Debating Strategy And Bitcoin With Larry Lepard - 7/9/26

All right. Happy to have my friend Larry Leard here with me today. Disappearance almost didn't happen. We got into a little bit of a domestic dispute this week, actually, which, uh, was odd. You know, we've been friends for a very long time, me and Larry. And, uh, I respect him more than a lot of people in the industry, most people in the industry. But I think I pushed his buttons this week and [laughter] he almost didn't come on, but now he's here. So, how you doing, man?

Chris, I, I apologize for that. Maybe I was having a bad day. Uh, look, I mean, we've been friends for a long time and I have a huge amount of respect for you as well. Uh, and I'm gonna, in this, in this, uh, thing, I'm going to convince you that we're, we're okay with MicroStrategy. But before we get to that, um, [laughter] you know, the, uh, you know, the general thrust of the article you wrote about all this was really great. You talked about how being skeptical, um, you know, doesn't make you a doomer. And you're absolutely right. Uh, and, and you, you cited a number of cases and your skepticism of MicroStrategy and, you know, SpaceX and just so many things. And it's, it's really hard for those of us who've been in the markets more than 20 years to look at these markets because they're just, they're Franken markets, right? And that's because of the Fed and the Fed printing all this money and everything's going up, not because the values are going up, just because the, you know, the unit of account is losing so much value so quickly. And so, you know, it makes it very hard to look at traditional metrics and make them have any sense. And people who haven't been in the markets as long as us are sitting there saying, "Hey, how come you guys are being such doomers about these valuations and everything else? It's all great." And we're kind of like, "Yeah, okay." Yeah, just wait.

So, so I think, you know, the, the reversion to the mean is yet to occur. It may never occur, but I think it will, if history is any sort of a guide. Um, you know, and I think Jeremy Grantham made a good case that history is a good guide. And so, um, you know, it's, it's tough to be in these markets with 40 years of experience, which we both have, and realize just kind of how out of whack everything is right now. And, um, but the, the MicroStrategy thing was more specific to the actions of the management team, and we should hash that out because, um, you know, it's, uh, it's worth having a debate. I mean, and we can look at the facts very clearly and, um, as we talked privately before this, I mean, I don't disagree with you on some of your concerns, but I, I still fundamentally am a bull. And, uh, um, you know, I'd like to kind of clear up, you know, the concerns or doubts you have because I don't think, I think logically, if we look at the facts, you will see that the, the logic of, you know, this is going to go into a death spiral is just, there's not facts that that support that, found that, you know, a foundation for that. So, we should go, we should go there.

