Was Bitcoin’s Price Suppressed? | Alex Thorn

It's very possible that if you don't have a fleet of robots working for you, it'll be very hard to acquire one because all the work and labor you might do to earn the money to then acquire your first robot. My fleet of robots can probably do that labor better and cheaper than you. If you have a long-term view and you're a long-term bullish Bitcoin, like, you know, you should look at these as opportunities. The best money is made buying when everyone else is afraid.

You want it distributed to people who buy it at a higher cost basis. And like the realized price, it is higher. And that's a good thing. That means people, they're willing to buy Bitcoin at really high prices. We really should focus on explaining its fundamental purpose and use cases and value to a holder of Bitcoin as the reason that it goes up. Right. Stop begging for like Jay Powell to buy your bags.

that's not nearly as durable as the reason it going up being that people deeply understand the savings technology that is bitcoin uh let's get into alex how you doing man i'm great danny thanks for having me back on how are you surviving amongst all this market manipulation that we're going through market manipulation what are you referring to exactly talking about jane street

this thing is this has annoyed me so much we have all these free market people in bitcoin that are now up in arms because jade street might have gone short like it blows my brain yeah and like i i happen to think this is most likely just straight up twitter cope like there there's you know a market making firm a quant trading firm they're very often you know in a trade like this most commonly they're probably trading at neutral delta neutral so they're doing

the basis trade or some kind of arbitrage or hedge right like so what is what do we think the actual incentive would be for them to being to suppress the price. Like there are dynamics and options markets that can cause, you know, like gamma squeezes and things that can, you know, put dealers in positions to either like amplify or dampen volatility. And there are and they for all we know, they're holding a lot of Bitcoin and they decided to be spot sellers.

Sure. But like it just seems like cope to me. Right. They had the lawsuit come out from Terraform Labs against them. And then this thing about the 10 a.m. dump, like this just seems like manufactured controversy to me. You know, people coping because Bitcoin's down, you know, 47 percent or something from all time high. Yeah. Like I was looking into this a little bit. Like I could see the potentially being something illegal that they did around the terror stuff. We'll we'll find out, I guess.

Totally possible. Yeah. Because like it sounds like they might have been trading with insider information.

I saw there's an allegation. There was like a chat, right, that they had with somebody at Terra Luna and they knew that they knew that the liquidity was going to be moved from this three pool on curve to the four pool before others knew. However, you can you were able to there is a plausible explanation based solely on public information, which is that they saw them move UST from the three pool and decided to immediately remove theirs.

Like, I mean, that is possible. The sequential order of events makes that possible. It's true they'd have to be monitoring it actively, but if they had a big position, they probably would have been. So there is, as far as I understand the facts, a totally plausible explanation. That doesn't mean there wasn't also something untoward happening. And that is the purpose of discovery in a lawsuit. So it's possible if they did, we might find out.

But, you know, Bitcoin's a, you know, multi-trillion, well, whatever it is, one point something trillion dollar asset, right? Like, what is their incentive to artificially suppress or what is the trading rude? Like, I'm not quite sure what the people are thinking. It's manipulation, like in some, I don't know, it's just, it's hard to like manipulate markets of scale, like in a specific direction, like because it is a free market and it's a large one.

Like, you know, like people tend these firms like Jane are very secretive, rightly so, or like Renaissance Rentech because they have code and algos that are their literal alpha. And but that and that secrecy makes it easy for outside observers to blame them for things. And I most likely my my base case is that that's what's happening here.

yeah but even like my problem with it is like it's so pathetic to see people writing articles on twitter like claiming that jane street the reason that bitcoin's down like their whole business is to try and make money and if they want to go short like i know not they're a market maker so normally they're neutral on the trade but if they want to go short like they can and like bitcoin might prove wrong and they'll get blown up in that trade or they might be right like

but i don't see there's this like call that we should be able to see the other side of their book like how what options they're trading like why this is a free market yeah exactly very strange

I mean, again, I think this just emanates from, you know, anger about Bitcoin's performance. And so like, you know, it's really like narrative typically will follow price, right? Like this is why, you know, the best money is made buying when everyone else is afraid because everyone else is talking about all these mean things. you know, the threat of quantum, like, for example, has existed if it is a threat for

over a decade. I've been answering people's questions about this since at least like 2016. You know, no one was asking as loudly last summer when Bitcoin is rallying. Now, all of a sudden, it's apparently the biggest deal ever, right? Like people need things to latch on to. And it's emotional. People are so emotional. This is one of those as well with Jane. It's like, I don't know,

they're just like the punching bag of the week. You know, it's not like there's so many people that trade and own Bitcoin. It's not just one secretive firm. Also, it's almost like, with a grain of salt, it's like people love to believe conspiracy theories when sometimes the simpler thing is just the truer one, right? Which is like, yeah, people trade in markets. I'm sorry. But their secrecy doesn't help for that big bad wolf narrative that people are hanging on them.

Yeah, but people want to find someone to blame for the reason that Bitcoin's at 67K or whatever it's at right now. Always, they do. What is the truth? You're at Galaxy. You have a pretty good insight into what's actually happening in the markets. You facilitated that 80,000 Bitcoin trade last year. What do you think

has caused this drawdown? I would say at the start of last year and in between the president's reelection and his inauguration, so November to January, longing Bitcoin was the most popular trade in the world, the most crowded trade. Everyone, that was the number one trade, right?

And everyone was long Bitcoin. And then throughout the year, it like it became not the most popular trade. And like, you know, when you're fighting for money at the scale that Bitcoin requires at this big of a market cap, attention matters.

And, you know, other trades became hotter trades, AI broadly in a bunch of derivatives like chips, energy and other stuff like that. Quantum stocks was a big trade during part of last year. Gold became higher confidence, lower reward, right? Like a safer, more sharp, you know, risk adjusted way of getting returns was up 30, what, 30, 40 percent last year.

And that's, I mean, a massive asset rising like that much is crazy, right? So you were able to get gains from other things and people just, so there was, there was some decay in buying demand. And then you couple that with, you know, massive amounts of whale selling, right? And there, there was, right. And you can go look and look at, you know, pick your metric of choice from, you know, the best Bitcoin metrics website in the world, check on chain.com.

And you'll find that like, you know, long term holder, like in both units and dollars, like 25, they're selling like the whole time. It makes sense. That's also what, you know, long term believers know how to sell rips and buy dips. Right. It's it's the casual frightened investor that is the one that sells the bottom. Right. It buys the top and sells the bottom.

