Everyone Was Wrong About This Cycle | Andy Edstrom

Is Bitcoin stupid cheap yet? Based on my experience, no, it's not stupid cheap yet. If you have no Bitcoin, like, should you be buying? Yeah, you should be buying. If you're under allocated, should you be buying? Yeah, probably. I mean, DCA works. I'm still of the mind that it is a bear market. Bear markets are about both price and time. So we've had quite a bit of pain on price. we haven't had that much time yet.

Like if Bitcoin nuked to, yeah, to forehandle something in the 40s now, would I want to be buying that in size? Yeah, probably I would.

Andy Edstrom, the guy who called the top, said that this time wasn't different. And it looks like you were right, man. Well, Danny, it's always a pleasure to see you. I don't think I quite called the top. I did call the bear market with 60% probability at a time when price was much higher than where it is today where we're recording. So, you know, I hope I saved some Bitcoiners some pain and we can talk more about that. I'm still long-term bullish, right?

I haven't changed my 10-year price target. But when I published Why Buy Bitcoin in 2019, I think price was, when I went to press, I think price was eight and a half and the target was 400. And, you know, it was a 10-year price target. So we're six years in. We've come a good part of the way. And haven't changed the target. 400 by 2029 seems totally reasonable.

You know, neither Total Boltard nor Andy Wysso Barish, although I've definitely gotten a lot of Andy Wysso Barish comments over the years. So, yeah, you know, pain of cycles, the four-year cycle, or is it the 3.8-year cycle?

We could bust that myth. Remains intact. And there were many, many people in this space who spoke with great confidence and certainty that the four-year cycle had ended. Or better yet, there's some people who said it never existed. That I really won't understand. You're talking about me here. Oh, no, that's you, Danny? This is stuff that I want to get into this because, yes, I definitely said those things. I think this time being different was something that I totally got caught up in.

I still don't know if it still might be in my opinion. I'd be interested to know your take on this. But like, why did you not get caught up in that? I guess painful experience, I suppose, is the first answer. So I'm class of 2017, like late 2017. I bought my first coin the day after the Bcash hard fork.

okay august 2nd i think it was and not not because i was waiting that's a weird time to buy yeah no it's a great time to buy and it's not because i was waiting for the hard force because there were some people out there who were like oh no the hard fork's coming is this gonna you know is this gonna kill bitcoin no i had just discovered it and i like i couldn't fund my coinbase account fast enough right so i was desperately trying to buy uh so did not get any free coins uh in that

little event, unfortunately. But yeah, man, so I've lived through two painful bear markets. And there was a time when I was almost all in, right, substantially all in, definitely all in crypto and then all in Bitcoin, because I sort of, you know, figured out that crypto was not the thing and Bitcoin was the thing. But I've also lived through two savage

bear markets and I'm only human and I feel pain. I felt pain in those bear markets. And even though I've sold coins along the way, the pain of loss for me exceeded the opportunity cost of, you know, not having ended up with more coins, I guess, if I would have ended up with more coins. But yeah, so that's how it's gone for me. And, you know, I did, part of it was based on analysis this. Well, okay. Let's go back to the, I'll go back to the why. So I'll try to keep this short

because people know the story. Like, okay, why four-year cycle? What was the premise originally? Well, the first time it hadn't happened yet. So people were like, oh, are the miners like really going to do this? Are they really going to cut the supply to them, you know, by half to themselves? And they did it. Okay. So that uncertainty was removed and perhaps that caused the, you know, the rally after the first cycle. You know, after the second cycle, obviously it was still a major

supply shock. And there might have been some doubt, I think, especially under or among those who were newer to Bitcoin at the time. This was still before my time. So I'm sort of speculating here. OK, eventually you get a few cycles in and you say, OK, it should be irrelevant.

But there's still the fact that if anyone's going to attack the network, the optimal time to do it, honestly, is right after having because that's when the most mining equipment, the most ASICs are sort of marginally profitable. So if a government or consortium of governments or whoever were going to try to tip the thing over, the time to do it would be right after a halving. So that's still a fundamental characteristic.

And that'll never go away, although as the issuance falls more and more, it becomes less and less relevant. But then, of course, you still have the fact that whales have a lot of coins. If Galaxy Digital is telling the truth And it was one guy that sold 80,000 coins that fateful day last year. Right. That means there are still whales that have a ton of coins. By the way, you have to ask yourself if he sold 80,000, like how many did he have? Because he probably didn't sell them all. So so, yeah.

So now whales always could cause the end of the cycle because they could dump on all of our heads if they chose to. And then it happened again last year. And so I think that was definitely a factor in my thinking in terms of, oh, yeah, how concentrated is the ownership? OK, it's still pretty concentrated. And then, you know, the whole bear market, bull market thing, it's also empirical in terms of how price behaves relative to information.

So it's almost definitional that in a bull market, when you get good news, price pumps. And when you get bad news, it doesn't matter. And then, of course, the opposite in the bear market. And I started to see signs of that, you know, as the year wore on last year when good news wasn't helping price and bad news, you know, was basically causing causing downdraft. And so kind of reading the tea leaves and then obviously looking at the liquidity element.

Like I follow Michael Howell a bit and others who are in the liquidity space watching that closely. And the words coming out of their mouths were getting more hedged and sort of more wishy-washy and mealy-mouthed. And they were saying things like, yeah, we don't think the liquidity cycle is over yet, but it's looking kind of weak. and it's looking short-term week and maybe kind of we think it's not over yet, but we're not as sure as we used to be.

