Key Takeaways

James Check argues that Bitcoin has entered a new era of maturity defined by institutional dominance, evolving derivatives markets, and a powerful “buy-side floor” forming around $95K–$110K. He believes Bitcoin’s realized cap surpassing $1 trillion signals unprecedented capital inflows, with ETFs and IBIT options marking a permanent market structure shift. The “chopsolidation” of 2025, months of sideways trading around $110K, has built a multi-trillion-dollar base that positions Bitcoin for a sustained move toward $150K and potentially a $3T market cap. Long-term holders are still selling in waves, but buyers, ETFs, corporations, and high-net-worth individuals, are absorbing supply and holding firm. Meanwhile, retail participation is shrinking, and institutions now drive price discovery. Check views gold as Bitcoin’s roadmap in a global “debasement trade,” with fiat currencies and bonds collapsing in real terms. He warns that external shocks, such as an AI bubble burst, could slow Bitcoin’s ascent, but overall sees the market entering a more volatile, euphoric phase driven by derivatives, liquidity, and demand for hard assets.

Best Quotes

“Bitcoiners are sitting on $1.5 trillion of unrealized profit, half a trillion more than Berkshire Hathaway’s entire market cap.”

“There’s something wrong with the denominator. It’s all one trade now.”

“Gold smells out the debasement first, Bitcoin follows with force.”

“We’re not seeing people exit because Bitcoin’s overvalued; we’re seeing people take profit while buyers vault it away. That’s new.”

“IBIT options overtaking Deribit this fast is mind-blowing, this is the biggest shift since ETFs went live.”

“Retail doesn’t move the needle anymore. The sovereign and institutional bid now defines the cycle.”

“We’ve proved a $2T base, now we’re building toward $3T. The era of chopsolidation is ending.”

“You don’t want dumb retail to show up, that’s when it’s over.”

“This time is actually different, you can see it in the volatility profile and the maturity of the bid side.”

“Stay humble and stack sats, the goal is to understand why Bitcoin moves, not to chase it.”

Conclusion

Check concludes that Bitcoin’s bull market is entering its euphoric stage, supported by deep institutional liquidity, derivative expansion, and a structural shift in market psychology. The $95K–$110K range now serves as Bitcoin’s “HODL wall,” signaling resilience even through major selloffs. As gold leads the “debasement trade,” Bitcoin is positioned to follow, reflecting growing recognition among investors that fiat is failing as a denominator of value. While AI and macro risks could briefly unsettle markets, the long-term trajectory is clear: Bitcoin has crossed the Rubicon from speculation to systemic adoption. Check’s final message is measured optimism, embrace the volatility, stay flexible, and don’t mistake noise for signal in a market that’s still “growing up.”

Timestamps

0:00 - Intro
1:20 - The Debasement Trade is here
7:00 - Businesses stacking sats
10:18 - James’s report and chopsolidation
15:40 - Bitkey & Crowdhealth
17:50 - Realized volatility
20:48 - Debasement goes mainstream
23:56 - Fiat in gold terms
27:01 - Are people waking up?
30:10 - AI boom
38:00 - SLNT & Unchained
39:26 - Gold ripping
50:32 - On-chain levels
58:44 - Retail doesn’t have the power this cycle
1:12:33 - Metrics to ignore