Yeah, I think a good place to start is really talking about what I said and what I didn't say. You know, I never, I never said it was going to go into a death spiral. >> Uh, I, you know, I >> was not as bombastic about strategy as somebody like Peter Schiff has been, who is basically calling for its imminent collapse, right? [laughter] And, and [clears throat] in fact, when they put out the new strategy now that they call the Bitcoin monetization strategy, which just means we can be sellers of Bitcoin, uh, what I, what I wrote in fact was that it probably buys them significant amount of time, >> right? Um, [clears throat] you know, um, however, what I argued was that management was talking out of both sides of their mouth. >> Yeah. >> Which they have been doing. >> Uh, that, you know, layering cash outlay obligations on top of the collateral Bitcoin. I mean, they're essentially a Bitcoin treasury company that has started to layer financial products and capital outlay on top of their collateral. Right? So, that's what these preferreds are. That's what this dividend is. The preferreds exist >> under the notion that Bitcoin is going to keep appreciating 30% per year. And so they'll strip the volatility out, as Sailor says, and, and spit off 12% a year because they found this 30% a year wellspring and they're going to keep some of the water and they're going to hand out some of the water to shareholders. >> Perfect. Yep. >> Right. [clears throat] So we understand things the same way. Um, you know, I, I never claimed that it's going to be going into a death spiral, but what I did say is there's a lot of, you know, a, there's a lot of concern with management's credibility for saying one thing and doing another. Now, in February, Sailor was on CNBC saying they're not going to be sellers. And now all of a sudden, it's four months later and, and they're sellers. So whether or not the company goes under or it goes up 10x from now, for me, that's a demerit in my book. I've spent the better part of my professional career, you know, doing research on the short side and looking into every deceptive dirt [ __ ] management team that there is. And they have a lot of things in common. One is they change the narrative when it doesn't work for them. The second is they start to remove financial metrics when they don't run in the company's favor. And that was something too that I found to be, uh, deceptive. The fact that Bitcoin yield has been touted over and over and over again by the company. Fong Lee has talked about it over and over as the main purpose of the company. And then when that doesn't serve them, as soon as the yield starts to decrease, as it did over the last month, Sailor just stops referencing it in his tweets, which he was doing prior. >> And so those are the kind of things that I think are red flags that I point out to my subscribers. >> Fair enough. So let me, let me counter that. Okay. Um, you know, the, first of all, they, they still have a positive Bitcoin yield for this quarter. And I think the goal of the company still is to increase the Bitcoin yield, which is to say to grow the Bitcoin per share. Um, and I don't think, I mean, what you call deceptive, I call adapting to market conditions. Okay. Um, basically, you know, their, their goal is to increase the value of this company and to increase the ownership of the Bitcoin and to increase Bitcoin yield. It's not like they stopped talking about it, but what, what happened, what they learned, the, the market event that happened that led them to stop talking about Bitcoin yield and talk more about, you know, the liquidity they have, the cash flow management ability that they have, the ability they have to sell Bitcoin to service these obligations they're taking on. That all occurred because of a liquidity cascade that took part, took place in Stretch, right? So, we all know, you know, you bring up a chart of Stretch. What you see is, you know, this, this was, they, they've raised close to 12 billion dollars in this thing, I think, is the number. And, um, you know, it's basically, uh, it went for a dive. It went, you know, people got nervous about the price of Bitcoin. They thought it was going to break to new lows when it hit 58 or 59. They thought that people wouldn't, that he wouldn't be able to service the 1.7% dividend, which if you look at the map, the balance sheet, it's, it's kind of patently absurd. I mean, he's got >> it's a $1.7 billion dividend. It's not 1.7%. It's a, it's >> No, no, it's, yeah, it's, it's a $1.7 billion dividend on an enterprise value of 54, 52 million of of Bitcoin that he's got plus another $2.6 million dollar reserve. So, he's got 54 billion of, you know, things that he can use to basically service 1.7. It's very hard to see how there's going to be any kind of a problem, you know, coming up with 1.7 when you're talking about 54.5 billion of assets, right? I mean, it's just, you know, Bitcoin's got to go down, you know, >> right? >> Yeah. That, that I agree with you. Like, I [clears throat] don't contest that. You know, if there's one thing that I think we could probably stipulate that makes both of our points and really the fact that I'm trying to get across is the larger the cash outlay obligation becomes and the lower the price of Bitcoin comes, the far more risk there is to the company. >> Oh, there's no doubt about it. No doubt about it than there would be if this was just a company sitting on un, you know, unlevered Bitcoin. And that's the only argument that I'm making, which is that [clears throat] the, the plunge could accelerate quickly. You use the term death spiral. I try not to use terms like that, but like it [ __ ] could hit the fan to the downside quicker because he has these capital requirements and because the more the higher he raises the dividend and the, the bigger that obligation gets and the more debt they take on, any type of cash obligation or leverage they put on top of this pile of Bitcoin, the, the bigger that gets, the smaller the move has to be to the downside to trigger sales, right? But, right, but you're being hyperbolic. I mean, >> no, I'm not. >> Yeah, [clears throat] you are. Yeah, you are. Because the balance sheet right now, I mean, basically all he's got to do, all the company's valuation has to do, he's got to sell $1.7 billion on, I'll do the math on 54 billion of value. 1.7 or if 54, he's got to raise, he's got to take 3% of his value every year to service this dividend. So, current prices >> at current prices. So, say you're a common shareholder >> and say, you know, he either sells common shares or he sells Bitcoin, okay, to pay the dividend, all that has to happen is the balance of the Bitcoin that he owns has to go up 3% and you're in the same position. And for it to become a bigger number, let's say Bitcoin fell in half from here, which is unlikely, but it could. Let's say Bitcoin went from 60 to 30, he's got to come up with 6%. So even that number isn't, 6% is not something that's going to, you know, completely destroy the company. I mean, I've seen, you know, small gold companies raise 10% or 20% of their equity in one financing and they do it repeatedly over and over and over again. So, I mean, this is not, you know, a, I mean, and that's assuming [clears throat] Bitcoin falls 30%, which is well below the models that show, you know, that we're at the lower end of the range. Bitcoin's only been this cheap, Chris, you know, three or four times its entire history. I mean, it's, it's right at >> cheap relative to what? >> Relative to its 200-day moving average or relative to the power law model, both of which are meaningful. The power law model, basically a log of time and a log of price back from inception, describes with a 96% R-squared the price of Bitcoin. Okay? And it, it falls within a band and that band is a, that band varies around the average. What the mean, the mean right now is about 134,000. Okay? So, we're, we're already at a very steep discount to the mean power law valuation of Bitcoin. And, but to be fair, you know, three or four times, and we've had big drawdowns and bare markets in [clears throat] Bitcoin, we've gone right to the bottom of that model, which is basically about one half a standard deviation below, you know, the mean and tends to be about one half of the, the existing price. And that's where we're at. We're at 53% drawdown right now, which, by the way, is smaller than all the prior drawdowns, which I can go through for you in just a minute. But, but the point is that even if Bitcoin were to fall 50%, this company's not in trouble. I mean, it's just, it's not in trouble. I mean, the, the only obligation they've got, two obligations they've got to meet. They've got to pay back their debt, which is $6 billion. Okay? And that's, by the way, it's, you know, it's layered out over time. And they've got to meet the $1.7 billion of dividend obligations that they have today, assuming they don't grow, you know, nothing grows. And so, so that's really kind of the preferreds, you know, they don't have to pay it back. And by the way, I mean, they could actually even, they're legally allowed to stop paying the dividend and let it accumulate. Okay? Now, of course, that would trash the preferred holders, but, but they could do it. And so, so the point is, you got a company that's got a $60 billion market cap with $6 billion worth of debt. >> So, right, in a $1.7 billion annual cash out, >> $1.7 billion annual cash outlay that you could stop if you had to, >> right? And all, all things being equal, if the price stays where it is, >> right? And, and it trends according to the power law model and all of the technical analysis that, you know, you're looking at and the guys over at Fred Krueger spaces were talking about the other day. Yeah. If everything holds up according to, you know, the data >> but, but it's better than that, Chris. It could fall 50% in value and you're still fine. It could, it could fall, Bitcoin could go to 30, and this company is perfectly fine. I mean, would you have, you'd have, if at a 30 bill, at a $30,000 Bitcoin price, the company would have a $30 billion, round numbers, you know, market valuation. Okay? And they've got to make a $1.7 billion payment. I mean, so what? I mean, and by the way, they can stop the payment. So, so the whole notion that you give a platform to a guy who says that this thing is going to go into a death spiral, you know, a guy who's been dead ass wrong about Bitcoin for 16 years, you know, a guy who's cost thousands and thousands of gold holders millions and millions of dollars of potential upside. I mean, I just, you know, I'm like, what, what's that all about? And so, so Fong Lee decides to change his messaging from, you know, we're going to grow Bitcoin per share, which, by the way, they still have year-to-date, you know, they grew their Bitcoin 25%, they grew their shares 19% for the six months just ended. So they are still growing Bitcoin per share. Then they go out and they sell 3,000 Bitcoin, which, by the way, 3,500 and some Bitcoin, which, by the way, is 3/10 of 1% of what they hold. Everybody freaks out that we're going to get into some liquidity cascade or that's going to cause the market to turn. I mean, Chris, this thing, Bitcoin trades $27 billion a day. $27 billion. You know, MicroStrategy is 4% of the total outstanding Bitcoin supply. And, you know, Bitcoin's going to make it whether MicroStrategy makes it or not. I mean, the, you know, one of the narratives that a lot of people have been saying is, well, the MicroStrategy is now a seller and they've been the marginal buyer, which isn't true. And that therefore now that they're a seller, the marginal buyer has gone away and the thing's going to collapse. It just doesn't make any sense. There's absolutely no sound business or economic logic to support that argument. Zero. It's ridiculous. I mean, Bitcoin trades, you know, on any given day, Bitcoin is trading $20 billion worth of value. MicroStrategy is trading $2.8 billion of share value per day. And we're talking about, we're sitting here arguing that they're not going to be able to come up with $1.7 billion to pay a dividend. I mean, it's just absurd. It really is. The facts just tell you it's absurd. And so for, Yeah. But for Fong to then change his metric from [clears throat] Bitcoin per share to, we are going to be very flexible in our balance sheet management in order to make sure we cover these obligations. Because what the market taught them, what they just learned is that they probably reached the limit of leverage and in both the preferred and the debt that they can handle during a Bitcoin drawdown. That's what they just learned. I mean, the mistake I think they made was they paid off some of the, uh, debt. You know, they had a, they had a nice reserve built up and they used some of it to pay off the debt thinking that they could get it at a discount and the market would like the fact that they had less debt. And in reality, what the market told them, no, no, no. We liked it when you had more cash reserves, which is why they're now building the cash reserves and they now got 17 months of c of dividend in the cash reserve. So, you know, what? All right, let, let's just stipulate a couple things here. >> Okay. >> All right. Oh, sorry. I got to move my mic back here for a second. Can you hear me? Okay. >> Yeah, I got you. >> Okay. So, let's just stipulate a couple of things here first. >> Yeah. >> Okay. Fong Lee is is the CEO of the company that without talking about the Bitcoin yield metric, right? >> And by the way, it's still an important metric for them. It's not like it's gone away. He's just not focusing on it. >> Give me a couple minutes here. Okay. Give me a couple minutes to make my points. >> Yeah. All right. [clears throat] It's a metric that he was focused on. You can pull the quotes from my, uh, Absolutely. That >> that Sailor used to put in his tweets all the time whenever he acquired Bitcoin. And he surreptitiously left it out of his tweet, just like he stopped tweeting, you know, STRC's price at the end of the day like he was doing every day when it was trading at par. We don't get those tweets anymore anymore. So the, the point there is that they're being selective with what they talk about. That, that's the point. All right. And for me, that fits a pattern of things that I've seen in my past. I used as an example on the last podcast that I did back when I was looking at Herbalife many years ago. They used to put on the front page of their 10K their number of active members and the number always went up every year. It was a, you know, higher number. And then one year they stopped putting it on their 10K. And the reason they did was because the number went down, that, you know, or coincidentally the number went down that year and they decided to stop disclosing it. >> To [clears throat] me, I don't like things like that. I like transparency, cut and dry, apples to apples, all the time. It makes it >> It's totally transparent. If you go to their website, the Bitcoin yield is still there. They're not hiding anything, Chris. It's all still totally there. What if you ask Fong Lee, how come you're not talking about Bitcoin yield right now? He'd say, because we've got a crisis in the preferred stock price and it's much more important to focus on how we're going to be sure we have the capital to, you know, to restore confer. It's not, it's not hyperbolic to point that out. >> That, that, that's not a s, that I'm not saying anything sensational. I'm saying that management is talking out of both sides of their mouth. You have again, the headline, the headline on CNBC from February >> with Sailor. Here's the headline. >> "We won't MicroStrategy's Michael Sailor, we won't be selling Bitcoin. We'll be buying every quarter forever." That's the headline. And now they are. Now they are selling Bitcoin. >> Chris, has, has there, has there been a net quarter where they've sold Bitcoin yet? >> Well, yeah. First, it's going to be, has there been >> Has there been a net >> First, it's going to be, first it's going to be, we said we weren't going to sell, and then we are. Then it's going to be like, has there been a net week when we weren't sellers? Has there been a net quarter that we weren't sellers? Then it's going to be, has there been a net year where we've been sellers? So the point is, you can move those goalposts as many times as you want. You're okay with the fact that he said they're not going to be sellers and now they are, and I'm not okay with it, and that's, that's fine. Where we can have a disagreement on that, but to me, that, that's moving the goalposts. >> Well, he, he still hasn't been a net seller, you know, even, I mean, he's been a net seller. What, in the past two weeks? I mean, and how much >> Well, how about, how about we just, how about we just start with, he's been a seller. >> Okay. >> When he, when he said he wasn't going to be a seller, >> Correct? >> Right. Okay. So, >> I mean, it, there had, there had, there had to come a time, there had to come a point in time >> at which, you know, he had to, what he, what he learned in the process. Okay. What, what, what I think happened is the market schooled him. And what he learned is that if he says he's never going to be a seller, people are going to short the living [ __ ] out of his stock, you know, in a speculative attack. And there's a point in time where, as a, as a, as a ma, as a matter of corporate, you know, balance sheet management, if the stock is selling lower than the value of the underlying Bitcoin, the thing he should do that would be best for his shareholders would be to sell Bitcoin and buy the stock, right? >> Well, that, that's fine. I mean, if you want to, if you want to retrofit what you just said to make it, to make an excuse for him, essentially, then that's fine. I just don't see it that way. I see him, you know, he has cashed out a lot in MicroStrategy stock. Personally, he's worth hundreds of millions of dollars. >> Slow down. Slow down. You, you've got records that show that Micro, Sailor has been a seller of MicroStrategy stock. >> Look at this, foreign forest. >> I don't think that's Well, yeah, he's obviously he's got, he and Fong both have, you know, programs that they put in place to sell stock to pay for the, the dividend, the stuff they're going to buy. I mean, that, and >> they've sold personal, personal stock. >> It's form, it's formulaic. It's basically a formula that they set up. I mean, we went through this on a tweet that you, you were embarrassed by and you then subsequently took down. I mean, they both set >> the one where you attacked them for Fong for selling stock. And in fact, Fong had set this program up years and years ago where he, it's one of those, you know, I don't, I don't know what they call it, but it's a 10B5 >> 105 program. >> Yeah. He's still selling. He's still selling stock. >> Yeah, right. In order to buy more, in order to exercise options, it's not net selling stock, Chris. You're, you're being, you are not sticking to the facts. >> Let's see. >> You, you are crafting, you're doing exactly what they're doing in reverse. You're crafting a narrative to fit your story. Let's look at the fact, let's look at the facts. >> How about we look at Bloomberg and see what Michael Sailor has sold in MSTR personally? Michael Sailor personally cashed out approximately $370 million by unloading company stock, uh, made possible by a specific stock sale agreement that allowed him to offload up to 400,000 shares. So he has, he's, he's, he's