Transcription
Today, we are joined by Willie Woo, one of the most respected on-chain analysts in the world, to talk about where Bitcoin is headed next. Well, let's wait and see. But I'm just looking at Bitcoin, and it's structurally starting to look weaker and weaker into this bull market. We dig into liquidity cycles, investor flows, and why whales are unloading coins at these levels. The reality is, we're in a fiat world, and everyone needs fiat to live, apart from these hardcore Bitcoiners that are using SATs. Willie explains how Bitcoin is acting as the ultimate canary in the coal mine for global liquidity and what that means for the next phase of the cycle. We also get into the bigger picture: the Fed election cycles, debt, gold's rise, and how stablecoins are reshaping markets. If Bitcoin goes from $100,000 to a million, that means Tether is going to increase, 'cause it's the other side of the book. Tether is the gateway to our crypto ecosystem. Everything's traded against it. You work that out, and it works out that Tether can displace China on the short-dated T-bills. So now you've got a situation where the US government is dependent on the growth of Bitcoin to remain solid. Willie shares his candid take on whether Bitcoin could eventually decouple, trade like digital gold, and what institutional adoption means for the future of crypto. If you want a clear-eyed look at Bitcoin's make-or-break moment and how it ties into the broader economy, this is a conversation you don't want to miss. That's dope.
[Music] Let's go.
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So, Willie, my crystal ball is broken. Where's Bitcoin going next?
There are no crystal balls. There are no crystal balls, Scott. Yeah. No one knows exactly, but, um, you know, we can look at liquidity. Um, we can look at overall structure. How price responds to it is up to, obviously, the market and individual participants and how it actually moves. Um, so, you know, uh, it's late cycle, liquidity is waning. Um, you know, obviously capital coming into the system is what moves it, and, um, I would say price has run up, but, um, as of maybe six months ago, the liquidity powering it has started to drop away while the price momentum continues. Um, generally, that gives us a signature of where we are into the bull market. Um, I would note that in 2017, it started that that process started, um, at about $25,000 of Bitcoin, and it ran up to $20,000. So, the tops of a cycle are very unstable, right? Um, it gets very volatile. A lot of, um, kind of, um, euphoria happens. Uh, we haven't reached that stage yet, but the interesting thing for me right now is that, um, we are getting a pattern where the countdown timer has started. Um, you know, in the 2017 bull market, the last cycle, 2021, uh, we had this point where the flows in Bitcoin, um, while positive, started to decline, and the flows into Ethereum increased, creating a divergence, and that marked the end of, um, the fundamental cycle, the fundamentals powering the cycle. So, that seems to be happening right now. Um, Ethereum did climb, exceed Bitcoin's inflows, and, um, it's starting to just roll over right now. And the other thing that's happened right now is that the flows into Bitcoin, um, didn't make a higher high, um, to confirm the $120 range. Um, generally, each new all-time high Bitcoin makes and consolidates to a level, you get a higher influx of investors and investor liquidity to push it up. This one did not have that. So, we're kind of in a bearish divergence where the $120 level was not validated by investors. Um, and in the last cycle, that was kind of around April. Um, and it was, and if you remember, we went from $60,000 to $30,000, and that was the spot kind of, um, investors, like, not really validating the price levels, and then we had this kind of blow-off where it went to $70,000, and that was driven by paper. So, right now, $65 to $28 to $69. Good times. Yeah. Yeah. The $69, right? So that that was, uh, right now we're in that situation where this same structure is forming. Um, obviously, every cycle is different. Um, but, uh, the question in my mind is, do we get this sort of, is this, do we get an investor recovery? Do we get, uh, higher highs in the flows of capital and therefore validating that the structure is supported by investors, or do we actually, um, you know, basically the investors are slowly walking away here, and we might get another sort of run-up by paper investments, a lot of derivative action?
So, I'm just sitting here watching this. How do you track the flows? Like, is it personal indicators that you have? How do you actually, you know, uh, track that by what metric and, you know, what tool do you use for that?
