0:00

So I love cycles. Like I said, I'm kind of working on this

0:02

big thesis pulling a few different cycles,

0:04

and I love them because you can kind of use

0:06

this historical reference to kind of maybe help

0:08

predict the future a little bit. And Mark Twins says, it

0:10

doesn't repeeve it a rhymes. That's a big value

0:12

problem of bit coin is that there's a limited twenty

0:14

one million supply. Now, there had to be a

0:17

certain way to issue those coins until we reach

0:19

that mark. And what Sotshi

0:22

came up with was an idea where every four

0:24

years, the number of newly issued

0:26

coins per block, every ten minute approximate

0:28

block is reduced by half what

0:31

we're seeing across all markets. And I

0:33

am really the base of economics is people rushing

0:35

to scarce assets. You could almost

0:37

look at this kind of like Radalio's short and long

0:40

term debt cycle theory, where he's got these oscillating

0:42

waves of short term debt cycles and you've got the long term

0:44

one. I talk so much about how much

0:46

how many dollars have been created by the FED, but

0:49

bitcoins that a global reserve asset,

0:51

and so it really you need to look at the total amount of global

0:53

dollar but then COVID hit and that's like a

0:55

mega, mega bearish event.

0:58

But that bearish event brings in focus why

1:00

bitcoin is valuable. You don't have to

1:02

trust your government, you don't have to trust banks.

1:04

It seemed to kind of actually respond like gold

1:06

did um has done. If we look

1:08

at gold compared to stocks, and like the two thousand eight

1:10

crash, um, it takes an initial dip

1:13

but then immediately rebounds really quickly.

1:15

A lot of folks think, oh, it's a store

1:17

value asset, it's a risk

1:19

off asset. It must perfectly be like

1:22

have a perfect, perfect inverse

1:24

correlation with the markets. Well, nothing perfectly

1:26

does that. It there's there's an evan flow

1:28

to how prices move relative to other asset prices.

1:31

What happened in golden bitcoin in March twelve, that

1:34

was a liquidity crunch. Uh,

1:37

investors across the world, we're gonna be margin called

1:39

because a lot of the institutional folks go a leverage the juice

1:41

the returns they're getting margin called,

1:44

and they were selling anything they could, even

1:46

safe haven store value sets assets

1:48

like golden bitcoin. Hey everyone,

1:50

welcome to another episode of the Market Destructor Show.

1:52

And today I am joined by Dan held for

1:54

a second time. He's the director of growth Marketing

1:57

at Cracking. Um. He's really good

1:59

at mark keting, but he's also really good

2:01

at forecasting or talking about where

2:03

some of these kind of trends that are growing are

2:06

going. And so M he's written a bunch of papers.

2:08

If you haven't seen him, you definitely should. Will link to the latest

2:10

one down below. But Dan, thanks so much for joining

2:13

Mark. Thanks for having me excited to jam

2:16

on a couple different topics today. Yeah

2:18

awesome. So, UM, I know you're the

2:20

director of growth marketing Cracking, but you've

2:22

also been involved in a lot of other

2:24

roles inside kind of the bitcoin space

2:26

as well. UM, maybe just give us a little

2:28

bit of background on, like you know, what you've been

2:31

working on, Like how long you've been doing this kind of thing? Sure?

2:34

Yeah, so I've been in the crypto space eight years, which

2:36

kind of makes me a dinosaur. Yeah, I'm

2:38

thirty three years old and I've got gray hairs. I don't know if

2:40

you can see it on my webcam.

2:43

I've got some gray hairs coming in. Um,

2:45

I sort of stumbled and bubbled my way into tech. I

2:48

would use this as a word of encouragement for folks who

2:50

want to get into tech. It's definitely possible. UM.

2:53

I was formerly worked on a small investment

2:55

firm. I built a mobile app

2:57

with my buddy. It was an app that was called zero block

2:59

at real time market data news feeds, kind

3:01

of like a block folio equivalent in terms of functionality

3:04

and popularity. Back in we

3:06

got up watching dot com.

3:09

From there, tried out different

3:11

hats of product marketing, growth marketing, and

3:14

UM product across a couple of different crypto

3:16

companies. I worked at Uber on writer growth

3:18

and growth marketing team, so over at HQ. From

3:21

there, came back to came back to Bitcoin

3:23

crypto, co founded a company we got

3:26

bought by Cracking. At Cracking, I

3:28

stood up the growth marketing team and

3:30

that's how I'm here today. But yeah, my my marketing background

3:32

has been kind of a fun mix of working and

3:35

UM different crypto companies, working at companies

3:37

like Uber, and then also my personal

3:39

brand. So it's it's been pretty exciting. Yeah,

3:42

and yeah, you've you've been working on your personal brand

3:44

doing a good job with that. I've I've been impressed, and I'm a

3:46

marketing guy as well, so that's cool. UM

3:48

So someone that's been around for this long. I

3:50

mean, you've you've seen a lot, right. Uh,

3:53

it doesn't sound that long, but it but it is

3:55

right when you look at the time that bitcoin has

3:57

kind of been here. UM. So

3:59

I want to jump right in and hey,

4:01

guys, let me just interrupt this interview real

4:03

quick, just to plug the show sponsor, and

4:05

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4:10

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not a taxable event. You can use that debt for anything

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that you want, including to live off of, to leverage

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up and buy more, or roll it into another asset.

5:00

UM. You can do something like I've done recently, like sell

5:02

some real estate put that money into bitcoin.

