Transcription
He's looking at fiat and he's saying, "I think this is a scam. I think this is a Ponzi and fiat's the Ponzi." Yeah, fiat's the Ponzi and I'm going to lean into into Bitcoin because I think it's going to continue to have this growth and this network effect and adoption across the world and I'm going to stack that and I'm going to denominate liabilities and fiat.
[Music]
Preston Pish back in the house. I'm so happy to see you, sir. Thanks so much for joining me.
Hey, great to be here. Always fun to chat. Nat, you know, I saw you on Danny's podcast today and I thought I just got to call Preston and we've got to record just so you know, we bang him out for people that want their Preston pitch fix. Oh my I I you know I can understand if people are frustrated on this whole Bitcoin Treasury stuff and I know it's so much financial jargon and I don't know what else to say other than I'm trying to like explain some of it and but I understand it's probably not not the most pleasant thing to listen to.
No. And just FYI, we had this scheduled before I knew that uh Danny was coming out with a show, but um we'll we'll touch on some new things in case someone's binge watching these. Um but by the way, Preston, I have this very bright college student that uh created an AI model and ran analytics on my channel. And do you know who the top converting guest is to a subscriber on my show?
Who's that?
You. Apparently, when people watch you on my show, they automatically become subscribers. So, thank you.
Oh, wow. Oh, you're welcome. You're welcome.
Um, I'm just giving the audience what they want. Um, okay. Well, first of all, I mean, how are you doing? I I would love to get an update. You've been doing a lot of exciting things and, um, congratulations on the second raise for Ego Death Capital. Um, just any updates with you.
Uh, in general, that's keeping me busy these days. uh you know, just kind of looking for companies that are building in Bitcoin and doing it in, you know, a sound, ethical, responsible kind of way that's uh like buying real equity. It's uh it's it's a full-time job, that's for sure. And uh we're having fun doing it, but uh it's a lot of work. It's it's a lot more work than I ever thought. So, you know,
Well, I I bet it's very rewarding work. Um, I wanted to bring you on because people are feeling so bearish right now. I mean, the sentiment has gotten crazy, especially around the corporate Bitcoin treasuries. So, I would love to get your your reaction. Why is everyone all of a sudden so down on Bitcoin and becoming bears?
I think uh at large I think you have uh now that the institutions are here they're doing very institutional like things which is turning Bitcoin into a paper derivative on top of Bitcoin and uh for all intents and purposes like I would say uh up until the ETF launch um it was very clear whether something was being built on top of Bitcoin or it was some type of ICO token scam kind of thing off to the side. And so there was like this bifurcation. Either you're in this camp or you're in the the camp that's creating these clown coins and and uh trying to convince people that it's somehow going to be valuable someday. And now that you have the institutions showing up and they're they they are creating derivatives of Bitcoin. Um, there's a lot of people that are concerned as to first of all, what's the impact of that long term? Second of all, am I being scammed like all the other scams that preceded this uh this this wave that we're currently in? And um I think that at large like part of the c the Bitcoin culture is to be pretty much skeptical of everything and to question everything because pretty much everything we've been told, you know, up up till now has been kind of a lie in in the way that the economy works and how things work. So I think you have a a bit of a culture clash that's kind of coming to head there. um that's causing a lot of the sentiment and a lot of the frustration that you're seeing. And you know, uh if I have to speak candidly, I think I think it's healthy. I don't I don't necessarily see it as a bad thing. I think that a lot of it is healthy, but I would also caveat that with, you know, if we warp ourselves 10 years into the future, how do people see Bitcoin being used? Is it something that is pretty customary to have Bitcoin on a company's balance sheet, a publicly comp a publicly traded company's balance sheet? How do they want to own it? Do they own it through IBIT or do they actually own the coins? And for people who have kind of made Bitcoin what it is, that getting it to here, getting it to over a trillion dollars involved individuals for the most part, self-custodying Bitcoin, holding on to the keys for dear life through 70 and 80% downturns and still not selling them because, you know, the the term we like to throw around is we're Bitcoin psychopaths.
And part of that culture that brought it to where it is is looking at where this is all going and they're saying, "No, no, no, no. This is all moving in a bad direction." But and and again, I'm not trying to say that everything's good and dandy and fine and not to be concerned, but I think a lot of the ethos that got us to where we're at are being challenged. And I think they're going to continue to be challenged. And I think that it's going to move in a direction where a lot of people kind of use Bitcoin the way they want to use Bitcoin, especially institutions are going to use it very differently than individuals use it. And that's kind of difficult for people to that's a difficult pill for people to swallow and they don't like it. So I think that's part of it.
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Where do you think we took a turn though? Because I feel like at the very beginning when we were hearing about more Bitcoin treasury companies coming out, everyone was very excited. And I mean look at I mean MetaPlanet what it did in just the span of basically a year a year and a half is incredible.
But then all of a sudden people are like whoa they they turned kind of bearish. They started to become a little more bearish on MSTR and like what happened here?
