The Last Trade E038: Dubai Debrief with Jackson Mikalic & Brian Cubellis

Brian Cubellis (00:01.838) What the hell did you gentlemen do over in the Middle East You were missed, you know our friends at coin Mina they were asking about you They were seeing if you could make it told them we'll get you out there soon enough. I Had prior engagements in Palm Beach great weekend in Palm Beach, too Maybe it was a little double action. You guys were in the Middle East. I was in South Florida It's getting getting everybody build up pushing Bitcoin above $50 ,000 currently standing at $51 ,604. According to Bitbo. We're pumping. The quietest $51 ,000. People keep saying that. Is it that quiet? It seems pretty loud. I don't know anybody talking about it outside of these five guys on this call. Yeah, I think we're just we're in the bubble, man. Like I think it feels like people are talking about it. But most people are not thinking about this. I'm thinking. It's a healthy base right now. I'm waking up wife and I are dancing in the kitchen It's a it's a good vibe so we're back on the last trade and As I just mentioned we're here with the whole or a large majority of the on -ramp team three of you We're in Dubai last week at Bitcoin Oasis Text message that were that were being sent as you were over there when you got back seems like things were pretty bullish So I think what we're gonna do with this episode is do a recap of what you guys saw over there how The Middle East is thinking of Bitcoin compared to the United States obviously we had the conversation with the the Coin mean a team a couple weeks ago. You guys went and saw it in person Michael will start with you Did it surpass your expectations? Definitely surpassed, but I want to put our buddy Jackson on the gun. I don't know if Jackson has been introduced to the group. I know Cam was with us, but Cam's been on, so I thought Jackson would be a good person to talk about what we did. And also, he had a lot of meetings. He was in the room talking with folks from all over the region. So maybe, Jackson, if you want to introduce yourself and then kind of give the heads up on the conversations. Let me do the intro. Jackson is a special place in my heart. We went to the same high school we met. Brian Cubellis (02:24.558) Where was it? The Harvard Club or the Penn Club in New York City? Yeah, back in 2018. Yeah. We were the only two talking about Bitcoin at our alumni event. And people thought I was crazy. Except for you. Yeah, to pick up the story from there, I was working in New York in 2018 and it was quite a miserable first job out of school. And it was like, all right, I got to do anything to advance my career here. And there was a, Marty and I went to... a private all guys Catholic school in Philadelphia. So there's a contingency in New York. And we went up to, or I went by myself to this networking event in 2018. Like I said, I was really at the time was working at BNY Mellon, really just not thrilled about what I was doing. And I needed to figure out any way possible to get, you know, by putting the door at a new firm and meeting the right people. So I went to this networking event by myself and, uh, met Marty there. Like I said, I was by myself. Marty was having a good time with a couple of, I think guys from his grade. But yeah, at the time I owned a little bit of Bitcoin as maybe like a couple hundred bucks. I was fresh out of school, so I didn't have a lot of money anyway. And Marty, I think you were just starting TFTC or the newsletter and the podcast. I'm not entirely sure where you're at with it at the time, but you pretty much set me straight. You're like, you know, stop focusing on the crypto and shit coin stuff and you know, check out, I think it was maybe VJ Boyapati's article at the time was one of the few pieces out there that was Bitcoin only. And, you know, really took a historical view on sound money and Bitcoin. And then, you know, piece by piece started following along there. I ended up going down the CFA route for a bit. So I passed the first part of that. It was kind of the best way to advance my career in the fiat world. So I ended up moving over to another firm, Stiefel, did alternative investment research there, covered hedge funds and private assets, so private equity, credit and real estate, did that for a bit and then actually joined a smaller startup firm that was focused on agricultural investments in the US, was really direct connecting accredited investors to investment opportunities in the US, a lot of permanent crops that'd be like vineyards, nut trees, apple trees, et cetera. Brian Cubellis (04:43.214) I was really the first sales hire there, helped scale the firm quite a bit, raised a decent bit of money into our funds and our private placements. And then, you know, really just been a Bitcoiner all along. Like Marty said, we met back in 2018 and over time the conviction has grown quite a bit. 2020 was very eye opening in many ways in terms of fiscal, monetary and just everything going on in the world. So. started to get more convicted at that point. It was like 2017, 18, 19. It was just kind of dabbling, trying to figure out what was going on. And then really the past three years had been really focused in on Bitcoin only and trying to figure out a way to break into the industry and couldn't have found a better place to land at OnRamps. Really excited about what we're doing here. Yeah, they put some special stuff in that water down there, Marty. I'm concerned about Philadelphia in some of the videos you see on Twitter, but then hearing about guys like both of you coming from there. But sometimes we gotta contain the Jackson, has a little Jackson Jones in him, and so we gotta push it down real deep. Yeah. Hey, Philadelphia. gets a lot of flack for good reason at times, but there's still a few of us among the city that believe the ideals that the country was founded on, which were written about in the city of Philadelphia. The revolutionary spirit of Philadelphia will reemerge. I think it will be because of people like Jackson and myself. I think it has to is like, you know, going into the UAE stuff now in Dubai is just incredible being there, right? It's, you know, I'm, I walk around the city of Philadelphia, it's crumbling in many ways. You know, there's obviously a lot of people here who still believe in the values of the country and the city and love the historical aspect of it. But I will say it's quite sad what's going on here. And it's really eye opening to go somewhere like Dubai and just see really how prosperous the city is. And it is in many ways like something worth striving to. Brian Cubellis (06:52.654) in a city like Philadelphia or New York. It's pretty incredible. I mean, I think the guys will chime in, but my experience being there for a week was eye -opening. It was kind of inspiring the amount of people who, two weeks out, just like wanted to take a meeting and the amount of meetings that we all had between the four of us that were there. was quite surprising. I mean, everyone wants to do business. They want to hear the story about Bitcoin. They want to know what we do specifically. How does it differ from crypto? And it's quite a stark contrast compared to the attitude generally in the U .S., but maybe more so in New York and Philadelphia, the Northeast, kind of like the Fiat hub of the world. Brian Cubellis (07:37.582) Yeah, I think. Yeah, I was just going to echo some of that. I mean, it was my first time in Dubai, been to Singapore in the past before. I would say there's some similarities there just in terms of like it's just a very impressive city. Right. Sort of came up out of nowhere over the past like 10 to 20 years similar to Singapore. And it's just, you know, America used to be thought of as as this melting pot. And to me, it's like these are these are the modern day melting pots that the device in the Singapore's of the world. And. To Jackson's point, it's just that there was sort of a palpable difference in attitude and perspective about what we were doing at OnRamp, but also just broadly in terms of like innovation and technology and people wanting to do business and be productive. So it was very refreshing in that sense, just to see the city that was just buzzing with people wanting to collaborate and learn about what we were doing at OnRamp. And even if... even if there wasn't a direct way that they could work with us, they were ready and willing to introduce us to people that might be interested. And so just a super refreshing city to be in and really just met a lot of great people, potential strategic partners, potential clients. So overall, super productive trip for us, I think, and just was very bullish in the sense that I think sometimes sitting here in the States, we can get lost in sort of the the fiat bubble, if you will, or the US dollar bubble specifically. And I think there is an element of complacency with not only allocators here, but regulators. And so the differences there are just are very apparent once you're over there, that investors are open minded thinking about, there is a lot of sort of digital asset and crypto talk in Dubai, but I think, Bitcoin specifically does resonate with people. There's interesting synergies between that region of the world and how they've generated their wealth over the centuries and hard assets, commodities, oil and gas. And so I think there's a natural tendency for them to appreciate something like Bitcoin, this digital hard asset, this digital commodity. So I think it was just interesting to see sort of that dichotomy between what we're familiar with on a day -to -day basis and Brian Cubellis (09:59.758) you know, going somewhere halfway across the world that just has a different outlook on things and is just generally more open minded to what we're trying to do here. Yeah. And make no mistake, too, that, like, yeah, as you said, that Singapore and Dubai are really these two modern examples of, like, global capital havens that are built on globalism, in a sense, like globalist financial markets, at