The Data Says Bitcoin’s Bottom Is Already In | Mitchell Askew & John Haar

0:00I don't think we'll have these blow-off tops anymore, but that goes hand-in-hand with I don't think we're going to get a 75% drawdown. I would give myself like 95% confidence that the bottom is in, in terms of price. I do think we could stay at this range for another three to six months potentially, but I seriously doubt we get a 75% drop. I track 55 high-flying AI-related stocks. When I look at that in the last month, most of them are in the red.

0:30Year to date, though, they're still in the black big time. So like they're still up a lot. So if more start to pull back in Q4 and then at the same time, Bitcoin chart looks favorable for calendar reasons, and then Bitcoin starting to go from 65 to 70 to 80, I think that could cause the capital rotation back. That's that's kind of my base case. Does it have to happen in Q4? Doesn't have to. Maybe it takes till Q1 or something, but that's that's what I think is going to happen.

0:57Mitchell and John, how are you doing, guys? Doing good, man. Happy to be here. Excellent. Good stuff. First time you've been on the show. First time. First time, long time, as they say. I'm excited. I think three things have happened in the last few days that make me think the bottom might be in. Satsuma, do you see what happened with them? They've sold all their Bitcoin. Yeah. See, SmartWeb has started selling Bitcoin. BitMEX has closed down. Like, these all feel like bottom signals.

1:27Yeah. What do you reckon? Yeah, I think in terms of like their impact on the Bitcoin price, it's going to be probably pretty negligible, right? They've got like 600 Bitcoin. Yeah. But these are, like you said, are the things you would expect to see at a bottom. And it makes sense because they're trading at, I don't know the exact number, but pretty big discount to the actual value of their Bitcoin holdings. Yeah. And I don't think they have any other business.

1:49So it's like, why not just sell the Bitcoin and give that capital to the shareholders? Yeah, I think it's a good thing for Bitcoin. Yeah. We need this capitulation. Then we can move forward. Like, we need to kind of weed out the companies that aren't really strong enough to be here. Yeah. I think it's good. would you say that like any public Bitcoin company, they need to have a core business? They need to have cash flow? I don't know if it's... I don't know if I'd go that far.

2:13Like, I'm yet to see on that one. It depends. Like, do you think strategy has a core business? I don't think selling STRC and like giving yourself liabilities is a core business. They still have the legacy software business. So I would say yes. Because people frame STRCL, this is a product. It's just taking on incremental liability. And I also think people overstate the actual potential of it. They frame it as this vehicle that's going to be the plumbing that brings capital from the bond market to Bitcoin.

2:49Do you guys know the actual market cap of all the preferred equities in the world? No idea. Not big. It's smaller than Bitcoin. It's like 1.2, 1.3 trillion. And so you can call STRC digital credit, but it is in this very narrow niche of preferred stock. So I think even if STRC gets back to $100 a share and it makes sense for them to sell more, there's a finite amount of capital they could actually pull into Bitcoin through that vehicle. And so I think the true rendition of like digital credit or Bitcoin backed bonds is going to look a lot different than what we see with STRC. So I don't really think it's like a core business or product per se.

3:30The reason I asked that question, like, do you think they have a core business is like, obviously they have the software company, but it seems irrelevant to me at least. I'm going to left curve it and say it seems irrelevant and they don't have like necessarily the core business. And I think they're going to be totally fine. I think Bitcoin will get them out of this hole are in. I think I'm sure stretch will go back to par. I think maybe it's been a good wake up for the market to see what can happen. But I don't think strategy are in any kind of danger.

3:56No, no, I don't think so. But I do think the common shareholders, there's some red flags that have been raised with basically they're trying to serve two masters at once. When they created STRC a year ago, it's like, oh, this will give us a vehicle to raise capital when the MNAV is low and when we're in a bear market. But now you're seeing the opposite. You're seeing them issue common stock to support STRC. They're trying to kind of serve two different agendas.

4:22Yeah, they're fiat maxing right now. Yeah. I think they're figuring out things as time goes on. I'm also in the left curve camp on this one. Like, they'll be fine in the long term. I think when times are good, people are like bowing down to Saylor like he's a mega genius. And then when times are bad, some people are like, he's a scammer. He should be in prison. and it's like both of those takes are too extreme. I also believe that they're playing the long game.

4:51I agreed that preferred stock, you can't really make the case of like, we're going to have preferred stock, even if they get it investment grade rated. You can't be like, oh, that's tapping into like trillions and trillions and trillions. You can't make that case of capital. But I think they're playing the long game. I think they trying to check the boxes for S which is one of the biggest rating agencies then they can potentially get an investment grade rating Then I think years down the road they might try to issue not preferred stock, but just regular investment grade unsecured debt. And then that market is actually massive. That may seem like a pipe dream right now for just a Bitcoin treasury company to issue unsecured debt. Like the biggest companies you can think of, they issue unsecured debt.

5:37but MicroStrategy might try to get there at some point. And then that would actually be a huge pool of capital. But yeah, I think the take is like, things are not going to get back to 2x MNAV, 3x MNAV. I think those days are over. Totally agree. Could they have a 1.1, 1.2 MNAV, maybe gets like approaches 1.5 if like Bitcoin is just going ridiculously higher in a raging bull market? I could see that happening. but sustained super high MNabs probably over the days of like, we're going to have 50 treasury companies over.

6:15I know you've had guests on your show who pointed that out and they were correct early on. They were like, look, I just don't think anyone cares about the 18th biggest treasury company. And I think that's been proven correct. So I get a load of people shouting at me in the comments who obviously are still big fans of the treasury company stuff who think that MNAS can go above like 2 again. I can't see that happening. Like it doesn't seem like it's on the cards, but what is the exact reason you don't think it'll go really above 1.5 even in a bull market?

6:45I feel like people, it was a novelty a couple of years ago. And it was like, it's almost like two novelties combined. It's like Bitcoin's kind of a novelty, even though obviously it's been around 17 years, but like in the grand scheme of things, it's still a novelty. and then to have a Bitcoin treasury company wrapper was a novelty. And people didn't really know what's the right comp. And people also thought that Bitcoin was just going way higher.

7:12And I think markets can be irrational in a short period of time, measured in like 3 to 12 months. So maybe, I mean, just imagine the most bullish Bitcoin announcement possible. It's like the government says Bitcoin is on par with the dollar. and the government owns 500,000 Bitcoin and they're going to stack another 500,000 Bitcoin. They announced that all at once, right? Could MNav go to some ridiculous number? Sure, why not? But I still wouldn't think that would be sustained over a multi-year timeframe.

7:46Yeah, I think one of the things that completely wrecked people the last cycle is I know quite a few people that were taking out Bitcoin-backed loans to go and buy treasury companies because they thought they were going to be a leverage play on Bitcoin. And Bitcoin-backed loans are great, But you have to be really careful what you do with them. I think that's going to have hit a lot of people. Yeah. I think there's more effective ways to get that leveraged Bitcoin exposure now without taking on the corporate treasury counterparty risk.

8:13Because if you wanted to amplify your Bitcoin returns now, probably no financial advice, but this would be a good time to take out a Bitcoin-backed loan, buy some more Bitcoin or buy Ibit options. and then you don't have the risk of excessive dilution just to try to outperform Bitcoin on a short term. Yeah. So, I mean, I agree. Taking out a Bitcoin back loan at $65K or whatever we're at is much better than $125K. Do you think we're at the bottom?

8:40Yeah, I think it's highly likely. I think $60K was a double bottom. We got a bunch of charts we put together we can look at that kind of show if this isn't the bottom, we're close. Yeah. And we had two rounds of major FUD and sentiment isn't like a perfect indicator. But in February, when we hit 60K, it was like Epstein Pedocoin. And then in June, July, when we hit 60K again, it was like Michael Saylor's going to capitulate and sell all his Bitcoin.

9:09Neither of which are true, but just off of those vibes, they give strong bottom vibes to me. If you hold Bitcoin long enough, there's going to come a time when you need some dollars. It might be a tax bill, a business expense, life getting in the way, but whatever it is, it might come at a time when you don't want to sell your Bitcoin. That's where Ledin comes in. Ledin lets you borrow against your Bitcoin instead with tiered rates that go as low as 9.25%.

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11:58Go to bitkey.world today and use the code WBD to get 10% off the new BitKey. That's bitkey.world and use the code WBD. Yeah, so we kind of start the first chart. I think it's obviously a meme like Global M2 and Bitcoin. But there is extreme disconnect over the past 12 months. And I think it's important context that explains a lot of why Bitcoin actually went down. Because historically, it was like Lynn Alden calls it, kind of the sponge of global liquidity.

