Former Blackstone Partner: The Reset Already Started — And Washington Knows It

David Thayer (00:00.135) guys if you don't mind. Jackson Mikalic (00:01.563) All right, we are back. We're having some audio issues. I think we've worked through it. I'm talking at a very high volume right now. So our guest, David Fayer can hear us. David, how's it going? David Thayer (00:13.511) What'd you say? No, I'm kidding. Everything's fine, except for the technical malfunction taking place in my brain. Michael Tanguma (00:14.67) Hahaha Brian Cubellis (00:14.715) Ha ha ha. Jackson Mikalic (00:23.089) David, it's really, it's a great pleasure to have you back on the show. I've been looking forward to this. think, I think I'll speak for the group as well. You know, we love having David on the show and I noticed that you come on during holiday weeks. Last time we had you on the last trade was Independence Day and now we'll have Thanksgiving tomorrow. And I guess yesterday when this releases on Friday, but David, it's nice to see you. Everything's going well, I hope. Michael Tanguma (00:23.512) Just look. Brian Cubellis (00:27.207) Recurring guest, recurring guest, David Thayer. David Thayer (00:48.849) Yeah, everything's great and I'm glad that I lead a sufficiently boring life such that I can always be available for your holiday appearances. Jackson Mikalic (00:58.353) Yeah, well, no, you know, I know that you prioritize us above all else. So we really appreciate that. And we'll start because you know what, Brian actually called me out last week because I did not pull up the price chart. So I will pull it up because it's in my favor. Yeah, it's in my favor right now, too, because we're pumping at the moment. It's just been it's been really sad to look at the Bitcoin price in the past month. But we're pumping. Brian, you're the quant. You have the house view. Anything you discern from this or? David Thayer (01:02.429) That is true. Brian Cubellis (01:12.869) Gotta give the people what they want. Jackson Mikalic (01:28.272) Is it just noise? Brian Cubellis (01:29.991) Yeah, I mean, as I've said many times on the show, I try not to think about the short term. you know, I'm writing the newsletter that'll come out tomorrow on Thanksgiving morning. And I speak a little bit about this, but like this notion of, well, let's define like what is long term, what is short term. And I would say, you know, most TradFi market participants and retail folks are just generally more short term oriented in their thinking, how they think about the investment landscape. how they think about an asset like Bitcoin. And I think what we've seen over the past month, month and a half is people digesting the real volatility of this asset. And if you bought at 120 or even 125, this may feel a little scary, the 30 to 35 % drawdown that we just sort of experienced. But you do have to zoom out. You do have to think about this asset long term. And I think a conservative estimate of like, okay, what is long term? I would say it's at least five years. I tend to think about Bitcoin in decades in terms of like my personal investment thesis on the asset. But I think five years at least is a reasonable sort of long term orientation. And over sort of Bitcoin's history, the rolling sort of window, the rolling five year window of returns just outpaces every other asset you could possibly own. So undoubtedly, people are going to be at the Thanksgiving table this week and maybe talking with an uncle that they got to buy Bitcoin last Thanksgiving at around 96k and they're going to say, hey, what the heck happened? I'm down 10%. The NASDAQ's up. And there's a few just honest ways that you can speak to those relatives or those people in your life. And just say, zoom out. If you're taking a position on a new monetary asset that could upend the sort of monetary order, you need to have a horizon that is longer than 12. These things happen in decades, not in months. so if you have a long-term constructive thesis on the asset, Bitcoin's on sale. Black Friday came early and Sats are cheaper than they were a month ago. And so that works to your benefit. This is the other realization that people need to get towards is that volatility, particularly in an asset like Bitcoin, where the volatility is positively skewed over time, volatility is your friend. You use it to your advantage and you buy on weakness. Brian Cubellis (03:53.863) You buy when other people are fearful and that's not even specific to Bitcoin. That's all investing. That's a Warren Buffett-ism. You buy when others are fearful. And so that's my house view. That's my quant view. This is short-term noise. Good prices if you have zero Bitcoin today. David Thayer (04:12.285) I'm sure we all have a story like this, Brian, but I remember recommending somebody buy BTC when it was trading like 55. And then shortly thereafter, know, it zooms to 69 and then all the way back down to 16 or whatever it was. And yeah, I felt awful about it, but I also felt confident enough that it would eventually pan out. And she was like, you know, winging out. But here we are. That's your 90k and everything's just fine. So you're right. Jackson Mikalic (04:47.1) I for one don't bring up Bitcoin at Thanksgiving anymore. I actually would do this for years and then after the ETFs were approved in 2024 was such a hot year. One of my aunts said, why didn't you ever tell me to buy Bitcoin? So was like, all right, I've had enough. I'm actually not going to bring it up at Thanksgiving dinner anymore. But David, one thing we wanted to get your thoughts on is we kind of kick off the show, get past the opening remarks, get past Brian's gigabrain quant view. I'm curious what your thoughts Brian Cubellis (04:50.053) Hahaha Jackson Mikalic (05:17.154) are just on general market sentiment. There seems to be a divergence between those who are quite bullish, particularly on technology, artificial intelligence. Yet at the same time, you have concerns among Wall Street about the concentration in tech stocks. Saw a survey that went out last week that 53 % of fund managers think that AI stocks are in a bubble. And another 40 % of that same survey think that this bubble popping is really the greatest tail risk to portfolio. So I know you've been an investor quite a while, been participating in various types of markets. Do you have any thoughts just in terms of divergence between those who think we have far more of a bull run ahead of us, know, equity is still kind of hovering around all time highs and those who think that the floor is about to fall out below. David Thayer (06:07.269) Well, the only thing I would say is that I think a lot of folks have seen or observed that the current market looks much as it did in, say, the late 90s. But I myself see compelling arguments on both sides of that equation. And there are a couple of things. One is that Listen, we'd all love to have greater market breadth, when you have a technological revolution taking place, it's not surprising that you're going to have a bifurcation of the market, in this case led by seven names, which is unusual, but not wildly shocking. So it could be a bubble. But perhaps it's not too. It could just be a technological revolution taking place right in front of our eyes. And having said that as well, people look at P-E ratios across the market, and they're historically high. But by the same token as the four of us know and many of the folks watching know, It's not surprising that P-E ratios are going up over time, just because we have this asset inflation premium that's baked into asset classes like stocks, but also real estate and gold and Bitcoin and other asset class, where people just trying to preserve their wealth. And so because of this so-called fiscal dominance, I think we're going to see P-E ratios in a nominal sense float up over time anyway. And we can't look at history as a So if it used to average in the mid-teens or low 20s and now I think it's like in the 30s that's That may just be sort of the the table stakes going forward But to answer your question Jackson, I'm probably not wildly helpful because I see You know arguments that are compelling on both sides of that equation As to whether or not AI is in a bubble now. What do you guys think? Jackson Mikalic (08:05.852) What I could just take away and I'm sure the guys have thoughts. What I would take away from that though is you got to throw out some of the status quo of the past decades as it relates to investing because we're just in a fundamentally different fiscal monetary macro regime. And so those who have been pointing to the price earnings ratios the past five years or probably even since you know shortly after the great financial crisis have just been sidelined as asset prices continue to melt up because they point at frameworks that were used you know 50 years ago. but may be obsolete in really where the crash is happening in the denominator. It's happening in the fiat currencies. And so everything melts to the upside over time. And if you're looking to enter at attractive price-to-earnings ratios historically, well, you may be just waiting a very long time to do so. David Thayer (08:53.947) Yep, exactly. Brian Cubellis (08:55.365) Yeah, the point around the sort of historical valuation metrics is spot on in the sense that that trajectory or that trend says more about the denominator being broken than it says about a proverbial equity