The U.S. Bitcoin Reserve Is Here - Why This Changes Everything
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Hey, welcome to the Bitcoin Matrix. I'm your host, Cedric Youngleman. In this episode, I bring together Joe Burnett, Vijay Boyapati, and Jesse Myers for the world's first ever Bitcoin Matrix group therapy session. With the news cycle running wild and market sentiment at a low point, I wanted to gather long-term Bitcoin hodlers to offer some much-needed perspectives.

We dive into Bitcoin's recent volatility, its cyclical nature and the broader macroeconomic forces at play, including the role of gold and the emergence of nation state Bitcoin reserves. If you're looking for a rational take, admist the madness, this episode is for you. I hope you enjoy this rip. If you want to smash by this dip, use my code Matrix over at River.com and earn up to $100 when you buy Bitcoin on River.

If you do want to get in touch with me, it's Cedric at thebitcoinmatrix.com, where you can also sign up for our upcoming newsletter. And now let's enter the Bitcoin Matrix for the world's first ever Bitcoin Matrix group therapy session. What is real? How do you define real? You can't jump into cash. Cash is trash. What do you do? You get out. Joining me today is...

For the world's first ever Bitcoin Matrix Groups therapy session is Vijay Boyapati for the fifth time, Jesse Myers, aka Cretious, and Joe Burnett. Fellas, you know, the news has been wild lately and sentiment kind of sucks.

So I kind of wanted to bring us together. I think for maybe long term hodlers like yourselves, maybe it's just another day. So maybe we can just get some perspective. I'm going to kick it to Joe. Maybe, Joe, you could kind of describe what you're seeing or what you're hearing or what you think is going on right now. Well, Cedric, thanks for inviting me on. It's honored to be on with Jesse and Vijay. Yeah, I mean, the volatility of Bitcoin has been, you know,

quite interesting over the last few days, right? Like we, we fell, you know, you know, $10,000 in 24 hours or something along those lines. And then Trump came in and he's like, actually, we're going to make some sort of national strategic reserve again. And then we went back up, you know, $10,000 and then fell back down. Then now we're like in the middle ground. So

Bitcoin's been incredibly volatile. But, you know, if you've been around Bitcoin for a while, you know, this is kind of nothing new, right? Like there's a lot of day to day short term volatility that, you know, happens. It's been happening for 16 years at this point.

Bitcoin naturally goes through these massive bull markets and then it's followed by these massive bear markets. And then in between that, there's a lot of short-term day-to-day volatility that's just, you know,

for occurs for a variety of reasons. And it's it wipes out a lot of over leveraged speculators, it wipes out a lot of day to day traders. And the the optimal strategy from from my perspective, at least is to just buy as much Bitcoin as you can and hold on for it for as long as possible. So yeah, it's been a it's been a wild couple, couple days, couple weeks. But it's been fun. Jesse, I'm kind of curious your take.

Yeah, I think Joe nailed it. It's funny to be downstream of Trump's moves right now. Tariffs are on, tariffs are off. And that's kind of, oh, and, you know, we'll have a crypto reserve, Cardano and Solana. Oh, also Bitcoin and Ethereum and watching the price react to these rapid changes. It's been pretty funny.

For me right now, the big story with Bitcoin is the playing out of the post-halving cycle and the mechanics that I think are still in the driver's seat. And also gold and what's going on with gold right now. Gold is showing a ton of strength. And I think that that is the signal under the noise of Trump's announcements whipping the market all over the place.

Today, I was curious to pull up the gold, the Bitcoin chart denominated in gold. I think it's always an interesting exercise to sort of level set, like, where are we really? Because you have to remove the US dollar denomination in order to find out under inflation, what's happening under the surface, what's happening.

And we're now under the prior all-time high from 2021, the bimodal top in 2021 in gold terms. We're now, we sort of had like a false breakout the last three months, getting out above that and then being pushed back below that prior all-time high level.

Uh, and, and we're sort of in this ascending triangle to over the last two years of higher lows, making their way back up to that prior all time high, uh, in gold terms from 2021, which to me says that, you know, gold is moving upwards. It gold investors tend to, there seems to be a pattern of, of them sniffing out, um,

changing conditions faster than Bitcoin and the gold price tends to lead Bitcoin in the last few years. So I think that that is an indicator that there's, you know, Bitcoin is kind of on discount right now. And that also,

we're we this bull market has a lot left in it uh which is i think exciting to hear or think about the possibility of it's it's quite possible that we're all this time we've really just been sort of bumping up against prior all-time high even though it felt like we broke out we got to 108k usd in gold terms we're really just where we were in 2021 and i don't think that has priced in

all the changes, the real changes that have happened for Bitcoin since 2021, including the halving. And so I think that means there's a lot of room left for Bitcoin to break out in earnest and send this much higher. So over the course of this year.