12:29It was that for a long time. The correlation was tit for tat. And then over the past 12 months, there's been this extreme disconnect. Global M2 is making all-time highs. Bitcoin's down 50%. And, you know, we can elaborate on these next few charts. But the simple matter of the fact is AI stuck all the risk on liquidity out of the market. So there's an abundance of evidence that shows all that liquidity just went into AI. But I think at some point that liquidity is going to have to find something to rotate back into.

12:59I think Bitcoin's kind of sitting in a prime position to absorb all that. I totally agree. The interesting thing here is, so before 2013, like we were way below. But I think you can discount that because Bitcoin wasn't, we didn't really know what Bitcoin was then. And since then, the only times it's really deviated from that trend is the peak in 2017, which again makes sense. That was like pure euphoria. And it's been very close apart from that. And this is the first time it's really deviated to the downside.

13:24I think you're so right, though. I think when this AI trade rolls over to some degree, I think if you have a lot of money in that AI trade, where else are you looking? Like the rest of the equity market is not exactly doing great outside of the AI stocks. Bonds not going to be the spot. Like where else do you go? So like gold and Bitcoin, I think, are going to really benefit from that. Yeah, and gold already kind of had a frothy run earlier this year.

13:45So even more so pointing towards Bitcoin. So you think the tide's about to turn here? I think before the end of the year, we'll start to see a shift. And I think Bitcoin will be potentially back over 100K this time next year. Because that's just so much liquidity. I mean, it's over, I think Global M2 is over like $110 trillion, something ridiculous. I mean, that's a lot of capital in the market. John, for anyone who doesn't even know what M2 is, do you want to explain it a little bit?

14:10Yeah, M2, you could think of it as like a broad measure of money supply. I don't recall exactly what's in it offhand, but it's like, it's going to look at many different measures of money. As the name implies, there's M1, M2, there's like different levels. But M2, and this is global M2, so this is meant to look at like liquidity, really. And this affects all different types of assets. This typically affects inflation. There's some linkage between M2 and inflation.

14:41What the Fed is doing affects M2. What banks are doing affects M2. Banks meaning commercial banks, central banks, commercial banks, and treasuries, meaning like governments, fiscal authorities, that's all going to feed into M2. Agreed that it's kind of shocking to see that it's the first time it disconnected a downside. And what I find is interesting is that even in prior bear markets for Bitcoin. There wasn't like, like, let's just look at 2022.

15:09And this underscores the point that I think 2022 was way more explainable. Yeah. When we're looking at each other and Bitcoin's down 75%, peak to trough. We're like, okay, M2 is, is down, which is very rare for M2 to actually be nominally down. You know, it's like, basically goes up and to the right. 2022 was M2 coming nominally down. The treasury was like pulling back all the COVID era stimulus was being reversed There still deficit spending but they had a massive deficit during COVID They pulled that back.

15:44Equities were down like 20% at the index level. The high flying tech stocks were down like 50, like Nvidia was down 50% in 2022. Inflation was a 40 year high. The Fed is hiking rates at like the fastest pace ever. FTX collapses. FTX. Oh, yeah. All the crypto contagion. The Fed switched from QE to QT. You just looked at that. And if someone told you in 2021, hey, that list of things we just went through is going to happen in 2022, we all would have said, oh, Bitcoin is going to get clobbered. And I think this time around, we could come up with a list. I have like four main things that I think cause this 50% price decline. But if you would have told me ahead of time that those four things are going to happen, I would have been like, I'm not sure how Bitcoin is going to do.

16:30So I think this, and granted, it's only a 50% price decline. So maybe we should be happy about that. But I think big picture, we're still kind of scratching our heads because it doesn't feel as explainable. 100%. I've said this on the show before that I think this is why sentiment is so bad because there's nothing to point to to blame it on. What are those four things? So I would say the first one is OG whales, long-term holders selling Bitcoin. that definitely did happen.

16:58The most clear example of it, and I'll ask, I know I asked you this, so I'll ask Danny, do you remember the Galaxy announcement, the Galaxy press release? Yeah. What month do you think that was offhand? I genuinely can't remember. I guess around a year ago. Okay, very good guess. It was almost exactly a year ago to the day. I was like testing myself on that and I looked back and I thought it would have been like September, closer to the peak. But I looked back and it was July 25th.

17:27So like almost to the day that we're recording. Because I think we dropped after that and then pumped again a little bit to 126. We did. And the drop was only like a few percent in price. I remember we was talking about how bullish that was. Exactly. We were all like, look, this guy sold 80,000 Bitcoin, did a press release on it. And Bitcoin dropped like 3% or something around there. And we were all like, the liquidity is there. You know, the buyers are there.

17:51And on-chain metrics were showing that other large holders were selling. So that obviously happened. And you can explain it. It's like they held for many years. 100K was a milestone. In the Galaxy case, they just said it was for estate planning purposes. Maybe some guy died. And it was like, the estate's going to sell it. You know, maybe it wasn't even his own decision. I'm just speculating there. So that would be number one. Kind of number two, but it's related, is the miners pivoting.

18:19Which this is a trend Mitch has been obviously following for a long time. but their large holders, they've sold a bunch of Bitcoin to pivot into AI. And I don't think they're coming back because they're getting paid more for AI, HPC. Then I think you have to say the four-year cycle, whether it's real, I put that in quotes, or if it's just self-fulfilling. I think people started to look at the calendar and said, this is when Bitcoin is supposed to go down in October.

18:48I don't like that that's the case. Yeah, it breaks my brain. I can't have it. It doesn't make sense to me. Yeah. It depends how you define it, right? Because Bitcoin made an all-time high prior to the last halving. To me, that defeats this idea that the halving sparked some major catalyst followed by a pullback. And then to me, another indicator of the four-year cycle or defining feature is the 75% pullback. But I think all these treasury companies kind of ate that on the chin, kind of absorbed a lot of that volatility.

19:21And I don't think Bitcoin's going down 75%. But I do think definitely some kind of self-fulfilling nature to that. And when you look on chain, you can see basically all the Bitcoin that were held for many years sold off in Q3, Q4 last year. So maybe they're anticipating the cycle or maybe that sell pressure causes the cycle. But the end result is the same. Yeah. The bullish selling that we had last year. That's what we kept calling it. So what was number four on this list?

19:51So then you have to point to AI. It's like just taking so much investor attention and flows. So I think we're going to look back and we're going to say, it's actually kind of crazy that the four-year cycle believers, and I think there's an interesting thing. There's the people who always believed in the four-year cycle, and they were going to position for that accordingly. And then there's people like myself who I actually did believe that the four-year cycle would be no more.

20:18um mitch has interesting points i think i think you have to say that it's not like every cycle is exactly the same yeah we should point and say yes this one was a little different in this way but in terms of just calendar timing like it's it's kind of uncanny how ridiculous it was time between havings when we peaked in october so there's people who always believe that again i was not in that camp but having seen the price action since october even i'm like kind of throwing my hands up and being like, okay, this is a thing to some extent.

20:49Um, And then that becomes a little self-fulfilling because the people who didn't believe in it are like, oh, wait, it is a thing. And then they're going to kind of sit on their hands because they're like, oh, if it's a thing, that means I have to wait until Q4 of this year. And that's when the chart starts to look good. And that's when things turn around. So I think we're going to look back in Bitcoin history and be like, those were actually two very negative catalysts.

21:14It was at the same time that the calendar turned negative for Bitcoin. AI was like, everyone started to love AI and pick your favorite AI stock. But some of these are up like 3x, 5x, 10x, even more. So it's like that. And I do think that's not just all hype. There's like a real trend there. So those two things combined have just put Bitcoin on the sidelines. And then you get a war thrown in the middle of all that too. I mean, I'm going to be one of the first ones to say this time is different again, because I just don't believe that the four-year cycle is going to exist forever.

21:48Like, every cycle, I've got more chance of being right. I think there's, you know, investors are forward-looking, right? So you had this run-up prior to the halving, investors kind of anticipating that as a catalyst. And then we peaked in October instead of November. So it kind of leads me to believe that, all right, maybe this summer was the bottom instead of making the Pico bottom in Q4. Yeah. Well, I did have Michael Howell on the show recently.

22:13I don't know if you know him. He tracks the global liquidity. And he was talking about the cycles in liquidity being probably the bigger driver of the Bitcoin cycle. And that's more believable to me. Like the day Bitcoin having to sell off on a certain quarter of a certain year, like makes no sense to me. But if it is global liquidity rolling over, that one I can kind of believe. Right. But I don't know. I don't know. I feel like at some point, Bitcoin is just going to break out of all trends.

