Twitter. So yeah, do you think do you think it's changed? So like, um, obviously, like you have network effects, right, So the bigger than network gets, the more valuable it gets. And so maybe it was kind of more foofy as you in your words,

or not not as usable. But now today since everybody's on there using it more, it's it's become more viable. I think it depends on your interest graph. So before Bitcoin, you know, Twitter was less interesting. I think the bitcoin community is one of the most rapid communities on the Internet, and Twitter is sort of like one of the primary places where people involved in bitcoin come together and share

information and build relationships. And so I think for me, a lot of it was just becoming kind of a full time bitcoiner in a sense, like really embracing that as part of my identity is something I wanted to talk about and think about every single day. Um, and when I when that switch flipped, Twitter all of a sudden made more sonse right, and the community here has been incredible. I mean, look, I I sometimes get in battles with with people. I mean that just seems to

be part of the space. It's funny how many friends I have that are like enemies of each other. But that's just sort of the fun part of of of using Twitter. Yeah. Well, I think it's important to battle, uh you know, not not in a bad way, but in a good way, because good ideas are one through discussion, right, and so we need to kind of I call it like verbally sparring, right, if we need to spar back

and forth and in a in a good way. And um, we learned from that a lot of times, I'll see somebody's post and I'm like, oh, wow, that's that's that's that's so good, that's that's that that's right. I hadn't thought of that. And then I'll just read the comments of people sparring back and forth, the baiting if you will, right, and I'm like, oh, I didn't think about that. I didn't think about that. So you know, it's important to be able to have that discussion, and it's worked good

for that. I I didn't start using Twitter until um I was in I was in Hawaii. It was January and um I was on the north shore of Oahu. Were there for a month and I woke up in the morning and my phone was like making this like weird alarm and uh, I think it was seven in the morning and something like pretty early, And I grabbed my phone and I looked at it and it says imminent threat inbound missile alert. This is not a test.

I'm like what. And then like I look at my wife and like she's got the same alert on her phone and we're like like and this was right at the height of like the whole North Korea thing with Trump and the Korea is going to fire this missile and here we are and it's like alert inbound missile, imminent threat, not a not a you know, not a not test and uh and then that was it. And then there was like no news about it. You could turn on the TV, jump on the internet. There was nothing.

And people were freaking out. All the neighbors were jumping in their cars and taking off all the where you're gonna go hide in the island, right. Um, And my business partner at the time, um, he was on Twitter. I wasn't, and so he jumped on Twitter. And then all the information was on Twitter, right, and like I couldn't find any information, and so I was like, okay, I started on Twitter. And that's great how the information goes. But let's uh, let's jump past that. That's some fun stuff.

But um, some of the things that's been going on in the bitcoin and cryptocurrency space the last couple of weeks, it's been fun to see happening on Twitter. Well, fun depend on what side of the ball you're on. But we're starting to see crazy liquidity crisis happening and almost like this domino effect, uh, maybe starting with Tera Luna and now going through into other platforms, um Celsius, Voyager. I don't know, maybe Genesis Block Fi next, so and

we don't know how far this gets. Let's talk about that for a little bit. I know you've been like pretty vocal and outspoken on that, Like what's your take on that on the big picture, and then we can kind of dive into that. At a very high level, I think we're at the tail end of like a ten to twelve year kind of fed fueled bowl market where interest rates have been held at a very low level for too long. There's been too much money creation, there's been too much risk taking, everybody's way out on

the risk spectrum. Um. And so even before you get to crypto, I mean, you just look at what happened to Tiger Global, uh this year. You look at the decline and some of these large cap technology stocks, including some like Facebook and Netflix that were viewed as kind of teflon up until about the last kind of call

it nine to twelve months, um. And so I just think we're seeing what happens at the end of every liquidity cycle, where there's this cascade of folks that get liquidated because they convinced themselves, um that the world was going to continue on in the same trajectory that it had been on for the last ten or fifteen years. And that's the problem with an unstable monetary policy. I mean,