Vijay, I'd love to hear from you. I mean, especially around cycles, whether we're in another cycle. We've only been through three cycles, so it's kind of like a small sample size. Or is it rapidly changing conditions in a new playing field? And do you still think there's a lot more bull market left? Well, I agree with Jesse. I think that there's more bull market left. But I've been watching Bitcoin since 2011. And I

I would say that one thing that I'm observing is maybe the shape of the cycle is changing. I think in past cycles, it was more parabolic in shape and kind of reflected the retail psychology, the madness of crowds where you have slow, steady accumulation, and then people get interested, they start piling in. Eventually you get a kind of climax and then a crash after that as the number of participants in the cycle is kind of exhausted and you run out of capital quickly.

coming into the market. I think there's a maturing of the kind of capital that's coming into the Bitcoin market. I think this cycle is dominated more by institutions as opposed to retail. I don't think we've seen like really strong retail FOMO yet. And there's been a lot of

hyperventilating about how the bull market is over that I've seen in the media and on Twitter. But to me this actually reminds me a lot of last year and I had a tweet thread about this about how you know there was this period of euphoria after before and during and after the ETF announcement was launched and everyone thought this is a game changer and really it is actually a game changer.

But then suddenly we stalled out and people back then thought we would get to 100,000 very, very quickly. And we stalled out and we went sideways for eight months. And it was pretty painful grind. And the biggest drawdown in that period was around 27%. If you're living through that, that feels painful and you have a sense of

maybe this is over, maybe the bull market's over. Actually, the worst drawdown we've had so far in this sideways grind, which really began, I'd say in January, we had this same period of euphoria after slightly before and after the election when there was anticipation of very friendly policies towards Bitcoin and perhaps a strategic Bitcoin reserve.

And I think people believe we get to 150,000 like very quickly. And then we stalled out. And we've been going through this sideways movement in the market for, let's call it three, three and a half months.

But the biggest drawdown so far has not been quite so bad as the biggest drawdown in the sideways chop of last year. So really, this is just normal movement. I haven't seen anything out of the blue. I know this is like your first Bitcoin exposure or investment and you bought near the top. It probably feels pretty painful. But this is the school of hard knocks that you have.

you have to get used to when you own Bitcoin. I did want to visit one thing that Jesse said that I think is really critical. I do agree the big story, the big financial story is gold.

Because it speaks to, I think, a much bigger, more important shift in the world, which is the breakdown of the Bretton Woods Monetary Agreement. And honestly, the breakdown of this political vision of globalism that's existed for the last 40 or 50 years and the rise of nationalism, that is nation states looking after their own interests first as opposed to these kind of global alliances that have been...

used over the last 40 or 50 years. And I think you see that in gold. When you have a breakdown in trust between nations, especially when you're talking about reserves between nations and how these reserves are used. For example, Russia had its US treasury reserves frozen by the United States. That has a pretty profound impact on the thinking of people who are managing reserves at nation-states.

Do you want to hold US Treasuries when the United States is potentially an adversary? If you're China or you're Russia, you're probably thinking it's quite risky to hold significant reserves in US Treasuries that could be frozen at any point, especially if you become adversarial to the United States. So what is an alternative? It's the ancient alternative of gold, the venerable reserve currency of the world that has been money for thousands of years.

And I think gold's rise speaks not necessarily to an inflation story, but to a story of the breakdown of this Bretton Woods monetary agreement. And I think that's an incredibly important story to think about. What do you guys think is like maybe, because you mentioned the madness of the crowds, and I think that was a really great way of summing up how it feels right now.

And what do you guys think is the main sort of the true signal out there? Is it interest rates? Is it is it tariffs? Is it trade wars, currency wars? And, you know, and I think about strategic Bitcoin reserves. You mentioned like world leaders should be kind of thinking about how to put Bitcoin on their balance, you would think. And at what point does this market kind of grow up and mature and not trade around like a meme stock?

you know, you guys kind of surprised. I mean, I think volatility might increase, but it's still to see a whipping around like this. And there's a lot of uncertainty about whether to take it seriously or not even in the madness of the crowds. Yeah, I think what, you know, what Vijay was getting at about this cycle sort of shape sort of speaks to Bitcoin is maturing in front of us. Like we've been in these long, boring ranges where there's volatility within the range.

