Why This Wall Street CEO Says Bitcoin’s Price Isn’t Nearly High Enough

Jackson Mikalic (00:06.953) Okay, and we're live. It's the last trade. There's five of us here. We got some special guests as well. For those who are not on video, we can just rattle off the names real quick. So we have big Tim Cotsman. Tim is showing up to the podcast today from the backseat of a taxi cab. Tim, great to see you. How are you? Brian Cubellis (00:11.616) heads. Michael Tanguma (00:23.528) So. Tim (00:25.496) Not a police car. It's not a police car. It's a taxicab. Jackson Mikalic (00:29.481) Not this time, that's next episode. Stay tuned for next week. And so we got Michael as well, Michael Tanguma and Brian Cabellus on the OnRamp team. Gentlemen, good to see you. I see you guys enough, so we don't need your introduction. then, Tad Smith. Tad, it's great to meet you. Just before we hit record here, thanks for joining us today. You're the guest of honor this week, how are you? Michael Tanguma (00:31.988) See you Tad Smith (00:50.074) Wow, thank you. It's great to be here, Jackson. Appreciate it. Jackson Mikalic (00:54.035) Excellent. Well, certainly want to get more into your background on the back half of this show. But what we do here at The Last Trade is we always pull up the Bitcoin price chart. so this was actually, Tad, just so you know, this was a very sad moment for us the past several months because we just looked at 80K for week after week, what felt like it was an eternity. And then last week we started to see some positive momentum. It's actually, I think it was because Brian wasn't on the podcast last week. And so... Tad Smith (01:14.118) Hmm Brian Cubellis (01:19.969) That might have been it. That might have been it. Jackson Mikalic (01:22.261) So finally, we have some green candles to look at. The price is getting close to 100K. Gentlemen, what are your thoughts here? What's driving Bitcoin right now? Brian Cubellis (01:33.165) just broader recognition of its inherent monetary properties. think just people getting educated every day. I put out our newsletter this morning and what I was really talking about is just, we've said this in the past, but on a risk adjusted basis, if you consider all of the backdrop, all of the positive tailwinds that are constructed for Bitcoin adoption going forward, 96K, whatever at 97K is just extremely mispriced. Michael Tanguma (01:53.94) you Brian Cubellis (02:01.838) arguably the cheapest Bitcoin's ever been if you're considering where we are, how we sit here today with government adoption, government support, corporations adopting it. And again, the education is just permeating around, this isn't a tech stock. This is a superior monetary asset that you can store value into the future. And that's really all this is. And, you I've been saying this for weeks, but, you know, With everything going on, it's really the most bullish I've ever been on Bitcoin, even when we were hanging out in the 70s and the 80s. It was only a matter of time before we started to move back up. So great to be back in the 90s with you, Jackson. But yeah, is everything's going according to plan in my mind. Jackson Mikalic (02:48.673) just week after week, my complaints pushed the price higher. And so just a quick recap. it's actually May 1st. We're recording on Thursday. This will come out tomorrow morning. Just to recap what happened in April. It was a crazy time in markets. A lot happened in the span of a month. We had the announcements of the tariffs on April 2nd, all sorts of volatility, uncertainty in terms of trade relations. What was going to happen with the yield curve? Bonds are spiking as well. What actually, where we ended up in terms of class performance was gold was about 6 % up for the month of April, peaked at about $3,500 an ounce. I think we're sitting close to $3,200, $3,300. So still incredible performance for year to date. NASDAQ and S &P were both about flat. I want to say NASDAQ might have returned 1 % in the month of April. S &P was just about flat. And Bitcoin, 12 % in the month of April. It didn't feel like that. In the trenches in the middle of the month, it did not feel like this is the outcome we're going to have. Michael Tanguma (03:30.724) Okay. Jackson Mikalic (03:48.537) Tad, maybe I'll throw it over to you. What do you make of just what happened in the month of April in markets and with Bitcoin? Tad Smith (03:55.103) Well, the context for me, for my answering your question is I'm a strong ardent proponent of the liquidity philosophy and how it drives Bitcoin and asset prices. Whether you credit Michael Howell or Raoul Powell or Julian Battelle, take your pick. And liquidity has been on a monster run in the last six to eight weeks. Gold has been telling you that story. It's sort of front loaded it. Bitcoin is coming in very strong to catch up. And you could argue the dip Michael Tanguma (03:55.602) you Tad Smith (04:24.001) prior to the last sort of period of time was baked in when liquidity began to shrink in October of last year. I'm definitely on that train. The fact that we have buyers emerging everywhere, we've got strong secular bullish trends, all of that to me says number go up. And if anything, it feels a little bit like the tail end of the chop solidation we had last year. except that the liquidity situation's probably even more bullish right now. So I'm not surprised. I think the other thing that I would observe in the month of April, and you put your finger on it, is it was interesting to see the NASDAQ, which is also liquidity sensitive, go one direction and Bitcoin go a different one. And I would attribute that, now this is just armchair, post hoc trading analysis, if you will, If that much, I would say that the stocks in the NASDAQ were much more sensitive to the economic cycle and also frankly to the effect of potential tariffs and the uncertainty than Bitcoin was. Bitcoin is essentially immune to it, in my opinion. If anything, it's a positive. And then the final point, and so therefore you would see them diverge quite naturally, whether you call that a flight to safety or you call it a limited flight to safety, which is to say Bitcoin is safe in a tariff world. Michael Tanguma (05:47.124) Thank Tad Smith (05:47.699) I'll take that as a friendly amendment from the floor. And the final thing I would pile onto this is that Bitcoin is probably sniffing out that the Fed is going to move. Now, whether they move on rates or whether they move on the supplemental leverage ratio or whether they do whatever it was Bessent said yesterday, so-called treasury buyback, I'm not sure. There'll be some fancy version of "non-QE" QE and Bitcoin sniffing that out. Michael Tanguma (06:14.172) Yeah, that's a great summary of what's going on. think you and Brian brought the sophisticated right side of the curve. I'll go on the other side and say, maybe it's not just fully Michael Saylor, but there's about nine other sailors in the market currently right now that are heavily bidding this price up and accumulating BTC, whether it's GameStop. What is it? MetaPlanet just coming into over the U S and then I'm sure there's no shortage of behind the scenes pre SPACs that are picking up BTC ahead of going public. so there's a lot of demand and then you have the tailwinds as Ted alluded to with liquidity. We pulled up that chart previously. We've talked about for the past few weeks, you know, gold fran front ran that cycle and we've seen it kind of temper off. And this is, think what happened like six months ago as well where gold broke out and then kind of like, you know, took a step back and Bitcoin ran. And if that's what is ahead of us, we have a pretty exciting next kind of a few weeks or months ahead of us. Jackson Mikalic (07:12.831) I came across this chart that reinforces more the relationship between Bitcoin and gold. And so this is from Tefer Digital. And Tad, it really ties into a lot of what you just said in terms of liquidity cycles. Gold tends to front run. But if you look here, it looks like we're just with the price action this week. Bitcoin seems to be sniffing out the increase in global liquidity, which Tad, believe you mentioned was the past, what, six to eight weeks or so. And then so this is the ratio of Bitcoin to gold. And so can see here it tracks over the past three years or so through the collapse of Luna and FTX, the initial launch of the Bitcoin ETFs, and you can see that really dramatically increased the ratio of Bitcoin to gold, which really just speaks to investor ability to get access to this asset class, which previously really felt uninvestable for a lot of people. But I'd argue now, if you look on the right hand side of this chart here, we've seen a decrease of the Bitcoin to gold ratio. ratio, meaning gold outperforming Bitcoin really in the month of April and March as well with uncertainty and just... Yeah, general uncertainty around tariffs, recession, growth fear, et cetera. But I'd argue now we're really poised to see this ratio go higher because we have gotten through this period now of consolidation and correction in the Bitcoin price. I always like to joke about this, Tad, because it's kind of a blessing and curse we do this podcast because a lot of it can be redundant, but it's also important to help investors remain convicted in the thesis. So I could probably close my laptop and never look at Twitter or X again, and I would feel very confident that Bitcoin goes higher because I know the structural situation of the fiat system is more debt, more dollars, more liquidity, et cetera. But it's good at least to have a pulse maybe for those who don't have the same conviction that we do that things are looking to improve here in terms of liquidity expanding, which will drive both gold and the Bitcoin price higher. Tad Smith (09:16.954) Jackson, I love that point. mean, for me, this is the North Star for hodling and to allow you to hang on during the tough patches. But for those who try to trade in and out or take positions, it's a little bit tougher to use this kind of analysis, the one that I'm mentioning, the one that you're mentioning, because the timing of these things has a high degree of variability. If you have limited time issues on an