Well, I think the bearishness on MSTR is because it's gone sideways for a year, right? And so people that maybe bought it call it a year ago they were hearing discussions about how it's outperformed Bitcoin this and that and so they buy it and their actual analysis as to why they bought it was everybody's talking about this it's outperformed Bitcoin Michael Sailor goes on an interview he sounds super smart therefore that end of analysis therefore I'm going to buy MSTR and then it goes sideways Bitcoin has gone up slightly not much. I mean, at the beginning of the year was 100,000 and now let's call it 11 what 14,000 or somewhere in that ballpark 113,000. And so, Bitcoin went sideways. And what happened to MSTR during that period of time is it got more and more levered through that period of time. And what happens when you're more levered against something that's a derivative of Bitcoin? So, it's more levered and it's gone the underlying went sideways. what's going to happen to the derivative that's levered. It's going to move even more with more volatility and more vigor against the underlying. And um if it goes slightly sideways, maybe a little bit up, if it's a derivative and it's levered, it's it's probably going to go sideways and maybe even down just because of how leverage works. And so you have a lot of people that bought it and they haven't got the performance that they were expecting and they're mad and that's that's it. I think that's it. And you know what? If Bitcoin goes down, if if Bitcoin goes down, let's say Bitcoin goes down 10% more from here, like your expectation on a derivative that's levered to that should be that it would go down more than 10%, it should go down like 20%. like you can't expect outside performance when the when the underlying goes up without having the same kind of dynamic when it goes down. So I don't know what to tell people.
When it comes to spot Bitcoin, why do you think we've had such sideways price action? Um because we had a lot of momentum coming in and the Trump administration, all these corporate treasury companies buying. So who's really on the sell side? What's putting that pressure on Bitcoin's price that's causing us to maybe have some headwinds on the way to 150 and 200, which people are still predicting for the end of this year?
Yeah. Um I first of all, I don't know, but I definitely can feel the the frustration and the pain because like it just feels like every day there's another announcement of, oh, so and so company just bought 10,000 plus Bitcoin, the price was down on the day or whatever. But if I had if if I was going to guess what I think it is, I think that you have fast money Wall Street traders, Jane Street, uh to kind of name one actor, and there's many of them out there that like they're in the business of of sucking volatility out of the market and and really not having any exposure other than they're going long and short simultaneously and they're arbitrageing the difference. And what what that does, uh, if you're going to zoom out and kind of look like what does that do to a market that's going up, it's going to make that volatility continue to collapse as it's going up. So, you're going to see the waves very large at the beginning when they're entering the market and and conducting this this fast money trade. And um as as it continues to progress along, the chart is up and to the right, but the the volatility is getting further and further dampened in that process. And so that's what I think we're seeing. Um, which so a person would be like, okay, so like what does that where does that take us, right? And where I think it takes you is this scenario where the spring is coiling and it kind of pops one way or the other. Um, the upward trend would suggest that it's going to pop higher. But, uh, you also have to understand that markets are highly dependent on liquidity. They're dependent on all these other external factors. So, I'm not like one of these people that's looking at a technical chart and saying the volatility is collapsing. It's going up and we're going to go to, you know, to the moon. I'm not saying that.
But but because I think the external factors are are way more important than people realize. The liquidity, the basic liquidity in the market is massive. When I'm looking at the liquidity metrics of just global equity is a great way I like to like just kind of view like I'll look at all the global equity markets and if they're all ripping that's telling me that that the markets are flush with liquidity fiat liquidity and right now that's that's what we're seeing like when I look at global equity markets all around all around the world they're all like bidding. So to me that's a healthy indicator that uh bitcoin could go higher but it also is dependent on like whether that whatever the source of that is continues to persist and continues to be pumped into the market. So people just have to be careful like it's it's not a guarantee. None of this is a guarantee that it's going to continue to rip or like that compression is is signaling that we're going to 200k in in weeks. It's not it's to me it's not that. But um I think that's why we've maybe seen a little bit of what we we've seen which is this dampening of what we have historically seen in the price action which is at this part of the cycle if you want to even subscribe to this idea that the four-year cycle is valid. um you would have seen a very aggressive move kind of already taking place and and to be honest with you back um Christmas time frame I I would have guessed by now we would have been way higher than where we're at right now.
I know I think we talked about that on our macro hangout right around December. Um what do you think about the execution of these more recent corporate Bitcoin treasury companies that are coming out? I mean some of them are announcing stacking massive amounts of Bitcoin. They've raised so much capital. Um I I actually think it's really interesting if you start digging into the papers and the filings and the covenants because they're they're all executing in very different ways. I'd love to get your your broad overview.
Uh my broad overview would be buyer beware. Read read the prospectus.
Yeah.
Uh
Which a lot of people don't, right? A lot of people invest without going into these documents and actually digging through the filings and what they're what they're sharing with the SEC, how much people are getting compensated, what what are the, you know, covenant obligations. And I recommend you do.
And you know what the beauty is these days, Natalie, is you can use AI to help you out. Like back whenever I was doing a lot of like reading the prospectus of various companies like you, nobody could just like summarize it for you. like you couldn't go into AI and say, "Hey, tell me the top 10 risks that you're getting from reading this prospectus." And I mean, this thing will like literally like knock it out and give you some really good feedback as to what those risks are.
So, like people have tools at their fingertips to help them go through all of these filings and like I would encourage you to do so. There's there's a there's a lot of shenanigans happening. Uh I and and I think it's important that like although I love covering this topic and like really kind of getting into all the the accounting and the mechanics of all of it because it's super intellectually stimulating to to kind of cover. I do think that there's um there's a lot of risk out there uh with respect to like the capacity to to actually execute and do something similar to like what uh strategy is attempting to do. And I'm not even saying strategies in the clear. Like there's risks there. Like of course.