22:36Right. And miners right now, all the miners in the world make like a combined 20 to 30 million a day and Bitcoin's doing tens of billions of volume. So that getting cut in half is pretty negligible on daily volume. Yeah. Yeah, I've been a believer in that for a while. That if, like you said, how you define four-year cycle matters. If people are telling me that it's a mechanical process based on the halving, I don't really believe that. And I would argue that even the past cycles were not a result of the halving.

23:08I think it's more like, is there a four-year cycle due to various factors? I've even seen people point out that a four-year cycle is just common in other assets, like stocks. Even though I now believe that there is a four-year cycle, or I think you just have to admit it, I still don't believe it's a mechanical halving-driven thing. Yeah, I agree with that. All right, can we go on to the next one? What have we got next? Yeah, that's just the correlation between Bitcoin and GlobalM2.

23:42So it's not like a temporary disconnect. I mean, this is a statistical anomaly. It's almost always been at one, except for like in the very bottom of the 2022 bear market, COVID in the bottom of the 2018 market. But now this is a prolonged disconnect. At some point, you have to expect it to revert to the mean. Yeah, this is almost like the peaks and troughs of Bitcoin and where it disconnects. Like 2017 top, 2018, 2019 bottom. Like it's the most volatile times is when it is next, but this one's different for sure.

24:13Interesting. All right. Yeah, we can hop to the next one, I think. Yeah, so this is just, again, on USM2. I think that's either April or May there. The fastest growth rate since COVID. Interesting. Yeah, the growth of the money supply is accelerating. It is picking up. What's causing that? I would have to point at the fiscal spending. I mean, the deficits are ridiculous. Elon and Doge did what they could. Didn't work, like Lynn Alden says. The train just does not stop.

24:45Did they even get a chance to do what they could? I don't think they did anything, really. I mean, the first six months of the Trump administration seemed like they were trying to throw the kitchen sink at everything. You had Besant. The first thing he said was like, first order of business, we got to get the 10-year rate down, get more mortgages, stimulate the economy. You had Doge. You had the tariffs to try to bring in revenue. You had Trump jawboning at Powell.

25:12Literally everything they could to try to get interest rates down, and just none of it worked. And now all the debt's rolling over at higher rates. They're financing a war. They spend over a trillion dollars a year on interest. That is definitely the driver. So we've had two big peaks in 2026. They'll be war-driven, right? Yeah. Yeah, almost certainly. By missiles. But this is just an up-only chart, isn't it? Yeah. So from 2022, that's when they're raising rates and dropping the, like, cutting the balance sheet.

25:40Yeah. Interesting. It's quite an anomaly. I wish I had the zoomed out 60-year view of this because that was literally the only time USM2 has, like, ever contracted as far as the FRED data set goes back. Wow. Cool. Let's go on to the next one. Yeah So here you can really quantify how much of that capital is just going into AI which is the alternative risk on position It almost double in 2026 what it was in 2025 at least the projections by the end of the year. And I listened to Jack Mahler's live stream on Monday. He made a fantastic point. It's like all of these AI companies, they're getting tech SaaS multiples, but they're really a real estate development business. It's extreme, like upfront capital expenditure. And then they make like a small spread on the power.

26:34It's just like almost like being a landlord and making rent. It's not like a SaaS company where you can scale 100x in 12 months. It's a very, very CapEx intensive business, but you're getting these SaaS like multiples on it. And it's all being financed by debt for the most part. So I don't think AI is a bubble in the sense that the, I think the impact on our economy and how we do business is very real and tangible. But at the current moment in time, some of the equities are probably overpriced. Yeah. So I had Alex Thorne on yesterday and I was talking to him about this and I made a point that he disagreed with, but I'd be interested in your take. I wondered if like the hyperscalers are getting such crazy valuations in the same way that Bitcoin miners used to, when there was no real vehicle to own Bitcoin in the equity market.

27:21So people just used the miners as a proxy. I wondered if people are doing that with the hyperscalers because Anthropic and OpenAI aren't public right now. Yeah, I actually agree. We were talking about this at dinner last night with some of our Blackware colleagues. It is effectively the same business model. Like 90% of it's fungible. You just need land and power and physical infrastructure. And what happened with public Bitcoin miners a few years ago is effectively what we're seeing now on the AI side.

27:49Yeah. So do you think that that's going to roll over at some point? Or do you think it'll keep going until we have these companies go public and then they'll just take the liquidity? I think they would like for it to extend until they go public. If I had to put a bet on, I would say it'll last until we get Anthropic and open AI in the markets. The thing that I don't know about is, obviously, like, really, AI companies are driving the entire market.

28:13Like, they're the only things that are absolutely pumping. Yeah, I think if you flip to the next chart, Yeah, that's the S&P 500 returns year to date by sector. And so can they actually let the bubble pop, as it were? Too big to fail. I think it's been proven that you can have short-term retracements. And 2022 was a pretty good example of this. It's not like the Fed's going to rush in if equities go down 20% or something. That could happen. but it can't go in reverse for too long.

28:48And this is something that Luke Groman talks about. It's like tax receipts are correlated to asset prices and it's just like spending across the economy is correlated to asset prices. And once that system starts going in reverse, it's just like everything gets worse from like a fiscal perspective at the government level, at like an individual level. and it's just not a pop deal. Even if you could make the argument that it's the right thing to do for whatever reasons, what politician wants to be like, we're going to go through this long, painful period where you, the individual, things are going to feel worse for you.

29:27Your small business or medium-sized business, everything's going to feel worse for you. Your 401k is going to go down. Bitcoiners obviously get this. The savings vehicles for all these people are 401ks, IRAs, pension plans. If those get cut by 20% or 30%, people are pissed. And you could try to give them an intellectual argument for why that's good for them because you only own this much in assets. And when assets pump, it actually helps the wealthy people.

29:59But I think that falls on deaf ears. I think people just don't want to see their wealth. And we should throw real estate in there too. You could deflate the real estate market. that might be good for certain reasons, but most people are just going to be like, no, my net worth went down by 30, 40%. This politician sucks. And no politician wants to explain that. You just kind of want to keep this whole system going. Yeah, and I would definitely be one of the people that would argue it probably isn't the right thing to do.

30:24Like you have to let markets do what markets do. But if you intervene and they print a load of money, if everything starts rolling over, like it shows the most insidious side of inflation in that it's probably what most people would even choose over like a deflationary bust in the markets. You just take the inflation, which is, I mean, it sucks, but it's probably the easiest one to take. Yeah. If we were starting from scratch, I would say allow these bubbles to pop.

30:48There's going to be a natural market cycle. And it's good if you're running an unprofitable enterprise. Prices are your signal. You're destroying capital. You should go out of business. But at this point, the knock-on effects of allowing that to happen would trickle down to Main Street and the everyman person. So it like probably do you just have to kind of gradually inflate your way out of this Yeah Do we miss one there Yeah go back to that So this is fascinating This is obviously Anthropic and OpenAI are still private So those are estimated market cap valuations But those three companies SpaceX OpenAI, Anthropic, about 3.7 trillion in market cap, 13 times greater than every company that IPO'd in 2021.

31:33That's insane. COVID stimulus, euphoria markets, you know, Chamath, SPACs, all of them combined, 13 times smaller than just these three companies. It's wild. One of the crazy things is I don't remember the year, but I remember when was it Google was the first trillion dollar company? Was it Google? To IPO? No, no. To reach it? It had to be either them or Microsoft. There was a time maybe like three or four or five years ago where I think one of the companies hit a trillion, then a couple others followed.

32:06And now we're having companies IPO at $1.75 trillion. Like it's absolutely insane. I think there's like a dozen trillion dollar plus market cap companies now. And it was not that long ago where we got the first one. It's like the growth in these is absolutely wild. The trillion dollars ain't what it used to be. That's for sure. Crazy. And they're staying private longer too. I feel like it was more normal that SpaceX would have went public much earlier in their own path to maturity. But yeah, these are eye-popping numbers, no doubt.

32:39That's definitely true with SpaceX, but Anthropik's not been around very long. But they're on like Series J or something ridiculous. Is that right? Yeah. I'm losing count how many times they've raised privately. You're going to run out of alphabet. What happens when you get to Z? Series AA, I guess. You just restart. Yeah, that's absolutely wild. I thought it was cool that SpaceX had 20,000 Bitcoin on their balance sheet. Yeah. Just, you know, you wouldn't know that until they go public, but just quietly stacking 20,000 Bitcoin.

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35:47All right, let's go on to the next one. Yeah, and so this is how much they're financing it with debt. So Meta, $57 billion. Google, $56 billion. Amazon, $40 billion. It's not like these are unprofitable companies. These are the Mag7 that are basically cash cows, but the cash they do have, they want more debt. They want to finance it incredibly fast and aggressively. Do you see that as being an issue? Potentially. Debt always seems to find a way to kind of unwind itself at some point.