Well, you can track the flows or spot buying across exchanges, a mix of all the above. You can use the UTXO model, right? And you can look at the prices of which, um, coins moving from one wallet to the other, and you get a snapshot of when the coins moved in, therefore their cost basis, and the cost basis of the new investor coming in. Um, and so realized cap, for example, that's the on-chain metric that measures, um, how much, um, capital has come in through that type of arrangement. It's an estimation. We don't know exactly if it's a new investor. It might be the same guy rotating wallets and so forth. Um, there's ways you can filter it, but effectively, we're looking at on-chain measuring, um, this cohort. This cohort is, um, using wallets, moving cold storage, therefore, they're not actively trading. Therefore, you can call them an investor. Uh, and so, yeah, using, using the on-chain metrics, you can measure or estimate the flows, right? Um, that's what I call capital flows coming into the system. That's relatively easy to do. Um, there's other things you can look at which take into the pricing structure and volatility, which is a bit of a secret sauce, and sort of overlay that on top of the on-chain description, which is investors. You know, a lot of these, the action is happening on exchanges that can only be picked up by the pricing action. So, between the two of them, you get a good idea of liquidity and, um, where the flows are going. And also, you can measure it for other networks like Ethereum and Solana and so forth. So, you can see the rotations between the two. Yeah.
So, we have this interesting scenario where, as you put it, liquidity is somewhat dried up, or at least flows into Bitcoin. But there's a macro expectation that since M2 has risen, Bitcoin will continue to follow those M2 flows, and that we're likely to get Fed rate cuts in the coming week and a half, and that could also increase liquidity. So, it seems like you have a macro picture. Now, we can discuss whether that's an accurate macro picture or not, because that might be an interesting conversation, but there's certainly sentiment that there's going to be a lot more liquidity entering the system generally.
Yeah. And for sure, that is going to bolster confidence that, um, you know, currency is being debased, and a lot of, uh, liquidity, new money is injected into the system, cheap money. Um, and generally, that lifts things in a liquidity cycle. Turns out the liquidity cycle is four years, superimposed to Bitcoin cycles, superimposed onto the hardening. Um, Bitcoin was creat- I suspect it is soft influence from the election cycle that is soft influencing the Fed, even though it's meant to be firewalled, um, that is creating this sort of Fed policy of, um, a four-year cycle of liquidity. Um, that's just a theory I have, no proof. Um, but the thing was, Bitcoin was invented in, effectively published in 2008, after the World Financial Crisis, when the Fed was injecting massive amounts of liquidity because of the to soften this crash, right? And Bitcoin has really never had a really full-on test of a business cycle downturn. We've had liquidity cycles of four years, but have we had a full-on business cycle downturn? Co, you could say maybe. Um, those economic indicators showed that, um, but, you know, the Fed printed early, even before, um, the Co price affected crash in the market. So, um, in that case, I think it was saved off because a massive amount of liquidity. What is it? 20, 30, 35% debasement? There was some ridiculous amount of money that was unprecedented that was injected, and we had the run-up of from the last cycle. Uh, this time, we have a business cycle downturn. We expect, um, and leading indicators are showing that, um, and the Fed should be injecting capital. Um, and that also happened in 2008, World Financial Crisis. Um, they were injecting capital into the system. The markets were crashing. That was their job to buffer that crash, 'cause the, you know, directive of the Fed is to maximum employment. So, it's not always the case that, um, you know, lower interest rates create, um, market go up. And so, the question to ask is, is this leading or lagging? In this time around, usually, they cut interest rates when something breaks, right? Not because the stock market is at an all-time high and things are great. Yeah, it's a, it's a weird one this time. I think we're all a little bit confused. And let's wait and see. But I'm just looking at Bitcoin, and it's structurally starting to look weaker and weaker into this bull market. Um, and, you know, I work with Swiss Block. They've been running the numbers for over a decade on Bitcoin and measuring it and altcoins, and their data shows that Bitcoin is, um, leading liquidity. In fact, it is the most, um, sensitive asset, global asset, you know, global macro asset, gold, stocks, whatever, real estate. It's the most sensitive to liquidity. Um, and so, you could call it the canary in the coal mine. Um, and, yeah, by the way, Swiss Block is the people that bought you Glassnode and on-chain metrics, 'cause they were trading this in 2006, so 2016. So, it was very early this this data. Um, so anyway, let's wait and see. But, um, the underlying investor fundamentals is currently sort of in a make-or-break zone, and it's repeating the last patterns of, like, you know, the top. Um, we did have, you know, a higher high, and we can have this paper run-up, but let's just watch it. It could recover, you know, if investors really come in next three weeks. Um, but it's, you know, a little bit weak on my side. Um, I think we've, we've had a run to $120. How high will it go from here? You know, $140, $160? I don't know.
