Strategic Reserves, Fiscal Insanity, and the Bitcoin Explosion Ahead with Alex Thorn

Michael Tanguma (00:00.617) the pure synthetic Bitcoin. Jackson Mikalic (00:03.122) All right, we're recording. We're back. It's the last trade and we're back. I'll say we're back because of our loyal audience, because people decided to show up last week. I did not get fired. Alex, we can, we can tell you later in the episode, but Michael has been threatening to fire me for several weeks at this point. And because of our loyal audience, the last trade, not only did I not get fired this week, but we were also able to bring on Alex Thorne, who is the director of Alex Thorn (00:19.551) Yeah. Jackson Mikalic (00:30.312) Firm-wide research at Galaxy Digital. Alex, thank you for joining us. How you doing? Alex Thorn (00:34.579) Yeah, hey guys, great to be here. First time caller, long time listener. Michael Tanguma (00:40.587) Love it. Directive research and memes, by the way. Jackson Mikalic (00:40.724) Well, actually, if- Alex Thorn (00:44.371) I do have some memes. spend a deal. That is research, okay? My memes have a research quality to them. Brian Cubellis (00:48.485) Agreed. Jackson Mikalic (00:52.468) Absolutely. funny enough, you were on the podcast one time before and it was actually when the ETFs were approved and launched January 10th. The price of Bitcoin was $46,000. We've come a long way since then. Yeah, we've come a long way. We're looking at a 103 today. So we're going to pull up. We are going to pull up the price just very quickly because I have a question that's been top of mind. Is the top in, is the Alex Thorn (00:57.15) Yes. Alex Thorn (01:05.575) That's like more than a year ago. 46K. Brian Cubellis (01:21.147) You Jackson Mikalic (01:21.97) Did we already see the top this cycle? Did we double peek at 110k Alex? What do you think, man? Am I too bearish right now? Alex Thorn (01:29.203) Yeah, I don't think so. I don't think we have topped. That's a blanket statement. Look, there are fears of a double top pattern, right? Everybody saw that in 21 and then you're looking at it here and you only got to what, like 112 the other day or last two weeks ago. Wanted to see that go to like 120. Like I think to feel like it definitely wasn't a double top. But the thing is, like there haven't been that many catalysts actually. have happened. There's plenty of good stories, right? People in the government saying nice things about Bitcoin and stuff. Most of it hasn't even happened. Retail's not really here. Like, I don't see a lot of reason for Bitcoin to go down, and I see plenty of reasons for it to go up. But I also see plenty of reasons in the near term. I mean, I'm basically sort of targeting mid-July to maybe sort of restart this when the presidential working group delivers its report to the White House. And then maybe there's some catalyst there, but You're in sleepy early summer here and I think now you're sort of just trading on macro headlines for the near term, but I don't see a huge, I don't see a reason for a big drop in the near term. It's widely owned to be clear. Like whales have been selling like the, the, the corn that's being sold is being sold by like people that bought in like the 15 K and lower range, an enormous amount, right? So apparently they all made money and they're not huddling anymore. Not all of them, obviously, but like, You've had an enormous amount of selling and we're still over 100k. Like it just seems, I don't know where from where else like more corn to be sold is going to come from, you know? So like I feel pretty sturdy here. Brian Cubellis (03:04.058) Yeah, but... Michael Tanguma (03:04.159) Yeah, would be a very interesting top if retail never showed up because I think anecdotally, you retail hasn't come in. You kind of may be bullish for them so they don't get rugged by whatever is going to happen because there's going be no shortage of mouse traps when this thing really takes off that they just got to bypass a whole bull market. But that's never happened in Bitcoin's history that retail hasn't come in in droves and then also probably gotten rugged along the way. here it is. Here's the timeline. Jackson Mikalic (03:04.168) Yeah. Jackson Mikalic (03:26.868) Well, maybe, yeah, well, maybe we pull up some of the exceptional research that Alex has been doing. We have a great meme that he shared yesterday on Twitter or X. Maybe retail is here, but they're buying Bitcoin treasury companies. Alex, you walk us through this meme here? What's going on in this? Brian Cubellis (03:31.972) You Alex Thorn (03:32.735) Thank Alex Thorn (03:41.247) And those guys buy Bitcoin. Yeah. So basically, I'm just sort of cataloging some of the eras, the metas, the big narrative metas since 2017. I've been working on Bitcoin and crypto full time since 2017, like first at Fidelity, now at Galaxy. And this is just what we came up with remembering sitting around. And obviously, ICOs, that's easy to remember and was a huge deal. created tons of new altcoins. It separated people from their Bitcoin. Many of them failed. Some of them are still around. Like Cardano was a 2017 ICO, right? Tezos, they exist. Not all of them literally were frauds. Some of them might just be, you know, crappy networks that did actually launch. But it was the fraud and scam from that that then led to, which I don't even have on here. the like the later meta of VC coins, right? Of doing these private token deals through VCs and then releasing them through secondary sales rather than primary sales to the retail. Then, I don't know, 2018 was a bit tough to come up with one, but we do recall BitMEX trading on leverage on BitMEX was like that was like the first time that everybody was doing that. And then 2019 also a bit of a lull. I remember being at the Bitcoin conference in June 2019 with Bitcoin, you know, After the depths of this post 2017 bear, it was rallying from like 8 to 13 K and we're like, are we back? And then it failed to consummate. And later we all learned that it was a Ponzi scheme in China called Plus Token that you had to buy into with Bitcoin. That was probably the reason for that rally. DeFi summer, the food, yam finance, sushi swap, like algo stables, big, big in 2020 when everyone was locked at home. Remember Elon in January, they said Tesla was buying Bitcoin for their balance sheet. It was super bullish. Then later he said, wait a sec, I didn't realize that Bitcoin uses electricity. I'm rugged. And then Bitcoin. And then that was also right around when China supposedly yet again banned mining. And so we dropped from 60s to 25 in the spring of 2021. And then obviously Dogecoin hit 69 cents with Elon on the SNL and blah, blah. then, yeah, 22 is when all the yield Alex Thorn (06:00.627) Stuff came to a head right with all the lenders going bankrupt. I should probably have in 22 Also, the GBTC discount was a big big part of that year And then 23 Bitcoin opens the year at 16 5 great great to buy there by by March on the collapse of SVB It runs all the way to like 26 27 So as the bank failures then was blackrock in June announced that they were doing a Bitcoin ETF and then grayscale won the US District Court of D.C. the federal the sorry the U.S. appeals ruling at the appeals court in D.C. in August of 23 that ultimately paved the way for the ETFs which launched in 24. Basically the story of last year was like ETFs and meme coins and then later Trump embracing Bitcoin. I think that's pretty much the whole narrative of last year. You had the barbell market where it was like the lowest quality low cap penny. stock cryptos, meme coins were rallying and pushing Solana up with them and Bitcoin and everything else in the middle like sat it out. ETH had a terrible year last year while Bitcoin doubled practically or did double ultimately. And then I'm saying like, I think the meta right now is Bitcoin treasury companies. We're tracking like 35 of them. It is getting blown out. There's now we saw there's a Chinese limousine company that's going to start an XRP strategy. So it's starting to go down the shitcoin waterfall a bit, but that's a huge part of this story, right? You've got Cantor Softbank Tether. You've got obviously MicroStrategy. You've got now Bitcoin Magazine, right? You've got BTC Inc. with Nakamoto. You've got ones that are geographic based in Hong Kong and China and Japan and South America, right? Like there's a whole range of ways to do it now. And you've got like 20 to 35 of them at least. And that seems like a huge part of the story this year. Michael Tanguma (07:55.434) It's a excellent montage to run through. It had eerily resemblance of a TFTC back in the day that think Marty owes everyone a montage through Bitcoin or crypto's history. I think actually there's a lot of alpha if we ever clip this up and share it because most people coming into these markets have no idea of half of those narratives, let alone all of them. And ultimately, think that the meta to the meta is that there's always a contraption to take people's Bitcoin. And some people maybe make a little bit more Bitcoin, but a lot of people in the past 10 years have ended up with less Bitcoin. So TBD on where this all goes for everyone. Alex Thorn (08:28.541) Yeah. And like when I made that meme, like I'm not explicitly, I hadn't intended it to be all of those were bad things. Like I was just trying to recall like what, what the big story was of the year. it turns out though, that like pretty much outside of owning Bitcoin, like most of the other things that have happened in crypto just haven't panned out. Right. So I feel bad because I'm not actually saying that sailor with his laser galaxy brain is equivalent to like food-based finance. I'm not saying that. Michael Tanguma (08:46.348) Ha! Alex Thorn (08:58.437) I'm just saying like that's the current story and but it turns out a lot of the current stories end up, you know being short-lived You've gone through a lot of them. It's an epic saga of crypto. It's been an epic continues to be an epic saga I don't know how we keep coming up with these new things Jackson Mikalic (09:06.376) Well. Jackson Mikalic (09:14.97) I for one am excited about K-Wave Media, which is the prominent K-pop group that is planning to raise $500 million for a Bitcoin treasury strategy. Alex Thorn (09:25.523) You know, it's a music-based Bitcoin product. Who knew? Jackson Mikalic (09:31.241) Yeah, I'm curious, like to your point, Alex, it's not inherently a bad thing that these Bitcoin