So, I mean I I want to talk to you about sort of the direction that a lot of these companies are going in or they want to go in which is the preferred. Um I feel like and Sailor actually used AI for some of these, right? Which is just fascinating. Um maybe just zooming out for people that aren't familiar with some of the jargon. You do such a great job breaking it down because there are the there's this capital structure, right? And there's a hierarchy and the convertible debt if you have a bond essentially you're paid out first if in in the case of like a bankruptcy right which is worst case scenario but there's a there's a stack right convertible notes are on top then the preferreds and then the shareholders are sort of lower on that stack. Um can you talk a little bit about why a company would issue a preferred? Why is it even called a stock when really it's you're not getting equity unless it's convertible, right? So, it's it really sounds like almost more of a bond and it's a fixed income product rather than what it's called, which is a share.
Uh, In Security Analysis by Ben Graham. And I'm going to mess up this quote really bad. There's there's like this line in the in the book and this book's from like the 1930s and he's talking about there's a whole section in there that goes through preferred stock. Um, and by the way, I did a uh I did a video series on preferred stock.
No way.
Uh, in 2010, so like.
I gotta look this up.
Probably it's probably like 13 or 15 years ago where I covered preferred stock in I don't know three different videos. I go into depth. I talk about cumulative, non-cumul like all this stuff. And and don't laugh too hard because the videos are very cheesy.
I gotta look this up. But I mean, I go through all of it and teach people how to, you know, be a preferred investor. This was like a decade and a half ago. But um anyway, uh where was I going with it? Oh, okay. So, the Ben Graham quote from Security Analysis is that he he says if you're a preferred stock investor, you're pretty much getting the worst case of being a common shareholder, you're getting the worst part of that. And from a fixed income side, you're getting the worst part of that. And so he's in the book he's kind of like you know preferred stock is is basically the crap stuck between common and.
Really.
Debt investing. Yeah. Why.
In but what what I would say well because uh okay so like the the great part of being a common shareholder is if the company makes a bunch of money you participate in the upside of that right.
A preferred shareholder you don't.
On the fixed income side be it like when that becomes really important that you hold uh uh debt is if the company's going to go bankrupt. And.
So his argument is if the company's going bankrupt, you're probably not going to have anything left over for the preferred shareholder because the debt holders are basically taking it all that that's left over in the bankruptcy. So you're not getting the advantage of that and you're not getting the advantage of the upside and therefore it's the crap kind of stuck in the middle between the two securities. So, but yeah, if you anyway, uh, where I think the preferred stock is really interesting though right now in this moment of time and and I never would have thought about this and I don't think Ben Graham writes about this in security analysis either, is when a currency is kind of melding down, there's this really interesting use case that strategy has really tapped into, and I'm not even 100% convinced that this is even valid what I'm saying, but I find it an interesting dynamic that he's choosing to use preferred stock mostly because he never has to pay back the book value on it.
Okay.
Right. So, when you when you raise a convertible note, you have to pay all of that back.
Yeah.
Whereas, um, you raise money with these preferreds and you're paying out the the dividends, right? But you're not actually paying that lump sum. You put it into Bitcoin and you're making a killing over the long run.
That's right. So like the the the easy math of like kind of describing this is like let's say you do a convertible bond like after five if assuming you can get five years uh for the duration on it like after that five years if you borrowed a billion you have to pay the billion back and so whatever debasement happened against that fiat denominated billion uh you basically got five years of debasement against that that fiat denominated liability and then you have to pay it back. Right.
Right. So, you got five years to like really take advantage of it.
And so, when you pay when uh when you pay that back and especially if it's convertible, like you're paying for it through the dilution of the common shareholder after that five year 5year period. But if you've got preferred stock and it's perpetual and you're not really ever paying that back, you can allow that debasement of the fiat that that all of that's denominated in continue to just like draw out. So, like if you're dealing with a 10% dividend, you basically got like 10 years before like the face value has been returned to those uh the buyers of that preferred stock and you still don't owe back the face value or the book value of it after those 10 years. you can just continue to. So it in and going back to my point which is if you're dealing with a currency that's melting down, it seems like that might be the actual most optimal uh security to issue or to arbitrage against because you just don't deal with the face value or book value of the issuance. But and and what and and I want to talk to the other side of that. So like uh the buyers of these, right? You could like you could make the argument based on what I just said that you're totally screwing and and like screwing over the buyers of the preferred stock. But what I would argue is that those preferred shareholders, they don't want to participate in the common crazy volatility. They don't want that. They just need some type of stability in in the uh the dividend payments in the yield that they're getting. So like that's what they want. And so that's what's being delivered to them.
Yeah. They want fixed income and these are delivering that at a much higher rate than than the current system, right? And a lot of the other preferred that exist out there with some of maybe the big corporations that people might be familiar with. Um, so where people are getting kind of confused, like I'm trying to zoom out and put myself in the in the position of someone just looking in, not understanding the space fully, maybe not even understanding Bitcoin, and going, "Okay, well, if Bitcoin's going up at 40 50% a year, and they're paying out 10%, that's way more attractive than a standard bond. Um, that sounds great." And then there's like a 30% spread. And so this makes a lot of sense. But wait, hold on. they have to raise money in order to pay the dividends because they're not selling the Bitcoin. Is that like where you think that some people are getting hung up on the fact that they have to raise capital in order to pay the dividends? It's not coming from Bitcoin sales because Sailor has said he's not selling the Bitcoin. Is that what people are having an issue with?