option trade or a trading position or any sort of time sensitivity, it's a bit more problematic. But if you step back, you're a diamond hands hodler and you just need that positive reinforcement, this is exactly the kind of chart you want to see and exactly the kind of analysis you want to look at. Jackson Mikalic (09:56.92) Absolutely. One thing I wanted to jump to, I think we wanted to start here, but we just got too excited. We got too excited about 97k, so we had to just briefly chat about that. But I want to pull up this clip here and let me know if the audio isn't coming through, but we're going to take a look here at what the BlackRock CIO said about the digital asset space and particularly in Bitcoin. Michael Tanguma (10:00.82) you then just gotta turn it up. Jackson Mikalic (10:23.221) Not coming through. Michael Tanguma (10:24.508) It's coming through, but lightly. You just got to turn it up. Jackson Mikalic (10:25.953) Okay. Michael Tanguma (10:37.874) No, we can't. We can't hear it. Jackson Mikalic (10:39.547) Alright, well we can cut that out then. You want to try pulling it up Michael? Michael Tanguma (10:43.265) I can try pulling it up. did listen, not to the exact, one second. Tad Smith (10:53.09) I a great opportunity to call out BlockWorks Jason Yanowitz. sit on that board. It's he and Ableeto. They've got a, I'm so excited about their business. It's great to be, it's just great to be with them. Michael Tanguma (11:05.874) Yeah, they're great guys. It's funny you bring that up, Ted, because I was in New York City when I was going down personal rabbit hole and those guys were just starting out in 18 and they were hustlers. They were really to pick up traction were out like grinding. And then I remember specifically, I was talking to Pomp about that for they had reached out to Pomp and almost like coaxed him to come into the industry to start the podcast. And it's been incredible to see what they've done. I saw that piece that came out. I don't know if it was Fortune or Bloomberg. because randomly I was at the block very early days leaving the traditional technology world. And so they were just starting on the like news and data side. And so it started as a competition and they've just completely kind of like runaway with that part of the market. Tad Smith (11:47.85) Yeah, they're dynamos, absolute dynamos. Michael Tanguma (11:50.996) Let's see if it'll play on my side and then if not, we can talk about it. Let's go back. Michael Tanguma (11:58.899) Okay, sweet. Michael Tanguma (12:57.234) Yeah, it's a great clip. kind of comes back to what we discussed last week with, I think it was the head of institutional on Coinbase's side, referencing pensions, endowments, family offices, starting to look at gold as a trade and then indirectly BTC because of its properties. think historically we've obviously said Bitcoin's digital gold, but that was more of us trying to sell the market versus the market fully embracing or appealing to that. And with gold's breakout, inflationary environment, the 60-40 kind of moving away from a nominal or a real return. Now you're starting to see that I think liquidity flow from gold's trade into BTC. And that's what I think she's referencing and the market's also picking up on. And that's kind of the divergence that we saw with the NASDAQ and then hard assets like Bitcoin and gold. And I don't think that's historically been there. We wanted it to be there and on the margins, you know, for the Paul Tudor Jones and Druckenmiller's, but for the rest of the market, I don't think that trade is been as at the forefront, but it's starting to become, which is obviously ultra bullish. Brian Cubellis (13:59.298) Yeah, and the bigger signal from that clip to me is the clear distinction or delineation that she's making between Bitcoin and the rest of crypto. And I think that's kind of what the interviewer's question was trying to get at was, you know, are institutional allocators actually thinking about these things differently? And her answer, I think, is very telling that particularly in this environment of market uncertainty and tariffs, et cetera, people are looking for credibly neutral stores of value. They're not looking for high beta tech exposure, which I would characterize sort of the rest of crypto charitably as much more akin to technology stocks relative to Bitcoin being this purely monetary asset. And so that was the biggest takeaway from that clip for me is like, she's telling you how these people are thinking. They're talking to folks every day. so that, again, going back to like the education component, like the idea that Bitcoin is truly different than the rest of crypto is continuing to manifest. in the brains of allocators across the world. And the key point there is like, the reason that's happening is because the 60-40 isn't working, bonds and equities are going down. So you actually need a real diversifier. You don't need higher beta tech risk. You need something else that's going to preserve value. so Bitcoin is sort of fulfilling that role that people who have been studying it for a long time have understood. But the broader market isn't there yet, obviously. And so I think that's it's just a really clear signal that slowly but surely these concepts and these ideas of Bitcoin's true nature are starting to emerge. Michael Tanguma (15:39.284) Yeah, one thing to call out, it wasn't in that clip, but I would encourage anyone listening to go check out the podcast. It was very informative on BlackRock's overarching Bitcoin, but digital asset securitization strategy. And she referenced something we've kind of like speculated on that 50 % of the flow into iBit has been purely from retail investors that weren't comfortable with getting access to any other Bitcoin product. And she referenced that in like, I want to say 22, they had initially launched a private placement. And maybe even before then they were strategizing, do we really want to offer Bitcoin? Because if it's accessibility is so simple, you can download a mobile wallet, you know, River Cash App, Coinbase. But they had to go full circle and realize, well, no, people want the iBit brand or the BlackRock brand. They want that, you know, security around it, the wrapper along with Coinbase. But it's interesting because like they saw that. They're sophisticated enough to know that there's probably better products out there, but there's also the market that's still coming up the curve. And I think they're gonna go full circle and ultimately have to do a bunch of other things like in-kind delivery once the market gets educated. Because the thing we talk about here Ted is the ETFs are great, but anybody that builds a material position outside of two to 3 % of a portfolio wakes up and realizes what counterparty risk looks like in the Bitcoin space. And then they ultimately are gonna ask or look for better products. Tad Smith (16:56.835) You know, I agree and institutional investors are really very different from the mindset, I think, of the retail investor or even the what I would call the non-institutional family office investor or ultra high net worth investor. And the fundamental difference is for an institutional investor, it's not their money. And that is such a key point because when you are investing someone else's money, have fiduciary responsibilities and you have to have evidence-based approaches. And evidence-based approaches often are quantitative, they often have earnings statements, they have cash flows, they have analyst reports. When you think about all the set of apparatus of institutional investment, all of that stuff is a necessary precondition of investing at a fiduciary, a legally fiduciarily acceptable level for other people's money. And so that means institutional investors, everything else are probably or at least likely to be slow to invest in an asset that does not produce fiat cash flow. A very important point. Everything else being equal. And so then the question is why is it that anyone would invest in something that doesn't produce fiat cash flow? And the answer to that is overwhelmingly narrative. The narrative of Bitcoin versus gold, of of Bitcoin versus liquidity, of Bitcoin versus safety, of Bitcoin versus counterparty risk, those narratives. And what's so powerful about the ETF and so powerful about the environment that we're in now, and by the way, the narrative has changed dramatically, right, in the last six months. Suddenly the regulatory risk around Bitcoin has faded away. So that narrative risk is essentially gone. Liquidity is rising. Safety is a new narrative that's come on the, and when you look at the, change in narrative from the perspective of an institutional shareholder or institutional investor, it's a completely different situation. It looks a lot more like gold. And that means it's safe for you to put it some into someone and to the money that's not yours. And so I look at it and I say the institutional investors are not surprising to me that in this narrative environment, they're prepared to take a gold looking like flyer, not really a flyer, but weighed into this new pool. Tad Smith (19:16.338) on and that should probably accelerate as the narrative continues to get better and better and better but that's a totally different situation from retail because retail's perfectly comfortable when they're doing their own money investing in a narrative or frankly even investing in a flyer so back to what yanno was saying what's the narrative of bitcoin versus say the theory and versus say salon a versus a sweet from the perspective of an institutional investor very different the narratives for those If you're not investing your own money, those are a long putt for an institutional investor. Brian Cubellis (19:52.682) Yeah, that's really well said, Ted. And the other thing I would point out is, we've talked about the liquidity conditions. We talked about this divergence in Bitcoin being more recognized for its true nature. Jackson, if you could pull up that other tweet from Tefer Digital that shows the... actual sort of restrictions that are still in place around the ETFs at most banks and wirehouses around the country. It's really remarkable to think that these ETF