I do fault the Fed and politicians. I mean there they didn't see inflation coming, and then they don't understand that all of the activities that they've engaged in, including zero interest rate policy, quantitative easing, stimulus, etcetera. You can give out checked you know, six hundred bucks or bucks to people and then you can lie to them and say that won't cause inflation. But the reality is they've basically hauled out the middle class and and and the

poor in this country um through this policy, um. And so that that's filters over into crypto. You know, people can't get a yield because interest rates or zero, they can't put their money in a savings account, and so they become deluded into thinking that it's okay to deposit money into a platform like Celsius, which is essentially an unregulated shadow bank offering unsustainable yields in an environment where

yields are basically zero. And so the first red flag for something like Celsius is just that if you see yields of sevent when your bank is offering twenty BIPs like you might want to ask yourself how much risk

is I am I taking? And then when you see a CEO that engages um and essentially weakly uh, you know, conversations with the community where he repeatedly lies about the risk that we're taking, fails to disclose risks, irresponsible risk that lead to loss of client capital, and then consistently makes sort of irresponsible decisions across the business. You know, you shouldn't be surprised. My current view on this mark is that Celsius is probably one of the worst actors

in this entire ecosystem. It's completely it was completely predictable in my opinion, that it eventually was going to have problems. I also knew that Block five had had made bad, poor decisions as well. The difference seems to be that the investor community completely lost respect uh and trust in Alex Mashinsky and the Celsius team. Somehow, some way, the the sort of inexperienced team at Block five managed to hold onto some credibility in the market, and therefore they're

able to kind of get bailouts at this point. Yeah, yeah, that's a good breakdown. I want to I want to break that down a little bit more and dig into some of this, including like the short squeeze that's like maybe they're trying to warm up, and the credit extension

that's been thrown to block Fly. What that consolidation means. Um. I got a quote from Lenin that I want to read to you as well that I think helps some up kind of where we're at um and maybe talk about you know who swimming naked and kind of like a warm Buffett type type of quote. So anyway, listen to the Mark Mo Show. We're talking about the decentralized revolution the world's going through. We're talking about bitcoin and cryptocurrencies.

Of course, I'm in the studio with Mike Alfred. You can find them on Twitter at Mike Alfred and uh, we got a lot more to cover when we get back, so don't go away, all right, Welcome back. You are listening to the Mark Mo Show. We're talking about the decentralized Revolution. We're talking about bitcoin, we're talking about what's happening in the cryptocurrency space, and I'm in the studio

with Mike Alfred. You can find on on Twitter. At Mike Alfred and uh, you're explaining Mike, how Um, you know, this is basically kind of the the the end effects of this long term bowl market, the long's bowl market we've been in history and what happens, and um, it made me think of this Lenin quote that I wanted

to pull up real quick. Um, Vladimir Lenin from Russia, not someone that we should model after, but he said, quote, Um, the the best way to destroy the capitalist system was to debouch the currency by a continuing process of inflation. Governments confiscates secretly and unobserved an important wealth of their citizens by this method not only confiscate, but they confiscate arbitrarily,

so through inflation and deflation. And then and then at the end, he says, as the inflation proceeds and the real value of the currency fluctuates wildly from month to month, the ultimate foundation of capitalism becomes so utterly disordered as to be almost meaningless, and the process of wealth getting degenerates into a gamble and a lottery. And so I think that's kind of where we're at. Where it's like, um, you know, at the end of this long term death cycle,

through all this inflation. That's happened. Um, there's no yield left anymore. Right, the interest rates are down at zero. They've pushed everybody out on this crazy risk risk of to try to get any kind of yield they hand they can, but ultimately they've turned it into a generation gamble. And so now everybody has to gamble. And I think to your point, they think everything just goes up in perpetuity, and it doesn't and they and they find out, unfortunately,

