Bitcoin & Crypto May Have Just Topped! with Mark Yusko

favorite is the Treasure Save five. It's a beautifully designed and easy to use hardware wallet guys, and it's my go to, and they support a variety of coins, all your top crypto tokens, your big coins your x rp Ethereum, Solana and much more and even new coins even black Rocks Biddle token, So they support coins on the institutional side where you have tokenization of different assets and much more. And they even offer a great service that helps you

to get your treasure device set up. You get one on one customer support from their team, so you can check that out as well. So once again I'm a big fan of this hardware wallet. So if you'd like to learn more, visit the link in the description. Hey, folks, welcome into the Thinking Crypto podcast. I'm your host, Tony Edward and joining me today is Mark Usco, who is the founder, CEO and CIO of Morgan Creek Capital Management. Mark, great to see you, Great to see great to be with you.

I figured I got to get you on to get your perspective on everything that's happening. You know, what are your thoughts on bitcoin hitting this new all time high and then the outlook for Q four.

nine point nine percent, saything in Venezuela. So there is this, you know, I call it home market myopia, where one you think all the smart people are in your home market, which is clearly not true. Two you think you dominate every market, like you know, all the stocks are traded in the United States. Well it's not actually true. I mean, some of our stocks now are crazy valuations. So they they you know, dwarf, you know, Nvidia dwarfs the entire Japanese market in the MSCI World Index, I mean in

Spain and France, and so that can definitely happen. But in digital assets, I think it's interesting. You know, you got our president saying, oh, we want to be the crypto capital of the world, and then the bitcoin is like, no, no, we want to be the bitcoin capital of the world. Okay, fine, but neither one is going to happen. Right, We're twenty odd percent of global activity. You know, binances orders of magnitude, bigger than coinbase's greatest coinbase and as great as Kraken

and Gemini and these other exchanges are. You know, finance run circles around them on a global basis. So Tether is this gigantic beast of a company. You know, we're all excited about Circle, right, Circle goes public, great, goes up to forty billion dollar market cap, fantastic, excited for Jeremy and the crew. But I heard a stat that Teather makes more every four days then Circle will make in a year. Wow, you know, so what's that worth? Now?

Now they're trying to raise money? I heard, yeah, at a five hundred billion dollar valuation, which would make it the second largest bank by market cap in the world behind JP Morgan. It's pretty impressive for a company with like fifty employees. So that's a rambling, kind of strange answer to your question about how to feel about the all time I but it is a high, right, I mean, one twenty six yesterday is higher than we've ever been.

But when you inflation adjust and you look at it relative to how much devaluation has occurred and how much M two has been created, and actually what gold prices have done are actually not at a high now. I think we will, we'll get there. And then the big question on everybody's mind, and yesterday was interesting, you know,

October sixth, we're recording on the seventh. October sixth is interesting in that if you look at the previous two cycles, the seventeen cycle and the twenty one cycle, and now the twenty five cycle. If you look at seventeen and the twenty one, the time from cycle peak to low is three hundred and sixty four days in both of them, precisely. And then the time from cycle low to cycle high is one and sixty four days, and so one thy

sixty four days from the previous low was yesterday. And what's crazy is there's a guy and I wish I remember his name, so give him credit. But I saw there's this guy that tweeted in twenty twenty three, two years ago that the simulation will be repeated and the new high will occur on October sixth, and then we head back down.

but mark is your base case still.

pun intended like gold. Here's the crazy stat. Stocks are down since nineteen hundred priced in gold. Wow, actually not up now, but that doesn't count. Well, it kind of does. And look, most of us don't feel it when things are more expensive. Our rent is higher, are you know the price of a hamburger is higher? You know, you're up in New York, New Jersey. There's this place in downtown New York where you know, they only take cash, and there's a huge line and you get the privilege

of paying thirty dollars for a hamburger. And I went once with one of my guys, and it was a perfectly fine hamburger. But it wasn't like twenty times better, you know, or ten times better than the other hamburgers I've had. I'd probably prefer shakeshacks hamburger over that. But that illusion is what's happening when inflation right, which robs us of our wealth, and for most of our existence, up until two thousand and nine, there was no alternative. Right,

you lived in the fiat world. You I everyone lived. We lived in the Fiat world. Well, we tried to save dollars, but the problem was in saving dollars if we didn't put them at risk, like if we just put them in cash, then every day they're stealing a little bit back through this thing called inflation. And what's really funny about inflation is the normal state of a productive, innovative society is deflation, not inflation. What I mean when you think about it, if you innovate, then you make

things better. Right, you're getting more for the same amount. That's deflation or cheaper. Right, you can produce more like the model t for it. We discover the assembly line, and so cars started to go down in price. And from seventeen seventy six, when we started as a republic till nineteen thirteen, there was no such thing as inflation.