bubble in AI socks or something like that. So it's part of a longer term structural trend in terms of the money being broken and less about this specific area of technology that I think rightfully so is demanding a lot of capital. think the difference in my mind between this and maybe the dot-com boom of the 90s is that there's an air of basically national security interests related and associated to the AI race. And that spans across energy capacity and production as well as the actual model technology itself. chip fabrication, all of it. And so I think, you if you look at what the this current administration is doing, and even just this week, announcing a new AI focused project, yeah, the Genesis mission, a main Manhattan project for AI. They are taking this super seriously. And so part of my brain looks at this and says, well, there's been a lot of executive orders over the past 12 months that, you know, have some initial fanfare around them. And then the follow through on them is a little bit more tenuous, you could say. But this one does feel different in the sense of what I just described around the national security interests and the thought or the notion that we really, as a country, as a nation, can't afford to lose this proverbial AI race. And so the second order effect of that is like the bubble dynamics are irrelevant because they're going to spend as much as they possibly can, dilute the currency as much as they can. They really have no qualms in debasing the currency because they can't lose this race. so whatever amount of currency units they need to print to support these initiatives that are laid out in this plan, everything from AI infrastructure to quantum computing and sort of energy production, everything in between, that's the big difference when I look at what's happening now relative to maybe the AI, or sorry, the dot-com boom. There is a different air around it in terms of the importance. Brian Cubellis (11:15.055) of not losing this technological race and sort of, you know, our currency be damned to some extent. David Thayer (11:22.843) for Bitcoin. Michael Tanguma (11:24.487) Yeah, I think there's multiple things happening here, which is hard to pin down. think one of the key things that I've been thinking more and more about is we've effectively been in a recession since 1971 in the sense of, and then it's effectively acutely gotten greater every year because you get further away from the amount of monetary units versus GDP. So in 71, it's probably very close or at par, maybe even greater. So maybe you're not in a recession until 74, 75. But as you increase the monetary units, you naturally increase the distortion from coordinating economic activity and investments. And then what's the right denominator from return profile? And you fast forward 50 years, and then everything looks dislocated because the price of earning multiple should be really looked at in either gold or Bitcoin terms. Gold is easier because it's been around that entire time. And then he starts to really understand, what was it a relevant investment and what wasn't? And so you take all of that and then you take money production being closest to the Fed. You take national security issues and then you take energy, which are all intertwined. And that's where you get the AI output. And I think there's a confluence post 21 and interest rates rising where you needed a vessel to absorb a lot of capital, specifically in private equity, because everybody was underwater in the vintages around 21 and AI was that natural thing to step in. And there's a lot happening. think that there's just a lot happening there that have second and third order effects, mainly narrative driven approaches, because you see these layoffs, you see these things happening, but you also know that AI is not being integrated at a level to warrant the layoffs yet. Like you could talk to people at these organizations, you can see the studies. And so it's this nice narrative to be able to absorb wire like the fundamentals are dislocated where inflation is running these companies, unit economics aren't there. They can see the writing on the wall because they have the smart people to quantify where inflation is going, where purchasing power is reducing. And AI just naturally sits in there. And then you obviously have the geopolitical issues across the world with who wins AI from a number of things. Quantum is a great example. So it's a fascinating multifaceted aspect. I do think Michael Tanguma (13:35.05) The quantum stuff ties into it in an interesting respect because there's a race for quantum from, think that ties into national security and everything I've heard. We don't have to go deep here, but that's a podcast we'll need to do because there's a lot of FUD and narrative around quantum and Bitcoin. And I'm fairly confident from engineers for years and then just recently just listening, going very deep that at a very conservative case, you're still at a or very accelerated pace, you're still at five to 10 years away, roughly, of any kind of like quantum computing, because there's a reality of like the amount of capital and time that would be required just to break like one encryption key, let alone what you would need to do to really like change the protocol. And so that just randomly kind of gets inserted with all this price appreciation and what's going on right now that I think they're all kind of intertwined together. David Thayer (14:27.771) Agreed. also, there's mentioning that with a lot of these technological advancements, the so-called economic rents don't accrue to the actual players. They accrue to consumers. And by the way, mean, to your point, mean, Michael, the point about the extent to which this may cause joblessness, I think, might be oversold because I think many of us have heard this. I'm only sold enough to have heard this before. Every time there's some major advance, it's like, ugh, it's going to be displacing all these workers. And as yet, that hasn't happened. So I'm a little bit skeptical about that claim. Yeah, it's gonna be really interesting to how this plays out, but I do wonder the extent to which there are gonna be fortunes to be made in sort of widespread sense. A few individuals might get super rich off this latest technological wave in the form of AI, but typically consumers benefit from it. And I do wonder the extent to which... these companies are actually going to be quite as profitable as we expect they will be. Although Brian, your point, having the government providing that tailwind does kind of change the complexion of what is transpiring right now. there again, every time the government gets involved in something, I would claim it's often kind of a debacle because they're interfering with natural market mechanisms. But it does kind of provide a floor of support for what's happening in that space. Brian Cubellis (16:01.403) Yeah, it's a good point. the, you know, what you're referencing around OpenAI and Altman, I think they walked this back, but there was some notion of like, yeah, we might need a government backstop at some point. And then the other, just this week after the Genesis announcement, David Sachs, the AIs are, tweeted something to the effect of like, the stock market is, know, 50 % of it basically is being driven by a very small handful of AI names. If this bubble pops, like we're in a recession, like he said, the quiet part out loud, basically, like it's accounting for half of GDP growth, a reversal would risk recession. And so he's kind of telling you the game a bit here in terms of like, there is at least to some extent, probably some backstop for a lot of the spend. Even if the, you know, a return on invested capital doesn't make sense, or it's a lofty forecast, like it's kind of irrelevant because we need to win and we're going to do anything and everything we can to do so. Jackson Mikalic (17:01.456) I think, yeah, there's a parallel here as well, just on the Federal Reserve topic, because Michael loves to talk about the Fed. He likes to talk about where interest rates are going. But in all seriousness, I would say the market participants need to pay attention to the fact of what you guys are describing in terms of the strategic. aspect of artificial intelligence in the context of a great power competition with other countries, notably China. And the same would apply from the fiscal perspective when you tie in gold, Bitcoin and US Treasuries. And so there are some news that caught my attention as well, particularly around the supplementary leverage ratio, which was in 2020 kind of pretty much there was I forget the exact way to categorize it, but The Treasury, US Treasuries were no longer really accounted for as part of the bank's balance sheet in the sense that you could just start lending a bunch without having to have certain reserves held in treasuries. And it looks like that's going to be coming back. And that really ties into the fact that, there needs to be demand for our debt, right? And so we've all heard the story of de-dollarization over time, really since 2014 to present. And we're getting to the point now of Well, we have tens of trillions that will need to be rolled over in coming years. Who's going to buy it? I mean, there's stable coins. We have the Genius Act this year. They're going to play a critical role in adopting and purchasing U.S. Treasury debt. But the banks are going to be forced