Yeah. I mean, if it, that could all happen in a week, right? You could just fly up. This is Bitcoin, right? Get a 40, 50% move in a week or two, and then, uh, full euphoria, and see you in a couple of years. Nothing would surprise me. That's, that's last cycle. Certainly happened 2017. It happened all the time. I'm not sure about the cycle. Hey, it looks pretty flat. Um, the amount of capital that needs to move Bitcoin at $120 is quite different, you know, than last cycle where it was $10,000, you know, and then became $20,000. So, it's significant. Um, and then you've got these whales selling into it, um, recently, and every Bitcoin they sell, it's $120,000. They has to buy each one of them before, um, we're good, you know. I think there's a report that there's been 115, 120,000 coins from whale wallets sold just in the past month or two.
Yeah, month or two. Yeah. Some some decent, some serious selling from people that had diamond hands and never intended to unload a single Bitcoin, if you ask them. Right. So, I'm not saying they know something that we don't. I think there's just a serious point where your wealth is so high and so great that you just take something off the table, regardless of the asset. But we've never seen that level of whales selling at prices like this ever.
Yeah. I mean, absolutely. Like last cycle, I remember a whale, you know, a friend that said, "I'm selling." And I think it was around $50 or $60, something like that. I was like, "This is generational wealth for me. I'll just take it off the table." And, um, that happened to be, you know, because like he wasn't doing on, he totally was expecting $100,000, but it's like, I'll take it off the table right now. And it actually crashed to $30, you know, and it went to $70. And but it was the price point where, um, I guess maybe there's a whole bunch of whales that bought in roughly that time, and, um, that was the price point. And so maybe we're in a similar situation. Who knows, you know?
Um, so considering the cycles still rhyme to some degree, right? As you said, every cycle is not exactly the same, but what we haven't really seen this cycle is the rise of the altcoin market. Certainly not where you could just throw a dart and expect anything you hold to go up 10x. Do you think that in this last phase of the cycle, if we get it, that we will see that movement, or do you think that it's really limited to whatever is available on Wall Street at this point? Right? Because we'll get a Solana ETF, and we have Treasury companies, and so there's pretty transparent large buyers of some of these coins, but the rest of them are seemingly just stuck in the mud.
Yeah, I certainly altcoins have competition in the form of publicly traded equities, you know, rappers around Bitcoin now, and now rappers around digital assets. Uh, so certainly they've taken some of the heat. Uh, I mean, right now, over the past month, we are seeing rotation to Ethereum. I mean, we saw that pump. Then Solana had a little bit as well of capital rotation. Right now, I think it's around the mid-caps that's getting a lot of the capital rotation into. So, we are sort of seeing this, um, but it's certainly nothing like the past cycles. Um, it's like, you know, alts were beta, right? And now suddenly you could get beta on even Bitcoin treasury companies, um, and like a MetaPlanet going with ADM NAV, and everything going to the moon. We're seeing that in the treasury companies. So, part of me wonders how much of real capital was coming in, because these are the same guys that are moving capital from.
I was going to say, I wonder if some of those whales who sold for $120,000 tokens have actually just moved their tokens into a treasury company, cashed out on the stock market at a multiple, and called it a day.
Yeah. Right. Like, I imagine a lot of that stuff happened early, 'cause it's, you know, it's getting a little bit risky to do that, um, later in the cycle. But, yeah, I I think that the, the sort of beta game, which is kind of, you know, it's a playing chicken, you know, it's like this thing's going to run up. Who's going to get out first? Um, and suddenly we can do it with securities. Um, it used to be with altcoins. So, it's a bit different this time, but like, is the real fundamental, is real capital coming in? Which it is, but like, it's not at the scale of the previous, um, cycles relative to its market cap. Um, it's interesting because you have, you know, all of these treasury companies that are transparently raising money to buy Bitcoin, but a lot of them haven't even gotten clearance to buy. It's sort of cryptic as to who's done what, but you would think that there's this tremendous amount of demand. I guess on the optimistic side, you can say if there's been 120,000 coins sold, and we still are at $112K or so as we're recording this, that's pretty good news. But, you know, uh, we're going to need a hell of a lot of buying to push to much higher prices. And have they bought? Are they going to buy? Are they going to end up having to puke if we go down and never even get to buy because their MNAV will be at a discount?
