The Last Trade E075: Tailwinds Tipping the Scales with James Van Straten

Jackson Mikalic (00:01.473) All right. Welcome back to The Last Trade. This week we have James Von Stratton joining us from CoinDesk and I'm joined by my co-hosts Michael Tanguma and Brian Cabellus. Great to see you gentlemen. James, thanks for joining us this lovely evening of all time highs. We were joking before we hit record that when we recorded The Last Trade last week, we were breaking through 93,000 but really didn't have the momentum to continue on. So we're kind of... edging up against 94K right now. James, it probably has something to do with you joining us today and a lot of the bullish takes you'll be bringing to the table. But James, great to see you. How are you doing? James Van Straten (00:40.055) Thank you for having me guys. really excited just to dive into the world of Bitcoin and all the derivatives that surround it. But yeah, I'm doing really well. It's an extremely exciting time to be in this space and it's something that I think all of us have been gearing up for for a number of years now. And I think the most surprising thing is really that I haven't got any texts from so-called normie friends or it is relatively quiet and the sustain, this is another reason why I think the interest is reasonably low, which is why we can go higher. One of the many reasons. Jackson Mikalic (01:19.907) You know, I did get one text on Friday afternoon last week from this individual I met at my buddy's wedding in June. And he was like, hey, can we talk about that crypto thing? So I got one on the scoreboard so far, but you're right, James. I've gotten a couple, but it's nothing like you would expect. Like there are people who should certainly be reaching out to me to have it. Brian Cubellis (01:34.527) I've gotten a couple, but it's nothing like you would expect. There are people who should certainly be reaching out to me that haven't yet. James Van Straten (01:43.741) What I found was the catalyst because obviously the COVID, everyone was sitting at home, nothing to do, buying. But even if I'm getting that slightly bit of retail interest, they're not doing that conversion. They're not actually buying Bitcoin or buying crypto, essentially. They're just like, it's hit all time highs or it's whatever. But they're not actually then going and buying it, which was different to COVID. Because I think everyone's now back into that nine to five mindset. completely leaving us in this other realm. Brian Cubellis (02:19.154) You're on mute, Mike. Jackson Mikalic (02:19.192) Yeah, Michael. Michael Tanguma (02:23.332) The ears are perking up, but there isn't that actual like, you know, smash by or like the version of, I think where everyone goes down the rabbit hole is they start to wonder like, wait, what's actually happening here? Cause that's when everybody starts picking up. like, rather than just a little by, it's like, let me reevaluate what the hell's happening. And then that's when you get that like FOMO start chasing and the momentum. And then it starts that reflexive feedback load that we're way, way early on. Brian Cubellis (02:48.691) Well, I think it's also hard for us to grasp because we're so deep in the space and to an extent in an echo chamber or a bubble. for the average normie person, they up until this point where we're making new all time highs, they like legitimately thought it was dead again. Right. Like so it's and then the other component of that too is like even though it's making all time highs, then there's that natural Jackson Mikalic (02:48.95) I think it's a. Brian Cubellis (03:16.293) psychological aversion of like, do I want to be buying now at all time highs? And then that's really what you hope just sparks the curiosity to dig a little bit deeper and understand where this actually all potentially goes. And, you know, if it keeps not dying and making the all time highs, maybe there's something that you've missed previously. James Van Straten (03:36.365) Yeah, for me, it's once we hit another big round number, humans love round numbers. So 10k I thought, okay, Bitcoin is this mainstream asset, cements itself. I was wrong. It will be 100k. But the alarm bells for retail will be Bitcoin at 100k. And it's not going to be gold at 3000, 4000, 5000 dollars an ounce. And I think that's the difference. Because if you ask retail what the price of gold is, they couldn't tell you. But Bitcoin will be on every single mainstream media headline at a hundred thousand. Michael Tanguma (04:08.58) Yeah, that's exactly right. I've long thought I like the framing of the ET, the IPO moment people reference it as the ETF. think it's the hundred K. I think the hundred K is that, that you've kind of invert. what, why can't this go to zero? It's like now working this actually go to, can it go to a million? Where is that? Not to throw more bullishness on kind of what's probably already going to be a very bullish pod, but I, I had some interesting, you know, Bitcoin conversations over the weekend, shopping with very like high net worth individuals that I think it's going to be the easiest to the point that we discussed here that it's ever been because of what happened in the past couple of years. And so there's at least that embedded frame of reference that people know there's an asset class that's here, but maybe it's it's all like snake oil, whatever. But then the here seeing previous all time highs get breached and then in the a hundred K and then because the two big lever points was one is like, did you know it's 91K? And then everyone's ears perk up. They're like, wait, with $91,000 within the second part is just figuring out the way that you reference it's just a proxy for the amount of money printing. Because they already know that the money printing is there. Four years ago, it was still kind of taboo. Everyone knows that all of this is unsustainable. It costs too much for food. And when you tell them that this is the solution and you break it down in a very concise way. They're like, shit. And then what I found is very helpful is giving them a reason why nobody tells them this story because they're telling them, know, they're at the Ponzi to buy all these other things or like go park it in the wrong way. It's like, no, no, like you have to be very serious about this and thinking about your counterparty and also what you buy and you don't need all this trash. And it's kind of like where our offering comes in. But I think like the market's super primed for this whole thing. So yeah, it's gonna be fun. Jackson Mikalic (05:50.924) I'm gonna take the other side of the coin and this reminds me actually over the weekend my buddy had a few of us together for his birthday and he was like, you know, I bought $20 of Doge and I was just like, what the hell man? I had no words for him. I was just so disappointed because he knows, I know it's Unip. Michael Tanguma (05:53.691) There we go. Brian Cubellis (06:06.596) You Brian Cubellis (06:11.025) You James Van Straten (06:11.881) Unit bias, easy. Brian Cubellis (06:14.086) Yeah. Michael Tanguma (06:14.245) Well, I think I think Jackson just doxing who his friend group is. I don't think this is a proxy for like, I don't think it's a proxy for like the sophisticated sentiment of investors. think he's just James Van Straten (06:18.647) Yeah. Jackson Mikalic (06:20.864) What's your view the sophisticated sentiment of investors? I would say that majority of people still couldn't fully... Majority of people that you just would pick off the street, I think, would have a hard time discerning the difference between Bitcoin and Dogecoin. But maybe for the people that we're speaking to and, you know, James, the people that you're in circles with in the industry, people are really starting to coalesce around the idea that Bitcoin is very different than the broader crypto space. But for most people, they're still conflating the two. You're right. Michael Tanguma (06:52.795) Now you. Michael Tanguma (07:07.249) You're right. You just jogged my memory. There was a lot of conversation during the one I was referencing around CBDCs and other cryptocurrencies and how to like, but I think those are getting easier to dismiss, but yeah, you're right. There, the conflation there. Brian Cubellis (07:18.642) There's also, I think that's right, Jackson, but I think at the risk of saying this time is different, I'll say it, like no one's talking about a doge strategic reserve, right? Like the geopolitical sovereign level game theory is playing out for a specific asset and it's Bitcoin. So I think subconsciously or consciously, I think that's some air cover or James Van Straten (07:42.647) We do have, sorry. Brian Cubellis (07:47.276) signal in the market that Bitcoin is different. James Van Straten (07:51.873) I was just going to say a joke that we do have a Doge government department now. Brian Cubellis (07:56.304) Right, yes. Jackson Mikalic (07:58.094) Yeah. Yeah. I mean, that's it's not helping our case here, gentlemen. But James, we kind of jumped right into it, which which is a ton of fun. And, you know, it's kind of a hot star, which I appreciate. But I don't want to do a disservice to you as well. Just would love to give the audience a better feel for your background mentioned at the top of the show. You're a senior analyst at CoinDesk. You're focusing predominantly on macro and Bitcoin. But really, you know, how did you get into this? Brian Cubellis (08:01.948) Hahaha Jackson Mikalic (08:28.058) seat that you're currently in, what were your experiences that kind