So they're always structurally, you know, there's always, as an asset goes up, structural selling from people taking gains. That's literally how distribution occurs. And it's how you make money in a trade. Right. So there was a lot of that. And I think buyer demand basically decayed as other things became, you know, hotter and momentum stalled.

And then you couple that with that shock event of October 10th that really stunned the buy side in crypto broadly and also was a frightening and deleveraging event. And then it just became hard to make that the winner again. And then, by the way, once it became negative year to date, then you had tax selling at the end of the year because everything was up in everyone's portfolios. U.S. equities were up. Tech stocks were up. Gold was up.

Like, how are you going to harvest tax losses on anything other than Bitcoin? Bitcoin was the only thing really only major asset that actually finished 25 down year to date. And so people sold that to capture those losses. And, you know, so I think and then obviously now there's technical reasons. I mean, at this point, we put out a bunch, you know, but that gets you down below 100. And and then, you know, momentum becomes a thing.

And now now there's bigger structural questions about the economy and the markets like that are also weighing on sentiment. But, you know, it wasn't because of quantum that it didn't go higher. Right. I think this is really just that exhausted. It got exhausted and buyers went on strike basically at a certain point. And now it's really hard to convince capital that it's time to buy Bitcoin at this exact moment. Right. Like it looks still trading pretty weekly.

like I mean it I mean we cannot like on a weekly or monthly basis it looks like it's trading softly it doesn't look like it can really muster the steam for like a major rally you know I mean going from 62 to 60 to 70 ish like in the last day as we record this you know at the end of February like is that really a material move like or is that actually just range-bound trading it's already come back from 70 again it sort of sort of feels like it's in undetermined what to do now

and that's how I would frame the story. Again, keep in mind, gold went 40%, 30% last year. Bitcoin still right now is up more than 3x from its bottom from 23. So like it also just ran first. You know, if you look at like annual lows, like we're still way higher than like previous bear markets. So it's not like bad. It's just that it kind of got ahead of its skis.

You know, a lot of the optimism was priced in well, like as soon as early as like, you know, winter of last year was already, you know, pretty priced in. And then other stuff stole the attention and had a, you know, had a good year. And people feel like they know the Bitcoin story, investors do. And I would argue they don't. And there's a lot left to be written in that story. But, you know, people are downloading Cursor and Claude and

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with each hosted miner purchased. Yeah, for sure. I mean, Checkmate said that last year, I think 800 or maybe in this cycle, 800,000 coins that were older than 10 years went to market, which is insane like that's a huge number of that's a whole quantum attack basically and yeah like like the guy who sold 80k galaxy i don't know how much you can talk about this do you know any like of his reasons why he was thinking of selling yeah i can't i can't speak specifically

about any client but i can tell you what we put out in a press release which was that it was basically for estate planning purposes which is a broad category of things but you can imagine

You're sitting on like unfathomable gains. And I don't know whether it's take make something you could have a death in the family or maybe you become ill or you get a divorce or you have children or like this whole bunch of reasons why you might want to restructure your wealth. Right. In the context of planning for your estate. And so that that was the reason it's not was not explicitly some other reason. Right. So and I you know, you've seen a lot of that.

I mean, again, like you, Bitcoin wasn't even deep enough and order books liquid enough to even exit that number of coins like for a lot of times. I think that's also been part of the reason here. Like, can you really extract a lot of value when Bitcoin's only a hundred billion dollar asset if you're sitting on it in long term bullish? So I think anecdotally a big reason for why now, right? Like, or why then? And in that case, in July is like because it was possible.

Like it hadn't really been possible. And I would say, like, I mean, if the whale doesn't sell then, like, what do we prefer? That they sell at 119 or that they sell at 150 or they sell at 200? Like, I mean, in theory, like this, you know, every asset is part of the wall of worry that a growth asset has to climb is defined by early investors taking profit. Like, that's that is the wall of worry, basically. That is always the structural overhang, you know?

yeah i really like geordie vis's piece where he wrote about this being like bitcoin's ipo moment it was the first time that as you're saying like bitcoin is actually liquid enough to get out of a position this of this size yeah i think geordie's absolutely right about that framing like and i mean that's the thing like i mean technically you want more selling like you you you want it distributed to people who buy it at a higher cost basis and like the realized price which is the you

know, sort of the best on-chain metric for estimating everyone's average cost basis and aggregate, it is higher. And that's a good thing. That means people net like that are comfortable, have proven with enormous amounts of money that they're willing to buy Bitcoin at really high prices, at higher prices, certainly than last time. And to me, like that's a core signal of adoption. But it requires that old holders with low cost basis sell to new entrants.

And like you, any asset is better when the ownership is widely dispersed and not concentrated. So it's, it's, it's bullish selling, but of course it can cause the unit price to face headwinds. And I mean again we absorbed an enormous amount of those coins and still went higher It incredibly bullish It shows you the appetite to own Bitcoin at those higher prices was higher than it ever been I mean obviously it's people now want to own it at lower prices than they were paying for it last year.

But like that, that people were buying. And even now, again, it's 67 K. That's literally the 21

all time high. Like people are an enormous number of coins is changing hands at this price. Like, right so like people are willing to increasingly pay more for bitcoin and that's also a sign of adoption but it does that ipo moment as geordie described it like is necessary like yeah it's funny like the bullish selling narrative i probably said this as well but it seems like such cope now but i do understand the point like we do need this in as many hands as possible though we don't want

someone holding like yeah i mean like it does have to happen what you you're gonna you know buy Bitcoin because you believe it has a bullish price future, but other people who did before you aren't allowed to like it's that's just simply not how it works. So I think it's, you know, honestly, like if you have a long term view and your long term bullish Bitcoin, like, you know, you should look at these as opportunities. And many do. That's why we're at 67 and not,

you know, 20, like many more do than have in the past. And I, you know, I think I declined to predict a Bitcoin price for the end of the year this year. And I literally said this year and not just in Bitcoin looks too chaotic to predict. And I firmly believe that even more than when I wrote it two months ago, like it is very chaotic in the investing environment. And but I do believe with

strong conviction that Bitcoin will be higher in some small number of years. Right. Like it's not we're incredibly convicted on bitcoin's long-term future but like you know money and flows and liquidity and sentiment and narrative ebb and flow like and you know you got to have some ebb if you're going to have some flow it's just how it works right and if 60k does end up being you know close to the bottom this time like that's incredible and it's so funny how you're what you

