Bitcoin Alpha E002: Bitcoin on the Ballot
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The following is for informational and entertainment purposes only and should not be construed as financial advice. This discussion is a presentation by ten thirty one, the leading institutional investor focused on the bitcoin ecosystem. Ten thirty one has over ten years of experience in bitcoin and has deployed nearly one hundred fifty million dollars into the leading opportunities in the space.

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This is the first time I do for orbital recap. Typically that does IT and I didn't tag any of us in the tweet from the t ftc. Accounts are just checking yp or life.

not on twitter. You can tag me .

then to tag you gentlemen, we said last week, we're probably going to do this every two weeks, so we don't know exactly what's going to happen. And here we are a week later. Talk about a very important topic.

Bitcoin is on the ballot this year, monumental us. Presidential election year. Our lord twenty twenty four, Donald trump seems to have won in a pretty impressive fashion.

Took the White house, the republicans took the the house of representatives in the senate. A red wave has washed over the united states in a team like the orange wave is quickly following IT and surfing. We call a set the first ways red and looks like the second wave could be orange. John, you put together and nice .

list for .

us to go through. I guess let's let's start with the fact that bitcoin has hit fresh, new all time highs. The united of the election as IT was becoming clear that Donald trump would be back in the White house, what signal is .

the sending? By the way, you also said last time, we have to get past the first one percent. If we do the second one, then we've got a much higher degree of success that we continue the podcast. So I give this is the the second wave of our podcast, and that's probably a good.

good sign to IT is IT is yeah A A lot of blush .

signals this week for both this forecast and and the point yeah look, I think it's you know to give some perspective and make sure we mean perspective like we shouldn't understand how rationally different the set up here is now versus and it's just about two two years ago on the door that F, T X blew up and um you know regulators were seizing on that and pouncing on that to circle even even bitcoin, which fundamental had nothing to do with any of the kind of gypo griffe that we saw in the last cycle.

Um you had various pundits kind of dancing on bitcoins grave once again you know with we got our twenty thousand orbital ary about how bitcoin s finally done dead buried um and I don't know if if even the most bullish among us would have said that within two years um big going will be making new all time hires on the back of the biggest etf inflows, the biggest B F E F launches the world has ever seen and the election of a president who uh has spent the last six months kind of doing everything he can to actively court the bitcoin food. Um it's a it's been a truly wild twenty four months and you know think the market is signal where an open water bitcoin territory now and increasingly um investors are looking at I think that the bitcoin agenda, the turn put out there and starting to maybe try to to Price some of that in um and will will get into IT here. But I think it's highly, highly likely that you know not going to make short term Price calls. Bitcoin takes the path of max pain. So IT always IT always surprise you one way another um but I think it's very likely that if anything like the agenda that trumpets proposed fully plays out um then we are very very, very far from uh everything being Priced in that you know the run here is is just starting .

yeah and I think before we jump into everything that trump has on the agenda, let's look at some market reactions, particularly etf flows yesterday hit a historic level on the sure. Who has the chart, grant baby, if you want to pull that up. But I believe yesterday alone, IT had one point one billion dollars and influence .

was one point four.

One point four, excuse me, for being one .

point one was either. And I think one point four for the total complex OK.

and that is by far the largest inflow day that we've had since launched the etf earlier this year. Got the chart here. And do you think this demand will persist?

Well, yeah, I mean, I heard some interesting stats and this this date is pretty good. If you go to this website, coin glass, I think IT might be aggregating worldwide. Tf, not just uc tf, but some of the interesting data points i've heard around the etf flows.

I think this is a couple weeks dated now, but I think in the us, the bitcoin etf to already brought in something like twenty billion or twenty one billion dollars this year, year to date, which has been by far the most successful etf launches in history. What I heard was the prior record in terms of etf flows in the first year was the as that cues which was back in the dark m bubbles, which brought in something like five billion dollars in first year. But what most people I think don't appreciate is that um you know this is just the first year and if history is any guide, um in terms of prior etf watches, the the inflows just keep getting bigger after your one, your two should be bigger.

Your three should be bigger than that with the gold. E T, F. What we heard is that the inflows didn't stop increasing until after year eight.

So this could be a long persistent tae in that we have that we see in terms of the flows coming into the bitcoin etf. I think the the movement post election, um you know you saw rapid. I think there are some people tweet about how much inflow came in just in the first hour. So this is probably .

a sign .

that there's A A way of a tsunami of capital is going to be coming into these vehicles.

Shouldn't shouldn't a lost people either, grant you mention GLD, you know um because it's often called digital gold to goal in in many ways. And the GLD etf was incredibly popular, incredibly successful over its now close to twenty year history. And the bitcoin etf complex in in ten months has now surpassed gl A U M. Just to give people if if people hadn't heard that or kind of look at the scale of a sense of the the types of flows that we're talking about in less than a year of these things belong on the market. So a pretty clear signal from the market that the the demand is there strong, getting stronger.

