Inside Josh Mandell’s Beautiful Mind: The Future of Bitcoin & MicroStrategy
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Hey, hey, welcome to the Bitcoin Matrix. I'm your host, Cedric Youngleman. In this episode of the Bitcoin Matrix podcast, I sit down with Josh Mandel, a seasoned options trader with a background as a quant analyst at Salomon Brothers. Josh has a deep understanding of market mechanics and caught my attention in early January with a tweet raising red flags about risk models and micro strategy shares.

We chat about the complexities of Bitcoin as collateral, the micro-strategy standard, and how options markets and gamma squeezes could play a role in Bitcoin's financial evolution. Josh also shares his unique perspective on financial engineering, trading strategies, and why micro-strategy could become one of the top five companies in the S&P 500. What you're about to hear is a recording of an X-Space that I hosted on January 8th.

Of course, Josh's prediction of 84K on March 14th hadn't happened yet. But I'm convinced you'll still love diving into the thoughts of this new Bitcoin sensation that everyone's talking about. The world's largest Bitcoin conference hits Las Vegas May 27th to 29th at the Venetian. Use code MATRIX for 10% off your tickets at b.tc forward slash conference forward slash 2025. Or grab the link in the show notes.

Join me for an ice cold beer in Vegas. Get your tickets now. 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 the BitcoinMatrix.com. And now, let's enter the Bitcoin Matrix with Josh Mandel, a.k.a. Josh Stradamus. What is real? How do you define real?

You can't jump into cash. Cash is trash. What do you do? You get out. Well, let's get going here. All right. So, Josh, you have a fascinating background at Salomon Brothers, a lifelong professional career options trader. And you put out a tweet the other day on Twitter.

January 5th, it's a ding, ding, ding. Their risk models are throwing red flags. I used to run some of these models in my use as a quant analyst at Solomon. And this is in regard to micro strategy shares. So what are you seeing right now in the markets? What kind of prompted you to put out that tweet? Okay, so there's a couple of things. One of the things that hasn't yet to happen is that the system,

banking system has yet to give Bitcoin the credit for being good collateral that it is. I mean, government collateral on the government desk is like zero haircut.

1%, maybe 2% if it's a long bond. In other words, you get to borrow almost $100 for every $100 that you have. And then it goes down to the scale of the core because it's all based on how much within a single 24-hour period that asset could depreciate by and you suddenly wouldn't be able to collect the money back and it would default. So the financing of the asset.

So if Bitcoin is yet to be given any significant collateral recognition, then MSTR starts to look that way to them. And what I can sort of anticipate is that over time they're going to look and go, wait a minute, Bitcoin can move

Down by 80%, up by 40%. It can make very big moves in a day, and it will. And if that's the case, then the same thing could happen within a very short period of time. Over a weekend, for instance, from a Friday to a Monday, how would you collect the mark-to-market on something if somebody was short MSTR and jumped by 30%? Well, you would have to have a 40% haircut on it, on the valuation of it.

So I think they're coming to realize that. And let me talk about options in general. So an option is essentially, hold on one second. Yeah, sure. All right, I'm back. I'm back. Sorry. I had a connection problem. No worries. So an option, let me back up for a second. A call option is something that gives you the right to buy something. It doesn't mean you have to buy it. You're purchasing the right to buy something within a specified period of time under contract.

And you pay this money up front for that right. And once that time period has passed, you have a choice to buy it at the express price that you put it into in the contract or not. What a lot of people don't realize is they engage in call options throughout their lives in many places all the time. When you buy a stock on a company, you think you're buying the assets of the company.

Well, you're really not. You're buying a call option on the assets of the company because in order to actually take over the company like KKR would, you would have to turn around and buy off all the debt, but pay that off first. So a call option on MSDR, on the Bitcoin inside of MSDR, is really the stock. You don't own that Bitcoin. You don't get a one for one, right? You would have to pay the strike price, which is the outstanding value of all the debt or preferred stock or any other contracts or lawsuits they may have to settle. So

If that's what it is, think about call options all throughout your life. You buy a house, right? You enter a sales agreement. It says two months from now, I'm going to close on this house. Well, they require a deposit. You know why? Because you didn't really buy the house. You bought a call option on the house. And the worst thing that can happen is what if you die? What if you just go, ah, somebody just robbed me and I have no money? Guess what? They can't shoot you. There's no debtor's prisons. They just keep your deposit.

So when you enter in a sales agreement, you're buying a call option to buy that house. And the deposit is the premium you pay. Right. And then the strike price is the agreed upon price. And you can always walk away from it. You can. There's nothing they can do to you. There's no debtor's prison there. When you're on the other side and you have sold a call option, meaning you sold the house under sales agreement, you have a legal responsibility, what they call specific performance. You have the house. You can deliver it to them. You must. Period. So it happens everywhere in life.

All the time. Even when you buy the house, if you have a mortgage, you don't really own the house. You have a call option on the house and the strike price of that call option is the mortgage. Okay. So now think about MSTR. Underlying it is this really, really volatile asset called Bitcoin. And you have a call option on that Bitcoin with the debt being the strike price.