But somebody is accumulating, you know, and and quiet buyers are stepping in to buy 25 percent discounted Bitcoin. And they seem to have big pockets because we're not breaking down out of these ranges, you know, at any point last year. That could be nation states. That could be billionaires of the world who are not going to be announcing their strategic reserves if they're really doing it in earnest.

you're doing it quietly. And so I think that every cycle, there's some new development in Bitcoin markets that makes the pattern play out on the chart differently. Vijay laid out how the 2016-17 cycle was this classic parabolic advance that was retail driven.

And we didn't really have like ways to short Bitcoin at that point in time. Like there weren't sophisticated instruments, derivative instruments for large capital players to step in and say like, well, this is getting a little crazy. I'm going to harvest some of this, you know, carry trade potential.

And then the next cycle we had that. And so you had BitMEX sort of driving things then and there was like less volatility until there was a big volatility event and then it went crazy, right? So like March 12th, 2020, 50% drawdown overnight, screwing over a bunch of individuals and investment funds.

And that was kind of the nature of that cycle was these punctuated equilibrium, large moves because of leverage and that the irresponsible degree of use of leverage now that there was suddenly these instruments to be played with.

And I think this cycle, it's characterized by these long sideways consolidations where Vijay rightly points out that it's sideways, but there's undulations along the way and they may feel a little painful. But, you know, you're still within this constrained, like sideways band. And I think that speaks to the maturation of Bitcoin. The next slice of maturation that's going on right now is Bitcoin.

bigger players stepping in to reduce volatility and scoop up cheap Bitcoin when there's an opportunity to do that. And so I think that when you zoom out enough to look at it cycle by cycle, you're seeing Bitcoin mature every four years from a capital markets perspective. It's growing up in front of our eyes. And that means that every cycle is somehow different than the one before. And you can't expect

the continuation of the past because of that. Yeah, so I think it's happening and that volatility is over time diminishing and what to pay attention to is different on different timeframes and different geographies. But all this noise amounts to the world slowly collectively waking up to like, oh, I should probably be accumulating cheap Bitcoin.

Do you guys think that there's maybe the potential for a recession in the short term? Maybe Trump's playing a short term paying for long term gain kind of plan. Maybe it's sort of coming to the aid of Main Street and trying to lower real estate and equity pricing and these risk on assets or things that are perceived as risk on. I see Bitcoin as risk off. But, Joe, I'm kind of curious, you know, what your thoughts are there.

Yeah, I mean, I think like trying to time any sort of recession outcome in the short term is very, very difficult, if not impossible.

Nothing would surprise me, right? Like I think the S&P 500 could fall 20%, 30%. And I think if that happens, you know, Bitcoin would fall more than that. But do I expect that to happen? Not necessarily. And like, does that change the way that I'm, you know, allocating my personal wealth? Like, no, I'm like, I'm holding Bitcoin and I'm going to keep holding Bitcoin.

I think like generally speaking, Bitcoin is just so mispriced as it has been for the last 16 years that the market is just over time trying to correct Bitcoin to its optimal price. And like in my mind, the bear case for Bitcoin is some form of like gold parity.

like and Jesse's pointing out, like gold has been on an absolute tear recently. It's, you know, it's $20 trillion asset estimated. So Bitcoin still has a, you know, over 10x return just to achieve gold parity. And it's, you know, if you look back at it, you know, historical technological innovations, whether it was like Alexander Graham Bell's phone and then the iPhone, it's like typically when there's a new

technological development, that new technology is worth significantly more than the previous inferior technologies.

you know, Bitcoin is probably going to eventually hit gold parity and then it's eventually going to hit, you know, a multiple or a magnitude of gold parity. So I think that like the day to day volatility is, from my perspective, is like not going to go away anytime soon just because the price is nowhere near where it actually should be trading. And I think over time it's just a volatile corrective process to, you know, to actually get up there, as we've seen over the last 16 years. So like

Could there be a recession and would that hurt Bitcoin? Absolutely. Is it worth trying to time that? From my perspective, not really. Do you guys think there's price manipulation at all in the market? One thing I saw recently is that there's been, what, 80 historical CME gaps? And I think 79 of them have filled, which I find interesting because that's, what is that? That's cash future settled. Wow. Wow. That's surprising to hear, yeah.