We had a persistent deflation now was interrupted by a couple big wars and a depression like the depression of eighteen It was like eighteen forty eight or something like that was worse than the Great Depression. But no one ever talks about it because it's too long ago. To remember. So in nineteen thirteen the FED was created. What does the FED do? Well, the FED artificially manipulates markets. So free markets are prone to deflation because if I can compete,

Let's say there's some provider of a gooder service. If I'm in a free market and I can compete against that person, I'm going to try to win business by maybe underpricing or making something better, both deflationary. Well, if the market is not free, right, if there are barriers or tariffs or restrictions or regulations, then you tend toward inflation. Well, if you manipulate the price of money, meaning in a free market, people would bid openly on the acceptable return

that they would take for safety. Right, someone said well I need six percent. Someone will say, well I need five and a half, I need five, I need four and a half. And there's a natural market clearing price for risk assets. Well, in a world where a bunch of old white guys, I had to say it, but an old white guys decide what the interest rate is,

that's not a free market. That's market manipulation. And so in that environment you get a persistent theft and I use the word intentionally of real wealth from the masses to the few, so income and wealth generate income and wealth ownership that divide becomes great, gater and greater and greater. Today it's the highest it's ever been in history. And I think it's interesting, Like, I understand why the people in the club right to say it's a small club

and you ain't in it, right. I understand why the people in the club want that. What I don't really understand is why the rest of us don't pick up the pitchforks literally at some point and say no, no, Moss, Like we want open in free markets. We don't want this manipulated market inflation. Like who convinced an entire population of people that taking half of my purchasing power every thirty years is a good thing? That makes no sense, right,

I mean, I worked hard for that money. And you know, Jimmy Song, I'm sure you've probably even had him on the podcast, but Jimmy and the cowboy Hat, and Jimmy made an impression on me. I heard him speak, you know, kind of around the same time we met back in twenty eighteen, maybe twenty seventeen, and he said something very profound that you know, people get really agitated when I say it. But it's like he said, Look, if you work for a salary, you're a slave. Everyone. Oh, you

can't use that word. That's a bad word. It's like, no, think about it. You're a slave. Right, you get paid, you put your money in savings, and then they take it back from you if you don't spend it through this thing called this stealth tax called inflation. Well, if you work and get paid in bitcoin, you're no longer a slave because your money actually appreciates. Now here's the thing.

Bitcoin didn't change. One bitcoin, one bitcoin, the bitcoin we talked about seven years ago, and the bitcoin today, it's the same thing. It's one bitcoin. The amount of dollars you need from sixteen thousand to one hundred and twenty six thousand, that's different, but it's still the same bitcoin. So what changed was the money worse, not Bitcoin getting better. Now, Bitcoin did get better. It's got better hash rate, it's

got more decentralization, it's all. It actually is better. The network is better, and that's why the value of it increases. But at the end of the day, is the fiat that went down in value? And what's interesting about saving in bitcoin versus saving in fiat if you save in bitcoin, and again I'll give Jimmy full credit for this, he says, you you actually unleashed the most powerful force in all

of human history, which is human creativity. Because if you don't have to constantly be working and striving to preserve the pursoning power of your money, and you your money actually grows, you have some time to think, to create, to maybe start a new business, right, maybe build a new product. You know, you don't have to just do this slave labor and get paid in this depreciating asset.

So again, long answer to an instant question, but it to me, it all kind of weaves together in that why bitcoin is such an important innovation, why the construct of money is changing in it. Look, money is a very unique thing. It's an asset that exists in the absence of a liability, right, That's what money is. And that basically the only thing that meets that criteria that is used is gold. Silver meets that criteria. You know, copper,

you know, puka shells. There are a lot of things that would meet that, but but the only one that's been used for five thousand years roughly because of belief and custom, is gold. But gold. You know, we've talked about this before. Gold suffers from two problems. It's not very portable, meaning it's really heavy, and you can't like stuff it in your pocket a gold bar and walk through. Actually you can walk through the radar detector, I mean

the metal detector because it's inert. But anyway, so gold isn't very portable, and it's not very divisible. Like if I had a bar and I wanted to break it in half, I'm not strong enough. And even if I could break it in half, I couldn't stuff it in the computer and send it to you. You know, all the bitcoin in the world fits right here now. I don't have any on my phone. Don't sim swap me. It's not worth it. I keep mine in cold storage. In fact, I'm wearing my Chili Willy socks today for

bitcoin cold storage. The point is that it's also very divisible. I can send you one one hundred millionth of a bitcoin right there. That's a one satosha. I can send you one satoshi for free, and that's better than the current system. So it is this technological improvement that takes old money, five thousand year money, into new age money. For the next five thousand years. But it was says, well, that's not money. Money is dollars and yeend in euros, like, no,

those aren't money, those are currency. And you know, JP Morgan said it right, gold is money. Everything else is just credit because they're backed by debt and sailor you know can so oh, no, bitcoin is money, everything else. Okay, great, but it's true, right, everything else is credit, everything else is debt. Everything else lives in a world where governments can print it. Now, in the old days, you literally had to printing, press it and cut the paper and

fold them up and hand them out. Now you just push a button and you create more ones than zeros. Well that's just too easy. There's no proof of work, right, which is you know, one of the great innovations of a bitcoin. But anyway, I digress.