Well, then now if you buy a call option on the stock, now you're buying a call option on a call option. That's two levels of leverage. And you have to multiply that. That becomes exponential. So they start to realize this. Let me ask you this question. Whether like, I don't know, having a heart or whatever you pop up there. Right now we're trading, let's say 300 on MSTR. What do people think the chances are that in the next, I don't know, you say 10 years, it could trade at 600, right? What do you think they are?

I'm sure everyone's going to say yes. There's a good chance of it. The thing is that the call option can never trade for more than the stock itself. It just can't. So if I've asked you, like,

Offering a call option struck at 300, right? They can't say I'll sell it to you for 300. So I say, why? I'll just buy it for 300 then. It doesn't make any sense. So there's a problem with option pricing on a stock that has extreme volatility and they're offering options too far out in time to the point where a lot of people, many in this room included, could conceive a possibility that that stock could trade more than double the price of the stock. But they can't sell you the option for more than the price of the stock. Otherwise, you would just buy the stock.

Do you see the problem with that? Yeah, it's inherent problem. And it's going to blow the system up at some point in one way or the other. I mean, the only resolution is to have a scenario where the possibilities that it goes to zero. But right now, as it stands, I've said this many times, I would not be willing to make options markets on MSTR. I just think it's too dangerous because I can't say the option 300. And I think within a year it could be worse. I think within two weeks it could be worth 600.

So, but I can't sell you the option when 300, the law wouldn't allow it. Why? You would just go buy a stock. It's a problem. The system's going to get gummed up. You understand? And that's something that's starting to worry people. So they're starting to increase the marginal requirements for the stock. Meaning that if you want to hold that stock, you can't finance it. Basically, it's going to come down to the point where there's 0%. You get 0% value for your collateral because they're not going to allow you to put them in a position where they can go out of business.

They when you do a call option agreement, though, you buy this call option, you face the broker. You think you might not, but you face the broker. So I buy mine from Fidelity. Fidelity is the one I face. So I like a very strong broker. They may be dealing with some fly by night operation. And if that operation fails, doesn't manage to collect cloud from the other side quickly enough.

that's their responsibility but all he has to make good so i like dealing with very large brokerage houses that can handle this and not go under but somebody's going to go under here this is going to be a story what and it's just like it's almost an inevitability and i don't want to say i'm setting up for i'm trying to arrange but i'm calling for a short spike at some point short covering spike gamma spike a parabolic move and the first one i saw online was

Back months ago, I talked to Punter about this, many months, January 17th expiration. I said, well, if there was one that was going to happen, that would be the first one I would see happening. So I started looking at it. And then I started hearing about these letters going out saying we're changing our margin requirements.

And as they change their marginal requirements, all these accounts that own stock on margin suddenly can't finance them and they actually have to sell the stock because they suddenly say, well, we need a margin call. You don't have enough money. We had a deal. I thought we had a deal. No, your deal is not permanent. So people have had to actually sell the stock, which caused the market to go down. Now that's going to reverse itself. If we get a kick and the market starts to move up, everything's going to start to fire the other way. It's going to be a disaster.

now let me take a step back from options for a minute give you guys a chance to think about that and maybe make some notes and think about what what questions i leave open there i want to say thank you to a couple people now these are not people that um i know i've ever really met but the people that changed the way i think about things and well one of them is this guy in jeff booth i mean i just think that this is a guy i listen to him

And he just made me think differently about Bitcoin. It's more than about getting rich. It's more about making money and hoarding capital. It's not changing the world. It's about changing the universe. It's about doing good things. And I see an evolution in humankind that's going to come out about as a result of Bitcoin. It's going to be the system where it's not about hoarding money and allowing the rich to get richer and the poor to get poorer. It's talking about this idea that, hmm,

Everyone gets Bitcoin at the price they deserve. Well, I've often fantasized that Bitcoin is actually some solution from the future, which is designed to make sure that we have a stable system, sustainable.

where like a planet this one or another one could be cultivated we can make sure that we don't populate or overpopulate the system or underpopulate it in such a way that a child cannot be born and live its lifetime of say 100 years and go hungry go dead because you know that child has no original sin i don't believe in it and so what would you do is you would create a token

that at the end represents the value of all the goods and services and needs of human life from the beginning to end. And if it's 100 years, well, then whatever. 21 million of these things exist. And we have to define the value of all those goods and services that are necessary for a child, a human being to go from zero to 100, make sure they never went hungry because a child deserves to get Bitcoin at a price of zero. Otherwise, he shouldn't be born.

And that's the legacy that we give to our children. And that's a little bit philosophical, but I think that it's all about really thinking about things in the very long term. What's the very long-term value of Bitcoin? It's life. It's replacing this rat race where we think some people are better than others. Because let me tell you what, there's this question that I asked. I always loved it. It was a question about testing somebody's philosophy. Do you think some people are better than others? Most people will tell you yes. I've come to see the answer is no, because I don't know where they came from.

I have no idea where that guy who has to rob a bank and I used to have to rob a bank that day holding a gun because it's the only way to feed his family. I didn't have to do that. And I want to think very open minded about resolving these problems so that we don't have to have wars. Bitcoin can defund all the wars in the world because what we're fighting for most of the time is money, it's treasure, it's greed. It's about this person having more. And there are such huge hordes of capital that just don't make sense. They aren't being well distributed.