they find out the hard way. Yeah. And if you were raised in the nineteen fifties or sixties, right, um, you were told, hey, save money by government bonds, put in the bank, right, or earn more than you spend. And that whole model was flipped on his head because the FED change the rules. The rule for the last twelve years was big bar and steal as much capital as you can get, take as much risk as possible, use as much leverage as possible. It doesn't matter because

if you mess up, we will bail you out. So that FED put incentivized increasingly risky behavior, and only some people understood the rules of the game. Right, So when people were overlevered going into the COVID situation, in the spring of guess what the government did. They basically bailed those people out with p PP loans. So these companies got five million, ten million, twenty million dollar p PP

loans that were forgiven. And yes, some of the employees got to keep their fifteen dollar an our job for an extra six months, but the owners of those firms should have been wiped out by that irresponsible leverage that

was on those firms. So look, I think when the Fed manipulates the market like this, nobody knows which prices to trust, nobody knows which rules of the game to follow, And so people got sucked into things like Celsius, where, yeah, if you can't get a reasonable return in your bank, you might you might be convinced that, even though it

makes no sense, something like Celsius might work. Yeah, what about um, what about the Wall Street raiders whatever we want to call them, right, I mean, they've been they've been, They've been at this game for a long time. George Soros became infamously rich, making a billion dollars a day by breaking the peg of the Bank of England. And so it seems like Wall Street traders or raiders, they're gonna want to always want to go after these you know,

they smell a little blood in the water. They want to attack, and so, um, I don't want to dig into this, but it looks like that's there's some big Wall Street fund, Blue Street or Boost Blue guys going after the bo g A right now, which is pretty interesting,

but they want to be a George Soros. But back to the crypto space, it's almost like they spot these things like Tera Luna or Celsius, see how they're over leveraged, understand their over leverage, and they can start to see where their liquidation levels are, and they just start hunting those liquidation levels. Um. I think that's what happened with

Terry Luna. It looks like that was what's happening with Celsius, and they keep trying to lower their liquidation levels, but of course everybody knows where they're at, so it's like the raiders want to keep pushing that down. Do you do you see something like that happening? You think that's what happened. Yeah, I mean, look, that's the essence of capitalism, right. Markets systematically hunt down and kill any sort of weakness.

So if you're you have weakness in any form the full extent of any capital cycle, right if it's allowed to happen, which again, the FED is sort of this sort of put a pause on normal cycles in some senses. Right, we're supposed to suspend disbelief and believe that bowl markets can go on forever with no interruption. But in a typical cycle, all of the week as players at some

point get taken out. When times are good, right, you can get away with all kinds of shenanigans, But as soon as the tide goes out, you find out who's swimming naked. And I think that's what happened with Tara Luna, right, Like it was a weak system. It was sort of designed to fail from the beginning, and so it only took uh one powerful actor who identified the risk in that system and put a little bit of pressure. You just lean a little bit on the weakest part of

that system, and the whole thing collapses. Um, and you know, Japan's in a tough spot. I mean, the yen actually used to be a safety trade. If you remember, back in the last financial crisis, last major one, people bought the yet and it actually went up, uh you know, over a five or ten year period recently. Now they've got to print a lot of you and just to protect their bond market, and their bond market may go

down before our bond market. And obviously we have huge advantages in terms of being the global reserve currency that they don't have. But we'll see what happens there. I actually hope that that doesn't happen because I think it'll end up being bad for everybody. Yeah, well, I I think it's inevitable. I mean, it's it's only a matter of time. It's it's uh, I think more um if, I'm sorry, more when not if? But back to back to kind of the crypto space a little bit. So

obviously Terry Luna got taken down. You know, you said it's a capitalism doing this thing, which which it is, and um, I agree with that. I'm not super happy about it because, like you know, some rich Wall Street guy made an extra couple of bucks and he ruined the life of a lot of people. But that's that's capitalism. It's more, it's it's not their fault. Don't hate the player, hate the game, right, it's the game that enables them