Yeah. Yeah. It's, it's interesting times, interesting instruments right now. Um, certainly when the bear market hits, I I think, you know, you're not allowed to say a bear market's going to hit, Willie. There's never going to be a bear market again. They're illegal now. All right. That's right. Oh, sorry. That's right. Some people believe in the super cycle, and I also said the last cycle, last cycle, and then I kind of talked about this cycle, but I don't think that's going to happen anymore. I think we're just going to get a bear market. We're going to get a bear market. Um, but this time, I think it's different, right? Um, it's different in that we don't have the structural weakness as much as we did last bear market. Um, there was a whole lot of, obviously, everyone saw it in 2022, um, ending with FTX blowing up, but taking with it so most of the, um, the big boys along the way, including Genesis Trading, um, and and so there's, you know, I'm laughing now, but I was so disgusted, I felt like leaving the industry. It was terrible. But, um, we don't see that this time round. But I think right now, I think that it's the macro markets are going to have a downturn, and it's going to bring us down, and we're more sensitive to liquidity, so we'll have multipliers on the downward leg as well as with the upward leg. So, I think a normal, if, you know, assuming we do get this bear market, if the volatility will be dampened, or at least the amount of drawdown, like, you know, if our entire cycle here was $69K, previous bull market high to $125, or let's even say $130, $140, whatever, if that happens, will we also just get a 50% drawdown instead of an 85% drawdown on the downside this time?
Yeah, that would not be nice. That would be really nice. I mean, I'm kind of betting on, I mean, who knows? But like, I I think we'd get, yeah, I I think we'd get down to, um, below $40, at a guess. I think we get down below $40, actually. Um, but I don't know, who knows? Um, like the main thing for me to look at is not to guess at the crystal ball at the high. I think no one can guess the high. You get it if you're lucky, because the tops are very volatile and unstable, because when liquidity drops away, you're just trading on just momentum. There's no liquidity buffer to hold that price up. So, it could whipsaw, 'cause demand's dropping, and it's pure speculation. And that's very volatile. If you get the exact high, that's luck. The bottom is a lot easier and more stable, because liquidity is coming in. And you can see it just sort of stops. The volatility compresses because buyers are coming in, you know, buffering it. And when you see that, then that's the time to come back in. Um, never mind what the price is. I think knowing these price predictions are not really what you want to look at. You really want to look at the flows of capital, when they're coming in, where they're waning, and, um, what the investors are doing. Um, yeah, you can get led astray with, you know, looking at just the targets.
Yeah. So, you said with pretty solid conviction, you know, we'll get sort of a macro bear market and Bitcoin will go down with it. Do you think that there's an impending catalyst in your mind, or is it just the normal cycle?
I I also agree, obviously, that we're seeing irrational exuberance in macro markets generally, right? We see gold flying. That should be a signal that everything else should be going down, but they're all kind of just climbing this slow wall alongside gold, which we've never really seen before. And it just seems like nothing is as it should be for a bull market, but we're still in one.
Yeah. Yeah. Yeah. When when investors are really moving to gold, there's a lot of faith in the system that is dropping. So, I don't know. F was a question. Yeah. I'm just saying, like, do you think that there's some catalyst that would send us into this bear market? Because, you know, we kind of joke now that it seems like they've pulled every single lever to keep things propped up, but gold is sniffing it out. What's going to be the thing that sort of, I guess, turns it for macro markets generally, but also do you think, you know, we have some sort of smaller FTX-style blow-up on the Bitcoin side? Maybe a treasury company.
No, I just think it's, it's going to be macro, and I think maybe the tariffs really properly kicking in may may be enough to to kick it off. Um, yeah, we've had a bull market for a long time, right? If you look in the, not not Bitcoin, but since 2008, and there's a lot of debt in the system. Um, I don't know if the US government can stay solvent, you know, panning five, 10 years into the future. And I don't know, it to me it feels like since 1971 to 2025, what is that? That, um, it's over 50 years of governments, um, plugging holes from their overspending 'cause they could do that. And, um, somewhere along the way, you cannot continue to debase. You can see it in the fabric of society. You can see it in, um, you know, the average person, Mrs. Jones, you know, can she buy? Can she afford? You know, something like 15% of Americans are really struggling to put food on the table, with two people working in the family. It's getting out of hand. Um, the fabric is starting to, um, fall apart. And so, I don't know, like, we're 55 years into this, and, um, you know, Lord would say nothing stops this train. They're going to continue to print, and this train's going to go off a cliff. Um, and so, how close are we to going off the cliff? Um, and people running to gold seems like there's some fears right now. Last time we had that was World Financial Crisis for was it four years to 2012? Um, we thought, I remember trading those days, and we thought the whole system might fall apart. Like, actually, the banks would stop, and we wouldn't be able to get, you know, food on the supermarkets because there's no one could actually, you know, the supply chain breaks down. So, the question is, how close are we to that? And, um, these are things I think about in the longer term scheme of things. Um, I guess the question then naturally there is, if gold is sniffing it out, and many believe that Bitcoin would behave like digital gold, is there a chance in your mind that if we really start to see, well, start to see the debt continue to spiral out of control because we know that it already has, if Bitcoin could actually switch narrative, not drop with the rest of the market, and actually trade like gold?