Yeah, it's possible. It's funny to me, Cedric, you've got Vijay, Joe and I are the three of us so zoomed out that it's like we're not really bothered by the short term. You know, is Trump going to cause a recession? Because I think we all know that, you know, printer is coming no matter what. And the short term movements aren't going to throw us off. But yeah, Cedric, to your earlier question of like,

Like, what is Trump up to? It does feel like he's trying to create some chaos, front load the chaos now. I have heard, you know, a plausible explanation of like, you know, if you if you cause chaos up front, like a recession sooner than later, you can blame it on the on the last guy. And that's credible. Yeah.

knowing that you can then, you know, print a bunch and get your, you know, stimulate your way out of that recession on paper. And then take credit for that at the midterms. Like that's a very plausible scenario that, you know, may be going on. And the fact that they're doing tariffs for Canada and Mexico, and then the next day, maybe we're going to roll those back

That's pretty incredible level of willingness to cause chaos that may say that's their plan right now is front load any economic pain, including the public sector cuts.

You know, like that's that's inherently recessionary. And, you know, maybe that's part of what they're prepared to do. Vijay, I'm really curious, you know, as someone who campaigned for Ron Paul, what do you think of governments contemplating stacking Bitcoin? You know, not not do you think that's as good as a citizen?

or a Bitcoiner? As an American, I'm supportive of the idea that a nation state typically has reserves. The US has reserves in gold. I think as a citizen, it would be beneficial to have the reserves that are going to go up the most in value. And, you know, I'm supportive of the United States maintaining its gold reserves. You

Having reserves in something politically neutral gives a nation state a lot of optionality. And there's the potential with something that's being monetized that you could wipe out a lot of debt in the future through ownership of an asset that goes up trillions of dollars in value. So I do think there's some benefit.

When something is being monetized, you always want to be first in line because you get the most benefit. You don't want to be last in line. I mean, even the person who's last in line, if the economic good is monetized, still benefits. It's just that they benefit at the rate of productivity of the economy. But that's less than getting a 10x or 100x. So...

I wrote in my book the first time around that I thought it would be the western democracies that dithered the most in accumulating bitcoin as reserves because there's a political process and democracy is messy and it's hard to be decisive enough to make a decision on something like this. Trump has enough of a mandate that it may be possible

But I think my prediction was largely correct. It was the smaller nations, the ones where there was a lot of executive power. So El Salvador is an example where there's a lot of, it's a democracy, but there was a lot of executive power vested in the president because he won by a ginormous landslide. Whether or not that was a legitimate victory or not, I have no idea. But it's clear that he has a lot of executive power.

And so they were able to accumulate Bitcoin because of that. And of course, North Korea through, you know, not so, I guess, legal means is accumulating a reserve of Bitcoin as well. And it's nations like that that are expected to accumulate reserves first. I think there's also in terms of reserves,

I believe it's kind of a bottom-up phenomena in the sense that there are a lot of financial institutions that really

belittled Bitcoin and people like Jamie Dimon said that this is like ridiculous, it's useless. But eventually they were forced to engage with the market and provide products around Bitcoin and Larry Fink and the ETFs is a famous example of this. And that's simply because their customers asked for it and they kept hearing over and over again, we want Bitcoin exposure. This is a high net worth people telling Bitcoin

their financial institutions. I want to get Bitcoin exposure. I don't want to deal with a hardware wallet. Give me a product. I think the same will be true of nation states as well. They will start hearing it both from citizens, but also from financial institutions, which have a closer connection in terms of lobbying to the government.

I think El Salvador was a lot of people got their hopes up, including me, the last cycle that El Salvador sort of signaled a great wave of nation state adoption.

But I think that process has to play out a bit more organically. And as you see more financial institutions adopting Bitcoin, I think it'll become more likely for nation states then to consider it. And also maybe after financial institutions in the US, you might not see the federal government first, you might see state governments first. And that's kind of been a tradition in American politics that

Things happen at the state level before they become acceptable at the federal level. A classic example of this was the women's suffrage movement, where a number of states allowed women to vote in the 19th century before it was legalized in the 19th Amendment at the federal level.

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It is to me fascinating that we're at the stage where the U.S. federal government is even talking about

having a national strategic Bitcoin reserve. It's like, you know, in the S and P 500, right. We've got like Tesla and square and by no means are they on a Bitcoin standard. They've just have a little bit of Bitcoin. MicroStrategy is like one of the only public companies that has like truly adopted a Bitcoin standard. Most individuals out there probably don't even own any Bitcoin. Maybe like, you know, a few people own like, you know, a,

a small percentage of their portfolio in Bitcoin. But like, I still think overall, like global Bitcoin adoption is still like in its very early stages from, from my personal opinion. And so it's just kind of, kind of fascinating to see like the U S government, you know, being on the cusp of, of,

potentially doing a national strategic reserve. Maybe that's a sign that it's far fetched and it probably won't come to fruition, who knows? But it's interesting to see how we got here. And it's interesting to see like if that domino actually falls, how many more dominoes will be falling potentially soon after.

