Bitcoin Is 'Dead' Again — That's When You Buy | Checkmate

Jackson Mikalic (00:02.166) We are back. Brian, good to see you. James check. Welcome back to the last trade. What's going on, Brian Cubellis (00:03.427) You James Check (00:10.596) Thanks for me on. Yeah, no, it's good, mate. Exciting times to be in Bitcoin. Brian Cubellis (00:15.563) As always. Jackson Mikalic (00:15.67) Yeah, it's exciting, right? Right before we hit record here, we're just talking about on both sides. lot of panic, right? Not, not from us, but from people that we work with, there's a lot of uncertainty in the markets right now. Last time we had it on the show was I think the week after we hit a new all time high of one 26 or it may have. Yeah, I think that sounds right. And then since then we've just kind of tested new lows just for the audience to remember. So this is back in October. I think at that time, James, were pretty, you were pretty balanced as you usually are. And I think your take was maybe perceived to be bearish relative to other analysts who were still calling for us to hit new all time highs again, before the end of the year, know, surpass 126. But you said, let's pay attention to what's happening on chain. Let's take a look at, you know, various metrics that you do and get a sense of like, all right, what are the key thresholds that we need to be paying attention to? And I think you'd referenced. some points around 95 K there were some other things to be paying attention to as well. And alas, here we are in the sixties. It's been a wild and I think for some people unexpected past couple months, but maybe it was exactly what you expected. So I'm curious just what you make of it all in the past few months and where we are today. James Check (01:31.779) Yeah, well, first things first, nothing in markets ever. If anyone says that it was perfectly expected, they're lying to you because that's just not how markets work. It's always surprises in the mix. This is one of those great examples of expectations not being met and that creating a bear market in my view, like there's a ton of like there was a ton of selling that when I think we might've, we probably would've talked about that back in October because it was just a ton of hot selling and that really has fallen off an absolute cliff. We're back to 2023 levels of profit taking. I did a study yesterday, like the last 30 days, we've gone down from was like 95 or 98, so very close to that local high that we hit. We're down like 37 % since that local high. That alone, that 37 % drawdown in a bull market context, that's like the deepest dip that you get. So we've had within the context of a bull market, a 37 % dip in the last 30 days. Now, On that 37 % dip, what would you expect to see in a, oh man, like the bull's gonna, sorry, the bear's gonna get considerably worse. You would see people taking profit and going, get me out of this thing, because I think it's going to 10K, like get me out of my profitable position at 98 or at 60 or at 80 or at 70. What we're actually seeing is people who are from earlier prices are below 60k sitting tight. Less than 8 % of the coins that moved were coming from below 60k in that last 30 day period. The majority of them are people who bought high going, it was unexpected that we went down at all and they're in the process of capitulation. So I'll give you a quick summary of my views. You mentioned I said 95k, I called it the bull's last stand. And the reason I called it that, I like to think about, I mean, I believe on-chain data is a fantastic measure of human psychology. Where is everyone's cost basis? Where is price relative to their cost basis? How much profit are they in? How much loss are they in? And most importantly, when do those things flip over? When do lots of people who were in profit suddenly go to not in profit? Because profits evaporating sucks, profits going to losses sucks more. James Check (03:35.61) selling the bottom and crystallizing those losses is the worst, but that's what most people do. So, 95k was where I think at the time it would have been 65%, it rose up to about 70 % of all the wealth that's been invested in Bitcoin was above 95k. And my general framework as we sold down from the all-time high was I had these key levels and they happened to be nice 5k increments and 110 was the short-term cost basis. Anytime you go below the short-term cost basis, you just have to be at a minimum cautious. You're no longer in an uptrend, right? On the short-term timeframes. By the time we got to 105k, which is not a long trip from 110, we got past the midpoint of that 70 % of the wealth. So suddenly you've got half of all those guys are underwater. At 100k, we hit the long-term average of everyone's portfolio value. Bitcoin's an old beast. The average portfolio value for all coins in the system is plus 80%, right? People are up 80 % on their position on average. So what that was at 100k and I'm like now you're beyond the halfway point of all the recent buyers you're also beyond you're at the halfway point of everyone all time and 95k like I don't know how you want to you know, what is the correct number of too much money underwater 65 70 percent it's big enough that I'm like I think things change if you get down to 95 and the trip from 110 to 105 to 100 to 95 it it happens quickly right? not it's not a large price gap And my thesis was if we get down to 95, we're probably going straight to 80, because that is the long-term average for everyone, like the break-even level for investors on chain. And it's also where the ETFs have their cost basis based on inflows. So my rationale was between 110, 105, and 100, your exponential risk of going to a bear market just climbs. So, you know, for folks who really want to stay in the bullish camp, stick around at 110. But once you get to 105, you have to lift your probabilities of bear. Once you get to 100, you've James Check (05:32.62) lift them again and once you get to 95 if you're not like seriously thinking about your bear case good luck 80k was then a very important level because most people I'm of the view and just you know I based this on Twitter and sentiment and message that I get that process from 80k until we broke it in February I would describe that as like the stages of grief. The vast majority of people were still in the early stages of grief about it, like believing it was a bear. Sorry, believing it was a bull. They didn't want to accept that we were in a bear market. The break below 80 in February, we reached the acceptance phase. Everyone now believes it's a bear and all the people who thought it was a bull market dip are now reassigning their bear probabilities down to 30k, 40k, 10k, 1k. They're all adjusting their price targets that they never had to lower levels. So I think we've hit the acceptance phase of the bear. I also think with like that sell-off both in November but then again in February we had over two billion dollars in losses on a single day on both of those days. They are like some of the biggest capitulation events we've ever seen in Bitcoin's history in dollar terms. I'm at a view that I think we've had a meaningful capitulation. That doesn't necessarily mean the bottom is in, but I do think it means we've hit a inflection point in the bear. If you go back and look at all previous bears, there's like the initial shock value. You come into the bear, no one really believes it. James Check (06:56.373) you know, a lot of people get chopped up in the the bear flags and all that kind of thing. Then people reach acceptance and then a lot of people just like, I'll come, I'll see you in a year. I'll walk away. You get a lot of people who just exit. You get a lot of people who panic out. A lot of people who go and just get bored and leave because of time pain. But generally speaking, a lot of the price damage is done, right? That doesn't mean the bottom is in FTX, but what's the difference between 17.6K and 15K in 2022? Not that much. We hit 17.6 in June. FTX took us down to 15.6. We range for a while, like... As a long-term investor, that's irrelevant in terms of price action, but there's a six, seven, eight month period of time that just beats people down. So I'm of the view that we've done most of the price pain damage. What we very likely have ahead of us is the time pain component of this thing, which is often as brutal, if not more brutal for the investor mindset. So that's my big picture view of where we are at the moment. Brian Cubellis (07:53.741) Yeah, that's all fantastic, James. Thanks for walking through that. guess one question that came to mind as you were mentioning some of those numbers and thresholds that we had talked about on the last episode, given the capitulation from what seems to be a lot of people who had a much higher cost basis, how does that then sort of reframe those health sort of health gauges or numbers in terms of where we are today? Like. James Check (08:14.755) Mm-hmm. Brian Cubellis (08:17.985) you know, are we in a healthier position basically because a lot of those people are now out and we sort of cleanse the system of people who bought much higher, don't have as much conviction as longer term holders. And does that help sort of set a base, even if that even if 60 wasn't the exact bottom, maybe, you know, it's around here because it's a healthier sort of composition on chain. James Check (08:38.009) Yes, so I'm actually running this study at the moment to just fully quantify this compared to the 2018 and 2022 bottoms. So I don't have all the numbers yet, but the answer is yes in part. We have started to get that capitulation type effect. The general way that I would frame it up, if you compare 2022 and 2018, they're actually very, very similar. So in whatever you want to call the bottom formation range, in 2018, that was like 3K to 