Key Takeaways

James Check, lead analyst at Glassnode, joins TFTC to present a comprehensive analysis of Bitcoin's evolving role in global finance, highlighting its shift into a mature asset class supported by massive institutional inflows, $36 billion per month, equal to Bitcoin’s entire 2017 market cap, with 55% of capital now sitting above a $90K cost basis. He argues that concerns over price suppression from paper Bitcoin are overblown, as real demand and responsible hedging dominate, especially with BlackRock’s ETF leading in liquidity. While speculative behavior around Bitcoin treasury companies resembles ICO-era exuberance, Check maintains that many are legitimately accumulating Bitcoin but warns of deep drawdowns due to market naivety. He urges caution with new lending products and stresses risk management in an overheated market. Technically, he’s bullish on CTV (CheckTemplateVerify) as a way to reenergize on-chain activity and counterbalance Lightning’s rise. Against a backdrop of soaring U.S. debt and inevitable monetary debasement, Check sees Bitcoin not just as a store of value but as the most pristine collateral in a system running out of options.

Best Quotes

“We are in a new paradigm… a stairstepping grind to a million dollars.”

“55% of all dollars in Bitcoin have a cost basis above $90K.”

“The market’s absorbing billions of dollars in sell-side pressure and still trading at $107K. That is the signal.”

“Your family is more valuable than your Bitcoins. Go and live your life.”

“If you have to ask the question, the answer is Bitcoin.”

“We are literally absorbing a whole cycle’s worth of market cap every month.”

“Bitcoin is money for enemies, including me and Mr. Reply Guy.”

“Every bull market ends when demand is exhausted… and this one is euphoric but structurally different.”

“I’ll just skip the middleman. They’re buying the stock to buy the coin, I’m just buying the coin.”

“Hodling is simple. It’s not easy.”

Conclusion

James Check’s appearance on TFTC offers a grounded yet forward-looking assessment of Bitcoin’s current market dynamics and long-term outlook, cutting through hype with a blend of macro insight, on-chain analysis, and practical guidance. While acknowledging the speculative excitement around ETFs and treasury companies, he emphasizes personal discipline, risk management, and the importance of thinking long-term. With surging demand, structural liquidity, and a fiat system under strain, Check’s message is simple but powerful: stay humble, zoom out, and just buy the coin, because the real fireworks may still be ahead.

Timestamps

0:00 - Intro
0:51 - Paper bitcoin panic
7:44 - ETF rebalancing
12:13 - Bitkey & Opportunity Cost
13:52 - WWIII canceled
16:18 - Lowering rates
22:38 - Lyn and Saif speeches
28:33 - Unchained
28:58 - James is bullish
34:07 - Protocol issues
44:19 - Demand drivers
55:31 - KISS
1:03:49 - Ending on hype