And that needs to be fixed with Bitcoin. And I think MicroStrategy is maybe one of the solutions because still today, Bitcoin is held in two lumpy hands. It's not well distributed. But the stock like MicroStrategy could be held by millions and millions of people in the form of indexes, retirement plans, pension plans. It better distributes this asset called Bitcoin across the world. Right. And I think

Tokenization in general is not a horrible idea. The original idea of tokenization is giving a chance of somebody in Nairobi to buy an asset only we here in America can normally touch. Give them a chance to pull themselves out by their bootstraps. And that's the kind of talk I hear and the kind of good open heart I hear from a guy like Jeff Booth. So I've never met him, never talked to him, but I want to say thank you to him. And they'll never hear this, I'm sure. But I want to say thank you to him because he's one of those guys just made me think about things differently. Like Alan Watts, you know, one more time.

So Jordan Peterson is this guy that I met one time. I didn't even know who he was. I had long debate with hours long, very smart guy. I thought he was kind of a little bit of jerk because he knew it all. I had no idea who the man was. Months later, I realized who he was. But I remember one of the last things I had in conversation. I don't know why I asked him. I said, okay. I called him Walter. That's what I thought his name was. Walter, let me ask you this question.

"Do you believe in God?" I don't know why I asked him that, because it's a strange question to ask somebody, but it came about as a result of a whole bunch of philosophical conversations we had. And he looked at me sideways, and he said, "Hmm, I think it's a really great idea if all of humanity behaved as if there is a God." And that hit me hard. So what he was saying is, wouldn't it be great if all of us believed that there was somebody looking inside of our brain, reading our thoughts,

knowing what we're planning to do what we've done and we'll have to answer for it one day so whether you believe in god in heaven or not wouldn't you all agree that it might change humanity make us all a better place if we behaved as if there is a god and we can't get away with something just because nobody else knows but what's in our head and what we did it's a secret we're going to get away with and jeff boot had this thing i don't know how i find it it's on this website the first time i heard him i said i'm gonna go look this guy up let me see if i can find it and uh

Think it's it's just the precursor for how I feel about everything. I can never get into my machine when I need to hold on There we go, there we go At the top of his website watch your thoughts they become your words watch your words They become your actions watch your actions. They become your habits watch your habits to become your character watch your character becomes your destiny and

And that's what I think this is all about. It's about thinking good things about other people, about trying to be empathetic and try to put yourself, I don't mean empathetic like crying and all that stuff, but being able to put yourselves into the mindset of everyone. And the thing is that Bitcoin is supposed to be about that. It's supposed to be about making the world a better place. Not about I'm better than you because I got it first. And I think that every child born on this planet deserves to get Bitcoin at price of zero when it's all said and done one day. I really do.

I'll take a break quickly and ask you to ask me a question. I don't know. MIKE GREEN: Yes, sure. That was beautiful, Josh, and I appreciate you sharing, especially something so personal. You mentioned a lot there. There's a lot we can get into, especially around Jetbooth and changing the world. I want to think about things along those lines from your trading traders' perspective and understanding markets. You mentioned MicroStrategy as a solution alongside Bitcoin.

How many shares are you trying to get to? And I think you're the first person I've ever heard say this. What does it mean to be living on a micro-strategy standard? Hey, Bitcoiners. I'm heading to Bitcoin 2025 in Las Vegas from May 27th to May 29th, and you need to be there. This isn't just another conference. It's the ultimate Bitcoin party. Grab your ticket now using promo code MATRIX or at the link in the description. See you in Vegas, freaks. Let's make this one legendary.

okay so i decided i was going to do an experiment with a new account mid-september and i funded it with a symbolic 2.1 million dollars because i just like everything related to 21 now um and so i put 20.1 million dollars in there now if i had a dca over the period of the next month or so i would have been able to acquire given the prices it was trading at approximately 10 000 shares that's a lot of shares but i said to myself what if i intelligently using what i know how to do because everyone has their own skills

I could actually trade my way using volatility, extracting the volatility, that volatility being vitality, extracting the volatility of MSDR and turn it into more. So I put all $2.1 million into options at a pretty timely point in time and managed to generate a large profit.

We got up there on September 14th and 15th, that first expiration, which was two months hence after I bought my options, my first options. And I had now options that were pretty far in the money, you know, struck around 210. And it was about 37,000 shares, but I didn't have the money to exercise them all. So I had to sell all the other out-of-the-money options and took profits on virtually the entire rest of the portfolio, about $8 million just to exercise. So now I said to myself, wait a minute, look at that.

i still have a couple little options i can still try to do this more but i got 37 000 shares instead of 10 000. let me see if i can do it again so i've been waiting for the moment to do that and i've just been sitting biting my time it's trying to extract more volatility so when we traded up around 500 and we went to 540 and started to slip i said well now's the time to start selling covered calls and i extracted another few million dollars out maybe four by selling the cover calls held my long position the whole time down

And about five days ago, I saw a chance below around $2.95. I said, okay, now I'm going to take my stab again. And I took some of that money and I bought call options again. The way it will work is if I keep doing this, bootstrapping myself up, up, up, then I'm going to end up with enough money to exercise more call options that were left over from the first round. And by January 17th, I fully expect to have 50,000 shares.