And I think of an element it's crazy to is there are a ton of no flush errors out there are as fund managers, wealth managers um at large banks and um as a management firms that either don't have the ability to even allocate into this yet or to actively going to pitch them to clients and source of them to clients. And so that all flow through over the next two knows how long year, let's say maybe longer. But at the point is just we've seen these crazy flows without really kind of an extreme um marketing push by kind of the on the ground sales force of a lot of huge assets manager. So that's that's incredible. Impressed as .

well that and without a catalyst, a clear signal that bitcoin is on the ballot. IT is something that the incoming administration wants to embrace and and Foster as we move forward in time. And john, you took some time to write a newsletter er little brief on the potential impacts of this election, particularly on bitcoin, and laid out exactly how this changes the tide of how the coin is viewed in the eyes of the federal government. So we just walk for you. Would you put together yesterday and publish this morning in terms of the immediate impacts that, that this incoming administration could have on the market?

Yeah for sure. Um i'll start the disclaimer that you know what we put out is not necessarily exhaustive there. They're probably more downs am impacts to to unpack. Um but just for the sake of kind of summarizing IT for any capital alata, who's of looking at the face thing of the coin and curious how might play through to both bitcoin itself and kind of the big coin ecosystem and and the company's building technology on and around the coin, wanted to give you going to have a quick summary. What we see and what we think um you know walk to reach these points individually.

But I at a high level lah, I think the message people should take away um from the last couple days is that the assuming that you uh trump is inaugurated and assuming that um the the agenda that he put out there approximately maps to reality. The regulation and political left tail risk associated with allocating the bitcoin has declined dramatically. Um you never say never there are always there always be risks with with any asset of some sort of kind of railway ory had wind by um when we've talked to allocators over the past few years of standing up ten thirty one, the question of kind of the real worry environment rails, worry framework and banking access and the department of justice, how they view different companies in different technologies in the space, like that's all been top of mind for lot of allocations. And understandably so people just have this kind of um have had this view that there's a kind of black box with that you can really underwrite associated with what and administration, particularly an arterial administration like the administration of the last four years, uh administration like that, what they what they might do um at the top of a pin to bitcoin and and companies building on IT um we've always made the argument that but ultimately doesn't care and and IT ultimately doesn't kind of matter if there are little b to restriction orbital GTA regardless of what any government does, does the becot or becot holders but certainly IT IT makes our lives easier and makes the lives of all americans easier if um access to bitcoin is not competed and I think that the risk of that happening um has players said just declined dramatically and totally changes the way that um investors and especially institutional allocators need to be kind of underwriting their their thesis on the risk reward set up around bitcoin.

Yeah, no doubt. And we were over the last couple years, I think we felt pretty good anyway with the with the clarity specifically around how bitcoin was treated versus all the other crypto stuff. But nonetheless, IT still was one of the biggest and certain days.

And um even though we felt good about that, there were some, some worth out there. I would say it's still uncertain which direction is going to go. There's still as some risk on on what happens. But I think that like that significantly being um diminished at this point. We just given the postings that we've seen, we'll see if some of this stuff plays out.

And hopefully, if if you say there were certainly of some pockets of uh, resistance, some real problem areas such as you know the banking access, the john mention, there's some other other areas that some of the different agencies through that our agencies are very focused on. Maybe some of that will alleviate be alleviated going forward. But i'd say to set up certainly looks a lot Better today than I did last week and last year. So that's encouraging.

Yeah, I think you got we've been saying for the whole year like um in addition to our our general view that we've had for a long time that um the the railway ory treatment of bitcoin in the us.

Has has been very clear for a long time um earlier this year with the launch of the etf by institutions as kind of um large and venerated and respected as as black rock fidelity at such a um that I think was A A clear kind of early signal of where the wind was blowing as IT relates to kind of how the railways area landscape was going to continue to shape up. Um generally asset managers like that arent aren't launching massive etf for any kind of asset or asset class that actually has got a meaningful railway risk sociate with IT. Uh but I think you know the the progression for the last over the past year and inserting into the election just firmly validates said even further.

Um but grant, you actually bring your initial point that I before we dive deeply into the different kind of financial impacts, love to going to get your thoughts on both you, marty, um to take the weve. We've been uh very, very bullish so far on the spot cast to look at the bear side to the kind of handy capper or bullishness. Ss, how likely do we think that the the bull cases here, we're certainly seen the phrase rugged again in bitcoin is is popular for a reason. We've certainly seen our fair share of rug polls um in in different ways. Um so know how likely is IT that we uh you think that the from administration ultimately follows through on a lot of these proposals that they put out there.

Well, I I don't even know how probability wait that. I mean, I think in the bit ecosystem, what you find is that a lot of people, the builders, the founders, they tend to be they tend to think very adversaries. Anyway, we have had to do that based off of um you know just survival.