5K, that zone where we chopped around for a couple of months. In 2022, it was like 15.6 up to 25, kind of a larger price range. At that point in time, we had about 25 % of the wealth just in that zone. Now, before we got down here, before when we're trading up at 80k earlier in the year, there was only 10%, less than 10 % of the total wealth was in this current zone that we're in between, let's just say 60 and 70. Now we're up to 15 and a half percent. we've seen about, it's about $50 billion of coin has been deposited from higher cost basis down into this zone. So, you know, through this kind of boring choppy as the dust is settling in this process, we've seen $50 billion reallocated. and 50 billion, reallocate to new investors. And if you think about who is buying right now, the headlines are horrendously bearish. The price is down 50%. People are saying that gold is going to be the future of the internet. Like, get out of here, right? Tokenize gold? What are you talking about? So there's a bunch of these narratives. It's a really, really bearish setup. And for me as an analyst and for me as an investor, that's fantastic because when everyone feels safe to jump in the bearish pool, and I've been using this concept, like why don't journalists bring out their bear articles at 120k? Because it doesn't feel safe to do a bear article then. It also doesn't feel safe to take out leverage into a Bitcoin back loan when the price is down 70%. James Check (10:32.378) But I'll tell you what, I got a lot of calls to do that at 110K because it feels safe to jump in the pool on the bull side. So we often see this like investor mindset where people want to feel safe to take risk. For a journalist, what's taking risk? Putting out a bold headline that strategy is going to implode and Bitcoin is going to zero. It's a bold headline that you're only willing to put out when the price is down 50, 60%. Right? So the journalists now feel safe to jump in the bearish pool. The people who Thought it was a bull market four weeks ago, now have a price target of 30k. Right, this is again, the bears feel very safe to jump in the pool. And again, this doesn't mean the bear is over. In fact, I don't believe the bear is over. We've got a long process of painful grinding, maybe lower prices. There's a journey ahead of us. But the signals that we're seeing, just if you put all this together, do you ever see this at the top? No, so at a minimum, are we at the top anymore? Absolutely not. Like we are much, much closer to the kind of environment and sentiment that you see near bear market floors and certainly not at bull market tolls. Brian Cubellis (11:37.773) Yeah, that's very well said. mean, just the note on a very strong signal historically being people boldly proclaiming Bitcoin is dead. We've seen a lot of that over the past couple of weeks. One thing I did want to go back to was like, know, talked a lot about investor psychology and sort of the behavioral elements of holding this asset. And I think it's part of the reason that this down move has been you know, maybe more uncomfortable for some is because there isn't a specific thing that people can point to. There's not like an FTX implosion. You know, I would say there's a lot more sort of macro uncertainty in the world, geopolitical uncertainty, which I think are factors, but I think it's a confluence of things. And so I think that that is unsettling for folks to not be able to point at something specific because then you kind of never know if it's over. And so I'm curious from your perspective, like, beyond just the simple sort of maybe the easiest explanation of investor psychology, cycle thinking, what would you pinpoint as like the cause for a lot of this decline? James Check (12:43.767) Yeah, yeah, no, this is a really, really good point. And there's a few elements here. So first things first, I actually think the economy side of things is actually really important. You know, I'm not one of these folks who will anchor to one everyone's got a story and narrative in it. You know, you always see these metrics the last couple of weeks have been, look, Bitcoin's perfectly correlated to software. It's like, okay, yeah, for like what the window of the chart that you didn't trim because the rest of it looks like terrible. So it's one of those classic things. But like there is a relationship, a correlation, let's call it between Bitcoin and your PMIs. And like, if you look at the US PMIs, Brian Cubellis (12:59.756) Yeah. James Check (13:13.691) they've just been grinding along with nothingness. They're just like in this neutral zone of not doing well. So I would just generally say that the real economy hasn't been doing that. great. I think that's a component. In fact, I actually, I've got this idea I'm still formulating and need to put some numbers around it. But I do think that we should, I'm starting to think about this 23 to 24 period a little bit more like 2019. It's like a echo bubble hangover from the bear that came before it. 2019 and 2020, that was very formative in my Bitcoin years. So I remember the emotional journey I went through quite closely. And it feels like we're in this, we didn't really deserve to go up. Like in 2019, it was because we had the plus token Ponzi that sucked in like 2 % of the supply and then they unloaded on July onwards. Um, so there was like a big supply demand that created a bull, but it wasn't really a bull. We had the ETFs and treasury companies that kind of created a bull, but it wasn't really a bull. So I think there's this like transitional thing that we're going through. And you can, there's a whole lot of economic relationships between those two periods as well, like a of a, you know, we the repo rates spikes. Like there's a lot of things where the economy wasn't in. And I think a lot of folks thought the debasement trade. I don't think we've been in the debasement trade. mean, if you actually look at the way that the system is currently operating, it's kind of like clinging on, not austerity, but it's certainly not throwing money out everywhere. So I don't think we're in this like just raw debasement trade. There's a few elements that I think have probably people don't fully kind of put them all together. But first of all, I know a lot of people are Bitcoin only. I'm certainly Bitcoin only. A lot of people who aren't. James Check (14:51.775) And if you aren't Bitcoin only in the crypto space, your portfolio has been a bag of dead weight. It's done terribly. So the crypto world has done horrifically for many very easy to understand reasons. There's no value capture there. So I think that the crypto industry has been a drag on people's portfolio. I've actually had a lot of messages from people who have been like a diversified crypto portfolio who are going even in this bear market saying, That's it. I'm done. I'm totally done with altcoins. now going Bitcoin over. So I've had a lot of those messages recently. I think treasury companies nuked a lot of people's portfolios. I think a lot of marginal demand went into these inflated stocks, which then proceeded to not inflate. So I think that crushed a lot of marginal demand. And then I just think the 100k level was, you can just see it in the data. People like to say like, why would you sell it 100k when it's gone to a million? It's like, because they've been holding for such a long time. Like the dude that people made fun of the dude who cashed out 9.6 billion dollars via Galaxy They made fun of him at the time. It's like but what's gonna go higher? It's like dude the guy top ticked it with 10 billion dollars sell he's fine. You know what mean? Like so there's there's those components of just like under a K was a very special number because it was it was the Unbelievable impossible stretch target for all of bitcoins life. So the way I've been thinking about it I kind of liked Jordy Viss's IPO moment. I think it's a nice way to think about it. That's not gonna be a perfect analogy, but from a mental framework. James Check (16:20.805) I we're in that transitional period from the Bitcoin world too. So I actually reflect on my own journey. So I'm like 90 % Bitcoin, 10 % precious metals. And I've been buying a lot more precious metals in the last, since 2024 really. And yeah, I can go through the details of why that is, but for me, I'm divesting out of Bitcoin, not by selling it, not as buying as much personally. So I'm actually allocating more of my marginal capital to other assets. Why? Because I'm at a stage in my life where I've got a kid, I need to get a house, like Bitcoin's down, my net worth got cut in half 50%. Now I don't need to sell my Bitcoin, but what if I needed to go and what if I needed to pull the cash? I would hate to have to sell my Bitcoin in a distressed position. And I've had plenty of friends call me recently saying I'm in that position. So I use the precious metals as ballast in my portfolio. I think there's a lot of Bitcoiners who are just like us and they're a point in life where they actually realize they've finally clicked that they can't be a 100 % Bitcoin anymore because life is life and life is complicated and so is Bitcoin when you put two complicated things together you get chaos So they're looking for I just need to stop. I need some stocks. I need some gold I need some something that isn't Bitcoin. So I'm not like my mood isn't anchored to this price chart on the flip side the institutions that are coming into the market, first of all, they take a lot longer to move. But second of all, they're diversing from a 100 % not Bitcoin position to a small percentage of Bitcoin. And the capital that they bring with that small percentage offsets everything that we're going to divest. So I just think that that that 100k zone has been a almost like a end. If you want like a full stop on the end of