least. And Bitcoin speaks to that because... You know, in the US, if you have just a US centric mindset and you think, well, we've got a good regulatory environment here and financial markets are strong here, the dollar is strong. We don't really need a new currency. We don't really need a currency that shines going across borders in particular that is borderless. And, you know, Dubai and Singapore in particular are all about borderless, you know, financial infrastructure and property rights and being a safe haven for capital in the way that Bitcoin is designed to be in the digital landscape. So, of course, it makes sense that Dubai and Singapore would latch on to the value proposition of Bitcoin above other financial hubs at this point in time. Brian Cubellis (11:25.742) Go ahead, Michael. Yeah. I think, um, there was a few things, I think like taking a step back, how we got involved was Laura and Lena from the Bitcoin UAE association reached out, um, based on their, I believe they lived in Dubai the past five to seven years. They recognized there needed to be a Bitcoin only advocacy group, similar to what's going on, uh, in Texas with the Texas blockchain council, as far as helping the government understand, you know, why Bitcoin matters. advocating on behalf of people bringing businesses to Texas, specifically the miners historically, but others in the future plan. And they reached out looking at different partners and identified on rent from custody infrastructure, asset management, going and just being able to tell a very sophisticated story around the asset. We had backgrounds in this, obviously in Texas, setting up a lot of the meetups and a lot of the conversation and cultivating that. So that was like the anchor point to go in there. And then we had partnerships with Coinmina and others going. And so that was like the framing from a large part of the team and myself. Getting there, initially you look around and because we live in the States, it's like, this place is pretty cool, but it looks very similar to the States. Obviously people wear different things. There's different customs. And so I thought that was like at surface level, that's what I was walking into. But then on the back half, after all the conversations, I started to realize that it's just starting. Like it's, we caught this in the upswing in the sense of, I guess, first to go back to Bitcoin and crypto, I realized like halfway through the trip that it was the most sophisticated crypto place on the planet Earth. And what I mean by that is, They had a lot of understanding of like infrastructure. They were an interesting in quote unquote interesting things around stable coins. Crypto firms going there. People understand, you know, all this stuff related to crypto currencies and businesses going there from a geopolitical perspective or reason. But they were the most unsophisticated when it came to like Bitcoin, why Bitcoin, different forms of custody, the asset. And basically, how do you delineate or what's the difference between Bitcoin and crypto? Brian Cubellis (13:39.342) And that was really eye opening because I think living in the West and as you start going East, it's very different from like a market perspective on here in the West, we at least have, or specifically in the U .S., Bitcoin only firms that people recognize as Bitcoin only. So you can go there if you want to send somebody to learn about the asset, if you're looking to invest, if you're looking for multi -sig custody, education, you know, starting off on your journey, you send somebody to Cash App or a river or wherever it might be. There's nothing like that there. And it was so, it was very fascinating, but on the other side of it, it's literally the most ripe region as Brian referenced and everybody on, they're just like prime for it for so many reasons, whether it's culturally and religiously from a debt based or how they're against, you know, usury to understanding from a commodity base and also the energy aspect of it and just the sheer amount of capital that they're sitting on. And so it started to like navigate over the course of the week to say like, Oh my God, like, We're just getting started. Another example of this was they have a ministry of AI where it was explaining, and I'll kind of butcher this, but I think the essence will come about in that about six years ago, one of the partners we found there, who's a family office that sits in Australia and then is moving to the UAE, at least partial part -time, had a... went to like an AI convention and they had started about five, six years ago, a list of about 200 projects that they identified that they want to implement across the city. And there was 200 projects that they put on a chart, they were managing, and then it started to whittle down. And I think the idea was to implement 20 of the top 200. And right now today, February, 2024, they're in the last five is from a strategic perspective and getting them implemented. And they were showing me these screenshots of like dashboards that look. like the UI that you would get at a, you know, fang company here in the States that are governed by the government. And so when you start to look at that on the AI side, you start to really think about it again to what Jackson was referring to the amount of interest and openness to talk about, you know, a what we're doing or by just Bitcoin in general, because it's a melting pot, the openness to have conversations and make introductions. Brian Cubellis (15:48.398) Throughout the course of that week, we started to like loop back around to other people we were talking to that reference that we had already been there or they knew of that individual. So it's still small enough where the same people are kind of working on similar things. But it's incredibly exciting. We'll talk about throughout this podcast. But yeah, there's gonna be a lot of opportunity and anybody that's on the Bitcoin side, so we're looking over there, it's just right for kind of like education and delivering services to a part of the world that's historically been a lot. As you go further East, it's all crypto all the way to Singapore. Yeah, one thing I thought that was particularly interesting was kind of leading up to it, you know, doing prospecting and trying to find out who we'd be meeting with while we were in the UAE. I noticed that a lot of people on LinkedIn use the term blockchain specifically, you know, rather than digital asset, digital assets, crypto or Bitcoin. So what I thought was going to happen was spending a lot of time in these meetings. trying to kind of start from ground zero and explain the Bitcoin only thesis and how does that differ from all the other cryptocurrencies and the blockchain space, right? But I found myself not really having to do that despite these people, a lot of people having blockchain in their profiles, it was almost like maybe the industry term there, but it didn't necessarily signal that they were doing all sorts of things in the blockchain, right? So. I went into these meetings thinking that it was going to be just spending a lot of time having to educate on Bitcoin. What is it? Why Bitcoin? But it was all intuitive for the most part. I would say 75 % of my meetings, the conversation wasn't about Bitcoin at all. It was just about what we were doing specifically. And they already understood that Bitcoin was different from other crypto assets. So it was really encouraging in that sense too. It was just like, you go in with a mindset or an expectation of how things are going to play out and it ends up being a little bit different than what I expected in this case, it was really positive. Brian Cubellis (17:51.214) Yeah, that's a key. That's a key insight. It's like the sophisticated individuals know there's a difference. And that's where we kept finding it was the people on the ground that didn't know there was a difference. So like when you go to the meetups and a lot of the things that people shilling the stuff, it's all crypto. But once you go into a room with people with capital, they completely understand it. The problem is they don't really have an educational custody. How do you like actually get delivery and like being able to allocate in size? And that that speaks to a problem, I guess, in the Bitcoin. space is so many of these product services companies are US based, you know, in Bitcoin only land, US based serving US customers, especially if you're, you know, providing a hosted wallet or custodial service, or you're taking custody of, of, of assets. And that means that, you know, a lot of these international places that are hungry for good Bitcoin products aren't able to be served by a lot of the Bitcoin only business models that exist in the US. And obviously you see clones of them, of Bitcoin only companies popping up in specific countries, whether that's the UK or Australia or whatever. But it's kind of rare, I guess, for smaller countries like Dubai to have sufficient Bitcoin only startup serving what they need locally. And there's kind of a shortage of the ability for companies based in the US to serve the needs of those all over the world. So it's kind of exciting to find opportunities where it is possible to serve some of those needs. And with all this context in mind, I think the vibe that I've gotten is despite the fact that they may not be up the as far up the learning curve as we may have expected individuals in the Middle East to be. Do you think that they'll be quick to jump on this opportunity now that they've had the seed planted in their minds? Like you're talking about custody very smartly. It seems like they get it intuitively now. Like how quickly do you think they get into this? Brian Cubellis (20:10.05) in size. So they're already kind of getting into it, which was crazy. Sorry, Brian. Just one thing popped into my mind is the sovereign wealth fund is already seeding portfolio companies that do Bitcoin custody and Bitcoin mining. So it is already happening. I'm sure it's going to be accelerated into this next cycle. But I was just