the next five years. And and it makes perfect sense, right if you are a central bank and you have the money layer. Right, the way the money layer works is the central banks own gold. Sometimes they own other stuff, like the Swiss central Bank. I shouldn't say this, but isn't a real country. No, I'm just kidding around. I mean they don't make stuff. I mean it's just like a that it's like a it's a neutral place where you hide your money in Swiss banks, So that's what

it is. But their central bank owns stocks and stuff because it's not a real central bank. It's like a private company that must to make money, so they buy stocks. But real central banks like you know, the Central Bank of the US or the Central Bank of China, the Central Bank of Europe, although that was less real. They buy gold and sometimes I buy euros or yan or dollars or whatever, but mostly they buy gold. Well that's

the base layer of money. Then they issue debt to create you know, their paper currency out of thin air. That's called fiat. So in that environment we should think about replacing gold with bitcoin. Makes it perfect sense or partially. I mean I could go all the way. I mean I don't need to go all the way. I mean they they can coexist. But for me, I transition. I mean, I get I have nothing against gold. It's it just isn't as good as bitcoin, sure so, and it doesn't

mean gold is bad. But just like gold beat silver. Remember in the early days, nineteen hundreds nineteen twenties, you had things called silver certificates, Like if you had a piece of paper money. It wasn't like today where it says in God we trust and it's worth nothing. Like if you gave that to the government, they give you nothing. Right, you don't get gold, you don't get silver, you don't get tax or seats, you don't get anything. You don't

get teriff revenue. You get nothing. It is just a piece of paper to settle debts between private or public borrowers, so it has no value. But in the old days it was backed by silver, like every dollar you printed had to have gold or silver in the vault that if someone surrendered that money to you, you had to give them the hard asset. That went out the window in nineteen thirty three and then again in nineteen seventy one.

But gold nudged out silver, and silver nudged out bronze, and bronze nudged out puka shells or stone wheels or whatever it was in the early days thousands of years ago. Because people have always wanted a medium of exchange. Right, Let's say you grow chickens and I grow cows, carrying our cows and chickens around with us all the time so we can barter. That's a pain in the ass. So let's have you know, you would print little tokens with chickens on them, and I'd print little tokens with

cows on them, and we'd exchange those. But then how do we know how much a chicken token is worth us? A cow token sounds sounds like now right, everyone prints thrown token, so it didn't really work. So then they said, well, let's have one token and let's call it. You know, your first one in China was called flying money because literally it was made of paper and it's actually more linen. But it would fly away in the wind, right because it wasn't like you know, gold, it would not fly away.

That was the first one, and then the Dutch came along with the dolar, and then we've copied that and we made the dollar. So we have these these things that we can we create them out of thin air, and gold would be better than those as a store value, but bitcoin is better than that. So to me, it's logical and natural that all nations states should migrate to bitcoin, not tomorrow, but over time. That makes sense to me.

You know, Murray Stall, who's right up there your neck of the woods runs Horizon Kinetics used to have them on the show sometime. He explained this way better than I do. How you normally in the world, there's something called Gresham's law where bad money crowds out good And we've seen all the stories Venezuela, Turkey, you know, Zimbabwe. You know, I have over there on my desk, a one hundred trillion Zimbabwe dollar bill. Wow, right, and wouldn't

buy a loaf of bread? Right? One hundred trillion. And they just keep printing bad money and it eventually crowds out the good money, and the and the country goes down the toilet. So that's Gresham's law. Well, Murray describes Bitcoin is going to do reverse Gresham's law. The good money will eventually crowd out all the bad money. And even though gold is money and it's good money, bitcoin should even crowd that out. So in the short term I probably have a little bit of both, but over

long term it's Bitcoin. Governments like Fiat because governments are run by a small number of individuals, right, Congressman, senators, politicians, presidents, vice presidents, pretty small group those people. When they come to power, they're usually not very rich. Occasionally someone's already rich, but most of them actually aren't very rich. They're doing and as public servant. By the end they're super rich. Yeah,

how's that happen? Like if you get paid one hundred grand and you got to pay your bills, you're not going to get rich that way, so you must be getting rich some other way, well, it's the payola for this project, or or hey, let's just print money and you know, allocate it back to ourselves, like hey, I know, we'll allow ourselves to buy companies before either the government buys them or some big announcement happens, because you know, it's just the committee and we're on the FDA, and

we know that something's going to get approved, so we'll just buy the stock and it'll go up. That sucks, but because most people can't do that. In fact, if you do that in the normal world, you go to jail. You do it in as politician, you know, as ms Pelosi said, I was just part of my compensation, Mike, Hell to the no. But all of that is to say, the system is what the system is, and governments really like FIAT, so they're going to fight the adoption, which

is why we don't have a strategic bitcoiners with. It's like why we don't have the Epstein files. Well, why is that? Well, because the people in office are in the files, I mean, so so they're not going to release them. I mean, and look, I don't really care about all this stuff, but it is just kind of comical. It's like, why won't you release these things? Are you joking? Right? Because self incrimination, I don't have to do that, so

and it doesn't. I mean the last guy was in him, and the guy before that, and the guy all before. I mean, they're all in it. So this group of people they like making themselves wealthy, and FIAT helps that, whereas a bitcoin standard you know, to quote safety would would not promote that. And so I understand why there's reticence.