to play that. Um, it's this fiat money system and it's the FED behind them that's enabled them to get to this point, and so I think we have to put the blame where the blame is due. Um. But uh, you know, back to Celsius. You know, they they froze Withdraws, which was kind of the death kneel. Right. They were getting a run on the bank, which is always going to happen when you're overleveraged. It's kind of like the free banking era that we had in the late eighteen

hundreds of the United States. Right, each of these banks were over levered. There wasn't enough mone me there. Um they had they had to they had to shut down with Draws. Um. Have you seen did you see this week they started getting a little short squeeze. They were trying to organize a rally on the cell token. Yeah. I mean there's a guy named the Real plan C who is an influencer on Twitter or a hundred thousand plus followers, who told everybody it was safe to use

uh Celsius. Up until the last moment. There were other influencers like this invest answers guy who literally had Maschinsky on days before the withdraw all shut down, basically giving him a platform to continue to spew all kinds of potentially definitely misrepresentations but potentially fraudulent misrepresentations about the state of the platform to customers, and so that's that's bad stuff.

These same people who um did that are now trying to organize a short squeeze on an essentially worthless token, which is fine, that's the free market too, But like the token has nothing to do with whether or not

people are gonna get their money back. So I'm really more focused on the underlying solve and see and liquidity issues experienced by the corporate entity Celsius network, and whether or not the sort of half a million or so depositors into that institution ever see any of their money back.

My current view is unless there is a bailout, unless there's some sort of acquisition of all of the assets and liabilities of Celsius, that it almost certainly will go into Chapter eleven over the next call it a month or two, and then it will take at least a year to start distributing assets to the underlying customers. That's what I'm focused on. I think the short squeezes a total side show. Yeah, I would agree, and uh, you

know that that sounds like the most probable outcome. Right, they've already brought on the people to kind of help that wind down. I think there's a difference of money they had in custody versus money that was being earning yield, so then they'll probably get divided up between that a little bit better. Um, there's a chance there's a chance you might get some of your money back. I wouldn't hold your breath, but there's a chance it might be

pennies on the dollar. Um, we'll see how that shakes out. I want to talk more about this block fine this credit from ft X. I think that's kind of interesting. I want to talk about in a minute. I'm in the studio with Mike Alfred. You can find him at Mike Alfred on Twitter. You listen to the Mark Mo Show talking about bitcoin and the decentralized Revolution. Be back with that and more in a minute, So don't go away, we'll be right back, all right, Welcome back. You are

listening to the Mark Mo Show talking about bitcoin. We're talking about cryptocurrencies, we're talking about the decentralized Revolution, and I am in the studio with Mike Alfred. You can find them on Twitter. At Mike Alfred and we've been talking about, you know, the capitalistic system, how the FED kept things too low too long, and we ended up here and some of the damna is being done in the cryptocurrency space. We were talking about Celsius. Uh, maybe

maybe someone gets some of their pennies back. We'll see what happens with that. But with Block five, maybe they're in the same boat. Of course, the problem with all these companies is we don't know. When I was at the Bitcoin conference in Miami a couple of months ago, I met with one of the one of the head guys over at Celsius, and I told him as much. I said, look, I said, I can't give you money

because I have no way to quantify the risk. I said, if you could give more transparency over the assets and where they're at, etcetera. I said, then I could quantify the risk and I could decide if I wanted to. And I said, I thought, I think if you would give more visibility or transparency, that would help your business. Apparently they didn't do that, but blocked fire. Kind of same thing. We don't know right, it's like this black box. Um.