made personal wealth off of selling MSTR shares, right? >> Look, if it was set up in a 10B5 program beforehand, you knew he was going to do it. And I'm not sure that that's necessarily, I don't know if I, I don't know if his net ownership of MicroStrategy has gone up or down over time. I don't have those facts right in front of me, but I know that when you attacked Fong for doing it, Fong had clearly said he was going to sell shares in order to exercise new shares given. I mean, when they're given new shares and they, they're about to expire, they need proceeds to exercise them, right? In, in the form of options. [clears throat] So, >> Uh, okay, let's see. 45%. Yeah, the small Sailor sales, they're a small fraction of his overall stake, but he has sold, uh, shares personally. I mean, I've seen the foreign fors, but I, I don't know this for a fact, but I believe he's sold them in order to exercise the warrants he's given by the board. That's my guess. I'll bet if you match them up, that's what you'd find. >> So, again, you're crafting a narrative, not necessarily based on the facts. I don't know if that's necessarily true. I mean, >> Well, we, we'll have to, it's something we can investigate. We can see whether he's used the proceeds to buy to exercise his warrants, but I know in Fong's case, that's what the filing show. >> This is his quote. "Michael Sailor, for almost a decade, at my request, the company has only paid me a $1 salary, and I've chosen not to be eligible for cash bonuses. Exercising this option will allow me to address some financial obligations as well as to acquire additional Bitcoin for my personal account." So, exercising this option will allow me to address some financial obligations. So, he's selling, he's selling stock for personal. >> All right. So, Sailor has actually sold some stock. I mean, you know, >> Well, that's a big, that's a big difference between that and me crafting a narrative, right? Well, but in the, in the case of Fong, you're crafting a narrative because you took down the tweet where I pointed out that Fong basically said, you know, his, it was a 10B5 to, to exercise warrants. >> Well, we can look to see how much Fong Lee has sold. >> But I mean, it doesn't matter. The, the point of the matter is they're talking out of both sides of their mouth. That, that's the point of the matter. >> No, they're not. And >> They're not. I mean, >> All right. Well, we just, we just disagree on that. I mean, I don't know what to tell you, man. I mean, that's, if you're okay with that, then that's fine. You, you know, like you said already, that layering this stuff on top of their pile of Bitcoin collateral, you know, increases the risk, especially to the common. Right. >> Sure. >> Right. Okay. So, that, that we can agree on. >> Yeah. >> That's, that's a lot of what I was >> There's no question that if they get overleveraged, they're going to be in trouble if the price of Bitcoin falls. So, there's, there's nothing hyperbolic about raising that point. And then there's nothing hyperbolic about the idea of, you know, the, a lot of the base bull case for this company is based on a lot of things that people don't talk about. It's based on, you know, the power law model holding up. It's based on the technical analysis. It's based on the assumption, I keep hearing, oh, you know, it's only got to go up 3% a year. It's like, yeah, okay, but like, what if it doesn't? What, you know? And this isn't like, we're not talking about the, the price of oil. This is a 17-year-old asset that, you know, is >> nobody knows where it's going to be in 5 to 10 years from now. There's some great models. It should, very easy to look back on what it's done over 17 years and then try to derive where it's going to be at a certain place in time and I get all that, you know, but all of this is based on the assumption like you said, >> hey, you know, it's already kind of drawn down as far as it's going to go or it can't go to 30,000. And the fact of the matter is, you know, you have one of the biggest owners here that's again adding leverage to its capital stack who everybody kind of assumed was always just going to be [clears throat] a buyer. Possibly shifting not just the, the market dynamic and becoming a seller, potentially to meet obligations, but also kind of informing the market, you know, that they're also sellers, too. And you agree with me that adoption is everything, right? Like that the size of the network has to grow in order for Bitcoin to grow, right? >> That's correct. Yep. >> So, there's a huge psychological element, you know, that the long-term success of Bitcoin rests on. People are going to want, they're going to have to want to adopt it in order for it >> to make it in the long run. Right. Right. >> And so all I'm saying is psychology plays such a huge role here that these types of things can detract from, you know, the overall groupthink relating to Bitcoin. And if the network does start to shrink, which it hasn't yet, um, you know, those are situations that nobody's talking about. So you just have a, you have a, a giant layer after layer after layer of assumptions that this statement of they can easily meet their $1 billion, uh, $1.7 billion cash obligation per year is sitting on top of, putting aside the fact that, you know, I think that they're talking out of both sides of their mouth and you don't. But all of those things rest, you know, that statement rests on top of all these other other assumptions. Well, >> And it would be one thing if they didn't have the dividend to pay and they didn't have debt to pay back. That would be one thing. I would have far less concern about >> Let's just, let's just address that. One, they can stop paying the dividend. And two, >> But then, but then, then who's, you know, then what's going to happen to the common and what's going to happen to the preferred shares? >> Stop paying the dividend. >> The common's actually going to probably do pretty well if they stop paying the dividend. The preferred >> It will get, it will get crushed. That will be a major blow to the company's credibility if they stop paying the dividend. Now, >> Chris, they, they have Bitcoin that's worth, okay, $52 billion. Okay. >> Yes. And if they stop, if they stop paying the dividend, why would they do that? They would do that because the price has gone down, ostensibly, right? And if you tell, if you tell common shareholders and preferred shareholders that they're suspending that dividend, if they suspend that dividend, that stock's going to get crushed. Not necessarily. >> Who the hell is going to buy it then? >> Well, because it represents a claim on the Bitcoin and basically they could suspend the dividend until such time as the price recovers and the dividends accumulate and then they just pay the dividend back and you get the upside. I mean, the guy, the guy has built all kinds of upside optionality and there's no way you can break it on the downside. No way. I mean, he's got six billion of debt. That's it. Six billion. Okay? And it's got $60 billion of market cap. So for this thing to, I mean, you, and, and Schiff and others have said this thing could become a negative cascade and it could fail. Okay? And in fact, it can't because Bitcoin, unless Bitcoin goes down from here 90%. And if that's the case, yeah, it'll fail because it's levered. But I, you know >> So, so, so, okay. So, show me some fact in the marketplace that suggests to you that Bitcoin is going to go down 90%. I mean, you know, >> I don't, I don't have a specific catalyst, but what I can say are there's risks that, you know, people don't really kind of know how they're going to play out related to Bitcoin. Not just adoption, but, you know, all the quantum computing [ __ ] And then also you have crypto as an asset class sitting at the top of an equity market right now. Like, really, I call it the tip of the risk-on spear that is the most overvalued that it's ever been. And we're kind of in unprecedented territory here in terms of equity valuations. And >> You know, let's distinguish between crypto and Bitcoin because you're right, bit, crypto is extremely overvalued. It all should be going to zero. It's all pretty much worthless. >> But Bitcoin, Bitcoin is actually going to become, Bitcoin is actually going to become a safe haven because it's digital gold. >> Well, it might be. You're saying, you're saying give me a scenario where Bitcoin goes down 90%. And I'm telling you, you're just admitting to me, okay, the rest of crypto is worthless and that's fine. And what I'm saying is right there, you have a trillion-dollar kind of pin that could prick the bubble that the equity market's in. And if people get into some type of deleveraging situation, because right now margin debt as a percentage of GDP is at all-time highs. People are having trouble with credit card delinquencies, auto loan delinquencies are at, uh, uh, financial crisis highs. You have student loan delinquencies off the charts. So the consumer is stretched. And the average retail investor is a gambler and is also stretched and not an investor. And all I'm saying is if in your situation, half of the crypto market cap out there, which is something like a trillion dollars, Bitcoin is probably like the other trillion, right? >> If that winds up going to zero, as you predict, >> I'm not predicting. I'm saying it could. >> Okay. Or as you, as you say, is a possibility, you know, that could very easily result. I mean, if the market >> Look, Bitcoin could go down to 50 or 40. There's no doubt about that. You know, I don't think it will, but it could. But again, I don't think the mathematics of this balance sheet suggests that even if that happened, the company's fine. I mean, the company's completely fine. It's just, you know, you're talking about six billion of debt and a 1.7 dividend obligation that you can defer. So, I, you know, I, I, I just don't see it. And, and more importantly, I mean, everyone views, you know, that, that MicroStrategy has created this Bitcoin bull market. It really hasn't. I mean, you know, I, I did, I looked at a chart of the number of Bitcoin owned by the ETFs and, you know, the ETFs and, and it's interesting, you know, basically that chart went straight up from the ETF inception in early, you know, '24. And what you see is that, you know, while this bare market has occurred and the value of all the money in the ETFs has gone down, the net selling of the ETFs has been very light. I mean, there were about 1.3, uh, million Bitcoin in the ETFs at the peak and there's close to 1.2 today. So, it's not like there's been a lot of ETF selling. And so, you know, adoption is kind of continuing, you know, everywhere you go in terms of wallet growth and, you know, hash rate and usage of the network, etc. So, you know, what's, what's going to change that's going to suddenly cause this thing that's really digital gold to to die? I just, I don't see it. I mean, I don't see the thing that's going to change, you know? That's the. And, and, and by the way, you know, we've been here before. I mean, I, you know, we could pull up the chart, uh, that we, you and I shared before we started, which kind of shows you that in >> share that. I mean, I think there's some interesting data points that, you know, listeners might benefit from hearing. I mean, >> we've had prior Bitcoin bare markets. Okay. The first one was in 2011, you know, Bitcoin went down 93%. The second one was 2013, it went down 87%. 2018, it went down 84%. 2022, it went down 77%. This one's only down 53%. So what you've got is kind of a continued period of higher highs and higher lows. And if you look at this chart, you, you'll see that period in, you know, '18 and '19 and '20. And that was a long one. That was, you know, two and a half years of kind of just bumping along the bottom there. And then the next one, FTX one from 2022 to 2024. That was kind of a year, year and a half at the bottom. And so we're coming into another one. And this one could easily last into early next year, mid next year. But at some point in time, another bottom will be established and it'll be higher than the 15k bottom and higher than the 4k bottom and, you know, we'll, we'll be going up the other side of this curve. And so it's not as if we haven't been here before. I mean, I, before I got on, I googled or I chat GPT, you know, Amazon and all the corrections it's had over 20%. And, you know, it went down in the dot-com bust. It went down 95% and then it went down 70 some odd percent and it's been down 50% and 40 and 30. And it's a similar thing in the sense that Amazon was kind of becoming the leader of, you know, selling goods online. And this is a leader in digital currency. So they both have kind of a network effect. And so what's going on, um, is you're seeing, you know, slower and slower or smaller and smaller drawdowns over time. Now, you know, I'll admit nobody enjoys having a 53% drawdown. And if you bought it at 123 and you're at 60 today, you're not feeling great about life. But, you know, those of us who've been in it for a long time know what happens next, which is it goes to 180 or 200. And, you know, when does that start? I don't know if, you know, tomorrow or or sometime early next year or mid next year, but it's going there. So, you know, unless, unless suddenly the adoption stops and I don't see any evidence the adoption stopping. So, you know, I, I hear all these people attacking it and it's, to me, it's just typical bare market behavior. It's easy to kick an asset when it's down, you know, and, and, um, you know, basically in, you know, in about another year, two years, you know, everybody, I mean, look, to me, there's an extraordinary upside optionality in this thing. It's the most asymmetric thing out there right now. It's more asymmetric than gold. I mean, you know, call gold, let's say gold's at 4,000 right now. Do I think gold's going to go to 12,000 in the next two years? No way. You know, that's a three-bagger. But do I think that this is going to go from 60,000 to 180 in the next few years? Absolutely. I really do. And so, you know, and, and MicroStrategy is just a levered version of that. I mean, I see MicroStrategy going to 200 to 400 to 600 to 800, you know, and that's just with MNAV staying at one. I mean, if you expand the MNAV multiple, which would happen if in a bull market, it could go higher. So, you know, to me, it's, it, you know, you're, you're only looking at the downside. You're not considering the upside optionality in these things. And they're >> That's, that's not true. The whole world is considering the upside optionality in it. And, and all I'm doing is pointing out things that are inconvenient to people that don't look at the skeptical side of things. And, and I said, I'm, I'm not short MicroStrategy. As a matter of fact, I have some exposure to the long side to Bitcoin. And so, uh, you know, I'm not like, uh, I'm not talking my book here. I'm just trying to make sure that all of the cards are out on the table. And, you know, there's nothing hyperbolic or disingenuous about pointing those things out and having a >> There's nothing, there's nothing wrong with pointing out the risks of leverage. But if you actually look at the mathematical facts to suggest that the things, you know, in deep [ __ ] or there, you know, there are problems, it's doesn't line up with the facts. I mean, it, it doesn't, it's like you haven't gone and done the balance sheet analysis of what they've got. I mean, I, I've got a spreadsheet, an Excel spreadsheet model that I've built. I mean, Bitcoin's got to go down to 20 or $30,000 a coin and stay there for a bunch of years before this thing starts to really get into serious dilution here, you know, and, and to me, you know, have, have Sailor and Fong changed what they're focusing on? Yeah, they're learning as they're going along. I mean, this is a, this is an emerging space. You know, the, the facts on the ground are changing. I, I'm, I'm guessing that they had no idea that Stretch was going to get tested the way it got tested. I mean, I have to admit, I was, I was kind of shocked. I thought I thought the only way a 12% yielding preferred would trade down as hard as it did would be in a correlation to one event. And yet, you know, no, everyone got freaked out and and sold the [ __ ] out of it. And it went from, you know, par to 75 very, very quickly. I mean, that was like, wow, okay, that's, that's not good. What that, what that to me indicated is the mark was, and it happened after they used a lot of their cash proceeds in order to pay down debt. Um, it told me the market was saying to them, "Hey guys, you're way out. You're out too far over your skis. You know, you're too levered." And, and, and I think, you know, to their credit, they reacted and said, "Oh, okay. This is about." And my guess is what they're going to do now is they're going to sit on their hands for a while and wait for the Bitcoin price to recover. And by the way, >> That would be the smart thing to do. >> Yeah, it would be the smart thing to do. And by the way, they can do that. I mean, they've got, you know, 800 and some odd thousand coins. I mean, and the, you know, the notion that they're selling and that that's going to lead to some kind of a a big, you know, change in psychology, big. They sold one-third of 1% of what they own. One-third of 1%. This is not heavy selling. I mean, this is, and, and they've got 17 months of the dividend coverage. >> We just see that. We see that differently though. Like, I'm not talking about them, you know, moving the market, uh, you know, and coming in and brutalizing the bid and destroying the market, you know, with their sale. What I'm saying is now they're sellers and people are on notice that they can, that they can be sellers at any. And what I said in my article too was, if you're a holder of strategies preferred shares, there's a lot to like. This is about their new, uh, overhaul of how, right? >> You know, they can be sellers now. >> What I wrote was, um, uh, "It's a meaningful step forward. Uh, the company's creating dedicated cash reserves, formalizing its dividend policy, authorizing thousands of billions in buybacks, and introducing a more disciplined capital allocation framework," which I think is true. And I also said that I think that it is going to buy them time. So the idea that I'm out there, you know, saying the company's going under tomorrow, it's just not, it's just not there, you know. But, but what I am saying is, what I am saying is that I don't like how, like you just said, management, you just said, I assumed that management thought Stretch was going to stay at 100 for a while and then it didn't and it surprised them and it surprised you. And what I'm saying is that can happen also with the common, that can happen also with the price of Bitcoin. You know, there, there are a lot of things being built on assumptions of what has happened over the last 17 years. And again, the great adage in finance on every piece of financial literature you can find is, "Past performance is not indicative of future results." >> Right? And so there are a lot of beautiful charts and graphs and technical analysis. You know, I saw technical analysis on a million equities that, you know, I saw eventually go under because of whatever management wrongdoing or accounting fraud or whatever. And they ride the 200-day moving average and then they go straight down. And so, you know, technical analysis is a backward looking at, it's a nice guide. I get, completely understand your