But it's been really disappointing to see sort of the path of digital assets being included, things like Solana and Cardano. And I don't understand of any no fundamental economic value. Trump launched his own coin and Melania coin. I mean, what do you guys think of all coins right now? Is there going to be another alt season? Is retail? I mean, I hear from friends and family a lot about retail.

crypto and Ripple to just my surprise still. So, I mean, what are you guys hearing or do you guys think there's going to be, you know, a lot of confusion in that area and maybe another cycle of altcoins? Well, I wrote about this just a little bit on Twitter. I declared, hopefully not prematurely, that alt season has been permanently canceled.

I think, you know, two of the biggest drivers of speculation in altcoins in the past were one was unit bias, where people would see the price of Bitcoin and say, oh my goodness, that's expensive. And they had this irrational notion that you can only buy one Bitcoin, you can't buy a fraction of a Bitcoin. And so they would see XRP or, you know, Litecoin or something else and say, oh, that looks cheaper. So I'm going to buy some of that.

That's one of the big things that's kind of gone away. And I think that's gone away because of the emergence of ETFs. And ETFs allow you to create these artificial share representations of a Bitcoin where you can buy iBit, I don't know what it's trading for now, like $50 or something like that. So this idea of a Bitcoin being too expensive is gone because you can buy one share of iBit for $50.

and get that exposure and have kind of the sense of I got one. And so that gets rid of unit bias. I think there was also demand for extra volatility because there's kind of speculative fervor during the bull markets where people want to go out on the risk curve. And the way they went out on the risk curve was to invest in illiquid alts.

Now you have other mechanisms for going out on the risk curve just in the Bitcoin space. And one of them is MicroStrategy, obviously, which is kind of like a levered Bitcoin ETF. And then you have these now quite well-developed options markets in Bitcoin. So if you, you know, in the past, if you wanted to do like a 100x bet on Bitcoin perps, you go to BitMEX and you do some degenerate gambling there. Now you can go to like...

legitimate financial institutions like Fidelity and Charles Schwab, and you can make the equivalent of 100x bet on Bitcoin by buying calls way out of the money calls that expire in like a month. So and so this recent pump, for instance, there's an example of someone who who bet 4 million in real dollars, but had the equivalent of a $200 million bet because they were using I believe they were using options to make that bet

So now the two core reasons that people used to speculate on alts are effectively gone. So I think the incentive...

speculating in alts is largely gone and I think you see this most notably in the bellwether altcoin as Seyfriedin calls it, the mother of all shitcoins which is Ethereum and Ethereum has just been a dog compared to Bitcoin. If you held Ethereum you have been losing non-stop against Bitcoin for over a year now

And that's doubly bad because not only are you losing against Bitcoin in sort of nominal terms, risk adjusted, you're doing terribly because any investment you make in alts, you always have to factor in that

the alt is riskier than Bitcoin. It's less liquid, the market's less well developed, you're more likely to get rugged, all of these things. So if you can't even keep pace with Bitcoin, you're doing horrendously badly. So Ethereum has been a really terrible investment for the last several years. And I think that is a function of these core incentives to speculate in alts have been removed.

What do you guys think about maybe the removal of capital gains? Do you think that's going to happen maybe in this administration in America? And would that be bullish for Bitcoin? I mean, I could see that unleashing a lot of, you know, selling, you know, the people saying I can now maybe they were holding out for 120, but like with 90K Bitcoin, they could sell and have the same reap the same amount without taxes being involved.

And, you know, or is it long term bullish people scooping up Bitcoin knowing they want to pay taxes in the future on future gains? Personally, I don't I don't think that that'll happen. Obviously, I wish that would happen. That would be incredible. And I think that would be very bullish for Bitcoin if it actually did happen. People short term people might sell, but long term, it would be wise to buy more Bitcoin because you can sell it and not pay taxes on it later after it goes up a lot.

I did have another comment on what Vijay said, and I completely agree pretty much with everything he just said as far as like, if you're going to gamble, there's now better ways to gamble from a risk adjusted basis by buying, you know, exposure kind of more directly to Bitcoin, whether it's

I bid options, MicroStrategy, the MicroStrategy leverage ETFs, whatever else. My only other thought and kind of I'm sad to think this as to why like there could be like some sort of other alt season.