treasury companies exist. it's still we'll still see how pans out in terms of Bitcoin obviously plays a massive role in corporate adoption from just a vanilla. Let's accumulate some Bitcoin on the balance sheet, preserve our companies cash for the long term, et cetera. And then there's, of course, these other companies that are using capital markets, equity debt, et cetera, to accumulate as much Bitcoin as possible. And to your point, mean, there are companies out there that are viable and have a strategy, but then there's also just going to be a lot of excess that we're just starting to see in this cycle pan out. I'm curious from your point of view, as you've done research at Galaxy in the space here, just like, how do you think about assessing the Bitcoin treasury landscape? mean, what excites, what are you excited about, if anything, in that part of the space? Alex Thorn (10:22.559) Well, one thing I am definitely excited about is the rising prominence of talented Bitcoin evangelists, and there are many now. these companies, if nothing else, give them a strong platform, right, to explain and promote Bitcoin in equity markets. And that's a positive. Look, I'm an operating company maximalist. I believe in owning equities that are companies that build stuff. I don't need to get a tiny little, you know, bips on my MNAV. at a Bitcoin treasury company. I'm not interested in that really personally. I simply don't care. I for that way, I basically no opinion. I'm fine with it. I think the big question that people have is do these end up looking like a closed-end fund and what happens if they end up trading at a discount to their Bitcoin holdings? And I think David Bailey's been very straightforward and transparent about this. He says they will sell Bitcoin and use the proceeds to buy their stock back, right? Which is By the way, that's what they should do. GBDC couldn't buy their own stock because they weren't public. Like there was no way for them to close the gap. And because you couldn't redeem, there was no way for anyone else to close the gap. Now, you can't redeem here in a Bitcoin treasury strategy, but the issuer themselves can close the gap. So the fear is that if they end up having to sell some Bitcoin, if it's a lot of Bitcoin, then that can create a vicious cycle in the market. Not just in spot Bitcoin prices, but also in with the other Bitcoin treasure companies. but there's not that much. There isn't a lot of debt. Like, it's not really that big of an issue. It's just that like people should know that most likely if these trade their stock prices trade below the value of their Bitcoin. A prudent executive would sell Bitcoin and use it to buy their stock back. So then you're going to and you really just don't want to see that, particularly from somebody like Michael Saylor. Like, imagine if Michael Saylor has to sell Bitcoin, right? And that's why he doesn't say this. But I'm quite confident that he might do it if he had to. Right. And so it's just a bad narrative. If someone like, you know, if any of these people who are hyper bullish Bitcoin end up having to sell Bitcoin, to me, it's more about the signal that that would send to the market that like, well, I thought these were the most diamond handed people in the world. Right. It's just it's just a strange vehicle. And in general, like I feel comfy in spot, you know. Michael Tanguma (12:44.297) Yeah, it's strange and it's also not like, it's not long standing in the sense that if you really extrapolate into the future, let's say these all went up into the right, well, ultimately everyone's journey maps pretty similarly. Once you find out about Bitcoin, you naturally end up at wanting spot. You learn about counterparty risk. So you have to assume that all these never lose any asset, never get too far on the risk curve and blow themselves up, which I think we all agree is not going to happen. And then once that happens to the first one, everyone starts to wonder, well, like what am I actually holding? And it's the logical progression from the micro individual to the pension. That's the most sophisticated weight. Why don't I just hold the underlying? And so it's just like, it's a trade and anchoring back to the, the Montage that you shared, like the plus token stands out because I remember specifically in 19, when the price went from like the bottom, was like that. bottomed in like March or April and then went up until like that November up to 12, 13. And everyone was super long thought we were going into a market and then literally it all fell apart and everyone lost a shit ton of Bitcoin because they were either levered up that was like a holder or just part of the deal. And so that montage I think is just like the first innings and what we're gonna see in the next decade because everything we're seeing like it's been done in the like off channel non-trad file way. We're just gonna see that like. fuckery basically in the new world and people aren't prepared for that and they're just going to get wiped out. That's at least, it's partially why this business was started because what happened in 2022 were like, oh my God, the same thing is just going to happen again with the lack of transparency and counterparting risks that existed in 22. Alex Thorn (14:14.493) Yeah, I mean, it is a new class of counterparties that have emerged, right? And it's not just in Bitcoin or crypto, but in all of finance, humans make the same problem, mistakes over and over again, right? Like we've seen the story before, when you mix leverage with volatility, like it's highly risky, right? Like so, and that's what this is. This is, that's expressly what it is. Like these companies are harvesting the volatility in their own stock, you know? Like, and it's quite clever. Like you have to admire the financial engineering. That someone like Michael Saylor is doing it's it's truly historic in some ways I mean when his his company when his stock was running in the fall like this MSTR was the talk of all of Wall Street like everybody was standing in awe of what he pulled off like in this crazy thing right he announced in summer 2020 that he was buying Bitcoin for his long running mostly obscure and pop probably failing software company And four years later, it was worth $80 billion. Like, he was right again and again and again. Like, it was epic, right? But not everyone is as smart as Michael Saylor. Not everyone's as good at financial engineering. And this hasn't existed before. So we don't know exactly how, when, or why it could blow up. But everything can blow up, right? You know, the only certainty in life is, you know, death and, you know, in 10-minute blocks, basically. When you start putting stuff into weird financial structures, it's you just don't know. mean, it's the thing we put out a report on crypto lending and we're showing how we got a bunch of the centralized lenders that are alive like Galaxy to give us their data. And we were showing the aggregate loan and the aggregate like loan book, outstanding loan book size of the centralized lending markets. Plenty of other stuff in that report, too, including a bunch about this leverage in the Bitcoin treasury companies. But that, yeah. So this chart, though, so it's. Last quarter, Q1 was the largest since the top since Q1 22, right? But the thing is, is like the companies that are doing it now or that made it through, like they, they learned a lot of those lessons. Like it's a significantly more mature lending market than what was happening in 21 and two. So, and one of the criticisms and constructive feedback I got about this report was somebody saying, Alex, like you're looking back at the way it blew up last time. You need to be looking for the way it's going to blow up this time. Alex Thorn (16:38.931) And a lot of people are worried that it's these treasury companies that are the new X factor that if there is a cascade liquidation cascade blow up that it could come from them. think I think that's intuitively right to worry about. But like again we also pulled the data like there's not a lot of debt like it's not really that it's not nearly as big as people think. And honestly it's mostly just micro strategy. Most of these other ones are just super small. Even if even if the K-pop one is 500 million that's nothing. That's not remotely big enough to like cause a huge problem. But yes, if like, you know, if the K-pop company isn't good enough at managing it and they have to puke their Bitcoin and then that causes another slightly small one to also have to puke their Bitcoin and then, you know, then that's the fear, the positive feedback loop. But we're not there yet. But this is the, I think this is like still the top story of the year. And like I said, it's not just Bitcoin anymore. There's sole ones. Joe Lubin is launching an ETH one. It said there's a Chinese limousine company launching an XRP one. Like, I don't know how far this goes. Michael Tanguma (17:40.444) This is, it's actually a good question because something Brian and I have been, you know, battling for the past few months is about Bitcoin dominance. And he kind of sees it going up into the right. And I feel like it's the opposite, obviously, over a long enough time horizon, I think up into the right. But because of this, like this, there's an unforeseen bid for altcoins. And I think this is the plays you're gonna wrap securities around other assets and the market doesn't really recognize it. Where do you, do you have a stance on either way? On Bitcoin dominance? Alex Thorn (18:07.327) I mean, I would say in a long enough timeframe, it should go down and not even because Bitcoin's importance doesn't go down, but you can launch unlimited altcoins, right? So like eventually, even if it's orders of magnitude bigger than the others, there's still unlimited numbers of those that can emerge. You only need, you know, 5,000 like $10 million ones to challenge dominance, right? And that's like, to me, it actually should go lower over time. Naturally, even if it's absolutely dominating In fact, I think the looking at that chart like I think It's pretty remarkable given like that. I mean you really did have a Bitcoin native and Bitcoin only res Excuse me Renaissance over the last 18 months like even with the ETH ETFs if you look I mean, it's Caltry compared to the Bitcoin ETFs, you know, I think it's like, you know a couple hundred million in net flows I think they're there actually I think it eat ETFs are minus a billion net because