36:19I don't hold any of these stocks, so I'm not worried about it. But I mean if I was a meta I would be doing it with debt Yeah yeah Like usually uh shortly inflation Yeah I don know if that maybe their hypothesis but I I agree directionally I would probably do the same thing. Everybody is speculatively attacking the dollar in some way. Yeah. I take a big, like big picture takeaway for me here is I think a lot of us have like the old school mentality, either consciously or unconsciously of like you get out of debt.

36:51when you have like a good quarter for yourself or your business, whatever, pay down your debt. And like, maybe there are cases where you should do that. I'm not saying it's a bad idea all the time. But clearly, these companies are not Amazon's not like we had a good quarter, let's get rid of that debt. This is a permanent part of their capital structure. I have to tell this quick story because it's about Amazon debt. So my in a prior life, I was a portfolio manager at Goldman Sachs here in New York. And Amazon issued debt for the first time in their company history in 2014.

37:26And the reason I remember it so well is I had just started as a portfolio manager. And they're in our universe. So they bring the deal in the morning and you have to decide as a portfolio manager if you're going to buy or not for your client accounts. I was like 20. I must have been like mid 20s in age. I just started. So I was not a lead portfolio manager. I was like an assistant portfolio manager. But the guy who I reported to went on vacation.

37:53And when you go when he goes on vacation, it kind of comes down to the next guy in line. So I had to do a call with a large client who gave us billions of dollars to manage. And I had to explain to them that we bought that this is what we did in your portfolio. you like the management of the client's portfolio is like you're you're the manager but it's kind of hand in hand you give them weekly updates on what you do and they can tell you if they like it or don't like it and when amazon first issued debt in 2014 uh their balance sheet and their income statement didn't look so great um you guys probably weren't following this at the time but they were like in grow grow grow mode and they weren't really optimizing for like an attractive bottom line earnings. So and they had weird ratings. One of the rating agencies rated them like double A, another agency rated them triple B, which is a huge spread. So like the market clearly didn't know how to value Amazon. And I'll never forget it. You can imagine why this stuck with me because I was like a young kid. Mitch has a lot more confidence in his 20s. And I was like, you know,

38:59crapping my pants on this call. It's like, I have to explain to this client why we bought like 40 million of Amazon bonds for them. And the client rips me a new one and is like, we don't like this company. Their balance sheet is like junk. This is like you guys bought a junk bond. You bought too much. Don't buy anymore. So number one, I had to tell that because this is a slide about Amazon debt, but also just amazing because the guy on the other side of that phone call was a professional investor. He was probably in his 40s. I've been doing the job for like 20 years. And he thought Amazon was like a bad company to hold the debt of in 2014. And like, obviously, that was one of the best debt holdings you could have on planet Earth. But just I give that story because people like the narrative at the time was this company doesn't make money. And it wasn't clear that they had a path to make money. Now they're looking at them now. Yeah, look at them now. And that was that wasn't some guy I just put a microphone to on the street. That was like the CIO of an insurance company wow have you spoken to him since uh not about that specific situation i uh i don't want

40:03to poke him too hard no you need to rub that in his face you're clearly very right not like it was 2004 right it's 2014 you already had instagram the whole world was on the internet by then anyways exactly but and that like makes the point even stronger i think is that in 2014 people were still like uh amazon how successful are they going to be yeah and people are saying like similar things about Bitcoin now, even though the government has given it their stamp of approval, BlackRock, Fidelity, even Vanguard now, it's like, we're definitely in a similar situation.

40:34What more evidence do you need? Probably even more so a strategy than any of those. Do you think, this is complete tangent, but do you think strategy will outperform Bitcoin? I think it can on an interim timeframe. During a bull market? Yeah, during a bull market, I wouldn't bet against it. Yeah. A bit more of a tangent. I'm more interested in MetaPlanet right now. Okay. I think if there's any Bitcoin treasury company that actually justifies an MNAF premium, it's them.

41:06Why? Well, for one, the market they're in. So the interest rates are obviously much lower in Japan. Their currency inflates at a faster rate. So their preferreds, which I don't believe you can buy publicly, they're only sold privately, are in the four to 6% range. So they have much cheaper borrowing costs. I actually didn't know they did. Yeah, it's called Mars. But it's like, you can only buy it in private, like over the counter tranches, you know, $40 million clips, like what John was slinging back in the day when I was, you know, 14 year old middle schooler.

41:39So they've got, that they're in like a better market for it. They don't really have much competition. There's still a 50% long term capital gains tax on Bitcoin in Japan. So it actually makes sense to hold a securitized version. But then this is the biggest reason in my opinion, they just acquired a securities broker called like Cybo Securities is basically kind of like a penny stock, whatever it was very small market cap. But it has a license that now it's meta planet securities.

42:07they have this license to issue real bonds, like real financial products beyond preferred stock. So Bitcoin backed bonds and like actual instruments that are credit by legal definition, not digital credit in name only, but it's preferred equity. So that can actually tap into that $300 trillion fixed income market. So I think they've got a much wider pool to tap into in a market that's more desperate for any kind of yield. Wow, that's interesting.

42:37And what are they trading at right now? They're trading below 1x MNAF. And at their peak, they were like 10. Yeah, I mean, that was crazy. Yeah. Because, I mean, that is interesting. I don't know enough about MetaPlanet. I do think with strategy, like I'm sure they will outperform Bitcoin in the bull market, but I'll be really interested to see over like, say the next four year period, how it looks. I think outperforming Bitcoin, even for like the strategies of the world, is going to get increasingly hard.

43:01Yeah, it is difficult. And you mentioned it earlier. I want to really hone in on this point. They are kind of figuring things out as they go. Like kudos to Saylor and Fong Lee. They are trailblazing what I think is a potentially legitimate path. But because they're figuring it out as they go, you can't assume every action is perfect because they've already unwound certain, you know, a year ago, they're like, we're not diluting under two and a half XMNAV. And then like a week later, they changed it. And now they're diluting under one XMNAV. So I'm generally a fan. I don't like when they say they turn Bitcoin into money, but that's a side point. But you just, you can't like praise everything they do as if they can never do any wrong. And I see a lot of that. Yeah, I totally agree. And I'm with you with the saying you make Bitcoin better money. That's the thing that really rubbed me up.

43:47Yeah, major red flag. Yeah. Yeah. All right, let's do the next one. So this is what John was talking about earlier. OGs and long-term holders selling. And I do think the psychological impact of $100,000 was underestimated, certainly by myself. So this is the Bitcoin price in black. And then in orange is the percent of the supply that hasn't moved in at least two years. So it peaked right before we made new all-time highs in Q1 of 2024. It's about 57% of the supply had not moved in at least two years. So those are People, you know, they bought at a minimum in the 2022 bear market or before, held through all of that.

44:30Of course, they're going to start selling, you know, when Bitcoin reaches 70K and when it reaches 100K and 120. But it dropped to a low of about 47%. So that's 10% of the Bitcoin supply. About 2 million Bitcoin have been sold into the market over the last two years. Of course, that's going to make the price go down. But what we've seen over the past really six months is that metric has tapered off. So you're not seeing these long-term holders selling.

44:55And they're just, you know, slowly but surely starting to build back a new base. And eventually, it's supply and demand. Supply is constraining. You've got all the potential demand from the liquidity that went to AI. I think we're going to get fireworks in the next 12 to 18 months. Yeah, it is the question, like, who is left to sell? Like, at this point, who's going to be selling? Like, the one thing I'm not sure of is, I know ETFs, you know, at the start of this bear market, were really good.

45:18Like, they held stronger than, like, the average Bitcoiner. Have you had any idea of what's happened in the last few months? Q2 was capitulation. So it was like the most amount of coins the ETFs have sold ever in a quarter. I think net net, it was around like 80,000 Bitcoin, which, I mean, there's a lot of capital, but it's not. It's one whale. Yeah. It's the one galaxy guy. Yeah. Interesting. I think like just on vibes alone, I feel like we're making it.

45:47Like we must be near the bottom here. If we're not already hit it, I just, I can't see it going much lower. Yeah. I'll just say back to that 2022 comparison we were making earlier. If we go down 75% and there's not like some ridiculous event that we can point to, that's like, it's just going to frustrate us a ton more. Yeah. Because it's like, I don't see why, I do see a lot of people making comparisons to 2022 and they say, well, this is what happened in 2022.