And so, yeah, it was a number of factors that came together to cause me to conclude that it was more likely than not that a bear was upon us. And, you know, someday I'll be wrong. Someday you'll be right, Danny. Maybe it's this year. Maybe this will be the year where we get to new all-time high in a short period of time. And the cycles will end. And by the way, it won't matter because all the damage is already done and the pain has been felt.

And the Bitcoiners who are using leverage got liquidated and all the Bitcoiners that went heavy into the treasury companies got completely wrecked, which is a shame because I know a lot of those people. And yeah, it's just a shame. It's an unmitigated disaster. Anyway, I digress.

yeah so the michael howe thing's interesting because like i i like this idea of like liquidity cycles and i think he said this one's rolling over basically now i think he said the first quarter of 2026 um which obviously like historically has not been good for bitcoin and so when you look at the four-year cycles like american hodl's green green green red meme i mean that one broke this cycle because we had green green red um okay sorry sorry i'm gonna i'm

going to interject and cut you off there. So, and this is one of the myths I want to bust. Four-year cycle. Okay. Yes. But people say four-year cycle, what they really mean is, you know, epoch, having epoch. And we know those actually aren't quite four years, you know, it's 3.8 years or something. And if you look, this was another factor too. I didn't mention, I should have, I'm glad you brought it up because I didn't mention it was the literal top, right?

Was the same number of days past the having to the day in this cycle that it was in the prior cycle. So if you're so, yes, I understand the calendar year thing. But if you're talking about like days past the halving, yeah, no, then the cycle's unbroken. But what do you think that is? Do you think that's it being a self-fulfilling prophecy or something else? Because excuse me, because the actual like supply issuance is becoming less and less relevant.

Yeah. No, no, no argument there. I definitely think, yes, it's a partly self-fulfilling thing when I say that the whales can dump on all our heads. They can and they do. By the way, it might not be a terrible thing in the long run It depends on your view right Okay If you want cheap corn great Number go down fantastic Bring it on take us lower show me 50K show me 40K show me lower numbers So that's definitely one perspective. Another perspective is if we actually ever want this

thing to be money, then maybe 50% drawdowns happening on the regular isn't optimal. And so the thing about the whales is some of them sell the top and then help set the floor, right? They rebuy the bottom. Granted, there are others who are new to Bitcoin who come in and scoop up coins. They have dry powder in the down cycle. But as we know, if you're a noob to Bitcoin and you're still kind of getting your footing and building your conviction, it's really hard to buy those

bear markets, those winters. It's really hard to buy those bottoms. Some people do. My hat is off to them. And that's great. But yeah, I mean, I think the good news, bad news about the self-fulfilling element and the fact that whales can cause a peak is that also they'll have dry powder to help set a floor, you know, so that those DGens who are using leverage in Bitcoin don't all get taken to the cleaners, don't all get rinsed in the downturn, and only some of them do.

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things like the ETF, obviously Michael Saylor buying as much Bitcoin as ever, do you not think that's changing the dynamic of how the market works? Like Saylor buys all the time. So four-year cycle is kind of irrelevant to him. ETFs seemingly will be the same. They've actually been really good in this bear market so far, at least, I believe. The outflows haven't really been that high. I think they've been better holders than just Bitcoin holders. So do you think that will change

the market dynamic going forward at some point? Yeah. But also you said it, sailor buys at any price. Wouldn't it be nice if he just bought at low prices?

i mean that might help the cycle i guess what you're saying is you know he's a buyer at any price so that also says he's irrelevant to the cycle right um he's buying the bottom he's buying the top i think actually he buys tops i think empirically he buys tops more than he buys bottoms um i'm sure someone smarter than me has studied the details on that but that makes sense because that's when money is more readily available for him right it's when he's stocks likely trading at

hire MNAV, like he can dilute shareholders, he can hit the ATM, he can go and raise money in other ways. So he'll always be a buyer at the top. But that on its own will surely change the market dynamic a little bit, meaning that if it's not running out, if buyers aren't getting exhausted at the top because sale is just continuing to buy, will that not change how these sort of four-year cycles work? Yeah, I wonder. I mean, I'm thinking through it as

you're saying it. I think what I'm thinking is the opposite, which is if he's a net buyer on average at the top, then he is incremental demand that's pro-cyclical as opposed to anti-cyclical. So that implies he's pushing peak higher at the margin, but he's not there as a buyer of last resort in the downturn. So then you might say, okay, yeah, but at some point,

Andy, won't it be different? Like, won't there just be sort of adoption upcycle, omega candles, governments buying, you know, federal government buying, central banks, you know, Bitcoin becoming money, the Bitcoin rapture, hyper Bitcoinization. Did I miss any of the of our favorite terms in there. You know, will it happen someday? Yeah, it might. It might. And I look forward to being there when it is and when it is happening. By the way, I kind of hope it doesn't actually happen

all that soon because I'm not sure that the world is ready for it. I'm not sure most Bitcoiners are ready for it. But yes, I am still struggling to see whether the new players in the market are net counter cyclical as opposed to just pro cyclical. Now, the ETFs so far seem to be holding in there, right? It seems like people are not panic selling ETFs. And part of that is probably wealth managers like me, right?

Who, although I trimmed exposure for my clients when I saw what I thought was kind of the writing on the wall of this cycle, you know, we still have a position because it's like any other investment. Okay, here's some more heresy.

Bitcoin is a lot of things. Obviously, it's uncensorable money that you can carry across a border when you need to. Okay, that's unique. And that's an amazing characteristic of Bitcoin. But it's also a financial asset. And when I say it's a financial asset, really, I mean, it's an investment, which for me is not the same as savings. We can get to that sacred cow in a second. I'll say it first. Bitcoin is not savings. Bitcoin is an investment.