like blown away because it's almost like to draw a parallel would be as if. the Federal Reserve or the US Treasury is like seeding companies to be mining Bitcoin in Texas or working on custody infrastructure. So it's like pretty phenomenal just in terms of the government getting involved in the industry already. Yeah, I think it already is happening and I think it probably accelerates pretty rapidly. And just sort of touching on the point that Michael made around being some of the most sophisticated crypto or digital asset people is an interesting point. And I think it's like, It's almost in my mind, sort of a double edged sword of being so forward thinking and innovative. It's like, you know, you want to go chase these shiny things that are purporting to do all these different things. And so I think naturally that kind of comes with it, that they've they've sort of leaned into a lot of the things that surround Bitcoin. But in some weird way, it's kind of a nice angle for us to come in there and just be very simple about it. It's like, you just need to buy this asset, you need to hold it. And here's how you should think about holding it, because it has these you. unique custodial properties. So it's kind of a nice like differentiated angle for a company like ours to come in and just say, you know, we're not, we're not really, you know, we're not snake oil salesman here. Like we just have a very simple philosophy and a simple product really. And so I think it was a nice, nice angle for us to be able to take given sort of the, the rest of, you know, people's focus gets, you know, distracted to all these other things. Yeah, and that's a key point. Like it really works knowing this playbook Marty to the point of like we've done this previously when you talk about, you know, we, Lauren, Lena brought it up early and we were going over there about, you know, they have enough Cowboys dropping in and their jets and looking for a hundred million dollars and to fly out. And I think you hear, I don't know if they still do it, but like where, when the market tightened up with interest rates rising, how like Calcans and people were flying out there to source, you know, dollars for venture firms. Brian Cubellis (22:32.27) And this notion of you don't go there to do that. And when I remember her saying that and referencing this sounds a lot like Texas and how you would do business and building relationships and education and shaking individual's hands. And so to Brian's point, that's effectively what the goal was to go out there and explain what we do, why it's different. It's Bitcoin versus crypto and why there's properties baked into the protocol that allow for different form of custody and governance around it. And that's really where things got fascinating to Jackson's point is everybody was a really open and interested in meeting. I think like the custody format really speaks to something like innate because they look at it and they're like, oh, that's interesting. Haven't seen it before with different institutions participating. They know Bicco Bicco is having a growing presence there. But then the other part was the again, going back or kind of reminds me in a weird way, not apples to apples. But when Austin, when I first moved to Austin, Texas, there was a lot of like a boiling pot. from a tech perspective where people are always happy to make introductions. They weren't from there, do business, do deals. And it was similar in that sense, minus all the homeless people on the streets. But the interest in making introductions and saying, hey, you should talk to this individual or this sovereign fund that's tied to the central bank in this country, because that would make the most sense for them to participate in this. Because part of our goal or going out there was, you know, showing that we do have an interest in investing in that region. And that's what they're looking for. There's really good podcasts out there. Maybe drop them in the show notes or if anybody reaches out that really talks about they're looking, there's like the two terms like greenfield and brownfield or like a brownfield will be like a multinational that goes to the country or the region and saying like, Hey, we want to, you know, leverage your infrastructure and we're going to, you know, expand our product there. And then there's, um, Greenfield where you go in and invest in the country and then build up your business from the ground up. And so a lot of that came about where there's a lot of interest from, you know, sovereigns to participate in these quorums. And the last part and all that was you found out that like a week before SPF and FTX blew up, he was there trying to, you know, extract some capital to get himself out of whatever position they were in. And I think that's important to note because they do in our Brian Cubellis (24:52.44) I'll speak for myself and the guys can chime in, but in my experience there, it sounds like they want to do things the right way. They want to work with the right partners. They vet people carefully before they give a lot of the licenses, whether it's in Abu Dhabi or Dubai. And so they're really looking for people looking to build long -term sustainable businesses. And we know about this custody structure and what we know about the different ways you can get rugs. I feel like it's the most compelling story for them to participate to protect their like individuals that live in these countries and the people that are looking at, you know, it's a clap. It's a top five capital market, I believe, in the world. So people are going to go there. They're looking for the advantages to be domiciled there. Well, then if you're going to be holding Bitcoin, it should be done in a way that is, you know, transparent and part of what we do. So that was another one of the last like pieces that were really positive when we were about to leave. Yeah. To just make that even clearer, if it isn't already to people who are listening to this, because of the nature of our custody product, we can serve international Bitcoin holders and do that without having to be a custodial service because we don't take custody of your coins. We help you set up a custody solution where we participate, but we don't have control. And so that's essential. for making it possible to serve Bitcoin holders all over the world, regardless of jurisdiction, because we're not a custodial solution. We provide a custody solution, which is a subtle distinction, but important. And to anyone out there who has been wondering if we do serve Bitcoin holders, if you're not in the US, the answer is yes. On the topic of the individuals that you spoke with understanding the importance of this particular custody model, multi -institution, multi -SIG, how much, because I know we've talked about this a lot over the last two years and particularly on this podcast with the US freezing Russian treasury assets. Is that top of mind for any of the individuals that you spoke with? So it didn't come out there explicitly. People like call up, Brian Cubellis (27:13.998) on consultations and obviously from a commercial perspective, we can't build products around ever around that. It's just not a commercial thing to do. But I will say, um, what has come up and I forget where this was an anecdote. Marty, you'd love this. Like we had a lot of people that were prospective clients, clients, partners from all over the world, meet us in Dubai, from India, from Australia to name two countries. And they really see the vision of the model. Um, and want to take it to their country or partner with us to do that. And one of the anecdotes that they brought up was as you start to go further east, the ETF becomes more and more untenable simply because of what you just referenced, the Russian treasuries. And it just doesn't make sense to part significant amount of capital in Coinbase that sits in San Francisco. And so that's really where another thing that ties into our offshore fund product, what we shared and that we're... rolling out over the course of the next couple of weeks and we partner with some of the pensions we're working with and other firms. That's a really nice product when it comes to being available to not have tax exposure to the United States, if you sit outside of the US. And then also from a custody perspective where those assets sit, because again, individuals may have interest in having a key that sits in the UAE and maybe Singapore or another country like Switzerland. Yeah, it's a great point, Marty, to your question and to Michael's point. The custody provider infrastructure provider based in the UAE that's backed by the sovereign wealth fund. If you go on their website, you know, one of the key words that sticks out is, you know, a geopolitical risk. So hedging a geopolitical risk or an event like that. So they are a newer company, maybe like 22 or 23. So I'm sure they were just thinking about this anyway, in the context of global macro and geopolitics, but. I'm sure that to Michael's point, a lot of people want to work with partners in their local market. So really for this to scale in the UAE, you know, part of the longer term vision here is to have a presence and have people, you know, based there and also having a key partner base there as well, just because then it's a little bit more comforting to them and they can get, you know, they can maybe scale into the business, get more comfortable with the business if they know that one of the keys is held, you know, in their city or, you know, at least in their country. Brian Cubellis (29:37.76) I mean on this point we're going to talk about it towards the end what's going on with the ETF inflows and How much of the daily supply they're eating up? It's far beyond the daily supply right now, but when These guys are ready to press go it seems like they've already press go But when they really open up the floodgates what type of impact do you guys think this will have on the market? I mean you mentioned the further east you go the less tenable the ETF becomes, you have to imagine giving