I think that is certainly possible, and I think I believe it will be. Um, but Bitcoin's what, barely over two trillion? So, it's one-tenth the size of gold. And so, it's like, you know, think of a boat that is a supertanker, and then think of a boat that's 10 times smaller. It's going to get buffeted. Yeah. It's going to get buffeted. And so, Bitcoin needs to grow and needs to grow a lot bigger before it becomes stable and it can be be that sort of more stable asset. Um, so, you know, and it's only just beginning, you know, it's, it's the newest macro asset in 150 years. Um, and it's tiny, you know, but the trading at scale, meaning it's, you know, over a trillion dollars. Um, but it's tiny. The next ones are like, you know, you've got FX markets, you've got, um, you know, that that is $100 trillion, you've got gold $20 trillion, you've got real estate $250 trillion, bond markets, how many trillions is that? Hundreds, hundreds of trillions, $300 trillion. So, it's like we're talking, you know, big boy club, and we're like the new sort of baby in town, and it's going to be pretty volatile. Um, it's going to be pushed around a lot, um, for a while, maybe a decade.
$145.1 trillion estimate on the entire global bond market. That's pretty big compared to two trillion.
Yeah. Yeah. It'll take 10, 10, 15 years unless, you know, something breaks, everyone runs away to, um, Bitcoin. Um, but it'll take time. I think we're bit conditioned from 2017 and prior, um, that these things move really, really quickly, but we're in a different game now. We're in the trillions. Um, and so, you know, you get the odd person that says Bitcoin might hit $2 million, and then you go, "Wait a minute. You mean it's going to be like, well, half of world GDP, um, you know, half of all equities on the planet. Um, you know, double two and a half times gold in this bull market. You know, you're getting into the limits of the size of the economy here now. So, it'll take time."
Remind me when you got into Bitcoin.
2013. Near the top, actually. Decap bounce. So, December. Yeah. December 2013. So, when you started, did you ever think that conversations on podcasts would be about BlackRock and a Bitcoin president, and the president's family launching tokens, and mining companies, and Bitcoin treasuries, and meme coins? Like, how far off your bingo card is the 2025 that you envisioned when you started?
Yeah. Well, I didn't have any understanding of any of this, right? Like, even financial markets then. I was more of a tech guy. And I just thought, gee, look at the MP3s. They, uh, they went from MP3 encoded downloads by a few people on the internet, and now we've got the iPod, and now that's mainstream enough. And it took 12 years. And I figured, gee, 2013, this feels like ripping a CD onto MP3 and uploading to websites, other people downloaded illegally. And it felt like that kind of thing, and it wasn't ready for prime time, but maybe 12 years, you know, 2025, it would be mainstream. And I didn't know what that would look like, you know, I'm not a finance guy back then. Um, but more or less, it's kind of hit it. Um, so, it's hard to think about the details, but on the broad strokes, timewise, it was about right. I think that's why I kind of bought one Bitcoin, 'cause I didn't want to be pissed myself if that happened, and I saw it, and then I walked away and carried on doing my thing until much later to really research it. Um, but that was it.
So, I guess a broader question is, this level of government adoption, sort of personal profit from the president, do you see it as a net positive for the asset class? Do you see any, uh, hidden traps there?
My, I can tell you my view is that obviously having like positive legislation versus the last four years and a positive view is good, but that the family involvement maybe is not as good. So, it's a, it's a bit of a, uh, you know, a difficult question, but I mean, it's nice persecuted at all times for being in the asset class. Yeah, I know. It's, it's, it's made it like seeing this cycle. I think Larry Fink was the big one. Um, because Larry Fink is like, you know, he's, we're talking about decades of of stability here with BlackRock, you know, whereas president is a four-year term thing, and I wonder how much, you know, an opposition would try to turn over, you know, what has been done so far. Um, but, you know, I think what's happening right now is, and I said it a long time ago before the election cycle, three years before the election, like I said, um, that it's really, you know, it, the point, the thing is, there's enough wealth in this industry that you can lobby and effectively fund, um, fund politicians on policy. Um, and I think that's what's happening, right? I think that there's a number of, like, you know, I think Coinbase was very, very particular, like very visible on that, they were very much showing the list of the senators that were against and pro, stuff like that. So, I think that that, I think a lot of that has, it's the cohort of Bitcoin and crypto voters have grown in in the in the in the in the population. So, it's got its own defense through the political system.