And if Bitcoin is an investment, it's a really attractive investment in my estimation. You know, if my price target remains unchanged at 400K for 2029, that's, I don't know, more than a 5X in three years. Do I want to hold an investment that my price target is 5X in three years? Yeah, you betcha. On the other hand, if I am still a believer in the cycle, like, did I want to trim my position, you know, in an appropriate time? Yes, also. Also, yes, I did.

And, you know, and by the way, last year, last year was the first year in a long time when I looked around and I saw a number of other investments that interested me on a risk adjusted basis. You know, Bitcoin was like, was the true North Star and it's still an important, you know, still plays an important role. But there are other ways, you know, there's other ways to to make money also in other financial assets.

Okay let get to the sacred cow then Bitcoin is not savings I mean Pierre Richard will be livid at that statement Why don you think it savings Because can savings and investment do they have to be mutually exclusive Yeah so and look reasonable people can disagree on exact definitions So words are important here obviously but to me savings is the thing where you have it in case something bad happens and you need cash and you need purchasing power on short notice.

And so that thing is not supposed to regularly lose half its purchasing power, right? So let's say wealth managers or financial advisors talk about the savings component. They're talking about, you know, you want to have six months of savings, you know, and that's basically generally fiat because if you lose your job or you crash your car, you got to replace it or someone has an unforeseen medical expense, you know, that cash is there and available.

Now, saving is another thing. Saving is the thing that happens when your income exceeds your living expenses and you have that surplus. And what you do with the amount that you save, you can put it in savings or you can invest it. And for investing, you have a longer term time horizon. Probably most people who are in Bitcoin will agree that you want to think about the Bitcoin you hold with a multi-year time horizon. And that is kind of the definition of investment.

Oh, and by the way, you're expecting your purchasing power in this investment to go up over time, right? We wouldn't be calling it an investment if we expected number to go down and keep going down or number to not go up ever.

so you know these are these are some of the factors to consider so yeah so to me saving or savings are the things that always hold purchasing power over shorter periods of time they do erode their purchasing power over longer periods of time as we know that's a problem with fiat um but yeah it's hard to see how bitcoin can be savings for people in the world today

Now, I'll caveat, you know, you talk to Gladstein and Gladstein may say, oh, yeah, but in hyperinflating countries like Bitcoin is rock solid in terms of purchasing power. And that's true usually. But also those people can now get stable coins, right? They can get probably they can get dollar stable coins if they want. So is any of this to say that you should not hold Bitcoin or not own Bitcoin? No, none of this is to say don't own Bitcoin.

All this is just to say, let's be reasonable and level-headed about Bitcoin in the context of our lives and our overall portfolios of assets. So when do you expect Bitcoin to become savings then? Do you think that it will get to a point where the volatility is minimal?

So the answer is, I don't know. And then the answer is, I don't know, but optimistic. So when it comes to Bitcoin, like hyper Bitcoinization or Bitcoin becoming common transactional money because the purchasing power is less volatile, that would be fantastic. That would be a better world. I'm here for it. Okay.

also we're probably a long way from that so when i think about will bitcoin reach its potential its ultimate potential yeah i think it has a good shot at it i don't know what probability i put on that but that would be fantastic if and when it happens someday and then with respect to displacing gold or taking significant market share from gold yeah now there my confidence level is much higher. I mean, the key pillar of the thesis I put forth in 2019 in the book

was around taking market share from gold. I had already in that analysis scored Bitcoin versus gold and Bitcoin versus the dollar. And Bitcoin already outscored gold on my criteria at that time. And if anything, it's more so now, right? It's more stable even than it was then. Like, okay, is it that stable in terms of purchasing power yet? No, as we've seen from the recent downturn. But it's more stable. It's less volatile.

And it's, you know, basically its characteristics have either held steady or improved for the most part. And gold, you know, gold's characteristics haven't changed in probably a couple of millennia. And although there are new, you know, liquid paper forms of gold, I guess, like tether gold, you know, that can be that can be transacted. I don't know if you want to get into that. But yeah, so so look, taking market share from gold, much higher probability.

In fact, at the margin, I'll say that's 100 percent probability right now. So I'm quite certain that in my clients' portfolios, because I'm the one buying the assets for them, okay, Bitcoin has taken market share from gold. My clients own Bitcoin, my clients own gold, they own monetary metals. And in a world in which Bitcoin did not exist, their gold allocation would be higher.

So already, you know, for the tiny amount of money in the grand scheme of global assets that represents my clients, I could tell you that Bitcoin is taking market share from gold and I expect it to take more in the future. And I hope Bitcoin reaches its ultimate potential. But I have no idea what the probability of that is. And I don't have much idea how long it's going to take either.

And corollary to that is the dollar, which is, yeah, I think the death of the dollar has been much exaggerated. And yeah, there's so many ways for fiat to keep limping along, especially for the dollar to keep limping along. for a very long time. I'm not sure that's such a bad thing overall for the United States, for me personally as a citizen, you know, for the world. I'm of two minds. I'm conflicted, right?

Like Andreas, like Andreas always used to say, you know, if we can, basically if we can bring forward the death of fiat, you know, one day sooner, then Bitcoin will have been worth it. I think he said that, something to that effect.

And I kind of agree with him overall with the caveat that, yeah, I don't want it to be totally Mad Max and complete mayhem in the transition. So yes, I want it to happen on a reasonable timescale. I want it to happen faster because fewer people will suffer in the long run, except for I'm selfish for me and my family and I don't want to live through a total disaster type of scenario in which it happens too fast.

one of the funny things whenever anyone mentions andreas i do think of all the bitcoiners that got in sort of from 2021 onwards who might not know who he is and and if you don't know who andreas antonopoulos is go back and watch all of his videos he was like so instrumental in my whole bitcoin thing incredible guy um so as like a wealth manager you said something a little earlier in this which is interesting you said like this for the first time in years is it's the only time

you've seen other interesting investment opportunities. What else have you been looking at?