to purchase the debt as well, because if other countries are moving away from U.S. Treasuries as a strategic reserve asset into gold, notably, well then the US Treasury needs to artificially create demand. And so I just saw, it might've been today that they're going to be making some revisions there in terms of regulations around how much you can, it's removing these securities from the supplementary leverage ratio would also help insulate the Treasury market from stressful episode. So that's exact language there where we need to avoid dysfunction in the Treasury market. And so this also ties into the fact that, Jackson Mikalic (19:05.39) Right now, Besson is interviewing new Fed chair for 2026. And I don't know if it's a rumor or if it's legitimate, but Macroscope tweeted about Kevin Hassett, who's considered the front runner at the moment, who has a very positive stance on Bitcoin and crypto has been involved as an advisor and some notable companies in the space. And so I'm curious if you guys want to like try to tie this back into this narrative of, you know, some things are critically important. And so when we're talking about the Treasury market, we're talking about the Fed. really just less independence they are having to support the treasury market. What do you guys make of all that? David Thayer (19:43.113) By the way, have to chime in Jackson, I like your little photograph there in black tie. Your avatar. touching on the point that you just made Jackson about artificial or real demand for treasuries, there are several options that could be on the table here. Jackson Mikalic (19:49.869) thank you. Yeah, thanks. Brian Cubellis (19:51.536) You David Thayer (20:07.206) In addition to banks being required to buy Treasuries, could also see something like a world in which, okay, Mr. American Citizen, if you are availing yourself of tax-advantaged accounts and we're allowing you to invest in say a 401k or one of the IRA products, you must buy treasuries as a portion of your account, all for your safety, of course. It'll be covered in some sort of language like that. Another possibility is if we're going to support a country like Argentina or... another partner whom we're assisting, could say, hey, know, part of the, this is kind of in the de facto since it's the case for years, but we have more explicitly say you must buy treasuries in return for our support. And then of course stable coins too. think this probably has more, much as we predict sort of the end of the fiat system, this probably has a longer runway than many of us think simply because there's so many tools at their disposal, artificial as they may be. that would that would kind of provide that foundation for Treasuries or even the US dollar You know like we could dollarize economies for instance like Argentina used to be dollarized. I mean they too go back to using the dollar But again, what do you guys think? Michael Tanguma (21:34.195) Yeah, I I think that's a good point. think we've danced around this notion of with Matt Pines and other folks from BPI that Bitcoin for Basant and Trump and the administration was like the gun on the table is like a wild card to be able to play when it probably was much greater than that. It was always going to be played. And this is the framework that's been being like worked on for the past 12 plus months. think Brian in his notion of looking at it from a longer term view, we've talked about this a lot when you look at like Trump and Trump's family's portfolio, right? It's not watch what they say, but watch what they do or watch where their pocketbook is. And so when you look at the writing on the wall with like percent and even like your point around stable coins, I think it went from 200 billion to 300 billion roughly in the past 12 months with Bitcoin's price being relatively flat. What happens when Bitcoin price moves and it extends that longevity of the dollar. But then to the Haslip point, putting somebody like that, think Pauli Markkita was looking up before we started, like 52 % now that he would sit in that position. He sat during 2020 around COVID and the stimulus that happened there. He said he I think still sits as an advisor to Coinbase. You can start to see these like positions being made around this like East versus West play around, know, East is absorbing a lot more gold than I think is generally like recognized. And the Western opportunity is this forward thinking nature of not only Bitcoin where the majority of it sits, capital formation on the public treasury side, along with the ETFs, and then just the amount of individual holders being majority in the US, that this is kind of the framework that's being set up. And so these like price action is just short term volatility to a longer term gain that is needed from a strategic perspective from dollar hegemony. And when you look at it from that angle, then it's a lot easier just like close the laptop, go back to work because this thing only goes in one direction. David Thayer (23:30.705) Yeah. Brian Cubellis (23:31.888) Yeah, David, I think you make a great point around just the timeline. This is something I've thought a lot about over the past year or so as the administration became so positive or favorable to stable coins. It became very clear that that was going to be one of the many tools in the toolkit to continue to kick the proverbial can down the road in terms of maintaining global reserve status while still basically being able to debase the currency. And so I think that is the plan and I think you're right that it probably extends the dollar's life, you more than most people would have expected, you know, prior to this administration just being in power. I think that would be the line of demarcation. The other thing to think about is just like back to your point around the long-term nature, the, you know, I think Mel Madison, who we had on the show a couple of weeks ago, put it very well in that the This administration, really any government, doesn't want the inflation and the debasement to show up in the real economy. So goods and services, real estate, education, et cetera. It's actually kind of nice for them to have purely monetary assets that can absorb a lot of that. And so I like to think of both gold and Bitcoin as these sponges, as Mel put it, that are basically more favorable for the country and these politicians to get re-elected if the inflation isn't necessarily showing up in people's everyday lives. but in these monetary assets. So I think that is part of the plan, whether it's the gun on the table or the stablecoin dynamic, it's all kind of intertwined. But I think that's where we're heading. And so I think that's totally spot on in terms of just being aware of the timing, but also aware of what they would actually like to see happen and what they want to avoid happening. Michael Tanguma (25:20.497) Real quick, not to put you on the spot, David, but I'm assuming you're good friends with Bascent now. Were you at Pubkey in DC rubbing shoulders with him? I assumed you were there, but I just thought I should ask. Brian Cubellis (25:31.367) You David Thayer (25:35.268) Well, Besen and I are obviously the best friends. Now, the, but I was just last night talking to... David Thayer (25:47.359) you know and I was supposed to have been there but I had another function to attend related to my former employer Thursday night that exact same night in New York so I had to miss it but it was quite the success and great fun to see him there and I'm sure you've already talked about on prior pause but seeing him also tweet out on October 31st his shout out to Bitcoin which is pretty neat to see were any of you there I take it you weren't is that right? Jackson Mikalic (26:13.37) I was not. David, I'm waiting for Philadelphia to have a pub key. David Thayer (26:17.392) I just, a little inside baseball here, I just recommended to Thomas last night that he buy Cherry Street Tavern. Don't think it'll happen, but we'll see. So, yeah, where were we? Jackson Mikalic (26:24.815) Nice. Brian Cubellis (26:25.371) There we go. There we go. Jackson Mikalic (26:28.954) Now we're talking. Jackson Mikalic (26:33.916) I have some thoughts and it actually ties into one of the things Michael wanted to discuss today as well. We don't need to spend too much more time on it, but there is a notion to, if you think back earlier this year around Fort Knox and, you know, Elon and all this crazy shit about we're going to audit Fort Knox. And I take that as a signpost that there's ambiguity about the amount of gold that is actually held in reserve by the United States government to the downside, right? There, a lot of suspicion that there's less than the reported amount. And the flip side is in China, there's a lot of suspicion that the reported amount is very much, under exaggerated. So they own typically far or most people in the gold markets think that China owns way more gold than they actually report. And so I think a lot of what you guys shared really ties into the idea that Bitcoin is a strategic strategic asset for the United States. mean, the United States has no doubt about it. The most wealth in terms of Bitcoin in the broader space. The companies are here as well. I mean, there was some offshoring that was happening in previous administrations due to just unfriendliness around how the industry was being handled. But a lot of companies have on short, course, Texas