What else is on your radar? Like, you're obviously an active trader. How are you approaching markets in general? Uh, is there anything that you're really excited to trade in this environment?
Uh, yeah. No, I try to trade very, very short-term. It's almost like market-making sort of stuff, but then, um, I also, yeah, it's not quite arbitrage, you know, I sort of like try to buy the dips and, you know, mean reverts upwards, very short-term tactical. It's kind of looks like a market-neutral yield, but the long-term stuff is, um, mainly I really want to make sure that I'm in cash. Um, don't tell the hodlers, but, you know, I think the hodlers are onto the right thing is to hold, but I've always done best when I move to cash and, um, just sit out the mayhem. Um, and maybe, maybe I'm wrong, you know, maybe I'm this wishful thinking that we get a bear market and it goes up forever, Laura. Um, but like that, I'm looking forward to. Um, I'm looking forward to a bearish market also. Um, and, you know, it's usually the long-term trades are the best. Like, you call them investments, I'd say. Moving out, moving back in. Um, and, you know, I'm the builder. I'm building stuff. Most people don't know what I'm building, but I am building stuff.
Can you tell us and in the BMA? Um, you first.
Well, we've already built, um, the Crest line of products, which is three institutional funds that, um, get you yield on US dollars. One which gets you yield on Bitcoin, one that's institutionally, um, sort of hardened to work with a Swiss private bank for their investors. So, this is like, you could think of it as like, you know, all these earn products, but this is how it's actually done. Um, they would give the money to a whole bunch of traders and try and trade it. Like, there's a whole institutional thing about it, and it's a fund of funds. So, that's been the last three and a half, three and a half years, and that's my learning in trade. And, um, now I'm moving into building, um, uh, let's call it a credit fund. So, basically tapping trade and grab capital, fiat capital, and giving it to Bitcoiners, like lending it out to Bitcoiners who want to use their Bitcoins, and doing it in such a way where they have private key on their collateral, so they know it's not no hanky-panky. It's not being moved around. It's not being rehypothecated. So, we want to get a profitable business that's working to, um, make use of, um, this Bitcoin and have Bitcoin self-custodied, because this is the type of lending we'll do, and I want to promote self-custody. So, that's what's lighting me up right now. Um, they haven't announced the products, and they say that all the builders, you know, relish the bear market because everything calms down and you can actually build in a bear market when everybody's not insanely euphoric looking at prices. So, I can understand why you'd be looking forward to a bear market in that perspective.
I also like it's so triggering to obviously Bitcoiners when you talk about looking forward to a dip. I don't know if I look forward to a bear market or not, but I still have cash, and I would prefer to buy Bitcoin lower than now, if possible. I don't know why that's such a jarring sentiment. If you're not selling tomorrow, shouldn't you want lower? Like, if you're one of these people who says, "I'm going to hold forever." Shouldn't you just want a permanent bear market to give you tons of time to buy a bunch of cheaper coins?
Well, maybe not permanent, but like, I know that if, like, the true Bitcoin is like, I remember seeing the price pump, right? And I think it pumped to $100,000 or something. I was like, from $70, and I was like, "Damn, it went up again." You know? Um, and because when you're sure of the trajectory, you kind of like the lower prices because you can stack more. Um, and so I think we should celebrate that coming back down because it's another opportunity. Um, yeah, like if you're confident in what you bought, if you've done the research, then every bear market is great. You can wind back time. You can wind back the clock and get some more, right?
Um, so, so clearly you're focused on building institutional products around this. So, naturally, you believe that that's where the puck is moving as far as where the big money is going to come, right? So, who do you foresee when you're building all of these things as your potential customers? Where do you think that money is going to come from?
