Gold Is Pumping, Bitcoin Is Next — Inside the Debasement Trade with James Check

Jackson Mikalic (00:01.607) All right, we are back. I am back. I wasn't on the show last week. It's the last trade. I'm joined by my honorable co-hosts, Brian and Michael and our special guest, James Check. James, thanks for joining us. What's going on, man? Brian Cubellis (00:05.181) Jackson's back. James Check (00:16.358) Thanks, mate. It's good to be here on a day when we've got some red candles going on. It's all part of the fun. Jackson Mikalic (00:21.481) Yeah, I'm hoping you can brighten up our day. The price chart's pretty ugly this week, huh? James Check (00:25.916) It is, it is. it's, you know, it's one of those things that we got to 124 K. I think it was in August and we took another bite at it, right? We went back to one 26 and then we had that pretty nasty deleveraging event. And look, I mean, I've maintained a bullish stance for pretty much this entire market cycle. And this is kind of the first time I released a piece yesterday where I was like, guys, we just have to be really careful that this is kind of like a second rejection of that high. And I've been calling, I call it the Hodler's wall. And it's basically like all the cost basis of the coins on chain. Basically, for the quick notes, about 30 % of the supply is above 95k. And if you price that in terms of the dollars of how much people invested to acquire those coins, 62 % of the dollars. if you just imagine the price going down to 95, you've got 62 % of all the invested wealth in Bitcoin is suddenly underwater. And the gap between where we are now at 108 and 95 is not a big one. So you only need a small move to suddenly put a lot of people feeling on the wrong side of the boat. So the way I'd kind of to summarise the environment right now. It doesn't look great. It's not over yet, but I'll tell you what, the gap between we're kind of okay and we might be up shits creek is not a large one. Jackson Mikalic (01:40.393) Yeah, I mean, that's interesting, right? Because to your point. We're not that far from some of those, I guess support levels as you would refer to in the, in that space, but I'm curious, like, this has obviously been a totally different year looking back on the four year cycles, right? So I think on this show, at least we're kind of of the opinion that the four year cycles are dead. I'm curious what your thoughts are on that. And if we were to break some of these support levels, does that mean that we're going to be repeating the four year cycle? Or do you think that we could recover from those levels and still see a strong 2026? Thanks James Check (02:14.384) Yeah, very good question. And obviously none of us know, but my base case and my instinct is that I agree. think the four year cycle, like, look, there's a lot of people who are going to trade it. So there's a little bit of this like self-fulfilling prophecy and sentiment is obviously going to turn sour quickly because people are like, no, I bought the top. it's all over. What a crappy Q4. However, there's also a very good case to be made where like, if you just take a really big step back and look at the macro environment, everything goes down, like down to go up is a real thing. And I think if we have some kind of spasm, we were talking just before we hit record, there's challenges in the banking sector, know, depending on where you look, there's cracks in the economy, this part's doing great, this part's doing not so great. Is AI a bubble? Is it not a bubble? Everything is just kind of, and like you call it the last trade, I think everything's just one trade. It's all just one trade of the denominators wrecked. And I continue to come back to this tweet that Lynn Alden put out some time back and she goes, every so often, fiat currency has a bull market, which is in other words a bear market in assets. So sometimes it makes sense to actually be in cash because you're going to have a bull market in fear, but her next line was, I don't know, paraphrase, it's a temporary thing. You know, like you sit in this position for a short span of time because at some point in time, all these macro forces that a lot of Bitcoiners talk about, gold bugs talk about, It doesn't change the macro picture. Like the reason that I started buying Bitcoin all those years ago and still do today, the reason I buy gold and still do today is that like it, none of this changes. They're going to have to debase the currency, but sometimes you've got to get these washouts that just kind of spook everyone, flush out the excess, flush out all the silly ideas, right? The forest fire comes through and then away you go again. So I can very easily see that we have a bear market that doesn't look like historic bear markets. If we go down 40%, 35%, we're down at 80k that's where we bottomed out in 2025 if we go down to 80k and like in four months time we're at 150 or 200 are people going to call that a bear market was it a correction like what is it so my my real base case moving forward you got to be really flexible in your thinking I'm certainly not anchoring to the four-year cycle I know a lot of people will but I think it's got to be flexible and just like take it as it comes and just see how these things play out but the ultimate direction of this thing is just substantially higher it's just a journey between here and there Brian Cubellis (04:31.985) I'm curious, James, like how much weight or how do you handicap generally like liquidity conditions, like talking about the macro picture? Because I think if you look historically at, know, quote unquote, Bitcoin bear markets, the liquidity conditions, the tightening conditions were just different than what we're facing right now at current, where it's actually kind of going the opposite way. We're going to cut rates, we're going to inject more liquidity, etc. And that's already sort of happening at the edges. I'm curious how you can't handicap that in the sense of like In addition to that, it's like the zeitgeist has shifted in terms of the crazy gold bugs and the debasement trade is now in vogue when this is really just the Bitcoin thesis that we've been screaming for years and now it's like, okay to say it. So how do you frame that in your sort of outlook going forward? James Check (05:17.806) Yes, I mean, look, there's a thousand ways you can cut and analyze liquidity. We do some collaborative pieces with the Bitcoin layer. They've got custom indexes and looking at bond volatility and banking reserves and all this stuff. You know, I'm a civil engineer. That's that's too deep, dark finance for me. I like to look at just like I'm a real back of the envelope kind of dude. Gold and Bitcoin are very important assets because they're not just assets. They're also information, right? All prices information. But I think those two in particular, whether you want to call them a smoke alarm, right? The last functioning smoke alarms, think Luke Gromen calls them. And I also think about them in the kind of a context where they're like a slow and a fast moving average When you're fast moving average, you get a lot of noisy signals. That's Bitcoin, right? It moves up and down Sometimes you get booms and busts, but it's gonna be much more sensitive So when you get a turning point locally or globally Bitcoin is gonna feel it first because it's highly sensitive to like local liquidity conditions Gold is like that slower moving average takes a lot to get moving But when it gets moving, you know, you got to pay attention goal going up to four Why is it 4.3? Like it's crazy how much it's adding every single day at the moment. Now, whilst I think gold's probably getting close to a pretty meaningful interim top, you you see lines outside gold bullion dealers of retail investors like guys, it's getting, it's getting late in this particular move. However, gold going up like that is a sovereign bid. has to be. These are serious, serious buy side. But it's also telling you the trade after the trade. So my base case on liquidity conditions right now is that the market is kind of spotting that locally something's wrong. Bitcoin is telling you that something is wrong in the economy. TradFi guys look at it and go, look, Bitcoin's underperforming. And I'm like, guys, I think your stock portfolio is having a view into the future and you're ignoring it. But the trade after the trade is that they're to James Check (07:07.94) to come in and rescue this with debasement, right? Because the balance sheet has to increase because no matter which way you slice this thing, if you run this experiment that we're in, this debt-based economy, mean, you know, it used to be for years and decades, now we're in that acceleration phase where you can see they're going to have to come in, any wobbles in the equity market, any hit to the wealth effect, the knock-on effects are just so significant that they just have to. go back to balance sheet expansion. So gold is telling you where we're going. Bitcoin tells you the road to get there. And that's really my simple framework for thinking about liquidity conditions. Those two assets, right? I mean, to me, especially in this part of the market cycle, they just have so much signal in them. I think a lot of TradFi guys ignore, TradFi guys ignore Bitcoin. They think it's because they don't like it. And Bitcoiners ignore gold. And honestly, I think that that's a mistake on both fronts. You should be paying attention to both assets. Jackson Mikalic (07:59.593) Yeah, James, it's funny you brought up the line. saw that tweet, I think it have been today or yesterday, but in Sydney, Australia. And I was wondering if you were actually in the line before we hit record here. Are you buying some gold bullion or no? James Check (08:13.838) No mate, strangely enough, the last time that I would have gone in to buy bullion would have been at least a year ago. You know, all my spreadsheet, everything's now ticking over to long-term cap gains. And when I was in there, I was saying, hey, what's the demand like? Like, nah, there's nothing. So, you know, I've been primarily buying platinum coins actually, because I'm like, just simple thesis, gold is going to run, silver's like the premiums are just really terrible. was like, platinum's just, you know, speculators are going to jump into this thing. was like, who's buying platinum? Like absolutely no one. said, okay, cool. I'll get two. Thank you very much. you know, like that was my framework. Like there was no demand when I was buying. And when I saw that photo, my actual thought was, shit, it's gonna be a pain in the ass to sell this thing. You're actually gonna have to get in the line and actually go and sell this thing. So that was my initial thought. So I'm like, sit tight, just let it do its thing. Jackson Mikalic (09:00.542) Yeah, you know, it's interesting because it's kind of a barbell approach right now to the gold markets. Like to your point, the sovereigns are bidding up the asset. I think today we might've hit $30 trillion gold as an asset class. And then you see these pictures online of, think I saw it might've been in, I forget where it was, somewhere. Brian Cubellis (09:19.237) Vietnam too, there was a video. Jackson Mikalic (09:20.252) Vietnam right? Yes, somewhere in Southeast Asia Lines to buy physical gold as well But then I've been texting a few of my buddies that still work in traditional finance mostly in New York Metro and kind of you know Just like big finance cities hubs in the United States and I've been asking them about any discussions around gold and client portfolios investment strategy calls and you know nothing at all, so it's it's quite remarkable because what that indicates to me is while in our little hub, we find ourselves