46:14So the price is going to, you know, follow that same trend now. And I just, I just can't get my head around that because if that happens, but we don't have some event that we can point to that caused it, then to me, that kind of implies that all the things that happened in 2022 wasn't the cause of the price going down. It was like just the time on the calendar. And like, I don't think we're going to have a FTX type crescendo. And, you know, you mentioned FTX, but there was five things before that.

46:43There was Luna, Celsius, Voyager, BlockFi, three hours capital. Like we had like BlockFills I think was the big one of this cycle You guys might not have even heard of this one I never even heard of it What is that Blockfills was like an institutional they did other thing Were they the one based out of Chicago? I think so. Yeah. And so they went under. They were a market maker. I think they had multiple business lines, probably market making, some lending, brokerage.

47:12And did they get blown up in that like crypto crash, the Binance thing? Potentially. Yeah, it got uncovered, I want to say, in February. It's a few months back. Yeah. The only reason I remember is because, like, I think the Chicago Blackhawks hockey team had, like, Bitcoin on that platform, and they were in the bankruptcy claim. I was like, so a professional sports team now holds Bitcoin. That's pretty cool. I mean, that is, like, to take a bullish perspective on that, one of the bullish things is that we've not really had a big blow-up.

47:42This is the first bear market where we've not had a huge company go under, I think. Yeah. Since I've been in Bitcoin at least. Agreed. I think it would be block fills, which again, most people haven't even heard of. And then the capitulation might be what we've seen with strategy. That they had to sell some Bitcoin, that they had to pull out a few wild cards that they probably didn't expect to pull out. If we look back and we say 50% drawdown and those were the big items, I think that's a sign of Bitcoin maturing. Like that's night and day different versus what happened in 2022.

48:14I totally agree. You know, you talk about the 100K psychological level. Do you think that will exist when we go back there? Potentially. I think previous all-time highs are always going to be a psychological level because you get the FOMO newcomer that's chasing price action finally at their break-even, and they can kind of wipe the sweat off and be like, I'm out of this thing now that I'm back in the money. Yeah. So I think more so like the $120,000 level would be probably a new psychological barrier.

48:43And do you think, obviously, there was a very muted top this time. Like, it wasn't like what we've had before. Do you think that's a permanent fixture now? Or do you think we'll have kind of blow-off top euphoria again? I left side of the bell curving this. Don't think so. But- You don't think which one, sorry? I don't think we'll have these blow-off tops anymore. But that goes hand in hand with, I don't think we're going to get a 75% drawdown. I would give myself like 95% confidence that the bottom is in, in terms of price.

49:13I do think we could stay at this range for another three to six months potentially, but I seriously doubt we get a 75% drop. That would be another 50% drop. Think about all the pain we've endured over the last 12 months, do it all over again. Yeah, the only thing that makes me think it has a potential is the market likes to play games. And doesn't NACA have like a liquidation level at like 48K or something around there? They do have encumbered Bitcoin. So there's some liquidation level. I don't know what that is, though. The market might want to try and sniff that out.

49:47Potentially. All right. What have we got next? So this and a few of the other charts in here just kind of show evidence of when there is capitulation. So this is the transfer volume from whales to exchanges. So any address or cluster of addresses with 10,000 or more Bitcoin. You can see there's a few distinct moments when they send those coins to exchanges during euphoric bull market tops and all time highs. They're going to take some capital out. They make the tops. They make the tops precisely. And then during capitulation. So you kind of see smaller but still visibly present spikes at moments where the price drops. So you can see this in Q1 of this year. And then more recently, you see another little spike there. And it kind of, you know, causes the price to go down all these whales sending coins to the exchanges. But- That is interesting. Like they, a lot of the time, and they're much smaller spikes, obviously, but they're kind of selling the bottom a lot. Well, them selling makes the bottom. Yeah. They make the tops, they make the bottoms. Yeah. We're seeing kind of lower highs here. So they are, you know, it would appear

50:56they're running out of coins to dump on us. That's what we need to see. Yeah. All right, let's see what we've got next. So this is kind of just like short-term focus. I think this has served as pretty much the key indicator of whether or not Bitcoin's in a bull or bear market. And it's the cost basis of anyone who's bought Bitcoin in the past six months. This is the newbies. This is the newbies, correct. And it's that psychological effect I was talking about earlier.

51:22When they're back at break-even in a bear market, they're probably like, all right, let me get out of this thing. They might not have the conviction. Yeah. In a bull market, it's kind of support because, all right, Bitcoin pulled back. I'm at my cost basis. Let's DCA in again. So it functions as a support during bull markets. It's already been rejected here twice in 2026. Looks like another three or four weeks, we're going to see the price have to face this level again. So my base case would be, I don't know when this podcast is going to come out, but sideways for the next probably four weeks until maybe late August, early September.

51:57And then I think Bitcoin's gonna make its next move and we get clarity on where we go from there Are you in agreement on that My base case predicting the next four weeks is always tough You could do it My base case for a little bit longer than that is coming back to this four-year cycle thesis. Even the people who don't like the four-year cycle, I think have to admit now that calendar-wise it's playing out. And that would imply something between September and December is when things start to get more favorable. Obviously, that could be off by a quarter or something could happen in Q1. But I think Q4 is when things start to get more favorable. And if you couple that with AI starts to cool off a little bit, I really mean just like cool off. I'm not one of these people who thinks we're in a year 2000 moment and Amazon's going to fall 93%. And I don't think that's what's happening.

52:51But these stocks that have gone up 3x, 10x, whatever, they could easily pull back 30, 40, 50%. That wouldn't be crazy. And that could be on so many different headlines that could happen. I think a lot of the data centers have had those pullbacks already in the last couple of months. It started to in the past month or two. But I tracked 55 high-flying AI-related stocks. And they're the ones that high-flying, I mean they've done really well. When I look at that in the last month, most of them are in the red.

53:22In the last three months, it's like half and half. Year to date, though, they're still in the black big time. So they're still up a lot. So if more start to pull back in Q4, and then at the same time, Bitcoin chart looks favorable for calendar reasons, and then Bitcoin's starting to go from 65 to 70 to 80, I think that could cause the capital rotation back. That's kind of my base case. Does it have to happen in Q4? Doesn't have to. Maybe it takes till Q1 or something.

53:54But that's what I think is going to happen. So you used to work with like real investors. Real investors. But like, so one of the things that doesn't make sense to me is the four-year cycle. No idea why that should exist. I don't think the subsidy is enough now. But the other thing is selling may and go away always seems to be true. Why is that? So I've worked in the fixed income markets, I think, which just means bonds for anybody who's totally unaware of that.

54:20I think selling May and Go Away has been more of an equity story. And I'm sure someone out there has done the research. Maybe it works more than half the time, but I'm sure there's years you can point to when it didn't work. If I was going to point to anything, it's like summer is a real thing in the world. People want to go to the Hamptons. People want to go. And I mean like, you know, politicians want to go, central bankers want to go, CEOs of companies want to go.

54:50enjoy the summer. So I think fewer things happen in terms of headlines. Fewer people are around to trade. These are very broad comments, right? You could still have a crazy thing happen in July. But generally speaking, it's going to be less active. And then September comes around and people are like, I'm back at work. The kids are back in school. Let's pump it. Congress is back in session. Let's have something crazy happen. Yeah. It's the summer doldrums. Yeah. I think it's a real thing to some extent. All right. What have we got next? Yeah. So there's a few charts in here that all, you know, you don't want to take any one chart as gospel, but when you look at them in the aggregate, they tell the same story that if we're not at the bottom, we're darn near close and you should be aggressively accumulating. Tell me on this. How does this work? This is all UTXOs. All UTXOs. And how many of them were moved at a price higher than where the Bitcoin prices today, over half of them are underwater. So they're at a loss.

55:48I've asked this question to Checkmate a million times, but I want your perspective on it. How do you trade off that obviously every time someone moves to UTXO is not a sale? Right. You just kind of run with the assumption that it is, because for the most part, in terms of quantity, it is. Like if you're paying for a beer at PubKey with Bitcoin, That's, you know, even if you do that on-chain layer one, that's like a $5 transaction, which is pretty insignificant to all 21 million Bitcoin.

56:20So I think just by the law of large numbers, like someone moving a thousand Bitcoin, they're probably exchanging the capital for cash. So it's just that enough probably our sales that it makes the data useful. Correct. Okay. I've had the same thought, Danny. like, and it's particularly in a bull market, on the upside, you could definitely make the case that a raging bull market could cause someone to be like, oh, I should upgrade my custody solution.