The, I mean, look, how do I answer this? Is the money that we're seeking, fiat, right? Is going to come from trade, traditional investors who want, um, yield on their US dollars. Um, and currently, the market for US dollars in our industry varies between 10 and 16%. Right? That's well above the risk-free rate. It outperforms the S&P 500 with zero volatility, zero drawdown. So, it's an incredibly great for them. Um, and so that's one customer. The other customers, the Bitcoiners who are getting 20, 30, up to 80% annualized return on their Bitcoin over a four-year cycle, depending on where they bought in the cycle. Um, so it makes sense for them as well, just, you know, um, that those two should load balance. Bitcoin's multi-trillion dollars, and it's getting bigger, and it should get to the tens of trillions. As you get to the coins of trillions, and there's infinite fiat being printed, and the fiat in the system is $100 trillion. Um, and I think that like this is great. We've got a business here for multiple decades, and I want to empower the Bitcoin ecosystem, make it useful. I believe that we've got two choices right now. We're going to move towards central bank digital currencies, basically lock in this fiat debasement forever into a totalitarian sort of pretty nasty 1984 scenario, or we have fair money. Um, and a lot of this burns to the ground. Um, and we have freedom, and so freedom of our finances. So, those, it's bifurcating, and I know what side I'm picking, and I want to empower that side. So, it's mission-driven as much as anything.
I'm trying to find the quote. I don't have it right in front of me, but literally today, a Russian minister said that the he was outraged that the United States was going to basically use stablecoins to like, I wish I had the exact words, but basically to just shove all our debt into stablecoins and distribute it around the world to effectively, you know, uh, democratize our debt around the world and get out of our debt problem because you really.
It is interesting though, because every time someone buys a stablecoin, they're kind of passively buying a treasury, or or somebody's buying a treasury for them to do it. So, you talk about someone in Venezuela sending $20 to someone else in Tether, Tether is buying, you know, $16 or $14, whatever the number is, dollars worth of treasuries for that to happen. Supporting the US government, you know, it's like, great, you know, like, um, China is no longer buying. In fact, they're selling. And so someone's got to displace it. And it turns out if Tether goes, if Bitcoin goes from $100,000 to a million, um, that means Tether is going to increase, 'cause it's the other side of the book. You know, Tether is the gateway to our crypto ecosystem. Everything's traded against it. Um, you know, the major markets on Binance and DeFi. So, um, you work that out, and it works out that Tether can displace China on the short-dated T-bills. So, now you get a situation where the US government's dependent on the growth of Bitcoin to remain, um, you know, solid.
Siren. It's ironic. It's ironic. It's pretty astounding that the two killer use cases so far for blockchain technology are obviously Bitcoin, which is probably the greatest chance at hedging against the fiat nonsense and actually owning the future digital reserve currency. And the other one is digital fiat to make fiat the thing that Bitcoin was created basically against, spread around the world, right? It's, it does make sense though, because you need an on-ramp, right? You need an on-ramp. And because banks never gave that on-ramp, Tether came birthed into existence, and they sort of, you know, maybe abstracted that layer, juggling all the banks, who's going to work with us, who's going to work with us? And so that became the on-ramp, and they did that very well. They did an amazing job over the, you know, whatever it is, 12 years. I don't think anything stops stablecoin adoption. It's such an incredible tool. And now that obviously it's been legislated, I think, yeah, we're just going to get the growth of the existing ones, but we're just going to get, you know, more JP Morgan and City Bank and Western Union coins and stablecoins in every corner of the globe.
I wonder if we'll actually see successful stablecoins on anything other than dollars, though, because we really haven't yet.
Yeah. Yeah. It's all around the US dollar, isn't it? That's the other one. I mean, Tether has Euro-backed stablecoins, but at the end of the day, when you're in some country, I guess, looking to use a stablecoin, you'd rather trade a dollar than a euro, right? So, interestingly, wouldn't it make wouldn't it make sense to like, you know, you use the base layer of US treasuries and US dollars, you know, if you've got a big, a big sort of base there, I mean, hedging is pretty cheap, isn't it? Wouldn't wouldn't you be worth just doing an FX hedge?
Um, maybe. Not sure. Yeah, it's, it's, it's interesting, but I guess it just proves in, because you know, Bitcoiners, myself included, would say ideally, you would want people all over the world to run to Bitcoin. But the thing is, they still want dollars. And so like dollars are still way better than anything else other than Bitcoin. So they rush to dollars, and stablecoins give them the ability to do that. I've heard some crazy stories. I had a friend in Argentina, and he said that, you know, I guess pre-stablecoin, that you would go to the black market to get cash in dollars, you know, and you would pay two, three X premium to get it. But someone would basically send you money, you know, a bank wire or something. You would get it in your bank account, you would cash out, go buy dollars, and you go back to the same bank and put the US dollars into a safe deposit box at the bank instead of into a bank account. So, you basically use the bank as like a depository for the safe deposit box with cash that you paid too much for to avoid being in your own currency.