online, following the sound money trades and gold, Bitcoin. There's very little discussion actually happening in high finance and traditional finance. And these asset classes are criminally under owned. think Brian is one of the things that you wanted to discuss today, but the allocations to Bitcoin and gold and institutional portfolios is pretty much nothing. I'll pull up the tweet here, but Brian, curious if you wanted to share a little color there. Brian Cubellis (10:14.599) Yeah, it was from a B of A survey from a few weeks ago, I think, and it just shows, I forget the exact number, but like 2.4 for gold and like 0.4 or something for quote unquote crypto. And like to me, know, those are severely underweight if like you actually understand what's happening right now. But obviously the people with those exposures don't fully appreciate what's occurring. And the other sort of where my mind went with this is like, you know, I'm seeing a lot of people saying this trade is towards the end of its legs and maybe gold is coming to a top. But how do you square that with this data? How can gold or Bitcoin be quote unquote overbought if the vast majority of these large capital pools have almost no exposure? Michael Tanguma (11:04.174) Yeah, and maybe just to add a little bit to it, I think it's interesting to see the lines out there because I feel like they're more isolated than the trend in the sense that specifically with Bitcoin, everyone here has their lens, whether running a business or being a gold bull or Bitcoin bull for a while, you have your circle of sphere of normies and we generally haven't heard from them, right? Like we haven't seen it. There's demand, but the demand has looked more institutional, more sovereign, more digital asset treasury company, but there hasn't been a lot of net new retail coming in. And you see a little bit of that. Most recently, I think the ETF flows on gold. started to pick up, but this has naturally been sovereign bid. And so... I guess on the Bitcoin side, like just curious James on that, like how do you think about that or do you not agree? Because I think that's been the most dumbfounding weird part of this whole cycle is that we ran up to 125 and we're late past the halving and you really haven't had that like reflexivity loop that brings in retail. A lot of people say they're tapped out of resources. I don't think that's the case. Like retail makes up a lot of different cohorts, not just, you know, guy with a thousand dollars. It's a family office or an individual with a couple million bucks looking to cycle out of a different asset. We just haven't seen that. yet really come in. James Check (12:19.581) Yeah, I think there's a few layers to this and it is an interesting question. The first one, if you look at the on-chain balances, what we call shrimp, so basically everyone who's less than one Bitcoin, they've actually been net sellers of Bitcoin since 2023. So it kind of goes against that narrative that, you know, there's all this retail, like there are no retail holders coming in. And in fact, a lot of those DCA holders are actually scaling out. Now, there's also been just like a transfer of wealth. We've seen, I mean, you've seen some of these like OG whales or like 80,000 Bitcoin, 10,000 Bitcoin, these massive of clips. Again, we can never really know why these guys are distributing, but they always tend to bring these coins back to life during bull markets. I've been of the view there's a few things. One, if you've been sitting on like tens of thousands of coins as an individual, up until this administration, you've probably never been able to sell because suddenly you've got $10 billion in your bank account. Where that money come from, like you're gonna get shut down. they've actually now got both the demand side from the ETFs, from the strategies and sailors of the world. They've got the demand profile to exit those big positions. And I think that the amount of sell side pressure in the spot market has just been massively underappreciated and honestly under respected in this particular cycle. you see a lot of people talking about price suppression and market manipulation and yeah that happens around the edges and like we're not going to kid ourselves there's people who try to suppress price and all this But there's been a lot of spot selling like billions and billions of dollars. know, people talk about the halving, you know, the four year cycle, miners sell what 450 coins a day. These OGs and long term holders bring back like 10,000 coins per day. Like the 450 coins is completely irrelevant. So I very, very rarely study miners as a result because they just don't matter anymore. So I think there's been a very large capital rotation. I also think that with the ETFs markets are relative. Money's going to go where it's treated. James Check (14:14.173) Bitcoin hasn't gone anywhere this year so a lot of people just moved their capital whether it's gold whether it's the AI stocks whatever it is There's always, you know, what's that, the meme with Arnold Schwarzenegger, there's always a pump out there somewhere if you go looking, right? There's always a pump somewhere. There's always a pump somewhere and people are going to rotate their capital in and out of these things. And let's go back the other way. At some point in time, let's not kid ourselves, there's going to be a rotation back to Bitcoin and it's going to be an elephant through a keyhole type environment. So, you know, I think there's a lot of Bitcoiners who are disappointed with 2025 because we've gone sideways, not down by the way, sideways. People are upset that we haven't gone anywhere. But it's like based on what expectation we just had to back-to-back 150 percent years in 23 and 24 We're up seven and a half X off the bottom Sure, people are gonna be disappointed but that's really because they're anchoring to this four-year cycle the anchoring to this idea that all but the fourth year is gonna be the big year it's like but What if next year is a big year, right? What if we go down 30 % this year and next year we go up 200 % or 400 % 300 % whatever it is I think people just kind of anchor to their most recent environment Just forget the bigger picture you see a lot of Bitcoin is complaining about the gold price I'm like guys that's just lifting the price of where we're going right we're going to parity because Bitcoin is just orders of magnitude better and just so many verticals You know this is just raising the price target, so it's very much an expectations game But I do believe that the this there's three dynamics that I think have defined this cycle the ETFs which have been widely discussed Treasury companies. actually don't think is a major Aside from strategy. I think the rest are a very small spot bid probably out. People have thought too much about them relative to how much they've actually benefited the price. So the ETFs are definitely a big one. Spot sellers, think, massively under reported and talked about, but it's been absolutely tremendous. And in my opinion, why we haven't gone higher. It's just that simple fact. And then the other one is the launch of the iBit options, which will forever change market structure. I think the ETFs are the most important financial change to the Bitcoin market that's happened. James Check (16:15.229) the iBit options going live in November is the second biggest because it's going to completely change everything moving forward and a lot of that is TBC. We are going to have to see how it changes the vol profile but you know leverage cuts both ways and for every guy who's trying to suppress the price is another dude who wants it to go much much higher. Jackson Mikalic (16:33.832) Yeah, it's very well said. know, one thing I want to tie in couple of things you said there, James, because there's always a pump out there. Right. And so if we go back a few months ago, there was fervor around the Bitcoin treasury companies. And now it's looking pretty ugly. And on this show, you know, we've had we found guests on the show that have been very positive on them, some that are just neutral, you know, not too much of an opinion and then others that quite bearish. And then the three of us as a group, I would say I've been You have a little bit more balance and we've had others who been a little bit more bearish or skeptical. But I think what we're seeing play out now is just with this. kind of lackluster performance that you just spoke to with Bitcoin. Again, it's not bad performance, but it's just, think people are disappointed because they had an expectation based on historical cycles. And those expectations are probably not worth having too much weight on anymore. And now you have just these bleed outs of Bitcoin treasury companies. think that, I'll pull the tweet up, but it was like 18 or so of these publicly traded companies are already one under Onex, MNav. You had a tweet as well in the past couple of days, just about The idea that people are really forget about all the metrics that people are creating for these companies, right? At the end of the day, people want to buy something and they want it to go up. And like that was always kind of like I've been kind of back and forth on it. I thought strategy and still kind of do think strategies different than a lot of the other companies. But the end of the day, The narratives that surrounded these companies were BS in many parts because at end of the day, they were not attracting institutional capital outside of, again, strategy and preferreds and the convertibles back four or five years ago. These were companies that were banking on retail investors really to buy their equity. Jackson Mikalic (18:22.466) And once those companies are now down like 70, 80, 90 % from their highs a few months ago, I just wonder how much longer some of these companies will hang on. And what do you think the other side of this looks like? Is there going to be a lot of consolidation? James Check (18:34.341) Yeah, it's a very good question. So yeah, I mean, I'm at the view that, If you're, and you just gotta ask yourself, if they keep shilling you Bitcoin per share has gone up 5X, 10X, 100X, and you've had so much accretive dilution and your portfolio's down 90%, you don't care about these metrics. That's great, Mr. Company, you've got a bunch more Bitcoin. I'm wrecked. So I don't really care about your accretive dilution. again, the stock price going up is the only metric, literally the only metric that investors care about. And all of these other things, MNAVs, Bitcoin, per share, whatever you want to call it, that's simply a tool to help you evaluate is it cheap or expensive. So for example, I've had this view that MNAV's the gravity is always towards one. And this shouldn't be a surprise because the company literally sells the stock when the premium is there. That is their business model. They sell the stock, they want the premium to go to one. And I agree there's very little institutional capital buying this stuff. I've been of the view for a long time that this is basically retail speculator pocket money outside strategy because we were talking Brian before we started the show. The difference between strategy's 640,000 Bitcoin and Treasury Company number 45's 5,000 Bitcoin is approximately 640,000 Bitcoin. Right. The gap between these two things is just a whole different animal. If you've got 5,000 coins, which a lot of these Treasury companies do, there's like a big chunk of them have about that much. Bitcoin goes to a million. Great, you're a five billion dollar company. What are you going to do, change the bond market? You're never going to be big, you're just never going be big enough. my case was that MNAV goes to one. Some companies have, like