Um so building in redundancy, building in resiliency, just in case just in case for banking access gets uh taken away. Uh just in case um you know you have um you know one of uh rest pop up that you weren't expecting uh so I don't know. I mean IT seems like IT would be a pretty significant one eighty for um in the groups in washington to uh go a different direction than what they're been signaling. I'm cautiously optimistic, I guess, but i'll believe that when I see IT.

i'm going to take the other side of that, which is the super cycle is here, gentleman, we have to prepare and what we have to look at is who's coming in and replacing the by administration staff, particularly in important departments. And so well, when you pull up the polar market, the holy market odds for treasury, the hume secretary of the treasury, right now, scot percent is well above fifty percent, fifty five percent.

And he has historically been very positive about big coin sing to see the police market odds here between him, john paul son, in a couple others. He seems to be pulling away in the ads. And as we know on election night, the Polly market signal did seem to be pretty high.

And so we're extract late that forward. IT looks like we could get a public coin treasury secretary, which would be massive. This doesn't happen before looking for to pull up to ours tweet.

We can we can see what scope set has said about bitcoin historically. In the tour says here's what the likely replacement of genet yelling as treasury secretary said about piccolos aliza. This is over year ago and things have obviously uh, progressed pretty well in the institutional side for bitcoin since then.

I think IT fits very well with the republican parties. Eat those of freedom. Crypto is about freedom. Crypto economies here to stay. I think everything is on the table with bitcoin.

One of the most exciting things about bitcoin is that IT brings in Young people and encourages a market culture, a culture where people believe that markets are working for them. That's the center piece of capitalism. And so I think those are very positive comments.

And from this one comment last july, seems like Scott percent understands the refunded ity of bitcoin. The opportunity provides the american economy, particularly Young people in the american economy, to really embrace the ideals of free market capitalism. Around bitcoin. He's sending a signal that he believes bitcoin is a great beef in a free market capitalism. And what would think if he's talking like that last year, he probably holds the same view, wants to Foster that.

And then i'm not sure if you guys when watching the two way streams with mark helper in the wasn't a dream logans run some mayor um but loan we can pull this video up and I just want to give before we play the video if you guys have not been watching the live streams at mark culprit and his team have been doing at two way. IT has been incredible, incredibly new format, particularly leading up to election discussion about the election, aging the populist to get many views. And i've been watching for last couple months and that has been the most high signal cover coverage of the election.

And um I think they were making a pretty clear that IT looked like trump was going to win in the lead up. And mark seems to be pretty well connected in terms of what's going on with the incoming administration. Here's what he said earlier this morning in regards to a potential secretary of state.

Okay, technical disputes I will periphrase with mark from was say in this and he's saying that he's getting word on the ground that is likely that center hagi from tennessee will be secretary state and as we the three of us know intimately, having met with senator hagi at between park many times, he is very pro bitcoin. He and not only ezy probe's in, he seems to intuitive ly understand the power of bitcoin because he seen that up close and personal in the state of tennessee. And so as two tennessee natus on the show here, what your thoughts about potential?

I mean it's it's just it's great to see obviously and I think IT also speaks to um the power in one way of juristic s barbital huge in in the us. That we've been talking about for several years over the last over the last four years or so during the country administration um certain states and really as last ten years certain states have been much more welcoming than others to becomin miners becomin companies because in death um and we've certainly seen both texas and tennessee take the lead on that front where other states like in new york were much less welcoming and kind of actually trying to kick a lot of they can work out of the state.

So um I think this is maybe just kind of the next step of that, right? Like you a deaths and founders and capital and minors is set to to go where they're treat at the best that have to be texas antenna y and so you start building relationships um in those jurisdictions and then that compounds into um the politicians there getting to know you Better, getting to understand the between the system Better. And so when they um you know gain additional influence as as they can build their careers, they've got kind of a deeply worded instinct for what bitcoin is, how IT works, why it's important um why why the ecosystem is good for the U S.

And they can kind of Carry that forward. So um it's kind of maybe the second phase of the the importance in power of your six NBA rage. Um and I know a ton of companies I know um matter matter dell, one of our partners, and ride a bitcoin park of an a tonto work over last few years to make sure that local politicians and government officials and intended sa understood backwards and um a positive kind of view out that relationship towards and you know you're just seeing the this is if if this ends up happening. Good example of just the importance of prefer work of kind of having putting the net work at a local level in jurisdictions that can want to work with you and and want to be hospital in bitcoin. So I think it's a great validation of all that.

Yeah, I mean, I don't know if if if that i'll turn out to be true or not, but I certainly have spent some time with sinter hagi, a very optimistic about um his leadership capabilities in whatever role he's end of here we SAT in on A A really interesting discussion during the week of the bitcoin conference um that he moderated with government leaf tennesee and jeff lash, head of the tennessee valley authority.