I would never personally participated in it, obviously, but I think that it could happen is I think in the short term, people are still thinking in terms of dollars. And so while, you know, you know, your favorite meme coin or whatever, you know, the chart denominated in Bitcoin looks terrible, right? Like it has one big spike and then it goes down perpetually forever and maybe another smaller spike and it goes back down. I think most people are still, you know, thinking in dollars and whenever they see,

XRP or one of the other millions of coins that you have to pick out perfectly, whenever they see that going up priced in dollars, it kind of becomes like a short term reflexive feedback loop where like, oh my gosh, like this thing went up, other people buy it, keeps going up, eventually it peaks and then crashes as it always does. And you still got to obviously for people that are participating in this, you have to pick the one of million meme coins that is actually going to do it.

it. But I still think people are unfortunately probably going to do it until they, you know, maybe start pricing things in Bitcoin or they just have a longer time horizon when it comes to investing and saving for the future. Jesse, I mean, are the yuppies still alt coining? Are they picking up Bitcoin yet? It's a good point. The yuppies that text me at this point know to only text me about Bitcoin.

Yeah, I think there is some weird staying power to altcoins because it's fueled by human greed and a desire to rectify the mistake of not getting into Bitcoin earlier. And that just underpins this temptation, the siren song of altcoins always. So a few thoughts on altcoins. I think altcoins always evolve to some new narrative that

hasn't been tried yet or hasn't been exhausted yet. And I think there's still room to do that because they'll get creative and who knows. I think that, you know, is alt season coming is always a funny question because altcoiners always say that alt season is still coming.

And I think that even when alt season has happened, people who are in that world don't recognize that it has occurred and it's over now. And I think that might be the case with meme stocks. I think alt season was last year and everybody was all excited for what was going to happen this year. But that might have been it for meme stocks and that whole wave of alt coins. And then final thought, I think that

The Central African Republic just launched their own altcoin. And in Argentina, Malay got involved in one down there or sort of gave it some credibility. It wasn't even launched by them. And I think that nation states will

shit coin. They'll try to control the printing press in this new world in the way that they have become accustomed to. And so I think that is at least one version of alt season that is yet to happen is nation state sanctioned official alt coins and they will all end in disaster. And we'll see what

shape that takes or if it gets nipped in the bud by early failures by the Central African Republic or whoever. But yeah, I think that unfortunately, there's the human psychology that has allowed altcoins to flourish for 10 years persists because 99.9% of the world don't truly understand Bitcoin and

Unfortunately, I think the most common way to get to Bitcoin is the way of pain and greed and trying to make up for your mistake of not buying Bitcoin earlier. And then you end up with less Bitcoin than you would have had if you just, you know, taking your medicine and accepted that Bitcoin is what you should be accumulating starting today.

So yeah, I think there's more of it to come, but it does feel like the magnitude of what's possible with altcoins keeps diminishing each cycle.

You know, Litecoin was supposed to be silver to Bitcoin's gold. That didn't prove out, you know, and then it's, oh, smart contracts that turned into just gambling. Now meme coins, the scope of what the use case they're trying to solve keeps shrinking, which is promising. And so hopefully that continues. Don't you think the next wave could be the tokenization of all assets, equities on Bitcoin?

the blockchain sort of black rock rolling this out. I mean, I think Wall Street could go way further than Silicon Valley ever went with the ICO craze. And I think, you know, with Elon Musk, I mean, this guy confounds me. He's talking about payments on the blockchain. He started x.com 15 years ago, merged with PayPal. He seems to understand money and payments, and yet he's still talking about using a slow database.

to put government payments on. He talks about Dogecoin. And I mean, they even conflated the name, you know, the department with the coin. I still have family friends who were like, shouldn't I invest in crypto? It's the same thing as Bitcoin.

I still think there's a lot of room for that spectacle to go way crazier with the madness of the crowds. And I think the nihilism, if we do have any sort of recessionary pressure and like assets like housing and stocks, and people could rush into maybe crypto as the last bastion of alpha and nihilism and gambling, you know, but I thought Vijay, I mean, I...

Your points earlier, what I thought we wouldn't be where we are now with the potential even for the tokenization of assets on the blockchain and the removal of the gambling with the options and you can bet on Bitcoin. I'd love to see that logic prevail. I don't know if that's in our little circle where we're just so logical and rational. And I don't know how the masses will go if maybe that narrative gets pushed. I wonder what you guys think about

maybe custody of our self custody going forward. You know, I think with the ETFs, I think it's very easy for people to think like, oh, I can have my Bitcoin at the ETF. I don't have to worry about managing it. That's sort of in their mind, inheritance planning. And I don't have to worry about keys. And I think the narrative of a strategic Bitcoin reserve makes this thing seem like maybe too hard to handle or scary. You know, you need institutional grade custody.

you know, do you see still a big push going forward for self-custody? Yeah, I think we all feel strongly on that. I think that self-custody is essential and should be part of what we all preach. I think where I differ from some Bitcoiners is I think that

some of the institutional custody solutions are also essential for helping Bitcoin make it further into the bell curve of technology adopters into the mainstream.