being the leader in Bitcoin mining. I think there's just too many signposts to ignore. And to Michael's point, the Trump family, the administration, there's just a lot of hands in Bitcoin. And people are just self-interested. And I don't know if it's actually that complicated. And so I think that the United States will continue to prioritize Bitcoin, not to say they'll not prioritize gold as a neutral reserve asset, but I think the people in power understand that the United States has a position above other countries as it relates to Bitcoin. Jackson Mikalic (28:16.142) that tied back to Michael that was interesting is Tucker, my Tucker voice, Tucker Carlson is joining the gold rush. This is interesting, you I think he's been a proponent in terms of some of the talking points that we'll share on the show just about central banking and the dollar, but interesting to see that he is going to be Brian Cubellis (28:24.999) You Jackson Mikalic (28:39.994) What is he launching the company or is it involved or is going to be involved now in a gold and precious metals company? David, I'm not sure. Did you see this as well? David Thayer (28:47.582) Yeah I did. think he co-founded it with a guy he's known for a while whom he also just had on his show. And I think that the angle there as you may know is, know, gold purveyors have been famous for kind of ripping their customers off. And, and so this alleges to be a company that's going to be a little bit more transparent, straight, straightforward about vague, know, the amount that they're making for on each coin sold and that kind of thing. And more transparent in terms of the custodial options and so forth. And Michael and I have talked about, I think we probably talked about this on the pod before, is that... Listen, we're all Bitcoiners, but I think there's probably room, at least in the short term, for a gold position too. And we've probably been a little bit dismissive of gold in the past as a community. And yet we have so much in common with the people who favor gold, and we probably ought to lock arms and fight the fiat system instead of saying Bitcoin's the future, which of course it is. mean, digital gold is so much better than the existing... Interesting offering but nonetheless it still has legs and you know, we've seen that this year What do you guys think? Michael Tanguma (30:10.566) Yeah, I think the gold narrative and understanding is one of the biggest misses from a societal standpoint and then definitely from the Bitcoin investor side. think Gromit has provided the best and most succinct look at. And randomly, somebody else on a completely other spectrum came to the same conclusion of Arthur Hayes when he looks at Bitcoin's trading pair, doesn't look at anything else except for to oil barrels, because oil barrels derivative of of that is everything that is just exist in production, whether it's how do you sustain an economy as a sovereign to how do you produce anything that's a derivative of petroleum. And so what Grohm imposit is that at the end of the day, if you're stacking debt like China was, and it's becoming debased, well, eventually you won't be able to export, you won't have the funding if your treasuries are being debased to what you need to buy, which is oil exports, food and other things. so naturally you need to hold an asset that's neutral like gold. So as it arises in purchasing power, it becomes not only more creative to you as a sovereign, but the trading pair is what's most important. So like they've been working on setting up all these different exchanges globally so that people can net settle in Yuan, but then not have to trust them to trade that for gold and the gold sits within their walls. Gold will be able to sit transferable in like Singapore, London, UAE. And so when you look at it through that lens and everyone wins there because the natural citizens holding spot gold as well as a sovereign, you're able to as gold appreciates, you're able, it's just the natural reason why you need a reserve, a neutral reserve currency. So you take that and then you take the natural lack of understanding of Bitcoin and even the most hardcore folks that are adopting it still get futted out by quantum and all these other things. So how can we expect the rest of the world just to come to that conclusion? Bitcoin is the thing, but they do need a neutral reserve asset to retain their purchasing power. So you add all that together and what you're really looking at is basically the emperor has no clothes in the sense that debt is the risk free rate being revealed and that that's not true. And that's the thing I think from the Tucker thing, he's an opportunist. It's the same trade as if he wanted to launch, you know, got like knickknacks here, he does his Alps or whatever. It's like he knows his demographic, he knows they'll buy in the same way that demographic is ready for sound money. Michael Tanguma (32:29.672) to be marketed to them. So he's making some money. But the thing that I take the greatest like note of is just the debasement trade narrative that sound money is coming back into the forefront. And it's kind of crazy because gold is the largest asset class in the world. It's $30 trillion. It's going to go much greater if that thesis around needing a better trading pair for oil and just other goods. Nobody knows how to buy it. Like think about $30 trillion. It is insane. That is like a concerted effort to make sure nobody actually understands the underlying. So how do you buy it? How do you make sure you don't get squeezed? Where do you custody it? And historically people have done very small allocations, whether it's individuals or institutions in the same way we talk about Bitcoin and how on a long enough time for they'll need to be a standardized way for custody because that's just how people will manage large amounts of wealth. There's going to increasingly be better products and services for individuals, institutions to manage portfolios of one, five, 10, 50 % in gold. And so we're just in an early stages of this like sound money Renaissance. And nobody's really talking about that. I think it's fascinating. David Thayer (33:35.88) It is. so actually compared to or referencing something you said, Jackson, I mean, what is the on ramp house view if there is one on whether or not the U.S. government sort of understands this? We know that like Brooks countries, China and so forth, they're buying gobs of gold and we understand why too. But, you know, it feels like the right move for us is to outflank them and to, you know, establish that Bitcoin reserve. But Are the folks in this administration smart enough to understand that? mean, they're kind of conflicting signals, but so I'm curious to know what the three of you think. Jackson Mikalic (34:14.842) Yeah, I think that stable coins are the first priority just in terms of having the demand for the debt. I mean, my listen, I'm not going to pretend like I know the answer, but I would say that this is well understood that Bitcoin. There's already so much wealth held in this asset class within the borders of the United States. There's so many companies, as I had mentioned as well. There's businesses that own Bitcoin. And a lot of other countries have been very hostile, whereas like we've been somewhat hostile or neutral over the course of the past 15 years. A lot of countries have been very hostile and have more stringent regulation and just have politically fought Bitcoin. So I think there is an advantage that's being understood. There's also the news in Texas got big Mike in the big state of Texas. They allocated five million of the initial 10. to Bitcoin, they bought the dip at an 87k cost basis. you know, I think David, there's one way to answer it on the federal side. I think there is an understanding or maybe it's just copium, but I do think there is an understanding of Bitcoin and the strategic relevance. And then on the state level, I mean, this is, this is good news. This is something that Texas committed to several months ago and they made their initial allocation. And I'm sure Michael has thoughts on this as well. Michael Tanguma (35:34.792) Well, just to go back to David's point, I don't think they're mutually exclusive in the sense of if you and your neighbor are competing and he accumulated a bunch of gold before you did and you want a chance to get to the same level at par and you have a strategic opportunity to get better gold earlier and then maybe evangelize for it so it can outrun gold, like that's effectively what's happening here because I think if it's widely understood that China is under reporting their gold, I'm sure the powers that be you national security understands that understands that not only China and Eastern countries from a natural production perspective are growing, but also they've been growing their gold reserves. We obviously have our gold reserves, but you, you need, and you win as gold appreciates to offset debt obligations. But then Bitcoin could be a strategic opportunity. And it also makes sense that the U S Not to say that we exist in a free market or we're more, I would say we're more prone to free markets, which just sounds funny because you're kind of living in a weird time. But point being is like, we would be more apt to adopt this form of free market in Bitcoin than something like China. And that's just by nature of holding the majority of Bitcoin