Transcript

(00:00) We are in a new paradigm and what it looks like is stairstepping grind to a million dollars. We're going to get some of those omega candles that everyone's looking for. The average inflow week is like a 5x multiple on the outflows. It's about $36 billion a month. The amount of money that is about to start allocating to risk-free Bitcoin. The numbers are massive.
(00:19) We are so big that you can fit a G7 country's sovereign balance sheet into 15% of the circulating supply. Jay Pal just has to deal with the fact that his boss, the government, has to be financed. The reason they need to lower rates is not because the economy is in a good or a bad shape. It's because the debt's too big. The math don't math when you've got what is it 37 trillion.
(00:36) Now, when strategy trades at a very big premium, I'm actually more bullish Bitcoin. Do not cloud your judgment and pretend that this is going to go on forever. A lot of people will experience 70 to 80% corrections in these treasury companies. Mr. Check, there's there's too much paper Bitcoin out there. The price is being suppressed. Good day, mate.
(00:58) How you doing? How do we get out of this? Doing well. Yeah, man. I'm just watching red candles and you know, the market makers, they keep they keep pushing the price down. Coinbase has got nothing on their balance sheet. The whole thing's a scam. It's a scam. By the end of the year, there's going to be 2,000 Bitcoin treasury companies and public markets.
(01:15) They're going to have 42 million Bitcoin and the price is going to be at 107K. My My favorite I replied to you on a tweet just before I went to bed last night. you were talking about Canada's sovereign reserves and they've got like 350 billion and uh you said you know imagine having 350 billion of some other country's paper and not buying 3 million bitcoin and the first thing that struck me is guys we are so big that you can fit a G7 country's sovereign balance sheet into 15% of the circulating supply
(01:44) and like just let that sink in for a second 3 million Bitcoin is Canada's net worth it you know it's it's an amazing stat that we're this big. So, don't get caught up in all the price aggression. I mean, we're a stones throw from alltime high and you know, the market's absorbing billions of dollars a day. It's bullish as anything. It really is.
(02:03) And as somebody who's been in it for a while, I like to see the coiling. I like to see the coiling. I like this whole year started right where we ended last year all-time highs, dipped down, came back up, tariff, tantrum, back down, now we're back to 107. You wrote a great newsletter last night uh my time. I believe yesterday morning your time.
(02:28) No, last night your time. This morning my time. This morning my time. I read it on had a 6 a.m. flight this morning. So read it on the flight and I think you highlighted a lot of good data on chain that that really made me extremely bullish and confirmed my bias towards the coiling.
(02:49) Seems like in the mid to high 90s range. We've got a nice sort of strong base of people that scooping up coins there and you're you're saying we we may be at peak hodddle or you're referencing the term pecodle the the metric podle. Yes. I uh I I tend to you know there's always this uh supply squeeze narrative that floats around and like you know I'm generally one of those folks who's like guys supply squeeze is you know don't get too caught up on it. But the truth is there are periods of time where there is a supply tightness.
(03:18) Right? So I'm not saying same as paper Bitcoin. Paper Bitcoin exists in derivatives in fraud. There's all sorts of reasons why paper Bitcoin exists. You don't need it as a core thesis to explain why the price isn't higher. You can easily explain it with sellside pressure. That sellside pressure. And this is I think what a lot of people miss. It's super bullish.
(03:38) the fact that we've had billions of dollars, tens of billions of dollars a day sometimes of serious sellside pressure and the price is $107,000. That is the signal. So, what you're referencing, you can look at there's a few different ways we can look at it.
(03:56) You can look at like short-term hold the cost basis, but also I've got these um these heat maps that basically just look at the UTXO set. give every single price, every single coin or UTXO a price when it last moved and let's put a density heat map and see where all the coins last transacted and in that 90 to 100k region it's a massive just an absolutely massive band um if you take that realized value so all of the coins that have last moved and again some of them change hands some of them are in exchange balance sheet some of them are just some dude transacting doesn't matter don't get too caught up in the details it actually doesn't matter when
(04:27) you look where every coin transacted, 55% of all dollars invested in Bitcoin or held in Bitcoin or saved, however you want to frame it, has a cost basis above 90K. That's insane. That's a super bullish scenario where the market is saying there's a flaw here, right? So, um, the way that I look at that, I don't really want to see the market go below 90K. I don't think that would be a good sign. I think it would take a lot.
(04:52) You'd have to have a pretty major event happen, I think. Um, I don't want to see that. If it does go below 90K then I'll probably start saying something is wrong and it's probably going to be a global thing not not a Bitcoin thing but um in lie of that if we stay above 90K it's just a huge amount of support there there's huge amount of demand we're seeing demand come in and like that's that's where we're at don't worry about price suppression look at the fact that there is so much demand that we've built this very very stable floor at 90k you know 90k 6 months ago we're at 70k So,
(05:24) you know, it's just a whole different animal now. Yeah. There's a a few things here. I think you mentioned it in the letter and I've been getting asked questions like people DMing me like, "Do you think there's paper Bitcoin price suppression? Is Black Rockck playing games?" And if you look at the just looking at huddle waves, it looks like long-term hodlers are selling.
(05:48) And then if you mention that to people, they'll be like, "Oh, why are the OGs getting out?" It's like they're not getting out. It's like they've been holding Bitcoin for so long. Their cost basis is so low and they want to treat themselves and say, "All right, I'm going to take some off the top at 105K.
(06:06) " And you know why? This is I think probably the most important thing because life is more valuable than your bitcoins. Your family is more valuable than your bitcoins. The home that you want to raise your family in is more important than your bitcoins. You know, bitcoin is not there to die with. it, you know, just I I think letting go of this idea that it's some like saintly spiritual thing that you can never sell and it's a sin like go and live your life.
(06:25) Not living your life is is far worse. Go and enjoy your life. And there's but you know there's some guys like they want to go and buy a house. They want to pay off their debts. The fact that they're debtree not everything is about financial returns. And actually you can almost go the other way and say by being so fixated on the gains in Bitcoin is a very fiat mindset.
(06:44) Bitcoin buys you opportunity and you know time. It gives you time back with the things that really matter. That's what it's worth. That's what it's for. Like if you're not using it to improve your life and your family's life, what what is the point of being here? Right? People just can't crack that. It's like you got to huddle forever. Michael Sailor, we're going to 21 million.
(07:04) If you can get past the huddle forever, that's actually the Bitcoin mentality. Don't get caught up in this fiat gains thing. You know, for example, I talk about this all the time. I don't own gold to out compete Bitcoin. I earn gold because I'm going to sell it in order to get into the housing market. It's its job is to not be volatile but be the same trade.
(07:21) I don't care about the financial gains. I'm not there to make money on it. It's there to be it's a tool to give me life chips. So, it has a very specific purpose. I view Bitcoin in the same way. Its job is that in the long arc of time, it's going to get my kids through a good education. It's going to pay off my debt at some point in time.
(07:38) I'll sit there and let it ride for the next decade. But, you know, it has a purpose to make my life and my family's life better. Yeah. And so, this is talking about OG's selling. And I don't know if you've written about this or been following along, but obviously last year post ETF launch, there's a bunch of 10K filings of institutions, hedge funds, others getting into Bitcoin.
(08:04) like how much of any outflows of ETFs could be driven by rebalancing that could be affecting the cell pressure as well. Yes. So, um I have actually done a bit of a study on this. So, there's a few elements. Um I ran through a lot of the it was a couple of um probably a couple of quarters ago but I looked at all of those 13F filings and basically looked at how much of the ETF flows were institutions and it more or less aligned with I think Eric Balcunis and um and James Safford to talk about the similar numbers about 20% and again
(08:31) this is probably half a year ago but about 20% of the ETFs appeared to be institutions the rest was mostly retail and my initial interpretation of the ETFs I imagine there's a lot of hodlers out there who finally got a vehicle to put their 401ks in, their we call it superanuation in Australia.
(08:50) Um, whatever their retirement assets, you know, ETFs are a very good vehicle for that because you got to do audits and there's all sorts of, you know, every every country's got their own system. So, I thought retail would naturally gravitate towards the ETFs with that pool of capital because much the same as what sailor's doing going after trapped pools of capital, there's retirement funds that for the first time have now got access easily into into Bitcoin. So, I think that's a big component.
(09:12) Um when we look at the and I actually ran this study um we were talking just before that I was in in Seoul for the Bitcoin soul conference and uh one of my talks at the industry today was all about the how Bitcoin's institutionalizing what's actually happening under the surface and one of the charts that I had in there was looking at the weekly inflows and outflows from the ETFs and what's quite interesting is if you look at the outflows an average outflow week is about $160 million which is not small money but the average inflow week is
(09:41) like 780 million. So it's like a 5x multiple on the outflows. So yeah, we get an outflow of 160 million, but then it's followed by an inflow of 500 million, 700 million, a billion. So the inflows are just so much bigger. And then the other thing you can do is you can overly CME open interest. And what we've generally seen is that CME open interest will increase as the ETFs get inflows and it will decrease on the outflows.
(10:11) So of those outflows that are occurring almost always it's matched almost one for one with CME open interest declining. Now not all of that is going to be cash and carry but a lot of it is and I think just recognizing this is actually not people like there was a big thesis at the start of the ETFs. I think Jim Bianca was a big proponent of it. The ETFs are just an orange poker chip and all these trad guys are going to come and just like you know gamble on the market.
(10:30) What's actually happening is that when we get outflows most of the time it's like structural. it's a hedge fund who's just degrossing and turning off their riskneutral position. So, you know, there's a whole lot of these things like actually it looks like the ETFs are just hodlers.