Maybe they handled credit or or risk better. We don't know, um, but it looks like they just got an credit line from f t X. I'm sure you saw that. Yeah, Yeah, that was what two or fifty million, Yeah, which which is probably a drop in the bucket, I would imagine, right,

considering what funds they have. Yeah. Well, I mean Sam Bankman Fried is personally worth over twenty billion dollars, right, and he personally did a half a billion dollar investment into a company that I was involved with last year, and so like, the guy seems to have almost unlimited liquidity at this point in to his credit I mean, FTX only has like two or three dred employees, so they're far smaller than most of the other venues and exchanges that have done the same amount of volume. And

he's an exceptional entrepreneur. Nobody's perfect. I'm not lionizing him. I'm not saying that, like everything he's doing is right right, like necessarily good for space and long term. But you've got to give him credit for helping both Voyager and block Fight at this point, because both of those firms might have already gone out of business without some support from him. Did he also extend a credit line to Voyager?

As well previously. Um, yes, I don't know the exact numbers there, but I've seen a lot of figures flying around. But all that said, I mean Voyager lost so much money with three a c that the stock was down to was down like at some point um this morning, it was under fifty cents. So I mean the markets basically saying Voyager could go to zero at any point. Yeah, the stock. If the stock goes to zero, does that mean the company goes out of business? Stocks barely go

to zero in the absence of bankruptcy. But remember, even in a bankruptcy scenario of the stock can still trade above zero for a period of time because sometimes during a reorganization, people still managed to get something out of the company depending on what the what the balance sheet looks like. But I'd much rather be a senior secured lender to those companies than an equity shareholder. You know.

Block Fight was one of the first companies in this space to to really show cracks, So I think at this sort of beginning of one there was no substantive difference in my view. Uh and qualitatively between the risk books of Celsius and block Fire and block five got caught in that gray scale bitcoin trust trade, which looked like a no brainer, right, you buy the trust and n a V. As long as you hold it for six months, you can dump it back on the market

at that premium. And for most of the history of g BTC up until that point, it traded at a twenty plus percent premium, so it looked like free money, and so kids with no risk management experience in a Wall Street experience probably would think that's fine, and they piled into that trade. They locked up a huge chunk of the deposits in block FI in that trade, and then when that premium discount flip negative during the draw down in the spring of last year, all of a sudden,

they were completely upside down. So if they had experienced a similar bank run to what Celsius just experienced over the last month or so, they would have gone bust. Oh last brick um. But again, they had such good equity backing that they were able to continue to raise equity and plug the hole in their balance sheet. Celsius did a similar thing. They raised a round of equity last summer, they didn't announce it until the fall, and

they used that to paper over their balance sheet. So I think the only difference today, Mark, honestly, is that block Fire grew up faster. Somebody on the board or somebody in that investor base said, listen, Zach and team, you guys need to grow up. You guys need to have put your big boy pants on and actually developed some adult level risk framework so you don't lose all of the positors money and go bankrupt. And they listen, and they stopped doing the same types of crap that

Selsie's was doing all the way up until now. I mean, you can see on chain Celsie's continues to gamble with the positive money even as they've frozen the customers assets. Yeah, yeah, I think. I mean, you know, the narrative that I've always kind of believed, and I guess maybe I was naive although I wasn't using these services, but um, I always believe that they were doing over collateralized loans and so it was supposed to be risk free because they

had overclatteralized loans. But then it turns out like Celsius is losing money and there's like Badger Dow attack, Like what the heck are they doing in something called badger Dow in the first place? Right, um, and so they were like way out on the risk curve, it sounds like, and that's just the tip of the iceberg. I mean, they lost seventy five million in stay count because the

protocol team managing that protocol lost the keys. They put a whole bunch of money into a mining business at the peak of the market when they have no expertise in mining. They would run around the market telling everybody they were one of the biggest North American miners. I mean those of us in the space just kind of chuckled and said, what the hell are these guys doing. Then they put out an s one about a month ago to take a mining business public. It is a

waste land in the publicly traded bitcoin mining space. I mean, there are stocks that are down, some of them are going to go to zero. I know of at least one publicly traded mining company that's already about the default on some of their loans. And so this is not