here. seems like a asset that was founded on American principles. And so That's what I think is ultimately going on is that like we knew we needed to offset into this gold trade. More people are going to be holding sovereigns holding gold, but Bitcoin is a strategic opportunity to accelerate kind of sovereign holdings. And then to Jackson's point, yeah, the state stuff's interesting because we've been very close with them. Lee Bratcher met with the Texas Comptroller a few months ago around this kind of positioning. And it was very cool to see that they allocated during this dip. to the ETF because the initial stance, and this is pretty much public information, was the state of Texas is very sophisticated and wanted to look at a self-custody option, something like multi-institution. And the reality, though, is there's a process when it comes to a sovereign. And you can imagine from RFIs to RFPs to vetting. And that takes months, if not years. And the idea was that they can get exposure via their Treasury accounts. And they're already like Michael Tanguma (37:54.44) plumbing via BlackRock and security like exposure via the ETF. And there was a transition to say like, let's buy this dip, let's get the exposure because also it's a very big win. Most people don't care how they got the exposure, just that they got it. And so it's awesome to see. And I think it's going to just really set up. It's really like the first, what was it? Four minute mile. You just need the first one to do it. And then, know, others start falling in line. And it's cool to see states kind of taking a little bit of the initiative and where we kind of know and offsetting these debt obligations at a federal level. David Thayer (38:27.423) Do you guys think Bitcoin is getting politicized? The last thing I want to see is, and this has always kind of been percolating beneath the surface, is Trump pro-Bitcoin, Texas pro-Bitcoin, and people on the other side of the fence feeling like, well, whatever they like, I don't like. And we all know, and Troy Cross has spoken to this and others, that it's not the case. But I certainly don't want us to suffer from that perception issue. Any thoughts on that? Jackson Mikalic (38:58.14) Yeah, personal experience that it is politicized. Ties back into the Thanksgiving conversations. But yeah, I've had some family members say that, you know, this is just like Trump and he's pumping things and he does it because it's for himself. you know, there's probably an element, there's no denying actually, there's an element to that, you know, with Trump, but Brian Cubellis (39:01.415) You Jackson Mikalic (39:19.74) 100 % David. Yeah, I think Bitcoin's politicized. It's unfortunate because as we know, anyone can use it. It doesn't matter who you voted for or what your beliefs are. And that's one of the great things about it. But yeah, I don't know. I don't know from here if that gets worse or better. You know what I mean? I don't know if it becomes less politicized over time or becomes more politicized. think one way it would be less is if other states that are left leaning were to adopt a Bitcoin strategy, similar to how Texas had made that initial allocation. But I think it remains to be seen. could easily see that, know, Ovic Roy, I'm pretty sure he's one of the, you know, him at BPI, he published something about, and then they fight you. And the whole idea is like, well, if you don't get enough consensus within the government, within the private sector as well, at some point Bitcoin will be very much stigmatized and maybe, you know, there will be attacks on Bitcoin or political attacks on Bitcoin. So I think it is really on us as an industry. We want to get there. We want to have the consensus. We want to have people bought in from both sides of the aisle. But it still remains to be seen if that happens or not, in my opinion. Brian Cubellis (40:29.521) Yeah, I would agree with everything you guys just said. I think it is currently somewhat politicized. But to me, it's sort of like any other sort of perception of Bitcoin. there's a certain maturation that's occurring. So like you could think of just this notion that, you know, five, 10 years ago, Bitcoin was perceived as for criminals. Now, people still say that, but like the very uneducated David Thayer (40:29.812) Yeah. Brian Cubellis (40:59.067) folks still cling to that. like, by and large, most people understand like Bitcoin is actually a pretty bad currency to use if you're a criminal. And so I think it's similar to that in my mind where like right now, because Trump is president, and because they're making these executive orders and his sons are launching mining companies, like there certainly is that perception that this is a Trump led thing. And given his sort of history around launching a stake. company and other things. It just feels like he's just being an opportunist. think the other reality at hand, though, is that there is at least, it's somewhat known now that there is a voting bloc that cares about Bitcoin or digital assets. I think there are certain people on the left, Democrats, who recognize that that was at least partially somewhat of a swing bloc in the prior election. And so that's going to be the case in the midterms and then in 2028. so I think I'm sort of optimistic enough to say that I think they will recognize that it doesn't behoove them to be anti crypto or anti Bitcoin, even though Trump has sort of heralded it and taken it on as part of his platform. I think there will be consensus that like, no, there's just a group of citizens that only care about this thing and we can't afford to isolate them because our margins are so thin on all this stuff. So that's kind of my hope is that like, you know, it's going to take time because right now we're in the middle of it. You know, we're a year into this administration. So it does still very much have that perception around it for sure. But I think as we move forward and, you know, there's new elections come up, people are going to realize that this is really a bipartisan issue, particularly on the stable coincide. Like I think the rate at which the genius act like was drafted, went through process and approved shows you that a lot of this stuff is bipartisan. And as people get more educated, come up the curve on a lot of this stuff, there's going to be a greater recognition that like, yeah, there's a group of Americans who care about this and they actually don't really care about all these other issues. And so we have to be open-minded to this at least and not be anti or attacking the industry and pushing innovation offshore, et cetera. Brian Cubellis (43:12.871) So that would be my optimistic take. I think to answer your question, yes, right now there is that perception, but I think like anything else, like any other perception around Bitcoin as education widens, as the realization that there's this voting block out there materializes, that'll go by the wayside. Michael Tanguma (43:31.259) So David, in true fashion for last trade, I take the more sobering, as the general elder hosts, this is a common thread we've had, like when it comes to proliferation of crypto and it's like it's all over, Bitcoin's the only noise and it's like, I want that to be true, but the reality is most people don't know what's happening. So we're still gonna see that the craziness ensue as the market comes back and liquidity comes in. Jackson Mikalic (43:37.787) Boooo Brian Cubellis (43:38.916) Hahaha! David Thayer (43:39.484) Hahaha! Michael Tanguma (44:00.902) And the same thing here is I very much want to agree with Brian, but I don't see it playing out. I think it only accelerates into the other side. An easy, more hyperbolic example is whoever the new mayor is in New York getting close to Ripple and sending out a bunch of Ripple to a bunch of people and just like completely, you know, obfuscating what Bitcoin is, how it empowers an individual to store and preserve their wealth. to the more natural version that I think we all will see as, know, UVI and stable coins and, you know, the dumping of these things and the wealth disparity and the natural, you know, adoption from 25 to 35 year old white males and, you know, Bitcoin in the United States. And I hate to cite it, but I will because I didn't read it for four years. And Matt Odell was just pounding this book, you know, The Mandibles. And if you go and look at that book, that book's not like a theoretical, it's basically a nonfiction dressed up as a fiction. And when these things happen, people look for people to blame and they look at the, politicized becomes the disparity grows and people look for scapegoats. so because you can't give anybody Bitcoin, there's no UBI, despite what people have claimed on here with Bitcoin. That's where we end up. So I think it gets worse before it gets better. David Thayer (45:21.279) You're right, that is sobering. That's no fun. Who invited Michael? Just kidding. But that's why we ought to underscore the human rights angle and some of the things that are more aligned with the other side of the fence because it's genuine and it's real and it's not just about the NGU, right? Brian Cubellis (45:23.079) You Michael Tanguma (45:23.312) Ha ha ha! Jackson Mikalic (45:25.871) Yeah, that's what I'm saying. You know, all I can maybe add to that. Brian Cubellis (45:42.184) That's a great point. Part of it's on us, As Bitcoiners, as a community, I think you