(10:44) People are just holding on to these things and we are not getting any sustained periods of outflows. Um, one divergence I have seen and I haven't fully passed it yet, but it it does make sense is uh the Black Rockck ETF this year. So, through most 2024, Black Rockck and Fidelity were always increasing at about the same rate.
(11:06) um Black Rockck was bigger but Fidelity was was kind of keeping um keeping track since the start of this year. However, Black Rockck is just peeling away and it has to do with the options, right? I can't think of any other reason why. Um there's this kind of uh centralization of liquidity. If you've got the most amount of liquidity in the underlying, then the options are going to be the most liquid.
(11:24) There's not really much reason to trade the second best option market. Everyone wants to trade the best option market. So, it actually makes sense that Black Rockck's peeling away. But uh every single other ETF combined is pretty much flat since December in total flows. And Black Rockck is just up and to the right. It's it's more than double Fidelity now.
(11:42) It's like 55 billion versus um Fidelity's uh I think they're like 20 billion in total inflows. So what does that bring us to totally in in totalum it's 135 billion which is from last I checked I asked Rocket a little while back I think we're 50% of the gold ETF. So you take all the gold ETFs and put it together and we're halfway. Yeah. That's insane. Yeah. 260 or something.
(12:06) I mean it's historically the fastest to this aum of any ETF launch ever. That's kicking ass. It's incredible. Is a is a signal in and of itself. So freaks. This RIP TFTC was brought to you by our good friends at BitKey. Bit Key makes Bitcoin easy to use and hard to lose. It is a hardware wallet that natively embeds into a two or three multisig.
(12:28) You have one key on the hardware wallet, one key on your mobile device, and Block stores a key in the cloud for you. This is an incredible hardware device for your friends and family or maybe yourself who have Bitcoin on exchanges and have for a long time but haven't taken a step to self-custody cuz they're worried about the complications of setting up a private public key pair, securing that seed phrase, setting up a PIN, setting up a passphrase.
(12:50) Again, Bit Key makes it easy to use, hard to lose. It's the easiest 0ero to one step. Your first step to self-custody. If you have friends and family on the exchanges who haven't moved it off, tell them to pick up a big key. Go to bitkey.world. Use the key TFTC20 at checkout for 20% off your order. That's bit.world. Code TFTC20.
(13:11) So freaks, guess what? We launched a browser extension. It's called Opportunity Cost. And it helps you see the true cost of everything in Bitcoin. Convert prices to Bitcoin as you browse the web. Opportunity cost automatically displays fiat prices in Bitcoin or SATS helping you think in a Bitcoin standard. It works on Amazon, Zillow X, your bank account, QuickBooks.
(13:30) You can convert everything to Bitcoin. It's really cool. It's also 100% open- source MIT license. We don't collect any data. All of the conversions happen in your browser on your local device. It's a great way to recalibrate your life and begin thinking in SATS. Go check it out at opportunitycost.app. That's opportunitycost.app.
(13:55) And before we get to forwardlooking, one more sort of a pastel looking indicator too. World War II. People thought we were going to World War II two weeks ago. You had you had that crash down the high 97s quickly bought up. And I think that was incredibly bullish for two reasons. one, it highlighted the fact that Bitcoin is a liquidity hedge.
(14:16) When you need liquidity and nothing else is open, if you own Bitcoin, you have liquidity cuz it's 24hour, 7-day week, 365 day a year market. And I think it proved that use case. Obviously, there was some risk off going on as uh the United States was bombing Iran, but Bitcoin was open. People were flying to cash for whatever reason.
(14:42) and went to bolster their balances and we crashed but not I wouldn't even call it a crash we dipped and it was quickly bought up and interestingly we haven't seen the bid for treasuries US dollar like generally speaking if you were to wind this clock back 2 years 3 years and you had the exact same set of headlines the DXY would be through the roof and it's not we're not seeing this like flight to US safe haven assets which is quite interesting and just as a simple huristic whenever your timeline is full of Tradfi guys looking at the one minute chart for Bitcoin saying look how it's not a hedge, it's usually a good time to
(15:14) actually step in and buy that dip because it's hilarious how they'll grab the one minute chart to look at literally the longest duration asset that exists which is Bitcoin and gold and they'll look at these two and be like see how they're diverging on my charts like bro zoom out. Yeah.
(15:32) And look at yeah look at US Treasury debt still around like 4 and a.5% range for the 10-year. And you think about if you're an international government or if you're foreign government looking at the United States Treasury market as a safe haven asset it's like is four and a half% over 10 years enough for me. I think you're going to need those yields to go up.
(15:50) And and then you get um I saw Trump tweeted yesterday, you know, in in uh in as many words, nothing stops this train, right? basically saying like we're going to have to monetize this thing at the short end. Um we're going to put someone in in power in in the Fed's chair when when power goes.
(16:06) We're going to put someone in who's going to be super doubbish. He'll lower range and then we'll just finance the short end. It's like oh man they they're just being really really explicit here that the uh the print the print's coming. They have no choice. They got to grow their way out is a euphemism for number go up. Yeah, there's uh I didn't dive too deep into the sto past the headline uh and this short clip that I watched, but it seems like even Scott Pent has made like a a phase shift in in perspective and I think this morning he was on CNBC where an interview was posted that he did
(16:37) yesterday or earlier this week where he was basically like, "Yeah, well, we don't have to term out the debt. We can we can play on the short end." And it was funny because as the Trump administration came into power, they were pointing and laughing and yelling for all the short-term debt that she issued. And now they're like, "Ah, we can we can play in the fight.
(16:54) " It just goes to show that they don't they don't have a choice. And and I I wrote a piece I think it would have been April. I did a very big like I sat down. I really this is when we were in Bedford. It would have been when we last spoke and I really tried to get my head around what was going on. And I built this table and it was like these three different games of chicken. There was the US versus China.
(17:13) Um there was uh Trump versus the Republicans and then there was um Bent versus uh JPAL. And I was trying to work out all these different games because someone's going to have to blink in in all three of these different games. And like at some point in time I was like Trump's going to come up against he may want to do all the most radical changes in the world.
(17:32) At some point the Republicans have to get reelected and it looks like we've just hit that point in time where he's like you know you guys have to get reelected. let, you know, let's all get on the same page and let's go. Uh, you know, that the we still don't have really a trade deal between the US and China, but I'm not convinced that the US has the strongest negotiating position because China's just the world's factory. And I think there's a lot of challenges there as well. And at some point in time, I think J Pal just has to deal with the fact
(17:56) that his boss, the government, has to be financed. And so he's I mean, he's holding out. And you I got to give it to JP, right? He's he has a very very difficult job. I don't envy him in the least. And look, you know, again, we can we can rally all we want against central bankers given the role that he has and the job that he has to do.
(18:15) I think like he got rates to 5%. No one thought he could do this. And he's holding out against a president who's, you know, tweeting you a numb skull every every second day. He's doing all right, right? He's got a tough job. I wouldn't want to be him, that's for sure. Yeah.
(18:34) And I I wrote about this last week and was tweeting about it last week as well, but it's crazy the the short- termism that exists these days and the amnesia that people have. Like Trump banging the drum to lower rates. Like to me it's like wait a second. like if the economy is not completely imploding, unemployment's not blowing out, inflation is coming down, but it's still higher than the historical target, and interest rates are are relatively elevated.
(19:00) Like, isn't lowering rates a signal that something's wrong? And if you're a president or anybody just a citizen, a consumer, a business owner in the economy is like higher rates producing a more accurate opportunity cost and cost of capital um throughout the economy a good thing that we should want to be able to sustain.
(19:20) Like why is this? Uh I know why, but I think it's just hilarious psychologically how Zerp Zer Zerp was like a meme like this is a bad thing for the better part of the last 20 years and all of a sudden now it's like no, we need Zer. We need Zer again. It's a good thing being positioned as a good thing. Yeah. I mean at the end of the day, the bond market is bigger than Trump. It's bigger than the government.
(19:44) It's it's the big thing, right? It's the big it's the one that calls time and uh and the bond market like they can't they can't finance themselves. that the reason they need to lower rates is not because the economy is in a good or a bad shape. It's because the debt's too big and the number just doesn't make sense. The math don't math when you've got what is it 37 trillion now. By the time we talk next it'll be 38 39.
(20:04) Yeah. And I don't think it's a foregone conclusion that if the Fed lowers the Fed fund rate target that 10 year and 30-year yields are going to go down. We saw that last 10 year went up. Yeah. Yeah. Totally. It's I mean it's a it's a tough position as Bitcoiners.
(20:26) We've obviously talked about this for a long time and I mean I know for me I mean again my background civil engineering I knew nothing about the bond market 3 four 5 years ago. I had nothing. Now I like again I'm not going to pretend that I know understand how it works but I know a hell of a lot more than I used to.
(20:42) And I'm just looking at the situation where you're like they're kind of stuffed aren't they? And this is why Lynn's meme is just so effective cuz no matter which way you want to run this calculus. You're like, "Guys, it's it's just math. It just doesn't work anymore. You have to print the money. There's just no other way." And then once you reach that conclusion, you realize it's all jawburning.
(20:59) They just have to create narratives. And the thing I find so fascinating is that the market kind of has to go along with a lot of the time. Um it's a it's a great example of shelling points. So, for example, the bond market is supposed to be the smart man in the room.
(21:15) They're supposed to be the market that understands what's going on and they're trying to judge. It's it's the big one. And yet, they still plug in CPI as their bond as their inflation number. And we all know CPI is but they have to plug it in because every bond trader knows that every other bond trader has their own they've got their own inflation metric, but every other bond trader is also plugging that in.