products were the most successful sort of financial products ever launched, all the capital that's come through them, yet most people still can't access them through their traditional brokerage. And so this is like a massive sort of signal to me that like I don't think we've even scratched the surface of what these ETFs flows could look like over the next five years, despite them being so exceptionally performing over the past year. This just tells you that slow moving approach you're referencing, Tad, is certainly still the case. think Tefra puts out this chart every few weeks and you see new check marks every couple of weeks, but it is... It is a slow process. And so I think just as these channels continue to open up, as that Overton window continues to shift and people continue to recognize Bitcoin for what it is, you're going to start to see pretty incredible flows into a lot of these products. Jackson Mikalic (21:28.673) Yeah, one of the incredibly remarkable things about this too is that Michael Tanguma (21:29.032) Yeah, one. Jackson Mikalic (21:33.783) The Bitcoin ETFs were still the most successful ETF complex. I've been in particular last year, even with all the restrictions here. So you can see about $30 trillion of assets under management restricted from fully participating in the Bitcoin ETF complex. Despite that, there was $50 billion of inflows last year. So, and Bitcoin's a small market still. It's $1.8, $1.9 trillion today. So it doesn't take a ton to move the markets. And Brian, just reinforcing what you said there, Tim (21:49.75) You Jackson Mikalic (22:04.14) We haven't really seen, I feel like it's the first pitch, right? It's not even the full first inning for Bitcoin adoption within the managed wealth space, within the institutional space. Tad, one thing I would love to hear your thoughts on too is particularly on gold in the institutional investment community, because I remember a handful of years ago before I switched over into the Bitcoin space, we would have investment strategy calls. I worked on a manager research desk, so we looked at hedge funds and all sorts of private asset strategies, but we had a monthly investment strategy call and gold, like was never really talked about by the investment strategy team. was maybe, if you want to express a bearish view on XYZ, you might want to have 1 % of your portfolio allocated to gold. But we really haven't been for several decades in an environment where people actually think about neutrality, sovereignty as part of, know, counterparty risk as part of their investment thesis, at least from my purview. So are you, would you agree in terms of your experiences and do you think now that these themes are more in vogue as it relates to allocating capital? the institutional space. Tad Smith (23:05.776) Well, specifically from the institution space, can pivot to ultra high net worth or retail in just a minute. remember that in a world where you can do what gold does and do it with an instrument that uncontroversially produces fiat cash flow, a la bonds, you don't have any need to go to gold. Again, so from the perspective of investing someone else's money, the first thing they're going to ask is, what am I going to get and when? Just that's the client is going to say, what am going to get and when? So in a world where bonds are satisfying the need to produce the cashflow, you don't actually have to have gold as a narrative at all. What's remarkable about this period and the prior period where gold wouldn't parabolic in the recent, in recent history is the basic idea of 60-40 broke down and that the cash producing or fiat cash producing instruments were not doing the job. And in that environment, you got to say, and I think Jackson, for the reasons you said, in that environment, you got to say, okay, well, I need something else. And so it's not going to produce, it's not going to safely to an institution produce cashflow. So it's gonna have to have a narrative that's tried and true and take one 5,000 years old that has lots and lots of statistical correlations with unusual periods of event that are risk off and does well. And then by the way, you can divide every possible financial chart by gold and see every Fiat chart in the world divided by gold. We all know what those look like. And you say, okay, well this narrative is really powerful. It's tried, tested, it's. formally an actual form of sovereign currency around the world. So, okay, it's worth a try. I get it. And that's how, in my mind, institutions think, which is I'm going to default to the tried and true. If the tried and true doesn't produce cash flow, I've got to have an absolute rock-solid narrative. Jackson Mikalic (25:09.985) Yeah, it makes a ton of sense. And those markets are small to begin with as well. There was actually, I wanted to pull up a chart here. It's like if you're managing considerable capital as an institutional investor, you don't want to be moving markets by scaling into a position or in and out of a position. And so I think that's still a large impediment to Bitcoin adoption is if you look at this. Tad Smith (25:26.369) No, exactly. Jackson Mikalic (25:32.663) you look in the top right side here, Bitcoin 1.8 trillion, it might be a little bit higher than that today, but it fluctuates, right? And so this was actually a chart of money and then also precious metals crypto Bitcoin markets produced by NIDIG just to show that the markets that actually exist for a non-sovereign store of value is incredibly small. mean, gold is a $22 trillion market. The entire precious metals industry is only 24 trillion. So Bitcoin 1.8, Total crypto market caps about three trillion. I think it's down about close to 20 percent from all time highs a few months ago. But so these particularly Bitcoin in the crypto space will have to actually expand in terms of their market capitalization. There needs to be more liquidity, at least in my opinion, before institutional investors will come in and scale here. But there's really not many other options to go to. I mean, there's gold. then I haven't really heard much about platinum or palladium outside of a few like niche macro funds that I worked with back in like Michael Tanguma (26:16.884) Okay. Jackson Mikalic (26:32.473) 2019-2020, same with silver. Tad Smith (26:35.552) You know I love about your point, Jackson, I lots of elements that I love, but I got to one in particular, how funny it is that even with the institutions, which are the highly rational investors in theory, right, versus the DGENs, the number of Bitcoin, for example, has to go up significantly from here in order for them to put money to work, which in turn will make the number go up. I mean, when you think about that for just a minute, meaning the price isn't high enough for them to have interest is really what we just said. Now, in a world where the supply could adjust, you would just print more Bitcoin, print more Bitcoin, print more Bitcoin, and provide supply so the institutions could come in. In this world, you don't get that option. In this world, Bitcoin has to hit a certain minimum efficient scale for the very super large institutions to come in in a way that adjusts portfolio results in some meaningful way. And that means, and by the way, we haven't even talked about sovereigns, forget institutions for just a minute. That means we're just beginning. What'd you say? First inning, bottom of the first? I don't remember what you said. You used a baseball, but I grew up in Denver. We didn't have baseball there. I'll take, into the first quarter, whatever you like. Jackson Mikalic (27:42.049) First pitch. It's only the first pitch. Brian Cubellis (27:42.704) First pitch. Jackson Mikalic (27:49.259) Love it. What? Michael Tanguma (27:49.78) Yeah, this is something we talk about a lot because that paradox or reflexivity is embedded in a lot of things. One of them is, you may have seen this chart, Riverhead sourced it, where you see, I think most people would educated know that this has been a retail driven phenomenon. Our thesis is it will continue to be for a number of reasons. One is simply because individuals are a consensus of one. So they can allocate much more material wealth than like you referenced governance going to getting consensus will take much longer to take that view and then take a larger position. But then also because the individual holds the vast majority of this asset, they are by nature the most sophisticated because they've been in the market the longest. And so they're the ones that are looking for the most sophisticated products. And that's ultimately something that you haven't seen from the traditional like smart money, Wall Street. building products and services like the ETF again, is sophisticated for a pension endowment, but for an individual that's holding a hundred million dollars, that's the last thing they're gonna want to put their assets in. And so from a market structure perspective, it's something we pay attention a lot about and how we build our products because we're preparing for when the market has more material positions, they get more educated and they naturally are gonna look for the same products that the individual, which has never really been seen. And so when we talk with institutional allocators and specifically large TradFi firms, some see our model and are starting to talk about what's maybe incorporating, but others are like, why would anybody ever want anything other than an omnibus wallet full of a bunch of coins? And it's like, well, let me explain why. And so that's a huge opportunity. And I know you said on the investment side to actually invest in products and services that are ahead of that curve. Tad Smith (29:30.813) Exactly, exactly, couldn't agree more. So, anyway, headline, number go up. Jackson Mikalic (29:38.167) Tim, can you point higher for us, just to make sure on the same page here? Michael Tanguma (29:42.334) Tim, what's going on with this tie situation? I don't know if I should feel bearish or... Tim (29:42.491) Orange coin, good. Brian Cubellis (29:46.155) Yeah, business casual, Tim, what is this? Tim (29:50.201) I, you know, it's opposite day, the price is going up. you know, there's, there's no