of primed for you to be adopting Bitcoin at a personal level and then, you know, taking the plunge professionally as well and covering the asset class. Michael Tanguma (08:28.969) you James Van Straten (08:38.797) Yeah, I've always had an interest in money, finance, economics, probably through my parents. And I first bought Bitcoin, already actually only really heard of Bitcoin in 2017. So I bought in December right at the very top, I think the price was about 19,900 and something. And I was like, yeah, it seems like a good buy. So I bought the exact top that you could buy. couple of months later, bear market. But in those couple of years, being really early 20s, didn't really have anything else going on as much. It was just studying, learning. I didn't really take a liking to any of the crypto. I did love the 24 seven, the volatility, like from that aspect, but I kind of understood the... I understood the gold narrative pretty well. I actually bought gold before I bought Bitcoin, which is quite weird at the age of 20. And then I realised like... shit, like can't really buy a house over the next couple of years unless I put down like half a million pounds worth of debt in London. So I thought, okay, this is probably the best way to do it. I probably fully understanding Bitcoin at that time. And then not until 2022, I was in normal normie jobs doing a nine to five. And then I thought, okay, I've been learning about Bitcoin for four or five years. I want to take a full plunge at this. I went to Sideler and Co, which is a hedge fund. their research department. So they were just onboarding Bitcoin as a treasury asset for themselves and wanted to understand on-chain analysis. And that was kind of the stuff I was just doing on Twitter by myself and just putting charts up where we are in the cycle or that kind of stuff and started with them. I then was there for about a year and a half or so and went to another media publication, Cryptoslate, focusing again on Bitcoin and macro. James Van Straten (10:42.955) and then yeah just joined CoinDesk a couple of months ago doing similar stuff and just really understanding the intricacies between Bitcoin and the macro landscape really. Jackson Mikalic (10:56.94) Yeah, that's awesome and really excited to dig into some of the topics that you've been covering recently. Fascinating to hear that you were at a hedge fund a couple of years back that was already thinking about Bitcoin as a Treasury Reserve asset. How did that kind of coalesce within that organization? Was it kind of driven top down by leadership or was that... The CEO at the time, he was a big thing. Michael Tanguma (11:08.337) So. James Van Straten (11:16.991) Yeah, the CEO at the time, he was a big Bitcoiner. They acquired a custody service called Numbers. So they were well ahead of the game. I think they were there since 2013, but they wanted to really like branch out their research department. So that's kind of where I learned about Glassnode and all of that kind of other data stuff. And why it was so interesting is like when you trade any of these US equities, you just don't get the granularity. of the data that the on-chain analysis provides you. You can go so granular with this data, and I'm not saying it gives you an edge in the market or anything, but from a data perspective, it is fascinating because it's just a story. And there are so many charts and cycles and metrics that... Michael Tanguma (12:01.384) you James Van Straten (12:09.491) not saying that they time bottoms or tops perfectly, but they give you such a good understanding of Bitcoin as an asset and the story of its 15 years of adoption and what monetization from zero would really look like. And yeah, it's such a beautiful way of portraying the data. But like one metric for me that just really resonates with this cycle comparing it to previous cycles, I'm sure you've seen the, when you look at the Bitcoin price from the cycle low, which was the FTX class November 22, 22, and we're up about 550, or 500 % from the cycle low. But if you take those two previous cycles before at that point in the cycle, we're exactly where we were. And that to me is just human psychology. You buy Bitcoin when it's depressed, really low, because you're like, it's so cheap, I just have to buy it. And then it obviously does that whole rebounding phase and the consolidation phase and then that disbelief phase. And it's picture perfect, which is one of the reasons why I still ascribe to that four year cycle theory. Jackson Mikalic (13:17.708) Yeah, absolutely. mean, there's a lot of, I guess, debate at this point just how much the halving plays into the Bitcoin cycle dynamics. I would tend to agree with you that it still plays a pretty crucial role and it has to be in part due to investor behavior and human psychology. James, to your point is like this chart is an interesting one to look at because you can kind of see that we're tracking fairly closely the third and fourth epoch. So the price Michael Tanguma (13:26.609) So, thank Jackson Mikalic (13:47.712) performance since having right like for those who aren't taking a look at the video for this podcast we're looking at a chart that shows the first second third fourth fifth epoch and the price performance after the having so we're how many days into this one two hundred thirty eight days and the performance is pretty close to obviously that the first two cycles were disproportionately large just for obviously many reasons but we're tracking pretty Michael Tanguma (13:50.801) Thanks. James Van Straten (14:15.085) Thank you. Jackson Mikalic (14:17.642) closely to the previous two cycles. James, do have any thoughts on that? Michael Tanguma (14:21.521) So James Van Straten (14:22.357) Yeah, I think it's kind of going back to the human psychology. I do think the halving decreases in its relevance cycle after cycle. But again, I think as long as the theory or the narrative continues to stay up, then it's relevant until we break the four year cycle. It's not relevant. Yeah, we have these new players in the game, the ETS, MicroStrategy, all the other Bitcoin crypto equities that doing this playbook. We've never had this sell this demand sell side imbalance before ever. So that would be one reason why, we should just break to the upside. You have the other theories of, no, we have the diminishing returns theory where each cycle returns get less and less. But again, we're valuing that in a denominated in a fiat currency that has to inflate in a credit, in a... Michael Tanguma (14:54.609) Thanks. Michael Tanguma (15:11.513) you James Van Straten (15:15.775) in the credit. you can go back and forth with it, but as long as human psychology plays out, think we're still ascribing to this theory. Brian Cubellis (15:26.162) I'm curious, do you agree with the notion that the previous cycle was somewhat muted due to what FTX was doing and various forms of paper Bitcoin? Because I think it was interesting at the beginning of this year when the ETS were going live and there was this thought of, we made all time highs before the halving for the first time. And in the back of my mind, I was like, well, yeah, but what if the previous cycle had just played out like it should have? Would we really be above all time highs before the halving? Probably not. Curious if you ascribe to that line of thinking. James Van Straten (16:04.319) So two things, I do ascribe to FTX muting that cycle on the basis that I actually count the all-time high in April as the real all-time high and not the November all-time high. From an on-chain perspective, addresses, transaction, throughput, everything was, yeah, that's a normal all-time high. And then we had the China mining ban, which saw that hash rate 50 % correction. That really stunted any kind of meaningful growth. Brian Cubellis (16:22.844) Mm-hmm. James Van Straten (16:34.223) that second half of 2021 was purely a derivatives play. It was just pure leverage. think was more from a, I think everyone knew inflation was here to stay. The Fed are tightening, central banks are tightening. Let's just get like one more juice out of this cycle. So that 2021 second part completely took me off guard. I wasn't expecting that. So I played it as April was the high and the next six months kind of threw me because I was so bearish kind of because of the China Mining Band. And then going into the all-time high before the halving, that was one of the calls that I did make because one, I was so bullish on the ETFs and the impact they would have. But what was really interesting was in October of 2023, just before October, 2023, Binance was the number one futures exchange, which is completely retail driven. CME, the institutional exchange, was second. From October, it became number one. and that's when Bitcoin started to climb. And I was like, okay, these guys are front running this ETF launch. The exact same thing happened in the gold ETF in 2004. Just before the ETF launching gold, gold hit a 16 year high because all the hedge funds, traders were taking a long position on the futures market, front running the ETF. The narrative of the gold and Bitcoin ETFs is so similar. Michael Tanguma (17:39.215) Yeah. James Van Straten (18:05.901) it's scary. And for the seven years from 2004 to 2011 when gold peaked, the ETF inflows were just inflows, inflows, inflows every single year. And this is, and I think Bitwise did this unbelievable chart where the Bitcoin inflows just destroy the gold inflows. And yeah, for the next seven years or however long we are going to get inflows, and