Yeah. In fact, uh I had a really uh interesting exchange with some folks on X literally this morning on this particular topic and um you know people out there saying, "Oh, this is a Ponzi scheme." And and going through like some of the mechanics and one of the points that I would say that I thought was a really valid Oh man, I can't remember the name of the guy. Um, I want to give him credit for the the thought that he kind of put out there, but I'll just explain this very uh this was Josh Man kind of had some posts and it was, you know, pretty bearish and negative point of view and then people were piling in there.
Oh yeah, Josh Mandal, right?
Yeah, Mandal, sorry. Um, but one of the points that I thought was a really valid point that somebody brought up was if you are issuing preferred stock, okay, let's say the MNAV is below one. So um you know if you buy your common stock back when the MNAV is below one that's actually accreative in Bitcoin terms for common shareholders.
And what the person was saying was if the preferred share if if Michael or whoever would go into the market and issue more preferred stock to raise capital okay and you take that that cash in instead of buying Bitcoin you would go buy the common stock you are clearly at that point demonstrating that you're just benefiting the common shareholder at the expense of these preferred investors, which I agree with. I I think that you would actually open yourself up to a legal issue if you were doing something like that. Like, think of think of it from you only own the preferred stock.
Yeah.
Right.
And you're going and you're you you're holding these shares and he's debasing the shares by issuing more to raise cash. And then he's taking that cash and he's basically putting more Bitcoin per share for the common shareholder. And like that's it. Like you are now being somewhat exploited as a preferred owner because it's it's not putting more Bitcoin on the balance sheet, right? From a nominal standpoint from a company enterprise level standpoint. It's not putting more Bitcoin on the balance sheet further collateralizing your holdings. What it's doing is it's it's just benefiting the common shareholder at that point. If they would if if you would raise further capital in preferred markets and just go buy Bitcoin which is a commodity.
Then it's not you I don't see that being a legal uh loophole or legal issue for the company.
Because at the end of the day that Bitcoin is further collateralizing the the purchase of that is further collateralizing the the capital stack of debt holders and preferred shareholders which are in front of the common shareholder.
Mhm.
So that would be an enterprise level decision that that net benefits everybody. So that's I think really important for people to kind of understand that nuance. And I think this is a really important thing that if you're running one of these companies, you better understand that or you're probably going to get sued into oblivion.
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People have also just made drama online about the change in the mnav guidance, right? So, um, why are people getting so upset about that?
Well, uh, you know, part of part of being a shareholder, whether it's preferred, common, you know, holding the debt or whatever, is, you know, the guidance that the leadership is putting out there, people expect it to be somewhat sticky guidance, like you're not going to kind of change your mind within a couple weeks. And so I think uh you know when Michael put out the guidance or the the leadership at Micro Strategy put out their guidance that they weren't going to be issuing any additional common stock for I think it was below a 2.4. Um initially everybody was pretty excited that uh they weren't going to have like this dilution happening from the common shareholder standpoint. But what I think the broader market saw it as was, "You mean to tell me if the MNAV's two, you're not going to go buy the Bitcoin for half off?" Like, what are you doing? Like the whole the part of the whole strategy here is that you can basically go into the market and treat your common stock as if you're, you know, the issuer of a fiat currency almost and go out and buy these things for a super cheap price relative to what the MNAB is. And so the market reacted very negatively to this. Uh the scuttlebutt online was extra negative and Michael quickly recognized uh well I don't know who I don't want to say it was Michael but the the executive leadership at Micro Strategy recognized this very quickly and they did an about face.
People weren't happy about that because you got to realize everybody positions themselves based on the guidance that the management is putting out there they then all go and position themselves accordingly based on that guidance. And so if you go out and you change the guidance again, now all of a sudden if you were positioned long or short or whatever, um you get caught in a situation where the where the management is appearing to flip-flop and like if you're positioned a certain way and it flip-flops against you, like uh that can be a very bad day. So that's why people were upset.
But I feel like you made a good reply to one of the tweets, which is um you know, if something like this happens, what do you want to see in leadership? someone that reacts and does the right thing and, you know, adapts, right? I mean, sometimes things change or they re, you know, re-evaluate things. So, um, I mean, I guess if you want to just kind of be on the bullish side of all of this, it's I it doesn't seem to me like MSTR is dying anytime soon. I think everyone's going to be fine. If anything, this might be a good buying opportunity.
Yeah, I would agree with that. Um, and it doesn't mean I'm right or you're right or whatever, but uh what in life the the the person, the animal, the whatever that dominates their environment is the one that can sense their environment very clearly and sense truth and react to it the fastest.
Mhm.
If their mental model of like how their environment works is flawed, the speed at which they can change their mental model.
Right.
Is the one that will become the apex predator.
For sure.