Transcript

(00:00) The era of chop consolidation as we know it is probably going to take a back seat because I think we now enter the proper euphoria phase. The fact that we're still pushing up to 125. Honestly, the market is now saying I want higher. You could be at 150 by the end of the week. People who are coming in now, the traders, the retirement accounts, they just see the IBIT chart.
(00:16) It's in a bull market. It goes up only. Bitcoin has this very, very unique characteristic where it lulls everyone to sleep and then it rips. Gold, I think, tells us the future. It's where we're going when all is said and done. It smells out the debasement first months in advance. Bitcoin's at 125 grand. It's punching all-time highs and I just flick through all the treasury company charts.
(00:33) Down 85, down 95. Some of them are punching new lows. The least discussed, but I think most important thing since the ETFs, there's a market structure shift has been these IBIT options. This time is actually different and you can see it in this chart. It's just looking at all the major fiat currencies.
(00:49) They're all down 40 to 60% in gold terms and Bitcoin is up 50 to 80% more than that. Now, the gold market going up is just raising the ceiling for where Bitcoin's going. Vast majority of these firms had like 0.1% allocated to Bitcoin. Tens to hundreds of millions of dollars. Tiny portfolio allocation. Massive dollars. What happens if they go to 0.
(01:05) 002 the most bullish metric of all time in Bitcoin? The realized cap. It just crossed a trillion dollars. I bit as of today just crossed over 58% of the overall AUM dominance. Blows into all the ETFs except IBIT are flat and IBIT is just tearing away. James, the debasement trade is on. New alltime highs are here. It's all one trade, mate. It's all one trade. There's something wrong with the denominator. It really is.
(01:33) It really is. And people don't realize it yet. It's fascinating, right? And like I've said this before, I think even on this podcast, it's amazing to me that like bond traders, I love Luke Gman's line, is like they have to lull them to sleep and just like slowlyize the bond market.
(01:51) they have to just like pretend that they're going to try and solve this problem. Don't worry, just hold these bonds. We're going to mandate these ones or no, it's okay. We're going to try and get yields down, which means bond prices up. And it's like, guys, it's just they're they're coins. They really are. And this to the skeptics out there, the Bitcoin skeptics, it is astonishing.
(02:09) I think uh Mitchell Hodddle, he had this tweet from earlier today. I'll I'll pull it up because I thought it was a good one. uh new all-time highs today and people for better or for worse still believe Bitcoin is a fad. Um not something to pay attention to, but if I mean we've talked about this many times I think how far Bitcoin has come in only a little under 17 years is is miraculous and it shows here like you we'll look back on Bitcoin's monetization and marvel at how fast it happened on the zoomed out timeline of humanity. Bitcoin's takeover happened virtually instantaneously. Truly a zero to one
(02:46) moment. Totally. Um, so here's an interesting thought that I'd be curious to get your ideas on. I don't know about you, man. I'm certainly observing that Bitcoin has become desensitized to it. So there's almost this bifocation of how people are observing and and analyzing and studying Bitcoin.
(03:05) People who are coming in now, let's call them the traders, the retirement accounts. Like granted, there's still a small chunk of the overall demand. um I would estimate something like 20 odd percent or thereabouts. They're coming in and going like they just see the IBIT chart. It's in a bull market. It goes up only.
(03:21) What's not to like? And then people, all the Bitcoiners who've been around through all the high octane phases looking at this thing being like, "Oh god, this cycle sucks. It's so slow. So boring." You've got this real interesting dichotomy where it's like it is monetizing at an incredible rate. Think about some of the headlines that we see these days.
(03:41) If you told yourself that back in 2020, back in 2018 for you back in 2013, 144, 15, you wouldn't believe it, right? You just actually couldn't believe it was happening and now we're so desensitized to it. There's like this bifocation of the market. What are your thoughts on that? I think Bitcoin bores people to death. It This is what Bitcoin does.
(04:00) It ls people into a state of complacency and uh uncomfortability where they're not happy that it's not reaching new alltime highs every day. But again, it's insane looking at the charts now. We're at $2.5 trillion market cap and thinking back to our conversation earlier this year where Bitcoin had established itself as a $2 trillion asset and it's already added 25% more in market cap since then.
(04:27) And it's like what do you what do you people want? What more do you want? It's up almost 100% in over the last one year. It's up 32.6% year-to date. five years up over a thousand percent like it is monetizing in real time. But you were alluding to some things that have manifested over the course of this year that may have some longtime Bitcoiners but hurt because they made the wrong decision. Oh yeah, the old treasury company trade.
(04:50) This I mean this is one of those things that like I I love it. Like all things I love the gray zone. The gray zone is where I find it interesting. Um and you know you look at some of the comments I get on Twitter. I was, you know, I poked fun of them on Twitter saying, you know, Bitcoin's at 125 grand. It's punching alltime highs. And I just flick through all the Treasury company charts. Down 60, down 70, down 85, down 95.
(05:12) It's like some of them are punching new lows as Bitcoin is ripping to new alltime highs. You just look at this thing like something is going on here, right? That the market is in my view, like my real high level view, I've had this line that MNAV gravity is towards one.
(05:32) It appears to be that MNAV gravity is indeed towards one that by the way gravity just means that's the that's the acceleration. That's where it wants to go. There are a handful of these companies that I think are going to be able to fight that gravity. But you need a toolkit, right? And if your stock goes below one, it's just hard to dilute shareholders. We're below one.
(05:52) And then people are saying, "Oh, well, why don't they buy back this stock?" And I'm just like, why would you want to own a hedge fund that isn't a hedge fund that basically sells Bitcoin at the high before it runs to buy back their stock which is in a downtrend, right? You're like, you're rotating out of your winner into your loser. Why Why would I want to own a company that does this? So, I just think the toolkit for companies that aren't strategy, that aren't maybe MetaPlanet, like there's a handful of these things that make sense.
(06:17) I just think the market's sending a really really brutal signal that there isn't quite the demand people thought there is for this like hundreds of treasury company trade type idea. Companies that saving in Bitcoin is great, but like I just I like I just think there's a lot of there's a lot of capital that's being incinerated and I think that's put a dampener on moods honestly.
(06:35) Um, some of them might come back and if Bitcoin goes on a tremendous run, there's no question there'll be some kind of premium baked back into these things, but will they ever like if you go and do that calculation of what it takes if you're down 95%. If you're down 95, it means you've been down 90, you've been cut in half again, you've got to get a really, really big return to get back to break even.
(06:54) Like to get back to break even. So, it's just a it's a challenging proposition. I think it really is. And it for most of these companies, I agree with you, there's going to be a prao distribution, probably even more pronounced of a distribution.
(07:13) And it just I've been saying it all year, it's just too good to be true that you can just easily spin one of these up and issue shares, do converts, whatever it may be, accumulate Bitcoin, and have your stock outperform Bitcoin. to your point like operating businesses that are profitable doing something completely different and unrelated to Bitcoin that has value uh and provides utility to the market is and they're funneling their profits into Bitcoin.
(07:39) That's I think that's the best strategy long term to totally I mean our business does exactly that. So like and that's that's the separation there's like the all-in sailor style strategy. Whenever I talk about treasury companies, that's all I'm talking about. Like companies that just sweep cash into BTC. Good. Fantastic. Exactly what you should be doing. It's the ones that go allin.
(08:00) That is a very very tough It's a tough business because you don't have the scale. Like strategy has the scale to tap debt markets. They have the scale to do preferred. They have enough inertia where the market believes that they can, you know, 640,000 corn. Sure, it's going to be hard to double your stack.
(08:19) maximum of two is challenging, but they also have the most means and likelihood of being able to do that. If once you get these small penny stocks, once they go below an MNAV of one, like how do you restart those engines? It's tricky. Um, but uh, you know, that's that I think that's one element, but I also think that part of this whole story is actually just derivatives as well.
(08:39) uh as the market matures that is I mean the least discussed but I think most important thing since the ETFs there's a market structure shift has been these IBIT options I don't think people understand how big they are I'm doing a report as we speak on this uh it's 51 cents of options leverage per dollar in IBIT like it's exploded it's now 57% of the trade volume for options it's overtaken Darabit uh and they only went live in November so this is just a massive massive massive shift to market structure uh you know it creates more avenues for leverage. Wall Street's going to start
(09:09) playing games to capture volatility. But as we know, Bitcoin has this very very unique characteristic where it lulls everyone to sleep and then it rips and it just moves. And that's the kind of thing where you can get a bunch of guys really offsides. Uh, and where we are right now, we're at 125 something or 124.
(09:30) There's a massive pool of calls, like 350,000 contracts that are due in octo, just October. So, it's a massive massive chunk of of total open interest. These are people who've sold covered calls above the previous all-time high. They've just flipped over to being out of the money, right? So, they essentially the c the buyers of those calls are in the money, so they're happy.
(09:54) But the guys who sold those covered calls, sure, if the price stays here at 124, 125 till the end of October, that's fine. They collect the premium, they win. But if we go to 130 or 140 and we just keep climbing, suddenly they've given up all that upside at massive scale. So you'll probably see the higher that the price goes, the more of those guys are going to say, "Oh I shouldn't have sold that upside." And start flipping and going the other direction. So it's going to be a very interesting dynamic.
(10:18) Well, that's one variable of many that you you highlighted in a recent report that you did in collaboration with Unchained about the changing market structure. And we've been touching on this during during our quarterly uh catch-ups throughout the year, but I don't know, I read the report, went through it.