(21:39) So the shelling point is what other number are we going to reference? So they all have to use the same number because they know that everyone else is using the same number and in order to go out on the risk curve and say well I actually think that number is wrong. I'm going to bet against it. You're betting against the mass and eventually the mass will get there but it's not an immediate thing.
(21:58) And this is like, you know, not quite a perfect analogy, but this is why in like the big short, they knew the housing market was cooked, but it took years between when they realized that it was cooked and it actually imploding. That period of time, that funding cost, you you you get you get wrecked in that middle period. So, it's a really interesting thing that like simple things like CPI is bogus and yet everyone has to use it because of a shelling point.
(22:18) I find these dynamics in finance so fascinating. All right. It's a hard co a hard-coded input into all these calculations that so everybody knows it's a bad one, but we got to use it. I'm having visions of Michael Barry going to the whiteboard or Christian Bale playing Michael Barry going to the the whiteboard and and writing the uh the losses he was stomaching during that period while he was waiting. The carry. Yeah. Yeah.
(22:42) And I'm happy you brought up Lynn cuz I was there in Vegas when she gave what I thought was the most succinct and clear and distilled version. Terrific, wasn't it? of her nothing stops this stream and we'll stay we'll stay on like backward-looking stuff for this point. My other favorite presentation at that conference was SAFE's safe adamoose's uh presentation on Tether and the US Treasury market because here in the United States looks like we're going to pass the Genius Act which creates regulatory clarity for stable coin issuers and all the politicians and pundits and macro influencers are saying that we need
(23:20) stable coin regulation. We need clarity. We need stable coins to proliferate because they're going to create a lot of demand for uh our treasury market, which demand is waning right now from traditional buyers. And so we need to bolster up this new buyer that'll drive significant demand.
(23:39) And I I I really loved Safe's presentation because it was a real finger in the eye of the sort of uh the the mainstream belief um around stable coin regula regulatory clarity and what it will do for the treasury market specifically. And he's basically just looking at Tether, the biggest stable coin issuer in the on the planet by far and what they're doing.
(24:01) And he basically pointed out like the the math doesn't math here either. like very conservative assumptions too like it was like like 10 x's or something and you know and and uh the reduction on interest rates is like very very it's a strong correlation like it's just this is not happening guys.
(24:19) No, they're and they're taking those yields and funneling them into Bitcoin. And I I really when you're thinking about like creative thinking and thinking outside the box, like Tether becoming like a Bitcoin stable coin at some point in the future because they're beginning like their company reserves and I believe treasures reserves.
(24:39) Now, maybe that will change with the Genius Act passing, which I believe for US issuers specifically, they can't have Bitcoin as a reserve backing the stable coins that they're issuing. But we know Tether the company is separate from Tether's sort of uh the liquid backing of the tokens themselves. Yeah. There's the backing of the stable coins and then there's Tether the business who is generating profits from that product. Yeah. Exactly.
(24:59) And stacking a ton of Bitcoin. Yeah. And gold. What? They got like 30 tons or something gold. It's crazy. Yeah. No. All this is just to be said getting back to what we were saying earlier. You can't stop this strain. like it does. It seems like the big print has to come mathematically any way you look at it.
(25:17) And then they just have to convince people to uh to you know in some narrative, shape or form. It's okay. That's not what's happening. Don't don't believe your lying eyes. They just have to convince enough people again. That's why I brought up the CPI thing.
(25:35) You just have to convince them enough to just go along with it for another 3 months and then another 6 months and then just go along just just another 3 months which we're almost there. just massage these people through the journeys. You just debase them through this uh you know and it's going to take a long time to do it. But you know there's going to be a suddenly moment everyone just goes, "All right, I'm I'm sick. I'm done of it. I'm done with it. I'm out." Yeah.
(25:52) I think the holy grail narrative sort of framing that they're going with right now is that the productivity gains from AI proliferating are going to be such that we can stomach more inflation because productivity is going to explode exponentially. Okay. Um don't worry, it's good for you. Yes, it'll be easier.
(26:11) And is like as somebody who's been playing with the tools and leveraging it myself, like I can totally see that like we've done many things here at TFTC that would not have been possible uh without going out and hiring somebody which um which we're typically conservative about doing, but we've been able to do a lot more with the same team that we've had for the last year and it certainly has made us more productive.
(26:37) uh um does that you also didn't hire somebody else. Yes. Like that's the that's the trade-off, right? So, yes, you're more productive internally, but you also didn't hire other people. Yeah. So, that's the big but that's what they're going to say. It's like productivity is going to be insane.
(26:56) You may not be hiring people, but more people can start more businesses, little little uh little side gigs that they can make some money off of. That's it. Yeah. Everyone's doing a a vibe coded side project. Yeah. Hey, vibe coding. Try it. You may need it to just to survive moving forward. They're going to print money. You you have these massive productivity tools at your fingertips and you got you just got to shoot your shot and try to make some money out there because AI is coming for your job. If you're a if you're an Excel monkey out there, be aware. Be aware.
(27:21) Well, it's funny actually. I mean like the one of the many things that I like back in 2019 when I was falling properly falling down the Bitcoin rabbit hole. Listen to plenty of your pods by the way. um walking around regions part listen to you and uh you and Matt uh shill self custody to me um but in that process uh I used to download coin metrics had this CSV with all the original onchain data like the very first time you could get data for this stuff and I used to download it every day plug it into my spread I'm an engineer right so I use spreadsheets for everything plug it into my uh my Excel sheet and I was like
(27:52) eventually I can't I can't get doing this this process sucks waiting for all your charts to update so that's actually where check on chain originated from is me going, "Okay, I've got to get off Excel." And it was my excuse to go and learn Python and and learn how it all works. And it's still building today, right? Still plugging away.
(28:09) I think it's 250,000 lines or something of code that prints out every day. And uh yeah, that was my my job to get off Excel. And now, like, aside from the occasional little accounting thing here or there, everything is Python. I don't touch Excel anymore. It's a beautiful product, too. Anybody listening should go check it out. It's checkain.
(28:28) com, correct? Checkain.com. Oh, I I was talking about Excel, but yes, no, check on chain. Beautiful as well. Yes. Serious about your Bitcoin? Start acting like it. Unchain just launched the financial freedom bundle, a curated pack that includes a premium Bitcoin book, a new hardware wallet guide, and access to a private macro event with Tur de Mester, legend. It's time to take control of your generational wealth. Go to unchained.
(28:52) com/tc to request yours. That's unchained.com/tc. Pretty hot package, freaks. go pick it up. All right, moving forward. You're pretty bullish. If I if I read your newsletter correct this morning on the plane when I was a little groggy, you're pretty excited about what what stands before us here.
(29:10) I I mean, I find it hard to look at the price being at 107K, 108K, a support floor below us at 90K, which again, can it fail? Yes. Do I expect it to? No. Not my base case. Um if it does, then we flip around. But we're in a very very healthy spot.
(29:29) And uh you know even just simple things like funding rates, funding rates are like neutral to negative. And I spent a bunch of time last week trying to work out why that is. And there's a few reasons why funding rates could be negative. Lots of cash and carry trade. Generally speaking, if you cash and carry trade, which is where people long spot short the future, if the yield you get from that is it's at the moment it's like two and a half% annualized, just buy a T bill.
(29:53) What on earth are you doing a complex um cash and carry trade to earn half the yield in a risk-free rate? Doesn't make any sense. So, it can't be I'd be very surprised if it's cash and carry. Um there's relative value trades where people would like go and you know short Bitcoin long Shitcoin. I don't see any of that happening, right? I don't see that going on in the crypto world.
(30:13) So, really at the end of the day, there's just like people just short people just like net short and that appears to be what's going on. So, there's a bunch of people who just net short Bitcoin. And I wrote a piece on umh probably two weeks ago or a week and a half ago called Imagine Being Short. And uh I literally put myself in the shoes of options and futures traders and tried to work out why they were short.
(30:31) And in the options space uh it basically looked like I think it was out to the end of July or might have actually been to the end of of June. Uh there was a lot of put options like people were just like very very hedged. And someone in my comments actually reminded me that we've got tariffs that start to roll off or that 90-day pause comes off. I was like, "Oh, yeah, that makes sense.
(30:49) " So, there's a bunch of people and again, options are a more sophisticated instrument. You're not going to get like your average DGEN in there who just wants to play gamble poker chips. They're going to be more sophisticated actors. So, you're telling me that the guys who are in the sophisticated market are hedge for downside for a very rational reason.
(31:08) When you're hedge for downside, you're not concerned about downside. That's the whole point of hedging. And then you've got in the more degenerate markets, funding rates are basically negative. There's a lot of short interest. When I look at which exchanges it's happening on, yeah, there's some on Binance, there's some on Bybit, there's some on CME.
(31:26) They're the big three, but a lot of it's on these like other I just put them in the bucket of other. All these exchanges you've never heard of and you don't want to hear of. That's where all the people are short. So I'm like, okay, so I've got the most degenerate traders in the world who are net short. I've got a bunch of sophisticated guys who are hedged for downside because of a very rational reason which where's the max pain here? It's probably eight down then up. And I wrote a piece called we got to go down to go up. And that feels like how it