5:04

Now as that bitcoin price has risen, I'm able

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you can do this UM. And Block five is

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So check out block Fine, now let's just start talking

5:29

about um kind of the space and talking

5:31

about the cycles. UM. So it seems

5:33

like and I know you've done extensive research

5:35

and writing on these subjects, and so that's why I love having

5:38

you on to talk about this kind of stuff. But UM,

5:40

right now, obviously bitcoin has

5:42

is in this bowl market cycle. UM, it's

5:44

it's starting to attract a lot of attention right

5:46

now. Um, but it seems

5:49

like there, you know, there are these cycles and and I'm actually

5:51

working on the big thesis about all different types of

5:53

cycles. But bitcoin has these cycles that like

5:55

seem to operate in four years based

5:58

off of having cycles. Um, you want

6:00

to just explain that for a little bit. Yeah,

6:03

So for those unfamiliar, those who may be new to bitcoin,

6:05

bitcoin has an issuance curve. So bitcoin

6:08

are issued over a certain curve over

6:10

a very long period of time, and

6:12

bitcoin will be issued until we hit a twenty one

6:14

million hard cap. That's a big value

6:17

prop of bitcoin is that there's a limited twenty

6:19

one million supply. Now, there had to be a

6:21

certain way to issue those coins until we reach

6:23

that mark. And what Stoshi

6:26

came up with was an idea where every four

6:28

years, the number of newly issued

6:30

coins per block every ten minute approximate

6:33

block is reduced by half, and

6:36

that that happens until it's like an asum totic

6:38

curve, until it hits twenty one million at a very

6:40

far day in the future. Now, when

6:44

we look at bitcoins price in

6:46

conjunction with these havings, so the

6:48

moment in which that reward has dropped,

6:50

or that subsidy duly minted coin is

6:53

dropped in the block reward. We see

6:55

a corresponding bull run occur a

6:57

year or two later, and this is

7:00

ocurred three times now. So you could say

7:02

it's coincidental. You could say

7:04

it doesn't predict the future, but certainly

7:06

it means something because we see bitcoins

7:09

boom bus cycle or a big bull run and

7:11

then a drop correspond from that. You

7:13

go having

7:19

ten bull run, having

7:22

bull run, having and

7:24

now we're in the middle of a bull run. So these

7:27

cycles are kind of like the micro

7:29

cycles of bitcoin's economy, um,

7:31

and they've largely let a lot of development volume,

7:34

users interest, and we're in the middle

7:36

of one right now. Yeah, So I

7:38

love cycles. Like I said, I'm kind of working on this big thesis

7:41

pulling a few different cycles, and I love them

7:43

because you can kind of use this historical reference

7:46

to kind of maybe help predict the future

7:48

a little bit. You know. Mark Twain says it doesn't repeat it at rhymes

7:50

um. And so if we look at that, now,

7:52

three havings is not a lot of data.

7:54

I mean, it's not conclusive evidence, but it

7:57

is something, right, It's all we have, Um,

7:59

it looks cych um that we kind

8:01

of have. Maybe it peaks out about eighteen

8:03

months after the Having cycle. Um,

8:06

is that kind of what you've seen through your research. Yeah,

8:09

I mean there's a window of time that

8:12

it typically peaks within. And there

8:14

are the last two cycles there have been a certain

8:16

amount of you know, they're within a few months of each

8:18

other or within a few days. Actually I forget. I

8:20

forget how granular it gets. I forget, you

8:22

know it Also it depends on do you do.

8:25

Do you look at the cycle based on the Having

8:28

to the top of the cycle, or do you look at the bottom

8:30

like the bear the lowest part of the cycle to

8:32

the top of the Having. And so I forget

8:35

which one has which sort of time period. But yes,

8:37

generally a year and a half and a half

8:39

and we're looking at the peak of the next bull run. I think it

8:41

was May that we had

8:43

the Having, so a year plus that is May

8:47

add add three to six months and

8:49

we're looking at Q three Q four. Right.

8:53

But um, you know, one of the things I really

8:55

want to dig in with you today is that you wrote you wrote

8:57

a paper talking about a supercycle,

9:00

and so obviously we're having cycles, and there's

9:02

three cycles that we've had so far, but

9:04

you have this thesis that there's this super cycle.

9:06

I like, I like that word. It sounds sounds

9:08

pretty dramatic. I think a lot of people like that. Um.

9:10

But I guess I guess that's kind of

9:13

sits on a premise that maybe this time

9:15

is different. I've been saying quite a bit that

9:17

the world we're going into is not the one we've come out of,

9:19

right, the FED, COVID, every change

9:22

everything. But you also kind of agree that

9:24

maybe I think, for your paper, um,

9:26

that this time is different, and maybe this cycle

9:28

is going to be quite a bit different than the last ones. I

9:31

totally agree. I do think this cycle is different.

9:34

And what's funny about data

9:36

is if you wait till you have all the data, then the moment

9:38

is probably too late. Right, So, when it comes

9:40

to investing and when it comes to product decision making,

9:42

because I've worked on both products and marketing teams,

9:45

you have to operate with limited information.

9:47

That's always the operating environment. You don't

9:49

have perfect information. So, yes,

9:51

we've got a couple havings. We've seen a couple of

9:53

bull runs. Some go, well, we

9:55

don't. This is you know, data science wise, this

9:57

isn't correlated. I'm like, that's

10:00

the best we've got, and it's pretty good.