56:49And that would cause them to move Bitcoin onto like, I'm going to do multi-sig now or whatever. They're moving from one thing to another for better security, better estate planning. That would show up in these types of analyses as like, oh, that's a sale. Yeah. But I think if you look at it in aggregate, most of them probably are still sales. Yeah, that makes sense. But it interesting that we very very rarely get to these levels and we never go very far below Yeah and it only happens at like the exact bottoms I do wonder how useful on data will be going forward if we get more and more paper Bitcoin, if that's where a lot of the market is.

57:27But inversely, imagine how useful this data set would be if the entire economy ran on a Bitcoin standard. Yeah. Like if you could see the precise movement of treasury bonds, who they were sent to at what time and how much quantity, how long they held for, that would be a very valuable data set. So if we do over a lifetime shift to a Bitcoin standard, I think a lot of like economic, you know, research could be conducted based on on-chain activity. Everything's better on a Bitcoin standard. It is. All right, what have we got? So this is similar. So of the coins that are being moved on-chain, how much of that is at a profit versus a loss? And I've highlighted here the very rare regimes in which more coins are being moved at a loss than at a profit. You could see kind of, and that's that red line. So anytime the red is over the green, more transfer volume at a loss.

58:17Again, it all lines up with bottoms. It does not happen a lot. No, it doesn't. And we've actually been in one of these regimes basically all calendar year. So they don't tend to last too much longer than what we've already endured. So the data is totally on our side right now. It is. It is. It is on the side of someone who should be not waiting for Bitcoin to go lower. You should be deploying capital now. And if it goes lower, deploy more capital then.

58:41Yeah. And that's the thing. People, I think, get too caught up in trying to pick the absolute bottom. Now is a good time to buy. You might miss it by 10%. You're going to be happy in the future. So it's important to be a productive member of society. If you have a job, if you make income, all right, you can buy it now. And if it goes lower, buy more then. As long as you have an income stream, you should just be dollar cost averaging always. Yeah.

59:04Dollar cost averaging always. but more so. Yeah, more so now. Also, I'm going to be a broken record here with 2022 comparisons, but Bitcoin hit like 19K in June of 2022. And the rest of that year happening with like FTX happening, which was the biggest blow up ever. He's the SPF of crypto. My great aunt, who's 80 years old, knew about it. Like everybody knew about FTX and SPF. That only took Bitcoin from like roughly 19 down to like 16. so like if it took that and you know that didn't cause that much of an additional price decline for someone to be thinking Bitcoin has to go to 50k from here I would just ask them like what's going to be the catalyst for that and I don't have a good list of potential catalysts Is that right?

59:50Was Bitcoin at 19k when it blew up and it only went to 60k? Yeah it was only like a 10-15% drop Crazy But it felt way worse Yeah yeah because you never knew it yet That one felt like not existential to Bitcoin but in terms of the market's perception of Bitcoin, it felt real bad. Why is both these lines dropping? Less on-chain activity. I thought that's what you were going to say. I see that as a bearish sign for Bitcoin. You think so? Why are we not transacting on-chain anymore?

1:00:20I know, obviously, Lightning- So it's actually interesting. This would be volume. So the actual total quantity of coins being sent. I've got another chart in here. the number of transactions is actually at an all-time high. Oh, okay. That's what I thought we were looking at here. Yeah. Okay. So this would be amount of coins being sent. Okay. You can ignore what I said then. All right. Let's do the next one. So this is, yet again, a signal that only flashes at the bottom.

1:00:44So this is the cost basis of people that bought Bitcoin between 12 and 24 months ago. So in bear markets, that would be the folks that FOMO'd in at the top. And now they're underwater. you've seen in 2015, 2018, 2022, and then now those coins are at a loss. See, the interesting thing on this one, and perhaps this is to do with us not going as high, we've not been under this for very long. Like we were under that a lot longer in 2022. Yeah, it's been five or six months.

1:01:16But yeah, 2022, it was almost two years. See, that one I could see as being like, maybe we need a bit more time paying in this bear market. Potentially, but also if you kind of like, you know, I don't like to cherry pick, but let's cherry pick. If you grab the midpoint of that 2022 regime, it was the bottom. So it was, you know, it was a grind up between the midpoint there and the end. That's going from 16K to like the mid 30s. That's a nice little recovery.

1:01:41That's true. And like, if you took 2018, I think you can actually ignore when we went above it there, because that was the plus token Ponzi. Is that what it was called? Plus, do you remember the Chinese Ponzi? Predates my time in Bitcoin. Okay. So when Bitcoin was pumping then, And everyone thought he was making a recovery, but it was actually like a Pondy scheme running out of China. Very nice. And so I think without that, we probably would have stayed below that line for a lot longer.

1:02:03Yeah, yeah, probably. Interesting. I think maybe more time pain. That's the only one that kind of- Yeah, that's where I'm at right now. I think we're going to get time pain. I think, I don't know where it is in this deck, but there's a chart. The percentage of a rate hike in 2026, those odds are always kind of dynamic. But whenever I made this chart, which is about like two, three weeks ago, like right after the last Fed meeting, it was still like an, 80% chance by the market that we get one rate hike this year.

1:02:35I think I might have said cut before. Rate hike. The market's still pricing in that the new Fed chair is going to increase interest rates. And I do not see that happening. So I think as time goes on and it becomes more and more clear that maybe he doesn't cut, but just pausing, I think that's going to be received bullishly by the market. Yeah, I think Polymarket has it that a hike is the most likely right now. Yeah, and that's not going to happen.

1:02:57And I think my most interesting and insightful takeaway from the recent Fed meeting, I was talking to John about this. Do you remember when Jerome Powell said, we are navigating by the stars under cloudy skies? I don't remember that. That's an awesome quote. Yeah, it is an awesome quote, but maybe not from the guy who pulls the strings on the monetary system. The idea is the data that the Fed uses to make policy is incredibly flawed. But as we all know, it is a CPI is a handpicked basket of goods that they're constantly changing.

1:03:30Literally apples to oranges, not to mention it's lagged, it's delayed. And it's very analog. It's literally like government employees going to a store and writing down the prices of things. GDP is a little finicky. Anyways, the data that they make their decisions by is lagged, it's outdated, and it's maybe directionally accurate, but not perfect. Kevin Warsh is throwing all of that away. So he's got these five task forces. He didn't even give his own forward guidance on where he thinks rates are going to go. He did not fill in the dot plot. And if he was really trying to be a hawk, he probably would have filled in a dot plot. I think him not doing that and him taking the view that, hey, we are going to reassess the actual data that we look at could potentially give him the justification to cut later because he couldn't just come in and just cut on day one. That wouldn't have been received very well. Because he'd have just looked like a Trump stooge.

1:04:32He would have looked like a Trump stooge, going to do anything the orange man tells him. And he's actually being very precise so far in that the increase in CPI earlier this year, We all know what cost it. It's the war in the Middle East making energy prices go up. But the market is pricing that in. Oh, inflation is like getting back out of control. We should hike rates. You shouldn't hike rates. You should just stop going to war and let the energy markets function freely. And so I think he's taking the perspective with that. Hey, there's no need to hike rates here. Core CPI is trending down. The trend is directionally accurate. If we figure things out in the energy market. There's no need to preemptively hike rates. And so I think he's kind of establishing that position, but the market's not pricing that in.

1:05:22Yeah. I think to add to that, the other interesting thing he said is that he cares about the left side of the decimal place, not the right, meaning like 2.9% inflation might still count as 2% to him. So he's obviously like increasing the scope a little bit there. Right. Which I think is also inevitable. Yeah. Yeah. At some point, they're going to have to lower rates and the market still doesn't seem to have that figured out. Yeah. Bullish. All right, very bullish.

1:05:46What do we got next? This is very interesting. So it, sorry, it's a little cut off here, but you've got the Bitcoin price in gray and then the realized market cap in green. But then in orange at the bottom, you have the drawdown in a realized cap. So in realized cap draws down, those are effective. The UTXO is being moved at a loss. And you can functionally think of it as capital leaving the Bitcoin network. So realized cap is all the capital that's been entrusted to Bitcoin to be stored.

1:06:14If it's pulling back, people are exiting. There's an exodus from the market. It's only down about 5%. So it's not like this rapid outflow of demand per se. It was just an influx of supply that made the price go down. Realized cap's down 5% compared to 14, 16, and 19 in previous bear markets. Wait, explain to me why that shows that it's not a lack of demand. Because if I buy 100 Bitcoin at $100, that's $10,000 I'm putting into the market, versus if I buy 100 Bitcoin at $100,000, that's, what, $10, $100 million worth of Bitcoin.