So last year was a very active trading time for me personally, and it was mostly about commodities. And that now is becoming, I would say, much more consensus. So it's definitely not that much alpha, you know, arguably, at least at the moment. And the timescale matters too, of course. So obviously, you know, sorry, Bitcoin lovers, I'm still a Bitcoin lover too. But, you know, I bought gold last year, I bought silver, I bought, you know, I was a degen trader,

playing in that stuff. I even, you know, gold is a core holding for clients too. But, you know, I even bought silver for clients and sold it well. And so that was a good trade. But then also industrial metals, you know, also the whole energy complex. And I'm talking about stocks,

really. I'm not talking about like, like I don't trade spot oil price or anything like that. I'm talking about, you know, Exxon and the majors and the, you know, basically companies that pull stuff out of the ground have been a great trade that was so undercapitalized and so under-owned for so long that it just got ridiculous. And then you kind of caught the momentum aspect of it too, which is not different from Bitcoin in a lot of ways, right? So I have a thesis on what Bitcoin

should be worth. You have a thesis on what Bitcoin should be worth. Everyone listening, most people listening, let's say, probably think fair value of Bitcoin is much, much higher than it is right now. Okay. I agree with you. But then of course, you also get these momentum factors at

play in Bitcoin. A lot of that is also at play in much of the commodities complex. Plus you had the sort of fundamental underinvestment for so long that now, yeah, basically too many people got on one side of the boat they got on the on the software is eating the world side of the boat which wasn't wrong fundamentally but there's also the esg narrative putting people off owning the oil stocks and things like that 100 100 i was sitting at lunch with a with a guy i've known

for years who works at a kind of a value focused mutual fund and they are heavy commodities and they been banging the drum for for a while and they were arguably early but that was one of the things we talked about Yeah it was evil to own companies that produced carbon right Carbon energy So yeah so that reshuffling has been happening in a big way. Now, going forward, I'm of two minds on it. It's moved so far so fast that it sort of looks overbought at the moment.

So I'm not the guy pounding the table like, you know, go buy oil stocks right now or go buy commodity assets right now. But then you have the broader super cycle or call it 20-year cycle that tends to play out in commodities.

Speaking of historical patterns that someday might not be the case, but remain, you know, the track record remains unbroken. You have these longer cycles in commodities whereby there's some big demand. Okay. Last time it was China. Basically, China was hoovering up all the metal and all the cement and all the materials as they built their economy. And then eventually they got sufficiently built or overbuilt and then supply responded. Right.

This, of course, is different than Bitcoin, but with most commodities, more supply comes online as the price goes up. So then you get overinvestment and then you get a crash in the price of the commodity being produced. And then it's a long bear market and then underinvestment. And then there's some there's some catalyst from the demand side that restarts the whole thing.

It seems like right now the catalyst from the demand side is both AI, right, in a major way, obviously the build out, plus the geopolitics, which is rearmament, you know, reindustrialization. And this is across the world, right? I mean, it's the U.S., of course, but it's also Japan is, you know, the sleeping giant. Godzilla's waking up as we speak.

And there's all these areas around the world where societies and their governments are figuring out that they need to allocate capital differently. And one of the places they need to allocate that capital is to industry. And that's probably got legs.

So I look at the short term and I say, you know, am I rushing? Would I be rushing to buy commodities assets like right now today? Maybe not necessarily. But do I think it has legs over at least several year time horizon? I think probably. And then, Danny, there's another there's another factor here, which is scenario analysis.

So, OK, sorry, I own more than one asset. I don't just own Bitcoin, right? I have a portfolio. Why do I have a portfolio? Well, one of the reasons I have a portfolio is because I want to own stuff that does well in certain scenarios that might not be high probability. But those scenarios are scenarios in which other assets I might own get whacked. So I think about war, basically. And obviously, you know, we've already got the Ukraine situation. We've already got stuff going on in the Middle East.

But I'm talking about a major escalation or, you know, a standoff in Taiwan or actual hot war between the U.S. and China, something along those lines. And in that scenario, many assets get taken to the cleaners. But you better believe that oil and gas and other commodities are going to be in demand. And, you know, we haven't electrified the U.S. military just yet. And so, yeah, industrial inputs are a major factor in that type of a scenario.

And that's the type of scenario where a lot of other assets could lose purchasing power. And by the way, that's a scenario where I don't know what happens with Bitcoin, at least in the short term. You know, some would argue, OK, demand goes up, you know, because more people will be fleeing whatever jurisdiction they're in. They pile into Bitcoin so they can move assets or they pile into Bitcoin because, you know, other things are going down. Maybe that could happen that way or could happen.

a different way, right? It could be that demand goes down. It could be that for reasons of national security, the buy button on Coinbase has been disabled temporarily. Things of that nature. I mean, we know that the Nijia quick reaction will be Bitcoin crashes. It happens every time as a major geopolitical event. When the US bombed Iran, Bitcoin price crashed. The same thing would happen, I'm sure. I mean, longer term, if it was something that played out over weeks and months,

I don't know. But I know on the announcement, Bitcoin will be crashing, probably pre-announcement because it's a prediction market. I think that's a good bet. Good bet, Danny. But I want to know, like you said you were in the precious metal trade, got out of silver at decent price. Like when do you start rolling money back into Bitcoin as a wealth manager? Because we are now down pretty significantly. Like how do you think this bear market plays out?