10:02

And certainly there's some qualitative reasons

10:05

because we've got the quantitative side. There's a qualitative

10:07

reason why, um, these cycles

10:09

occur. Now, is this cycle different than the

10:11

other cycles? This

10:14

is where I coined the term supercycle most

10:17

people, by the way, and I'm not even sure if you know this. I

10:19

coined that term in during

10:22

the bear market. UM I wrote

10:24

in the Held Report, my weekly news that are I

10:26

wrote in December the

10:29

sort of revisiting of the

10:31

um of the supercycle theory.

10:33

Now in twenty you were kind of you were back then

10:36

and you were kind of predict predicting

10:38

that we were going to go into that at some point. Yeah,

10:41

And so I think that gives it a lot more credence than a

10:43

lot of people thinking thinking that I made it up during the bull

10:45

run, because it's easy to be bullish in the bull run. This

10:47

was in the middle of the bear market where

10:50

I basically postulated that what

10:53

if this cycle, what if bitcoins microcycle,

10:56

this four year boom and bus cycle, what

10:58

if a boon correspond with a macro

11:00

bust, a macro recession, a

11:03

macro depression. So macro would be like the

11:05

mainstream financial world, your typical

11:07

they typically have eight to ten year cycles. You

11:10

could almost look at this kind of like Ray Dalio's

11:12

short and long term debt cycle theory, where he's

11:14

got these oscillating waves of short term debt cycles

11:16

and you've got the long term one. This is bitcoins

11:19

equivalent of that. So if you're Raydalio fan, I think

11:21

you'll find this analogy kind of fun um.

11:23

And what I hypothesize is if we have a recession

11:25

while bitcoins in a bowl run, that is

11:27

the make magic moment. And Bitcoin was born

11:30

in the two thousand and eight financial crisis as

11:32

an antidote to poor central banking policy. But

11:34

Bitcoin's existence has been in largely a

11:37

very very productive bull market.

11:39

So what happens when people start to question the nature

11:42

of their money and question the nature of their government's

11:44

control over money, then Bitcoin's

11:46

value props shines the most. And that's what

11:48

we have now. COVID, I

11:51

mean I put the COVID. It was a negative

11:53

event. I'm not trying to celebrate COVID. COVID

11:56

certainly made people go wake up and

11:58

go, wait a second, I'm not sure if I can trust

12:00

my government with my money, and it just takes

12:02

that sort of moment. But this was much more intense

12:04

than I even hypothesized, because

12:07

I was like, Oh, there'll be a normal recession, we're due for

12:09

one. But

12:11

then COVID hit and that's like a mega,

12:14

mega Barish event. But that Barrish

12:16

event brings in focus why bitcoin is valuable.

12:19

You don't have to trust your government, you don't have to trust

12:21

banks, and that's where

12:23

the supercycle theory, I think has a largely

12:25

got a huge check mark from that event. And

12:29

there's other check marks too that we can dig into later,

12:31

but that one on a micro macro cycle.

12:34

I think like we're having a Bitcoin bowl run in

12:36

the midst of a moment when everyone

12:38

comes to realize the value of bitcoin. I

12:40

don't think we're going to see a normal price movement

12:42

of We can go into some

12:44

numbers, some of the predictions that you know,

12:46

I would say an aggregate analyst are predicting,

12:49

Yeah, yeah, I want to dig into that. Well, well, we're

12:51

gonna leave that towards in make sure everybody sticks around

12:53

and listen to kind of those numbers of where we

12:55

were maybe we're going. But I

12:57

guess to kind of dig into what you said, obviously

13:00

that makes sense, right, people are all of a sudden

13:02

starting to go, what the heck is happening to our

13:04

money? The money sippply was created

13:06

the last twelve months, all those things. UM,

13:08

So I think I think there was that distrust that was like

13:10

the psychological factor. But then we did

13:13

have six seven trillion

13:15

dollars dumped into the markets, so

13:17

we have we have that as well, So I think it's kind

13:19

of it's getting it from both sides, right, a rush

13:21

of liquidity into the markets. Um. And the

13:23

other thing I think is that what we're seeing

13:26

across all markets, and i'm's really the

13:28

base of economics is people rushing to scarce

13:30

assets. And so we're seeing

13:33

you know, the best beach runner lake from property

13:35

going up way more than other properties,

13:37

for example. And so bitcoin

13:39

might be the most scarce financial asset,

13:41

and maybe that's one reason why it's going to more than others.

13:45

Certainly bitcoin's moment to shine

13:47

as a twenty one million fixed supply comes

13:49

into focus. In this sort of moment, we're seeing

13:51

other scarce assets like gold and real

13:54

estates start to go up in price. Two. I'm

13:56

going to Austin this weekend of visits of friends, and

13:59

I've noticed that the apartment

14:01

has come back. I'm I'm moving

14:03

out there in a month and a half. Yeah,

14:06

it's it's already set in stone. We're just figuring out where

14:08

we want to live. I did a scouting

14:10

mission before in terms of checking out different neighborhoods,

14:12

but now it's time to go put some ink on

14:14

paper and make it happen. So I'm thrilled.

14:16

I'm a Texan. So I've been out in California,

14:19

in San Francisco for eight years, working in tech.

14:22

Still gonna work in tech. It's time to come home.