think of as being like deep value bitcoin changes so much quite quickly like when bitcoin hit 62k last week or whenever it was two weeks ago, I was like, holy shit, this is cheap Bitcoin. Whereas that was literally the top four years ago. Yeah. I mean, totally. Like the psychology of price action is a fascinating thing. I totally agree with that. I will say some bears have become emboldened, you know, bears who said they would be buying 60 when it was 85 are now, some of them

are now calling for 45. Right. And it's like, kind of hit your level. Like, like, so it works both ways, I would say. But I think there's a pretty strong case that that is the bottom. One, the February 5th was an absolute carnage capitulation day. I think there's plenty of chance that it drifts lower, could go lower too, to be clear. But let's say we fast forward a year from now and it turns out that February 5th, like candle to 60K flat, turns out to have been the

bottom. We'll look back on that day and say, you know, that day did actually feel like pretty good candidate for a capitulation bottom. There was a lot of feared panic on that day. We basically dropped from like 82 to 60 in like 18 hours. Like it was a very big move, right? Like that is tends to be like a requirement to form a bottom is a true like capitulation like day of like outright

bloodshed. And it did feel like that. I think the main thing that causes Bitcoin to go lower if it does in the near and medium term is equity markets rolling over, which I think people are very concerned about. Right. And that's that's a big risk. Why? Why do you think equity markets are

all over? Is this like AI fear in the markets? Yeah. Yeah. I would say AI and geopolitics primarily. But I would say I think geopolitics have tended to be less, you know, medium term bearish than people always fear they would be. I remember when we were in Bedford, I think was it two years ago when it was, I think, Iran sent a bunch of drones to Israel and Israel knocked them down.

And, like, it was Saturday night and literally the only thing you could sell was Bitcoin and Bitcoin dumped during the, what James Chet calls the chop solidation phase. It dumped from, like, 62 to, like, 48 or something, right? Like, so, like, there can be near-term disruptions from geopolitics, but, you know, depending on, you know, as long as it doesn't devolve into, like, a giant, like, land war,

I feel like typically they end up getting bought pretty well. The equity markets, I think, are a lot trickier. And, you know, I tweeted something about this today, but basically the market is in deep anxiety about AI, because on the one hand, people are very concerned it won't be good enough.

And thus, they'll have overspent all this CapEx and there won't be more CapEx needed. And so all the spending that's been happening by the hyperscalers and the big tech companies like will have been for naught. And so it won't deliver. And so they won't go higher. And that's a lot of the biggest equity companies in the world. On the other hand, they're worried it'll be too good and it'll kill all these jobs and all these other sectors. And it is true. There's some overlap like both can be true or one can be true first and then eventually the other can be true.

But like those are like almost opposing competing narratives. And I mean, I don't know if you or the audience is using AI tools a lot. We are and I am using a lot like I'm vibe coding apps and dashboards and database. I was making a video tracking meme generating app in Cursor the other day, literally like to do that Matthew McConaughey meme from Interstellar where he's watching the TV.

Like I want it to be a lot easier for me to overlay my own video and not have to go into Premiere and like track the make sure it sticks to the to the TV like boundaries as the camera moves. Like you can literally build almost anything pretty easily with very little experience. experience, if you just have a little bit of iterative discussion with it, like these things are, I think it's very possible that AI does have, maybe even likely, a major impact on labor,

right? And people are very concerned about what that means. And people haven't really thought through like the societal impacts at scale. Obviously, some people have, and certainly probably more likely among your audience and people we talk to, they have. But like, you know, There was that graphic that showed that like 0.06% of the population is the total amount of people that are actually using pro AI tools. It's like almost nobody. I don't think.

Yeah, society hasn't really like generally grasped how it plans to deal with these questions.

And not only the possibility that it is extremely disruptive to labor and companies, but also the realization that society hasn't really figured out how to react to that. That's also causing anxiety. So I think there's there's just an enormous amount of uncertainty. And that makes it, you know, you couple that with, you know, the rate path, like rates, you know, Fed rates aren't really lowering like borrow rates that much in the economy.

And like maybe you might need QE and just there's so much uncertainty in the macro and in the equity markets that, you know, I think it's totally possible you see a 10 percent correction or more in the S&P, for example, this year. It's totally possible. Do we really think Bitcoin holds 60 K and an environment like that? Like, I mean, it could, but it may. I think it very likely does.

And therefore could go lower. I mean, I think most of the juice has been squeezed in the Bitcoin short, to be clear. Like, I wouldn't be short here. I mean, we I was I wrote a piece on like what? Let me see when this is published. February 1st that I sent to clients when Bitcoin was like 80, 84 K or something. It was 84 K. And I said it could go it should go lower, like down to 58, like to the 200 week moving average to the realized price at 56.

Very high chance of that happening. It literally ended up happening like four days later, I said, in the coming weeks to months. But like, you know, at this point, though, like, would I say that the risk is to the downside? I think there's plenty of the risk is to the upside. Like, do you really think we're more likely to go lower from here than we are to go higher from here? I mean, I think, but I also think you can afford to be patient.

Like there's, it's probably, even if 60 technically is the lowest price you see, like we're not also not seeing a lot of conviction to go a lot higher either. So you're probably going to get more bites at this apple if you are looking to buy at lower prices. It's, we're in, you know, this takes time. It just takes time. Yeah, we're in buying the dip phase right now. Welcome back. We get, this is what happens.

I feel like every, you know, on average, it's like 10 months of just horrible bear market or like sideways chop solidation. We get like two months of euphoria. Like, well, we're back in the normal Bitcoin or world where we're hodling till Valhalla because we believe in the thing. And we're not going around high fiving each other because our number went up at the moment. But it'll come back.

I've got to ask you, you know, that day you're talking about two years ago when Iran sent the drones to Israel.

was that the night that you got liquidated in the bar at midnight yes yes i i was um trying my hand personally at leveraged uh bitcoin trading with you know like i would say play money not like with my stack or anything like just to make life exciting and you know the cost at the time i was using gmx on arbitram which is an ethereum l2 which is a way to do this in a non-custodial yeah in a non-custodial way and like it um there was so much market movement

that stupid arbitrum like the literally the transaction fee just to like update or post more like more collateral was like two thousand dollars and i was just like f it let it ride let's see what happens it was that night i was i totally fell for the narrative that this time was different and that kind of the four-year cycles over bear markets weren't going to look the same. Did you ever fall for that? And why do you think that didn't happen?