And the three of them they they very much understand that coin. Uh, and we're talking a lot about the positive impact that mining in the state of tennessee can have on the energy infrastructure and resiliency. So whether or not he ends up position in washington, verses stays in tennessee.

I think you know having people like that who are open minded and understand bitcoin in a way that most still do not you know i'm are domestic about that and by the way, mari mean um I do think you all the other things that you mentioned, uh the stars are lying in what seemed to be a positive way. But I wouldn't necessarily say that that means that were at the beginning of super cycle. I tend to .

think let's debate this.

Let's do I mean, I think that um there when you say super cycle, I think what you imply is that there's just escape velocity ity of bitcoin and that we don't end up having you these um very cyclical swings and volatility and you know eight percent all out is set A. I don't think that um we're going to have that type of evolution in this neck cycle.

I think that Price discovery is something that comes with you know new people coming into the market trying to understand IT, trying to understand book coin. It's a very complex thing. And with Price discovery and you know new people entering the market, I think is inevitably IT will lead to the same type of dynamic that we've seen in the past. And I think it's just human nature that you find a period of access followed by periods of significant decline as those access in the market access is corrected.

I can see that, but I think, okay. So here's my pet for when I say super cycle is a bit of an outlandish term coined by suz oo three hours capital last cycle and IT turned out not to be a super cycle last cycle. And suzie was at the center of the shit show that LED to the edge collapse of tera celsius, blocky f tx.

Most notably, however, having been in this for eleven years and to your point about the market needing to learn about big coin, we as so we'll start there for sixteen years. And sixteen years from the White paper being published a couple weeks ago will be sixteen years into the network being alive on january third, twenty twenty five. And when you think about IT, like big coin has brand awareness, obviously, he has brand awareness.

There's a bitcoin act that could hit the floor soon to make bitcoin strategic treasury reserve the united states. And so just from like a pure marketing perspective, you have to think of the idea of like converting new users. And that comes around touch points, that how many touch points as a take with a particular product before the user converts and actually uses that product.

I think over sixteen years, there are there is a critical massive people that have had multiple touch points with big coin and do have the potential to convert into new longer m holders this particular cycle. And I think whether we like IT or not, the legitimacy that comes with the stamp of approval from the U. S.

Federal government will sort of initiate people's monkey brains with the area. But coins good now like this is something I should hold too. I think this a very multivariate situation. So ah the brand awareness, the multiple touch points the legion acy handed the big point by the the west government if um they they move forward the campaign promises of the trump administration ah too.

We have a completely different market dynamic in terms of the type of bitcoin holder and the drivers of demand this cycle where you have microchip out there and has one percent of the total supply. And has publicly stated that they intend on buying forty two billion dollars were the big coin over the next five years in their long term term. How the sailor seems pretty convicted when IT comes to holding bitcoin for the long term, and that has played out well for microscope.

So that is an example of a demand driver that's going to pull the significant amount already one percent of the total supply of market and hold IT long term. Uh E T S, another different holder. Um maybe not as long term as microstrip gy, the individuals holding the etf.

But I think it's important to highlight of the ets have created a new avenue that that runs into a dead end that has never existed in the history a of bakin markets and the fact that the etf seem to be the 呃 the avenue that most people are taking into bitcoin mykle was very important because historically， what we've seen, people buy the coin, particularly retail investors will buy bitcoin on an exchange and then they'll hear the sound calls of alt coins. It'll convert their bitcoin and all coins and speculate on other coins. And so that was an avenue where you'd buy bit coin that was very easy to convert that bitcoin to an alternative cyp du currency.

And I think that um sort of tapered holding demand for big coin in a way with the etf that does not exist, you don't buy I bit and then convert your ebit to some chick when etf that simply not how it's going to work. So I think that dead and really creates a blockage of a valve that is existed historically, which would value value to eat out of bitcoin into alternative ript o currencies. Uh and then we see IT at ten thirty one two.

I've been beating the drum on podcast that i've been going on over last few weeks. I think this is the cycle. The between has established itself from a liquidity profile um as a trillion dollar asset like the the mean.

That has been talked about. And a lot of our portfolio companies have been building around for many years of bitcoin a super clatter. Or I think this is the cycle where that really begins to shine. And you see bitcoin being blended with traditional credit products.

I mean, historically, on chain down the whole, we've got hot or hot to developed in the portfolio of they'd an incredible job of building a rails and text tax that make IT easy to use bakwin clatter al, to receive the fiat loans. And I think we begin iterating on that very simple product and get into more complex credit structures, which demand that you pull bitcoin off the market foreign extend a period time longer and durability. And then lastly, you have if again, promises made, promises not delivered yet because they're not the weight hospital.

If they aren't delivered, the U. S. Government sending the signal out that we are building a strategic bitcoin reserve. We want to get a million coins over the next five years.