could look at the past 12 months and say, to your point, like, yeah, maybe we should have been focusing more on the human rights components of Bitcoin as opposed to the DAT craze and financial engineering. I think that there is probably some self-reflection that's required, broadly speaking. Michael Tanguma (46:06.935) The problem that like suggested completely take the other side is I actually fully don't agree with that because it's like the point of what is it hard choices, easy life, easy choices, hard life. Like when you give it to somebody, like initially they don't see it in the thing that saves them. Everyone's been there. Whether somebody's giving you the advice or you give it to them, you're like, I know I'm right. You don't get it. And three, five years that medicine you'll recognize was the right thing. And at the end of the day, there is only one thing that furthers Bitcoin adoption and growth. It's literally number go up. Everyone will get it. Everyone realize it. It's the sole thing to focus on. And then people will wake up and realize everything we're talking about. Like we could take 20 % of the efforts and focus on the human right thing. There's people doing that. And it's great. And Bitcoin's most egalitarian ESG, like it does all of that. But the only thing that will let people adopt it and success and its awareness is literally number go up. And that's the one thing to focus on because you need billionaires to park their money in it because that's what adds to the liquidity profile. But nobody wants to hear that. But it's just the truth. Like, so anyway, okay. David Thayer (47:07.262) Well, Michael, check your financial privilege. No, I'm just kidding. But I think that's Alex's point, Alex Gladstein's point. It's true for us, but his thesis is that the bottom billion are desperate for Bitcoin, but for an entirely different set of reasons. Having said that, I think you're absolutely right. It's for the developed world. It's a great point that it's the financial gains that will get them kind of in the door. Brian Cubellis (47:10.503) You Michael Tanguma (47:36.454) And the liquidity profile because like Alex is right to a certain extent, but like if there's only one person and there's only X amount of market cap, just because they can hold that foreign money, if it dumps because somebody like just sells in the market, then they just lost all that purchasing power. So you need the liquidity profile, the amount of like large holders, large economic holders is what moves the needle. You rather have 1 million. David Thayer (47:38.63) Yeah, that is true. Exactly. Michael Tanguma (47:59.994) high net worth people deposit money in Bitcoin than a billion people with a dollar to put in because it helps the other seven billion there. It's just economic literacy. It's just a story that people like to hear. That's why we used to go back in the day in 21 and 22 about, I think it was in a room with Alex talking about this and it getting a little heated was around, let's see, it was always emergent markets and then it became, David Thayer (48:07.005) Yeah, yeah, no, that's true. Michael Tanguma (48:27.521) the global south, was the size of all size because it's like everyone wanted to invest in the global south. But there's no money in the global like there's no way to make money and you have to make money if you're going to continue the investments. David Thayer (48:29.519) yeah. David Thayer (48:41.439) Well, I saw Marty Ben last night and he reminded me of that phrase and I'll probably butcher it, but you guys know it. It's like, know, come for the profit, stay for the revolution. that's essentially, it sounds like what you're saying, Michael. You know, once they're in the door, then people can have their eyes open to, you know, the... humanitarian utility of owning Bitcoin, what gets them in the door is, hey, this could be both profitable and liquid, and it's a very attractive financial profile. Michael Tanguma (49:17.861) 100%. And I learned all these things the hard way because when I came into Bitcoin, I was very ideological. And then when I started working in this space, wanted, I didn't come in to get rich people richer. I came in to get people that didn't have capital to be able to preserve it. And I learned very closely with working with Parker Lewis that when we were building Unchain, it's very similar model here with OnRamp, is you have to go where the money is because the money is what not only, it's the same console. You have to be able to save yourself before you can save anyone else. your business has to have fundamentals. have to go to make sure it's viable so it can persist in the future. But also the people with money are the ones that will move the needle around the liquidity profile and adoption with Bitcoin. And then everyone gets to benefit. So that's the core angle there. David Thayer (49:58.688) Yep, that was a fair point. Brian Cubellis (50:01.925) Yeah, I I mean, I agree totally with you, Michael, on the the number go up aspect. guess my point was more around like the perception angle of like, you know, the debt craze Bitcoin per share, like not focusing on even just the number go up component of like, let's protect ourselves against the basement. Like, I do think that there is some room for improvement in terms of, you know, the vocal leaders, quote unquote, leaders of our industry. Like, look at a Michael Saylor who's, you know, tweeting AI. slop images and saying never back down. Like that's the perception I want to avoid because that does actually scare away the large pools of capital that you're referencing. Jackson Mikalic (50:39.461) I think we're an interesting, yeah, we're gonna get there. We're gonna get there for sure. But I think it's an interesting observation because there's a bit of a culture war happening within this industry at the moment. And I feel like we sit very neatly. Michael Tanguma (50:39.557) Are we gonna talk DATS? Is that the transition to DATS? Brian Cubellis (50:40.987) Hahaha David Thayer (50:42.161) Thank Jackson Mikalic (50:57.571) in a nice middle ground. We have a very moderate stance as a business, whereas on one side you have the proponents of self-custody, ideologically driven Bitcoin that was really the big culture of the 2021 cycle. And there's still a strong remnant of that. And I think that, of course, needs to exist. But the culture of this cycle has just been suit coiners, dats, Wall Street coming in, mucking things up, which was inevitable as well. But I think now there's less consensus on what Bitcoin actually is and what purpose it serves. Like I think there are very few conversations around Bitcoin's monetary properties that happen in JP Morgan, right? They just launched or they're going to be launching a structured product, which we should talk about. But I think there's like this tug of war happening now between the people who came into the space, you know, five years ago, who have an idea of what Bitcoin is. And then you have the particularly the Treasury companies, right? The Bitcoin yield, all this stuff like a lot of the proponents of that really never even talk about the merits of owning Bitcoin directly. They just, you know, are talking about how their company can grow Bitcoin per share and use capital markets to acquire more Bitcoin. And so I don't know where I'm going with this, but I think like as a business, we recognize that both are true and both have merit because you need to have people who use Bitcoin in a censorship-resistance way. And there's going to be people who use it in a different way outside of the US. Let's say Brazil is an example. There's different set of circumstances there that may afford you different reasons to want to own Bitcoin than have it as an investment in your portfolio in the United States. Likewise, there needs to be adoption. To Michael's point, needs to be there needs to be bought in people within Wall Street, within tech companies that embrace this as individuals and also as companies or else at some point the adoption doesn't materialize. Right. So there's like Jackson Mikalic (52:51.675) these, I think right now, culture war that's been happening for the past year. I don't know how that resolves exactly, but I did want to get, David, I don't know if you saw this, but it's interesting, right? And this is going to be certainly a trend in terms of structured products around I-Bit, around the ETFs. For those who are not familiar, I can just call it out real quick. structured products are just ways to use different financial instruments that drive different types of outcomes for an underlying asset. So... In this case, JP Morgan is now going to be offering a structured Bitcoin product using iBit. And how this works at a high level is you can pretty much, if I say this correctly, there's a 20-28 maturity, but right now, sitting November of 2025, a year from now, depending on where the price is, you would have a minimum guaranteed return of 16%. So you're kind of like mitigating some of the downside or flatness that we've seen this year. Should Bitcoin not be up, then it kind of goes out, turns out to the full 2028 term. And depending on what the price does between now and 2028, you have different ways to participate in Bitcoin's upside or downside. So this is ultimately a way for institutions to sell product, but also to provide solutions to the investors who maybe don't want Bitcoin's highly