an environment to take a mining business public. But it speaks to the desperation of the Celsis management team because they had made so many poor decisions compounded on top of each other that they literally had to file on us one for an liquid mining business at the worst time in human history to do that. Um, so it's just an absolute disaster. I really think the people who lost money in this, they need to accept that they're probably going to lose a big chunk, probably up to

fifty of the money at the low end. Right, they're lucky they'll get eighty cents on the dollar back. But instead of attacking the people who pointed out the risk here, maybe maybe spend more time looking at all the management decisions that led to this so that you can avoid it in the next for future times, right, because I think if you learn from this, great, maybe you won't make the same mistake again. If you spend all your time attacking folks that were just trying to call out

the misdeeds. Um again, I think people are wasting their time on that. Yeah, I mean it's uh it again. It's a capitaliststs capitalistic system, right, So, um in any market, right, you have short sellers, and then um they might decide to put big short positions, and then of course they're going to start talking about how bad that that position is that company is to try to drive it lower. And it's just part of the capitalist system. And so

you have to identify the risk. Um, all this leverage builds up, and if you're going to put your money there and you don't know that the celsis is going into Badge or Dow or whatever this other one here is talking about it, then if you're not paying attention to that, then why do you have money there? Right? And so you kind of have to figure that out. To your point, they think they have to kind of, um take this lesson and learn. What is that saying?

I never lose either either win or I learned, and so hopefully they'll learn from that. I was thinking about Block five just in regards to this and to your point, Um, you know Sam Makmun freed, but he's got a lot of money. I mean f t X. You know, between f t X and Alameda they seem to be pretty much in bed with Tether as well. Um, big big, big pockets. I would imagine if um, he's putting two d fifty million in, he's probably not gonna want to

lose that two million. So we might have done a little bit due diligence and he might be prepared to do whatever it takes to keep them afloat. Do you think they might have dodged a bullet with it. Was that was that kind of like a vote of confidence from SPF? Yeah? I think so. And you know, if you've got SPF on your side, there's a good chance that you won't go out of business, right And the other thing to keep in mind is they were already out raising a down round in Oliver raising a billion

dollar valuation. I don't think they were finding a lot of success with that. But after an equity investor sees a vote of confidence on the debt side from an SPF, they're going to be more likely to put equity in because they can underwrite it with a lower risk of losing all of the capital that goes on. I want to make one quick distinction though, mark On if we can just go back real quick, I think there's a

big difference between Tara Luna and Celsia's Tara Luna. You actually had a somebody, some sort of chanization or trader attacking Tara Luna directly. In the Celsius case, it was literally just mismanagement. There was no particular single incident, There was no particular single actor that that precipitated that situation, whereas Tara Luna was very clearly one actor that was was moving on the on the against that tokens. That's that's that's a that's a really good point to bring up.

So I appreciate that. I'm listening to the Mark mo Show. I'm in the studio with Mike Alfred. We are talking about bitcoin. We're talking about the cryptocurrency space. We're talking about the state of the markets with the Federal Reserve driving them to a level never seen in the last well the longest ball run in history, and here we are de levering the system. I want to talk a little bit more about who swimming naked when we come back in a minute, So don't go away, all right,

Welcome back. You are listening to the Mark moa show. We're talking about bitcoin and the decentralized revolution, specifically in the studio with Mike Alfred, and we are talking about um, the blow up in the I don't know what we call it, se FI central heist finance world if we call it that, talking about Celsie is talking about block fire, talking about Voyager. Um. You know a couple of people that I haven't heard a whole lot about. Maybe you have is a genesis that seems to probably be behind

all of these people. And then NEXTO as well, what have you heard about them? So, I mean, Genesis is a digital currency group company, it's Barry Silbert, and that is probably one of the best financed funded organizations in the entire space. Barry systematically buys back stock every single year and also pays a dividend, which is very unusually for a non public growth company. And they have some

of the strongest equity shareholders in the world. And so Genesis probably the last lender that would ever fail in the space. And from what I hear, they terminated three A, C and and UH some of the other bad counterparties alongside block Fire others right pretty early. And even if they took losses, they have a big enough on sheet across DCG that like probably not going to go anywhere.