Bitcoin's early life, I think 100k is it. And we've watched a very very big capital rotation and you know I try to help people understand you have a decision tree Bitcoin is either dead and going to zero if you choose that if you fundamentally believe that it is not going to zero which I certainly do then eventually it's going to put in a bottom and when it puts it puts in a new all-time high which it will do James Check (18:30.326) When it puts out their next all-time high, you can't blame it on the ICOs, you can't blame it on stimulus in 2021, you can't blame it on the ETFs, you can't blame it on the president, it's just demand. So I think that we're in this rotational period where a lot of hodlers... They extrapolate what their wealth could have been and will be eventually, but patience is a part of markets. The institutions are only just starting to onboard, getting all the tooling, the wire houses, all that kind of stuff. All of those things are in the process. The infrastructure is there. And when we take out that next all-time high, narrative follows price. the amount of like there is, there is nothing that the critics can throw at it. Like that is just, are now objectively wrong in every possible way. You can't pinpoint it to anything except people just wanted to buy this thing. So I think we're in that process. So for me, as a long-term investor and a Bitcoiner, you're going to give me these prices. I'm going to take them the whole time you're going to give them to me because this took like, I've restarted my Bitcoin accumulation quite heavily. I've basically turned off everything else because I'm looking at this and just going, this is the time to be DCAing as hard as I can. And once we get back, back above 80k, I'm going to do exactly what I did before. I'm going to stop buying as much. I'm going to start reallocating to other things, do my divestment strategy. So that's how I'm currently thinking about it. Jackson Mikalic (19:47.213) That is what the people want to hear. James, we're going, we're going long Bitcoin. We're going short traditional finance journalists calling Bitcoin dead. yeah, right. Brian Cubellis (19:49.737) You Brian Cubellis (19:55.576) Yeah. James Check (19:57.338) We're just waiting for the IMF to bottom ticket with a 250 page report on why it's gone to zero. Jackson Mikalic (20:02.574) Yeah, I mean, the ECB did it last time in 2022. Bitcoin's last stand at like 16k. James Check (20:05.707) Yeah, that's the story ECB. Yeah. That's it. It's in like a final death spiral. what a shame. Jackson Mikalic (20:12.558) Yeah, that was, that's, that's a great one. Um, I mean, look, there's a lot, there's a lot of different themes we can get into. I think we'll try to cover them all. Uh, one, one point you did make that I think is often overlooked is there is this, forget about the uncertainty around the price. I think you did a great job explaining what's actually going on there. There's just uncertainty as it relates to what is Bitcoin right now. It is weird as it sounds, you know, you have the treasury debacle that we saw in 2025 and there's obviously a lot of, um, people in this space who've been in Bitcoin five, 10, 15 years, who didn't necessarily appreciate what was happening there. And it was certainly at odds with their vision of what Bitcoin was in terms of decentralized peer to peer money. And for it to be co-opted by just Wall Street, traditional finance, know, the suit coiners, I think there was that battle in the culture between treasury companies and just say, at least when I got in, the culture was very heavily towards self custody. James Check (20:53.88) Mm-hmm. Jackson Mikalic (21:11.776) you know, very ideological driven, nothing wrong with that. And so there's these kind of two opposing viewpoints. And then you have the true suit coiners coming in or the traditional finance pools of capital that are really only starting to creep in. So then you have them coming into the picture and then you have all these competing narratives of like, what is Bitcoin? Why should you own it? How do you own it? All these different things. And then to add another layer of complexity to it, it's exactly your point, right? People who are Bitcoiners, a lot of them look like you and I. And they are a lot more mature than they when they first got into Bitcoin their situation is different They probably have families they may be looking to own a home and there's just a lot more complexity Then at least there's more complexity for me than there was five or six years ago when it was just like I have nothing else to think about besides myself and I'm just gonna smash by Bitcoin and I don't really need to keep any capital on the sidelines because I have no responsibilities Yeah, I just James Check (22:03.032) I can empty my, I can literally empty my bank account. Yeah, I can't do that anymore. Brian Cubellis (22:06.07) You Jackson Mikalic (22:07.628) Yeah, I've just, I don't have to be responsible. I have no one, you know, accounting on me. And so things are definitely changing. and so I think there's that aspect to it as well, where it's always hard to quantify just the culture around it and how that's developed. And I think ultimately as well, what happened last year with the treasury companies, I mean, we talked about it on the last show that you were on and, and, Michael's not here today, but Michael in particular on our side has been very vocal against them since really the inception of it all. And I think we're kind of in a process now of having to flush through all of the excess that happened there. And maybe some people will atone for their sins and we can move on. But I think there's just, you know, I'm rambling at this point, but I think the broader point is, look, we don't have certainty on the direction that Bitcoin's headed. And that's part of that. That's okay. Like, you know, Bitcoin is for anyone to interact and own whatever way they'd like. And so we don't need to have one cohesive Bitcoiner to own the asset, but I think there's still this aspect of like what you know, are the next couple of years look like from that perspective? James Check (23:14.36) Yeah, no, and I actually think there's a component here which I won't stick on too much because I've spoken about this a lot, but I think that the gold rally, the parabola envy, cooked a lot of people as well. again, if I come back to my original point of like the debasement trade, I don't think gold went up for the debasement trade either. I think gold went up because the world at a sovereign level goes, hey, we can't trust treasuries anymore, which is by the way, the same thing they've been doing since 2008, just hitting that wall of, hey, they're taking physical delivery. And this is where I think it gets really interesting. Brian Cubellis (23:23.48) Mm-hmm. Jackson Mikalic (23:23.8) Yeah. James Check (23:43.671) Why did gold do what it's done? Because people took physical delivery. And by people I mean large-scale entities. We saw there was a period in time, I still have no idea what was going on, but there was that period of time when they first launched all the tariffs and suddenly there's just mountains of gold being shipped across to the US so much so they had to adjust the GDP numbers because there was so much gold moving. Why did gold go up? Because people took physical delivery. What's Bitcoin really good at? Physical delivery. You know what I mean? Like the more that people just stack the sats, you just put the bottom in. Like that is where this goes. And when you watch something like silver and gold add trillions of dollars in a, you know, what looks to be like a blow off top, but trillions and trillions of dollars. Bitcoin is going to go on a run and you know it just makes all these things you got once these things get moving now you know on those rallies it's a bit of a repricing event we see Bitcoin do this through its history and I actually think another thing people should always remember Bitcoin if you look at it on a daily price performance basis it's like 40 % of the time it goes less than 1 % in either direction 40 % of the time Bitcoin does actually nothing Each, there's about a 30 % tail where it goes up more than 1%, down more than 1%. Most of the time Bitcoin does nothing. If you put that on a quarterly basis, how does it move on a quarterly basis? Suddenly you've got a really positive skew to the upside. It does nothing most of the time and then sometimes it goes up 100 % in a quarter and if you're not there for that quarter, you kind of miss the whole run. So Bitcoin goes on these repricing events, but it doesn't do it often. And it's one of those things that think a lot of people fantasize, is probably the right word, about perfectly selling the top of the cycle and perfectly buying the bottom of the cycle. And they kind of miss that, like, there's about 10 days that you have to be there for and you have to be allocated for because that's where it happens. And most of the time, people who are trying to bottom ticket... James Check (25:38.989) They missed the first three of those 10 days because they tend to happen very early in the bull cycle and then they come towards the back end of the cycle. So a lot of people who trying to bottom tick this thing like and what I've been saying to folks, if you look at mean reversion models, all of them 200 day 200 week, realized price, literally every mean power law, choose your weapon. Any mean reversion model you look at, we're in the bottom 20 % of days at 70k and below at 60k we're entering like 10 % of days territory. So unless Bitcoin is real. just a completely and utterly broken market, which it just isn't, then if mean reversion is a thing, then we're in that zone, that what I call the deep value zone, right? Below 20 % of all days, those 20 % of days occur in the bottom end of bear markets. Price can go lower, yeah, but I just want to buy the whole thing. Because if I buy the whole bottom, then I'm going to get all those 10 days, right? I'm just going to get the whole 10 days. because that's sometimes in the whole four year cycle. It's literally what makes the whole cycle. If you remove the 10 best days, I need to actually run it for the cycle we've just had. You're actually flat or down, right? 