chart that you posted and I'm going to just put it back up here again so that everybody can see it.

Completely understand this chart, right? Everything about this chart looks bullish. It looks like it's going to do exactly what you said that it's going to do. That it's going to make a little bit of a bottom here. God knows where. 30,000, 50,000, 60,000. It's going to stay there and then the next move is going to be up to 180,000. So, it's not like I don't understand where you guys are coming from because I completely do.

You know, but but my argument is, we've never been where we are right now with the equity markets in terms of valuation being stretched the way that they are, right? We've never had a buyer or seller of this size that has basically staked their whole reputation on being now, as we're saying, net buyers come out and say, "All right, well, we could also be sellers at the same time, too."

And they've also have, like I said, leverage and cash outlay obligations. As minuscule as they may seem to you right now, layered on top of that, there are obligations there, too. So, let me ask you a question. Is there a situation you can see where Strategy winds up going under but Bitcoin makes it for the long haul?

Oh yeah. I mean, well, I don't see Strategy going under. Okay. I I just say outright, I I think there's very low probability that Strategy fails. But I think Bitcoin's going to survive whether Strategy does or not.

And I think I think one of the mistakes a lot of people are making is that they're assuming that that Strategy is what's held up Bitcoin. And it really, it's it's a piece of it, but it's not it's certainly not all of it. Um, 4% it's just it's not that big a number. You know, there's the 96% is held by other people and the 96% is growing. And so, you know, I I don't see, you know, I don't I don't I just don't see it. I don't see that you need Strategy for Bitcoin to succeed. I think Bitcoin is going to succeed on its own merits and Strategy will be there and probably succeed with it. But um I could see, you know, if if for some reason Strategy were to really mismanage it, get way overlevered, we had a deep downturn and the whole thing blew up or whatever, I think Bitcoin would continue to live.

Um, because I think the idea of Bitcoin is it's a virus that's been planted and it just can't be stopped now. I mean, the the notion, you know, you see, we've just seen I mean, we've seen all kinds of use cases. I mean, that's one of the things to like about it, too. Yeah. is the fact that it will survive if people want it to survive. I've said also it's, you know, kind of the the digital equivalent of like power to the people because if the government bans it, it can, you know, it can show up somewhere else. So I I get that completely.