Strategy I think, has a case to be made where I think Strategy, I mean obviously they pioneered it, but they understand the assignment. The assignment is that Bitcoin isn't the product. And I think a lot of these treasury companies think that if I have Bitcoin I have a product. No you don't. James Check (20:28.092) The means by which you accumulate the Bitcoin is the product. And the means by which these companies do it is the stock, right? And for the common stock, you want volatility. This is why strategy again has an advantage because it's got the options, it's got the volatility. The whole idea is that people want to trade the stock and that creates that liquidity environment that they can sell into. The other one is these preferreds, let's like preferreds are basically, they're basically bonds, right? They're bonds packaged up as a stock. So strategy's product is bonds. They're a bond salesman. Is that product desired? Well, yeah, of course, fixed income, people who want to get 10%. Of course, there's a huge demand for that market. They're going to go through challenges where they can sell more or less of it, but that is the product. So the treasury is a means to an end. So let's now apply that to Treasury Company number 45. They've got 5,000 Bitcoin. They're not big enough to tap debt markets. They're not going to get any kind of special deals. Most of the deals they do get are going to be extremely dilutive. And if your best case proposition is that you might get acquired, mean, you don't acquire an asset at a premium, you require these distressed assets. So all these poor shareholders are going to get bored out. there's a project that I used to be a civil engineer and I worked on a mining project in the UK. And I keep coming back to this story because I think it's relevant. All these people were investing in this mine. It was going on in the Northern UK and the shares were trading like 40 pence. And then they had some problems. They couldn't raise money. They couldn't get their bonds funded. Next thing you know, the share price is down at five pence. And suddenly a big American company comes in and buys the mine at five pence. So you've invested 40 pence, you've been bought out against your will at five pence, and then by the way the mine's going to go ahead and be extremely profitable just under a different banner. So you Mr. Poor Investor, you got bought out at the exact wrong price. That's what these acquisitions are going to look like. So look there might be some consolidation but I really really really struggle to see this being anything other than a massive Pareto distribution. got strategy at the top. mean, good luck beating strategy in any way, shape or form. You're going to have a handful of winners. I've fade this idea that we need a treasury company in every country. I don't see any reason why Australia is going to benefit from having a treasury company. I can just buy a strategy. You know what I mean? Like it's the leakage is the fact that you've already lost. That's the problem with these, these treasury companies. So, um, I think they've destroyed a tremendous amount of capital. Um, I think a lot of people, those retail speculators, they did, they was kind of sold a dream. And I think honestly, they got. James Check (22:53.44) very much very crypto right this is a very very crypto these these kind of false ideas that 5000 bitcoins gonna change the world it's it's just absolutely not and I think a lot of these people just been wrecked and you know when you buy something you go down 90 % that capital has not gone into spot Bitcoin you could have just bought bought spot Bitcoin and actually supported the price and you'd be in a far better position just relatively speaking you know even at 108 what are we like 12 13 14 percent off the all-time high some of these things are down 95 like it's it's Michael Tanguma (23:21.23) Yeah, I appreciate you running through that. There's a lot of sentiment there that... James Check (23:23.36) It's just ruthless. Michael Tanguma (23:29.614) Ultimately building in this space helping build infrastructure to custody assets for at this point half a decade You really take pride in helping people retain and hold that asset and so when you see things like this Similar back in 21 and 22 when you see the rehypothecation It's your job to effectively communicate this independent of what anybody says because as long as you're right the market will remember via reputation and so We said Joe I would joke and call like Bitcoin per share. It's not apples to apples but like profitability per hour at the casino if you're in Vegas. It's like somebody calls you when you're up, but like when you get home you generally have a hangover and you probably are wrecked, right? And so to your point on the crypto side, there's a lot of like red flags that always existed, whether community, like generally communities are associated with either Ponzi's or Colts and neither one you really want to be associated with. And then you add to the crypto aspect where you look at a lot of these pipe deals and you they get leaked and there's some really great Twitter handles, Pleditor and I feel like a few others that just like make it their life to go dig into these filings and you see the same people that were investing in, you know, the FTX and just like all these different products that existed in 21, 22, it's the same names. And then the last aspect, which has been kind of sad is like, I do recognize a lot of Bitcoin influencers didn't make a lot of money outside of holding Bitcoin. So it's been very hard to make money in Bitcoin outside of buying, holding maybe some lending products if you can do it the right way. And so the first time to get an opportunity to get capital, I don't think they even understood that structurally this never made sense. And so it's really sad to see eight Bitcoin bot, you you get a nice image on Twitter, I got seven Bitcoin, I got 300 and Brian and I were talking about this in Dallas. James Check (25:10.202) Yeah. Saw one today for like 0.47 Bitcoin. I'm like Okay, we're at the tail end of this thing now Michael Tanguma (25:17.408) It's just sad. Even Brian and I were talking about this, that like, we don't think that people structurally understood just because you accumulate a bunch of Bitcoin does not mean that the stock price was going to rise. And I still don't think they get that. So it's just it's been a fascinating thing to sit in the back end and watch play out while you kind of recognize it never made sense. And then maybe to the last. James Check (25:38.238) And I think a lot of people cast aside the GBTC analogy. It's not perfect, but frankly, these things are a closed end fund. Sure, they're actively managed, but if you actively manage by, you you even see some people saying, oh, but then they can sell the stock to sell the Bitcoin to buy back the stock. I'm like, so you're telling me that your stock is a hedge fund that buys Bitcoin at the top, sells it at the bottom and buys back your own failing stock. Like, why would I own this thing? You know, like every time you try to defend this case, you actually make me more bearish on this whole trend. Brian Cubellis (25:58.718) Hahaha James Check (26:08.191) because it shows you haven't thought through any of this whatsoever. Brian Cubellis (26:11.421) Yeah, we use- we- we- go ahead. Michael Tanguma (26:11.534) That's exactly, sorry, I was gonna say that's exactly right, that if people just understood these are effectively closed-end funds and closed-end funds by definition have to trade at a discount to NAV because of the cost that goes into it and then most people haven't even looked at these agreements and won't call any out where they're getting paid portions of the Bitcoin upside and the crazy salaries like there's a lot of decay being eaten into the Bitcoin per share that they don't even recognize as part of the deals. Brian Cubellis (26:41.981) Yeah, I was just gonna add like, you we would talk to folks three, six months ago who were, you know, super convinced that there was some sort of floor on the MNAV, whether it was like 1.211 or one even. And I like tried to tell them like, there's no floor. They could easily trade under one accent. Like there's all of these embedded risks from management execution to custody, you know, just layers and layers of risk on these things. there's no reason it should trade at one. you know, over a long enough timeframe should probably trade under if they're not, you know, actually creating an operating business, right? Like that was the other thing too, as you know, all of these announcements have come out over the past six to nine months. It's like, you know, basically promises of an operating business, like we'll make some money somehow. We hope. And it's like, well, that's not really the correct order of operations here. And you know, I would put like the sort of the Teslas, the FIGMAs of the world in a totally separate category as these things, where that's just like a logical balance sheet move and makes a ton of sense. Whereas all these other things are like, well, there's no operating business. So what are you selling? And to your point, I think strategy is unique in that like the stock is the product that is their operating business and they've done a better job of anyone than that and probably have an insurmountable lead in that department. James Check (27:39.025) Totally. James Check (27:59.388) Yeah, totally. And I think it is important to make that very clear distinction that when we talk, when I talk about treasury companies, I'm not talking about like, if we talk about businesses that sweep their excess profits into, into Bitcoin, then my business is a treasury company, right? But you know, that's not what we're talking about. We're talking about sale a playbook all in, I'm going to take this business. And the idea is you, whatever operating business it is, know, telecom or whatever it is, they're trying to make that operating business and like strategy did an insignificant part and the Bitcoin Brian Cubellis (28:11.817) Breath. James Check (28:29.331) part of it swells. But what we have seen, and I think the dichotomy between meta-planet and strategy are actually a good case study here, as strategy gets bigger, it has far more tools to survive a bear market and it has far more tools to grow its balance. It's going to be much harder, right? If you think about MNAV as like a growth multiple, does strategy ever deserve a 2x multiple again? That's kind of indicating it's going to go from 640,000 to over 1.2 million coins. That's a big ask. However, strategy has a hell of a lot more chance of going from 640 to 1.2 than Mr. Treasury Company with 0.45 Bitcoin and no operating business and a boatload of debt and pipe deals. It's harder for them to go up. for MetaPlanet, they're good example of the other side of that bell curve. They've got a smaller stack. They've been growing it much quicker. They deserved a larger MNAV in the early days. they get bigger they've now got 30,000 coins sure could they go to 60,000 yes could they get to you know 3x 4x suddenly that becomes harder and harder you've got to reach a certain scale so the bigger they get the lower that your mnav has to be by definition however the likelihood that you can sustain a positive more than one mnav is also much higher because you've got that inertia in that size and scale something like meta planet it is moving from the right hand side of the spectrum across to strategy side of the spectrum where they're growing much bigger but their MNAV premium goes down. And what a lot of investors I think didn't quite understand is, sure, you can justify that MNAV of six or seven, however, once you get bigger, you