(31:50) goes. You just go and find this like tap a little bit of liquidity. We went down to 98k as you mentioned before. Super strong bounce off the top of that support floor I was talking about. So everything makes sense to me. the next level is just go and tag alltime high and grab all those people who are short and going to get liquidated up there.
(32:08) Like that to me feels like where it wants to go. There's a whole bunch of other elements, right? I mean long-term holders, they're still selling but significantly less than than usual. So, you know, um at the peak in November, December, they were selling like 40,000 Bitcoin per month. Um so, sorry, per day, not per month, per day.
(32:25) So, there's 40,000 Bitcoin that were older than 6 months coming back to life. And yes, I get this point all the time. Not every coin that transacts is being sold. That's true. But it's very funny that they all seem to transact when the market's ripping to the upside. So it actually doesn't matter where it's 40K or 35K or whatever.
(32:44) It's more than it was yesterday. Significantly more. So look at the trend and the direction. There is a lot of old coin that comes back to market when the market rallies. We're not seeing anything quite like that. So really where I sit at the moment, I find it very hard to be bearish.
(33:03) The one thing actually that I think is notably bearish is just the onchain activity. The blockchain is dead, right? Empty blocks. So, so that's the one thing I'm looking at going, I don't like that. I would much rather it be full. Uh there's a case to be made that it's because people are punting on treasury companies and all that, but even that is probably not a great sign and that's a speculative signal.
(33:20) So, that's really the main area of like let's be careful, but I just draw a very simple line in the sand. When we're above that short-term cost basis, which is like 98K, you're allowed to be bullish. For me, until we're below the short-term cost basis, you're allowed to be bullish because literally every time we're above it, it's generally bullish.
(33:38) Once you go below it, you've got to flip over. And there's no reason I can see that we should go below that level. Uh we bounced off it earlier. If it goes down to 90K, it's possible, but we need to bounce higher. If we go below 90K, then I got to flip around and be like, "Something's very wrong here, and I'm wrong.
(33:57) " And I'm now going to say I I think we might be in a a fairly protracted bare market, but we're a long way from that. So there's a lot of reasons to be bullish and until proven otherwise, I think be a bull. Be a bull. It's always a good device. And as it pertains to onchain activity, I agree. It's it's weird going to menpool.space and seeing all these empty blocks.
(34:15) It's almost very odd. The meme the guy holding the stick like do something. And then I think my own Bitcoin usage, like I transact in Bitcoin almost every day. And if I'm uh and obviously I'm more of a hardcore user, very well-versed in the the different tools and ways of spending Bitcoin, but if I just look at my own usage, uh it's probably like 90 to 10% lightning to onchain in terms of actually spending. So you're 90% lightning, 10% onchain. Yes.
(34:46) Like you pay like when I look at my my footprint. So both myself personally and the business we're probably like three to you know three to five transactions a month thereabouts. Um depends if we're doing um you know if we have any sales or something but like you know something in that ballpark and that's why when I look at the chain I'm like okay if I'm if you know just this one entity we're a small entity and you know an individual in a business um if we're doing five to maybe 10 in a month that's like my chunk of the the block space that I'm consuming. You're telling me that we
(35:16) don't have enough people to kind of fill up at least a couple of blocks here or there. So that's the one area I'm like surprising. So we're mostly on chain versus lightning. Yeah. Cuz I wonder you think about like stake and shake big meme here in the United States.
(35:34) They launch their point of sale lightning only. If you think of the mobile wallets that most people are onboarding to, wallet of Satoshi, Speed Wallets, climbing up the ranks after the stake and shake launch, which they're running the back end, obviously Strike as custodial and even Yeah, like and I'm thinking of like if I get a Zaprite invoice and I have the option to pay onchain or lightning lightning automatically just cuz So here's the interesting thing, right? Maybe this is a question we can riff on. long-term lightning and any kind of system that
(36:04) scales there is the perverse incentive where it actually makes the onchain security system because if you have a fee market right in a way they work at odds with each other which is a very interesting dynamic um it's actually why I'm generally supportive of things like covenants because I think that as you make the onchain side more useful um and even actually just as a side note something I was thinking about a lot on my walk yesterday if you have things like covenants uh thefts are actually harder. So if you're an exchange, the exchange can set
(36:34) up so it has to transact to a specific way. So you actually make this paper Bitcoin thing, you know, if you worry about entities being hacked or stolen or not having the coins or whatever, there's actually more clever ways to ensure that they can't be hacked as easily. So I think that's actually a very promising side to the equation.
(36:52) But as we make the base layer more effective at doing those types of transactions, you can actually start to see more stuff getting built on top. So you almost have to combat the scaling side of lightning with more functionality.
(37:09) And I'm not saying go and just, you know, plug everything into Bitcoin, but um the more you make the Bitcoin base layer useful to have those transactions go down to the base layer, uh it actually tries to counteract that idea of people just transacting on Lightning. Cuz when we were in Seoul, I think we went to two or three dinners and we settled via Lightning. Um and again, there was probably like I don't know 15 people.
(37:27) So say 15 transactions on lightning um and I would say probably three or four of those had to do an onchain to get onto lightning beforehand. So you know it it definitely is going to be a factor in that regard. Yeah, I've I've I've always been a believer of this is that you can apply Jevans paradox to UTXOs in terms of you make them more efficient. Covenant's a great example of making a UTXO more efficient.
(37:52) You can do more with it. you get more optionality and therefore it should drive more demand. Yes. No, I tend Yeah. I'm actually I'm I'm quite keen to see how um CTV plays out because obviously we've gone through this as as Bitcoiners a couple of times. Um I wasn't around for the 2017 wars. I bought the top in that market cycle. So I've certainly read about it and understood what happened back then.
(38:18) uh speedy trial was the first time I think first time I saw like a full scale networkwide software. It's going to be very interesting to see how CTV plays out because there's obviously a lot of support for it and I think rightfully so. Um it's a fairly simple upgrade. I'm not going to pretend that I understand it fully on the technical side.
(38:35) I think a lot of this stuff is quite hard to reason about, but there's enough people out there who I certainly value their opinion. I've listened to their views on it. Um, I'm going to be very curious to see how we approach this as a Bitcoin network because I think there's been a lot of movement towards the oification side of the equation, which I think is incorrect.
(38:51) Um, you know, everyone's lay their own view, but I don't think oification is the right outcome for now. But it's going to be curious to see how we actually attack this from a soft fork perspective. I think that's the biggest boogeyman in the room in terms of I I think if you ask most Actually, I won't speak for anybody else. I'll speak for my I would love Covenants and CTV specifically.
(39:10) I think it's been out there. I mean, I remember funding launches for CTV research back in 2018. Like, this is an idea that's been around for quite a bit. It's like the codebase has been pretty rock solid in terms of like it is what it is. Not much changes to it. And there's been a five Bitcoin bounty to find bugs in CTV for I think two or three years now, maybe even longer. And nothing's been found.
(39:41) And I think Covenants, to your point, making exchanges unhackable or individual cold storage somewhat unhackable is a massive benefit. And then when you compare it, I think people have PTSD from Taproot and SegWit, how big of changes they were. And not only that, but the unforeseen consequences of what they enabled com when combined with orninals and inscriptions.
(40:06) And I had James O'Burn on who was one of the co-signers of the letter that went out to the core repository that were endorsing the implementation of optv and check sig from stack together. And when you compare the lines of code, I think CTV is like 200 compared to tap routt and segwit which were madam projects. they were massive.
(40:29) Um, and so yeah, but it is I think the boogeyman in the room is like how do you actually get it implemented if people want it and when do you start that process when you end that process? And uh I I think I do agree with you. I don't think I think it's pretty it's already certain like oification is not an option. There are things that need to be changed within Bitcoin if we want it to sustain itself for a century, multiple centuries, potentially millennia. Um, so oification is already a no-go out the door.
(40:59) I think we need to I'm actually I'm actually quite bullish. Like again, I don't have any reason aside from just my Bitcoiner instinct, but I'm actually quite bullish that CTV will get activated. And I think we'll find out how we activate things. And strangely enough, I actually was quite encouraged because when they released that letter, it was like at the height of the OP return chaos, right? So, everyone's at each other's throats. We're all arguing over stuff. Um, and by the way, I I found that whole experience quite quite interesting, intellectually
(41:26) stimulating in a way because again, I don't really have a strong opinion either way. Like, I would I would prefer the scammers would and the spammers would would piss off. I I fully agree with that. At the same time, I also see where the the tech side comes from. cuz like it's kind of hard to stop them. So, we can yell and scream at each other all we want, but like probably unlikely stuff changes.
(41:45) I actually kind of like that they launched this letter at the height of that feud because it was a bit of a we're not going to be deterred. It was this is just a good idea and it felt very meritocratic. There's a bunch of smart people who've done the work. They've thought about it. They've done the process. They're very conf they're enough to put a signature down to it.
(42:04) And they launched it irrespective like if we had a Bitcoin community that was like, "Ooh, it's too contentious. There's too many people yelling. Let's not do it." It's like, "No, that. Let's go. Let's let's put this letter out there. We think this is a good idea. Don't care what the environment is.
(42:21) " And I'm actually quite bullish because of the order of operations in which they they issued that letter. I thought that was actually quite indicative that Bitcoin is just going to press on. If it's a good idea, let's do it. Yeah. It's like, I hope you guys are having fun with that OP return battle. Here's another grenade. CTV, here we go. Yeah, totally. Let's go.