them an avenue to access Bitcoin that isn't the ETF and that they're more comfortable with could have a similar, if not more pronounced effect on how much Bitcoin is getting gobbled up on the market every day. Yeah, I mean, from just anecdotes, anecdotal conversations, right, like from the market perspective outside of Binance, there's not like a crazy amount of like liquidity or like trading happening. So it's a lot of OTC and it's a very like clunky and hard and obviously like somebody has to send money for somebody else to send Bitcoin, but there were like sizable transactions that we're talking to different individuals about Jackson had conversations and understanding that people are holding Bitcoin in very unsophisticated ways in vaults of very sophisticated individuals. And, um, All that's to say, I think that the assumption is there needs to be the proper sophisticated kind of rails from execution all the way to custody where then you can really unlock, I think large amounts of capital are gonna come in either way. It's just how comfortable individuals can be and then really maybe that flywheel expands. I think Marty, one thing that was really fascinating that kept coming up was that Saudi Arabia and Riyadh in particular are looking at Dubai and wanna do exactly. what they've done the past 10 years, but a hundred X bigger and faster simply because they have the capital to do it. And they, everybody believes that it's going to happen. And so I think that's a more larger thing that me and Brian were talking a lot about. It's like, what happens when that part of the market, there was a tweet that came up when we were at dinner, but it was saying it's like not priced in that I think like Muslims globally are 2 .1 billion, if not a little more. And when you think about like, Brian Cubellis (31:54.126) It was a joke, but somebody asked about like Sharia compliant and it was like, this is like our product is the most Sharia compliant thing that could exist in the sense of like, you literally just sit on the asset, you put it in cold storage and you don't touch it and it appreciates in purchasing power. And so this whole idea that when that part of the world starts to recognize like what this thing is and why it can't be weaponized against them in the sense of like what treasuries have been done, that that's not priced in at all. Yeah, totally agree. I think it's it's hard to fathom just that that pool of capital that your point, may not be allocated to all the other asset buckets today because of Sharia compliance concerns. And so they historically haven't owned stocks, bonds, real estate, whatever it is. And so it's this massive, fully untapped pool of capital that may now recognize Bitcoin as this thing that they can actually own. And so, yeah, that's part of it. I think the other part, too, just going back to the sort of innate appreciation for something like Bitcoin and its value prop in this region. I think it's partly has to do with really just proximity to areas where there has been more severe inflation or hyperinflation. I think that's certainly a component. It goes back to the idea of like we're in this Western fiat US dollar bubble and it's easier to ignore this thing called Bitcoin that protects you from fiat debasement. But I think people in this region and all the surrounding countries, it's just way more top of mind for them. And so part along with that is a greater recognition and understanding of counterparty risk. So your earlier point around, probably not going to get comfortable with owning an ETF where the custodian is Coinbase and they're sitting in San Peren. So I think it's this confluence of all these different sort of elements that lead this region to just be. very open -minded and really thinking critically about not only the thesis on this asset, but how to actually own it the right way, which is just incredibly bullish. Brian Cubellis (34:01.612) Sharia Sharia compliance is something that definitely is not priced in yet. And what were the conversations around mining? Obviously, very energy rich region or conversation with Talal. He highlighted there's obviously countries that are better suited to take advantage of the mining opportunity compared to others. But were there large conversations around mining specifically? I think that goes back to the Abu Dhabi sovereign wealth. fund that's investing in them. And I believe because of the way that a lot of the investments are structured when you go into the region, you file applications. So it's not like, I don't know. I mean, I'm sure people are off grid mining, like in the moonshine way that's done in the States that aren't like actually registered. But I, the way that it was described, I feel like it's less simply because they're, they're open to it. They're just in the, there's obviously like, it's a better tax. climate for something like that. But it was referenced more Abu Dhabi because Dubai, it's my understanding that they don't have any oil. They're very little. And that's really where they kind of made their mark on the financial market side where Abu Dhabi is where the oil sits, I believe out of the seven kingdoms, it's either the second or first most oil rich. And so that's really where like, I believe Marathon and other firms are. But yeah, there's a large, I think Oman and one other country that's up in the GCC was referenced. I can't think of the other one. Obviously Saudi Arabia, the problem with Saudi Arabia, I think is they don't have any publicly said mining yet. They're still like, I think, like the innovation there and like what they're going to allow and what they're not. And I guess maybe we can dive into more topics if you guys want to about the week. But I think the last thing that I want to touch on before we head to ETF news here in the States is should the US, should the West more broadly be worried about the competition that's coming? Brian Cubellis (36:04.968) You know, it is sort of funny that we've in the US, in the West, we've sort of been lulled to sleep about like, oh, Bitcoin is this cool technology. I think Brian did a great job of talking about how this is more top of mind, this more relevant salient to people outside of the US in particular, where the dollar is strong. And so we have been lulled to sleep into thinking like, oh, this is great technology. It'll catch on eventually. And we in the US are frankly closer to tech innovation and hear about these things sooner. I think that's just the reality of how tech works because of the US's pole position in terms of tech innovation. The innovation happens here and then it eventually, you know, percolates out to the rest of the world. But in percolating out to the rest of the world, Bitcoin finds hungry adoption. It matters more sooner, is more relevant to people outside of the US. And I don't think that that's priced into how we think Bitcoin adoption is going to go. Bitcoin adoption for the first 15 years has really been tech innovators in the US and in the West and in China, seeing the potential of this thing way before it has real like attraction and mainstream applicability and speculating early. That's been the entire history of Bitcoin adoption to date. And now I think we're entering this era of greater access to Bitcoin everywhere in the world. And the people who will most readily adopt it are people in Argentina or Turkey or in in regions where they're wary of foreign exchanges being seized, foreign exchange reserves being seized because of what happened to Russia with being cut off the swift and having their foreign exchange reserves seized by the G7. And so I think that's the next 15 years is we're going to be surprised us like complacent folks in the US who have thought that Bitcoin is wonderful technology that will eventually catch on by how it will be. Brian Cubellis (38:35.022) taken up now because of the imminent value proposition of it in an era where the US can cut off people's foreign exchange reserves, we're going to see nation -state adoption not in the US, not in the G7. It's going to be everywhere else first, and that happens in this next decade. For Jesse not being there, that was literally like the most elegant way to describe what's happening. Because if we know Bitcoin, it's all incentives. And they've created infrastructure to bring people in there, to not tax and kill them, like to provide resources for growth, to open up channels of commerce globally. Like they literally are setting themselves up and you're seeing talent go there. So you can start to see exactly how this forms into the point of you need the first 15 years where innovation, quote unquote, happens in the West. But then what's happening is now people are going for different reasons. And I think about this stuff like water. It's why I have like so bullish on multi -institution because I just think effectively, like if you're gonna be successful, you have to go where the current is going. And realistically, like everything is not actually great there as well. It's the most surveilled country in the world. Like there's a lot of things that aren't positive, but the idea is, If you're from a game theory perspective, you can set up shop there, you can do a lot of things, you can have them hold a key, but they can't rug you and take all your Bitcoin. And that's really where you start thinking about long standing, how do you build incentive models and infrastructure around ways that distribute risk where you don't have a single point of failure, whether it's your personal life and being domiciled there, or your assets being sitting at a single custodian, they're both one of the same things of like, You're going where the puck's heading and you don't want to be in a place that's taxing you 40 % looking to seize your funds hate to because you're doing something that like is deemed, you know, not ESG friendly and all the things we know happening in various parts of the world, frankly, not just the US. So that that is the key thing. They're setting themselves up to be welcoming. They're taking care of people and business