(10:36) You seem more bullish than you have been um throughout the year. You you're calling for 150 and I believe the report had uh some potential targets above that. Yes. Yeah. So I think the uh the dynamic as it as it stands. So chop solidation's been my my meme of the year, right? That's been or actually meme of the cycle. We've had two major phases.
(10:55) The first one was in 24 proved we're a trillion dollar asset. Second one I I would say all of 2025 has been one big ass chop solidation. And just for clarity when I say chop solidation, it derives its name from uh an index a a technical indicator I call the the choppiness index. and it basically looks at how much energy is in the tank for a market to keep trending.
(11:21) Short story is when the market runs really hard in either direction and it works on daily, weekly, monthly time frames, you just hit a point of exhaustion where the market can't keep running. It's got to take a break. Uh and my definition of chop consolidation, it's obviously taking the chop part, combining with consolidation, price goes nowhere for like 6 8 12 months. Absolutely nowhere. You close your eyes, but it's sold off.
(11:43) It's rallied. It's blown up. It's liquidated people. Like accounts of the the bodies of traders are litted all over the road to get there and the price is dead flat. 2025 has more or less been that, right? Up until very recently, we're at 110. We had a previous all-time high in January at 110. The market's gone basically absolutely nowhere.
(12:02) And only in recent history have we started actually lifting off that base. That 2025 zone, here's some some fun facts for it. uh 30% of the supply currently has a cost basis above 95k 60 if you price those coins based on when they moved on chain. So really people, yes, some of us think about things in BTC terms, most people think about it in USD terms.
(12:28) When you buy a big slug of Bitcoin, you're looking at the price relative to that purchase price. So the dollar value is actually what people emotionally anchor to. So 30% of the coins are up there, but 60% plus of the dollars that have ever been invested in Bitcoin is above 95K. This is our new home, right? Imagine if we go down below 95.
(12:48) Suddenly that 60% of dollars, they're all underwater and going, "Holy did I just buy the top?" So, you can imagine how the sentiment would shift really badly if we went below 95. However, we've now bounced, right? We're now at 125. We tried to sell off. And let me tell you, there are plenty of signs of slowing momentum uh in this market. And you're right, I've been I've been relatively cautious over the last I would say month or two, really since the first um 125 all-time high.
(13:18) somewhat cautious because I was like, why is gold ripping? Why are equities ripping? Why isn't Bitcoin ripping? And there's this idea I've been floating around recently where gold, I think, tells us the future. It's where we're going when all is said and done. It smells out the debasement first months in advance. Bitcoin is much more sensitive to the near-term local liquidity.
(13:37) So, if Bitcoin is showing weakness, gold is ripping. One interpretation what that could mean is that the path between here and where gold is is a bit weaker, right? Where you maybe you see a crack in the equity market. Maybe the AI bubble slows down. Whatever it is, the response is going to be the basement at a monumental scale.
(13:58) This is the big print idea, but Bitcoin's going to show us the road to get there. Now, the fact that we're still pushing up to 125, great. And honestly, the market is now saying, I want higher. So my like big picture view here is we like we could have gone to 95. That would have been I think all over for for the bull. We didn't we didn't even get below 110 which is a critical level there short-term cost basis and we've bounced. We did that twice. The bulls are now in control.
(14:26) If we go back down to 110, you now have to ask yourself where the hell are the bulls? What are they doing? Like where's your firepower? So it kind of sets us up with a really nice just framework. But going back to your original question, that shop consolidation we've seen in 2025, if my thesis is correct, we've built an enormous base up here at 2 trillion. We proved a trillion in 24. We've proved two trillion in 25.
(14:50) So now the question is how many trillions and I mean the most logical thing is go let's go to 150. Let's see what that looks like cuz that's 3 trillion. But we've got this massive base, right? 60% of the dollars invest in Bitcoin have said I want it above 95k. Let's that like that's more of a flaw than it is a ceiling.
(15:12) So it's one of these nice binary setups and markets you've always got to hold two views at the same time. We have no there's no excuse for the market to go down to 95 right now. We have proven that we want to go higher. The bulls are in control. If not, the bulls are just weak source and it we're probably over for a period of time.
(15:31) But that's not the base case because we're at 125 and it feels like we want 150 and we're coming off a really really nice stable base. you can kind of start lifting some of your targets and saying, "Well, because we've proven 110, that's the floor. Where where do we go from here?" Sup, freaks. This rip of TFTC was brought to you by our good friends at BitKey. Bit Key makes Bitcoin easy to use and hard to lose.
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(17:55) Another chart that we're talking about before we hit record that I really like in this report is the realized volatility. And I think that is chop consolidation painted in another picture. If you just look at these ball numbers, you can see like it's a a spring coiled um getting ready to pop. And so I'm pretty sure that I called out this chart like if there's one thing in the entire Bitcoin market cycle, if there's one data point that says like this time is measurably different. And it's important to make the distinction here.
(18:20) When I say this time is different, it is not in the financial sense of the word, which is that when like the four most dangerous words in finance, this time is different, is when it's ripping to the upside and everybody is just saying new paradigm. No, no more bears, blah blah blah. That is not what I'm talking about.
(18:39) This time is actually different and you can see it in this chart. We are trading in a very, very different regime. If you look in previous bull markets, Bitcoin is very commodity-like. volatility picks up during the upswings and then compresses in the bare when no one cares about it. We've had this very very compressive vol profile and there's a number of factors that come into this.
(18:57) There's derivatives, there's options, there's also just this kind of institutional bid that's under us. Um, one thing that's been very characteristic of this cycle, if you look at spot order books and because as you would know, you can do taker or you can do maker, right? If you're a maker, that means you're putting in a limit order and saying, "I want to buy Bitcoin below the price.
(19:20) " Or if you're a seller, I want to sell it above the current price. The taker is the one that goes across the order book and actually hits the ask or hits the bid and is actually taking um liquidity out of the books. For almost the entirety of this cycle, we've had a massive bias towards net sellers, people who are market selling into buy walls, and the price hasn't gone down more than 32% twice.
(19:44) There is a huge amount of liquidity that's just sitting there on the buy side, but it's not rushing to the other side of the book. It's not doing FOMO buys. It's allowing the market to sell to them. It's a much more patient, much more conservative, sophisticated, honestly, bid side. And it does, it compresses the volatility because you're not getting those crazy down swings.
(20:07) We're also not getting the crazy upswings, but there's this like demand cushion sitting underneath the price just accepting all the sell side. And let me tell you, there has been some tremendous sellside this cycle. Tens of billions of dollars in a month. We saw 80,000 Bitcoin get sold. The market went down 3% and then recovered.
(20:27) There's just all these dynamics that say that we have a very sophisticated bid side and they are. They're just boring people to death, right? People are selling because they think, "Ah, you know, Bitcoin cycle's over and, you know, we've come to the end of the four-year cycle and it's been I may as well get out of this position." And then these like giant ball of buyers are just like, "Thank you very much. Keep it coming. Keep it coming. We're just going to absorb absorb absorb.
(20:45) " And then one day it's just there's going to be no sellers left. It's just going to rip. Yeah. And it's it's funny to the the October meme really becoming true in the first six days of the month. But then I mean just pattern recognition of the psychology of the Bitcoin market specifically like you had Paul Tudtor Jones on CNBC this morning like Bitcoin's going to rip, Gold's RIP, Bitcoin's going to rip.
(21:10) You have a bunch of people in Tradfi, you had JP Morgan come out and basically say we surveyed our clients and we're asking them why they're investing in particular assets when it comes to gold and Bitcoin. uh they're doing it because they're worried about debasement and fiscal dominance taking over.
(21:28) And then you had Muhammad Elra come out and basically say, "Oh, like Bitcoin is the debasement trade." And so, so you sort of have this mimemetic power, narrative power building around it at the perfect time, too. Which, by the way, Bitcoin has just memed that into existence, by the way. Like, we literally just said it enough times, now the whole world says it. It's great.
(21:45) It is. It I mean, it it seems like the basement is on on the table. I think if you look at what's happening here in the United States, particularly with the economy, it seems like the economic data uh is painting a different picture than what's actually happening behind the scenes in terms of the quality of life of most Americans uh that particularly don't own financial assets.
(22:13) You look at this push towards AI dominance and it being viewed as an arms race that we have to win. And when you factor in the the amount of money that's going to need to be poured into that, uh, it's immense. And we're seeing that manifest in the form of industrial policy being at the scale that it probably hasn't been since World War II with the Trump administration taking stakes in chip manufacturers, rare earth metal companies, um, pushing for, uh, the takeover of social media companies as well. And it it seems like we're definitely hitting a point here in the
(22:44) United States where uh the the sort of combined factors of the economic backdrop and the industrial policy and goals that the Trump administration wants to go after demand that that we unleash the money printers or inject stimulus into the economy one way or another.
(23:06) And they just there's just there's only so many options that they have, you know, like these this is just what they have to do in many ways. So, it's part of that dynamic if they're trapped. Uh, if you look at the the correlation between like people say Bitcoin's just levered NASDAQ, but Bitcoin's the correlation between Bitcoin and the NASDAQ, Bitcoin, the S&P, Bitcoin and gold since 2022, since the bottom of that bare market, it's basically just been one. So, everything is just correlated to everything.
(23:28) And this is abnormal. And it's because it's all one trade. It's all one trade. There's just something wrong with the denominator. And again, gold is sniffing this out. We have an inert yellow metal uh as well as a bunch of silver medals. In fact, I think I said on your pod some time back that I was a platinum maxi.