That's what I mean by living on a micro strategy standard, because now I'm thinking to myself, $2.1 million is already gone. I'm just trying to grow my stack of MSTR. So I've gone from 2.1 converting into 10,000. I could have just sat on that period, but I'm trying to show that it can be done. And then Michael himself is doing a service to some people like me. I am going to prove that I've gone from 10,000 to 50,000 shares in a matter of four months. And then I'll still have some dry powder.

My goal is by the end of this year to have that be 100,000 shares. So that's what I mean without any cash injection, all having started from 2.1 million. Now, I'm not telling anyone else that hodling is the wrong answer because what I'm doing is very hard to do. But I'm trying to say this is what Michael's strategy means by volatility is vitality. He brings people like me in on the professional side to trade his stock when no one else would really have been able to grow that stock to the valuation that it can grow.

OK, that's awesome. And what I love about this, I think learning how you think, learning how traders think, I think helps people huddle and manage these swings and maybe understand what's happening. But also, I think a lot of people are starting to realize the beauty and the financial engineering that Michael Steyer was pulling off and the opportunities here, and especially if they have money stuck in the system. So how do you think

how do you see the derivatives market driving the spot price of MicroStrategy going forward? Finally, I think I'm trying to imagine you imagine that the price of Bitcoin is actually really straight line, kind of like that power law. And it fits right on top of the power law trend. It doesn't vacillate, which, of course, it does. But what would happen then is that MicroStrategy would have the sine wave on top of that. We're going overshooting, undershooting, overshooting, undershooting.

That's how it would work. And those who know how to do it can extract the volatility from that, make markets in that micro strategy and cause it to be worth more and more and more as a financial vehicle. It becomes a derivative of Bitcoin.

Follow me? And then there's call options on that, which become derivatives on derivatives. And the derivatives market is what makes the market go round. It is the cart that leads the horse. If you look at anything, including the government bond market, there's always a great deal of swaps, futures, and options, notional values that are well and extreme of the value of the underlying securities themselves.

And those are risks to the system, but they're also benefits to the system. And that's what micro strategy brings to the equation. There's nobody else that can produce that. Bitcoin does not have a developed, truly developed, nor will it. It's the raw Bitcoin options market because it's being held in wallets somewhere. Who knows who? These guys are like, oh, I'm holding out. Eventually sell maybe. It's very lumpy.

he has a finite amount of bitcoin can grow it over time to offer you the right to buy into the tail event either side whether that's protection on the downside of the upside and big money is going to do that we're going to drive a high level of volatility in the thing and give you a chance to maybe buy in some dips um i don't tell you have to sell on the pops but uh on the dips you might want to huddle because i'm going to be in their mind

That makes sense. And then so in terms of liquidity, which do you think is a deeper pool? Bitcoin for sale, Bitcoin on exchanges, Bitcoin on OTC desk versus micro strategy share prices that are actually micro strategy shares that are actually trading?

It's going to become the latter. It's going to become the latter for sure, because I don't know who these people are. They're on the OTC desk. I don't know when they decide. The Bitcoin market is a manipulated market insofar as by the SEC's point of view, like a stock comes on the market, it's issued and you can buy or sell it. You can see the amount of open interest.

Bitcoin's always been a weird thing. You can pull off the exchange and suddenly you don't know where it went. It's not available. It's very strange. I always felt that way. So I think that the literal true regulated market that's going to be sought after is going to be the one that has collected the Bitcoin. It's comparing a stock that owns gold.

or a corporation or the US Treasury to that show with gold miners, you know, like Parker Schnapple, whatever his name is. Who knows how much gold he's going to dig out of the ground anytime or when he'll decide to sell it. Banker strategy is going to formalize and create a sort of an asset-backed version of this asset that otherwise is kind of lumping and a little scary to people. Just sitting in some wallet somewhere. Who knows? Not being taxed.

So, yeah, eventually, MicroStrategy is going to become the cart that leads the horse. Right. Let me ask you, can you explain the five Greeks in options trading and what a gamma squeeze is? Well, I'm not going to go all five. I like people to take things in pieces. So the first one is Delta. So if you buy an Ethel Money option, right? And let's say, where is MicroStrategy? 330. Let's call it 330 spot, right? 330 lock market. Okay.

The delta on a call is 50%, period. It is. And the delta on a put is 50%, struck at 3.3, exact price. And what the delta is, it is the calculated probability that the stock will be there upon exercise.

because there's no reason necessarily for the mathematical model to assume that the stock's going to go up or down if it's a 330 it's a coin flip well what's the coin flip this is gonna be heads or tails 50 50. so it starts out thinking about that way the Delta is the probability that the stock will end up in the money well I'm sorry that the option will end up in the money it's also when it's at the money it's always going to be 50 50. so interestingly enough

If I tell you what's the price of a call option for a 330 strike for a month, and you say it's whatever, X, $5, $10, $100, it's got to be the same price for the put. Mathematically, it has to be, otherwise there's an arbitrage. So the put and the call have to be priced exactly the same price when you're trading at the money option. It's called put-call parity. And the delta is all related to that. So now as soon as you take it out and you say, well, now we're stuck at 330, but now we're talking about an option that's 340.

Well, the delta of the call is going to move down from 50 to say 45, 44. Then you add to make it 400, it might move down to 40%, right? And make it 600, it might move it down to 5%, like 0.05. That's what a delta is. It is the probability that that number is actually going to be reached in the amount of time that the option has to expire.