Let me ask you one more question. How you said you only think Strategy's kind of been an incremental part in being a buyer. How much how much weight do you think Tether has had in being a buyer also too?

I I think very little, actually. I mean, it's it's interesting, Chris. You know, the whole world thinks these stable coins are a big deal and thinks that, you know, and and Bent and and the whole administration has kind of pushed these stable coins as like they're going to save us and all. They're going to buy all these treasury bills as you know, they buy treasury bills. I mean, Tether buys gold too and gold equities, which we like. But um I I think that's kind of a to me that's that's like Doge. It's it's kind of a fantasy. I mean, these Tether and Circle are not that big. I mean, we're talking maybe $300 billion dollars in the context of trillions and trillions of dollars of financial, you know, markets. I mean, the Fed has got, you know, the percentage as a percentage of Bitcoin's market cap, which is a trillion dollars. That is substantial.

Well, yeah, but but but it's not it's not all, you know, it's not all Bitcoin. I mean, it's I mean, those guys, what they're really doing, they're not they're not, you know, they're they hold some Bitcoin, but that's not all that they hold. I mean, Tether really, what they really are to me, they got created when Russian Russian reserves got grabbed. You know, they're basically just a payment rail that allows the unbanked and the sanctioned to make payments. I mean, I I was in at the Prague Bitcoin show and I met some Russians and they said, "Look, when you guys shut us out of Swift, we had to figure, we were businessmen. We had to figure out how to pay for [ __ ] So, we got a Kraken account. We started using Tether, you know, and and so and Tether, you know, although Tether, I don't know the breakdown right now of all of Tether's reserves, but the vast majority of Tether's reserves and Circle's as well, as I understand it, are T-bills. It's not Bitcoin. So, so that 300 billion, I'd be surprised if 30 billion of that was actually, you know, in Bitcoin. I think the I think the vast majority of us have been buying T-bills and and of course that's why, you know, and they're hoping it'll grow, but actually I looked I checked this recently too, the in not by a lot, but in the last six months or so, um, stable coin volume or or total value of stable coins outstanding has actually gone down. So, you know, the the notion that stable coins are going to get huge and save us, save the Treasury bill market by buying up the $9 trillion that, you know, the Fed or the Treasury has to roll over every year. I mean, that's to me that's a fantasy. I don't think that's realistic.

Does Tether has still not had a full independent audit, right? They engaged?

I don't know. I think they were moving towards that. I I thought that was.

They did. I think they engaged Bo in March, but I don't think it's been completely.

Yeah, I thought I think they were moving towards that. I mean, you know, I mean, they basically came in from the cold and and as we now know, and actually this was relevant in the Iran situation, you know, they've now um they can they can see stable coins. So, stable coins, if you're, you know, if you're Russia, you're Iran or whatever, if you're an actor and you're you're worried about the hostile US, you know, in the olden days, if you were dealing with Tether, there was no way that they would grab. Well, I think that Tether ended up having to make a deal with the US government where that I've now seen and read and I believe it to be true that stable coins have actually been seized. And so, as you as it was interesting to me that there was some press to support it that when Iran started talking about charging tolls for letting people through the strait, you know, the immediate discussion was and it's going to have to be paid in Bitcoin. And the reason for that, I mean, there's there's the beautiful use case, right? Because you cannot seize Bitcoin unless you have the keys, whereas you can say seize a stable coin. So you know I I I think state, you know, money that's, you know, sanction-proof, you know, state control-proof, fixed in supply, you know, easy to store and easy to move. So, in a sense, really like digital gold. It's just to me, it's just a no-brainer that it's the next step in money and it's the future. And it's sad that guys who totally get the Austrian case like Peter just, you know, rail against it and fight against it. And, you know, the amount that he's cost gold people who've listened to him, it's just it's tragic because, you know, in my view, it is going to ultimately be become equal to to gold, you know.

Right. First off, I always take exception. He says this too. Other people have said this to say he he's cost people. People make their own financial decisions. You know, he's he's not out there placing trades for people. People are well within their.

Sure sound and sober minds to take everybody's opinion into account, including Peter Schiff's, and put them next to Tom Lee or, you know, Michael Saylor, like like I've done, like I've done and listen to the cannon of their works. You know, I've listened to probably a hundred hours of Michael Saylor talk about Bitcoin and I watched, you know, Safedine Amos on Lex Friedman's interview and I looked at the Bitcoin standard. So, people are well, you know, he's not coming to people's houses and.

And it's not to say and it's not to say that he's going to be wrong for the long term. He's just hasn't been right about its price to this point. And that that's a fair point. That's a fair point, you know, but.

After after after se after 17 years, when do we decide he's finally got it wrong? I mean, look, the, you know, no, people make their own investment decisions, but if you're in the investment business and you've given advice for 17 years that's dead ass wrong, well, then you're wrong. And but.

And people and people who've listened to you, it's cost you money. And that's and I I know a lot of gold people who come up to me and say, you know, I wish I'd listened to you instead of Peter.

You know.

What about the fact that he called out Alex Mashinsky for running essentially a Ponzi scheme and that's great. Two, three, two, three months later, Alex Mashinsky's company gone bankrupt. He was.

That's great. That's great. And there are a lot of Bitcoiners who called him out. You know, Corey Clipston and all theirs. I mean, there are a lot of us who called out FTX. I mean, there there were Bitcoiners who went to the SEC and the Justice Department and said FDA, you know, Bankman-Fried is a fraud and they didn't listen.

Right. And so so he's just, you know, I think he comes by. I think he comes by his opinion. Honestly, I don't think.

That's fine. That's fine. But, you know, and and you know, so I mean, at at 25 years, will he still have the chance to ultimately be right? I mean, I suppose so. And if you look at it that way that it's someday it's all going to collapse. But, you know, he he doesn't even know that the the definition of a Ponzi because by definition it is not a Ponzi. It you know, it's a neutral monetary protocol and there's nobody running it. There's nobody, you know, a Ponzi scheme involves somebody who's, you know, taking money out as they bring new investors in. There's nobody doing that here. So, you know, it's just, it's it's disingenuous. It's disingenuous and it's wrong and it's about time that he admit it. But, you know, if he wants to continue to believe it's going to collapse, so be it. You know, it's it's it's just not correct.

Well, you know, it hasn't it hasn't been.

It hasn't it hasn't been for se for 17 years. It has not been correct. And I, you know, if if if you want to make that argument, I would say, okay, please explain what's changed that's going to make it go in that direction. The only there are only two possible reasons why it doesn't work in my opinion. One is technical, you know, difficulties, which, you know, I think 950,000 plus blocks in 17 years leads me to believe that they've got that ironed out and I'm not at all worried about quantum based on what I read. And then secondly, you know, that adoption, you know, people just get bored with it and adoption slows. And that's the, you know, that's the argument made by Grantham, you know, that it's just going to waste away. And yet, you know, okay, that's an argument for sure, but show me where that's happening. Show me where fewer people are buying it. I mean, we've now got central banks testing it. I mean, the Czech central bank had a a pilot, you know, test of it. I mean, it's just it's being the usage is just growing everywhere. So, I don't see it. I just don't see it.

Yeah. I mean, look, those are fair points. I understand where you're coming from. You know, would you agree that Peter understands economics in general?

Oh, yeah. Yeah. No, I agree. He's a decent Austrian economist. No doubt. Um.

Would you agree that he understands, you know, history and money and the history of money?

Uh, I would Yeah, I would agree with that. Certainly up until the point when Bitcoin was invented. Yeah.

Okay. So, you know, it's really just your your beef with him really is just his opinion on Bitcoin.

Well, yeah, but I don't think his opinion on Bitcoin is based on on facts. I mean, I think he's I think he's conflated. Well, if he's if he's got a good understanding of, you know, Austrian economics, like you just said, and he's got a good understanding about the history of money, which you and I both know he does.

Right? You we both know that he understands what he's talking about when it comes to basic economics and economic history.

Right? So, you know, you're both kind of looking at the same facts and pulling different opinions from it is what's happening. So, you know.

Well, I obviously except except there's there's one substantial difference.

This interview kind of like calling him out a couple of times trying to figure out.

You just have a difference of opinion.

No, Chris, we don't. There's a difference of facts. I've been right. It's gone up for 17 years. He's been wrong.

That's a difference. That's a factual difference. That's not an opinion.

Over the course of 17 years, it's gone up. Yes. But like you just said, if you bought it at 120 and it's.

Massively. That that that is a fact.

That's not my opinion.

No, no, no. Sure. But but you we're talking about the future, right? We're talking about where the price is going to go.

The future.

He's forecasting that it's worthless and you're forecasting it's going to a million or whatever. Right.

Right. That's correct.

Right. Okay. And we won't know until until a couple years from now, but a couple years from now, we'll have the same discussion and there'll be there'll be more facts that I think will support my side of the argument.

Hey, and look, to be honest with you, I hope you're right. You know what I mean? Like, I I really like I don't really care whether or not this thing goes to zero or it goes to a million. I just don't think that like giving management of of Strategy a free pass is.