volatile. volatile underlying asset and probably don't give a shit about sound money, right? So it's like, this is kind of going into the culture war stuff as well. Michael Tanguma (54:20.612) Can I help? This is very curious, David, your understanding of this. just to clarify, what they're saying is between now and a year from now, if the price is greater than what the person bought in, they get it called and they get it just 16%. So BlackRock or iBit participate in all that upside and they're only getting 16%. If it's below that and they hold till 2028. They're going to get 1.5x on what their basis was. And if they're underwater by less than 30%, they're going to be made whole. David Thayer (54:56.767) less than 30 and then if it's more than 30 they lose. Michael Tanguma (55:03.086) I mean, it's pretty savvy when you think about it because it plays to all the different investor types. We've this firsthand. We've structured certain products for large institutions that they want like generally, and David, you can speak to this, some institutions when they're going to allocate to an asset manager, they want to sit on the same side as the asset manager. So they have no problem giving away some of the upside. So it makes it more palatable. It's curious though, the 1.5 acts. from that. But anyway, yeah, I was just trying to understand that now I have a better lens, but I'm just curious your thoughts on just like that product in general from an asset manager perspective. David Thayer (55:41.376) Well, there's so much to say. I I don't know if you saw, Simon Dixon posted something about this product and crucified it just in terms of the manner in which MSDR might be trapped having participated in some financial engineering and entering into sort of the Wall Street space. They might be at Wall Street's mercy is his thesis. Now, that's just kind of a sidebar with respect to the JPM offering. You know, much as we stand outside the TradFI fiat system and object to it, I mean, this was inevitable. I mean, once the iBit... and similar ETFs were introduced, financial engineering was just going to come around eventually, especially once the Jamie Dimons of the world recognized that Bitcoin has legs. so right, wrong, or indifferent, I think this is just the first of any number of structured products to come. And I don't think I even object to it. I just think it's sort of an inevitability. And they're serving a certain segment of the market whom I it was you, Jackson, maybe it you, Michael, had said, they probably don't give a crap about sticking it to the fiat man kind of thing. And what they really want is just those returns. And what's also interesting is that it seems like JP Morgan has not only accepted the inevitability of Bitcoin, but now they're trying to ride its coattails and they're one can kind of reverse engineer their assumptions as to where Bitcoin is going. If they feel comfortable with a 1.5x return and also providing that floor so far as so long as the losses aren't greater than 30%, then that's kind of interesting. It seems like they're on board and believe as we do that Michael Tanguma (57:33.239) Yeah. David Thayer (57:37.215) Bitcoin's going in the direction it's going and that they're happy to take the return in excess of 1.5x in three years time. Michael Tanguma (57:47.65) Yeah, the one thing I'll share from that, I think it's a net positive. And I think that they're, I'm a big fan of like counter positioning, right? So like, whether you're a startup, or you're just like, you have challengers, and you're always trying to figure out what is your economic or your narrative advantage from what is happening. And so one of the disadvantages that exists across the world is Bitcoin education around digital assets. And that's generally a negative. But in the same way that education is a gap, there's an education gap on the potential upside and where it goes. So if you can deliver structured products and narratives around how to get people in while limiting upside and downside, there's pockets in different segments, whether it's individuals to institutions that you can capitalize on, that's a free market, you get them in, and then you can gain economic advantage. And we've seen this internally with different institutions and what kind of products they need. So that's how I perceive this is it's just meeting the market where they're at, getting them exposure. And as long as they can hedge out and everyone is made whole, you're going to get net new buyers in that want to limit the upside while also limiting the downside. David Thayer (58:56.838) Exactly one other thing that was mentioned this game came up last night is that You know, it's not only about the network effects and and what that means for big coins price over time and viability and robustness But it's about within the US but other countries to the extent to which if you have broad-based ownership then the political and regulatory risk is diminished, right? Because people are gonna push back, oh, okay, it's way too late to outlaw Bitcoin or something like that, but they could say, all right, we're gonna tax the crap out of it. But if you have this widespread ownership of Bitcoin in whatever sort of derivative form, there won't be enough of a political constituency to say no. And that's really important. know, can't just be a bunch of like hardcore Bitcoiners making significant donations to their favorite candidates to ensure that. Michael Tanguma (59:42.679) Until... Michael Tanguma (59:50.979) Until they tried to fork Quantum Coin and then that all hell breaks loose. that's different conversation. David Thayer (59:53.618) Okay, that's fair. Jackson Mikalic (59:58.458) Yeah, I mean, this is important. It was going to happen. I think structured products are interesting. When I worked at Stiefel, I was on the alternatives desk and right behind me was the structured product desk. And they're just constantly getting calls from advisors who have high net worth, ultra high net worth clients who want different type of participation in assets with. different upside and downside characteristics. So, you know, I think this is interesting. I think we're going to see a lot more of it. And the point I want to make as well, because someone's going to come like last week, someone is like, I'm supposed to listen to this guy at the vest on. They're talking about Michael. Now I have a vest on this week, but like it doesn't diminish anyone's ability to use Bitcoin however you want. So I don't see why this is such a big deal, but we're going to see a whole lot more of it. That's for sure. Brian Cubellis (01:00:36.199) You David Thayer (01:00:43.658) Yeah. Brian Cubellis (01:00:49.221) Yeah, I think David hit the nail on the head in terms of the biggest signal to me around this is like, it tells you what they think of Bitcoin and the trajectory. And like, if I'm understanding the structure correctly, like they make the most money if Bitcoin is up way more than 1.5x in 2028. So the way they've structured this structured, yeah, higher. His price stock rate is much higher is basically the real signal from this. Jackson Mikalic (01:01:09.66) So what's Diamond's price target? Jackson Mikalic (01:01:18.928) So I know we have a hard stop in about 10 minutes. There's two things that we have to do, at least from my perspective. We have to talk about treasury companies very quickly. Michael's favorite topic. Because one thing, I don't know if you guys saw this as well, and I'm not sure the validity of it, but the market nuking. back last month, October 10th, there's now rumors about MSCI, which is one of the big index aggregators saying that digital asset treasury companies are funds, not companies. They should not be included in indices. And apparently this is one of the catalysts for one of the big liquid, the cascading liquidations that we've seen since then. And I guess now MSCI is determining and we'll have a ruling by mid January on whether or not debts are funds or companies, but But it seems like if they are, if they're decided to be funds and not companies that has pretty bad ramifications for these companies not having access to passive flows from indices. Is this, do you guys think there's any merit to, not the decision, but like merit to this thesis or idea? Brian Cubellis (01:02:28.827) I'm skeptical and typically I'm here for the tinfoil hat theories, but I think in my mind, the timing is most likely just coincidental. Like I think the decision or announcement that was made like wasn't even public on the 10th. like, okay, who knew about it and who was moving the market base on that? And also if you just think about it, practically speaking, that would lead, would expect that to lead to a sell off in the public equity stocks, not necessarily the underlying because like if you just hold spot Bitcoin, and you see this or you had early information that this ruling could come, why would you be selling your spot Bitcoin? Like it doesn't impact you. So like, I don't fully follow that train of thought that it sparked that liquidation. I think there were other factors that were more specific to the crypto space and all coins than Bitcoin specifically. David Thayer (01:03:05.61) Yeah. David Thayer (01:03:19.572) Well, even if not deliberate, the new JP Morgan product, which is bound to be products, and not just offered by JP Morgan, but others, are going to compete with some of the products