I understand why. You know, Senator Lummus is great, and she's you know, she's up there and she's talking about it, and they're like patterner on the head saying like Cindy lu who right, you know, setting her off to bed with their glasses milk, you know, the grinchs like, no, no, I'm not going to do that because because that hurts my ability to keep getting rich. At the end of

the day, how would that ever change? Well, term limits, maybe you go back to the old system where you came for two years and then you went back to your farm. You know, maybe two years is too short, but you know, maybe four, maybe six. But lifelong politicians.

or anything, but the boomer a crowd.

So what did we do? We created a system that rewards debt, real estate ownership, stock ownership, and it makes promises to pay us old people. Right, So every day in this country, ten thousand people turn sixty five, and you know they start to become eligible to receive these these benefits. Well, that created the inflation that led to housing prices being now unaffordable for the average person, particularly a young person. Okay, so I can't buy a house.

It's like you know, the you know, white house picket fence, you know having kids. Now, this is bullshit, But they tell you it's too expensive. It's not. It's just not. I mean, yes it's expensive, and yes it's hard, but do stuff this hard is good and it's the best thing you could ever do. But some people are having less kids and they're not buying the houses, and so they're like, well, I I found my way out. I

can just down bitcoin. And it's actually not the craziest thing because what bitcoin does is it it's like it's like an anti matter machine. It sucks up all of the grift and the graph and corruption and it energizes it and it and it grows again. Bitcoin itself doesn't grow, but the number it's it's there's that great picture U. It's a so it's a big triangle like this and it's green. Then there's a little triangle at the bottom, which is bitcoin. So this is fiat and and it's

literally like a funnel. And eventually all that that capital that's been created out of thin air, it just keeps pressing down into bitcoin, and that bitcoin triangle is going to keep growing. So you're right, there is this generation gap. I mean, I joke all the time. My granddaughter, my youngest granddaughter is three. She'll never have one of these, right, She'll never have a leather wallet, She'll never have paper money.

She won't even know what paper money is. She'll laugh at the idea, you picked up a dirty thing and you hand it to somebody you know, silly, just tap your wallet. So but the point there is that the system is set up to, as you absolutely identified, to take advantage of this digital divide. Right, Ask anyone over thirty five, who's your broker? I don't know, Maryland s ubs? Why? How much gold have? I don't know? Three four percent? How much bitcoin? Yah? Zero? My god? Are you kidding me?

That's a Ponzi scheme? Haven't heard that? Peter Schiff guy? Asked anyone under thirty five? Who's your broker? What's a broker? I mean, I mean I got a Robinhood account?

second for thirty one, seven and ten years. So thirty nine of those babies owned by me and my brother and sister and all us boomers. It's all going to y'all, right, we're all gonna die, I mean hopefully not soon, but what we're all gonna die, and all that money is going to get left to the next gen. And those people aren't gonna leave it in brokerage counts. They're not gonna leave it in gold and real estate. They're gonna live in a digital world. And and what's really crazy

is that next generation. So you got you got you got the boomers, and then you got gen and gen Y, then you got gen Z and jen A and the Z and the A. You know my old well, I got two older sons who are gen wise, older son and daughter to get this right, So a son and daughter who are gen wise, and then I got a a gen Z little baby. And then I got my grandkids who are Jenna's and so my zoomer son is

just never ever ever. I mean, my older kids, the gen Wise they have brokerage accounts, they have Fiat accounts. My zoomer son and my alpha grandkids they're just not and that's okay, and that's good, and that's progress and that's innovation. And at the end of the day, what does this mean for biclin? What means Bitcoin is gonna continue to rise? The big question, the question on everybody's mind.

It was yesterday the cycle peak? Or is the cycle obliterated and there's no more cycle because there's so much demand from institutions and sovereigns and maybe there was going to get this cheek bitcoin reserve. I'm on record saying I don't think October sixth is the peak. My calculations gave me end of October beginning of November, and the way I get to that is seventeen was December eighteenth.