14:24

Um, tax wise

14:27

and personal belief wise. I just feel like I'm more

14:29

comfortable out there. Um

14:32

when it comes to you know, the what

14:34

we're seeing is, you know, when we look at inflation

14:36

numbers, and we look at inflation calculations like CPI,

14:39

they don't include a lot of metrics

14:42

or a lot of prices that are inherent to living. They

14:44

exclude some of these costs, which is ridiculous,

14:47

Like, for example, they only include rent, but they don't

14:49

include the the rise in

14:51

in the average home price. So

14:53

we're seeing acid bubbles occur in equities

14:56

and in real estate, where it's

14:58

very symptomatic of all this money

15:00

printing. And by the way, I looked this

15:02

metric up recently, it's twenty five trillion

15:05

dollars that have been printed globally during

15:07

COVID by governments trillion

15:10

and bitcoins only at a trillion dollar market

15:12

cap. Yeah, these are the sort of moments

15:15

when you just realize the size and the enormity

15:18

of the value prop for a bitcoin, the the

15:20

total dress ball market of what bitcoin

15:22

can evolve and grow into in terms of size.

15:25

Yeah, that's a great point. You know, I talked

15:27

so much about how much how many dollars

15:29

have been created by the FED, but bitcoins

15:31

are a global reserve asset and so really

15:34

you need to look at the total amount of global dollars

15:36

and so that's a that's a great point you bring

15:38

up. Now, Um, you did mention that bitcoin

15:40

was created, you know, in the two thousand nine kind of as a response

15:42

to two crash um, and so it's

15:45

it's you know, pretty apparent that bitcoin hasn't really

15:47

seen a big bear market, and so

15:49

you know, there's always the debate between you know, is it risk

15:51

on, is a risk off? You know, where does that fit?

15:54

Um? But I think that you know, what happened

15:56

last year and that COVID plunge or whatever you want

15:58

to call that, it seemed

16:01

to kind of actually respond like gold did

16:03

um has done. If we look at gold compared

16:05

to stocks, and like the two thousand eight crash, UM, it

16:08

takes an initial dip but then immediately

16:10

rebounds really quickly. And Uh,

16:12

I think we kind of saw that. Does that kind of

16:14

give you maybe a little bit of taste of what we may

16:17

expect from that in the future. Yeah, great

16:19

question. So a lot of folks think, oh, it's

16:21

a store value asset, it's a

16:24

risk off asset. It must perfectly

16:26

be like have a perfect, perfect

16:28

inverse correlation with the markets. Well, nothing

16:30

perfectly does that. There's there's

16:32

an ebb and flow to how prices move relat to

16:35

other asset prices. What happened

16:37

in golden bitcoin in March that

16:39

was a liquidity crunch. Uh,

16:42

Investors across the world, we're getting margin called

16:44

because a lot of the institutional folks go leverage to juice

16:46

the returns. They're getting margin called

16:48

and they were selling anything they could, even

16:50

safe haven store value sets assets

16:53

like golden bitcoin. So I

16:55

think that um, that moment

16:57

was a good example of a liquidity crunch, not necessarily

17:00

a lack of confidence in bitcoin or gold

17:02

as a global store of value asset.

17:04

Um, what's kind of cool about bitcoin is that bitcoin

17:07

as referenced by Jerome Powell, the Chairman

17:09

of the Federal Reserve, he states

17:11

that bitcoin is a speculative store of value.

17:15

I think that encapsulates this perfectly. It's

17:17

inherent properties make it a good long

17:20

term risk off asset, but

17:22

it's price volatility is

17:24

very much a speculation

17:27

as to its future utility of a store of value

17:29

asset. But what's funny is that

17:31

this speculative nature of bitcoin is entirely

17:33

how we heard about it and how it is gains adoption,

17:36

price goes higher. You hear about it, you talk

17:38

about it, you buy it, you tell your friends about it,

17:41

and the loop continues. It's a viral loop. It's essentially

17:43

a viral loop baked into bitcoin. And

17:46

um, you know, when we look at this

17:48

from how does like

17:50

a money go from zero? From a white

17:52

paper and a group of

17:55

nerdy dudes who want to talk about cryptotomy.

17:58

Hey, sorry to interrupt this video just one more

18:00

time. I'm not running Google ads, so it's actually

18:02

way less interruption than I normally would have on a

18:04

video. UM, and that's because it's sponsored by

18:06

block five. UM. They are opening

18:09

up the world of bitcoin and financial products

18:11

offering to pay you interest on your

18:13

bitcoin. Um better than own in a rental

18:16

property that you have to manage and control and have the risks.

18:18

You can just earn interest on it, or you can

18:20

leverage against it. Now, I plan to hold

18:22

my bitcoin forever and literally never

18:25

sell my bitcoin. So how do you do that? Well,

18:27

if I need money, I don't want to sell that bitcoin.

18:29

I'm gonna pay tax on it, all right, I'm gonna

18:32

end up with less and I don't have the bitcoin anymore.

18:34

So a better way to do it is to borrow

18:36

against the bitcoin. So I've put all my

18:38

money into bitcoin. If I want to buy a car,

18:40

or I want to buy a house, I can borrow against

18:43

it at very very low competitive

18:45

rates. Get my house, get my car, whatever that

18:47

may be, and get to keep the bitcoin.

18:50

I've done a whole video on this. You

18:52

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18:54

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18:56

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18:59

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19:01

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19:03

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19:06

free bitcoin just for using that link. And that's

19:08

it. Let's go ahead and get back to the interview biography.

19:10

How does it go from that to the mainstream? And

19:12

bitcoin has done this through these speculative cycles.

19:14

I don't use the word speculative and a negative connotation.

19:17

It's simply people discovering discovering

19:19

bitcoin to discovering why it's valuable. Some

19:21

stick around it because they realized the value. Some

19:24

just came in to speculate. Um.