(42:34) But let the let the free market of ideas fight it out. And it's it's it's a very Bitcoiner um dynamic. So, I was actually quite encouraged by the the order ops there. Yeah, it'll be interesting to see how that plays out. think that that was the I I I think I'm very much aligned with how you described your perspective on OP return and that was the most disconcerting part of that whole kurfuffle that's still ongoing to a certain degree to me is that like the conversations around covenants particularly CTV were starting to to
(43:04) gain momentum and then that sort of came out of left field and I when it comes to operturn like I think there were I think people on both sides of the argument are being a bit childish and uh agree not pragmatic, but it is what it is. Not ideal. I don't like the spammers. I don't like inscriptions.
(43:23) I'm not a big ordinal fan at all. But to your point, like they're going to do it anyway. They're going to do it anyway. And u I mean, my big takeaway, and I I had this opinion when they first came out in 2023. I was like, it's kind of cool that no one can stop this. I'm pretty sure most Bitcoiners are like, "This is that this is a scam. This is a spam. I don't like it.
(43:43) " I'm pretty sure most Bitcoin is there, but I was also like pretty cool that you can't stop it. Kind of like that there's no like central authority that can be like, "Yeah, let's turn this off or let's amplify this." Like you kind of can't do anything about it. Yeah. To anybody out there, I can hear you typing in the comments right now saying that I need to over overthrow core. We need to replace them.
(44:01) Bitcoin is money. Okay. I don't like it. I think I think we all just got to be a little bit more pragmatic and understand the reality and and the way people are using it whether we like it or not. That's it. That's it. Bitcoin is money for enemies, including me and Mr. Reply Guy.
(44:23) Um, moving back to what's going to go on uh through the rest of the year, what what are sort of the demand drivers that you see really falling away, picking up, staying where they are, moving forward as we sort of potentially go higher after consolidating at this level. Yeah. Yeah. So my my general framework here is that and it's just a reality.
(44:47) Every bull market exhausts itself eventually just the same way that every bare market exhausts itself eventually. Eventually you just run out of buyers. So how this plays out. So one thing I have documented quite a bit in recent editions um since April. So actually very recent since April we've definitely transitioned from what I would call to be a healthy spot- driven market to a less spot- driven more derivatives more speculative market.
(45:13) Um, as demonstrated by the fact that the onchain market is quiet, the market's at 107K stone from alltime high. Treasury companies are popping up like mushrooms. Uh, we've got open interest in futures and options just ripping to all-time highs. Uh, I' I've mentioned this on a few pods um recently.
(45:30) I don't know about you, but I've received zero phone calls from normies being like, "Hey, should I buy Bitcoin? Zero." this whole cycle. In the last like 3 months, many many bit existing Bitcoiners have asked me how how would you recommend I lever up. So make of that what you will. Uh that's where we're at. So um we're definitely in a more speculative environment and the way I often look at these things and you can just look at the way these metrics trade.
(45:52) We are entering the euphoric phase. Now this is the period in time where things get really exciting. Like stuff really starts to move. Um, we're going to get some of those omega candles that everyone's looking for. There's going to be some red ones. There's going to be some green ones. Um, there's going to be some periods of time where the market really wants to move and the narrative will very quickly switch to there is no ceiling, new paradigm going up forever, Laura.
(46:15) And yes, it is, but there's going to be roundabouts along the way. So, how this plays out moving forward is likely to be more volatile. We've actually seen a fairly low volatility environment. I kind my base case is that we actually see volatilities pick up because of liquidations. Um leverage is going to start creeping in.
(46:32) You know, people buying all these treasury companies, it's speculation, right? So, um yes, I agree with the take that it's probably not fair to lump them in with shitcoins and call them the shitcoins of this cycle because, you know, I mean, our business, we're a treasury company. We we have Bitcoin in the balance sheet, but you know, we're a serious business.
(46:50) And I'm not saying any of them aren't serious businesses. It makes sense. Why wouldn't you put Bitcoin on the balance sheet? It's the best asset that we have. So, that part of it makes sense, but the behavior of people is a bit shitcoiny where people want to go and find the next small, you know, you got to get in when they're a small asset and ride them on the the 100x multiplier. So, the behavior pattern is shitcoiny speculative.
(47:14) And really, there's nothing wrong with it. It just shows us where we are in the phase of the cycle. And if you think about market cycles and why do why do uh bulls eventually exhaust their demand because there's only so many people who are going to buy and there's only so much capital that's going to flow in um over a defined period of time.
(47:34) And uh case in point, every single one of us who has a job and a salary, you've got a month worth of pay and then you got to wait for the next month. You literally can't put infinite money in. Every entity has that. Someone only wants to put in a 1% allocation. someone only wants to put in a 5% allocation. Once they've allocated 5%, they're in. They're in the market. That's it.
(47:52) So, there is a limit to how much capital comes in. Um, I'm also of the view that these treasury companies, they're going to have massive accelerant. Uh, it's clear that we've got a very very large spot bid. The more that the market rewards these companies, the more are going to show up and the more the existing ones are going to buy more.
(48:09) Um, they're as big as the ETFs now in terms of the demand side. So, both of those are very, very significant factors. So, we have a massive spot bid. We've got long-term holders who are generally speaking backing off. I call it like the lead foot when I talk about demand and supply just to simplify things.
(48:27) You've got the demand accelerator and you've got the the break from sellside pressure. The break is being backed off and the accelerator is going down, right? There's probably only one way that price wants to go. I got a bunch of people who are short. Love it. Great combo. But at some point in time, we're going to hit a level where that sell side's going to ramp back up again.
(48:46) um you know 125 is where I expect it to start kicking back in. Once you get higher than that 150 160 170 you're in very very thin air. We can go there but historically speaking the odds get slimmer and slimmer very quickly the higher above 120 you go at the moment. What I think is going to be very interesting and what I I have a view but I'm not again I can't predict the future.
(49:11) Uh my base case is that we actually have a cycle top that looks like every other cycle top. And no one's going to believe it because they're going to think it's a new paradigm. But what I think is going to break people's head is that the bare market is going to be different.
(49:23) And there's a lot of evidence to say that like we've already had two bare markets this cycle in 2024 and then more recently. They kind of look like bears. At the same time, I think the next bear is going to be worse. But we're in this kind of very strange environment where like Bitcoin is just not giving back the the sell side. we're not getting the depth of these draw downs that we've seen in the past. They take longer. They take months, not weeks.
(49:42) Um, that's a very big difference and it leads to a lot of people getting bored and that boredom creates price suppression claims and paper Bitcoin. But like I think that's how this G that's my current working thesis and we'll see how it plays out. Yeah, I saw you responding to I'd like you to expand on this is some I guess altcoin trader who was likening the treasury companies to like ICOs and he was saying hey it seems uh euphoric right now but trust me it's only the beginning and you you responded to him saying there is a difference like the
(50:16) thing they're holding is already about like I can't recall it verbatim off the top of my head but I'm sure you you remember um the conversation you're having in that thread like I think that's one question myself included like I see what's going on with the treasury companies and just pattern recognition alarm bells going off like this seems rightfully so very familiar but there is a difference with the asset that's underlying the strategy and um it's a different pool of capital so what's your like you're kind of euphoria it feels very frothy because 100 I'm 100% align
(50:51) with you where like I'm looking around being like Guys, this looks this is like topping behavior 101. But the difference is and uh if you think about strategy when strategy trades at a very big premium, I'm actually more bullish Bitcoin because strategy's incentive is to sell MSTR, capture the premium, buy BTC. So in theory, there is sellside side on the stock, buy side on BTC.
(51:15) So in theory, all of these treasury companies, the bigger their premium, the more buy side for Bitcoin is incoming. Now the challenge is going to be a lot of people are not going to understand how those premiums work. So let's just for example just for simple math let's just say that strategy is trading at a 2x premium MNAV of two.
(51:35) If someone buys MSTR in theory MSTR could literally double their treasury and you could make zero dollars. the MNAV could go to one and in theory you you bought the stock at 500 bucks and suddenly the the Bitcoin balance is twice as big but you are flat because the MNAV is one.
(51:55) So people have to remember that if you're buying a treasury company at a premium you either need that premium to stay the same as a percent or as a component and the Bitcoin balance gets bigger so it kind of pushes you up um or you need the premium to expand. This is no different to people looking at like um uh price to earnings multiples.
(52:12) If a company's trading at a 20x price to earnings, you need the earnings to go up, right, in order to push it's like this kind of underlying force. Um or you need multiples to expand. But if the multiples contract and the market is willing to pay less of a premium for future growth and this is what's going to happen in the next draw down, the next b maybe not the next one, it could be the one after, it could be the next one. There is going to come a time.
(52:37) So do not cloud your judgment and pretend that this is going to go on forever. There will be points in time where people buy the hottest thing as these treasury companies. They'll pay a big premium because the market is growing and they're, you know, they're the only one in their jurisdiction or whatever else.
(52:56) And then what's going to happen is the market's just not going to perform the way that people thought it would. And the premiums will come down. And I think a lot of people will experience 70 to 80% corrections in these treasury companies. I think that's going to be a normal thing. So the way I have been like mentally thinking about it and just explaining it, Bitcoin is trading like Bitcoin in 2025.
(53:13) It's a different animal. It's low volatility, low draw down. Yes, Bitcoin you can't you can't lose like over any meaningful time frame. Bitcoin is going to kick ass. If you're buying something like strategy, strategy lives in this like 2015 1617 type volatility environment. It's like 2x what Bitcoin is.