The rumors about next are much worse. Right, there's a lot of conversation about whether or not NEXTO is actually solvent. I don't have any smoking gun or particular issue to take with NEXTO like I did with Celsius, where with Celsie's I felt like it was definitely going to collapse. Uh, and I said that multiple times on the record. I'm not gonna say that about Next because I don't have enough information, But if I was a depositor there, I'd be thinking about pulling my assets out based on based

on just the chatter that I'm I'm hearing in the market. Yeah, I was. I was always skeptical of Next. So just because one there European company, if forget exactly what country they're from, um, and their founder has some you know, rumors about where he's from and maybe some nefarious things that he's done in the past, and that lack of transparency, the lack of US regulation concerned me. But I saw

it today. They came out with this UH post talking about how they're partnered up with City to do some I don't know if they're going to try to provide liquidity to the space. They put out a press release talking about how they ad buy Celsious. I think it was just like a press release. UM. It wasn't like an actual you know, l o I or anything like that. Um, so it looks like they're trying to make some noise, kind of trying to prove that maybe they're above all that.

But yeah, I would probably pretty skeptical of that as well, yeah, my impression is that City is quite desperate to be in the space all of a sudden. I'm not sure where that's coming from at the executive level within City, but somebody gave a directive that they need more exposure, and so they seem to be thrashing around trying to get into the custody space, trying to back certain companies.

Their their analysts keep making comments about how high bitcoining can go, even though they knew nothing about bitcoin like three weeks ago. Um So, I wouldn't read too much into anything related to any of the banks because frankly, none of the banks have proven the big US banks at least have proven to have any real expertise in the space. They'll come when the hedge funds are clamoring for services, but the moment the price goes down, they seem to disappear. Um so I wouldn't read into that.

I would focus more on whether next To itself is actually solvent and what kind of lending they've done behind the scenes, and if there's real risk there. Again, um, my vote would be to remove your capital from all of these centralized landing platforms if you haven't already. Yeah, I would agree with we agree with that statement. And what about the big news that broke this week with UM the first UM short et F that Ginsler just approved on bitcoin. What's your thoughts on that? Is that?

Is that bullish or is that barish? Or is it neutral? I mean it could be it could be bullish, right, Uh, just because usually by the time a short ETF comes out, right, most of the move is is sort of over. Uh. Michael Sonenshein, the CEO of Gray Scale, actually put out

a tweet store arguing that was actually bullish. But I think the SEC regulation angle is actually the more interesting one, and just that the SEC is allowing these futures based what I call garbage products with ten percent fully loaded cost. When you when you look at the cost of rolling those contracts every month, UM, it's it's just kind of

ridiculous that they would allow those products to exist. But they wouldn't allow the biggest bitcoin fund, the Great Skill Bitcoin Trust, to just convert to an ETF and remove the discount from n a V that the fund is currently trading out. I mean, that would help so many more people than giving the general public another vehicle to

speculate with and to trade. Yeah, you know, it's crazy, it's absolutely I almost I'm starting to think the SEC is trying to hurt the public through some of these actions, because it actually makes no logical sense why you would allow a futures based short product before you'd allow us body t F. Well, I think you could look at most of the SEC's actions and probably draw that conclusion.

Just look at the credit investor rule for example, right, so they can't get into the early round deals, but they can get dumped on by retail as soon as it goes public. I mean it's uh, I think you could probably draw that conclusion with most of them. And I think if you look at um Gary Ginsler, head of the SEC, I mean, he obviously knows bitcoin, he was teaching at m I T he gets it. He's you know, he's quoted Satoshi. He seems like he gets it.