And it's the way that the street hedges. So if I'm you, if I'm a dealer and you ask me, sell me a call option struck at 330 where it is on a million shares, I'm going to go out and buy half a million shares of MSTR right away to hedge myself so I'm Delta neutral. So does that help you with Delta? Does it have anything follow up questions on Delta about that? No, that was great.

All right. So now gamma is a second order. It is it's like velocity is the delta and then acceleration is gamma. It's the rate at which the delta changes with a movement in the price. So if I said to you, it's it's it's moving up, the delta is moving up.

As you move further into the somebody put a park novel. Sorry, Tommy made me laugh. So the price moves up from 330 to 400. Then immediately what's going to happen is the delta is going to go up and the gamma defines the rate of I kind of got that's making me laugh too much. The delta, the gamma is the rate at which the delta moves up. Right. And that is a function of the implied volatility, the time to expiry.

So on an option that's very short-lived, that's right at the money, you have a lot of gamma. Because it doesn't take much for that thing to change. And suddenly it becomes going from 50-50 to 60-40. So right now we have a market at 330 and an option market 17. Nine days from now, we have a big expiration. Is there a chance that 330 could... Actually, let's pretend that we're at 330 on that morning, right?

The 17th, the day before even the 16th, because that's my date. Now you have a 24 hour, one day to expire. That's why I always like to think about things. We're stuck at 325 markets there. The 325 option was the value of a 325 call. It's only got that one day, right? Not zero, but one day. Well, it's not worth much. You wouldn't think it moved that much, but.

But if someone told you it could move to 400, suddenly it would be, whoa, well, then it should be worth some possibility. I should definitely be willing to pay $10 for it. Well, now you've suddenly changed that price. Somebody can buy it at $325 and sell its call option at $10 and essentially have bought it at $305 by doing a covered call. So the gamma is the rate at which

That delta can change with a movement in the price to stop. And that is maximized. The highest level of gamma takes place when you're very close to expiration and at the money, because that's when it's like, whoa, if it happens, if suddenly had a shortcoming spike up to 500 that day, nobody would be able to, no deal, no option deal in the world would have been able to sell you a call option at the price that makes sense for that.

But theoretically, it could happen. Theoretically. I did an experiment on purpose with my first option in this portfolio on September 17th. And I even published it. I bought this thing. I spent five cents on an option. We were trading at 135. It was exactly two months to expiration. And I just decided to do a video to show you how absurd things are. And I set out a price. I said, look, I'm spending $30,000. I bought 6,000 options worth, 600 shares.

60 60 options which was 6 000 shares and most people say i'm pissing that away chances are you are by the way but i bought it i just did a video to put it up front as well there's an outline scenario where this thing could trade as high as 960. i don't know how i put up my scale 960. now i've been traded at 960. that sounds crazy two months later i'm sorry sorry i'm sorry

It could become worth $960,000. That was my value. I was looking at the company. So what are the chances that a $30,000 option could become worth $960,000 two months later? It should be zero. But I was just toying around with it. And then I look up two months later, two days before expiration, it was worth $957,000. So an option that I paid $30,000 for, now that is not supposed to happen.

I would fire every trader on my desk if anyone sold an option for $30,000 to find out that two months later it was worth $960,000. I would fire them because they just looked at a model too blindly. But they should have said, I can't make that market. I can't sell it to you there. Or I have to double the price. I have to make it so that you can't possibly buy. Because that's what the problem is with Bitcoin. It's too volatile. And you add the volatility of MSD on top of that. I tell you again, I could not sell you call options.

on MSTR as a business. I can do it strategically when I want to, but when you're a dealer, you have to do it whenever they want it. And that's a little scary. So that's the thing about this gamma is that what happened to that guy who sold me that option for $30,000 only to find out that it's worth $957,000 two months later.

on expiration. That guy got fired, I hope. I mean, he doesn't deserve to be trading, making markets. Or he should learn a lesson that makes him want. I would never do that job. I don't know if that answers your question. No, that was great. Well, you know, speaking of trading, you know, Joe Burnett called out Martin Shkreli the other day.

Oh, yeah, sure.

I love Sailor, but Sailor's not a trader. He's an engineer. I wouldn't try to do engineering math against him. He'd beat the hell out of me. But that was my job. What I see in Sailor is I see a very quick learning young trader like me. He's learning things. And I'm watching him. I see what you're learning. I remember learning that. He's making little mistakes here and there. He's doing good things. He's catching up. I wish I could get into his ear once or twice. But I would trade Sailor, sure.

I'm not saying anything negative about Seller, please. I know that Seller- Oh, great. No, I love it. I love the Top Gun attitude. What do you make of what he engineered last year? Obviously, there was an evolution in strategy. What did you think of how much Bitcoin they were able to accumulate? And how did that change your thinking on micro-strategy?

My first thing about Michael's strategy is this. What he did was brilliant is he got five years ahead of everyone else and getting through all the regulatory and all that stuff and making it possible to put it on the book and to get to this point and fastly what you're going to come to. That is hard work. And he speaks better than me. He's a great ambassador to the cause. I mean, in some way, shape or form, if I was his brother, we would work great as a team, no doubt, because I have a little bit to add. But I didn't go to MIT. I went to University of Florida.

Fair enough. What do you make of the QQQ inclusion?