21, if you miss those 10 days, you lost money in 2018, I'm pretty sure you're flat. And you know, that's just how markets tend to work. They reprice rarely and it catches people off guard. But that is why it's a time in the market type thing. It's just how Bitcoin works and how all markets work. Brian Cubellis (27:01.549) Yeah, that's very well said. think also just on the debasement trade thing, I think it's a very salient point because last year, this notion of the debasement trade sort of entered the zeitgeist, went very mainstream. But I think that in hindsight, that's kind of a classic case of just ascribing the rationale for price movement, particularly as it relates to precious metals. And I think you're totally right about James Check (27:19.842) Felt safe. Brian Cubellis (27:26.881) the spot delivery aspect and central banks buying larger entities buying and demanding physical delivery. I guess I'm curious like on a go forward basis, like I do still think the sort of like fundamental tenants of what the debasement trade represents are in place to happen at some point. And I guess the question is like, well, when does that happen? What needs to happen for, you know, either the Federal Reserve or other central banks to James Check (27:45.898) Absolutely. Brian Cubellis (27:54.445) take serious action and turn on the money bazookas per se. I would say right now people are kind of looking at AI disruption as like a natural thing to point to in terms of massive displacement of white collar jobs that's being forecasted. Curious what you make of that. Like is that a reasonable go forward sort of projection that there's going to be so much disruption, so much job loss, so much credit losses as a result of that, that they're going to have to turn on the money printer, whether it's like probably won't sound like something like UBI, but they're going to have to print money to basically repair the economy when that does happen. Is that sort of going forward what you think might happen, or are there other reasons that the real debasement trade might play out? James Check (28:31.755) Yeah, so. James Check (28:39.606) Yeah, so I agree with all of that and I think that the debasing trade is a thing, but it's like all things in macro, it moves at glacial pace and then it cracks and it all happens at once. So I very much view, and again, we can borrow a lot of rationale from the gold bugs because they're right on this kind of stuff. Gold and Bitcoin, in my view, are insurance against something that is mathematically programmed to happen. Bitcoin is mathematically programmed to have just less than 21 million coins. Gold is programmed to have 2 % inflation because as technology gets better, we mine more of it, but it's still hard to get. There's a whole lot of gold seams that are now accessible that weren't previously because the price has gone up. and eventually technology will get better, right? Now it is hard manual things like digging holes in the ground. Yeah, we get some technological developments, but dynamite still dynamite, you know, like it's kind of hard to have bigger dynamite. So generally speaking, physical deflation occurs at a slower rate than digital deflation. Now on the AI thing from like, I've got a few different views on AI. I've been using it in two different ways. Up until very recently, the primary way was just helping me fix up some of my chart code and stuff like that, right? More of the programming side of things. I don't use it for any of my writing or my thinking because first of all, thinking is like my favorite thing to do. So that's, just not gonna outsource my favorite thing to do. And I also think that... the human element of having lived through Bitcoin cycle helps me contextualize the data that I look at. So in many ways, I try to take all the complexity of the data and just explain the narrative of what it's saying. And a lot of it is drawing on my own lived experience of going through those market cycles in the past and then how it displays in the data. So that's a big part of my writing style and my thinking style. But I do do it like, you know, I don't want to copy paste a bunch of chart code. Like I'm using templates, go and fill this stuff in. James Check (30:33.182) It makes a ton of mistakes. It still makes tons of mistakes. And I do find that sometimes I literally just sit down and just do it myself because I just couldn't be bothered checking its work. Now, the other thing I've done more recently is I've been playing around with these open-claw things where it kind of takes over your whole machine, right? And just trying to get it to run my code. because I have a system that runs it, to see if I can get the AI, like a system administrator, to sit there and run it for me, which is gonna be really useful when I'm traveling or whatever else, if something goes wrong, in theory. Again, something I took away from it, first of all, it's incredible. And I have no doubt that the path it's gonna go down, in two years time, in one year time, it's gonna be a fully fledged system administrator. I'm not a developer, not a system administrator, but I understand technical stuff. Like I use Linux as my main operating system. I find that it's still just like, you've got to get it, you've got to ask it three times. It makes mistakes regularly. Now my general framework is that I didn't hire a developer, by the way, the whole thing, I was watching how much it cost me in terms of tokens to, to spin this whole thing up. it cost me about 70 bucks, Aussie, like 50 bucks US. cost me about 50 bucks to set the whole thing up, get my system running. It would have cost me two grand to pay a human to do that. So I chose not to hire a developer and this piece of what is fairly early software did it for me. Yes, it took a little bit of hand holding from my side, but I didn't have to hire a developer. And at the end of the day, I could have learned to do all the things that it was doing, but I just don't have the time and the bandwidth to do that. So what it really replaces me hiring a junior. And I think this is where it gets really hairy because I don't need to learn how to use GitHub and all the ins and outs and the detailed stuff of it. The AI can do that. So I don't need to hire a junior developer. And I think about what that means for bigger firms. James Check (32:32.158) A lot of the, I call it the generational divide, you often hear this kind of thing, there's like a ladder pulling, know, house prices go up, people pull the ladder up behind them. So then there's all these young folks who are coming out of university and can't get jobs because it's replacing exactly that part. Now, I try to balance these two views and go, well, I learned, mean, for me, I used to be civil engineer. The amount of value I got from being in the office and just hearing, conversing, talking with all the gray hairs and learning the human side of engineering. I can't imagine juniors not going into the office and not getting that experience because what happens is you end up with no gray hairs. And that I think is a very, very scary proposition. Now this is the generational thing. It's gonna take decades to get here, but we're at the phase now where the initial ladder of being an intern has been pulled up. But then I also look at how much value I can create with my human thought and how much value, I mean, the graduates that worked under me. They were so much smarter at me at new stuff. They could use new tooling, whatever. I'm really talking about, you know, five, six, seven years difference in terms of age, but they were able to do what I was doing to my boss, which is bringing in new ideas, fresh ideas, new technology. And I just, I actually really worry about what the world looks like. Cause when at engineering, there was a lot of folks who were saying quite concerned that there's a huge pool of experience, the baby boomer generation, the Gen X's. When they retire, we kind of lose a lot of human knowledge, a lot of human knowledge. And we actually saw a lot of this after COVID, because the stock market went up so much. There was a lot of retirees who were like five, six years away from retirement. Bang, COVID retired them straight away because their portfolio just took them out of the market. You lost a lot of that human experience. And then I do worry about the world where people are overly reliant on AI. So I find myself, I'm a bit resistant to it because I literally like to think. James Check (34:28.652) But I can also see how a lot of people will become addicted to using it to think and they won't actually learn how to think. I worry about that component a lot because I think that's a... The problem isn't that AI is smarter than humans. The problem is that the bottom end of the bell curve of what people do, a lot of it, like a lot of jobs are kind of... Replaceable they they are replaceable there, you know administrative type roles The challenge is that there's a very large pool of the economy That is disruptible the top end harder to disrupt But the bottom end is easy to disrupt in their knowledge worker base for sure I mean robots as a whole another thing So look all this is a long and long-winded answer saying like it's not there yet I don't believe this stuff where like we're gonna lose all the jobs tomorrow But five years time, where the technology is better and we're further down this ladder pulling