That sends a game, the radical signal to the market, that creates a mad dash on the nation state level and no turning back. And that this is something that big winners talked about for sixteen years. And that seems like IT may finally be happening.

And once you get that type of buyer in the market, that is another buyer, the U. S. Government, explicit and the bills says we're going to hold this bitcoin for twenty years. And so when you talk about that, the main drivers going into this cycle that are simply buying bitcoin in bulk and taking IT off the market for extended periods of time, I think that is a dynamic that is never existed ebi queen's life cycle and is only going to grow from here, which would be persistent demand, taking supply of the market, which, since there's only twenty one million big coin, means one thing the Price is going to continue to go up.

That's the but my view on the super cycle thesis is it's probably a super cycle because we just passed all time high as and now ever want to saying it's a super cycle or not everyone, but that's even a mean like you know a thousand box passed all time. I has makes me feel like, okay, it's to sorry to consensus. We were too excited.

But to me, the are kind of comes down to the ater pounded in the room is do you actually have meaningful nation status option? does? Does trump to know what's been suggested? Does, uh, center allah is bill get enacted? Does the U S.

Actually kind of move forward um with building of the conventional reserve or even kind of continue to hint that they will do that? Because to your point, even putting the bad single out there, making the indication that we're strong considering this immediately kind of churches, the red alert that if if you're at all interested in acquiring bakin, they're only twenty one million out there. That's approval, fix supply.

And you know the biggest government in the world with infinite budget and essentially no Price sensitivity is just going to be like smash buying every day for the next five years. Um even just the thought of that could serious ly happen I think is is potentially enough to to read the ball rolling on some some meaningful the nation state acquisition and buying. And so that to me is that's where you get your multiple orders of magazine of and criminal persistent demand that would kind of damp in typical like cycle dynamics potentially.

Definitely not calling for a super legal, but um I don't think anyone has really rocked yet. Even even us here on on this call like just how crazy and insane IT is that the U. S. Government might be like a few months away from actively building a bitcoin states's reserve um that is um beyond the pale of anything we've ever seen in in prior cycles.

So I think it's certainly meaningful and would certainly be a massive demands speed for bitcoin and consequently for all the companies that, that we're investing in um who benefit from the growth of big adoption and provide the tools to make that happen. An extended to tilly in different ways like you like you're pointing out with the collateral peace, marty. So super cycle, I don't know, but I think it's very likely up from here for at least another twelve.

twenty four months. Yeah, I think I I hear all those posts. I definitely really with with them in in many different ways. I think that when you have increased adobe, like naturally, the volatility will go down over time.

We're just still so early that I don't think you even if we have a ten x in um you know new entrance, new new people, institutions, governments entering the bitcoin market, we're still going to be so low in terms of adoption and penetration that I find IT hard to believe that will have enough to damp and volatility so significantly. You know the the unique thing about bitcoin is this twenty four seven global liquid market unlike anything else in the world. And IT responds to exogenous factors immediately in a way that you can't get with markets are on the open, you know, from nine thirty to four thirty or whatever.

And I just think that your back swan type of events that you don't like, I don't think those are going to go away. I mean, if you think about the last two the last two cycles that we saw, I mean early tony tony with cover right we saw a bitcoin go down fifty percent and twenty four hours around the F, T, X blow up um and the crypto access you sought significant draw down. What could be the next event I don't really know.

You can sort of tied into your peace done. One of the things i'm really interested to see over time with the growth of the ets is how the custody dynamic plays out. You know right now, like most of the t after sitting, the assets are sitting with coin base.

I know there is a movement of a lot of banks that would love to custody bitcoin because of sab one twenty one. It's effectively keeping a lot of these groups on the sidelines. You you touched on this in your peace.

That could be one dynamic with the you the the you know the new evolution that we have now with the with the election, that there could be a tail in behind positive changes there with E, F providers. You know they will look to, uh, custody the bitcoin in a place that they think is secure. I think just because a bank decides they want a custody backup in doesn't necessarily mean that they can build IT themselves.

They can build IT safely. Hopefully the ones that do you decide to go and build IT themselves that they they are able to build infrastructure that can remain secure. But I think of A A black one risk there. If someone starts cutting, said theyve never done before and there's a hack, there's some sort of bug in their infrastructure and a bunch of bit going gets last. I mean that a black one event that could cause significant disruption space. But I also think to tie back to like bullish on the infrastructure and the companies that are already building in the space as there's evolution and potentially in the sab one to twenty one stuff, that a lot of these companies are going to potentially become targets for some of financial players that decide the'd like to buy that capability rather than build IT themselves. So a lot there to unpack, but curious how you guys react to that.