And cast it behind going forward. I think it was key. I think he was very careful to avoid having it be reclassified as financial because that would have kicked it out. But once it got into QQQ, it lines us up for S&P 500, and that is the game changer. That's going to be the world right there. QQQ is not all the end-all and be-all. S&P 500 inclusion will be, period, full stop. When do you think that could happen, and what kind of effect would that have? Sure.

I mean, that's going to be monumental, and I don't know when. I think, as I want to give the committee a break, the more pressure is put on them in terms of price, the more likely they are to do it because they want to own the fastest, hottest producer. They don't want to have some other index sucking away their indexed funds. But I think they have to be careful about some things. They may make a request of him to –

To reclass, to convert his 10 times voting shares to regular shares. They may make that request of him. That's what I think they would do. That's just my guess. And don't go into like defending, well, so-and-so has that. Listen, if I was running that committee, I would say, listen, we would just like you to do this. And if he doesn't do it, I would probably take some time to think about it more.

But I think he would do it. Right. And then in the short term, I mean, what do you make of the next few weeks? We got the margin requirement increase, which, you know, you could see a little bearish pressure there. But then we have the historic options expiration on the 17th and we have the inauguration on the 20th. Yeah. And a special meeting of stakeholders on the 21st. Do you think the inauguration could play out to be a sell the news event? Yeah. Here's the thing.

I don't know about the inauguration, so I stick with what I look for right now, which is this January 16th. I'm an options trader, and I look at the striation across all the strikes, and I say to myself, that's going to be a spooky period of time. I would not want to be an options trader, and I don't think it's going to cause it to go down a lot.

I think it's going to have a retracement. I've always said that since we were out at 4.50, I said we're going to come down to a sweet spot around 3.25. And if we are sitting at 3.25 on the close of the 15th or the open on the 16th, I see the chance for a problem on the option dealer's side for a rally, a

a short squeeze that is not trickly engineered. It's just by nature because the way that things are lined up because all these strikes that are way out there, they were sold, that looks like they're worth nothing. They're writing them down to zero, right? Like people that had about these 500 strikes or 600. What if that actually ever happened? If you get up to 450, if you start out at 325 on March 15th, close, or March 16th open, I'm calling it. I think we're going to move to 450.

Maybe they're up and down. We're going to make a move to at least 2x, and it could be 3. Does a strategic Bitcoin reserve affect your thinking at all? And if that happens, what? Not yet. I put that back. I put that back. That's a political football. I don't know yet whether that's a real reserve. What I hear a lot of is people saying, well, he's going to take that Bitcoin and freeze it. But that's a little bit of a political thing.

But you know the grandstanding I'm gonna freeze the Bitcoin make sure it never gets sold Which is the same Bitcoin that the prior president administration the one for never sold So that's just be a they decided they were gonna actually go out and start printing money to buy Bitcoin Well, that would be interesting. That would be a strategy, but I don't think it's gonna happen So I don't quite as much important on the SBR the way that it's currently being talked about I think it's a lot of job morning which would cause more volatility in the market. I

Fair enough. All right. Well, let's ask the $2.1 million question. I'm not talking about powder like Jeff was and cocaine, country Jeff. But if you had $2.1 million in dry powder today, and for anyone listening, this is not financial advice, but let's think about a portfolio and what you would do. And that could be $21 million, that could be $210,000, that could be $21,000. But if you had $2.1 million today,

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at thea.us forward slash Cedric. That's T-H-E-Y-A dot U-S forward slash C-E-D-R-I-C. I published my position today. I'll do it as soon as I get off of here in that one account.

that has 2.1 million, that started out with 2.1. Now you just have to gross it down because it's now 20 million. But, you know, 20 could grow to 40 in a matter of two days or three days if this works out. And I would be sitting with my, will be sitting with my current long that I've acquired 37,000 shares. And I will be sitting with my current long of 200 strike calls on another 6,000 shares. So, yeah,

14,000 shares. So by July 17th, I will be exercising those presumably, and I'll have 50,000 shares and I will still have cash on the side because of the other ones I'm holding until April and the $3 million cash I raised to exercise is already sitting there ready to go. So I will be buying some

uh scattering of out of the money options on the chance that we make a move up um and that's in that july 16th july 17th period i'm sorry january 16th 17th period and if we do i'll probably scalp a few million dollars out of that and get ready to go next

I'll publish my portfolio. That's all I can tell you. I, I'm pretty open, but I'll show you what I'm doing. I'll show you the trades I'm doing. And, um, and I'll, I'll buy some more on the 15th. That'll probably be next week. The next person should be, look for my account on the 15th and, and you'll see what trades I'm doing. I'll probably won't be doing a trade until then. Well, we'll be watching. So, uh,

I want to ask you about the net asset, you know, the multiple on the net asset value or in a particular equity. And you put up a great tweet today.

There will always be those who seek to explain why the wind is wrong, why it must turn around. Then there are those who seek to understand the nature of things, and they discover the reasons why trade winds exist. We who learn can spit out our mistakes and see the wind carry them away. Then there are those who, like you, sir, will always hold it in unless they spit into the wind. And this was in response to Thomas Jeffressaurus on Twitter, who was responding, I think, to you responding to British Hodl.