that goes there. And it's just like starting to accelerate. And then Saudi Arabia is looking at them and they're like, well, why don't we do this? Like we're sitting here. They've been there's just been this macro tailwind the past 10 to 20 years of. Brian Cubellis (40:54.07) diversification from, you know, oil for a number of reasons. And so they're like, well, why don't we bring in country or companies to co invest alongside them and then also get out into the market? So yeah, it's going to be a crazy next 15 years globally. Yeah. And to both of your points, Jesse and Michael, you know, the word that stuck out to me is complacency. And it's a very complacent attitude here in the U .S. But then from what I gathered in conversation in the UAE, It's an extremely competitive attitude, what ultimately keeps them kind of at the forefront of new technology. And Michael, to your point, you know, skating where the puck is going. So the way it was described to me is if the UAE sees, you know, Singapore, for example, do something, they want to do a 10x better. And that attitude is largely absent as a culture in the United States. And it's ultimately why, you know, we're losing our foothold kind of, you know, at a global scale. And, um, You know, kind of to that point is like skating where the puck is going. They see multi -institution custody and they compare it to, as Michael said earlier, there are kind of a lot of unsophisticated ways of holding Bitcoin. And they see this new model as a way to hedge out counterparty risk, geopolitical risk, eliminate single points of failure, and they get it. It's really intuitive. So it's just been encouraging in that sense to, you know, to actually be in a jurisdiction that is not extremely complacent. And, uh, you know, has an attitude of competitiveness and really, you know, pushing its country and its people, you know, to be one step ahead of other countries. So it's really refreshing. Yeah. And it goes back to the whole thing in Bitcoin about if you think it's a good idea, it probably is. If it hasn't been done yet, you just got to do it because we're so early. It's like we had no business being out there. It's just nobody goes out there from the Bitcoin only side. And part of the 10X better, it's like saying this stuff publicly is good for Bitcoin, but it's also good for us because we just like put out these ideas out in the market. It's a free market. Who's going to go there, go and provide services. And we all benefit from that. As long as we continue to like innovate and push, you know, this stuff forward. Yeah. And you have to imagine. Brian Cubellis (43:03.95) The fire under their ass is getting hotter looking at what's happening here in the United States with the ETFs launching in the amount of inflow that they're seeing, which is hitting what seems like escape velocity. So I think we can transition to the ETFs. So like, when you pull up the article from earlier today that I put out, just wanted to shoot this out there. The guys at Bitmec's research and Thomas Farr from Apollo Sats has been Following the inflows, we surpassed $51 ,775 today. We touched $52 ,000 for a bit there. And a lot of people are surmising that it's because of these ETF inflows. And yesterday was the largest net inflow of more than 10 ,200 Bitcoin. So it's all time high inflow in Bitcoin and dollar terms, obviously, since we're higher than what we were when we launched the ETFs. and What's happening here Jesse, I mean, this is the most successful ETF launch across the board I think the Bitcoin I think black rocks ETF surpassed GLD and trade volume yesterday in daily volume Is this is it happening Yeah, this is this is a smash hit in terms of ETFs unprecedented smash it I think it's already In my opinion, it's already eclipsed what I expected by this point. I was sort of cautioning people that when the ETFs launch, there'll probably be like a small sell the news event where we'll go down for a little bit. And then the real sustained continuous inflow of demand from the ETFs will matter over the next year plus into the future. But that's already happening at a scale that I think has certainly surprised me. I the last four trading days, we've been averaging 9 ,000 Bitcoin per day of net demand flowing into the ETFs. 9 ,000 Bitcoin per day in an era where right now we're mining 900 Bitcoin per day. So there's 900 Bitcoin being issued every single day. Brian Cubellis (45:24.558) and 10 times that amount of demand coming in from just one demand source. That's these ETFs. So that's not even accounting for sat stackers or people accumulating coins outside of ETFs. 10X, the current supply issuance from just ETFs. And that is two months in advance of the halving when obviously the supply issuance gets cut in half. If we if we're sustaining this level of of daily average daily net inflows to the ETFs of 9 ,000 Bitcoin per day that would mean that in two months we suddenly go to to 20x the demand from ETFs versus the amount that's being Issued through Bitcoin mining every single day, which will be dropped to 450 Bitcoin per day That's that's insane. I'm Really what's happening here is that when a halving occurs, typically, the day before the halving, you all else equal have established a supply -demand price equilibrium, where the amount of sat stacking that's going on every day is equal to, in dollar terms, is equal to the amount of Bitcoin value being mined every day. So supply and demand are in balance. Then the day after the halving, Suddenly there's half as much supply being created, just as much demand, all else equal. So now you have a situation where there's two X, the demand versus the supply that's now being created. And that accumulates over time. That shortage of supply accumulates as a supply shock over the ensuing 12 to 18 months and causes our parabolic rallies as that eats through the available for sale supply that sits on exchanges and suddenly. There's no coins available to be had and the price starts to go up faster and faster as, you know, buyers have to bid for more coins and they have to raise their bids in order to find more supply. That's the supply shock that happens after every halving. And that's because of a 2X, right? And right now we're seeing a 10X from just one demand source. And that's the scale of what's going on right now. So it's pulling forward a bull market. Brian Cubellis (47:48.59) into the here and now so long as this ETF inflow continues at the rate that it's been achieving, which has actually been picking up over the last couple of weeks. So we might be entering just a period where, because of the ETFs and making it so much more accessible to put capital into Bitcoin, we're going to keep seeing hundreds of millions of dollars flowing into Bitcoin every day on average for who knows how long. And that's That could cause a hell of a bull market in a short space of time because it's so much greater than the typical supply shock that we see after a halving. Yeah, it's been it's been insane. Just to I mean, that was a great, great summary. But I've found it funny just in sort of the first few weeks of these things being live. Like you did see like mainstream media articles saying like, oh, this is a flop. It's like, no, by all measures, by all accounts, these are the most successful ETFs ever launched. And to Jesse's point, like the last four or five trading days have been absurd in particular. And if you know, if this is sustained in any way, you're going to start seeing this have a material impact on the spot price. And obviously, in the first couple of weeks of it being live, you had various sort of factors at play, like people rotating out of GBTC. And there was also likely a sort of preparation on the side of the issuers in terms of negotiating with OTC desk and sort of having a lot of Bitcoin ready to be used to create new units of these things. And I think ultimately, we know where this is all headed that those OTC desks sooner or later run out of Bitcoin and they have to go source it in the open market. And that's when you see a more direct relationship between these flows and spot market Bitcoin price. And so I think it's been funny to see some of the narrative around like just people not grasping what's going on here. And also, yeah, to Jesse's other point around the halving, it's like it's right around the corner. This thing goes from 10x to 20x potentially. Brian Cubellis (49:53.582) terms of demand versus supply each day. And yeah, we just had the Super Bowl last week. We've got Jesse's Super Bowl coming up in a couple months here. And it's like, in my mind, it's more than just a Super Bowl, right? Because I think what some people aren't grasping about this having in particular, and I think we know this internally and sort of in Bitcoin circles, but it's like, this one is even more important. It's kind of a special having in the sense that In terms of Bitcoin stock to flow, it becomes more scarce than gold on an annual production basis. And I think that has been an internal Bitcoin narrative for a long time. But I think once that hits the mainstream narrative of like, oh, this is actually the hardest asset on the planet, it's now officially more scarce than gold. I think that has a profound effect on whatever FOMO is going on around that time. And so you combine that with these ETF flows if they can be sustained. You might see some fireworks. Yeah, that 3 .125 and whatever the stock to flow gets updated just seems insanely small when you look when somebody is external looking at like how much is this getting how much is getting made daily? Yeah, and to Brian's point there, like I think I think if the entire world understood Bitcoin, the price of Bitcoin, the total value of Bitcoin would right now be at or significantly larger than gold just based on the stock to flow. comparison of it. If Bitcoin didn't have greater functionality than gold does, currently its value should match. Oh, this is great. Yeah. Logan just pulled up. I saw this tweet today too. People are dumping gold ETFs and buying Bitcoin