19:26

But yeah, with this, you know, Bitcoin I

19:29

think is increasingly being recognized as a

19:31

goal two point oh. And this was a checkmark for the

19:33

supercycle theory. In no

19:36

one recognized bitcoin is gold two point other than

19:38

us, other than us, other than

19:41

our our group of believers. All

19:43

the institutions though you've got, You've

19:45

got investment banks, hedge funds,

19:47

and hedge fund managers who are legends. Tesla

19:51

micro Strategy either putting bitcoin on their balance

19:53

sheet. These are gigantic check marks for like a

19:55

supercycle theory. Now again, I'm not saying

19:57

it's likely to happen. I'm saying it could happen.

20:00

You know, big bitcoin moves in mysterious

20:02

ways. Who knows how what the future holds.

20:05

I can't predict the future. I'm just describing

20:07

a potential outcome that no one

20:09

was describing at the time, because I think

20:11

this time might be different. But yeah,

20:13

I mean we're seeing every institution across

20:15

the world say bitcoin is gold two point Oh, I've

20:18

waited eight years to see this moment. This

20:20

is not like the other cycles, the other cycles

20:22

where we were considered bitcoin

20:24

is considered a very risky investment that only

20:26

retail traders get into. No, you've got

20:29

like giant investment banks going oh

20:31

yeah, Bitcoin's like gold. Yeah, this

20:33

is huge. This is a huge moment, a huge

20:35

moment for a bitcoin. Yeah. I think, um,

20:37

you know, obviously we don't we don't know the future. But looking

20:40

at cycles and understand how technology rolls

20:42

out, and I'll understand all these different things that gives

20:44

you different perspectives and so um, I always

20:47

like take like the macro view because, UM,

20:49

I think it's easier to kind of see the future, the

20:52

long term future than the short term future. And when you see

20:54

these actions being taken, as you said, by

20:56

these institutions, you know where that leads

20:58

to eventually. But before we get into

21:00

that, I want to I do want to talk about, um,

21:03

how the makeup of the people

21:05

in the space has changed and what that means for the

21:07

future, because I think that really builds into that super psychle

21:09

But before we do that, UM, having

21:11

you know, someone like you that's been in Silicon Valley

21:13

for this long, UM, it's it's

21:16

interesting and I'm curious your perspective on this because

21:18

you mentioned Jerome Power calling it like a store value.

21:20

I think China came out like last week and said

21:22

it's like a store of value. I mean, we're seeing that from

21:25

these even City Bank and JP have been coming out

21:27

and kind of saying these things. But yet we still have all

21:29

these other people like, uh,

21:31

you know, whether it's Mark Cuban or we

21:33

have you know, seemingly very smart

21:35

technology driven people. Um

21:38

tally recently came out the same thing is that

21:41

it's it's not a currency,

21:43

it's not a store value. It's too speculative,

21:46

and it seems that like they've completely

21:48

forgotten that technology has to evolve,

21:51

Like just because it's not something today

21:53

doesn't mean it's not going to be something in the

21:55

future. So, as a Silicon Valley kind

21:57

of tech guy, what's your thought on that? Yeah,

22:00

there's a couple of things here. One to address the val Tildy

22:03

question, where a lot of people are just kind of put off by that,

22:05

Like, how did you think how did you think any major,

22:08

gigantic valuable company ever got

22:10

that big right? It wasn't a

22:12

nice, perfect linear function from zero dollar

22:14

market share to like a one dollar markets

22:16

or two dollar markets, you know, it was like these ebbs

22:19

and flows of investor interest and

22:21

execution. Bitcoin in a

22:23

similar function, does that, you

22:26

know a silicon value though it's been a little bit disappointing.

22:28

Silicon Valley tech people inherently

22:31

don't get bitcoin their first

22:33

inclination. And

22:35

I wrote about this too because it was a

22:37

very rare thing and a bunch of folks agreed

22:39

with me too, which at first I wrote this and I didn't. I

22:41

was like, man, I'm I gonna put myself out here and are people

22:43

are gonna be like cool? Dan, that's a nice

22:45

opinion. A bunch of people in tech

22:48

who are in a bitcoin came out and they were like, this

22:50

is exactly how the system works. Silicon

22:53

Valley has two primary uh

22:55

function to primary players vcs,

22:59

so venture capital or people who fund startups

23:01

and startups. Vcs

23:04

are constantly looking at what's next, whatever

23:06

is hot they want to pile in on. They

23:08

don't care, and most of them aren't subject

23:11

matter experts. They can't be experts on every single

23:13

sector. So they either outsourced

23:15

that bringing people, or they just choose a theme.

23:18

They're thematic. It's a thematic investment into

23:20

a R v R, drones, bitcoin,

23:24

chat bots, you name it. And

23:26

what happens is you go deploy capital and the

23:28

vcs, no one out of a hundred make it. So they

23:30

just look for whatever is hot, super hot,

23:33

and and they put in capital there. It was

23:35

one of the most disappointing things to find out ever about Silicon

23:37

Valley. Venture capitalists are not risk

23:39

tickers. Risk tickers at all. They

23:42

claim to be, but they're not. Yeah, so

23:44

what happens is they will

23:46

never go against the grain versus all the

23:48

other vcs. There's top it's

23:50

like a top four VC couple of VC firms,

23:53

they choose what's hot. And

23:55

if they don't choose what's hot, what happens is

23:57

that the LPs, so the investors in your fund,

24:00

they go, well, why aren't you talking about this other subject

24:02

that they're talking about. Why are you investing

24:04

in something else? That's not

24:06

the common narrative, And it's very counterintuitive

24:09

because you would expect vcs to be into

24:11

contrary and investments. That's the whole point,

24:14

right. What happens is that they're beholding

24:16

to the LP still and the LPs will give them

24:18

a lot of uh, you know, they'll

24:20

they give them a lot of ship if they don't get into these

24:23

like more thematic plays that are endorsed by the hot

24:25

hot vcs. There's also a joke,

24:28

you know, if you get into there's the hot

24:30

vcs, and if you can get in with them,

24:32

it's kind of like the same no one ever got fired for buying

24:34

an IBM. Well, no one ever got fired

24:37

for investing alongside a

24:38

six, right, so

24:40

the same. So that was kind of a big element.

