Bullish Selling: Why Bitcoin is Going Much Higher with Galaxy's Alex Thorn

Jackson Mikalic (00:01.612) Alright, we are back. Michael, how's this energy sound? Is this energy good for you, Michael? Michael Tanguma (00:04.14) Jackson's in his new office. You're meeting Alex where he's at, so I appreciate it. And you're in a new office as well, so that's a big deal for us today. Jackson Mikalic (00:12.942) Yeah, well, my energy is so high because we're joined by Slop King himself, Alex Thorn, head of firm wide research at Galaxy. Alex, what's going on, man? Thank you for joining us. Alex Thorn (00:20.919) I do love the slop. Hey, great to be back, Jackson. Thanks for having me on. Yeah, I love slop in all its forms, okay? Like think everything's actually always been slop and let's get sloppy, you know? Michael Tanguma (00:37.976) The meta for the slop, at least the way I interpret it, is you remember Marty back in the day called the top of clown world or peak clown world, and that was probably one of the worst calls ever. This was like 2021. This is the version of like slop is directly correlated to the amount of monetary units in the world. So as they increase, the slop increases. And so we can only expect it to increase from here for a while. Brian Cubellis (01:06.778) So what you're saying is there is no slop top. There's no such thing. Alex Thorn (01:09.717) No, there's no slop. Are you talking about slopflation? It's never ending. Debasement of slop. Jackson Mikalic (01:46.818) Brutal to watch. And what I'd like to get some thoughts on Alex, we'll hand it over to you first is what does it mean when the treasury secretary is tweeting about Bitcoin on white paper day? What does he mean by Bitcoin network is still operational and more resilient than ever and Bitcoin never shuts down? Alex Thorn (02:05.419) I mean, it's top tier slop. Okay. It's phenomenal pleb slop. He's clearly got some top men helping write his tweets that know a lot about Bitcoin. I respect that a lot. I think it's, I mean, if you had told Satoshi Nakamoto or frankly, anyone or even me just two years ago that the Treasury secretary would be congratulating and celebrating the anniversary of the Bitcoin white paper, no one would have believed that. So the simplest take is, wow, look how far we've come and isn't that great? This is not some precursor to a giant billion dollar Bitcoin purchase. It's good slop. Slop is bullish. Alex Thorn (04:43.937) Like I'm not saying it's not bullish. Okay, slop is bullish, right? I mean the fact that this is even on the Treasury Secretary's slop-genda is bullish. It is bullish. It's just also slop, which is great. Jackson Mikalic (06:10.667) Yeah, I mean, to your point, Alex, the sentiment is so poor online right now that I think people are just trying to grasp at straws and try to construct bullish narratives out of just about anything. Alex, you had published a piece last week acknowledging Bitcoin's 17 year anniversary of the white paper. You mentioned that it's really come a long ways, but it's still a paradox in the sense that it's owned by anarchists, but then it's also owned by the asset manager. I'm curious if you want to just distill your thoughts from that piece. Alex Thorn (06:59.799) Yeah. Well, I mean, I think it's a triumphant and historically very significant moment. October 31st, 2008, when Satoshi published that white paper, I think it'll continue to be reinforced as a very key historical moment. Every day that Bitcoin survives, it does. But Bitcoin hasn't just been surviving, it's been massively growing. There's always been infighting and debate within the Bitcoin community about what is Bitcoin empirically and what is it meant to be? Is it freedom money for activists? Is it primarily censorship resistant online freedom money or is it a scarce digital commodity meant to help diversify an institutional portfolio? It's obviously both but there is some tension there. I was even asked, I've been pointing out one of the things that I'm bullish on is the wirehouses finally authorizing their wealth channels to actually recommend Bitcoin ETFs, which Morgan Stanley has done with an initial allocation of 4% so like a Morgan Stanley. That's bullish, right? That's a catalyst I've been watching and waiting for since the ETFs launched. But then I was talking about this and somebody was like, do you think Satoshi would be proud of that? He went from his anarchy, cypher punk money to a Morgan Stanley RIA managed portfolio. And I was like, first of all, I don't care. Alex Thorn (09:18.335) One answer is Bitcoin doesn't care, right? And it certainly doesn't care. So it's all of this narrative generation that we, we're storytellers, humans, we require, we got to add slop to everything in our lives so that we can understand it. We have to slopify Bitcoin in order to understand it. We have to tell a story to ourselves about what it is and what it means. And that story is, has always been evolving and it continues to evolve in really interesting and sometimes paradoxical ways, but the growth and success of Bitcoin is undeniable. Alex Thorn (13:14.497) Yeah, I totally agree. I mean, I think, you know, if you believe that Bitcoin is going to whatever your utopian end state is, hyper Bitcoin-ization, replace money, be digital gold, whatever it is, you're going to have Bitcoin everywhere. Right. I need Bitcoin in my bank. I need Bitcoin in my fintech app. I need Bitcoin in my portfolio. I need Bitcoin in my cold storage. So it's inevitable. There's no need to be upset. There's a very interesting aspect of like the zeal or zealotry of the convert. In religions and cults, the later entrances tend to be much more zealous than the early adopters. And it's