(23:45) Platinum is like one of the best performing precious metals at the moment. It's kicking ass. Um the market is just saying give me something that isn't cash because cash is just not doing it for me at the moment, which is it's incredible to watch. No, it really is. I'm going to pull up this chart.
(24:04) I can't find the Luke Roman chart off the top of my head, but I know that we shared it from 10:31 this morning, but just like really drive this point home, like it is. And it's crazy how under the radar it is for most people. Um, totally like especially when you consider how much Bitcoin gets bismerched in the media. Like if you look at the S&P going back to 2020 denominated in Bitcoin terms, it's clapped by 88%.
(24:28) Uh on my deck there's two charts are probably relevant. Uh look at slides eight and nine. Uh these are both really nice visualizations. Like I like I think Bitcoin is misunderstand gold a lot of the time. Uh I like like gold's my second biggest holding and I think it shows us the future.
(24:52) It helps me understand where the Bitcoin trade is going uh and why it's doing what it's doing. So go to I think it's the next one. This one here. So I like to use gold as my benchmark. So basically um for those who are just listening what we've basically done here is since 2022 and and specifically February 2022 and the reason that I've checked that date is that's when the US froze Russia's reserves.
(25:17) That's the immediate signpost to say hey the Treasury market is no longer your sovereign savings vehicle to anybody who was listening. Now it also the reason I like to pick that date is a it's a very important geopolitical date where the the foundation has been challenged at a fundamental level. Uh counterparty risk has been reintroduced to the savings asset but also it's not cherrypicking like Bitcoin's bottom and saying look how much it outperformed.
(25:36) We're not cherrypicking Bitcoin's top and saying look how you know how much it got destroyed. It has the bare market and it has the bull market that follows. Uh and basically what I've done is everything is indexed to gold. So gold is the benchmark of one and it's just looking at all the major fiat currencies.
(25:53) Dollar, Mexican peso, Aussie dollar, euro, pound, whatever. They're all down 40 to 60% in gold terms. And that's when I took these measurements, which would have been in late August. So it's down even more than that. I view gold as like the benchmark inflation rate over the long arc of time. It is the real um uh the real inflation rate.
(26:13) Bitcoin is up 50 to 80% more than that now. uh it it is versus gold and that includes a 55% draw down versus gold in the uh 22 bare market. But if you go down to the next chart, you can just say, well, you know, fiat currencies, they're all programmed to debate. So, yeah, of course, Bitcoin and gold are beating fiat currencies.
(26:34) Well, let's price the S&P 500, silver, um TLT bonds, which is Luke Gman's favorite line. Let's price all of these in gold. and they're down 10% for silver, 24% for S&P, 65% for bonds since that same period of time. So clearly there is something going on with these hard, scarce, sound money assets. Uh coins of all shapes and sizes are doing particularly well. Uh everything else, yeah, everything's part of the fiat ponzi, not so much.
(27:00) Well, do you think I mean taking into account that this time is different in the sense of the market structure and the players that are involved in in the Bitcoin order books and the derivatives around them specifically? Do you think people are beginning to wake up to this? And if so, how does that change things moving forward? So, here's an anecdote.
(27:26) Uh, if I I I regularly track what's going on at the local bullion dealers here in Australia. Almost all 1oz gold coins are on back order only. Uh when I was buying platinum, every time I would go in, I would say, "Hey, is anybody buying this stuff?" And they like more sellers than buyers. No, no one really cares. I can't find a platinum coin to save my life now. Sold out everywhere.
(27:45) All the gold coins are on back order. Um even the silver market, right? They've got they got thousands of these um you know, silver coins with stupid designs on them that no one wants to buy. Even they're starting to run out. So like just the local bullion dealers are moving into back order only here in Australia. There is a clear demand.
(28:04) Now what does that do to people's psyche once people work this out? And this is another thing that I think Bitcoin has me'd into existence. Gold bugs tried forever to get fiat currency. Call it what it's actually called. Give it the name. It took forever to for gold bugs to even achieve any kind of, you know, acceptance of the term. Bitcoin to show up on the scene.
(28:21) Next thing you know, everyone from Gen Z to boomers are talking about fair currency. So, we managed to just crack that egg and say, "Hey, there's something wrong with your denominator. Call the evil what it's called." And as people work this out, this is another thing I think is really interesting. We're all but seeing an era where information travels much faster.
(28:40) Narratives travel very quickly through the internet. There's this dynamic at play where we're just kind of working out like what the actual trade is much much sooner. So, I think about this in the context of the AI boom. I think there's a lot of evidence that it's a bubble.
(28:59) Uh I'm certainly like a little bit concerned about it because I I get there's like the industrial policy side of it, but also the revenue picture of it is very very questionable. But how quickly can like if you look at the dotcom bubble, it took a long time for people to actually work out. You had many many years of this thing just going vertical and there's no question there was a you know all the fiber was laid and all that the internet was super powerful blah blah blah. Are we going to reach that point of the Pets.
(29:25) com recognition moment much sooner? So, if people kind of index and say, "Ah, it's still 1999, but what if the timeline from 1999 to 2001 isn't 2 years? What if it's 2 months?" You know, what if things just travel much quicker? And in my view, that's like the one thing.
(29:48) If there was a major risk vector for Bitcoin, I actually don't think it's internal. I think the Bitcoin market is actually quite sound, quite solid. I just think that the the external factor of hey, suddenly the AI bubble isn't quite as healthy as we thought. There's some kind of external event that just breaks down. That's the main thing that I think is hard to analyze, hard to kind of track when those things pop.
(30:07) But there's enough warning signs that we should be paying at least a little bit of attention. Yeah, it's funny. I've been um spending the last two days really battling over this question internally in my own mind. Um I've had Jordy Visser on the podcast and I've been watching his weekly show and a watch a bunch of other shows to it too.
(30:26) And when you when you compare the AI boom to the dot bubble like they obviously rhyme in many other ways but then there are ways in which they don't rhyme. a.com era was laying broadband and there really wasn't much use for that broadband yet because nothing had been moved to the to the digital world uh in size or materially or anything that was worth um monetizing at that point in time.
(30:52) And I I guess this is what Jordy and many others are saying was that it's different in the sense that like the AI has utility from a productivity standpoint right now for whoever uses it. I think Chat GBT has 800 weekly active users and u everybody admits that there's definitely a massive misallocation of capital going uh within AI specifically.
(31:20) It's just the question of is it as sort of catastrophic does it does it re is the end result as catastrophic as the dot bubble bursting or is the signal within the capital that's been allocated to AI strong enough to sort of just uh shed yourself of the bad investments and the good ones will shine. Not only will they shine, but they'll produce so much productivity in advance. The people leverage them so much that uh it won't be as bad as 20201. I don't know yet.
(31:50) Jerry's still out in my mind, but it is like one of those fascinating inflection points that we find ourselves in in trying to make decisions because this is all new to everybody who's involved. Um and especially when you consider like the exponential increases the to productivity that that AI is is bringing the world.
(32:13) Yeah, I very much agree and I think there's no question that the potential is there but and again this is very very anecdotal. I I certainly find for me AI makes way too many mistakes. Like there was when I was trying to do this study on I bit options. I started pulling number from because data sources in the trad world you'll be amazed how often they diverge and you're like hang on a second I've got 5 billion from this source but I got 35 billion from this one. Which one is it? So it's very very hard to actually reconcile this stuff. So I was using AI.
(32:37) I tried Grock and chat GPT and I'm like can you just estimate for me what is the open interest for IBID options? And then you do the deep think one where it actually really goes through and looks at different websites. And as I'm reading through its copy, it's like, I'm just going to assume that there's a million contracts open and then just carries on.
(32:56) I'm like, what do you mean you're going to assume there's a million contracts open? And I just send it a website, but like this one here says there's like 53 million contracts open. Oh yes, you're abs. And you're absolutely right. There are 53 million. It's like, me. Like do I have to check everything? And I do wonder it'll get there, but the mistakes it makes already.
(33:15) I find that I'm using it less and less. Uh, and then again, that's just me and how I work. I mean, I like to write my own stuff anyway, but even in my coding, like it helps me do when I'm building up charts and things. Yes, it can make things faster, but also the amount of times it just introduces random bugs or like it wants to make a change.
(33:32) I'm like, I don't want to change anything. Just like off, leave me alone. And sometimes I just have to disable it because I'm like, you're literally just a pain in my ass. I got I need to focus on my own work. So that's just where we are at the moment. So again, that's not a that's not a perfect analogy to say that it's all it's not going to work, but there's still a lot of errors and I can't quite see like for me, I think the AI there's a lot of similarities to Bitcoin mining.
(33:56) Some examples of this uh if we look at like the subsidy and fee model for mining they don't control their output cost which is uh bitcoin that's the thing they produce the subsidy is guaranteed income the fees are volatile and based on user uh user application we've gone through a phase at the moment where they're training all these LLMs that must happen it's like a big race for building up these LLMs that is guaranteed usage of these chips of these data centers That's the subsidy. But at some point, that's a very expensive
(34:30) exercise. And those models get deployed and they have to start actually generating revenue in people's business models, in apps, whatever it is. Over time, that subsidy is probably going to have to give way to the inference side of the equation where people actually have to use AI. And by using it, that's your fees. It has to be useful.
(34:50) If you keep plugging stuff in and it goes, oh, I'm just going to assume this legal premises. you're like, "But that's there's no premises for this whatsoever." The more people are going to say, "Maybe I can't trust this thing to actually do the job I'm asking it to do." So therefore, your fee revenue goes down.