possible way that the tie could be long enough, right? I don't, I don't just don't know how it would go if Jackson asked me for the tie reveal and how long is the tie, right? I don't have a tie that goes all the way down to my shoes. So it's just no tie today. Jackson Mikalic (30:10.079) I think the audience is going to be very upset about this, Tim. We might not even be able to publish the episode. Brian Cubellis (30:10.263) Tim. They might be. Tim (30:15.761) Yeah, well. Brian Cubellis (30:15.927) Tim, can you speak to a rumor I saw on Twitter this morning that Nvidia is considering putting Bitcoin on the balance sheet? Was that the other large corporate that your buddy AP Apigus was referring to? Tim (30:28.734) I have no idea. really seems like a rumor mill at this point, right? So yeah, as soon as I woke up at five or six, right before I texted Michael for the very first time, right? I saw an account that has a lot of followers, right underneath the announcement, the comments are like, where's your source? What's the source? I am the source, right? And I'm like, yeah, this thing doesn't have legs as of yet. Brian Cubellis (30:40.855) You Brian Cubellis (30:50.049) source. Tad Smith (30:57.179) Truth is, to me, it doesn't make a lot of sense. Because when you think about some of the most successful companies in the world, Nvidia is right at the top of that list. this, for them, is a net distraction, if you ask me. I don't know what it would do necessarily to their shareholder base. I'm not sure in the near term. And I think you quoted Saylor just a minute ago, Tim. I think you're spot on. Saylor says, really, the people that are very young and Tim (31:01.202) Mm-hmm. Tad Smith (31:26.331) or desperate are the ones who are appropriate for this. And in the case of corporations, he always points at zombie companies or companies that are shells that are the ones that are right for it. And I think he's right. I think the most successful companies in the world actually can afford to be the last ones to do it. So I don't know why Nvidia would be on that list. if it were, by the way, to me, I'm not an Nvidia shareholder anymore, but I used to be. To me, if it were, I'm not sure it wouldn't be a sell. Michael Tanguma (31:45.054) Yeah. That makes a lot. Tad Smith (31:56.834) Interestingly enough, it would be signaling something to me that's a little strange. Jackson Mikalic (32:03.576) How about the subsidiary for MetaPlanet coming to the US in Miami? Have any thoughts? I'll throw it over to the group. I'm pulling the tweet up as I speak to it. So backed by $250 million of initial capital to essentially give access to US markets, to MetaPlanet. Yeah, mean, Tim, this is kind of, Tad, excuse me, this is exactly what you pretty much have said, right, in terms of the video's going to be potentially one of the last companies to adopt it. They don't really have the urgency or need to, but companies like MetaPlanet have seen wild success in adopting a Bitcoin treasury playbook, so, gentlemen, what do you think about this announcement that just came out, I believe, yesterday? Or today, rather. Brian Cubellis (32:47.849) It just seems like it seems like every day there's a new announcement about some sort of corporate adoption, whether it's something like this, launching a subsidiary or all these the SPAC deals that we've seen with 21 Capital. And I know there's a number of other ones in the works. It seems like there's at the margins, at least, this is not a widespread phenomenon just yet. But at the margins, it does seem like there's people scrambling to get Bitcoin. in a vehicle that is accessible to public markets effectively. And so I think, you if we're first pitch, first inning, whatever it is, like, I think we're just scratching the surface of companies attempting to do this. think one thing we've also talked about is like, you know, while this broadens the landscape, broadens the access for people with a brokerage account, people that aren't necessarily ready to manage private keys or hold the underlying Michael Tanguma (33:34.036) Yeah. Thanks. Brian Cubellis (33:47.596) That's all well and good, but I think the reality is, you know, people are going to wake up in five years and not necessarily want proxy exposure through a levered vehicle. And so I think it's going to be very interesting to see how it plays out. We we talked with Pierre Richard last week about this. our question to him was kind of like, is there is there a level of saturation? Do we need all of these public companies that are basically Bitcoin proxy levered exposure? Michael Tanguma (33:48.436) Okay. Brian Cubellis (34:17.409) Is there a point at which the market just doesn't need all of these different vehicles? is there some economies of scale that just lead all the capital to flow towards strategy predominantly? I'm curious your view there, because we're seeing more and more of this. In your view, do public market investors need all of these different options? There's obviously going to be differences, like leverage ratios, how much risk they're taking. So there's sort of like a different flavors of these things. But in your mind, is there a saturation point where like the market's like, all right, we don't need all of these Bitcoin treasury companies. Tad Smith (34:56.32) Well, they all have the same, well, let me step back. If they're all shells or approximately shells, mean, obviously, Sailor's got a $500 million software business in it, they're essentially shells. Then the question is, how do they differentiate themselves? And any market where you have a whole bunch of competitors that have very low levels of differentiation, to me, is not something that's an exciting investment. And so when I look at it, I say with respect to strategy, stroke, micro strategy that has, and you said it, Brian, you said they've got huge scale, which, you know, a sailor doesn't buy into this thesis, at least as far as I can see, but the huge scale will give them things to do other than Bitcoin per unit share going up in the future as that and ways to innovate around that that I think will be tremendously important. The rest of them, in order to differentiate themselves, they have to be doing something materially different. The thing that has me intrigued, back to your point about MetaPlanet where we started on this, in terms of their announcement, the story I'm going to tell you may be entirely coincidence, and I'm not being cute, I'm actually just entirely coincidence. So I've been eyeing MetaPlanet for a couple of days, thinking, you know, I really like the way it's moving, it might be fun to put something for the kids in there. So I called JP Morgan yesterday and I said I'd like to buy MetaPlanet. interestingly I had tried them about six weeks ago and at that time they were sort of talking about getting a stock in the Japanese exchange and I almost lost the will to live. I said think about the paperwork. I'm not doing that. So then I saw that they have this MTPLF little OTC ticker now and it's like two bucks 93 or something at the current trading price. And it's, by the way, if you look at the, it's moving up very nicely and I think Simon's doing exciting things and you know, it's a higher beta option than strategy, maybe a little bit around the edges, it'd be worth having, putting some for the kids, you know, you never know. So I called JP Morgan yesterday, said, can I have some MTPLF? And they looked it up on the screen and they said, I gotta call you back. They called compliance and they said, it's an OTC stock, less than $5, we won't sell it to you. Flat out. Tad Smith (37:17.511) So I sit there and I think, okay, well maybe if I were Simon Brovich, I would say, well, I would want to be over here in the US with access to US capital and to make it really easy to people like Tad who want to buy some. Maybe this is coincidence, but there's your story. Michael Tanguma (37:36.264) But they're separated entities, right? It's not like a feeder, like a feeder fund. Like this is completely different because my understanding is MetaPlanet success comes from the arbitrage with that current market and all the other ancillary things. Like this would be fundamentally different. So it'd be trading on its brand recognition alone. Tad Smith (37:43.976) Yep. Tad Smith (37:50.723) I couldn't agree more and you have high expectations for the level of information I'm going to take in before I buy. Brian Cubellis (37:58.122) you Michael Tanguma (37:58.823) Yeah, I think that's the interesting aspect of this. It always reminds me of the Zero to One book. If anybody has a monopoly, they never tell you it's a monopoly. And then if you don't have a monopoly, you always say you have a monopoly. And so Saylor saying that, you know, he doesn't really have a moat is him telling you maybe he does have a moat. It feels very Pareto distributed. There's gonna be a large winner. I like the notion of that's been thrown around as like a strategy was the immaculate conception in the corporate treasury game. can only do it once. But TBD, but to your point, it's hard for us to in good faith, be excited about some of this stuff because it all looks the same and it's hard to tell somebody why don't you just buy spot BTC. But obviously for Bitcoin and if it gives institutional capital a reason to get exposure, it's good, but it's hard to see the return profile makes sense. Tad Smith (38:43.908) And by the way, it's actually worthwhile, not at this point in the cycle, if you still believe there is a cycle, I do believe there's liquidity cycles. It's actually cause for concern. What do I mean? When you have, call it X, more than a dozen, maybe 80, whatever the number of companies is, whose sole focus is to try to differentiate on providing some version of alpha with respect to a Bitcoin treasury strategy. And You can imagine that would be an invitation for the marginal person to be adding too much leverage, to be extending themselves too far, to put too much risk into the system. For the hedge funds that are buying it trading it to be borrowing too much from their banks, all of it intensifies the level of both enthusiasm on the way up and the potential risk on the way down. I look I don't mean