may have bought the stock and they could 7X their Bitcoin holdings and the stock price will be dead flat, if not lower because of dilution. And we also another lesson that I learned by just observing the crypto world, you'll occasionally a token where the market cap hits an all-time high and the price hits an all-time low because you get all of these unlocks and again this is why I come back to that original tweet the only success metric for a treasury company is your stock price going up investors don't care about anything else now perhaps there's a case to be made that like you know we're gonna buy all this Bitcoin and then the stock price is gonna go up a lot more but like the proof is in the pudding and the pudding right now is down 95 % Jackson Mikalic (30:55.902) Yeah, it's ugly out there and I'm mostly just, you know, it's kind of sad for the people who got pulled into this because at end of the day, they could have owned Bitcoin. They could have just stored their wealth in a better savings technology. And instead they bought into this pipe dream that Bitcoin treasury companies were going to accumulate all the Bitcoin out there. There's going to be one that leads in every single country. And you you're going to retire next year because you bought the right company. I'm curious, James, like Looking forward the next 12 months, 24 months, how do you think market structure in terms of buyers, particularly on the buy side? How you think that'll evolve? Because you obviously don't think that Bitcoin treasury companies are going to be the, you what are the significant pools of capital stepping into the market as many people still think that they will be. So I'm curious, do you think it's institutional investors? Do you think it's just the opening of the spigots of wealth management channels and traditional finance? Do you think it's a sovereign bid? What are the next like 12 months or so look like in terms of the buy side? James Check (31:59.516) Yeah, I think honestly all of the above. So one of the key dynamics is I spoke about the sell side, which I just don't think people understand how massive it is. I like analyzing sell side, obviously, because it's a massive part of market structure. But one solid Bitcoin is also one bought Bitcoin. So by analyzing the sell side, you're actually like Newton's third law, equal and opposite forces, you're measuring demand. And the demand this cycle has been extraordinary, because we're at 108k. And we're seeing tens of billions of dollars coming back to market every couple of weeks. So there's a huge amount of demand out there as well. So, I mean the ETFs have never had a sustained period of outflows. They just continue like you get a burst of outflows and then it's just right back into inflows. The inflow weeks are usually like 2.8 times larger than your average outflow week and there's a lot more of them. So from those dynamics, I think the ETFs are just a tremendous source of of buy-side liquidity. They've been a bit more of like a structural passive bid. So when you look at the way the ETF like I consider the treasury companies like a short-term aggressive bid they come in waves and they're very aggressive on the buy side. Whereas the ETFs, they have this pattern where like every month, people are just DCA, right? People are literally using the DCA, retirement accounts and whatever else. I think the walls from a regulatory and just reputation standpoint that have been broken down this cycle so far, I use my old man as a good case study. So he got in in 2020, he rode the up, he rode the down and he told me all about it. Now, he doesn't complain about the price going down. He's actually like he took his initial investment out. So he's cost basis neutral. He's watched the market not go down for a long time. And he's now saying, well, maybe I should actually allocate some more to it. So he's become much more comfortable with the volatility profile. I think he's a great example of someone who's in fact a lot of our clients are retired or they've sold a business and they've got a meaningful amount of money that they want to look after. believe in Bitcoin, but they also don't want to get these like the general timing right. They're not trying to like perfectly time bottoms and tops, but they don't exactly want to ride a significant bear market. And they also like they look to buy and the amount of people that I have conversations with like I don't particularly care about the top. Tell me when the bottom is that dynamic I think is going James Check (34:11.057) to proliferate across a lot of, you whether it's high net worth individuals. the debasement trade that we are in the early innings of that because you know as Lynn says this train it has no breaks they can start putting stuff on the tracks and try to slow it down but it's it might slow down temporarily but it's going straight through eventually and I just think more and more people are going to click and say I just need to have some of this thing in my portfolio and you know I'm very confident that Bitcoin is going to go back to all-time highs when it happens as TBC but I think that the next time it runs you know there's all these gold bugs you know Peter Schiff saying oh you're down 35 % versus gold it's like mate we take out that all-time high, you know, there's only so many all-time high breaks you can have before everyone just goes, I'm wrong, I'm wrong, I've got to walk away from my bearish thesis because otherwise you look like an idiot. And I really think we're one move, like one serious bull market leg move away from just completely changing that dynamic where you just, if you're arguing against Bitcoin, you're just wrong. And I think that's where we're on the cusp of that. Michael Tanguma (35:00.046) Thank Michael Tanguma (35:10.286) Yeah, I think that's exactly right. I know this sounds crazy, but I think we're still been in this quasi bear market I felt it and I was on a call. There's only so many so somebody could probably guess but one of the largest hardware manufacturers I didn't realize that a lot of the money made is actually via the wallet software not the hardware Because if you think about it when you go and plug into whatever You know again, there's not I want to dock some but when you plug in a hardware and get it set up You have the software that you have on your computer when you're sending transactions. They actually take a a fee from those transactions. And the point of that is that their books on the hardware sales were completely kind of like just evaporated because there's been no demand for hardware devices. And so point being is like, generally when retail steps in, they hear about self custody, they're gonna buy some hardware devices. I remember back when we were building Unchain in 21, basically Trezor, the model T ran out because the market's reflexive. Coinbase sees up, see client services, you can't onboard a business, you can't buy certain devices because it requires manufacturing capacity. And if you're in a bear market, you're not overproducing because that's lost, you know? And so the point being is seen in anecdotally, but then to your main point, I feel like retail in the market comes in with that reflexivity to the point of when you hit those all time highs and it starts to become part of kind of like just the notion, he gets on the news, you hear people stepping in, that's when it takes off. And we haven't seen that yet. And that's when you naturally get some of blow off top and we're still in the early stages of this and it just came out today with Schwab still going to they're turning on you know crypto purchases in 2026 like everyone knows behind closed doors and then publicly all of these different pipes are getting like just turned on the ETFs are barely turned on with RIAs and other institutions banks are just getting plugged in like I think just structurally this is a completely different dynamic that we're in and then you add the debasement trade which is interesting because there was a good quote I'll butcher it but it was effectively like like, and you can lump in paraphrasing Bitcoin, but it was about gold is tactically overbought, but structurally under owned. And that's effectively what we're talking about here is gold and Bitcoin are tactically maybe overbought or maybe under purchased with Bitcoin, but they're structurally under owned because of where we sit with inflation and its persistence, specifically post 2020, that we're past the event horizon of like real inflation of roughly double digits, if not greater. And once the market realizes that the price will do its natural, it'll do its natural thing. Michael Tanguma (37:39.917) you James Check (37:40.04) Totally. And you know, you've got lines out the door at bullion banks right now for $4,300 gold. No one cared about it a year ago. Right. No one cares about Bitcoin this year. There's gonna be lines out the door. There's gonna be lines out the door. It's not today, but it's gonna happen because these things, just where it's going. People are working out and you know, I think Bitcoiners deserve a lot of credit. First of all, we memed this thing to $2 trillion. That's pretty hectic. But the other one is that we memed fiat currency into existence because Gold Bugs been trying to get the world to say the name for decades. And here come Bitcoiners and we just make some memes on the internet and suddenly everyone on TikToks talking about fiat currency So we've cracked that onion of like hey, there's something wrong with and the more you peel off the layers you got It's actually the money that's got the problem. Maybe I should go looking elsewhere. So, you know We don't get to this point and also you meet Bitcoiners. I'm sorry. You just don't bet against these people There's just too many smart folks in the room and we just consistently consistently calling out Hey, this is where the trends going and then five years later it happens. I didn't know the shape or the form of the tariffs and COVID and printing and all this stuff I didn't understand any of that back in 2019 when like the penny really dropped for me for Bitcoin but I started buying because I'm like I can see something coming and like I can see the outline of this thing and now I can actually see the shape starting to come out I'm like Okay, so now that the thesis is happening, what do I do? Exit? It's like, no, I literally started buying for this exact reason and now it's happening. No, I buy more because this is why I started buying in the first place. Michael Tanguma (39:10.518) It's such a great call. We hadn't had a chance to catch up with Jackson being out. We were out in Dallas for some events, but then we were meeting with family offices. And your point around everything that the gold bugs have been saying has been taboo for so long. Bitcoin had been taboo to talk about, you know, the denominator being broken, the debasement trade, all these things, but they were always there. Now you can go into rooms with real gravitas and explain like you don't actually know what you're talking about. Like, let me explain to you how your denominators fund and then you can point to a $30 trillion market cap or value in gold and say, look at this and look at its performance the past year. And there was a, we ended up in one of these rooms with a guy, just very wealthy. He came to deal, I don't really know exactly what the setup is and his friend's probably listening, so we got a kick out of this, but it was part of like evaluating who we are and I'll read the real deal. Because these wealthy people have different tactics on how do you understand if somebody's serious or not. And so the individual, let's I'm worth 50 to 100 million dollars oil guy, you know didn't believe