Yeah, I mean, there are a lot of companies out there. Well, I actually I should say not not a lot there. There are a few really strong companies out there. Many witch were invested in that. F R T built great text tax, large sticky customer relationships, brands trust at seta um and great said as someone of our chats early the day. But to the extent that this materializes and that no regulations and kind of regulators, that treasury fd, I C O, C C C C cetera move in the way that you would kind of expect them to move.

Um if there trump appointments um and you do see uh a appeal of sad once only one which was repealed by congress early this year until that was vetoed ed by a president biden personally know present elect trump t would have not behave the same way um if all of that happens, you know you said earlier today, there are a lot more potential acquirer than there are targets. Um and so I think that there will be a lot of interest in the the best companies in the space for um existing and legacy strategic s across a lot of verticals that may feel that they have more kind of related reflects to to move into um the space with with a little more aggressiveness and emergency. Um so I do think you know um we we ve always in bullish on our economies were invested in as potential to you take out at some point that may may not be the way that any different file wants to go.

They want to continue to build themselves. They want to move to our IPO or or stay private and just dramatic know a highly cash allowing business there, all options on the table. But I would not be surprised all to see a lot more appetite from strategic, especially in kind of these first concentrate circles that most clearly touch bitcoins of financial services lending as a managment payments, whatever IT may be.

Um and in those guys, you, I think, will look at the landscape, look at where bitcoins going, particularly if a strategic reserves being built, if there's a nations state kind of game three playing out, if adoptions really growing up on a hartist basis, there's going to be just that much more urgently to move if if you're strategic and a faster way to deal with that is gonna to buy, not build. And there are not that many um industry leading companies in bit point to go by. So um yeah bullish bitcoin and very bullsh our companies based on all this as well.

Yeah I think it's important to this is having been through many of these cycles, the the foo really set when the Price starts running. So we're sitting here now what seventy six thousand and four fifteen dollars according to my block lock, let's say we get to six figures, we get two hundred thousand. And I think that is a psychological level.

Once one hundred thousand is cross, people go shit. This is a real asset. We need to make decisions.

And finally, enough, I think trump, i'll think that way too, like we get to one hundred thousand around an augury day he sees the Price running is like what are we doing? We need to get the strategic reserve bill past. We need to start accumulating the care way from wait for us.

And alternatively, similarly, you're going to see this in the income and financial sector where people like we need to strategy, the Prices is running, yet people like coward let nick out there beating the drum like this things here to say it's going to be massive. We are investing heavily in IT. And as we know.

Um there is a big hermens ity on wall street. If some people are doing something, having great success with the others for they get right, we need to get in. And so I got lunch with rain gentry from lightning labs yesterday. We were just talking about this and that there could be a point next year, maybe by the end of this year where we go over six, six years and the formal really begin to set in and these companies need to develop a strategy. It's onna take time.

So I I think that we will be an interesting to see a thing to see how plays out is what is the timing of the strategic acquisitions that the incoming financial services firms and banks, how how fast can they move in, which ones are positioned and have board set up in a way that they can be faster than others in this mash to set up the infrastructure. And I think again, important to point out the differences of this cycle to last cycle seems like bitcoin is the focus. There is obviously crypt to talk and um so catering to the broader cyp du industry.

But I think anybody that's extremely serious about this, at least that we've talked to, has noticed the pickin as the signals what you should be building your infrastructure around repair this to the the blockchain craze, the ico craze. Twenty seventeen is completely different that I don't think it's going to be companies putting blogg chain in their name in expecting their stock. They are around and think people again going to time brand awareness, touch points, the market getting Better information this cycle. I think it's oh, we need big coin infrastructure because this is the asset that a lot of this incoming wealth is gonna get sucked into um in with that mining. Throw through out to youtube, like for what we're doing at ten thirty one talking to a lot of these institutional investors, what are being downend pensions as we know they move slow history ally like White like how would you frame this set up and how they should be thinking and begin preparing for this from an allocation perspective to get exposure to bit in not only bit in the asset going up, but the industry matching and accruing a tone of value as well?

Yeah, I mean, one I I guess I would say in response to that, and I think if if nothing else like this is the thing that the point that I would encourage people the most kind of take away from the piece I won the discussion is for a long time allocators that we've talked to have had the sense of career risk associated with advocating for kind of big coin exposure or exposure to the coin technology infrastructure at such because, you know, it's very new.

You see scary blowups like the last couple cycles. Um the brand often gets kind of armani tainted by things like ft ex or kind of the crypt o craze uh know the ico craze of twenty seventeen. Um it's new.

It's difficile to rock. And you you need to do a lot of work internally to to get people out to the finish line. And if IT doesn't work out or if you advocate for IT at the wrong time with the cycle and you make an allocation and you know get here with fifty percent, eighty percent drawdown.

And there are all these negative headlines in the news. Well, that looks that looks bad. It's how you to deal and to take your investment committee and going to deal with that heat. And so there's just this kind of even if you are sympathetic to of the arguments that the coin that to make um IT can be hard to get over that hump of career risk um which which is understandable and social setting.