Okay. Like period. So, I'm just looking at it more from like I could care like people are like, "Oh my god, you're this shill or what?" No, I'm just using first principles to assess what I think is the the best way to navigate or to uh affect your environment, which is you need to be able to change your mind. You can't have sunk this sunk cost bias or there's all sorts of biases that that pop out of like just this idea alone, which is oh, here's one consistency bias. Okay. People refuse to change their mind because they feel that that when everybody socially around them sees them change their mind that they're that's a that it's viewed as a weakness. And so just because of the social dynamic, they're hesitant to change their mind because they're they're afraid they're going to be viewed negatively. And what I found is like people like Stan Duck Miller, he'll do interviews and he'll be like, "Well, this is my opinion today, but I could literally change it before the end of the day." and take the exact opposite uh you know uh position and be short by the end of the day. So you know take take with it what you will. Uh this is my opinion right now at this moment in time. And that is in my opinion that's the hallmark of somebody who's going to really do well in in capital markets because they don't care what anybody thinks and they're very quick to kind of change their mind when the facts and circumstances change. So.
Right and sometimes you do need to pivot and and move things in a direction if you sense something or or um realize that maybe the environment has changed or you know you you didn't consider something before. So, I completely agree with you. Um, kind of going back.
In general like just just on that topic of like should you issue MNAV guidance when I'm looking at uh, you know, what is the best way to kind of go about this? You having optionality is a profoundly valuable thing.
At all times. And so when you say, "I'm going to do this no matter what," at these points, you're signaling to the market that they can kind of take advantage of whatever those handcuffs are that you just put yourself in.
Right?
So when I look at the the initial guidance, you know, was I I actually thought the market was going to respond very favorably to it. And what was funny is it didn't. It actually did the exact opposite of what my personal expectation was after seeing it.
Wow. But um uh I would just say in general anytime you put a self-limitation on yourself that this is what I'm going to do, it can be pretty damaging because now you're just literally taking your flexibility and optionality away.
Going back to my earlier question just about the idea of raising capital in order to pay dividends. Um can you explain I guess to people out there that look at that and say that's the thing I'm having an issue with. Like if you were to sell the Bitcoin, that makes sense to me to pay out the dividends, but I don't like the idea. To me, it sounds like a Ponzi that you're raising capital to pay the dividends. Like, how does this make sense for those folks that are having trouble with it?
Well, I mean, all he's doing is just taking the legal, you know, capital stack and uh he's looking at fiat and he's saying, "I think this is a scam. I think this is a Ponzi." And.
Fiat's the Ponzi.
Yeah.
Fiat's the Ponzi. And um I'm going to lean into into Bitcoin because I think it's going to continue to have this growth and this network effect and adoption across the world. And I'm going to stack that and I'm going to denominate liabilities and fiat. It's really that simple.
The um the thing that I want to preface for people is if you're buying like call it stock and and strategy, it is completely predicated on Bitcoin being this engine that continues to go up relative to fiat. If it doesn't do that, like that entire company is at risk long term. Like if Bitcoin would go sideways or down for three or four years straight, it would be a real problem. like it would it would be really messy and and somewhat disastrous, right? And and so if you're buying that equity and you don't understand that that's the core engine is Bitcoin continuing to go up and and I think that part of the part of the math is he expects it to maybe go down for a year, year and a half and get punished, call it 50%, but then it will rebound and it'll it'll recover. I think that's part of like how they've modeled things.
Right?
But if that model's incorrect.
Natalie, it could be incorrect. Like, I'm not here to tell you that that it's destined or whatever that Bitcoin will always go up. I have no idea.
I mean, I think it is based on everything I'm looking at, but I who knows, right? If you're buying the equity and you're not understanding that core fundamental thing that's the engine which is Bitcoin keeps going up then.
I don't know what to tell people like it's a free market.
Right. I mean, well, and if Bitcoin keeps going up, thing securities like this can outperform Bitcoin, which is I think what attracts people to it, right?
On the flip side, if there are some bad years, which I guess a lot of people are thinking that that's behind us, that a Bitcoin bare market can't last that long. It can't dip too low. And I and Michael Sailor said on the earnings call, which I thought was fascinating when Lyn Alden asked the bearish question, right? Like, are you prepared for a stress test? And he said, yeah, I mean, in the case of an 80% draw down, things would be totally fine. These these new products that he's launched are over collateralized, right? But I think that's because most of us think a 90% draw down in Bitcoin at this point with this level of adoption and the institutional side coming in and the regulatory favor that we've gotten. There's no way. But I mean, do you think that we we could see something that bad? I mean, I I guess I'm not in that camp and I'm not the most bullish person ever all the time where I think we're going to a million next year, but I I just don't see us going down 90%. I just think that the the bid in Bitcoin is highly dependent on the liquidity of the fiat system.
Yeah.
Right. Like that is if they are just adding tons and tons of fiat monetary units into the system, Bitcoin's going to bid um in in my opinion. And this isn't something that like anybody knows for sure as to how aggressive are they going to add more fiat units into the system. Uh are you going to get an administrative administration in there or are you going to have this global cooperation that they really try to you know tighten? I would argue that the start of this administration, this current administration, that was what they were trying to do. They were trying to actually I think trying to get their spending under control. I mean I was sitting there kind of smirking like there's no way they could actually do this like get the spending under control. They're going to do these tariffs that's going to create this revenue. They're not going to have to base the currency because this is a it's a global problem. It's not just a US-based problem. So even if the US did these things and were able to like get it all under control, like you're still competing on the global stage of fiat debasement in order to stay viable and not have all your resources and and equity like basic basically usurped from the ones that are printing faster.