of Because of what do call it? Whatever was GBC one called I forget whatever the grayscale one is Whereas the Bitcoin net flows in the US ETPs are 60 billion, right? So it's just not even close and You know, I just having been in this market a long time, like usually the history, historical thing has been Bitcoin runs, the alt coin runs, then you have a giant outside the risk curve, all of the shittiest alt coin runs, and then the whole thing collapses and then you get a bear market. Like that's, that's how it went in 17. It's basically how it went in 21 and just hasn't played out like that at all. Um, you don't have a parabolic move. You have a pretty nice, slow and steady. rise basically. mean, you know, if you watch every day like we do, sure, it's felt volatile at some points, but you know, Bitcoin crashes to 103, which is the price that it was like three months ago. It's five months ago. I mean, basically Bitcoin is the same price it was in mid December, right? It's almost like nothing happened at all in six months, right? So it's like, we're just sort of grinding and I think there's a lot of positives for Bitcoin in particular that are still playing out, right? So it's like, Alex Thorn (20:20.573) I don't know if the all I mean, maybe the stable coin legislation will be buoyant for like ETH and soul because the stables probably move on Ethan soul. And if you get like some giant like explosion of these stable coins, maybe that's a catalyst. But sort like the other metas in altcoin land, you the metaverse gaming like NFTs, et cetera, defy like they're just not resulting in coins going up. Not not mostly. Right. And so Brian Cubellis (20:34.117) you Alex Thorn (20:47.391) But while Bitcoin grinds higher, that that dominance chart has just been grinding. But even like ETHBTC is like I've been I'm a longtime ETHBTC watcher and I think we bottomed recently in like the point 018 range, which is super low to be clear, historically low, almost basically at at the historic lows for that chart. And, know, it's rebounded a little bit here. It's like point 024 or something like that point 023. Brian Cubellis (20:52.753) . Alex Thorn (21:16.351) That's still super low. That's still super low. It's reasonable, I think, just from a pure market standpoint to say like, well, it probably will rebound, probably. But it hasn't. And it's part of this Bitcoin. You know, I still think it could go lower. I mean, it's like you look at the ETFs and it's just just orders of magnitude. I mean, the Bitcoin ETF flows are more than 60 times more than the ETH ones. Bitcoin is a lot bigger than ETH, but it's not 60 times bigger. Like the the ETFs are skewed heavily way above the market. like market share of the two assets in favor of Bitcoin. I think that tells you something about the demand for Bitcoin as an institutional asset versus these other cryptos. Brian Cubellis (21:50.395) Yeah. Brian Cubellis (21:56.24) Yeah, absolutely. That's sort of been a key point of my thinking around dominance in general is looking at those ETF flows and just assessing the appetite from larger pools of capital for all these other assets ex Bitcoin. And I think part of what we're also saying is like, well, the question is, that moving out the risk curve is now is that now just Bitcoin Treasury companies? Like, does that sort of replace that demand for some form of leverage or more risk effectively? I want to go back just briefly to the point around like the actual indebtedness of these companies. I think, you know, sailors been very intelligent, like intelligent leverage is sort of a phrase coined from from this. like, I think that right now you're totally right. Like it is muted. But where my concern or question comes in is like, OK, so for for all of these other imitators and late comers, yeah, it's it's not like excessive right now, but ultimately, how do they compete? How do they try to catch up? In my mind, it probably involves taking on more leverage because I think there's, in your mind, is there a point of saturation where like, do you need 12 dozen tickers of proxy Bitcoin exposure or like, because otherwise, how do they differentiate? Obviously, there's jurisdictional differences like MetaPlanet has its niche and I think that'll Alex Thorn (23:10.569) Yeah. Brian Cubellis (23:21.933) sort of replicate across other jurisdictions as well, but like, how do you think about that point of saturation? We're clearly not there yet and like, if I'm being honest about it, it probably could persist longer than, you I anticipate, but is there a point of saturation where like, in order to differentiate, they will take on more leverage? Alex Thorn (23:39.689) Yeah, that's a great question. I don't know the answer. I think you're right about the differentiation problem. If we think of it as a problem, why do you need all these? I don't know, you start to, mean, part of what you're, part of what the suggestion is, is that you pay the premium on Bitcoin because you get the intelligent leverage, the management there, and particularly in strategy's case, like 25 year old stock, like deep and liquid options market, right? I mean, at sometimes it's been like the highest traded equity on the entire and the entire US stock market and you get the intelligence of the team there, right? Michael Saylor, Sharice Jodia, like Ed and like, right? There are talented financial engineering, talented. Like these are truly epic types of new securities that they're creating. that just are super interesting if you're a nerd for financial engineering, right? Is everyone as good at that? I don't know. So maybe that's one way. that they differentiate. But again, is the average person that buys these capable of evaluating the financial engineering talent of the man? No, probably not. So then you're talking about like, is it the spokesperson, right? Like, you know, you've got like a Jack Mallers, for example, or David Bailey, right? Who's they're both talented marketers, right? And let alone Michael Saylor, who's probably the most famous person in the world that likes Bitcoin over the last like three years at this point. Like he's sort of the, that's what I loved about. the fact that Trace Mayer is back on the scene a bit because I was like, dude, Trace was pretty much the most famous Bitcoiner in a prior era and he kind of left the public sphere right after Michael Saylor came on. So it's like you've never really had the monetary philosopher balance to the Michael Saylor like hardest asset in the human history balance. I don't think I think there has to be a point of saturation, even if you just look at like convertible debt markets like there's. Brian Cubellis (25:24.591) Right. Alex Thorn (25:24.671) Yeah, there's a lot of money there, but like, I mean, how much, right? Like at some point it's like, do I buy MSTR debt or do I buy this other one's debt? Like, presumably there's not an unlimited source of buying there, right? So yeah, I don't know. Yeah. yeah. I think if you had like, I think the jurisdictional one is interesting. It's very similar to like in 14, 15, 16, 17. Michael Tanguma (25:37.434) Trace ticker. Just made me think, we need a trace ticker now. Like maybe it's too much coincidence. Alex Thorn (25:51.735) doing venture investment in crypto exchanges. Like there were whole firms that did very clear strategies like invest in the next coin base in this jurisdiction, in that jurisdiction, in that jurisdiction, over and over again, tons of them, you know, like a Filipino exchange, Indian exchange, a South American exchange. Like that was done excessively and eventually many of them like failed as companies because like there's only so much trading, right? Like at some point you just go to the one that has the most volume and then you're done. And you could see something similar happen here, but I still, again, like there are plenty of capital markets that have enough, that are big enough, I think, to support one of these companies. that's, people are doing that. They're going around to every jurisdiction to launch them. But, you know, beyond that, like, I don't know how many, how many, there is a point. And I think you're right, Brian, to worry about the fear that when that point is hit, if you're facing like death or something, what is that something that you end up doing? Brian Cubellis (26:49.753) Right. Yeah. And Jackson, I'm sure you probably want to move on so we can transition. But one final thought on all this stuff is like it is it's all very nuanced because on one hand, like I think it's entirely rational for basically every business on earth to want to store some of their value in Bitcoin, use it as a reserve asset. And I think that's the trajectory we're on is every company realizing that over time. The core distinction, though, is that that doesn't make every company that decides to do that. a wise investment for the individual. And I think that's what's being lost in this broader discussion is like people just chasing these returns and not necessarily recognizing that these are trades versus owning spot Bitcoin is savings technology. And those are two just very different things. Alex Thorn (27:33.949) Yeah, I agree with that. think, look, the empirical data is quite clear, like that owning some Bitcoin in any portfolio, almost no matter how you construct it. And we've done research on this and basically the single best benefit to the sharp and sortino ratios of a portfolio with Bitcoin goes from just adding any from zero to one, basically, right? I mean, there have been times when the optimal amount was to have a hundred, but like from a pure mathematical standpoint, but that's true. The benefits that Bitcoin can bring to a portfolio or has brought historically is true for individual portfolios. It's true for institutional investors. It's true for endowments and pensions. It's true for why it could be true for a company. That's fine. Owning Bitcoin is a has been a smart move. It has been a smart move. Right. I continue to believe it will continue to be a smart move. That doesn't mean you have to run a company that is 100 % capitalized with Bitcoin and whose only job is to issue new shares or debt for the purpose of buying Bitcoin. That is a different thing than just, you know, using Bitcoin for its saving technology. And the other thing I would say too about the saving technology and it kind of plays into not just the treasury companies, but GameStop style meme stocks, meme coins. sports gambling like there is a