process, yeah, now it starts to get really hairy. Jackson Mikalic (35:26.595) Yeah, I mean, it's definitely a hairy topic. I would say my thoughts on it all would be I agree with a lot of what you said, James, but I also wouldn't necessarily. I don't think you were negative, but I personally am not negative about it, especially for younger generations, because I still think that while someone like yourself or me like or Brian, someone who's actually using these tools every day or if you're setting up open claw like your. you are just so far out there compared to where most people are. And so I still think that there's a huge opportunity for particularly younger, younger generations, recent graduates, entry level roles, because while a lot of those roles are going to be, um, obsolete, the fact of the matter is that about 10 % or so of people actually report using any of this stuff on a daily basis. And you'd have to imagine that out of that 10 % James Check (35:58.912) yeah. Jackson Mikalic (36:23.562) it's a very small percentage of people that actually use it for any sort of strategic work. Like I'd imagine most of that 10 % is prompting chat GPT to like give them a recipe idea for what to make for dinner. and so there's still a lot of opportunity to the extent of people who are willing to lean in and learn the skills. Like it's there for the taking, but I just don't know how long that window of opportunity lasts because everything is moving incredibly quickly. I think where maybe the most pain happens is middle management. I would imagine like a you know they're they're typically getting a nice salary they have benefits be the large companies in the multinational corporations are extremely bloated you know there's all you always read about people who work remotely and they don't actually do any work or they do work like 15 20 hours a week not even close to 40 let alone more and so I think there's a lot of bloat there and they're also in a tough position. Like I think that someone who's more internet native, digitally native, 20 years old, 30 years old is more likely to actually become proficient at this new technology than someone who's like 45, 50 kind of at the tail end of their career. And so that's probably where, and that's an unfortunate thing. mean, those people are typically in a position of providing for a family. They probably have pretty significant obligations and that's probably where I'd be worried if, you know, in terms of the workforce. So yeah, I mean, it's, it's a challenging thing to think through and then to tie it back to Bitcoin. I mean, there's so much uncertainty. And I think Brian kind of where your head was at with it all was we're, we are going to see some deflation and James, you started talking about the deflation of, of gold, of Bitcoin, right? It's going to be incredibly interesting to watch this play out. mean, Jeff Booth, I think has the best thesis. I remember reading that book for the first time, the price of tomorrow. And it was like blowing my mind whenever it was in 2020 or 21, because I had never really thought too much about just how at odds these forces were and the degree at which the pressures would grow both ways, right? Deflation from technology, inflation from the monetary system. And so it kind of gives me a little bit sense of relief and peace knowing that Bitcoin is just programmed to do what it will do and knowing that there's going to be an insane amount of intervention in the economy and in the fiat financial system. Jackson Mikalic (38:44.674) to try to patch over as much of these losses and pain that will be presented from artificial intelligence. James Check (38:52.406) Yeah, and I think there's like there's a few elements here. One is we're to get a move back towards and we're in the move back towards real things. So for example, engineering, I know that if I go back and put myself in my old shoes, I'd be able to use AI for stuff, but there's no way it can replace what I would what I was doing at the time. Why? Because a lot of it is dealing with contractors who are digging physical holes, who are dealing with mechanical machines and steel and concrete. It's not something that AI understands enough to be able to automate those roles. You can't really automate a plumber. Your toilet's stuffed, you've got to get a plumber out. Yeah, but... Yeah, look... Brian Cubellis (39:25.548) Until the humanoids, which may not be that far away. James Check (39:31.82) The last humanoid robots that I've seen was a dude dressed up in a suit, right? So I think it's going to take time for that to become like, where's the full self-driving cars? You know, they're just, they're just not a thing at this point. So there's a bunch of these things where like, it'll get there, but we're a long way away from that. I think physical trades, sorry, literally physical trades, physical jobs, physical things. Brian Cubellis (39:40.599) sure. Yeah. James Check (39:57.561) are required. We're also seeing this from like the US's industrial policy. They need to reshore manufacturing as a national security interest. It doesn't really even matter if it's that profitable. They need to do it for a national security interest. They're going to subsidize it. They're going to support it. And that's physical stuff. So I think in that sense, there is going to be that move back towards the physical world. And there's a lot of physical jobs out there. I agree with that kind of middle management side of the equation. That's where a lot of this stuff really hits home the blow. Right. The bloat starts kicking in, but also there's a reliance factor to these things. So I think that's definitely a key component. And really at the end of the day, the way I view Bitcoin as a gold holder, as a Bitcoin holder, I know that Bitcoin is just a whole lot easier to use. And I think about my young son, is he going to be using gold coins? Like guys, we're not Romans anymore. You know, we're in a internet native age. It's a real pain in the ass. In I'll tell you, I can't remember who exactly said it, but when we're talking about when France tried to get their gold back, it was like hundreds of ships to take their gold, like taking custody of gold is a, it's a job. It's a physical job or it's a 10 minute Bitcoin transaction. So I think the world is over time. It's just a game of trust. And the way I view Bitcoin and gold, they have one very, very important role, not to die. That's it. As long as those two assets don't die, gold's got the atomic side of the equation, Bitcoin's got the human incentive, the greed side of the equation, why does it operate? Because people want it to operate, right? I am not going to change the supply cap because I'm self-serving. It's my own, in my own interest not to change it. The miners are going to do it because it's profitable to mine. When it's not profitable to mine, they'll sell their rigs to someone who is profitable to mine. Bitcoin is based on a very, simple assumption that humans will be greedy. And it's just a very, it's a very reliable assumption. So I think both of the assets, their job is to not die. I very much view them as insurance to get to the other side. And that's, that line there is really what I think is the most interesting and challenging part. Get to the other side of what? That's the... James Check (42:07.926) That's the debasement side of the equation. That's the mathematical challenge of an inflationary system. Why does the ECB bottom tick a Bitcoin bear market with a price of a paper at what's dying? Because their system is dying. It's a defense mechanism. They do not want people to buy Bitcoin. They do not want people to buy gold. The IMF will buy gold, but they'll disparage it publicly whenever they can. And like I've recently been doing a very deep dive on, just history, civilizations and the like. There's a podcast called Fall of Civilizations, how the Byzantines fell, how the Aztecs fell. I've also been listening to the audio book of the Bible, not because I'm a religious person. I'm just curious from a historical standpoint. Gold, silver, gold, silver, gold, silver, the amount of times that things happen because of gold and silver. When you study how the monetary system came to be. the amount of mechanisms that were designed to say, give us all your gold, we'll give you a token. There you go, there's your token, go and spend it, pleb, out in the economy, but we're gonna hang on to the actual thing, right? The custody of the asset was the thing they wanted. This is the story of human civilization. Honestly, it amazes me how many thousands of years ago we'd already converged on gold, right? And if you just think about why did we converge on gold? Because of its properties. Bitcoin is, what, 16, 17 years old? It is so young in its process of becoming understood. There's no chance that the first human, the first time they saw gold, like, oh, that's money right there. It has to be. No, they had to like, the gold had to compete amongst the copper and the rocks and the shells and all that stuff. And eventually we all go, oh yeah, you know what, that's actually kind of the one. Bitcoin is going to go through that process and it's going to do it at a much faster rate because of the internet, because of AI, because of... just the transfer of information. So it is a sound money for the modern age. So yeah, I think it's just a game of patience, time and process. Jackson Mikalic (44:08.482) What do you think about the droids being the ones that usher in hyperviginization? You know, mean like it's at some point, at some point we will be incredibly reliant on these models. I don't know when, I don't know when that happens, but I mean, I already feel to my own work, like I'm in Claude all day, every day. If someone took that away from me, it'd be like taking a pacifier away from a