Twenty one was November twenty first, both coincidentally correlating to days when the CME announced futures projects which would allow the big uglies to go naked short to push the price down. Is there a date in late October where this CMME is going to make an announcement. The CMME did make an announcement last week, but I think they said it's coming in twenty six but I have to get my details on But they said they're going to go to twenty four to seven three sixty five digital

asset futures. That's a bad thing. That's be careful what you asked for, you might get it. We don't want more paper, we want more real We want more bitcoin, not futures bitcoin. Because when commodities can be created out of thin air, then prices tend to get spoofed. Whether

it's gold now when they finally break out. Gold was stuck for a long time, from like twenty eleven until recently this year, and now boom, it finally goes up because the people who were spoofing got overwhelmed by the demand. And it's mostly safe haven demand from places like China and India and places where you know people are waking up to hey, FIAT is really not a good thing. I'm on record saying I thought this cycle would would go through late October early November. That by my numbers,

and I think I said this in February. You know, we'd hit one seventy five ish would be this cycle peak? Now why that? Well, fair value? We can determine right metcals law model. Tim Peterson does it easy. You know, one hundred and five hundred and ten somewhere around there. Maybe it's a little higher now one fifteen fair value. In previous cycles we got to two times fair value. Fair value was ten thousand. In seventeen we got to twenty. It was fair value was thirty three thousand. In twenty

twenty one we got to sixty nine. So two times for why leverage? Too much leverage, too many people doing stupid stuff, you know, bitfinex and you know, all kinds of crazy bad actors giving people one hundred to one leverage and pumping the price. I think those days are gone, but doesn't mean there's no leverage, but I think the crazy, crazy leverage is gone. And you know, I hear you can get fifty x in the purpose market now, but whatever, it's less than there was. So I said we'd go

to one and a half times fair value. So let's say fair value is one fifteen. It gives us another you know, fifty five, that's like one seventy. And that's kind of where I come out. Now. If you look at the power law curve, which has been super accurate for a very long time, it's saying we hit two hundred, like first week in November, second week in November. Maybe maybe I don't know, sometime around thanks maybe maybe it's even Thanksgiving. They've been really, really accurate, so I wouldn't

argue with them. So is it possible in the next thirty to sixty days we have a short squeeze big bull market? Definitely possible. Is it possible that this guy was right two years ago, that the simulation has already been written and yesterday was the peak and now we're in, you know, the beginnings of crypto winner. The only thing that makes me think it is it is definitely possible is the relative strength. Yesterday was seventy four. Anytime you're

above seventy that's been a temporal peak. Again, doesn't necessarily mean you have to have a crash, but it usually means you can't go much higher. Our first fund, which we launched back when we met in tent eighteen, you know, is now getting towards the end of its life, and we bought bitcoin early. We started buying. We waited, you know, so we raised the fund in twenty eighteen the market

was crashing. We're like, jeez, we can't buy this stuff now, and and you know, on good good on us now we didn't buy it on the day like December seventh. I remember the day, you know, because a big day. I was on TV and it was CNBC and uh, the woman host says, yeah, look how bad bitcoin is is you know, three thy two hundred and you know it's going to zero? And I said, look, bitcoin will outperform stocks next year and for the next ten years.

In fact, I'm so confident of that. Pomp and Jason and I just issued yesterday and I had actually called Warren Buffett literally, someone told me if he call his private number, he will pick up the phone if you call after five o'clock. And I did and he did, and we had a nice conversation, and I said, hey, you made this hedge fun bet. Would you like to make a bet? You take the S and P will take Bitcoin. Said well, I mean, let me talk to

my guys and I'll come back to you. So he came back to me and he said, they tell me I'm too old to make that bet. I'm like, look, you're gonna be chasing my sorry ass around when you're one hundred years old. See, you're fine. But he didn't take the bet, but so we made it on television, said, anyone who wants to take S and P million dollar charity bet, just like the buffet thing and you eat both fun half and you put it in bonds and then you see, you know, charity gets it. It's not

for me. Long story short, No one would take it. We had one guy said all right, yeah, I'll take it, and his son said, Dad, are you out of your freaking mind. No, we are not doing that. I mean, we have no upside. If we win, we're supposed to win. If we lose, we look like idiots. So no, we're not doing it, which is kind of funny. So no one would take our bet. Now it's a good thing because bitcoin has kicked the crap technical term out of

the S and P since twenty eighteen. But we did start buying first quarter nineteen, so our average cost is, you know, less than five k and and so we're literally in the process of determining when will we distribute that to LPs and so it's probably, well, we know it'll be in fourth quarter, just don't know exactly when.