malaise among the global youth about the state of the economy a fear that their life won't be as good as their parents was that their prospects for making it in the world are dim and and diminishing further right that they'll never be able to buy a house that you decades of corruption and wealth inequality and you know an economy that is not designed for you know young people has created this global fear and deep-seated malaise that has led to the rise of much more speculative fiat activities. And in that spot, a lot of people, particularly young people, would rather gamble than learn about the savings technology that is Bitcoin. And that's sad. Michael Tanguma (29:38.32) Yeah, I mean, that's fundamentally why I keep and won't stop about the whole treasury stuff is because it effectively plays on the naivete of the traditional 60-40 and most people don't know where to put Bitcoin in. So at best they're looking at one to 2%. So that's where the treasury, the public goes come in. And then on the other side, because we hear this all the time, people feel like 100k Bitcoin, missed it. And so now you're looking to make that back up and that's where the speculation comes in and attend 100 bagger. And that's where it ends up being kind of like a pervasive setup for people. Alex Thorn (30:08.563) Yeah, everybody wants I mean, look, you've been rewarded for buying stocks basically every single day since 2008. Right. Like that's it's been up and to the right. Retail is conditioned to buy the dip. And it's and it's been it's worked in stocks. Right. It's also worked in Bitcoin. And so there is this idea that you need fast gains. And I think the reality is and I think we all know as as Bitcoin believers in Bitcoin that like Look, I believe life is about working hard and saving and growing your money and working, right? And I think people are jaded because a lot of the employment opportunities in this world aren't paying enough. They're not. You're declining in real terms, right? the the the the that's what I mean about the economy not working. So they have to they feel they have to look for these fast gains and easy money. And, you know, it's it's a symptom of the. the way the economy, know, but the boomers, man, they really screwed this thing up. They did. They screwed up the economy and we're all paying the price. Michael Tanguma (31:13.125) Well, now they're aping into MSTR. like somebody's gonna have to pay somewhere. Alex Thorn (31:14.975) Well, they should also buy some Bitcoin. Brian Cubellis (31:15.249) You Michael Tanguma (31:19.717) That's it. Jackson Mikalic (31:20.884) Yeah, we were chatting last week about the housing market in the U.S. and I saw something. You can just pull it up quickly, but then I want to get Alex your thoughts on some other things. But the concentration of wealth, I think, is probably obvious to all five of us on the call and maybe a lot of our listeners. But this chart really puts it into perspective. I mean, this is about three decades and the amount of wealth that's been concentrated in the hands of people who are over the age of 70 has moved from about 19 percent to about 31 percent. And so to your point, Alex, I mean, it's really hard to get ahead. Like we were joking on the last podcast. My wife and I went to a few open houses and just getting crazy outbid by boomers with unlimited fiat money. But anyways, exactly. Yeah. No, no utility, just store of value homes. But point being is, yeah, if your wages increased by like two or 3 % per year, money's debased 8 % or so per year past couple of decades. Alex Thorn (32:04.403) just stacking houses basically, right? What do you even need this for? Jackson Mikalic (32:20.028) It's pretty bleak for people generally my age. And so it's not surprising to see just, you know, whether it was the DeFi summer of 2020 or now it's just speculating on the next Bitcoin treasury company, people just kind of are grasping at straws trying to find something that maybe they can get ahead with and not really recognizing that Bitcoin is something that you can get ahead with, but you just need to think maybe a decade or two out. Alex Thorn (32:42.451) Yeah, I agree. I mean, this is a devastating chart. That is a devastating chart. And, you know, I don't know how this gets fixed truly in the long run. mean, I guess maybe if young people can harness Bitcoin and or be the leaders in the AI boom, like maybe you need like an industrial revolution, basically, of some type, I think, to really reverse this. Otherwise, you know, the status quo. is always standing in opposition to revolution. is why it's called the status quo and that's why it's called a revolution, right? So like the powers that be always want you to believe that nothing can change, that everything's in its right place, that it's all been thought of already. And I think that, you know, the young, every generation has to try to rethink it and come up with a way to change the world. we're still, look, I'm looking on the other side of the screen here watching the Senate. waiting for the stablecoin vote to happen at some point. It's not going to happen today probably. and like dude, mean, it's like Jackson pull up the chart of the average age of a member of Congress. I mean, it's the same chart. That's the same chart. It's just up and to the right. Like, right. So I don't know. Something's got to give. Brian Cubellis (33:45.933) Yeah Michael Tanguma (33:47.973) Haha Jackson Mikalic (33:53.609) That's a good segue to just talking about what's going on in the United States from a policy perspective, institutional appetite. I did see that chart. I tweeted about it earlier this week or quote tweeted and shared it on LinkedIn. But fascinating chart you put together, Alex, on the success or appetite rather of particularly Bitcoin ETFs in the United States versus the rest of the world. And I'd love to get your thoughts on what is driving that. There's obviously been a remarkable shift in the Trump administration and how they're far more favorable than any other cabinet, White House administration that came before. And then there's, course, to your point, there is legislation on the horizon that I think will allow for just institutional allocators to come in more confidently, know the rules of the road as it relates to this asset class. I mean, this is insane, right? Like 60 billion inflows in about 18 months in the US and then about 2 billion of outflows in the rest of the world. Why is the diversion so, so massive? Alex Thorn (34:56.095) Yeah, well, and I should say I said that ETH was net outflow, but actually I was thinking of this rest of world number. think ETH is like plus 900 million versus the 60 billion of Bitcoin. But yeah, at the nation's level, mean, look, on the one hand, you have, I think a huge part of the story about US versus the rest of the world is just our capital markets are so much bigger and deeper and better. So you can invest in the US stock market from abroad. That's totally possible. So like, why would you own like the Swiss one when you could buy like FBTC or BTC or I bet or whatever in the US, right? So there I think there's a there's a flight from some of the existing vehicles that had existed publicly tradable vehicles in Switzerland in France and Germany and in Australia, right? Like you'd rather just again, it's the same story liquidity, but gets liquidity rather be in the US version once they launched. Brian Cubellis (35:26.694) Right. Alex Thorn (35:52.255) I do also think though, if we go back and look, there wasn't 60 billion in those foreign vehicles. So like this is net new demand coming to Bitcoin vehicles in general and crypto. mean, there's ethers in there too, I think in a couple of Seoul, well known, that's the US. don't have Seoul ones yet, you you look at River, Sam Baker at River puts out great research on this though. It's something like, you know, 19 of the top 25 hedge funds in the world, almost all of them basically American. have bought the ETFs, you know, I mean, they're they trade but so, you know, it's there are wide, you know, is the state of Wisconsin, Wisconsin Investment Board, there's foreign sovereign wealth funds buying it right like it is significantly easier for an institution to buy a pure Bitcoin ETF spot based ETF than it is for them to buy spot Bitcoin like that's just they are already set up to do that they can buy any any stock. trades on like the Nasdaq or the Nise is very easy for people to buy. Right. There's a reason for that. It's decades of like financial infrastructure. Right. You can buy it from your fidelity account, your Robin Hood account. You can buy them in your cash app account. I mean, obviously you can buy Bitcoin and cash up to which I recommend. It's a good experience. like it there that they did unlock significant capital. Right. And and so I think it's a combo of I think the main reason U.S. versus the rest of the world is just that like our capital markets are so much bigger and deeper and we have a better rule of law and you know than most other places and that's why. But I do think the U.S. being supportive is also a big part of the story. mean being not hostile. mean those ETFs launched in the last year of Joe Biden's presidency when his administration was extremely hostile and they still did great right last year. So you know it cuts through and those I mean It's just so funny though that like you spend years calling for these ETFs rightly so I mean, I am a firm believer that you know Bitcoin should be available everywhere in basically every vehicle right you want to buy it at your bank you should be allowed to you want to buy it in an ETF you should be allowed to like you want to buy it on the street you should be allowed to you want to buy it from on ramp and store it and multi-sig custody like you should be allowed to like I don't think it's bad for Bitcoin that like ETFs exist but the fact that we spend so long Alex Thorn (38:07.337) calling for that and now people are doing the treasury strategy rather than just buying ETFs. Like it's crazy to me that like that's where this is gone. You know but you're constantly surprised. I do think the U.S. alone when it comes to capital markets and that includes Bitcoin capital markets. Jackson Mikalic (38:25.276) Yeah, speaking of that makes a lot of sense. And speaking of the research report that River put together, I don't have it in front of me, so I won't pull it up. But I want to get your general thoughts just on the state of the