It's it's not it's not really a free pass. I mean, I look definitely No, it's not. I do. I think they've done everything perfectly. No, I don't. There's there a lot of things they've done that I don't agree with.

You know, the AI slop and a lot of the way they, you know, that he markets it. I'm not, you know, I'm not I'm not wild about some of that stuff, but, you know, that that it's not a free pass, but I think that they've they've been very very adaptive to market conditions and they're pioneering a new strategy. I mean, this is a new asset class.

And a treasury company is a new strategy. I mean, you know, no pun intended. Literally, this kind of thing never existed. Nobody I mean, he's doing a a you know, a speculative attack on the dollar. It's it's.

For sure.

You know, right? And and so nobody's ever done that before. And so, you know, can can he make missteps? And do they have to maybe change the, you know, the strategy a little bit or or the the messaging a little bit? Yeah, they do. and they but I'll say this, I mean, I think they've learned, you know, along the way and I think they've been very quick to adapt to whatever the market's telling them and, you know, my view is and and you you can see to this yourself, I mean, you know, the the steps they've taken make this, you know, the preferred look a whole lot better than it used to look, right? I mean, it it was the right way to behave given what happened to the preferred.

So.

That I that I agree with. Yeah, like is it, you know, of course, because they're they're deleveraging a little bit by selling some of their Bitcoin and raising cash. So like obviously there's a better way to shore up their balance sheet as I wrote. But what I'm saying is like it's still very highly dependent on the price of Bitcoin.

No, at the end of the at the end of the day, if Bitcoin doesn't work, Strategy fails and Strategy fails faster than Bitcoin.

What if Bitcoin goes to 15,000?

Um, if Bitcoin goes to 15,000, you know, the Strategy shareholder is going to be severely diluted. I think I think the company will probably make it. I mean, you know, Bitcoin going to 15,000 probably implies that that Bitcoin is failing, but I um, but I don't know. I mean, it's, you know, the the history thus far has been that every low has been higher than the prior low in each cycle.

That's true.

And so, by quite by, you know, by a substantial amount. And so, you know, I think going to, you know, I mean, going to 40 or 50, okay, you know, that's possible. I don't think it's likely, but it's possible. But I I do believe that ultimately, you know, we'll be back on, you know, going to the next high. And, you know, this to me, this is just, you know, the adoption. I mean, it shows you just how early we are in the adoption of this thing as as a, you know, as digital gold or as a monetary standard. I mean, you know, most people don't understand it. You know, most people can't handle the volatility and, you know, that is what it is. But it, you know, the characteristics of it, they they just sit there. It's there and it, you know, um, you can trade on it. You know, it's it's immutable. It's, um, you know, it's non-sovereign, etc. I mean, it's and I, you know, I know I know you say you don't care whether it wins or loses, but I can't, if you're truly the libertarian anti-statist that I believe you to be, my gut is you actually hope that it wins because, frankly, it's a sharper spear than gold. And if we want to kill the fiat monster, Bitcoin's got a much better chance of doing it than gold because of the way they corrupted gold. So.

Well, I I I concede that like I, you know, I'd like it if it if it won. That'd be great. you know, if it replaces fiat and solves the the problems that we have that that fiat have created, you know, with basically living in this unlimited inflation era that we live in now that just continues to enrich the, you know, top 1,000th of a percent of people and brutalize the lower middle class. Like me and you agree on almost everything, dude. Like, absolutely. We almost agree on everything. And from day one, that's why I get all these stupid messages. people like, "Oh, you know, you you you used to be really bullish on Bitcoin. Now you're not." It's like, no, I'm making a lot of nuanced points that are offending people because they're emotionally invested in Bitcoin. And what I haven't said is, "Oh, I think it's going I think Bitcoin's going to zero or I hope [clears throat] it doesn't make it." I've never said any [ __ ] like that.

All I've said is I think Fong Lee is full of [ __ ] You know, and like that seems to be the key point that me and you were disagreeing on, you know, like and the one thing the one thing I said on Fred Krueger's spaces the other day that of course everybody [ __ ] took big offense to was, "I don't know." They asked, "Well, where's it going to be in 18 months?" And I said, "I don't know." And he said, "Well, do you agree it's a good buy at the 200-day moving average?" I said, "I don't know." Because we, you know, to be making technical analysis on a 17-year-old asset class that you and I both know, we don't know which way it's going, if it will, if adoption will continue or if it doesn't. Sure, you think it's more likely that it's going to survive than it isn't, but [ __ ] happens sometimes. For me to come out and forecast it's going to be X on X date like he does on his Twitter, it's just not me. And that is what people took great offense to. You know, that the fact that I, you know, that that I came out and said I don't know when really nobody knows. It's not just me. I'm just I'm just the only person saying I don't know. Everybody got it all [ __ ] figured out.

I don't have any problem with that. I don't know. I don't know where it's going to be. I I tend to believe, you know, absent some significant change, which in the adoption pattern, that it's going to continue to do what what it's done for 17 years, which is go up and to the right. Now.

Do you think an equity market crash could?

Oh, absolutely. I mean, look.

Could affect the adoption pattern?

Uh, not entirely. I mean, I think it, you know, but the I think it could hit the price. I mean, look, it in a correlation of one event, um, it's going to go down. I mean, it's liquid, right? In fact, it's arguably it's one of the most liquid things out there. You can sell it very, very quickly. You sell it 24/7. I mean, you can't access your bank account over the weekend. You can sell this thing. Um, I remember watching it in 2020, uh, when, you know, that whole thing when COVID broke out and and, you know, they all got hit right before Powell came in with his anything it takes speech. And, you know, I I it got hit about the same as gold at the time as I recall. You know, they all kind of got sold as did stocks, as did bonds. In fact, the bond market went no bid, which is part of why he came out with his speech. But, um, and so, yeah, if we get another one of those events, sure, it's going to be very, you know, it's going to be very volatile to the downside very briefly. Um I think that, you know, what we saw there and and we saw that same thing in '08 and it's what I wrote about in my book and because those were the first two big prints is that we know with great certainty that the policy response to a correlation of one event and a drop of 40 or 50% and all the assets in the world all at the same time, you know, leads to one thing. They're going to run the press printing press incredibly hot and.

Right.

You and the minute we know that they're going to, you know, all those assets, you know, uh rebound in price and go on to new highs. I mean.

I remember in '08, you know, um, I had a friend who was in the gold stock management business. His fund went down 60% in three months and, you know, and once the crisis was resolved and the money printing started, it also went up 100% in the next four months. So, you know, that kind of stuff happens and and it could happen in this asset as well. But, you know, I'm not I'm not playing to make money in three months, six months, one-year time frames. I'm playing for five and 10-year time frames. And, you know, I the money, you know, I want to I want my money to be in things that can't be printed. And, you know, the the two that the three that really qualify are gold, silver, and Bitcoin. And so, because I'm pretty sure that, you know, where the policy response going to, I mean, it's look, it's an evil and dreadful game that the central bankers play on us, making us go through this [ __ ] and making people suffer through it and and throwing everybody off the scent. And, you know, it's just it's it's horrible. It's absolutely horrible. It's it's equal to the way they've screwed the lower middle class by making them pay 24% on credit cards when Wall Street can borrow, you know, at basically the Fed funds rate. I mean, it it's all a criminal system set up by these insiders who, you know, get rich off it. And uh and that's what we're trying to kill. And the way to kill it is to is to opt out of it. And the only way to opt out of it is to store your savings and things that they can't print. You know, again, gold, silver, Bitcoin. So, and I, you know, the great thing about when Bitcoin came along, I think you'll agree with this, is there weren't many of us Austrian economists back when we were just in a gold world because we were weirdos.

[laughter]

I do agree with that and I and I wrote on more than one occasion that like one of my favorite things about Bitcoin coming to prominence was it shoehorned a giant monetary policy lesson into the brains of a million people in the younger generation.

Exactly.

And so I I loved that and as a matter of fact I.

Yes. And it and it continues to be great because like with the last round of printing, you would see all these memes and stuff popping up basically just ridiculing Powell and ridiculing the central banks for just printing unlimited money. So I think it has already done a great service in that regard. And in fact, I wrote an article when I first wrote right after I wrote the article why Bitcoin and went on McCormick's podcast to give my again nuanced keyword take on why I was buying Bitcoin at the time.

Yeah.

But I wrote an article thereafter called the catalyst that I think could standardize Bitcoin. And what the article basically said was if we have another Zucati Park Occupy Wall Street type of austere moment in markets and in the economy, which of course is going to happen. The only question is how long will it take the Fed to react. But if that happens again, people are going to very vigorously and seriously look for an alternative. And that is a situation where I do think adoption and standardization could happen. Do I think it'll definitely happen? No. Is it possible? Yes, that is a situation where I see it poss being possible. And again, I have written that I think it is the digital equivalent of the phrase power to the people strictly on the fact that it, you know, the adoption is going to tell the tale going forward. Absolutely.

Having said that, price is an enormous psychological factor. So much so that Safedine Amos said to Peter Schiff in February of this year during a debate that if the price goes to $15,000, he will admit he was wrong about Bitcoin and and it will say that that like upended the case for for Bitcoin going forward.

Possibly.

Well, no, I know. No, I know he said that. That's what he said.