Yeah, that's a great question. And I struggle with it daily. Okay. So, yes, Bitcoin is for me and for clients, one of those assets that's a strategic core holding. Okay. Gold is too, by the way. In other words, the world would have to change a lot fundamentally for me to not want to hold Bitcoin, to not want to hold gold. And then most other major asset classes are also fundamental core holdings in some amount. Talking about U.S. stocks as an example.

Like, am I ever going to own zero U.S. stocks? Probably not. I'll probably get more selective about which ones I own. And I'm probably less likely to go market cap weighted because although that's worked really well for more than a decade, we might be in the later innings. We might have already passed the peak on that situation.

um and so yeah so then the question is you're getting at is well yeah at the margin you know maybe around the core holding when are you when are you getting greedy right um not yet i guess is my short answer um you know i think that uh you had joe i think you had joe consorti on recently i think he was yeah i can't remember was he calling for a three handle or something or maybe he said he thinks we might hit 40 yeah yeah and that's entirely possible like that would not

surprise me at all but equally i'm not gonna bet like i probably don't put greater fit than 50 chance on that that's probably a less than 50 chance scenario for me by the way another yeah just a reminder always think in terms of percentages and uncertainties right nothing is certain uh nothing is certain in this world not even uh not even death anymore i uh i reckon but we'll see how that goes um taxes uh possibly possibly um so yeah so so like is bitcoin stupid

cheap yet in my experience based on my experience no it's not stupid cheap yet um if you have no Bitcoin, like, should you be buying? Yeah, you should be buying. If you're under allocated, should you be buying? Yeah, probably. I mean, DCA works as a general principle, by definition, because you buy more coins when prices down and you buy fewer coins when prices up. I'm talking about DCA in dollar terms and fiat terms. And so, you know, that's kind of Always a good idea.

But yeah, I'm still of the mind that it is a bear market, most likely. It feels that way. I'm still of the mind that bear markets are about both price and time. So we've had quite a bit of pain on price. We haven't had that much time yet. And we haven't really had ultimate pain on price either.

um i sort of think you have to believe that this time is different which it might be to think that the bottom or to have confidence around the bottom being in so my guess is no probably the bottom is not yet in but i don't have confidence in that uh and you know like a bitcoin nuked to yeah to forehandle something in the 40s now would i want to be buying that in size yeah probably I would. What if you could lower your tax bill and stack

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And if you want to find out more and download the app, just search for Club Orange on your app store or go to cluborange.org. Like I always tell people to ignore anything I ever say about the price because like really I've got no skin in the game in some ways because I'm not selling Bitcoin.

like even if like you'd have told me the problem like in november when you started saying we're getting close to the top i still wasn't thinking about selling because like i just don't i just buy and hold bitcoin and and like when we hit 62 i think i put a bit of money back in like the because i'm obviously i have cash flow so i have money coming in all the time so like i am buying at these prices i've seriously upped my dca um and i wouldn't be shocked if 60k was

a bottom but i also would be shocked if it goes lower like this is bitcoin weird things happen But like the one thing I am still convinced about is that we are seriously undervalued at these levels, in my opinion. And like I have just this like maybe maybe this is pure coke, but I think this time might be different. Like I wouldn't be surprised if the economy runs really hot in 2026 and we do see Bitcoin go back up to like near all time highs. It wouldn't shock me either if that happens.

And that'll be great. I own Bitcoin. That'll be great. And, yeah, you know, this is the fundamental question is, well, first of all, I like your statement about, you know, stacking harder, DCing harder. I think that's a rational approach. You're never going to catch the bottom. That's pretty much impossible. You're never going to catch the top either. I mean, I didn't catch the top. I never caught the top.

And so, yeah, you have to kind of, I think Checkmatey on your show recently framed it well. Yeah, stacking harder, kind of being in really harder accumulation mode, having some dry powder. The amount of dry powder is different for different people. And if you're comfortable having no dry powder and literally putting every incremental fiat dollar or Aussie dollar or whatever that you earn into this thing, more power to you. You're built differently than I am. Maybe you're a better human.

there i know i know some of you uh out there you know some of my friends are are literally every dollar they make they they put into btc and they just don't think about it um it's not for me uh and each of us has different life circumstances but um but yeah stacking harder at stacking harder as a general principle when price is down by half in the long run that's likely to work that's likely to work very well.

One of the things you sent across some notes before this show, and one of the things you put in there was that you don't think anyone should be all in Bitcoin.

I am all in Bitcoin. Like this is basic, like apart from a very small amount of cash, like the business has cash. It also has Bitcoin, but it has some cash because I have expenses there. But like personally, I basically have no money in the bank. It's like all Bitcoin. Why do you think that's a bad decision? Because this actually gets back to the savings idea a little bit.

because while Bitcoin is not great savings, if you buy it, you know, if you'd have bought 126K, like, and now we're at 65, whatever, like that's not been a great savings vehicle, but I've been buying Bitcoin since like 2016. So these price drops don't really, like it still kind of behaves as savings to me because we're still way above my cost basis. So given enough time, does Bitcoin become savings? Interesting, interesting framing. Okay, first I'm going to defend myself.

I said it makes being all in makes no sense for almost anyone, almost anyone. Okay. I hedged my language as I usually do, Danny, because, you know, like nothing's 100%, right? There are rare superhumans in the world like you, and my hat is off to you, you know, if that makes sense for you, except for I think you also said you were stacking extra hard in the downturn. So I'm not sure those things can both be true. How can you stack extra hard if- Little dividends from the company.

that's how okay okay all right all right all right well anyway um yeah it i think it's true that for some people who are early enough where their average cost basis is so much lower than the purchase price then yeah it uh it's gone great for you you've lived there's two things there first of all not only are you way above your cost basis your average cost basis but also So you've been forged in the you've been forged in the fire of Bitcoin bear markets, right?