U.S. economy and the fiscal position. thought it was. I just can't take it at face value, but Elon talking about how he needed to be a part of Doge and then recognize that the interest expense was larger than like, he obviously had to know that before he got involved, but then he's talking about it on an interview. And so why it's interesting now that in the zeitgeist, you have people like Elon Musk, insane amount of wealth and influence talking about the fiscal position of the United States, maybe being at a point of no return. Alex Thorn (38:52.03) Yeah. Jackson Mikalic (39:04.846) And I'm curious like what you make of that because dollars down about 9 % this year, yields are spiking. Other nations are accumulating gold. The United States is looking more favorably at Bitcoin with SBR. States are passing legislation. Just how do you think about what's going on from a fiscal perspective? How does Bitcoin from a policy and just more of a strategic perspective fit into the U.S. playbook now? Alex Thorn (39:28.435) Yeah, it fits in well and I think it really does. And look, it used to be like the swan song of doom saying gold bugs that like the debt was gonna be too big or whatever. Like that used to be, and then it was limited. Then it was like, okay, a couple hedge fund managers here and there, Ray Dalio, like ringing the alarm bell. The secret is out. The world is net buying gold and net selling treasuries. Like that is a fact. Right. You can see that in the data. You can see Bitcoin all time highs. You can see gold all time highs and you see like, I mean, not literally all time highs for treasury yields, but you know, bad, like it's like a beach ball underwater. Right. Like you can't, they just can't get those rates, those yields down. and that, that signals, a declining appetite for us debt, which makes sense because we continuously as a country show an inability to Spend wisely and maintain a healthy budget. It's not possible There hasn't even been a budget in like decades like dude They just keep passing continuing resolutions and stuff right like they've they've never not even doing the budget Okay, and and you know, I look Elon has a long history of pretending He didn't know something obvious like as with the Bitcoin proof-of-work Electricity use which he obviously must have known and, and, and I would say, and using that as a smoke screen for something that is self-serving in the case of Bitcoin mining, while he needed to be pro ESG and he was probably getting pressure, right? In the case of the big, beautiful bill, it doesn't include EV tax credits. And like, he's probably pretty upset about that since almost most of Tesla's revenue over the years has been from selling those tax credits to other companies, right? So, but he's not wrong. He isn't actually wrong. He's definitely right. think more people know it than ever. think, you know, it's like pretty much just during this podcast will have added like, like, you know, $300 or something of debt for every person in America. the number just keeps going up. And I think it's not just, it's not just the macro and the fiscal, but it's also the geopolitical. One other countries don't, we're clearly in. Alex Thorn (41:48.415) The Pax Americana of like post 1991, even if it may even have ended, you know, on 9-11, it's certainly basically ended now. We no longer have the ability to unilaterally project for us all around the world. We have strong ability, right? But like the dollar is no longer the de facto thing. You've got Russia and China settling trades in rubles and renminbi instead of in dollars. You've got an increasing amount of that. continuous chatter about whether there'll be a BRICS currency. You're clearly entering a more multipolar world. And I think in that spot, non-sovereign commodity monies like gold and Bitcoin should do quite well, I think. I think it's a little tricky with the US government. think just like I said, mean, basically any portfolio should own one of the best performing assets in the history of the world, especially one that has these. mean, Bitcoin is perfect to be a strategic asset, right? Because You know, it's yes, it lacks obviously certain functionality. It's hard on the L1 to send small amounts or it's a little bit slow. Ten minutes. I mean, it's orders of magnitude faster than traditional system, right? It's transparent. It's not very private. But like for like reserves or like international trade, those don't really matter. This has non sovereign issuance, no issuer, right? No liability to any issuer at all. It's able to be held. cryptographically and securely can't can't really I mean if it with good custody and multi-sig and you know the standards of custody can't really be stolen by your adversary and If you want to spend it, know I can send a billion dollars across the Bitcoin network in ten minutes If you want to send a billion dollars of gold you have to send a literal warship, right? It's just simply not useful right gold gold's biggest transactional use over the last like 50 years has been one dude taking it out of a cage in the basement of the New York Fed and rolling it across the floor and putting it in a different cage. That's literally how like a foreign country settles with another foreign country. They just call up the New York Fed and be like, can you just like move those gold bars from that room to that room? Like that's the only way it works as a settlement vehicle. So it sucks as a settlement vehicle. Now it is really good because like it's been around for, you know, all of time and has, you know, multi millennia of establishment as this. Alex Thorn (44:08.063) You know non debasable commodity money and it's got all those features, right? It's it's scarce, but it's not too scarce It's like just just right right but Bitcoin just like Satoshi said in that early post about what you know Imagine that's a thought experiment like a weightless colorless odorless version of gold I mean, it's just really good and I think Jackson like I think that's why countries states like sovereign wealth funds like it's it's it's useful It's undeniably useful in that world and we are heading towards it But yes, not just the macro and fiscal, but also the geopolitical, I think all point to growing Bitcoin adoption. Brian Cubellis (44:43.905) And maybe to extend that sort of like strategic plan or concepts of the US, we were talking a bit about this before we hit record, but like where do stable coins fit in into that strategic playbook? Because I think there's this notion of maybe you can continue to exert dollar dominance across the world if you allow stable coins to proliferate. And I think you're seeing that in sort of the order of operations of the legislation, right? Like the Genius Act comes first, then we'll do some market structure, then we'll get to the SBR. how do stable coins fit into it? And Luke Gromen has talked about this a ton as well of sort of this tacit sort of admission or allowing the citizen to invest in Bitcoin or hard assets while still transacting in dollars. So spread stable coins, allow citizens to save in Bitcoin, sort of remove the toxicity from Bitcoin. You could even go back to the approval of the ETF says like the first signpost of like, this is okay now. Yeah. So I guess all that is to say where, where stable coins fit into this strategic playbook. Alex Thorn (45:50.687) I think that's right. Luke's point is right. That is obviously the way to for the government, probably the governments, but certainly the U.S. government to allow the proliferation of Bitcoin is in that way as a store of value asset, not as a money. Right. And I think this is an interesting contradiction here with the U.S. strategic Bitcoin reserve concept, which is like a lot of the ideas of funding it, I think, are totally unpalatable to the government because like any acknowledgement that the dollar needs further backing, right? Like people have talked about using this thing, the exchange stabilization fund at the treasury, which is a fund set up literally to let the secretary of the treasury like basically buy and sell FX in order to help protect the dollar, right? In general. they, I don't think, I don't know the last time they've used it decades probably, right? But it's sitting there and some people said, well, they should buy some Bitcoin with that. And I'm saying if you buy Bitcoin with that, you're going to collapse the dollar. Like people are going to say, wait a second. I thought the dollar wasn't backed by anything but the full faith and credit. Now you're like backing it with something like it wouldn't matter if they bought popsicle sticks in that thing. It would spook markets. Right. Same thing with bit bonds like you have the Treasury issue like some fixed income securities that have a Bitcoin element. Everyone in the that could that could spook the debt markets badly and harm the dollar. Right. So they got to figure out for the SBR how to fund it in a way that is that doesn't harm the dollar. If for no other reason than that the president for whom they all work has called for the dollar to remain the global reserve currency, right? And so transitioning a little bit closer now, Brian, to your question, like at the crypto round table in the White House on what, March 6th or March 4th or whatever day that was, Scott Besson literally said, we will protect and grow the US dollar reserve status and we will use stable coins to do that. That's what he said. And I think they have a strategy here, which is, look, you don't want to buy our debt or you don't want to own as much of it or you don't want to transact in our dollars. Fine. We'll just dollarize the smartphone of every one of your citizens. Like it is a subversive and powerful American empire play and it should be seen as that. It's not a crypto bill like watching some of the, you know, long time antagonists like Senator Elizabeth Warren rail against the genius act. Like it's some kind of handout to crypto. It's like, hello, we can all issue these today. We're not the ones that need this. I mean, there's 200 billion of U.S. dollar denominated stable coins already in circulation from crypto firms, right? Alex Thorn (48:15.037) Like it's not a handout to crypto. It should be seen as a dollar dominance bill. That is the plan. I think it's a good idea. I think it it is a powerful idea. Like it is a big, big, big idea. And yeah, I mean, look, in the end, every global reserve in the history of the world has failed. Like I see no