in Bitcoin or gold and We found ourselves, you know explaining the thesis but halfway through it was I kind of switched it I was like you're gonna get Bitcoin I'm very confident and everyone's looking and it was like You're gonna get it because you're a winner because he was explaining how he's done all this and if you don't you're just gonna be a loser it's that simple because your competitor across the street or whoever you're competing with is gonna hold it and they're gonna buy you out and they're gonna out compete you and you just like there's a level of where this is going that is just fundamentally there and part of this I think you mentioned and it was me personally was 2020 because once you understood what they did and the level of monetary units that would have to be injected to sustain an economy after basically closing it down you're like it's it's over like it's fundamentally over and so I kind of make the case that I think bitcoin almost just keeps us at par with inflation post 2020 it's not a popular opinion but because inflation is so rampant and bitcoin obviously it may go up and back down and outpace but it's just keeping us like afloat to where the cost of living has increased on anything that we actually want in a society. James Check (41:17.181) You know, I use the reference points. I'm an Aussie and most people would know that we've got a housing bubble of all housing bubbles. If you go back to 2020, because I think 2020 is a good reference point. I don't like picking, let's measure Bitcoin from the bottom. look at our perform. Like that's kind of a useless metric. Let's actually measure from like important events when the zeitgeist changed. I like to use February for goal, February 2022 when we had the Russian invasion, because that's when the US froze reserves and everyone goes, something's wrong with the collateral. Now that's the right benchmark for how did gold perform since then. For Bitcoin, if we're going to talk about the inflation side, you can do the same for gold as well. Just go to the start of 2020. We're right before COVID. We don't know anything. We do not know that this money printing is coming. No one's even worked out what's about to happen. Go back to 2020. For me in the Australian economy, the Australian housing price is up like 60 % in Aussie dollar terms. So the house, the thing that my inflation rate has gone up 60 % since 2020. It's down 95 % in Bitcoin terms. So I can buy significantly more house with the capital that I saved in Bitcoin. So for me, my inflation rate is the housing market and my Bitcoin is on a stellar job in keeping me well and truly ahead of that. I can buy significantly more house and my Aussie dollars and my salary got completely debased versus that relative point. I think that's the right way to think about it is like pick your right anchor point and say well what is your inflation rate because everyone is different and for me that's running the hardest and Bitcoin is running significantly harder. Jackson Mikalic (42:47.114) Yeah, it's a great point as well because that's only a five year timeframe. And going forward, the case for adopting Bitcoin is just preservation and growth of wealth, right? And so I think it's just a matter of time where all the traditional assets continue to struggle to really generate any meaningful real returns. mean, bonds forget about it. They structurally can't provide real returns, but even equities, you know, to benchmark against housing prices. You're probably up a little bit if you were allocated to SBY since 2020, but not to the same rate that you thought you were. If you actually start denominating it and things that you would actually like to purchase. And so I think that margin of real inflation to traditional asset nominal appreciation is going to continue to shrink. And it's really going to leave only a few asset classes, Bitcoin being one of them that would actually provide any sort of real returns. But the thing is, nobody's still even five years later, nobody's still really in the U.S. is thinking about real returns. They're still stuck in nominal returns. James Check (43:51.07) Yep, no, I think that's a really important point and I've got a chart again looking at the housing market in Australia about a hundred shares of the ASX 200, which is our equivalent to the S&P about a hundred shares is approximately the same price as the average Australian dwelling. So I actually use that because our housing data only comes out once a quarter. So if I want to know like what the housing market has done in Bitcoin terms between the data points, I just plot a hundred shares of the ASX and they just track each other. And when I showed that chart, particularly my old man and my mate's dad, when they saw that they were like, oh, okay, so the stock market is the housing market, which is the gold price, which is it's all inflation. And another chart that I like to reference back to, we've often talked about Bitcoin as an uncorrelated asset. And for the vast, vast majority of its history, it has been. You get these arguments saying that Bitcoin is just a levered version of the NASDAQ. I'm like, yeah, but did you know that the NASDAQ is also a levered version of the S&P 500? And the S&P 500 is just a levered version of the housing market. And all of this stuff, if you look at the one year correlation, Up until 2020 the bottom of that bear market. It was all over the place Right Bitcoin was sometimes correlated to the Nasdaq sometimes to gold sometimes inversely they chopped around It's like this crazy wave of correlations since 2020 the correlation between Bitcoin and gold between Bitcoin and the Nasdaq between Bitcoin and the S&P 500 They all basically went to one right not perfectly one, but they all basically went to one It's a very clear pattern that's telling you not that Bitcoin is levered Nasdaq or not that Nasdaq is levered S&P telling you there's something wrong with the denominator. It is literally all one trade and people are just trying to find the right horse to get on and if you're not on the right horse just get on a horse because there's something wrong with the denominator. it's all correlated, it's all one trade and it's a very very clear distinction from that 2022 bear market where you see the bottom and TLT look at TLT just got absolutely destroyed no matter which way you want to price it. I've got a couple of charts where I use gold as the benchmark and You can see all these fiat currencies are getting destroyed since 2022. If you look at the S&P 500, even silver until very, very recently, but then you look at TLT, long duration bonds, and like it's doing worse than the only thing that's really doing worse than TLT is the Japanese yen and it got wrecked to epic proportion. So you really have to look very hard to find something that's done worse than bonds since that very, very important geopolitical milestone. Brian Cubellis (46:20.425) James, I'm curious, is there anything outside of price you look at? Because I remember, I always like looking at hashrate, just generally speaking. And we were talking a bit about sort of the proverbial sovereign or nation state bid that may or may not already be happening. And to me, hashrate is really a reflection of exactly what you would see or expect to see if nation states were tipping their toes in and actually just. you acquiring a hash rate instead of just outright market buying, I would expect to see, you know, sort of what we have seen, which is up sideways chop, up sideways chop, but hash rate just absolutely ripping, which I think made another all time high this week. Curious if you look at anything like that to try to get a better gauge just outside of pure price. James Check (47:08.189) Yes, I mean, I think this is what on-chain data is so powerful for. So Hashrate I think is interesting, but honestly I don't spend that much time thinking about the mining sector because I think it's just become a small factor in terms of price impact and market structure. What I generally look at in the on-chain world, what I think is so amazing about it is you can see every single coin. Now, sure, some of those are in Binance and some of those are not HODL and some of those are in ETF, but in aggregate, human beings are herd animals. We do the same thing all the time given the correct stimulus. What does Smart Money do? They wait until the pain is significant. They wait until the people who bought the local top or the global top, they hodl and they hodl and they hodl and then they just capitulate everything. And we saw this when Three Arrows blew up in 2022. We saw it in when FTX blew up. People who bought their coins at 60,000 and 40,000 and 50,000, they all capitulate on the same day at 15,000 or 17,000. And then you see the Smart Money stepping in and buying those coins. And then what do they do? They wait and they wait and they wait and they start distributing towards the top which we've seen all through this year. from that perspective I think the on-chain side of Bitcoin is just so amazing because it's like this record of human beings doing what human beings do, being fearful, being greedy, making good decisions, making terrible decisions. And we all do this stuff in a herd mentality and you've got a handful of the smart money that do the right thing at the right time. Now what I think is really interesting, I can't remember what we talking about earlier, but this idea of retail. Retail, it's an interesting dynamic is for Bitcoin, specifically for Bitcoin, in 2017 the very first Bitcoin I bought was like the literal Pico top and you can see this massive influx of people buying that 2017 top. Now we never recovered that level of buy side until FTX blew up. When FTX blew up, retail came roaring back into the market. So we're at 20K over in 2017, that was the all time high. Now people are buying between 15K and 20K, except it's the bottom of the bear. And if I go back and reflect on my own personal journey between 2017 and 2022, James Check (49:15.451) We had no podcast back in 2017. Suddenly we had heaps of them. We had no thought leaders who were like, there's thought leaders, but like the proliferation of Bitcoin education was tremendous through that time. It's where I kind of learned my chops and kind of worked out how this thing all works. The education level just showed the conviction and the conviction came out in that buy side of the 2022 bottom. So I think retail for Bitcoin specifically, but perhaps even elsewhere. I've seen some tweets and posts recently. how retail jumped in in April. Tariff tantrum, markets selling off, everything's collapsing. And all these TradFi guys are like, retail's buying like 10 billion dollars in a week. You know, some crazy number that's coming in. They're like, look at all these idiots buying the bottom. We're going to zero. Next thing you know, the S&P 500 is at all time high. So retail in the age of the internet is actually not quite... there's still like, there's still plenty of dumb retail. Let's not kid ourselves. But this like age old adage of like, always fade retail. It's like, well, what if they're kind of... unconstrained by your mandates where you've got to buy in 60 % of your portfolio and bonds? What if they're unconstrained by all, like they've got research services that they pay 20 bucks a month for and they have some of the best research in the world and they don't go to these sell side, you know, Jim Cramer's of the world. So what happens if there's like a pool of retail out there in the age of the internet and the age of information, they're just kind of a bit smarter than your average bear. So I think that's another interesting angle that's probably under discussed and under appreciated. Michael Tanguma (50:41.23) Yeah, I mean 100 % like the retail investor at least for a Bitcoin holder is and will always be more sophisticated than institutional capital Simply because they have longer time in the market. That's what we mean. You look at self-custody It exists not just because of ideology It's just the most rational thing to sever the internet connection because it's you know, a digital bearer asset and if a custodian lose it It's gone forever. But I think there's another aspect that you were referring to when it came to retail and the bid around, I refer to it and there's probably a better version of air pockets in financial assets that are underappreciated and under, exposed to Bitcoin's value prop in the sense that like the past few weeks have been super volatile with Tri I think it's tri color and then there was first brands and I think a bank blew up today this notion that because there's too much debt not enough dollars naturally and especially because more monetary units have to be inserted to keep it propped up there will be more holes in assets that people think are even at par or you know bonds delivering something below real returns that when retail and investors pick up on the fact that like you want this notion of outside money you want it segregated you don't want the counterparty risk even from a BlackRock Coinbase situation if something happens that also is a misunder price or understood that gold and Bitcoin if if purchased in custody the right way are fundamentally not exposed to all of this. Now, the digital asset treasury company is fundamentally different. That's also part of the thesis on why they don't make sense. But yeah, I think that really ties into what you're saying, is there's just like different external factors. Signal and the Hong Kong riots come to mind. And then what we saw recently in, I forgot, the Asia Pacific country with the new BitChat application, which the notion of once the market realizes the need for something, and because we Michael Tanguma (52:36.878) in this like memetic society that we saw it with SBB where the amount of capital flew after like Founders Fund send that email. Once they understand the trade and the value prop outside of just number go up, like preserve wealth outside of a system that can just capture it or seize it or debase it, that's not priced into where this goes as well. James Check (52:56.059) Yeah, no, totally agree. And again, I think that 2023 banking crisis was a good example. Bitcoin started going up because there's obviously the self custody element, but also they're like, hey, they're have to patch over this thing. once the market sniffs out that that's the direction it's going, you get these short term liquidity pockets where things just, things just, know, markets have these spasms every now and then, but they got to patch it over. And when they patch it over, there's just one direction of this whole thing. And it's not fiat getting stronger. Jackson Mikalic (53:22.004) James, I wanted to ask you about altcoins because on this show, Brian and Michael in particular have had different opinions on Bitcoin dominance and what altcoins would do. Let's say this cycle, even though we may not necessarily think that four-year cycles exist anymore, but there are different opinions on what would happen with the altcoin market. And you had this tweet a few days ago after the liquidation event of last week. So I'm curious your thoughts on altcoin or alt season, altcoin in general and then I also want to ask Michael does your thinking change on Bitcoin dominance based on just altcoins getting absolutely wrecked last week? James Check (54:01.662) Yes, I mean my general view, I think the gold silver ratio is actually a really good reference point because a lot of gold bugs are expecting silver to go back to like a ratio of 30 to 1. think atomically it's like 12 to 1 and they're expecting this like epic bull run that goes to you know a gold silver ratio of 30 from where it is at 85 or 80 whatever. And I'm like, guys, if I look at that chart, the gold silver ratio, which is really gold dominance, it kind of looks like a forever uptrend since 1971. Like it just looks like a trend that is going higher structurally. Yeah, you get bursts here or there, but like guys, you're at 85, you're at 120 a little while back. That kind of looks like you're becoming an industrial metal, not a monetary metal. That looks like true loss of monetary premium to me. I think that Bitcoin dominance is much the same. 2017, hey, we might actually flip Bitcoin. Look, we've got all these features. We've got all these things. We've got all this great stuff. Then we had the everything bubble in 2021. And yeah, we got another rip, but we set a lower high in terms of if you invert Bitcoin dominance to lower high. We didn't get to the same Bitcoin dominance as 2017. Take ETH, the second biggest got nowhere near its all-time high versus BTC and then it had this horrendous collapse and I think that that sell-off in for the ETH BTC ratio really woke a lot of people up because no one like the treasury companies no one takes off the rose-colored glasses when the numbers going up but when the number goes down for three straight years without a relief bounce you start saying there's actually an investment case for this thing and you start realizing like if let's take ETH for example I could just go I think that what what applied to a theory applies to literally every other token. The challenge with these things is that they've lost the monetary premium war because it's just one there so good luck with that trade. if you don't have a monetary premium argument like silver doesn't really against gold, central banks aren't buying silver they're buying gold. Why? Because silver is a shit coin. James Check (55:59.864) when they look at the ETH price, how do you justify half a trillion dollars? And until Tom Lee started smash buying, there was no case to get to, I mean, they were struggling to stay at the current market cap, let alone go higher. They were struggling to stay at the current market cap. A lot of people say, well, it's going to be from transaction demand and the whole stock market is going to be on Ethereum and all, you know, all these layer twos are going to proliferate. And I'm like, well, let's assume that's true. If the whole stock market is on a... Well, first of all, it can't be on the L1 because it will never scale. We know that. So it's got to be on L2s. So what are L2s doing? Well, BASE is probably the biggest L2 and what are they... they're using USDC as gas. So, sure, they pay a little bit of fee down to the Ethereum main chain, but like for most of this bull cycle, gas fees have been one guay, which is as cheap as it gets. And I ran this experiment because I held these back in the day. I ran the experiment saying, how... you can run your wallet through these websites to show you how much your all-time gas usage was. And I compared my all-time gas usage to my all-time high ETH holdings, and I bought 256 years of excess usage. I won't be here. I don't need that much, right? When I fill up my car, I don't fill up the swimming pool worth of petrol as well because I might need it later on. No, I just go to the gas station and fill up. So if you're look at this from a gas-based perspective... when you run the PE numbers, and I had a chat with one of my clients some time back, and they'd literally run the PE or price to sales for that token, this token, all of them. And he goes, These guys keep saying, these altcoin folks keep saying that they want TradFi to come in and run the numbers. It's like, you don't want them to run the numbers. If they come in and run the numbers, you're arguing over who goes down 99 % first because you are going to struggle to justify your current market caps, not let alone growing. So I think in the altcoin world, I truly see Bitcoin dominance in a forever uptrend. There'll be bursts here or there, but I just can't, I've never been able to convince myself that there is an investment case for these things because James Check (57:58.9) when you run the numbers, it's just really, really ugly. And I think a lot of people don't really appreciate and understand that. Like what is your valuation framework? Because if the space professionalized and you get more of these institutional guys come in, they are going to do the calculations and you need to ask yourself, what are they going to find? And if the numbers are unattractive, you know, are we richly valued already? Michael Tanguma (58:23.436) Yeah, that makes complete sense. think where generally disconnects happen, at least on our side with Brian and I, because we have this ongoing debate of what you said is really the timeframes, because obviously, like I'll preface that crypto doesn't have any value. And then on a long enough time horizon, similar to gold and silver ratio, it's in a forever uptrend. But when you realize what you just explained and how crazy the debt set up is that people don't run the numbers. There's all this liquidity and the mental model I use is like when gold was monetizing because that's what we're going through right now is the monetization of an asset. You have to think about some caveman that like found something that was or like look like a rock and there was something glimmering on it and they shaved a little bit off and they traded it to somebody else for something else and one person got the better end of that trade and the other person did it that persisted for hundreds if not thousands of years. And so the point being is there's so much liquidity and there's so much financialization of this ecosystem that everything that tells Wall Street is to make a bunch of money on these other narratives. Now we know they're false but that's not the point of if they're false and have value it's the point will retail and will the incentives bring in that liquidity. And the example to tie it back to is since the beginning of Bitcoin whether it's color coins, ICOs, DATs, there will always be something that will take people's Bitcoin over a shortened duration. And that's where you'll see this reflexivity back to bitcoins dominance And I would prefer that never happened and that we go straight up into the right But that's just not how humans operate and it goes back to the my favorite thing of like do you want to make money? Or do want to be right and the notion is like I don't you know, I don't actually even think it is policy or it's just the notion of If somebody was trying to be right or make money their way they can make money is by effectively setting up the E fund or whatever and the stories that they tell and the stable coin like we realize all this stuff will not settle to Bitcoin but between there and where we sit today there's every incentive for the market to do everything outside of the rational thing because it's very hard for them to understand that Bitcoin is the last trade so that's the idea where we end up below like some you know I think our better number is a like roughly 50 % dominance that it'll go below Michael Tanguma (01:00:39.502) But I don't even think that's really the hard number. It's just the notion that we went up to 65. I think we dipped into like 55 and then it went up back to maybe roughly 60 that I still think if we end up getting whatever bull market that we've been talking about, we'll end up probably low 50s if not lower because that means a bunch of money is gonna come into other assets and then that's gonna inflate the cryptocurrency market cap until we blow up. The last part is like whatever happened in Friday, my base case is that happens and it's been the base case in founding this business part of why was founded around the custody offering we do is that we will