So then you kind of have to look at that and then look at his actions, and then I think, like, um, with these synthetic you know, degenerate gambling, you know, naked shorting for example, that they're bringing out, or even this these long synthetics or whatever, it's like almost like it hurts the cryptocurrency space more and even potentially hurts bitcoin, So like, are they doing it maybe as the way for the government to kind of attack bitcoin and crypto

potentially um or maybe he doesn't want to have a physical so he can encourage people to buy the physical. I don't know. It's a it's interesting either way, I guess yeah. I mean, I actually think it's probably more ineptitude, um than than conscious effort to destroy bitcoin, Like, I honestly don't think the government is smart enough to do that. What about for somebody like myself and probably yourself as well. I'm not trying to put words in your mouth, but

you know, Michael Sailor type right, I'm long bitcoin. I'm gonna hold bitcoin. I want my grandkids to own my bitcoin. I'm never going to sell, so I'm not trying to trade it. I'm not trying to sell the peaks and re buy back at the dips, etcetera. You think having a shorting et F could be beneficial in that type of environment where I don't want to sell my bitcoin m at the top, but I could take a little leverage on the short to protect myself on the downside.

I think net of all the expenses and the potential taxes on that. You'll find most people over a ten year period come out behind. Any trading at all generally is going to be a drag on long term returns, especially for an asset like bitcoin that has the potential to compound at a year across the decade. So my

advice is never going to change on that. No matter how many new fangled products that Wall Street comes out with and try to tempt people to trade more, tend people to hedge more, or whatever, the vast majority of people will not use those products properly no matter how hard they try, and they'll end up poorer and worse

off by even using them at all. Yeah, So for the listeners, what Mike's referring to is that I believe on this short fund, they recalculate on a monthly basis and then they put the fees about two percent per month, So over the course of the year cost you between ten and fifteen percent in fees, and so you're gonna have to beat that just to break even on that. And then on top of that, if you have profits, you have to pay taxes on that as well. So when you let out the fees and the taxes, like

it's pretty hard to get ahead. I guess is that kind of we're referring to. Yeah, I'm saying the stated expense ratios are always lower, right, They're not going to

tell you center fient. But the cost of rolling because the futures contracts and the contango, right, that that happens sometimes in these contracts as the prices change across those months as you look out, and just the trading fees that are internal to the fund, the market impact of those trades, um, that's what creates the real cost versus

just holding spot bitcoin. Most people should just buy bitcoin, uh, put it in cold storage, leave it alone, don't try to lever it, don't try to earn yield on it. Don't you any other products. Just hold bitcoin and leave it alone for five or ten years. That's the only way that I can sort of make sort of assurance to somebody that I think they'll do pretty well. As soon as they start bringing in options, leverage, uh ets with futures, etcetera, there's a good chance they're gonna mess

something up. Yeah. Brings me back to a quote from Warm Buffet's partner, Charlie Munger. He says that the big money isn't made in the buying and the selling. The big money is made in the waiting. So you wait for the right opportunity, and then you wait for that opportunity to come to fruition. And to what Mike is saying, bitcoin is average, I mean it had been average annual compounding growth rate. Even if that slows down to half of that or even a quarter of that fifty times,

I mean, it's still still amazing. And so just wait, just waited out. Um. That's that's been my approach as well, and it seemed to work out pretty good. Sometimes it doesn't look perfect, but like right now, but over the long run of you zoom out, it's been pretty good of buying. So it's worked out. Um. You listen to the Mark Moss Show. We're talking about bitcoin. We're talking about the decentralized revolution. I've been in the studio with

Mike Alfred. You can give him a follow on Twitter at Mike Alfred talking about the the contagion that we've seen in the scripto lending space. Word of the word word to you from Mike is get your money out of those platforms around there. That's what I got for today Thanks for listening to The mark Ma Show. Until next time,