There is still leverage, but is less, And then you have the ETF sucking up Bitcoin like a massive vacuum. Oh yeah, and then you have digital acid treasury companies buying. I know you're invested in a metaplanet.

fair value. Sure, if we got to one seventy five or you know, two hundred and we're fifty percent above, the bear market might be you know, twenty five sixty percent, but it's probably not going to be seventy five or eighty four percent like the first couple. So to me a correction again, humans are going to human We push things up too high, like AI stocks right now, or quantum computing stocks right now, or nuclear stocks. I mean, we've pushed them to levels that don't make any sense

and they will correct. Now, some of them, like the quantum, they might go down ninety nine percent. I mean, I don't know, but if if we peak, if yesterday was the peak, we might never go below one hundred k again, right, because there's just no downside pressure. We might just just kind of fluctuate like this for a while, and then this fair value will keep accreating a five to six percent a year as they devalue currency, and you know,

we just have this nice, steady, boring asset. If we have a blow off top between now and Thanksgiving, yeah we'll correction. And my guess is the correction is always proportional to how far you are away from fair value. Sure, so if you're fifty percent, if you're one hundred percent above fair value, you got to drop at least fifty. But then you normally go another fifty of that fifty,

So that's another twenty five, So you get down seventy five. Now, if you're really super crazy, like you know, the US stock market in two thousand, you go down eighty four percent. Bitcoin in twenty seventeen you go down eighty four percent. Bit that bitcoin in twenty twenty one you go down seventy four percent. So if you get crazy crazy, then your drop is bigger. Mark.

like a stock market's a bit crazy. It feels like gold real estate. It seems like we're we're in everything bubble, and I don't know, I get this feeling.

you know, dividends to shareholders. That's real economic value creation. If we're doing crazy stuff like this, this this silly circular stuff that we're doing, where Okay, I'll tell everyone, I'm gonna buy all your chips. If you promise to buy you know, capacity from this company that I own a little piece of that will I'll like, Well, but someone has to pay the money, Like this one yesterday, it's like, well, just give us the chips, but you

have to pay us for them. Oh no, no, no, no no no. You give a stock too, but then your stock price will go up and then you can sell. Oh no, then then that's it. Then we'll sell the stock that we got from you for free and then we'll pay. Are you serious? And and it worked, So.

to do by the rules. The amount that's actually free floating is small, so if anyone tries to short based on the crazy valuation, they just get squeezed. And the Tessa's been doing this for years I mean, when you have low free float and lots of the asset locked, you can manipulate the price. It's like doge coin, right, doge coin quote unquote has this multi billion dollar market cap? Really? Well, let us think about this. If Elon sold one doge,

how far with the price fall? If he tried to sell five percent of what he owns, how far with the price fall? If Mark Cuban sold ten percent of what he owns, how far at the price fall? So market cap, particularly in crypto, it's just a dumb idea, right to say that the like XRP ridiculous. Right, you got all this stuff owned by Brad and the foundation, and then you got the army trading that shares back and forth, back and forth to try to get two

eighty six or two eighty nine. If the foundation actually sold all those coins, the price will basically go to zero the feed of the duck thing. Okay, great, but that's a that's a winding answer to how bad is the market right now? The market is the worst ever, Like two thousand was bad and I lived through it, and you know we actually got very short it. Now we were early euphemism for wrong. So our nineteen ninety

nine technical term sucked. But man, from two thousand to two thousand and two, when the rest of the world was down forty percent and the average endowment was down twenty five, we were flat. Now flat isn't awesome, Like, you know, I shouldn't break myren pat myself on the back for flat, but flat sure better than down twenty five or down forty. And again, it wasn't us being geniuses. Was that people like Viking and Tiger Global and or Tiger Tech back then were short these things. Now there's

one funny story. So you know, we got short subprime, so we put ten percent of client assets short subprime and gold financial crisis. Who worked out great? And the problem with shorting, though, is you know you can short all the way down to when things get really really close to bankruptcy. But then there's a risk if they don't go bankrupt, Yeah, they will squeeze back up. And I'll never forget. I was in Chase Coleman's office and I walk in. He's in a pissy mood and he

literally tosses this reported me. He says, look at this, like what am I looking at? And this big thick report and he you know, throws them and I, what is this? Says City Group? Our model City Group is worthless. They have more liabilities than assets. This thing should be zero. Right, Yep, you're right. But it just went from one to five, right, gone from eighty to one and then one to five. So you know you're getting your ass kicked, right, And

he says yeah, and I finally figured it out. It was inconvenient for too many people for city to go to zero. And that's kind of it's inconvenient for too many people to say, hey, open Ai, do you actually have any money to buy those ampty chips? You're burning eight billion of cash this year, like torching it on fire. Oh but our revenues are growing, right, But every time someone uses chat GPT you lose money. You actually don't make money. You lose money every time they use it.

And it's the old thing of Jeff Bezos. Oh yeah, we lose money on every transaction, but we make it up on volume. Hahaha. That doesn't work. You have to find a way to make money, and Jeff did obviously in Amazon's great business. But I don't see a world where they can find a way to make money because the transformer model in and of self, it's very inefficient

in terms of power and demand for electricity. You know, maybe someone will figure out a way to do it more efficiently and effectively, but then that's bad for the incumbent, right, I mean, the person with the new model will get all the benefits. So I don't know, but it's inconvenient for too many people who have put lots of money into that business to say it isn't great.