I'm bullish on these things. I think things at this point in cycle look very good. But this is a party with leverage Bitcoin equity that is going to really be raucous and a little farther in the cycle, a little bit bubblier, a little bit more speculation, a little bit more parabolic curves on these assets. And you can bet your bottom dollar I'm a stand near the door. Michael Tanguma (40:01.278) Yeah. I mean, you said this in a lot more sophisticated way than I have or will ever, but this is the sentiment I've been sharing internally and externally is I grew up with the understanding, you know, every, you know, there's no such thing as a free lunch and money doesn't grow on trees. And ultimately it also, you know, the marginal cost of production things trend to, and if you're printing money at a thin air to buy an underlying hard asset, ultimately that has to go back and mean revert. And that Tad Smith (40:29.614) Or as they say, you either run out of money or you run out of air and neither one of them is good. Michael Tanguma (40:33.684) Exactly. And then the last part in all of that is more of, this is kind of like bird's eye view, but historically in Bitcoin's 15 years, there's always been these centralized concentrations of the capital that are aggregated and then they kind of diffuse or disperse like throughout. And we never know where the assets go, but they're always just gone, right? You have FTX, have BlockFi, you have Celsius, you have all these things. You never really know who's holding them. And not to get conspiratorial, but it's just always funny because we're always like blame it on the underlying, but we never know where the actual, there's a lot of people holding paper BTC that have been waiting for claims for three years. And what you just described is kind of a proxy for that where you have 10 different entities absorb a lot of BTC, they blow up. That BTC goes somewhere and disperses, but you're really, you're gonna only point to the animal spirit. So you're never gonna point behind the strategy. And so there's just a lot of. I think a lot of wisdom in what you're sharing that the market should pay attention to because we're going to get into the animal spirits again as liquidity increases and people are going to forget previous cycles, you know, cautions. Tad Smith (41:33.322) Mike Michael you're exactly right I mean we forget the Fed in terms of liquidity right now is basically tight I mean it continues to be tight I'm not talking about necessarily the rates although I happen to believe they're too high and I'm entitled my opinion Jay Powell actually runs the show it doesn't matter what my opinion is but I also think liquidity is a bit tight and the liquidity you're seeing around the world is mostly not US liquidity except insofar as the dollars rolling over the yields on the 10-year a little lower because of growth expectations changing the reason I say that is It's been a while since we had a really, really rip roaring parabolic move. we've, you know, it's easy to say we've forgotten. I mean, that little thing we had last, the fourth quarter of last year, and that was nothing compared to what this thing could do when the, when the Fed, mean, the Fed starts printing dollars, the whole world wants dollars. And when it starts printing dollars, like really printing dollars, we've had an unusually long period of tough, tight money. relatively for the Fed, we're going to forget those animal spirits are going to be explosive. And it'll be exactly the moment where we don't want to leave the party. Brian Cubellis (42:37.89) Yeah. Michael Tanguma (42:37.918) Yeah. Michael Tanguma (42:42.152) And to throw more gasoline on that, now you have a friendly administration and regulatory environment to digital assets. And so you're just throwing, you know, like dynamite or whatever the analogy would be on top of the building on fire. And it's just going to be a pretty, it'll be fun for a while. Tad Smith (42:58.155) Yeah, I mean, a perfect example, a strategy, then micro strategy, was a heck of a lot easier to sell at $400 than it was at $544 last November. What do mean? It's at $544, even though it's gone up $100, $150 in like, what was it a week? I mean, you guys would know. It says the FOMO sense is overwhelming. Okay, now's the time to sell. It's just hard, really hard. It's a lot easier at 400, and it sounds kind of a yawn. In fact, what is it? 396 or something today. It's easy to buy and sell today, even on the day of earnings. So, and that's the mindset. Jackson Mikalic (43:39.372) Tad, do you have any thoughts on just, we didn't talk at all about sovereign accumulation of Bitcoin or mining or what? I'm generally just curious to hear your thoughts. We talked a little bit about institutional adoption, but we haven't talked much about sovereign central banks. I think it's incredibly early for that, but I would love to be wrong about it. I think it'd be interesting to see what happens if the U.S. moves forward with starting to accumulate Bitcoin in more of a budget neutral manner. What are your general thoughts just in terms of, like I guess my question would be, what do you make of the first 100 days or so in terms of the US policy with Bitcoin and digital assets? And then what are your thoughts through the end of 2025, however many months that is, seven months or so on US policy, but then also just sovereign game theory around this asset class? Tad Smith (44:32.04) So I would characterize the first hundred days of policy by this administration with respect to Bitcoin and the Strategic Reserve, which is, let's stay narrowly focused on that for just a minute, or sovereign accumulation, I think, of Bitcoin's Strategic Reserve, as appropriately sober. And what I mean by that is they've launched a study, six months is a good period of time for a study. I think they're actually really thinking it through. There are all sorts of dynamics for the world's reserve currency leader to think about a Bitcoin reserve. It's easy to announce the intention one. didn't go into the sort of they didn't do a self-immolation of printing dollars to buy Bitcoin without taxpayer support, without the education, all these different things. They're thinking it through and they're proceeding cautiously. In the meanwhile, they are galloping on the stablecoin. legislation which has clear and present benefits for the US dollar and the US Treasury bill situation. And they are actively working towards some version of what we call the FIT-21, which is the financial market restructuring or structuring so people will know what a token is and clarify which regulatory agencies make sense. So for me, the fact they've queued the strategic Bitcoin reserve carefully and thoughtfully, they're not slow walking it because they're actively moving along on it, in my opinion. but it's appropriate that it goes slower than the other two. Now, that's a slightly different answer than countries that are in the, back to the sailor quote, the young and the desperate. The young and the desperate are really all about Bitcoin. And you can think about what countries in the world are both either young or desperate. And in those instances, as long as the IMF in particular makes it hard for them to adopt Bitcoin, then you could imagine a world where those countries are in effect doing some version of a strategic Bitcoin reserve. But what's more likely for them? Honestly, what do they really want? What they really want is stable coins. What they really want is the US dollar and to be on the US and have US dollar currency pegged, in my opinion. So stable coins will be good for them. So I don't see in the near term a lot of countries adopting it. Tad Smith (46:53.355) except with respect to what I would call the US dollar adversaries as a hedge. Example, if I'm in China or I'm in Russia, or I'm in a place where I'm concerned about the long-term ability of my ability to use the US dollar in any capacity with the recent weaponization of the dollar, I'm not saying any political, I'm just saying the Biden administration put in place is pretty tough sanctions for Russia after the Ukraine invasion and the use of the dollar. I've now... if I'm a country that is often adverse to the United States interests, I would certainly be buying gold for the reason that we said, and I would potentially quietly be accumulating Bitcoin. Bitcoin, and the reason is it's almost a call option on the future reserve system. You're not sure how it's going to play out, but the one thing you can pretty much guess is that Bitcoin's going up. And the more of those you have, the more power you'll have, the more seats you'll have at the table to figure out what the final monetary world's gonna look like. So that was a long-winded way, but I hope it was helpful. Michael Tanguma (47:58.152) Yeah, I think this kind of underpins some of that. chart recently came out, I increment and put it together, but it's showing close to $325 trillion in global debt, money supply, and then ultimately hard assets, and Bitcoin only make up 5 % of that. And so in a world full of debt and counterparty or potential counterparty risk, specifically around adversaries, Russia and treasuries, you may want possession being nine tenths of the law. If you take delivery of that, you're hedging yourself out from the counterparty risk of a, you know, the U S dollar or corporate bonds or bonds. And so I think this is part of that stacking. I never thought of the, there's an interesting aspect you mentioned about the IMF and that kind of ties into what we've talked about as a little inorganic in the hash rate, like post the past 24 months, it's kind of really, I mean, it's gone insanely parabolic where It's been rumored, you know, that certain countries are mining with nuclear energy and that would be a kind of like a subtle way to start establishing a reserve without actually buying in the open market by leveraging natural resources. And that goes back to the hungry and young countries are probably already doing this today. Some in Latin America and some in the Middle East. Tad Smith (49:10.467) By the way, all of this, at both your point and my point, my point more so than yours, which is more forward-looking even than