ETFs, largely meaning baby boomers with large stock portfolios are shifting allocation away from gold and towards Bitcoin. Brian Cubellis (51:59.88) Which is exactly what you want to see it also speaks to the narrative of of you know Bitcoin is fulfilling what the gold bugs have all always thought was possible or should happen in terms of the sound money they just had the wrong one because Gold has its Achilles heel of centralization and its vulnerability to paper gold manipulation in the markets and and Bitcoin is is come the hour, come the asset of Bitcoin for sound money in the digital era. Yeah. So, you know, I think that right now Bitcoin should be worth what gold is or higher, which is $500 ,000 per Bitcoin. It's just that only a tiny portion of the world has learned what Bitcoin is. And so only a tiny portion of the world has appropriately valued Bitcoin in their portfolio, which isn't to say that Bitcoin doesn't have that value. It's that it's just that the world hasn't caught on to what this thing is and how it fits into the global asset landscape. And what's incredible about it, too, is that it doesn't stay where it's at, which right now, one point eight percent per year supply issuance for Bitcoin. Gold has historically averaged one point five to two percent per year of new supply issuance from mining. And in two months it drops to 0 .9%, making it twice as good as gold. And so then we enter an era where for the next four years, the total value of Bitcoin from a stock to flow perspective, a store of value asset capacity perspective should be significantly greater than gold. We're nowhere near that yet. And it's just because, you know, 0 .1 % of the world understands what Bitcoin is to date. And that's just a function of time. Yes. To be fair, like gold didn't stay stuck at a magnet at 10 trillion. And my running gold is also moving. I just had a really great conversation with a I'm down here. Oh, and lost it. Now you're here. Oh, gold ATMs are coming around the world. I was meeting with the founder. Brian Cubellis (54:26.098) Drew from down here the oldest and largest Bitcoin ATM Bitstop and we were having this conversation yesterday around this narrative of like when Bitcoin goes up Especially if it's going up to anywhere near 10 trillion Then like there's narratives around sound money and all the things associated and so I think we see a lot It's a lot longer of a burn when the price goes it's a $500 ,000 10 trillion dollar market cap Gold has gone up to 15 to 20 million dollars or whatever, but I think the point still stands. It's a better form of money. Um, I The other thing that it was a GBTC and FTX is last rugging of the ETF outflow. It was like a nice poetic, like, you know, the launch and you saw the like, you know, whatever happened with Grayscale and then the FTX, I guess it was a billion that needed to be sold. Um, that was like the last kiss, uh, before kind of we, we get to send it. Well, not yet. Apparently Genesis is requesting that their bankruptcy, uh, What's it called? Bankruptcy guardian? Not guardian. What's it called? The estate, the bankruptcy estate, allows them to dump $1 .1 billion worth of GBTC shares. So there could be some more outflows from that type of activity due to Genesis, which is funny because Genesis is a digital currency group, family company to GBTC. But on top of that, like all this ETF talk, one thing, that has been confirmed, pulled up Logan, that we surmised with Mark Connors is whether or not these ETF issuers would begin to use the Bitcoin ETFs that they have to put in other portfolios. And I think Fidelity was the first one to do that last week, adding a 1 % allocation to its conservative all in one ETF in Canada. So now we're beginning to see these ETF issuers put the Bitcoin ETF and more they're diversified. portfolios that Bitcoin falls into the bucket of in Fidelity's case the concern of all -in -one ETF. So that's just another avenue for demand and flows. Yeah, not only is that bullish for passive flows, but also on the active management side, going back to my stifle days working with hedge fund managers, we'd have quarterly monitoring calls. So we'd work with a bunch of different fund managers, all sorts of strategies. Brian Cubellis (56:52.75) And the quarterly calls would just be to review the portfolio and see how they performed against the benchmarks. So really, in addition to these ETFs being launched where there's an allocation of Bitcoin and passive money starts flowing into that, there's also the whole entire active side where managers are benchmarking against a benchmark. And as those benchmarks start to incorporate Bitcoin into them, if managers are on a... If managers have negative attribution, meaning if they're like underweight Bitcoin relative to the benchmark and it's detracting from their performance or causing them to underperform the benchmark, then their investors, their LPs are going to have questions for them. So once Bitcoin starts making its way into more benchmarks, then active managers are almost going to have to be forced to start allocating the Bitcoin as well. Because, you know, we're all bullish enough to think that if you underweight Bitcoin relative to a benchmark, you're likely going to underperform. Yeah, that's the most fascinating part about this news to me. Jackson spelled it out perfectly. It's that assuming Bitcoin does what we all think it's going to do, that data point on your attribution report is going to stick out like a sore thumb. And the reality is that the vast, vast majority of active managers, if you're managing an all world type portfolio, we are going across asset classes. The high, high likelihood is that you have zero exposure to Bitcoin. So that is going to stick out on your attribution report if Bitcoin does what we think it does this year as the main contributing factor to why you underperformed that benchmark. And so it's going to spark a conversation. Why isn't this in your portfolio? This is the main reason we're underperforming. What's your thesis? Why don't you own this thing? So that's going to be a really powerful. I love it. Sort of a slower burn, obviously, like you need to see this play out as it as it's in these benchmarks for, you know, a few quarters, at least in my mind. But once that starts happening, yeah, it's like it forces the conversation and it becomes very apparent that this is the best performing asset of all time. And like, yeah, why if the benchmark has it, why don't you have it? You have to at least have an equal weight. Yeah, that's the mechanic for you know, we talk about the you know, the Brian Cubellis (59:15.852) ETFs are a Trojan horse. It's Wall Street trying to make money off of a product. But in doing so, it becomes embedded into the norms of here's how portfolio construction should be done. Here's the benchmark. And then it flips everything. It's like, why are you excluding Bitcoin? It becomes the question rather than like, why would you possibly include this crazy Internet money? And just with that like switch, just a binary switch there, that's the seed for completely changing the broader societal stance on Bitcoin's place in a portfolio. That trickles down into your wealth managers talking to families about here's what you should have in your portfolio. And then that trickles, that spreads into every conversation at every country club about you know, how people's portfolios are doing in the current climate and how Bitcoin is outperforming. And that, through this viral process of people talking to people, turns into Bitcoin being a standard, like a pillar of everyone's portfolio into the next 15 years. Marty, you ever pinch yourself like starting? Are we saying super cycle? Are we saying super cycle here? Is this what is happening right now? I'll take the opposite on that of like, this just sets up the exact mechanics for the next bubble. You know, Bitcoin's history, entire history is a series of bubbles where people get too excited. It goes too high. And then the bubble pops and then people get too bearish at the bottom. In particular, people who are in their first cycle get shaken out at the bottom. and sell at the exact wrong time. And we're going to see that just at the next level here. We're like, maybe we go to 250 and crash very painfully to 70 ,000. That might be what we're in for over the next four years. I think that's probably a little muted because of the passive inflows, but still the same. And then it goes back to like, even though the halving amount of Bitcoin issuance is less, you still end up with the same cycle because you're losing. Brian Cubellis (01:01:29.742) the amount of demand or supply versus the amount of demand and the dollar amounts what's changing. I don't know boys. Yeah, I mean, I think I think Jesse's right, but there is there is a small part of me that and I haven't fully squared this in my mind, but it's like, you know, if if what we think to be true about a lot of this capital that it's now flowing in, they typically in all their other investment asset classes, stickier capital, right? Yeah, they have a longer term investment horizon on whatever they're doing. Um, so if they have a fundamental understanding of what this thing is, they should have a longer than a two year view on it. So I think there's some, there's some amount of rebalancing that will, that will happen. Um, but I just do think to Marty's point, it's potentially sticky or capital. So maybe it's, it's more muted. And I and I think like this part of the conversation is in a bit of a vacuum, completely neglecting the macro headwinds for the incoming economy and. the financial markets, stock market particularly, and the tailwinds that provides for Bitcoin. Where are people going to hide? Look at what's going on with credit card delinquency rates beginning to creep up at a faster pace than pre -2008. Inflation has not been solved, as is evident by the fact that Joe Biden came out and tried to blame shrinkflation on greedy corporations. Seems like the Fed's going to have to keep rates higher for longer, and despite