JP Morgan a lot over the years and all the things that have been happening and manipulation and so forth. But Mark, they're all bending the knee. Vanguard capitulated JP Morgan's new in tookenization. They partner with coinbase to lunch crypto custody. City Bank's talking about see and launching its own stable coin. Are we seeing the full capitulation here?

your bitcoins. So science project not really interesting? Trade drugs? Are it great? Okay? Seventeen or to nine to fifteen, sixteen to twenty one. Then they laugh at you. Ah, a bunch of nerds and geeks or your magic internet money? Yeah whatever, Oh it's cute. Block five has ten billion dollars came out of JP Moore. Eh, cute. Wait a minute, now you're twenty billion. Now we got a fucking problem. Okay, so you know, get the new Jersey regulators shut them down.

You go after Celsius and so get rid of competition. So ten seventeen, I'm sorry, twenty two to I think twenty twenty seven. Then they fight you faced the first part and then they fight you. I mean it was the smack in the face, put companies out of business, threaten lawsuits, you know. And look Brian Armstrong, you know, God loved the guy. I mean, he he just fought. He said, come at me. Come at me. I'm doing this right, I'm the future, you're not. And he won.

But now the problem is in theory. JP Morgan should just say yep, decentralized is better than centralized. No JP morgan coin, uh uh. They want JP morgan coin. They want a permission blockchain. They you know, they'll let you move money in their system using their blockchain, but they don't really want you on a public ledger. So there's a little bit of apicition. Now, Vanguard, that is true capitulation, because that's you know, the guy's get over my dead

body where we allow our clients. But that was a calculated risk, right. Their clients are all boomers, and boomers have all the money. Boomers don't like bitcoin, right. All the young kids want to buy the ETFs. They like, well, you don't have any money, so go knock yourself out on robin hood. We don't care. So it was it was a branding thing to say nope, we're not gonna do this, and all the boomer are like, oh, yeah, yeah, I told you, I told you to palm's this game.

Well then a few boomers were like, shit, my son's making a lot of money at this My daughter's making a lot of money at this I gotta do this. So once the boomers started saying, yeah, we want this, they had to give in. So that's that's real, that's capitulation. But the bank capitulation to me is still they're still trying to do an end around. You know, they're still trying to say Bitcoin is bad, Bitcoin is evil, it's

for terrorists and drug dealers. But we over here it's what's your life of tastes art, right, and we say that there's all this predicted programming out there, and if you'll watch certain movies, then that happens in the future. The one that gets me was a movie, but it was a series called Mister Robot. Yeah, and it's scary. Evil Corp. In Mister Robot is JP Morgan. I mean, they talked about Bitcoin. They talked about Evil Corp shutting it down with e coin and evil coin, and it's

interesting because that is playing out in real time. Now. At the end, we know the goodness is we know how it ends, right, is that then they fight you, then you win. So we know decentralized is gonna win. We know that bitcoin is better than fiat. We know that real money is better than fake money. But seven trillion dollars of revenue in banks, brokerage firms, insurance companies,

you know, counting firms audits. Like, why do we need an auditor and pay them seven hundred thousand dollars a year to audit the books and records of the company if it's audited every ten minutes on chain? Well we don't, so the auditors are probably not very psyched about this business. Title I have to pay a thousand dollars every time I do a real estate transaction for title search. Well what if you do it once and then it's good forever.

That's just a better business model less. I mean, it means you're freeing up capital do other more creative things. But I understand the title insurance I like, I have two buddies. They own a title insurance company, and they're nice guys and they live a really comfortable life, but they don't want this to happen. I look at at all of innovation the same way. Right, when when new technology comes along, it does a couple of things. One,

it solves the problem that people thought was intractable. Like, I love all the charts now are like you know, electricity uses going like this, and we're gonna use all the electricity in the world just for AI and no one else is gonna get any and you're gonna lose all your w like, no, you're not. There is zero chance that we're as a society going to say, yeah, you know, it's okay, we're gonna use all the electricity for this stupid thing. So I can ask chatch ept

you know, a silly question every morning. I mean, we're just not gonna do that. And so it's just like when everyone's saying we're gonna use all electricity in the world to mind bitcoin, No we're not. I mean that that's a silly thing. What's gonna happen is people are gonna invent more efficient a six, right, They're gonna invent,

you know, workarounds like deep seek. Deep Seek doesn't use as much electricity because they use software to make some of the hardware things unnecessary so they don't need the power hungry hardware. The fact that innovation always follows this cycle, and whenever there's a new innovation like cars, when cars came there said oh my god, we're gonna run out of oil. Yeah, no, we haven't we haven't come close. And oil prices in real terms are actually really low,

right comparatively, so we get more efficient. And remember telling the story, you know fifteen years ago that there was more oil in the US than Saudi Arabia, Right, that's ridiculous. I'm like, well, it's actually true. It's underneath Colorado and Wyoming and Texas. And the problem is it's in the shale. And the only way at the time, back then, the

only way to get it this is crazy. You literally drilled a mile down and then you started a tungsten steel rod and then you heated it up to like seven hundred degrees or something, and you melted the shale and then hydrocarbons would bubble up like that just sounds expensive, right, And so if that was the only way to get it out, we probably wouldn't have got it out. But somebody said, what if we fire sand down there with

pressure and will break the rock? And again, if you told me you were going to do that, I'd say, no, you're not. That's ridiculous. But it works, and it's cheaper. Now we have cheap oil and we produce more oil than anybody in the world. So innovation and human creativity. It's back to Jimmy's song. If we have more time to think and less time to just do what we're told to do. If we don't have to, you know, be in the monopoly that is the incumbents, Well, life will get better and it will so Anyway.