I did fall for it. But although I'm going to caveat this, I still think this time was different. Okay. I think there's a lot that was different about this time and is still different. And technically, it wasn't the exact four-year cycle. This was supposed to be the down year and last year was supposed to finish green. I think technically, right? If we're doing the- We didn't get green, green, green, red.

Correct. We got green, green, red. Right. So like, although it's sort of like when people said that this time was different, the four year cycle wouldn't happen. I don't think they meant it would be the same, but a three year cycle. But look, I mean, again, you know, for it to be the same, like we would need like a 70 percent plus correction from all time high. And we haven't gotten that yet. And I think that is probably the max that you could get.

Um, I, I still don't think it's very likely to see like something with a four handle. Um, I think that's pretty unlikely. Like, I think you've got a lot of folks who are looking for like 55 to like back the truck up. That's what I'm hearing in chats and discussions with people. So I find it hard to believe it can really go like another minus 20, you know, get, get down to minus 70%. But you know, if, if this ends up being a max, like 52% drawdown, like that would be

different, technically speaking. That might sound like me coping on saying it was going to be different. There's a lot about it that is different. But yes, I mean, it did. I absolutely have to acknowledge that like it just so happens that it did end up looking pretty similar

to prior cycles. And I don't know if that's coincidence, if it's the business cycle, if it's liquidity, if it's that enough people believe in the four-wheel cycle, perhaps a lot of the OGs believe in the four-year cycle and they're the ones that brought a lot of supply to the market. But yeah, well, I mean, luckily, at least saying the four year cycle is over. And anytime I did say that, I caveated that, like, you've got a whole different cohort of buyers.

It is different. It's not purely like boom and bust on adoption and narrative and having dynamics. That's true. That was still true. But, you know, whatever, for whatever reason it did, it has ended up looking pretty similar to a four year cycle. That is true.

yeah it's funny though it feels like sentiment right now is really bad like amongst the worst i've ever seen it even like when you take into account like the ftx collapse like it would that felt different because there was a very easy thing to point out being like this is why bitcoin's going down and like it didn't really affect anyone's long-term conviction if they believed in bitcoin it was just like a fraud being unwound whereas this time it's like people are confused as to why

it's going down it was never really a part of that debasement trade that was gold and silver that took all the market share there. And like what I worry about or what I think about at least is that we don't really have any strong narratives that have always been like a catalyst to push Bitcoin higher. Like, do you think we need something? Yeah, I think you are right about the sentiment. It's among the worst I've ever seen. And I totally agree. Like in 22, it was like, oh, well,

there's market infrastructure that was fraudulent. Like it wasn't really a Bitcoin story. It was like, oh, this guy Sam stole everyone's money. You know, this guy Mashinsky stole everyone's money and bought NFTs with it or whatever, right? Like this buy side firm like lied to everybody and borrowed all this money and then lost it all, right? Like it wasn't about Bitcoin. I think part of the issue, yes,

there has been narrative damage from Bitcoin's failure since September to trade like gold. Like I think that's totally right. I don't think it's correct. It's never really what we meant when we've called it as Bitcoiners digital gold. I tweeted about this also, like, you know, that moniker emanates from a post Satoshi himself made in August 2010, where he's describing the characteristics of gold, that it is scarce. It's not issued by a government, right?

It's durable and fungible and transportable. And in many ways, Bitcoin is better on those features, certainly on transportability, on verifiability, right, et cetera. Visibility. Yeah, the audience, your audience knows this.

we didn't I don't think so Satoshi was very clearly not saying and nor have I often heard Bitcoiners say that it's going to trade with a high beta to GLD right like now some have and I frankly believe that it will eventually still and to me it's like the delta between its fundamental gold-like characteristics and its ability to trade like beta to gold that's your alpha if

you believe it eventually will, right? Like you buying the arb to close that gap, if you believe it will eventually be treated like gold by the market, that's why you can make money on the trade. That's why that's the reason to be bullish on it, right? It's not the lack of it having succeeded means there's still opportunity if you believe it eventually will. And I do believe it eventually will. But a lot of Wall Street and money like took it super literally and now is like, see,

it failed. Well, literally, you know, tick tock next block. It didn't fail at all. Bitcoin's not even aware of your of these narratives that you've foisted upon it in your own mind, right? Like it's working perfectly, to be clear, I think. But it has done damage. And then I think, you know, it's part of the reason for the negative. That's one reason. I think the other reason why it's hard to find and come up with catalysts in your mind is that we like shot for the moon in 24 and 25. You

had the president saying we're gonna be a Bitcoin superpower. You had all this everybody pinning their hopes on regulatory changes or the U.S. government's going to buy a million bitcoins and et cetera, et cetera. And that stuff has already either been shown to not have occurred or it's like, well, what's a higher catalyst than that? Like if I mean, now we can orange pill the next president's like we already did that. Right. Like what's higher than that? Do we need Jesus to come

back and say he's did so to buy Bitcoin? Like, you know what I mean? Like, I think there's a real aspect to it where it's like what like so much of the story for Bitcoin and broader crypto adoption over the last two years has been one of like regulatory pivot change in government attitude towards Bitcoin. We already got all of that. It's like you're we're so trained to think of those types of unlocks as the catalysts and we already got all those unlocks. And so like what more could

there possibly be? And I think that's a big contributor to the negative sentiment. And I But the reality is like those aren't those are like structural impediments being moved.

It you have to think about Bitcoin fundamental features and more and more people believing in using them Right Like and that is happening And I think that will continue to happen And there are like some structural impediments yet to still be unlocked Things like model portfolios from wirehouses and RIAs, almost none of them offer it. Morgan Stanley offers one now, has it in a model portfolio, right? Like there's most of the investment advisor.

Remember when we did these episodes a couple of years ago on ETF stuff, which I think I did at least two of them with you. I did one with James and you

And yeah, James Safar from Bloomberg, like one of the main case that I've always made for ETFs was that like the true there are a huge unlock for the wealth channel, which is like investment advisors. Still, most of the big investment advisor platforms only allow things like, you know, if you have 10 million or more to invest in Bitcoin, they won't recommend it. It's not a model. So there is stuff like that that still is going to come and is coming.