You've already lived through several. So if you've already made it through this many, then yeah, then then your conviction is ironclad and and you're probably going to be fine. And, you know, but also I know I know a number of people and I'm probably I mean, I'm definitely in this category, which is. I'm bullish on Bitcoin. I had pretty high conviction and success. Still, I feel pain in the bear market. And then also,

you know, the magnitude of the numbers matters for me. So like when I first started stacking, you know, it was a large percent of my net worth, but like it wasn't in absolute dollars. It didn't, it wasn't all that much really at the time, relatively speaking. You go through a couple cycles. And if you stay all in, you know, pretty soon you're talking about real money, as they say. And so then the swings in purchasing power can be big, you know, then the up down is like,

plus or minus a really nice house or, you know, whatever else. And so I think some people, I think different people respond differently. I think some people, when the nominal numbers go up, And even though one Bitcoin is one Bitcoin, they have to reckon with the fact that most of the real world in terms of living expenses is denominated in fiat.

And so, yeah, losing a significant amount of purchasing power, like, you know, years of income, in some cases, decades of income, if you really, you know, if it's really gone up for you, you know, that can weigh on you psychologically, I think.

I think that can weigh on a lot of people psychologically So you know obviously everyone different You know if you got diamond hands and you don feel pain and you got alligator blood what the I always think of the that movie Rounders and and the Russian Teddy KGB talking about how Matt Damon got alligator blood then you fine But if you're a mere mortal like me and some of the rest of us, then, you know, maybe maybe 100 percent isn't necessarily for you. And that's OK, too.

that is okay too funnily though like i'm the opposite i even though the number like the dollar number that bitcoin drops for me is higher than it than it ever has been like i feel less emotionally attached to it than i ever have like the first bear market was way harder for me psychologically than than the one we're going through right now even though the numbers are greater which is i don't know maybe that i think the reason is like buying bitcoin is super easy selling bitcoin is

really hard like i can because i have like so much conviction about what bitcoin will be in the future parting with bitcoin becomes a very hard thing like i just don't do it um and like the question is always like what are you selling it for like am i gonna sell bitcoin for more dollars like i don't i don't care like i'm okay holding this for longer like i have conviction that bitcoin price will be higher in the future so like i don't need dollars in my bank account right now it the the like

equation changes because like at some point we're going to buy a nice house and that kind of thing and that at that point i will sell bitcoin but right now like sell it for what is always my question yep and that's where i say yep sorry bitcoiners uh last year i sold some coins and i bought a house well see that's awesome like the the thing like time is more scarce than bitcoin right you need to enjoy your life as well um i do find pressing the sell button impossible

Yeah, you know, and there's different, it all depends on, you know, what your asset layout is, too. I mean, I, so speaking for myself, like, you know, taxable coins are hard to sell, but I did, I did sell some and, you know, took the pain. And I'm a California taxpayer. So let me tell you, it's, it, it is a lot of pain. And, you know, and then I have retirement assets and those there's no cost to trade. And so like, I don't know, like, like a, not like a lemming.

I'm searching for the, you know, for the metaphor, but I look around and I see the world of potential things that I could trade and I don't have to hold them for a long time. I can hold them for a week or a month or, or a year, or I can hold them for one day. And so, you know, when I have a sense, and by the way, this is not the way to operate for 99.9% of people. I've been trading markets for whatever, 25 years. So I really don't want to advocate this for people.

but yes when bitcoin is in a bull market nothing keeps up with it it's severely undervalued you know as a long-term investment i think it makes sense to have a sizable allocation for most people and then yeah as far as the asymmetry and the variant perception i think you have to ask yourself. So like, for example, when I put out my thesis in 2019, my sense was there was a major variant perception. What does that mean? It means that the average person with money or the average

investor or speculator in the world didn't think too much of Bitcoin. And I thought a lot about Bitcoin and my probability of success multiplied by the potential valuation was very different from the markets. Today, how much, you know, how variant is the perception? Well, it's definitely very variant for some Bitcoiners who think that, I guess, that Bitcoin's, you know, going to a

million next year. That's an exaggeration, but, you know, you get the idea. I think the variants, let's put it this way, a lot more people in the world have done their homework on what Bitcoin's potential value is. So it's not a, it's probably not a secret or not as much of a secret anymore. Obviously we know there's all the naysayers, there's professor fax machine, uh, Paul Krugman, and you know, God knows how many who say it's either worthless or going to zero or never going

to reach its potential, blah, blah, blah. Um, and so, yeah, so, so I guess what I'm saying is I feel like for the first time in a long time, I have a variant perception on more than one asset in a sizable way. And so for me, it makes sense to hold other things. But look, for many people, it probably doesn't make sense.

Um, and also for many people, you know, they claim they're all in, but also they own a house, you know, really they have other assets, uh, that they, I guess, don't think of as investment assets. I do think of, of the housing stuff as investment assets because unfortunately housing has been monetized. And so, you know, there's so much capital there that you kind of have to think about it as an investment, even though you, you live in the thing and you consume it. So yeah,

I don't know. I digress. I forgot your original question or comment, but those are a few thoughts. Yeah, it's interesting. One of the other things you put in your notes was around the treasury companies. Actually, I guess there's two questions here.