because they came of age or got interested in the thing, in this case Bitcoin, by hearing it evangelized by people. The people that learned about Bitcoin last year on Twitter are more zealous, usually more fundamentalist about the asset than the long term people. Jackson Mikalic (17:14.764) You know, one thing Alex, you brought up earlier that I think you just have a great lens on given your background and the type of clients you work with at Galaxy. You mentioned the Morgan Stanley integration of Bitcoin and portfolios, 4% allocation. Can you just kind of speak to what you're seeing, whether it's the wirehouses or it's more independents or it's just institutional investors, what you're seeing in terms of access opening up interest? Alex Thorn (17:58.136) Yeah, I mean, the access is growing. Bitcoin is a maturing asset and it's going to be characterized not by 10, 100 and 1000 Xs, but by passive bids and flows. And like that's where this appears to be heading. You're going to start with eventually probably half of the wealth-advised clients in the world having like a one or two percent allocation in Bitcoin. I did lower our official Bitcoin end of year price target from 185, which was a year ago that I said that, to 120, which is still plus 20% from here as we speak. People are like, my God, you're so bearish. I'm like saying that it's going to go up. Could go up 20% in six weeks is bearish. The largest cohort of wealth that needed the ETF is the wealth advised the RIA channel, right? Like they can't buy spot and they can buy ETFs. It's now almost 24 months after the Bitcoin ETFs launched and one of the four big wirehouses is only just letting their advisors off the leash in terms of recommending. Alex Thorn (22:45.057) But again, everything did, right? Like that's an exogenous thing. I think generally the RIAs are going to be an increasing part of this story, which will be more and more characterized by sort of a passive, less active bid that is nonetheless accumulating. Michael Tanguma (23:01.847) Just to go real quick, a little deeper on just that part of the market. One, think the volatility dampening will let a lot of these things turn on. Because if you remember like 21 and 22, everyone was talking about some form of digital asset exposure being integrated and then FTX happened and everyone kind of took a step back. The ones that come to mind are like this past week with Coinbase and Apollo, Citibank for payment, Citibank turning on custody obviously, Charles Schwab, there's the BVNK rumored acquisition for close to two billion. There's a lot of M&A, a lot of people recognizing this industry is not going away. Alex Thorn (24:09.353) Yeah, I think the M&A is and the acquisitions are very strong signal, right? Like MasterCard's been tinkering with stable coins and crypto for a long time but they didn't shell out two billion dollars until just recently. That's a meaningful uptick in their level of confidence about the technology and the industry. Lower volatility means you can increase your position size. You're never going to get like the world sovereigns or the giant pensions to buy Bitcoin at scale when it's a 50 to 100 vol asset. Alex Thorn (26:32.778) The SEC said that the exchange act does not prohibit national securities exchanges from allowing spot commodity crypto trading, AKA they're saying NASDAQ, you're allowed to trade Bitcoin on the NASDAQ. So like, what does that mean? Who's going to, are people going to buy Bitcoin on Coinbase or on the NASDAQ? Right? Like this, there's a push and pull and a Venn diagram emerging and overlap between the traditional and the disruptive. I'm certainly betting that it's going to farther on towards decentralization than it is currently. Jackson Mikalic (33:13.312) We just saw the most amount of layoffs in October, 150,000 for major employers in the U.S. and that was the most since 2003. The median first time home buyer hit 40 years old. Despite asset prices being at all time highs, if you're a young person, you're totally priced out compared to like the previous generations. The social contract is breaking in real time. And so that's pushing the incentives to take risk in the bad way. Alex Thorn (36:07.223) It's about protecting yourself and your wealth, I think, in this spot. The national debt - pretty much the only way out of that is crippling austerity, which can't happen. And the other option is debasement. And that means money printing. You need to own scarce assets, whether that's your home or real estate or gold or Bitcoin. Is Bitcoin trading like a debasement hedge right now? Maybe not, but it fundamentally is one. It fundamentally is scarce and it has a lot more utility than certain other debasement hedging assets. I'm very confident that it will trade like that. Alex Thorn (01:04:26.881) They gotta, the genius act implementation is incredibly bullish for the adoption of stable coins. It is going to force it upon the world. I think in simple distilled terms, the genius act probably extended the life of the U.S. dollar as the dominant world reserve currency for another 30 years. Every bank and fintech knows this, whether or not they know how to use it or figure it out yet. They're all working on that. And it's the banks that are the slowest to move here. Alex Thorn (01:08:00.418) Totally agree with you, like in the end, at some point people still might want to spend their Bitcoin. Stable coins don't solve the core problem with the dollar, which is that it's been depreciating to zero for its entire existence and being debased. Certainly doesn't solve debasement. Money is not just a medium of exchange. It's also a way to store value from your labor across time. And stables don't change that.