baby, right? It's a problem. And so, At some point we're going to become so reliant on it as, you know, just as companies or individuals. And I would imagine like it makes more sense than taking dollars. You're not going to take gold and you're not going to want to take an inferior fiat currency. And it works from instant settlement. It works from microtransactions. It works very quickly. And you can spin up wallets very easily, right? And so there's, and then obviously the scarcity, but all that is well understood. like, I'm curious if you think that, cause you said this will happen faster than we think, but I think people were also saying that five or 10 years ago, like they're not saying you were, I'm just saying people, when I first got into Bitcoin in like 2020, like more seriously, 2020, 2021, I think people thought that was imminent people. You know, most people were saying, Oh, dollar collapse is imminent. Hyper Bitcoinization happens Bitcoin standard a couple of years from now. And there probably are still some people who say that, but I would say like most people still don't know anything about Bitcoin and they don't give a shit about it. And they probably are going to give a shit about it until they're forced to. And maybe it's the fact that we have to rely on certain technologies that require to be paid in Bitcoin in the future. James Check (45:50.681) Most people don't own like stocks outside like a forced retirement vehicle either. Most people weren't lining up outside gold shops when the price was low. Most people don't think about any of this stuff because life is already complicated enough. Like I talked to my old man quite a bit. You know, he went on a fishing trip with a couple of his mates, know, 10 blokes all retired. And, you know, he and I talk a lot about his finances, trying to help him put in the right things. And he was saying, asked them, how many of you guys know what's in your superannuation fund, which is our Australian equivalent of a 401k? How many of you guys know what your super is invested in? No answer. No one knew a thing about what was in there. They're all retired. And this is literally the money they have left for the rest of their life. They only know the number that was on the screen when they last checked it. They have no idea what it's invested in. And I can tell you right now, it's almost certainly invested in bonds. And there's no doubt that would have took a big haircut in 2022 because they had no idea. So that's where most people are. They won't, they just won't do this ever because it's just human condition. I think Bitcoin is one of those things. This is where it's actually very favorable that we move to a world where Bitcoin becomes like a half a percent, 1%, 2 % part of just a typical normal portfolio. which means the investment advisors have to become comfortable, which means the firms that run those investment advisors have to become comfortable. And this whole thing just takes time. There's always going to be early adopters to this stuff. We now have the fastest growing ETFs ever, ever. I can't imagine what's going to come out that's going to beat the Bitcoin ETFs in terms of their launch. I think they will hold that record for a very, very long time. These things have been tremendously successful. When you look at the outflow profile from those ETFs, by the way, We're down what, 50 % from the highs. The AUM is down like 4 % in Bitcoin terms. The total flows are at like 12%. So we've just seen, and most of those flows, in my opinion, you can link them to the CME Open Interest. They all happened before December. It's a bunch of hedge funds doing window dressing to close the end of the year, closing out a basis trade. It's not like sell this thing because it sucks. It's a structural, like it was a trade. So I think that it just takes a long time for this stuff to happen. And the vast, vast, vast majority of people have... James Check (48:08.888) no idea what they're invested in and they don't do any investing. Even a lot of people that I know, investing is just not a thing that they do. They haven't really gone through the motions. Eventually it hits them in the face where they go, oh, wow, things are getting really expensive and I've got to retire and I've actually, oh, wow, I've got to actually save some capital. A lot of people saving cash, in cash, because they think that it's like, oh, I need some cash on the side. It's like, yeah, but... It's inflating away. And like I've heard stories of some people who've got hundreds of thousands of their life savings in dollars, earning 0.1 % in a bank account somewhere. you're just like, even at 3%, 4%, great, you get five grand on a hundred grand. Well done. Like that's, what are you going to do with that? So in many fronts, I just think people don't think about it, which means that the system has to evolve and that's a slow beast, right? You've always going to get the early adopters and you also, this is the other thing. When you think about the size of the capital, right? If you look at, I need to do this study again, but you can look at all the 13 F filings, who owns the Bitcoin ETFs. Last I did a very outdated study, mind you, it was like somewhere in 24. When I looked at that, then it was like 25 % was institutions, 13 F filing institutions. Of those, there was a very clear pattern. The smaller the firm, the more likely they were gonna have like a one or a two or a 5 % allocation. The bigger the firm, the more likely it was a 0.001%, like... peanuts, but that 0.001 was all if you put those big firms together like all 10 of them, it amounted to like 90 % of the capital of the 13 F filing companies. So what happens when they go to 0.002? That's all you need people. I think I've seen a lot of narratives of folks being like we need the sovereigns to come in, right? The individuals bought Bitcoin, then the companies. Now we need a sovereign to buy others. It won't go up. No, you just need those firms to go up a fraction of a fraction of a percentage point. and it just absorbs all the sell side because the numbers are just tremendously big. that's where think Bitcoin's in its just overall life cycle journey. And yeah, it's just a game of patience as all things are. Brian Cubellis (50:13.379) Yeah, it's really good points there on just the one sort of the slow moving nature of institutional allocators. But I would say like zooming out a bit, like if we rewind, you know, pre ETFs two, three years ago, like there was no sort of acceptance of this thing of people actually thinking of it in a way that you described earlier around like. This thing just needs to not die. It's a hedge against this mathematical certainty. People were not thinking about it in the institutional world like that. They were thinking of it as a speculative Ponzi. And we are still there in the very early stages of that shifting and those, those allocations changing. And it feels like, and maybe it's just cause I'm like tuned into this stuff. and so maybe it's not more broadly known, but like every day, every week, there are announcements from the incumbent TradFi firms that are. hiring for dozens of roles for digital assets, Bitcoin, new products, Morgan Stanley filing for an ETF. And then you have the Abu Dhabi sovereign wealth fund continuing to build a position. we got excited about Harvard buying last year. It sounds like they trimmed their position a little bit and bought Ethereum, which is unfortunate. But the reality is, is they're going to have their learning curve as well around crypto and Bitcoin. But I think the broader trajectory is extremely constructive. couldn't even be imagined three years ago that this would be the case where you had all these firms hiring for these roles now actually like beginning just beginning to solicit their underlying clients because even for the first year of the ETFs it was like the end client had to like demand to get into it even if it was on the platform and we're just now being seeing like the early early stages of like people actually selling these products to people and so like to your point like James Check (51:57.336) Mm-hmm. Brian Cubellis (52:07.393) You don't need a huge turn in what those percentage allocations are to get to a place where, going back to what sort of Jackson's question was around, was like, people don't even need to know that they own Bitcoin. It's just gonna be in their portfolio at one, two, 5%, maybe 10 % if they're younger in age. And that's gonna be all we need. James Check (52:27.564) Totally. Yeah. you know, I think something I often reflect on is you get, know, something happens on a Sunday night, Bitcoin price goes down 10%. Every macro analyst and commentator in the world posts a Bitcoin chart. Why? Because it was not, not because Bitcoin's irrelevant, because it was so relevant, it was on their Bloomberg terminal. It is now so relevant that every macro analyst has Bitcoin on it because they know its information. They may hate that it's information, but they know its information. When we break the next all-time high, it is going to be a moment that I just don't, I don't think folks have properly comprehended how many critics are going to have to realize that they can't keep doing this jump in the pool at the bottom thing. You know? they're going to realize maybe there's something here. And that's why whenever you see a critic, this is one of my favorite things to ask them. They post some nonsense headline or reason like why Bitcoin is going to die. And my favorite question, and it never gets answered ever, is what is your threshold? Give me any metric. What is your threshold at which you will reconsider your bias that you might be wrong? And they never answer the question. Is it a market cap? If it gets to 10 trillion, if it flips gold, if it flips, you know, what does it have to do? What is your success metric? And the only time I ever see a reply, it's something totally ridiculous where like it has to consume the US dollar. I'm like, okay, then that's really bearish for Nvidia, isn't it? That's really, really bearish for gold. It's really like... Set your benchmark up here. Okay, by the way, when that happens, and by the way, don't think Bitcoin's gonna replace the dollar, you know, Bitcoin gets as big as the dollar. Great. You can buy it up there when it's, you Lord knows what the price is when that happens, but I'll happily sell you some. Brian Cubellis (54:12.419) Yeah, I mean, it's great point like I to be honest though, like I thought that that level that dynamic that you described would be the 100k and it clearly wasn't because people are dancing on graves after a 50 % decline from 126 or whatever. But I think you're right. Like there it can only happen so many more times like there has to be a finite number of times where the psychology can can not break effectively to where these people have these inherent biases. James Check (54:33.336) correct. James Check (54:40.824) 2017 it was too small for them to take it seriously. 