(53:36) Once you go down to these micro caps, these like brand new treasury companies, welcome to Bitcoin in 2011 where an 80% correction happens overnight and you have no idea why. There's no reason for it. There's just not enough liquidity, right? There's just people who come in and out, big orders can move stuff around. Um, there's going to be games where like if you're not in the Telegram group that says that this company's about to go through a spack and turn into this and if you're not aware of that in advance, you're not going to catch the initial pump, but it's going to be very very exciting cuz you're going to think, "Oh
(54:03) this one's going to there's going to be the next Metaplanet. There's going to be some Meta Planets. There's going to be some that like there's going to be a Purto distribution." So, just be aware that a lot of these companies, like literally every business venture ever, every startup ever, they're not all run by a Michael Sailor. They're not all going to make it in the same way.
(54:26) And this is very retail money. I can't imagine serious institutions going out and buying the 35th or the 52nd Treasury Company. I just don't think that's happening. They're going to concentrate in the big pools of capital. So, I think there's going to be a handful of standouts. strategy is just in a whole different world to itself.
(54:46) I think MetaPlanet is is clearly doing its own thing in Japan. Um there's a couple of others out there, but like generally speaking, you know, my business, we just put Bitcoin in the balance sheet as part of our equity. That's all we do. We keep it really, really simple. A lot of these companies that try to do this growth mechanism, it's good for Bitcoin, but I can't help but feel that a lot of these companies will spit out and puke their coins at the end of the cycle just because they don't have the the skill set, the shareholder buy in, the stones that Sailor has, whatever it is, there'll be a bunch of these companies
(55:16) that do it. Miners have done it every single cycle. We all thought in 2021 that miners would have access to capital markets, therefore they would never have to puke out their coins. What happened? They all puked out their coins at the bottom of the bear. So, I suspect this will happen again. Yeah, that's sort of my thinking, too.
(55:33) I like literally right before we hopped on an hour ago. I had somebody DM me asking, you know, I haven't responded yet, so if you're out there listening, here's my response. Might text you response later, but they were like, I just got a lump sum of cash.
(55:50) What do I do? Do I put in MSTR? Do I put it in Bitcoin? And I'm like old school. Like, nothing's better than cold hard UTXOs and cold storage. like I'm not I'm not going to try and stop. The way I would frame it, if you have to ask that question, the answer is Bitcoin. If you know the answer to that question, go and speculate.
(56:09) If you like the fact, if you don't know, cuz like for me, I've only recently I've been in Bitcoin for, you know, as I mentioned, finally fell down the rabbit hole properly in 2019. I've seen a couple of cycles. My whole job is analyzing market cycles and Bitcoin data. I'm only in the last like three four months starting to take and and I'm limiting myself to strategy really. I I don't really care to go that far out in the risk curve.
(56:28) I actually think what strategy is doing is quite fascinating going after the bond market. I understand it. I can reason about the product. The product is bonds and they're tokenizing bonds more or less with a Bitcoin backing. I think it's a fascinating strategy. I did a podcast with Preston which should be out soon enough where we just went deep down this rabbit hole. I get it.
(56:48) I understand what strategy's doing. I think it's fascinating. So, I want to share in that. Everything else, I'm like, go have fun. Enjoy. I'm going to watch it. I'll analyze it. I'll see them pop up. I'll see them explode. Um, personally, I'm not interested. I'm very happy with my predominantly BTC.
(57:05) And then, you know, I'll I'll punt here or there because I've been around long enough. If you're asking the question, how do I split this up? The answer is Bitcoin. Yeah. Keep it simple, stupid. Keep it simple. Keep it simple, stupid. Keep your income higher than your expenses. Save some money in Bitcoin. I don't think there's anything okay to be Squidward in the in that where he's watching Spongebob and and Patrick playing outside.
(57:28) You know that meme? It's okay to be sitting there watching everyone playing with their treasury companies cuz I assure you it's going to be fantastic for them in this phase of the bull. It's going to suck. It's going to suck for a lot of people cuz they're going to go too much at the top.
(57:46) They're not going to understand the premiums and a lot of these companies just frankly don't deserve a premium because most companies don't. Yeah. All right. Another factor in this cycle that may be different. It's not completely different but I think with the launch of the lending product at strike and particularly Jack's messaging around it bringing the cost of capital down through their lending desk.
(58:04) I mean that that's another meme that's more predominant this cycle which is we are going to get lending products to make it extremely easy for you not to have to sell your Bitcoin. Obviously historically we've had Unchained which is down the hall for me right now let in Genesis famously with their blowups uh last cycle but it seems like BlockFi Celsius name the blowups but I I think the markets learned this lesson on rehypothecation.
(58:37) I I know for sure the strike is very on top of making sure they're taking people's Bitcoin to lend against it. They're not going to rehypothecate it. And there are many people that are beginning to look at the depth of liquidity of the market above two trillion and see it as an asset that can be used as collateral to get cash to fund a lifestyle without having to sell spot.
(58:56) Is this a factor at all in your calculations? It will become increasingly so. So, I mean, lending against your Bitcoin makes all the sense in the world. Like, it's pristine collateral. Why why wouldn't you? So, um, for me personally, and again, I'm only going to speak for myself, I have definitely looked at it, and right now as it stands, a lot of them are fairly hefty interest rates, 12%, something of that ballpark. Um, and 12-month terms.
(59:23) Now, there's obviously then another layer, and I think actually, I forget the name of the website, but um, Hugo from Nunchuk, I think he was involved. They've got a a 21 something. There's a website shows where they've kind of rated um all these different entities. I thought that was quite useful and I think for me I'm going to allow this to play out for one more cycle.
(59:40) I'm in no need to go and tap that liquidity just yet. I'm actually okay to just allow the competition to build, allow the rates to come down. I I think what strategy is doing, we're seeing in the trady world, they're normalizing Bitcoin as a collateral.
(59:58) So, I think that once the market gets more comfortable, so this is what I would call the early adopter phase. You're right. We had like the the cowboy phase with Genesis and all that last cycle. We're now in the early adopter phase. I I kind of look at like what am I going to do to, you know, you borrow 100 grand and you have to pay it back in 12 months. Like for me, I want to if I'm going to borrow money, it's to get into the housing market.
(1:00:16) And that's just like, you know, that's just not really a feasible approach. So, for me, I'm just going to allow the market to find its level. Um, there'll be a lot of people who do it. I've had this question actually from a lot of people saying, "Hey, you know, how do I risk manage these kind of things?" It's like if again, if if you're asking those questions, it's probably a bit early for for to be thinking about it, right? So, you you should be in the market long enough and understand your financial position enough that you shouldn't be questioning what LTV is. And you should know, you should be able to work this out. If you're still, again, this stuff
(1:00:45) isn't easy, but go through the loops of trying to work it out yourself. model it out and never ever assume the Bitcoin price cannot go to a certain level. And I'll tell my story. I learned this lesson trading options back in 2019, 2020. Um, I thought I was hot I've got I've discovered the realized price. I've worked out how onchain data works.
(1:01:08) I'm, you know, I'm teaching people about I thought I was a genius and I've learned about options and I was selling puts um below the the realized price of 6K. And my thesis was we're never going to go below 6K again. March 2020 comes straight through that level.
(1:01:29) Literally liquidated me by like took my whole account straight back up and then next thing you know we go to 60k. So I would have made all my money. I would have I would have made it all if I just hadn't have thought the price can never go back to this level. So you know when when you're thinking about LTVs on this stuff never ever believe anyone telling you the price cannot go to a certain level.
(1:01:49) I often say the odds of it going back to 40k and undoing the ETFs in my opinion is like slim to none. I do not factor and it is not even in my cases but I would never ever settle loan on the assumption that it can't happen. So just be aware of that. I think it's going to build up um over time.
(1:02:07) I think in 2 3 4 5 years time this industry is going to be booming because it makes all the sense in the world and especially with like SA 121 once the banks get involved and I know this is another you know bitcoin is going to say oh don't give your bitcoin to the bank it's like you use bitcoin to do whatever you need to do to make your life better don't listen to anyone else tell you what to do with your savings you do whatever you want with your savings certainly listen to heed the warnings right if you're putting your coins in a bank you are giving up self custody but for I'm going to sit there with my UTXOs for now. Let this market play out. Find the
(1:02:37) level. Wait for the rates to come down. Wait for the terms to go out. Wait for the market to get more accustomed for Bitcoin as a collateral asset. It will happen. I'm just going to be patient and wait for it. Yeah, I'll add some other pieces of advice there. If you're going to take out a loan, do not put your whole stack in a loan.
(1:02:57) Number two, I'm going bring this up again. And I brought up in rabbit hole recap a few weeks ago, but it seems to be a question in people's minds. I was at a meet up in Philadelphia and somebody asked when's a good time to take out a low when the price is low and the price is high. The price is low. That's when you want to take out the loan if you're going to do it. Yes. When it Yes.
(1:03:15) If it gets above a certain level and you're thinking about it, it may be too late. That that 100%. I mentioned before I've had a bunch of people saying, "Hey, what's the best way to lever up?" I've had some questions like, "What's the best price to like where where should we lever up?" I was like probably at 20K when FTX blew up. That's probably the best time to have leveled up.
(1:03:34) Um 110K when like there's speculation coming out everywhere and you know um futures open interest is at alltime high and people are levering up. Not really the like you can do it but be prepared to ride the wave because it's going to be a wave. Yes it is. That said we're talking to check the analyst.