1:06:56So when you multiply the amount of coins by the price, you can determine how much capital is put into the market. And so if I take those 100 Bitcoin I bought at 100K and I move them again on chain, again, there's assumptions being made. But if I move them on chain at 50K, I'm selling, we would assume that's a sale. So instead of that 10 million or whatever being entrusted to the network, it is now 5 million. And so it's a net decline in capital. And the interesting here is these seem to turn around very quickly.

1:07:27They do. Yeah. As soon as you start to see realized cap going back up after it was going down, it almost always confirms the bear market's over. Isn another interpretation of this data that a lot of the sales that happened in 2025 were people selling at a profit Correct Rather than people saying I bought in Bitcoin at the wrong time I down 30 and now I out of here. Yeah. More evidence of your thesis that it was long-term holders and OGs. Yeah. Interesting.

1:07:56That also kind of shows that conviction across the board might be going up. Yeah. Yeah, I think so. Yeah. And I think much better for Bitcoin that people did choose 100K as like a generational exit and then you get distribution of coins rather than 2022, which was like those sellers who sold that down 20% and that's an aggregate number, obviously. But that was like a lot of people thought, oh, Bitcoin's dead forever. I don't think this is a Bitcoin is dead forever moment. Absolutely not. Okay. Well, if we got more capitulation, the title's cut off here, but this is the Coin Days Destroyed chart. So one Bitcoin that was held for one day and then moved as one coin day, one Bitcoin that was held for a thousand days and then moved as a thousand coin days. So it's just- So they're showing that we had a lot of OG selling. A lot of OG selling.

1:08:43It's transaction activity waited for the OGs. And you see spikes at tops and then capitulatory moments. We had a major capitulation at the end of last year, all those OG coins being sent to exchanges, presumably to be sold. But we've started to see it die down. And again, that's just more evidence that you're not getting an influx of supply on the market, which means we're probably going to, you know, time-based capitulation more so than price. This is cool. There's a lot of different data that shows if we're not at the bottom, we're probably close. Yeah. Yeah. A lot of it. And again, you can't take any one metric and cherry pick and say, I'm going to input my entire life savings based on what this might indicate. But all of them, you know, we looked at like 10 different charts here that kind of tell the same story. Yeah. Very cool. All right.

1:09:32And this is the zoomed out, you know, low time preference chart. So the amount of Bitcoin that hasn't moved in six months or longer, you know, it's subjective what a long-term holder is. Glassnode categorizes it at six months. They did a huge statistical analysis of this a few years ago. Any coin that doesn't move for six months, the odds of it then moving any time in the near future decrease dramatically. I just love that the 2017 top, like all the OGs did so well as all the retail got absolutely screwed.

1:10:05You know, as they should. I can't imagine holding through like the 2015-16 bear market. Because today it's so obvious what Bitcoin is doing. But I can imagine back then it was not quite as clear that Bitcoin would win. That's a great point, Mitchell. Just to underscore that real quick. In 2017, there was not this narrative of like stack as much Bitcoin as you can. Bitcoin's going up forever. Obviously, some people believe that. But I think people buying Bitcoin, even in 2017, it felt more like you're buying a lottery ticket. It didn't feel like I'm stacking generational wealth and sell my chairs. It's all up only. Yeah, I think for the people that knew, they knew. When you read Pierre Richard's articles and Goldstein from 2013 and stuff, they knew. But I think the interesting there is that was such a retail-driven market.

1:10:53I came in in 2016. That was my first experience of that. And the sort of pie-in-the-sky crazy number that I remember people talking about was 100K. Like, will we ever get to 100K? And now that number's a million, and we're going to get to that as well. It's just going to take time. Yeah, two decades. And yeah, this is the chart. If you could jump back real quick, I think the bigger picture idea here is that is Bitcoin's finite supply visualized. So you get supply available to the market if the price gets bid high enough.

1:11:24But bidding the price higher is the only way to find new supply. You can't mine more. You have to bid the price higher. Supply reacts, but over the long term, it's just becoming more and more finite and scarce. Every subsequent bull market, you get fewer coins distributed into that price action. Up and to the right. It's a bumpy ride though. Oh, it's what we just talked about here. Yeah, so this is the odds of a rate hike by December. So before the end of this year, it's still like well over 50%.

1:11:54Where are these odds coming from? They are coming from the CME Fed Funds futures data. Okay. Yeah, and I think this is going to unwind and I think Bitcoin is going to perform well as these odds kind of get priced out. I do wonder where rates will go. Like even if they do drop, like I can't see us getting back to 0% or close to 0%. Can you? I think it would take a big time crisis, which on a long enough timeframe, our system is designed that there will be some sort of crisis. And when I say crisis, I mean like the big ones, like 2008 was a financial crisis, obviously resulted in a big print, a big print, COVID. Yeah. Another one. Um, so I think that will happen at some point and that gives the authorities the cover to say, this is a once in a lifetime thing, you know, rates have to come down and they'll give all the lingo.

1:12:49But if you one of those people who like forever predicting that to happen three months from now you end up looking kind of silly So it more it like I do it a matter of when not if but I'm not going to be the one who's always saying it's a quarter away. Yeah. And the bigger point related to that, I would just say is you asked the question earlier, Danny, of like, do you think we have these euphoric price run-ups in Bitcoin? I think generally speaking, no, as the asset matures. But if there's another big print, like a 2008 or a COVID type of environment, that I think could cause euphoria to the upside in Bitcoin. And I would couple that with, that's when I think adoption follows a similar pattern. There's always going to be a gradual trickling in of people that learn about Bitcoin through a book, a podcast, a friend, whatever.

1:13:46But then I think adoption happens in waves as well. Absolutely. And COVID was like the biggest example of that. So those waves will happen. I'm not predicting it to happen in a quarter from now, but like over a multi-year timeframe, they will happen. A number go up is what brings in new people. But I think because we didn't have the euphoria is why we got less newcomers to Bitcoin in the last cycle. Yeah. I think it was on your show with Brandon Quidham recently.

1:14:10Did you have him on? Yeah. And he was talking about like the different personality types that adopt Bitcoin. And I don't know much about the Myers-Briggs stuff, but I guess like the INTP or whatever, that's like us. That's like the schizos, like we don't trust anyone. No institution can pull the wool over our eyes. We're already all here. The people of that archetype have found Bitcoin. So I think the next wave of adoption, it's going to have to be force fed to some degree.

1:14:39it's going to have to be like MSTR inclusion into the S&P or Bitcoin becoming part of like a state pension fund. Like I'm not necessarily convinced we're going to get too many more like, let me set up three geographically distributed cold cards and run a node type Bitcoiners. Yeah, no, I agree with that. The only thing I would add is I think I agree with that. But I think there it's like if you wait that for capital, it could be a little different. What I mean by that is the young Younger people might be into Bitcoin now, but they're not earning a bunch of money.

1:15:14So the money that they're putting into Bitcoin, it might be very small. As they start to earn more, as they get inheritance from their parents, then they're already here, but they're not here in terms of capital. So that could be another catalyst, I guess. That's a good point. One of the hypocrisies that I have as a Bitcoiner is I look at this and I'm like, I want this to go down because I know it makes Bitcoin go up. But also, the cost of capital should never be 0%.

1:15:41Like, that's absolutely insane. Yeah. I don't know what like a healthy level is, but it's clearly not zero. I wrestle with the same struggle because it's like, why am I rooting for them to debase the currency? Well, it's because my personal, you know, financial eggs are aligned with that thesis that they will do it. And so it does kind of distort, you know, what money does distort. But, you know, we're in Bitcoin not because we're like rooting for them to cut rates, but because we look at the data, believe it's inevitable.

1:16:13And so you should not try to row against the current, just position yourself so that when they follow the natural path, which is to devalue every fiat currency to nothing, you're not totally screwed. You got to hold hard assets. There you go. All right, what have we got next? Yeah, so this a bit of a 180, but what you're looking at here in the gray line is if someone makes $250,000 a year and they live in the States, so not particularly relevant to you as an Aussie, but how much they pay in federal income tax over a 30-year career, it's 1.68 million. So making a quarter million a year for 30 years, you pay almost 1.7 million to Uncle Sam so he can do whatever with that. The green line is if you could instead invest that capital in something growing at a modest 8% per year. Obviously, Bitcoin's done much better than that.

1:17:10And so if you weren't already aggravated by inflation, here's how much capital you're likely forfeiting over to the government that doesn't generate you any kind of return. And then it's juxtaposed with the opportunity cost. So if you could actually keep the capital that you're giving to the government and instead invest it, that's almost a $6.5 million opportunity cost. So this is where we can probably introduce you as a member of the Blockware team.