I think if we are moving to a world where, as we mentioned earlier, the kind of left tail risk of like a catastrophic regular ory outcome is taking off table, and the federal government um is actively encouraging and explosively protecting the kinds of custody bitcoin mining um bitcoin technology development kind of rid large um so that kind of the worst outcome is off the table. You've got Better cabinet members and then flier kind of administrative bodies that are not going to the bank bitcoin companies or sue bitcoin companies for for different things that are kind of hard to predict. Um beforehand you've got that kind of rise piece has has found, by the way, side on the flip side, you've potentially got uh a government that is not only kind of a neutral or bitcoin and not going to heard IT, but actively trying to to get you know five past percent of the supply and kind of out there with a passive bit every day to kind of get their own.

So so now the the risk is chopped off on the left tail and the right tail outcome maybe starts to look a lot more likely and fatter, right? And so the expected return profile of that actually gets dally Better. And the interesting thing to me is like the career risk gets foot on its head.

It's not career risk from allocating to bitcoin and IT doesn't work out its career risk from missing out on bitcoin at levels that we may be likely to, to never see again. If again, if all of this plays out like we're kind of proposing with with trust agenda. So um that's one of the things that I would just encourage anyone in institutional seat or even an individual investor just kind of wearing the the risk reward and how IT affects either your portfolio or kind of career trajectory.

Um we could quickly be in a world where the career risk sits not with um embracing bitcoin and and promoting IT but rather ignoring IT and waiting too long to develop a bitcoin strategy. Um if you if you're waiting until bitcoin is, is you absolutely ripping and the U. S. Government has already started to build the big coin stack in arnest, and other nations are kind of aggressively fighting to do the same. And you haven't been started to kind of build a big coin strategy that that too late and that's onna catch a lot of people off guard, unfortunately and be a expressed a lot of people um but all is just to say, if this week IT truly portends how things are actually onna play out, then we've totally flipped on the ted the idea of where the career risk sits when you advocate for our investment .

back in well said. I mean, I think thematically, like from a capital allocators your institutional investor seat, it's become blindly obvious, I think to everyone for a long time now that like the AI trend is here that like they're forced to figure out how are they dealing with that, like how is IT impacting their existing investments.

And unfortunate, I think, like the backdrop for a lot of investors who've allocated to venture capital over the last ten, twenty years as that a lot of that B2B as tra ditional sil icon val ley pla ys are goi ng to be sig nificantly dis rupted by AI. So there's a lot of on the one hand, there's a lot of just carnage out there that they're forced to just acknowledge and D O, F. But then on the other hand, they're also having to think about IT from a new investment perspective.

You know what where they looking to get exposure because that is clearly in the very early stages of just this new paratime shift has got tremendous growth. And that's obvious to people. I think that's obvious to anyone has been paying attention over the last year particularly, but even the last two years. But I don't think it's become obvious yet on the big coin side, thematically that like they need to have a strategy, but pretty soon, that is going to be the case. And I think we talked about some of this last week, but bitcoin has this underlying long term secular growth, just like A I that were in the very early stages of.

And so as you think about how are you deploying capital where you're allocating to, I think it's going to be obvious to people that um that is one of the areas that they will be forced um to to consider um you from a um investment perspective and the different options that they have. I think that points to a number of other trends that are um different from what know how theyve allocated in the past. I think these large asset managers that um you invest across multiple industries, like that's been a theme that we've seen declining over a long period of time.

And there's been the shift towards highly specialized GPS that go in an inch wide and mile deep in their space. And I think that would be the case, and people will see that very much so with the bitcoin ecosystem. Just because they recognize there's a trend in bitcoin that is here to stay doesn't mean that they can get exposure to IT by a investing in a sixteen z or you know name another crypto fund.

We've we've moved into the specialized world, where is particularly in the bitcoin in ecosystem. Investors that are on the ground understand bitcoin in a very deep way, have the network with the people building in the space that will prove to be different differentiated strategy. And I think that there's going to be the shift from the large asset measures, the capital of alligators into these emerging groups, which I think is bullish for what we're doing.

Yeah, I think another important thing to bring up here is the fact, I mean, going back to the etf in the inflows and as IT pertains to the institutional investor class, it's something has been talked about for quite a bit this year, but I think will really have some legs behind IT as we had into twenty twenty five as a benchmark and track record for products that institutional investors have access to that, that begin to really show like, hey, here's the benchmark.

And so pull up the short I bit here to date, up sixty three percent almost. Um this I think this is also going to be a big catalase for the institutional investor class, recognizing the career risk that you explained earlier, john, the career risk has flipped in. A few are not on the boat.