24:43

And I'll weave this all together at a big point here pretty quick.

24:45

So that's a big element that they're not contrarian, and

24:48

that they're largely chase narratives, and the narratives

24:50

evan flow very quickly. Like does anyone

24:52

anyone talk to talk about chatbots? Yeah?

24:56

Remember that whole trend for a while, super hot

24:58

or a r v R. I'm not wearing

25:00

an air headset and I'm a gamer, like and I've

25:02

got a high. Do you think it's also though,

25:04

because like, um, why the medical

25:06

industry won't embrace CBD, you

25:08

know, or you know, cannabis right

25:11

because they it's natural. They can't own it. There's

25:13

no money to be made there, so they want to they want

25:15

to create their own version of uh, you know,

25:17

a synthetic version of it. They can patent, is

25:19

it something maybe like that where you know vcs they

25:21

can't make any money off bitcoin, so they want to create

25:23

the next all cooin kind of thing. Yeah, that's

25:25

certainly an element. I think part of this as well

25:28

is like um, VCS prescribed

25:30

the narrative to bitcoin that like, oh, bitcoin

25:32

is good to disrupt PayPal. Vcs

25:34

don't even grock the idea of like disrupting

25:36

governments, and that is that is

25:38

next level, like next level revolutionary,

25:41

and how do you make money? Off that. You

25:43

know, they can't really go pitch their LPs. Hey,

25:45

I bought bitcoin. It is hoddled. You need

25:47

to be an active investor, actively investing

25:49

in companies. And what's interesting

25:51

is that hoddling Bitcoin will likely outperform any

25:53

company that you invest in the crypto space. So

25:57

it certainly has. It certainly has

25:59

even coin based I think it's maybe on par

26:02

like the best performing startup in crypto.

26:05

I think like if you look at Series A check or

26:07

seed check to I p O, bitcoin

26:09

is still outperforms, which is wild, which

26:13

is nuts, and your risk is far lower

26:15

with bitcoin. So yeah, one they can't make

26:17

they can't make money off of it. To the themes have ebbed

26:19

and flowed and they don't really rock Bitcoin's

26:21

corps, Like how do you make money on Like I want to disrupt

26:24

the government, Like they

26:26

can't go pitch their LPs like you. By the way, bitcoin

26:28

is gonna disrupt central banking and make all the banks

26:30

ops lead. Also it's gonna remove power of government

26:32

to do all these things. These the LPs,

26:35

I think they're nuts. So they latched

26:37

on the narratives like cheap PayPal replacing

26:40

visa replacing master card, which were totally

26:42

incongruent with why bitcoin is valuable.

26:45

And then you also have like dats decentralized

26:48

dat platforms, but you could own the token, so you

26:50

do. The vcs could eventually take their little

26:52

cut, right, so the ebbs

26:55

and flows of the space, the vcs latch

26:57

onto whatever narratives are hot, um

26:59

and so bitcoin's narrative. Bitcoin is old

27:01

and boring and that's why I don't like it. And

27:03

then you've got the operators. So

27:06

when you're an operator, you constantly have to ship and build.

27:09

So cracking is constantly building

27:11

new apps, new sorry,

27:14

new functionality to go execute and compete

27:16

against coin base. If we don't execute, then

27:19

coin based well, and we're gonna be left in the dust. So

27:21

you have to constantly iterate. That's

27:24

tech, that's tech mindset. With money, you don't

27:26

want to tinker with it all the time. Bitcoin

27:29

needs to stay ossified. It needs to be slow

27:32

moving and eventually become ossified because

27:35

that ensures that trust can be built around

27:37

this open this open network, this open

27:39

framework versus a weather

27:41

app. You need to keep pushing a new update to it to

27:43

make sure that people find it relevant and useful.

27:46

Um. So for money, it's the opposite. You don't

27:48

want to touch it a lot. And that's where they

27:51

don't like bitcoin, but they like ethereum

27:53

because ethereum is constantly tinkered

27:55

with, and tech builders are tinkerers.

27:57

They want to tinker with everything. They want to tinker with the monetary

28:00

policy, they want to tinker with like block

28:02

time, they want to tinker with proof of workers at prove mistake.

28:04

Constantly tinkering and tinkering and tinkering, and

28:07

the idea that a product could be perfect

28:09

or a a protocol could be perfect is

28:11

unfathomable. They're like, no way, they're they're they're

28:13

like, that's that's impossible. There's no way that the

28:16

first try you got it right. They

28:18

don't. You don't You don't see them going and tinkering

28:20

with the t c P i P, you know, Internet protocol

28:23

Um. They're tinkering with all the things that are built on top of

28:25

that. So maybe that's also an evolution

28:27

thing. So over time they're gonna, Okay, well accept

28:29

this protocol and we'll just tinker with what's on top of

28:31

it. Totally exactly.