mine, all of this is a, call it a medium-term answer. Medium term being sort of five years, because at the rate of AI and agentic transactions and the use of agentic AI to conduct e-commerce and deal with currencies, the dollar, some non-digital version of currency isn't going to cut it. And in that world, again, what I would want to do is I'd want to have some Bitcoin, which is the perfect digital form of capital if I'm a country or sovereign nation, just to make sure everything comes out okay for my people. Jackson Mikalic (49:55.48) But if you're a sovereign nation by the name of Italy, apparently we're concerned about Bitcoin. I saw this article today. It was the Bank of Italy talking about, pretty much saying that they don't like the pro-Bitcoin, pro-crypto stance that the Trump administration has taken, citing that Bitcoin and crypto assets with their high price volatility pose meaningful risks to investors. also, somewhere in this article as well, Michael Tanguma (49:55.518) Yeah, it's... Jackson Mikalic (50:25.433) It was, believe, Italy, maybe France as well, didn't necessarily like the idea of pro-dollar dominance via stablecoins. So, Ted, you think that this is, is this related at all to the trade wars, trade alliances? you see, like, how do you see, I guess, the EU in terms of adoption of Bitcoin, digital assets, stablecoins? Do you think that... the dollar's going to consume more of that market and global trade via stable coins, or do you think that we're gonna see more fragmentation because there's just like this battle between, there's just been this ongoing battle of de-dollarization or not? Tad Smith (51:05.917) Yeah, there's a great book, Hat Tip to Mark Andreessen, published in 2014 by guy named Martin Gure, G-U-R-R-I, called The Revolt of the Public. And the central thesis of it is the traditional way to think about politics has been flawed. And the way to better think about it is there are those who believe that the power of the center needs to retain control over all aspects of what a system or social system or economic system do. And the other is the periphery of that system trying to pull power back to the people, to the populace. It's exacter. The reason I say that as a framing device is Europe is the epitome of the center. They are all about a monstrous bureaucracy in Belgium. And even when they're not operating as a monstrous bureaucracy in Belgium telling everybody what to do, their countries are little versions of Belgium that are telling everybody what to do. So this is exactly the opposite of the sort of philosophy that you have that is sort of Bitcoin oriented, frankly, right? Which is Bitcoin is all about the periphery. It's giving people power, it's giving people autonomy, it's giving people libertarian freedom, it's giving them choice. That is exactly what Europe does not want you to have. What they want you to have is they want you to fall in line, they want you to... Michael Tanguma (52:24.819) No power. Tad Smith (52:28.274) be a good citizen, they want you to go forth and within the framework of their controls, create great tech companies if you can and employ people and they want you to have a happy life. And good for them, that's a totally different way to approach it. But is it any surprise that the bureaucrats don't want Bitcoin anywhere near them? The last thing the European Central Bank wants is... a population of 300 plus million people running around with Bitcoin or Satoshi's because you don't have enough Bitcoin for that. But you know what I mean, a bunch of sats. They don't want you stacking sats. That makes their life a lot easier, a lot more difficult. Michael Tanguma (53:10.164) Yeah, and to add what Ted said, they want you to do all that also with no power, depending on what country you are. Tad Smith (53:15.216) yeah, no power, exactly. Yeah. So, you know, look, Europe has wonderful qualities to it. It has the most amazing people in the world. It's one of the greatest museums on earth, if not the greatest museum on earth. It's a fantastic, it's incredibly creative people. I'd rather eat food in Europe any day, but I prefer our policies to theirs, for sure. Jackson Mikalic (53:38.967) Well, where do we go from here? So we've been recording for close to an hour now. I don't know if any of you guys wanted to flag some topics we didn't cover already. There was the Charles Schwab CEO, which could be interesting, but yeah, Michael, go ahead. Michael Tanguma (53:54.578) Yeah, before going in transition, think any topics that will rattle off a lot of the public market stuff that's going on, I Galaxy either filed is coming or is filing to come to the US Schwab announcing, think getting a little bit louder about the launching crypto trading. There's a few others on the banking side, think rumored potentially Ripple. think Ripple has been rumored almost by everyone, but with Circle. a lot of like at the highest level of finance positioned or the table being set for what people are setting up for this new administration, the liquidity flow coming in. think Ted or anybody just chat a little bit about that because I think it's the complete opposite side of what we just talked about with Europe in the sense that something we've talked about for weeks that we know we're coming into an inflationary environment. People need to hold hard assets if they're going to come outside of that and have, purchasing power to buy things. And I think the US knows that and that's part of this new strategic version of getting Bitcoin in everyone's IRA or ETF or just spot. So it is promising to see the innovators in the highest levels of finance trying to embrace that, but also just curious on where the risk lies or who's doing it right, who's not. Tad Smith (55:09.773) Well, I think it's going to be for me a pattern of let's experiment and innovate. And if it works, keep doing a little bit more of it, keep doing a little bit more of it, keep doing a little bit more of it. And if it doesn't work, adjust. I'd rather see that, which I think is a very sustained, it's a little, it's like the difference between a meltup in the stock market or in the crypto market or Bitcoin market rather than a parabolic move. I don't think we need parabolic moves. We needed to roll some bad things back. parabolical, know, swiftly and they did that. But now in terms of innovating going forward, I think we can move at a healthy pace and I think a Galaxy coming here is terrific. Novogratz is great. I he's got a great firm. think all of those adjustments make sense. The one thing I would say, which you didn't mention Michael, if I may, is by the time this podcast comes out, but at this moment we're still two hours or one hour and 53 minutes from the close today. And tonight is Strategies Earnings. And we do have Tim Cotsman on the phone. Don't you think we ought to get him to commit himself right now before the earnings come out about how that's gonna go and what's going on? you think? Brian Cubellis (56:18.54) Yes. Michael Tanguma (56:18.6) think so. Tim (56:19.887) Yeah, I mean. Tad Smith (56:20.248) I think we ought ask the maestro. What's your prediction, Tim? When this is aired tomorrow, they're going to be able to listen to this and then look at the screen and what are they going to see? What do you think? Tim (56:30.629) They're going to see a V-shape recovery, like every single time with Bitcoin, with MSTR, right? You'll have the Curris-Dales and the Peter Schiff's of the world posting their posts. And then you'll see the after hours and tomorrow morning, the price trying to tank and then just ripping right back up. I mean, it's just a tale as old as time, meaning the last 16 years. Tad Smith (56:53.047) Okay, so last big one. Okay, the last big one wasn't his 21 plus 21 plan back in November, if I'm not mistaken. Do you think we're gonna get a $21 million ATM at the equity or is he gonna double down and go for more? Tim (57:09.029) Yeah, I was going to say 21 at a minimum. Wouldn't be shocked to see 42 or whatever 42 times 2 is or 121 million dollar. Tad Smith (57:17.687) 42 times 2 is, if he actually does an $84 billion equity issuance at the market, that may be a V, but my prediction is it'll be a deep one. Tim (57:27.813) Yeah, yeah, or 121 billion dollar ATM. think anything's on the table. So it'd be interesting to see what happens at 5 PM Eastern Standard Time. I'm sure you can find a watch it on your own or find a group on social media that's doing a watch party. That's how big this is. Michael Tanguma (57:48.439) Tim, give us some insights into what's going on in that world. This is something that I personally don't follow as close. I know the conference is coming up in the next couple of days. You got different derivatives. There's the MSTY, other publicly traded. guess maybe on that, what's going on, but also what's the sentiment like with the new 21 launch and how do people feel about that from a flow perspective and interest from that segment of the market, the true North market? Tim (58:18.971) Well, we had an awesome True North call last night. Invite everybody to go watch that. Dan in particular was kind of on fire with like just different theories and even mentioning Joe Burnett, I think actually came up with this idea of if you think that strategy does not actually own any Bitcoin, then you can like sort the stock but long something else. like it was a very interesting way to basically still get 10%. and be hedged in case strategy doesn't have any Bitcoin, right? Which we believe they do have a lot of Bitcoin. As of this morning, I think the, what is it? Cantor Equity Partners is like 5.2 X MNav. So that's an interesting story. Last night, I kind of lost my cool little bit and said, look, we can stop talking about GameStop until they actually put Bitcoin on their balance sheet. Tad Smith (59:02.069) Thank Tim (59:16.455) Right. That's a little too much free press. The vibe is off in my opinion there. And Tim (59:24.549) Yeah, there was something else that I'm missing. Brian Cubellis (59:28.097) Conference coming up. Tim (59:29.449) Oh yeah, the conference, the first ever True North World on Cinco de Mayo. So Monday, that'll be a lot of fun. think we'll have about, it's sold out. I think