they are only going to accelerate in my opinion. So yeah, it's that it's so hard to contain yourself and you always have to justify why you're being so bullish. yeah, these ETFs have just been just a tremendous success. Sorry, the last thing that I just want to talk about about the ETFs, just because it's on my mind is the basis trade, which was the way you long the underlying asset and then you're shooting short in the futures market and you're capturing that premium that was prevalent at the beginning of the launch that dominated most of the ETF inflows. That's why we were kind of consolidating for other reasons. We were obviously drawing down and consolidating after the all-time high. But now these ETF inflows are not basis driven. They are long plays. And I think it's taken almost a year for the hedge funds and these traders to be like, okay, we've developed a big enough liquidity in the market. I'm now comfortable taking a net long position in these ETFs. And I think with these launch of options, on iBit today, and that's going to grow the spot market, that will grow the options market, that's just going to grow everything. And it means bigger positions for these bigger players. Michael Tanguma (19:47.311) Yeah, that's something we talked about all summer long because we weren't seeing that retail interest or demand and that had come up with some folks closer to Wall Street as the basis trade for a lot of these like absorbing these inflows, but it also makes sense post that consolidation. What we're seeing now is actual positions being established. James Van Straten (20:05.868) Yeah, and this is something like Bernstein, the private asset manager was saying that it takes time for these guys to get a liking and accustomed to this kind of market. And yeah, I think we're here. I think these next 12 to 18 months is the part of the cycle that is the hardest part, just to essentially sit on your hands. But yeah, it's... We're now seeing the full almost the full monetization of Bitcoin within all these financial instruments now. Michael Tanguma (20:39.121) Yeah, curious on your side being so close to the analysis on the listed companies, but then also on the institutional side, where do you see the inflows or majority over the next 12 to 18 months? Because we have a lot of conversations and just from anecdotally, the institution still seeing they're very far, obviously like there's on the margins interest, but they're still like trying to develop a thesis and then they air cover to establish how do they not get because the 2021 is still a top of mind with everyone. and like how everything went down, where on the treasury, feels like we're seeing, you on a daily basis, new firms stepping into the market, specifically listed companies. Curious how you think about that. James Van Straten (21:18.141) I think if you look at the 13f filings and the top holders of iBit, they're pretty much all hedge funds and... investment companies that are probably doing this basis trade kind of play. And we're not seeing that many net long positions. You've got the Wisconsin Pension Fund, I think maybe one or two other pension funds, but not many are doing that kind of play. So I think it is dominated by retail. You can see by the size of trade, it's relatively small, okay, comparing to the other ETFs. And then it's really interesting. Their cost basis is around, I think around 60,000 off the top of my head, the ETF investors. And each time we had a 20, 30 % correction, their cost basis was almost the support for the price. So these guys are really momentum driven. So I'd like to say that is primarily retail. But it is encouraging. Like when we had that yen carry trade unwind in August, I think it was August, the iBit saw like no outflows. Like for two days there was no outflows. And these guys have stomached 20, 30 % corrections over the year. And I think that just builds that conviction. it's, yeah, maybe these institutional guys. longer. We know that quarter's years but I think this next quarter coming of the 13f filings because the one we just saw was the one that wouldn't have the Trump victory and all of the recent price action. I think now we're going to see people and companies scrambling to actually kind of get a position now because I think the market is now dictating them. They can't really dictate the market. Jackson Mikalic (23:00.204) Yeah, those are great points. were actually taking a look at the ETF data or the 13F data yesterday and kind of digging through the largest position sizes. James, your point, a lot of hedge funds that are probably some are long. Others are probably have short futures on to hedge out some of the exposure. But taking a look specifically at 13F filings that came in for firms that have greater than a 5 % allocation to Bitcoin or to the ETF specifically, Michael Tanguma (23:26.156) you Jackson Mikalic (23:30.128) was like about 2 % or so. And those are ballpark numbers. So only 2 % of, let's say, the firms that were captured in the third quarter filings for the Bitcoin ETFs had greater than a 5 % allocation. So it's still in most cases very de minimis. Like you see 10-bip exposure here, 30-bips here, percent here. James, I'll be really curious as well to see what the fourth quarter results look like, because I agree with you. Michael Tanguma (23:33.108) Okay. Jackson Mikalic (24:00.048) that markets really like certainty. And we, I think, now have a lot more certainty as it relates to how the political landscape will shape up to be for in favor and supportive of Bitcoin and the broader crypto space versus being antagonistic. So I do think now that that that was probably the biggest impediment to not seeing more institutional adoption. now that barrier has been lifted. So it'll be quite exciting to see what happens for the fourth quarter filings, because I think it will vastly different. James Van Straten (24:32.501) Yeah, I think we're going to get some form of announcement from someone within the next six months or Trump's first 100 days if there is the rumours of the strategic Bitcoin reserve. I've just been looking at the Bitcoin price and every time it goes down... I'm like, there's just bids relentlessly every time it drops. And if you look at the bull market correction drawdowns for this cycle, our biggest drawdown in this cycle has been 25%, maybe 30 % of a push. If you compare it to other cycles, okay, Bitcoin is becoming more mature as an asset class, but we were seeing 50, 60, 70 % drawdowns in bull markets, so that's normal. Michael Tanguma (25:01.427) . James Van Straten (25:18.221) And to only get maybe a 30 % correction like once, it's just insane. Like we're so used to this volatility and we just haven't really got it this cycle. Yeah, you can talk about the one or two days where Germany sold or the Yankari trade unwind, but those are like one-off events and they kind of rebound straight after. showing that demand for these bids. And we've now been around 90,000 for a week. the market hasn't given up anything really below that and anything below 90,000. As a joke, a couple of days ago, I tweeted that the Bitcoin price went down minus 0.77%. So I'm going to buy and it was like 88,000. And that was like the, that was literally like the bottom and now we're at 93 and a half. And to me, that is so indicative of like, this is relentless bidding and this is why we're marching on higher. Michael Tanguma (26:14.236) Yeah, the momentum seems to the structure really changed post election. And to your point being around never seen bid like this where like the corrections usually there and it's wild to see it run like this and then barely correct. start marching again. James Van Straten (26:31.531) And why this is different sorry is in this regard, this is something that US equities and gold do. So gold is made like an all time high this year and like 30 times, 35 times. But every time that Bitcoin makes an all time high, every time people like greed, euphoria, must sell, it's gonna go down again. It did in March, but again, this is why this part is different because we didn't get that correction and all the holders were in profit. A lot of profit. Well, actually there was a stat. When we broke the all-time high for the first time, I think around say 85,000, 86,000 two weeks ago, there was more realised profit in the 2017 all-time high than we saw when Bitcoin broke the $86,000 all-time high. And Bitcoin is four times greater in nominal value than the 2017 all-time high. And that to me is wild that there was more profit taking seven years ago because that was a bubble and everyone was like, yeah, take profits. But people were like, no, I'm not taking the profits here. Even on an inflation adjusted basis with just above. But people were like, no, this thing is going higher. Michael Tanguma (27:47.545) Yeah, there's a, there's a, this notion of like, like, you know, this idea of like energy can neither be created or destroyed. Like the volatility has to exist somewhere always. And so going back to 21 or 22, there's a lot of demand that exists that people don't, don't have exposure or didn't have exposure. right from like the paper Bitcoin and whether it was the payouts from Genesis and the other firms. Like there's a lot of people short Bitcoin that want Bitcoin independent of like Net New Market, right? Usually it's like goes back to the FOMO and the, like there's a lot of people going to be chasing. I think even right now and going into it that I don't think we've historically seen willing to step in and then not sell because they have