So that's why I'm super skeptical as to like the government's ability to ever rein this in. But to the point that I'm trying to make which is like we just don't understand the velocity of of the printing and the pace at which they're going to debase and so that has an impact on the flow of funds that come into Bitcoin.
Yeah, for sure. I mean, I feel like a lot of people were expecting a big print to come in a little bit sooner because they didn't think that the market would withstand these high interest rates for as long as it has. And um you know obviously that's why we have brilliant people talking about fiscal dominance because everything has been thrust on that side as opposed to the monetary policy. But we're in such a wonky position. I mean I saw you retweeting some of the stuff about the the housing situation, how unaffordable things are getting. But now prices are starting to change. It's starting to become more of a buyer market. Like new home prices are now starting to be what? Like lower than older homes. like older homes are more expensive, which is interesting because I I blame fiat building.
That's a factor. I think that's definitely a factor.
Yeah. But it's just crazy because it's like there are all these weak factors in the economy and I I mean everywhere I go, people are just talking about how high prices are. Um, I've been doing work here, um, in the new place that we moved into and all the material, all the material is so ridiculously expensive and everyone just says, "Yeah, ever since co, ever since the pandemic, you know, it was like half the price a couple years ago." So, we have these high prices. We have a lot of issues. Um, I mean, unemployment starting to creep up a little bit, but yet it's like, "No, the economy is the best ever. Everyone in office just tells you it's the best it's ever been. don't pay attention to the numbers. Everything's great. These tariffs are gonna bring in billions for us. We're gonna have more tax cuts and like it's it's hard to figure out what the reality is and when that next maybe crash trigger is going to happen because we know that they're going to have to come in. There's going to be some sort of situation. You always point to the bond market, right? And Luke Roman talks about that shadow third mandate. The the Treasury market has to be functioning. at some point it's going to have some trouble and they're going to have to come in and print, right? Um but trying to figure out when this is all going to play out or how that's the tough part.
Yeah. I think that uh and you have a lot of great like comments wrapped into this. I what I would just say generically is you're seeing this bifurcation between what equity markets are doing and what was usually a really good sign of like where we're at in the overall credit cycle.
Mhm.
Which is if stock if the stock market's at an all-time high, everybody's just doing really well was pretty much the generic uh like it was in harmony with each other. Like the credit flu flowed into the system, everything got bid, everybody was doing good and then it would slowly unravel and when everybody was doing bad, the markets were going down. You now have this dislocation or this bifurcation where stock market is at an all-time high right now. But I would argue if you went to anybody in the middle class or lower class in the country and said, 'Hey, how how's things going? Do you feel like you can afford things? Everybody would be like, I'm levered up to my eyeballs.
Just trying to make make it buy on what I've got and I can't afford to really do anything right now is what I think the the general market sentiment would be. which is one of the reasons why you have Trump and all these others like kicking and screaming at Jerome Pow to drop rates.
And everyone's expecting the rates to come down like as low as it they were.
Yeah. And think about that. They're they're kicking and screaming about rates to go down when literally equity markets continue to put in new all-time highs.
Crazy.
It's crazy. And so when in a mechanical system things break down or when you start getting resonant frequency you literally have uh the the forces are literally hitting at the exact wrong frequency with each other and that's how the machine literally eats itself apart. And so what I would say is like we are finally starting to see uh examples of that in the market where equity markets are skyhigh, everybody's in still feeling pain despite that setup and they're screaming for rates to be lower and maybe even artificially kept lower so that everybody can refy their house, right?
Like what do you think the ramifications of that are going to be for the prices of homes long term? they're going to rip. They're going to rip even higher than what you're already like if we, you know, we jump five years into the future. So, all of these things are a manifestation or an example of the currency melting down in my humble opinion. And so, um, you know, when people are like, "Oh my god, how in the world can anybody afford a house?" Well, just go like price the house in Bitcoin for like the last 10 years every year. And what you're going to find is the price just keeps going lower and lower and lower.
Yeah.
And if somebody's like, "What did he just say?" Yeah. Rewind the tape and listen to what.
I just said. The prices keep going lower and lower in Bitcoin terms, and it's just going to, in my opinion, it's just going to keep going that way.
Well, that's the thing that confuses me, Preston, is um Bitcoin is so clearly that solution that people are crying out for, even if they don't realize it. Um, and you'd think that they would maybe pay attention a little bit more, but I swear this is the most bearish bull market I've ever seen. It's like retail mainstream doesn't care. I'm hearing some of the same things that I heard really when I was really starting out in Bitcoin, like this is a Ponzi, this is this, the people who own it are corrupt, blah blah blah blah blah. Um, I they're not reaching out for the tool that it really is. Uh, I loved that tweet. You probably saw it that um and um the Harvard economist that tweeted about like how you know he's he's obviously not the problem. Bitcoin's the problem and he didn't realize how stupid everyone was.
That was gold. That was Oh my god, was that funny and all the comments were off. All the comments.
I know he doesn't even have the courage to allow us to respond to him. Um, but also I saw that clip that I shared with you from Dave Colum and Tucker Carlson talking about how Bitcoin is a tool of the state. It was created by the state. They're never going to allow us to be free with it. They're going to control us. This is just going to usher in central bank digital currencies.
I believe that the the authorities are not going to let crypto take over.
Of course not.