You are now being benchmark against this performance and you're under performing. So not only do we have ebit and the other etf that have hit the market are performing well, obviously, of individual equally microscope, but we're ginning to see. I've mean, if i've had mat dines from build asset management on and there, their credit fund is beginning to develop a track record as well. And so I think the combination of these products hitting the market and developing a track record over the last year is really going to be in the face of the institutional investor class, where it's going to be abundantly clear that they're under performing compared to people with exposure to bitcoin and the infrastructure around IT.

Yeah absolutely. And the great thing about you know they going to is, is everyone can get access to that, especially now right if you know before had institutional kind of governors on your ability to hold private keys or have some or multiple set up or. You couldn't know you know be in off, you get an account add like a fidelity or or something like that.

Um as you point out earlier, marty, like maybe you were kind of you had a wall and you are early what to move forward? Bitcoin allocation in a direct way. Well, now the spy tf give you that and so you won't be able to kind of you say like, well, yeah, i'm underperforming this of that asset class, but I I couldn't get into the top deal kind of fund our funds in in this.

Are that space that really performed well this year? You know bitcoin is is right there and easily available, highly liquid. Um if you if you don't want to use n etf, it's no it's salable twenty four, seven, three, sixty five um by basically as much sizes as you want almost immediately. And so any allocated right is not going to have um the ability to kind of fall back on not being able to get in to bitcoin or not having um just the the the way to make an allocation is right there and as accessible as I can be. And so agree, that is going to become increasingly, I think a venture marked are going to need to fall back on and and take a look at as they can start the portfolios.

IT feels like it's all culture dating a perfect storm. And I I do this every ball market, but I get a little head of my skies. But I don't know this does having been in IT for eleven years, this does feel like a starkly different dynamic heading into a bull market. I think it's pretty clear with the potential for strategic reserve in very friendly administration coming into the lighthouse.

Yeah you if you're out there, you an institutional investor or listening, feel free to reach out to us to die deeper into this because I think um again, really leaning into the careers obvious that we're talking our own book here and we are highly incentivised to convince you to get exposure to a bit. But I truly earned lessons from somebody who cares about your career in your future like the career risk has flipped. And if you don't have a big queen strategy moving forward, you you're get yelled at by your clients.

We miss the best performing asset of all time as the U. S. Government was giving a stamp of approval and accumulating IT.

Yeah well.

so one thing i'll throw out before .

we if we want to rap soon, um one last piece that I threw in in that I say um was just a the tromp is very, very likely, as was Harris you know, had hedgie uten in very likely to continue to expand and accelerate the growth of U. S. Federal debt and you know widen deficits.

IT looks like its early days, but his platform will sustained high spending on a variety of things. Know what will shift the spending, the composition about around so maybe let's goes to um you esg novel energy initiative and and more goes to domestic manufacturing initiative. Maybe maybe you can ask some sort of industrial policy that intends to you know reassure lot of manufacturing.

But whatever the case may be um the libel is are going continue to grow um interest expense um is now above defense spending, likely passes security spending next year. Det gp is over one hundred percent um even conservative investments at the the C B U. In the treasure department before trump s elected had IT going to one twenty one twenty percent you know by the end of this decade or early next decade. Uh, so even if the terminal straw drags its feet on building a tragic big on, even if there proved to be um difficile and logistically setting that up for one for one reason or another or its hamstring somewhere in congress, like the story is ultimately the same.

It's a question of how how fast we get there and how can easy IT is for how easy life is for kind of the debs and founders entrepreneurs are building on backs in in the meantime and what their banking access looks like and um whether the the hotoke pen is showing them or not um but even if the government just remains entirely neutral, tobaccos kind of forgets about IT as long as the a pathway of federal deficits continues in the way that that IT has, as long as the intra burden continue to to grow relative to tax receipts and and move toward becoming the biggest line item that the U S. Is spending on. Um ultimately, that points to stim basically stimulative activity for the economy, likely a regniero inflation.

And we think ultimately down the road some sort of accommodative monetary policy and maybe unconvenient monetary policy that starts to look a lot more like bound SHE expansion, key we yield for control, whatever the case may be, where you want to call IT. We're sitting here now with the fed having cut rates seven, five bps over the past two meetings with the start market ripping to all time hires um and with unemployment ah know we can talk about the how IT looks under the hood, but at the very least the headlines for unemployment of have not been um overly recessionary and yet the feeds already cutting rates um think that probably tells you something about the know the fiscal dominance we may be in and regardless of whether we get the treated big in reserve and we're all bushing that and hope for that. But the story really hasn't changed here is the same long term gypt and encourage dedicator to even if you're skep portal on the reserve peace, just to take a look at you know the path of federal deficits and where monitor policy might need to go to accommodate that over the next ten, twenty years and realize that um the stories is just accelerating. And it's it's a the same that's the same today was yesterday and it's going to continue tomorrow as well.

The strategic big win reserve is that is a nice ker. That's your big point. Alpha for the week.

We'll see guys next time, maybe next week. I don't know. We'll see you.