accid treasury companies because Mark it feels like a bubbles forming here. It started with bitcoin, but now they're expanding to ethereum, salon and other assets. What are your thought Are somebody these companies going to survive the bear market?

could say, well security, they have better security. Okay, fine, I'll pay a two percent premium, five percent premium, maybe that does make sense to me. Okay, how about ease of transaction, right, it's easier to do a transaction with an ETF than it is with Eh. That's that's spurious argument. But let's say security. I'll take that one. Okay. Then the only other reason would be, well, if they can issue debt at a really low rate and buy more

of the asset, there's an arbuitage. And Sailor has done this famously on CNBC saying, look, if you'll lend me money for zero and I can buy bitcoin that just accrets to shareholders, and then I'll get an m NAV above one. Well, if people pay me a premium and I can issue new shares at one point two and buy an asset at one, then I have a flywheel. But the problem is if your m NAV is one or lower, no flywheel. And so I think in the bitcoin space there's going to be a small number of winners.

And I do think, you know, my strategy is one. I think metaplanet is one. I do think there's going to be definitely a few winners in the other assets. I struggle because bitcoin to me is like gold, like if you did this with gold makes sense to me if you did it with you know, shares of a

company that did internet security. It's kind of like, how I have you a smart contract to me a smart contract, it's it's fine, but if I can issue more of that token, I don't know, that's that's not that's more like fiat.

the issue of more tokens, but what about like the staking the yield component with's.

and you should get a premium for that. I guess the question is at what point do they equilibrate, meaning the dilution of the new shares relative to the production of the yield you know is equal or maybe you know the protocol says, you know we're gonna burn you know, we are going to reduce supply, We're not going to grow supply. Infinitely. But you know, places where there's no guarantee on on the supply of the asset. I just

don't to me. The bottom line digital asset treasuries need to focus on scarce assets.

market structure, and that's a huge narrative. As you see approves additional all coin etaps. We lead to this blow off top come November December, and that's it.

so all that I get it. You know, Goldman knows how to lobby and Jeremy's ex Goldman, So I get that one. The other one, I just think you're dancing too close to the incumbents and and they just don't like it. But if it were to get pasted, I think exactly as you describe would happen, we could get We could finally get the all season that doesn't seem to be coming it. It's funny. Scott Melker, who's a buddy

you know, tweets says, yeah, forget all season. I made more money on Iran than than all my all coins, so I'm just gonna trade stocks, which is kind of funny. So bitcoin dominance and stable coin dominance are totally logical, right, stable coins payment rails to replace you know, VSA MasterCard, whatever, you know, Venmo PayPal, That makes perfect sense. Bitcoin as digital gold makes perfect sense. All the other use cases, I can see them, and I can make an argument

why they could work. But but they're they're fighting up against incumbents that that have a lot to lose, whereas gold, you know, there's really no one. I mean, I guess the gold miners have stuff to lose, but they're not big enough to matter, so they can't really fight against bitcoin. Becoming digital goal. They you know, they're just not gonna do it. But but the banks can still fight, So we'll see how that goes. But I think it is a good point, and I'm not the extreme. There's bitcoin

and everything else. It's a scam. I don't believe that. I do think you know, Ethereum, Solana Avalanche. Smart contracts I think have a role in the future. I really do, and I think I think they're they're good, and suiy is an interesting protocol, and I keep hoping chain Link does what they tell me they're going to do. And

you know their army is like, you know you're missing that. Look, I would love there to be interoperability, but armies who are angry at you Link and XRP, so well, I'm never going to come around XRP just not so army. You can hate me, It's okay, I'm just never gonna come around. Because look, I've been doing this a long time and I've met with more than a thousand groups building companies. We've invested in a hundred of them, so we probably met with a couple thousand. I've never met

one building on either XRP or Cardono. That's impossible, right, It's just impossible. I mean, now people will at me and say no, we're building on I'm like, okay, then come see me. No one's ever come see me. I've met with hundreds of people building on eth, I've met with hundreds of people building on Bitcoin. I've met with hundreds of people building on Avalanche. I've met hundreds of people building on Solana. I've never met anybody building on

those two protocols. So to me, I'm I'm just being logical. But I makes people angry.