And and by the way, that means that they're going to lose total control over society. Yeah, I don't think so. think the Rockefellers and the Rothschilds are going to hand it over to Max Kaiser and Michael Sailor? I don't think so.
I wanted to get your perspective on this because I just don't get it. Like to me, if I was struggling, which I was, this is like me when I found Bitcoin. I was struggling. I didn't understand it. I knew that there was a problem, but I was like, "What the heck is going on? Can we please just tax tax the rich?" And then I found Bitcoin and I or I started to hear about it, right? And I'm like, "Is this a solution? Like maybe I want to learn more. Maybe." And then I dug into it and I'm like, "Oh my gosh, this is the best thing that I found that could address these issues."
Yeah.
Why aren't more people doing that?
Okay, so I've had Dave on the show. Dave's super smart. Dave Colum, super smart guy. Um I think he's up in uh oh uh what's the university uh Greg Foss and others went to?
um um uh
that's what I Yale. No,
no, no, no. It's not Yale. Uh, oh my gosh. Okay, edit that out or whatever. I I
mind meld. It begins with a C.
Colombia.
No. Oh my god. It's
not Columbia. It's not
Ella went here. Uh,
Cornell.
Cornell.
Cornell.
Good god.
Is it Cornell? Is it Cornell?
Cornell. Okay,
it's Cornell. keep it all in the show, Natalie, so people can see what what these what these conversations really look like
[Music]
Cornell. He's a professor up at Cornell and um anyway, he's done a lot of research on uh like all the weather stuff and uh you know, he's he's just a really smart guy, deep thinker. But this is the thing that that I can only hang my hat on after seeing this time and time again in this space is at your core if you just think the world is going in a bad and I had just had this conversation with Ephrit over in Lugana.
If if at your core you're just kind of a negative person and you think that the world is just going to hell in a hand Natalie and they're going to take all of our jobs. we're going to be pets to the AI, like all of that. If you believe in your heart, like deep down in your core, that the world's just going to hell in a hand basket, when you think about something very complex, and when you look at a potential solution, that core belief that things are always going to be worse is going to help you deduce that that's where it's all going. And therefore, anything that could potentially offer a solution or savior to this terrible world will be spun into that type of outcome or point of view. And so, like his his comment that the US government created it or one of these threeletter agencies did it from the beginning and it's all just a giant scheme or scam to pull. Okay. Well, let's pull on the thread. Okay. Let's say that is true. Is there some part of the code that's not auditable that you can't go in there and and assess, right? No. Okay. Go to go use AI say like what in the code like look at the you could upload the code base of Bitcoin into like how can I exploit this code for my own personal benefit? Assume I'm a I am a rogue government agent that created this. How could I exploit it against all the people? Like ask these questions. Go in there. dig around and and you know I don't think you can find a vulnerability in it.
And so when people wave their hand and say things like this, it's like okay well let's get quantitative and like let's back up the statement. Let's figure out like prove to me
right
how it could be. So I when I when I see stuff like that, I just point to well there's a there's a pessimistic person. And
you know when you interact with AI, if you start off and you seed the conversation with a very negative or like uh dark undertone, what you get back from it is going to be some flavor of that dark dystopian point of view. That's so true,
right?
Yeah. How you feed the AI is very important.
That's right. And so why would you think that your environment that you're operating in in life is any different than that?
Yeah.
If you go around and you're interacting with people all day long and everything is like instead of smiling at somebody, you're frowning at the person or when they say something positive, you're just like, "Yeah, but it's terrible today." Like is that person ever even going to like want to talk to you again? And so like it's a broader theme and like idea that what you're feeding your environment is somewhat of a reflection back into your own soul and like who you are. And um Bitcoin aside, I just think that it's such an important idea for people to think about and like what what are you feeding into your environment all day long? And you know, if you're not real happy with your life, maybe start there
and think about what you can do to maybe change the way that you're providing these inputs into your into your own setting.
That's really profound. It reminds me of what Jeff Booth always talks about, which is that if you look out and you see negativity, you're going to get negativity. If you look out and see love and abundance, you're going to get it back for sure. Um, do you feel like people are just one way or another? Or do you think there's some way to help bring them, especially with something like Bitcoin, to the more positive side, to see this as a tool for good as opposed to focusing on, you know, there's always going to be bad. There's always going to be greed. There's always going to be corruption. But I can't think of anything, I can't think of a technology that empowers more people across the entire spectrum, right? regardless of where you're from, whether you're wealthy or poor, benefits you so much um and gives you back some of these fundamental freedoms that are really core that you know things that like our constitution was really founded on and returns that to you and
gives it to you in a way that can never be taken away. I just do you think that there's a way to like make people see that and has something worked with you when you talk about Bitcoin or do you feel like people that are just negative just you just got to let them be negative and and come around to it themselves?
At the end of the day it's the individual's choice for sure. Um I do think that some people maybe uh enter this life in a way that it's a little easier from the start than others.
Mhm.
And so, uh, when you're thinking about like, let's say you and I go out and play a game of golf, if I give you a handicap of like 20 strokes and you go out like and you beat me because I didn't have any strokes to start off with, like you're going to kind of be in a position where you're like, "Hey, this game's kind of fun and I'm going to be more of in a position that like this game kind of sucks."