2021 stimulus. know, just ETFs and the president. And then you're like the same way there's no clear narrative on the way down when there's no clear narrative on the way back up aside from just kind of ran out of sellers, hey? Right? Too many buyers. When that happens, just, what do you argue? What do you debate? Now maybe there'll be something that happens and they'll be like, look, I could point to that too. Brian Cubellis (54:44.087) Yeah. Maybe this time it's just like, this is Trump. This is a Trump thing. Like maybe there's that. Yeah. James Check (55:10.006) Keep going. Give me your threshold. What's your threshold where you accept that maybe you got it wrong? Now, if Bitcoin goes to zero, then everything about this is irrelevant. But unless you can formulate a fundamental case for that, right, that's a whole different discussion. Jackson Mikalic (55:23.734) Yeah, I love it. Yeah, just wake me up once. Once we get to that point, James, you know, like, wake up one day. Price is pumping every day. There's no narrative. Everyone just wants the coin. That'll be a good day. Brian Cubellis (55:27.585) Hahaha. Brian Cubellis (55:34.743) Bitcoin is alive forever headlines. Jackson Mikalic (55:37.848) Yeah. James Check (55:37.849) Yeah, yeah, yeah, exactly. Yeah. But look, in my view, and this is again, this is why I love the data that I study is it helps me understand why things happen, just like the fundamental why. And when you understand the why, the journey becomes fun because it's about trying to understand like, okay, so we've got a bunch of top buyers, we're in a bear market. Once you accept those things, we're waiting for the price and the time to be painful enough that those people capitulate out. And unless you start with a base case that Bitcoin is dead, what's your threshold? If it's not dead, then we're going to form a low, we're going to get all these people capitulate out, there'll be a bunch of people like myself who bought coins at higher price and just sit tight and do absolutely nothing with them. There's going be a ton of that that goes on. price bottoms out, narrative follows price, you know Bitcoin has this beautiful property where it just reinvents itself every single time. It comes back with a new reason why it's awesome. And it just takes time, like we know it's awesome, it just takes time for people to remember and finally work out that it's awesome. And once you realize, like there are very few people who become a Bitcoiner and then go like, yeah actually you know what, it really sucks. Like very few people drop off the other side of the map. They tend to come in and go, yeah okay I get it. Jackson Mikalic (56:50.169) Yeah. If you liked Bitcoin at 126, you're going to love it at 66, right? mean, like that's, that's the crazy thing about this asset. It just, the volatility, I forget, I think I said it on a recent podcast, just like the monkey brain, it doesn't compute well with Bitcoin's volatility. And so for a lot of people, they feel like they have all the conviction in the world to your point, you know, they're jumping in the pool at 110, 120. And then a couple months later, we're in the sixties. Brian Cubellis (56:55.359) You Jackson Mikalic (57:18.103) Nothing's changed about Bitcoin, but it's like, well, shit is it, is it going to four? Is it going to zero? Right? Like people get really scared very quickly because it happened so quickly. I remember at the start of the year, we were getting close to being back above a hundred K. We had Marty bent on the podcast and we were like, you know, just Joe, we were joking, but we were talking about, all right, like we're going to be ripping higher super cycle, all that kind of nonsense. Right. And then funny enough, you know, we're in the sixties, just like two or it happened in two or three weeks. So, you know, it's a, Brian Cubellis (57:41.251) Yeah. James Check (57:47.352) Well, the funny thing about sentiment. I did a pod, um, similar time I would have been on with you guys in and around October. Marty and I spent like 80 % of the podcast describing that 110, 105. We're probably on a go. If we do, if we take out these levels, like the bear case, we're probably going to 80. We spent 80 % of the podcast talking about that. And then right at the end, he's like, come on, give us a bullish throw away target. look, you know, probably go to 150. That's like where I like throw away comment. And then I did a, I'm my most recent quarterly with him. Brian Cubellis (58:09.219) You James Check (58:17.271) And in the comments, everyone's like, this guy called for 150. What an idiot. I'm like, did you miss the 80 % of the pod that we were talking about? Like, not that. Like, being able to distinguish between, by the way, first things first, price predictions. If I could just give the audience something that's like really valuable, stop looking for them. No one knows. No one knows. Not even myself that spent all day in data trying to work out where we might go. Everything is a probability distribution. Everything is a random walk in the short term, even more so. Brian Cubellis (58:19.939) Of course. James Check (58:47.415) What you're just looking for, and this is where I come back to the probabilities of things, just give me an environment for Bitcoin where the odds are much more in my favor. I want to go into markets are a casino. I want to go into the casino with the best edge I can possibly get. The best edge I can possibly get, you can look at mean reversion, you can look at investor behavior, look at capitulation levels, you can look at the volume, who's transacting, who's not. Right now, in this current market environment, every mean reversion model is in the bottom 20 % and that bottom 20 % corresponds with bear market bottoms. Can it go lower? Yes, but it's all part of the bear market bottom. I don't care that I bought at 8k, 6k, 4k, 5k back in 2018, nor 15, 16, 18, 20, 22. All of those are great prices. I'd buy all of them again right now. So buying the bottom is like a thing rather than an event. Like stop thinking about the bottom as like a day. Right now we're in the bottom 20 % on every mean reversion model. Deep value zone in my opinion. and that's below 70K. We've got capitulation where people who bought the top are now the primary sellers in the market. So people crystallizing losses. We've seen the number one headwind from 2025, was long-term holders taking profit has collapsed back to 2023 levels. So that is, and that is not picking up on any rally. So we've seen profit taking go away. Losses now dominate the market. Price is massively stretched below in the bottom fifth of all mean reversion models. What are you doing? The headlines are bearish. Like, this is the time where the pool, the bull market pool, is the coldest. And it sucks jumping into it. But I don't regret any time I've jumped into that cold pool. Right? If your stomach is turning and churning on both, like if it's a bull market and you're going to sell, if your stomach is in knots because you're afraid you're going to miss the top and it's going to keep going, press on. James Check (01:00:44.664) commit to your plan, write it down months in advance and commit to it. Do it when it happens. What happens is people in the bear market, they see the red candles and they update their thesis. They update their plan. You probably said to yourself, man, I wish I had bought more back at 70k, 60k, 50k in 2024. As we rallied out of it, you go, damn, I wish that I bought more. That was your plan. You wrote that plan when you actually had a clear mind. Now, you're updating your plan because the price is red. In reality, you should actually stick to your plan. And that's what I try to do. I form it. We might go down to 80 and I believe the 2024 zone is going to be very, very strong support. We went to 80. We went down to the 24 zone. My thesis hasn't changed. My thesis is exactly the same. All I'm doing now is executing. Executing the plan that I've been thinking about planning for a long time. And actually I wrote a piece in January, 2025, when we first hit a hundred and a hundred K and I wrote a piece called rethinking bears, because I was actually starting to think ahead. and say well what would a bear market look like in the future because I don't think it's going to be the same as previous ones and that's where I identified the true market mean which is an on-chain model we can go through details if you want but that's where I believed the bear market was going to start forming a floor and that was about 80k. And then you've got the ETF cost basis converged on over the course of 2025. Now that doesn't mean it's the floor. I don't believe in