But I think it's really now just a story about telling people understanding what Bitcoin is. It is fundamentally very valuable in a world that is degrading and, you know, the institutions and the geopolitical structures we've had for the last 75 years degrading and becoming less certain. like Bitcoin is extremely useful for the same reasons that people say gold is useful. You can't peel off your shares of a GLD ETF and send them across the world for payment in a billion dollars.

Every single high net worth person, if they're trying to preserve wealth and keep custody of assets, should have a Bitcoin position. There's no doubt about that in my mind. They still need to learn that and are learning it. To be clear, again, like think about prices like, you know, fundamental, some value in the stack of the price of Bitcoin is fundamental understanding and some value is speculative fervor. And like, obviously, a lot of the people who bought it didn't have a long term view like

that's that's a failure of teaching what Bitcoin is. Right. But again, the fact that we're at 67 and that and that that is, you know, almost 50 percent down from all time high, that shows how big of a stack of more fundamental holders there are. Right. Like, so So I think it's a matter of Bitcoin being more widely held and adopted, and that is happening.

And, you know, you can be upset about short-term price action, but I promise you if 1010 doesn't happen and helps snowball this negative reaction and we finish the year at 110 and then we're at 130, everybody would be remarking to themselves about how smart they were. Like, it's, you know, like this has never been a short-term investment. Like, that's the issue. I will say it also faces competition from stocks. Stocks are highly volatile right now.

So a lot of the people that like to play a more volatile market, which Bitcoin and cryptos have been, they can just do it in their brokerage account right now. There's so many. If you want to active trade, right? But again, we're going to get, I think, to that point. That's what bear markets are for. It's for the diamond hands accumulating. And that's what people are doing, by the way. People are buying Bitcoin at these levels. It's not for every sale there is a buyer, right?

Like, it's not just like the other thing, ETFs are like all the big hedge funds on the ETFs. That was amazing. We orange pilled them. Those people were doing like basis trading mostly. And like, right, they're they're capturing arbitrages in the market. It's not like that. A lot of the ETF AUM create was like, you know, traders also not long term people. Plenty of long term people, too. But so I don't know, that's a lot of words, but I agree.

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orange.org. It's funny though like I do agree with that but the the sentiment was kind of shot from I don't know, late last year, like even when we were above 100, the sentiment still seemed like it was shot already. But I do agree with like Bitcoin is getting too wed to a narrative is an issue. And I think for all the Bitcoiners that came in like 2020, 2021, a lot of them got wed to the narrative that like if the Fed's not expanding the balance sheet, Bitcoin doesn't go

up. And I don't believe in that either. And like since then, we've basically seen the Fed's balance sheet declining, QT. And like, I think there's a lot of people who want to see QE come back just So the Bitcoin bags go up and it would be nice to break out of that narrative where Bitcoin can go up despite whatever the Fed are doing.

Depending on like all again, I would consider that in the category of like structural impediment or exogenous like factors like that's people saying like I want Bitcoin to go up because of something else happening. Right. And I'm just saying, like, we really should focus on explaining its fundamental purpose and use cases and value to a holder of Bitcoin as the reason that it goes up. Right. Stop begging for like Jay Powell to buy your bags and like stop begging for XYZ entity to buy your bags.

Like that's it's just not because that's that's not nearly as durable as the reason it going up being that people deeply understand the savings technology that is Bitcoin. Yeah. And don't get me wrong. I think the Fed is going to continue to expand its balance sheet as well. So that narrative will probably be around for a while.

I mean, Lynn Alden is obviously right. Like nothing stops this train. I saw the Dallas Economic Club like a week or two ago, Scott Besson, the Treasury secretary, was asked this explicitly, like, how do we solve the debt? Do you think you can grow your way out? You can grow your way out, have austerity or you can inflate it away.

He's like, sure. The questioner was like, surely three is, you know, inflated away is the only like truly viable option. Obviously, the Treasury secretary can't say that and didn't say that. He said, sure, we think you can grow your way out. Well, it's not clear if that's ever actually happened in the history of the world. But, you know, I get why he can't admit that the most likely outcome is inflation forever.

I mean, that's definitely the most likely outcome. But if you were going to give it like a wild card, you could say that AI might unlock a ton of productivity and there is a chance it could grow their way out. The problem I have with that, though, is I think if you accept that sort of scenario, I think it grows its way out while joblessness goes wild. And then I don't know what happens.

I mean, look, like I'm I'm definitely of two minds on this. I agree with both of your points, basically, like on the on the Doomer side, like it's really hard to come up with a job that an A.I. agent or even a humanoid robot or some type of robot with A.I. inside its head could like that a human could do better than that.

Like, in fact, we spent like an hour or two, a week or so ago, literally just brainstorming what jobs, you know, a six year old should in 20 years think that they'll be able to do. And, you know, what job is job role is safe from AI? And like, honestly, the best example I came up with was politician because humans will at least want to be governed by other humans. Right. And I was like, I hope so. Which is obviously a terrible answer.

Like it's not we couldn't come up with much like it seems like especially when you bring in humanoid robots or other types of robots, physical robots could probably eventually, you know, powered by an AI agent. Mine could probably do a lot. That's generally one doomer argument. And I think you really do have to prepare for that. It's, you know, prepare for the worst, hope for the best.

I think on the upside or, you know, the hope for the best side of the argument is also pretty compelling, though. look at every technological innovation in human history. Yes, it killed certain jobs. It also made a lot of new ones, right? Like, so, you know, you have to, humans are very creative. We're also very

restless. We like, we need to be doing stuff, right? The idea that we're all just going to sit back and, you know, have robots serve us Mai Tais next to, you know, at a, inside of our caged in community pool while we eat the bugs and watch the slop. Like, I don't think that's likely. I think humans will figure out something to do and how to use AI. There's also, I would say, we're 0.06% of the world is using pro AI tools today. Like we're pretty far off, I think, still from actual

destruction. Obviously markets like to price in the future. That's what they're great at. It's what they want to do. So it's, it's, it matters now for the economy and for markets, but like, it probably doesn't matter quite yet. I do have on the prepare for the worst side, I do have a thesis here that's, I think, becoming more and more compelling to me the more I think about it. And that's that you really do need to buy like the first robot and the second and the third if

you can. And whether it's a physical humanoid robot or having AI agents doing tasks for you, it's very possible that if you don't have a fleet of robots working for you, it'll be very hard to acquire one because all the work and labor you might do to earn the money to then acquire your first robot, my fleet of robots can probably do that labor better and cheaper than you. Right. So there's kind of an aspect of like, you got to be early to AI. Like you've got to be using these tools.