about 150 people. have like a whole page full of sponsors. Of course, the sponsor ticket was only 500 bucks, but you know, when you see UTXO and Deloitte and some of these other names up there, you're like, woo, all right. Brian Cubellis (59:36.866) Sold out. Tim (59:56.626) We're in business, as far as just getting to know people. so that'll be basically a four hour podcast live, 12 to four, then the strategy party, then the True North party. So that'll be a lot of fun. Yeah, I'm hearing from people that people are just coming into next week in Orlando, very business minded. All the things that you've touched on so far in this show, looking to raise capital. They're looking to build relationships. They're looking to, um, I mean, everything from building a business to trying to get a job, to trying to get on a board. mean, it's like up and down and all around just people really getting in position for, I think what's about to happen. So I think that's super interesting. I think the, you guys were talking about a little bit earlier, Maybe it's not attractive from an investment standpoint for the 500th Bitcoin Treasury Company, but it's probably still interesting to them if they are the web design company and the only one that's putting Bitcoin on their balance sheet. The interview I put out yesterday on the Treasuries Pod is actually literally that. A web design company in the UK, I think it's a $6 million business. You go to the Bitcoin for corporations handle their, you know, they're doing announcements about adding two or three or four Bitcoin to their balance sheet. But if they're the market leader in that segment, what does that mean? As the Kager on Bitcoin goes down, do they just dominate that sector and obviously just do whatever they want? But as an example, maybe it's. Maybe it'll get an investing audience, maybe it won't. a lot of what we talked about last night on True North was if you're going to not buy more Bitcoin or more MSTR shares and you're going to allocate to something further out the risk curve or with a different risk profile, it's just something to be thoughtful on and then quickly on the structured product front. If Bitcoin is the hurdle rate and Bitcoin is Tim (01:02:21.841) just the best performing asset for the foreseeable future, call it the next five years, the next 10 years. I think there is a place for all of these products so that investors can become educated and analyze what's the best product and between a suite of products really build their new portfolio. If the 6040 is on the way out and Bitcoin is on the way in, but you still have everyone having different needs, think, right? Just dialing in those different volatility factors through these different structured products could be is very powerful and will continue to be so. Michael Tanguma (01:03:02.694) Yeah, one angle of that is if you add the president's son to your board, that could always help in the profile of the corporate strategy. That could be a differentiator. Tad Smith (01:03:03.289) So. Tim (01:03:10.749) Yeah. Tad Smith (01:03:15.502) One of the things I struggle with, by the way, I 99 % agree with my buddy Tim here, is if, he and I happen to agree, by the way, about the hurdle rate, which that's appropriate to use for people who, in effect, are selling Bitcoin to do something else, to invest in something else. When a company undertakes a leverage Bitcoin equity strategy, think about how the dynamic of how they allocate capital inside the company becomes. On the one hand, they can put capital into their Bitcoin treasury strategy, which is growing between 40 and 50 % a year, depending on which internal rate of return you want to use. On the other hand, they can put it in, I don't know, a web design business or whatever else the other business is. How many businesses in the world are delivering a consistent, volatile, but consistent internal rate of return at the rate of Bitcoin, dot, dot, dot, without doing any work? Think about that. Very few. So the moment, and this goes back to the Nvidia point we made, the moment you bring Bitcoin into a treasury strategy, from the perspective of a classic corporate machine, if capital within the corporation is being financed externally and then going to the most exciting investment projects, Bitcoin inside the machine will suck all of the capital out of all the other projects that don't perform at the level of Bitcoin. The treasury strategy by definition will eat the whole enterprise from the inside out. you are simply outside like investors, all are, we are already making that decision. Why would I want to invest in, I don't know, X company, General Motors or Eli Lilly, I'll make one up, when I could put it over here in Bitcoin? And that to me is a, for me, a higher return on capital. The same problem, once you're inside a corporate hat, you have the same problem. So I find it very difficult to see that companies that have businesses other than the Bitcoin's treasury strategy, unless those businesses are the rare few on earth that are effectively money printing monopolies, will be able to sustain and grow a Bitcoin treasury strategy if their capital allocation process is thoughtful. I don't see how it works. Michael Tanguma (01:05:33.928) Yeah, Ted, I like you. We hadn't met formally, but you effectively just described how we built this business on a Bitcoin standard. And then we spun out a venture firm that's Bitcoin denominated, Tim is an advisor on. But it was with that exact understanding that when you look at every preference when you're building a business from hiring to how you spend on ads or whatever underneath the sun, it's not to say it has to, you don't spend the money because that's what it's for. But you need to make sure you're more discerning and the return on capital is higher. And the realization was that the incumbents have too much pork and fat built in. And so the people, the firms called early writers, because the early adopters of the strategy are going to leave the firm because they won't be listened to. And then they come build with us on that standard. But when you build on that standard, you're inherently more efficient and you're going to outcompete the others, not only because you hold a better form of money. but constraints are the design surface of the world. And so when you put constraints on yourself, you're to come to the most efficient outcome. And that's how we actually rebuild. So that whole imploding happens. And in parallel, we're going to build on a better standard AI and Bitcoin. Yeah. Tad Smith (01:06:39.719) I love that. That's awesome. And by the way, give it five more years and you can be sitting on the beach and your agentic AI can do it for you. The only other thing I would say for people who don't care about micro strategy, but care a lot about Bitcoin, what Tim was talking about tonight is really important. Also, because if Sailor comes in, not 21 billion, but 42 billion or 84 billion or whatever billion it is that he does as an ATM, that is... new demand for Bitcoin and not a little bit. So up and to the right, as Tim famously says. Jackson Mikalic (01:07:19.755) I guess I'm gonna go to the beach for the next year. You're here to hear it. Tad Smith (01:07:23.305) Make it a good beach. That's the advice. No financial advice today, but the only advice I have is make it a good beach. Jackson Mikalic (01:07:30.583) One thing, Tad, that we do on every episode, there's actually two more things I want to do. I want to do quickly the single point of failure of the week, and so I'll explain that in just a second, and then I want everyone to be prepared to have maybe a bullish and a bearish thing that they want to share, just quickly. And Tad, if you're interested and you want to, we'd love to just hear a little bit more about your background if you have the time. So you think about if you wanna do that or not, why I just pull up the single point of failure of the week, which is, dun-da-da-da, here we go. Ledger confirms physical scam letters requesting seed phrase and fake security upgrade. So I actually think this ties into the Charles Schwab CEO interview of this week. Ultimately Bitcoin is perceived to be uninvestable by many people still because of Maybe they're not opening up the block, but they're opening up the journal or Bloomberg and they're reading about the Couple that loses five million dollars of Bitcoin because they throw their hardware wallet out or they read headlines about FTX or whatever the next FTX will be blowing up and this perception just plagues investors both retail and institutional because What's embedded in investing in Bitcoin is not necessarily, I invest in Bitcoin and it goes to zero. We all think it's not going to zero. I think we're long past those days. But what's even worse is I buy Bitcoin, I'm right about the investment thesis, but I mismanage the asset. And so ultimately it's probably worse to make the allocation and then one day not have the allocation anymore because you lost your device or you end up on the next FTX. I think ultimately this ties into the schwa news because the CEO said very confidently that they would be the premier Jackson Mikalic (01:09:28.149) firm for crypto or something along those lines. And so they actually want to launch a spot Bitcoin and perhaps other crypto asset trading custody solution within the next 12 months. And the CEO mentioned that their clients trust Schwab, right? And so naturally people may want to hold off on making an allocation into the space until they actually can work with a firm that they trust. And so This is something I don't think any of our audience would necessarily fall for a scam like this, but the unfortunate reality is a lot of people do. I think somewhere in this article it may have mentioned, or it might have been somewhere else, the amount that was scammed in similar manner last year. might have been $12 billion of Bitcoin and crypto. Michael Tanguma (01:10:05.62) Can I point, can I just pull something really quick up? Cause it just basically, it'll, it'll make it more, this is similar from the block. This is unrelated. I mean, it's definitely related, but it's different incident. There was an elderly elderly person. Jackson