28:34

That big one is like a t c P i P. You don't

28:36

tinker with that. However, most younger

28:38

developers weren't even around back when TCP,

28:40

t c P I P was was talked about in debated

28:43

versus other protocols. So I mean,

28:45

actually, I think if you're around then you're probably pretty

28:48

old. Like if you were in your thirties and forties

28:50

when they were discussing that might

28:52

be so old that you're not on social right. So

28:54

like there's a whole generation of kind of lost context

28:56

there. But there's been some really cool

28:59

folks on in the big points space. We've pulled out old

29:01

debates and old I think there was one

29:03

that was kind of like a joke, like a

29:06

joke comic book about how many protocols

29:08

they were thinking of doing. They were thinking of doing protocols

29:10

for every type of application back then, and

29:12

instead they just came up with t c P I p UM.

29:15

There's more nuance of this and a lot more to dig get

29:17

on in a lot of context I'm leaving out. But yeah,

29:20

essentially you've got a bunch of like more like front

29:22

end front end devs who are building they're

29:24

building io s apps and web apps, and they're

29:26

like, oh, I want to tinker with stuff, you know,

29:29

They don't think about the implications of like the protocol

29:31

level, which is like, this is a huge responsibility.

29:34

This isn't your fucking weather. App Like, if

29:36

you mess up something, you've got the entire world's financial

29:38

system building being built on this. This isn't

29:41

it's not going to break and you can just fix it, you know,

29:43

like if you break it, you might lose trust for forever.

29:46

And almost no engineers in the world, a

29:48

very few operating that premise maybe

29:50

like aircraft aircraft, software engineers

29:53

or you know, they have to think about crazy

29:55

up time to ensure that everything, like a

29:57

plane doesn't crash with people on it. Type

30:00

of engineers the right wants to think about protocol design.

30:02

Yeah. Yeah, that's that's some good context. Thanks

30:04

for sharing that. Let's say, let's pivot into back

30:07

to this this supercycle. So um

30:09

I think you know, and if

30:11

you were around in seventeen,

30:14

it was like, obviously it's like retail fomo.

30:16

All the individuals are coming in and that that's interesting

30:18

in itself how it was the kind of the first time that

30:21

retail had come to technology before the institutions

30:23

and funds um But at

30:25

the same time we were talking all the institutions are gonna come. They're

30:28

gonna come. But now we've seen

30:30

a completely different type of buyer,

30:32

and I think that really feeds into what you're

30:34

calling this supercycle. Absolutely.

30:36

Yeah. The market before was retail retails,

30:39

individual like Mark and I who were not

30:41

we're not professional. I don't know if market is or

30:43

not, but you know we we don't want run hedge funds,

30:45

um and and

30:47

so the institutions had largely stayed

30:49

out of bitcoin, and in seen where like, the institutions

30:52

are coming, the herd is coming. It

30:54

was a little too early. Now the herd is

30:57

here. The herd is storming through the house. We

30:59

can hear the herd, we can smell the herd. The

31:01

herd is here, and um,

31:04

this represents a huge moment for bitcoin, not

31:06

just because the institutions, and I'll get

31:08

to the second part in your second it's the institutions

31:12

bring about large amounts

31:14

of capital which gets deployed in a

31:16

bitcoin. They bring around large amounts of

31:18

stability in terms of infrastructure, but

31:20

the legitimacy factor I think a lot of

31:22

bitcoiners are underestimating. Look,

31:24

guys, I'm a libertarian. I'm

31:27

a libertarian freedom fighter to like corporations

31:30

buying bitcoin is not a bad thing. They can't

31:32

do anything if they buy bitcoin. They can't change

31:34

the protocol, they can't change the governance.

31:37

We still control bitcoin. But they're opting

31:39

into our free world. This is a great moment.

31:41

These institutions are opting into a world that we

31:43

designed of permission less nature.

31:46

Um, they're not going to change bitcoin, it's not possible

31:48

given how bitcoins architected and we are the resilient

31:51

core, and that won't happen. But what the

31:53

bitcoiners don't realize is that by institutions

31:55

buying bitcoin, now more

31:57

retail will buy bitcoin. Because retail

32:00

it looks to institutions for legitimacy.

32:02

You know, they're not libertarian like us. They don't question

32:04

the nature of the reality. So when these trusted

32:06

institutions like banks by bitcoin, then

32:09

they buy. So now we're hitting

32:11

that moment and that stride in the market. These

32:13

institutions are buying bitcoin, and retail

32:16

goes wait a second. These institutions are the smart people

32:18

that I trust. They started to buy bitcoin,

32:21

and so that's why this could all feed into a supercycle

32:23

where we've never had that before. We've had a very

32:25

small retail segment, a retail segment that

32:27

was very risk on. They were willing

32:29

to reject institutional buy in,

32:31

reject government buy in. And

32:33

now we're starting to get that, which I think increases

32:35

the legitimacy of bitcoin in the eyes of the retail trader.

32:38

Yeah, so the retail trader, I mean, they came

32:40

in chasing pumps. So you know, at the end of seventeen,

32:43

their their friends said, oh, I just turned five thousand

32:45

and twenty, so they jumped in. But

32:47

as soon as it started going down, they didn't understand

32:50

why they bought. They just thought they were going to make it

32:52

rich overnight. As soon as you started going down, they sold.

32:54

So that not only did it push it up faster, but

32:56

it also brought it back down faster. That's why the volatility

32:58

is always the most at the top. But then, as

33:01

you're kind of explaining, now, with these institutional

33:03

investors, you have like not Warm

33:05

Buffet, but like Warm Buffet's own Coca

33:07

Cola since like the sixties, like they

33:09

buy things like Forever and so

33:11

um. You just have a different makeup of the person

33:14

there um, And so they're not quickly

33:16

that they understand why they're buying. They're not buying

33:19

to make twenty grand and if it automn if it starts

33:21

dropping, they don't automatically sell out. So I guess that kind

33:23

of changes that volatility kind of curve for that sharp

33:25

ratio totally. Yeah, definitely changes

33:27

the volatility structure. I think bitcoin

33:29

is still gonna be volatile, quite volatile compared

33:31

to other currencies and other assets for

33:34

some time, but it certainly changes the

33:36

the the holdler mix, the mix

33:38

of individuals buying bitcoin, and I do

33:40

think most institutions will skew towards a

33:42

longer hoddle period than a retail trader.