long-term conviction versus just looking for some kind of price, short-term price appreciation. James Van Straten (28:34.987) Yeah, it's a very weird dynamic. Like you said earlier in the call, I think the COVID mentality has kind of changed. I was at a conference last week in Slovenia, a mining conference, not only obviously everyone was bullish about Bitcoin, but they were also talking about the fiat currency being like, I don't want it. I don't want to hold it. I don't want to... I just don't want it. And it's not even that they wanted Bitcoin. were there to learn about Bitcoin. They were just like, I don't want this. And that's the first time for me really that a lot of people were like, don't want it. And they're just outright like just rejecting it. And again, that's part of the mentality, probably the game theory of what is your denominator in this world? It was again interesting to see that the All In podcast with the four of them talking about what do you actually, do you see Bitcoin as a denominator for the world against goods and services? And again, that's a mindset to have as well. So I think this all takes time, but it's mad how this is all happening and it's happening quickly and COVID did accelerate this by a number of years. Michael Tanguma (29:44.424) It's funny you mentioned all in because we've talked about this before and like, you know, it's, it's advantageous or easy for them to not talk about it or think it's a joke when the price is low because that's just who and then also the debt cycles and they have investors and they have to just kind of appeal to them. But I've always had this contention that like Chamath is probably the smartest one on that call and he grocks what's happening, but it's just not in his best interest to explain it to like long, large investors that the dollar is going to end and all the things associated. But on this last call, he kind of hinted at it in like understanding the dynamic of like, it's like, Hey guys, like right now we're not, the dollar's not ending. Like, so let's just not talk about it. It's not being used. That's okay. That's your vision of the future. And it was almost like he bought into it, but it's like right now we have to live in the present and this is what it's used at. It's a store of value, but that was very subtle and nuanced and understanding this notion where most people just think that these guys don't get it. It's like, it's like, you know, it's the same thing as Elon where people don't think he gets Bitcoin. It's like, we get it. Like we get consensus. We get there's only 21 million. one of the smartest people, know, that this guy just like fundamentally doesn't get all of this. Like, I just don't buy into that. James Van Straten (30:47.801) No, I believe Elon fully understands it. He holds like 12,000 on Tesla's balance sheet. Like if he didn't he'd sell it. He's and Yeah, and SpaceX as well. So yeah, he probably holds around 20,000 Bitcoin and personally I assure you he probably holds a lot as well But it was also from the all-in podcast the two things the second thing was the opportunity cost and this is what a lot of people can't understand that I have friends trying to flip flats Michael Tanguma (30:55.229) and SpaceX, I believe. James Van Straten (31:18.081) work they're trying to do and that's not even their primary job they have no experience with real estate but because they've seen their parents do it they're I would say I could go on about an hour just on about real estate but the the work they're doing and I'm just sitting there I'm just like just buy a bit of Bitcoin like it will be it's just a lot less work and do the work but it's less work holding it but it's either stubborn ego or And I think that general, or my parents' generation, just kind of skewed everyone else below them's values, visions of what the world should be. But yeah, it's again, it's another mentality and a way of thinking about the world. Brian Cubellis (32:04.686) It reminds me of one of the slides in Sailor's recent presentation he's been giving where he just has a slide of two columns lists of all the different costs and frictions associated with owning property. And when you put it in that light, it's like, yeah, no, this is just the best form of property. There's no cost associated, no upkeep. You don't have to get after your tenants. It's very simple and straightforward. So I think that's been an effective one for reaching these segments of the market that, you know, it sounds like your friends or peers are in where it's like, know they need to do something, right? And they've landed on, you know, what their parents did. Let's, you know, flip some flats. But it's like, no, there's just a much, much easier, cleaner way to do this. James Van Straten (32:44.171) Yeah. James Van Straten (32:53.323) Were you referring to the sailor presentation, the one he did at Cantor? Brian Cubellis (32:58.01) Yeah, was that one. I think the one he did in Nashville was similar. It had some of the same slides in it. But yeah, it just goes through all the costs associated with owning property. James Van Straten (33:09.461) Yeah, that presentation was absolutely incredible. Michael Tanguma (33:14.344) Really, I heard that this past week from somebody and they made a note, they were like called up, like you gotta go listen to it. And I wrote it down, I haven't gotten to it, yeah. Brian Cubellis (33:20.657) It's good. James Van Straten (33:22.733) Yeah, so I've been the biggest microchashie bull since almost October of 2020. But one of the reasons is as the UK don't have access to an ETF or anything like that, I'm sure we'll be getting onto that later. So you have all this fiat essentially sitting in a pension. And I was like, okay, this guy is buying it. But it was more of a defensive play for Michael Saylor. He's like, I've got all this cash, I don't want to do with it. Okay, I'll buy Bitcoin. Some of us in the UK are like, OK, that's quite cool. We'll just give him our money and see what happens. And it's thank you to the FCA, because without them, our returns have just been magnitudes greater than anything that we could have hoped for. But what Michael Saylor has done in this past, I could say, week, but he's just rewritten the financial playbook. And I just don't understand. how anyone isn't talking about it. It's mind blowing. When you first... find Bitcoin, your mind's blown when you actually first understand it. And then when you read about microstrategy and the whole play he does, it's like, it just blows your mind like multiples more and how it all converges with one another. It's just, it's insane. It's so hard to even talk about this to other people because it's just a completely different way of thinking. Brian Cubellis (34:52.474) It's very true. And it's crazy that the average normal person still has no idea who this Michael Saylor guy is. Like maybe they saw, I remember, because it always comes up on Twitter of like, I guess it was some, maybe New York Times or some other mainstream media, when it was like basically the depths of the bear and it was like, Saylor bet billions and lost. And so everybody references that now that he's, you know, obviously way up on the position. But it's like, for most people, like I think they Jackson Mikalic (34:52.846) Very true. Michael Tanguma (35:11.444) Thank you. Brian Cubellis (35:22.162) they probably don't even know who this guy is. So it is mind blowing to your point. And yeah, you've done a great job of sort of covering everything going on with MicroStrategy on your Twitter. I'm curious, like, what is your, any thoughts around the most recent sort of announcements of the 42 billion? And do you think that he gets through all of that, like, in the next couple months and issues another announcement or what do you think? James Van Straten (35:51.467) Yeah, so the 21 billion of the ATM equity offering, I he's gone through about five billion already. And I think he'll be through it by mid December. So the three year projection sounded normal when he did that earnings presentation, which was, again, one of the best earning presentations I've ever sat through. Brian Cubellis (36:07.495) Right. James Van Straten (36:12.653) just from a visual learner, just to see all those charts and graphs is insane and the transparency is also incredible. But yeah, he's going to go through that ATM definitely before the end of the year. And then he's just issued another convertible note for 2029 at 0%, which is insane because it's essentially saying that these bond buyers don't want any interest on the debt. They'll just take like the 2027 note. It's above par by 170%. The volatility on these products is insane and the performance of these bonds, I on a blended basis, all five convertible notes have outperformed Bitcoin since he's issued them. And we're talking about bonds here, like that's not meant to happen in today's work, whatever. So yeah, he has six convertible notes going out from 2027 to 2032. Two of them, I believe, are eligible to be converted. I don't know the specific details of, but I believe by mid-December, around mid-September to end of the year, that they could all be eligible to convert. So that could be short-term bearish that they get converted into equity, just increasing the outstanding shares and with the ATM as well. But... I think issuing a convertible debt with 1.75 billion repricing is going to go to 2 billion, which is going to be their largest convertible bond by over 1 billion. Just shows that the institutional demand, again, so many institutions