the fact that people... have been opining for years that bitcoin has only appreciated value due to the low interest rate environment in the last 16 months 15 months has proven that not to be the case and in terms of the ETF opening up these avenues and what we discussed earlier with the middle east once that spigot gets open I think you have to imagine there's a lag there it could take a year to 18 months which would line up with this oracle peak of passable markets and you have all these confluence of events happening that like maybe this time is different. I don't know. I don't think people correlate all those things with Bitcoin though. Like that assumes the bubble we were talking about is widely known. Like when this stuff happens, Bitcoin doesn't become the like natural solution to all of it. So you and then to the other point that Brian was bringing up about the passive inflows, there will be sophisticated people that are holding for a long time, but the same thing happens on the other side of it. There will be exit liquidity that's common. Brian Cubellis (01:03:53.326) been in larger size. I don't think I don't think anything changes here other than the pool is like, I don't know the analogy, but it's like we had a small pool with like a little hose coming in. And now the pools gotten bigger and the hoses gotten bigger. But then the people jumping in still cause it to overflow. It's just more people until the whole until we're just swimming in the whole thing. And you know, it gets to where we're going. But you see where I'm going with it, like nothing actually changes like more money comes in, the supply gets constrained every four years. It's the same thing whether it's Bitcoin at a dollar or Bitcoin at a billion dollars. I guess then we have to. Does that make sense? Because I know that I mean, I see what you're saying. I think analogies work for this, though, like the pool analogy. Like I get what you're going for there. But like, I think this is a whole, whole other game we're playing in this cycle because Logan pull it up. The central banks are taking the mask off. This is from the central bank of New Zealand. Yeah. Earlier this week, quick clip. the fiscal challenges, et cetera, that are there. So, very focused on the cost -effected. We actually fund ourselves and then work out what dividend is needed to pay. So, we kind of work, it's a great business to be in central banking. You print money and people believe it. And, and, and, and, and so, so it's a slightly different beast. Wow. I just caught something here that I didn't catch yesterday. So. where central banking is a great business to be in. We print people, we print money and people believe it. And then he said touch wood. He's like hopefully they don't figure it out. I didn't catch touch wood till right now. The mask was off, people were waking up to this. Like a social New Zealand, which was the first central bank to issue interest rate targeting policies in the world, fun fact. So a lot of the reason that we're in this terrible situation. I'll be, I'll be a little generous to, to these guys. Like to me, this speaks to, they're just so deep in it. They truly believe it. Like they truly believe that this, this is, this is how things should work, can work and it's reasonable. And that's why he's like, he's like making a joke, uh, and not realizing how incendiary the underlying subject matter really is. He's touching wood. But again, I wrote this in the newsletter yesterday. It gets completely. Brian Cubellis (01:06:16.142) We'll pull up this clip a little two minute clip. We got clips on clips on clips here But it's completely analogous not even though I just said that analogies are not apt I think it is how many it really is that scene in the big short where they're down in Florida talking to the mortgage brokers asking them like what they're doing and in the We'll watch the clip after this but like in this clip like you're talking like they're the central bankers in this or like yeah, we don't care like We're exhibiting moral hazard because the incentives put in front of us are to shovel these people into subprime mortgages. We get 10k a pop. Similarly with the central banker, it's, yeah, we are incentivized to engage in moral hazard because of the way the system works, the way we've erected it. So we're gonna print money, we're gonna make money from it. And knock on wood, hopefully the people don't catch on to it. Post 2008, I think people really caught on to it. the systemic nature of the housing crisis. And I don't think that's been fixed, but I think what the central banks are doing is obviously a layer below everything that happened in 2008. People are really going to wake up to this. And as we know, where debt is, they have to print more money. And people, I think this is the point I'm trying to get at is I think we're approaching, I don't want to say it, it's not QA non -related, but the great awakening where people... basically understand like, oh shit, these people are not good actors in the economy. Well, that's why he's knocking on wood, right? Yeah. That's that's the nefarious part of that clip is that he's knocking on wood, which is demon summoning. Hey, so the point of taking the other side, it's good to it's good to have like talk this out. I don't think this is anywhere remotely the case simply because if we go back to the the people that were crypto sophisticated, like talk to people setting up the CBDC or not CBDCs, they might as well be, but like the stable coins in the UAE, like Bitcoin might as well be like dead tech. Like it's a dead rock. Like there's all this stuff happening. The point of just sharing that is like, those are the people theoretically should be closest to what you're describing. I'm like thinking about like, it's so far removed that the feds, the central banks have lost control, inflation's a thing. They don't believe it to be a problem. Brian Cubellis (01:08:41.774) Well, they can they cannot believe it to be a problem, but it is a problem that is like, I agree. It's just that when it runs, they're not going to be like Bitcoin's the solution is the point. Yeah, this kind of goes back to for folks who haven't read it. When money dies is this incredible compilation of little anecdotes and vignettes really from Weimar, Germany and like what happened and like what. what unfolded when money died, when fiat hyperinflation took hold there. And what is so heartbreaking about a lot of that, you know, a lot of those stories there is like that people just didn't wake up. Like it took like gold was there in front of them as as the, you know, the lifeboat and. for the most part, people didn't realize. Instead, it actually went the other way of people who put their money in stock markets saw great nominal returns and thought that they were getting rich. And so he poured more money into the stock market rather than realizing what's happening is it's a melt up because the currency is becoming debased at a faster and faster rate. And you really need to just get out of the system and put your value into sound money in gold at the time. And so there's all these examples of people like speculating even harder and then getting more wrecked eventually because of the volatility that comes from, you know, that kind of debasement, you know, volatility to the upside, but also to the downside, wrecking people. So, you know, like in history, when this happens, people don't really wake up. It's really only in hindsight when, when, um, Stability is found in the thing that emerges from the ashes That's what i'm saying the hindsight may be on the other side of this cycle because are we in the melt up phase right now? Logan pull it up Look at this chart Have you guys been paying attention to video? Like in a lot of these other tech stocks. I just saw the ceo I think he referenced like, you know, why waste that energy Yeah, the idiots are in control Brian Cubellis (01:11:03.534) Like are we in a melt up phase right now? I think we are. Yeah, to both your points that we are and it's like I saw something on LinkedIn yesterday and it's someone who, you know, on paper is very intelligent and could be very, you know, well intelligent than everyone in this call right now. But it's like he shows a map of the United States and it shows property values and how they've increased since it's the second or third quarter of 2020. And what was the money supply increased by? called 40 % or so since then or in the 18 months. And all of the state's property appreciation were just like right around 40%. And the post is about how like real estate's a great investment. Look how these properties are appreciated. And it's like, I don't know how, like, how does it get more obvious than what, you know, what's currently going on? It's just, it's frustrating. Hey Marty, on that note, because we haven't had a chance to catch up is how great was Glenn and Sam? Because this goes back to what we're saying. Like they understand this I Mean obviously Glenn second appearance kindred spirit and getting Sam on as well as Incredible. I mean That's the thing. I do have this and I've Disclaimer I've had this feeling in my stomach since 2013, but it's more pronounced than ever right now That something like people are gonna get caught off sides. Not only like not getting on the Bitcoin train, but really expecting the Fed and the federal government to be able to kick this can down the road further and further. I think the next time they kick it, it hits the wall and drops like six inches in front of them. Logan, pull up the chart I just put in the chat of like, I agree and I think we are in the melt up phase, but I think we're so early in it that it fools us. So here's the chart of Weimar hyperinflation and it really took place between 1917 and 1923 when it all fell apart. But it's obviously a parabolic advance, you know, exponential acceleration of... Brian Cubellis (01:13:11.726) of the exchange rate of the mark to gold. But if you look in the 1917, 1918 range, you're seeing 100 % year over year growth. And that's still