see a 10 to 100x deleveraging that happen when perps and stable coins and USDC is backing up derivatives trading with the CFTC. It's all going to just delever, but we have a lot of room to run there and that means a lot of inflation of the cryptocurrency market cap. James Check (01:01:31.406) Yeah, and I guess coming back to that liquidation event, this really the impetus of my tweet, you kind of, I mean, you get these stories of just people who've just been completely like, when your token price literally goes to zero, which some of these things did, because, you know, Binance, like the token actually went to zero, it doesn't matter what your leverage ratio was, you're gone. So there's a lot of people who like, We haven't seen the influx of new retail traders this cycle. So basically what you've got left are all those crypto natives who by the way have underperformed Bitcoin horrendously in the cycle. And then they get finally to this moment with like, all right, here it is. Alt season is coming. Bitcoin dominance is broken. I'm going to max lever up. And then they get zeroed. So all of your survivors are gone. So there's no retail who's coming in. There's no retail coming in and the guys who survived are gone. And then the real like the reason put out that tweet, if I put myself in the shoes of an institutional capital manager and I've been running the thesis you were just talking about then, there's all these crypto ETFs which are like lined up in the cannon and then you see the token literally go to zero or go down 60 % in 10 minutes, I can't buy that ETF. I can never buy that ETF, it's over. So I don't know where the demand comes from, man. I just can't see any serious investor looking at that kind of market structure and saying that is acceptable for my investors to be exposed to. Michael Tanguma (01:02:53.442) think the best way to think about it is what you just described, whether it's the Bitcoin fundamentals that we all understand, think about what percentage of the human population understands that it's less than 1%. And so think about the crypto market. It goes back to analogy of gold monetizing in real time, that institutions we've learned over the past 15 years that they don't follow anything except for what is the inertia status quo and what will not get James Check (01:03:04.906) totally. No, I get that. It's the Great Afford theory. It really is. Michael Tanguma (01:03:23.396) them fired. So if the trade goes on to crypto, then the trade goes on to crypto independent of the illiquidity profile of the ETFs and whatever constructs they make around tokens or what is it, polymarkets rumored to run out with a token and ICE just went in. they, will, we, never could have saw the DAT thing coming. So my main point is we can't even fathom the level of fuckery that will take people's money is the point of the whole thing. And this is, it's fun to talk about it this is basically me and Brian's conversation that runs every couple months. We talk about it and it's going to really be fun. when the market takes off because we're really going to find out who is off base because when the market takes off is when we'll really learn. I think we're still in this weird period where we don't have the best sample size because net new buyers haven't stepped in. Brian Cubellis (01:04:02.055) You're right. You're right. We don't know yet. We don't know yet. I've I'm humble enough to know that I don't know what what that what those shenanigans might look like into the future, because you're right. Like we, you know, we go to some of these more digital asset focused conferences and all they're talking about is stable coins and real world assets. We're to put all this stuff on chain. And there is incentives for At the very least, the issuers and the people involved with setting these things up, there's massive incentives for them to do this. They've watched the ETFs make a ton of money. It's BlackRock's most profitable product. So that is the narrative, right? Like, let's just push that to all this other stuff and we're going to make a ton of money. And they might not be wrong, but the people that invest in those things aren't going to make money is really the problem. Michael Tanguma (01:04:47.406) And the reason to take that a step further is all of the money that exists is incentivized to push that because you can't make any money on Bitcoin. James Check (01:04:58.096) So here's a question. Let's just for argument sake, let's just say Solana because it's fast. Let's imagine that the entire Nasdaq starts trading on the Solana blockchain. Can you explain the value creation for Sol? How does, so I've often had this view that Ethereum is different to ETH. Ethereum, the blockchain is different to ETH the asset. Bitcoin is the only one where it's actually flipped around, where BTC is the product, the blockchain is a means to an end. Ethereum, blockchain is the product. Solana, the blockchain is the product. Sol and ETH are the means to the end. They're the gas to just make that happen. Hence the tokenization ecosystem. Hence the smart contract. let's say you've got the entire NASDAQ trading on Solana. It's super fast, super liquid, whatever. Where does the value capture for Sol come from in that environment? Michael Tanguma (01:05:43.087) Hey Yeah, I'll answer it. like this is and this is asking me to get into the mind of like the fuckery of the financial system. And so I'll attempt to do it in the same way we try to attempt to get into the debt system earlier and like where people why the trade made sense to everyone from institutional allocators. It's the same thing we're talking about. It's like where does it accrual? It's like, it doesn't matter. They they ate into it they're still into it is one of the mechanics that I've been watching and I kind of like listening to the crypto trade five pods because part is just to see how much they're missing because I think that's alpha to recognize how you can be better. but then also just to see around the corners. And one of them is just passive flows because the whole game around Ponzi tokenomics is locking up the underlying to reduce the flow, right? We saw this like MakerDAO back in the day. And the thing that they're going to do with these assets, there's a couple versions. One is they're very hard to get hold of specifically on a spot in like self custody. So there's already a market for just putting the institutional wrapper. I had a weird conversations past week with one of the largest asset managers explaining it was like one of those conversations. where you're like big short, they're like, man, these guys just buy it. They don't even know it's like 10 X the spot and you get private placement purchasing these assets. But the other angle is around dividend structures because of the proof of stake mechanism. They can go and tell these stories that the validators are spitting out additional cash flows. They can model it out. Again, I'm not saying this is right. They all have no value. I'm just explaining the rationale of wire. And it's kind of a weird position of being because like I own no crypto and nothing, but I just have to build a business and be prepared for where the market's going. and also how to educate people. And that's why I make that case. And that's just one example. I can't think of like the other 10, but I'm pretty sure if you gave me some time, I could come up with 10 other very compelling reasons why Sesquihana or whoever would ape into whatever next token, because it's gonna be built on X, or Z. James Check (01:07:32.317) Yeah, I love it because it's this idea that ETH trades like a bond. You get your 3 % staking year while it goes down 75 % versus Bitcoin. But don't worry because you're also the rest of the network got diluted by 3%. So your real return is zero. But you know, we don't count these numbers. Michael Tanguma (01:07:49.914) Good. The mental model that I try to use is, there's like a, I don't want to call it religious thing happening, but there's something to renaissance and notion of being out into the desert and certain people are gonna have to like burn out effectively. What I mean by that is if your whole life has been 60-40 diversification, understanding cash flows, and you're gonna come to what we understand as this is the last trade and everything there, it's like that doesn't happen overnight. forces will not allow it for a number of reasons and that's how you end up with these different things persisting where people keep getting fleeced to their Bitcoin and that's just where we're at and that's why this is gonna take much longer than we all expect and gold and Bitcoin probably persist forever if not for hundreds of years because it's just like gold is built into like the oxygen the DNA and it's just something that like the Bitcoiners side to your point we have an exciting announcement next week because we have a venture arm it's probably the only Bitcoin I think it is the only Bitcoin denominated venture fund and we actually allocated to a very significant gold business that's coming out and we're gonna do some interesting stuff with them because we've been looking at this for a while that the way through and to get to Bitcoin into the lens that we're at usually comes through gold whether you read the Bitcoin standard and just understand the global monetary landscape stemmed from sound money or you're an institutional or older individual and don't want to suffer from the drawdowns like your father and why should he have to like have to just get out of the trade why doesn't he just buy 75 % in gold and 25 % in BTC or whatever at least he has exposure to something with fundamental properties versus over-inflated or over-priced equities. James Check (01:09:26.746) Yeah, no, and I think that's a very valid case. I put out a tweet some time back, it was one of those unpopular opinions. A lot of Bitcoiners are going to sell their Bitcoin for gold, not because they don't believe in Bitcoin, but because they've got a family or they've got other requirements and they just can't deal with the volatility. Or they might want to just buy some index stocks that just pay them a dividend every month and they stop thinking about it. So I think that diversification thing, even Bitcoiners, I'm having that thought, but I'm not going to do it now. If we go through another 10X cycle, now it starts to become interesting. And if I'm thinking about that in a 10x move from here, then there's a lot of Bitcoiners from 2013 where right now is their time. That is their time where they're thinking about that diversification. Michael Tanguma (01:10:05.998) And it's super perceptive because that's what happens with the largest holders that have been holding tens, 20,000 that were GPU mining cycle out of positions. It's the rational pragmatic thing to do. And then you take it a step further. There's going to be interesting products where there'll be, you know, whether it's 20, 80, you know, BTC gold funds, and then you take it a step further and certain passive funds that let you lend against your gold to increment some yield, whether it's denominated dollars, Bitcoin or gold, because gold just naturally has a different volatility profile. Nobody's really structured. James Check (01:10:15.183) Absolutely. Michael Tanguma (01:10:36.002) things like that where you can lend against gold to buy additional gold or Bitcoin and increase some nominal yield. That will persist and that'll just give you some kind of flow that isn't built into the structure of where's the air pocket, where I think it's risk-free and then it's not. At least you can underwrite the risk. James Check (01:10:52.058) Yeah, sounds about right. Jackson Mikalic (01:10:53.982) Yeah, one thing I know we got to