One is, do you think they impacted the bull market in a negative way this time? And how many of them do you think you can survive this bear market? So yes, I think they impacted the market in a negative way because if the marginal purchasing power coming into Bitcoin is fiat denominated, right? Let's say it's dollars. And the question is, is the dollar flowing into Bitcoin or is it flowing into an entity trading at a premium to Bitcoin, right?

then the entity is absorbing more fiat capital per dollar of bitcoin purchased than it otherwise would so yes like uh you know like throwing a punch just to left curve that it's like if something's trading at 2x m nav then you're getting actually half the bitcoin demand yeah right exactly well said you said it much more succinctly than i did no i was just trying to figure it out so i think yeah i think that happened um i think that happened uh so yeah so

i need to ask a question there because i don't know if that's right why would if if something's trading at 2xm nav and you put a hundred dollars into that stock they're still buying a hundred dollars of bitcoin with it so why is that negative i think that if you're putting they're still buying $100 of Bitcoin. Well, I guess the capital flow, you're selling... I have to think about it, honestly.

So let's say you're at the margin and you some Bitcoiner who owns coins and you saying okay I going to sell some coins because I going to buy some company that I like because I think it going to be a higher return on investment mostly because I think they're going to raise debt capital efficiently, right? They're going to borrow money from somewhere. That's another factor too. How much of the debt capital funded into these companies otherwise would have bought BTC?

The argument is you're tapping new markets, is that there are investors out there who can only buy convertible debt and they can't buy outright coins or they can't buy the ETF. They can only buy preferreds or some kind of debt instrument. And then obviously, yeah, you had all these convertible issuances, which were, I think, some hedge incremental, there were definitely incremental hedge fund money who were just kind of hedging it out, right?

They were saying, you know, I can essentially lock in a profit if I short the right instrument against what I'm long.

but yeah I don't know you put me on the spot Danny I had to think about it honestly but I'll I'll follow up with you it seems like it seems like I mean a question is like how do you bid up the stock to a premium like where is that premium coming from at the margin I think maybe the answer is like how does MSTR trade from whatever one times MNAV to three and a half times MNAV I think it's because there's marginal buyers, there's marginal capital just buying the stock

and bidding it up. Where did the capital come from? I think that marginal capital into the equity for a lot of people came out of coins. I mean, certainly people I know sold BTC basically to buy MSTR, but I'd have to think about the math. Yeah, I heard a lot of that as well. That's one of the things that I'd be really curious on the truth in some of this. People always say that these treasury companies, it's like unlocking new pools of capital, like,

especially outside of strategy. I don't know how true that is. I think this is just Bitcoiners looking to basically get leverage on their Bitcoin. I don't really believe, you know, the call, whatever the 20th biggest treasury company is getting, you know, real institutional capital coming in. I just don't believe that. A hundred percent. I agree with that take. That's

how the market's shaken out. You know, MSTR is sort of a unique beast and the long tail of all these tiny cats and dogs are not size enough, not relevant enough basically to entice real money, institutional money for the most part. Yeah. Do you think next cycle we'll still have a big treasury company pump? Interesting question. So let's take, well, let's parse it out. Let's take MSTR as an example. How many coins can MSTR buy? How many coins can Saylor buy?

I think at some point there might be a limit, and I don't just mean because number goes up and so for each fiat dollar that they can raise, it doesn't buy as many number of coins. I'm thinking in terms of how big a target gets painted on that pile of coins, you know, when it gets to be whatever, you know, 5% of the total outstanding, you know, 10%. It's probably not going to get to 10%, but you take the point.

But I think that then as an investor, you have to say, well, if governments need to get their hands on a big pile of coins, where are they going to turn? And then you also get single counterparty risk in general.

you know as an investor you say okay if there's a dominant player in an industry do I want to own that because dominance is sort of a reflection of a durable monopoly position or ability to over earn this was part of the you know the debate I don't know a year and change ago I remember having a debate I can't remember who it was which pot it was

You know, and there were there was a lot of noise about, well, what imagine the things you could do, the mirror, the miraculous, wonderful things with the world's biggest pile of Bitcoin.

And my response was, yes, I imagine. How about just tell me, like, give me an example. There was no concrete, there's like no concrete, you know, actionable ideas about what is actually the implementable business model that uniquely you can capture, you know, because you have more than half a million coins or a million coins or whatever.

yeah are there economies to scale there it's not obvious to me at all that there are economies to scale um you know i use the model i think i talked about this on pressed on the on the bear market episode i did with press in which was most of these things are kind of like closed end funds you know they trade at sometimes they traded a premium to book value but oftentimes they

trade a discount. If they're excellent capital allocators, then maybe they trade at some modest premium to book, you know, like Berkshire or Markel Corp or any of these conglomerates. And then if you look at the bank model, you know, really well-managed banks, like exceptionally well-managed banks, sometimes trade at two times book, which is like two times MNav. And if they trade higher than that, you know, that's a, that's a sell. Um, so will there, will a premium

come back into the market? Maybe that's a better question. Like if you have, if the question is, will these things trade up if Bitcoin goes up? Well, if they still own Bitcoin, then yeah,

hopefully they trade up. If they don't, then we got a real problem. I think the better question is, do they trade to, does the, does the discount go away or does the discount contract a lot or even does it flip to a premium i suspect it'll be i will suspect the discount will contract a lot so there'll be some point in this cycle where if you can buy these things that you know 30 40 50 discounts uh or whatever 0.5 m nav or 0.6 or whatever that is you know it's probably

going to go pretty well. The real tricky question is, yeah, is where do you where does spot go? And where does discount go? Like, that's another example. Like if I saw names that were trading at, you know, less than 50 percent or greater than 50 percent discounts or less than 0.5 MNAV, then even if I'm bearish on Bitcoin spot for a while or I don't have confidence, you know, that could still go pretty well.