As a co-founder of OnRamp, I'm very bullish on multi-institution custody, which is a variation of multi-sig custody where the end user doesn't have to hold any of the keys. Instead, three separate institutions each hold one of the three keys on behalf of the end user and are only able to sign at the direction of the end user. And I think that's an amazing thing.

new format of Bitcoin custody that keeps the power in the end user's hands while taking some of the technical and security responsibility away from the end user. And so I'm excited for that model to hopefully become a bigger part of how people choose

to distribute their custody. And I think innovations like that are still possible into the future for Bitcoin self-custody and also for institutional custody. I think end users pushing for better forms of custody to be used by the institutions like

Right now, 90% of ETF funds are held at Coinbase. And it's a total black box how they're doing custody. I'm sure it's fantastic custody and they're untarnished in their track record, but it is a black box and it is a bit of a honeypot. And so informing end users about the importance of custody and trying to decentralize custody is, I think, a goal worth striving for.

Yeah, I'm personally I'm very optimistic for the future of collaborative custody, right? Like on ramp, on chain, other companies that are doing this. I think one, it's great for Bitcoin because... Hey, Bitcoiners, invest in Bitcoin with confidence. Why do I recommend River? River is the best place to build your Bitcoin wealth and they offer zero fee on recurring buys.

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As Jesse pointed out, it's not ideal that there's millions of Bitcoins in Coinbase's black box of who knows where it is, if they have it, whatever. And so it's important that you have multiple key agents out there. And obviously, individuals could self-custody or do some form of collaborative custody. And I think that that's great for Bitcoin. And just...

A week or so ago, we learned what happens if you have this centralized honeypot of Bitcoin or Ethereum in the case of Bybit a couple weeks ago, where it's like, if you have this honeypot, you're going to be an obvious target for attackers to go out there and take those coins and steal it.

and so it's like coinbase is an obvious honeypot obviously i hope nothing happens to coinbase but you know anything could happen i'm sure they're being targeted by you know sophisticated hacks and phishing attempts and whatever else but i think like you know starting out most people don't think about custody they just see the number going up and they're like i need to get some exposure to this

And then they buy some and then the number actually does go up over a certain amount of time. And then they start to think like, wait a second, like, am I holding this the correct way? Like this is actually a pretty sizable portion of my personal wealth or corporate wealth or government wealth. You know, maybe there's a better way to hold this that I can have sovereign control or the very least, I don't have a single point of failure with one key agent.

And so, yeah, I mean, I think it's a definitely a learning process, as we talked about with Bitcoin, right? Like 99.99% of the world has really no idea what this thing actually is and how it works.

But people eventually, you know, cave in, buy some, the number goes up, and then they actually decide to learn more and they try to, you know, make sure that they're not going to lose the coins that they hold. And I think collaborative custody is like the obvious solution for so many individuals, businesses, corporations, and whatever else. Guys, this has been awesome. My final question to you guys is,

Do you guys foresee a scenario where we have a true, maybe bull market in a great economy, low interest rates, whatever the scenario is, and we really climb high? Let's say we hit some sort of crazy number, whatever that number is, but I'll make one up, 700,000 or something, followed by a vicious drawdown with like an 18 to 24 month sort of bear market that we've kind of seen in the past.

Or are we kind of, maybe to Vijay's point, something very different going forward? Do you guys see a vicious drawdown at the end of a big market where maybe you go up to $700,000, you come right back down to $75K, $78K. So from here, it's not a big change if you hold and huddle through that whole thing. Do you guys see that sort of scenario as having a high probability? I think there's less likelihood of it. And I think...

the institutionalization of Bitcoin is going to play a part. I'm not going to say that it's impossible. It is certainly possible that retail gets FOMO at some point and causes a parabolic move and then we have a kind of crash there.

But one of the things that helps us is that you have funds now targeting an allocation to Bitcoin. These kind of retirement funds managed by BlackRock and Fidelity where their target allocation is right now it's starting small, but you can see it growing. But let's say the target allocation is 5%. As the price goes up,

and their allocation in their fund grows from 5% to say 7.5% or 10%, they have this tendency to sell down to meet their target allocation. And the same goes in the other direction. As Bitcoin drops, they will tend to buy Bitcoin. And so this has a dampening effect. The other dampening effect is that the existence of the options market, which really sort of puts constraints on how quickly Bitcoin can go up or down because you have

a lot of liquidity in the options market holding kind of Bitcoin in place. That's sort of how the options market works. So I think the market has matured significantly. It's certainly possible that we could have a significant drawdown, but I think it's much less likely than it was in 2017, say, where it was almost purely a retail phenomenon. The market was driven almost purely by retail speculation.