and people cannot get access to this product. like me, essentially have to buy it. And there's probably all people, investors all over the world scrambling for this kind of instrument. And then you've got people crying about a NAV premium that's trading at like 3x. I'm like, yeah, so I'm buying it 170, 200,000 a coin. Like, that's cheap. James Van Straten (38:19.179) because where else is my money meant to go? And I don't know one company that trades at book value. You look at any of these companies, and again, we're denominating in fiat. It makes no sense to be thinking, it's got a trader, it's book value. It's insane. But what's really important is to keep looking at its Bitcoin per share, which is the Bitcoin holdings against its shares outstanding. And that made another year to date high or a new all-time high. So again, that's a creative for shareholders. And that's what I think that's all that really matters. It's going to get harder for him, but look, he's going to tap this ATM. He's going to issue even more convertible debt. There'll be new rounds for every single year again and more ATMs. But as long as people need access to these instruments, the demand's there. That's evident. Michael Tanguma (39:14.346) It's a fascinating part of the market structure because I remember going back to 2020. If you remember that summer we consolidated similar to this and then we kind hung around nine to 11 and it kept looking like it wanted to crash and there was somebody stepping in because you were thinking you were going to get all that like from 17 or 18 to 2020 volatility and you went up to like 14, there was a plus token. You're always just waiting for the shoe to drop and it didn't drop but there was sailors stepping in. Jackson Mikalic (39:14.702) It's a fascinating part of the. Michael Tanguma (39:41.18) And it feels very similar to like this run up where people were talking about maybe there was a sovereign stacking, but it's like, sailor was picking up all that coin from 70 to 90. And it's just a curious thing to think through like that mental, the exercise of like, what does the market structure look like without a without MSTR? You know, James Van Straten (40:01.964) Eric Balchanas, the Bloomberg analyst, he loves ETFs and he thinks that ETFs without it would be a 30k Bitcoin price, which is just incorrect. The ETF trade volume is like a couple of percent of the entire market. The futures in the spot market is multiple times greater than the ETF market. Yeah, again, we can speculate. Yeah, the price would be significantly lower without Michael Saylor. But again, I think we need to appreciate how big this market is. So for example, Michael's bought 50,000 Bitcoin last week and everyone's like, all right, the price did go up or, but why did the price not go higher? And we have all these ETF inflows, but long-term holders, so anyone that's held Bitcoin for 155 days, they've sold about 300,000 Bitcoin. So there is, as the price goes up, you are gonna get these sellers and it just has to try and find that balance. But like we were saying that before, profit isn't as great as it is and we are getting this huge demand of buyers so that's why I think the price grinds up higher than we and quicker than I expect but for every buyer there's a seller and the higher we go we will get sellers so I just don't think people appreciate how big the Bitcoin market is when we think it's just ETFs. have they, like the inflows are strong? Why are we not seeing the price go up? It's a lot. And it's like, it's like Germany. They sold 50, 60,000 Bitcoin within a week. Maybe it was OTC, but the market, Fram run it. It knew the news or the market was bigger than expected. And we do need to realize that this is almost a $2 trillion asset now. what is it, the seventh largest in the world. It's a lot bigger than we give it credit for because I think we're still in the mindset that it's really niche and we're the only ones here buying it. Michael Tanguma (41:57.168) Yeah, and we're going to see wilder things happen, I'm pretty sure, because if you think about it, like you can just insert another firm if MicroStrategy didn't do it, somebody else is going to use the tools at their disposal to go stack Bitcoin in any way. And it's just a symptom of amount of liquidity in this system. All the capital chasing, any kind of yield where all this construct is developed. So it's just going to get weirder from here. It's not actually going get tempered. Jackson Mikalic (41:57.346) Yeah, and we're going to see while. James Van Straten (42:21.189) Yeah, and we saw Marathon also issue a convertible note and that also got oversubscribed and they had to reprice higher. are very different to MicroStrategy and something I've really learned this week is I think why the market takes a liking to MicroStrategy and maybe Semino-Scientific more than the miners is that their playbook is so clear, concise and coherent. You know exactly what they're going to do. I was reading that marathon just announcement and I was like, how much are you gonna buy with Bitcoin or what's your asset expansion gonna be or what do you need to buy? And it was quite confusing on where the cash is gonna be deployed. But with MicroTresor, you know exactly what's gonna happen and the markets love that certainty. But it also shows that Marathon's down near today, but their bonds are getting bought up like no other. So again, the institution appetite's there on a zero coupon. when is the... It's also perplexing how a company is not doing this. It's free money. yeah, it's just insane. Jackson Mikalic (43:27.404) Yeah, mean, it's, it's, Sailor's been doing it for a while and I mean, he's just like a mad genius. give him, give him props for just executing this playbook. And I agree with you, James, there's a lot of... there's still lot of barriers to entry as it relates to getting access to Bitcoin. And that's why you are seeing so many institutional players gravitate toward MSTR and similar scientific, because to your point, they're very transparent about how they're executing their strategy. And there are such limited amounts of ways for a lot of people to participate in this market that, you know, they kind of find themselves having to, if they want to have exposure to Bitcoin's upside, they have to participate in something like that, where it's not directly, Michael Tanguma (44:02.25) Stop. Jackson Mikalic (44:14.863) not participating directly in the asset, but they have financial instruments or proxies to do so. mean, I even just I even experienced this might have been last week or the week before where I don't need to disclose the firm, but I had brokerage accounts and retirement accounts with a large broker dealer in the States here. And I was just taking a look at my accounts for the first time in quite a while. And I'm doing some personal consolidation and I had some cash just sitting in my Roth account. So I was working with the the FAA who kind of manages everything. I was just like, could you just put all the cash into into FBTC? And they couldn't trade that for me. They still are not allowed to place any of their clients assets into the Bitcoin ETFs. And this is like a massive broker dealer in the United States. So what did I do then? Well, I said, put it into micro strategy. And because I didn't want to be out of the market because I was consolidating things, I was rolling things. over, that takes 10 days, 14 days, depending on, you know, the process and the custodians that you're dealing with. So it's like, I want to be in the market. I know I feel pretty confident that we're going to continue to take up higher from here and I don't want to be having to, you know, buy things two or three weeks down the road. just a personal anecdote that really speaks to like, there's so many people who literally go to their financial advisor and say, I want to be allocated to this asset class and they still can't do it. They can only do it through MSTR or other public equity. with ease. James Van Straten (45:46.613) Yeah, and you've also got Vanguard not offering it, a number of asset managers not allowing investors to buy. I was reading something about iBit was only approved for only 25,000 contracts as a position limit. I haven't actually dug into this. I just saw it as a top line thing and... I think Jeff Part from Bitwise was talking about it. So I haven't dug into the details, but again, there's a limit or there's something that, okay, it's not just here you go and we're going to replicate how we've done for other asset classes. So it's that barrier to entry that you were saying, there's always a restriction, there's always a limit. And I think Bitcoin just hit 94,000 and it's almost like it doesn't really care what these trapfire people are trying to stop. Michael Tanguma (46:37.155) Exactly. Yeah, it's such a key point that I was gonna, I was gonna bring up is like anecdotally I've, so we try to be very diplomatic and button up in the sense that we want to work with a lot of the Trefi help them get their solutions in place. But at the same time, to your point, it's the whole notion of, it's just like the internet, like you either jump on board or you don't. And it's not the perfect analogy, but it's like this notion of like the travel agent and like how you can now go online and get everything. It's like, James Van Straten (46:37.821) and Michael Tanguma (47:05.931) in a future world, if you really dig into the monetization of all these assets, do you really need a financial advisor to break you down how to manage your 60-40 and take