I tell everyone you've got to be because there's absolutely a point in time when my agents are going to be doing your job and you won't have a skill that you can use to buy the technology to get the agents and the robots that you need to compete with me.

And it starts to get like I think that's, you know, whether or not it like devolves into a feudal society of landowners and energy owners, you know, that have solar powered, you know, robot barns filled with their agents that go out into the world and do tasks for them while they sit back and drink Mai Tais by their pool.

Like it may not actually get that bad, but there's no doubt that a giant gap is going to emerge and already see it between those who can replicate themselves and do many jobs at once, thanks to AI and those who can't.

And it's going to be very you could imagine a very big wealth of disparity emerging from this. And so you as the listener, as an individual, everyone should be trying to make as much productivity out of these tools as possible. Right. Like that's one of the biggest gaps in labor skill is going to be your ability to use AI. I mean, people have been saying this for a couple of years. It's becoming very clear, though, now, like ever.

I did an episode with Nick Carter two years ago called AI Will Take Every Job when he was bullish on AI, right? Like it's, it's not like people haven't been telling you that this is something that might happen. It's just that you're kind of starting to see it happen now. And I think it's,

the snowball is gathering, gathering pace. I mean, it's really hard not to see a dystopian future in this, but like when you're talking about like what you can do if you've got a six year old or whatever, I actually think that's an easier question to answer than it is if you've got a 16 year old. And I think this kind of gets back to like the markets being a little bit chaotic

right now and uncertain as to what's coming. Because like if you're 16 and you're trying to go into the job market in two or three, four or five years, whatever, like what is going to be available to you? I think that is super unclear. At least if you've got a six year old, then there's some time to wash it out and see what like the new world looks like. Yeah, that's right. Like leaving college right now would be scary. Yeah, I mean, but gosh, I mean, it's almost been scary

for, I mean, I graduated right into the 08 Great Recession. A bunch of other people graduated into COVID. Now you're graduating into like AI job disruption. I mean, there's been a lot of chaos, I would say, and disruption. I guess in the case of 08, it was financial turmoil and 20 and 21, it was global pandemic. And now it's explicitly technology related. But I mean,

tech in general has been disruptive. It is funny. Like there was a joke that was like, somebody said like, you know, I'm so happy that after having neglected and declined to learn how to code for 10 years, now it's the first thing that AI is, you know, automating. So now I don't even have to learn. And that's pretty much true. Like I've been using AI coding tools a fair amount now for the last like, you know, month or two. And even I felt late, by the way, even though most

people in the world aren't using these things. And it's incredible what it can do. But I think you have time, I think there's still truly it's not widely adopted yet. It's possible, you know, what we really end up wanting are creative and well-rounded humans. Sure, you don't have to study computer science because the AI can basically walk you through it. Not everyone needs to, the way you used to tell people 10 years ago, what should I study? Coding, right? Like,

go get a job in big tech. That's where all the money is. And that's highly disrupted now. But you can imagine like philosophy, the classics, basic and not necessarily super deep, but thorough understanding of mathematics and the principles behind math and coding, like, you know, create a highly what we really need is human creativity. I really don't. I mean, the A.I. has already

appeared to be able to simulate it pretty well. But like, I believe there's something unique in humans that make us special and that can't be replicated by another animal or another technology. and so you've got to focus in one way that that manifests, I think, is creativity. And so like creativity with a firm base in the classics, I think will make a strong human in the future economy. I hope, that's what I think. Yeah, I think that's right.

And I think the white pill is probably that if you are leaving college now and you have an idea, you can just go out and build that thing. And like there'll be a hundred billion dollar company made with like 10 employees at some point. And that's never been possible before. 100%. And yeah, you've got more tools and for more cheaply than ever before. Right. So it's when I say that, like the gap will emerge, like still today, like AI is pretty cheap for most things.

It's not like, you know, you can I mean, that's that's why people are worried about it being disruptive. But that also is a very egalitarian democratizing effect to things like creating businesses or generating wealth, doing research, which is what I do. All right. Back to Bitcoin. Yeah. Do you think with like you were saying this time has been different, even if we're still, you know, 50 percent down from highs, kind of four year cycle ish.

Has the market changed to a point where like volatility in Bitcoin going forward is different? Do you think we'll still have crazy upswings? Yes, I think you will. But I've been making this argument a long time, but it was really related to the institutionalization of Bitcoin in a portfolio, which, as I pointed out, we haven't actually really gotten yet. Many people put it in their portfolios. But you don't have the structural like investment advisors at scale doing this.

And that does have a volatility dampening effect, in my view, when that happens, because if they're targeting 1% allocation and Bitcoin goes up, they sell to get back to 1% and take gains. If it goes down, they buy to bring it back up to 1% for their long-term thesis. And so that is a naturally volatility dampening phenomenon, in my opinion. But we haven't actually really had it widely adopted yet in those types of model portfolios.

So I think there will be some volatility. And by the way, you can just see this empirically look at realized volatility over time. And it very clearly has come down That doesn mean that you don have you know the chance of significant gains or the chance of you know either 1010 or Feb 5 type deleveraging events like those can still happen

So I don't know. It's a mix of both. But, you know, I think I always am sort of a believer that like store value you have to tackle before, you know, you need an account or a medium of exchange. And it's, you know, well, it doesn't mean that everyone adopts Bitcoin as a store of value. It means that this volatility about whether or not it will be, you know, decreases. Whatever portion of the world thinks it will be, they've decided. They've had the opportunity to learn about it.

They've decided one way or another. And whoever thinks it won't be has had the opportunity to decide and has chosen one way or another. And that should lead to some general like stability in price over time at some level. Right. That's sort of my heuristic for how I think of that. And at that point, people say, wow, it is pretty stable. And they'll say, you know what? There's no reason to sell Bitcoin because someone, a company in Japan missed earnings or whatever the weird risk catalyst may be.