(35:08) So, it's one of those dynamics to just keep an eye on that we're just not there yet where I'm like, it's going to replace thousands and thousands and thousands of jobs. It'll certainly replace some, and it is, but I'm not necessarily convinced that we're going to see like a shedding of the workforce in the next period of time. Now, that's a longer term view. That is something that probably will happen.
(35:26) And the sad reality that I have to balance this with the world is a bell curve. And sadly, even with all the mistakes that AI makes, there are still a lot of people who probably are going to be replaced by the systems as they stand today because they also make mistakes. So that's also a challenging dynamic to be aware of. But yeah, it's it's it's hard to get your head around where we are in this whole mix.
(35:43) It really is. It's so fascinating, dude. I completely agree. I I catch it making mistakes every day. we've been leading more into the video gen stuff which has been fun but it's uh no it's just fascinating to think through this and I wish I wasn't actually I don't wish I wasn't 9 years old when uh the do bubble was bursting but it would be interesting to be able to uh sort of teleport back to that point in time and try to gauge the u the sentiment correlations that are that are happening uh back that were happening back then that are happening today because everybody in Silicon
(36:18) Valley Obviously on CNBC is like dead set like it's here it's happening and we're getting to the point where trillions are being poured in. It's like oh my gosh what uh better hope this pays off. But it also highlights the relative value of Bitcoin as well. I mean, we we talk about this a lot at 10:31, like you have all these venture capital funds and growth funds being thrown at AI and yet still Bitcoin, which arguably I can make the argument is more important or a bigger total addressable market than AI because it's going to be
(36:54) the whole money of all the world and AI is even going to be using it still overlooked by these same investors. Yeah. And I I think one thing that I've I can't remember where it was a couple of days ago. You saw the headline that uh Nvidia invested 100 billion in I think it was in Open AI so that they can buy 100 billion of Nvidia chips and you're just like this is some like PowerPoint plugged into itself type It's starting to get a little bit circular and like where have we seen this before? the crypto industry in every facet like we're going to fund this protocol which is going to fund this one which is going
(37:26) to put and you just see these like loops of internal financing and you're like is that because you can't actually raise money anywhere else like is that what's going on here so some of those dynamics are also you know leverage and debt starting to creep in and again I'm not an equity analyst I I couldn't tell you where we are in this whole cycle but also I I've come to trust my gut in markets because generally speaking that serves me well I just have this this smell test you're like like at some point this doesn't carry on the way it's currently going right we're
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(39:19) Download now and you'll also get access to the online event featuring James Czech. Bitcoin has crossed the Rubicon. Get the report at unchained.com/tc. That's unchained.com/tc. Bringing this back to Bitcoin I think going back to Paul Tudtor Jones comments and actually I've been recording I've recorded twice with Michael how from crossber capital and his whole thesis is we have these liquidity cycles that are dictated by the duration of treasury bonds and other debt instruments and he was saying 2 months ago that we probably have 6 to9 months left in this liquidity cycle. So, I mean, four to seven months left from from this point forward. Uh,
(39:57) and then you had Paul Tudtor Jones saying like from here to the end of the year, it's a big meltup. Um, and so that's I I could feel like the 17 the 2017 vibes coming back in terms of the speculative fervor, not only around Bitcoin, but all assets. Yes. No, and that's one of the real challenges, right? You've got all these competing forces and I was listening to Brandon Quiddam talking with with Danny the other day. The whole fourth turning idea. You've got like the long-term debt cycle. You've got the social structures
(40:27) that are the institutions that are weak. You've got all these things coalesing at the same time. Liquidity cycle, debt refinancing, social cohesion, uh you know, uh politics, all of it is just a real melting pot with like there's not that many stable things when you look around.
(40:46) And actually, I was going back to gold. I was talking to my old man. So, he's retired and he has to have his assets somewhere. And he was uh he's now properly convinced and he understands the gold trade. But I've been saying gold for years, for years and years and years. And he finally started to catch on. He's like, "I get it." He's now understands the Bitcoin and the gold trade.
(41:06) But he was like, "Why gold?" And I was like, "Because look, if you look around the world, there's instability everywhere you go. Everywhere you look, there's just stuff that's going wrong." And I said, ' Do you know what a shelling point is? And he goes, "No." And I said, "We're in Paris." And I say, "I'm going to meet you at midday. Where are you going to be?" And he goes, "The Eiffel Tower." So, of course, you're going to be that's that's the shelling point.
(41:25) So, when the world is in just a real pretzel and no one really knows how to like where do I put my money? Uh, and he was saying that he went out for like a golfing weekend with some of his mates and he asked, "How many of you guys know what's in your we call it superanuation, your 401k? How many of you guys know what's in your 401k?" They're all retired.
(41:43) And he goes,"None of them had a single clue what was in what they'd invested in. They had no idea." And he's like, "What are your fees?" They're like, "I don't know. I've never checked." This is kind of where a lot of people are. So, if you come back to that view, when people start to finally click and go, I'm struggling to retire and the things I own. Yeah, sure.
(42:01) I'm getting 6% 8% a year, but my bread just went up 25% in 3 years. Like, something's wrong. I'm not earning enough to stay solvent. What are they going to do? They're going to look around. It's like gold is just that shelling point where people go, I just I get it. I don't You don't have to explain gold to anyone.
(42:19) They just understand that it's valuable because it's gold. It's kind of as simple as it gets. So, that's kind of the dynamic I think why uh gold makes sense. I think Bitcoin it's just I mean gold's just got the size and the scale and the central banks and all that, but Bitcoin is the only other asset that has even a remote potential to achieve that. And uh I was talking about this the other day.
(42:43) Once Bitcoin, it's already at 10% of the gold market cap. And by the way, the gold market cap going up is just raising the ceiling for where Bitcoin's going. Uh it's just lifting up where that target is as more people start to click that these two things are synonymous. Uh and in a way, we've again Bitcoin has kind of memed that with digital gold.
(43:01) Call it an affinity scam if you want, but we've basically associated oursel with the only other asset that's kicking ass. people are going to start saying, "Well, maybe if it's 10%. What happens if Bitcoin goes to 20% of the gold market cap?" Once you're at 20, go to 50. And once you're at 50, let's go the whole way.
(43:18) Like, if you can prove that you're at 50%. Go the whole way because if the market's willing to support that kind of evaluation, then why wouldn't it go higher than that? Yeah. No. No, I I think this is a really important topic to dive into because I remember back in jeez um like the first time the sort of Bitcoin to gold parody targets were being set out there.
(43:41) I think the first time if I remember correctly it was like Bitcoin 336,000. That's when it reaches parody with gold. Then like 2017 21 750,000 now it's like 1.8 million. And I think in terms of market cap, that's what people really don't realize. Gold's up what, 40% this year. It's adding literally trillions of dollars to its market cap on a somewhat daily basis at this point.
(44:07) And that's I think we're talking about like orders of magnitude that you're climbing up. Gold's obviously been the target for some time, but even the target, it's like a moving target that's drifting higher as it appreciates and more people uh accumulate that.
(44:25) But the the gold has added tens of trillions to its market cap very quietly and like in Bitcoin sitting at a $2.5 trillion market cap. It would be basically insane to think that that could happen in the timeline that it's happened with gold. But I think that stat alone highlights how early we are with Bitcoin.
(44:42) The fact that gold has quietly added I believe over 25 trillion to market cap and crazy. It was like it was 25 trillion, you know, uh I think at the start of the year somewhere around 25 and I think if you go back to like the the run here really started in 23 from memory.
(45:00) Uh and if you go back 22, I'm pretty sure it was like 7 trillion at the start of that 2020 run. So it's basically added 20 trillion, right? 10 bitcoins worth of value in the span of like 3 years. And I I I really believe this is very much a um elephant through a keyhole type idea where you've like if you look I saw a sentiment poll um recently and it basically showed the allocation that institutional investors have to gold and like 45 or 50% of them had less than 1% allocation and you're like no one owns this thing and even like the upper bound was like 4%.
(45:31) Most institutional investors have no allocation to gold very very small and then you look at their Bitcoin position it's even smaller. Um I ran a study, it's a little bit outdated now, but uh it would have been in the first like two or three quarterly cycles of the ETFs going live. It was something like 20% of the ETFs were held by institutions.
(45:51) And the vast vast vast majority of these firms had like 0.00001% allocated to Bitcoin or their AUM. Now that 0001% was like tens to hundreds of millions of dollars. Like it was infant like tiny portfolio allocation, massive dollars. And you're just like, "What happens if they go to 0.002 0003.1?" Suddenly you're getting like a 10x. Now we're talking about billions of dollars coming in. Elephants through a keyhole at some point.
(46:17) Like there there really is just so much capital that has to find a home and it just takes time. It takes time for the market to work out. There's something wrong with my denominator and I got to go looking for an alternative. Yeah. And I think that that's bring it back to like fourth turning.
(46:35) I know this time's not different in terms of uh if we get to like new breakout all-time highs and it's like the new paradigm super cycles here, but it is fascinating. You had Germany come out today and saying they want to raise the retirement age to 72 to make sure that they can pay out their pensioners. Trump flippantly just like off-hand comment two weeks ago um posited the same thing here. Let's let's raise the age to 67.
(47:02) Uh, and I don't know if you're seeing it over in Australia, and I'm sure you've seen the Tik Tok videos from over here. In the United States, people are in the cars talking about health insurance premiums going up like 50% on average across the board. Here in the United States, uh, this year, we have the open enrollment window, which just opened up uh, at the beginning of this month, and it'll be open till the end of January. People get to pick their healthcare plans there.