(1:03:57) They have been very level-headed, sober, says things that not many people want. People want the moon juice. And to pull that out of you, what would have to change from like a market structure, sentiment, psychology, sort of demand drivers in the market for this to get weird in your mind? Very good question. Um, so this is more from check the hodler's perspective, right? when when when the things get a bit uh bit looney tunes.
(1:04:24) I mean I just look at the price pattern like look at look at the monthly chart. It's just it's incredible stairstepping pattern. Where the hell are the draw downs? I like I I can't for the life of me put myself in the mindset of someone who's saying this cycle sucks. I look at this cycle I'm like it is unbelievable how much capital is coming in, how little the draw downs are.
(1:04:49) And I've been using this this analogy or this kind of anecdote from my old man. My old man bought in 2020, which means he went through the up of 2021 and he went through the down of 2022. And let me assure you, I heard all about it all the time. When number go up, mate, when is my number going to go back up? Now he closes every sentence with number go up. Love it. That's where he's at.
(1:05:11) So like think about the pools of capital who are now going to look at this price chart and be like, "Yeah, I'll allocate. Why not? I should actually take 5%. It looks like it's no longer volatile. Looks like it doesn't do those, you know, crazy things and I I don't see it going down anymore. It seems to go up. Hey, I'm waiting for a dip and I'd love to buy in.
(1:05:30) " All of these things, you just got to think about the pools of money who the lower V that we're seeing at the moment is going to be much more tempting for. So, and I've heard this from many people. Um, people are getting calls from investment managers and um, retirement funds and family officers who are like, "All right, it's time. I want to put a 5%.
(1:05:48) " You mentioned, I think, I can't remember if it was on the on the air or not. Um, there was like an IRA bloke coming out and said like 20 to 40%. Like guys, the amount of money that is about to start allocating to risk-free Bitcoin is is astronomical. Like, we can't actually think about how big the numbers are massive. Um, and actually, I ran a study a little while back.
(1:06:08) I was trying to just put things in perspective of, you know, for how big Bitcoin is. If you look at the um capital inflows into BTC, whether it's via ETFs or treasury companies or whatever, over the last 30 days, it's about $36 billion a month. That's the rate of change. 36 billion.
(1:06:27) The Bitcoin market cap in May 2017 was 36 billion. So everything up until May 2017, we absorbed in one month. If you take the ETFs and strategy and put them together, the market cap combined of those two is like 2 days before the 2017 all-time high. So, literally everything up to 20K is in the ETFs in Strategy's balance sheet, which really both of those have grown up over the last like, you know, really let's say 18 months.
(1:06:52) The ETFs are 18 months. Strategy bought the most um over the last like six, seven months. So, guys, like old history doesn't matter anymore. Like all those previous cycles, they're irrelevant. They're they're like a footnote of behavior. They don't count. We are in a new paradigm. They We are in a new paradigm.
(1:07:11) And what it looks like is stairstepping, right? This slow, boring ass grind. I think Joe Kasari said this. We're in like a slow, boring ass grind to a million dollars. And we're going to be price suppressed the whole way up. Stop being bored, guys. Be bullish. It's It's bullish. Get excited. Yeah.
(1:07:28) We're going to be at 200k and be like, "There's paper Bitcoin out there. They're suppressing. I know. There's so much there's so much. Why aren't we at 2 million? We should be at 2 million. We should be higher. Yeah. And if the other thing we can focus on what's happening in terms of demand drivers internally with within the Bitcoin market, whether it's ETFs, treasury companies, structured credit products coming to market.
(1:07:54) Then like going back to what we were talking about earlier, like is there a big print? And if so, how big, how fast, and what does that mean for inflows into Bitcoin? Exactly. And sorry, just something that clicked to me before. Um, I wrote a piece that I called paper Bitcoin trying to address this this topic. I mentioned before that Black Rockck is tearing away from the other ETFs. That is real Bitcoin going into those those ETFs.
(1:08:16) Why are they doing it? Because of the options market in order to take advantage of the derivatives people can now allocate to the asset in the first place. So the the growing up of derivatives allows bigger money to come in. This is why Black Rockck's peeling away. So it's just great evidence that like just because you have paper Bitcoin in the system being derivatives that actually enables a lot of these big entities to allocate when they previously couldn't because they can hedge risk. So I think that's just a really really important uh um
(1:08:41) thing to pay attention to. I missed your question before actually. Um what' you say before that? No say um it wasn't even a question. It was a statement. Just look how big is the big print if it comes. Oh yeah. How long does it last and what is it in terms of market structure changing moving forward? Like how much effect? We went from 36 to 37 trillion. Like I remember people talking about 36 trillion. Then like next thing it's like 37.
(1:09:05) It's probably like halfway to 38 by this point. Like I mean they don't have a choice. So just like grit your teeth and sit tight. I really don't. You're going to send it on turbo as Elon said before he left doge. his hands.
(1:09:25) And that's that's another great example, right? What they go in saying they're going to cut one trillion, two trillion, they got 150, and then he got kicked out. It's like the base is too big. Yeah. Kicked out saying that Trump's on the Epstein list as he's walking out the door. It's chaos. It's beautiful chaos though. I think despite whatever happens whether it's within Bitcoin treasury companies going crazy ETFs going crazy aping in externally Elon saying that Trump's on the Epstein list world war II fears UFO fears who knows what's going to pop just blinders on stay focused keep stacking Bitcoin don't get overlevered don't get crazy just focus on stay humble stack. It's just not that
(1:10:09) difficult. That is that is that is the best advice. It has to go. I mean, it's it's going to compete forever with nothing stops his train is the two like quintessential Bitcoin memes. If you just listen to those two little phrases, you're going to be just fine. Well, it's funny. It's not that hard, but it's very hard for for a lot of people who haven't.
(1:10:27) It's it's simple, but it's not easy. I think that's a really important element. And I actually wrote about this um in the piece you were talking about before, Podle. I open by saying like why do I actually write any of this stuff? It's to just help people not feel like a deer in the headlights because hodling is simple.
(1:10:46) It is a very very simple strategy but it is really really difficult because the world keeps telling you that you're wrong. We keep getting crazy headlines. Um every influence in the world wants to shill you why their thesis as to why the market's up or down is better. Like at the end of the day you just have to stay humble stacks and just trust the process. This is just trust the process. Yeah.
(1:11:03) It's funny cuz you have the the TRDFI incumbents who hate Bitcoin saying, "Oh, it's going to zero." And then on the other side, you have those far out on the risk curve within Bitcoin like aping into all these treasury companies and levering up whatever it may be saying, "Oh, you're you're going to miss out. You're not you're not levered up enough." And then you're in the middle like, "Wait a second.
(1:11:23) " It's like smash buying and moving to cold storage. That's not good enough. And because every treasury company still has to buy the Bitcoin as well. We're all in the same trade there. And uh I'm just going like at the end of the day, you're selling the stock and buying the coin. I'm just buying the coin. I'm just going to skip the middleman of buying the stock. Who's going to buy the coin? Just buy the coin. Just buy the coin.
(1:11:42) James, it's always a pleasure, sir. Thanks for what you do. Good to be back on. We'll uh we'll have to do this again. Uh maybe uh we'll catch like Peak Euphoria at the end of the summer, beginning of fall. Uh we'll be catching up then. Yes. Yes. Hey, when uh when we enter the topping cloud and things start to get really exciting, um we can definitely do a an ad hoc episode. The um uh I have a feeling we're going to do an episode.
(1:12:08) People are going to be like, "Oh, James is too bearish. It's a super cycle." And then something's going to happen. Either it'll be a super cycle. No, no, super rational sound view evidence as to why it's over and it's just going to keep going forever. That's how this plays out. That's the best way it could play out. Yeah, totally.
(1:12:27) And and that's the other thing, right? In a way, by being very rational, if it keeps going, I win. If it doesn't, then at least I'm like aware and prepared for it if it doesn't go the way that the Moonboys think. So, you know, it again, it's all about managing your psychology because at the end of the day, you're the only one that can manage your Bitcoin and your how you deal with market cycles. It's actually a mental game.
(1:12:51) Don't worry about it's a financial game. It's a mental game. And that's what getting a reasonable take on things, that's what I do. That's that's why I write and why I do the analysis. It helps me stay grounded so that when stuff doesn't play out the way the moon boys said or the doomers said it kind of goes down the middle. I'm like, "Oh, yeah. Makes sense actually.
(1:13:09) " Yeah. Check the rational analysts. You actually win bigger because you're prepared to buy the dip when it materializes. You're not overlevered. And and the rip. You're not surprised when it happens. No. All right. You go enjoy your Tuesday. Thank you for hopping on and uh keep keep writing the newsletter. I love it.
(1:13:28) Um if you guys haven't checked substack.check onchain newslet check.com you can't you can't miss it. All right it's there. Go check it out. Peace and love freaks freaks. Thank you for listening to the show. I hope you liked it. If you did like it, please make sure you subscribe, rate, review the show. It helps us out a lot.
(1:13:47) And also, if you like these conversations, I've come to realize that many people listen to the podcast. They don't know we have another sort of layer of this media company. We have the newsletter, the Bitcoin Brief. Go to tftc.io. Make sure you subscribe there.
(1:14:06) A lot of the topics that are discussed on this podcast I write about 5 days a week in the newsletter. We also have the TFTC elite tier. If you sign up for that, become a member. We have a private Discord server for the elite freaks out there where we're dropping adree versions of this show and having discussions about everything we talk about a day early.
(1:14:30) Logan wanted me to make sure if you want to get the show a day early, become a TFTC Elite member. You will get that. We have our Discord server right now. conversation between myself and TFTC elite tier members, but we're going to expand that. We'll probably do closed Q&As with people in the industry. Uh I may be doing macro Mondays. So, join us. Go to tftc.
(1:14:54) io, subscribe, find the button in the top right corner of the website, become a TFTC Elite member. Thank you for joining us. Okay.

Spread the signal,
earn Bitcoin.

Get your unique referral link when you subscribe.

Learn more →