Like as long as the thing doesn't unwind, as long as it's not a fraud, you know, then actually you could make a nice trade there. And then the question is, well, is that a trade or is that an investment? And my sense is it probably a trade It like do you want to be a long hodler of XYZ treasury company I don Not really Yeah, exactly. You know, do I want to trade it with no tax effect with my Roth IRA? Am I a buyer at some level? Yeah. There's a trade there, probably.

uh you know have i put the trade on yet no um yeah so that's probably the framework uh probably the framework for me yeah i think one of the really interesting questions that you brought up then is like how many coins can say their own and like it seems pretty inevitable that he'll probably get to a million coins at some point given enough time like he's really not that far away right now um but at some point it's going to get really hard for him to incrementally

increase his stack but he has to constantly buy otherwise there is no like case for him to be trading at a premium and so like when like what what is the end game here like it can't like being an etf is not interesting like he has to continually try and acquire coins and like how many coins is too much like i don't know these are just all the questions i have in my head i don't know the answer to these questions, Danny, I think that what's really interesting about him and their situation,

but also of lesser, let's call them lesser Bitcoin treasury companies, is that, yeah, the valuation models and the frameworks really depend a lot on the assumptions, rate of accumulation, you know, price of the underlying, how much and how fast can they raise debt capital or quasi dead capital, whether it's preferreds or anything else. And the confidence intervals or the bands, you know, around these potential outcomes for these variables are huge.

Like one of the, there was a lot of discussion, I think, about around, I can't remember the term, but, you know, basically the rate of accumulation, I guess it's BTC yield. Is it BTC yield? And the question is, yeah, you can look historically and see the BTC yield, like that's historical fact. What's it going to be in the future? I have no idea. How much variance is

there around the base case? Huge variance. Yeah, I really don't know. When you're trying to value a stock in general and you're thinking about earnings or cash flow, you're saying, I can see what the earnings and the cash flow were, or I had some model of how they'll evolve over time. And obviously, nobody knows the future. So, you know, you had scenario analysis, you have your downside, you have your upside case. But it seems to me that the, yeah, the

width of that window is quite high. It's a very wide window. And so I think it's really hard to value these things or make projections about how it turns out. I don't know the answer. I wish I knew the answer, Danny. It's going to be interesting. I don't love the idea of a single entity owning 5% of the supply, certainly not 10%, but there's nothing we can do to stop this.

Yeah, and I wonder from a valuation perspective, the funny thing is we know about MSTR is you got your hardcore Bitcoiners who just want leverage. So they're greedy. Let's call it what it is. Greedy Bitcoiners. Bitcoiners who are bullish on Bitcoin, but they say, ah, but I can make even more holding this thing with leverage. You know, and then you have, there's some institutions there, obviously. And then now, you know, there's some indexation inclusion, right?

Some robots are buying this thing mindlessly. And each of those pools of capital is kind of different. I do wonder what a clear-eyed, you know, sort of not bull-tard Bitcoiner analyst says about how big that stack can be. I don't want to say allowed to get, but I kind of mean allowed to get, right? It's like, at what point do the powers that be start to worry about that? Or at what point do rational investors just say, yeah, that's too big a honeypot?

Now, you could say, oh, well, Coinbase has already had, I forget the number now, but they have more than 10% of the coins physically. Maybe, I'm trying to remember, it's like between 10 and 20, we think. There's a difference between just custodian coins on behalf of someone else, though, and being the owner of those coins. And I guess you could maybe argue that you're still costing them on behalf of the shareholder, but it's different.

Yeah. And then you get the I mean, obviously, you got the key man risk. You know, I want Michael Siller to live long and prosper. But, you know, to the extent that he has control, you have a rational investor has to ask, OK, well, if there's, I don't know, change in leadership or ownership for whatever reason. Yeah. Does the board keep sticking with the strategy? under what circumstances would or could the board capitulate if he's gone? I don't know. I don't know. So many questions, man.

You know, this is what makes it fun, though, Danny,

which gets back to one of the themes that we were talking about earlier, which is anyone that says anything with certainty about anything, Bitcoin or otherwise, run in the opposite direction. Totally. You know, ask questions, you know, have some doubt about things, and assume that the range of possibilities around your base case is wide, basically. That's my approach to life. Maybe I'll end up poorer. Maybe I'll end up with fewer coins.

Maybe the all-in Bitcoiners, lifers who never sell coins will be laughing all the way to the digital bank of the future. And I'll be stuck in my... Yeah, I don't know. I'll be stuck eating the bugs because there's been so much inflation that all my other assets lose all their purchasing power. Even then, I have a suspicion that if Bitcoin gets anywhere close to reaching its potential, hopefully, fingers crossed, I and my family will have enough coins. But who knows what the future holds?

I'm sure you will, man. This has been awesome, Andy. We'll have to do it again. When you think the bear market's over and we're back in a bull market, let's do another show.

um where do you want to send anyone who wants to find out more about you yeah i guess i guess why buy bitcoin is the book and i guess on on x uh edstrom andrew i have the book here somewhere i just can't see where you're checking the shelf the thing is there's so many bitcoin books these days that if you if you actually if you keep a shelf of all the books there it is good man he's got his copy you knew it was there you knew it was there it was

right in the middle. I should have seen it earlier. That's great. It's been a pleasure, Danny. Yes, it really has. Thank you, man. And I'm sure I'll see you again soon. We'll try and do one in person at some point. Thank you, Andy. Looking forward. Thanks, Danny. Thank you.