(47:26) And I think on average across the United States the the sort of premium is going up anywhere from 25 to 60%. And the cost is getting way out of hand. People are intuitively understanding that something has gone off the rails. And like at what point do they force their politicians, their wealth managers, their raas to say, "Hey, you need to get into these hard assets.
(47:53) " The math math. It's funny. And then it's like I uh I mentioned to you before we hit record, I moved to a new area. I was at a little cocktail party on Friday night and met uh a gentleman who runs a big Raia buck here in the United States and he like sort of like pulled me aside. He's like, I need you to teach me about Bitcoin. Like I I don't I don't know much about it.
(48:16) Anytime somebody's pitched it to me, it's it seems like too good to be true. But it's like, dude, you manage billions of dollars and you don't have a grasp on Bitcoin yet. It's not. Yep. I didn't say it to him and hope he doesn't listen to this. But if you are listening to this, we need to sit down and talk cuz it's not okay. But it it's also getting to the point where people are asking those questions.
(48:35) And that's again a very very big difference. Um I've successfully orange pill four or five different people uh this cycle. But I I don't go out of my way anymore to orange pill people. I just if they've got questions, I've got infinite time. But the way I would characterize the folks who have actually come to me with questions, people who actually have wealth, they've got some kind of serious family wealth behind them, they're looking around and going, there's something wrong here.
(49:00) Uh, you know, I don't really want to keep invest like real estate's illquid and there's certain risks with those depending on where you live. There's just all these things people go, you know what, maybe I actually need to look into something that is scarce, liquid, and just I can hands off. I don't have to think about it anymore.
(49:19) So that's the kind of dynamic I think the the kind of the high net worth individual also the retirees um you know with our one of our plans that we have at check and change our orange plan disproportionately retirees who have a you know meaningful amount of wealth and they're now looking ahead and saying well I need to buy myself some runway but I also really understand Bitcoin trying to find that balance between like I don't really want to sell all of it but I kind of need to sell some of it or I need to you know find some kind of liquidity somewhere but that dynamic of the type of investor who is now coming into Bitcoin and staying here. That is a really really different dynamic that I think a lot of people
(49:50) have missed. We're not in that like millennial hodler phase anymore. Um and of those millennial hodlers I think a lot of us like people say well why would you sell your Bitcoin? This is a topic that you know I like to talk about because one sold Bitcoin is one bought Bitcoin. It's actually a measurement of demand.
(50:08) But there's a lot of people like you and I who are at that phase where they've got kids, they need a house, they've made a bunch of money, they kind of need liquidity to like improve their life and live because that's kind of more important than your Bitcoin. That's another phase I think is misunderstood.
(50:24) People sell because they just have life requirements that are more important than number go up, right? Because lifestyle go up is just more valuable. So I think that's another component that is worth worth tracking. Agreed. With that in mind, I mean the what what are you seeing on chain like talking about new market dynamics, new drivers um for liquidity in the market and new buyers and sellers.
(50:50) What are the levels that are sticking out to you now that we cross over a new all-time high? Yes. So, uh if if I kind of it's easier to illustrate on the downside because on the downside the real risk is 95. 95 is a level that we don't want to hit. And honestly, we go back down to 110. You're like, why? Why do we go there? We have no place being there.
(51:09) Uh I was describing that whole block. That's 60% of all the dollars invested. I call it the hodler's wall. Because that zone is super super like just so many coins are there. So many cost bases there. It's where our sentiment lives. We don't want to go below that. Now, on the buy side and the upside, this is where things start to get really interesting.
(51:27) Uh, I think there's a there's a chart I think I can see in your in the background there. This chart with waves. There's two arguments that I think should be put to bed. The first one that Tradefire guys love to put in the put out there is that Sailor has been the only buyer in this market and it's just measurably false.
(51:47) It there's no way that it the numbers simply aren't big enough for Sailor to be the only buyer. Uh, if you flick down to so actually we should come back to this chart. There's another one at I think it's slide 21. Um so if we look at the overall hang on keep going keep going keep going. I think it's after this next one. This one. No.
(52:12) Although this one's also useful. Let's just start here. First things first. Um the most bullish metric of all time in Bitcoin. The realized cap. The realized cap. I just want to pause here because it's actually really important. It explains the next chart. The realized cap prices every coin when they last moved on chain.
(52:31) So the coins that you bought back in 2019 or 2013, if you still hold those UTXOs, it's saved at that price point. And the reason why I like this is it represents our as investors as Bitcoiners. This is our proof of work. This is the money that we earned in our fiat job and we gave to Bitcoin to look after, right? It's when we allocated it. It just crossed a trillion dollars. So Bitcoin is a $2.
(52:50) 5 trillion market cap. We have collectively allocated a trillion dollars in our hard-earned savings to this thing to look after. And by the same token, we're now sitting on $1.5 trillion of unrealized profit. Just let that sit with you for a second. Bitcoiners are sitting on a 1.5 trillion of unrealized profit.
(53:10) Birkshire Hathaway's market cap is a trillion. So, we've got an additional half trillion worth of just profit relative to Rat Poison Squared's market cap. Kind of tough. Anyway, so go down to the next chart. I think this is a really good one to understand the supply and demand balance.
(53:27) So I mentioned that Sailor it is impossible for Sailor to be the only buyer in this market. So that's the first thing I want to put to bed for those who are listening. The chart we're looking at here, so the realized cap is like the onchain market cap. If you buy a coin at 10K and you sell it at 100K, someone had to come in with an additional $90,000 to buy that coin.
(53:46) So it's really representing a capital inflow. And likewise, if you buy the top and sell the bottom, you've destroyed capital. So your realized cap is going to increase and decrease as we all do this in aggregate. So if you look at the 30-day change of the realized cap, the best way to think about this is capital flows. It is profit taken by one guy, but new demand by another guy.
(54:06) Newton's third law, equal and opposite forces. So, if you look at the orange curve, we see these massive waves in the 2024 peak in March, in the January, November, um, January of this year, November of last year, and we're talking about 70 billion, 80 billion, hundred billion a month in profit taking, but that's also demand. Profit taking and demand, they're synonymous.
(54:32) So, there's two narratives that go to bed. The first one, the purple, the dark purple you can see there, is Sailor. It's just so much smaller than the amount of aggregate demand. There is so much more demand than Sailor. Very rarely is his buying more than like 10 to 15% at most of the overall demand profile.
(54:50) So it is literally impossible for Sailor to be the only buyer cuz you're missing 85%. Now there's about 20%. The green zone is looking at the flows into the ETFs. So this is how much coin the ETFs are buying. So this puts to get bed another narrative that a lot of people have missed. They just say that all the pro it's not really profit taking.
(55:09) No one's actually taking profit. They're just rotating into the ETFs. The ETFs are five to six times sorry the the profit taking is five to six times larger than the ETF flows. It's impossible. It is impossible for all of those coins that are taking profit so to speak at the top are just rotating into the ETFs.
(55:28) The ETFs should be 10 times bigger for that to make sense. It just doesn't make sense. So I think those two narratives can be cleanly put to bed. Now, when I talk about sellside, in my opinion, it's super bullish. Like, it is the most bullish thing that's happened this cycle, 55 to65 billion a month in July and August of net sell, and the market went down 12%. And has just rallied to all-time highs.
(55:58) That is 55 to65 billion a month of demand that all the bears just aren't quite understanding is sitting underneath us. So yes, there's a lot of sellside and I'm actually I'm writing a report as we speak. The average age of coins that are being spent this cycle is much much larger than previous cycles and trending higher.
(56:18) We are seeing a lot more old coins, whales, OGs, like actual serious old money. Lots more of it is coming back to market this cycle, like significantly more than any previous cycle. And it's sustained and it's been going on since mid 2024. So that's a important thing to note. and we've barely pulled back 32%.
(56:38) You know what I mean? Like the the demand profile of who is coming in, it's institutional in scale. If you look at the the actual the memp pool, we have very very few like the mele's almost empty. We don't have as many transactions, but the volume, the onchain volume is like almost at alltime high.
(56:56) So, what does that tell you? You've got few transactions, but it's almost all-time high volume. Big money. We have huge pools of capital. What we don't have this cycle is retail at all. And I talk about this in terms of Bitcoiners as well. If you look at the 90-day change of all of the balances held in like UTXOs under one BTC, so the shrimp cohort, we have been in net distribution since 2023.
(57:19) The overall balance of small retail holders has been decreasing persistently since 2023. So there's a lot of sat stackers out there who are also taking profit which is just that's just part of the the handing of the baton right we are seeing a major change in Bitcoin's ownership structure well and that's one thing I worry or not worry I wonder with this cycle too many people anchoring back to 2017 and 2021 specifically and saying retail's not here retail's not here and I'm sitting back thinking I don't think retail's coming this cycle I don't think retail
(57:51) has the money I don't think they have the money to come I think that's true and also So you actually don't want retail to come because they come like sorry and I say there's two ways to think about this. You do want retail to come because you don't want Wall Street to be the only player in the market. So that's the the more sovereign side of the equation.
(58:08) But you don't want dumb retail to come because that means it's over. So you kind of want to balance your views. Like if you're waiting for retail to come that means it's actually finished. It's all it's all over. So I also just think that Piton is a big enough market that you kind of need institutional money to to move this thing now. Um it's just the nature of being a very large multi-t trillion dollar asset.