reason to believe that the dollar, you know, will will for it until the end of time when the sun engulfs the earth will still be the global reserve. It's just you have to believe in the end of history to think that's true. But that doesn't mean that you should give it up willingly. Right. And I don't believe any rational country would no matter how much they like gold or Bitcoin or whatever. it's practically the core of what being a sovereign is, is the ability to issue money like and you'll never get the U.S. or any other country that has the ability to be the reserve to willingly give that up. It's funny like you know when the president was saying that the trade imbalances that we have were unfair. Right. And I'm like, sir, not only is it not unfair, it's explicitly what we signed up for. Like that is the Triffin dilemma. Like the global reserve has to be a net exporter of currency and a net importer of goods. And by the way, it's great. We basically get to trade depreciating paper for a bunch of good stuff that other people make. Like it's actually, it is a privilege, right? Like it's a, but it naturally results in a trade imbalance. And the idea is that, and this is what's so perplexing. There's a, Contradiction between tariffs and being the global reserve because when you're the global reserve like I said You have to net export dollars when you add tariffs on imports to your country You are increasing the cost of global exporters buying your dollars with their goods, right? You don't want to be increasing the cost you want to be Streamlining it making it super easy to have people have wall dollars in their wallet, right? So countervailing that is how I look at stable coins the idea is well, we're doing tariffs here and the other stuff that's multi polar trends and whatever is an impediment, a headwind to dollar reserve status, how can we put a tailwind behind it? And I think that to me, that's how I view stable coins as strategic, which is that we can just put dollars everywhere, right? It doesn't mean that the dollar, the DXY is going to go up. Probably not. It probably just continues to go down forever, the value. like, reserve status is different than the strong dollar, right? Alex Thorn (50:38.407) You were talking about distributing the dollars, not so much like how much they are valued versus other things. I the US needs a weaker dollar to help us pay our debt. That's obvious. But I think see stablecoins as highly strategic. I also see them as benign in the face of Bitcoin. I know a lot of Bitcoiners who want Bitcoin to be itself the global reserve currency. I really don't think that will ever happen. And I think that's OK. Like you can I think Bitcoin can win massively and will win massively. It doesn't need to be the global reserve. I don't think and I'm not saying I'm not offering a qualitative assessment. I'm saying I predict that there will never be a Bitcoin backed dollar. There will never be. We're not going back to the gold standard. You're not going to get the Bitcoin standard. I don't believe that will ever happen. So. In the face of that, may as well, I'd rather have it be the dollar with us allowed to buy and hold Bitcoin than, you know, Chinese renminbi or like Bricks currency. Like, I mean, still the best of the, you know, was the Winston Churchill? Like democracy is the worst one except for all the others. Like the dollar is the worst one except for all the others. So why not upgrade the rails? It's an upgrade to the dollar. To me, this shouldn't be controversial. They should have done it years ago. I don't know. Like if there's any better technology, if you could, you know, if Michael Tanguma (51:28.095) few Alex Thorn (51:57.393) If there's a new type of physical wire that will make it easier to be the global reserve, they should do it. I mean, it's just purely logical and strategic. Michael Tanguma (52:06.859) Yeah, a few things to call out. We had a podcast earlier in the week with Jacob Shapiro and there was a little bit of, I don't know if it was an antagonistic, but it was a little bearish on like Trump strategy. And it was referencing pulling forward like 20 years of what was going to happen to today. And we had a conversation this morning with Brahman, the way I was able to, the time I wasn't able to, but today think about like the U S is running a startup playbook and basically trying to disrupt themselves effectively. There was innovators dilemma and that's where Bitcoin adoption and then stable coin proliferation comes in a play of like, how do we actually, you know, prolong this? And one of the things that doesn't get talked about is the structural demand for, for stables at the banking level, if they're going to hold Bitcoin, because we're talking about the proliferation outside of the US, but if banks are going to start custodying this, which I think we all expect they will be, there's going to be some standard, at least we believe in that was set up where they have to hold some amount of dollars or treasuries, which would be, you know, demand for treasuries, not stable coins. But then the other one to call out is the banks. I think like, I got really bullish on where the price of Bitcoin goes. Once I saw this bill starting to look like it was going to get passed because of what Tether and BTC end up being in that trading pair. And I think we underappreciate once the notion of a digitization or digital dollar exists in everyone's bank account and how that can be traded into another digital currency and what that looks like. then how that proliferates through capital markets, through the internet. I think that's super bullish for Bitcoin long-term. I will make a bet to Alex on whatever he wants. That Bitcoin will eventually, I don't say this a lot because it's not commercial, but you were so emphatic that it won't be as the reserve. It's just an inefficient way for us to transfer between two, because this is something that Parker I think keyed in on is we've never had a currency and commodity. Gold is a commodity and then you had to shave it off into creating a currency and that's where you ended up or you had to like create dollars and second layers. But Bitcoin is a commodity and is a currency and that's what gets hard to, you know, via Satoshi. So at the end of the day, like Satoshi's will be priced in there because it's just the most efficient way and people will want the Sats versus the dollar. Now, what is that time scale? Is it a hundred years? Is it 20 years? I don't know, but I would feel fairly confident Bitcoin wins. It ends up being the thing that people want. And so that's what naturally would be the most efficient way to transact. Alex Thorn (54:31.495) I think there's that that's true. I think but I think here's the other thing like, you know, you're talking about sort of like I'm thinking more of like a Gresham's law concept here. Like, yes, we all want fiat. You all want the unshaved coins, not the shaved ones. Right. But the thing is, is like, I'm sorry, we all want Bitcoin. You don't want the shaved coins. You want the unshaved coins. Right. That's why the quarters have the ridges on them, because you could shave off and then melt down the value of the coins. And I can't now because our coins aren't even valuable in a metal sense. I think this though, like I don't want to spend Bitcoin on anything that's not hard. I don't want to pay. I personally like I'll buy a house out of stone and brick with Bitcoin, but I don't want to buy Amazon fucking credits with Bitcoin. Like you need there is a need for I believe and not just in a like a anti Bitcoin standard way for fast crappy money. Like because there are fast crappy. Michael Tanguma (55:23.327) Here's the kicker. But the kicker is, let's pretend like the zero to one is finite scarcity. The layers will figure out, right? Because if you can figure out finite scarcity, the easy part is how do you make it fast? The kicker is whatever you want, somebody's gonna want Bitcoin for. So you have to make the decision. That's actually how you fix everything else. That's the counter, like the... Alex Thorn (55:41.545) Possible, but I mean again think about it. We're it's not just layers now. There is no gold backing the dollar It's pure fiat like we so like you're talking about a devolution back to a commodity money-based world and I just feel like the world is not going back we might all want Bitcoin sure but like Well, I don't know I guess yeah theoretically if everyone refuses to accept anything but Bitcoin for goods and services Then yeah, it will that's what being global money will mean right? I mean that is what it is I don't think it's gonna happen, you know, power to it. mean, I'm long Bitcoin, you know? you guys seen? mean, sure, I'd love it. I just feel the main reason I make this point though is to tell people that it doesn't have to happen. You don't have to believe that happened to be bullish Bitcoin. That's my main takeaway because I talked to lot of institutional investors and they're like, I heard this. I'm not gonna name any of many of them my friends. I heard this Bitcoin influencer saying that like everything will be Bitcoin. I just think that's crazy. And I'm like, Brian Cubellis (56:15.555) You Brian Cubellis (56:26.033) for sure. Alex Thorn (56:37.009) you don't have to agree with him to be bullish Bitcoin though. Like there's a whole other world where, you know, it takes out gold, right? Gold now is what 25 trillion or something. It's up a lot since we used to say 20 trillion, right? Like, dude, that's a, that's a 12 bagger from here. If Bitcoin is as valuable as gold, right? And there's plenty there, like beyond whether it is used as money. so yeah. Michael Tanguma (56:54.9) Yeah, I definitely agree there because that's like literally the founding of this whole business is meeting the market where they're at. And there's a difference between being right. There's different, you want to make money or do you want to be right? And making money is what you just said is like meeting the market because nobody wants to hear it. Nobody wants to hear the dollar is going to end and we're going to use it. But I just had it be on the record just so we can look. Alex Thorn (57:09.897) Yeah, I'm just saying. That's what saying. Maybe we will. That's right. I I agree with you. It's totally possible and I'm fine with it. But the reason I like to be hyperbolic with that statement is so that there's somebody out here saying you don't have to agree with that and you can