the very beginning. And there's a lot of at 220%, one year, 220%. Oh, sorry, I was looking at the wrong axis, but you get the point of like, very early on, there's still already like uncomfortable levels of inflation, and you're still like seven whipsaws away from it all falling apart. Brian Cubellis (01:13:58.638) Marty, I think you're probably right in terms of US perspective in terms of going back to the thoughts around complacency and really just trusting that they can keep kicking the can down the road. But like Bitcoin is this global asset. I think, you know, if we're if we're comparing this time around to Weimar Germany, it's like, well, the Internet exists now and Bitcoin is by far and away. the best, most effective escape valve that we've ever had. So it is a totally different scenario to, you know, a hundred years ago in that sense, right? Like it's much more feasible for people to get out in time than it ever has been. Thank you, Brian. Articulating. That's the other, yeah, again, analogies. I think the historical context is good to understand and try to map to what we're going through now, but the context is completely different with the internet, with Bitcoin, with the global nature of this asset. I have a question for you guys. I'm generally curious on with the ETF inflows, do you guys think people get like, you know, they go in at a 1 % or whatever alternative asset allocation and then it appreciates the 2 -3%. Do you think that whether they increase their exposure or gets a 5 -10%, do they go far enough to understand why? they need to take it off or why they would want different custody, all the things that you would go down when you naturally go down the rabbit hole, or does this end up being where people just passively have large material exposure, not 1%, 0 .5%, but like 5 % to 10%, and they leave it on there. Brian Cubellis (01:15:46.67) I think it's going to be case by case. Like I think some people it will prompt them to learn more about it just from a pure curiosity and interest perspective. It's like, oh, this is by far and away the best performing asset in my portfolio. Maybe I should understand it more deeply. And if they do that, then yeah, maybe they take it out of ETFs or if not, maybe if they don't even go to that extent, it's like their next buy, like their next allocation is something that's outside of the ETF, whether it's self custody or something like on -ramp. So, but I do think it's just gonna be case by case, because it's like, comes down to the person or the investment committee, the allocator themselves, looking themselves in the mirror and saying like, should I understand the best performing asset in my portfolio a little bit better? Well, to compare to equities, right? Like equities have been de facto savings vehicle for people in the US for several decades now. And I think it's still quite a minority of people who even think about why that is, right? Why am I just? funneling my retirement into the S &P 500, which is predominantly a handful of companies driving the performance. Why do I do that? And it's not like people are a lot of people aren't thinking past that point in terms of, you know, the money is broken and I'm using this as, you know, an alternative or store of value. So I don't know, maybe it's a little pessimistic, but I think a lot of majority of people that buy the ETF are probably not going to go fully down the rabbit hole and understand. the complexities of Bitcoin, the true nature of it, just because they haven't even, a lot of people haven't even gone to the point of understanding why are they putting their 401k or their brokerage account into the S &P 500 or another passive ETF. Brian Cubellis (01:17:31.438) I'm a little more optimistic in the sense of the people that do understand it and taking their dollars out of the equity markets, like the five people on this pod. And that people that once they learn a little bit about or have material exposure because it's money, they have to like figure it out. It's just like, if they don't, then they can lose it all. But we'll see. It's something I've just been thinking a lot about, like people get their exposure and then it's obviously going to increase, or they're going to increase, you know, willingly. Independent of price appreciation and then what threshold does it get where you start to look at it more deeply than a number on a screen? and I think that I think it's naturally just because It's money and it's very different than anything else. You have a like intimate relationship with it You start to look at like what is this thing because it keeps increasing and Now you end up at this other side of it where you're you know going down the rabbit hole Yeah, I mean look at the data. We're up 131 percent over the last year after over the last twelve months seventy percent of supply has not moved in over a year obviously probably not the institutions were talking about in this context looking at their portfolio go up significantly not rebalancing but they are competing with these hardened holders as well that's a whole because the bitcoin market the holders that are in now i think really get as is evidenced by that hot away that seventy percent holding for a year or longer. I think a lot of people that are already in are not giving up their Sats anytime soon. Yeah, and we saw this previously with the GBTC holders. It was part of the impetus of onramp on the Bitcoin trust is that people realized they didn't like it to be in the trust and then to sell they had the taxable event and then they had to, that wasn't even the problem for a lot of people. It was getting out of the market for that two weeks because you have to sell. Then you have to wait for the dollars to roll over to your bank account. Then you have to wait for the dollars to roll back over to execute. And then that timing, especially in a bull run, really pisses people off because it can be the difference between having 10 to 20%, if not more or less Bitcoin. And so that's another like just data point on you get exposure, but then you wake up and you're like, wait, this is a shitty product. So I think, and again, I don't know what the number is in percentage from all, obviously it's probably not, it's definitely not ever, it's not a large percentage, but that was also more. Brian Cubellis (01:19:54.574) I guess it wasn't a retail product, but there wasn't a lot of institutions. That was the only version, but there weren't a lot in in 2017, 2020 versus what's coming now. Brian Cubellis (01:20:08.43) more bullish than all of you, maybe not Brian. Brian Cubellis (01:20:13.774) What do guys think, anything else we should touch on before we wrap up here? Brian Cubellis (01:20:19.694) We'll be back in the desert soon. Jackson's going back in a couple of weeks. We'll be back there in April. Hopefully we get Jesse along with us. Yeah, we got some big stuff planned in April. Can't name names, but big firms that we will be doing some events. We're going to take Bitcoin to the desert and there'll be maybe crypto things going on, but we will own the Bitcoin side of it. It's a very high signal stuff happening. Thank you gentlemen. We need the Bitcoin only message getting out there. See? These societies have been built up over millennia. They don't deserve to get rugged by the disgusting people in crypto. We need to save them. We need to bring them in. Show them the light. Yeah, there was actually a big learning party that I don't know if you've thought about deeply is like, they kind of do a disservice when you offer crypto, like in you're trying to like navigate to Bitcoin because at best you can just like, it's a sprinkle of like casino versus just saying one thing and you go there and you explain why one's valuable, the other isn't. And then you can just give a whole, like it's multidisciplinary, right? People come at it from different angles. So you can like help architect in their brain why this is an asset that's not 1%, but 5 or 10%. It's just they're like doing themselves a disservice and they don't even realize it. It's something like it just started like being out there and realizing it's like they're trying to get like there's ETF providers that are out there shilling everything. And it's like, guys, all your inflows, all your custody is Bitcoin. Why wouldn't you just focus on that? You're because at best you're just shilling, you know, crypto currency. Yeah, just trash cryptocurrency, which basically because like the idea is an institutional investor, if you're getting, if you see all this on a website or what you're doing, then at best you're like, well, why would I take a Brian Cubellis (01:22:00.206) meaningful position in Bitcoin because what about these other things? Like what if they're the next Bitcoin? So you're like rug yourself on the allocation side versus just like having a stance. And it's funny because it's the most, all these people, whether it's custody or liquidity, it's all Bitcoin, like a majority is 80 to 90%. And it's funny, every time we say we're Bitcoin only, to very sophisticated people that are in crypto, they're like, oh, that's real smart. Really? Yeah. I was on a call with an ETF provider, I won't name who, that basically said, MI, multi -institutions, bull. Like it's just the reality of like you have to, you know, it's you got to get in strides. Like it's still early, you know, it was also that it would melt brains. So, you know, that kind of sends a signal of how early we are, but make no mistake. Like if, if all this stuff works out, which we all believe it will like multi -institution will be the standard for how ETFs will be distributed globally. It's just from again, again, flow of water. You can't have large amounts of Bitcoin sitting with a single entity. Yeah. It's common sense. Gentlemen, it's been a pleasure. Jesse go yell at the people working on your house today, and they're looking to do that right now. Kidding Jesse's a kind homeowner. It's good to his subcontractors It's true bro Brian Jackson, it's great to have you guys on we'll be back next week Yeah