that MSDR have trotted out, which are, I think, interesting. But yeah. You know, deliberate or not, the gauntlet's been thrown and I think my view is that we benefit from it. I think it seems that maybe that's our collective view. JP Morgan's entry into this space. But what it means for treasury companies, not so sure. Probably not the most encouraging development. Michael Tanguma (01:04:08.77) David, just to put you on the spot, your friend is a do you have any bull case to share that you would like to share on debt companies long term? David Thayer (01:04:11.026) no, here we go. David Thayer (01:04:19.712) Well, listen, I'm actually not very, I guess, smart about it, it's like, what the, like, I've never understood why. So you guys educate me, like, why would MNAV be significantly lower than one unless there's no proof of reserves or, yeah, I know like the, there can be a question mark around management and so forth, but if they have the Bitcoin. wouldn't the mNav eventually flow closer to one? It may not be one. mean, lots of things for you to discount to NAV. But let's open it up to the floor. I think Michael may have some thoughts on that. Michael Tanguma (01:05:00.098) Well, think then I would reframe it and say what would cause it to trade at one is first, because if they're just closed in funds, everyone understands that the net asset value, it should trade lower than that because you have, whether it's execution risk, management fees, there was a thread that came out about missing whatever 10Q and that they can't actually hit them at the market, like offerings for the next year. So that's like. David Thayer (01:05:16.063) Yeah. Michael Tanguma (01:05:28.21) component of like, why would it trade at one and then let's break down. Will these things exist? At least my fundamental thesis is they exist because Bitcoin is hard to understand. So the 60-40 is already this archaic framework for retaining purchasing power that is breaking down in real time. And so that 60 is a lot easier for people to bucket into an equity versus the underlying. But once you start to move outside of that framework and it becomes a lot easier with proliferation of tools like multi-institution where you can click a button and get the same security as the largest institutions, well then it makes zero sense to offset that. That's just one angle you can tie into, well, if Bitcoin monetizes, you may want it. So why would you buy this security like exposure that has all this execution risk when the underlying is fundamentally better from counterparty risk to you need to use that asset, you have no claims on it. And then the overarching theme is I think the notion of Bitcoin for share. Is an ultimate fallacy reminds me of again, I've used this a couple times is like saying hours per profit at the casino, like everyone's up at some point, but who goes home with money is very few people. So there's very few people on insiders that make more Bitcoin because they were early and got to that trade. But along the time horizon, everyone ends up with less Bitcoin. So the expected value or outcome is just to hold the underlying outside of that wrapper. David Thayer (01:06:48.65) Well, I think it worried about the execution rates and the other risks, management risk, whatever. So there would be a discount applied and it would be probability weighted. But on the other hand, an MNAV higher than one could be conceivably, although again, I open it up for discussion, justified because a the company in question might be able to lever it in a way that an individual can't and B, if you have, we'll call it MSTR in your brokerage account, you can lever that in a way that you can, least currently, or at least easily, underlying Bitcoin. Now, as discussed on our last podcast, as I recall, like we're all Bitcoiners. Like I think it bears mentioning that this is just an argument to be had on the margins because I think we're all dedicated Bitcoiner. Bitcoiners you like own your coins stick them in a place like on ramp as I do etc. So this is really just kind of I Would encourage others who are listening to only think of this as sort of like a marginal Discussion to even be had in the first place. This is not to replace actual Bitcoin ownership But if we're talking about it and people are curious about it, I guess the question on the table is Isn't there an argument to be made as with say forward looking like PE? We were talking about PE ratios earlier. The reason you're not just looking at book value and you're looking at market value is because the expected profits that may accrue to you because in this case the Bitcoin's leveraged. Okay. So Michael, what do think? Michael Tanguma (01:08:14.187) Yes. Michael Tanguma (01:08:24.097) So I'll say quick three things, because I know Jackson, hold on. Yeah, I'll limit 10 seconds. So on the leverage side, Vijay had a great example. If you want leverage, just take out the loan yourself, and that's already risky. On the MSTR, well, you should just use an ETF because you can leverage them, and then you just have spot exposure with no execution risk. And then the last one that gets thrown into all of this is around Jackson Mikalic (01:08:24.764) Just really quick, limit it to 10 seconds. Brian Cubellis (01:08:28.505) You David Thayer (01:08:28.851) wait, sorry guys. Didn't realize we were rolling on. Go. David Thayer (01:08:42.044) I know, I totally agree with that. Michael Tanguma (01:08:52.053) people are saying they're credibly gonna create some form of yield on that. And in Bitcoin 17 years, nobody's credibly made enough yield to make a difference without blowing themselves up. So you're basically saying, I'm gonna go do something that's never been done. The last thing Jackson, this is unrelated, but we have to call out, I'm gonna pull it up. We did have a winner for our hat. So we were giving away one of these on-ramp hats that was very exclusive, only a few exist. And so whoever wrap up, he sue you. If you he won the hat so, you know, we'll reach out or we'll on the next comment you can comment on the the YouTube channel Jackson's gonna ship your hat because he's our de facto FedEx person Jackson Mikalic (01:09:29.348) Okay, perfect, perfect. All right, before you leave, Michael, I know you have a hard stop. I'm gonna put you on the spot first, but we're gonna go around the horn. Michael, what are you thankful for? Michael Tanguma (01:09:40.958) I'm thankful for the relationship with all of you guys and specifically David Thayer. David's been a good friend, seen the business early on. I'll actually never forget when David, when we first launched, he reached out and we literally sat like this. I think you're in the exact same room and we talked about for two and a half hours, roughly, literally just Bitcoin multi-institution custody. And he's grown to be a friend and advisor of the business. so thankful for him, but then also you guys as well for dealing with all my shit. Brian Cubellis (01:10:08.737) You Jackson Mikalic (01:10:10.076) lot of shit to deal with. guess I'll go next. You know, I'm thankful that Michael put me up in this nice office to record the last trade today. But no, in all seriousness, it's a blessing to have a job where you get to have some fun, you get to have some laughs. So I do enjoy getting to Brian Cubellis (01:10:16.794) You Jackson Mikalic (01:10:28.72) do this podcast with you guys. David, I am appreciative of you joining for the holiday specials. I think it's always fun to catch up with you. So yeah, thank you guys for an hour well spent. I'm grateful for that. Brian Cubellis (01:10:41.831) Very well said, Jackson. I'm also thankful for you all. The opportunity to talk about Bitcoin on a daily basis is a dream. what I would also say is it can be easy to fixate on, especially when you're in this world and you're in this bubble, it can be easy to fixate on the price and where things are headed and why we're right and everyone else is wrong. But ultimately what really matters is friends and family and our health. And so that is also what I'm thankful for this year. David Thayer (01:11:14.176) Thanks, Bart. I echo that. And for me, it's faith, family, friendships. But it's also exciting. mean, it sounds like a little mercenary to say it, Bitcoin is exciting because it's not just a way to accrue wealth, but it's a way to participate in freedom, right? I mean... what a blessing it is, unlike the internet in which we couldn't participate. We're participating in a monetary revolution and even though, without question, faith, family, friends are the most important, it's a blessing to live in a moment in time when we get to participate in revolution. And Jackson, congrats on your recent arrivals being a family. Jackson Mikalic (01:12:00.784) Thank you. I appreciate that David. Michael Tanguma (01:12:02.965) We could tell David hang out with Barty last night. A lot of revolutionary talk. We gotta appreciate it. Brian Cubellis (01:12:07.089) Ha David Thayer (01:12:07.2) You're in a coffee house like the revolutionaries of old. Jackson Mikalic (01:12:07.674) Heh. Jackson Mikalic (01:12:12.782) Awesome. Well, it was a great time catching up with you, David. Thank you for your time as always. We're appreciative of it. Brian Cubellis (01:12:19.751) Thanks David. Michael Tanguma (01:12:20.225) Thanks guys. David Thayer (01:12:20.587) Thank you guys, really appreciate it. Michael Tanguma (01:12:23.115) Alright.