I know he said that. I don't I don't actually I don't actually agree with it. I think it could go to 15.

You don't you don't have to agree with him. He's one of the top people in the Bitcoin space and that that was his sentiment. And so the point I'm trying to make is that a lot hinges on price. Remove Strategy from the equation. There is an enormous psychological element to this thing. And all I'm saying is we have to be mindful of that also because if the if we get a 50% drawdown from here, you know, and we go to 30,000, which might not happen. We might, you know, but just as quickly as Fred Krueger can say on a spaces the other day, hey, if this thing if Bitcoin doubles, they can just retire the preferreds. It's like, yeah, you know, and if and if it goes down 50%, they can't retire the preferred. Like anybody can speak in like best-case scenario.

AB: Absolutely. Well, none of us none of us know what's going to happen to the Bitcoin price and the models are just models and they could be broken. But.

Right.

But it does come down to adoption and if you do look at what it is.

You know, I I think that over time more and more people are using it and, you know, it it's I mean, it reminds me, you know, I remember the Amazon case. I don't know what you were investing in at the time. I looked at Amazon a lot of times as a potential investment. I was a, you know, I was a tech investor and I was believe I believed in growing things that grew. And, you know, what the, you know, what the negative always was on Amazon, Chris, was that they weren't making any money.

Yeah.

That anybody could give away, you know, could sell dollar bills for 90 cents and, you know, that's a good business, right?

Yeah.

And and because of that argument, I I passed on Amazon. It always just seemed too goddamn expensive, you know? I was like, well, where the hell's the earnings power? And what I didn't realize is that once you've once you've got the entire, you know, it is the monopolist strategy. Once you've got the entire marketplace, well then the earning, you know, and there's nobody around to compete with you anymore. You put all the small retailers out of business. Well, guess what? You know, suddenly you have earnings, you know, you have pricing power and suddenly you have really big profits. And right, of course, web services came along, a lot of other things. But the point is that, you know, it it's, you know, we're we're in that early adoption stage where there's a lot of FUD still left and, you know, people aren't necessarily I mean, there were a lot of people regarded it as a risk-on asset as a, you know, a as a strategy, it was part of it was the triple Q's all over again, all that as a tech investment, you know, and all the web three bros, I mean, all that crap. No, it's really just digital gold. It's the only asset. It's the only financial asset with a fixed supply and, you know, it's immutable. It's been working for 17 years and, you know, it's got a lot of advantages over gold in terms of its ability to, you know, transact quickly and be stored for nothing and be verified very quickly. And so I think.

Real quick, just just on what you just said about another risk that people aren't talking about. You know, you said all right, you think we're still very early on with adoption. Somebody who wanted to argue with you would say, "Hey, like we have the most pro-crypto president in history uh in right now. There there's been there probably no other better single human being on earth other than Michael Saylor to be at the helm of the presidency for crypto right now. Do you see Democrats winning in the midterms, House seats, Senate seats, or winning in 2028 as a risk? Because I just wrote a like a week ago an article trying to fact.

That.

The Democrats may come in and make this their issue because it's Trump's issue, right? And so like do you think that they could try to throw a wet blanket on.

Oh, absolutely. But yeah, so let me let me give you kind of a nuanced answer first. Let me counter your view that this is the best president ever for for crypto and for Bitcoin. Okay. Who's been better than him?

Well, um, I don't know. I mean, arguably somebody who wasn't, you know, there there haven't been there's only been him and Biden, but the point is since well, and Obama, I guess, since the since Bitcoin existed. But the the fact of the matter is that I I would, you know, he's been a net positive in the sense that he has not, you know, he wasn't Elizabeth Warren cracking down on crypto, but he's been a huge net negative in the sense that he's been an enormous grifter with Trumpcoin, Melaniacoin, World Liberty Financial, and all the other [ __ ] you know, and and and all the he just reported how much money he's made off of all this. And, you know, that's extremely negative. And one of the biggest problems that Bitcoin has had to deal with ever since its inception is that Bitcoin and crypto are not the same thing. Crypto is often very fraudulent, very bad. And that's what Sam Bankman-Fried was all about. Bitcoin is actually a a digital innovation. It's the creation of digital scarcity. It's a network that nobody owns or controls. And, you know, a large number of people have come to believe that it it's a store of value. Um, you know, the fact that we have a president who allowed it, that's good. Um, but the fact that we had a president who was an enormous crypto grifter, that's bad. And that crypto grift, you know, it rubs off onto Bitcoin. A lot of people look at that and they say, "Oh, well, that's just part of Trump and Bitcoin. I hate Trump and [ __ ] Bitcoin." So, so I would argue that he actually hasn't on balance been all that great for for Bitcoin. Um, you know, and I certainly don't think he's been that great for crypto, although he's he's a perfect example of what crypto is all about, which is just, you know, fraud and [ __ ] Um, you know, to your point about the the Dems coming in and getting after it. Yeah. I mean, there's there's no doubt that, you know, they see how much money he's made on it. They see, you know, CZ getting a pardon. They see um, you know, World Liberty Financial and what his sons have taken out of it. And, yeah, they're very likely to to to want to go after that in some way, shape, or form. Um, the problem they've got is that the horse is out of the barn. And, you know, now BlackRock runs an ETF and uh I mean an ETF, Fidelity runs an ETF. You know, millions and millions of their constituents own it, you know, and by the way, it's ultimately uncensorable. I mean, they could go and grab the ETFs and that's a, you know, that's a 6102 risk. But um, you know, that's I think that's unlikely to happen. And more importantly, you know, self-custody Bitcoin they'll never be able to grab. So, you know, while I think that they'll probably come after crypto in some ways, um I'm not sure how that extends to Bitcoin and, you know, if they'll be successful at getting after Bitcoin, I don't think they will be. Um, probably the only thing they could do is is, you know, try to tax it heavily. But again, you know, if you've got it in self-custody, um, you know, that they can't take those coins from you and and the whole notion of trying to tax something that's unrealized is is pretty difficult. So, I think it's going to be able to weather any political storm going forward.

So, we agree on everything.

The literally the And let's just run down the list real quick and then I'm gonna let you go. All right. So, get get a stipulation out there because this is.

This is the discussion that almost uh caused us to stop talking to each other, which would have been cool. You know what I mean? Like, you're talking I got I got your book on the shelf right there. I came. We we do we do agree on everything except except for Fong Lee. I think Fong Lee is an honest actor and you think he's a bad guy. But that that's okay.

I didn't say I didn't say I think he's a bad guy. I said I think he's talking out of both sides of his mouth and I think that he's he's giving the company that he's giving the company a credibility problem. But we both admit that we don't know where the price is going to be 18 months from now. We both we both think that the equity market could pose a risk to to the price. We both we both agree that adoption is the is the key metric with Bitcoin and that there's a huge psychological element to that, right?

Yeah. Yeah.

Okay. We both agree that the rest of the crypto ecosystem, which is about a trillion dollars worth of air, is in fact more than likely air and [ __ ] Right.

Yep. Right. Yep.

Okay. So, we pretty much, you know, pretty much agree on almost everything.

The only thing the only the only difference and we both agree that layering debt obligations and cash outlay obligations on top of MSTR Bitcoin pile gives it makes it a riskier investment. Absolutely. Though though it is not likely to go under tomorrow or the next day or next week.

That's right. I mean, there's no.

The only thing we disagree on is whether or not Fon Lee is talking out of both sides of his mouth.

I think that's right. I think that's right. And I think and I think that to the to the to your point on leverage, it's a fair point. And I think what the market just told them was, "Guys, you've gone far enough." You know, the the selloff in STRC, I got to believe that shocked the [ __ ] out of them. I know it shocked the [ __ ] out of me. And it was a it was a wakeup call that, hey, hang on a second. you know, this this whole strategy of getting all levered up. That's nice and it's going to work really well on the upside, but, you know, be careful because you get too far out over your skis and you got a problem. And it forced them to have to change their communications. There's no doubt about it.

Well, let's not forget, Chris, that, you know, we're sitting here talking about all the downside and I get all of that and I I get your skepticism. I know you were a professional short seller at one point in time and I understand it. I understand you're you're, you know, you're looking at management teams and saying, "Hey, this guy's talking both." I get that. Okay, fair enough. Um I I don't see it quite the same way, but fair enough. Let's not forget the potential upside here. Okay. [laughter] There there actually is really really substantial upside. I mean, you know, the leverage implicit in in in Strategy is about 40% of the leverage in BTC. Now, I've often said to people, you know, Bitcoin is such a a volatile asset, you don't want to use leverage. And I do believe that. and my Bitcoin stack is much much larger than my MSTR holdings. But I do have MSTR holdings. Why? It's kind of like, you know, you probably own a bunch of stocks that you know are solid and are going to grow at 10 to 20 or 30% a year and then you own a few things that are real flyers that if you're right about them, they'll be 10 baggers, right?

And if you're wrong about them, maybe, right?

Yeah. Yeah. If you're wrong about them, it's 5% of your portfolio. It's not going to ruin your life.

And that's kind of how I view MicroStrategy. It's a levered call option on the underlying Bitcoin. And I'm telling you, if Bitcoin does what I think it could do.