floor models. When I talk about floor models, these are zones where once you're below them, you're in really attractive territory. And breaking through that 80k level, I just saw so many people accept that we're in a bear and in the heat of the moment, revise price targets that they never had lower. And you just love to see it. Jackson Mikalic (01:02:30.637) Yeah. Yeah. You know what? I mean, I love that. I love that conviction. Not, you know, Bitcoin aside just, but like sticking to the plan, having the discipline, just good, good mindset to have. would be a killer, a killer business would be buying Bitcoin. Like pretty much sticking to the plan is like, all right, I wish I bought more Bitcoin in the fifties or sixties. All right. Well, you're going to lock in this amount of capital. And if Bitcoin does hit like it's a limit order, But you cannot, you can't cancel it, right? So it's like, all right, I wish I had this much Bitcoin when I was in the sixties. Well, man, you shouldn't have backed out. You shouldn't have backed out in the first place. So look, man, before we wrap here, just if you could spend a couple of minutes talking about what's exciting to you, you know, before we hit record, you were saying that there was like some interesting things you were digging into the data set, you know, I guess build out some new models or new You tell me, don't want to put words in your mouth, but what's exciting to you? James Check (01:03:28.315) Yeah. Yeah, yeah. No, I got a good question on a podcast the other day, which was, what's the most exciting thing in Bitcoin too? And I was thinking about it and like, know, a lot people like, oh, there's this protocol or I'm really excited about this thing, institutions, blah, blah, I'm just really excited about my job, honestly, because there's a couple of guys, I've been giving him shout outs because they absolutely deserve it. ResearchBitcoin.net and Bitcoin Research Kit. Both of them, they've basically built their own software that passes on chain data. tremendous value like you know bitcoin research kit you can self-host research bitcoins like a hundred bucks worth of bitcoin you get just infinite credits you can study anything on the bitcoin ledger and my favorite thing about bitcoin is how robust the utxo set is as a source of information you can see when old money buys you can see when old money sells you can see when people take profit when people take losses there's error bars around everything but it actually just doesn't matter because people take the most profit They sell the most old coins, well, spend is the correct term. They spend the most old coins when the market's going up. Everyone wants to debate me over the, they're not really a long-term holder because my arbitrary definition means they have to be at least 55 years old. No, old coins come back to life in bulls. One spent Bitcoin is one spent Bitcoin. It's the same thing. So you can see so much, so much clarity. I'm waiting, there will be a day at some point in the future where the NASDAQ calls me and goes, hey, Brian Cubellis (01:04:36.323) You James Check (01:04:53.784) We've got all these like, we know we've got all this data. How do we turn it into models for Tesla and Nvidia and every stock under the sun? Because they've got this data, right? On-chain data exists for gold. We just don't have a chain to study it off. Bitcoin is just like this beautiful raw. And actually I find this a real grounding anchor for me. The consistency of human behavior that I see in the on-chain data set. It's so, it's so reliable. People. when the narrative is the most bullish, ignore all the evidence that people are selling huge amounts of coins at a huge profit. And then what happens? The price stops going up and people go, why did it stop going up? Sailors buying, ETFs are buying. I'm like, because they're selling a lot, man. Like, no, they're not really long-term holds. Like they're selling a lot, man. So from, and then what happens? Those folks who buy the top, ignoring the data, looking for confirmation bias, they hodl through the whole bear. Brian Cubellis (01:05:36.675) You James Check (01:05:47.789) and then the poor souls sell everything in a massive loss at the exact bottom on the same day. And to me, I'm like, that's a capitulation and I'm paying attention to that. That's now interesting information. honestly, the most exciting thing that's happening in Bitcoin is just that the UTXO set keeps evolving and it keeps being so incredibly consistent. We can also see things that are different. This cycle is different measurably on a number of different wavelengths. For me as an analyst, I've got all my historical patterns. And I assume every single one of them is already broken. A lot of them continue to play out, but I also know that a lot of them are going to break. So for me, I'm very much on the, on the edge of trying to work out what has changed. Horizontal thresholds and all things that used to get hit. don't really use them. have to, I'm continually adapting, adjusting, correcting for just really understanding the true psychology of what's going on. So for me, most interesting thing that's happening in Bitcoin for me is literally my day-to-day job. It's fantastic. Jackson Mikalic (01:06:47.011) man, I mean, you, couldn't ask for a better setup in that. Like you're, you're spending your entire day doing it. And so it is exciting. And it's funny that you point out that the human psychology of the, the dataset doesn't change, right? Like at the end of the day, it's, it is just, it's so hard to, it's so hard to stick to the plan sometimes, right? Like it's hard to do exactly what you described. And it's because this thing is just so crazy. It's unlike anything we've ever seen before. And it really tests you. even for the most convicted people. James Check (01:07:17.4) Well, mean, to speak of testing, 50 % of all the coins are underwater. 50 % of the Bitcoin supply is currently underwater. And that's like, we've got a crossover of the number of coins in profit, number of coins in loss. When do you reckon we've seen that happen before? Bear market bottoms. Just like every single cycle, we've always seen 50 % of the coins go underwater. And now folks are like, no, the bear's just starting. I'm like, I don't know, man. Looks kind of late in the piece. Jackson Mikalic (01:07:24.313) Let's. Jackson Mikalic (01:07:41.267) Ha! Jackson Mikalic (01:07:44.656) Well, I'm going to stick to, uh, I'm going to stick to the guns that here. Like I'm not going to fade James. I like James, uh, for a number of reasons, man. Thank you for coming on the show. I like that you just tell it how it is. I like that. Um, you're balanced, you're measured, you stick to the data. And I think this space has a lot of jokers, man. And, um, I liked it. I liked that you're a real one. I, you know, you mentioned the price targets earlier in the show. It just, James Check (01:08:12.994) Get rid of him. Jackson Mikalic (01:08:14.017) It's crazy to me how people just throw out price targets year in year out, but they continue to get the engagement. know, but they know, but they continue to get the engagement and then there's no reputational damage. There's no recourse for just throwing bullshit out like day in and day out. And that's probably the most frustrating part. And you have a big platform. You could throw bullshit out if you wanted to, and you'd probably get more engagement, but I respect that you don't do that. And, Brian Cubellis (01:08:20.291) It's engagement, it's bait at this point. James Check (01:08:41.528) couldn't, I actually couldn't care less about engagement on Twitter. In fact, I'm spending so much less time on Twitter now, obviously, cause I got a kid, but I just, I just like, I just find the noise levels and you know what? actually inspires me to just do good work on my own. It's like, I'm just turning off the Twitter machine. Cause like every time I log on there, I'm like, I'm never going to get those 20 minutes back. And I just turned it off and I get back to doing my own study because you know, for me doing that thinking when I go on Twitter, my, my favourite thing to do, which is thinking just turns to mush. And I'm like, nah. Jackson Mikalic (01:08:44.397) Yeah. James Check (01:09:11.073) Cossard way. Jackson Mikalic (01:09:12.643) Yeah, I feel that too, We'll appreciate the time. We don't want to send people to your Twitter then. Where do we want to send them? Where should we send people? Brian Cubellis (01:09:19.139) You James Check (01:09:20.568) Yeah, I mean just head over to checkonchain.com. We've got a charting website, is, mean, literally every chart that's on there is I've made it because I use it. So there's a, mean, every Bitcoin metric you could possibly want is there. And then our newsletter, which is where we do two posts a week, written and video, you know, generally two, 3000 words and 30, 40 minute videos. more or less the same thing, but the writing is where I do my thinking and then the video is where I summarize it for folks who are visual learners and some people read, some people watch, some will do both. But yeah, just trying to help people understand why things happen, not entry, stop, loss, exit, couldn't care less about that. Why do I think things are happening? And here's my worked example. Jackson Mikalic (01:10:03.695) Check on chain.com smash the DCA button. We're in the bear. We're in deep value or a deep value. Smash the DCA button, smash the like button and the subscribe button as well. And go to check on chain.com James. Appreciate you, man. Thanks for coming on the show. Brian Cubellis (01:10:08.291) You James Check (01:10:08.812) by the whole bottom. Brian Cubellis (01:10:13.443) Thanks Brian Cubellis (01:10:21.795) Thanks, man. James Check (01:10:22.243) Good on you, Lodge. Thanks for having me.