your X percentage? And what's happening, I'm starting to see anecdotally from this group I was talking to this week, and I've heard from my mother-in-law is they're getting really annoyed when you bring up exposure and that their financial advisor has get them out of other exciting or more interesting things. So imagine you have this format where you take their advice, but they're actually like, at best not losing you. In real terms, maybe they're getting some small return, in, or nominal terms, some small return, real terms, you kind of feel that you're kind of going backwards because everything's getting more expensive and your retirement isn't actually like outpacing it. And you know, like you're not dumb. You made all that money. It's always been weird to me that people just give all their money to somebody else to manage, but that's a different note. Like, so they accept that and then they kind of know intuitively something's not right. And then you kind of tell them about this. You're like, I can't, or I've tried to ask them and they don't tell me anything. There's this pent up like, like frustration that's happening. it's, I don't care because I'm not a financial advisor, but if anybody's listening, it's like, it's, it's, it's to the point, the court doesn't care. It's like the internet doesn't care. It's going to do its thing and you get left behind and you got to figure out a way to get like them involved because people are going to literally leave. So that's their money. Brian Cubellis (48:21.68) And we've talked about this in the past, but I think we are now really approaching the point of the career risk flipping from you're worried about getting fired for allocating to Bitcoin, where you should be worried about getting fired for not allocating, or at least having it on offer to your clients, educating them about it, having thoughtful responses when they inevitably ask you about it. I think we're pretty much there. And as we were talking about before, like the 100K mark will accelerate that even further where if you are acting in a fiduciary role, you better have a good answer why you didn't bring it up with your client because they will leave. They will leave your firm. They will pull their money out because their friends, their peers have gotten some exposure and they feel like they were led astray, which they were. And so I think we're now finally approaching that point where that career risk does flip. Jackson Mikalic (49:23.675) Yeah. And to that point as well, mean, it's not even Brian, you're right in the sense that some clients will probably get fed up with not being able to access Bitcoin directly through their FAA, but they may even just passively or actively start moving money away from their advisor, right? Or like as they continue to earn direct deposit into their account, they're just they're coming to on ramp and they're buying Bitcoin through on ramp or they're opening up an account with swan or relay or, know, and they're just accessing Bitcoin directly rather than, you know, working with their advisor and having the Bitcoin exposure tied into the rest of their portfolio and their more comprehensive financial planning. I still think there's a lot of value in that because people need someone. In my opinion, most people will need help in terms of thinking through like estate planning and more complex considerations. But I do think that Bitcoin plays an interesting role as it relates to the demonetization of other asset classes, allowing people to preserve and grow purchasing power. without having to allocate to all these different financial products and asset classes. So that is an interesting dynamic. But I do think that people are just going to start moving. If they haven't already, which a lot of people have, they'll just start to continue to allocate to Bitcoin away from their advisors, which that's not the best situation for either one of them. James Van Straten (50:44.513) and I think you've just hit the nail on the head. It's like, so you've got rampant inflation, you've got rampant currency debasement, you've got people trying to work out, all right, I'm getting screwed, but I need to do something so I'll flip flats, or they're working a nine to five job, or they have to work multiple jobs, and they're like. I can't really get ahead. Even for me, you're, and I say this with my brother, so you do a full-time job, you're then managing your own assets, so you're essentially your own financial advisor, you're doing like, and then you've got to deploy the capital, you've got to do like three, four jobs just to keep up or try and beat the inflation. And I think people are just getting sick and tired where they're working that nine to five job and then they come home like. I can't even afford food, I'm not even laughing, you can't even afford food or the basic necessities in first world countries. And I think people, like I doing, are just gonna stop. They're just gonna be like, I'm not doing this, and they're just gonna find another alternative. What perplexes me is people choose gold, because I just don't understand at all from the 21st century how that's even remotely possible anymore. Michael Tanguma (51:46.607) you James Van Straten (51:55.735) But yeah, I think people are just gonna stop playing the game. I just think people are just gonna be, no. Michael Tanguma (52:00.099) Yeah, what you said is interesting because stop playing the game, we can kind of like see how with equities and things that are movable to sell and buy Bitcoin, the one that we were talking about earlier that I wanted to come back to is the real estate and these flats flipping and commercial real estate. That's the one that scares me because But if for some reason it's the physical nature of it, that it's kind of the same thesis, right? Scarcity, it's just at a different magnify that Bitcoin has or accentuated, but like they miss it, they don't see it, but it's the one that's going to be harmed the worst because of the, it's the door just gets smaller and smaller. And you see this already with interest rates increasing, like in hot cities, like we're in Austin or these other markets where they're already down from like 2021 when the market was crazy, 20 to 30%. And there's this fear like that only accelerates, especially as people like, why was I holding this and all the like, you know, that whole notion that doors just getting smaller and smaller because we know how much it's just like bonds 2.0 and that it's a horrible asset to hold. James Van Straten (53:08.093) We have, I keep a really close eye on the Florida real estate market and that looks like it's just, I haven't seen anything like that. It's quite insane to be honest. But yeah, everyone ascribes a monetary premium to property because that was the Apex asset to do before the internet and it made sense. But I think there's like, 80, 90 % monetary premium to real estate and this thing will shrink really, really rapidly. And if I told you some of the government schemes that went on in the UK that have now actually stopped because they realised that... all these buyers are now essentially underwater. really quickly, there's something called the government help to buy scheme for like essentially my generation who wanted to get on the property ladder because apparently getting on the property ladder is the most important thing in the world and that's what you should aspire to. You would only have to put a 5 % deposit down on a flat. can't buy a house, you can only buy a flat. And another stat, 75 % of all the properties available in London are flats. So there are just so many flats for sale. So all the idea was, all these property developers to build all these really poorly manufactured new flats and you could charge a premium to them. These flats in London or just outside of it would go for £600,000 at its maximum. You only have to put a 5 % deposit down, so that's about 35 grand, and you have all these people that were flocking, can't afford it, but they only had to put 5 % down. And this is obviously when rates were relatively low. You then have rates, say, at 5%, which is historically average since 1950. And because our wages Michael Tanguma (54:27.271) Thank you. James Van Straten (54:44.751) are so suppressed and especially in the UK. I think the average wage in the UK is probably about £40,000 maybe, £50,000 at a stretch. So the wages now don't even cover the mortgage payments. So after five years, you have to not only pay your mortgage loan on the 95%, you then have to start paying interest to the government on top. You pay a mortgage to the bank, you then pay a mortgage to the government and every year you Michael Tanguma (55:00.999) So James Van Straten (55:14.671) sell that flat it goes higher and higher and wait for the kicker that is in line with CPI inflation. So if you think CPI inflation is going to run riot which it probably is you're looking at mortgage rates of like 10 % on flats that are worth no more than 250 grand but they've obviously x two and a half times there. Michael Tanguma (55:22.723) So. James Van Straten (55:36.361) on people that can't afford it. So they're all at the moment now sitting in negative equity, stuck in a flat, and they've actually just scrapped the scheme of like last year. And this has to be the start of some form of real estate contraction, which it is. But it's mad how this is just playing again, or people are still very happy because it's property and they're very happy to buy a property and have that assigned property ownership. And I think that's