still be mega bullish on Bitcoin and its adoption in a variety of different things. And you are right, by the way. know, gold is a commodity money. You did have actual gold coins. It wasn't always layer twos, right? I mean, the Romans themselves probably recapped and debased the coins like on three different occasions, major occasions over their long empire. And it was true gold coins. But you don't have to believe that like it's going to be, you know, the only money in order to see a world where Bitcoin is widely adopted and useful and not just useful like a store of value could be useful in some other way. Maybe it's a money, but only for big giant purchases or big long distance purchases or maybe it is an interbank money or maybe it is closer to what you're saying Michael and it's like what Hal Finney said, it's Bitcoin banks and it really is the foundation of a new layer. All of those are possible. Any one of them I think means Bitcoin can win. Jackson Mikalic (58:23.497) So Alex, please entertain me. Let me operate under the assumption that the top is in. We started the episode, the top is in. I want to hear why the top isn't in. mean, you said something I think at the start of the episode where was like a lot of bullish things have been announced but actually haven't happened yet. I don't actually believe the top is in. just, I want to say it to say it, but we have seven months left. Yeah, I want to hear like we got seven more months of the year. In theory, cycles. Brian Cubellis (58:29.144) You Alex Thorn (58:44.979) Yeah, you me to argue against the top is in? Jackson Mikalic (58:51.976) Maybe they don't need to happen anymore to the same extent they have in the past, but I just want to hear your unfettered thoughts. Like, what are you paying attention to? What's exciting for the rest of the 2025? Alex Thorn (58:58.429) Yeah. Well, business and market cycles will always exist, right? I think that sort of Bitcoin having and crypto Bitcoin having driven crypto market cycle, I think probably doesn't exist anymore. And it really shouldn't exist. mean, to the extent it was ever the having actually causing that, like the having is an immaterial supply difference now versus daily Bitcoin float. Like it's not material, whether you go from 900 to 450 coins per day on average like that. Jackson Mikalic (59:03.719) Yeah. Alex Thorn (59:27.497) does not matter. Bitcoin trades 10 to 50 billion dollars a day of Bitcoin. Right. But I think I think why. So you still have many shoes to drop on that that ETF story. And I had forgotten that I was on the good was like a year and a half ago, I guess, at this point. But I'm sure I talked about it in January 20, 20, for when I was on the show of the wirehouses, the RIAs, like the family offices. There's still an enormous amount of technical unlock that still has to happen. Like. Just today or yesterday said JPM said they'll start allowing you to margin your Bitcoin ETFs, right? There's still a lot like that to happen. And so and it's when we're finally like a year in now and so like it's gonna actually finally start happening with the big banks. The big asset manager is actually finally allowing people to buy the Bitcoin ETFs. So there's that benign sort of passive story on the underside that I think does lead to more ownership over time. You have basically all of the like state or national level SPR related stuff and like literally right now think about with the USS PR ordered in March to buy to hold and try to buy Bitcoin and to hold or sell if they want all altcoins literally Bitcoin put in buy-only mode literally every altcoin put in sell-only mode They're actually prohibited from buying altcoins in that executive order 30 days after that they had to deliver an audit to the president of how much Bitcoin the government thinks it owns actually much, much more complicated than people think. And then 30 days after that, so 60 days after the EO, deliver a list of possible budget neutral strategies to require more. None of that's public, okay? Has not been released publicly. We don't know how much BTC the government thinks it owns. We don't know what they are thinking of as possible budget neutral acquisition strategies. We don't know. We think we might find out. in July when the other EO mandated presidential working group report is released. But technically there's nothing about the SBR in that EO and therefore it doesn't have to be in that report. There might not. Who knows if we'll find if you read the EO doesn't mandate that those strategies or the audit be made public. It mandates that Treasury and Commerce deliver that to the White House. So I do think there is a point at a minimum forgetting whether we buy. OK. Just when we get the number when the U.S. government says Alex Thorn (01:01:47.185) we officially own, you know, 100,000 BTC, that's going to be a huge catalyst, think. Whenever that is, and I think it will happen. I mean, at some point, like, dude, they've got to tell us. It's actually tricky because so many of the coins that the government has are encumbered in various legal or civil asset forfeiture states of being, right? And the government, there is federal law that says the government can't just take stuff and make it and move it into its own account, right? So they got to go through all of those. U.S. Attorney Districts, 94 of them, and be like, do you guys have any Bitcoin? What's the current state of it? Like, do you owe it? Like, for example, RazzleCons, Bitfinext hacked coins, right? Like, it's a lot. It's like 100,000 or something, I forget. We think the government has about 198k Bitcoin. That's what we think. That's what the market thinks. That's what Arkham shows these explorers think. Huge portion of that is recovered stolen funds and it's not like the victim is dead like they presumably will be returned to the victim right and or they'll be a creditor like bankruptcy Proceedings in a lot of these so we don't know and it's actually pretty hard like just laborious for the government to figure out like what the current status is of all these but at some point they will and at some point we'll learn it and That's not talking about Hopefully at some point they'll you know follow the president's order and actually buy something Right. So those are obvious catalysts. I mean, I think everybody knows that. But merely finding out the audit results, I think, would be highly positive. Then you've got all the macro stuff, right, that is, think, uniquely supportive for hard non-sovereign assets. And then you've got a bunch of crypto stuff that I think ultimately is still positive for Bitcoin, even if it's only tangentially related. Right. People normalizing the use of public blockchains and public key cryptography around assets is naturally going to lead to more Bitcoin adoption. Like now. probably going lead to a lot of altcoin adoption too. But again, like, you know, it's a free market. Hester Perce told the Bitcoin audience in Vegas, like, Bitcoiners stop asking for the government to arrest shit coiners. All right? Like, it's a free market. just you have the best asset, just exalt it. It's literally what Hester Perce from the SEC said to the giant audience in Vegas. And I've always believed that. Like, I don't need others to lose so that Bitcoin can win. I think Bitcoin can win on its own. And that's fine. Alex Thorn (01:04:00.499) But I actually think Bitcoin benefits long term from the institutional use of things like stable coins of something like DeFi. We also look now here's some more cute ones. I'll throw out here Jackson one Bitcoin credit cards like Gemini's card. Right. They have to buy Bitcoin. If those become widely adopted. Think about how nice it is for a turbo normie to just go about their life and be acquiring Bitcoin in pieces. Like I think it's actually a very, very powerful retail product. And if they get big they have to buy Bitcoin every day. Right. So like Those could be an interesting catalyst. think also the Bitcoin layer two story is a big positive catalyst actually. And you know, we're an investor in one Citria, but you know, there's Alpen, these are ZK roll ups. think that's powerful. Like I don't know where Bitcoin maxis have landed on this. You know, for a long time it was like, don't do it on my L1, do it on the L2. Then some of them are like, well, we don't like the L2s either because they're going to be filled with shit coins. And it's like, at some point like, We just need more block space and people want to do stuff on Bitcoin and some of these are really really powerful like I also like arcade and arc and and light spark spark l2 and like there's a bunch of interesting layer 2 stuff being built that like Could could really drive a lot of usage and ultimately I think it's very likely not just with Bitcoin But basically we think this for almost all layer 1 blockchains They end up being like solely filled with like proofs for layer 2s right that that is what drives the block space demand and Bitcoin less likely to get there soon than something like Ethereum because like Bitcoiners like to hold L1 Bitcoin in their self custody and I get that I do myself, right? But like I think it is the best network also. It's the highest fidelity blockchain in the world. It's the most transparent, most predictable, most secure. like there's data anchoring that people want to do on it, right? And those are going to start coming pretty soon. These new ones, mean... This is literally like what a lot of people said, where it was like all coins are test nets. Alpen and Citri are literally taking the best. There have been enormous developments. Bitcoiners may not realize this if they don't follow blockchains. There have been enormous advancements in cryptographic ledgers. Enormous. Way beyond anything that we do. Even Lightning, the rest of the world moved beyond state channel payment channels like seven years ago because they're not that good. Alex Thorn (01:06:20.617) They are good in some ways. They're good because they're more private. They're good because you can be more self-sovereign. But there's no global state. You can't do any type of that. I I'll be stunned. And I love the teams at Lightning Labs and Tether. But I will be absolutely stunned if USDT on Lightning becomes remotely big at all. Lightning's not made for that, right? It's so easy to do tokens on a different type of blockchain. But there's a bunch of interesting ones coming and these Citri and Alpen are ZK roll ups. And like this is an