Well, stablecoins do seriously solve that.
Yeah. It does. It does. Yeah, it's, it's a great invention, right? The reality is, we're in a fiat world, and everyone needs fiat to live, apart from these hardcore Bitcoiners that are, you know, using SATs. Um, in, I don't know, you've got to be a bit of a ninja to figure out how to do that. I've met a few, but it's not easy. It's not. And there's, there's always a, there's always a way, but it is still very, very difficult to live your life entirely in SATs.
Yeah. Yeah. So, I mean, that's that's the reason why, you know, dollars exist, if stablecoins exist, and so forth. So, um, yeah, I guess Bitcoin can be your savings account, and stablecoins can be your checking account, your spending. And save in Bitcoin and spend that dirty fast digital fiat.
Yeah, pretty much. And I think it's also an emotional buffer, you know, like when the price really crashes, you can get excited because you can sort of rotate some of your buffer in, or at least you've got runway. Um, I think like being too heavy in Bitcoin, like 99%, um, you can freak a bit. Um, yeah, because you can't spend your Bitcoin. You've got to like rotate it to US dollars, or whatever the fee is. So, then you buy, and it doesn't feel good to sell the dip, you know? You don't want to sell the dip. You want to have some buffer building so you can take a loan against it and never have to sell it.
I mean, that's the, exactly. That's the whole point of it. That's the whole point of it. So, listen, you kind of alluded to the fact that we'll get a bear market inevitably, that means we get another bull market, but when you started throwing out, you know, Bitcoin at $2 million or higher, how much of the global economy that becomes? So, do you think that there's a ceiling in your mind to Bitcoin price? I mean, you know, we hear this, Bitcoin will be a million by 2030, or $14 million by 2040, these huge monster numbers. In your mind, what do you think is a reasonable, I won't call it forever top, but where does the, you know, how high can it go before it's so big that the volatility is just dampened, and it, by the way, it would have to kind of stabilize to be the global reserve asset. So, that's not unreasonable.
Yeah. I look, um, first, the price target is kind of like the wrong approach because, um, it depends on the debasements. The unit of account is, you're measuring in US dollars, which is being debased, and the unit of account is distorted. But, um, so I think of it in terms of the pools of capital. Um, generally, money is one-to-one matched with, um, GDP, and it seems like it's pretty close, a one-to-one match with all the publicly traded equities around, just over $100 trillion. So, I think that would be a pretty good, like, um, sweet spot. Um, if Bitcoin becomes the new money, then that would be, um, you know, equivalent to world GDP, $100 trillion, maybe that's $200 trillion, maybe it's, you know, a, you know, a gazillion or like $500 trillion, you know, if AI, you know, the AI wave and, you know, like all sorts of, who knows, we had the singularity, um, in 2027, and jeez, it's so hard to think of in dollar terms, but I do think sphere that money should be one-to-one matched with world GDP, 'cause that's what you're trading against. Um, and then you've got to think about, um, how much of that capital in real estate is just store of value versus actually living in, how much of that would Bitcoin take, um, and so forth. So, you know, on the optimistic, I would think double world GDP. Um, on the pessimistic, I think something like gold, which is one-fifth of world GDP. Um, one-fifth of world GDP to double world GDP is, is the, the zone. I would say spread. I'll take it. It's a big spread. So, anywhere from, you know, a million or $22 million of Bitcoin to a gajillion deflated US dollars worth of Bitcoin.
Yeah. Yeah. Yeah. Something like that. Yeah. I'm just waving it. It's not useful, everyone, right? It's just like, you know, a a target to 50 years in the future should be super inaccurate and loose. And anyone who's telling you with conviction that they know where they're going is nuts.
I know it's literally past midnight for you, man. And, uh, yeah, I got to run and get my kid. So, I appreciate you staying up and taking the time, Willie. Any final thoughts before I let you go?
No, no thoughts. That's way too think. That just means we nailed it, man. Go to bed.
Thank you so much, Willie. I'll speak to you soon, man.
Thanks, Scott. Cheers. Have a good one.
[Music] That's dope.