You know, it'll go up two or three and MicroStrategy will go up six to 10x.

I agree.

And so that that's why that's the case. But what do you what do you, you know, in in so doing, you know, what do you I mean, and I'll tell you, I'll confess my average cost on it right now is about 130. And I'm looking at my screen today. It closed at 93. So, I'm down nicely on my average and I own a lot of it. So, you know, I'm down very nicely on my average cost. I started buying a while ago. I thought at the last earnings call, I think it was I I was very convinced it was had a lot of upside. So, I started buying. I took a meaningful position and here I am and I'm down. But, I'm not selling it, you know, and in fact, I recently bought a little bit more, just a little and um, you know, here we are. And and so, you know, I'll either be right or I'll be wrong. I mean, if if the whole thing doesn't work out and it's a goose egg, so be it. I mean, that's certainly one of the possibilities. Or it's a possibility that we have a market blow up and a correlation of one event. Bitcoin goes to 40 and this stock will probably get cut in half. I mean, the $85 it's at right now, it'll probably go to 40.

Yeah.

You know, I don't think I'll sell it because I don't need to sell it. But on the flip of that, you know, let's just So, that's the downside. I could lose another 50% of my money from here and that would at 40 that would take me down hell, I'd be down 70% on my initial on my 130 cost. Okay, but let's let's play the other side. Let's say, you know, Bitcoin finds a bottom around 50 or 60, which I think it might. And then let's say, you know, a year a year and a half from now, Bitcoin's at 180. You know, MicroStrategy is 6 or 700.

I agree with you.

Right? [laughter] And 6 or 700 when it's trading at 80 or 93 right now. H that's interesting, [laughter] you know? So, so that's kind of the bet, right? I mean, it's just it's just an economic bet based on where we think the price of Bitcoin will go. Yeah, I'm not bullish on it. You know.

I I totally understand it. I said I have exposure to the long side and I don't want to say that there isn't a bull case because there is.

Yeah.

The the only thing is all day, everywhere you look, everywhere you go, you get the bull case.

I get it.

But but you don't get you don't get people pointing out little things like, "Hey, they removed Bitcoin yield from their tweets." or hey, he said four months ago on CNBC they're not gonna sell and now they're and now they're selling. There's a million people out there that'd be happy to tell me, well, they're they're they're not net sellers for the quarter or they're not net sellers for the year or it could go to 600. My only gripe is to to even just come out and not even be outright bearish to just say we don't know where things are going to go and this is not as sure-fire risk-free of an investment as a lot of people are making.

I get it. No, I I think.

Which is why I wrote that which is why I wrote that piece because in this market environment.

Look, I think you're doing listeners a service on on balance. I really do. Um and I just, you know, I think I think my my general belief is is that it's going to work. I think you're a little more skeptical than I am on that and that's fine.

Sure.

And that's that's okay. And, you know, look, I mean, the proof will be in the pudding.

Yes.

You know, and and if and if I'm wrong, I'll confess I'm wrong. I mean, we'll, you know, we'll have to go and see. I mean.

I hope I'm wrong and everybody gets rich. I really do.

Yeah. Well, it's, you know, we we'll just have to see. The market the market will tell us. But, you know, my my view is it's a very interesting situation. I think it's one of the more asymmetric bets right now. I mean, just as an aside, you know, I think some of the silver stocks are also very very asymmetric bets right now. I mean, you know, silver was stuck, as you know, at $50 ceiling for 40 years. Broke out, went to 120. Okay. Got ahead of itself. corrected back to 60, but the history of a breakout is you don't correct back to the you come to the base and then go below the base. No, we're, you know, the next leg up is going to take silver to 200 or 300. And, you know, the silver stocks are trading like we're going back to 50. And so, you know.

While I see a 3x upside in Bitcoin and a 7x upside in Micro Strategy, I got a lot of silver stocks where I see a 5x upside, too. So, and I think I think honestly, you know, you said before, well, you know, is gold really going to go up 3x. I actually think it could. I think on the next big print it will. I think Bitcoin will probably Bitcoin, you know, if Bitcoin has not lost confidence by then, it it will probably outpace it to the upside.

Let's specify a couple things. Let's specify just I think because I think there are two potential models for where we go here. I think one is just, you know, worse cuts and, you know, they're going to I mean, we all agree they're going to kind of try and run the economy hot. I mean, Trump has said he wants to have 13% GDP growth. Well, you can get 13% GDP growth, but it's with high inflation. Okay.

And so, let's say they kind of they do the the run it hot strategy and they lie about the inflation. The task force they have to that's they have to, right? So, I think in that case, you know, gold goes to 7,000, 6,000, 7,000. Which is, you know, that's up 70% from here, but it's not it's not 12,000. Okay. Um, and I think in that case, Bitcoin goes to call it 150 to 180. Okay. So, that's a that's a 3x from here. Okay. Good.

Um, let's say something really breaks like, you know, the bond market pukes and just, you know, Japan blows up and everything blows up and and we get, you know, big print number three because one was 08 and number two was 2020. And now we get the third one and Fed balance sheet's not going to be at 6, 6.7 or anything. It's going to 18. Okay. Like it's very clear, you know, they come in and they're just fire hoses of money. Okay. In that case, yeah, gold's going to 15 and Bitcoin's going to four or 500, you know, and silver is going to 500. I mean, that that that's kind of a new and and at that point in time, I think the entire and and by the way, the stock market, you know, maybe it goes up, maybe it doesn't. Probably goes up in nominal terms, but I don't think it keeps pace with these other two things. And the reason for that is just that, you know, the inflation is going to be so high that that's going to eat into corporate profits. So, you know, because if you look at the 70s, you know, the stock market kind of went sideways, right?

So, so I think in that scenario, um, you know, it's all going to go a lot higher. And at that point in time, everyone's going to realize we got a real monetary problem. And hopefully, you know, the the Warren Davidsons and the Thomas Massies of the world are going to step forward and say, "We got to do a monetary reform because that's the solution. The underlying solution to this entire friaking problem is a return to sound money." And and that that's one thing I think Peter and I would agree on and he knows that. I know it. All Austrians know it. And so, we got to get there to have a better world. And we will get there. The problem is these bozos who are running the show are going to make us go through all these other steps first. And we got to try and protect our wealth in those other steps, right? And it's hard. You know, it's really, really hard. I mean, I, you know, I feel sorry for, you know, people and, you know, I feel sorry for those who don't get it. And even those of us who get it, I kind of feel sorry for all of us because these guys are making us go through, you know, a goddamn roller coaster ride. And they've been doing it for 20 years and they're going to continue to do it until we fix it. And so that's that, you know, that's the bright future that I think we all have to look forward to in this fourth turning. We return to sound money. But, you know, unfortunately, I don't see us that's not happening tomorrow. It's going to take some time, right?

Well, we agree on everything. We agree on the direction of the economy. We agree on what the proposed solution is going to be. I think we both understand what's going on here. Literally, we just have this small little wedge in between us. Yeah. Because I look at an asset, you know, that's 17 years old and say there's more risk here than people are letting on. And you look at it and say it's the future. And you know, we can both be right. It can be the future. And there can be more risk than.

Well, that's right. I mean, look, look, the I mean, we are both right. It is risky. The volatility tells you it's risky inherently. Okay. So, you're right about that. And I've always said to people who ask me, "How much should I buy?" I say, "Buy an amount where if it goes down 50%, you won't panic, right? Because in the longer run it's always gone to higher highs and higher lows and I believe that pattern will continue. If that pattern gets broken I'm wrong, you know, we we'll have to see and and you could be right. That pattern could get broken. There's no ironclad law model, technical analysis, anything that proves that pattern will be broken. It all comes down to adoption. We agree on that. So, no matter what you think about this or equities or macro or any of those things and no matter what I think about, none of this is ever personal. We're here to try to hash out what the is going on in the world. I love you as a person. I'm consider myself lucky to be your friend. I love your book. I speak very highly of you to everybody, you know, and so uh and I appreciate I appreciate you talking to me. the the the feel the feeling is completely mutual and I respect what you do and I think you're doing a great service and I you know having having a skeptic you know or a devil's advocate is a good thing particularly in the investment you know if everybody's what is it who some great general said if everybody's thinking alike then somebody's not thinking you know and so.

Yeah, I put that in the presentation actually that was in my gold presentation in 2018 that I did. Yeah, I mean, you're you're you're providing a great service and so I, you know, as long and we keep it respectful and and look, let's just see what happens. I mean, I, you know, I think over I think over time, you know, I think over time I'll be right and but I but there's certainly the possibility that, you know, we could have there could be some rough sledding between here and where we get to. I'm the first to admit that and and you point that out and that's a good service to your listeners. So, I think people need people need to be prepared for volatility. I mean, I I would point people to, and I think you're aware of it, the Murmuracan chart that shows how volatile, you know, the the German mark was from 1918 to 1923 when it failed, you know, in gold terms. I mean, there was just incredible volatility. And sadly, I think we're going to have to endure some of that as well.

Yeah. Well, the Chinese say, "May you live in interesting times." So, ju just uh let's not stop the dialogue. All right, brother. We'll talk again in a couple months.

Okay. Sounds good. Sounds good, Chris. Thank you.

All right. Thanks, Larry.