enormous advancement in distributed ledgers. Right. And I think it would be fascinating to see what happens if people start doing those. I don't think it's just going to be monkey pictures. I think there is going to be some interesting finance that can be done with Bitcoin as the base asset in a highly secure L2. And so that's one that I'm excited for. Don't know exactly when those are really coming. But And then again, the DLC based ones and these, I don't even know how Arcade works yet. I've got somebody who's looking into it to explain it to me. There's a lot of interesting stuff on the L2 front on the dev side. then, so what have I said? The cards, the institutions, the states, the development. Any other? Brian Cubellis (01:07:26.437) Where do you, I was gonna say, where do you put just global liquidity generally, because we've all seen the charts of M2 versus Bitcoin on the lag. And I think that's the, to me, that's the biggest difference if you're trying to compare what looks like a similar double top is like, well, back then we were about to enter the fastest rate hike cycle in history and constrained liquidity. And now we're sort of entering the opposite. Jackson Mikalic (01:07:26.558) Yeah. Alex Thorn (01:07:49.983) Probably going to enter a lower interest rate environment, probably. Although I would say the Fed is, and power to them by the way, keeping rates high is the Fed being an adult in the room, to be honest, right? Every time they cut rates, they're being profligate. And every time they keep them high or hike them, they're being conservative. you've got to respect that. But yes, I think we're much more likely to have rates come down than we are to have them go up. So you're right. I think when it comes to like global M2, like I'm not a huge fan of this metric. It's not really a good measure of money, but it, also like bank, bank reserves might be better, but like, you know, but it, but it is also kind of the same. like, think the chart actually works. It's just probably not the actual right instrument to measure it against. Um, yeah, I mean, it's same thing. is the other reason I say this is an even more sort of crass reason why Bitcoiners should be fine with stable coins. Like dude, the dollar is a, the dollar depreciating means Bitcoin appreciates against it. Like, Brian Cubellis (01:08:27.77) Yeah. Alex Thorn (01:08:46.269) Like, you know, okay, so Bitcoin doesn't go to infinity because it's the only asset, but like, it's perfectly fine trading it against a perpetually debasing dollar. And that's what we have. And we know we have to debase it. We know liquidity, like an issuance of the dollar has to go higher. We cannot afford to pay off this debt. It is truly impossible. look back to Elon on that too. Like, I guess, look, he's throwing up his hands. Like I tried, I knew it was a problem and I just didn't realize like how big of a problem it was. And like, Whatever man, good for him. I mean, if he didn't actually know, like he learned like everybody else, eventually everyone gets there. The odds of this government, our government design coming up with a way to save this fiscal and debt situation, extremely unlikely, right? Extremely unlikely. Most likely in five or 10 years, we have a hundred trillion in debt. Almost, I would like, that's a safe bet, I think, right? Way more likely than we actually reduce it. And Bitcoin looks great in that way. Brian Cubellis (01:09:37.637) Yeah. Yeah. For sure. Alex Thorn (01:09:44.447) It's not just us. The Chinese are printing a ton. Like there's plenty of printing going on. And yeah, you probably enter a more printing era pretty soon, I would think. I mean, this is the big question with macro is like, look, stocks are almost at all time highs still. They're like one and a half percent off all time highs, right? Like we're back. mean, April was, you know, April 7th liberation day was like the bottom, it turns out. And we basically have done a full V. Like we were up at the start of the year all the way down a bunch. mean, 20 % or something in equities down. then basically all the way back. so stocks look OK. Inflation is low. think core PC is 2.1 percent, like CPI is 2.5 percent. If you told the and employment's like four and a half or unemployment's like at four somewhere in the fours. If you told the Fed like two years ago that they'd have 2.1 percent core PC and 4 percent unemployment, they would literally be standing up cheering. It worked. They did it. Quote unquote. Right. So why aren't they cutting? Like that's the question. Like they're having the stiff upper lip about it. And I think the fear is there's a lot of sort of like latent indicators that the employment market is going to crack and it's going to get bad. And housing is a great one to look at. It's like totally drying up. Like it's there's like virtually no transactions like and it's so tight. Like if that turns, then you'll see then then then what would you do in that response? Right. It's like when the Asteroid comes down and the dinosaur turns to the other and he says quick print money, right? I think that's it's it's more That's the reason they're not doing it yet because they worry that they might do it later. Right? I think that's But again, I don't think there's zero likelihood of higher rates anytime soon So you're right Brian when that the liquidity is gonna come back at some point I think they're trying really hard not to you know, jam inflation Brian Cubellis (01:11:09.988) You Alex Thorn (01:11:32.359) Right? Because also tariffs are going to be inflationary. I the trade deficit numbers came out and it's like, wow, our trade imbalance declined a lot. Well, yeah, that's people stopped shipping us stuff over the last couple of months because they're worried about tariffs. Right? So tariffs are inflationary by design, by definition. Right? Like goods will become more expensive. You know, it's not structural so much as it is trade, but like they're really I mean, inflation is like the you know, it's like it's like the devil to a central bank and to a country and a people. It's a terrible, terrible thing that hurts everybody. Brian Cubellis (01:11:40.102) Right. Alex Thorn (01:12:00.541) and hurts the poorest people the most and they really are afraid. I think otherwise, you know, they're just kind of like battle scarred or like they have PTSD from the inflation that happened under COVID that they're just being super cautious, but they will open the printer soon, I think at some point. Jackson Mikalic (01:12:16.776) Yeah, that the juxtaposition. I know we got to wrap up here in a few minutes. I thought it was an interesting juxtaposition about Trump and Senator Warren agreeing on scrapping the debt ceiling or the debt limit. Meanwhile, you have Trump. Yeah. It's yeah, it's remarkable, right? So you have that. then on the flip side, you have the Trump family is uber bullish on Bitcoin. They're attending the conferences. They're involved in mining. Alex Thorn (01:12:31.443) They both tweeted that. both said, wow, we both agree. There we go. Brian Cubellis (01:12:34.917) You Jackson Mikalic (01:12:46.152) the was like last week, two and a half trillion. They were looking to raise through equity and debt financing. Yeah, the S1 as well for a like ETF product too. So I think it's just interesting to watch how that plays out where you have Trump. mean, they did a lot of deficit spending in the first term as well. It's 45 out of the last 50 years, the US has run a deficit. it's Alex Thorn (01:12:52.607) to do the Treadsbury Strategy. Brian Cubellis (01:12:53.84) Yep. Alex Thorn (01:13:09.225) He's a populist. mean, they're populist. That's that's I mean, you don't get elected telling people you're going to give them less and tax them more. And that's the problem. I mean, that's that's the issue. So we're going to give people more and tax them less, which is, bam, there's the problem. That's the debt. Jackson Mikalic (01:13:23.508) Maybe Elon will come back and become an advocate for Bitcoin since he's a little upset that he doesn't get his tax credits in this new bill. Alex Thorn (01:13:30.279) He's so close. I don't know why he hasn't like, revisited his 2021 love of the Bitcoin because like, he's so close. Like his stuff about the debt, like, hello, like that's what we've all been saying for years. you know, I don't know, maybe in like 20 years, he'll fly back down from Mars and grace us plebs with his presence and, and, you know, he'll, we'll be able to leave this debt collapsing nation and hop on the starship with him and live gloriously in the stars forever. That's my hope. Brian Cubellis (01:13:31.611) You Jackson Mikalic (01:13:59.124) Well, yeah, before we let you go, is there anything Alex you wanted to touch on with Galaxy now trading on NASDAQ? I'm not sure if you wanted to discuss anything there or better to keep it. Alex Thorn (01:14:09.535) Well, we're just we're super happy. It's been a long road. Galaxy has been publicly traded since it launched in 2018. But in Canada, the United we we love our Canadian friends, but the United States, as I said earlier on this pod is the premier capital market in the world. We're just really proud to tell our story. I mean, we're about to be we think we're going to be one of the biggest data center providers in the world. And so you got a data center business with a giant crypto capital markets business on top. And I think we're a leader in both. So we think it's a very interesting company. I mean, I've been at Galaxy for four and a half years at this point, and this was a huge milestone for us and our employees and our investors. So we're just happy to be here. But you know, the game doesn't stop. The show must go on. We have a lot of exciting things that we're excited to do and announce over the coming months and years. Jackson Mikalic (01:15:01.876) Congratulations. Alex, thank you for your generosity with the time. It was a fun conversation as well. For those who are not following you, where do you want to point them to? you want Twitter, research? Yeah. Alex Thorn (01:15:11.603) Yeah, follow me, Intangible Coins on Twitter, GLXY Research on Twitter, galaxy.com slash research. can read all the reports there. And listen to Galaxy Brain Spot. Yes, and see my memes, please. Please like my memes, you guys. Thanks for having me. Brian Cubellis (01:15:19.971) and get your daily dose of memes. Jackson Mikalic (01:15:26.271) Thanks Alex, it was fun. Brian Cubellis (01:15:26.994) Thanks Alex, this was fun.