Yeah, for me, I remember last cycle, I was like, you know, there's no way Bitcoin is going to fall 80% again. And then it basically fell 80% again. And I was like, dang, got that one wrong. But I agree exactly with what Vijay just said. I mean, there are like the institutions out there that target a specific percentage, which means they're effectively going to be selling the top and buying the bottom, which will help out with that. Yeah.

I'm reluctant to say that if we go to $700,000 or $1 million, will Bitcoin fall 80% if we reach those levels this year or next year? I feel like maybe it will fall 70% or something like that. That would not surprise me whatsoever. So I'm reluctant to say that it won't happen again just because I said it wouldn't happen again last time and I was very wrong.

But, you know, who knows? I do think it's kind of a function of like how high it actually goes and how fast it goes there. Right. Like if if it's a slow grind higher to 700000 over the next 18, 24 months, then maybe there's a less likely chance that it falls 70 to 80 percent. If, you know, we go flat for a little bit and then in the next couple of quarters, we just go in an absolute tear because the United States decides to do a strategic reserve to some extent.

then, and then there's some sort of, uh, you know, negative or, you know,

the hype kind of goes away right after that, then maybe it does fall briefly. You know, it's going to, it's, it's hard to tell what I try to time it just because I might expect, you know, the 70% drawdown. No, because, you know, it could just keep going straight up, you know, who knows? So I'm going to be excited to, to see how it plays out, but I do think it's possible again. Yeah. Yeah. If we went up to like 700 K, that'd be like a 40 X from the bottom.

And then I think you would see that like a 90% drawdown or something, just, just the function of how, how much it goes up in the bull market. And, and yeah, my base case is just the continuation of the trend. We've seen each major bull bear market of reducing amplitude of drawdown over time. So I forget the numbers. There's like 91%, the first major bear market, then like 85%. The most recent was 75 or so. So,

So I guess my base case is 70% drawdown and that sort of continuing over time as Bitcoin continues to mature as an asset class. But it's possible that, you know, this time it's 60% and, you know, and it's matured a lot more than we realize. I mean, 70% is an order of magnitude lighter than 80 and 90 even.

And I can't imagine a scenario where we rip that hard because of positive things like a strategic Bitcoin reserve, and then that drifts away in terms of institutional adopting. It's going to be fascinating to see. I'm going to read a tweet from each of you, and then I'll give you guys a chance to roll out some parting words. Joe Burnett wrote, as long as the dollar is still the world reserve currency, Bitcoin will remain highly correlated to U.S. equities, especially to the downside. Few understand this. I think it's a really interesting point you make there, Joe.

Cretias, aka Jesse Myers, wrote, what's the downside risk from here? We visit heavy support at 70K prior cycle peaks eight months in 2024. Upside is still 200K. Better to buy us towards bull tart with Bitcoin.

And Vijay went on to write, he quoted from one of his favorite books, "It was never my thinking that made the big money for me. It was always my sitting. Timeless wisdom from the greatest book on stock trading ever written. Reminiscence of a stock operator." I have that in my other room, I just haven't cracked it open yet. And another one from Vijay, "The media is hyperventilating about Bitcoin's correction, and many are suggesting the top may be in. It is not. This correction is fairly run-of-the-mill when you consider the last two years."

Well, I appreciate the therapy boys. Uh, like any other therapy session, we can't do above 45, 50 minutes here. You got to keep it to a tight hour. Uh, this has been so great guys. I'll leave it to you for any parting words and let people know where they can find you and your work. Maybe we'll start with Vijay. I think we're still at the early stages of this bull market. Hell yeah. Right on. That's awesome. Yeah, I sure hope so. Um, great idea, Cedric therapy, uh, keep it, keep it quick and, uh,

And I don't know, I really enjoyed Joe and Vijay's perspective of sort of triangulate with my own, like, where are we right now? And I think Vijay is right that the recent downtrend is just the latest toll you have to pay when you're sitting on your hands making the real money. Joe?

Yeah, I agree with Vijay. I'm holding and excited to see what the rest of the year brings. So thanks for having us on, Cedric. Thank you, fellas. It's been so dope. Thank you so much.

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and let's keep growing this community together. Stay curious, keep stacking, and I'll catch you in the next one.