a complete, again, it's psychological, it's the mindset, but it's just, it's insane of what world we've created and trying to buy a flat, rent it out, earn the yield. And it's just, yeah, for me, it's insane. Michael Tanguma (56:21.886) Yeah, it's in a sponge for liquidity. There's a similar story. You have to go look through it I don't know it to detail, but basically how Fannie Mae was created. It's very similar to what you're describing. It was created to absorb this liquidity because that's effectively what it is. It's a sponge for dollars and taxes. James Van Straten (56:39.425) and now it's all ended up on the fair balance sheet. Michael Tanguma (56:42.507) Yep. Yeah. This is like, yeah. James Van Straten (56:46.025) And I actually had a really good stat. think globally, central banks, the top central banks around the world, no, the top 15 had about 40 trillion on their balance sheet. Through this whole quantitative tightening cycle, I think they got down to about 34 trillion. So they managed to get like six, seven, eight trillion commutatively together. And you're like, all right, when's the next crisis and how much are they gonna have to print? And when you were sitting there in Covid and they just printed 40 % of all the money supply, you're like... I didn't even know what to I think I was in shock for that. Yeah, you're like... There's no accountability, you're all liars. It's again, I don't want to play, I want to opt out. And everything they do is just... Brian Cubellis (57:20.85) It's transitory, it's gonna be transitory. We're good, it's gonna be transitory. James Van Straten (57:35.073) It has come to the realisation, like for me, that anything like they say, I just do the opposite and it kind of just works out way better. Don't buy Bitcoin, buy Bitcoin. Go G. Jackson Mikalic (57:45.894) There was an interesting anecdote as well. It might have been from this week where someone that works with us here at OnRamp mentioned that there's someone who owns Realist, understands Bitcoin, allocates and has allocated to Bitcoin for quite a while now. James Van Straten (57:48.609) Cheers. Jackson Mikalic (58:08.111) has a material position, but continues to own real estate, right? Because there there's uncertainty with the Bitcoin stack. Historically, there's only so much you could own because you either were trusting one institution or you had to take on full responsibility. Right. And you you bear the burden of potentially messing that up yourself or your heirs not being able to access it or you're welcoming violence into your home, especially as Bitcoin continues to appreciate Michael Tanguma (58:35.557) Thanks. Jackson Mikalic (58:38.175) So there's also this interesting dynamic where people want to own more Bitcoin in some cases, but they don't because they think that it could go to zero. Not because they think Bitcoin could go to zero, but that because they could mess something up or they could have their own counterparty exposure. And then that could result in catastrophic losses and a massive hole in their balance sheet. Michael Tanguma (58:58.544) That's a big, that's a big component that's going to be like something that individuals are going to have to grapple with of you mentioned James, like you don't get where people still allocate to gold. think that we missed price, the latent. like it's in our DNA, right? You think about for thousands of years, you got to figure out like fight or flight and all these things and like gold is just money forever. So there's the natural version of like, do we decide on gold being money and people thinking about their grandparents and all the things. So I think that's where that kind of is built in. But a cousin of that is what Jackson just references. We are very, it's we've been told diversification our whole lives, right? Like, you know, don't get knocked out of game. It's kind of part of why this podcast is called The Last James Van Straten (59:41.837) and have a good one. Michael Tanguma (59:43.235) this podcast called The Last Trade is because once you get it, it's like, what else do you do? You allocate to it, you put all your chips in a basket and then you watch it very closely. But it's part of where we get excited about what we're working on is we recently started thinking about the mental model, especially with normies that aren't in. It's like, let's not talk about why Bitcoin's not zero. Let's talk about why it's not 10 trillion. And the reason why it's not 10 trillion is because you've always had a single point of failure if you're going to allocate. Cause you have a single point of failure with yourself. got forbidden to get hit by a bus, you lose all the money. Or you have a single point of failure because it's Mount Gox or Celsius or Blockfire. You can go down a laundry list. And that's where we get excited about this multi-institution notion. And we've just seen crazy demand coming up to this hundred K is because people are waking up and be like, wait, I don't want this in my house. There was a story and it happens everywhere, but in they were telling in London specifically that like there's spotters that will watch when people come out of their house and rob their Patek Philippe, like off their, off their, their wrist. It's like, what do people think is going to happen when they find out that the plastic devices are sitting in people's homes, in next to their family members. And nobody tells this story of like there needs to be risk mitigation around. James Van Straten (01:00:51.405) I actually had a robbery on my road and the some reason that the one of the and I don't live on like I swear on that nice road literally a standard countryside road one of our neighbors has three Rolls Royces three because he clearly doesn't know what to do with his money he just shut me up I swear and he just leaves them on the side of the road and he gets robbed I'm like yeah what you what you actually expecting it's insane that people just don't know what really to do. And this is also the thing between physical assets and digital assets. the physical assets now are so, they're almost becoming like you can't really wear them. You can't wear that watch. You can't have that nice car. You can't have that nice house because you are a target. And that gives that ascribes that value to the digital. narrative of, okay, that you can actually go away or no one can know because it's in your head. So there's a huge monetary premium to that. Let's subscribe 100, 200 % monetary premium to digital premium for that. Michael Tanguma (01:02:05.547) Yeah, there's a friend that his dad was in real estate and he was a versed for a while to Bitcoin. And what he said is his dad would say, you know, the thing about real estate is it's not really liquid, but it's always there. And his response is, you know, think about Bitcoin is it's not really there, but it's always liquid. Brian Cubellis (01:02:24.507) You Jackson Mikalic (01:02:30.941) James, maybe before we wrap up, you'd want to just flag that we didn't discuss today, top of mind, heading into 2025, what's exciting to you? James Van Straten (01:02:41.517) Yeah we've actually probably not taught the greatest story so far that Ethereum is literally dying in front of our eyes. I'm looking at the chart it's two and a half percent down, ETHBTC is six percent down, it's at 0.033 and the market cap spread between Bitcoin and Ethereum is about to hit 1.5 trillion and it's incredible that this asset Brian Cubellis (01:02:47.954) Yes. Jackson Mikalic (01:02:48.517) Ha! James Van Straten (01:03:10.637) has been going for so long at number two. It seems like Solana, this is definitely not a crypto, but it's insane how long con the Ethereum trade was essentially. again, that's actually quite nice to say that Bitcoin is tulips and it's been going for 15 years. The Ethereum has actually only been going for what, seven years, like half Bitcoin's time. and that trade is kind of done. So again, it kind of shows that strong narrative that Bitcoin is actually not a tulip bubble, but Ethereum kind of has changed its narrative one too many times. Michael Tanguma (01:03:51.925) You must be a riot at the CoinDesk holiday parties because I didn't think we were going to go there because we obviously feel the same way, but we never know with the guests if they may have some e-th bags or at CoinDesk as a crypto publication. So how do you reconcile that? That was an interesting tape. Brian Cubellis (01:03:56.725) You James Van Straten (01:04:13.238) This is not the, what's the phrase, it's not the phrase, it's the I'm for, it's my opinion. But no, it's just interesting to see how it has traded against Bitcoin. And again, look, Ethereum probably is going to go up in nominal values in dollar terms and everything like that, like most of this stuff. But again, if we're using Bitcoin as that benchmark denominator, it's just, and if you compare it cycle after cycle, Michael Tanguma (01:04:15.725) This is not official. Michael Tanguma (01:04:35.927) Yeah. James Van Straten (01:04:41.353) it continues to generate worse returns against Bitcoin. Michael Tanguma (01:04:44.765) Yeah, in any first principle thinker, like you had so many narratives they could hide behind, but now they're basically all gone because you in the markets kind of shown even though it's more nuanced than this, but you just have meme coins that all exist anymore because like Ethereum's narrative was like, well, it does X, Y or Z better or faster or, you know, sounder or whatever than Bitcoin, but those all have failed to when you get down to