(58:28) Retail just don't really move the needle. They you know a small factor but even so after all these years shrimp only have like 5% of the BTC. You know they're a very very small component. Sailor got what was it 3% something like that. Um you know one entity versus all of the shrimp comparable. Yeah.
(58:47) What are some of the sort of events or entrance into the market that you're keeping an eye out for in the coming months that would that would signal that things have not only changed but are changing massively? Are you expecting nation states? Are you expecting normalization of uh ripping cash flows into a Bitcoin treasury for profitable businesses? Um I think the last time we talked was right after Figma uh filed their S9 or excuse me their S1 uh to go public and we made aware that they had 70 million in IBIT and they intended to buy 30 million of spot BTC as well. Um what are some of
(59:26) the sort of sticky demand drivers that that you're looking out for that we haven't talked about yet? Obviously, we got ETFs, treasury companies, um, family offices, and high net worth individuals, but is there anybody else I mean, no one specifically. I just think that we're we're watching a modern Bitcoin cycle, and we've got to come into this thing recognizing that things have changed, right? It is measurably different. Um, there's still going to be cycles.
(59:54) We're still going to have peaks and we're going to have troughs, but as we've seen so far, those peaks and troughs, they have a very different character. the volatility profile is very different. The derivatives landscape is evolving. Like, as an analyst, for me, this is awesome because I'm I'm watching Bitcoin grow up and mature, and there's all these different facets.
(1:00:12) Like, yes, I'm known for the onchain side of the equation, but that's really just the substrate that stitches all these things together. It's like it's the settlement layer between all of these different vehicles. And really, you've got to analyze and study all of these components. It's not as simple as just looking at old metrics and saying, "Oh, it's got to get to this height now.
(1:00:30) it's got to get to this level or it hasn't hit that level. I think a lot of people are going to hang on to old ideas way too long. I also think people are going to throw out things that work because they're like, "Oh, it's a new cycle now. We don't that that's broken." They're going to throw stuff out too quickly and they're going to hang on to stuff too late.
(1:00:48) For me, that's that's exciting because we get to live in this very very new modern idea of like be flexible. Allow the market to tell you where it wants to go. Um, look at what the ETFs are doing. Look at what treasury companies are doing. Look at what sovereigns are doing. Like there's a whole bunch of different angles here that we've got to study. And it's just all information.
(1:01:06) Like for me, some people look at metrics and they go, "Oh, this metric has to do this." But to me, it's information. Tell me about the profit of investors, where's the supply dynamics, how many coins are and aren't moving, what's the average age of them. All of this stuff just helps you understand who the buyers are, who the sellers are.
(1:01:25) Uh, one thing we've seen that's very different this cycle in 2017 and 21, we had like if you look at long-term holder supply, it was basically one big sellside event. The bull was just one big sell as you go up type thing. We've had three waves already of that and we saw that in that chart before massive sellside in 24, but then what was really interesting is long-term supply recovered almost back to its high. Then we had the second wave of sellside in November, December.
(1:01:49) long-term hold of supply recovered. We're having the second or the third wave of net sellite as we speak. But here's the thing that it's telling you on the way down for long-term supply. So price is up, supply is down. That's telling you a story about the sellers. Lots of sellside. But then the recovery is telling us about the buy side.
(1:02:08) Who bought those coins 5 months ago? They are hanging on to them. So that's one thing that's very different this cycle. We are not seeing this like I'm going to exit my Bitcoin position because Bitcoin's overvalued. There's a I'm taking profit because I've got to do X Y and Zed or my firm has to do it or I need to retire or whatever it is.
(1:02:25) I'm going to take my profit but then the buyer is like hey I really want to own this thing stick it in my vault and sit tight whether it's ETF or spot doesn't matter. So that's a dynamic that's very very different. We have this buy side that is willing to buy at 100k at 110k 95k and put it in the vault and sit tight.
(1:02:49) That is a very very different dynamic that we've seen that in previous cycles but not only with the hardcore hodlers. Now it's a bit more mainstream. The hodddle idea is much more mainstream than I think people give it credit for. And that's super bullish. And do you think this has been made easier by derivatives so the institutions get and buy and then hedge out? Yeah, I and and that's derivatives getting bigger. Yes, it massively changes market structure, but it gives them an opportunity to buy in the first place because they can hedge risk.
(1:03:12) And when they can hedge risk, they can take the risk in the first place. So, it actually enables big money to come in. It's a natural part of market structure. There's no question it changes volatility profiles and you know, you can call it paper Bitcoin and whatever else, but it also enables the the initial buy side.
(1:03:29) You had that chart up before that was looking at the cash and carry trade. We saw the ETF flows and CME open interest trade alongside each other. Now we're seeing IBIT open interest trading much the same with um uh with what's going on with the ETF flows. So covered calls and I mentioned before at 123K there's an enormous call wall people who've sold covered calls at that zone. But you can see how these things move together.
(1:03:57) Um, and what's really interesting, if you go back to pre- November last year, it doesn't matter what ETF you buy in order to put on a uh buy spot, sell the future on the CME. It doesn't matter which ETF you buy because they all track the Bitcoin price. So, up until November, all of the ETFs were growing at the same rate. We saw FBTC growing, even the smaller ones.
(1:04:20) It was a prito distribution, but IBIT had some advantage, but it wasn't just like tearing away. If we look at it since November, IBIT as of today just crossed over 58% of the overall AUM dominance flows into all the ETFs except IBIT are flat for the last basically year and IBIT is just tearing away. Now we're seeing that the IBIT options are the preferred vehicle for pretty much all these traders.
(1:04:46) Futures volume and futures open interest is kind of stagnant um across like Binance and CME. CME is down. Binance is flat since November. Buy bit is flat since November. We haven't seen that much growth in futures and they used to be like the lion's share of um trade volume. Options absolutely parabolic in every single metric you look at. Just straight parabolic.
(1:05:12) So this is now the thing that is in my opinion the most underdised biggest change to market structure since the ETFs went live themselves. The fact that Ivid options surpassed Darabit as quickly as they did is kind of mind-blowing. Oh, totally. And Darabit's been the market leader like 95% dominance forever. Yeah. And I guess let's talk, you mentioned paper Bitcoin summer, but James, Wall Street's going to take over Bitcoin. Price suppression is on the way.
(1:05:35) So that's what's right now. Right now, we've just seen a bunch of guys with covered calls at 123K suddenly go, "Hang on a second. We're at 125. Did I sell too much upside?" Now, for those who aren't familiar with options, when you sell an option, you're basically, if you sell a call option, you're basically selling the upside above that strike price.
(1:06:00) So, you do collect an insurance premium. So if the price goes to 123 or 124 125 and stays there for all of October, you actually win because the insurance premium that you collected for selling that covered call will more than offset your losses.
(1:06:20) Generally speaking, if on the other hand, we go to 130 or 140 and the bulls really are in control and we start moving, all these guys are going to say, "Whoa, hang on a second. I got my $600 worth of insurance premium, but I just missed out on $25,000 worth of upside. Maybe I shouldn't do that again, right? And more people will come in.
(1:06:38) But these options um the way that options uh dynamics play out, same as futures, if you've got a very large liquidation level, let's just say at 125K, let's say there's a giant um guy who sold all these contracts, it may be easier for him to lean on the spot market because it's smaller than the futures market.
(1:06:56) Sometimes it's easier for them to lean on spot in order to keep their futures position alive. But we have to remember this paper Bitcoin summer. The bulls have the same artillery. They have the same leverage in play. And all the guys who've written those call options, there's a bunch of guys who bought those call options and they want it to go to 130 140.
(1:07:17) So paper bitcoin summer in many ways it works on both sides of the ledger. Both teams have the same weaponry and it's like in many ways I my if I had to predict what goes on from here on. If we go down to 110 I think the bull market's over because we just have no place being down there.
(1:07:34) That's my like I I think it deteriorates quickly below that. That's not my base case. My base case is I think we're heading higher. If we're heading higher, I think the era of chop solidation as we know it is probably going to take a back seat because I think we now enter the proper euphoria phase. If we get proper legs from here, I think it's off to the races.
(1:07:53) And my base case is we probably get more corrections, like actual proper sell-offs that make people themselves and go, "Oh, damn. It's over." And then it springboards higher again. So, I suspect we actually move into a more volatile regime. That's going to bring more options traders in. The more options traders who come in, the more they have to buy the underlying to sell the covered calls.
(1:08:12) Like suddenly you actually get more liquidity, more demand, more inflows. Um, all of this assumes that, you know, we don't get an AI bubble that implodes and just nukes everything. But my base case is that we actually move into a much more volatile environment moving forward. Exactly. This chart dead on.
(1:08:30) I can't stop thinking about this chart and when money well like when money like if you haven't read when money dies, go back. You only have to read like a few pages of it when they're talking about every paper boy was trading stocks and thought they were wealthy on p uh like they thought they were wealthy but they didn't realize that the denominator was getting blown out. Like it feels like we're living through that now.
(1:08:54) And to your point about increased volatility like this could be what the Bitcoin price chart or the return chart looks like over the next I mean this is a a 10-year chart. like this can be compressed to a year, two years moving forward from here in the age of the internet. Yeah. So I I I personally think volatility is mispriced. When I say volatility is mispriced, it basically means a bunch of people who've got very very comfortable with that chart we looked at earlier.