So what do you make of that argument of sort of NAV versus PE, and where do you see this going in MicroStrategy? Gosh, first of all, I have to say, I sometimes write much better than I think I can. That sounds pretty good coming out of your mouth. Thank you for that. I didn't really think it sounded that good until you read it. I think that it's true. I think that people just get stuck in their minds. They're like, no.

They dig in and it shouldn't say more than it doesn't. MNAV isn't going to matter that much at some point because this is going to be special Bitcoin that's been captured and placed inside a vehicle. And it's going to start to come to a point where I believe, I hope, if I can ever get into Michael Taylor's ears, he defines a maximum amount that he's going to buy, period. And it's going to be like last chance. Do you want your Bitcoin to be in here? Right. You want to exchange it for shares because it's going to be special Bitcoin.

it's not going to ever leave it's not going to go anywhere now if you want to there's gonna be two grades of bitcoin there's the bitcoin that's in here versus the bitcoin and that happened with gbdc gbdc traded with an extreme premium because it was special bitcoin right and the fact that it traded to a discount was a gimmick it was a it was a why it was a trick

It was tricking everybody out. And that's where I got rich by. That's where I claimed the thing was GBDC. So I believe that at some point, Michael should declare, OK, this is the total sum total of the funding that I'm going to issue. We are we're going not issue any more shares beyond this amount. It could be a magnificent amount if he wants. But you don't want him owning four million Bitcoin. Otherwise, he starts to become like he's always going to be doing this. No.

No, I want that Bitcoin sitting in that company to be special Bitcoin, just like the Bitcoin that was sitting in GBDC for years was special Bitcoin and traded in a premium. Just like the iPhones that you could get a knockoff on the street could be exactly the same, or the Louis Vuitton purses that you can buy on the street are exactly the same as the one Louis Vuitton, but when they're in the Louis Vuitton shop and they're actually made by Louis Vuitton, they're worth five times as much. Right, Venmo goods.

All right. I want to ask you, what kind of price predictions would you put on MicroStrategy and Bitcoin in 2025? I mean, this is just my guess. I don't want to get called NFA, NFA, right? I think 440 is my target for the cycle for Bitcoin. And now you start to play some games and get up to $3,000, $4,000 on MicroStrategy without too much difficulty.

Okay. What kind of volatility do you see on Bitcoin at a price point of like $450,000? Let's talk about volatility on MicroStrategy because it's hard to... There's still a lot of fake trades going on in Bitcoin. I want to tell you that right now. I see it all the time. Cross trades going on everywhere. So I don't know how to estimate that. But the volatility on MicroStrategy is going to be one of the top five companies in the S&P. Wow. Okay. Before we maybe get into some Q&A with some people listening, what do you think about... Yeah, I got a bad time. Yeah, what do you think about...

I'm sorry? I have about 10 minutes if it's okay, yeah. Okay, let's wrap it up then. What do you think about Gladiator?

I was irritated at first because he was, man, got it. He's a social media darling. He's good. We follow each other now, and I play off of him pretty well. I wrote a little model to pretend to model. Listen, it takes all kinds, and sometimes I get a little bit nutty, and he's a little bit nutty. He's a kid, and somehow something started to warm up to him. I don't know how else to say it. I would shake his hand for sure. Right. No, he's awesome. I think he's great.

And what do you think about punter Jeff selling the calls every day in the money? That's a little personal joke between he and I. I'm trying to teach him to be more of a D-Gen. He just loves the exercise. He's going to get to the point one day where he's going to go, I don't want to do this. Can you go over there and handle that exercise for me? He just loves to click the button. And I remember that feeling. I was a kid once too. And punter Jeff, I just love him. I just love that kid. I love him.

All right. Well, any advice for them or, you know, again, not financial advice, but for any of us who want to be degenerates, any D-Gen advice? Okay. Okay. Okay. D-Gen advice. D-Gen advice. There are times rare, though they may be, when it pays to be a D-Gen. Just try to make sure you're not looking for them. You just have to like be looking for the moment where everything seems really crazy and go, is this the time to be a D-Gen? Let me call Josh.

I hear you. And then my last question would be, what about the change in FASB rules? I mean, that's coming.

That's going to change the world for them. I think once you get there, that's preparation for S&P 500 inclusion because they're going to start looking at S&P and if he can smooth out, that's why we just love to have Michael C. There's something he can do with the options market himself that would allow him to really maximize. Because right now, it's too predictable just selling the shares to buy the Bitcoin, selling the shares to buy the Bitcoin.

There's some financial engineering that he has yet to take advantage of, and I would love to offer some advice. Yeah, that'd be great. I think that'd be a great conversation. I don't know if I'll have to... Oh, man, I got to spend a little time with him on New Year's Eve. It was interesting to hear a lot of this from his perspective. How has Bitcoin changed you? Hmm. Hmm. That's a good question. I don't know yet. I mean, I...

Has it changed the way you trade? I love the idea of Bitcoin before I ever talked to anybody about it. I thought about it. The idea of Bitcoin started before Bitcoin. There was this friend that I had, his boss, in BPA back in 1994, who had this idea. I ran this thing called the Broad Investment Grade Index. And he said,

The thing is, if you look at the two to five year high yield, the one that's the lowest class that fits into the big index, that is just a remarkably stable return between four

14 to 17% with virtually zero volatility. And what he had this idea was to offer up something called a coin that they could sell to people in third world countries. My job was to try to optimize that point, replicate how the trades would be done so that it could be done as a service to the world. And Salomon Brothers lawyers kicked it out and said, you call it a coin, we're going to lose our primary dealership. The US government doesn't like anyone talking about anything with the word coin. It has to be the dollar.