1:17:38Thankfully, there is a solution. There is an option where you can, instead of giving capital to the government, put it into an asset that appreciates. My first thing I would say is I would only work at a company that sponsors the What Bitcoin Did podcast. There you go. That was my requirement too now. Yeah, I would say, so yeah, I've joined the Blockware team, super pumped about it. I look at it really simplistically and I did this myself as an individual So obviously I think it attractive If someone owns Bitcoin if someone has a high or really any amount of ordinary income, to be honest, an ordinary income, that's like W-2 employment income.

1:18:21If that's true, and if you find it attractive to receive a Bitcoin dividend, which is what owning Bitcoin miners gets you, if those things are true then this strategy makes sense for you because you'll get a bitcoin dividend you'll lower your taxes and like i could just leave it there but then icing on the cake would be if you believe it's a local low point for the price of bitcoin and therefore the machines that you would be buying then i think this strategy makes a ton of sense so that's like my own very simplistic explanation of the strategy but it's also an explanation of why i thought moving to block where it was attractive for myself to take advantage of that. And I think the message of getting that out to the Bitcoin world, we're like only in the early innings of that. Because one of these tax policy things just changed in legislation last year. And I think most people are literally unaware that they could benefit themselves tremendously from this. So I'll leave it there.

1:19:22Just to clarify for people who have no idea what we're talking about. The ads probably already run. Yeah, they watch the show all the time. If you switch to the next slide, it quantifies this a little more. You can take a 100% deduction on Bitcoin mining servers in a single tax year. So it's literally like dollar in to miners, dollar off your active income. So we've really hit kind of a sweet spot with doctors, lawyers, attorneys, and business owners. Anybody who makes a lot of guap and has to give a lot of it to Uncle Sam. So if your tax rate, for example, is 37%, your marginal tax rate, and you spend $100,000 on Bitcoin mining servers, you will get roughly, and check with your accountant, $37,000 back in tax savings.

1:20:09And we were just talking about going with the current, don't row against it. Tax law, as boring as it sounds, is just a blueprint of incentives. So the same way you don't want to save in fiat currency because that is not the proper incentive. It's going to depreciate. There are tax codes to incentivize certain types of behavior. The big, beautiful bill incentivizes investing into physical capital to run a business. And we were talking earlier too about they're throwing the kitchen sink at this debt problem. This was one of the resources in that kitchen sink. They want the economy to grow. So they're creating an incentive to start a business. So Bitcoin miners can be fully deducted in year one. Like if you bought a scissor lift and you run a construction business, that can be fully deducted. So don't go against the grain, just find whatever incentives are in the tax structure and then follow them. And that's a significant amount of capital over a lifetime that could actually be working for you.

1:21:11Yeah. Buying a Bitcoin miner rather than giving money to the government sounds like a pretty good win. Yeah. They're subsidizing it for you. This is how high net worth individuals think. Like this is like tax strategy is part of your investment strategy. So I think there's a lot of Bitcoiners who are just stacking as much Bitcoin as they can. They should continue to do that. But you should also think, how can I minimize my tax bill? Absolutely. And the other thing that's interesting about that is like as all the Bitcoin miners move to AI, move away from Bitcoin mining, it also helps like decentralized hash rate.

1:21:42Yes. And that's what the next chart shows. So what we're looking at here is the Bitcoin hash rate. I think it's on either a 14 or 30 day moving average. It has not made a new all-time high since November of last year. That's the longest stretch in Bitcoin history. It's like eight months with no new all-time high. Like you said, all the large data centers that were mining Bitcoin are running AI servers instead. So it's creating a more open playing field for the middle guy or the little guy who can actually now mine at a nice profit margin because they're not competing with these billion-dollar institutions that can tap into debt and public capital markets.

1:22:19and just endlessly finance, like mining at a loss. Because a lot of the large public miners were mining Bitcoin at a loss. And now they're all exiting the network and hash rates down about 16%, which means blockware clients are earning 16% more Bitcoin now than they were at the hash rate peak. Yeah, the interesting thing here is like that is literally an up-only chart until very recently. Yeah. I remember, I think Sam Waters at River did a report on Bitcoin mining.

1:22:48the Bitcoin network into a Zeta hash, which it obviously did. And when he did that in like 2022 or something like that, and it seemed like the most far-flung, like crazy projection, we got there in four years. Do you think this will continue to drop now? I think in the near term, yes. A lot of capital is, like the marginal dollar in the data center industry is not going to Bitcoin mining servers. And so there's kind of three bottlenecks at the moment.

1:23:16Number one is simply power. You need power to operate large scale Bitcoin miners to actually move the needle on this chart. So you've got power, then you have the physical data center infrastructure. Even if you have access to power, you have to get transformers, containers, all that. And then third is actually on the ASIC level. So there has not been a new air-cooled Bitmain ASIC in almost two years. The Antminer S21XP came out at the end of 2024. The S23, they do have the hydro equivalent, but the air-cooled been delayed and delayed and delayed because the semiconductors in a Bitcoin miner are also in artificial intelligence servers.

1:23:58Just make more money selling it there. Yeah, exactly. So TSMC and Samsung are going to fill all the orders for the hyperscalers before they, you know, go to Bitmain and help them make their ASICs. Yeah. Is that also because they're reaching like, not necessarily a peak, but they're kind of plateauing in terms of how much incremental difference each model... That's, yeah, that's another factor at play. So the S21 XP now is about 10% better than its predecessor.

1:24:21It used to be like if you bought an S19, like all the S9s basically overnight became unprofitable. So it longer for machines to hit the market And even when they do the impact on hashrate is pretty negligible Do you think there a bullish side of this which is taking hash rate away from just a few public Bitcoin mining companies into the hands of more and more regular people Yeah, I think that an argument could be made that that's a good thing. I don't know. I generally think it's kind of like a non-factor. Like some people would point at this and like, oh, it's the minor doom loop. Like all the miners are turning off. I don't think that's necessarily the case. I also don't think it's necessarily like bullish for the Bitcoin price, but it is bullish if you are in the mining business and you no longer have to compete with your biggest competitors.

1:25:07Yeah. And I think there's a good argument to make that I do think this on a long trend is still going to go up into the right. But I think at least for like the next year or two, and Mitch, you can tell me if you agree, but I think even if hash rate starts to go up a bit, I think there's there's a good chance the Bitcoin price will go up faster. And it's because of all these factors that Mitch is highlighting, which is a lot of these players that moved, they're not like waiting for Bitcoin to go back to 100k and then they're like, oh, we're going to go back into Bitcoin mining.

1:25:39So Bitcoin could go to 100k in the relatively short term. And I think that increase will happen faster than hashrate will So it be more prof Even hash rate will be going up nominally it be more profitable for the people who stay and mine Correct. Yeah, there's a lag. At this point with Bitcoin at 60K, any new capital is going into AI and it's going to take a massive bull market before they're like, maybe we should mine a little more Bitcoin. But even then, if you compare some of the hosting deals in the AI space, they make more money like running these AI servers than even mining Bitcoin when Bitcoin is 120k.

1:26:17Yeah. So I think it's going to take like a blow off top before you see significant amounts of capital put back into the Bitcoin mining industry. I'd actually be surprised if a lot of them come back ever. Like I think Iron have said that they're not like they've they're kind of I don't know if they're still mining Bitcoin a little bit, but I think the plan is to completely deprecate that entire business line and just entirely to AI. But I guess all that's opportunity.

1:26:38It is opportunity, yeah. It's more slices of the pie available for everyone else. Yeah. And you get a full tax deduction on the machine. Sounds like a win. It is a win, big time. All right, what have we got next? I think that's it. That's it. Yes, sir. Anything else you want to talk about then? No, this was great. I appreciate you having us and I looking forward to your live show tonight Yeah I excited for that I just got a call from Junseth just before we recorded I was like shit he missed his flight But he on his way Perfect We got Hoddle and Eric Kaysen landing at 4 p So I just desperately hoping their flights aren't delayed.

1:27:10We can actually do this show, but it's going to be good. Yes, sir. PubKey, let's go. Gotta love PubKey. Like I said, it's the first time I've been here in the morning when it's not dark outside. So it's a little odd, disorienting for me, but gotta love PubKey. It's 11.30 a.m. You're just going to sit downstairs for seven hours now. We're going to Wall Street to ask Wall Street people what they think about Bitcoin and see if they've really taken over.

1:27:33Let's go. Come see the bull. We'll come back with the data tonight. Let's go. Well, thank you, guys. We've obviously spoken about Blockware, but where can they go to find out about it? Blockwarsolutions.com. For slash WBD. Yeah, slash WBD. And fill out the form there. And you can also DM myself at MitchellAskYouOnX. And you can also DM John, who is now jhar blockware that's correct good memory thank you guys it's been awesome thanks danny thanks danny