it, there's nothing else. Cause like Solana doing it is a proxy for like what ETH try to do and then eventually fails and you just can go down and so investors kind of grok that. And so now you, there's no utility around anything else except for let's just trade on momentum and FOMO, which is actually fine if that's what people want to do, but call it what it is versus saying that it's competing with money, which is effectively what ETH has tried to do and kind of conflated crypto and Bitcoin. Brian Cubellis (01:05:31.228) think that's been one of the most sort of healthy signals in a weird way of this cycle is that the broader crypto space isn't even trying to hide behind these false narratives of decentralization or this or that protocol for this specific use case. It's no, it's like this is just pure gambling, meme coin momentum and I think, again, this points back to like, this is just the process of Bitcoin sort of diverging from the rest of this market slowly over time in the minds of the market. And I think this is like a critical moment where it's like, Michael, to your point about Ethereum specifically, I mean, they just contradicted themselves, right? Like first, they tried to be... money like Bitcoin realized that wasn't really working and then like losing, leaving proof of work was really the nail in that coffin of being money. And then they said, okay, well now we're going to be, you know, utility focused smart contract focus. And then they just got leapfrogged by Solana, which is faster and cheaper to use. So if you're going to be trading meme coins, it's far more efficient to do it on Solana than it is Ethereum. So that's where, you know, you know, Solana has found some product market fit, you will, for gambling, because it's faster and cheaper to do, you can get in and out of positions a lot faster and for much cheaper. So it's just been a fascinating development, but I do think the longer term trajectory is very healthy because it's like, at least we're being more honest about what this stuff is. James Van Straten (01:07:13.419) Yeah, and that capital from Ethereum is going into Bitcoin. Like a couple of my friends have sold their ETH, they bought Bitcoin with it. James Van Straten (01:07:26.346) It's probably one of the best signals. Again, you can see it with the ETF inflows. Okay, you don't get that staking yield with it, but is the appetite there? No, not really. And look, you're gonna get a Dogecoin ETF, you're gonna a Ripple, get a Solana ETF. That's fine, but let the free market decide what they want and what they wanna do with it. That's perfect. And it's taken however many years. We understood it, but again, it's nice now for the mainstream media. and mainstream retail to see, there is literally one, I don't even like calling it a crypto asset, but it's just one form of money and then the speculation is below that. You just have to look at the tech. Michael Tanguma (01:08:06.576) The thing that I think it did do, Brian, that's kind of just hit me, which is actually more nefarious than competing with money is with Ethereum, you guys, this is interesting. So Ethereum effectively like incepted in the market, we're going to tokenize and create smart contracts and all these things. And so to the point that we all just recognize, okay, it's not competing with money, maybe it doesn't store value. But what it did was it created this like like weird malaise or kind of like smoky market of like, well, they're still digital assets. So when you look at like the Franklin Templetons and all these worlds, they're all building these like blockchain based infrastructures with securitizing all this stuff based on a premise that's still latent there about Ethereum. And so now that's basically like the next narrative of where this goes into, which was I think maybe not like always part of the end game is we're going to tokenize all this crap and we're going to like conflate and obviously you know, Bitcoin in there. And so it's going to absorb capital in an indirect way. Cause the thing that everyone misses with the blockchain is like, you still have a counterparty. Like that's the difference between Bitcoin and everything else is that you can take delivery where everything else you can trade it, but you still have a counterparty that has to own the underlying. And those are fundamentally two different things. And that's what everyone kind of conflates with the tokenization of like, well, who actually owns the underlying? Cause it doesn't really matter who owns what's on the blockchain. That's just a ledger. Jackson Mikalic (01:09:29.181) Yeah, I think the market dynamics are very favorable now to Bitcoin because you have like this infighting between all these supposedly credible crypto assets and then you just have like the meme coins and then you have Bitcoin, right? So it's like all the serious people are paying more attention to Bitcoin. It's the seventh largest asset. The ETFs have been wildly successful. The Ethereum ETFs have been absolute disaster. Just dumpster fire results. And then you have meme coins, which again to the points made here, if you want to just gamble on them then you're free to do so. But there's at least a recognition that that's really all they are is gambling. So I think this is ultimately good market dynamics. Brian Cubellis (01:10:10.245) And 100 % and the tokenization piece, Michael, is further solidifying what I'm saying in the sense that like, they're no longer clinging to these other use cases. It's like, no, we're just going to tokenize real world assets. Like that's all we've got left to do with these, these quote unquote decentralized blockchains is we're just going to put real estate on the blockchain for some reason. And so it's, it's a different angle, but the same in the sense that like it's an admission of there wasn't anything there, right? Michael Tanguma (01:10:43.696) Yeah, but I think incepted in the market structure is Bitcoin still a risky asset like all this stuff and nobody's thinking about Bitcoin as a material asset class yet. They're just throwing it all like the baby out with the bathwater that like this is all speculative because of that. James Van Straten (01:11:00.636) Sorry, I think why maybe I'm flipping to Bitcoin slightly going risk off as an asset here is the dollar is above 106. It was actually even over 107, which was like a year to date high, maybe even like a two year high. And notoriously Bitcoin and the dollar have an inverse correlation with one another. And we've now obviously got strong dollar, strong Bitcoin, high yields, which is very unusual. To be fair, Bitcoin pretty much weathered the quickest hiking cycle in 40 years as well. is it a zero interest rate phenomenon asset? No. Is it only for like weak dollar? No. So it's kind of like, is it this American asset now that will kind of grow with this strong dollar? And if you have that, if you ascribe to that dollar milkshake theory that the dollar just slurs all the weaker currencies, which I believe, especially with the UK and the pound and don't even get me started on my country, but... Yeah, this is really, really encouraging because if the dollar was below 100 and then the dollar runs, you'd expect Bitcoin to fall. like, don't see, look, the dollar probably isn't going to go much higher. Or even if it does, Bitcoin doesn't seem to care. So there's huge amounts of tailwinds for Bitcoin here. Jackson Mikalic (01:12:19.411) Yeah, agreed. I think it might have been last week where we kind of discussed the maturation of Bitcoin with the first 15 years being predominantly driven by liquidity and deficit spending and strong dollar, weak dollar, what's going on in currency markets. And think the four of us would agree that'll continue to play a role because Bitcoin exists among these hundreds of trillions of dollars of other asset classes in currency markets. But I do think that we're at a point now where it starts to decouple. Michael Tanguma (01:12:23.62) So. Jackson Mikalic (01:12:49.335) already has. James, I think that you've published stuff on recently just related to Bitcoin's correlation to was it NASDAQ S &P 500. And for a while, people have kind of just said that Bitcoin is high beta tech exposure, right? But it's become increasingly clear that that argument no longer really holds validity. So I think we're at a point now where the market has matured quite a bit. know, players are here in step James Van Straten (01:12:58.508) Yeah. Michael Tanguma (01:13:06.94) So. Jackson Mikalic (01:13:19.255) stepping in from both a political point of view but also from the broader investment community. So I feel pretty good just in terms of Bitcoin decoupling and starting to be understood as a risk off asset in the marketplace. Jackson Mikalic (01:13:36.853) Well, James, unless there's anything else, I mean, we could call it here. I know it's late for you and appreciate you carving some time out around dinner time. Maybe for anyone who hasn't come across your work before, where would the best place for them to get in touch with you or find your work be? James Van Straten (01:13:55.443) Yeah, I post all my analysis with CoinDesk and then I'm on Twitter at think BTCJVS. Jackson Mikalic (01:14:04.457) Awesome. Well, thanks, James. Really appreciate the time. It was fun to have you on and quite bullish. I'll have to do a smash buy once we hang up here. Brian Cubellis (01:14:12.384) Thanks, James. James Van Straten (01:14:13.111) Cheers guys, thanks for having me. Jackson Mikalic (01:14:14.825) exchange. Michael Tanguma (01:14:15.142) Yeah.