And so I played with the idea for a while. And it's very similar to what if you could extract just the value of Bitcoin on a cagger basis without any of the volatility. So just have this Bitcoin ride along the lower band of the power law. And so I've loved this idea for a lifetime. I just want to find out if a way we can strip away the volatility that is above the lower band and sell that as a residual for people that love to trade volatility.

Yeah, man. Wow. This conversation has been incredibly dope. I'll open it up to a few questions before we got to let you go. As a reminder, my name is Cedric Youngman. Please tune in and subscribe to the Bitcoin Matrix podcast and Free Ross Day One. Let's see if we can bring a couple of people up here. Let's go with Asteroid. Asteroid. I know you all. Asteroid, if you just unmute. There you go.

Yeah, we can hear you fine. Yeah, we can hear you fine. Hey, Josh, how's it going, buddy? I haven't talked to you in a while. Hey, yeah, you said that you think that... I had two questions. You think that MicroStrategy will become a top five company. In what time frame do you think? It happens slowly and then suddenly. Is that what I'm saying? Once it gets in, if it got in next year, it would be...

It would be so fine in class. But there are cycles in Bitcoin. So if it got in near the top of the cycle, we start to roll over. It might take another four years. See what I'm saying? So like eight years from now. Yeah. Well, it's anywhere between two years and six years. Yeah.

Yeah, that's crazy. So it's crazy. Yeah, also, I was going to bring up, you mentioned that there's likely to be a gamma squeeze. But from what I understand, a gamma squeeze will kind of make the price of MicroStrategy kind of whipsaw around prices. What's going to cause it actually, instead of just whipsawing around a certain point, what's going to cause it to basically kind of launch up? Yeah.

It's going to, here's the way I envision. I've seen it before in my earlier life. Have you ever watched a pinball game? You shoot the pinball out from the bottom and it goes all the way up to the top. And then it comes back down and you catch it with the flippers. Now it doesn't go all the way to the top again. It goes a little bit less, right? And then shoot it back down again. And you catch it with the flippers. Now it goes up a little bit less. But once in a while, you catch it with the flippers just right. And it goes out this weird channel and it goes over the top. And it starts to cause the machine to go crazy. And that's what it's going to look like.

Holy shit, that's a great analogy. Beautiful. It's like a poem. Cool, man. Thanks, Josh. That's awesome. Thank you. Do we still have Charles with us?

Charles, do you want to? Charles? Yeah, Charles is here. Thank you, gentlemen. Super interesting conversation. I just wanted to say, Josh, man, let's just cut to the chase here. I mean, I've seen some of your stuff, always great content, hearing you talk for one of the first time here. And I'm just like, you know, let's just cut to a chase. What does a young guy like myself need to do to come work for you? You know, I might even do it for you. I want to contribute and learn.

I'll try to help you. I just started following you. You send me a DM later on. Sounds good. Sounds good. But on a serious note, a question here just to tie in both the Bitcoin and the philosophy piece, because I think we're really aligned there. I just wanted to better understand what you meant when you were talking about how every newborn could potentially get Bitcoin at zero. How does that happen if Bitcoin's at one million? Yeah.

10 million. And if it's capped, if the supply is capped, how does that happen in theory? I don't know. Don't you ever wonder why Satoshi still has that 1 million Bitcoin sitting somewhere? Oh, you're cutting out. I can't hear. Has it ever made you wonder why Satoshi still has that 1 million sitting somewhere? Ooh, that's interesting. I don't know. Deep thoughts. Yeah, deep thoughts by Jack Handy. Let's get one more in and we'll roll out. I think, let me see if I can get it.

I don't see... Here we go. Mixar. I don't know if I'm saying your name right. M-I-X-A-R. Mixar. I've seen you. Rhymes with Pixar. Just need to unmute. By the way, if anyone knows Jeff Booth, tell him I said thank you, by the way. He really made a big difference for me. I've had Jeff on the show a couple times. If I talk to him, I'll definitely let him know. We got Michael up on stage as well. Shooty shot for the last question. All right. Row the boat ashore, buddy.

Tell me more about your connection to Alan Watts. I just love the way he thinks about life, the philosophies. I feel like I've met him in a prior life. Sounds great. That's awesome. Josh, I'm going to respect your time. We'll roll out. Everybody, thanks for tuning in. Maybe I'll do this again next week with another guest. If you guys are interested, let me know. My DMs are open here and over at saidyoungleman on X.com.

you know, or tweet it out. But thank you all for coming. I really appreciate it. I'm going to end this now. Thank you for the invite. Yeah, man. This was great, Josh. I really enjoyed it.

take care be well thanks for tuning in to this episode of the bitcoin matrix if you enjoyed the conversation don't forget to like subscribe and drop a comment below with any questions or thoughts you may have we'd love to hear from you you can support the show by checking out our sponsors and affiliate links in the description it helps keep bringing you great content while connecting you with awesome products that i believe in share this episodes with your friends family or anyone curious about bitcoin

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