Right. Because all the people who thought that already don't own Bitcoin and all the people who own Bitcoin own it because they view it as a store of value. Right. And so I think when you get to that point of lower volatility, that's when you start to think about it being used for, you know, at scale, perhaps things like payments or or other or other use cases that are less speculative.

it. But I still think the driving force here in Bitcoin's investment thesis for the foreseeable future is, again, closing that gap between Bitcoin's fundamental gold-like properties and its beta to gold, right? And there's clearly a gap there. And I believe it will eventually get to a steadier state where it is viewed more like a debasement, non-sovereign commodity money hedging asset. I'm very confident because I just look at the fundamental features and they look really

gold-like to me, right? Like, it's just a fundamental, I'm talking about its features, not its trading behavior, its features. And I just, I firmly believe they're very gold-like, and it's even better than gold in a world becoming increasingly digital, let alone with AIs and stuff,

which even make everything more digital. And so to me, that delta looks like the opportunity. And so you're looking at it like still a venture bet, venture style bet on a gold startup, gold-like emergent commodity money. And there's a lot of opportunity, I think, for investment there. And, you know, when Bitcoin's going up a lot, you don't want to spend it on things, right?

Like, so I think it's this volatility and upside volatility in particular over longer periods of time has been an impediment to people, you know, buying stuff with it. And so I think it must happen for Bitcoin to be used widely as money is the volatility has to go down. And I think there's good reason to believe that it both has empirically and will continue to go down in the future. I'm curious to know what you think about treasury companies

if volatility is reducing over time. Like, do you think we had the craziness in treasury companies this year or do you think that trend continues? You know, I think there was obviously a huge, like, no pun intended, gold rush or speculative mania around treasury companies. That's obvious, right? I mean, how many of these things were created. I do think that treasury companies will have a second act. I think there's plenty of them that

have no material, even if their stock is down a lot, maybe they have no debt at all. You know, an enormous number of them have no debt, right? Like they only exclusively funded purchases with, you know, stock offerings, right? And dilution. So like they don't have a structural, many don't have a structural reason to actually sell their coins. That doesn't mean the stocks will trade well. And if they don't trade well and they go by this MNAV sort of theory, then they probably

They can't buy more. But I think because they don't all have to collapse, though, surely something else will happen. What's next? And I think the future of DATS will probably be characterized by consolidation, operating revenue, you know, and maybe digital credit. At least MicroStrategy and others are going that route. I don't think they're all going to be able to pull that off, but I think Saylor might be able to.

And so I think it'll be characterized. It'll be different. Most of them will not be able to solely be Bitcoin acquisition and market access vehicles. Right. I think most will need a business. And that's good, by the way, because even Michael was not for years was saying every business would have Bitcoin on its balance sheet. He wasn't and still isn't really quite saying that, in my opinion, that everyone should replicate his exact strategy.

Right. We really wanted was Apple to have Bitcoin on its balance sheet and Microsoft and NVIDIA and XYZ and every company. Right. Like because it is good for a lot of use cases, not just for individuals, but for businesses as well.

I don't think everyone can run like a, you know, a financial engineering access vehicle play like strategy. But it's one thing I like about, you know, Bitcoin treasury companies having an actual business in there as well. Like I, I know it, you know, they kind of are, you know, Michael Saylor argues that those are sort of mutually exclusive, that you can't really be the pristine access vehicle if you have this other stuff in it.

I think he's right, but I don't think many will survive as purely the access vehicle. You know, you could imagine one or two per top coin, you know, or maybe there's a jurisdictional aspect to this with Japan and MetaPlanet as an example, right? Maybe one or two in a couple jurisdictions. And outside of that, I think you're looking at businesses that can, you're looking at companies that can also within them have businesses that could further drive Bitcoin adoption, right?

So I was very intrigued with the Nakamoto, you know, acquisition of BTC Inc. and UTXO because BTC Inc. is the largest global Bitcoin media brand in the world. And their entire purpose, as stated, is to increase hyper Bitcoinization. Like that actually seems like pretty well aligned with the idea that their efforts can help Bitcoin become more widely adopted. Right. And thus, you know, grow the value of NACA's treasury. That's a pretty interesting idea.

It's tricky for Bitcoin businesses, though, because, I mean, there haven't been that many great Bitcoin businesses ever in the history of the world that are Bitcoin only. Right. Because Bitcoin is so decentralized and so open source. Right. And you've got miners, you've got on and off ramps, you know, like whether you call them brokerages or exchanges.

But like outside of that, there's not been that many good businesses, big businesses, I should say, built and plenty of good ones, but not a ton of big ones built in Bitcoin.

So it's tricky. It happens to be easier in the proof of stake land because like you can run a validator and then like sell access to the chain through your validator and sell block space into MEV and like just build all these things literally on your coins. Right. Whereas Bitcoin, it's a self-sovereign asset that you can just hold and it doesn't. That's that's what you mostly do with it. Right. You can run a mining business, but that is totally different economics than like these proof of stake validator businesses and is an extremely competitive business.

I was going to say, even that's a savage business where people are now just moving to AI because it's way more profitable. Like, the market will pay you more for selling your energy and electricity to AI than it will to Bitcoin at the moment. I guess trying to build a business on top of what is essentially just money is quite hard. Yeah, it turns out like, I mean, yeah, that's right.

I mean, there's also very few big, successful Bitcoin only brokerages because it's kind of hard to run a trading business when you're only trading one asset. It's not that easy, you know. So, I mean, I think there are big questions about it, but I do think you'll see a debt 2.0. Like I think there's and like I said, characterized by consolidation, surely among some, maybe some capitulation by others, which we've already seen, you know, some of and but also of revenue generating businesses.

Yeah, that's something that I'm very excited about. like good profit-making businesses buying Bitcoin, like that, that's cool. Right. Yeah, we need more tahinis out there, you know? Exactly, the OG Bitcoin treasury company. Yeah. The interesting thing that happened though last time, last cycle, is that so much money went into the treasury companies, like retail money, because people basically, I think, were saying Bitcoin's not volatile enough anymore. So let's go and capture more volatility.

And we didn't really see much retail FOMO in Bitcoin at all. And I am kind of of the mind that maybe that's gone. Maybe like unit biases has crushed the idea of retail FOMO and Bitcoin. And I don't know if it matters. Like, what's your take on that?

I think you might be right. I think it's observable. And I agree with your observation. It's not just dats, but also just like in crypto, like, you know, people were had degraded all the way down to memes, right? That literally intentionally do nothing and have no purpose as self stated. Right. And like, you know, and we talked about this, I think the last time I was on the show, which I think was like last February or something, maybe, I don't know, maybe I came on since then.