Yeah. And so like I'm not naive to the idea that some people kind of had let's call it a head start in life and it's a little easier to kind of view things optically from a very positive you know point of view. But at the end of the day and at at a certain point in that timeline, call it, you're 20 years old, like you have to somehow figure out a way to to course correct or start looking at things maybe with a more positive lens despite maybe the hardship or the difficulty that you started off your life with. Um, and I don't have any advice for that. I Well, I do have some advice for that. the the more you can surround yourself with people that you admire and that you want to be like, it's going to rub off on you. It's going to have a it's going to have an impact at some point. And so, and that works both ways, too. Like, if you're constantly around people that are just like negative this, negative that, like, it's going to have an effect on you. So change change change up the people in your environment as best you can if you feel like they're kind of one versus the other with
well I just I get sad that people are so distracted by like the political things that do they they get really negative and I feel like that's where a lot of the attention is even for podcasts right now and content in general. People love all the political stuff. It's like this team versus that team. And even the red and blue teams are starting to splinter and like fragment. They're all mad at each other, too. And it's so sad because it's like Bitcoin's staring everyone in the face and they don't take it seriously yet. But, you know, we'll keep we'll keep doing our our hard work trying to reach people. I guess
part of part of the challenge, and I've talked about this a lot, is if you don't have disposable income or you're you're you're like not making a uh any type of savings at all, like you're you're really going to have a hard time even saving in Bitcoin because you're just you're just trying to make it to the next month.
Right.
Right. And so that's going to be lost on a lot of people. Um, and then something else that I think is a dynamic that's starting to play out is like boomers buying, let's say that they're buying the Micro Strategy Preferreds and all this stuff. Like they're not interested in Bitcoin from the lens that you and I are maybe looking at it from. They just want the income.
Yeah. And so I think that maybe uh a big wave of investors are actually going to investors uh the next wave of adoption is going to actually be very passive paperized Bitcoin because people just want the income and totally they don't even really know that Bitcoin's behind what it is that they're receiving from. Well, this is why I don't understand how people could be bearish on MSTR because these products are so revolutionary and they offer such a higher yield than whatever else is out there. There's going to be such demand for it once people wrap their head around it a little bit more, I think. And that market, the fixed income market is just massive and ripe for a revolution like this, right? So,
um it's just going to be interesting to see how this plays out going forward.
It's going to take some time. I don't think that uh I don't think it's going to be very obvious how it continues to just kind of like extend its tentacles and kind of reach into everything. And I think that there a lot of the adoption is going to be in a way that people don't even understand that they have kind of somewhat adopted it and are using it. uh it's way into the background and and this goes to our original conversation which is the culture clash
as it's being paperized and it's being turned into these things that people never imagined or don't think a lot of people don't think that that's a good thing. Um and that's for a whole another conversation as to like the vulnerabilities of some of this stuff being paperized. that I think the next wave of adoption might not be what a lot of people kind of wanted or expected or or were prepared for.
Yeah. I mean, to our earlier points, I think every company is going to have Bitcoin on the balance sheet. So, in some way, every company is going to be a Bitcoin treasury company in the same way every company is an internet company, right? Every company has money. Like, Bitcoin's going to become more universal.
Um, so I
to that point to even pull on the thread more, they might not even if you looked at their balance sheet of let's say you're Apple, okay? And let's say Apple owns SPY, the S&P 500 ticker, okay? as a marketable security listed on their balance sheet. And let's assume Micro Strategy gets included into the S&P 500.
Okay, now all of a sudden Apple has Bitcoin quote unquote on the balance sheet. It's a really small portion and it's through this derivative of a derivative of a derivative.
And so this go kind of goes to where I think a lot of the culture, the Bitcoin culture that kind of brought it to where we're at has issues with that. They're saying I don't want it to be paper on paper on paper. But I kind of suspect that whether people like that or not. That's where the next wave of adoption might be coming from. Well, and to the point that you've been making on your shows, which is really important, there's nothing better than self-custody Bitcoin, right? So,
I'm trying to be
go out and get that. I mean, evaluate the risk on the spectrum of all these different products that you have available. Some of them I'm actually really really excited about and I'm a holder. Um, so there's lots of fun to have in the space, but also
spot Bitcoin in self-custody in multiig, please, everyone. We've got tutorials on it. Just go there.
Um, any final thoughts, Preston?
No. I That's the most important thought of the whole conversation.
Well, it's been great to see you. I hope I get to see you in person soon. Um, thank you so much for joining me. I hope I hope people listen, even though you were just on another show, but that's part for the course with these Bitcoin podcasts.
Thank you, Natalie. And for people that don't know, Miss Natalie has a book coming out soon, so I don't know if she's uh been talking about it, but I'm sure it's going to be amazing. Yeah, I can't wait. Can't wait to share it. Uh, we'll talk we'll chat more about it soon. But um thanks so much, Preston.
Thank you, Natalie.
Thank you so much for checking out this episode of Coin Stories. Make sure you're subscribed to the show so you don't miss any new episodes. And if you can, turn on those notifications and leave us a positive review. They really help the show grow organically with new listeners. We have a free weekly newsletter. You can sign up at the newsblock.substack.com. This show is for educational and entertainment purposes only. Nothing should constitute as official investment advice and you should always do your own research. I'm always open to feedback and guest suggestions, so please feel free to reach out at info@talkingbitcoin.com. I'll see you next time.