33:45

Retail traders typically fomo in because their

33:47

buddy told them about it, and then they're

33:49

not very convicted, you know, the nor are they managing

33:52

people's money to where it like a

33:54

hedge fund manager or fund can hold onto

33:56

it for a longer duration and they have an investment

33:58

thesis um And they were like,

34:00

sure, we'll wait five years, and the vcs holder

34:02

their investment for five to ten years UM.

34:05

Now, headpunds are the same thing as vcs, but

34:07

in a similar vein there can they have a can

34:09

they have a conviction in this trade and they're gonna

34:12

go with this investment thesis and they're gonna

34:14

go do it. I was a retail trader wakes

34:16

up and they had two cups of coffee and they bought bitcoin,

34:19

and three days later they're drunk with every buddies at

34:21

the bar and they panic sell. You know, so they're

34:23

quite a different dynamic. The other thing I

34:25

would say is that you know, kind of like

34:27

what you were saying about the vcs, where nobody wants to

34:29

be the first guy, and then they all want to jump onto the trend.

34:32

I think that we also see the same thing with the funds and institutions

34:34

as well, where nobody wants to be the first guy. But once

34:36

the first guy buys a little bitcoin and they outperform,

34:39

then everybody else has to jump in, and then

34:41

that kind of becomes this self fulfilling prophecy. More

34:43

people jump in, they outperform. More people jump

34:46

in, they outperform um. And we see

34:48

that now I know, we've got to kind of start wrapping this up,

34:50

so maybe we can just kind of move along,

34:53

um where this cycle

34:55

takes us and kind of what you're thinking now, Michael

34:58

Sailor said that like all models are broken

35:00

at this point, which you know might be true.

35:02

You're kind of saying the same thing right this time is different

35:04

or whatever. Um we've heard.

35:07

You know, Cathy would from ARC said that she

35:09

she thinks that SMP five companies

35:11

should put ten percent of their treasury in it, and

35:13

if they did that, it puts it to five hundred thousand dollars

35:15

a coin. Seems pretty logical, Michael

35:17

Saylor. You know she's just going to three hundred chillion,

35:20

and and there's there's reason behind that. But in

35:22

this cycle, kind of what are you what are you

35:24

thinking or seeing? Yeah, so, I mean

35:26

if we talked, if we look at historical cycles

35:28

and project the future, we would see between

35:30

a hundred and three three hundred thousand dollars a

35:32

bitcoin. This is also what a lot of analysts

35:34

are predicting based on on chain data, etcetera.

35:37

Typically, if everyone's guessing the same thing, it's probably

35:39

not going to be that. It's probably not what's going to happen.

35:42

Um. So that's that's kind of how what's to define

35:44

is like the classic outcome here, the supercycle

35:47

outcome would be anything above like three d thousand

35:49

up to like a million. Think, well, there's

35:51

no limit to it, but I think anything past

35:53

a million would be insane. Even

35:55

people think about crazy to even say a million or half

35:57

a million, But I think anything around there

36:00

the half a million to a million dollar range would be in like super

36:02

cycle territory. Um I'd

36:04

say, like entering that is a cycle that was

36:07

predicted to be much smaller but was bigger

36:09

than expected. Or it could

36:11

be a normal cycle and there's no bear

36:13

market or a limited bear market, so it

36:16

goes to two hundred dollars bitcoin and only

36:18

drops to two and stays

36:20

flat to the next bowl run something

36:22

like that. You know, something that's very atypical,

36:25

so basically doesn't break the pattern, does it break

36:27

the mold. I think we've got all the elements

36:29

that show that this time is different. We'll

36:32

see what happens. I'm happy either

36:34

way. Bitcoin doesn't change. Either

36:36

way, bitcoin doesn't fail or succeed. Bitcoin

36:38

would even succeed in these lower bound scenarios

36:41

of a hundred thousand and three thousand supercycle

36:44

is just what I think could happen if the whole world

36:46

wakes up to bitcoin at the same time, and

36:48

certainly the price isn't going to be the same, it should be

36:50

much higher. Than what we expect or

36:52

have a less intense bear market. Yeah,

36:55

and and as you said, all the catalyst is there.

36:57

We have you know, the pandemic and

36:59

an unlimited money printing. Um, we

37:01

have this younger generation. If you look at

37:03

some cycles like the fourth turning, we have rapid change

37:05

is going to be happening in this decade. Um.

37:07

You know, all these things are kind of lining up so it could

37:09

happen. So UM, I know we got to wrap it

37:11

up, but you left us with a lot of thoughts,

37:13

so hopefully everybody enjoys that. Anything you

37:16

want to say closing it out, well,

37:18

Mark, thanks for having me on. Really appreciate it. Um.

37:20

If you want to follow me, check out my Twitter account

37:22

at Dan held That's where I post all

37:24

my thoughts. Um. Yeah, but thanks for

37:26

having me Mark. Yeah, we'll go ahead and linked to your Twitter

37:28

and your news letter down below for everybody and

37:31

without we'll wrap it up. Thanks so much, Dan sures