Mikalic (01:10:16.939) Yeah, please. Michael Tanguma (01:10:28.968) They probably weren't always elderly. Maybe when they bought this, they were a little bit younger, but they lost $330 million in BTC. This was a phishing scam, believe, or social engineering, I'm sorry. But it goes to Jackson's point that there's just a lot of education still coming into the space. Yeah, this was social engineering. And yeah, just do your diligence, make sure you know who your counterparties are and don't pick up the Google phones or the emails that get sent that say reset your password. Or I think yesterday I got hit. with a firm, I won't mention the name of the firm, but it was like, it was obviously a phishing email and they said, you know, pull your assets off to like another wallet. The level of sophistication when it comes to hacking as this asset grows, we're only at two trillion today market cap for BTC. What happens when it's five or 10 trillion? It's going to be a wild west. So just be vigilant. Tad Smith (01:11:22.029) Yeah, I think that's good advice. mean, you know, for me, it's a very real question about do I fear the sort of counterparty risk that I, in theory, make myself immune to by cold storage on the one hand, or would I rather just have it at my, you know, in an ETF form at JP Morgan and know that I'm going to call them. Now one is so analog and ancient and almost boomer that you gotta laugh at it. But think about it, it's not so much that, it's the relative level of security. by the way, you don't even need to be hacked, it can just be an error. I'll tell you, I have been sitting on an email literally for three weeks from Coinbase because Coinbase is taking their wallet where I have my NFTs and they wanna merge the assets in that back into the Coinbase main app. And I gotta tell you, This is just, want to get in there and deal with this like I want another hole in the head. I know that I've got some nice NFTs there and I don't know how, I'm going to send them back to this thing. This is just a total nightmare. One thing I know is I'm going to send them out of the wallet and they will not be in the Coinbase account, wait and see. And this is not even a hack. So I look at that and I say, security has many different dimensions depending on the cohort that we're talking about and people that are absolutely fluid coders. think cold storage is an absolute slam dunk and I'm a complete idiot. On the other hand, it's tricky, you really do. Cohorts are very sensitive to different aspects of security and so it's all around us. Michael Tanguma (01:13:00.434) Is it Schrodinger's cat about it being alive? Is that what it is? Tad Smith (01:13:04.627) And by the way, the famous book that I also recommend, edition, revolt of the public is called, what is life? That he wrote about 120 pages long and it is extraordinary. Brian Cubellis (01:13:05.762) Yeah. Michael Tanguma (01:13:17.064) What is it? Can you say that again? Tad Smith (01:13:18.696) What is life? By Schrodinger. Yeah. Michael Tanguma (01:13:20.692) What is left? Okay, so we'll have to look that up. The reason I brought that is because there's a 1.5 trillion. I know you guys or your firms, a very large investor and ledger, and this is where the majority of assets sit in that 1.5 trillion. And folks that have like certain amount of assets will upgrade to our product. They usually diversify, so they'll park some in multi-institution. But what's come up increasingly is, like inheritance and all the things associated. They're like, no, I got it. Like I got it, but I need to this for my wife or loved ones. Like, okay. But what's come up is they haven't touched the device in like three years or five years. And so generally it's like, to your point, it's the last thing you want to do because you're always in sales, right? Competing with the status quo and status quo is just doing nothing. And I came up with this like, it's like Schrodinger's box in the sense of like, you don't know if the assets are still there. So if you don't touch it, they're still there in your mind. Tad Smith (01:14:10.56) 100 % Michael Tanguma (01:14:15.422) but you're afraid if you go touch it, they're not gonna be there and similar to your circumstantial, like if I don't do anything, I think I'm good, but if I go do something, now I can mess everything up and go to zero. And so that's been an interesting and a show for us. help in that whole process, but it's just such a key thing. And you bought it at 10K, now it's 10 million and you're like, man, I don't wanna deal with this. It's still there. If I don't touch it, it'll always be there. Tad Smith (01:14:38.492) Yeah, 100%. So in fact, the best place to keep my art, think, is with Pascal, point of ledger. I think you're exactly right. But I just need to get it over there. And I fear all the sort of steps I need to go through to do it. And all I can see is my art disappearing and not being recoverable. So I'm terrified. Michael Tanguma (01:15:00.276) Yeah. And so I know we're coming up on time, but this ties in a little bit of your background. Um, would love to hear a little bit of the Sotheby's journey in particular and how that led to digital assets. If it did. And the main reason why is because in a different life, I worked for a high end auction company for a very small time and heritage was the place we actually sent, uh, new mismatch coins up in Dallas too. And so I was always familiar with Sotheby's. And I kind of took an accelerated approach to Bitcoin because being younger, I collected like baseball, basketball cards, and then Pokemon. So I knew scarcity. And once I heard 21 million and having to be in like the auction business for a little bit, it was like, well, of course this thing has value. It's just now you have to underwrite how much value it has and what happens to be almost everything. And I was always wondering if that was a product of kind of what influenced your journey to understanding this space or was it something completely unrelated? Tad Smith (01:15:48.123) Michael, you said it better than I could have. There's literally not a ray of light between what you just said and my journey. None. You nailed it. Michael Tanguma (01:15:57.832) Nice, Yeah, scarcity, guess it's just the thing that makes us all tick and then once you get it, now you just have to figure out how scarce is this thing and how much does everyone else want it and if it's super scarce and everybody wants it, well then there's value. It's not, yeah. Tad Smith (01:16:09.66) And as you implied, and as you implied, and I was alluding to earlier, in parts of our economy or assets where they don't produce fiat cash flow, narrative drives the price. So that's how you can sell a Picasso for $20 million, which is paint and canvas. It's the narrative. And by the way, you can have two Picassos that look almost identical, and one will go for 20 and one will go for two. What's the difference? The year they were painted. Narrative. Michael Tanguma (01:16:42.11) You know what the kids call it these days? It's all vibes. It's all vibes. get masa, you get masa, you get some tether, and you get some loud guys, and now you got the vibes for the next big thing. Tad Smith (01:16:46.683) WAH Tad Smith (01:16:54.309) But they're right. mean, think of us as a species. We're all about the vibe. We are. And by the way, anyone who invests on Wall Street and is very focused on the analyst reports and the earnings and the PE, all that stuff, if they don't think those stocks are vibes, well, then they haven't seen the list of the highest performing stocks in the first corner in the S &P 500, which as I recall, Palantir's right at the top. So there you go. Michael Tanguma (01:17:21.246) Yeah, you know, the strongest strongest vibes is Tim Cotsman. He came on the scene and you know, the vibes just have been getting stronger week after week, him showing up. Tad Smith (01:17:29.979) Do you know my first talk with Tim Cotsman, and this I'll never forget because it was November 5th, it was election day. So I've always, I've sort of got it always sort of logged into my mind. It was election day. So. Brian Cubellis (01:17:41.237) Your life changed forever that day. In more ways than one. Tad Smith (01:17:43.817) In so many ways, Brian, so many ways. So yeah, I have been the CEO of Sotheby's. I sold that company. I am a partner in one round table partners and 10T Holdings, which as you noted before, I'm the former CEO of Madison Square Garden. And I've had a long career at basically the intersection of technology disruption and creative businesses and a whole range of things. But honestly, Michael, I couldn't improve one minute on your statement of how you came to Bitcoin lines exactly the same, which is when you understand that value is what we say it is, then it's very easy to see that a piece of code could have tremendous value. So, you got it. Michael Tanguma (01:18:23.572) Nailed it. Jackson Mikalic (01:18:25.377) Well, guess we could wrap it. I don't want to go over. We didn't do the bullish and bearish, but I also want to be respectful of everyone's time. Yeah. Brian Cubellis (01:18:31.745) No bearish takes this week, Jackson. We're back in the 90s. We're rip roaring. Tim (01:18:36.853) The only reason I'm bearish, the only reason I'm bearish is because next week you're going to see some things that are going to make you even more bullish. I'll leave it at that. Michael Tanguma (01:18:37.022) I would say WorldCoin coming to the US is a little bearish, but we'll save that for another. Brian Cubellis (01:18:38.989) yeah, that was... yeah. Jackson Mikalic (01:18:44.629) Well... Michael Tanguma (01:18:44.958) TELL Jackson Mikalic (01:18:55.831) Alright, Tim. Michael Tanguma (01:18:58.194) The only reason Tim's bearish is because we're not bullish enough. I got it. Tad Smith (01:18:58.274) Definitely leave it at that, Jackson Mikalic (01:19:05.121) Well, Ted, thank you so much for joining us this week. It was a lot of fun. Thank you. Tad Smith (01:19:07.444) I've really enjoyed it guys, thank you. Thank you all, it a pleasure to be here. Brian Cubellis (01:19:09.133) Yeah, appreciate it, Michael Tanguma (01:19:11.508) Yeah, this was a lot of fun. Jackson Mikalic (01:19:12.865) Thank you.