wrap up here pretty soon, but I would say the gold rally that we've witnessed this year, even into last year as well. But just the pace at which the gold market is adding to its market cap. It's a hundreds of billions, it's trillions, and it's a $30 trillion asset class now. And that to me is encouraging, James, because you just mentioned, you know, if we see another 10X in Bitcoin's price, for a while, there have been people in like maybe even like three or four years ago had this idea of like diminishing returns, right? Because as Bitcoin grows larger as a market, certainly retail doesn't move the needle. You need institutions to step in. You need a broadening out of adoption, you know, from institutional investors, from the wealth management channel, from sovereigns. But to see just how quickly gold has moved this year, I think really defeats the diminishing return case for Bitcoin. I'm curious if you agree with that. James Check (01:11:47.548) Oh, no, absolutely. my base case is people will let's imagine right now we go to 80k for Bitcoin. In my opinion, that's a bear market. We're in a bear market. And the great irony of that is that is no worse than the drawdown we had in 2024 and no worse than what we had in the tariff tantrum. Right. That's literally the same percentage decline. So that to me is a bear market. So therefore, do I have to say that 2024 was a bear? What about 2025? Was that a bear? Maybe they lasted eight months, but like, was that a bear market? So when When are people going to reset their cycle chart and say that was the FTX low, that was the 2018 low? When are people going to reset their cycle chart? What happens if people just lose track of where the cycle began and end? So is it a super cycle if we just never have another 80 % drawdown and no one wants to call it a bear market? Is it diminishing returns? Because at some point in time, we're going to get to gold parity. And what happens if we only have 30, 40 % corrections between now and then? Does that just mean that it was one big-ass super cycle that we had? It could blow away 2017, right? It's going to take 12 years to do it. But, you know, like how are people going to think about this stuff? So that's my favourite thought experiment is just like, recognising that I think people are going to get lost trying to work out using old frameworks, what comes ahead. And whenever people say the top is in, question always immediately comes back which top? Which top? Because there's lots of tops. Because you know if you're a leveraged trader on the one second chart the top that you care about is the one that just liquidated your account. If you're a long-term investor the top that you care about is the one that comes before a significant drawdown. So what's significant? How do you define significant? Is it duration? Is it depth? Is it both? Helping people understand like which top? That's really the most... which top and which bottom? Most important question moving forward. Michael Tanguma (01:13:36.393) If I had to create a line of demarcation and this is a fool's errand I would say the bull we're a bit in a bear and the bull starts when we pass all time eyes pricing gold. I think that's what James Check (01:13:47.099) I think that's fair, but I also don't like the idea of we haven't been in a bull market because we're up 750 % from the bottom. So we are in a bull, it's just not quite the same as what people expected. Michael Tanguma (01:13:55.756) Yeah. Michael Tanguma (01:13:59.949) Yeah, I think that but the with the Preface like the bull historically has been retail fervor stepping in and like similar to gold has been more institutional sovereign bid. And that's the I think difference with like we've been in a bull but this bull has been fundamentally like from that construct different in the sense of like what we talked about the anecdotes with the hardware devices and our peer group. Outside of the people we've been shilling Bitcoin to very few people have just stepped in on their own volition to buy it versus in a traditional bull people are stepping in because like gold in a bull market basically. James Check (01:14:32.005) Sure. I think I would define... Michael Tanguma (01:14:32.196) you James Check (01:14:35.451) I think that's the euphoric phase of the bulls. So I actually break down the bull. There's like the recovery process from the bear. We've only got the survivors that are left over. That was 2023. And then you've got the, like the belief stage where you get into 2024 and like people now believe, oh, I don't have as much PTSD that we're going to fall back into a nasty bear market. The bulls here, but no one knows. And then you have the euphoric phase. And I don't think we've hit that euphoric phase, right? If you want to kind of frame it up that way. I think if we go down to 80 K, I think that the euphoric phase come soon after that because people are going to say, Hey, that's a discount. was looking for him and step in. You've got serious capital buying that thing. Um, where it bottoms TBC, but, um, that's the kind of environment where you suddenly slingshot. And I think a lot of people also miss this. say, Oh, the 2021 higher was 60, 69 K really sucks. We only got to 29 cam like, yeah, but that's only really relevant if you bought the 2021 top and then waited to buy the 20, 25 top like There's kind of a trick here. If you're at 126k, which is our current all-time high, 150k is a 20 % move. Okay, cool. But if we go down to 80k, now a move back to 150k is almost a doubling. So, you know, it all depends on like, whereabouts are you stacking sats? And there's just a lot of people who are upset that the top to the top sucked, but they forget the whole journey between like, they're comparing the two worst days to have ever bought and be like, that's the cycle. I'm like, well, there's kind of literally every day in between here and there. Jackson Mikalic (01:16:06.122) That's fair. If we get done to 80k, I'm doing 50x leverage. James Check (01:16:10.299) That's the other thing I said this probably six months ago when we I think when we got to the first like 110 K all-time high I forget what month it was I said at the time I've received no phone calls from people saying like, you know, no coin is saying Oh should I buy big I've actually received none this cycle What I did receive at 110 is a bunch of existing Bitcoiners saying, what's the best way to borrow to buy more? And I'm like, you're asking me this at 110, not at 20. know, 20 and 30K was the right time to have that conversation. So you're right. The lower it goes, the more de-risked the market is. So, you know, when people are thinking about leverage and debts and all this stuff, don't do it when it's mooning. Think about it when no one wants to talk about it. Michael Tanguma (01:16:52.748) It's actually a local top signal when people are looking to take out leverage. You're just like, hey, I should have. And then once it pukes, once they're liquidated, that's when the market takes back off. James Check (01:16:55.405) Absolutely. James Check (01:17:01.051) And you imagine how many people did that. We're at 107, 108 at the time of recording, right? 110 is where I started getting those calls. How many people levered up at 115 and now I'm thinking, oh shit, what have I done? Michael Tanguma (01:17:13.166) Yeah, there's a lot of people severely that you follow, like not you, but people listening on Twitter and their favorite thought leader are very short Bitcoin. They hold a lot less than they think, that they perceive hold or none. You see these random polls on crypto followers, you're like, what's your percentage of Bitcoin? It's like nothing, it's very bad. James Check (01:17:28.911) it's brutal. 75 % zero. And honestly, like this is the thing, I know people are upset with the price performance. I don't think like at the end of the day... I'm a happy buyer, right, of this thing because when I actually just take a really big step back and say, where is the world going? Has my thesis about Bitcoin deteriorated? No, it's gone the other way. It's so much more correct because it's now starting to actually take shape. I'm a very, very willing buyer, irrespective of how long it takes and how low it goes, because the trajectory of this thing is just, it's a winning formula. Michael Tanguma (01:18:01.847) It's a great point, like you rather take, I'm not saying everyone, but you could make the case you would take Bitcoin at this level with gold doing what it's doing because it's the canary versus sitting at like 160 with gold not and nobody talking about like the denominator being broken. Like there's structural things changing in the landscape. James Check (01:18:18.318) So think about the other way. Gold's ripping to 4-3. I would say, like, my view is it's probably hitting a local top because you've got retail lining out the doors of bullion banks. Imagine if Bitcoin was at 250k right now. We'd be talking about this being like, guys, it's fucking over. Like, that's it. It's over. So right now, everyone's saying it's over. And I'm like, for now, which top? Maybe a local top. But guys, the next move is going to be super fun. Jackson Mikalic (01:18:44.97) Yeah, it's interesting too, because you know, people don't just, if you're a long-term oriented investor, you're not necessarily just like selling out at the local top of the S and P 500. If you're going to retire 20 or 30 years from now. So it's kind of like all, you know, it's fun to talk about, but I guess at least for me, it doesn't really matter all that much. And I'd imagine for a lot of the listeners too, but it's at least, um, exciting to talk about where things are headed. And I think it's going, I think we'll probably look back on this episode six to 12 months from now. think we've proven right. think things are going much higher. Michael still won't admit it, but there's somewhere in the archives he called for 750k Bitcoin. I want to say at the start of the year, but I haven't had the time to dig it up. James Check (01:19:23.98) As long as you have a price and not a time frame, it's fine. Michael Tanguma (01:19:24.246) It's messed up. Yeah, it's messed up because I was going to bypass this, but James, part of where Jackson's been talking about price is he's trying to move right now. He's in his grandmother's closet and so he's trying to get out. He's trying to move out. So he's working on like, how does he figure out the leverage ratio on the top so he can sell for the down payment? So it's all good Jackson. Jackson Mikalic (01:19:43.498) gonna try my best. Well, that was fun. We're ending right on time. James, thanks for joining us today. Good to hang out with you. Where do wanna send people who wanna get in touch or check out your research? James Check (01:19:56.514) No, thanks having me on guys been a pleasure and a lot of fun I think we wanted to make it spicy and hopefully we hit that mark. So you'll find us over at checkonchain.com We've got two main products. The first one is a charting website, which is free We've got I mean pretty much every Bitcoin chart you could possibly want from on chain derivatives Strategy all sorts of stuff and then we've got a newsletter which is I do two posts a week written and video So some people like to learn by watching other people, know, just want to read so we do both and really just sharing my thoughts on market structure, treasury companies, whatever I think is kind of important and meaningful each week. Michael Tanguma (01:20:31.84) Awesome. Appreciate you joining James. This was a lot of fun. Brian Cubellis (01:20:34.483) This is great. Thanks, James. James Check (01:20:34.703) Thanks guys. Cheers. Jackson Mikalic (01:20:35.042) Yeah, we'll have to have you back on. Thanks, James.