(1:09:17) V just goes sideways. Market's lulled to sleep. Ah, we've tamed Bitcoin, right? We've tamed a wild horse. Next thing you know, volatility comes ripping back and it just blows people's socks off. And you know, remember options are 100 to one lever. So when happens, it happens in a really big way.
(1:09:36) So to me, it's going to be pretty like it's pretty exciting. I'm I'm looking forward to this next phase where Bitcoin kind of reminds everyone, "Hey, you haven't tamed me just yet." Yeah. All right. What's your adjusted uh upside potential here? So my I think it was January, pretty sure it was January, I wrote a piece that was basically saying if we had a So this is we've rallied to 100 100k. I think we might have tagged 110.
(1:10:01) And I basically was looking at the amount of capital that we see come in per unit of market cap change. And my case back then was I don't know if we have the real capital inflows yet to justify going to 150. So if we go into a different universe where Bitcoin had have gone in January and February this year, let's say it had gone from 110, it hadn't reached 150, I think we would have come back down to this 90K region.
(1:10:26) I think it would have been a a major top big correction. probably would have looked much the same in many ways like chopped around and then away we go again but I don't think we were ready for 150 and my base case was I think the ETFs approximately have to double in aum and then we probably justify 150 well in that process if you take the ETFs and sailor just those two entities which really are just like net buyers we now have that doubling so personally I think we belong at 150 I think like the difference is I think we go to 150 I think we stay there. That's the big
(1:10:57) difference. Now, obviously, it'll correct and consolidate and chop around, but I think Bitcoin deserves a 3 trillion market cap, and I think the market's going to keep saying, well, how many more trillions? If you get up to 160, 180, 200, possible, for sure, but also, we're really on like the there's low probability of it happening.
(1:11:20) We're in the like sub 10% sub 5% of all trading days. Markets are mean reverting. And the thing about chop solidation when you're doing a mean reversion model, and that's what I base a lot of my stuff on, it's like how high do we have to go before the average Bitcoiner is in so much profit that they have literally sold in every previous cycle.
(1:11:37) The sell side we looked at before, it was always because we hit some meaningful deviation away from the mean. And the mean is some cost basis, whatever it is, 200 day moving average, you pick it. If we get to 200K, just about every mean reversion model is stretched into the far right tail. It's just like improbable events happens during euphoric bulls.
(1:11:56) Unlikely we stay there. 150 is kind of that like it's medium heated. It's we yeah we'll probably get some vol there. It'll chop around but like we're not overheated. We're just toasty. So that's how I'm thinking about things at the moment. I think we deserve 150.
(1:12:13) I think a lot of people are going to look at it and go well all these metrics are overblown again. But what if it keeps going and then they're going to buy the top and then it's going to sell back down. You know, I'm excited for that phase because I think volatility is going to come back in. We're in that late phase of the bull, but is this bull a little bit different, right? Are we just going to keep stairstepping higher but with a bit more vol? Take some time for for the market to adjust, but it's exciting times. It really is. I know we got to wrap up here. You mentioned it earlier. What are the uh metrics that people
(1:12:38) aren't going to throw away that probably they should throw away and not focus on this time around? Good question. So I think uh you know a lot of people like to look at MVRV and MVRV is a very powerful tool. The realized price is one model that I think a lot of people look at.
(1:12:59) It's the average cost basis for all BTC in the supply includes Satoshi includes early miners all that stuff. Now it's currently trading if I'm I haven't checked it for a while I think it's like 155K something like that. We have gone below that in every single previous bare market. everyone. I don't think that happens anymore. So, I'm going to put it out there.
(1:13:17) I think there's a new model that uh Dave Ple and I developed in coin time economics called the true market mean. Now, the true market mean uh basically we we filter out or we process and get rid of the Satoshi era coins, the early miners, people who just don't spend their coins are long lost to history.
(1:13:37) And the reason why this is important, in order to be at the break even level, which is like where the average Bitcoiner is, not Bitcoin, the average Bitcoiner, Satoshi can't respond, well, not I shouldn't say can't, probably won't respond to a ripping bull market. Lost coins can't really respond to a bull market, but the guy who bought the top can.
(1:13:57) He's going to sell, he's going to buy, he's going to trade in and out. So, the true market mean is currently about 80K. That's where I think if we have some kind of a bare market, not necessarily at 80, but wherever that true market mean is, that's where I think we start to bottom out. And the reason is that that's currently the average cost basis for active investors. Sailor is at 75. Uh the ETFs are at 80.
(1:14:19) There's like four or five different levels all coincident with that price model. So I think a lot of people are going to expect that we go down to the realized price and the bear. And I think that's too bearish. I just don't think we have that kind of a draw down potential these days. Uh if we rip to the upside, right, these models will all drift higher.
(1:14:37) But I just don't think that looking for the same thresholds to the upside, the same thresholds to the downside. In my view, look at the incentive. How much profit are people in? Look at the result. Are they taking profit? Are they fearful? Are they actually taking losses? Are they not? This is where I live and I love it. I think it's great. And and quite frankly, Bitcoiners tell you the answer.
(1:14:57) when you see people capitulating and like just panicking, get me out at any price, bare market. When you see a couple of top buyers get flushed out and then the market rebounds, you flush out the top buyers, away we go. So, there's these very distinct character shifts that we see.
(1:15:16) Um, so look at these metrics more as information, less as it's got to hit this level. You know, get rid of that kind of very basic horizontal line. You're looking at incentives. It's all about incentives and then the actions and reactions to it. I love that. Thank you for starting your day with us. It's uh Tuesday where you are. It is. It is Monday night where I am. I'm losing my voice.
(1:15:38) And uh this is a great check-in. I I can't wait to do the next one, which will be the beginning of next year. And I'm sure a lot is going to happen between now and then. So, it should be a pretty fun catch up in in January. So, let's I think we at least tag 150 between now and then. At least you heard it here first. 150.
(1:16:01) I think I think it's uh I think it's written into Destiny already. 150. We could be at 150 by the end of the week. Who knows? We could be. No, we could be. Again, this is not a special call here, right? It's literally 25 grand, which is, you know, what is it? A 12% move or a 20% move. Let's go. Yeah, I'm not calling for 150 by the end of the week.
(1:16:22) But I think the one thing that is clear is that we've entered a new market dynamic. People are waking up to the debasement trade. They're waking up to the fact that Bitcoin is scarce, comparing it to gold, saying why if it is digital gold, where can it be? And I I think people are the obviously we're here.
(1:16:42) or we've woken up to Bitcoin, but I I do think we are at this incredible inflection point where people are beginning to take it more seriously than they ever have, which is important part of the process should be expected, but don't get over your skis. Don't get uh too greedy. Make sure you have cash. Cash flow most importantly, and you're able to stay alive.
(1:17:06) And that's why we bring James back every quarter because you are check the analyst at least. is very level-headed and making sure that we're all staying in line and and not getting over our skis. And the most sage advice of all time is just stay humble and stack sats. You really don't have to deviate too far away from that plan. The rest is just managing your own mental state.
(1:17:23) Making sure that you're never confused by why things are happening. Never be a deer in the headlights. Like that's that's if I can if I can help people not be a deer in the headlights whether we go to the moon or we go to doom. That is essentially what I like that's what I love doing.
(1:17:40) I like helping people just go, why did Bitcoin do what it did? I don't care that it's up at 150K because I'm not a seller. I don't care that it went to 75 because I'm also I'm a buyer. I just don't care. But I want to know why. Because if I understand why, it makes it so much easier to dig through and just get rid of all the noise that you see in narratives and just focus on what's really going on because it's fascinating.
(1:17:57) It really is. If you want to download uh this full report, you can go to unchained.com/tc. if you want to read through it yourself, throw it into an LLM, see if that LLM is hallucinating. Um, you're absolutely right. Go check that out there. James, thank you and congratulations uh on the birth of your of your new child since the last time we uh we met. It's a big thing.
(1:18:20) Welcome to Likewise. Welcome to the Bitcoin Dad Club. It's a fun one. Yes. I I've always thought that someone should do like because there there's all these things like how do you deal with kids in AI, right? Bitcoiners are going to be the ones who are we're trying to pioneer like how do you do this stuff right? How do you teach them the right tools? There's scope out there for all these Bitcoin dads and moms to just like how do we do it? Like there there's going to be problems and challenges with like how do we as Bitcoiners navigate this parenting thing because it's it's it's weird for us. It's going to be
(1:18:47) bloody weird for them. It's definitely a double-edged sword. Me and the boys uh we've had some fun with AI purely for learning uh learning reasons. if they ever have a question, it's like, "Okay, let's let's explore this." You see a mushroom, a random mushroom while we're walking. All right, let's take a picture. Let's see what it is.
(1:19:09) And uh yeah, there there's definitely going to be a whole new sort of niche carved out of uh child uh AI that is safe for children, AI literacy. Yeah, I'm actually joining a I reminds me, I need to send an email joining a task force for AI at my at my child's school. So, need to make sure that they're doing it right. Get involved. Good, man. No, that's good stuff. That's what you need to do.
(1:19:34) And and I can't There's been a few podcasts I've heard people saying this like we as Bitcoiners, we've got to make a positive change. You know, like if you just win and walk away, what's the point? The whole idea is to try and make the best change you can within your sphere of influence. Yeah. Go forth and make some good change, be a good influence in the world, and stay humble, stacks. Peace and love, freaks. Okay.
(1:19:53) Thank you for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family. We're looking to get the word out there. Also, wherever you're listening, whether that's YouTube, Apple, Spotify, make sure you like and subscribe to the show. And if you can leave a rating on the podcasting platforms, that goes a long way.
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