But, yeah, we talked about meme coins and I was saying that, like, there's a global malaise among the youth and like their lives won't be better than their parents. And they all there's a big trend of straight up gambling because of it, that like they're more likely to hit it big on a flyer than they are to be able to work hard and save and buy their house. And I think that malaise still exists. I think it you know, you're right. Unit bias is a factor like people still think they missed Bitcoin.

And the funny thing about that is like, I think Bitcoin has a 10x in it from here, like, you know, over some period of time, 600, we got to 126. Do we think 600 is really off the table? Like, I don't. I think it's totally possible. But you didn't get those gains. All those people that you saw get those gains in Bitcoin.

You know, there's obviously some people who were like, you know, hyper libertarian computer nerds that had it in 2010 or something. Sure. But there's not that many of those people. Don't don't buy the hype. Most people and many people who worked in Bitcoin back then don't have a lot of Bitcoins. They had to sell it to survive. Right. Like that was their money. A lot of like, oh, geez, like Andreas and people have talked about that.

the reality is the most most people's big gains when they had them was because they bought the dip right and so like you can't complain that like your 120 is now 67 when you were afraid to buy when it was 15 5 like to get the eight bagger that some got you know or the seven bagger they had to buy the ftx bottom right and many people did i was here buying that bottom that's how i you know, grew my bags in fiat terms. It wasn't by, you know, buying when it was safe. It was by

buying when it was scary. And so, like, I always tell people this, like, if you want those gains, you have to buckle up and make a long-term investment decision and buy when others are fearful. And you have that opportunity now. So, you know, if we end up going back higher, which I believe eventually we will, don't come to me and cry about how you missed it. I was here

telling you to buy at 67. I've bought, I've been buying down in these levels. I've said, the note where I said it could go lower said that the 200 week moving average, which is really like almost 59K right now, almost what we've got to, has historically been a great time to buy, right? And it's not that it can't go below that. It did in 22 for a bit, but like, and it did even in 18 for a bit. But again, it was a strong time to buy. It represents deep value to me. And I think

Bitcoin is, frankly, it's too cheap. I mean, it could get a little cheaper, but down in these areas, if you have a long-term view, I think is a good place to be putting some capital to work as a contrarian to the rest of the crowd, which is still quite fearful. Yeah. It's funny, this is totally anecdotal, and I said it on the show recently, but there's a difference this time.

Like in previous bear markets, when Bitcoin price is really low, whenever I speak to someone who knows that I'm into Bitcoin, they're kind of like laughing at you a little bit. They hold me back, but they're smirking and they think that this thing is like over. This time has been really different to me. Like every time I go into the gym where the people know what I do, they're talking about it like, OK, maybe now is the time I need to buy some.

I think the general perception of Bitcoin has changed. And I don't know, that's one of the most bullish catalysts I see out there at the moment.

Yeah. Like I've seen, you know, retail friends of mine asking me when to buy. And there's big also chats of like even OG friends of mine where we're all kind of like, all right, like where we think the bottom is, when should we be backing up the truck? Like it's it's actually like more in the professional investor class where buyers are sort of on strike and they're sort of saying like, well, wait a second, failed to trade like gold. What if it's over?

But like I've been getting it. I do see like a pretty widespread acknowledgement that like it's for sure here to stay. It might have been in a bubble, but like because of the questions that I've gotten are along those lines as well.

Oh, great. I missed it. When do you think I should be buying? I'd previously missed it. But like, I mean, also, look, the fact that it goes to 120 is like evidence that can go to 120. Well, that's like a two bagger from here. That's pretty good. So like, you know, it's obviously, you know, past performance is not indicative of future results or certainly not a guarantee. But like there's plenty of evidence people want to buy Bitcoin at higher prices from here in the past and did happily.

so like what do we need a sentiment shift and a momentum bleed higher and then i mean people forget like it's not it doesn't take that much to get the ball snowball moving again you know all of a sudden if we if we get up to 100k you'll hear people all of a sudden all the narratives they said were dead they'll be saying it were back like i mean right like that that's the the funny thing about you know explaining and promoting you know bitcoin's features and adoption when it's when the price is

down a lot is like people like that's what you said the last time I'm like well the last time it was it went up like I don't know what to tell you like I've just been here explaining how Bitcoin works from my point of view for years at this point and I'm just trying to do it again like I'm not in control of the markets you know it's not my fault that a bunch of people thought that it should you know it should trade like gold all the time even though it was up like 7x while gold

was only up 40% like I mean sorry like I mean you probably didn't buy the bottom like when we told you when you were scared. I'm just saying like you have a long-term view, understand the fundamentals and put your money to work when, when it looks value, like it's in deep value to you, right? You got to be more cautious when it's trading at all time highs. Like everyone knows that. Yeah. It's time. Everyone needs more Bitcoin and like, no one's going to regret buying in the

sixties. I think that's exactly right. Do something. You're not going to regret buying Bitcoin in two years at this point. Um, Alex, this has been awesome, man. Anything else you want to talk about before we close out? Well, I think we just got to, this could be a long one, fellas and ladies, like, you know, I mean, if this is a true bear market and it certainly looks like it is one, then these things typically take a long time to resolve. So I would say, you know,

you don't have to rush out necessarily. And if you want to buy the dip in size, right, I think you can still afford to be patient. We'll probably drift around in these areas are slightly lower. You know, do you really care if you if it goes to 55 and you end up having to buy 65 in the long run? That's like, no, you don't. You know, like it's not a material difference. But, you know, there's a lot of uncertainty in the global markets right now. And I think Bitcoin's unlikely

to be immune from it. But a lot of this juice has already been squeezed out of the Bitcoin short at this point. So like if you have a long term view, I think, you know, this is a pretty good area to be looking at Bitcoin. I am. And but again, you know, you don't have to rush out and instantly do it. This isn't unfortunately it does not appear this is going to be a V-shaped recovery. Like history would suggest that these types of unwinds and downturns take a long time to resolve,

you know, a year, right? Half a year, a year. It's been pretty common. So, you know, buckle in, pop in those old Andreas Antonopoulos videos and Danny Knowles and Peter McCormack episodes. Go back. Danny's got a ton of them in his library. Go back and learn those things you neglected to learn about Bitcoin when you were just maniacally focused on the euphoria of number go up and, you know, lock in because Bitcoin is here to stay. There you go, man. All right. I'm looking

forward to seeing you in Vegas, Alex. I will catch you soon. See you soon, Danny. Thank you so much. Thank you.